Beyond Huawei: Europe’s adoption of PRC technology and its implications

Presentations by Didi Kirsten Tatlow, Paul Charon, Łukasz Sarek, Frank Jüris, Ondřej Klimeš and Filip Jirouš at a Sinopsis conference on PRC tech companies in Europe.

As Europe debates the implications of PRC involvement in 5G networks, the national cybersecurity agency’s warning against Huawei and ZTE, the Chinese party-state’s response and the influential proposals at the 32-country Prague Conference have put the Czech Republic at the centre of the discussion. While global researchers have led increased scrutiny of Huawei, research-driven, policy-relevant analysis of the broader significance of the European expansion of Chinese technology for relations with the PRC has been less often articulated.

On 27 November, a Sinopsis conference held at the Czech Academy of Sciences brought together specialists on the PRC’s economy, the political system under the CCP and their interactions with Europe in order to discuss the broader implications of the adoption of PRC technology in telecommunications and other infrastructure. The presentations discussed existing and new research on the activities of selected Chinese tech companies and their presence in Europe, as well as local attitudes and responses.

The conference was moderated by Kateřina Procházková of Sinopsis and broadcast online on the Youtube channel of the Czech Academy of Sciences (Akademie věd České republiky) and through the live-streaming service of the Czech News Agency (Česká tisková kancelář).

The conference and an ongoing series of articles intend to facilitate rigorous, research-based discussion in order to inform policy-making in the Czech Republic, its CEE neighbours and its European and other allies, as they debate how to respond to the expansion of PRC technology abroad, beyond Huawei and 5G networks.

Below we provide the abstracts of the presentations, together with links to video recordings and audio files for download.

Martin Hála, Sinopsis and Charles University: Opening remarks (video, audio (11:28)).

Filip Jirouš, Tech companies as a component of the CCP-led system: The case of Huawei (video, audio (16:12)).

The European presence of technology companies linked to China’s Leninist governance system has implications that go beyond technical considerations or vulnerabilities exploitable by intelligence agencies. An emerging consensus among decision-makers in European nations and their allies, expressed in the proposals at the 32-nation Prague 5G Security Conference last May, the Poland-US declaration in September and the October report on the EU coordinated risk assessment, sees an authoritarian state’s ability to influence its exporters of advanced technology as a potential risk for the security of infrastructure relying on such technology. While such concerns are naturally formulated in country-agnostic terms, their current trigger is Chinese technology; most urgently, Huawei’s possible participation in the development of 5G infrastructure.

The fair application of criteria set out in these general proposals and declarations poses challenges that result from the role of business in China’s unique political and economic system, which integrates private enterprise into Leninist governance. Major technology companies in today’s PRC are not centrally managed government units; should they therefore be treated as equivalent to private businesses from free-market economies? Is Chinese technology any more vulnerable to being exploited for intelligence purposes than that of Western competitors?

Approaches to China based on analogies with Western entities risk placing excessive emphasis on familiar categories of both legitimate and hostile activity, such as trade and espionage, that fail to account for key aspects of the party-led system’s interaction with foreign counterparts. Based on analysis by Sinopsis and other researchers, this presentation will use Huawei, and especially its recent activity in the Czech Republic, as a case study demonstrating that the company’s expansion shares methods and targets with the political influence machine of an authoritarian party-state. Under the system ruled by the Chinese Communist Party, corporate profit-making by state-owned companies and ‘national champions’ may overlap with domestic and foreign policy goals. Huawei’s expansion in Europe should therefore be analysed in conjunction with the CCP’s efforts to influence European politics deploying modern versions of Leninist propaganda and united front tactics that aim to turn foreign élites into instruments of its global power projection. While the CCP’s global influence operations overlap with civilian and military intelligence work, their extent is broader and heavily relies on legal, overt activity. Technical considerations aside, we conclude, the adoption of technology by such companies as Huawei carries potential risks of reinforcing the political influence of an authoritarian state.

Policy responses to these risks must crytallise existing and new research on corporate links to authoritarian influence into binding criteria for the participation of non-EU companies in government procurement and tenders involving critical or other sensitive infrastructure, considering, in addition to a company’s shareholding, non-ownership links to authoritarian governance structures. Government organs in EU member states should compile lists of companies with such demonstrable links, relying on assessments emanating from rigorous research and resting on an understanding of authoritarian influence. The media, research institutions, think tanks and civil-society organisations should investigate and expose authoritarian lobbying at the EU, in Member States, and at the subnational level, in particular its corporate component.

Filip Jirouš is an analyst at Sinopsis, a project implemented by the non-profit association AcaMedia in scholarly collaboration with the Department of Sinology at Charles University in Prague.

Ondřej Klimeš, The Xinjiangisation of the whole country: Technological authoritarianism in China and abroad (video, audio: presentation (24:43), questions and answers (14:53)).

The CCP has long viewed ethnic, linguistic, cultural and religious diversity with suspicion, recurrently portraying expressions of non-Han identity as signs of backwardness, and responding with violent repression whenever it felt that they might threaten its monopoly on power. Under Xi Jinping’s administration, the Xinjiang Uyghur Autonomous Region, also known as East Turkestan, has become a laboratory for the application of advanced surveillance and other technology to the problem of controlling non-compliant (in this case, Uyghur) minds. A growing body of evidence indicates the CCP’s securitisation and use of modern technology is turning Xinjiang into an unprecedented AI-driven police state. In such circumstances, Chinese and foreign technology companies that actively cooperate with repression in Xinjiang are in fact participants in systematic genocidal practices and human-rights abuses.

Ignoring such cooperation can have serious medium and long-term consequences for democratic states whose values rest on the defence of human rights. Doing so violates Western nations’ commitments to the advancement of human rights worldwide. It rewards the behavior of businesses willing to collaborate with human rights abuses. Perhaps less evidently, it implicitly condones the proliferation of technological authoritarianism now deployed against Xinjiang’s Uyghurs, and already trialled elsewhere, from Central Asia to South America. Cooperation between authoritarianism and technologies of as yet unpredictable power poses risks to the long-term survival of democracies everywhere. The CCP’s increasingly totalitarian rule under Xi Jinping is not only using extending aspects of the Xinjiang police state to the whole country, but also incentivising the export of technologies of repression.

This presentation will summarise evidence of the cooperation between selected Chinese technology companies and the party-state on the securitisation of Xinjiang, and suggest policy steps European and other decision-makers can take in order to prevent the Xinjiangisation of democratic societies.

Dr Ondřej Klimeš is a researcher in modern China and Xinjiang politics at the Oriental Institute of the Czech Academy of Sciences.

Didi Kirsten Tatlow, China Technology in Germany (video, audio (21:48)).

Many people in Europe don’t realise that China needs Europe more than Europe needs China.

Why? The European Union is China’s biggest trading partner. But the United States, not China, is the EU’s biggest trading partner.

We have been conditioned by a large, steady stream of messaging by our own business and political class and by the Chinese government that the reality is somehow the other way round: that Europe needs China. China is of course important to Europe, yet it is only the EU’s second-biggest trading partner.

This tells us something important when it comes to technology. Despite the excitement surrounding China’s new technological capabilities, which developed out of an intricate, decades-old system of technology transfer from developed nations of the “west” (including Japan and South Korea), using methods legal, “gray zone” and outright illegal, there is nothing inevitable about China supplying, even taking over, European technological systems, such as 5G — except if we let it happen. Germany, a technologically advanced nation in the heart of Europe that has cooperated abundantly with China since 1978 on science and technology, has significantly deepened cooperation in recent years despite, today, knowing that China is an economic competitor and “systemic rival”. It has long been weak on scrutinising Chinese technological activity in Europe and making sure it is to Europe’s benefit. Its approach has been both “narrow and shallow”. This presentation will show some key areas where this is the case, why it is the case, and what the consequences are.

Didi Kirsten Tatlow is Senior Fellow at the Deutsche Gesellschaft für Auswärtige Politik.

Questions and answers, discussion: Data collection targeting Uyghur activists in Europe and abroad; Huawei contracts in the Czech Republic since the cybersecurity agency warning; Huawei in Duisburg; police violence in Hong Kong; export of technology targeting Uyghurs in the Arab world; PRC technology in the Prague metro; Huawei in Taiwan; 5G debate in Germany; investment screening mechanisms (video, audio (22:31)).

Paul Charon, France and the ‘Huawei law’ (video, audio (15:02)).

Like other European nations, France was caught up in the debate on Huawei following the turmoil created by the arrest of Meng Wanzhou. Stuck between the demands of respect for economic freedoms, the refusal of the sector’s operators to accept binding legislation, and declarations of good intentions from China on the one hand, and Washington’s expectations that Huawei would be banned from European markets on the other, Paris found it a little difficult to shape its position. The result is a law passed in August 2019 and “aimed at protecting France’s defence and national security interests in the operation of mobile radio networks”. Quickly renamed “Huawei law” by the media, this text aims to propose a legal framework for the security of 5G networks.

Dr Paul Charon is Deputy Director of the Strategic Thinking research area at the Institut de recherche stratégique de l’École militaire (IRSEM) and responsible for the Analysis and Strategic Foresight programme.

Łukasz Sarek, 5G and the Internet of Things: Chinese companies’ inroads into ‘digital Poland’ (video, audio (23:11)).

ZTE and Huawei have been present in Poland for years, providing telecommunications equipment and solutions to Polish mobile operators, public administration, banks, hospitals and other public institutions. While ZTE’s operations have remained relatively small-scale and obscure, Huawei’s presence and activities have become prominent. It became the key supplier of the rapidly growing new mobile operator, Play. Other operators followed suit, allowing Huawei to become the leader in the market and pushing out Nokia and Ericsson. In recent years, it has also taken the lead in the development of 5G technology in Poland. However, growing awareness among Polish experts and decision-makers of Huawei’s roots and China’s changing policy objectives, amplified by the US-China trade conflicts and Poland’s government decision to align itself with Washington, have resulted in a much more cautious approach to Chinese suppliers.

The Polish government’s position on the participation of Chinese companies in 5G infrastructure development has not been unified. Different views were expressed even after the joint US-Poland declaration on 5G had been signed. Polish administration is under pressure from the operators, who want to build and operate the 5G infrastructure at the lowest possible cost, as well as from Beijing and domestic pro-China lobbyists. However, the security risks and US demands also weigh heavily on Warsaw’s position. After the recent elections, the situation still awaits clarification, as new officials are being appointed and policies might be redefined. While the Huawei-ZTE conundrum has been widely dissected in the public discourse, much less highlighted has been the role and risks connected to the Chinese engagement in smart-city projects and Internet of Things. A successful 5G implementation will enable huge flows of data and reshape telecommunications, enabling massive and hard to control machine-to-machine communication and unchecked transmission of data. Huawei and other Chinese companies are interested in participating in smart-city projects in Poland and offer a wide variety and rapidly increasing number of devices in the Polish market that collect and transmit data, from security equipment to home appliances. IoT is known for its security vulnerabilities and there have already been examples of Chinese equipment sending data back to servers in China. Intelligent cities with vital processes controlled and managed trough internet communication will be exposed to disruptions with equipment and solutions providers equipped with more opportunities and facilitated access to data and processes.

Łukasz Sarek is a researcher and China market analyst. He writes about China-Europe economic relations with focus on Poland and CEE.

Frank Jüris, The Digital Silk Road in the Arctic (video, audio (24:20)).

The paper discussed in this presentation aims to research one aspect of the Belt and Road Initiative, namely the Digital Silk Road (DSR) that was first introduced as “Smart Silk Road” in 2015. Today, DSR can be divided into four subsections: digital infrastructure; next-generation technologies; e-commerce and digital free-trade zones; digital diplomacy and internet governance. The paper deals with the Finnish project by the name Arctic Connect, that is planned to connect Europe with Asia by building a submarine communication cable in the Northern Sea Route (NSR) seabed. The end point of this critical infrastructure is China, which is also the obvious benefactor of this project, because Artic Connect will enable it to diversify its internet connections with the outside world. The building contractor is the Finnish company Cinia OY, whose majority stakeholder is the Finnish Ministry of Transport and Communication (MTC). Cinia has already built the C-Lion1 submarine cable, which connects Helsinki and Rostock. By adding the submarine communication cable in the Arctic seabed, Cinia OY will be able to connect Europe with Russia and Asia, and provide better internet connection with lower latency and less disruptions due to the less intense traffic along the NSR.

The implementation of the Artic Connect project started in 2016, when the first political feasibility study was conducted. Currently the project is in the development phase and the implementation phase is supposed to start this or the coming year. In June, one of the biggest obstacles, that of finding a Russian partner, was overcome, and an MoU was signed between Cinia OY and the Russian company MegaFon. The participating countries in the Arctic Connect project are Finland, Norway, Russia, Japan and China. Currently there are no other MoUs signed, but China Telecom has shown interest in the project. This paper will analyse how Arctic Connect fits into the Digital Silk Road initiative, how it resonates with China’s white papers on the Arctic and the China International Optical Cable Interconnection.

The second half of the paper analyses the security threats involved. Although the source of the investment has not yet been announced, there have been talks of including private investors, which poses ownership-related risks. Security-related risks also involve the possibility of increased competition in the Arctic between countries capable of tapping the wires. Ownership-related issues might also cause the participating countries to express the need to protect their infrastructure, which might lead to the militarisation of the region and significantly raise the risk of conflict.

Frank Jüris is an analyst at the Estonian Foreign Policy Institute.

Questions and answers, discussion: China and Russia in the Arctic; smart cities in Poland; Nuctech (同方威视) in Poland; acquisition of Huawei Marine (华为海洋) by Hengtong Optic-Electric (亨通光电); interactions between European police and PRC entities; BGI Genomics in Poland and the US, notably DNA collection; perceptions of the PRC among decision-makers, influencers and the general public in Estonia, Poland and France; French FONOPs in the South China Sea; IP theft by PRC actors and related risks (video, audio (33:37)).