When Chancellor Angela Merkel of Germany and Premier Li Keqiang of China met in July 2018, both parties were optimistic. With a new joint venture on the horizon, business looked rosy for both countries. After an idyllic ride together in a driverless Volkswagen van, Ms. Merkel exclaimed: “There is nothing like seeing in practice what’s possible!” It seemed that combining Germany’s powerful auto industry with China’s technology giant, Huawei, was going to be an extremely prosperous endeavor.
However, it’s been just over 18 months and the dynamic between Germany and China has changed dramatically. Ms. Merkel’s ever-increasing reluctance to allow Huawei to help build its 5G next-generation mobile network has raised tensions within Merkel’s own Christian Democratic Union-led bloc and the Social Democratic Party.
After all, German automakers, including Audi and Daimler, are already doing business full-on with Huawei. German engineers who became clients of Huawei are strongly against the proposed exclusion of the Chinese vendor. They expressed their disappointment and said that further delays would be extremely costly. They fear that billions of dollars could be wasted in the interim following the eventual launch of the 5G network.
China’s position as the biggest market in the world and the largest source of development for the German auto industry has literally put it in the “driver’s seat.” China sees Germany as a rival competitor and its aim with regard to German carmakers is clearly to dominate the luxury car industry.
A sensitive enterprise
In a recent interview, Wu Ken, China’s ambassador to Germany, warned that if Berlin were to make a decision that led to Huawei’s exclusion from the German market, there would be consequences. “The Chinese have made clear that they will retaliate where it hurts: the car industry,” Konstantin von Notz, a lawmaker and member of the digital affairs committee in the German Parliament, said to The New York Times.
Additionally, Germany and most of Europe are being pressured by the U.S. to shun Huawei as evidence mounts that the firm may be acting on behalf of the Chinese Communist Party (CCP). It is clear that the CCP wants to weaponize Huawei by utilizing it to spy on European and American communication networks. The Shenzhen-based company has categorically denied all such allegations.
The German and American dynamic
Although President Trump signed a first phase trade deal with China, pressure remains. “The West should have a joint solution to 5G because we view the world the same way,” Richard Grenell, the United States ambassador to Germany, said in an email.
Now, the dynamic between Germany and the Trump administration has entered a new stage of heightened tension. A once ironclad trans-Atlantic alliance is being threatened with tariffs against the German auto industry.
Cybersecurity, a risky business
Ms. Merkel was sharply criticized by German lawmakers for her statement in the Handelsblatt newspaper. She said: “The question of trust in the integrity of the manufacturer and the legal system of the country of manufacture is central.” (The Telegraph) It’s obvious that documents relying on “trust” are not enough to protect a country from international espionage.
Current official documents for use in applying for a bid only require that companies agree, through a mere signature, not to spy. Norbert Röttgen, a conservative lawmaker and critic of Ms. Merkel’s Huawei policy said: “When you deal with Huawei you also have to accept that you might be dealing with the Chinese Communist Party.”
Chancellor Merkel’s Christian Democrats eventually passed a motion that demands that “only companies which demonstrably fulfill a clearly defined catalog of safety requirements should be allowed to bid.” Ms. Merkel responded by saying: “It is not about individual companies, but rather security standards. It is about the certification we will carry out. That should be our guiding benchmark.”
At the annual meeting of the World Economic Forum in Davos, Switzerland, Ms. Merkel, (not naming Huawei directly) said: “I don’t think I make myself particularly secure if I completely eliminate providers in their entirety and then don’t know how they develop – I am skeptical about that.” (Al Jazeera).
However, the debate is still raging on. Social Democrat (SPD) lawmakers support the proposal that stipulates that businesspeople from countries without “constitutional supervision” must be excluded. Conservatives also oppose the rules favored by the chancellor that would keep the door open to Huawei. To complicate matters even further, moderates don’t want a showdown with Merkel and are all for strict security criteria that should apply to the core network only.
On January 20, 2020, Ms. Merkel asked her conservative lawmakers for an extension until after the March European Union summit. Thereafter, she will make a decision on whether China’s Huawei may take part in the roll-out of Germany’s 5G network.