Commentary on Political Economy

Tuesday, 14 July 2020

UK orders ban of new Huawei equipment from end of year

UK intelligence chiefs had warned Boris Johnson that they could no longer be confident that new kit used by Huawei was secure © Zuma Press/Alamy
Huawei, the Chinese telecoms company, is to be banned from supplying new equipment to the UK’s 5G networks from December 31, in a major U-turn by Boris Johnson’s government.
Mr Johnson’s National Security Council agreed on Tuesday that existing Huawei equipment must also be stripped from 5G networks by 2027 — a slower timetable than that demanded by some Tory MPs.
Just hours before the decision was announced, John Browne said he would step down as chairman of Huawei’s UK board in September. Lord Browne, who ran BP between 1995 and 2007, spent five years as Huawei’s first independent chairman.
The NSC, attended by senior ministers and security chiefs, concluded that further US sanctions on Huawei, introduced in May, meant that the Chinese company’s equipment could no longer be fully trusted for use in Britain’s new telecoms infrastructure.
Culture secretary Oliver Dowden admitted the ban on Huawei could delay the full rollout of 5G networks in Britain by two years and add hundreds of millions of pounds to its costs.
The UK’s full-fibre broadband operators will also be given two years to “transition” away from the purchase of Huawei equipment. However, the Chinese company’s existing kit used for 2G, 3G and 4G networks is deemed secure and will not have to be removed.
The 5G decision represents a significant strategic victory for US president Donald Trump, whose administration has been urging Mr Johnson to kick Huawei out of Britain on security grounds for months.
Mr Trump’s latest sanctions would stop Huawei using US-made chips in its equipment, raising the prospect that the company would have to rely on China-made alternatives.
Having previously advised ministers that the risk from Huawei could be mitigated, UK intelligence chiefs warned Mr Johnson that they could no longer be confident that new kit used by the Chinese company was secure.
The decision to ban the use of new Huawei equipment came six months after Mr Johnson infuriated Washington by agreeing that the company could take up to a 35 per cent share of the 5G market.
Officials insisted the decision was taken on “purely technical” grounds and was not the result of pressure from the White House. One official said the US sanctions on Huawei had been a “game-changer” for security reasons.
The Tory China Research Group, including former party leader Iain Duncan Smith, had urged Mr Johnson to remove Huawei from the 5G network by 2023, a timetable deemed unrealistic in the telecoms industry.
A slower stripping out of Huawei will be less disruptive, but the change of tack by Mr Johnson will nevertheless cause a further deterioration in strained relations between London and Beijing.
Mr Johnson angered Beijing this month by confirming the offer of citizenship to up to 3m Hong Kong citizens with British overseas passports; the Foreign Office estimates up to 200,000 could come.
Chinese investment is also widespread in the UK economy, from train companies to the nuclear power sector. Mr Johnson will now wait to see what kind of retaliatory measures Beijing might take.
China’s ambassador to the UK said this month that Britain’s actions were being scrutinised for signs it could not run its foreign policy independently of the US.
“The China business community are all watching how you handle Huawei. If you get rid of Huawei it sends out a very bad message to other Chinese businesses,” Liu Xiaoming said. “We want to be your friend. We want to be your partner. But if you want to make China a hostile country, you will have to bear the consequences.”

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