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China should be encouraged to play in a rules-based system
HUAWEI is under siege. Google is restricting parts of its Android operating system to the Chinese telecoms tech giant. US chipmakers are poised to suspend supplies too.
The US move to put the Chinese telecoms flagship on its so-called Entity List - requiring American companies to obtain a government licence to sell products to it - is a pivotal moment for the global technology industry. It represents an opening salvo in an emerging new US-China cold war. It is also a serious miscalculation.
All countries have a right to protect national security interests - nowhere more than in 5G telecoms, the nervous system of the future digital economy and the "Internet of Things".
The Trump administration's moves last week, however, go far beyond what is needed to address security concerns. They also seem far more than an attempt to pressure Beijing into reaching a trade deal.
They amount to an effort to decouple the US and Chinese tech sectors, leading to a bifurcation of the global industry. This reflects a view reaching beyond the Trump White House and deep into the US security establishment that President Xi Jinping's China is a malign actor, and that its technology is on course to outstrip America's. Indeed, the US steps appear part of an attempt to constrain China's rise.
Echoes of the Soviet era abound, but Soviet industry was never entwined with America's in the way China's is. The latest US moves seem designed to cripple or crush one of the first Chinese tech companies to become globally competitive - and one that relies on American suppliers in both mobile phones and network equipment.
Assuming the US administration sticks to its measures despite heavy lobbying by US businesses, they will damage American and other western corporate interests. Allied capitals will resent the White House's efforts to impose its writ.
However great the vulnerabilities in Huawei and the broader Chinese tech sector that they have revealed, the US' steps may ultimately fail. They are likely to spur a Beijing-led effort to address China's weaknesses and develop a fully independent supply chain. A historical analogy might be China's nuclear weapons programme: the departure of Soviet advisers in the late 1950s forced it to build its own A-bomb. The result could hasten a splintering of the Internet and associated technologies to which China and Russia, which recently passed a law ensuring it can cut itself off the World Wide Web, have already contributed.
Indeed, while China is complaining bitterly about the US moves, Beijing must take a good share of the blame for the situation it is now in.
China has blocked multiple foreign companies and websites, including Twitter, Facebook and Google services, including Gmail and YouTube. The number of European companies compelled to hand over technologies in exchange for market access in China has doubled in two years, a report said on Monday.
While western intelligence agencies disagree on the size of the security threat Huawei represents, all point to China as the biggest source of cyber attacks on security and industrial assets.
If China wishes to change its image as a malign force, it must rein in such attacks. Yet Washington's coercive steps are misguided.
The US and the West should not seek to block China's rise but encourage it to co-operate in a rules-based system, by setting good examples themselves.
Washington's allies should be free to determine the steps they judge necessary to combat security threats from Huawei or others. The US has the right to take security steps too - but not to allow these to slide into destabilising protectionism. FT