By Christian Cheng
September 7, 2023
Image Source: Open Grid Scheduler/Flickr
While many countries in the Western world have decisively banned Chinese telecom equipment company Huawei from their 5G networks due to national security concerns, the EU has lacked the consensus for such a policy, in part due to Huawei’s and China’s strong relationships within the bloc. However, recent announcements from Germany, the biggest holdout, and top EU brass suggest that momentum within the EU is growing for a ban on Huawei.
This article is part of a series of articles authored by young, aspiring China scholars under the Future CHOICE initiative.
At the start of this year, the German government did not even know how prevalent Huawei equipment was within its telecom networks, unable to respond to this query from parliament. This was not a big surprise; Germany had been especially reluctant to take action against Huawei, despite pressure to do so coming from the US, EU, and other member states.
However, in March, the German government reversed its position and announced an investigation into Huawei. The evolution of Germany’s position shows how the strength of the economic and cultural relationships Huawei had cultivated within Europe has now been trumped by greater geopolitical developments.
Less than a decade ago, Europe was Huawei’s largest market outside China. According to industry figures from Strand Consult, 48 percent of European mobile customers had access to Chinese 4G RAN, and 41 percent had access to Chinese 5G RAN (which consists of both Huawei and ZTE equipment, but of which ZTE makes up a minimal part).
Along with these strong economic ties, Huawei poured lavish amounts of money into developing strong cultural, people-to-people relationships, donating millions of dollars to universities such as Oxford, Cambridge, University of Warsaw, and Technical University Munich, and sponsoring research centers such as the PSNC-Huawei Innovation Center in Poznan, a scholarship to study at Huawei’s headquarters in Shenzhen and even Germany’s Christian Democratic Union’s party convention in 2021.
Despite these strong ties, European countries had always been slightly suspicious of Huawei: in 2010, the UK, one of Huawei’s biggest European markets, established the Huawei Cyber Security Evaluation Centre, a special arrangement between the government and Huawei, designed to investigate Huawei equipment entering the UK for signs of espionage; and in 2019, Huawei opened a cybersecurity transparency center in Brussels, a few blocks away from European Parliament, in part to reassure government officials of their stated goal “to develop a secure and trusted digital environment supporting Europe’s Digital Single Market.”
These early concerns were fueled by the advent of 5G, which has promised to revolutionize society in what the New York Times has called “the most dramatic remaking of the plumbing that controls the internet since it sputtered into being,” enabling advancements in the Internet of Things (IoT), artificial intelligence, VR, robotics, healthcare, and other fields. In addition, within the realm of 5G, Huawei holds great prominence as only one of three competitors, with Finnish company Nokia and Swedish company Ericsson; Huawei equipment is also often cheaper and its technology is a leader in the industry.
The first signs of movement towards any sort of restrictions on Huawei began in 2019 and 2020: representatives from 30 EU and NATO countries signed a recommendation regarding the security of 5G infrastructure (the Prague Proposals); the EU released its toolbox for 5G security (a nonbinding recommendation) which called on EU countries to restrict 5G suppliers deemed “high risk,” such as from “state-backed actors”; and over a dozen European countries signed joint declarations on 5G security with the US, such as Romania, Estonia, Latvia, the Czech Republic and Bulgaria which often affirmed the Prague Proposals and pledged to restrict 5G suppliers subject to foreign government influence.
These actions were often motivated by concerns regarding China’s 2017 national security law, which compels Chinese companies to give information to Chinese national intelligence agencies; Huawei’s ambiguous ownership structure; the arrest of a Huawei employee in Poland for espionage; and its development of AI facial recognition technology to assist the government in identifying Uyghurs and other minorities. These specific concerns, as well as the general nature of China’s authoritarian system of state capitalism and the fact that the government heavily subsidized Huawei’s rapid rise, question the strength of the relationship between Huawei and the Chinese government. It is clear that the Chinese government values Huawei as a Chinese global brand – 5G is one of the critical sectors named in the government’s “Made in China 2025” plan to boost domestic industries, and the government has continued to come to the defense of Huawei when facing scrutiny internationally.
However, European countries overall have not participated in the US’s broader campaign against Huawei, such as the 2018 arrest of CFO Meng Wanzhou for violating sanctions and the 2022 ban on semiconductor exports to Huawei; Europe has been focused only on 5G security. While the US decreed an outright ban on Huawei, the EU and European countries have emphasized the need to examine “high-risk vendors,” which while currently targeted at Huawei, also provides flexibility to extend the policy to future vendors.
Little progress has been made on the EU level since the toolbox came out in 2019. According to European Commissioner for the Internal Market, Thierry Breton, only ten countries have implemented the recommendations from the 5G toolbox, which involves not only passing laws giving the government the ability to restrict vendors based on security analyses, but actually using those laws to exclude specific vendors.
Signs of Momentum
In recent months, however, there seems to be further momentum towards restrictions across the EU. Germany, the biggest holdout by far on restricting Huawei (57 percent and 59 percent of its RAN was Chinese for 4G and 5G, respectively, representing 25 percent of all European customers with access to Chinese RAN), began investigating the company in March, amidst its general reevaluation of its relationship with China. If Germany – which has been cozier towards China, its largest trading partner – were to make moves in this area, it would signal strong momentum towards restrictions, and its decision could prompt other countries to follow Germany’s lead, given its position as Europe’s largest country and an influential player within the EU.
The EU has also become more assertive on the issue. Breton, in his 5G-related communications, has only referred to “high-risk vendors.” However, in June, he and the Commission called out Huawei, as well as Chinese company ZTE, by name for the first time, in urging member states to immediately comply with the toolbox: “…the decisions taken by certain Member States to restrict or exclude completely Huawei and ZTE from their 5G networks are justified and in line with the toolbox,” he said, backing up the European Commission’s assessment that they “represent in fact materially higher risks than other 5G suppliers,” prompting a rebuke from the companies and the Chinese government.
In addition, the EU, as an organization, has moved to ban Huawei and ZTE internally; in the same release, the Commission announced it was going to cut off its internal communications from telecom networks using Huawei or ZTE equipment, and ban the companies “in all relevant EU funding programmes and instruments.” This is a measure that the US government similarly announced – banning government agencies from purchasing Huawei telecom equipment – before it moved to ban Huawei nationwide.
Finally, the Financial Times reported in June that the EU was mulling a compulsory requirement for its member states to ban companies from 5G that had security risks, which would include Huawei. However, the article noted that progress on this front would only happen after the current term of the European Commission, as it needed time to gather sufficient support. This would be more likely if Germany, which has now come around to investigating Huawei, supports restrictions on Chinese companies.
It seems that Huawei has also accepted its bleak prospects in what used to be its largest international market, downsizing its offices in Europe and refocusing on other regions.
Why the Momentum?
One clear reason for the recent developments is that the war in Ukraine has made the risks of relying on non-allied countries for critical resources, such as Russian gas, extremely clear to European countries. This is no less clear to Germany, with the failure of Nord Stream 2. Breton made this argument clear in his June statement: “We have been able to reduce or eliminate our dependencies in other sectors such as energy in record time, when many thought it was impossible,” he said. “The situation with 5G should be no different: we cannot afford to maintain critical dependencies that could become a ‘weapon’ against our interests.” With the degree to which 5G networks will be integrated within all facets of society, many are viewing it as critical infrastructure – akin to the water or gas supply. China’s position on the Ukraine war has also generated general geopolitical tension.
Another reason is the increasing pressure from the United States. While the US moves against Huawei began with Trump, Biden has continued the assault, and in some areas, such as the semiconductor ban, increased its intensity, and his increased credibility on the international stage has made the US position more legitimate. Furthermore, the US, in pushing for Huawei bans, frequently threatens to cut off intelligence-sharing with countries that have Huawei in their telecom networks. This tactic was effective in pressuring the UK, Canada, Australia and New Zealand into banning Huawei, over threats to exclude them from their Five Eyes intelligence cooperation deal. These factors, plus the US sanctions and bans on Huawei’s supply chain (e.g. semiconductors), which questioned the viability and reliability of Huawei’s products, have emphasized the need, in Europe’s eyes, to diversify their supply chains, “de-risk” their economic ties with China, reduce their dependence on foreign countries and increase the resilience of their own critical infrastructure, language that they frequently emphasize in their communications. Given this, the EU has begun promoting the development of local industries for the next big telecom rollout – 6G.