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India risks US wrath after Huawei thumbs up

India’s decision to allow Huawei to participate in 5G trials is certainly a win for the vendor, but it does add further strain to an already tenuous relationship with the US.

As a country, India has gone through an incredibly aggressive digital transformation in recent years. Reliance Jio democratised the digital economy, bringing the benefits of mobile internet to hundreds of millions who were priced out of the equation in bygone years. This is incredibly promising for the people of India and the Indian economy, but it also pushes the nation into the spotlight.

Thanks to an increasingly wealthy and digitally competent society, India is looking like a goldmine for other nations. Every country will want to secure a lucrative trade relationship with India, and for the US, it represents another battleground for China in the race for supremacy in the digital economy.

Aside from fighting the ‘red under the bed’, attempting to convince India to ban Huawei is a step towards eroding the Chinese telecom champions dominance on the technology world of today, and China’s influence on the 5G world of tomorrow. The US has already warned of the consequences of India working with China, and in particular Huawei, it has threatened to severely limit visa applications from the country, but India has seemingly ignored these threats.

India is heading towards becoming a tier one digital nation, but with this success comes the challenge of making friends. Countries will push, bicker and threaten to secure more valuable trade relationships, as well as try to get the upper hand over rivals.

India is walking the line of diplomacy, and unfortunately it is a very precarious trail. And such is the animosity between the US and China, it becomes very difficult to be friends with both.

Country Export Import
USA $44.3 billion (15%) $22.8 billion (5.5%)
China $14.8 billion (5.1%) $68.8 billion (16%)

India Exports and Imports value and percentage of total

As you can see there is a delicate balancing act in play. It is not as simple as choosing one superpower over the other, as one trade partner is the most valuable globally in each column.

Looking at the exports, heading towards China are a lot of raw materials. Iron ore accounts for 9.9% of the total exports to China, refined copper 12%, refined petroleum 3.7% and granite 3.6%. While these might not be considered the growth prospects of the economy, these industries are still incredibly valuable and employ significant numbers in the rural regions.

In terms of exporting to the US, diamonds account for 19% of exports, while packaged medicines make 14% of the total. What is worth noting, is that these numbers from the OEC do not include the service industry, the largest contributor to the Indian economy.

If a country was to value its relationship with partners on the value of exports, the US is the financial winner, however the industries which China underpins are likely to be larger employers in the country. The nuances become a bit more complicated, and that is before the import column is considered.

In terms of the goods coming into India from China, 13% of the total ($8.84 billion) are telephones (landlines, smartphones and feature phones). The OEC estimates that machinery (including consumer devices and computers) accounts for $38.9 billion of the Indian imports from China, perhaps due to the affordability of Chinese brands. These imports will be a significant factor to continue the drive towards the digital dream.

These statistics become important when you consider the other countries who are being heavily pressured by the US to ban Huawei.

Take the UK as an example. The UK has a valuable trade relationship with the US (11% export, 7.5% import), but it also does with China (5.6% export, 9.5% import). The US might account for more currently, but this might be down to the longevity of the relationship; China could be a more profitable market for the UK in the future.

Germany is also in a similar position to the UK. US and China account for 8.4% and 7.1% of total exports, and 5.7% and 10% of imports. In Italy, the US exports and imports are 9.3% and 3.8% of the total, while it is 3.4% and 7.2% for China. These are all countries which are resisting President Trump’s demands to ban Huawei.

What is worth noting is that there are countries which do not seem to be walking the fine line of diplomacy in the same manner. Australia, as an example, was one of the first to ban Huawei and to place its relationship with China at risk. According to the OEC statistics, China accounts for 35% of exports while the US only takes 3.5% of the total. In terms of imports, 24% come from China with only 10% heading across the Pacific from the US.

There is no hard and fast rule to explain why some countries have been swift to ban Huawei while others are sitting on the fence. Competition and reliance on the firms 4G equipment will be part of the reasoning, but the overarching implications on the relationship with China should not be ignored.

The conflict between the worlds two superpowers is incredibly complex, and there is certainly credibility to the argument that it is more than one country pushing back in the name of ‘national security’.


5 comments

  1. Avatar Andy 02/01/2020 @ 8:26 pm

    It is just stupid, I am an American and all the US is doing is bullying other countries to do this cause Huawei is getting bigger than they like. It is just another power play by USA. Let’s see the proof of national security, oh wait there is none. I think other countries need to just do what they want and say screw you USA.

    • Avatar JN 03/01/2020 @ 10:39 pm

      If you’re truly American, then you’re at least one of these:
      1. Chinese
      2. Democrat – you think the US-China Price war is all about Trump. And since you hate him, then you’d rather vote with China against your country. Cut the nose to spite the face!
      3. You know very little about China’s avowed end game: to dominate the whole world!

  2. Avatar Mark Carrera 03/01/2020 @ 11:30 am

    USA
    Cry about everything, sanctions anyone who defy them, believe everyone must follow them
    Philippines is a good example, to go to USA a Filipino needs medical exam, NBI and other clearances, a sponsor proof of income assets and
    Interview, fees and forms. For a two week vacation.
    Philippines might make a USA citizen get a Visa insert now, OMG
    They bully everyone, I hope they try green new deal, because that will wreck their entire system.
    Join China and Russia and all other, the USA is no longer a friend of the world they give nothing… expect everything

  3. Avatar Daryl 03/01/2020 @ 11:04 pm

    I’m from Australia and had never even heard of Huawei but thanks to Mr Trump for the constant advertising of how scared he is of the company (and the fact that you can get a mobile equivalent to an iPhone for about half the price) I went out and purchased one which I am using right now. It is the best phone I’ve ever owned and the company doesn’t need suicide nets to catch poorly treated employees.
    As far as the current network infrastructure goes here in Australia , it’s mostly Huawei already according to someone I know who works for nbn Co.
    If you think its smart to avoid a company that treats its employees well over a company that that has many suicides every year due to mistreatment of staff…. Go ahead but remember someone may have lost their life during the build of the phone that is in your hand and you supported the poor conditions that lead to them taking their own life. I will never buy an apple anything. Good on India for having something our Prime Minister Scott Morrison doesn’t have… Extremely large balls.. Hopefully I can say that.

  4. Avatar jack 06/01/2020 @ 5:23 am

    The 2 biggest threat so far to privacy and data security issues are Facebook and Google.
    There have been numerous evidence of known breaches where personal data were sold, leaked or breached.
    Huawei is not even remotely close as to US companies when it comes to violation of data privacy and security.

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