Doug Guthrie is the dean of the school of business and co-director of CCNES at George Washington University.
Protectionism is a powerful motivating force in Washington, though it is often disguised as principle. Frequently cast as patriotism or a hawkish defense of U.S. security, the current protectionism practiced by U.S. officials toward Chinese company Huawei is culturally ignorant and insular in its economic world view. And it is putting the U.S. economy at risk.
In the name of security, policymakers have branded Huawei as a tool of China's state-sponsored espionage and then refused to publicly release any legitimate evidence to validate the charge.
There are three problems here:
First, the House Intelligence Committee's report conflated Huawei with ZTE, another Chinese telecommunications company, yet they could not be more different. A close scrutiny of Huawei's history and culture makes it clear that the company is no pawn of the government of China. Unlike ZTE, it is a private, employee-owned company that looks much like its successful U.S. counterparts: global in scale, innovative in its products, and determined to grow. The fact that policymakers do not seem to know the difference between the two does not give me much confidence in the government's assertion that both companies pose an identical threat to U.S. security.
House members are not alone in their narrow vision. The Committee on Foreign Investment in the United States (CFIUS), a government panel that evaluates foreign investments for security risks, has rejected three efforts by Huawei to purchase U.S. firms. The public rationale for these rebuffs was the fact that Huawei's founder and CEO, Ren Zhengfei, was allied too closely with the Chinese military. Ren served in the People's Liberation Army's engineering corps until retiring in 1984, but he was only a lower level officer and not a general, as some have charged.
Second is the issue of transparency. In cases like this, CFIUS and the House committee should be required to make it clear what the threat is, demonstrating the kind of transparency that is the foundation of the U.S. democracy—the type of democracy that U.S. officials have urged China to become. The days of a "just trust us" declaration from federal officials in matters of global trade must be over.
Third, we are completely out of step with the realities of global capitalism today. The approach of U.S. policymakers to globalization has been parochial and antiquated. In an era of international corporations, where companies are less allied to nations than to profits, it behooves U.S. decision makers to think more broadly about how companies like Huawei and ZTE cross borders. Failure to do so could result in economic isolationism (leaving trillions of dollars of foreign exchange reserves on the table) that could haunt our country for years to come.
Why is Huawei under attack then? Its main downfall is its success and Chinese pedigree, which makes one wonder if political leaders here aren't engaged in a peculiar form of racial profiling as they work to reject every bid by Huawei to enter the U.S. market.
Let's say there are potential cybersecurity risks in inviting a foreign telecommunications giant into the United States to purchase U.S. companies. Our confidence has been so undermined by Huawei's mishandling that it has become difficult to judge its veracity now and into the future. Unfortunately, the United States has become the Peter to China's wolf.
- Read the U.S. News Debate: Should Congress Interfere with China's Currency Policies?
- Read Robert Zarate and Patrick Christy: Four Policies With Which Obama Should Engage China
- Read Justin Logan: The Fiscal Cliff Doesn't Threaten the Pentagon—Or Global Order