In Huawei Battle China threatens Germany ‘, where it hurts, for example: car manufacturers

In Huawei Battle China threatens Germany ', where it hurts, for example: car manufacturers

BERLIN – Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang settled in the back seat of a Volkswagen truck without driver, fastened their seat belts and walked around a runway at the disused airport in central Berlin.

“Nothing beats what is possible in practice,” Merkel said when they returned.

That was in July 2018, when economic cooperation between the two countries seemed limitless, combining the powerful automobile industry of Germany and the technology giant of China, Huawei.

Eighteen months later, Germany is embroiled in a tortured debate about whether Huawei can help build its own 5G mobile network. But with German car manufacturers, including Audi and Daimler, who are already working closely with Huawei, it may be China that is at the wheel.

Whatever Germany decides, it will shape its relations with China for many years and resound throughout the continent. It will send a powerful political signal about how united or broken Europe will be in the digital age of rivalry between Washington and Beijing.

Germany, like the whole of Europe, is under enormous pressure to exclude Huawei from the US government, which fears that it is a Trojan horse with which the Chinese can spy on or control European and American communication networks. The pressure remains even after President Trump signed a first trade agreement with China on Wednesday.

But for Germany, that decision is particularly tense. Relations with the Trump administration are infused with tariff threats against German car makers and the growing mistrust that Europeans have come to believe can permanently reform, if not break, a transatlantic alliance that was once an armor.

China, on the other hand, is entering the European stage as a new strategic player and an increasingly indispensable economic partner. By far the largest market in the world, it has become the biggest source of growth for Germany’s leading car manufacturers and the key to its dominance in the luxury car market.

It is a position that has not made China shy to arm.

“If Germany made a decision that would lead to Huawei’s exclusion from the German market, that would have consequences,” said Wu Ken, the Chinese ambassador to Germany last month. “The Chinese government will not stand idly by.”

Konstantin von Notz, legislator and member of the Digital Affairs Committee in the German Parliament, said it as follows: “The Chinese have made it clear that they will take revenge in the places where it hurts: the automotive industry.”

For months, German legislators have danced on whether Huawei should be effectively excluded from the bidding process. The issue is expected to be discussed again in Parliament in the coming weeks. As a decision approaches, Chancellor Merkel is caught between worried German car makers who accompanied her on a dozen trips to Beijing and her own cautious intelligence community.

Merkel, administrator of the pro-business Christian Democratic party, is against banning the Chinese company.

“It is not about individual companies, but about safety standards,” the Chancellor said in November. “This is the certification that we will carry out. That should be our reference point. “

But there is a revolt in the intelligence and foreign policy community in Germany, afraid of American threats to restrict the exchange of information, and even among some of the Chancellor’s own legislators, who want to submit a proposal to Parliament with criteria for stricter safety then in fact keep Huawei out.

Merkel’s critics say that the current certification process, which simply requires companies to sign a pledge not to spy, is inherently flawed because it depends on trust.

At their party’s annual conference in November, Chancellor Huawei’s Christian Democrats defused as a corporate sponsor and adopted a motion requiring only companies “who demonstrably meet a clearly defined security requirements catalog to submit bids. An important requirement would be to its state off interference.

The motion did not mention Huawei or China, but the implication was clear.

“Under Chinese law, companies are required to cooperate with the Chinese secret service,” says Norbert Röttgen, a conservative legislator who co-authored the motion against Merkel’s Huawei policy. “If you are dealing with Huawei, you must also accept that you may be dealing with the Chinese Communist Party.”

Cars that can drive themselves can make driving safer, but they also offer opportunities for government supervision and control.

Apart from the fear of espionage and sabotage, the legislators warned that if Germany were to offer Huawei, this would not only alienate Washington but would also risk undermining a much-needed European front.

“Our only hope is to stay together as Europeans,” said Röttgen. According to him, that was also an argument for awarding the 5G contract to European companies such as Nokia or Ericsson.

Analysts say that Nokia and Ericsson, who have won 5G contracts in Denmark and elsewhere, have the competence to build the 5G network, but it would take longer and cost more, especially since Huawei is already a large part of existing networks. in Germany. The change will be messy and expensive.

However, given the scale of the new offer, Röttgen said, if it were for Huawei, Europe would be in danger of being left permanently.

“If after a while you let Huawei build a large part of the 5G network, you don’t understand your own system,” he said. “It would be a maximum loss of control and sovereignty.”

“From a strategic point of view, it is a clear case such as glass,” Röttgen said.

However, others say that offering the offer to Huawei may not be a bad idea.

“If we ban Huawei, the German car industry will be expelled from the Chinese market, and this in a situation where the US president also threatens to punish German car makers,” said Sigmar Gabriel, former Foreign Minister and Vice President of Germany. Chancellor.

“Just because we have an American president who doesn’t like alliances, do we all give up?” He said. “” Why should we do it? Especially because it does exactly what the Chinese do and threatens the German car industry. “

German car manufacturers such as Volkswagen, Daimler and BMW continued to make revenue gains in China and participated in rivals such as Ford, even when the general market collapsed.

“See, 28 million cars were sold in China last year, 7 million of whom were Germans,” said Wu, the Chinese ambassador to Germany, in his comments in December, which many in Germany interpreted as a veiled threat.

“Can we declare German cars unsafe because we produce our own cars?” He said. “” No, that would be protectionism. “

Because German car manufacturers have become more dependent on China, they have also become more dependent on the Chinese government.

The preferences of Chinese consumers and the policies of the Chinese government increasingly determine which models car manufacturers build and what technology they develop.

China has also become the stage where German car manufacturers develop and test new technologies, often with Huawei.

Audi, Volkswagen’s luxury car unit, announced a “strategic partnership” with Huawei to develop autonomous driving technology during Mr. Li’s visit to Berlin last year. Daimler, which is 9.9 percent owned by Chinese investor Li Shufu, uses Huawei’s high-performance computing. BMW and others work together with Huawei in research and development.

No car company is more closely connected with China than Volkswagen. The company has been active in China since the early 1980s, when the communist government began to open itself to the West.

Today, Volkswagen earns nearly half of its sales in China and has 14 percent of the Chinese car market.

“When we retire from China, Volkswagen’s director Herbert Diess told the Wolfsburger Nachrichten newspaper in December,” one day later, 10,000 of our 20,000 development engineers in Germany would be out of work. “

German car makers deny that their dependence on Chinese sales has made them argue for Chinese interests.

“We don’t want political developments to extend to product development,” said Bernhard Mattes, president of the German Automotive Industry Association, in an interview in Berlin.

But Mr Mattes admitted: “We are not operating in a policy-free area, that is clear.”

Huawei has understood so much. The German headquarters are located in Bavaria, together with BMW and Audi and many other deep-rooted companies in China. The company is a generous sponsor of all major parties, including the conservative governors of Bavaria.

Markus Söder, the conservative leader of Bavaria, publicly defended Huawei’s right to bid while attacking the United States.

“To say in advance that I’m throwing it away because another partner in the world doesn’t like it,” he said, “is a bit problematic.”

Stephan Weil, prime minister of Volkswagen’s home state in Lower Saxony and member of the company’s supervisory board, has chosen a similar line and urged Germany to protect its 5G network from all sides. “I would not necessarily put my hand in the fire for someone else,” he said, without naming the United States.

When Peter Altmaier, the German minister of economy, recently pointed out that Germany “had not imposed a boycott, quot; on American technology companies after it was announced that the National Security Agency had intervened on the phone of Chancellor Angela Merkel, she received a strong reprimand from the ambassador of the United States Richard Grenell

“There is no moral equivalence between China and the United States and anyone who suggests that it ignores history and is obliged to repeat it,” said Grenell.

In July 2018, when Merkel and Li left the bus without a driver in Berlin Tempelhof, it was once the location for the Berlin airlift and a powerful symbol of Germany’s alliance with the United States.

“The truth is that if the US security guarantee was what we used to be, we would not have this debate,” said von Notz, the legislator. “But it isn’t. And now we have to find a way to defend our freedom and the rule of law in this digital world.”

Christopher F. Schuetze contributed the reports.