Huawei's an Asset All Right—But It's Not Our Asset
Technology can be a beautiful thing. But in the matter of who wields it, it can be vital to distinguish friend from foe. The late historian Samuel Eliot Morison, in his classic 15-volume naval history of World War II, bequeathed us a "grimly humorous" anecdote from the aftermath of the 1942 Doolittle Raid on Japan -- in which, in order to surprise Japan with a retaliatory bombing less than five months after Pearl Harbor, two U.S. aircraft carriers, the Hornet and the Enterprise, sailed much closer to Japanese waters than Tokyo was expecting. After U.S. bombers took off from the deck of the Hornet, the carriers turned for home. They were sighted by a crew member of a Japanese patrol ship, who -- mistaking them for Japanese aircraft carriers -- went below deck to rouse his sleeping skipper, telling him to come look at "our beautiful carriers."
Morison recounts: "The skipper came on deck, studied Enterprise and Hornet through his binoculars, and remarked, 'They're beautiful all right, but they're not ours.' He went below and shot himself."
That story, told by the captured Japanese lookout after his patrol ship surrendered to the Americans, comes to mind in the current context of an op-ed by George Gilder, published in the May 21 Wall Street Journal under the headline: "Huawei Is an Asset, Not a Threat."
Yes indeed, China's telecom-equipment giant Huawei is an asset. But it's not ours. Whatever the details of Huawei's officially private ownership, or the marvels of its innovations and industry, Huawei is for strategic purposes an asset of the globally ambitious despotism that is the government of China. Which makes it dangerous.
Let me stipulate that I am a longtime admirer of George Gilder and his passion for free markets. My respect for Gilder goes way back to 1981, when he published his best-selling book on the benefits of capitalism, Wealth and Poverty. For decades, he has been an ardent and eloquent advocate of capitalism, an oracle of the innovation and prosperity that free markets can engender, and I owe him no small personal debt for his advice half a lifetime ago that the way to make a living as a writer is to just start writing. Gilder's voice is needed now, more than ever, to counter the siren call of socialism.
And some of what Gilder says about Huawei makes sense. He's correct, that the U.S. should not underestimate the talents of Huawei's "founder-philosopher," Ren Zhengfei. In his WSJ op-ed, Gilder highlights Ren's amazing feat over three decades in which "he turned the equivalent of $3,000 into China's telecom-equipment champion and a multinational colossus" -- operating in 170 countries, with 180,000 employees and $105 billion in annual revenue. Gilder praises Ren as "a vocal admirer of American openness" and "supply-side admirer of President Trump's tax cuts." He lauds Huawei as a big customer of American technology companies and notes that its finance division "is staffed by hundreds of graduates of Harvard, Cambridge, Wharton and Yale."
But beware Gilder's conclusion, that "The U.S. should embrace Huawei as a triumph of the American-led system rather than push it into the arms of Chinese hard-liners who revel in autarkic dreams."
Nope, sorry -- Huawei is not a victory for the American-led system. Huawei is a product of 21st-century China's system, making expert use of the openness and innovations of America, but subordinated -- like everything and everyone else in China -- to the priorities, demands and aspirations of China's ruling Communist Party. And China's rulers do not confine themselves these days to reveling in provincial dreams of autarky. They aspire to global dominance. Beijing is already translating this dream into enormous cyber warfare capabilities, a rapidly expanding blue water Navy, military bases atop artificial islands straddling vital shipping lanes in the South China Sea, and debt-trap financing for countries such as Sri Lanka, thus acquiring footholds for potential military bases under the label of fostering trade through China's "Belt and Road Initiative."
Put another way, Huawei embodies the twinned triumph and tragedy of today's China, where even the most dazzling enterprise remains yoked to a ruthless and expansionist despotism. Vice President Mike Pence explained this brand of warped development in a speech last October at Washington's Hudson Institute:
"After the fall of the Soviet Union, we assumed that a free China was inevitable. Heady with optimism at the turn of the 21st century, America agreed to give Beijing open access to our economy, and we brought China into the World Trade Organization.
Previous administrations made this choice in the hope that freedom in China would expand in all its forms -- not just economically, but politically, with a newfound respect for classical liberal principles, private property, personal liberty, religious freedom -- the entire family of human rights. But that hope has gone unfulfilled."
The problem is that simply by way of being a Chinese company, Huawei since its inception has always been in the arms of China's hardliners. That's who rules China, and whatever the nuances of hardline versus moderate (or pick your niche on the spectrum) among senior officials of the Chinese Communist Party, the entire system is by any democratic standard obscenely "hardline." There is no free press, no freedom of assembly, no opportunity to replace via elections the current president-for-life, Xi Jinping. There is enough economic latitude to do business, and plenty of encouragement to exploit free and open societies abroad, such as America. But China itself is not open. China's 1.4 billion people are encircled, monitored and censored in their digital communications by the "Great Firewall of China." Anyone who dares dissent openly from the Party line risks prison. China's rulers are now enlisting technology to enhance the usual pervasive domestic surveillance with an Orwellian system designed to control everyone in its sights by assigning scores, rewards and penalties for "social credit."
Gilder argues that Huawei does not deserve some of the allegations leveled by the U.S. government, such as intellectual property theft. He writes: "In recent months the U.S. government has begun backpedaling on specific claims of wrongdoing by Huawei, reverting to a more general argument that it does the bidding of Beijing, which requires Chinese companies to cooperate with its intelligence services." Gilder warns that "Anathematizing Chinese companies simply for being Chinese would cripple the world economy."
That's true. But there could also be ruinous results to embracing as an asset to the Free World a Chinese technology company that aims to dominate the new 5G generation of mobile phone and computing networks, while required to cooperate with Chinese intelligence. Trump sounded a much-needed warning in his May 15 executive order enabling a U.S. ban on telecom equipment and services from "foreign adversaries," on grounds that this could open the way for such adversaries "to create and exploit vulnerabilities in information and communications technology or services, with potentially catastrophic effects."
Nor does Gilder's defense of Huawei quite address such items as the U.S. indictment unsealed in Brooklyn federal court this past January, in which Huawei Technologies, two of its affiliates and its chief financial officer, Meng Wanzhou -- daughter of Huawei's founder Ren Zhengfei, and boss of all those graduates of Harvard, Cambridge, Wharton and Yale -- were charged with bank fraud, wire fraud and conspiracies to commit bank and wire fraud, in relation to what the U.S. Justice Department described in a press release as "a long-running scheme by Huawei, its CFO and other employees to deceive numerous global financial institutions and the U.S. government regarding Huawei's business activities in Iran." Huawei and Meng should be presumed innocent. Meng, who was arrested last December in Canada, is fighting extradition to the U.S. Meantime, China has arrested two Canadians on charges of spying.
And so the wrestling goes on. The great pity is not that America is failing to embrace Huawei. It is that China's rulers, having failed to embrace the rights of their own citizens to freedom, are engineering a Chinese rise that is becoming a growing threat to the Free World. Huawei, with its enterprise, talents and legions of Western-educated financial wizards certainly has the potential to be a brilliant asset to the U.S.-led global trading system. But for that, Beijing must first deliver a free China.