China and 5G: the future of technolog

Mar 04, 2019

China and 5G: the future of technology

The race for 5G presents a new theatre for geopolitical competition, with China raising the stakes for rapid deployment of its 5G network and the US pushing back to maintain the control over its network and applications. China has situated 5G as a priority, describing it as a “key technology” under its 13th Five-Year Plan.

Why is 5G important?
To understand China’s investment in this field, the importance of 5G should be considered. It will bring several new features, unlike previous generations of mobile technology that incorporated one main evolution alone. This would bring an increase in speed and broadband of wireless networks up to 100 times faster than 4G. Additionally, it will also allow massive device connectivity, providing immediate and uninterrupted ultra-low latency communication. 5G is about both enhanced capacity and its revolutionary applications in the short and medium term. It will grease the wheels of many Fourth Industrial Revolution key technologies such as the Internet of Things (IoT), smart cities and smart farming, telesurgery, and virtual reality. Therefore, it will have implications far beyond the technological dimension.

On the economic front, for instance, 5G could trigger significant competitive advantages in the short and medium term. Globally, it will generate $12.3 trillion in economic outputs and support 22 million jobs by 2035.

However, 5G will also lead to security and privacy concerns. As sensitive industries such as autonomous vehicles, health or industrial processes become more reliant on wireless connectivity, they will also become more exposed to cyber-threats. Risks such as remote sabotage of medical devices or automotive cyber-attacks could turn into a reality. This creates a higher than ever need for strong security measures. Additionally, researchers found that 5G protocol known as Authentication and Key Agreement (AKA) still presents security insufficiencies. This can translate into challenges for national security in the form of more sensitive data theft or sabotage.

China and 5G
China has been trying to get ahead in its quest for 5G dominion, aiming for its commercial launch in 2020. In 2018, it built a trial network of 350,000 cell sites, which will continue expanding in 2019. By 2025, after an investment of $400 billion, the country will be the largest 5G market with 430 million users.

The Chinese firm Huawei has been Beijing´s spearhead on this matter. The company is already a leader and a symbol of the Chinese advancements in innovation and ICT. In 2018, it surpassed Apple as the second largest seller of smartphones, and it’s set to overtake Samsung´s market share by 2020.

Huawei seems to have a central role in China’s bid to outline the future of 5G. The company already provides technology for the 5G wireless infrastructure across the world. Huawei is not state-driven. However, like any other Chinese company, it is expected to cooperate with the state intelligence work in accordance with Article 7 of the National Intelligence Law. In recent years, Huawei has heavily invested in 5G, patented technologies, hired international experts, and lobbied in the industry groups for the definition of new standards for performance and interoperability. These standards will delineate the money flow coming from royalty payments.

Concerns over technology
5G and China’s dominance in the field has raised the concerns of Western counterparts. They have brought this issue to the political and judicial arena under fears of intellectual and technology transfers, and loss of influence over the definition of standards. Last January, the US disclosed two indictments that placed 23 criminal charges for conspiracy against Huawei and its CFO Meng Wanzhou, who was arrested in Canada in December. The indictments claimed that Huawei violated sanctions and stole intellectual property.

In August, Australia banned Huawei and ZTE from providing 5G technology, citing security concerns. New Zealand followed suit last November. In Europe, the UK, France, Germany, Poland, and the Czech Republic have also voiced their concerns and said that they are considering banning Huawei.  They all quoted the risk of extrajudicial state interventions. However, Huawei insists the Chinese Government or intelligence officials never gave instructions or data requests.

Troubles ahead of a new digital era
China perceives these bans as an attack on its national strategic interest, as the exclusion of Chinese network suppliers from key advance markets will affect its commercial interest. In a context of US-China trade dispute, this is likely to result in retaliatory measures from China against countries that ban its technology in the short and medium term, as expressed by China’s ambassador to Canada, Lu Shaye.

For example, China could cancel current EU-China scientific cooperation or stop future initiatives in this area. It could also establish new trade barriers, like the recent restrictions on Australian Coal. It is also likely that Beijing slows down its current introduction of measures to facilitate foreign investment, or places new obstacles for foreign tech companies operating in China, as it did with the ban on older iPhone models as part of a patent lawsuit between Apple and Qualcomm.

The ban on Chinese technology could also lead to higher costs from alternative vendors or lower performance of networks. Moreover, if political competition results in a divided 5G infrastructure system, users and operators could face problems of interoperability and higher costs derived from transactions and lack of economies of scale.


In conclusion, while Huawei has achieved significant advancements in 5G tech, it is not a monopolist. The company still competes with international companies such as Intel, Nokia, Eriksson, and SK Telecom. They are also contributing to defining the current ICT landscape. Besides, Western governments will take further steps to avoid information breaches. On the other hand, China will surely seek more influence in this arena. However, due to the highly competitive scenario and obstacles to Chinese technology, it is unlikely to view China transformed into a technological hegemon empowered by 5G.

 

Source: Global Risk Insights


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