Chinese Regime Enables Huawei’s Overseas Expansion Through One Belt, One Road Initiative

By Frank Fang, Epoch Times
January 20, 2019 Updated: January 30, 2019

Embattled Chinese telecom giant Huawei has been able to expand its business internationally even as many governments around the world voice their concerns about the security of its equipment.

Huawei has successfully transformed into one of the biggest tech giants in the world from a small Chinese company because it serves the interests of the Chinese Communist Party (CCP): providing the advanced technology the Party needs to exert its political clout globally, while assisting the Chinese regime in carrying out surveillance and spying activities. 

Huawei was able to build its presence in global tech sectors because the company has been piggybacking off China’s “One Belt, One Road” (OBOR, or Belt and Road) foreign-policy initiative in recent years. 

In 2013, Beijing rolled out “One Belt, One Road,” an aggressive plan to build up trade routes connecting China, Southeast Asia, Africa, Europe, and Latin America. Through the financing of infrastructure projects in more 60 countries, the Chinese regime is seeking to bolster its geopolitical influence around the world.

Huawei is a key participant in those projects.

Internet Cables

On Oct. 22, 2018, Huawei Marine, a joint venture between Huawei and the U.K.-based submarine communications firm Global Marine Systems, announced its Peace Cable project: a 12,000 km (7,456 miles) long underwater high-speed internet cable system linking Pakistan, South Africa, Kenya, Somalia, Djibouti, Egypt, and France. The project is currently in its cable and material manufacturing stage.

The project, which will be jointly carried out by Huawei Marine and the Peace Cable International Network, a subsidiary of Chinese fiber optic manufacturer Hengtong Group, is expected to be in service by the first quarter in 2020, according to Huawei’s official website, and will serve as a “new information expressway” from China to Europe and Africa. 

Days earlier, Mao Shengjiang, chief operating officer of Huawei Marine, said while speaking at the third Asia Pacific Submarine Network Forum that Huawei Marine has been “contracted to build about 40,000 km (24,854 miles) of submarine cable worldwide, which [is long enough that the cables] could circle the earth at the equator.” 

But Huawei Marine’s global ambitions were stonewalled in June 2018, when Australia stepped in to stop the company from laying underwater internet cables for the Solomon Islands. Australia offered to fund and build the cables instead, which the Pacific island nation accepted. According to Reuters, Australia’s decision was based on security concerns, given that Huawei would have had access to a broadband hub in Sydney if it were allowed to lay the cables. 

5G Rollout

Huawei is also the key to the Chinese regime’s plan to roll out 5G technology around the world. 

5G is the next generation of wireless mobile communications technology. Countries are vying for leadership because that technology is seen as critical to future economic growth.

According to a Dec. 2018 report by U.S.-based think tank Center for Strategic and International Studies (CSIS), Huawei has become a market leader in manufacturing equipment that is vital for 5G networks, the radio access network (RAN). 

RAN connects mobile users with the 5G core network. According to the report, Huawei is the market leader for RAN equipment, with a 31 percent market share, followed by Ericsson (29 percent) and Nokia (23 percent), in the first quarter in 2018. 

Huawei’s overseas ventures in both underwater fiber optics and 5G have been in part driven by China’s national policy of OBOR. 

OBOR

In March 2015, the Chinese regime made clear how important these technologies are to its interests: the National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce, jointly issued a directive detailing goals and actions for OBOR. Two key objectives were the “construction of transnational fiber topics for communications” and “synchronizing technological standards [between China and other countries].” 

By dominating 5G standards at international standard-setting agencies, Huawei could pocket licensing fees from mobile-service providers and governments that use its 5G technology. Huawei would also gain earnings from future contracts for maintenance or repair jobs of its sold equipment. 

This agenda is in line with Beijing’s overall desire to become less dependent on foreign technology. In January 2018, China’s state-run media Xinhua reported on its intention to accelerate the development of technical standards for technologies such as 5G and the internet of things (IoT), under the name of “China Standards 2035.”

In May 2018, Zhou Jialiang—who was a company director working in Kyrgyzstan at the time and now serves as director for Huawei’s Volkswagen account, according to his LinkedIn page—said in an interview with Chinese media 21st Century Business Herald that OBOR provided many opportunities for the company to expand its market in Central Asia and elsewhere. 

Zhou said that different OBOR infrastructure projects, such as railways, roads, airports, and oil pipelines, would all require modern telecom equipment to allow systems to communicate with each other—prime business opportunities for Huawei. 

By participating in OBOR, Huawei, which had relied on concessional loans and business loans for overseas expansion, would be able to receive funding from the Asian Infrastructure Investment Bank (AIIB) and the state-owned Silk Road investment fund. 

The fund was designed to foster investment in countries under OBOR. Beijing pledged $40 billion when it was established in December 2014. 

Huawei executives have continually made it clear their intentions to capitalize on the Chinese regime’s flagship project. While speaking at the annual World Internet Conference in China in December 2015, Richard Yu, CEO of Huawei’s customer service division, Consumer Business Group, announced that Huawei would embark on its own “One Belt, One Road” initiative: a plan to reach out to untapped markets around the world.

Smart City Projects

OBOR also involves exporting another of China’s technological advances: the “smart city.” 

China’s State Information Center published a research paper in December 2015, detailing how the construction of smart cities could help lead the OBOR initiative. The paper applauded Huawei, as well as its domestic competitor ZTE, for undertaking an important role in building “smart cities” in other countries. 

In May 2017, at the Belt and Road Forum in Beijing, where Chinese leader Xi Jinping invited heads of state to participate in the project, Xi reiterated the importance of building smart cities under OBOR. 

On the company’s official website, Huawei has touted its ability to provide “smart solutions,” including “safe cities” and “smart cities”—in other words, using Huawei’s surveillance technology and cameras. 

“A Smart City is a complex mesh of systems across sectors such as transportation, energy, water, and healthcare,” according to Huawei’s website. The company claims that its “smart city” solution can build up a network, much like a person’s nervous system, with “real-time situation reporting and analysis that combines cloud computing, IoT, Big Data, and Artificial Intelligence (AI).”

But inside China, such technology has been used to monitor citizens and snuff out dissidents. 

The dangers of Huawei exporting such technology abroad were explained by the think tank Jamestown Foundation, in an article published in June 2018. 

“While the smart cities of the future could be better, more efficient cities, they could also provide authoritarian regimes with previously undreamt of tools of surveillance and control,” the foundation warned. Additionally, when used in democratic countries, Huawei equipment may “act as a conduit for [Beijing’s] intelligence gathering.”

An example of Huawei’s “smart cities” is at Astana, the capital of Kazakhstan, under the OBOR initiative, according to a 2017 article published by Huawei on its official WeChat social-media account. 

In the WeChat article, Huawei claimed that it had reduced the number of traffic violations and crime rates after placing more than 10,000 cameras in Astana. 

Jamestown Foundation, in the same article, noted that within three years from 2014 to 2017, Huawei doubled the number of countries where it has deployed its “smart city” technology: to 40 from 20. An interesting pattern emerged: Huawei first deployed it in “a number of authoritarian and hybrid regimes” such as Pakistan, Venezuela, Laos, and Angola, before branching out to democratic countries, such as France and Germany. 

In January 2018, the German city of Duisburg signed a memorandum of understanding on a smart city partnership with Huawei. Under the agreement, the two partners will work together on projects such as expanding the city’s WiFi network, improving government cloud solutions, traffic management, smart street lamps, and 5G technology. 

Smart Energy

Huawei’s OBOR projects also include another “smart solution”: selling its “smart energy” system to petroleum companies and oil-producing countries, according to a Nov. 8, 2016 article on its website. 

During a speech at the Huawei Global Energy Summit held in Abu Dhabi, Jerry Ji, an executive within Huawei’s Enterprise Business Group unit, said that “Huawei is committed to helping oil and gas companies address challenges and build competitiveness in the global market in today’s digital age.”

Huawei’s answer is to offer data solutions technology to energy companies. In November 2016, Huawei and Abu Dhabi Marine Operating Company, a subsidiary of the UAE state-owned Abu Dhabi National Oil Company, announced they established a new cloud data center to help the latter process huge volumes of data created by offshore oil exploration and production. 

Huawei, in an article published on its website in June 2018, announced that its oil and gas data solutions have been implemented in 45 countries, providing the service to 70 percent of the world’s top 20 oil and gas companies. Some of these “smart energy” deals have been officially declared OBOR projects by the Chinese regime.

Also a part of its “smart energy” solutions, Huawei inked a solar power plant project in Argentina, the company’s first successful OBOR project in the South American country. 

The solar project, a 300 megawatt (MW) power station, is being built at Cauchari village in northwest Argentina, with financing from Chinese loans. The plant, which adopted Huawei’s internet-enhanced “Smart PV” system, is being built by Shanghai Electric, a subsidiary of China’s state-owned construction company, PowerChina. 

Huawei’s possession of such sensitive data can have dangerous ramifications, given its close ties to Beijing. In February 2018, the U.S. Council of Economic Advisers, which conducts economic research to advise the White House, highlighted the potential for cyber attacks on critical U.S. infrastructure sectors to “generate especially large negative spillover effects to the wider economy.” Examples of critical infrastructure include utilities, agriculture, and finance. 

The council’s report cited a 2014 report by PricewaterhouseCoopers that explains the motivation behind such attacks: nation-states would target critical infrastructure providers in order to steal trade secrets and proprietary IP, including financial and workforce-related information, for the purpose of “advancing their political and economic advantages.” 

Several U.S. lawmakers recently voiced security concerns that Huawei’s sales of solar equipment in the United States could threaten the entire American electricity grid.

Rep. Tom Marino (R-Pa.) wrote a letter to the U.S. Energy Secretary Rick Perry, according to the Financial Times, about his concern that “[Huawei’s] entrance into large-scale and residential solar markets may pose a threat to our nation’s infrastructure.”

National Emergency System

One of the country’s signature OBOR projects is the national emergency system developed in Ecuador, according to China’s official OBOR web portal. 

The emergency system, named ECU 911, is built by China’s state-owned China National Electronics Import and Export Corporation (CEIEC). Huawei supplied tens of thousands of dollars in equipment to the system, including 4,500 surveillance cameras—some equipped with facial recognition technology, routers, wireless access points, network switches, and wireless access controllers. 

Shashank Joshi, a senior fellow at the Royal United Services Institute, a UK-based think tank, expressed concerns about buying surveillance equipment from China, as it encourages authoritarian principles and omnipresent surveillance, according to an August 2018 editorial, titled “Ecuador’s All-Seeing Eye Is Made in China” and published by Foreign Policy magazine. 

Meanwhile, David Denoon, a professor of politics and economics at New York University and the director of the school’s Center on U.S.-China Relations, pointed out another exploitative aspect of working with Chinese companies.

“Telecommunications and surveillance systems are considered attractive projects [for China] because they permit monitoring of local content and usually lead to long-term contracts for replacement parts [in surveillance equipment],” Denoon told Foreign Policy.

Follow Frank on Twitter: @HwaiDer
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