Selected Analysis

Ties that Bind: Huawei and the Chinese Party-State

Questions have been raised over Huawei’s relationship to the Chinese government and whether this relationship would pose a danger to users of Huawei-built 5G networks and associated systems in Western countries. These are critical considerations, as many countries around the world are currently deciding what kind of relationship they wish to have with Huawei going forward.

On the one hand we have the U.K. and the Germans who have decided that they can mitigate any risks associated with Huawei through testing facilities and rigorous procedures to limit the company’s penetration into critical systems. On the other hand, we have the U.S., Australia, and Japan which have outright rejected any place for Huawei in their emerging 5G networks out of national security concerns.

Another complexity often dismissed in discussions revolving the use of Huawei is its price competitiveness for emerging economies in South and Southeast Asia and Africa. For emerging economies, Huawei’s comparative cost advantage tends to outweigh the potential security risks associated with the technologies.

Ms. Marrian Zhou’s February 5th, 2020 long read in the Nikkei Asia Review entitled “Cyberspies, 5G and Iran: Is the US case against Huawei crumbling?” provided a nuanced picture of the Huawei issue. It raised incisive questions about Huawei’s independence from the Chinese government and how China consistently contradicts its own 5 Principles of Peaceful Coexistence, in particular that it does not interfere in the politics of foreign countries.

With regards to interference in the politics of foreign countries, Zhou’s article highlighted the possible role of Huawei in the recent protests in Vancouver, Canada related to the court proceedings of Huawei Executive Ms. Meng Wanzhou and her potential extradition to the U.S.

The protests were amateur in nature. This contrasted starkly with suspected embassy/ consulate supported pro-Meng Wanzhou protests we saw over the past year or so. Those protests were peppered with the PRC flag, Meng Wanzhou focused placards, and its participants were of Chinese ethnicity. The placards seen in Vancouver, but also in Toronto and Ottawa, had similar phrasing, suggesting coordination with a government entity rather than spontaneous grassroot organization. In their reading of online Chinese comments, John Dotson of the Jamestown Foundation’s China Brief and others found the phrasings to align with PRC government talking points.

These were seen by most Canadians as PRC government-supported protests and thus illegitimate. Rather than garnering sympathy, they stirred up anti-CCP China sentiment across the country.

The lesson learned was that any protests to support Ms. Meng would need to garner support from ordinary Canadians and also have a diversity of Canadians represented within them. To do so means enlisting a broad array of Canadians, which would prove difficult if the true intentions were clear. Here, trickery was used to enlist participants as when reporters asked some of the “protesters” about the events they showed no understanding of the reality of what they were supposedly protesting.

Did Huawei have a role?

Huawei is a sophisticated, global technology firm with PR experts that would have likely frowned upon this or refused to be implicated. It was likely the United Front Work Department, which has been the primary organizer of pro-China events overseas and regularly boosts disseminators of disinformation.

We have seen the United Front’s disinformation footprint related to pro-Hong Kong protests from Melbourne to Seoul, and Vancouver to Paris.

As their efforts are usually targeted at ethnic Chinese communities overseas and select power brokers or influential individuals (politicians, business people, academics), we should suspect the amateurish protests are related to efforts to mobilize support for Meng with techniques usually successful with existing sympathetic parties and mobilized Mainland residents (students, SMEs etc.).

The secondary questions raised in Ms. Zhou’s article are what is the relationship between Huawei and the Chinese government, and are there dangers in the company’s involvement in the 5G system?

These are separate but interrelated questions.

To answer these lines of inquiry its necessary to examine the following: the government’s past and present track record in interfering with or making requests of the private sector; recent laws requiring organizations to provide their data to the Chinese government upon request; increased Party representation in all organization in China; China’s Military-Civilian Fusion Strategy (军民融合, junmin ronghe); and China’s distancing itself from constitutionalism under the leadership of President Xi Jinping.

First, when we examine the Chinese government’s past and present track record in interfering with or making requests of the private sector, what we have observed over the past several years is that the CCP has removed powerful billionaires from businesses or silenced them when they became too outspoken, when they overshadowed President Xi, or when they went against the Party’s wishes.

Prominent examples include Jack Ma’s outing as a member of the CCP after he shunned President Xi at a meeting following the G20 in Hangzhou, and his subsequent “stepping down.” We also had Wanda Corporation’s Wang Jianlin, who became uncharacteristically silent and could not travel abroad after a track record of outspokenness. Still another example is Wu Xiaohui, the former chairman and chief executive of Anbang Insurance Group, then one of the largest insurers in China, who was sentenced to 18 years imprisonment on charges of fraud and embezzlement in May 2018.

All three were incredibly wealthy, connected, and close to the Party until they weren’t. The Party stepped in when they went against the Party’s wishes. It’s difficult to assume the Huawei’s CEO Ren Zhengfei would not be subject to the same treatment if he refused the CCP access to Huawei’s technologies for state purposes.

Second, consider China’s National Security Law and Cyber Security Law, which came into effect in 2015 and 2016. Huawei must abide by these two laws, significantly blurring the distinction between privacy and security.

More specifically, Article 11 in the National Security Law states: “All citizens of the People’s Republic of China, state authorities, armed forces, political parties, people’s groups, enterprises, public institutions, and other social organizations shall have the responsibility and obligation to maintain national security” while Article 28 in Cybersecurity Law stated: “Network operators shall provide technical support and assistance to public security organs and national security organs that are safeguarding national security and investigating criminal activities in accordance with the law.”

Third, in November 2018 new party regulations stipulating the establishment of party cells within all organizations in society, including the private sector. This means that Huawei and other corporations must ensure their business falls in line with Party priorities.

Fourth, Huawei was able to develop its technologies and secure market dominance through significant government subsidies. This requires a relationship with the government and an overlap in interests.

Fifth, the COVID-19 outbreak in China in early 2020 is also a useful illustration of the proximity of the state and Chinese Red Chips such as Alibaba, Tencent and other Chinese businesses. On February 10, 2020, Chen Yueliang, an official with the Ministry of Civil Affairs implored “major internet companies, such as Tencent and Alibaba, to develop public community apps for community workers.” He also stressed in his press conference that “charitable software is more useful than a one-billion-yuan donation.”

Both comments raise serious questions as to how the state views the roles of the private sector in instrumentalizing government policies.

While the COVID-19 outbreak maybe an exceptional case when it comes to the central government making demands of Chinese corporations, the example leaves us with concerns over what demands would be made of Huawei and other tech giants if the government deemed it appropriate to do so.

This dilemma is further exemplified by President Xi Jinping’s support for China’s Strategic Military-Civilian Fusion, as outlined at the plenary session of the 13th National People ’s Congress ’s First Meeting of the People ’s Liberation Army and Armed Police Forces on March 12, 2018. Here President Xi stressed that “the implementation of the military-civilian integration development strategy is an inevitable choice to build an integrated national strategic system and capabilities, and it is also an inevitable choice to achieve the party’s goal of strengthening the army in the new era. It is necessary to strengthen strategic leadership, strengthen reform and innovation, strengthen military-ground coordination, and strengthen task implementation. We will work hard to open up a new era of in-depth development of military-civilian integration, and provide powerful motivation and strategic support for the realization of the Chinese dream of a strong military dream.”

State-led fusion of military and civilian activities further obfuscates the distinction between the civilian and military sectors and raises questions as to whether or not this fusion will be deployed outside China.

Huawei’s leading role in the development of telecommunications systems and 5G technologies in China and the world would make it a prime candidate to be at the forefront of any military-civilian integration. Could the company just say “no” to the Party when a request is made? Unlikely.

That leads to the next question concerning the dangers of 5G technology.

Most experts would say that the technology itself is not the danger. What is of a concern though is the relationship between the PRC state and Huawei. This threat is increased by the lack of a rule-of-law system in China and a separation of the country’s political and legal systems. Xi himself has said that China must never adopt Constitutionalism. In other words, there will be no checks and balances on the Party and what it wants to do.

With no checks and balances on the Party, legal requirements to do the government’s bidding, and an established record of removing influential business leaders, the answer to the question as to the relationship with Huawei and the Chinese government is the same for Huawei and all Chinese corporations: they are bound to the Party, both by law and personal relationships.

Source: Geopolitical Monitor

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