As the world’s biggest telecoms firm, they are big enough to look after themselves, but it’s amazing how many directions Huawei is getting pummeled from.
Let’s count the ways: Poland decided to rule out Huawei from its 5G network upgrade, saying the arrest of its former local corporate head on espionage charges sort of ruled it out. France is considering legislation to allow security personnel to make retroactive checks to telecoms operators’ equipment once installed. Canada’s former spy chief said Canada should ban China’s Huawei from supplying equipment to Canadian 5G networks because of the security risks involved. The Chinese government warned Canada of consequences if Huawei was excluded from 5G networks, and Ottawa responded by saying it would not compromise on security. A German newspaper report said the government there was considering excluding Huawei from the German 5G networks. Meanwhile, the daughter of Huawei’s boss is still detained in Vancouver pending an extradition hearing on bank fraud charges. The U.S. formally informed the Canadian government that it planned to proceed with the extradition request, and the Canadian ambassador to Washington initially said Ms Meng had a good case against extradition and then rescinded what was obviously an inappropriate comment on judicial matters from a diplomat (but it may be an infection that’s going round). But if he’s right, that could be provide an unexpected ending to one element of the Huawei global story.
In other news, China’s GDP growth rate for 2018 was announced at 6.6%, so we were off by 0.1%. But Q4 was 6.4% and the analyst predictions for 2019 are tending towards 6. A couple of senior Chinese officials commented that, yes, things are tough, and China’s economy is slowing, but it will muddle through. In terms of dealing with the consequences of the slowdown, party chief Xi Jinping chaired a meeting at the central party school which addressed the overall situation and the threats that exist to stability and unity. He talked about the need to be alert to major risks in areas including politics, ideology, economy, science and technology, society, the external environment and Party building, and specifically referred to the need for vigilance against “black swan” incidents and “grey rhinoceros”. That is, as we have said for years, an X factor event. Such is the consequence of opacity.
One of the most commonly referenced risks is debt levels, and the ratings agency Moody’s issued an assessment this week which said that China’s large economy-wide debt burden had stabilized over the past year, although local state-owned enterprise (SOE) and household debt levels were continuing to rise. Also, it said, the efforts at deleveraging and de-risking are slowing. So they managed to both shrink and re-inflate the question mark over debt in 2019.
Also of passing interest this week was the surely unintended echo of the Hundred Flowers Movement in the mid-1950s in a statement from premier Li Keqiang: “The government is open to public opinions to better resolve the issues that most concern people.”
Have a good weekend.