The Geopolitical Fight Over Huawei w/ Yangyang Cheng

0:00 It's the the people, the workers, the consumers in both countries and around the world that are being exploited by corporate interests and by national security interests. And I think that is part of the sadness that these techno-nationalistic and state capitalist rhetoric are foreclosing the political and moral imagination in terms of thinking about what are these communications technologies actually for Amazon.

1:04 But we don't talk nearly enough on the show about these major Chinese tech companies, which are not just global firms in their own right, but have increasingly been drawn into this geopolitical battle between the United States and China, which means that we should have a much greater understanding of what they are, what they do, where they come from.

1:23 And that's why this week I wanted to discuss Huawei, which is a company that you might know from its phones and tablets and things like that if you're in a market where those are sold. But it's actually a major telecommunications company in the sense that it makes a lot of the kind of switches and underlying hardware that allows us to communicate with one another around the world.

1:44 At this point, it's one of the four dominant firms creating these kinds of technologies. Huawei and ZTE are the Chinese ones. And then you have Nokia and Ericsson in Europe, and those four companies are kind of the major players in this space now. There's a new book out recently from Eva Doo called The House of Huawei, which I'm in the process of reading and am finding really fascinating to learn about the history of this company.

2:09 And then I read a review that Yang Yang had written of the book itself that kind of drew in some of these perspectives that are certainly in line with those of the show in how we approach technology. And so I thought it was a good opportunity to not just discuss Huawei, but to discuss how it fits into this geopolitical battle and how it also reveals some of those hypocrisies of the United States when it accuses China and Chinese companies of potentially spying, but then actually engages in a lot of those things itself as well.

2:40 And part of its reasoning for wanting to limit the global scale and ambition of Chinese companies is so that companies that are more aligned with its security apparatus are the ones that are still dominating these telecommunication spaces and thus letting it in to be able to surveil communications around the world.

2:58 It was actually funny on this point, after we had recorded this interview, Donald Trump gave an interview to Fox News, you know, over the final weekend of June, where he was essentially asked about China hacking into telecom systems, stealing intellectual property, all of these sorts of things, and saying, like, how can we negotiate with such a bad actor?

3:17 And Trump just very, very matter-of-factly said, You don't think we do that to them? We do. We do a lot of things. That's the way the world works. It's a nasty world. And while there are so many things that I hate about Donald Trump, it is interesting the moments where he's just very honest about the fact that the United States engages in all of this skullduggery that it says only the most nefarious countries on the world, its enemies, of course, are up to.

3:40 So I think that this is a really fascinating conversation with Yang Yang where we learn more about Huawei itself. Certainly, there is so much more that we could have gotten into in this conversation because there's so much to be said about this company that can't really fit into one, you know, 50-minute episode of a podcast.

3:57 But I do hope you enjoy it. I do hope it helps to fill you in on this history. Obviously, in the show notes, I'll put a link to Yang Yang's review, but also Eva Dao's new book if you do want to check that out. If you do enjoy our conversation, make sure to leave a five-star view on your podcast platform of choice.

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4:46 Thanks so much and enjoy this week's conversation. Yang Yang, welcome back to the show.

4:50 Thank you so much for having me.

4:52 I'm really excited to talk to you again. Obviously, you know, discussing China is always something that I want to do more on the show, and I often don't get to as much as I think would be interesting, especially because of, you know, how important China and Chinese technology is in the discussions that we're increasingly having about this industry and you know the wider kind of world that we live in.

5:12 And so I I wanted to have you back on the show because you wrote this really fascinating piece, basically reviewing uh a new book about Huawei. And you know, this is one of the really important Chinese tech companies, and especially one that has been brought into these broader geopolitical debates between China and the United States, or you know, China and the West more broadly.

5:32 And so I thought that this would be something really interesting for us to dig into to not just understand the company, but you know, this kind of broader geopolitical debate even better. So I was thinking, you know, just to start, for people who might not be so familiar with this company, could you talk to us about what Huawei actually is, what this company does, and you know, its significance within the Chinese technology landscape?

5:55 Yeah, absolutely. Thank you so much. And it is really interesting because for someone of my generation, I think when I first heard about Huawei was in the mid or late 2000s when I was in college, and it was like, oh, there were schoolmates who went to work at this big Chinese telecom company, but it wasn't considered like particularly prestigious or glamorous, it's just like a job.

6:15 And so it's really interesting to see how a decade on it became pushed into this geopolitical spotlight on one hand and becoming this national champion on the other. However, the company itself actually had a rather humble beginning. So it was founded in 1987 by this former Chinese soldier by the name of Rien Junfei in the city of Shenzhen on the southern coast, just across the border from Hong Kong.

6:38 And so it was as part of China's earlier transitions from a collective economy to embrace the capitalist market. And so one could really see the four decades of Huawei's development as a way to mirror these four decades of China's development, both in times of its transition to embrace a capitalist market and its rise in the global capitalist hierarchy.

6:58 And Huawei started and it entered a telecom market in the very beginning, partly on as Ren Zhenfei himself would say out of Navite, because that was seen as an open and lucrative market because of scarce phone coverage in China. It had faced fierce competition within China itself. So its main business at the beginning and even now is producing telecom equipment like these phone switches and these kind of not particularly glamorous things.

7:27 And it started as a subcontractor, like assembly products for other companies. But one of the things that really distinguished Huawei and Ranger-based business approach from the very beginning is part of its ambition and its emphasis on research and development, that Iran did really want Huawei to have its own technology that is seen as a way for the company to achieve longevity, not just short-term profit.

7:54 And so it developed its own phone switch that received Chinese state approval in the mid-1990s, but it was still a rather humble company at that point through the 1990s. And partly because of the fierce domestic competition. Another thing that did distinguish why we was at Adventure Overseas rather early on, and that was partly also because of a business decision that the domestic competition was really fierce.

8:22 And venturing overseas was seen as a way that was essential for the company's survival. So it was partly out of these bold business decisions, and partly was also that it had reliable and good communications technology that it developed. And so up until the early 2000s, Huawei had stood out as one of the leading telecom companies in China, and it was starting to establish, make a name for itself in overseas markets as well.

8:52 And then around 2010, that was when Huawei entered the smartphone business. And that was when this public profile probably erased that it was no longer being seen as only this bulky, outdated like company, not outdated, but in terms of just like not very glamorous. But then we entered a smartphone business and had got like Scarlet Johansson made one of its ads.

9:12 It was being really branding itself as one of the hip tech firms that is also branding itself to both a younger generation of customers and the overseas market. Both its business expansion and its global expansion, coinciding with China's overall economic rise, as I mentioned earlier, also led to this process of intense geopolitical concerns raised over Huawei.

9:37 And some of these concerns were indeed valid. That, of course, as a telecom company, it also produces a lot of surveillance equipment, including surveillance cameras and other types of equipment for not just the Chinese market, but also in its overseas market. And that is a legitimate concern in terms of its potential security vulnerabilities.

9:57 But I think it was tapped into a broader geopolitical dynamic in terms of intense US-China economic rivalry, that Huawei's global ambitions is being seen as part of Beijing's overall geopolitical ambitions. And that is some of the things that listeners in the West would probably be familiar with that Huawei.

10:19 Huawei was constantly in the headlines over the past several years over various kinds of surveillance concerns over intellectual property suits, including different types of sanctions that the US government had slapped on around 2019-2020.

10:33 Yeah, I think that gives us such a great, concise understanding of this company that we're going to be drilling into even further through the course of this interview. But, you know, as you say those things, right, it's it's that public profile. It's the kind of making of smartphones and devices that people would be using, as well as then seeing the Western, in particular US, you know, sanctions and issues with Huawei, that would probably be what people often associate it with, right?

11:00 The kind of much more behind-the-scenes business, the ones that is its more primary business, is the thing that people would be less familiar with, but that is really important to understanding the company and its origins. And so there are a number of things that I wanted to dig into that you were talking about kind of earlier on in the company's history, so that we can gain a better understanding and then we can dig into these kind of bigger geopolitical issues.

11:22 And I wanted to go back to that transition in China from the planned economy to the market economy and what it means for a company like Huawei to be founded in that moment, particularly when you're looking at a company like ZTE, which is a big competitor of Huawei's and is state-owned or partially state-owned, whereas Huawei is set up as a private company early on.

11:42 So what what does it mean to be kind of starting a private company in that moment? What does that mean for Huawei to be founded in a particular moment like that?

11:51 Yeah, this is such a great question. And I feel it is really interesting because there is a lot of these uh misconceptions about Huawei as if it was somehow like the Chinese government had laid this golden egg like full decades ago and then tried to like cultivate it across full decades to have it like expand overseas, and then Xi Jinping has like a kill switch in his office and he just like pushes a button, then all Huawei equipment overseas will shut down, and that's how like Beijing will take over the world.

12:19 And it's absolutely Yeah, I I feel like I feel like whenever a Chinese company is successful, that has to be the image that we receive of it, right? Like obviously, this is created by the Chinese government and and they're doing it for only the most nefarious reasons. There can't be any other potential motivation or business driver or anything like that.

12:36 And it's quite interesting because, well, it is true that uh Ren Zhenfei said his uh first job was in the Chinese military, but it was a very humble position and it was not that unusual for a man of his generation born in the 1940s to uh join the military during the Mao era as just like a career path out of at a time with very few options.

12:57 So that military uh career was often being seen as oh, that is proof that he has this particular tie with the Chinese state. But that is not the case. And what is also really interesting in terms of this China's transition after the Mao era from socialism to market capitalism, and part of that transition also embodied was a drastic cut in defense spending to focus more on economic development rather than national defense.

13:23 And because of that, it led to a number of things that are closely tied with the founding of Huawei and Ren's personal career was that his former he was an army engineering soldier, that engineering corp was disbanded as part of this transition, this reduction in military spending. And so he was dispatched to Shenzhen to work at a state-owned oil company that he didn't like and he soon floundered out.

13:47 However, there were these new experiments that are being set up, including at this special economic zone in Shenzhen that had a pilot program that allowed private Chinese citizens to just set up tech firms as an experiment. So they could experiment, they could succeed or fail, but that's on their own.

14:04 And then as I mentioned earlier, Ren Junfei and a couple of his earlier business partners chose the field of telecommunications because that was seen as a very wide open market with a lot of business potential. But what is also very interesting at this moment was telecommunications, because it has this technology component, and also it was indeed a market that needed equipment and capital to fulfill this need.

14:32 It was one of the first fields in China to open up to foreign investment. And this in terms of investment is not just in terms of capital investment, but also in terms of technology transfer. And that reflected a broader view on industrial policy and technological development in the Chinese state at the time, was that on importing technology from the West in the 1980s and 1990s was being seen as this faster way to achieve domestic capabilities.

15:02 And so the Chinese government actually favored foreign firms and gave like tax breaks and other types of favorable policies to entice foreign firms to come investing in China, including like foreign telecom companies to invest in the Chinese market. And for foreign telecom companies, it was of course being seen as a wonderful business opportunity.

15:24 And at that time, there was this saying back in the 1990s that the Chinese telecom market was called seven countries and eight systems. It was eight companies from seven different countries, US, European, and Japanese firms that had their own products and they were setting up joint ventures. And their joint venture partners are usually a Chinese state-owned entity.

15:46 And so these were the companies that initially had the upper hand in the telecom market in China. And a private startup like Huawei was very much uh the scrappy kid on the block that was trying to just like survive and make a name for itself. And what was also very interesting at that time was this type of foreign tech transfer was being seen as a faster, more convenient way to enhance domestic technological capabilities.

16:15 But it was not a very creative way. There were Chinese engineers and Chinese business people who had ambitions that actually exceeded the state's main policy in terms of they wanted their own technology, they wanted to innovate. And so it was very much a Chinese, like a private-driven effort, not a state-directed effort at that time to develop their own switches, develop their own telecom technologies.

16:44 And a major player in that, and then coming back to this cut in military spending, right? And so this um this reduction in defense spending, also the Chinese government basically told the military, right? Like on one hand, there is this cut in defense spending, on the other hand, you can go find your own ways to make money.

17:03 And so there was this encouraging uh military personnel to research dual use technology with commercial prospects as a way to have additional income. And so there was this group of military researchers led by this military engineer by the name of Wu Jiangxing, who led an effort to develop a homegrown telephone switch.

17:25 This was named the O4 switch, just by its label, that was invented in 1991. And at that time, um, because this is a military research team, even though they were being uh encouraged to develop commercial technologies, they were not capitalists and were not so much aware of and were not incentivized to guard their intellectual property.

17:49 And so the designs of the 04 switch was actually widely disseminated across China, including to Huawei and ZTE, and partly through the military network, partly just through technological diffusion. And it also helped Huawei develop its own switch that I mentioned was um approved in 1995. So this is uh this is a long history, but I think there is um there are really interesting points that resonate a lot today.

18:16 On one hand, I want to mention one anecdote was uh when the Wu Jiangxi team was developing the zero-force switch in the late 1980s and early 1990s, there was um Cold War era export control rules that barred them from accessing the most advanced chips at that time. And they actually scavenged the used electronics market in Hong Kong across the border from Shenzhen to get these old chips.

18:42 On the other hand, they did design this distributed computing architecture to achieve the same calculation capabilities using the less advanced chips. And so there is a lesson here about innovation under conditions of scarcity. On the other hand, there is also this question about intellectual property and whether or not guarding intellectual property is necessarily understood as the way to incentivize innovation.

19:12 We saw, like in the 1990s, on one hand, the broad dissemination of the design of the zero-force which was in some ways maybe seen as a blunder that the Wu team did not protect its intellectual property. On the other hand, it also helped incentivize a broader innovation ecosystem within the Chinese telecom community in general and helped spin off these a lot of different types of products that were built on the basis of the Zero Force which were inspired by the original design.

19:45 On one hand, in terms of the technological capabilities. On the other hand, it also lowered the cost of telecom communications equipment in China and helped facilitate the development of the overall telecom industry.

19:58 When you talk about the Zero Four Switch, I feel like that is an interesting opportunity to have a deeper talk about intellectual property, right? Because I feel like you know, this is one of the often big issues that comes up when we talk about Chinese tech companies, and the accusation is always that the only way that Chinese tech companies have been able to grow is by kind of stealing the intellectual property of the West and then just kind of replicating it and building off of it.

20:22 I wonder what you make of those accusations, because certainly you know, reading this book about Huawei by Ava Doo, basically what you see is at certain times there are questions about how Chinese chips resemble some Western chips. There's a lawsuit from Cisco against Huawei, you know, later on, uh, which I believe is about routers or something like that.

20:43 But yeah, I guess this broader question around intellectual property and this accusation that you know China's advance is only through, you know, kind of stealing Western intellectual property. I wonder what you make of that in in relation to Huawei in particular.

20:55 This is really interesting. And I also think a lot of this is is about narrative and perception. We mentioned earlier, like right, this perception of Huawei in Western discourse that is very much divergent from its actual humble origin story. And when it comes to innovation and invention, I think there is often this kind of perception that invention is something that just like bursts out of nowhere.

21:20 That is just this stroke of genius in an genius individual's mind. And then that intellectual property legislation and like on IP regimes are used to protect the fruits of genius of these individual minds. But that is very much not the case either for how innovation actually takes place, nor is it actually reflects the actual purpose and effects of a lot of these intellectual property regulations and legal regimes.

21:51 And so when we when we think about uh there is a really wonderful uh book called Emulation and Innovation by Brooke Hindle, right? That was actually based. On the earlier part of US history. And one of the things that one needs to remember was a lot of times the dominant narrative is not the one that is the closest to the truth.

22:11 The dominant narrative is the one that is being invented and disseminated by the ones in the greater positions of power. And so when the US was by itself a developing country, and European countries had the more advanced technologies, actually, US industrialists and inventors also emulated, in some ways, also aggressively acquired European designs and machines and skilled workers to the US at times in violation of European emigration export control laws.

22:43 And then later, based on this emulation process, US inventors and engineers also made improvements upon the original designs. And that's how innovation is this incremental process that is always built on what has come before. And that is how technological developments have taken place in Europe, in the US, and also in China.

23:06 And as I mentioned earlier, in China, because partly related to its own political development and the context of the Cold War, there were indeed long periods of relative isolation from the US-led West during the Mao era. And so during the reform era, when the Chinese government opened up its markets and welcoming foreign technology and foreign investment, a lot of the foreign firms were eager to invest, not just invest in Chinese markets, but also transfer part of their technology, so long as it's not the most cutting-edge, the crown jewels, to Chinese partners, because that was seen as a good business strategy to take advantage of the Chinese labor and consumer market.

23:52 And so that is a very important thing to keep in mind when we talk about innovation, intellectual property is what is the actual purpose of it? And I think one analogy on a Western listener might be more familiar with is, for example, the history of like between the PC and the Mac. And Apple and IBM took very different approaches where Apple decided that only Apple can make Macs, while IBM decided that other companies, whether it's Compaq or Dell or Hewitt Packer, can also make PCs so long as they can pay like a royalty share to IBM.

24:28 That was seen as a good business strategy. And so this is an important thing to keep in mind when it comes to innovation intellectual property protection. And another part that is important, which we kind of like jumps ahead in the timeline a little bit, if we're still in the 90s when Huawei was a startup.

24:48 But if we talk about Huawei now as a global telecom giant, another thing that is really interesting to understand is that Huawei itself holds a lot of patents. And it also lists really high up there among global firms. And it's by itself very litigious, including in the US market. And it's not just as a defendant, also as a plaintiff to defend its own intellectual property rights.

25:17 And so in a lot of these ways, Huawei actually, even though it is a Chinese company, it behaves very much like any of its Western-origined global companies in terms of treating its intellectual property. And that brings me to my final point is a lot of times nowadays, when intellectual property in terms of commercial intellectual property is being discussed, how it is being defended, where the boundaries are drawn, is not so much about who came up with the original idea, but it's really about who is most motivated and committed to expand and has the resources to expand to defend it.

25:55 Yeah, I think that's a really good point, especially, especially thinking about power in both instances, right? Thinking about the things you were saying originally in your answer and then what you ended with, where it's kind of like the companies that are going to be the largest, the most global, are going to be most incentivized to try to defend this intellectual property.

26:10 But whether it's companies just getting started or even countries that are lower down the totem pole on like, you know, the kind of level of technological advancement or whatnot, they are going to be incentivized to kind of move up that pole, just as you were saying, with the United States early on in its own history, making sure that it was kind of learning from the more advanced ways of doing technology in other parts of the world as well.

26:31 I feel like that's a good transition to talk about telecommunications technology and the importance of kind of controlling technology and all those sorts of things. But I just wanted to touch on one thing before we do that, which is I feel like when you're in the West, you know, you will occasionally run into communists who want to say, you know, Huawei is actually great because you don't understand that it is an employee-owned company, unlike many other Western companies or many other global companies that are these publicly traded kind of owned by shareholders, those sorts of things.

27:05 I was interested in having you discuss that a little bit. You know, what does it actually mean for Huawei to have a lot of its stock owned by employees? How is that related to this kind of early founding of the company in the transition from the market economy? And does that actually mean that employees kind of control the company?

27:22 Like what does that mean in practice for a company like Huawei?

27:26 Yeah, this is uh this is this is really, really interesting because I I think uh before I get to the specificities about Huawei, one is China is really like it, if anything, it is proof that a country ruled by a nominally communist party can be more inscrupulous in global capitalism than a lot of countries that does not have a socialist history.

27:53 So it is really interesting. And in a lot of ways, Chinese firms have even more cutthroat capitalist competition than some of its Western counterparts. And then coming back to Huawei, so I think one of the things is, as we discussed earlier, its comparatively humble beginnings and birthing out of this moment of social and economic transition in China, out of like a relatively chaotic and elastic regulatory environment, led to some of its quirks in terms of its company's management and ownership structure.

28:28 But it does not mean that Huawei is somehow like a commune that is good for the good of its employees, is actually extremely exploitative and unabashedly so. And so one of the, as I mentioned earlier, like when Huawei was a private startup, its competitors were much better equipped in terms of Chinese state capital and foreign investments.

28:51 Well, Huawei did not have those advantages. Huawei did have those ambition. And so Yang Jenfei was very aggressive in terms of recruiting tech talent to join the firm, but it was not able to pay its employees in full. So it came up with this scheme, which was to convert part of the salaries that it owed its employees into company shares, which was like these non-voting stock options.

29:19 And it was really interesting that this is something that would that happened then, but would probably be seen as an illegal fundraising today in a more formalized corporate regulatory environment in China today. And also when it was founded in 1987, as I mentioned, it was as part of this tech startup pilot program in the special economic zone in Shenzhen.

29:41 And then through its 1990s, it also changed its, I guess, its structure at various points up until 1997 when it became a limited liability corporation. And that was partly also because of this uh regulatory transition in China as it transitioned from socialist planning into a market economy. And so some of these are legacy factors.

30:06 However, Huawei is, as I mentioned, unabashedly exploitative of its employees that is written into its company bylaws, into its various kinds of corporate propaganda material. It claims that it also is this way that there is no job security at Huawei. No matter how long a person has worked at Huawei, no matter what one's past contribution is, one could get fired if one couldn't keep up.

30:33 Yeah, there was even like a kind of stunning story about how there were these new laws coming in in China that would give, I believe it was people who would be at a company for like a decade, additional kind of rights and things like that. And so a bunch of workers, thousands of workers at Huawei resigned and took their jobs back in order to like reset their clocks so that they wouldn't have these protections effectively.

30:54 Exactly. So this was the the 2008 the Chinese new uh labor law. And so when uh Ren Zhenfei led his employees to preempt that before the law could take effect. So in late 2007, there were 6,000 Huawei employees, including like and also Ren Zhenfei himself, symbolically like resigned and then reset their cogs.

31:15 And so so so this is um I I think I think it is important that when one criticizes capitalism and and and Western uh corporations, it is also important to have a realistic understanding of what is the situation in China and not project one's fantasies and and imaginations on on another country and that is very far removed from reality.

31:37 Well, and this is why I like speaking to you about it as well, right? Because you're giving us a very clear-eyed picture of what is going on. You know, you're not just trying to say, oh, China is amazing because it's China or anything like that. Like some of the stories about the treatment of workers in this book are just really stunning, and the the degree to which people are experiencing health effects because of the long working hours and the stress and those sorts of things, and like the expectations and demands that come from the company, even you know, not just in the early days, but even progressing to the point where it is becoming this kind of global, you know, major competitor in the

32:11 telecommunications landscape. This expectation of excessive work culture coming right from the top from Ren himself. And you know, he is also engaging in this as it's described, is really stunning.

32:21 Yeah, and and that is in some ways, it was uh it has been a contributing factor to Huawei's corporate success, the way it exploits its workers. So when one thinks about it, right, in a telecom market, especially in terms of its overseas expansion, Huawei is able to outcompete a lot of its Western rivals because it would be able to send its workers to dangerous situations, whether it's conflict zones or an immediate aftermath of a natural disaster where telecom equipment needs to be restored or repaired.

32:54 It would have its workers work longer hours, it would send more workers to a single location, and it would also like be able to keep the cost comparatively lower. Um, this kind of exploitation is good for the company in terms of its global competitiveness, but it is not a distinct corporate model that one should emulate.

33:17 No, absolutely. And you know, it feels worth saying as well when we think about these Silicon Valley corporations, one of the things that we often observe about them is how they want to set up a kind of set of perks that are going to encourage their workers to stay at the office even longer and in kind of this culture that expects long working hours.

33:35 It is just kind of framed and done in a very different way than what we see at a company like Huawei, but still the expectation is you know they want to get people to work longer hours because it is going to be of corporate benefit.

33:48 Aaron Powell Huawei's executives also like it's corporate literature have also like spoken admirably of the long working hours in Silicon Valley, including the so-called mattress culture where employees sleep in their offices and have a mattress below their desks and such.

34:04 Fascinating. Yeah, it is no surprise, right? Of course they would do that. But I I did want to pivot, as I was saying, to talk about these broader geopolitical and technological issues, right? One of the things that really stood out to me, even when you look at like the early days and when China is improving its telecommunications technology once you know its market is opening up and things like that, is the focus on the argument that it is important for a country like China or kind of any major large country in the world to control its own telecommunications technologies.

34:38 Can you talk a bit about why large countries see it as important to want to control this technology, to not be using foreign telecommunications technology in this way and what the incentive is there?

34:50 I think when it comes to um telecom technology, it is uh it is really interesting because on one hand, it does require a degree of technological capability and investment to develop one's own. On the other hand, it is also a critical infrastructure that doesn't just have commercial implications but security implications.

35:08 So I think when we think about the development of telecom industry and technologies in China, I think there needs to be uh placed into context that that a lot are tied with China's historical development at different junctures. And so if we just look at what I mentioned earlier, right, in the 1980s, first of all, when the telecom market was one of the first markets in China to welcome foreign investment, both capital investment and technology transfer.

35:39 So this is an area where the Chinese government certainly saw this need for foreign technology to come into the Chinese market to fulfill this domestic need. And I meant as I mentioned, uh, because it is a lucrative field, not just for foreign companies, but also for the Chinese uh state-owned partners.

36:00 And so at that time, in the early stages of uh equipment development, a lot of the incentive was indeed to continue with this kind of foreign investment joint venture model. And one of the most prominent examples is probably Shanghai Bell, which is of course a joint venture between the Belgian telephone manufacturing company and a state-owned entity in Shanghai.

36:25 And up until the end of the 20th century, uh Shanghai Bell was actually the world's largest manufacturer of this specific type of um telephone switches. And so it had a lot of domestic manufacturing capacity. On the other hand, that kind of reliance on foreign tech transfer and joint ventures was always insufficient.

36:45 It is insufficient in terms of the private ambitions of Chinese engineers and entrepreneurs, and it is also insufficient in terms of the security dimension. And that, of course, also has a historical element to it, that the Chinese, of course, the Chinese Communist Party when it was not just nominally communist, but indeed communist as a revolutionary party, it came as this guerrilla warfare out of conditions of extreme scarcity.

37:15 And self-reliance was very, very important in terms of the party's own identity and partly as part of a national identity that was through the Mao era, that there was a strong emphasis on self-reliance and self-sufficiency in terms of science and technology. And that is not purely out of ideological reasons, but also serves a pragmatic purpose, partly because of Cold War era embargoes and partly out of this security concerns, that self-reliance and self-sufficiency is important.

37:48 So I think that dimension has always been present, but whether or not that dimension is dominant really depends on a specific historical period and what are the domestic and international conditions that weighs on Beijing's calculus.

38:03 Well, and I'd like I'd like to pick up on that as well, because I I think you laid that out really nicely. And basically what we start to see as China opens up to the world is a number of events that encourages it to think more in relation to self-reliance and to be skeptical of this relationship with the United States, whether it is the kind of 1999 embassy bombing that the United States engages in, that obviously has a lot of serious effects with how Chinese people relate to the United States, you know, especially given, as you were saying, you know, kind of this long-standing hostile relationship between the two countries.

38:39 But then, of course, as well, if you're thinking about telecommunications in particular, the revelations in the Snowden leaks that Huawei's network had been accessed and compromised by the National Security Agency in the United States, and they were able to gain access to all these conversations and things that were that were going through Huawei's network.

38:59 Can you talk about how that also kind of increases this desire for self-reliance and this pressure for China to develop its own technologies rather than being reliant on US technology?

39:11 Yeah, it is a great question since you pointed out these two different time periods in 1999 with the Belgrade bombings that are where US missiles hit by accident, um, as the US government insists, well, a lot of the Chinese public are not convinced. And the Snowden leaks, which was happened in the early 2010s, what has changed dramatically over this course of about 15 years is China's position in terms of global capitalism.

39:41 And so if we look back at 1999, China was not yet a member of the World Trade Organization. And what was actually quite ironic was right like weeks before the Belgrade embassy bombing, and then Chinese Premier Zhu Longji had just visited the US with a list of concessions that the Chinese government were willing to make in terms of its domestic uh trade and market policies as a way to earn the US's approval for China to join the WTO.

40:11 And at that time, the Chinese government was also encouraging domestic firms, both state-owned enterprises and private companies like Huawei, to enter the overseas market to experiment, but also as a way to show goodwill that China is trying really honestly trying to become a responsible player in global capitalism.

40:32 But this was when China was still very much on the periphery of global capitalism. And what the Belgrade bombing, that was uh international wound, and what revealed to a lot of Chinese people the imbalance, the inequalities of a wealth system that the Chinese, their country has been trying so hard to be a part of.

40:54 And what has happened over the next 15 years, up until the point of the Edward Snowden leaks with China has indeed emerged from the periphery to inching closer to the core, I guess, and up until the early 2010s in global capitalism and also the 2008 global financial crisis was also a shock to the Chinese leadership in terms of seeing the vulnerabilities of the US economy and Western capitalism.

41:22 And that was also an incentive in terms of self-reliance and self-sufficiency. But what uh really happened with the with the Snowden leaks was, I guess it was twofold, right? Both technological and ideological, in terms of the revelations to the Chinese state. On one hand, the technological part is that the Western telecom equipment had inherent vulnerabilities, and the US government had the technical capability to infiltrate effectively any telecom network in around the world, including Huawei's, and not just in terms of surveillance, but uh potentially to sabotage as well.

41:58 And on the other hand, the ideological part is that since the US government has this capability and is willing to use that capability, then there is no particular reason to unilaterally disarm or just trust its Western counterpart on the Chinese state's part, that it's really important, uh, that it's not just an economic incentive and it's not just in terms of national pride, but it's really a matter of national security to be able to have uh domestic technologies in terms of these critical infrastructures.

42:31 Yeah, I I think that's a really good point. And I want to pick up on that, right? And dig into it a little bit further. Because obviously, when we look at the United States and its accusations against Chinese tech companies and Huawei in particular, one of the things that they often argue is that the reason that Chinese tech companies need to be restricted, you know, the reason why Huawei needs to be banned from US and Western telecommunications networks is because of this threat of Chinese surveillance and Chinese spying, right?

42:59 That that China could tap into these telecommunications technologies and then, you know, kind of listen into what people in the West are saying, or that China could use TikTok to get all of our data or what have you. And I feel like one of the kind of values of the argument that you're making is not so much to say China would never theoretically be able to do something like this, but rather the United States can do this, it does do this.

43:26 It seems like quite a hypocritical stance to then say it wants nobody else to be able to do this thing that it is doing to everybody else and not willing to stop doing.

43:35 Yeah, so I think I think the question is never whether or not Huawei assists state surveillance. That answer is in the affirmative. But the point is Huawei doesn't just assist Chinese state surveillance, it also assists state surveillance in other countries. It's willing to sell its surveillance technologies to any country that's willing to buy it.

43:56 On one hand, on the other hand, Huawei is certainly not alone in. In terms of selling surveillance technologies to any country or any individual or entity that wants to buy it. And so I think what is important here is not to defend Huawei, which shouldn't be defended in terms of its complicities and its actions, but in terms of actually having a correct diagnosis of the problem, that this is not a problem that is unique to Huawei.

44:25 It is not a problem that is unique to Chinese firms, and it's not a problem that is unique to companies that were out of an authoritarian system. This is really a problem that is inherent to surveillance capitalism or capitalism in general. We can think about security concerns with telecom equipment along these three categories.

44:48 The first vulnerability is technical, which should be company and country agnostic. This means whether or not this equipment itself, the hardware or the software itself, has some kind of vulnerability that can be exploited. And that can be evaluated in a company and country agnostic way. That's a technical evaluation.

45:08 And then I know there are like different evaluations of Huawei's equipment, and we're not getting to the details of that, but that is a technical assessment. The second type of potential vulnerability is regulatory, which is not in terms of the equipment per se, but in terms of, let's say, the data that has been collected by this equipment and during its collection, storage, and transmission.

45:32 Whether there are different regulatory loopholes, that means this information can be exploited, can be sold to other parties and data brokers and such and exploited in other ways, right? But these are regulatory vulnerabilities that there are not enough oversight, there are not enough restrictions in terms of the exploitation of information that goes through telecom equipment.

45:56 And that by itself should also be company and country agnostic, that regulations should, if it needs to be effective, then it cannot just like target one company or companies from one country. But a lot of these discussions about potential surveillance and security concerns with regards to Huawei are very much removed from the questions of technical or regulatory vulnerabilities.

46:19 But this falls only into the third category, which is geopolitical. That's very much about US-China relations, about concerns over China's economic rise in the US, including why we see some of these very divergent security assessments between the US security establishment and its traditional allies, in like say in the UK and in some European countries, where they do use Huawei equipment and do not come to the same degree of security concern or evaluation as the US does.

46:55 And at times, the US government has basically pressured its allies to remove Huawei equipment from their networks. And at times we also see other geopolitical questions, such as the Russian invasion of Ukraine, that has raised the security alarm bells in Europe, and that has extended to more alarms and more scrutiny over Chinese equipment like Huawei's equipment as well.

47:19 But these are questions that actually do not immediately touch on the technical or the regulatory aspects. And I'm not saying the geopolitical concerns are not valid, but they are not the way to understand what are the actual vulnerabilities that come with telecom equipment and telecom infrastructure in general.

47:42 I think that's a really important point and a really good way to put it. And I really just wanted to end off by asking you about something that you wrote about near the end of your review of this book, The House of Huawei, which is you know, you were really talking about how tools of communication do not have to be inherently technologies of capture, right?

47:59 Do not have to be used in these ways that we hear our governments talking about being concerned about, but then they're also often engaging in. Can you talk about this aspect to it and what you see as the potential of these technologies and how to avert them being used in these kind of very harmful and concerning ways?

48:18 One thing that concerns me greatly over the past few years with regards to this discourse, as I mentioned, a lot of these questions that are technical or regulatory questions about technology and surveillance capitalism are being captured by this techno-nationalistic great power rivalry framework. And then the actual problems are being obscured or skewed, and the diagnosis is skewed, and then the solutions actually do not address the real issues, such as like ripping out Huawei's equipment, doesn't really address the problems of surveillance capitalism.

48:51 And so what has become really interesting is Huawei has become a lot more popular in China over the past several years. And it's no longer just a successful Chinese firm, but it's now becoming seen as a symbol of Chinese pride that is under siege from like evil Western imperialists. For example, like my mother who doesn't care about brands or anything at all, like she now insists that she would only use Huawei cell phones.

49:21 And I can understand like it's it's also becoming like it's not just like a commercial choice, but it's becoming an ideological one.

49:29 Oh, I I definitely understand that being in Canada today and you know the increasing Canadian nationalism in response to you know the threats from Donald Trump and wanting to buy Canadian and all those sorts of things. Like I'm sure that's a that's a common thing around the world when the perception is that anything related to your country is under threat and you kind of like rally around it.

49:48 Yeah, and and then to that extent, it is in some ways, like of course, like I don't criticize my mother's consumer choices. She can use whatever products she wishes, but but this overall nationalistic rallying around a company like Huawei in some ways is sad. And it since you mentioned the 1999 Belgrade embassy bombing, and I uh that there was also a rallying around these nationalistic symbols, this heightened nationalism in China in the immediate aftermath, even though back then it wasn't rallying around a commercial company, it's rallying around the symbols of the state.

50:25 But then of course it's the symbols of an authoritarian state that also uh suppresses its own people. And so nowadays when one sees these very nationalistic rhetoric from Chinese people around Huawei, but then Huawei also like exploits its workers, which um still predominantly are Chinese workers, it also sells surveillance technology to Chinese companies that helps with surveilling the Chinese population.

50:52 So like Huawei is not like good for the Chinese people. So this is, I think that that is partly the sadness that we see some echoing of that, say, here in the US, where um this great power competition is being used as a way for US tech firms to argue against regulation, that they shouldn't be regulated because they need to freely compete with Chinese state champions like Huawei, even though it's not really a state champion, at least not in the beginning.

51:25 And so then it's still like it's the people, the workers, the consumers in both countries and around the world that are being exploited by corporate interests and by national security interests. And I think that is part of the sadness that these techno-nationalistic and state capitalist rhetoric are foreclosing the political and moral imagination in terms of thinking about what are these communications technologies actually for?

52:09 It does not need to be, and I would argue should not be this site of extraction, exploitation as this site of profit. So, how do we imagine a way to wire up the world and to network individuals and communities in a way where the infrastructure is not controlled and dominated by a handful of the most powerful entities, be it a state entity or a corporate entity?

52:38 And I think that is the question that is that should be asked. That is the important question, rather than whether or not Xi Jinping has a secret switch to all the Huawei switches.

52:49 Like Yeah, no, I I think you put that so well. And that is inherently not just a technological question, but a political question as well, right? And the type of political system that would enable something like that. And I really appreciate you drawing that comparison between the United States and China to say it is not that Huawei is the good guy against the bad Silicon Valleys, it's that this geopolitical contest between China and the United States helps these exploitative monopolistic firms on both sides that have a whole load of harms associated with them.

53:22 Yang Yang, I always appreciate having you on the show, getting your insights. Thank you so much for taking the time again to come back on Tech Won't Save Us.

53:30 Oh, thank you so much for having me, and thank you for your incisive questions as well.

53:35 Yang Yang Chang is a research scholar in law and a fellow at the Yale Law School's Paul Tai China Center. Tech Won's Save Us is made in partnership with the Nation magazine and is hosted by me, Paris Marks. Production is by Kyla Hewson. Tech Won's Save Us relies on the support of listeners like you to keep providing critical perspectives on the tech industry.

53:51 You can join hundreds of other supporters by going to patreon.com slash tech won't save us and making a pledge of your own. Thanks for listening and make sure to come back next week.