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Huawei: China's complaints about fairness ring hollow

Britain's widely predicted dumping of Huawei has provoked some equally predictable responses from China.

Besides the threats of retribution, two kinds of responses stick out.

One is the refrain from Chinese diplomats demanding "an open, fair and non-discriminatory environment" for Chinese businesses in the UK.

The other is from commentators that the ban is an act of "self-harm." A Huawei spokesperson said it would condemn the UK to the "digital slow lane, push up bills and deepen the digital divide."

These views would certainly raise the eyebrows of any of the handful of foreign telcos doing business in China.

To convey a sense of China's fair and non-discriminatory practices in telecoms, government think-tank CAICT has just issued some data on "foreign-invested telecommunications companies" approved to provide value-added services.

According to the CAICT list, the government has issued 385 licenses to 266 companies with various levels of foreign investment. Of these, 314 licenses, or 82%, are for online data and transaction processing, information service and domestic call centers.

To put this into context, 84,000 domestic companies have been issued licenses.

So while the rest of the telecom industry is working on integrating AI, autonomous vehicles, massive IoT or digital media into their networks, China is pleased to announce that foreign firms are doing online transaction processing and running call centers. For every 316 Chinese firms with a VAS license, one foreign company is licensed.

This is a long way from the commitments China made when it entered the WTO 19 years ago, promising a relatively open value-added services sector with ample scope for foreign involvement.

In its latest annual position paper, the EU Chamber of Commerce in China has called for, among other things, the deregulation of IaaS and PaaS cloud services.

It points out: "While China has issued numerous policies promoting cloud services domestically, international cloud service providers still find themselves confronted with insurmountable market access barriers in the form of licensing, technical cooperation and data localization requirements."

Echoing China's diplomatic corps, the EU chamber calls for "equal treatment in the Chinese marketplace in key areas such as participation in standardization, rule-making, government-funded national R&D projects and market access."

As to the self-harm caused by China's telecom protectionism, the EU chamber cites cross-border IP-VPNs.

It notes that currently available cross-border VPN connectivity solutions "carry high costs, making them less affordable for small and medium-sized enterprises."

In the EU chamber's latest annual survey of business confidence, 50% of respondents say they believe China's Internet access restrictions have a negative economic impact on their business: 47% report lower productivity, 45% highlighted their inability to search for information and 15% said it affected their ability to attract talent.

We could go on, but the point is clear: Fairness is a handy China talking point, but in reality it has made little effort to keep its promises on market access and instead weaponizes market access against governments that make unfavorable decisions.

For all the talk of the UK punishing itself, China's largely closed telecom market, with virtually no meaningful foreign participation, along with its harsh censorship and traffic filtering practices, severely disadvantages business and consumer users.

Britain's Huawei decision may be a good one or a poor one, but China is in no position to demand fairness or pretend that it prioritizes the needs of telecom users ahead of upholding its political order.

— Robert Clark, contributing editor, special to Light Reading

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