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US concerns about Chinese tech giants challenge Europe

Governments in major European countries seem reluctant to side with either the US or China in what has been characterised as a battle for global digital supremacy.

The European Commission will soon address issues concerning Huawei's role in the development of next generation mobile networks.

"It is clear that Europe needs to have a common approach to this issue," Commissioner for Digital Economy and Society, Bulgarian Mariya Gabriel, announced earlier this week during the Mobile World Congress in Barcelona.

It not clear yet what kind of measures the commission might propose in an attempt to balance conflicting concerns and interests.

On the one hand, the US secretary of state, Mike Pompeo and vice-president Mike Pence have been deployed to urge EU countries to impose a ban on Huawei's technology in their telecommunications networks.

"We won't be able to share information with them, we won't be able to work alongside them," Pompeo said upon his return from a trip to Europe.

The US claims that links between companies like Huawei and the Communist Party of China (CPC) gives rise to risks of espionage.

"We think (the European countries) will make good decisions when they understand that risk," Pompeo said.

On the other hand, the telecommunication industry's trade body, GSMA, fears that delays in the implementation of 5G in Europe will lead to missed opportunities in the development of the 'Internet of Things', such as self-driving cars, smart cities and smart healthcare. etc.

And China is pushing back.

"Using security reasons to hype, obstruct or restrict normal cooperation between companies in the end will only hurt one's own interests," Chinese foreign ministry spokeswoman Hua Chunying said during a press briefing.

Like the US, countries such as Australia, New Zealand and Japan have already taken steps to ban Huawei from supplying equipment for their future fifth generation mobile broadband networks for reasons of national security, while Canada is still considering which steps to take.

Meanwhile in Poland, a Huawei sales manager is under arrest on suspicion of espionage.

And in December the daughter of the company's founder, deputy chairwoman Meng Wanzhou, was arrested in Canada at the request of the US justice department for allegedly breaching the ban on dealings with Iran and violating intellectual property law.

France has already barred Huawei from providing technology for the country's sensitive networks, and cyber agencies in a number of other EU member states have reviewed or are currently reviewing possible security risks.

In the US, the House of Representatives' intelligence committee found in 2012 that "China has the means, opportunity and motive to use telecommunications companies for malicious purposes".

China's national intelligence law from 2017 states that organisations such as Huawei must "support, co-operate with and collaborate in national intelligence work".

China has dedicated a lot of effort to reassure European lawmakers to gain access to the EU's common market, the biggest in the world.

In an op-ed published by this website, China's ambassador to the EU, Zhang Ming, warned leaders in the EU not to draw "an Iron Curtain", which would "upset global economic and scientific innovation".

He recommended Europeans to take "a holistic view" on the issue of security risks.

"The Chinese government calls on Chinese companies operating overseas to strictly observe laws and regulations of the host country, has and will never ask Chinese companies to engage in illegal activities," Zhang Ming wrote.

Huawei in Brussels

The Huawei company has set up cyber-security centres in the UK and Germany, which are soon to be followed by a similar centre close to the European institutions in Brussels.

According to Huawei, these centres serve for "testing, verification and engagement with stakeholders".

"We are probably the most open and transparent organisation in the world. We are probably the most poked and prodded organisation too," Huawei's cyber security chief John Suffolk told the BBC.

And in interviews with American and European media Huawei's founder, Ren Zhengfei, has insistently emphasised that the company would never allow China's government to access customer data.

"China's ministry of foreign affairs has officially clarified that no law in China requires any company to install mandatory back doors. Huawei and me personally have never had any request from any government to provide improper information," Ren Zhengfei, a former engineer in the Chinese People's Liberation Army, told CNBC.

Digital supremacy

In recent weeks, a number of European countries seem to have resisted US lobbying on the issue.

Ahead of a government review, due in March or April, the UK's national cyber-security centre has come to the conclusion that any risk posed by Chinese technology can be managed.

German chancellor Angela Merkel has called for guarantees on data protection, but not a priori excluded Huawei from the development of Germany's 5G networks.

Likewise in Italy, where a member of the government has dismissed American concerns.

"I don't see Huawei as an issue, for me it's just one of 25 names of equipment manufacturers that you can choose from," undersecretary of state, Michele Geraci, who oversees international trade and foreign investments at Italy's ministry of economic development", told Bloomberg.

Governments in major European countries thus seem reluctant to side with either the US or China in what has been characterised as a battle for global digital supremacy.

European politicians seem to think that American warnings may not be unrelated to an effort to shield tech giants such as Apple, Facebook and Amazon from Chinese competitors like Huawei, Alibaba and Tencent.

The fight for technological hegemony is therefore not just a question of industry and national security, but also about the power to influence minds and win hearts.

"We should increase China's soft power, give a good Chinese narrative, and better communicate China's message to the world," Xi Jinping, CPC's current general secretary, said during the party national congress in 2014.

However, the European commission is looking for a solution to ensure that the launching of 5G networks not will lead to the fragmentation of the European common market. 

Spring summit

The commission is expected to table its proposals for a tougher screening regime for foreign investments, mainly targeting China's big state-controlled companies, ahead of the next European summit (21-22 March).

"We have an open market. Everybody who complies with the rules can access it. We have EU procurement rules in place, and we have the investment screening proposal to protect European interests," a commission spokesperson told EUobserver, adding that "EU member states have the right to exclude companies from their markets for national security reasons, if they do not comply with the country's standards and legal framework".

At GSMA's trade fair in Barcelona, which closed on Thursday (28 February), and where Huawei had launched their newest luxury 5G phone, Gabriel sought to reassure the telecommunications industry that political issues raised by the US government would not put a brake to technological innovation.

"Nobody is helped by premature decisions based on partial analysis of the facts," the EU commissioner said.