Beijing's unique approach that ensured dominance in 5G, 6G over US

Huawei, the Chinese telecommunications giant, was founded by Ren Zhengfei in 1987. By the mid-1990s, it was producing switching equipment—key hardware and software for modern telecom systems. In a 1994 meeting with the leader of the Chinese Communist Party Jiang Zemin, Ren argued that controlling such infrastructure was akin to national defence and that a country “that did not have its own switching equipment was like one that lacked its own military.” Jiang agreed, sealing a lasting partnership between China’s government and its telecom firms in pursuit of strategic security.

While China pursued telecom as a national priority, the United States took a more hands-off approach. In the 1990s and 2000s, American dominance in telecom felt assured, with an article by Foreign Affairs recalling that US innovations led to global adoption of 2G, 3G, and 4G technologies, while government investment had already birthed the Internet and GPS. Apart from funding R&D, Washington largely let the private sector lead.

By contrast, in China, the government and military elevated top telecommunications firms as national champions, promoting their growth to advance Beijing’s strategic objectives. The government reportedly provided Huawei alone with $75 billion between 2008 and 2018, which allowed the company to undercut global competitors and quickly capture market share—even in the US The effort was so effective that by 2012, Huawei equipment had been installed throughout rural America, including near bases housing US nuclear weapons. This gave the Chinese government potential access to continuous surveillance of some of the United States’ most sensitive military operations. While Huawei may not have profited significantly, the intelligence advantage for Beijing was substantial.

The US began to push back during the first Trump administration, banning Huawei equipment from national networks and encouraging allies to do the same. The Biden administration continued this strategy, but both parties understood that bans alone wouldn’t suffice. A competitive, affordable alternative to Chinese equipment was necessary.

Global race

To that end, Washington mobilized agencies like the Export-Import Bank and the US International Development Finance Corporation. These agencies were set up by Biden and financed telecom projects that favoured trusted vendors, such as Nokia, including a shift in Costa Rica away from Huawei’s 4G and support for 5G rollouts in India.

Huawei remains the global leader in 5G and is aiming for dominance in 6G. Competitors accuse it of leveraging intellectual property theft and benefiting from subsidies and a closed Chinese market. Over the last 15 years, US firms like Cisco and Motorola exited the telecom hardware market. Others, such as Lucent, French Alcatel, and Germany's Siemens, were forced to merge. Nortel, a Canadian leader, went bankrupt in 2009. Today, only Sweden’s Ericsson and Finland’s Nokia can globally compete with Huawei. Together, they hold just 40% of the global market—down from a 90% Western share in the 1990s. Chinese firms now command another 40%.

The article argues that the race for technological dominance in the telecommunication sector is not just about profits for Beijing. Huawei’s networks transmit vast amounts of data, and under Chinese law, the firm must share data with the government if asked. In the era of AI, this data becomes more valuable. Huawei’s “Smart City” systems—deployed in over 200 cities in 40 countries—collect everything from camera footage to utility use and social media activity. These data sets could feed Chinese AI models used for national security and surveillance, strengthening Beijing’s strategic edge.

Washington's strategy going forward

To counter this, the author urges the US to implement more measures than bans and diplomatic pressure. The 2022 CHIPS and Science Act established a $1.5 billion fund to promote telecom innovation. Initial grants focused on testing interoperability between systems from different vendors. Over $140 million has already been awarded, with another $420 million available in 2024. But, according to the article, progress has been slow and so future funding must accelerate and focus on commercializing new technologies to help US software firms enter the market.

The United States also lags China in infrastructure. While 88% of Chinese mobile users have 5G access, only 45% of Americans do. China built 600,000 base stations in three months; the US took two years to build 100,000. While Washington can’t match China in speed or scale, it can compete on innovation and efficiency. AI integration in telecom networks could boost speed and capacity, enhancing performance.

Another recommendation put forward in the article concerns tax incentives. Accelerated depreciation—allowing firms to quickly write off new investments—encourages capital spending. The 2017 Tax Cuts and Jobs Act included such a provision, but it's being phased out. Reviving this tool could help US firms invest more in digital infrastructure.

By Nazrin Sadigova