Chinese communications equipment company Huawei continues to secure contracts and grow rapidly in developing countries, according to an investigative report. Experts warn that Huawei’s cloud services collect critical and sensitive information in developing countries and that Beijing could gain “coercive leverage” through this “back door. Experts have called on the United States to use its cloud computing advantage to compete with China on cloud infrastructure and services in developing countries.
Huawei Bypasses 5G Blockade, Moves to Global “Cloud” Presence
The Center for Strategic and International Studies (CSIS), a U.S. think tank, released a report on April 17 that said Huawei had struck 70 cloud infrastructure and e-government deals with 41 governments or their state-owned enterprises between 2006 and April this year.
In such deals with developing countries, Huawei bundled cloud services with hard infrastructure, offering customers national fiber networks, wireless networks and a wide range of cloud infrastructure solutions, from “modular data centers as big as shipping boxes” to “multi-story dedicated buildings with servers. .”
Huawei’s rapid growth in orders comes at a time when the United States and other Western countries have repeatedly warned about Huawei’s potential espionage activities. The U.S. government has repeatedly warned about Huawei’s ties to the Chinese government, citing security concerns about the company’s 5G wireless equipment.
Former President Donald Trump in 2019 cut off access to Huawei to supply U.S. chips and other technology needed to make smartphones. Restrictions were tightened again last year, barring Huawei’s chip suppliers from using U.S. technology. The U.S. ban has nearly collapsed Huawei’s sales outside China for two years, according to an earlier report in The Washington Post.
Jason Li, a fellow at the Stimson Center, a Washington think tank (Photo courtesy: Jason Li)
Jason Li, a fellow at the Henry L. Stimson Center, a Washington think tank, sees Huawei’s cloud strategy as a new direction in the face of the heavy U.S. ban. “[Huawei] is looking for new markets to offer new products to stay afloat, which comes at a time when Huawei is reconsidering how it markets itself,” Li said.
And Huawei faces formidable competitors in the U.S. and within China: Amazon Web Services, Microsoft, Google, and Alibaba Group, which occupies the largest domestic cloud computing market share in China.
Richard Weitz, director of the Hudson Institute’s Center for Political and Military Analysis, believes Huawei is repositioning itself by being among rivals such as cloud services expanding into developing markets. Weitz said, “Because of security and other pitfalls, no one in the United States or Europe will buy Huawei’s cloud services. But there are untapped markets in Africa and Latin America, parts of Asia, and Huawei seems to be making inroads [in those regions].”
The CSIS report summarizes the characteristics of Huawei’s customer countries: most of these countries are classified by Freedom House as “not free (34 percent)” or “partly free” (43 percent), concentrated in sub-Saharan Africa (36 percent) or Asia (20 percent), and Most are low- and middle-income countries. The report notes that these developing countries have “strong demand, lower barriers to entry and less scrutiny than developed economies.”
Beijing’s strategic “leverage of coercion”
The CSIS report focuses on data privacy and security issues for Huawei’s cloud infrastructure and e-government services. The report notes that Huawei handles large amounts of sensitive data on citizens’ health, tax and legal records in contracted countries. Huawei cloud services also operate critical infrastructure, such as oil production and fuel distribution in Brazil, and power plant operations in Saudi Arabia.
Richard Weitz, director of the Center for Political and Military Analysis at the Hudson Institute (Photo courtesy: Weitz)
Enabling Chinese companies to collect, control and store data from other countries/regions and access it as needed is what the Chinese government wants,” Weitz told Voice of America. China is also interested in analyzing huge amounts of data and trying to use it for artificial intelligence to help them refine their computational and control models.”
Last July, Democrats on the U.S. Senate Foreign Affairs Committee reported that Beijing is using ever-changing technology to monitor networks and censor information, and that this government-created “digital authoritarianism” is being used not only within China This government-created “digital authoritarianism” is not only being used flexibly within China, but is also being actively exported overseas. The report also identifies Huawei as a key driver of Beijing’s strategy, warning that “if the U.S. allows it to grow, it will open the door to China’s digital authoritarian domination of the Internet and related technologies.”
The CSIS report argues that “as Huawei gains a foothold in the competition to provide services to governments and state-owned enterprises, its activities could provide intelligence and even ‘coercive leverage’ to the Chinese Communist authorities.”
In response to the report, Huawei issued a statement saying that “as a cloud infrastructure and service provider, our customers own and have full control over all customer data,” and that “network security and user privacy protection remain Huawei’s top priorities.”
A Voice of America reporter reached out to Huawei’s media department for further reaction, but did not receive a response from Huawei by press time.
Herbert Lin, senior fellow for cyber policy and security at the Hoover Institution (Photo courtesy: Herbert Lin)
Herbert Lin, a senior fellow for cyber policy and security at the Hoover Institution, explained to VOA how Huawei can play a key role in “coercive public diplomacy. If everyone and every industry in a country is using Huawei’s cloud infrastructure, he said, the Communist Party can force the country to adopt a foreign policy favorable to the Communist Party when it can influence Huawei to shut down its cloud services in the country, deny access or terminate future contracts.
According to Weitz, similar “coercive leverage” would include having “compromising information” that countries using Huawei’s services and their leaders do not want the public to know, thereby allowing Beijing to Beijing benefits.
U.S.-China “Cloud” Competition in Asia, Africa and Latin America?
Because of the strategic importance of cloud services, experts are calling on U.S. policymakers to make cloud infrastructure and services a strategic competitive priority, and the CSIS report argues that the United States should leverage its strengths in cloud computing to compete more effectively with the Chinese Communist Party in developing markets; the United States and its allies should pool resources to expand digital infrastructure and provide funding for technical assistance and training to developing countries to Remove foreign regulatory barriers that disadvantage U.S. cloud providers.
Herbert Lim said current U.S. policy is simply saying no to Huawei, ignoring the need for 5G infrastructure in those countries. “Just telling them to say no is not a strategy, and (Huawei) has to have a competitor.” That rival must be technically capable and willing to boldly market to other countries, and “if the U.S. is going to get on board, we have to have a policy in place to support our bid.”
Indeed, the U.S.-China competition for cloud services in developing countries is already underway. The U.S. International Development Finance Corporation, a financial institution of the U.S. federal government, released its 2020-2025 International Development Plan, which includes cloud computing as a key objective to enable open, interoperable, reliable and secure digital The U.S. International Development Finance Corporation (IDFC) released its 2020-2025 International Development Plan, which includes cloud computing as a key objective to achieve the goal of open, interoperable, reliable and secure digital infrastructure and Internet access for developing countries.
Lee told VOA that leveraging U.S. private capital through the International Development Finance Corporation would be a major way for the United States to compete with China on cloud infrastructure. He said, “The Biden administration should leverage the strong technology background and financial assets of U.S. companies to help improve transparency in recipient countries, including transparency in data, transparency in governance. . as well as improve the overall effective competitiveness of the United States.”
Weitz, however, is not optimistic about U.S.-China competition for cloud infrastructure in developing countries. He argues that “the U.S. could make it a higher priority, especially after the report points out these challenges, but it won’t be easy to displace the Chinese… because it will involve government interference in the private sector.”
Weitz noted that the Chinese Communist Party’s diplomatic service has been very active in urging some countries to accept Huawei as a service provider. As a sales tactic, the Communist authorities would make up the shortfall in those markets where Huawei suffers losses, allowing it to build market share and gain a monopoly. The Communist authorities could also help Huawei strike a package deal with Chinese banks and other service companies. This would make it difficult for the private market-driven U.S. to compete with it.
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