Huawei, 5G and China-India Relations

President Trump’s coercive throttling of Chinese telecom giant Huawei has compelled Beijing to engage in technology diplomacy to keep markets open, particularly in South and Southeast Asia, for the embattled company as it looks to secure national 5G licenses. One key market for Huawei is India—a country on the cusp of finalizing vendors for 5G networks. But America’s sweeping effort to asphyxiate Huawei has placed New Delhi in a tough spot diplomatically and domestically—should India acquiesce and block Huawei from the Indian market, it would please Washington but incense Beijing that is actively pushing Delhi to let Huawei vie for 5G licenses. Geopolitics aside, an Indian Huawei ban would have domestic implications. In the last decade, Huawei has helped develop India’s 3G and 4G networks; Indian telecom operators have relied on Huawei equipment to contain costs and expand network coverage to areas, particularly rural, that have limited broadband range. Restricting Huawei could stymie India’s 5G introduction and expansion, while permitting it could bring potential security risks. Stakes are high. The Huawei case shows that technology is and could become a key aspect of China-India relations and how India balances relations between major powers like China and the United States.

Huawei’s troubles began this year. In May 2019, the US Department of Commerce blacklisted the company from purchasing American products without Washington’s approval. The injunction arrived at an inopportune time as Huawei was constructing advanced 5G networks that are widely expected to drive the next frontier in wireless communication. 5G networks will provide exponentially faster data speeds compared to existing mobile networks which, experts claim, will fuel innovations in areas like autonomous cars and artificial intelligence. 5G networks also stand to transform warfare; with better coverage, large volumes of data can be used and shared to inform the deployment and use of weapons. There is growing consensus that China is ahead of the United States and other countries in terms of 5G development. In 2019, Huawei’s share of the global telecom market was 28% ahead of US companies like Verizon, Sprint and AT&T. Globally, Huawei’s imprint is expansive having worked closely with developing countries, particularly in Southeast Asia, to build their 3G and 4G networks; Huawei is intent on leveraging this global base by working with individual countries to build their 5G networks, an objective stymied by Trump’s sanctions on the company and pressure on allies like Germany, Australia and the United Kingdom, and partners like India and Singapore to remove Huawei from their 5G plans. Some countries, like Australia, have agreed while others like India are assessing options.

Pressure from the United States to desist from using Huawei equipment comes at a pivotal time which makes India’s decision a difficult one. America’s qualms vis-à-vis Huawei stem from the company’s proximity to Beijing and fears that the Chinese government will have access to the information collected through the telco. The Trump administration has cited concerns that private communications gathered through various devices could flow through a ‘backdoor’ to Beijing. New Delhi has taken on board American misgivings given the economic and security implications. Bilaterally, India and the United States are in the midst of their own trade squabble that involves tariffs both countries have imposed on various goods, and the H1B Visa issue regarding the movement of Indian professionals to America. As Washington and New Delhi negotiate these issues, American demands vis-à-vis Huawei burdens the existing conversation. Both US and India also diverge sharply on India’s proposed e-commerce and data rules that favour local technology companies. A potential Indian decision to allow Huawei to bid for 5G spectrum could lead to the US hardening its position on tariffs and visas. A positive Huawei decision could also constrain intelligence sharing between American and Indian agencies given US anxieties about how Huawei technologies are being used.

India has to balance Chinese concerns with American demands. The Chinese government has been pushing New Delhi to permit Huawei; given the telco’s current predicament, the Indian market is one it cannot afford to lose. Beijing has warned India of retaliatory measures or ‘reverse sanctions’ against Indian companies operating in China should New Delhi ban Huawei. Potential market restrictions could deepen India’s burgeoning trade deficit with China ($53 billion) that India has been attempting to reduce by directly prodding the Chinese to expand market access for Indian firms in industries like pharmaceuticals and IT. The latter demand was a key part of India’s RCEP strategy shaped by the reality that Chinese imports would have flooded the Indian market had India entered the regional trade agreement without enough concessions. Beijing could have also stressed development constraints India confronts as it moves forward on the digital economy front without Huawei technologies. A ban on Huawei could delay India’s 5G roll-out given the dearth of existing market substitutes that can fulfill demands of the Indian market and the ambitions of the Modi government keen on expanding broadband access to power India’s growth. That said, potential security risks associated with Huawei’s involvement is not lost on New Delhi. Loss of communications and personal information to China is one reason why India is also keen on data localization or rules that retain personal data gathered within India.

India’s Huawei conundrum illustrates the growing relevance and importance of technology to international affairs and how rising powers like India manage major power tensions that occasionally affects bilateral relations. The growing technological divide between China and the United States is fundamentally an ideological one that boils down to whether technology is used for coercive purposes as a mode of control or as a tool to drive globalization and openness. Countries that side with either China or the United States could end up making choices that fundamentally shape how political and societal change occurs. India has a clear choice ahead that could define and perhaps alter its political future.

Initially published as a China-India brief from the Centre on Asia and Globalization, LKY School, National University of Singapore. 


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