Foreign Policy Research Institute A Nation Must Think Before it Acts China’s 5G Challenge to the U.S. is for … the Future
China’s 5G Challenge to the U.S. is for … the Future

China’s 5G Challenge to the U.S. is for … the Future

Original Orbis pieces: Lawrence Rubin, General Philip Breedlove, and Admiral James Alexander “Sandy” Winnefeld, Jr., “Technology, Strategy, and the Future of Policy,” and Harsh V. Pant, “The 5G Question and India’s Conundrum,” Orbis, vol. 64, no. 4 (Fall 2020).

Implications of the Arguments: In that special issue of Orbis, guest editor Lawrence Rubin observed: “The intensifying competition to acquire capabilities to dominate or to pace an adversary has profound geo-political implications, including arms racing, inadvertent and intentional escalation, or even conflict. Uncertainty about others’ intentions and capabilities is a central driver.” Given those developments, what should be the U.S. response?

Revisiting these Questions: The United States risks falling behind the People’s Republic of China in the development and deployment of next generation technologies. Beijing has launched the world’s first quantum science satellite. It also is now poised to overtake Americans as the world’s most cited experts in artificial intelligence, and most immediately, has expanded its 2+ year lead over the United States in 5G communications technologies and standards. America must respond to China’s challenge in 5G or risk losing the future. According to former U.S. House Speaker Newt Gingrich, China’s leadership in 5G is the “biggest strategic disaster in U.S. history” and “we are losing to Huawei.” Former Google CEO Eric Schmidt also referred to the U.S. falling behind on 5G as a “national emergency.”

What Is 5G and Why It Matters

5G is the latest generation of wireless communications technology (we’ve had about one every decade since the 1980s), and it means the future as we have envisioned it in movies—driverless cars, autonomous combat craft, drone deliveries, ubiquitous robotic manufacturing, smart homes, and advanced precision medicine; the list goes on and on. It basically is the infrastructure that everything requiring very high data communications flows through—more than 100 times faster than “4G” communications, and it requires the deployment of new technology and infrastructure to use. The next-generation network will transmit data over higher frequency signals, or waves, that are closer together, travel shorter distances, and are easily obstructed. This means more and smaller antennas about the size of a pizza box (some estimate as many as 3-10 times the number of existing transmitting sites) will be needed to cover the same area as 4G networks. This new communications infrastructure will provide the backbone of what Klaus Schwab referred to the “Fourth Industrial Revolution,” spawning new types of companies built on “digital platforms,” such as trailblazers like Uber and Netflix.[1]

Consulting company Deloitte & Touche said in 2019: “5G technology introduction marks the beginning of a new era in connectivity that will impact almost every element of daily life. First adopter countries embracing 5G could sustain more than a decade of competitive advantage. . . . 5G technologies will influence everything we do.”

But there is no American national champion in 5G. 5G will use some of the infrastructure we have right now, namely cell base stations with antennas to receive and transmit radio signals. However, according to the U.S. Government Accountability Office (GAO), in addition to these “macro cells,” 5G will also require many more “small cells,” which will be installed on existing structures like streetlights due to the shorter range of 5G transmitters and frequency. Right now, both the base stations and the small cells technologies are dominated by a few select companies. According to author David Goldman, China’s national champion Huawei dominates this field with a 30% market share (in 2018), and which is “expected to ship 1.5 million 5G base stations, the core building blocks of 5G networks” globally in 2020.[2] Finland’s Nokia (18%) and Sweden’s Ericsson (14%) round out the major players in terms of 5G equipment market share—and are making strides in recent months. America doesn’t have a national champion company in this field—Qualcomm has America’s largest space in the 5G market—but it needs to move fast to catch up. It is not just important to be a key manufacturer of 5G technology, but it is also critical to be so in order to have a major influence over the standards that are developed for it. The nation that makes the dominant technology sets the standards for which 5G networks are pegged to worldwide. In other words, if America allows the Chinese to deploy the first 5G networks in countries nationwide, future technology upgrades to those networks will need to be compatible with those Chinese technology standards. As Deloitte reports,

5G is more than just a new wireless interface protocol offering more capacity and better performance for more smartphones. It is that but it also a myriad of technology innovation like antenna designs and device communications protocols to standardize both the way license and unlicensed networks interact, and the way network applications collaborate.

Further, while some U.S. telecom/phone service providers are advertising “5G” capability, they largely mean 5G-like “hybrid” capacity pushed through mostly 4G infrastructure. China has the lead in deploying a true 5G network in its own country, having deployed 1.9M wireless base station sites nationwide, expected as early as this year (2020), possibly 2 full years before the U.S. (with only 200k sites).

There is a national security threat. Building the communications infrastructure and network on which a national economy runs creates the potential for backdoors and malware, allowing for espionage and theft of the data that runs over that network. The U.S. should be concerned about this no matter who builds the network, but especially if a Chinese company does it. A 2017 Chinese National Intelligence Law states, “Any organization or citizen shall support, assist and cooperate with the state intelligence work in accordance with the law,” and a Chinese 2014 Counter-Espionage law says, “When the state security organ investigates and understands the situation of espionage and collects relevant evidence, the relevant organizations and individuals shall provide it truthfully and may not refuse.”

Concerned about the requirement that Chinese companies (most of whom have Chinese Communist Party cells officially embedded within them) cooperate with the Chinese government intelligence agency apparatus, the U.S. government has led an international campaign to keep Huawei out of not only American 5G networks, but has successfully influenced Australia, the United Kingdom, and others, but met with various degrees of failure in most of the rest of world—it must keep up the pressure.

Consulting firm Finite State concluded last year that “Huawei devices quantitatively pose a high risk to their users.” The firm said its analysis “discovered that there were hundreds of cases of potential backdoor vulnerabilities—improper default configurations that could allow Huawei or a malicious attacker to covertly access a user’s device.”

5G will enable artificial intelligence for multiple applications critical to the competition between China and the United States. To comprehend the scope of this challenge, understand what is at stake. This is not just about movie downloads, driverless cars, and smart houses—it is about precision medicine. China’s Huawei built 5G network will enable AI processing of millions of Chinese health records for health indicators and genomic. China needs this because of its looming demographic crisis. Beijing’s ill-advised one-child policy in the 20th century left the country with an overwhelming demographic challenge, i.e., nearly 30 million more male babies than females, as well as a negative population growth rate. As a result, China’s population is second only to Japan’s for the aging of their population—meaning that over time every Chinese of working age will need to support four aging Chinese. Their solution to this? To use 5G, combined with artificial intelligence, to solve their health challenges, improve worker productivity, and reduce age-related health costs. In America, we have equally strong motivation for advanced precision medicine to cap out-of-control health care costs (now nearly 30% of our national economy)—but we have the fortunate breathing space to do so in the context of a growing and diverse population. But does America want this to be a Chinese-dominated function or do we want our own capability?

What can America do? Long term, the United States can recognize that 5G and other geostrategic challenges are solved by a return to America’s historical investment in U.S. research universities and its national laboratories. China learned from the United States in this regard and is attempting to recreate America’s world-beating system of research universities. Overall, China is outspending the United States on 5G by 300% and is in direct competition with the U.S. in numerous other areas of research as well. Depending on what data you reference, China has either already surpassed the United States or is a close second in terms of overall investment in basic science—but the truth is that America pioneered the model of investment in basic research and should double down on what made America the global superpower it is.

In the short term, authors like David Goldman argue, the United States is at least 2 years behind the Chinese. To help us catch up, the U.S. Department of Defense is establishing a program of pilots centered around 10 major U.S. military installations, which may lead to a federal 5G network that could form the basis of a public-private partnership to help the United States make up some time. To begin this effort, on October 8, 2020, the DoD announced a $600M initiative for 5G experimentation and testing at five of its installations. Experimentation like this is critical to help understand how 5G can benefit the U.S. military and encourage industry investments. However, there were indications that the White House has also been pushing DoD to engage in a non-competitive 5G spectrum leasing to a single company, which is raising concerns about whether DoD could “own and operate 5G networks for its domestic operations.” The DoD suggests this refers only to independent DoD 5G networks for “training, readiness and lethality,” not a national 5G network, which would be a dramatic departure from past practice.

The United States should be creative about encouraging the emergence of a national champion or a consortium of companies in 5G—possibly to engage or cooperate with Ericsson or Nokia to build a counterbalance to China’s Huawei. U.S. Attorney General William Barr has suggested that America might buy controlling stakes in Ericsson and Nokia, an unknown in terms of possibility or likelihood. Additionally, the Defense Advanced Research Projects Agency (DARPA) is developing software workarounds to allow software to be run on any manufacturer’s 5G technology, and the Congress should continue to fund and encourage these efforts.

At the same time, the United States should continue the current diplomatic effort to keep Huawei out of its own networks and the 5G networks of major U.S. allies; it also must do all that it can to develop a national champion or a champion in the form of a consortium of companies. In the current Chinese geopolitical challenge to the American-led international order, the 5G challenge is only the first global battle.

This article was updated on November 30, 2020. Rivada was identified as the firm seeking a non-competitive 5G spectrum contract, but a spokesman for the company maintains Rivada never sought a non-bid contract.

The views expressed in this article are those of the authors alone and do not necessarily reflect the position of the Foreign Policy Research Institute, a non-partisan organization that seeks to publish well-argued, policy-oriented articles on American foreign policy and national security priorities.

[1] Klaus Schwab, The Fourth Industrial Revolution (first edition) (New York, Crown Publishing Group, 2016), p. 20.

[2] David P. Goldman, You Will Be Assimilated: China’s Plan to Sino-Form the World (New York, Nashville: Post Hill Press, 2020).