MarketLine Blog

Huawei exerting soft power: International relations strained as Chinese giant seeks overseas expansion

Many governments fear, to varying degrees, the signing of contracts with Huawei will grant intimate access to the government of China – certainly that is the line being pushed by the US government. The New Zealand government gained international attention towards the end of 2018 after the Communications Security Bureau successfully banned mobile phone company Spark from using Huawei equipment in the planned 5G network upgrade. An abrupt cancelling of official Chinese representation at the launch of the much vaunted Year of Chinese Tourism campaign was a rare public statement of diplomatic intent, causing embarrassment for the New Zealand government, which was forced into denying tensions were simmering.

The US government contends that Huawei is a backdoor route to allowing Chinese intelligence services to engage in mass spying of foreign countries in a way that has not previously been possible. If the United States is successful in convincing governments to avoid entering into expensive and long-term telecommunications infrastructure contracts, overseas expansion becomes very much harder to achieve on the desired scale. Even though future 5G markets such as New Zealand offer only meagre financial returns compared to those on offer in major European states, the United States or China, breaking the diplomatic union of nations banning Huawei, or at least being very cautious, has taken on extra importance than otherwise would be the case.

Part of the campaign to improve the standing of Huawei outside of China has been to promote the company to the public as a reliable provider of telecommunications kit. The company sponsors a plethora of TV programs, sports teams and Universities around the world. The company has much work to do, though; newspaper headlines in titles published across countries including Canada, Australia and the United Kingdom – all countries which traditionally ally with the United States on such matters – have frequently published adverse stories about the Chinese firm.

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