China working on system to protect its technology, says daily

Updated June 10, 2019

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China is creating a system to protect its technology, according to state media, as the US restricts the access of Chinese companies to American technology in a spiralling trade dispute. — Reuters/File
China is creating a system to protect its technology, according to state media, as the US restricts the access of Chinese companies to American technology in a spiralling trade dispute. — Reuters/File

BEIJING: China is creating a system to protect its technology, according to state media, as the US restricts the access of Chinese companies to American technology in a spiralling trade dispute.

The People’s Daily newspaper said on Sunday that the system would build a strong firewall to strengthen the nation’s ability to innovate and to accelerate the development of key technologies.

“China ... will never allow certain countries to use China’s technology to contain China’s development and suppress Chinese enterprises,” the main paper of the ruling Communist Party said, without directly referring to the United States.

No details have been released about what China is calling a national technological security management list. The plan was announced on Saturday evening in a brief three-paragraph dispatch by the official Xinhua news agency.

The aim is to forestall and defuse national security risks more effectively, Xinhua said, adding that detailed measures would be unveiled in the near future.

The initiative follows US moves to restrict sales to Huawei Technologies and other Chinese tech firms on national security grounds.

The US commerce department last month added Huawei to its list of entities that are engaged in activities contrary to US security or foreign policy interests.

As such, any sale of US technology to Huawei will require the department’s approval.

China responded by saying its commerce ministry would develop its own list of foreign entities that it regards as “unreliable”. This weekend’s announcement of plans for a technological security management list is clearly related to the unreliable entities list, the state-owned Global Times newspaper said in an editorial posted online.

It said the act would provide a legal basis to manage technology exports and counter American supply cutoffs to some Chinese companies.

“Since 2018, the US has repeatedly drawn on its domestic law to exert pressure on Chinese high-tech enterprises,” the English-language editorial read in part. “China’s countermeasures against the US require more legal weapons.”

The two largest economies appear as far apart as ever in their dispute, though US Treasury Secretary Steven Mnuchin said he held a constructive meeting on Sunday with the head of China’s central bank.

In a Twitter post, Mnuchin said he and Yi Gang, governor of the People’s Bank of China, had a “candid” discussion about trade issues. The post showed the two shaking hands and smiling.

They met on the sidelines of the G-20 finance meeting in Fukuoka, Japan.

Mnuchin earlier urged China to rejoin talks on the dispute that have stalled after 11 rounds of negotiations. He said no talks were scheduled, however, and that major progress on the stalemate would likely have to wait for a meeting of Presidents Donald Trump and Xi Jinping later this month.

Huawei turns to Africa

As the US leads a drive for the West to shun Huawei over security fears, the Chinese tech giant has sought to strengthen its position in Africa, where it is already well-established.

Huawei has taken a leading role in developing next-generation 5G mobile phone networks around the world.

But it has been in turmoil since Washington charged its equipment could serve as a Trojan horse for Chinese intelligence services.

The world’s second smartphone marker fiercely denies the allegations, but the US has urged countries to avoid it and several companies have distanced themselves.

They include Google, whose Android operating system runs most smartphones.

And as Washington and Beijing duke it out in an escalating trade war, nations around the world are faced with the dilemma of having to choose a side between the world’s two top economies.

Russian President Vladimir Putin weighed in on Friday, slamming Washington’s attempt to “unceremoniously push” Huawei out of the global market.

Earlier in the week, Russia’s MTS telecoms giant signed a deal with Huawei to develop a 5G network in the country.

Chinese President Xi Jinping, a guest of Putin at an economic forum in Saint Petersburg, said China was “ready to share technological inventions with all partners, in particular 5G technology”.

But will the escalating fight lead to African nations having to choose between China — the continent’s top trade partner — and the US? “For African countries this trade war may end up a binary choice. It will be very difficult for Africa to just ignore” it, said Aly-Khan Satchu, an independent economic analyst based in Nairobi.

Huawei, now a major factor in US-Chinese tensions, has looked to strengthen its ties in Africa, last week signing an agreement to reinforce its cooperation with the African Union.

“This was a way to show that Huawei is still present in Africa and that they want to remain a major player by positioning themselves in this very important growth sector,” said Ruben Nizard, an economist and Sub-Saharan Africa specialist at the French financial services firm Coface.

The deal comes after the French newspaper Le Monde reported in 2018 that China had spied on the AU’s headquarters in Ethiopian capital Addis Ababa, citing sources inside the organisation.

The report said the spying began in 2012 after the completion of the AU’s new headquarters that was financed by China, and was only noticed when technicians discovered data on the building’s servers was being sent to Shanghai.

Both China and the AU reject the allegations.

Huawei has established itself across Africa since launching in Kenya in 1998, and now operates in 40 countries, providing 4G networks to more than half of the continent.

It will also showcase 5G — the next-generation mobile phone network that will transmit data at far greater speeds —in Egypt for the Africa Cup of Nations, which will be held from June 21 to July 19.

“Africa is a market Huawei had identified and which they conquered thanks to a very aggressive strategy based on cheap financing and speed of execution,” Satchu said.

“The fact that Huawei has equipped the AU says it all,” he added.

Huawei’s presence in Africa goes far beyond selling smartphones and building mobile networks.

In South Africa, it provides training at the country’s top universities, this year launching a specialised course on 5G.

Published in Dawn, June 10th, 2019