Between the Devil and the Deep Red Sea

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Tired of the Covid Crisis? The good news is that a distraction is heading our way. Not long after covering TV in ads telling us to stay home and do nothing, the UK government is about a launch the ‘Get Ready for Brexit’ campaign imploring the nation to be ready to grasp the opportunity.

That would be the opportunity for endless form filling, queuing and disappointment as business drains away. The Government isn’t even trying to hide that it will be damn difficult, and not even the head-bangiest Brexiteer suggests anything but negative impact on our trade with Europe, by far our biggest trading partner.

But, fear not, they say, there is now the freedom to massively increase trade with the biggest trading partners anyone could want: China and America. Which brings us to Huawei.

The ban on Huawei kit in the UK 5G network is a shame for those that will lose out on 5G opportunities as the technology’s arrival in the UK is postponed and becomes more expensive. Just when it can least afford to, the UK will slip considerably further down the digital economy league tables. It is also a shame for all those employed by Huawei in the UK, though one assumes many will find homes at the companies that will now be charged with making up the 5G shortfall.

It’s not so much of a shame for BT and Vodafone, who filled their boots when offered state-subsidised rock-bottom prices for the offending kit. But then no one told them not to, least of all our government, until now a massive cheerleader of Chinese trade and investment – let’s not forget there are currently still plans for Chinese companies to build nuclear power stations in the UK.

The UK thought it had struck a compromise with its earlier decision to limit Huawei to a 35 per cent market share and then ease it out. But President Trump had other ideas and piled on the pressure by sanctioning the Chinese company’s access to some chips.

This last point has been used as a fig leaf to cover the government’s caving in to White House pressure and its own back-benchers who are now hawkish on all matters China.

The UK government has been constantly criticised through the Covid crisis for dishonesty and lack of clarity. If the current incumbents remain in Washington and Beijing there is a Cold War coming, and it isn’t without cause; there is Hong Kong and the Uighurs, not to mention state-sponsored market dumping and IP theft. And so, the rest of us have to pick a side. But unlike the last Cold War, when the Soviet Union was essentially non-trading and emphatically not embedded in every developed economy, the day-to-day impacts were small. This time the consequences will not be small as the Huawei saga illustrates. Added to the Covid crisis and the fall out of Brexit (for Europe as well as the UK), leaders need to get real with everyone about just how tight we need to buckle up.


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