Author: Irina KHALTURINA
In early January, the US and China held another round of talks trying to end the trade war ongoing since the last year. In early December 2018, on the sidelines of the G20 summit in Argentina, presidents Xi Jinping and Donald Trump agreed to hold a dialogue. The main incentive for both parties is that the trade and economic conflict is not beneficial to Beijing, nor to Washington, or in general to the entire world economy. However, the main problem in relations between the two countries is not only the existing situation regarding trade duties and trade balance violations. These mutual claims can be resolved relatively quickly. It is completely unknown how China and the US are going to settle the situation in the telecommunications sector. In the very near future, leadership in this sector can become a determinant factor in the struggle for economic and political global domination. On the other hand, it can be assumed that there is no rivalry among the owners of large corporations, because profit blurs both national borders and interests.
“...Beijing is using political, economic, military and propaganda tools in more proactive ways than ever before to exert influence and interfere in the domestic policy and politics of our country,” the US Vice President Michael Pence said speaking on October 4, 2018 at the Hudson Institute. Apparently, these words imply more serious discontent than the well-known reasons for a trade war. Most likely, Washington is primarily concerned about the progress of China in the development of high-tech industries, where Chinese companies are increasingly competing with American ones. In this scenario, protective duties are no longer the reason, but simply a tool for the struggle. The main thing is completely different.
Recently, China has confidently set a course to stop being a factory of low quality and inexpensive goods. State strategy Made in China-2025 has set a goal to achieve the technological leadership including in high-tech areas. Chinese companies such as Tencent, DJI, Baidu, Alibaba Group, Xiaomi have gained international recognition and consumer confidence for years. But China is particularly proud of its telecommunications giants Huawei and ZTE. The former is the world's largest manufacturer of equipment for mobile communications and the world's second brand on the smartphones market. The West explains such a tremendous success of China with government injections, discrimination against foreign companies, violent technology transfer, which is a condition for access to the Chinese market for Western companies, as well as a large-scale program of industrial cyber espionage. Chinese companies deny these accusations.
Interestingly, China’s technological advancement is taking place at the threshold of what the scientists call the fourth industrial revolution (Industry 4.0). In general, Industry 4.0 will mean a transition to a digital economy including digital technologies, artificial intelligence (AI) based on cloud technologies, 3D printing, big data, Internet of Things (IoT), virtual and augmented reality, and inevitably new management models in various fields. These changes cannot be stopped, and very soon, unless some kind of global conflict or natural disaster occurs, they will radically change our concepts and ideas about ourselves and the world, the very definition of human labour and human interaction, political and ideological systems.
It's all about 5G
Anyway, the EU, the US, Russia, and the Asian region have long been preparing for Industry 4.0. However, a new world is possible only if there are super-fast mobile networks (5G), which will increase the data transfer speed many times, expand the coverage and ensure a stable connection of multiple mobile devices at once. In some countries, 5G is already quite on the way - according to Deloitte forecasts, 25 global wireless operators will launch 5G service in 2019 and by 2020 the number of such operators will double. Swedish telecommunications giant Ericsson believes that by 2024 the number of 5G users in the world will reach 1.5 billion. South Korea promises to introduce new networks in 2019, and China is going to do this in the same year.
Today the main problem is the lack of standards in this area, which makes it difficult to integrate the solutions offered on the market and in many ways restrains the emergence of new ones. Huawei and ZTE, as well as Ericsson and Nokia are developing the technological infrastructure and standards based on 5G. Chinese companies are still ahead of their competitors. Therefore, when the supply of Huawei equipment in the 5G network faced restrictions in major Western markets, it seemed that the US and its allies clearly wanted to create roadblocks for powerful competitors. Moreover, prohibitions and restrictions are imposed on the basis of obvious political reasons and mainly due to security concerns. For example, the head of MI6, Alex Younger, warned that the use of Huawei’s 5G equipment creates such risks as disruption of telecommunications networks and espionage. Huawei claims that the company is owned by its employees and has never engaged in espionage and sabotage in the interests of the state, as this may endanger its business. This statement however does not seem to convince Huawei's Western partners. Secondly, bans are imposed because of the violation of US sanctions on trade with Iran. Last April, this happened against ZTE, and on December 1, for the same reason, the Canadian authorities, at the request of the United States, arrested Huawei's Deputy Chairwoman of the Board and CFO Meng Wanzhou (Sabrina Meng) in Vancouver, Canada. Meng is also the daughter of Huawei's founder. The US authorities suspect that Huawei, at least since 2016, has violated sanctions against Iran. In turn, China did not leave the arrest of Meng unanswered. On January 3, 2019, two Canadian citizens were detained in China - Michael Kovrig, an ex-diplomat who served as Vice-Consul at the embassy in Beijing, now a senior adviser to the International Crisis Group NGO, and a Canadian businessman Michael Spavor. According to Beijing News, both Kovrig and Spavor are suspected of creating a threat to China’s national security. We will see whether the ongoing events are already full-fledged hostilities or just probing in the very near future. Leadership in 5G technology is such a serious thing that anything can happen. After all, the stakes are very high.
Dossier from IoT
Even the changes that may be a product of the large-scale implementation of IoT can show this. The Internet of Things suggests that literally everything around us will be connected to the World Wide Web - cars, fitness equipment, medical devices, door locks, cameras and alarms, kitchen appliances and sensors, lighting, plumbing, air conditioning, even our clothes and so on. In other words, it will be possible to collect a complete picture of each person from these sources starting from all habits and secret addictions to movement and health problems. All this information can be quickly processed, systematised and appropriately applied, for example, for any political purposes, including election campaigns and various manipulations. It is rumoured that the first test took place during the last US presidential elections and the Brexit voting in the UK when Cambridge Analytica used the accounts of millions of Facebook users for targeted advertising. If the voters have previously been roughly divided based on such characteristics as their place of residence, education, age, ethnic origin and religious affiliation, now the approach is rapidly becoming purely individual. Everyone will see in the right candidate exactly what is most important for a particular voter. In fact, something similar already exists - after all, Facebook has a completely individual 'face' for each user, based on his preferences (and ads that Facebook presents them knowing about these preferences). Such a dossier will be compiled not only for ordinary people, but also for politicians and public figures, as well as for their relatives. And, possibly, used for pressure and blackmail.
Obviously, such a global interaction of everyone and everything with everyone and everything will diminish the significance of national borders and to some extent the national sovereignty of states. Thus, Russia's alleged interference in the American elections seems to be a natural process rather than an interference, when every connected user can influence the result. In other words, an actual participation in the elections is not necessary if any interested person regardless of his or her citizenship can influence the preferences of voters. Finally, people from different countries with common interests will be able to unite and, for example, demand some form of virtual autonomy. If we count for the unpredictable influence of huge volumes of fake news, images and videos, then the possibilities for manipulating public consciousness are unlimited.
On the other hand, along with the increase in the number of devices connected to the Internet, the number of cyber threats will also increase. It is easier to launch malware through home devices. In the fall of 2016, the largest botnet attack in the history of DDOS attacks was carried out not from infected personal computers, but from IoT devices — video cameras and routers. And this is only a small part of the problems that may appear on the horizon of the current political and economic structure of the world as a result of the coming of Industry v4.o. Therefore, the real question is who's going to ultimately control the network that controls the entire world around us?
In fact, the technological rivalry between the West and China cannot be explained using the terms of the Cold War. This is also one of the signs of the changing world – there is a trade war between the two countries, but it somehow does not look like a war that we have been familiar with for years, at least in its classical sense, when everyone is on opposite sides.
Hence, in order to enter the new reality, the machines will have to speak the same language. Otherwise, it will not work. Cooperation is inevitable. As the CEO of Huawei Guo Ping said, "5G providers who choose not to work with Huawei will look like an NBA game without major players: the game will continue, but with less agility, talent and experience." At the same time, the sector of high technologies is teeming with innovations and developments, where the leading role of the Western countries is indisputable, and Beijing cannot ignore such a huge presence. After all, there is a close relationship between the economies of China and the US. For China, to undermine the position of the US means to undermine the economic system in which it has long been growing and flourishing. For the United States, to punish China is to punish themselves. For example, CEO of Apple Tim Cook has openly stated that one of the main reasons for the slowdown in iPhone sales were trade wars between the US and China. Sinking markets and the rising dollar also undermine the competitiveness of products from developed countries, such as Apple and Samsung.
There are the rules of the game played by transnational corporations that have multi-level supply chains and intellectual exchange. These links are more important and dear to them than the statements of politicians. For example, Huawei and ZTE are Chinese companies, which have many research centres in the US, Sweden, Korea, Germany, Turkey, India and Russia. Big business will always resist regulatory barriers, because globalisation of profits is their main goal.