Friday, July 12, 2019

Trump's Huawei Reprieve Is a National Security Debacle

by Gordon G. Chang • July 12, 2019 at 5:00 am

Huawei is in no position to resist Beijing's demands to illicitly gather intelligence. For one thing, Beijing owns Huawei. The Shenzhen-based enterprise maintains it is "employee-owned," but that is an exaggeration. Founder Ren Zhengfei holds a 1 percent stake, and the remainder is effectively owned by the state. Moreover, in the Communist Party's top-down system, no one can resist a command from the ruling organization.
The concern is that the Chinese government and military will be able to use Huawei equipment to remotely manipulate devices networked on the Internet of Things (IoT), no matter where those devices are located. So, China may be able to drive your car into oncoming traffic, unlock your front door, or turn off or speed up your pacemaker.
On Tuesday, Commerce Secretary Wilbur Ross echoed earlier administration comments when he promised his department would only issue exemptions "where there is no threat to U.S. national security." That sounds reassuring, but it is not possible to divide Huawei into threatening and non-threatening components. Huawei management can take profits from innocuous-looking parts of the business to support the obviously dangerous parts. Money is fungible, so the only safe course would be to prohibit all transactions with the company.
Beijing, buoyed by the talk of the American climb-down, is now fast selling Huawei equipment around the world, which means, in the normal course of events, the Chinese will soon control the world's 5G backbone.

Huawei Technologies, the Chinese telecom giant, is in no position to resist Beijing's demands to illicitly gather intelligence. For one thing, Beijing owns Huawei. Moreover, in the Communist Party's top-down system, no one can resist a command from the ruling organization. (Photo by Kevin Frayer/Getty Images)

Tuesday, Commerce Secretary Wilbur Ross outlined the scope of exemptions to be granted to sales and licenses to Huawei Technologies, the Chinese telecom giant.

At the end of last month, President Donald Trump publicly promised to give the Chinese company a reprieve from newly implemented U.S. restrictions.

Trump's move, announced after his meeting with Chinese ruler Xi Jinping at the conclusion of the Osaka G20 summit, was a strategic mistake. Moreover, it was a humiliation for the United States, almost an acknowledgment of Beijing's supremacy.

The U.S. Commerce Department, effective May 16, added Huawei, the world's largest networking equipment manufacturer and second-largest smartphone maker, to its Entity List. The designation means that no American company, without prior approval from the Bureau of Industry and Security, is allowed to sell or license to Huawei products and technology covered by the U.S. Export Administration Regulations.