The U.S. government announced that it would extend by 45 days a temporary license that allows U.S. businesses to buy equipment from and sell to Huawei. It is half the length of previous extensions. This is the fourth extension since May, when Washington put Huawei on its Entity List, which bans the company from buying U.S. components without special permission. But the Trump administration also launched a number of new accusations against the company, including racketeering and conspiracy to steal trade secrets. Analysts said the moves indicate that the U.S. government is intensifying its campaign to stifle Huawei’s business. The Chinese company has been accused of stealing trade secrets and lying to U.S. federal investigators and having been engaged in a decades long effort to steal intellectual property, giving it an unfair advantage over competitors. The new indictment also alleges that Huawei engaged in covert efforts to ship its goods and services to Iran and North Korea, in violation of U.S., European and UN sanctions. Racketeering, obstruction of justice and money laundering have been added to the criminal case, unsealed in January last year, accusing Huawei of financial fraud due to misrepresentation to HSBC bank of its links to Starcom.

“The indictment paints a damning portrait of an illegitimate organization that lacks any regard for the law,” said U.S. Intelligence Committee Chairman Richard Burr and Vice Chairman Mark Warner in a joint statement. The Senators said the latest indictment is “an important step in combating Huawei’s state-directed and criminal enterprise.” In a statement responding to the new accusations, Huawei said: “This new indictment is part of the Justice Department’s attempt to irrevocably damage Huawei’s reputation and its business for reasons related to competition rather than law enforcement. These new charges are without merit and are based largely on recycled civil disputes from the last 20 years that have been previously settled, litigated and in some cases, rejected by federal judges and juries”. Huawei added that the indictment was “unfounded and unfair”.

Huawei and four of its subsidiaries are accused of stealing intellectual property from six U.S. companies, thereby obtaining IP about robotics, cellular antenna technology and internet router source code, prosecutors said. The new charges came on the same day as new regulations took effect that tighten Washington’s oversight of foreign investment in the U.S. on national security grounds. The new rules give the Committee on Foreign Investment in the United States (CFIUS) broader powers to review and block any transactions in critical infrastructure, technology and personal data that are considered a potential threat to the U.S.

Concerning the license extension, Bai Ming, Senior Research Fellow at the Chinese Academy of International Trade and Economic Cooperation, said Washington’s multiple extensions underline how rural U.S. telecom carriers rely heavily on Huawei equipment for network coverage and how U.S. consumers are hurt more when normal business links are severed for political reasons.

The new accusations are also expected to complicate relations between the U.S. and the UK as a few weeks ago UK Prime Minister Boris Johnson announced that Huawei would be allowed to supply equipment for non-core parts of the UK’s 5G network, although it also designated the Chinese company as a “high-risk vendor”. Huawei’s involvement would also be limited to 35% of equipment supplies to the peripheral networks and exclusion from the core network. The U.S. had urged its allies to totally block Huawei from supplying equipment and U.S. President Donald Trump was reported to be angry at Johnson for not following U.S. advice.

Meanwhile, the Chinese Embassy in Paris urged France to establish “transparent criteria and treat all companies in a similar way”. It warned France against treating Huawei differently from European competitors when it comes to future 5G network equipment contracts. The Chinese Embassy said that a difference in treatment based on the country of origin would be considered “blatant discrimination” and “disguised protectionism.” The statement further warned: “We do not wish to see the development” in China of Finland’s Nokia and Sweden’s Ericsson being “impacted because of discrimination and protectionism” against Huawei by France and other European countries.

Huawei said that it is going to establish manufacturing units to produce 5G equipment in Europe, to further allay security concerns after the EU declined to impose a blanket ban on the use of Huawei’s equipment in its telecom networks. The news was announced in Brussels by Abraham Liu, Huawei’s Chief Representative to the EU Institutions, as the firm celebrated the 20th year of its operations in Europe. “We are looking forward to the next 20 years here. That’s why we have decided we want to set up manufacturing bases in Europe – so that we can truly have 5G for Europe, made in Europe,” said Liu. “Huawei is more committed to Europe than ever before,” he added. “The bases are expected to be used for assembly, and scale will not be big,” Xiang Ligang, a telecoms industry expert who closely follows Huawei, told the Global Times. In fact, the company does not have to build manufacturing bases in Europe as it could domestically produce all 5G-related products and later export to the region, which would be even more efficient and cheaper, Xiang said.

The EU has struggled to find a middle way to balance Huawei’s huge dominance in the 5G sector with security concerns pressed by Washington. A ban on Huawei will now ultimately be up to member states, but the European Commission’s middle road recommendations give cover to European capitals to resist pleas from Washington. Huawei employs over 13,000 staff and runs two regional centers and 23 research centers in 12 EU countries.

U.S. President Donald Trump was reported to be furious at British Prime Minister Boris Johnson for allowing Huawei to deliver equipment to the UK’s non-core peripheral networks, but the office of the PM said the row was “overblown”. However, U.S. Vice President Mike Pence said the Trump administration had made its disappointment at the UK decision “very clear to them”.

Huawei’s plan is anticipated to minimize concerns of many over the so-called security threat, and paves the way for the company’s development in the continent, Telecom Expert Xiang added. The U.S. are working hard to try to come up with an alternative to Huawei. But Xiang said that “the U.S. has to accept the fact that it has already lagged behind in this next-generation technology race, and that all efforts against Huawei will be in vain”.

The Mobile World Congress (MWC) in Barcelona, to be held from February 24 to 27, announced that visitors from Hubei province would not be admitted and all visitors must provide proof that they have not been in China in the past 14 days, and certify that they have not been in contact with an infected person. Several companies, including Amazon, LG and Ericsson, have already pulled out of the event. A reduced delegation from Huawei has traveled to Spain well in advance of the event and put itself into a 14-day quarantine before attending the event, which is expected to attract 109,000 visitors. The GSM Association, which organizes MWC Barcelona, said in a statement that cleaning and disinfecting of the exhibition areas will be stepped up. It will also encourage a “no handshake” policy among the event’s attendees.

As China and the U.S. signed a phase one trade deal in an effort to put the brakes on the trade war, the controversy over alleged security risks of using Huawei’s equipment in 5G networks continued unabated. UK officials said that information presented by a U.S. delegation contained nothing its intelligence agencies had not already foreseen. As it ponders a decision on whether to allow UK telecom companies to buy Huawei’s equipment, the official position of the UK authorities is that that the security risk the Chinese company’s technology presents to British citizens is manageable. While UK Prime Minister Boris Johnson said that he would not put UK security at risk in upgrading the country’s 5G network, he also said that critics “must tell us what’s the alternative” to not using Huawei equipment. Johnson is due to make a final decision on whether to allow the tech firm to supply “non-core” parts of the UK telecoms system within weeks. In his first interview of the new year with BBC Breakfast, Johnson said: “The British public deserve to have access to the best possible technology. We want to put in gigabit broadband for everybody. Now if people oppose one brand or another then they have to tell us what’s the alternative,” the Guardian reports.

The U.S. is also trying to create a competitor for Huawei. New legislation introduced in the U.S. Senate aims to create a viable Western alternative to Huawei Technologies and undercut China’s dominance in global 5G networks. One of the biggest problems in Washington’s bid to counter Chinese strength in 5G networks is the lack of global alternatives to Huawei. The U.S. does not now have a viable competitor, while Finland’s Nokia, Sweden’s Ericsson and even South Korea’s Samsung cannot match the complete technological package and attractive financing that Huawei offers. The Senate bill tries to address that gap. If passed, it would spend more than USD1 billion to bolster Western competitiveness, allocate new spectrum and support research and development in the telecommunications industry, the South China Morning Post reports.

“We are at a critical point in history for defining the future of the U.S.-China relationship in the 21st century, and we cannot allow Chinese state-directed telecommunications companies to surpass American competitors,” said Republican Senator Marco Rubio of Florida, a sponsor of the bill. Speaking in Silicon Valley a day earlier, U.S. Secretary of State Mike Pompeo echoed the Senator’s contention that excluding Chinese carriers from 5G systems in the West was essential. “China – specifically the Chinese Communist Party – presents unique challenges, especially to your industry,” Pompeo told the Silicon Valley Leadership Group. “We’re putting our allies and partners on notice about the massive security and privacy risks connected to letting Huawei construct their 5G networks inside of their countries. This isn’t about selling American stuff. It’s not an American commercial effort. It’s a national security effort,” Pompeo added. The six Democratic and Republican Senators who introduced the bill – the Utilising Strategic Allied Telecommunications Act – underscore that moves aimed at challenging China enjoy broad bipartisan support in Washington these days.

Huawei said the bill was misguided. “Huawei has spent billions in 5G research, so it would be unfortunate to see such a waste of U.S. taxpayer’s money to duplicate efforts when there are more cost effective ways to ensure the security of a network,” said Donald J. Morrissey, the company’s U.S. Director of Government Affairs.

Meanwhile the case of Meng Wanzhou, Huawei’s CFO, is winding its way through Canadian courts. The U.S. extradition request hinges on allegations Meng made a fraudulent presentation to HSBC in 2013 over a Huawei subsidiary’s business ties in Iran, but recently revealed documents show the bank had been aware of Huawei’s business relationships in Iran for years earlier. The documents seen by the South China Morning Post show communications between HSBC staff and Huawei employees about the bank accounts of Skycom Tech dated from as early as 2010. Meng made her presentation to the bank in August 2013. The existence of the documents could raise questions about allegations that Meng had misled HSBC about Huawei’s financial connections with Skycom and the latter’s business in Iran, which Washington alleges violated U.S. sanctions. If extradited to and convicted in the U.S., she could face up to 30 years in prison on some of the charges.

The legal battle has become one of the most widely watched cases in the world, also causing a rapid deterioration in the bilateral relationship between Beijing and Ottawa. The British Columbia Supreme Court in Vancouver started hearing the case on January 20. New litigation to force Canada to disclose more documents related to her case could extend it beyond November and possibly into 2021.

The Chinese government downplayed its ‘Made in China 2025’ plan under pressure from the U.S., but is now aiming to rely on domestic production for 75% of its key components by creating 40 national manufacturing innovation centers by 2025, up from 15 at the end of 2019. Domestic production can currently only provide around a third of the key components required by China, but Li Yizhong, a former Minister of Industry and Information Technology, said that the level would be lifted to 40% by 2020 and 75% by 2025.

New industries and business models fostered by WeChat, China’s all-in-one mobile phone application connecting people and businesses with a QR code, created a market value of more than CNY8.58 trillion last year, WeChat operator Tencent Holdings said in a joint study with Tsinghua University’s Institute for Global Industry. Featuring WeChat’s mini programs – which run inside the app – public accounts and payment functions, comprising the so-called WeChat ecosystem, generated some 26 million jobs related to transactions via QR codes last year, the company said during its annual WeChat-themed Open Class in Guangzhou, Guangdong province. Transactions through mini programs reached CNY800 billion in 2019. The adoption of a WeChat Pay Score, which evaluates users’ credit worthiness using data analytics, helped save deposits worth over CNY100 billion.

WeChat currently hosts over 1 million mini programs, with 1.5 million developers and 82 million third-party platforms devoted to enriching various services via the app, which boasts 1.15 billion users globally. Among them, 800 million have chosen to tie their bank cards to the app so that they can pay with their phones across tens of millions of stores in more than 300 cities. Due to its ubiquity, WeChat has effectively prolonged the operating hours of businesses. Data showed that evening expenditure was most vibrant between 8 pm to 10 pm, while a quarter of WeChat Pay users opened their virtual wallets from 10 pm to midnight.

Technology has also empowered mom-and-pop stores and individual peddlers. The number of transactions settled via WeChat Pay tripled between 2017 and 2019. More than 50 million small merchants, or 79.4% nationwide, use WeChat Pay as a payment method. Customers used WeChat Pay 5.8 times per month on average for purchases last year. Scanning QR codes for food purchases jumped six times, while public transportation benefited from increased adoption of QR code swiping for metro rides and consequently enhanced access speed by three times. Over 60% of hospitals used WeChat Service Account, a customer relations function that cuts the average queue time by 43.6 minutes.

As a bridge connecting the real world and the virtual world, QR codes lower costs for business operators, add more value in a smoother fashion, and are set to accelerate digitalization of the entire society, said Wu Jing, Researcher with the Institute of Science and Development at the Chinese Academy of Sciences (CAS). WeChat said it plans to include more functionalities this year to better monetize mini programs, including live-streaming, targeted QR codes pegged to items, and object-recognition capabilities to help merchants better convert clicks into cash, said Du Jiahui, Vice General Manager of WeChat Open Platform, as reported by the China Daily.

Lenovo’s upcoming Yoga 5G laptop

The U.S. Federal Communications Commission (FCC) has begun accepting public comments on its decision that Chinese companies Huawei Technologies and ZTE pose national security risks to the United States. Interested parties have until February 3 to give feedback on a November vote that could ban America’s rural wireless providers from buying telecoms equipment from the companies with money from the U.S. Universal Service Fund worth USD8.5 billion. At the end of the one-month period, the FCC will review the comments and make a final decision. The latest move reflects the U.S. government’s continuing determination to block any Chinese telecom equipment maker from having a role in developing 5G networks in the U.S.

The Trump administration in May put Huawei on a blacklist barring the company from doing business with U.S. tech companies. The Commerce Department has since delayed the start of the ban three times to reduce the repercussions for U.S. companies that have continued to sell to Huawei. The prohibition is now slated to take effect on February 16. The U.S. has also been pressing governments globally to keep Chinese suppliers out of 5G networks because of potential national security threats from China. The FCC said it aimed to strip Chinese equipment from American rural wireless networks to curb Chinese influence in the sector. “Both companies are subject to Chinese laws broadly obligating them to cooperate with any request from the country’s intelligence services and to keep those requests secret,” FCC Chairman Ajit Pai said. “The concern is that hostile foreign actors could use hidden back doors to our networks to spy on us, steal from us, harm us with malware and viruses, or otherwise exploit our networks.” In September, the House Energy and Commerce Committee voted unanimously to send on to the House legislation that would authorize a USD1 billion fund to help telecoms carriers with fewer than 2 million customers to rip out and replace the Chinese equipment. Huawei has strongly disputed the FCC’s conclusions, urging Pai to reconsider designating Huawei as a national security threat.

The White House pressed the Netherlands to cancel the sale of Dutch chip manufacturing technology to China to prevent it from getting machinery that would allow it to make the world’s fastest microprocessors. Dutch semiconductor equipment company ASML, the global leader in lithography, is waiting for an extension of a government license to sell its most advanced machine to a Chinese customer, the South China Morning Post reports.

The discussion on whether to involve Huawei in European countries’ 5G rollouts has been politicized by some politicians, senior Chinese officials and experts said. They noted that European countries, which have reaped massive benefits from the Chinese market, should make a cautious choice on whether to follow unreasonable U.S. bullying of the Chinese firm or cooperate and achieve win-win results with China in the coming era. A right decision will not only get European countries a ride on the fast track of future technology development, but also herald a new era for China-EU cooperation that brings tangible benefits for both sides, they said, as reported by the Global Times.

China’s Ambassador to the United Kingdom Liu Xiaoming said a British ban on Huawei would leave the nation’s technological development “trailing far behind” the competition and severely delay Britain’s transition from 4G to 5G networks. He also said there is no evidence to support claims that Huawei poses a cybersecurity threat. “Fabricating ‘Huawei risk’ in the name of national security is tantamount to giving a dog a bad name to hang him,” Liu said. “Doing so will only hamper normal cooperation between countries, and in the end, those who intend to scare others would lift the stone only to drop it on their own feet.”

Cristiano Amon, President of U.S. chipmaker Qualcomm, estimates that 200 million 5G smartphones will be shipped in 2020. Forty-five operators now have 5G commercially deployed, while 340 operators are investing in 5G globally. We expect that the number will go up to 1 billion connections by 2023; two years faster than what it took for 4G to get to 1 billion,” Amon said. Chinese companies continue innovating in the 5G sector. In partnership with Qualcomm, Lenovo unveiled the world’s first 5G personal computer, the Yoga 5G, which will be available in the spring for USD1,499. “The 5G PC is now a reality, and that will define the future of productivity,” said Amon. 5G is “getting to lower price points so that we can scale”, he said, adding that the market is “moving toward 5G smartphones on a global scale”. 5G will also bring further developments in the autonomous driving industry by allowing C-V2X, which enables vehicles to communicate with each other and the environment around them, to share the 5.9 GHz band, the South China Morning Post and the China Daily report.