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.