May. 21, 2019

Intellectuals need to 'think' when discussing Huawei

I have been reading George Gilder’s books and articles since 1981, the year his first book “Wealth and Poverty”appeared. And I have quite enjoyed them. His latest book is entitled “After Google.”He has been described as a writer, investor, economist and even a techno-utopian advocate. 

His latest article appears today in the Wall Street Journal entitled “Huawei Is An Asset, Not A Threat.”And no doubt in the world of real fair trade his statement would be true. The only problem is that that “perfect trading order”does not exist, at least not yet. 

It is unnecessary to list all the ways in which China has skewed the world trading order. Most thinking people are well aware of the complicated and unwieldy system China imposes on investors trying to do business in that country.

We are also aware of the Orwellian surveillance state that has been developing there and the even greater influence of the Communist Party over the affairs of all aspects of that society. I have personal knowledge having visited the country, advising clients who were considering doing business there and having friends who lived in several cities in the country. 

Freedom House rates Internet Freedom in China as not free, scoring 88 out of 100, 0 being fully free, 100 being least free. The USA, in contrast, is rated free scoring 22 out of 100. 

Huawei is a Chinese company operating out of China 

The Government of the USA has stated: For many years, China has pursued industrial policies and unfair trade practices – including dumping, discriminatory non-tariff barriers, forced technology transfer, over capacity, and industrial subsidies – that champion Chinese firms and make it impossible for many United States firms to compete on a level playing field.

China’s industrial policies, such as its “Made in China 2025” plan, harm companies in the United States and around the world.

China imposes much higher tariffs on United States exports than the United States imposes on China. China’s average tariff rate is nearly three times higher than the average United States rate.

Certain products are even more imbalanced. For instance, the United States charges a 2.5 per-cent tariff on Chinese cars, while China maintains a 25-per-cent tariff on cars from the United States.

China has banned imports of United States agricultural products such as poultry, cutting off America’s ranchers and farmers from a major market for their goods.

Gilder mentions none of this in his article supporting Huawei. 

Perhaps more egregious is that Huawei was found guilty in a U.S. court in Seattle (2017) of stealing technology from a US Company (T- Mobile) with which it was doing business and fined $4.8 million. This, too, is not referenced in Gilder’s article. 

If is not a level playing field how can it be advantageous for western nations to continue to engage in vital trade areas like communications, internet technology when it is not at all clear whether the security of our information is beyond doubt?  

I enjoy and support intellectuals who are the backbone of innovation and creativity and advancing world commerce, and the free flow of goods and services and ideas. But as long as there are nation states this must be done through a system that is fair and beyond reproach.  

China and Huawei have not demonstrated that they willing to participate in a free and open system.