Chapter 7 - Assessments and Projections

Chapter 7: Assessments and Projections
1. I. The Importance of 5G Networks for Dominance
II. The Importance of Winning the Race for 5G Between the United States and China

Chapter 7: Assessments and Projections

Focusing on the assessment of 5G networks and their importance in the competition for technological dominance between the United States and China, this chapter discusses the importance of controlling the first developed 5G networks and 5G networks for future countries seeking global technological dominance in the world, projects China winning the race for the first fully implemented 5G networks, and analyzes the potential security risks to the U.S. as China is on its way to achieve 5G dominance.

I. The Importance of 5G Networks for Dominance

Although 5G will take time to be fully integrated into society, the importance of 5G networks are centered around the revolutionization of industries, the invention of new technologies, and the integration into everyday society and products. 5G networks are the building blocks for the future. Similar to the ways in which 4G technology changed the world as well as the technology we interact with, 5G will have a similar, yet exponentially bigger, impact on the world. By creating the first 5G fully implemented 5G networks, a company will have an advantage with creating and determining technology until other companies implement the same tech.

5G is set to revolutionize industries by allowing same-second response to events or interactions. This will occur because of the latency that 5G will have in the future. As discussed in chapter 2, this latency will allow for instant control over objects. Such control will allow industries to become more efficient and use more artificial intelligence or robots for greater accuracy in their results. This will impact industries such as construction due to dealing with large equipment, the medical field due to medical use for increased efficiency in robots and machinery used in procedures, and the shipping industry which handle crates or large amounts of product. Another industry that will be revolutionized is smart phones. With new technology, cellular devices will have increased capabilities and advancements which allow them to instantaneously interact with each other. 5G will allow smartphones to have large speed increases, as compared to current 4G networks. 5G will also revolutionize current industries because of the Internet of Things (IoT) which will allow more devices to be connected to each other. By being connected, these products will be able to interact with each other in real time. This real time connection will also revolutionize self-driving cars, a concept which will become much more prevalent with 5G networks. In theory, 5G will allow self-driving cars to interact and communicate with one another in order to decide the best routes or roads to take on a journey.

Along with revolutionizing current industries, 5G networks will allow for the creation of many new technologies and industries, with one of these industries being the invention of smart city. These smart cities will allow household products and the infrastructure of the city to interact and assess what is needed at certain times. In regards to infrastructure, it will allow cities to run more efficiently and self-diagnosis itself before problems occur allowing for cities to operate more efficiently for all. Each part of a smart city will be connected, from the water systems to the power stations. Another technology that will become more integrated into society is artificial intelligence (AI). With 5G, AI will become more integrated into the products that we use and the ways that we go about our lives.

As discussed early in this section, 5G will be implemented and integrated into all daily products. This is due to the IoT and increased latency that is experienced with the 5G networks. The combination of these two will allow household products to become more intelligence and interact with each other to make humans’ lives easier. This could be used in anything from the light bulbs installed in houses or the toasters and ovens in a kitchen. All of these products will become more efficient and make life easier for the people using them.

II. The Importance of Winning the Race for 5G Between the United States and China

While 5G is an important technology for the entire world, winning the race to create the first fully developed 5G program is the key to world dominance for a number of reasons such as controlling large amounts of data, implementing advanced technology, controlling advanced 5G networks, and creating political advantage.

In this section of the analysis, it is important to note that when the author uses the term “winning the race to 5G” or the “race for 5G”, it is referring to the full or almost full implementation of 5G networks into society. This implementation goes beyond basic cell phone coverage in some areas, and refers instead to vast coverage and use throughout a country. “Winning the race for 5G” refers to a company having the first fully implemented foundational networks and infrastructure. This does not refer to companies that only provide consumers with 5G networks, as these companies need the infrastructure and technology that other countries create.

The first reason that winning the race for 5G is so important is due to the large amounts of data that will be transmitted through 5G networks. With more aspects of people’s lives being connected to tech in the next 10 years, there will be vast amounts of data that will be collected by the companies which control 5G networks. Companies can use this data or sell it to other companies, so that they can tailor their products to specific users. Alternatively, the controlling telecom company can use data itself to enhance the 5G experience for individual users. Another dark reason for wanting to control data is the possible control of internet networks and controlling what people are able to see across networks. While this is unlikely to happen, controlling 5G could allow a company to use user data to spy on users or, as previously mentioned, sell their data to harmful groups.

The second reason that winning the race for 5G is important is due to the competitive advantage gained by implementing advanced technology and infrastructure before competitors can. Not only will this give the winning company an economic boost over other competitors, but it could also allow for the further creation and invention of newer technologies and capabilities that other companies or countries do not have. By implementing 5G technologies first, companies will have an advantage over their competitors both in security and infrastructure. Additionally, by implementing these networks first, a company would have control over the 5G market before any other competitors, which gives them a greater chance at securing governmental contracts around the world and also smaller corporate contracts. These contracts matter because of the potential financial gains that can be made as well as the long-term effects that securing governmental contracts could have on a company.

The third and most important that winning the race for 5G matters is due to the political stakes that surround 5G networks and their implementation into society. Similar to the ways in which Russia and the United States fought over world dominance in the mid to late 20th century with nuclear weapons and military strength, the U.S. and China are fighting today over world dominance with network influence and strength. Across the news networks, the race for 5G between the United States and China has been at the forefront. While technically the race for 5G is between technology companies, the US and China have made it a battle between countries for technological power for the foreseeable future. Political advantage matters so much because of the economic and technological impacts that 5G will have on the future. The United States’ lead in 4G technology allowed for a major increase of United States GDP, and 5G promises exponential increases in economic gains for whichever country can controls the network.

Another reason that 5G is so important politically is due to the societal impacts that 5G networks could have on countries and their influence around the world. If a company within a country has developed the most 5G networks around the world, this country is more than likely going to have greater influence over countries or areas in which their networks are located. The country that creates the first fully capable networks will have this influence because countries will want to align with the country that has the first technological capabilities; giving whichever country wins, a head start economically and politically.

III. The Winner of the Race for 5G Networks: China

While the “winner” of the race for 5G between the United States and China has yet to be determined due to 5G networks being implemented over a long period of time, I project that China will win the race for 5G. To date, Huawei has the most functional and advanced 5G networks and their infrastructure will likely be in place before any of the American companies. The research that I conducted suggests that much like the U.S. had the advantage over Europe terms of technology with the last generation (4G), China will likely have a similar advantage over the U.S. with 5G. Huawei’s ability as a vendor to sell products on all layers of the 5G market, their significant backing from the Chinese government, the growing size of their Chinese market as compared to the small size and market of Qualcomm makes them the most likely victor in this race. This assessment is partially based on the inference that Huawei receives funding from the Chinese government. While this is not confirmed, the research and investigation conducted by many companies shows evidence that it is extremely likely that the Chinese government helps Huawei with their research, development, and implementation.

Huawei is a company unlike any other because they operate on all levels of 5G technology and 5G equipment. Huawei is an end-to-end infrastructure vendor for 5G. Meaning, they create the infrastructure needed for 5G networks, such as base stations and towers, while also creating smartphones that are able to operate on the networks. This advantage allows Huawei to make certain features in their smartphones that are enhanced by Huawei 5G towers. This feature could be costly to other competing companies such as Apple because no other company has the ability or infrastructure to make the technology on top of producing the phones that will be on the markets. While this type of overall domination of every area of the 5G arena is still in the future, Huawei has the inside track to make the most advanced networks as well as good, reliable, cheap smartphones for these networks. This type of domination would be hard to break once controlled in a growing market such as 5G.

Another reason I project that Huawei will win the race to 5G is because of the significant resources and funding that China has put into 5G research and development over the past decade. As discussed in Chapter 3, the Chinese government has put billions of dollars into the research and development of 5G so that a Chinese company would be the leader in the upcoming technology. As the recipient of this government investment, Huawei has had the advantage of receiving government funding while still having competition from other companies within China. Huawei has access to China’s population as well as almost unlimited resources to create the best networks possible. They currently have the largest research and development budget among Chinese companies which has allowed them to use almost half of their employees for R&D. Huawei is using this budget to invest in more 5G base stations, which it currently leads to world in, as well as produce the second most smartphones in the world. Support from the CCP has made this possible, so that Huawei can help China accomplish their goal of global technological dominance.

The next reason that I project will help Huawei continue to be the world leader of 5G is the growing population of China and the subsequent growing consumer population that comes with it. China is currently expected to have three times the U.S. market by 2030 and because of this, Huawei can be the leader in 5G by focusing on domestic strength and some international development. Even with U.S. sanctions against the company, Huawei has been able to continue to grow due to its increasing population. While they may not always produce the most smartphones, Huawei’s ability to design and implement infrastructure will make them the superior company in what will be the biggest tech market in the world.

The final reason that I project Huawei to win the race to 5G is the size and reach of their company compared to competing companies, namely Ericcson and Qualcomm. As stated earlier in this section, most companies operate on only one level of the 5G market whether that be the selling of smartphones like AT&T and Verizon, or companies that make infrastructure and technology like Qualcomm and Ericcson. Huawei has the unique advantage of operating on all levels on the market due to its size and funding. In contrast, U.S. companies only have the capacity to compete at one level because they lack government funding for research. Another problem with U.S. companies is that they are competing against each other in 5G markets. For example, Apple is constantly trying to cripple Qualcomm because Qualcomm and Apple are technology rivals. Companies in China, on the other hand, do compete but they also are working on lifting up technology for the country of China as a whole, not just each individual company. China realizes that this is a battle between countries, not between companies, so they attempt to help all their domestic companies build the best possible networks.

IV. Chinese Country Goals for 5G Networks

With the assumption that Huawei will have the first fully functional and implemented networks, meaning China will win the race for 5G implementation, it is important to assess how 5G networks and 5G dominance will help further or accomplish the Chinese Communist Party (CCP’s) goal of becoming the world superpower over the U.S.

China’s goal has been and continues to be to become a, if not the, superpower in the world. This has led China to extreme economic gains in the past twenty years which boosted their status as a world leader drastically since opening their borders for trade. If Huawei establishes the first 5G networks, I project they will be the world leader for the next decade or until 6G technology is implemented. This assessment is based upon the importance of 5G for economic development, China’s emphasis on country over individual person or company, and China realizing the importance of cyber capabilities over a standard military.

China is on pace to pass the United States as the world’s biggest economy by the year 2028. As the world’s biggest economy, China would have trade influence over a majority of countries around the world as well as be a place that businesses want to move to and invest in. 5G will help China achieve this economic dominance because of the new industries that will be invented because of 5G. If Huawei implements the 5G systems first, China will be able to establish new industries and revolutionized current industries before other countries as discussed in section 1 of this chapter. This would allow to China to bring in more capital due to the investment and influx of business seeking these advanced capabilities.

China also places a big emphasis on country goals over company goals. This is because of China’s one-party state and the ability of the CCP to rally their citizens around the idea of China first. China has taken a very similar path with 5G networks by giving companies the resources that they need to create and implement 5G networks. This is different than the United States as many American companies are more focused on competition amongst each other and having the highest profit margins. These values, while still important to Huawei and other Chinese companies, do not take precedence over their emphasis on the China dream which is China being the greatest country in the world. This emphasis can be seen with their new policy: dual circulation. This particular term focuses on the reorientation of the economy towards internal consumption without closing off from the outside world, has in reality been government policy for years, albeit now with renewed intent. The 14th five-year plan, released on October 29, 2020, has dual circulation at its core. The logic is sound: The capital-intensive model that has powered China to the economic forefront in recent decades is running its course. ¹⁵⁵ This new model will increase China’s reliance on their own 5G companies like Huawei which will increase Huawei’s profits and in turn increase China’s influence around the world.

5G is also important to China’s country goals because of their increased awareness and resources dedicated to technology and cyber capabilities. The world has quickly changed from its view on warfare in 1980’s to now. Today, a hacker can do more damage than a bomb in terms of crippling a country’s infrastructure. I believe that China has realized that the future of the world is not in nuclear weapons or the size of a military, but rather the size of networks, tech capabilities, and partners around the globe. This realization has led to China to put their resources into companies like Huawei, so that Chinese technology can be in place around the world.

In 1994, Ren Zhengfei told Jiang Zemin, the Communist Party Secretary, that a country without a domestic telecom switch industry was like a country without a military.¹⁵⁶ In the same way, this still proves true, if not truer, today than it did in 1994. China has taken extreme steps to make sure that Huawei is the world leader in 5G technology and its implementation because China understands the importance that 5G networks will have on the future. In 1994, not having domestic generational networks was like not having a military. Now, without generational networks, it would not be possible to be a world superpower.

V. Future Security Implications of Chinese 5G Networks

¹⁵⁵ Tang, F. “What is China’s dual Circulation economic strategy and Why is it important?” China Macro Economy 4 March 2021, https://www.scmp.com/economy/china-economy/article/3110184/what-chinas-dual-circulation-economic-strategy-and-why-it

¹⁵⁶ Johnson, Keith, and Elias Groll . “The Improbable Rise of Huawei.” Foreign Policy, 3 Apr. 2019, foreignpolicy.com/2019/04/03/the-improbable-rise-of-huawei-5g-global-network-china/.

In order to fully assess the impact that 5G networks will have on the future, it is important to assess the likely security implications of Chinese 5G networks and 5G networks as whole. This assessment is the product of the qualitative research done for this paper, and this assessment assumes that these security implications are mainly dealing with Chinese companies and networks. However, this assessment will also discuss 5G security risks as they pertain to the whole network, not just a specific country. The likely security risks that will be associated with Chinese 5G networks are: military and intelligence advancements, data breaches, risk of critical infrastructure failure, and the overall control of data. While this section is mainly assessing the likely security implications, it is important to note that these networks will not be fully implemented for some time, and therefore a full assessment of the security implications is difficult to project since the technology has not been fully realized yet.

The first security risk is the control of data that Huawei or China could have as a result of implementing the first 5G networks. If a country controls the networks, it has the capability to control what users of the network see and how they interact with each other. This occurred during the rise of 4G networks. In the mid 2000s, the United States was using devices to spy on individuals that they deemed as a risk to the United States. This resulted in the mass surveillance of U.S. citizens until made known to the public by whistleblower Edward Snowden. These 5G capabilities could allow China to track and limit what people who use Huawei networks see on their devices. China already does this to an extent to their own citizens, so it is possible they would the same thing to foreigners that could be enemies of the state.

If Huawei wins the race for 5G and has a fully implemented 5G network before the United States, China will have the capability to improve their military and intelligence systems before the United States can. This assessment is based on the increased capabilities of artificial intelligence and the IoT with 5G technology. The increases in these capabilities could allow the Chinese military and intelligence branches to create and implement new advanced weaponry, tracking, and communications that the United States would not have the capacity to stop because their 5G networks would not yet be fully realized. 5G could allow the Chinese intelligence community to be the most sophisticated and advanced intelligence community in the world if their networks are online first.

Another security implication that will come as a result of China winning the race to 5G is the possible implementation of backdoors in Huawei’s system. These backdoors, as previously discussed in Chapter 6, could result in data breaches of users on Huawei systems. While Huawei has stated that their system is fully secure, the Chinese Intelligence laws of 2014 and 2016 could force Huawei to implement these backdoors into the system without informing the public. These backdoors could allow Chinese intelligence agents or hackers to access user data or anything that uses 5G. This is a major security risk because of the increased technological footprint that 5G will allow for. Simply put, 5G will connect everything in the world, therefore, if everything is connected, this could result in catastrophic events if hackers or an intelligence agency got into the networks with an intent of causing problems. The critical infrastructure of cities or countries, for example, is at risk. Some experts warn that if a country uses Huawei’s systems, it is at risk of allowing the Chinese government to have access to — and potentially even control over — its internet network, leaving it exposed to crippling cyberattacks, industrial espionage and widespread surveillance.