Huawei, controversial in the West, is going strong in the Gulf

DUBAI - Chinese telecoms giant Huawei is enjoying an extended honeymoon with oil-rich Gulf nations, despite being criticized in the United States and Europe as a potential security threat. 

Arab Gulf countries -- strategic partners of Washington that are seeking to diversify their economies -- are investing heavily in the sector as their appetite for technology grows.

Huawei has struggled in recent years in the face of US sanctions, as Washington claims it has close ties to China's military and that Beijing could use its equipment for espionage -- accusations the company denies.

Britain and Sweden have banned the use of Huawei equipment in their 5G networks, while France has also imposed restrictions. 

Yet Gulf countries including Saudi Arabia and the United Arab Emirates have not only chosen Huawei for their 5G rollouts, but have also partnered with the company to develop "smart cities."

These feature enhanced digital services and security surveillance -- a Huawei speciality Gulf states value highly for monitoring their populations.

Gulf countries' "use of technologies for population surveillance is closer to the practices of China than those of Western countries," said Camille Lons, of the International Institute for Strategic Studies.

Concerns about Huawei voiced in the US and Europe "weren't convincing" in the region, she told AFP.

Mitigating 'political pressures' 

While the telecoms giant has had a strong presence in the Gulf since the 1990s, its deals and big announcements there have multiplied in recent years.

In January, Saudi Arabia announced it would open the largest Huawei store outside China in Riyadh, a few months after a deal with the company on developing artificial intelligence to support public and private sector growth.

Last summer, Saudi investment firm Batic cemented a deal with Huawei to work on "smart city" projects in the kingdom, where it is already a main partner in the Yanbu Smart Industrial City project on the Red Sea.

Huawei has also developed apps and digital infrastructure to support Muslim pilgrims visiting Mecca and Medina, Islam's two holiest sites.

"By gaining the trust of our partners in the Middle East, we have been able to mitigate external political pressures like those pursued by the US," Charles Yang, Huawei's Middle East chief, told AFP from the company's headquarters in Dubai.

In the high-tech emirate, one of 7 that make up the UAE, Huawei has launched projects ranging from data storage to online payment services for public transport networks. 

Dubai-based Emirates, the Middle East's largest airline, last year chose Huawei to build a center to boost the company's surveillance and security capabilities.

An Emirates spokesperson declined to elaborate on the precise nature of the technology, but said "such solutions are utilized... around the world primarily for public safety and security reasons."

'Risk' for the US

China remains one of the Gulf's leading trade partners.

UN figures show its 2019 trade with Saudi Arabia -- the world's largest exporter of crude oil -- reached about $36.4 billion, while with the UAE it exceeded $50 billion.

"Digital infrastructure has become a key pillar of (Gulf states') national transformation strategies," Yang said.

Huawei said this month it hoped for a reset with Washington, after former US president Donald Trump targeted the firm as part of an intensifying China-US trade and technology standoff.

But Lons from the International Institute for Strategic Studies warned the apparent Huawei-Gulf honeymoon could cause security worries for the US.

She noted the presence of American military bases in the region, and that Gulf countries are "major buyers of US military equipment."

There could be concerns about the "risk that sensitive US military information or technology is being spied on and transferred to China," she said.

Agence France-Presse

China's ZTE teeters as US ban hits operations

SHANGHAI - Chinese telecom giant ZTE faces a grim future after ceasing major operations due to a US ban on American sales of critical technology to the company, raising the stakes in a trade spat between the world's two largest economies.

The firm's fate has added a new source of tension to trade talks between the two countries after Chinese officials raised objections to the US ban during negotiations with their American counterparts in Beijing last week.

ZTE's fiber-optic networks depend on US components and its cheap smartphones sold en masse abroad are powered by US chips and the Android operating system.

Without access to such technology, the company has been forced to partially shut down. "Major operating activities of the company have ceased," ZTE said in a filing Wednesday.

Its dimming prospects could further sour discussions just as China's top economic official, Vice Premier Liu He, heads to Washington for another round of negotiations next week.

"The Trump administration has sent a clear signal to China through its attack on ZTE: compromise, make compromises" on trade, said Cheng Xiaohe, an international relations professor at Renmin University.

"Otherwise, we will kill you."

He added that the US is also investigating another Chinese tech giant, Huawei.

A telecom components buyer specializing in ZTE products said he had seen the effects of the production halt ripple into the market, with prices for available ZTE goods jumping 50 percent or more.

"They've stopped production of all products that have chips in them," said Zhao, the buyer, who declined to give his full name, adding that if production completely stopped for a year, "all ZTE's gear will become scrap."

MAJOR ALARMS

Beijing has closely followed the developments around ZTE, a company with 80,000 employees headquartered in southern China.

The ban on US sales to the firm arose from its skirting of US export controls by selling to banned countries like North Korea and Iran with employees documenting how to evade American oversight.

Those actions led to a $1.2 billion fine last year, with the current export ban imposed in April after ZTE allegedly failed to live up to its agreement, lying about the punishment of employees involved in the sanctions skirting. 

In Beijing, officials see the ban as part and parcel of the Trump administration's hardline trade demands.

"This is ringing major alarms for China," Cheng said.

"If the trade problems aren't resolved, and a full-scale trade war erupts, these high-tech companies will bear the brunt of it."

The result is that Beijing has been galvanized to push harder to develop the technology the US is now denying to ZTE.

"China must rely on itself for core technologies," President Xi Jinping told scientists as he visited an IT firm last month, while officials confirmed they were raising a huge new fund to invest in computer chips.

ZTE said in the filing it is still "actively communicating" with the US side "to facilitate the modification or reversal" of the ban, and hopes to "forge a positive outcome".

On Sunday, the firm submitted a request to the US commerce department for a stay of the export ban, along with supplemental information.

In Wednesday's statement the firm said it still "maintains sufficient cash" and would continue to pay its debts. Trading of its Hong Kong and Shenzhen-listed shares has been halted since the US decision.

In a ZTE research and development center in Beijing, employees remained at work, with a warning posted on the wall of their office.

"Abide by the law, and strictly observe civic values," the employee regulation said.

source: news.abs-cbn.com