China’s Huawei Technologies, founded in 1987, was built on stolen Cisco Systems technology, and from all indications Huawei has never stopped stealing. Why should we pay China for technology it criminally took — and is still taking — from us? Pictured: Huawei’s Bantian campus in Shenzhen, China. (Photo by Kevin Frayer/Getty Images)
Rob Strayer, the Deputy Assistant Secretary of State for Cyber and International Communications Policy, told reporters in Brussels on September 26 that the Trump administration is unlikely to grant another 90-day blanket waiver for transactions with China’s Huawei Technologies.
A 90-day waiver from Commerce Department prohibitions, the second granted, will expire November 19.
A refusal to grant a third waiver to the Chinese company, the world’s largest telecom networking equipment manufacturer and second-largest smartphone maker, would be the right move for the United States. After all, why should President Trump allow our companies to help Beijing steal the world’s data and remotely control devices connected to the internet?
In May, the Commerce Department, effective the 16th of that month, added Huawei to its “Entity List.” The designation meant no American company, without prior approval from Commerce’s Bureau of Industry and Security, could sell or license to Huawei products and technology covered by the U.S. Export Administration Regulations.
Beijing has continually demanded the withdrawal of the designation and has made such a climbdown one of its preconditions to a comprehensive trade deal with the U.S.
Since then, the Chinese have, in addition to threats, also tried to get off the Entity List with sugar. This month, in a conversation with Thomas Friedman of the New York Times, Huawei founder Ren Zhengfei said he was “open to sharing our 5G technologies and techniques with U.S. companies, so that they can build up their own 5G industry.”
Thursday, the 74-year-old repeated the proposal during a live-streamed conversation with Stanford University academics Jerry Kaplan and Peter Cochrane. “We would like to offer an exclusive license to one company from the West so that it’s able to achieve economies of scale to support a business,” Ren said. “With this one company, I think it should be a U.S. company.” Bloomberg reported the license would cover chip designs, hardware, and source code.
The catch? As Ren told Friedman, “the U.S. side has to accept us at some level for that to happen.”
Acceptance certainly means the dropping of Huawei from the Entity List and, in all probability, the repeal of prohibitions on the installment of Huawei equipment in U.S. networks.
Ren’s generous-sounding offer should, of course, be rejected out of hand. There are many reasons why we should not import a Trojan Horse made in China. Moreover, America has no interest in helping Huawei become the global standard for equipment.
In addition, the thought of licensing tech from Huawei is nothing short of hideous. The Chinese company, founded in 1987, was built on stolen Cisco Systems technology, and from all indications has never stopped stealing. Why should we pay China for technology it criminally took — and is still taking — from us?
More fundamentally, why should we have any contact with Huawei? Trump’s instincts are to cut off all dealings. “We are not going to do business with Huawei,” the president said on August 9, “It’s much simpler not doing any business with Huawei.”
So let’s not do business with Huawei.
Despite the comments from Strayer on Thursday, there is concern the Trump administration is merely engaging in tough talk to get a better trade deal with Beijing. Chinese negotiators are scheduled to arrive in Washington, D.C. next month for the 13th round of discussions. Their goal, in addition to the removal of Trump’s tariffs, imposed to stop intellectual property theft, is to rescue Huawei.
In the run-up to the discussions, the Chinese are buying boatloads of soybeans — ten boatloads to be exact — as a means of creating a favorable atmosphere. So, could there be a bargain in the offing?
Many think so. “For the president, the tariffs and tough talk are part of a maximum pressure campaign on China to force Beijing into trading fairly with the United States,” said tech expert Brandon Weichert to Gatestone.
“For China, trade with the United States is viewed as a bonanza to acquire — steal — American technology and bilk our people out of hundreds of billions of dollars and thousands of jobs. Any compromise with Beijing would, in the long-run, be to America’s disadvantage.”
It is hard to know what is on the president’s mind, but Weichert, the publisher of The Weichert Report, is certainly correct when he suggests America should not sign a deal with China, especially now.
On Tuesday, China’s Communist Party will celebrate the 70th anniversary of its coming to power. This is not a happy time for the communists, however, as their economy, the primary basis of their legitimacy, is crumbling.
China, in a sense, did not have an “economic miracle.” It achieved growth by maintenance of a predatory business model. That model, as Trump said during his U.N. General Assembly speech on Tuesday, has been based on, among other things, the taking of intellectual property. Huawei is proof that crime does in fact pay.
Unfortunately, a China ruled by communists will not relent on theft and related criminal behavior. Trump tried to create good will by, among other things, granting exemptions from U.S. tech-transfer prohibitions to Huawei this year and to ZTE Corp., the other large Chinese telecom-equipment maker, a year ago.
Unfortunately, these two companies, despite Trump’s reprieves, have continued to engage in unacceptable behavior. ZTE has almost certainly violated its settlement agreement with the U.S, by installing Dell equipment in Venezuela, and Huawei is currently under investigation for additional instances of intellectual property theft. It is, therefore, time to impose “death sentences” on the pair of Chinese giants, in other words, cut both of them off from U.S. technology.
Friedman, in relaying Ren’s offer to grant a license to a U.S. company, wrote “we’re heading for a two-technology world, with a Chinese zone and an American zone, and a digital Berlin Wall running right down the middle.”
The New York Times columnist is right about what could happen, but such a divide would be a good thing. We did not win the Cold War by enriching the Soviet Union. We should not try to enrich China now.
Gordon G. Chang is the author of The Coming Collapse of China and a Gatestone Institute Distinguished Senior Fellow.