David P. Goldman: U.S. Campaign Against China’s Huawei Has ‘Utterly and Completely Failed’

People walk by the Huawei stand at the Mobile World Congress (MWC), the world's biggest mobile fair, on February 26, 2018 in Barcelona. The Mobile World Congress is held in Barcelona from February 26 to March 1. / AFP PHOTO / Pau Barrena (Photo credit should read PAU BARRENA/AFP/Getty Images)
PAU BARRENA/AFP/Getty Images

China expert and Asia Times columnist David P. Goldman joined SiriusXM hosts Rebecca Mansour and Joel Pollak on Monday’s edition of Breitbart News Tonight to talk about the apparent victory of the protest movement in Hong Kong.

Goldman also discussed the economic, technological, and national security challenges posed by the dominant position of China’s Huawei telecom corporation.

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“The wicked Hong Kong government, Beijing’s stooge government, has been compelled by massive demonstrations to withdraw the proposed extradition law, which would effectively make it much easier for Beijing to intimidate any political opponents in Hong Kong by threatening to extradite them for trial in the mainland and subject them to the tender mercies of the inappropriately named ‘justice system’ in China,” Goldman said, summarizing the state of affairs in Hong Kong.

“That’s a victory for the people of Hong Kong. It’s a huge embarrassment for the government of Hong Kong, for Carrie Lam, who started out as a civil servant for the British and became a servant of the Chinese. And it’s something of an embarrassment for the regime in Beijing,” he said.

Goldman cautioned against supposing the political revolution in Hong Kong would spread to mainland China.

“Hong Kong is a British city where most people happen to be Chinese,” he explained. “Hong Kong protests have very rarely had any kind of reverberation on the mainland, which is a very different kind of place.”

Goldman said it was nevertheless a “wonderful thing that the people of Hong Kong forced Beijing to withdraw, badly stung.” It will probably seem less wonderful to Carrie Lam, who Goldman said has incurred Beijing’s severe displeasure for mishandling the extradition controversy.

“Beijing really wants Hong Kong and needs it for a very simple reason: the rule of law in China simply doesn’t exist. If you’re an international company trying to do business with a Chinese company, it’s much better to write all the contracts under Hong Kong law,” he said, noting that some Chinese companies have relocated their headquarters to Hong Kong so they can deal with foreign customers and investors in the more comforting legal environment.

Goldman pointed out that virtually the entire young adult population of Hong Kong participated in the protests, a level of resistance the Communist Party has not seen since crushing the Tiananmen Square demonstrations in 1989.

“I think it ends with the protesters having to declare victory and go home,” he said. “Basically, they’ve won. Beijing has been humiliated, they had to throw out the extradition law. It won’t come back again any time soon. At some point, the movement will dissipate because victory is victory.”

“In fact, most of what the students demonstrated for at Tiananmen were conceded by the Communist Party after that unspeakable massacre: the right to study abroad, freedom of movement, the right to choose careers, and so forth,” he observed. “The Communist Party did give ground after having first reacted brutally.”

Turning to the controversy over Chinese telecom giant Huawei, Goldman described the company as “the external side of the Chinese empire.”

“China is like a starfish that extrudes its stomach to consume its prey,” he said. “The expression of the empire externally is an entity like Huawei, which has 200,000 employees, a quarter of whom are foreigners. They’ve bankrupted most of their competitors around the world and hired their best engineers.” 

“They spend more on R&D than all their competitors in telecommunications combined, and they are the dominant force in what’s called fifth-generation broadband [5G] — that’s about a thousand times faster than what you currently have on your smartphone, and it makes possible all kinds of really cool stuff, like factory controls, like drone swarms and defense, the list is enormous,” he continued.

“What’s happening is that America’s campaign to persuade its allies not to allow Huawei to roll out fifth-generation broadband has utterly and completely failed,” he said. “Everyone, excluding Japan but starting with Russia and going all the way through to England — there is no resistance.”

“The British newspapers reported over the weekend that all five British mobile carriers are now building base stations with equipment from Huawei to use 5G. The Germans are completely on board. Their economics minister Peter Altmaier made a special trip to Shenzhen, to Huawei headquarters, to meet their founder Ren Zhengfei, in quite an abject act of homage,” he said. 

“The French are on board, the Italians, and of course the Russians. All of our admonitions to our allies have not persuaded them to wait until something else comes along. They’ve all signed up with Huawei. That’s, unfortunately, a defeat and something of a national embarrassment, because we put a great deal of our prestige on the line,” he said.

Goldman warned the failure to isolate Huawei is so complete that restricting the company’s access to updates for the Android smartphone operating system may have the unintended effect of displacing Android as the top operating system and replacing it with an alternative Huawei is designing, effectively recruiting European markets into a Chinese assault on the market position of Android’s owners at Google.

“The American tech industry is very upset about the prospective blowback,” he said. “Operating systems for handsets have been an American duopoly. You’ve got vanilla or chocolate — you’ve got Apple or Android. Now the Chinese may come in and become a major competitor in handset operating systems, and that has all kinds of security implications. It’s certainly not a good thing for the United States.”

“My view is that unless we can come up with a homegrown product that is better than the Chinese product, we’re not going to persuade the rest of the world not to work with the Chinese. It’s not like we’re taking a knife to a gunfight. We’re taking nothing to a gunfight because there is no American company that produces a product that competes with Huawei,” he said.

Goldman said that in addition to the often-discussed threat of China planting backdoors in its communications technology to eavesdrop on foreign communications and steal data, Chinese dominance of telecom systems might give it the ability to shut down American electronic intelligence gathering with unbreakable next-generation encryption systems.

“From China’s standpoint, the U.S. dominates signals intelligence,” he pointed out. “Let’s say the balance of power shifts to the defense and everyone is able to protect all of their signals. At that point, who’s the loser? The United States is the net loser. That’s one reason the United States intelligence community is so upset about Huawei. Unfortunately, they should have thought of this a few years ago.”

“I can tell you all this stuff was on Huawei’s website. It was being blared at public conferences. There was no secret about all of this stuff. Under the Obama administration, our brilliant intelligence community — the same intelligence community that has been trying to frame up the president — completely ignored the Chinese. Now they seem to have woken up, but it’s kind of late.”

On the other hand, Goldman said Silicon Valley is comfortable with the new status quo because “they’re making tons of money by programming the software and letting the Chinese and other agents build the silicon, build the actual physical product.”

“They don’t care about national security, as we’ve seen in any number of flagrant instances,” he charged. “They’re fine — as long as they’re making money — if China is becoming the dominant tech power in the world.”

Goldman recalled talking to a Chinese official who was baffled that America has not set up a national telecom project or corporate fusion to compete with Huawei.

“The answer is that Cisco’s stock price would go down if they bought Ericsson because Cisco’s margin of profit in software is much higher than the margin of profit on hardware,” he said, citing a potential corporate merger between Cisco and Ericsson that could swiftly become a serious competitor to the Chinese telecom giant.

“Perhaps we’d need a subsidy, perhaps we’d need some kind of combination of threat and incentive — I don’t know exactly what we need, except to say that we need the president to get these boys into the Oval Office and say, ‘What’s it going to take for us to set up a competitor that can beat Huawei and take the world back from them?’” he proposed.

“When we set our mind to it, we astonish the world,” Goldman said. “I was talking to some supercilious British interviewer on a different news program who said, ‘Well, isn’t it a little bit late for the United States to start getting into the business?’ I said, ‘You know, we’ve always started late, but we’ve always blown everybody’s minds with how good we are, once we really decide that we’re going to do something.’”

“I have boundless confidence in the ability of this country to astonish the world once again, but we have to set our mind to it,” he declared. 

“This really could be a turning point in our history, because the world’s talent is up for grabs,” Goldman proposed.

“Europe has a dismal economic position. They’ve had very little growth. They’re trying to figure out their place. If they get hardwired into Chinese technology and Chinese markets, Chinese commercialization, the gravitational pull of the Chinese economy is going to assemble around it a lot of smaller planets and a lot of the world’s talents. We could end up being relatively isolated,” he cautioned.

“I think the next couple of years may be critical for the position of the United States in the 21st Century. I think the president’s instincts are right. I support him. I think he’s looking to do the right thing. I just hope he gets the right kind of advice,” Goldman said.

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