Comment

How smartphones started the new cold war

In a digital world, who controls the chips and wires holds the power

In early December 2018, an unusual tech story broke in Canada: Meng Wanzhou, the chief financial officer of Chinese mobile technology company Huawei, was arrested in Vancouver. The story was explosive for Huawei: Meng (who also happens to be the daughter of Huawei’s founder and chairman, Ren Zhengfei) is reportedly charged with conspiring to circumvent sanctions against Iran. The bad news didn’t stop there: a few days later, a Huawei employee was arrested in Poland, accused of spying. The international cybersecurity community – including governmental agencies in the US, UK and Germany – has advocated bans on Huawei’s forthcoming 5G technology, citing potential for commercial and governmental espionage. Such a toxic international environment would sink most companies. But in December, in defiance of global sentiments, Huawei announced it had shipped 200 million smartphones in 2018 – overtaking Apple to become the second-largest smartphone company in the world.

‘The Chinese government has undertaken an ambitious and successful plan to become a world tech power’

Huawei is not the only Chinese brand in the ascendancy. Nine of the world’s top 20 tech companies are now Chinese – up from just two a few years ago. In smartphones, brands like Xiaomi, OPPO, Vivo and OnePlus are hoovering up market share with handsets that are racking up industry awards. In crucial developing markets like India, low-cost Chinese brands are dominating the market. Increasingly, Chinese phones – with advanced tech like in-display fingerprint readers, ultra-high-end-cameras, and bezel-less displays – are forging ahead of Western competition.

This is about more than the smartphone in your pocket. As economists will tell you, two of the central drivers of economic growth are manufacturing and the innovation that drives future jobs. But in the last two decades, Western technology companies have outsourced more and more of their manufacturing and development to China. Meanwhile, the Chinese government has undertaken an ambitious and successful plan to become a world tech power. The special economic zones in the south – China’s so-called ‘Greater Bay Area’ of Shenzhen, Guangzhou and Hong Kong – have largely overtaken Silicon Valley as the global epicentre of high-tech innovation. Once there was a time when your gadgets would have been designed in the West, and Asian factories merely did the assembly. Today, Shenzhen hackspaces can take a Kickstarter idea into a prototype and onto a factory line in a matter of days. The Thousand Talents Plan, an effort to reverse a brain drain of Chinese innovators to Western countries, looks like it’s working. And the Communist Party’s ‘Made In China 2025’ will supposedly make China the world leader in 10 key high-tech industries, including robotics, green tech and new materials. The imperial notion that Western economies could outsource its manufacturing jobs if it kept the high-value creative is being undermined. Today, Chinese labs are pumping out new patents and making world-leading scientific discoveries at a prodigious rate.

The West’s trade cold war with China is about much more than espionage fears, which, for the record, Huawei denies. It’s about how who shapes the global order in the 21st century. Mobile technology might seem boring, but in a digital world, who controls the chips and wires that process information holds the power – think of China’s Great Firewall and its dystopian grip on the truth. But a trade war with China is even more dangerous. The backlash against globalisation has already given us Donald Trump and Brexit. Far-right parties are in the ascendancy across Western nations. Economic protectionism, outmoded since the Second World War, is back in fashion. Western politicians need to come up with a new model of working with China to foster equality. Until then, the choice of your next phone upgrade just got a lot more political.