Ex-CIA director: It’s a tech war, not a trade war

And, in 5G, the US is losing by a mile

The recent arrest of a top Huawei executive and an escalating US campaign to get allies to stop using equipment from the firm – which is the world’s largest telecoms gear maker – has made the global race for tech supremacy a daily front-page news item.

This last-ditch effort by the United States to maintain dominance – or even relevance – in high-tech fields, especially in the areas of telecommunications standards and semiconductors, is what really lies behind US-China tensions, not a trade imbalance.

That is what Michael Morell, twice acting director of the CIA, wrote in a recent editorial for the Washington Post.

“The United States is in an escalating technological cold war with China. It’s not centered on tariffs and trade, which President Trump often cites; instead, it involves both China’s use of technology to steal information and the theft of technology itself,” said Morell.

And Huawei, which is by all accounts ahead of the game in the all-important area of 5G, is at the center of this competition. Morell explains the stakes:

First… there will be more mobile data, flowing faster than ever before, across 5G networks. Those who control those networks… will control access to that data – and they would be able to steal massive amounts of information over very short amounts of time.

Second… 5G networks could, therefore, enable not just espionage but sabotage, as well. The head of Australia’s military cyberdefense agency recently noted that 5G significantly raises the risk that critical infrastructure could be brought down in a cyberattack.

Third, choices made among competing 5G standards will affect who has the best understanding of how the technology is implemented… whoever has the best understanding will have a significant head start economically, in cybersecurity and in signals intelligence — i.e., in promoting its economy, protecting its secrets and stealing those of its rivals.

With all this in mind, as a multitude of recent research and analysis shows, there is a reason for the US to be worried.

Huawei has a big head start in rolling out 5G networks. In addition, even if Washington is able to convince a handful of allies to ban the use of Huawei equipment, as it seems to be having success at doing, that will only be to the detriment of those involved in the boycott.

A recent report from Eurasia Group painted a bleak picture for the prospects of a “US/China-exclude” coalition.

From the analysis, published last month:

“The push for a China-free 5G alternative is likely to delay 5G deployment in some countries, as backup suppliers are forced to invest in new manufacturing capacity and human capital required to introduce next-generation networks cost-effectively and at scale, further cementing China’s first-mover advantage…

“In a bifurcated world, third countries wishing to gain access to this virtuous cycle will face difficult choices about whose 5G network technologies and related application ecosystems to adopt. Governments are likely to come under pressure from the US and allies to avoid dependence on China for 5G

“At the same time, developing countries that are more sensitive to cost will find Chinese technology and related enticements—for example, infrastructure and project financing available through the Belt and Road Initiative—hard to pass up, particularly if China gains an edge in related technology applications. The US/China-exclude camp has no comparable initiative to extend its technology influence globally.”

The tech war is well underway. China already will have a big head start in developing the technologies and applications that run on 5G, even if they are left out of the markets of some US allies. Meanwhile, this “China-exclude” group may just get left in the dust.

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