You Could Bet Your 5Gs, US-China Frontlines Are Being Drawn

Why go after Huawei? Why now? On the day of Mrs. Meng detention at Vancouver International Airport, US president Donald Trump, and president of the People’s Republic of China came out and declared a temporary truce to their trade conflict. A ninety day grace period before a new barrage of tariffs set at 25% for negotiations between the US and China, however both sides came out with their own versions, and interpretations of the truce. The markets rallied for about two days, then, Trump came up with the moniker, “Tariff Man”. And then, to nail it in that this year’s end will be a volatile one for investors, news came out of Huawei’s CFO being detained at the behest of the United States District Court for the Eastern District of New York.

“….the debate about intellectual property rights (and) cybersecurity, probably will escalate,” Bob Parker, investment committee member at Quilvest Wealth Management, told CNBC.

 

We are now approaching a new generation of cellular mobile communications. 5G will enable telecommunication capacities like never before. But, capacity works both ways. Imagine a world where things are really connected to the internet. Toilets that collect data about your health, real time traffic updates from cars, air conditioning systems, the hot tub, the oven, washing machines, your door, the porch lights, your dog’s and cat’s collar, or the aquarium where Bill the goldfish lives.

Fifth generation internet is more than a humongous paycheck for the conglomerates frantically racing to be the number one provider. It is a matter of security for nations and global dominance. Unlike the Chinese communist party, the US can’t just stop businesses from doing business, it has to prove that the certain businesses violated serious regulations. If Huawei is found guilty, or more specifically, if Mrs. Meng is found guilty, a US export ban on components to ZTE which could have crippled the company into bankruptcy, could very well be a huge set back to Huawei’s 5G plans.

Mrs. Mengs extradition request, and subsequent detention came at a pivotal time for Huawei. While the repercussions of the CFO’s arrest could mean economic backlashes to US companies like Apple, the Iran sanction, and fraud cases could spell disaster for Huawei’s 5G networks.

In London, British network provider O2 will be testing Huawei’s 5G equipment despite its government’s warning against using 5G hardware from the Chinese telecoms giant. FT reported executives in UK’s telecom industry citing that, “a move to ban Huawei would set back the introduction of 5G, the new generation of mobile internet, by nine months to a year”.

 

Meanwhile, as the frontlines of the conflict between the US and China becomes more clearly drawn. US president Donald Trump has expressed his adamant opinion on drawing a line between his government and the Democrats, and the US-Mexico border; declaring “We’re totally prepared for a very long shutdown”.

President Trump has vetoed the Bill from the Senate that would allocate government funding needed for the government’s continued operations. Citing that he will not sign any Senate spending bill that does not include appropriations for the US-Mexico border wall. The wall that Trump and his supporters needs over $5 billion.

Senate Democratic leader Chuck Schumer said on the Senate floor:

“You’re not getting the wall today, next week or on January 3rd, when Democrats take control of the House,”.

 

Though, things seem to be kind of stuck in limbo at the moment, the geopolitical situation between the world’s two biggest economic powers have certainly developed into a high risk predicament for global stability where the frontlines are becoming more eminently drawn. Japan recently joined the US, Australia, and New Zealand in banning Huawei from setting up infrastructure for 5G networks in their countries, while the UK, and Canada are weighing their decisions to follow suit, or not. So far in Thailand, AIS is currently the only network provider testing 5G capacity, but they haven’t hinted to when it might become available, or which company they will be getting their 5G networks from.