Attorney General William Barr said U.S. national security depended on pushing back against China’s dominance in 5G technology, warning that Chinese companies such as Huawei pose a counterintelligence threat and a risk to the future of the global economy.
“A very concrete problem confronts us today: It is the pivotal nature of 5G technology and the threat arising from China’s drive to dominate this field,” Barr said during remarks at the Center for Strategic and International Studies on Thursday. “5G technology lies at the center of the technological and industrial world that is taking shape.”
Barr warned that China’s Huawei and ZTE already have captured 40% of the global fifth generation wireless infrastructure market and that “for the first time in history, the United States is not leading the next technological era.”
The attorney general noted that China “can monitor and surveil” countries and companies that use 5G equipment from Chinese-backed companies.
“That is, in fact, a monumental danger, and for that reason alone, we should mobilize to surmount China’s drive to dominate 5G,” Barr said. “But the stakes are far higher than this.”
The attorney general warned that “from a national security standpoint, if the industrial internet becomes dependent on Chinese technology, China would have the ability to shut countries off from technology and equipment upon which their consumers and industry depend.” Barr said, “the power the United States has today to use economic sanctions would pale by comparison to the unprecedented economic leverage we would be surrendering into the hands of China.”
The industrial internet powered by 5G could result in up to $23 trillion in new economic opportunities by 2025, Barr said, but Chinese dominance of the arena could give them a stranglehold on the future economy of “smart” homes, farms, factories, heavy construction, and transportation systems. Barr said artificial intelligence, robotics, autonomous vehicles, 3D printing, nanotechnology, and quantum computing inevitably would also rely on 5G.
“Within the next five years, 5G global territory and application dominance will be determined,” Barr said. “The question is whether, within this window, the United States and our allies can mount sufficient competition to Huawei to retain and capture enough market share to sustain the kind of long-term and robust competitive position necessary to avoid surrendering dominance to the Chinese.”
Barr said that “time is very short” and that “we and our allies have to act quickly. We have to make a decision on the horse we are going to ride in this race.”
The main problem is that “Huawei is now the leading supplier on every continent except for North America,” and that “the United States does not have an equipment supplier.”
Huawei’s two biggest competitors, the Finnish business Nokia, which holds a 17% global market share, and the Swedish company Ericsson, which holds 14% of the world’s market, are “the only two companies that can compete with Huawei right now.”
Barr said the U.S. and its allies should consider whether to “put our large market and financial muscle behind one or both of these firms” in order to “make [them] more formidable competitor[s] and eliminate concerns over [China’s] staying power.”
In explaining the dangers posed by China, Barr said it “has emerged as the United States’s top geopolitical adversary” and “remains a dictatorship under which the Communist Party elite jealously guard their monopoly on power.”
Barr highlighted the Department of Justice’s China initiative, launched in 2018, which aims to combat both Chinese malign influence, ranging from cyber-espionage to technology theft, and its Thousand Talents Program aimed at stealing research. He said the annual cost to the U.S. economy from Chinese malfeasance could be as high as $600 billion.
“In the past, prior administrations and many in the private sector have too often been willing to countenance China’s hardball tactics, and it has been this administration that has finally moved to confront and counteract China’s playbook,” Barr said.
The DOJ has increased its scrutiny of China’s activities in recent years, charging an increased number of espionage cases, cracking down on China-based hacking schemes, prosecuting Chinese efforts to steal trade secrets, and more.
