UK’s Huawei ban opens new front in US-China Trade War



Lionel Barber|Nikkei Asian Review

The British government’s decision to ban Huawei Technologies from participating in its fifth generation, or 5G, mobile network highlights how the U.K. — and other European countries — have become caught in the crossfire between the unpredictable U.S. and a newly assertive China.

Only a few weeks ago, the government, supported by advice from its spy agencies, was confident that the security threat posed by Chinese involvement in its advanced telecoms network was manageable. The screeching U-turn is the result of relentless pressure from U.S. President Donald Trump’s administration and China’s own actions, especially the crackdown in Hong Kong.

The U.K. now joins countries ranging from Australia to Japan and Germany recalibrating relations with China. Each has been unsettled by President Xi Jinping’s drive for technological supremacy, suppression of the Uighurs, and a more muscular approach in the East Asian neighborhood. Xi’s assertiveness contrasts with the “hide your strength, bide your time” stance adopted by former leader Deng Xiaoping, admittedly a generation ago.

Britain’s equivocal position on Huawei long served as cover for European countries eager for a cheap, fast upgrade to their cellular networks. Now it seems European governments, like the U.K., will have to choose between Washington and Beijing, even as business groups have become more outspoken about Xi’s “China First” industrial policy.

Back in 2015, Prime Minister David Cameron’s government invited the Chinese into the twin nerve centers of U.K. national security: nuclear energy and telecommunications. At the time, George Osborne, then finance minister, boasted: “No economy in the west is as open to Chinese investment as the U.K.”

The U.K.-China relationship goes beyond trade and investment. Thousands of Chinese students attend U.K. universities which have become dependent on their fee income. The City of London was hopeful of developing closer ties with the Shanghai stock market, via offshore yuan trading and green bonds issued by Chinese companies. For now, however, all these risks being lost in a red mist.

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