Breakingviews - Australia’s Huawei ban undercuts “Made in China”

A NBN Co worker arranges fibre-optic cables used in the National Broadband Network in west Sydney July 11, 2013. The future of an ambitious project to connect almost all Australia's far-flung inhabitants to high-speed internet, the largest infrastructure enterprise in the country's history, is hanging on the outcome of an upcoming federal election. The Labor government and conservative Liberal-led opposition have vastly differing plans for the A$37.4 billion ($34.2 billion) National Broadband Network (NBN), potentially hurting some business stakeholders and opening the door to others, including China's Huawei Technologies Co Ltd. Picture taken on July 11, 2013. REUTERS/Daniel Munoz (AUSTRALIA - Tags: SCIENCE TECHNOLOGY POLITICS) - GM1E97F1RWM01

HONG KONG (Reuters Breakingviews) - Australia’s ban on Huawei undercuts the “Made in China” agenda. Security and political concerns prompted authorities to block the Shenzhen-based telecom giant from providing supplies to the country’s planned 5G network. It’s a setback for Huawei, but also for Beijing. The world-beating national champions it wants to cultivate are increasingly seen as dangerous arms of the state.

Canberra on Thursday became the latest in a growing list of governments worried about Huawei. U.S. legislators have in recent months scrutinised Google and Facebook over their relationships with the company, while Verizon and AT&T dropped plans to sell its handset devices. In Britain, an official report last month said technical issues with Huawei’s equipment had opened the country’s telecom networks to new risks. Jitters are now spreading to continental Europe, too, with some intelligence agencies signalling concern about Chinese cyber-espionage.

Beijing officials have made little secret of their desire to develop and export 5G technology. Huawei, which generated about half its revenue abroad last year, is at the forefront of that effort. The company said in February that it had signed 5G field trial agreements with 45 telecom operators around the globe, more than those publicly announced by Nokia or Ericsson, according to Reuters. Chinese companies may eventually control as much as 40 percent of 5G-essential patents, according to one industry insider’s estimate.

The pushback now threatens to undermine the attempt, even if countries struggle to avoid using all Chinese 5G technology. It also points to a broader problem for Beijing’s approach to creating global titans. Officials have provided ample financial support to companies in high-tech sectors, for example, including those outlined in its “Made in China 2025” agenda. State media this week cited estimates that almost 1,200 “government guidance funds” had been established as of the end of June, with a “target scale” of nearly 5.9 trillion yuan ($850 billion), often channeling investment to fledging industries.

Other industries, such as finance, are also encountering resistance abroad. Tighter restrictions on investment, acquisitions and trade have become all too clear, including in deals involving Chinese buyers of MoneyGram and the Chicago Stock Exchange. In some ways, Huawei showcases successful endeavours by the People’s Republic. The decision Down Under emphasises its limits.


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