Ui Paper No. 1 2020

1/2020
What to Make of the Huawei Debate?

5G Network Security and Technology
Dependency in Europe
—
Tim Rühlig & Maja Björk
PUBLISHED BY THE SWEDISH INSTITUTE OF INTERNATIONAL AFFAIRS | UI.SE

Abstract
Europe is controversially discussing whether to ban the Chinese tech-giant Huawei from the roll-
out of the new generation of mobile infrastructure, better known as 5G, not least due to
conflicting pressures from the governments of the United States and the People’s Republic of
China. 5G is a critical infrastructure and will penetrate European society and its economy to an
unprecedented extent. Proponents of a ban argue that Huawei is closely allied with the
authoritarian Chinese party-state, which could utilise Huawei equipment for espionage and
sabotage. The argument is that banning Huawei is a matter of increasing network security in
Europe. This paper explains that while scepticism is reasonable, and the security concerns are
valid, a ban on Huawei is not an effective solution for generating network security. Other
technological measures – first and foremost better encryption, and redundancies coupled with
vendor diversity – would be more effective, although complete network security can never be
achieved. Scepticism of China’s influence over Huawei is reasonable. However, the idea of
banning Huawei stems, rather than from concerns over network security, from a geopolitical
logic. In this context, a ban on Huawei would help decrease European technological dependency
on China. The geopolitical fear is that China could leverage this dependency to extract political
concessions from Europe in the future. We argue that Europe should indeed respond to this
challenge but instead of striving for technological self-reliance, we discuss how the European
Union could preserve access to strategic technology by means of diversification of the supply
chain and underlying patents, coupled with “protectionism light”. We believe this could help
respond to the emerging geopolitical rivalry over high-technology such as 5G while at the same
time attempting to preserve free trade as far as possible. In short, our sceptical view on the idea
of banning Huawei from the roll-out of 5G in Europe does not stem from a trust in China or
Chinese tech companies, but rather from the perspective that it is not the most effective
response to the future challenges of 5G networks and technology dependence.
Tim Rühlig Maja Björk

Research Fellow Analyst
The Swedish Institute of International Affairs The Swedish Institute of International Affairs
© 2020 The Swedish Institute of International Affairs

Language editing: Andrew Mash
Cover photo: Stefan Wermuth / AFP
Content
Introduction .................................................................................................................................. 4
Centrality and innovation of 5G .................................................................................................... 6
Network security concerns: the current debate ........................................................................... 8
Geo-economics and dependencies ............................................................................................. 19
Towards a European response .................................................................................................... 25
Conclusion ................................................................................................................................... 29
References ................................................................................................................................... 31

Introduction People’s Republic of China (PRC). China has
taken an active role in technology and
innovation, and Chinese technology
The new “fifth” generation of mobile
companies have become significant players
internet connectivity (5G) will unlock new
in 5G equipment and infrastructure in recent
and improved ways of using wireless
years. The most prominent supplier is the
technology and is expected to revolutionise
Chinese tech-giant Huawei Technologies
multiple spheres of society, not least
Co., which is also one of the world’s largest
manufacturing, construction, electricity
telecom companies.
networks, transportation and health care.
The new networks will support innovative
Huawei currently finds itself at the centre of
technologies and enable a powerful
a heated international debate over 5G
increase in the application of artificial
deployment, which has also raised serious
intelligence (AI) and the Internet of Things
security concerns and accusations against
(IoT), while also allowing societies to
the company. Western intelligence services
become significantly more connected. The
and observers have expressed concerns
5G mobile internet has already been tested
about Huawei’s ties to the PRC as well as
and launched in certain locations, but is
the company’s legal obligations to
expected to launch more widely in 2020, 1
cooperate with the Chinese security
and account for around 20% of global
apparatus. 4 The main concern is that
mobile connections by 2025. 2 While 5G will
Huawei equipment could be used as an
not change the world overnight, its
inroad for Chinese espionage, and China
importance to society will grow over time to
gaining access to data on and control over
achieve an unprecedented level. 3
critical infrastructure. Such security
concerns led the US earlier this year to place
For 5G networks to be deployed, huge
a ban on Huawei and the Chinese state-
investments in new digital infrastructure
owned telecom equipment manufacturer,
will be needed. The ongoing competition
ZTE, preventing Huawei from participating
over 5G, however, is not solely among giant
in the country’s 5G roll-out, a measure also
tech companies racing for market share and
taken by Australia and Japan. 5 Many
royalty payments. It is also turning into a
governments have been pressured to follow
geopolitical conflict among states, first and
suit, and a number of countries have either
foremost the United States (US) and the
1 Matthew Wall, “What is 5G and What Will It Customers, Washington DC: RWR Advisory
Mean for You?,” BBC, July 24, 2018, at: Group, 2019. Christopher Ashley Ford, “Huawei
https://www.bbc.com/news/business-44871448. and its Siblings, the Chinese Tech Giants:
John McCann and Mike Moore, “5G: Everything National Security and Foreign Policy
You Need to Know,” Rechradar, August 20, Implications,” Remarks at the Multilateral Action
2019, at: on Sensitive Technologies (MAST) Conference, 11
https://www.techradar.com/news/what-is-5g- September 2019, Washington DC: US State
everything-you-need-to-know. Department, 2019. Tom Uren, “Weighing the
2 David Bond and James Kynge, “China Spying Risks in Building a 5G Network,” ASPI The
Risk Hits Huawei's UK Ambitions,” Financial Strategist, Barton: ASPI, 2019.
Times, 3 December 2018. 5 Li Tao, ”Japan Latest Country to Exclude
3 Steve Lo and Kevin Lee, China Is Poised to Win Huawei, ZTE From 5G Roll-out Over Security
the 5G Race, Hong Kong: EY, 2018. Concerns,” South China Morning Post, December
4 RWR Advisory Group, Assessing Huawei Risk: 10, 2018, at: https://www.scmp.com/tech/tech-
How the Track Record of the CCP Should Play into leaders-and-founders/article/2177194/japan-
the Due Diligence of Huawei’s Partners and decides-exclude-huawei-zte-government.
© 2020 The Swedish Institute of International Affairs 4

implemented or are currently considering already cooperate with Huawei. Outside of
various forms of restrictions on Huawei’s China, Europe is the region in which Huawei
access to domestic markets for 5G has grown its market position the most in
infrastructure. Not only New Zealand, recent years.11 Pressure from western allies
Canada and India, but also member states combined with the authoritarian nature of
of the European Union (EU), namely the Chinese party-state give many
Denmark, the Czech Republic and Poland Europeans a sense of unease over
consider taking a similar approach.6 cooperating with Huawei, while European
Estonia,7 Poland 8 and Romania 9 have governments are under increasing pressure
signed documents with the US voicing to decide their position.
scepticism about Chinese 5G vendors, while
Germany and the United Kingdom (UK) This UI Paper engages with the debate
among others remain more hesitant toward about whether to ban Huawei from the roll-
such a decision. While EU member states out of 5G in Europe. We take a sceptical
have initially adopted different responses, view of such a ban, even though we believe
moves are now under way to coordinate an that the concerns regarding Chinese party-
EU-wide approach. The first step has been a state control over Huawei are valid, and that
coordinated risk assessment and a joint the security concerns raised are genuine
communication from the Council of the and need to be addressed We do not follow
European Union, and recommendations to the mainstream argument put forward by
all member states will follow. 10 critics of a ban that the use of Huawei
technology is essential to avoid losing
Europe finds itself in a difficult situation, ground in the development and roll-out of
positioned between the US and China, and 5G. If banning Huawei was an effective
facing pressure from both sides. European means of containing the security risks, it
states are in a close security alliance with would be worth paying an economic price
the US, which includes comprehensive for it. The problem with a ban on Huawei,
intelligence cooperation. China, on the however, is that it does not offer an
other hand, is emerging as the effective solution to the security challenges.
technological leader in 5G and many China would be able to shut down 5G
European telecommunication operators networks regardless of whether Huawei
6 Andreas Kluth, “Huawei Is a Paralyzing https://www.whitehouse.gov/briefings-

Dilemma for the West,” Bloomberg, November statements/joint-statement-president-united-
23, 2019, at: states-donald-j-trump-president-romania-klaus-
https://www.bloomberg.com/opinion/articles/20 iohannis/.
19-11-23/huawei-s-5g-networks-are-a- 10 NIS Cooperation Group, EU Coordinated Risk
paralyzing-dilemma-for-the-west. Assessment of the Cybersecurity of 5G Networks,

7 White House, United States – Estonia Joint October 9, 2019, Brussels: European
Declaration on 5G Security, November 1, 2019, Commission. Council of the European Union,
at: https://www.whitehouse.gov/briefings- Council Conclusions on the Significance of 5G to
statements/united-states-estonia-joint- the European Economy and the Need to Mitigate
declaration-5g-security/. Security Risks Linked to 5G. Council Conclusions,
8 White House, “US-Poland Joint Declaration on 14519/19, December 3, 2019. Brussels: Council of
5G,” The White House, September 5, 2019, at: the European Union.
https://www.whitehouse.gov/briefings- 11 Worldwide Asset Management, The New Tech
statements/u-s-poland-joint-declaration-5g/. War and the Geopolitics of 5G, 2019, at:

9 White House, Joint Statement from president of https://cworldwide.com/media/PDF/WP_2019_T
the United States Donald J. Trump and President he_New_Tech_War_and_the_Geopolitics_of_5
of Romania Klaus Iohannis, August 20, 2019, at: G.pdf.

technology were included in the build-up of technology by means of diversification and
European infrastructure. Similarly, a ban on “protectionism light”.
Huawei would not be an effective measure
for significantly reducing Chinese To unfold this line of argument, we first
espionage, which is mainly carried out summarise the central innovations and
through applications and phishing rather revolutionary potential of 5G, before
than infrastructure. Even where turning to the current debate over 5G
infrastructure is necessary for espionage, network security and what measures would
there is little reason to believe that China best address the main security concerns.
needs Huawei equipment for its operations. We then turn to the underlying geopolitical
Banning Huawei would instead increase logic of a Huawei ban and its potential
political tensions and contribute to a consequences. Finally, we address the
technological divide between a western and European position and recommended
a Chinese sphere, ultimately fuelling the response before concluding with a brief
existing rivalry and fears of a major summary.
confrontation between the PRC and the US.
Most importantly, however, there are other Centrality and innovation of
more effective means of containing the
security risks than banning Huawei. Instead, 5G
banning Chinese companies from, or
limiting their access to, Europe’s build-out While previous generations of wireless
of 5G adheres more to a geopolitical logic, technology – from 1G to 4G – have brought
by addressing politically motivated issues improvements and new capabilities to
and trust. A ban on Huawei would aim to cellular communications, the shift to 5G is
weaken China’s political and technological predicted to be the most significant since
influence in the world rather than the invention of the mobile phone.12 The
effectively addressing network security fifth generation of mobile technology will
risks. We believe instead that reducing not only bring changes for consumers but
European technology dependency on also transform entire industries in a way not
Chinese vendors should be the policy goal previously possible. 13 This also means that
of the EU. This ties in with ongoing society will become increasingly dependent
European discussions on European strategic on mobile networks and rely on them for
autonomy and European sovereignty. We some of its most critical functions, including
are sympathetic to this approach but services such as autonomous vehicles,
believe that the debate should not fully health care monitoring and remote medical
focus on strengthening the digital industrial surgery, as well as emergency service
base of Europe, since this tends to put the response. As a consequence, society will
focus on protectionism rather than the become more vulnerable to attacks on, and
preservation of global cooperation. We the malfunction of, its 5G networks, and the
therefore discuss a different take on damage potential of such incidents could be
reducing dependency on Chinese and US catastrophic as connectedness and
technology: the question of how Europe can dependence increase.
secure access to strategically important
12
Miriam Tuerk, "How 5G Networks Will Change 13Edison Lee and Timothy Chau, “Telecom
America," Forbes, February 27, 2019, at: Services. The Geopolitics of 5G and IoT,”
https://www.forbes.com/sites/miriamtuerk/2019 Jefferies Franchise Note, Hong Kong: Jefferies,
/02/27/how-5g-networks-will-change- 2017.
america/#4466acae11b5.

The shift from 4G to 5G will also be more In Europe, the introduction of 5G
complicated than past mobile technology will take place first as non-
communications revolutions, as the standalone (NSA) 5G, which will use existing
intentions of 5G go beyond previous goals 4G infrastructure and mainly provide higher
which were focused mainly on increasing data speeds, to eventually be followed by
data speeds and serving the needs of standalone (SA) 5G, which will require an
mobile handsets. Instead of just focusing on entirely new network architecture. 15 A
person-to-person or person-to-device cellular mobile network functions
communications, 5G will also support essentially through the connections
machine-to-machine networking. This between mobile devices, through a Radio
makes 5G entirely different from previous Access Network (RAN) that consists mainly
technology. 5G technology is expected to of base stations (such as antenna towers)
deliver three significant new capabilities: and a core network. Standalone 5G
technology will bring changes to both base
1) Enhanced mobile broadband stations and the core network, and make
(eMBB): higher data service speeds, the distinction between their functions less
managing more traffic and more clear. 16 One of the most important changes
demanding services (e.g. faster with the shift to standalone 5G is its new
download and upload speeds, as virtualised core technology. By replacing
well as virtual and augmented the previous core network (Evolved packet
reality (VR/AR)). core), which relies mainly on physical
network elements, 5G will introduce a
2) Ultra-reliable and low latency virtualised core designed for software-
communications (URLLC): with based infrastructure running on standard
response times as low as one servers. 17 This will enable features such as
millisecond, enabling close to real- Network Function Virtualisation (NFV) and
time services (e.g. remote medical network slicing. 18 While cloud computing is
surgery, self-driving cars and not new in itself, these features enable new
industry automation). aspects of cloud use that extend beyond
storage to include communication and
3) Massive machine-type remote real-time services. In other words,
communications (mMTC): software and cloud functions are essential
connection for a very large number to the new 5G technology and will therefore
of devices (enabling e.g. the become increasingly important with the
Internet of Things, smart cities and development of 5G networks.
automated agricultural
processes). 14 NFV allows network functions that have
traditionally run on function-specific
14 Christian de Looper, What is 5G?, Digital Challenge, Berlin: Stiftung Neue Verantwortung,
Trends, November 18, 2019, at: 2019, pp. 7-8.
17
https://www.digitaltrends.com/mobile/what-is- Iwan Price-Evans, "Introducing the 5G Core
5g/. Network Functions,"Metaswitch, February 7,
15 Edison Lee and Timothy Chau, “Telecom 2019, at:
Services. The Geopolitics of 5G and IoT,” https://www.metaswitch.com/blog/introducing-
Jefferies Franchise Note, Hong Kong: Jefferies, the-5g-core-network-functions.
2017. 18 Stephane Teral, IHS Markit Technology White
16 Jan-Peter Kleinhans, Whom to Trust in a 5G Paper: 5G Best Choice Architecture, London, IHS
World. Policy Recommendations for Europe’s 5G Markit, 2019.

hardware to be replaced by virtual servers, position in the global value chains of
which essentially share one physical server Information and Communications
and can be available at any location. NFV Technology (ICT) equipment, and Huawei
technology concentrates these functions in has, not least with the help of the Chinese
centralised data centres. 19 This technology state authorities, become the leading
also enables network slicing, which entails supplier of 5G equipment and
subdividing different flows of data traffic in infrastructure. 22 Huawei has also become
the network for different services, to ensure the focus of the ongoing debate around 5G
that each network slice makes use of the deployment that results from a number of
kind of connectivity it requires. For security concerns raised over the company’s
example, the communication necessary for ties to the Chinese government. While all
self-driving cars might be different from, global Chinese firms are subject to some
and more latency-sensitive than, other level of party-state control, 23 Huawei is
services within the network. 20 Some of the thought to have particularly strong ties to
expected use cases of 5G mobile technology the PRC security apparatus. 24 Reports
also create the need for so-called edge suggest the existence of a high degree of
computing, which reduces latency and personal overlap between China’s security
improves data speeds by enabling data apparatus and the company. There have
processing closer to the end-users, long been concerns over the background of
presenting – in this sense – a less centralised the company’s founder, Ren Zhengfei, as a
architecture. 21 former Director of General Staff of the
People’s Liberation Army (PLA). Ren’s
Network security concerns: daughter and Huawei’s Chief Financial
Officer, Meng Wanzhou, held a “Public
the current debate Affairs” passport (i.e. a diplomatic passport)
for many years.25 A much-debated article
Given the importance and potential of 5G studying the CVs of Huawei employees,
technology, there is much to be gained published earlier in 2019, similarly suggests
from achieving leadership in its close ties between Huawei personnel and
development. China holds a very strong the party-state’s security apparatus. 26
19
Yuri Gittik, “Distributed Network Functions 22 David Bond and James Kynge, “China Spying
Virtualization. An Introduction to D-NFV,” RAD Risk Hits Huawei's UK Ambitions,” Financial
White Paper, March 2014, at: Times, 3 December 2018.
http://crezer.net/Newsletter/archivos/Distribute 23 Mark Wu, “The “China, Inc.” Challenge to
d-NFV-White-Paper.pdf. Global Trade Governance,” Harvard

20
EMF Explained Series, 5G Explained – How 5G International Law Journal 57: 2, pp. 261-324,
Works, without year, at: 2016.
24
http://www.emfexplained.info/?ID=25916. Douglas Black, “Huawei and China. Not Just
21 Robert Gibb, “What is Edge Computing?” Business as Usual,” Journal of Political Risk 8:1,
Stackpath, June 18, 2019, at: 2019.
25
https://blog.stackpath.com/edge-computing/. Ashley Feng, “We Can't Tell if Chinese Firms
Kris Beevers, “Why 5G is Bringing Edge Work for the Party,” Foreign Policy, February 7,
Computing Automation Front and Center,” 2019, at:
Network World, February 14, 2018, at: https://foreignpolicy.com/2019/02/07/we-cant-
https://www.networkworld.com/article/3255426 tell-if-chinese-firms-work-for-the-party/.
/why-5g-is-bringing-edge-computing-and- 26 Christopher Balding, “Huawei Technologies’
automation-front-and-center.html. Links to Chinese State Security Services,” SSRN,

July 9, 2019, at:

Huawei, along with other Chinese tech- Huawei’s ownership structure is not
giants, not only facilitates the build-out of transparent, raising suspicions of effective
surveillance systems within China, but also party-state control over the company.31
exports these technologies to third Moreover, of Huawei’s 160,000 employees,
countries facilitating what has been called 12,000 are party members, and they form
“digital authoritarianism”. 27 Chinese no fewer than 300 party cells within the
engagement in the development of company. Furthermore, Huawei receives
international technical standards of facial preferential treatment, not least by means
recognition technology is only one of the of soft loans which already amounted to
most recent subjects of western concern more than US $30 billion before 2011,
regarding the spread of digital mostly from the state-controlled China
authoritarianism. 28 There can be little doubt Development Bank (CDB). In the period
that Huawei is more than just a normal 2012–2018, CDB and another state-
company and plays a strategic role in the controlled bank, the China Import Export
policy of the PRC. 29 More recent concern, Bank, granted the company at least another
however, has focused on various pieces of US $9.8 billion for overseas projects. 32
Chinese legislation, in particular China’s Strikingly, however, Huawei is not that
Cyber Security Law of 2017, which legally different from any other Chinese company.
requires Chinese companies to turn over In fact, even the subsidiaries and joint
information and comply with China’s ventures of non-Chinese tech companies,
intelligence and security services, such as Ericsson and Nokia, face Chinese
essentially on all matters, – not just Communist Party (CCP) control not least by
domestically (article 14) but also means of party cells and the need to comply
internationally (article 10). 30 This concern with domestic Chinese laws – including the
becomes especially significant with regard Intelligence Law of 2017. 33
to Huawei, given the company’s strong
position in the 5G equipment market.
30
https://papers.ssrn.com/sol3/papers.cfm?abstra Huawei has denied this interpretation of the
ct_id=3415726. Cybersecurity law, but experts are not
27 Danielle Cave et al., “Mapping China’s convinced. Jichang Lulu, “Synopsis: Huawei's
Technology Giants,” ASPI Issues Paper Report Lawfare by Proxy,” China Digital Times, February
1/2019, Barton: ASPI. 2019, at:
28 Georgina Torbet, “Chinese Companies Want https://chinadigitaltimes.net/2019/02/sinopsis-
to help Shape Global Facial Recognition huaweis-lawfare-by-proxy.
Standards,” Engadget, December 2, 2019, at: 31 Christopher Balding and Donald Clarke: “Who
https://www.engadget.com/2019/12/02/china- Owns Huawei?,” SSRN, May 8, 2019, at:

facial-recognition- https://ssrn.com/abstract=3372669/.
standards/?guccounter=1&guce_referrer=aHR0c 32 Mathieu Duchâtel and Francois Godement,
HM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referre Europe and 5G: The Huawei Case, Paris: Institut

r_sig=AQAAAKcP2n- Montaigne, 2019. Bob Seely et al., Defending
viXPHG8Lg5mkOjmdZu8gmP9WLUrOWrFcjGH Our Data: Huawei, 5G and the Five Eyes, London:
pxN- Henry Jackson Society, 2019.
yxHCjDcTZSfaFTBe0hbvNR4w3_oo4FaKswdCG 33 Richard Baker, “Top 5G Suppliers Linked to
Yj8tBBq3oGZyrjCEYY- China's Communist Party,” Sydney Morning

OuAKozXYYjm1IzV9_tm36fHDrg12n6OsuLVllK Herald, August 13, 2018, at:
qNYXAi37gDPBTQTycuU-lbLPX4jZv8cc. https://www.smh.com.au/business/companies/t
29 Rick Umback, “Huawei and Telefunken: op-5g-suppliers-linked-to-china-s-communist-
Communications Enterprises and Rising Power party-20180812-p4zwzt.html.
Strategies,” ASPI Strategic Insights 135. Barton:
ASPI, 2019.

There is indeed reason not to trust PRC foremost the Intelligence Law. 40 Hence, the
authorities and Chinese vendors. Huawei Council of the European Union states in a
has an opaque governance structure, 34 has communication that “also non-technical
been accused of multiple intellectual factors such as the legal and policy
property thefts and of ignoring international framework to which suppliers may be
sanctions against authoritarian states,35 subject to in third countries, should be
does not issue financial statements since it considered.” 41
is not a publicly listed company, 36 and
shows significant software engineering and In addition, while there have also been
cyber security problems.37 Not least the cases of US espionage in Europe, significant
example of the Chinese company Lenovo differences remain between the US and
demonstrates that even in the authoritarian China. After the Snowden revelations, US
PRC, corporates can do more to reassure companies signed public letters advocating
their international customers. 38 Most surveillance law reform, filed lawsuits for
Chinese companies, however, have done more transparency, and brought cases
little to increase transparency over its against breaking encryption of digital
organisational structure 39 and the party- communication to court; which has led to
state has failed to reassure international changes in US policy. 42 It is unrealistic to
partners of its legal framework, first and think that a company like Huawei or ZTE
34 Colin Hawes and Grace Li, “Transparency and 39 The Russian tech company Kaspersky, in
Opaqueness in the Chinese ICT Sector. A contrast, has moved storage and processing of
Critique of Chinese and International Corporate its data to Switzerland, a measure that is far
Governance Norms,” Asian Journal of more reassuring than the cybersecurity centres
Comparative Law 12: 1, 2017, pp. 41-80. opened by Huawei. Kaspersky Lab, Kaspersky
Christopher Balding and Donald Clarke: “Who Lab Starts Data Processing for European Users in
Owns Huawei?,” SSRN, May 8, 2019, at: Zurich and also Opens First Transparency Center,
https://ssrn.com/abstract=3372669/. November 13, 2018, at:
35 RWR Advisory Group, Huawei Risk Tracker, https://www.kaspersky.com/about/press-
2019, at: https://huawei.rwradvisory.com/. releases/2018_kaspersky-lab-starts-data-
36 Andrew Foster and Nicholas Borst, “Time Is processing-for-european-users-in-zurich-and-
Ripe for Huawei to Launch an IPO, to Address also-opens-first-transparency-center. Alliott
Political and Security Concerns Once and for Zaagman, Huawei’s Problem of Being too
All,” South China Morning Post, May 27, 2019, at: “Chinese”, January 24, 2019, at:
https://www.scmp.com/comment/insight- https://supchina.com/2019/01/24/huaweis-
opinion/article/3011510/time-ripe-huawei- problem-of-being-too-chinese/.
launch-ipo-address-political-and-security. 40 Donald Clarke, “The Zhong Lun Declaration on
37 Huawei Cyber Security Evaluation Centre the Obligations of Huawei and Other Chinese
Oversight Board, Annual Report: A Report to the Companies under Chinese Law,” SSRN, March
National Security Adviser of the United Kingdom, 28, 2019, at:
March 2019, at: https://papers.ssrn.com/sol3/papers.cfm?abstra
https://assets.publishing.service.gov.uk/govern ct_id=3354211
ment/uploads/system/uploads/attachment_data 41 Council of the European Union, Council
/file/790270/HCSEC_OversightBoardReport- Conclusions on the Significance of 5G to the

2019.pdf. European Economy and the Need to Mitigate
38 Alliott Zaagman, Thinking About Working For a Security Risks Linked to 5G. Council Conclusions,
Chinese Company? First, Find Out If It’s a 14519/19, December 3, 2019. Brussels: Council of
“Lenovo” or A “Huawei”, October 9, 2017, at: the European Union, p. 4.
https://supchina.com/2017/10/09/thinking- 42 Jan-Peter Kleinhans, Whom to Trust in a 5G
working-chinese-company-first-find-lenovo- World. Policy Recommendations for Europe’s 5G

huawei/.

would bring cases about government “kill-switch”. Western observers fear that a
surveillance practices to Chinese courts, and large-scale deployment of Huawei network
even if they did they would face a judiciary equipment would provide such a kill switch
subordinate to CCP rule. and make it easier for China to shut down
5G infrastructure. While it is unlikely that
These concerns have led to discussions China would shut down an entire 5G
across many western states about whether network and risk irreparable damage to
Huawei should be excluded from the build- Huawei’s reputation in times of peace, such
out of 5G infrastructure. The US and a switch could be used for partial
Australia in particular favour a ban, and the shutdowns, accompanied by coercive
US has been pressuring European and other threats, or used in the event of an interstate
states to fall in line, warning about future war.
European-US security cooperation. 43
Commentators and policymakers in the
Focus on espionage and sabotage west also fear that Huawei’s 5G equipment
While concerns have been raised over could come with backdoors that would
various risks, including privacy issues and allow undetected Chinese access and
dual-use technology, the overwhelming enable economic and political espionage.
focus has been on the risks of espionage There are similar concerns that the
and sabotage. The fear is that 5G company might simply hand over sensitive
equipment from Chinese vendors would information to the Chinese government,
allow the Chinese government to control especially in the light of the Chinese
critical domestic infrastructure and to gain cybersecurity laws. China has a worrying
access to the information that travels on it. track record of espionage in general and
cyber theft in particular. 44 There have been
In discussions about the risk of sabotage, allegations of backdoors, espionage and
the main – and probably the most crucial – technology theft against the company.45
concern is about the ability to shut down Thus far, however, no “smoking gun” has
networks – a scenario often referred to as a been discovered to confirm these, 46 but
Challenge, Berlin: Stiftung Neue Verantwortung, attorney-general-rod-j-rosenstein-announces-

2019, p. 16. charges-against-chinese-hackers.
43
Nikos Chrysoloras and Richard Bravo, "Huawei 45 For example, Vodafone allegedly found
Deals for Tech Will Have Consequences, US backdoors in Huawei equipment they used in
Warns EU," Bloomberg, February 7, 2019, at: Italy in 2011 and 2012; Huawei was found liable
https://www.bloomberg.com/news/articles/2019 for stealing robotic technology in a US court in
-02-07/huawei-deals-for-tech-willhave- 2017; and in early 2019 a Huawei employee was
consequences-u-s-warns-eu. Paul Triolo, et al., arrested in Poland on grounds of suspected
“One Company, Many Systems. US Forces espionage. See: Bloomberg News, How Huawei
Governments to Choose Sides on Huawei,” Became a Target for Governments, Bloomberg,
Special Report Prepared by Eurasia Group, January 23, 2019, at:
Washington DC, Eurasia Group, 2019. https://www.bloomberg.com/news/articles/2019
44 Kadri Kaska et al., Huawei, 5G and China as a -01-23/how-huawei-became-a-u-s-government-
Security Threat. Tallinn: NATO Cooperative target-quicktake.
Cyber Defence Centre of Excellence, 2019, pp. 46 Ole Moehr, My Way or the Huawei: 5G at the
10-11. US Department of Justice, Deputy Center of US-China Strategic Competition, The

Attorney General Rod J. Rosenstein Announces Atlantic Council, July 23, 2019, at:
Charges Against Chinese Hackers, December 20, https://www.atlanticcouncil.org/blogs/econogra
2018, at: phics/my-way-or-the-huawei-5g-at-the-center-
https://www.justice.gov/opa/speech/deputy- of-us-china-strategic-competition.

nobody can rule out the possibility of the technology will bring new challenges,
Chinese government exploiting technical mainly through its technological
vulnerabilities – in any manufacturer’s innovations and the increase in network
equipment.47 However, experts have also dependency throughout society. New forms
pointed out that mobile internet of technological security risk arise primarily
infrastructure has not been the main focus from the increased use of virtualisation and
of Chinese espionage, and that spear- of centralised software. The software focus,
phishing and social engineering are more as well as the transferring of functions from
efficient for such purposes.48 the core network to edge computing, create
larger attack surfaces and greater
Assessments made by the United opportunities to introduce vulnerabilities,
Kingdom’s Huawei Cyber Security which, in turn, enables methods to access
Evaluation Centre (HCSEC) suggest that and control data on the network. 51 In
Huawei’s equipment comes with serious addition, as virtual servers replace
weaknesses, a problem irrelevant to the specialised hardware, different parts of the
origin of the vendor that indicates that network technology will no longer be
access could easily be obtained even physically isolated from each other, which
without built-in backdoors. In addition, means that if one vulnerability is found, it
British experts at the HCSEC make clear could potentially be exploited to access
that no certification can rule out the other parts of the network. In other words,
existence of backdoors and malicious it could make the damage much more
code. 49 Since hackers normally focus on dramatic if a vulnerability is found and
tracking weaknesses in the equipment of exploited.52
competitors, non-Huawei equipment would
also be a more likely target for Chinese Security concerns also arise from the use of
espionage.50 The Chinese government network slicing, which entails separating
decided in 2018 to prevent Chinese hackers flows of data on a network, and creating
from participating in international hacking slices that can be used for different services
contests, which Chinese teams have often by tailoring their use of functions to the
dominated, allegedly for national security requirements of each service. Ensuring that
reasons. each network slice is secure will be a
challenge, and there are potential risks that
While it remains unclear whether 5G will be vulnerabilities in one slice could be used to
more or less secure than 4G networks, 5G access traffic on other slices. 53 There are
47 Jan-Peter Kleinhans, 5G vs. National Security: 50 Author interview with an anonymous

A European Perspective. Berlin: Stiftung Neue engineer, Berlin, May 2019.
Verantwortung, 2019. 51 Christopher Ashley Ford, “Huawei and its
48
Jan-Peter Kleinhans, 5G vs. National Security: Siblings, the Chinese Tech Giants: National
A European Perspective. Berlin: Stiftung Neue Security and Foreign Policy Implications,”
Verantwortung, 2019. Remarks at the Multilateral Action on Sensitive
49
Huawei Cyber Security Evaluation Centre Technologies (MAST) Conference, 11 September
Oversight Board, Annual Report: A Report to the 2019, Washington DC: US State Department,
National Security Adviser of the United Kingdom, 2019.
March 2019, at: 52 Author interview with Pontus Johnson,
https://assets.publishing.service.gov.uk/govern professor in cyber security at KTH, Stockholm,

ment/uploads/system/uploads/attachment_data June 2019.
/file/790270/HCSEC_OversightBoardReport- 53 NIS Cooperation Group, EU Coordinated Risk
2019.pdf. Assessment of the Cybersecurity of 5G Networks,

also concerns that targeted attacks on that makes this issue such a crucial one. In
specific slices could be motivated if what addition to the services that will be enabled
each slice is used for becomes known. 54 by 5G technology, increasing amounts of
personal and sensitive data will be
Security risks also arise from the existence processed on the networks, which could be
of large numbers of connected devices. exploited if accessed. 56
Another form of sabotage that 5G
technology is likely to facilitate, by enabling Would banning Huawei solve the
massive machine communication and IoT, is problem?
distributed denial-of-service (DDoS) The risks of sabotage and espionage are
attacks. Such attacks are carried out by genuine and valid concerns and should be
finding and hacking machines with weak addressed and mitigated as best as
security and using them to overwhelm a possible. However, banning Huawei from
website or machine with more traffic than it the roll-out of 5G networks would not
can handle. With the development of IoT, effectively address or remedy these
the number of internet-connected devices is concerns. Excluding Chinese companies
expected to grow from 14.2 billion to 25 such as Huawei from providing 5G
billion by 2021, which increases the infrastructure in Europe might make it
potential for and power of DDoS attacks. 55 somewhat more difficult for the Chinese
This essentially means that DDoS attacks authorities to access and exploit European
can be used to shut down parts of the networks. However, a ban would only
internet, which could be very serious for 5G marginally address the network security
networks given the importance and scale of risks of Chinese sabotage and espionage.
the services that it is planned to support. Experts argue that if China were interested
in accessing a network for whatever reason,
In a nutshell, the specific vulnerabilities of it would have the capacity to do so with or
5G networks lie mainly in the complexity of without the help of Huawei equipment.
5G infrastructure resulting from Already today, China carries out extensive
technological innovation (discussed above) espionage for economic, political and
and the multitude of use cases penetrating military purposes. APT 1, APT 3 and APT 10
future societies. It is the centrality of 5G to are the most famous hacker groups
the economies and societies of the future attributed to the Chinese party-state. 57
October 9, 2019, Brussels: European expands-so-do-concerns-over-privacy-

Commission. 11551236460.
54 Michael Heller, “Nokia: 5G Network Slicing 57 PwC, “Operation Cloud Hopper,” PwC, 2018,
Could Be a Boon For Security,” Techtarget, April at: https://www.pwc.co.uk/cyber-

10, 2019, at: security/pdf/cloud-hopper-report-final-v4.pdf.
https://searchsecurity.techtarget.com/news/252 Brian Barrett, “How China’s Elite hackers Stole
461410/Nokia-5G-network-slicing-could-be-a- the World’s Most Valuable Secrets,” Wired,
boon-for-security. December 20, 2018, at:
55 Nick Huber, “A Hacker’s Paradise? 5G and https://www.wired.com/story/doj-indictment-
Cyber Security,” Financial Times, October 14, chinese-hackers-apt10/. FireEye, Mandiant
2019, at: https://www.ft.com/content/74edc076- APT1. Exposing One of China’s Cyber Espionage
ca6f-11e9-af46-b09e8bfe60c0. Unites, February 19, 2013, at:
56
Matthew Kassel, “As 5G Technology Expands, https://www.fireeye.com/blog/threat-
So Do Concerns over Privacy,” Wall Street research/2013/02/mandiant-exposes-apt1-
Journal, February 26, 2019, at: chinas-cyber-espionage-units.html. Thomas
https://www.wsj.com/articles/as-5g-technology- Brewster, “Chinese Trio Linked to Dangerous
APT3 hackers Charged with Stealing 407GB of

However, the main attack vectors are spear- We do not adhere to the popular argument
phishing and social engineering, not using promoted by critics of a Huawei ban that
mobile communication infrastructure or focuses on the economic costs and
hacking into base stations. In other words, competitive disadvantages that would be
regardless of a ban on Huawei, measures caused by the resulting delay in 5G roll-out,
will be needed to strengthen the security of or other negative impacts on western
future 5G networks against third party competitiveness not least stemming from
access and disruption.58 In addition, a ban Chinese retaliation.60 Another argument
would risk generating other costs and have suggests that the debate over excluding
further implications – both economic and Huawei from 5G participation is merely part
political. Decisions about how to manage of the current trade dispute between China
risks related to sabotage and espionage and the US. Such arguments might be true,
should avoid being locked into a logic that but this is also not what we are saying. The
focuses entirely on the fear and presence of risks of espionage and sabotage are valid
risk without considering other aspects of concerns. We are rather addressing the
the situation, such as the potential damage compatibility of issue and response and
linked to the risks, costs and consequences suggest that there are more effective and
of a ban. 59 appropriate means available to address the
network security concerns at the centre of
the 5G debate than to ban Huawei from
Data from Siemens,” Forbes, November 27, https://www.project-

2017, at: syndicate.org/commentary/cheney-doctrine-us-
https://www.forbes.com/sites/thomasbrewster/ war-on-chinese-technology-by-jeffrey-d-sachs-
2017/11/27/chinese-hackers-accused-of- 2019-11.
siemens-moodys-trimble-hacks/. 60 Handelsblatt, “Deutsche Telekom warnt.
58
Author interviews (including telephone and Huawei-Ausschluss würde 5G-Einführung
Skype interviews) with hackers, engeneers, and verzögern,” Handelsblatt, January 29, 2019,
technical experts in several European cities, https://www.handelsblatt.com/unternehmen/it-
February-October 2019. The German IT expert medien/neuer-mobilfunkstandard-deutsche-
Jan-Peter Kleinhans exemplarily summarizes: telekom-warnt-huawei-ausschluss-wuerde-5g-
“The current public debate around Huawei einfuehrung-
implies that a 5G network built with Chinese verzoegern/23921762.html?ticket=ST-38734491-
equipment makes it easier for the Chinese 9lY7UMO0LFL0PSMFVweD-ap5. Telecomlead,
government to conduct industrial espionage – Huawei Grabs 28% Share in Global Telecom
this assumption is at least questionable. […] A Equipment Market, December 7, 2018, at:
skilled, persistent state actor with a practically https://www.telecomlead.com/telecom-
limitless budget will always be able to equipment/huawei-grabs-28-share-in-global-
compromise networks and exploit assets.” Jan- telecom-equipment-market-87863. Andreas
Peter Kleinhans, 5G vs. National Security: A Kluth, “Huawei Is a Paralyzing Dilemma for the
European Perspective. Berlin: Stiftung Neue West,” Bloomberg, November 23, 2019, at:
Verantwortung, 2019, p. 9, 16. https://www.bloomberg.com/opinion/articles/20
59 Jeffrey D. Sachs makes a comparison of the 19-11-23/huawei-s-5g-networks-are-a-
United States’ policy on Huawei and the US paralyzing-dilemma-for-the-west. Jodi Xu Klein,
decision to invade Iraq, and argues that the “The Huawei Dilemma. Washington Still Stuck
same tactic is being used. He refers to it as ‚the Trying to Balance National Security Against US
Chaney Doctrine’ and involves the use of fear Tech Spremacy,” South China Morning Post,
over small risks to motivate drastic and November 1, 2019, at:
ultimately misguided action. See Jeffrey D. https://www.scmp.com/news/china/article/3035
Sachs, “America’s War on Chinese Technology,” 832/huawei-dilemma-washington-still-stuck-
Project Syndicate, November 7, 2019, at: trying-balance-national-security-against.

European 5G mobile infrastructure. In number of other measures are more
addition, excluding Huawei from European promising.
markets would not change the fact that
non-Chinese companies, such as Ericsson Remedies to network security risks
and Nokia, will continue to face the same While there is no solution that would
challenges and legal environment as effectively eliminate these network security
Huawei in any production or business they risks, there are ways to reduce them and
have located in China. make it more difficult for anyone – not just
Responding to recent developments, in China – to disrupt future networks. A
September 2019, Huawei founder Ren number of possible measures have been
Zhengfei offered to sell access to the brought up for discussion, such as greater
company’s 5G code, patents, licences, redundancy of equipment and diversity of
technical blueprints and production vendors, as well as the use of encryption,
expertise to a foreign company in return for certification and assessments, and network
a one-off fee. However, this offer is flow monitoring.
irrelevant as long as there is no buyer.
Ericsson and Nokia have no technological Redundancy and diversity are interlinked
need to purchase Huawei’s source code, and and about improving resilience and securing
US companies have no interest, not least availability of coverage. Their purpose is to
due to the lack of political will. Regardless provide an overlap of equipment and
of which company provides it, security vendors in case of network failures, to
concerns would persist over Huawei ensure that there is always some back-up
equipment, as well as the fact that any available. Given the critical services that are
buyer would still probably need to produce expected to rely on future 5G networks,
much of it in China. 61 The case has also been ensuring a reliable connection will be one of
made that Huawei licences will continue to the most important aspects of network
come under Chinese law, which would security. Time and again, technical experts
require compliance with the PRC’s security have emphasised how crucial redundancy
services.62 and diversity are, most recently during an
expert hearing in the German Parliament.63
In short, the existing vulnerabilities of 5G Diversity of vendors means ensuring that
networks need to be addressed, but neither many different actors participate in the
a ban on Huawei nor the purchase of its market, in order to prevent networks from
source code would provide a sufficient becoming fully reliant on a single supplier. 64
solution beyond marginal improvements in The logic is essentially that different
European mobile network security. A vendors are unlikely to be subject to the
same problems at the same time. 65 Most
61 The Economist, “Ren Zhengfei May Sell Mobilfunkstandard 5G,“ Deutscher Bundestag,
Huawei’s 5G Technology to a western Buyer,” November 11, 2019, at:
The Economist, September 12, 2019, at: https://www.bundestag.de/dokumente/textarch
https://www.economist.com/business/2019/09/1 iv/2019/kw46-pa-auswaertiges-5g-665414.
64
2/ren-zhengfei-may-sell-huaweis-5g- Mathieu Duchâtel and Francois Godement,
technology-to-a-western-buyer. Europe and 5G: The Huawei Case, Paris: Institut
62 BBC, “Huawei Chief Offers to Share 5G Know- Montaigne, 2019.
how for a Fee,” BBC, September 12, 2019, at: 65 Government Offices of Sweden, Ministry of
https://www.bbc.com/news/technology- Infrastructure, national 5G Risk Assessment-

49673144. Sweden’s Response, memorandum
63 Deutscher Bundestag, „Experten gegen (unpublished), 2019.
Ausschluss von Anbietern beim

recently, the Council of the European Union demand access to enable lawful
explicitly acknowledged the importance of interception of data, so there are usually
vendor diversity. 66 Similarly, network ways to get around encryption in order to
redundancy refers to building additional access information.
layers of equipment within the network
infrastructure (for example base stations) Another approach to strengthening
provided by multiple vendors. 67 The aim is network security has centred on evaluation
to ensure that alternative equipment is and certification of products and processes,
available for network connections to fall which aims to reduce the risk of backdoors
back on to ensure continuous coverage in or vulnerabilities that could be easily
the event of network outages or exploited by hackers. Products can be more
malfunctions. While ensuring network or less secure, and security audits have the
redundancy can be costly, it is also effective potential to assess the overall product
at minimising the risk of large-scale quality, while also testing products and
network failures.68 processes against certification
requirements. One measure relevant to
Encryption addresses the safety of data discussions on assessments is source code
traffic by protecting the information that review, a process of evaluating the
flows on a network from unauthorised programming language of a device or other
access. End-to-end encryption refers to a equipment to confirm it works as intended
system in which only the communicating and to search for potential defects that
parties can access the encrypted could be exploited. 71 Since reviews are
information sent between them, and no costly and time-consuming, however, there
third party in between.69 Improving data are limited incentives for companies to
security by means of encryption from a undertake them in any number internally.
policy point-of-view could involve devising Regulation could be one way to create such
standards of encryption requirements that incentives.72
operators must meet. There is, however, a
tension between strong encryption and the One example of such auditing is the HCSEC,
ability of law enforcement to access data for which was established in the UK in 2010
judicial purposes.70 While encryption is a with the purpose of providing insight into
reliable method of securing data, law Huawei’s products and strategies there. In
enforcement and intelligence agencies its most recent annual report, from March
66 Council of the European Union, Council at: https://www.wired.com/2014/11/hacker-

Conclusions on the Significance of 5G to the lexicon-end-to-end-encryption/.
European Economy and the Need to Mitigate 70 Council of the European Union, Law
Security Risks Linked to 5G. Council Conclusions, Enforcement and Judicial Aspects Related to 5G,
14519/19, December 3, 2019. Brussels: Council of 8983/19, May 6, 2019, Brussels: Council of the
the European Union, p. 5. European Union.
67 Jamie Davies, “Germany Outlines Its 5G 71 Douglas Busvine, “Exclusive: China’s Huawei
Security Requirements,” Telecom News, March 8, Opens Up to German Scrutiny Ahead of 5G

2019, at: http://telecoms.com/496135/germany- Auctions,” Reuters, October 23, 2018, at:
outlines-its-5g-security-requirements/. https://www.reuters.com/article/us-germany-
68 Dali Wireless, Whitepapers: Fault-Tolerant telecoms-huawei-exclusive/exclusive-chinas-
Public Safety System, November 22, 2017, at: huawei-opens-up-to-german-scrutiny-ahead-of-
http://www.daliwireless.com/whitepapers/ 5g-auctions-idUSKCN1MX1VB.
69 Andy Greenberg, “Hack Lexicon. What Is End- 72 Author interview with Pontus Johnson,
to-End Encryption?” Wired, November 25, 2014, professor in cyber security at KTH, Stockholm,
June 2019.

2019, the HCSEC oversight board highlights What complicates this issue even further is
serious vulnerabilities in Huawei product the fact that this work is complex and many
code and systematic defects in the operators involve vendors in the
company’s software engineering and maintenance work on the mobile
cybersecurity competences. 73 Aiming to infrastructure, providing them with direct
replicate the UK approach, Huawei has access to the core functions of the system.
erected transparency centres in Bonn, Even if restrictions were to be imposed on
Germany and Brussels. 74 In contrast to the access for maintenance purposes, however,
UK, however, these centres are not under such as excluding certain vendors from
the oversight of state authorities. making VPN connections to certain
equipment for remote maintenance or
Even more crucially, auditing and assigning maintenance work to specific
certification have their technological qualified and vetted personnel (as is the
limitations, not least that the heavy reliance case in the UK), auditing and certification
on software-based solutions instead of would be insufficient measures for
hardware in 5G technology requires providing meaningful reassurance of the
extensive maintenance work, updates and security of any given mobile infrastructure
security patches. This means that a certified technology. 76
source code will be continuously updated,
providing opportunities to include new Another suggested measure to mitigate
vulnerabilities or backdoors. Hence, even if attempts at espionage as well as sabotage is
auditing and certification could prove a level network flow monitoring, which essentially
of security of the source code at the time of entails gathering and analysing metadata.
its assessment, it would be practically Operators have access to information about
impossible to review all patches individually, the data that flows into and out of their core
leaving aside the vulnerabilities that can network, and could therefore track data in
result from a combination of updates. Due order to detect and investigate
to the complexity of today’s IT systems, it is abnormalities, such as traffic rerouting or
impossible to cover the millions of lines of leaks in which information could be
code present in devices and equipment, or redirected or transferred from the network
to confirm the absence of backdoors. In to some third party.77 However, while
other words, occasional audits are network flow monitoring can be used to
ineffective, and attempts to assess new create comprehensive views of network
code before every update unrealistic. 75 activity, it might be less useful for tracking
specific targets or individuals. 78 In addition,
73 Huawei Cyber Security Evaluation Centre 75 Achour Messas et al., 5G in Europe: Time to
Oversight Board, Annual Report: A Report to the Change Gear! Paris: Institut Montaigne, 2019.
National Security Adviser of the United Kingdom, We do not argue that certification is not helpful
March 2019, at: but rather emphasise that it is not sufficient.
https://assets.publishing.service.gov.uk/govern Improvement of certification such as GSMA’s
ment/uploads/system/uploads/attachment_data NESAS can only be a minor contribution to a
/file/790270/HCSEC_OversightBoardReport- multifaceted risk mitigation.
2019.pdf, p. 20. 76 Jan-Peter Kleinhans, 5G vs. National Security:
74 Adam Satariano, “Huawei Security “Defects” A European Perspective. Berlin: Stiftung Neue
Are Found by British Authorities,” The New York Verantwortung, 2019.
Times, March 28, 2019, at: 77 Achour Messas et al., 5G in Europe: Time to
https://www.nytimes.com/2019/03/28/technolog Change Gear! Paris: Institut Montaigne, 2019.

y/huawei-security-british-report.html. 78 Author interview with an anonymous
engineer, Berlin, May 2019.

the increasing amount of data is likely to actors, including mobile operators, which is
outpace the technology currently used for rarely mentioned in the public debate.
network flow monitoring and make it more
difficult to detect malicious traffic. 79 Some of the remedies discussed in this
section are more effective than others, but
Overall, when it comes to increasing none will be sufficient alone. The most
network security, measures must be taken effective way to mitigate the main concerns
with regards to technical standards for of the debate, however, is to address the
cybersecurity, their implementation, and two main areas of challenges that are
the configuration and operation of mobile anticipated for future 5G networks:
infrastructure. Technical standards can technological risks and increased societal
entail exploitable security vulnerabilities, an dependency. The most effective measures
issue that needs to be addressed on a global for this are encryption against espionage,
level at the Third Generation Partnership and redundancy and diversification of
Project (3GPP), which is the most important vendors against a kill switch. Together,
international standard developing these offer the most appropriate response
organisation in this field. 80 The Council of to the risks posed by an external party. At
the European Union emphasises “the need the same time, we need to acknowledge
to put in place robust common security that it is impossible to fully exclude the risk
standards and measures, acknowledging of exploitable vulnerabilities and backdoors.
international standardisation efforts on 5G,
for all relevant manufacturers, electronic Many of the risks that are expected to
communications operators and service accompany 5G technology are risks that to
providers.” 81 The implementation of these some extent already exist in networks
standards is the task of vendors such as today. What is essentially new in the
Huawei while configuration is the duty of development of 5G networks is that we are
mobile network operators. Finally, the now in a situation in which the leading
operators’ dimension should involve suppliers are Chinese. Banning them could
continuous risk assessments and risk make it somewhat more troublesome for
mitigation, including experienced IT China to gain access to network systems,
security personnel and routines for network but is unlikely to prevent the PRC from
maintance. 82 This demonstrates that gaining access where it wants to and would
improving network security is not just a come instead with high costs – both
matter concerning mobile equipment economic and political. It is true that it is
manufacturers, but involves a number of easier to listen in on, or shut down, an
already controlled network than to seek to
79 Jason J. Uher et al., “Investigating End-to-End 81 Council of the European Union, Council
Security in 5G Capabilities and IoT Extensions,” Conclusions on the Significance of 5G to the
The Next Wave 21:4, p. 18. Lorenzo Pupillo, “5G European Economy and the Need to Mitigate
and National Security. A Complex Puzzle,” Security Risks Linked to 5G. Council Conclusions,
CEPS, June 21, 2019, at: 14519/19, December 3, 2019. Brussels: Council of
https://www.ceps.eu/5g-and-national-security/. the European Union, p. 6.
80
Audun Jøsang et al., “Vulnerabilitiy by Design 82 Jan-Peter Kleinhans, 5G vs. National Security:
in Mobile Network Security,” The Journal of A European Perspective. Berlin: Stiftung Neue
Information Warfare 14:4, 2015. David Rupprecht Verantwortung, 2019. Jan-Peter Kleinhans,
et al., “On Security Resarch Towards Future Whom to Trust in a 5G World. Policy
Mobile Network Generations”, IEEE Recommendations for Europe’s 5G Challenge,
Communications Survey and Tutorials 20: 3, pp. Berlin: Stiftung Neue Verantwortung, 2019.
2518-2542, 2018.

exploit vulnerabilities in order to obtain corporate practices” should be criteria for a
access. However, many experts are “rigorous evaluation” of any supplier.83
convinced that China has enough technical Another approach, adopted for example by
knowledge and capabilities to shut down France and recently also Sweden, allows for
critical infrastructure or obtain sensitive the ban of suppliers on the grounds of
information even without Huawei concerns over national security, even
equipment. Thus, if the concerns really are without explicitly listing criteria. 84 Neither
about espionage and sabotage, other the “Australian” nor the “French” approach
means would be more appropriate for and provides a solution to network security
effective at mitigating these risks. risks. Why, then, do they remain part of the
political agenda? The answer lies in the
Geo-economics and increasing geopolitical tensions over
technology between the US and China.
dependencies
Instead of effectively mitigating network
Even though a ban on Huawei would security risks, a ban on Huawei would be a
provide little if any help with containing severe blow to China’s geopolitical
existing risks to 5G network security, such ambitions. Recently, both the US and China
action remains the main subject of the have been testing whether they can
debate. One suggested approach is to ban capitalise politically on their technological
Huawei by introducing criteria on the leadership. Most prominently, the US
political and legal ecosystems of vendors. administration has issued an executive
Poland, for example, is considering such an order that not only bans Huawei from the
“Australian solution”. The Polish Prime US mobile infrastructure market, but also
Minister, Mateusz Morawiecki, and the US includes the Chinese tech giant on an
Vice President, Mike Pence, have signed an “entity list” that prohibits US suppliers from
agreement stating that “independent doing business with it. 85 China responded
judicial review”, a “record of ethical with its own entity list and a threat to cut
corporate behavior” and being “subject to a western suppliers off from strategically
legal regime that enforces transparent important raw materials, most notably the
83 White House, “US-Poland Joint Declaration on https://www.bloomberg.com/news/articles/2019

5G,” The White House, September 5, 2019, at: -05-16/trump-s-huawei-threat-is-the-nuclear-
https://www.whitehouse.gov/briefings- option-to-halt-china-s-rise. David Ignatius,
statements/u-s-poland-joint-declaration-5g/. “Trump Loves Walls. But He Should be Careful
84 Sveriges Riksdag, Skydd av Sveriges säkerhet about a Digital Barrier with China,” The
vid radioanvändning, at: Washington Post, May 21, 2019, at:
https://www.riksdagen.se/sv/dokument- https://www.washingtonpost.com/opinions/glob
lagar/arende/betankande/skydd-av-sveriges- al-opinions/trump-loves-walls-but-he-should-
sakerhet-vid- be-careful-about-a-digital-barrier-with-
radioanvandning_H701TU4#stepBeredning. china/2019/05/21/7280a146-7c13-11e9-a5b3-
85 Ting-fang Cheng et al., “Exclusive: Huawei 34f3edf1351e_story.html?noredirect=on&utm_t
Stockpiles 12 Months of Parts Ahead of US Ban,” erm=.37ec7a374c88. Sijia Jiang and Michael
Nikkei, May 17, 2019, at: Martina, “Huawei's $105 Billion Business at
https://asia.nikkei.com/Economy/Trade- Stake after US Broadside,” Reuters, May 16,
war/Exclusive-Huawei-stockpiles-12-months-of- 2019, at: https://www.reuters.com/article/us-
parts-ahead-of-US-ban. Yuan Gao et al., usa-trade-china-huawei-analysis/huaweis-105-
“Trump's Huawei Threat Is the Nuclear Option billion-business-at-stake-after-u-s-broadside-
to Halt China's Rise,” Bloomberg, May 16, 2019, idUSKCN1SM123.
at:

rare earth minerals of which China supplies draw them into their respective spheres of
80% of the world market.86 technological influence. At the core of this
competition over third markets are the EU
This confrontation has the potential to member states.
reach far beyond the PRC and the US. For
example, in the weeks after the US issued A ban on Huawei (and potentially also other
its entity list, a discussion followed on Chinese suppliers) from the European
whether it covered “only” direct US market would further fuel this tendency for
business with China or all trade using a geographical split into two spheres of
technology based on US patents. If the technological influence. Most crucially,
second interpretation prevails, even however, this struggle has direct political
European suppliers such as ARM could be implications since it adopts a new kind of
forced to cease trading technology based geopolitical logic. It is geopolitical since it
on US patents with Huawei. ARM’s semi- thinks of spheres of influence in
conductors are a crucial component of chips geographical terms, prioritising relative
produced by Hisilicon, a company that is political gains compared to the respective
fully owned by Huawei. 87 In reaction, competitor over an absolute level of
Huawei is aiming to develop more economic output. In contrast to traditional
indigenous technology. Unless China and geopolitics, however, China and the US aim
the US reverse their current policy to control geographic spaces in a new and
trajectories, we will witness the very different way. It is not military force
development of two distinct supply chains but control over the flow of goods, services
with little if any overlap, or a process of and data that will be decisive. In essence,
technological decoupling that will split the both the US and China are striving for
world into two spheres of technological control over the technology and
influence. At its most extreme, this could infrastructure that enables connectivity in
even involve the loss of technological Europe. Mark Leonard has described this
interoperability and the introduction of two trend as the new “connectivity wars”.88
different sets of technology standards, China wants to achieve “flow control” in
although this scenario seems rather Europe; that is, the ability to “define,
unlikely. Currently, both the US and China monitor, and enforce the rules that enable
have adopted a tactic of combining carrots flows”, 89 and 5G will be at the heart of
and sticks to win over third markets and defining and controlling the flow of data.
86 Eamon Barrett, “China Is Creating Its Own 87 Dave Lee, “Huawei: ARM Memo Tells Staff to
“Entity List” to Avenge Huawei and Punish Stop Working with China's Tech Giant,” BBC,
Foreign Firms,” Fortune, June 18, 2019, at: May 22, 2019, at:
https://fortune.com/2019/06/18/china-entity- https://www.bbc.com/news/technology-
list-huawei/. Research and Markets, “Research 48363772.
Report on China's Rare Earth Industry, 2019- 88 Mark Leonard and Ulrike Esther Franke (eds),
2023,” Research and Markets, May 2019, at: Connectivity Wars: Why Migration, Finance and
https://www.researchandmarkets.com/reports/4 Trade are the Geo-economic Battlegrounds of the
771561/research-report-on-chinas-rare-earth- Future, London: European Council on Foreign
industry?utm_source=CI&utm_medium=PressR Relations, 2016.
elease&utm_code=f3gz66&utm_campaign=124 89 Heiko Borchert, Flow Control Rewrites
8502+- Globalization: Implications for Business and

+China+Rare+Earth+Market+Report+2019- Investors, Dubai: HEDGE21 Strategic
2023%3a+China%27s+Rare+Earth+Exports+to+t Assessments, 2019, p. 7.
he+United+States+Accounted+for+78%25+of+U
.S.+Rare+Earth+Imports&utm_exec=chdo54prd.

The US is seeking to avoid Chinese flow would be limited to just one “sphere of tech
control over data in Europe. influence”.
This geopolitical logic of achieving flow Second, technological spheres of influence

control by means of technological come with political dependencies attached.
dependence plays out in at least three Given how deeply 5G will penetrate our
dimensions. First, it creates economic future societies and economies, this makes
advantages insofar as Chinese and US it critical infrastructure essential for
companies will profit from a new wave of production, urban organisation, public
the digitisation driven by AI and 5G. security and reliability of supply. If a country
Corporations will be able not only to sell depends on US or Chinese technology
their products, but also to gain enormous exclusively, it could be forced to make
royalties for patents. political concessions. The fear is that the EU
could face a situation in which it simply
However, technological decoupling also could not say no to Chinese demands
comes at an enormous cost. Step-by-step, because it is the PRC that delivers the
existing equipment produced in the continent’s critical infrastructure.
respective other sphere would need to be
replaced. The replacement of Huawei base Another political implication is the increase
stations in Germany alone is estimated to in supply chain security derived from
cost €6.4 billion. 90 Limited production technological decoupling. If only suppliers
capacities could delay the roll-out of new from allied countries manufacturing
technology such as 5G. Large segments of exclusively in allied countries produce
the ICT manufacturing base are located in technology, this diminishes the risk of
Asia. It is questionable whether – and, even backdoors and spyware being installed in
if so, how – a relocation to the west would technology. 92 At the same time, however,
be possible. At the very least it would be banning companies might reduce the
costly and time-consuming, and would potential for diversity, such as in the case of
come with enormous delay. The exclusion 5G Radio Access Network technology that is
of Huawei from the roll-out of 5G in the UK essentially only supplied by Huawei,
could lead to a delay of 18–24 months. 91 Ericsson and Nokia. A ban on Huawei would
The division of the world into two separate leave Europe with only two suppliers.
markets would reduce the sales
opportunities of individual companies to Third, the new dynamic entails a new
“just” half of the world. Excluding Chinese systems confrontation with a US-led
vendors would reduce competition, which democratic model that aims to preserve a
should be expected to increase prices. Extra free market economy in competition with
costs would prevent technological an autocratic China relying on a state-
innovation, since less funding would be permeated model in which corporations
available for research and development, cannot be clearly separated from the party-
and the market for innovative technology
90 Xuewu Gu et al., “Geopolitics and the Global https://www.theguardian.com/technology/2019/

Race for 5G,” CGS Global Focus, Bonn: Center for jul/06/huawei-uk-mobile-5g-networks-
Global Studies Bonn, 2019. operators-gamble-security-concerns.
91 Jamie Doward, “UK Mobile Operators Ignore 92 Jan-Peter Kleinhans, 5G vs. National Security:
Security Fears over Huawei 5G,” The Guardian, A European Perspective. Berlin: Stiftung Neue
July 6, 2019, at: Verantwortung, 2019.

state’s authority. 93 This arises not least from Hence, while a ban on Huawei would not
the fact that the PRC is perfecting its significantly increase network security, it
authoritarian control by means of new feeds into the geopolitical logic of
surveillance technologies. The most technological decoupling since it would
prominent example is the social credit score substantially reduce European reliance on
system that not only penalises behaviour the Chinese tech giant. What critics of
that is seen as inappropriate from the CCP’s Huawei fear is not network insecurity but
viewpoint, but also rewards citizens for technological dependency.
what the CCP sees as good behaviour. 94 In Interdependence has generally been
many parts of the world, China is not only identified as a stabilising force, not least
exporting such technology, but training because it raises the costs of coercion and
authoritarian regimes in how to use it for (in the extreme) war. Decoupling is certainly
surveillance purposes. Hence, a digital a worrying scenario that is already under
divide would lead not only to two spheres of way. Europe’s technological dependency on
technology, but also to the use of China is already high and the trend is to
technological applications for political China’s advantage. At the same time,
purposes. however, European dependency on US
technology is also significant. The EU runs
China’s tech giants, including Huawei, the risk of getting squeezed between two
contribute to and collaborate with the technological superpowers. Levels of
party-state’s authority in this regard. In fact, market share and innovation provide a good
while Huawei should not be equated with estimate of European dependency.
the Chinese party-state, it remains under its
tight control with strong links to the Market share. Europe largely depends on
security apparatus (see above). hardware from China and software from the
US. For some time now, China has been at
It is this new geopolitical dynamic that plays the core of high-technology supply chains.
out in economic gains, political While it competed over price for labour-
dependencies and a systems confrontation intensive production for a long time, the
that has induced speculation about whether PRC is no longer just the workbench of the
we are facing a tech “Cold War” in which world. Technology made in China is
two spheres of technological influence competing on quality. Factories in the PRC
decouple from each other and face-off do not just manufacture for US, Japanese
against each other in a new antagonism. In and Korean brands. Chinese companies are
this context, isolating China technologically capturing huge market shares with their
will only motivate the PRC to become more own brands too. A crucial example is
self-reliant in its technology, further Huawei’s share of the mobile internet
reducting any potential leverage for the infrastructure. By 2017, Huawei had
west.95 captured 28%, ahead of the Swedish tech
93 James Lewis, How 5G Will Shape Innovation Challenges for Europe,” Merics Papers on China
and Security: A Primer, Washington DC: CSIS, 7, Berlin: Merics, 2019.
2018. 95 Jodi Xu Klein, “The Huawei Dilemma.
94 Sebastian Heilmann, Digitization plays into the Washington Still Stuck Trying to Balance
hands of the Communist Party, October 11, 2017, National Security Against US Tech Spremacy,”
at: https://www.merics.org/en/china-flash/19th- South China Morning Post, November 1, 2019, at:
party-congress-ccp. Kristin Shi-Kupfer and https://www.scmp.com/news/china/article/3035
Maraike Ohlberg, “China's Digital Rise. 832/huawei-dilemma-washington-still-stuck-
trying-balance-national-security-against.

giant Ericsson (27%), Nokia (Finland, 23%), IBM. Amazon is still bigger than all the other
and Samsung (South Korea, 3%). Another four combined.101
Chinese company, ZTE, held 13% in 2017. 96
In Europe, dependence on Huawei mobile In terms of hardware, the US (and South
infrastructure ranges from 80–90% in Korea) are ahead of Europe and – even
Belgium and the Czech Republic, to 60% in more so – of China when it comes to the
Germany and Poland, 50–60% in the United production of semi-conductors. Among the
Kingdom and 50% in Denmark to around top ten manufacturers, with a combined
30% in France.97 Another strength of market share of almost 60% in 2018, six
Huawei is the company’s ability to produce were US companies (Intel with a 14%
all the elements of the ICT supply chain for market share, Micron technology with 6.3%,
5G networks at scale – from infrastructure Broadcom, 3.4%, Qualcomm, 3.2%, Texas
to end devices.98 Only Samsung provides Instruments, 3.1% and Western Digital,
the same range of products; the South 1.9%). Two were South Korean (Samsung
Korean firm is, however, much weaker on with a market share of 15.5%, skhynix with
infrastructure. Also China’s roll-out plans for 7.6%) and two were based in Europe (ST
5G, particularly of SA 5G, are well ahead of Microelectronics and NXP Semiconductors
Europe and the US. Until the end of 2019, with 1.9% market share each). 102
the PRC is expected to have 130,000 5G
base stations up and running.99 The country Innovation and patents. European
further experiments with 5G enabled AI, not operators, vendors and experts agree that
least in the fields of smart cities and Huawei’s 5G technology is of high quality.
surveillance.100 Some believe that the Chinese tech giant is
on a par with European manufacturers,
A crucial example of a US stronghold is while others argue that it is already leading.
cloud services, which have become Particularly in a complex and innovative
fundamental to 5G. Globally, Amazon has technology such as 5G, technological
33% of the market, followed by Microsoft leadership requires massive investment in
(16%) and Google (8%). The largest Chinese research and development (R&D). China has
provider is Alibaba, which is fifth behind been prioritising 5G since 2009 and has
96 David Bond and James Kynge, “China Spying City”,” South China Morning Post, Novmber 1,
Risk Hits Huawei's UK Ambitions,” Financial 2019, at:
Times, 3 December 2018. https://www.scmp.com/news/china/politics/artic
97
Paul Triolo, et al., “One Company, Many le/3035765/chinese-city-shenzhen-using-big-
Systems. US Forces Governments to Choose data-become-smart-socialist
Sides on Huawei,” Special Report Prepared by 101 Synergy Research Group, “Cloud Service
Eurasia Group, Washington DC, Eurasia Group, Spending Still Growing Almost 40% per Year;
2019. half of it won by Amazon & Microsoft,” Synergy
98 CNN, “Huawei arrest: This is what the start of Research Group, July 26, 2019, at:
a tech Cold War looks like,” CNN, December 9, https://www.srgresearch.com/articles/cloud-
2018, at: service-spending-still-growing-almost-40-year-
https://m.cnn.com/en/article/h_9345b23ca7053f half-it-won-amazon-microsoft.
08332030a63d7e3329. 102 Gartner, Gartner Says Worldwide
99 BBC, “China Rolls Out One oft he World’s Semiconductor Revenue Grew 12.5 Percent in
Largest 5G Networks,” BBC, November 1, 2019, 2018, April 11, 2019, at:
at: https://www.bbc.com/news/business- https://www.gartner.com/en/newsroom/press-
50258287. releases/2019-04-10-gartner-says-worldwide-
100 William Zheng, “China’s Shenzhen Is Using semiconductor-revenue-grew-12-.
Big Data to become a Smart “Socialist Model

poured enormous amounts of funds into increase from a 4.3% to a 39% share for
R&D. Huawei spent US$ 77.1 billion on R&D Chinese patents in EU-registered
between 2008 and 2018, around 10% of the telecommunications patents. 108
company’s revenues on average. 103 In 2017
alone, several sources put Huawei’s 5G R&D Is the future Chinese? Even now, Europe is
budget between US$ 13.23 and US$ 14.3 largely dependent on US and Chinese
billion, equal to around 15% of the technology. Unless Europe changes course,
company’s revenues. With this amount of EU member states are highly likely to fall
funds, Huawei can outspend the combined further behind. The PRC is strategically
R&D resources of Ericsson and Nokia. 104 investing in innovative technology in
particular. Even though the formula “Made
China’s investments in R&D pay off. One in China 2025”, which is the official title of a
crucial indicator is its share of patented state-led project to support homegrown
technology that is necessary to meet global innovation in core technologies including
5G standards, known as standard-essential ICT, has been rhetorically downgraded,
patents (SEPs). It is highly complex to China will remain committed to the goals
calculate SEPs and data can differ behind the initiative. Potentially, this has
significantly at times. 105 While some (such far-reaching implications even for market
as IPlytics) calculate that China is already segments in which European vendors are
leading in 5G SEPs as a result of having strong. For example, today Huawei,
submitted the most, and particularly Ericsson and Nokia share the global RAN
important, contributions to the technology market. Experts fear that within
standardization process in 3GPP, 106 others the next decade, however, Huawei could
regard Europeans slightly ahead of Chinese squeeze out both European vendors if
vendors. 107 Whatever figures will turn out to nothing is done. The reason is not a lack of
be correct, China’s share of SEPs is not only equipment quality from Ericsson and/or
significant, but rapidly increasing. Nokia, but that Huawei receives backing
from the Chinese state. In developing
Many patents are still registered in the EU, countries, for example, China makes loans
but the share owned by European for the roll-out of 5G infrastructure
companies is decreasing. In 2008, 2,693 conditional on benefits for Huawei.
patents related to telecommunications and
connectivity were filed in the EU, of which China itself has adopted a geopolitical
only 116 were filed by Chinese firms. By approach to 5G. The PRC’s strong position
2017, this number had increased 12-fold to in global supply chains and technical
1,478 out of 3,717 patents. This is an standardisation does not prevent the
103 Data according to Huawei’s own declarations. 106 Tim Pohlmann, “Who is Leading the 5G
104 Rick Nelson, “China's Huawei Seeks to Patent Race? A Patent Landscape Analysis on
Dominate 5G Standards Development,” Declared SEPs and Standards Contributions”,
Evaluation Engineering, March 30, 2018, at: IPlytics, July 2019, Berlin: IPlytics.
https://www.evaluationengineering.com/industr 107 Matthew Noble et al. “Determining Which
ies/communications/wireless-5g-wlan- Companies Are Leading the 5G Race,” Wireless

bluetooth-etc/article/13017349/chinas-huawei- Technology July/August 2019, pp. 35-40.
seeks-to-dominate-5g-standards-development. 108 John Strand, “The Chinese Cybersecurity
105 Ericsson, Estimating the Future 5G Patent Threat is more than Huawei Network
Landscape, October 2018, at: Equipment,” New Europe, March 21, 2019, at:
https://www.ericsson.com/assets/local/patents/e https://www.neweurope.eu/article/the-chinese-
stimating-the-future-5g-patent-landscape.pdf. cybersecurity-threat-is-more-than-huawei-
network-equipment/.

country from heavily investing to gain crucially important. Europe appears to have
technological independence. This is not become not the only, but possibly the most
least in response to US threats against the important battleground. At first glance, it
Chinese tech company ZTE that brought it might appear that this puts Europe in a
close to a breakdown in 2018. 109 Also the favourable position and gives it
Snowden revelations led to a lower level of considerable leverage. For two reasons,
Chinese trust in US technology. In response, however, Europe is actually in a rather weak
the PRC strives not only for technological position. First, given its enormous
autarky but technological dominance. dependence on technology from both the
Protectionist policies of supporting national US and China, Europe is technologically
champions and forced technology transfers vulnerable. Second, the EU runs the risk of
as a precondition for market access are only fragmentation. It is a good sign that EU
two of quite a number of unfair Chinese member states have delegated the process
industrial policy practices. This endangers of coordination to the European
global competition and the diversity of the Commission. However, despite joint efforts
future ICT supply chain. 110 No doubt, the EU on a coordinated risk assessment that could
needs a toolbox to respond to Chinese result in similar responses to the current
industrial policies that goes far beyond situation, significant differences remain.
investment screening. 111 Poland and the Czech Republic, for
example, seem to be the most willing to
Should Europe therefore ban Huawei from follow the US position on banning Huawei.
the European market in order to protect its Portugal, on the other hand, is deepening
own companies and high-tech industrial its cooperation with China on 5G. Germany,
base? This growing technological France and Italy are about to adopt policies
confrontation and Europe’s increasing that formulate stricter technical criteria that
dependency raise the question of how the could lead to a partial ban on Huawei. Most
EU should react. recently, however, all three countries have
considered including political criteria in their
Towards a European response legislation that will make it more difficult
for Huawei to participate in the roll-out of
5G. Initially, the German government
The return of geopolitics makes US and wanted to follow the recommendations of a
Chinese competition over third countries public technical agency, but the push for
109Samm Sacks and Manyi Kathy Li, “How 110 Martina F. Ferracane and Hosuk Lee-
Chinese Cybersecurity Standards Impact Doing Makiyama, “China’s Technology Protectionism
Business in China,” CSIS, August 2, 2018, at: and Its Non-negotiable Rationales,“ ECIPE, June
https://csis-prod.s3.amazonaws.com/s3fs- 2017, at: https://ecipe.org/wp-
public/publication/180802_Chinese_Cybersecuri content/uploads/2017/06/DTE_China_TWP_REV
ty.pdf. Claire Ballentine, “US Lifts Ban that Kept IEWED.pdf.
ZTE From Doing Business with American 111 Mikko Huotari and Agatha Katz, Beyond
Suppliers”, The New York Times, July 13, 2018, at: Investment Screening. Expanding Europe’s
https://www.nytimes.com/2018/07/13/business/z Toolbox to Address Economic Risks from Chinese
te-ban-trump.html. Cheng Ting-fang et al., State Capitalism, 2019, at:
“Exclusive: Foxconn Plans $9bn China Chip https://www.bertelsmann-
Project Amid Trade War,” Nikkei Asia, December stiftung.de/fileadmin/files/BSt/Publikationen/Gr
21, 2018, at: auePublikationen/DA_Studie_ExpandEurope_2
https://asia.nikkei.com/Business/China- 019.pdf.
tech/Exclusive-Foxconn-plans-9bn-China-chip-
project-amid-trade-war.

political solutions is getting louder in the decoupling, fuelling great power
German Parliament. France and Italy have competition and – at worst – the emergence
adopted technical criteria but also devised of a new Cold War. Option 3, in turn, aims
two variations on a decision-making simply to ignore the ongoing geopolitical
procedure that allows political leaders the turn in international affairs, which appears
ultimate decision. 112 naïve. Given Europe’s close security alliance
with the US, it is questionable whether the
Caught up in technological dependency and third option is feasible. Even if it were,
internal fragmentation, what should the EU however, Europe could end up being
do? Three different options are being squeezed between the two great powers
discussed in the current debate. The first is with little room for manoeuvre.
for Europe to side with the US, effectively
banning Huawei and building on the Against a backdrop of these weaknesses,
transatlantic partnership, not least because this paper ends with a presentation of a
of the established transatlantic security preliminary idea for a fourth option, which
alliance. The second option combines non- has similarities with option 2 but contains a
discriminatory criteria that help to exclude crucial and markedly different aspect. We
non-European vendors, not only Chinese call this option “strategic access”. The
but also other – such as US – suppliers strategic access option starts from the
wherever technologically achievable. Such assumption that Europe has an interest in
technological protectionism would need to preventing isolation and decoupling, seeks
be combined with the development of an to reject the geopolitical turn to prevent a
indigenous European technology industry. new Cold War, but needs to be realistic. It
This approach ultimately aims for European contains a combination of and balance
strategic autonomy or “European between two elements: diversification and
sovereignty”. 113 The third option is no light protectionism.
change of policy, which preserves the
openness of the European market, and In this paper, we can only outline the basic
inevitably results in a further increase in underlying idea and need to leave open
Huawei’s market share and extended important details of its implementation.
dependency on China. This option is also The aim is to stimulate debate on this
likely to see a gradual deterioration in the subject rather than offering comprehensive
transatlantic partnership. practical solutions at this point in the
discussion. To implement the agenda we
While we are most sympathetic to the propose will require extensive discussion
second option, we regard all three as and creativity, ranging from digital free
essentially suboptimal. Options 1 and 2 trade arrangements through competition
adopt a geopolitical logic of isolationism law to minimum localisation requirements
from either one or both great powers and and a wide range of other means. Further
112For an overview see for example Kadri Kaska 113European Political Strategy Centre,
et al., Huawei, 5G and China as a Security Threat, Rethinking Strategic Autonomy in the Digital Age,
Tallinn: NATO Cooperative Cyber Defence Brussels: European Commission, 2019. Council
Centre of Excellence, pp. 15-18. Tim Nicholas of the European Union, Council Conclusions on
Rühlig et al., “5G, Europe and the Tech Rivalry the Significance of 5G to the European Economy
between the US and China - a Wrestling Match. and the Need to Mitigate Security Risks Linked to
Europe caught on its Back Foot,” SWP Comment 5G. Council Conclusions, 14519/19, December 3,
29, Berlin: SWP, 2019. 2019. Brussels: Council of the European Union,
p. 3.

discussion will be needed to address not just example, be granted to technology
the details, but the fundamentals of such an developed from open sources.
approach, and it will profit from discussion
beyond Europe, including with China and This strategy of diversification should be
the US.114 Crucially, however, while we have combined with the use of all available
developed the idea of strategic access in means under WTO law to preserve free
relation to the current debate over Huawei’s trade and fair competition. Even in fields
inclusion in the roll-out of the mobile where European companies are strong, it
network infrastructure for 5G, it is an idea faces competition from state-backed
that aims to address a broader set of companies such as ZTE or Huawei. Hence,
technological dependencies and the EU needs to weigh the options available
vulnerabilities of the EU. under international trade law to address the
challenges arising from dumping and
Diversification subsidies. The US could be a natural partner
In sharp contrast to all three options in these attempts.115 On patents, in turn, the
discussed above, strategic access aims to EU faces pressure from both the US and
preserve an international environment that China to reduce royalty fees. A fair patent
is as open and inclusive as possible without policy and the effective enforcement of
running the risk of strong dependencies. In Intellectual Property Rights (IPR) will be
order to achieve this goal, diversification of crucial for innovative companies such as
supply chains will be of crucial importance. Ericsson and Nokia.
The current rise of geopolitics is about the
US and China attempting to squeeze out Hence, strategic access does not start from
the most political capital from threatening the idea of locking into the digital sphere of
to cut off external actors from the supply of either China or the US. Nor does it adopt an
core resources (e.g. rare earths) and ideal of self-reliance and autarky in the
technologies (e.g. semi-conductors). A digital sphere – a goal that would be
response that follows the logic of open and unrealistic for Europe. However, the
free trade could therefore respond to this perspective acknowledges the geopolitical
tactic by diversifying supply chains. risks of current developments and aims to
respond by emphasising the diversification
Diversification of supply chains combines of supply chains.
two dimensions. First, Europe should import
technology and raw materials from as many At the same time, diversification requires
different suppliers from as many different substantial political intervention in the
countries as possible. Second, Europe economic sphere. While European
should avoid dependency on technology policymakers cannot and should not make
that relies on patents from one country in decisions about suppliers for corporations,
order to avoid being dragged into the they should provide the necessary
patent wars that loom behind Trump’s incentives for diversification, such as free
entity list. Preferential treatment should, for trade agreements on digital issues.
114 See for example the excellent discussion in a Big, Bold, Multilateral Case at the WTO,”
Elsa B. Kania, Securing Our 5G Future: The Testimony before the US-China Economic and
Competitive Challenge and Considerations for US Review Security Commission, 2018, June 8, at:
Policy, November 2019. Washington DC: Center https://www.uscc.gov/sites/default/files/Hillman
for a New American Security. %20Testimony%20US%20China%20Comm%20
115 Jennifer Hillman, “The Best Way to Address w%20Appendix%20A.pdf.
China's Unfair Policies and Practices in Through

Jan-Peter Kleinhans, for example has how to preserve the market presence of the
suggested a supply chain risk management two European tech companies.
system similar to existing ones in the US
and the United Kingdom, as well as the Most sensitive is the question of how to
promotion of supplier diversity through support and develop indigenous IT
industrial policy. One example could be manufacturing in Europe. The European IT
national coordination among operators to industry is mostly underdeveloped and is
ensure RAN diversity. This could allow for unlikely to flourish unless it receives some
national roaming guratanteeing coverage degree of protection. There is no European
even in the case that one operator’s version of Google, Microsoft, Apple,
equipment fails. 116 Huawei, Alibaba or Tencent. If Europe
wants to facilitate the rise of a tech giant, it
Protectionism light will need to think about preferential
While diversification should be at the heart treatment similar to the development of
of the European approach and prioritised Airbus in aviation.
wherever possible, it is unlikely that the
emergence of strategic dependencies can Europe needs to address its industrial
be completely avoided. Hence, weakness but also to take action to preserve
diversification will need to be combined its influence on regulation and standard
with a slimmed down version of setting. A positive example of Europe’s
protectionism that helps defend existing influence is the General Data Protection
and develop new strategic sectors of the Regulation (GDPR), which has become a
European digital industry. Protectionism benchmark for global data protection even
should be avoided wherever possible; it if it is not fully enforced by either European
should be a “last resort”, which is why we or non-European actors. The regulatory
speak of “protectionism light”. relevance of the EU relies on its market size.
Hence, if the EU wants to continue to
In some niches, the digital industry in the influence global rule-making in the digital
EU remains strong, mostly in highly sphere, it needs to deepen its integration
specialised fields of application driven by and develop its Digital Single Market. Some
small and medium-sized enterprises. One standards, particularly technical
exception is mobile infrastructure in general standardisation, are based on technological
and RAN technology in particular, where leadership. The EU needs to increase its
Ericsson and Nokia hold significant market support for research and development, not
shares. Experts fear, however, that the fact least in basic research that is less
that Huawei receives so much support from commercially profitable in the short term.
the Chinese party-state could squeeze Above all, Europe needs to coordinate and
western companies, including Ericsson and cooperate more closely on the development
Nokia, out of the global market.117 European of its digital economy, including both
policymakers should therefore consider diversification and protectionism light. 118
Jan-Peter Kleinhans, 5G vs. National Security:

116 117 White House, How China's Economic
A European Perspective. Berlin: Stiftung Neue Aggression Threatens the Technologies and
Verantwortung, 2019, p. 18. Jan-Peter Intellectual Property of the United States and the
Kleinhans, Whom to Trust in a 5G World. Policy World, Washington DC: White House Office of
Recommendations for Europe’s 5G Challenge, Trade and Manufacturing Policy, 2018.
Berlin: Stiftung Neue Verantwortung, 2019, pp. 118 Julian King, “Europe’s 5G Network Will be
10-13. Secure – If We Work Together,” The Guardian,

October 28, 2019, at:

Conclusion addressing sabotage and espionage, a ban
on Huawei would indeed increase security
but is not the most effective means to
Under the pretext of network (in-)security, mitigate the risks. Encryption is the best
Europe is discussing the roll-out of 5G protection against espionage. Network
networks throughout the continent. At the redundancies and diversity of vendors, in
core of the discussion is the controversial turn, would be most effective reducing the
role of Chinese vendors in general and the risk of a kill switch. After all, there is no such
Chinese tech-giant Huawei in particular. thing as complete network security, and
attacking critical infrastructure can only be
The security of Europe’s 5G network is made more complicated and more costly.
undoubtedly crucial. Technological
innovation, particularly a new virtualised Instead of increasing network security, the
core network, network slicing and more proposed ban on Huawei follows a very
edge computing, will enable a wide range of different logic: the logic of the increasing
applications of next generation mobile geopolitical tensions over technology.
networks. Ultra-low latency and massive China’s Belt and Road Initiative is a major
machine-to-machine communication will infrastructure policy that aims not just to
revolutionise the economy and society. 5G build physical and – even more importantly
will be omnipresent, running not just future – digital infrastructure, but to control the
“smart cities”, autonomous vehicles and the flow of goods, services and data. Third
health sector, but also production (industrial countries, first and foremost Europe,
IoT). In short, 5G networks are truly critical become the primary target of this rising
infrastructure and demand all our efforts to technological confrontation between the
make them as secure as possible. US and China, and Europe faces the risk of
further increasing its technological
The ongoing debate in Europe mainly dependency.
focuses on two risks to network security:
sabotage and espionage. The fear is that The current situation demonstrates
the inclusion of Huawei technology in 5G- Europe’s vulnerability. Europe is heavily
critical infrastructure could allow China to reliant on software from the US and
conduct industrial and political espionage hardware from China. This has contributed
and even provide the authoritarian regime to an internal fragmentation among EU
in Beijing with opportunities to shut down member states in their responses to the
the 5G network or threaten Europe with current situation. In order to address this,
such a scenario. These are real and serious three options are currently being discussed:
risks. Sabotage and espionage are siding with the US, strategic European
technically feasible and Huawei is hardly in a autonomy and no policy change, which
position to reject orders from the ruling benefits China.
Chinese Communist Party.
We reject all three options and sketch out a
We argue, however, that the proposed fourth alternative that we refer to as
solution of banning Huawei does not strategic access. Strategic access aims to
address network security, but rather geo- avoid both fuelling the geopolitical turn
economic challenges that arise from resulting from technological decoupling and
dependency. If Europe is serious about falling victim to this development. It
https://www.theguardian.com/commentisfree/2
019/oct/28/europe-5g-network-technology.

combines two aspects: diversification and European digital industry where it runs the
light protectionism. Diversification is the risk of suffering from unfair Chinese
most crucial component, aiming for a competition resulting from the state-
diversification of supply in order to avoid permeated character of the Chinese
dependency on manufacturing and the economy. It further entails a limited and
underlying patents that could be utilised in a strategically targeted industrial policy to
state-run patent war. It also implies strengthen the EU’s industrial base in core
consideration of using the legal means technological fields of digitisation by a
available under WTO law to address issues variety of means from R&D support to
of subsidies and fair competition, as well as deepening the Digital Single Market. While
effective implementation of a fair patent we discuss this approach in the context of
policy and IPR enforcement. the ongoing 5G infrastructure debate, we
believe that it addresses the wider
Protectionism light, in turn, should only be phenomenon of technological rivalry that
applied where the diversification strategy can be expected continue beyond 5G in the
has failed. It includes defending the existing future. 119
Marianne Schneider-Petsinger et al., US-

119 Technology Leadership, London: Chatham
China Strategic Competition: The Quest for Global House, 2019.

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1/2020

What to Make of the Huawei Debate?

PUBLISHED BY THE SWEDISH INSTITUTE OF INTERNATIONAL AFFAIRS | UI.SE

Tim Rühlig Maja Björk

© 2020 The Swedish Institute of International Affairs

Centrality and innovation of 5G .................................................................................................... 6

Network security concerns: the current debate ........................................................................... 8

Geo-economics and dependencies ............................................................................................. 19

Towards a European response .................................................................................................... 25

© 2019 The Swedish Institute of International Affairs

© 2020 The Swedish Institute of International Affairs 4

6 Andreas Kluth, “Huawei Is a Paralyzing https://www.whitehouse.gov/briefings-

paralyzing-dilemma-for-the-west. Assessment of the Cybersecurity of 5G Networks,

statements/u-s-poland-joint-declaration-5g/. War and the Geopolitics of 5G, 2019, at:

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© 2020 The Swedish Institute of International Affairs 6

© 2020 The Swedish Institute of International Affairs 7

d-NFV-White-Paper.pdf. Global Trade Governance,” Harvard

automation-front-and-center.html. Links to Chinese State Security Services,” SSRN,

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https://www.engadget.com/2019/12/02/china- Owns Huawei?,” SSRN, May 8, 2019, at:

HM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referre Europe and 5G: The Huawei Case, Paris: Institut

Yj8tBBq3oGZyrjCEYY- China's Communist Party,” Sydney Morning

© 2020 The Swedish Institute of International Affairs 9

/file/790270/HCSEC_OversightBoardReport- Conclusions on the Significance of 5G to the

working-chinese-company-first-find-lenovo- World. Policy Recommendations for Europe’s 5G

© 2020 The Swedish Institute of International Affairs 10

Challenge, Berlin: Stiftung Neue Verantwortung, attorney-general-rod-j-rosenstein-announces-

10-11. US Department of Justice, Deputy Center of US-China Strategic Competition, The

© 2020 The Swedish Institute of International Affairs 11

47 Jan-Peter Kleinhans, 5G vs. National Security: 50 Author interview with an anonymous

https://assets.publishing.service.gov.uk/govern professor in cyber security at KTH, Stockholm,

2019.pdf. Assessment of the Cybersecurity of 5G Networks,

© 2020 The Swedish Institute of International Affairs 12

October 9, 2019, Brussels: European expands-so-do-concerns-over-privacy-

Could Be a Boon For Security,” Techtarget, April at: https://www.pwc.co.uk/cyber-

© 2020 The Swedish Institute of International Affairs 13

Data from Siemens,” Forbes, November 27, https://www.project-

© 2020 The Swedish Institute of International Affairs 14

https://www.bbc.com/news/technology- Infrastructure, national 5G Risk Assessment-

© 2020 The Swedish Institute of International Affairs 15

66 Council of the European Union, Council at: https://www.wired.com/2014/11/hacker-

Security Requirements,” Telecom News, March 8, Opens Up to German Scrutiny Ahead of 5G

© 2020 The Swedish Institute of International Affairs 16

https://www.nytimes.com/2019/03/28/technolog Change Gear! Paris: Institut Montaigne, 2019.

engineer, Berlin, May 2019.

© 2020 The Swedish Institute of International Affairs 17

© 2020 The Swedish Institute of International Affairs 18

83 White House, “US-Poland Joint Declaration on https://www.bloomberg.com/news/articles/2019

© 2020 The Swedish Institute of International Affairs 19

8502+- Globalization: Implications for Business and

© 2020 The Swedish Institute of International Affairs 20

This geopolitical logic of achieving flow Second, technological spheres of influence

90 Xuewu Gu et al., “Geopolitics and the Global https://www.theguardian.com/technology/2019/

© 2020 The Swedish Institute of International Affairs 21

© 2020 The Swedish Institute of International Affairs 22

© 2020 The Swedish Institute of International Affairs 23

ies/communications/wireless-5g-wlan- Companies Are Leading the 5G Race,” Wireless

© 2020 The Swedish Institute of International Affairs 24