We’re getting our heads handed to us. I don’t like to be the bearer of evil tidings, but I hate losing. The only I hate more than losing is trying to make ourselves feel better while we’re losing, rather than winning. We need to wrest the initiative in high tech from China and re-establish American dominance in telecommunications, computation, artificial intelligence, materials science, chip design and lithography, manufacturing, and other key fields. I don’t care how much it costs. If we don’t spend the money to ensure America’s number one position now, we’ll go broke in any case.
We sat on our hands while China’s Huawei took the lead in the game-changing technology that will usher in what the Chinese call the Fourth Industrial Revolution. 5G telecommunications (which we are rolling out at a snail’s pace while China surges ahead) make possible industrial robots that design production processes by themselves, driverless cars, virtual-reality controlled surgery at long distance, and a dozen other breakthroughs. China is getting the jump on us while we dither. Think Manhattan Project. Think Sputnik moment. Think JFK’s Moonshot. Think Reagan’s Strategic Defense Initiative. We need a grand mobilization of material and human resources to meet the challenge of the 21st century.
You can’t stop something with nothing, and all of our attempts to slow Huawei down have failed miserably. Excepting Japan, Israel and Australia, every one of our allies has invited Huawei in to build 5G networks because the alternative would cost another two years and 50 percent more. Either they don’t believe what we’re saying about Huawei’s capacity to spy on them, or they don’t care. We shut down component sales to Huawei, and Huawei now builds smartphones and base stations with zero U.S. components. It now makes chipsets for smartphones and AI processers that rival the best America can produce.
And every day we read about another plan from the Commerce Department to crack down on component sales to Huawei. Doing the same thing over and over again and expecting a different outcome is the definition of insanity.
Mike Pompeo went to London to warn our British allies not to allow China’s Huawei to help build its 5G network. President Trump called Prime Minister Boris Johnson–his best friend among the world’s heads of government–to urge him to keep Huawei out. Johnson politely refused and invited Huawei in. President Trump called Johson after the decision was announced, “apoplectic,” according to the London Financial Times, and slammed down the phone. Johnson canceled a planned visit to the White House. Trump told U.S. Ambassador to Germany Richard Grenell to tell the Germans that the United States will cut off intelligence sharing if Berlin does not ban Huawei from its 5G buildout. Trump’s warning wasn’t even reported in the major German press. American officials, from Vice President Pence to Defense Secretary Mike Esper to House Speaker Nancy Pelosi warned Europeans at last weekend’s Munich Security Conference that Huawei was an instrument of Chinese espionage. The Europeans ignored them, and a Chinese official told the conference that it was the Americans, not China, that spied on everyone.
National Security Advisor Robert O’Brien told the Wall Street Journal last week that the U.S. had evidence of a secret Huawei backdoor that allowed Chinese spooks to interception Western telecommunication traffic. Publish the data, Huawei taunted. “A backdoor that only the US can see,” sniffed Germany’s top news outlet Der Spiegel. “Sounds like weapons of mass destruction in the Iraq war,” scoffed the CEO of Orange Telecom.
This is a national humiliation, maybe the worst since the British burned Washington during the War of 1812.
As I wrote yesterday at Asia Times:
Huawei has done more than sell high-quality, inexpensive telecommunications equipment to Britain’s mobile phone providers. It has made itself part of the fabric of British telecommunications engineering starting in 2011, when it hired the Chief Information Security Officer of the British government, John Suffolk, as the head of its UK business. A senior Huawei executive told me that the company’s relationship with the UK is the best of any Western country. GCHQ, the British counterpart of the National Security Agency, spent years critiquing Huawei’s code, often demanding improvements that the Chinese firm promptly made.
In 2012, Huawei announced to the applause of then Prime Minister David Cameron that it would invest £1.3 billion in the United Kingdom. A Huawei report notes that in 2018 it “invested £112 million in research and development, employing more than 300 researchers in the UK. Huawei also collaborated with 35 universities and research institutes, according to the report.”
Huawei employs 50,000 foreigners, most of them researchers, in two dozen research centers around the world, and subsidizes thousands of others. It is the first Chinese company that has engaged the engineering and scientific elite of the West and with their help, seized a commanding technological lead.
There never was any doubt that the United Kingdom would continue its collaboration with Huawei, illustrating Gen. Sun Tzu’s adage, “Every battle is won or lost before it is fought.” Huawei built its relationship with Britain in the open and became part of the British engineering establishment with strategic investments and calculated deference to Britain’s security services.
The United States didn’t see it coming for the same reason that no American agency considered the possibility that Pearl Harbor might be a Japanese target in December 1941, or the British military didn’t consider the possibility of a Japanese land attack on Singapore in 1942. It simply didn’t occur to America’s intelligence services that the Chinese were capable of cornering the world market in a game-changing technology. It also didn’t occur to Washington that China had developed sufficient capacities in semiconductors to produce its own high-end chips and ignore an American export ban.
All of this has been out in the open for nearly ten years. We just didn’t believe the Chinese could do it. Well, they could, and they are doing it. Michael Pillsbury’s book The Hundred-Year Marathon claimed that there’s a secret Chinese plot to take over the world. Secret? They brag about it. They think they’re the world’s benefactors, bringing superior technology to a world in which everyone will enjoy the benefits of Chinese-sourced prosperity. If you don’t believe me, browse Huawei’s website for an hour and see for yourself.
We’re not dealing with a bunch of sneak-thieves purloining American technology. China is now an innovation powerhouse on its own. We spent 20 years training a top-quality Chinese university faculty in science and engineering (80% of U.S. doctorates in electrical engineering and computer science go to foreigners, and most of them go home). Chinese students have stopped applying to American universities, and Chinese companies won’t hire Chinese kids with a bachelor’s degree from a U.S. university, because they assume that they’re rich dumb kids who couldn’t get into a good Chinese school. China graduates four times as many STEM bachelor’s degrees as we do each year, and twice as many doctorates.
This is a formidable challenge, but no challenge is too great for us — if we mobilize our resources and stay focused on the goal. We still can win this one. But time is getting short.