In the middle of US Secretary of Commerce Gina Raimondo’s goodwill tour of China last month, Huawei Technologies Co, a telecom giant facing stiff US trade restrictions, unveiled its latest flagship device, the Huawei Mate 60 Pro with a next-generation chip, illustrating just how hard it has been for the US to clamp down on China’s tech prowess.
The US Department of Commerce would have to discover whether Huawei developed the capability to manufacture the 7-nanometer chips at scale by itself or with the clandestine help of foreign companies, with the possibility that the US could ramp up its restrictions.
A report by Bloomberg revealed that several Taiwanese technology companies are helping Huawei build infrastructure for its under-the-radar network of chip plants across southern China to help Chinese firms bypass US export controls. The Ministry of Economic Affairs has summoned the semiconductor and factory services suppliers for questioning, and if found to have helped Huawei in contravention of restrictions, could face a fine of up to NT$250 million (US$7.8 million).
Washington’s decision to stop approving licenses for US firms to export most chipmaking technology to Huawei elevated the US-China trade dispute to new heights. The US and China’s competition rivalry has long spilled over into finance, technology and geopolitics. Washington has tried to curb Beijing’s ability to gain access to advanced chips to slow China’s development of war machines that could aid its growing military presence in the Taiwan Strait, and South and East China seas and thereby threaten global peace and economic growth.
In response, China has unveiled a “dual circulation” strategy. By relying mainly on “internal circulation” — the domestic cycle of production, distribution and consumption — it aims to cut its dependence on overseas markets and technology in its long-term development, a shift brought on by a deepening rift with the US.
As a result, when Huawei managed to introduce a new model with a Kirin processor, the device became a symbol of national pride and evidence that the country can break through US sanctions targeting Chinese homegrown technology champions. However, without advanced facilities and only equipped with anti-US sentiment, it would have been difficult for Huawei to make a breakthrough in the high-tech industry with “indigenous innovation” alone. This is why people have questioned whether China might have had assistance from external sources.
Some rumors said that South Korean companies provided Huawei with memory chips, and now reports suggest that Taiwanese companies are helping the Chinese company with infrastructure. Such major allegations, naturally, caused a ripple of unease in Taiwan. The companies in question have said that they only assisted Huawei with low-level tasks, such as waste management, internal renovation, machinery installation and piping, which still requires investigation.
Even if the companies are telling the truth, Taiwan would still be shown in a bad light. After all, amid the strategic rivalry between the US and China, Taiwan, as a victim of Chinese aggression, should stand with the democratic camp led by Washington to counter Beijing. Taiwanese companies should not waver on the question of national solidarity and seek to work for one’s interests by delving into a “gray area.”
The incident with the Taiwanese firms allegedly helping Huawei is a case in point. Even though China is seeking to devour Taiwan, overreliance on the Chinese economy and conflicting national and cultural identity has made some Taiwanese less vigilant, thinking of the foe as a friend, and inadvertently commit acts that could undermine national security, while escaping heavy penalties or contravening codes of conduct.
For example, when Taiwan prosecutes someone for treason and colluding with the other side of the Strait, the government usually hands down such light sentences that it has no deterrent effect on spying for China, revealing a disconcerting loophole in national security. In contrast to the US’ awakening to the ramifications of the rise of communist China, Taiwan’s wariness and sensitivity to China’s threat is slow to a fault.
At the beginning of the opening and reform of the Chinese economy, Western countries harbored the naive, wishful thinking that a wealthier China would bring political liberalization and become democratic and market-oriented after commercial dealings with democratic countries. Eventually, it would emerge as a power that is nonaggressive, that embraces free markets, political pluralism and works with the free world to build a secure international order.
The sad truth is they could not have been more wrong in their prediction. The Chinese Communist Party regime not only spat on democracy and refused to adhere to the international order, but fomented anti-US, anti-democracy sentiments domestically and had set its eyes on becoming the new hegemony to replace the US.
In the past, democratic countries have turned a blind eye to China’s widespread intellectual property theft. Realizing that China has used that knowledge to obtain illegal commercial gains and even to bolster its military and destabilize global order, the democratic camp quickly made restraining China’s ambitions and methods the new common goal.
The US went far with its export curb list against China in terms of technology, talent, equipment, resources and funds. As Huawei has shown signs of bypassing those sanctions, the US commerce department has immediately dropped hints to impose “full blocking sanctions” on Huawei. Further, the European Commission has demonstrated its resolution to protect its core technologies with a list of 10 critical technologies crucial to economic security.
What is heartening is that the government has been quick to pick up on the trend and take steps to safeguard the nation’s technologies. In a recent interview, National Security Council Secretary-General Wellington Koo (顧立雄) said that the government would publish a list of key technologies it wants to protect from China before the end of the year. It is expected to cover industries including semiconductors, agriculture, aerospace and information and communications technology.
Koo said that the policy would elevate critical technology in supply chain and semiconductors to the level of national security, enabling it to face closer scrutiny. The aim is to stifle Beijing’s efforts to acquire crucial tech to further its military and national defense ambitions. In other words, if Taiwan’s semiconductor products and technologies were exported to China, it would have been more than for commercial gain, they could help the enemy make chips to use in missiles, warplanes and warships, weapons that would be used to invade Taiwan.
Under Article 3 of the National Security Act (國家安全法), the national core key technologies are those “that would seriously damage national security, industrial competitiveness or economic development” if they are allowed into China, Hong Kong, Macau or “foreign hostile forces.” The Act Governing Relations Between the People of the Taiwan Area and the Mainland Area (兩岸人民關係條例) also prohibits the movement of advanced technologies to China and places investment restrictions on China. The International Trade Administration has also introduced concrete export control mechanisms.
Therefore, the publication of a list of key Taiwanese technologies would provide a safety net and help ensure and protect Taiwan’s national security and economic interests.
So far, the free world’s strategy to push back against China has been centered on national security, economic resilience, and democracy and sustainability. As decoupling is difficult to achieve in the short term due to long-term reliance on the Chinese economy, “de-risking” has become the new goal to build up a protection mechanism to counter China’s coercive economic tactics.
It is high time that we acknowledge that Taiwan leaves much to be desired in terms of citizens’ mentality on China, and regulations, laws, and national security and economic protections on countering Chinese threats. Only by amending laws and getting our act together can Taiwan safeguard its welfare against Chinese infiltration and invasion, and ensure its development, survival and sustainability.
Translated by Rita Wang
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