Now, it’s all about Tiktok. But Huawei leads

Huawei Home. By Eva Dou. Folder; 448 pages; $34. abacus; £25

It is one of the most controversial companies in the world, providing important telecommunications suites for most developing countries. US officials swear it was a spy tool for the Chinese Communist Party. It has been charged with various violations, including intellectual property theft, received luxurious state subsidies, allowing it to weaken price competitors and provide the Chinese government with state-of-the-art tools for surveillance and digital oppression.

No other company has incorporated the world’s two strongest leaders (the US and Chinese presidents) into a direct geopolitical standoff. However, China’s technology group Huawei continues to flourish. In 2023, its revenue is about $10 billion, almost twice that of the iconic Silicon Valley company Intel.

“Huawei Home” investigated these achievements and allegations. Eva Dou, a technical policy journalist at the Washington Post, has parsed decades of Chinese documents to piece together how the company’s mysterious founder Ren Zhengfei emerged from poverty to leading China’s most powerful company. Huawei has transformed from a basic phone switch about 40 years ago to designing some of the world’s most advanced semiconductors.

Ms. Du’s analysis was timely. The group is the first to raise national security issues in Washington today by many Chinese companies. On January 19, Tiktok, a popular short video app, temporarily shut down its U.S. products before selling again after Donald Trump said he would give him more time to reach a deal with his U.S. partners (avoid being banned). Not long ago, Huawei was hit harder when Trump banned the sale and import of communication equipment from several Chinese companies.

For decades, journalists and researchers have tried to prove that Huawei is state-owned, and Mr. Ren is a senior military officer. Ms. Dou explains how Mr. Ren’s time in the army actually spends low-level work to a large extent, sometimes in a cave factory. Many people in the West believe that he is not a signal intelligence official. Huawei’s early equity records are confusing. Early investors included those working in state-owned companies, and the group may have hired a factory in the country’s domestic spy agency to take senior positions.

Some of these strikes are at the heart of Western misunderstandings about how China works. In the 1980s, China’s economy was dominated by the state; doing business with purely private entrepreneurs would make Huawei strange. Analysts often use direct ownership of state or military companies as proof that companies may be swung by the Communist Party. However, this direct link is not needed. As Chinese companies grow and become more important, they are inevitably entangled with the state and the party. The largest Internet companies such as Alibaba and Tencent have extensive cooperation with the government and sometimes invest in projects. (In early January, the U.S. added Tencent to its list of companies that it believes work with the military.)

Huawei’s cooperation with the country may undermine its reputation outside of China, but it is an important part of its business. In the mid-1990s, the company sought connections with state telecom operators and promised to transfer its technology to the state’s hands. Along with party officials, Mr. Ren was an early voice that demanded China’s technology self-sufficiency.

Today, Huawei is at the forefront of helping the government achieve this goal. In 2023, the organization managed to produce its own high-power chips for smartphones, three years after Mr. Trump banned the purchase of U.S. chips. This has caused Huawei to restart its smartphone business. It has also been one of the major suppliers of surveillance technology to focus on China’s predominantly Muslim Uyghurs, who were detained in the northwest of the country. It once designed a “Uyghur Alert” for facial recognition programs.

Ms. Du pointed out that Huawei was angry about the US cigarette gun for the first time when it began expanding its fiber cables overseas in the mid-1990s. At that time, the NSA “found that many conversations that I didn’t like to hear.” This distrust will eventually lead to the arrest of Mr. Ren’s daughter Meng Wanzhou in Canada on a US order in 2018, triggering a fierce diplomatic dispute. Trump calls Huawei one of the biggest threats to national security.

Is the United States afraid of Huawei and others like Tiktok? The revelation about the largest Chinese hacker incident ever projected Huawei and Tiktok in a slightly different light. Late last year, it was revealed that Chinese spy agencies had obtained a lot of telephone data from top U.S. officials and could listen to private conversations. For years, American Telecom has been tearing apart and replacing Huawei equipment. Violations should raise new questions about how democratic countries protect themselves from China. In Washington, kicking out Huawei has always been a political victory. However, it did not stop the Communist Party from listening.

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©2025, Journal of Economics Co., Ltd. all rights reserved. From an economist, published under license. The original content can be found on www.economist.com