Wrong on Huawei
The Canadian trial of Meng Wanzhou, CFO of Huawei and daughter of its founder, started this week. Meng was arrested as she was leaving Canada under orders by the United States for allegedly violating its sanctions on Iran. Given the ongoing trade war between China and the United States and the latter's decision to place Huawei on its "entity" list, i.e. "bad guy" list, the trial has taken on a bit more significance, and will play some role in how Huawei and Chinese technology companies in general are perceived in the future.
The United States has been out to get Huawei for some time, using its global influence to thwart the company's attempts to sell 5G infrastructure. And so the imminent trial of Meng last week caused a few prominent economists/media personnel to weigh in as to whether or not Huawei is actually a threat to national security, the Western way of life... you get the picture. I'm going to focus on just one, blogger and usually sensible GMU Professor Tyler Cowan:
…Currently the U.S. is working hard to keep Huawei equipment out of the forthcoming 5G networks in many countries. (Imagine letting the KGB run the American phone network in say 1980, and you can see what is at stake here.) For that campaign to succeed, even partially, the U.S. needs some credible threats of punishment, such as withholding intelligence or even defense protection from allies. The course of the trade war has made those threats more plausible. If you are Germany, and you see that the U.S. has been willing to confront the economic and military power of China directly, you will think twice about letting Huawei into your network.
The analogy comparing Huawei's 5G hardware to the KGB "running" the phone network is so far off the mark it's not funny. Tyler's a smart guy and so he's being deliberately misleading here in an attempt to swing people to his side on the rather weak, broader point he's making in the article, which can be summarised as "America good, China bad".
Let's be clear about something: phone networks were (are) completely insecure. "Scramblers" were used to try and secure the lines but those were "often intercepted and decoded due to scrambling's inherent insecurity" (excuse the Wiki link). If you owned the infrastructure, you owned the communications of that country.
Not so for today's internet, which we can and should in most cases secure both with end-to-end encryption (e.g. PGP) and encryption in transit (e.g. TLS). Whether companies implement it property or governments allow it (Australia, for example, has been trying to ban encryption for some time) is a discussion for another day, but it's not only technically possible but also relatively costless to properly secure communication over the internet, regardless of who owns the network infrastructure.
The real issue is that Americans like Tyler want their government to maintain control, and therefore its ability to surveil, the world's communication network. Americans have been putting backdoors into their hardware for decades (e.g. Cisco), and the government has been conducting mass surveillance of its, and other countries' people, for even longer. Tyler is not worried about the inevitable surveilling and privacy violations conduced by Chinese companies, just that they will provide the data to a foreign government rather than the American one.
Ultimately the Huawei debate is a red herring, which much like Tyler's KGB example is designed to distract people from the fact that US companies have fallen behind in the 5G space and their government is using every protectionist trick in the book in an attempt to give them a leg up. A far greater threat to the average American is their own government, which by imposing import tariffs and subsidising domestic producers is driving up their cost of living. It's also actively trying to undermine encryption, the only technology that can stop all governments (and companies), not just the Chinese, from violating their privacy.
Enjoy the rest of this week's issue. Cheers,
Other bits of interest
We have a deal!
A deal is a deal and at least this conflict isn't escalating any more (for now):
The U.S. and China signed what they billed as the first phase of a broader trade pact on Wednesday amid persistent questions over whether President Donald Trump’s efforts to rewrite the economic relationship with Beijing will ever go any further.
The deal commits China to do more to crack down on the theft of American technology and corporate secrets by its companies and state entities, while outlining a $200 billion spending spree to try to close its trade imbalance with the U.S. It also binds Beijing to avoiding currency manipulation to gain an advantage and includes an enforcement system to ensure promises are kept.
Meanwhile, the hostility towards Chinese companies such as Huawei is achieving the opposite of the United States' goals, driving the Chinese government into providing additional support to its big tech companies, broadening global supply chains away from American companies:
The result has been a decisive shift in China’s approach to the industry. Beijing is accelerating its drive for technological “autonomy” to boost its control over its own supply chain in the face of political risks, such as further US embargoes.
To achieve technological autonomy, Beijing is pursuing strategies that often tread an uneasy balance between increasing its engagement with the outside world and shutting it out. For all the accusations China has faced about stealing other countries’ technology, Beijing is now embracing international open-source, or free to use, collaborations.
China is also tapping overseas markets for talent, while it is investing more in tech in countries other than the US.
This acceleration of the decoupling will not only affect the US groups that rely on China’s custom, it will also start to reconfigure the world’s tech supply chain, as Chinese companies shift supply to countries they view as safer allies. The two superpowers are already bullying countries they buy from, and sell to, to take sides.
The tariff man has his work cut out for him.
- U.S. and China Sign Phase One of Trade Deal »
- US-China trade deal seeks to combat sale of counterfeit goods »
- US tech backlash forces China to be more self-sufficient »
Cognitive automation, not artificial intelligence
Here's a good Twitter thread on why artificial intelligence is misnamed. There's nothing intelligent about it, which is why "Level 5" automation, i.e. "total hands-off, go-anywhere-at-the-push-of-a-button" driving, may never happen. Related: XKCD comic on machine learning.
- Twitter thread by François Chollet »
- Key Volkswagen Exec Admits Full Self-Driving Cars 'May Never Happen' »
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