What to Do About Huawei?

By Holman W. Jenkins Jr.

It will be a different kind of cold war, if a new cold war is in the offing with China.

The daughter of a top-ranking Chinese business leader has been sitting in a Canadian jail, subject to a U.S. extradition request. In arguing for bail in Canada, her lawyer cited facts that never would have been cited in the case of a Soviet official arrested while passing through Vancouver’s airport: She owns two homes in Vancouver. Three of her children and her husband were educated in the city. Her family members still summer there.

This will be our second column titled “What to Do About Huawei?” The company has only become a bigger and more important maker of telecom equipment in world markets in the past six years, including passing Apple to become the world’s No. 2 maker of smartphones.

It also has become even more distrusted by Western governments. The U.S., Australia and New Zealand-three of the “five eyes” that make up the world’s most exclusive intelligence club-have formally banned Huawei equipment from their forthcoming 5G wireless networks.

Of the other two, Canada is considering doing so, at the urging of former Prime Minister Stephen Harper and Canadian intelligence officials. Britain has straddled by creating a special lab to vet Huawei equipment, but now is rethinking. Even Japan is reported to be questioning its reliance on Huawei routers and switches.

Of special concern is Huawei’s conspicuous role in developing social control and monitoring technology for the Beijing government, currently being tried in western Xinjiang province, where detention camps have been set up. Huawei insists, as it always has, that it’s a private company, employee-owned, and not an arm of the Chinese government. These distinctions seem increasingly devoid of substance with Beijing declaring more forcefully than ever that all companies in China have an obligation to support its “maintain stability” agenda.

This new cold war, combining hostility with deep interdependence, is clearly a puzzling one for the U.S., and disturbing to our stock market. But Beijing does not seem to have found any better footing.

Though it openly and aggressively wishes to be independent from Western technology, China still had to throw itself on the mercy of Donald Trump when another company, ZTE, was found to have violated U.S. law and was about to be cut off from U.S. chip supplies. Huawei now discovers itself in a similar position. Its world-leading technology depends on access to world-leading chips that it buys in the U.S. to the tune of $10 billion a year.

Which brings us back to the case of Meng Wanzhou. One might wish that, if Huawei’s CFO and first daughter had to be arrested in Canada at U.S. behest, it would have been over the espionage or technology-stealing charges frequently levied by U.S. Congressmen, rather than over violations of U.S. sanctions on Iran.

Still, a shaft of light must be descending on Shenzhen, illuminating the folly of putting her in such a position in the first place. If U.S investigators are to be believed, she personally misled some of the world’s most important banks in 2013 about the nature of transactions they were financing.

In our column six years ago, we turned on its head the then-new fear that Huawei was a “Trojan horse.” That danger surely exists, but Huawei’s dependence on Western markets and suppliers also makes it something else-a multi-billion-dollar hostage to good relations. Whatever the doubts about its wisdom and timing, Ms. Meng’s arrest certainly underlines this important point for any new cold war developing between the U.S and China.

In the first Cold War, it would have been impossible to imagine a symbiosis like Apple’s and China’s, or that companies as important as Google, Microsoft and Facebook would employ hundreds of enemy nationals, or that thousands of enemy students would get high-tech training at U.S. universities.

A Boeing jetliner prepared as the personal plane for a Soviet leader-that would be hard enough to imagine. But both sides quietly agreeing not to make a fuss when it was discovered later to be riddled with bugs, as happened with a 767 for then-Chinese President Jiang Zemin?

The lesson of that episode, which occurred back in 2000, should stick with us. The intelligence gains that any government might expect to snatch from using its internationally successful companies as spying platforms are small potatoes next to the long-run benefits that accrue from having its companies competing and thriving and trusted in global markets.

Even the China of Xi Jinping must be able to figure this out. China is making a wrong turn toward totalitarianism under its new maximum leader, but the U.S. and the West should have confidence in freedom to prevail in the long run. In particular, we should have more confidence that China’s plans for homegrown, government-dictated tech dominance simply will not cut it against the freewheeling, open, global collaboration that made Silicon Valley the world’s high-tech hub.