RELEASE: United States Can Address Huawei Challenge by Countering China’s Market-Distorting Industrial Policies, CAP Report Finds
Washington, D.C. — A new report from the Center for American Progress offers new ideas for how the United States can address growing market and national security challenges from Chinese technology giant Huawei and its role in building 5G wireless networks.
The report argues that so far, the United States has largely ignored the market-distorting industrial policies Beijing uses to make Huawei the global front-runner in supplying equipment for 5G networks. If the United States can counter those policies to make this market more competitive, that will make it easier to solve the security risks of running global networks on Huawei equipment. And it will help bring new competition to the mobile network equipment market—and new opportunities for U.S. firms.
“The United States cannot succeed in bringing new competition to this market—and new opportunities for U.S. firms—until it effectively counters Beijing’s market distortions,” said Melanie Hart, senior fellow and director of China Policy at CAP and co-author of the report.
To effectively counter these policies, support the shift toward a more diverse and interoperable wireless network ecosystem, and open the door to new U.S. market entrants, the report argues that the United States should:
- Form a coalition of nations to assess how Beijing’s direct and indirect subsidies harm the global market and devise appropriate trade remedies.
- Conduct a comprehensive review to assess how Beijing uses credit to advantage Chinese firms over their competitors and engage the Group of Seven (G7) industrialized democracies—Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States—to develop new rules limiting those actions.
- Form a coalition of export credit agencies to support vendors seeking to compete against Huawei and the loans Chinese state banks offer its customers.
- Engage the key 5G standardization partners—the European Union, Japan, India, and South Korea—to improve leadership transparency and diversity at the International Telecommunication Union (ITU).
- Provide targeted financial support to increase U.S. participation in ITU standardization forums.
- Push the 3rd Generation Partnership Project (3GPP) to adopt the O-RAN Alliance open fronthaul interface as a common global standard. A truly open interface is needed to give smaller vendors—including disruptive U.S. vendors—a foothold in the 5G ecosystem.
- Speed time-to-market for disruptive U.S. innovation and reduce global dependence on 5G radios and other network components that are primarily developed and manufactured in China. Targeted public investments are needed to help U.S. firms overcome the market barriers Beijing has created through decades of distortionary industrial policy in this sector.
Read the report: “There Is a Solution to the Huawei Challenge” by Melanie Hart and Jordan Link
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