The United States has an ambivalent relationship with China that ranges from dependency to hostility, but is always wrapped in suspicion. It has become reliant on cheap Chinese imports and even cheaper credit, yet as it struggles with a variety of domestic problems the US seems determined to cling to a self-image that conceives no challenge to its dominance.
But, its confidence tends to be shaken when threatened by spectres that might be real, conjured or delusional. And in a presidential election year, phantoms do often appear.
Economic insecurity can easily lead to protectionism, while perceived dangers to national security can be used to justify all sorts of actions. The brouhaha over two Chinese telecom firms is the latest instance of peril, fabrication or paranoia
Last week, a US congressional panel warned that the two firms – Huawei and ZTE – pose a security threat to the country, and so should be forbidden to undertake any US mergers or acquisitions.
The house intelligence committee concluded that both companies were too closely linked to China’s government and military complex. It recommended that equipment or component parts from Huawei and ZTE should not be used by government contractors, although it didn’t suggest a boycott of the firms’ mobile phone products.
Huawei, one of the world’s leading telecom equipment makers, and ZTE had already denied the allegations to the committee in September, and their response last week was vigorous.
“Purporting that Huawei is somehow uniquely vulnerable to cyber mischief ignores technical and commercial realities, recklessly threatens American jobs and innovation, [and] does nothing to protect national security,” said Huawei’s vice-president, William Plummer. He added that the accusations were “dangerous and political distractions”.
But, the committee insisted that it had received convincing allegations from current and former Huawei employees of corruption, discriminatory behaviour and copyright infringement. Republican committee chairman Mike Rogers said they had passed on information to the FBI to investigate the allegations.
Basically, the charge is that the two firms have been stealing intellectual property, intruding on customers’ privacy, and passing on information to their governmental-military bosses. Their alleged economic piracy and dodgy business practices pose a national security threat, not least because they are also apparently spies.
Supporters of Huawei, which was set up in 1987 by Ren Zhengfei, a former member of the People's Liberation Army, argue that the committee’s accusations are barely disguised protectionism.
“It is because the US government wants to protect the interests of US companies that it is being so unreasonable,” said an editorial in China’s Global Times.
“Its lack of self-confidence is astonishing. Out of fear, the US is becoming oversensitive to China…If China held the same state of mind as the US, it would search for substitutes to drive US products out of China, which would result in no mutual investment or trade between China and the US,” the editorial added. Reciprocal action might also be necessary to ensure that the US doesn’t dominate bilateral relations.
The official Chinese response has been more conciliatory.
“Chinese telecoms companies have been developing their international business based on market economy principles,” said Hong Lei, a foreign ministry spokesman. “Their investment in the United States embodies the mutually beneficial nature of Sino-American economic and trade relations.”
Respondents to our latest website poll struggled to reach a consensus view. Perhaps that’s not surprising when the allegations concern potential spooks, and when the underworld meets cyberspace in a place full of intrigue and misinformation.
Although 46% of respondents reckoned that Huawei is not a security threat to the US, more than half believed either that it is (32%) or possibly could be (22%) a threat.
Even the Western industrialised countries can’t agree.
Since its rapid overseas expansion during the past few years, Huawei has faced repeated complaints in the US about using government subsidies to under-bid competitors, filching intellectual property and passing on information about foreign states and companies to the Chinese government. Last year, a US security panel rejected its proposed purchase of American computer company 3Leaf systems.
Yet, other countries are happy to do business with Huawei. The firm has signed contracts with Canada and New Zealand and recently announced a $2.1 billion investment in the UK.