Issue 61

Wrong on Huawei

The Canadian trial of Meng Wanzhou, CFO of Huawei  and daughter of its founder, started this week. Meng was arrested as she  was leaving Canada under orders by the United States for allegedly  violating its sanctions on Iran. Given the ongoing trade war between  China and the United States and the latter's decision to place Huawei on  its "entity" list, i.e. "bad guy" list, the trial has taken on a bit  more significance, and will play some role in how Huawei and Chinese  technology companies in general are perceived in the future.

The United States has been out to get Huawei for some time,  using its global influence to thwart the company's attempts to sell 5G  infrastructure. And so the imminent trial of Meng last week caused a few  prominent economists/media personnel to weigh in as to whether or not  Huawei is actually a threat to national security, the Western way of  life... you get the picture. I'm going to focus on just one, blogger and  usually sensible GMU Professor Tyler Cowan:

…Currently  the U.S. is working hard to keep Huawei equipment out of the  forthcoming 5G networks in many countries. (Imagine letting the KGB run  the American phone network in say 1980, and you can see what is at stake  here.) For that campaign to succeed, even partially, the U.S. needs  some credible threats of punishment, such as withholding intelligence or  even defense protection from allies. The course of the trade war has  made those threats more plausible. If you are Germany, and you see that  the U.S. has been willing to confront the economic and military power of  China directly, you will think twice about letting Huawei into your  network.

The analogy comparing Huawei's 5G hardware  to the KGB "running" the phone network is so far off the mark it's not  funny. Tyler's a smart guy and so he's being deliberately misleading  here in an attempt to swing people to his side on the rather weak,  broader point he's making in the article, which can be summarised as  "America good, China bad".

Let's be clear about something: phone  networks were (are) completely insecure. "Scramblers" were used to try  and secure the lines but those were "often intercepted and decoded due  to scrambling's inherent insecurity" (excuse the Wiki link). If you owned the infrastructure, you owned the communications of that country.

Not  so for today's internet, which we can and should in most cases secure  both with end-to-end encryption (e.g. PGP) and encryption in transit  (e.g. TLS). Whether companies implement it property or governments allow  it (Australia, for example, has been trying to ban encryption for some time) is a discussion for another day, but it's not only  technically possible but also relatively costless to properly secure  communication over the internet, regardless of who owns the network  infrastructure.

The real issue is that Americans like Tyler want  their government to maintain control, and therefore its ability to  surveil, the world's communication network. Americans have been putting  backdoors into their hardware for decades (e.g. Cisco), and the government has been conducting mass surveillance of its, and other countries' people, for even longer.  Tyler is not worried about the inevitable surveilling and privacy  violations conduced by Chinese companies, just that they will provide  the data to a foreign government rather than the American one.

Ultimately  the Huawei debate is a red herring, which much like Tyler's KGB example  is designed to distract people from the fact that US companies have  fallen behind in the 5G space and their government is using every  protectionist trick in the book in an attempt to give them a leg up. A  far greater threat to the average American is their own government,  which by imposing import tariffs and subsidising domestic producers is  driving up their cost of living. It's also actively trying to undermine encryption, the only technology that can stop all governments (and companies), not just the Chinese, from violating their privacy.

Enjoy the rest of this week's issue. Cheers,

— Justin

Other bits of interest

We have a deal!

A deal is a deal and at least this conflict isn't escalating any more (for now):

The  U.S. and China signed what they billed as the first phase of a broader  trade pact on Wednesday amid persistent questions over whether President  Donald Trump’s efforts to rewrite the economic relationship with  Beijing will ever go any further.

The deal commits China to do  more to crack down on the theft of American technology and corporate  secrets by its companies and state entities, while outlining a $200  billion spending spree to try to close its trade imbalance with the U.S.  It also binds Beijing to avoiding currency manipulation to gain an  advantage and includes an enforcement system to ensure promises are  kept.

Meanwhile,  the hostility towards Chinese companies such as Huawei is achieving the  opposite of the United States' goals, driving the Chinese government  into providing additional support to its big tech companies, broadening  global supply chains away from American companies:

The  result has been a decisive shift in China’s approach to the industry.  Beijing is accelerating its drive for technological “autonomy” to boost  its control over its own supply chain in the face of political risks,  such as further US embargoes.

To achieve technological autonomy,  Beijing is pursuing strategies that often tread an uneasy balance  between increasing its engagement with the outside world and shutting it  out. For all the accusations China has faced about stealing other  countries’ technology, Beijing is now embracing international  open-source, or free to use, collaborations.

China is also tapping overseas markets for talent, while it is investing more in tech in countries other than the US.

This  acceleration of the decoupling will not only affect the US groups that  rely on China’s custom, it will also start to reconfigure the world’s  tech supply chain, as Chinese companies shift supply to countries they  view as safer allies. The two superpowers are already bullying countries  they buy from, and sell to, to take sides.

The tariff man has his work cut out for him.

Learn more:

Cognitive automation, not artificial intelligence

Here's a good Twitter thread on why artificial intelligence is misnamed.  There's nothing intelligent about it, which is why "Level 5" automation,  i.e. "total hands-off, go-anywhere-at-the-push-of-a-button" driving,  may never happen. Related: XKCD comic on machine learning.

Learn more:

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Issue 61: Wrong on Huawei was compiled by Justin Pyvis and delivered on 21 January 2020. Feel free to send feedback, suggestions for future issues, ideas, insults, or pretty much anything that crosses your mind to their account.