Spengler's AsiaTimes article, which is behind the paywall.
A new policy paper by an A-list of academics and former officials close to the Biden camp proposes cooperation rather than confrontation with China in a wide range of fields, including a role for Huawei in the global buildout of fifth-generation mobile broadband. Entitled “Meeting the China Challenge: A New American Strategy for Technology Competition,” […]
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by an A-list of academics and former officials close to the Biden camp proposes cooperation rather than confrontation with China in a wide range of fields, including a role for Huawei in the global buildout of fifth-generation mobile broadband. Entitled “Meeting the China Challenge: A New American Strategy for Technology Competition,” the November 16 report may signal a major change in US policy under the incoming administration.
Most of the document is unremarkable, indeed modest in its recommendations. It proposes for example to increase the National Science Foundation’s annual funding for artificial intelligence (AI) to $1.8 billion from $1 billion. By contrast, the city of Shanghai alone plans to spend 270 billion yuan ($40 billion) during the next five years to support AI and the Internet of Things; the National People’s Congress in May proposed a $1.4-trillion technology budget. China fought the Covid-19 pandemic by linking its vast network of sensors to AI servers that helped to anticipate surges in infection and direct forensic testing to potential hotspots.
But the report’s authors, who include Professor Susan Shirk, a former State Department official under the Clinton Administration, former Deputy Secretary of Defense Bob Work and former US trade representative Charlene Barshefsky, depart radically from the Trump Administration by declaring that the US has to learn to live with Huawei and other Chinese telecom equipment providers. They write:
The United States should not attempt to win a race between Huawei and a new American national champion. Instead, the United States should adopt a forward-looking strategy to enable a variety of new entrants to enter the 5G innovation space successfully…
That is a remarkable departure from previous American thinking. Even if the “variety of new entrants” appears, the United States will abandon any hope of world leadership in telecommunications equipment.
Huawei’s prominence in the global technology market presents a special challenge. The risks associated with Huawei can justify a ban on some products by some countries, but total global exclusion of Huawei is not feasible – nor is Huawei the only risk. Instead, the United States should pursue a layered approach to risk mitigation that maximizes network reliability and security and manages the espionage and sabotage risks in the applications and end-user devices that interact deeply with these networks. While a ban on Huawei is feasible in some key countries, especially allies and partners, this is a global networking challenge that requires multifaceted solutions. Considering that Chinese components, user terminals, and software will be intermixed among the billions of connected end users of 5G globally, a total global market ban on Huawei and other Chinese suppliers is not practical.
Shirk and her colleagues do not propose to let Huawei or ZTE build out America’s 5G networks, to be sure, but they eschew Secretary of State Pompeo’s “clean networks” plan. The notion that the United States can insulate its own networks when billions of 5G customers will use Chinese components is absurd, as the authors argue.
A “layered approach to risk mitigation” is exactly what Huawei has advocated for years in response to American charges that its networks would allow Chinese intelligence services to scoop up all the data that flows through them. The Chinese firm avers that it has no access to customer data except when national police agencies require it, and has proposed that governments certify independent research labs to determine whether data is secure. The United States declined the offer.
Rather than depend on the major 5G network providers – Huawei, Ericsson, Nokia, or recent entrant Samsung – the “China Challenge” supports a Silicon Valley pet project,
“O-RAN” (open radio access network), “mixing and matching offerings from various hardware and service providers.” Instead of dedicated chips to process and route signals, O-RAN uses off-the-shelf components. A related approach, or “virtualized radio network” (“Vran”) routes calls through the computing Cloud. Among the major telecom providers, only Nokia has endorsed ORAN and Vran. Ericsson and Huawei argue that the software-based approach is untested, unwieldy and unstable.
Substitution software (routing signals through rented computing capacity in the Cloud) for Huawei’s or Ericsson’s base stations might increase costs, according to experts at both companies. Writing and testing billions of lines of code, rather than embedding the instructions in dedicated chips, could take years and involve long delays and unforeseen expenditures. Since ORAN and Vran are untested, it’s hard to guess in advance whether the approach offers benefits.
America’s tech industry writes code instead of producing physical chips, and it’s understandable why it would prefer subsidies for software rather than hardware. Outside the US, 5G will be built out with dedicated boxes from Huawei or its competitors, and the “China Challenge” authors accept this as a fact of life.
Shirk et. al. propose to keep some of the Trump Administration’s restrictions on technology sales to China, but to allow exports of finished chips for “civilian use”:
The United States should enhance its capabilities by funding R&D in advanced semiconductor capabilities, including manufacturing equipment and by providing incentives for the construction of state-of-the-art semiconductor manufacturing facilities in the United States. In addition, the United States and its allies should impose strict export controls on the sale of semiconductor manufacturing equipment for advanced chips to all Chinese companies, private as well as state-owned, while continuing to allow the sale of finished chips to Chinese companies for civilian uses.
Sooner or later (and probably sooner) China will de-Americanize the production processes for chip fabrication, and the total impact of export controls on equipment will be to impose a modest amount of overhead on the investment side of the Chinese economy. The authors no doubt know this, but think it impolitic to make too many concessions to China. The concession they propose to make, namely the sale of finished chips to China, will make it easier for Chinese equipment producers to build out 5G networks globally.
One might as well state the obvious, however that might grate on American sensibilities. If America is not prepared to create its own national champion in telecommunications equipment, then the next best thing it could do would be to allow Huawei to compete freely in America’s domestic market, under suitable security review, to be sure. If the US doesn’t want to lead, it might as well take advantage of superior (and lower cost) Chinese gear.
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To be continued...