Why its Huawei U-turn could prove costly for Britain

Having given in to Washington's pressure, London is now likely to miss out on much-needed Chinese investment

Huawei's newest flagship store building in Shanghai, China. Britain's telecom network will not be allowed to purchase new Huawei 5G kit in the future. EPA

The UK government's controversial decision to ban the Chinese telecoms giant Huawei from building the country's new 5G network means that it has now firmly allied itself on the side of the Trump administration in Washington's increasingly bitter trade dispute with Beijing.

When British Prime Minister Boris Johnson made his original decision, back in January, to allow Huawei to continue work on developing the 5G network, he did so in the belief that it would be possible for his country to maintain good relations with both the US and China.

Huawei’s involvement in the 5G construction project dated back to former prime minister David Cameron who, following a highly successful state visit by Chinese President Xi Jinping in 2015, declared that the two countries were entering a “golden era” of co-operation.

Boris Johnson's U-turn on Huawei could be economically damaging for the UK and politically damaging for himself. EPA

Indeed, only last month Mr Johnson himself uttered a similar sentiment in Parliament, declaring his affection for China. He said: “I am a Sinophile. I think China is an incredible country and an extraordinary civilisation.”

Moreover, the British government’s original decision was taken on the advice of senior intelligence and security officials who concurred that, while the company was considered to be a “high-risk vendor”, they were confident of ensuring that its involvement would not in any way compromise national security.

Mr Johnson's willingness to persist with Huawei, though, was met with stiff resistance in Washington, where US President Donald Trump is engaged in an increasingly acrimonious trade war with Beijing. In particular, his administration has singled out Huawei, which it claims constitutes a security risk, and has pressured key allies to adopt a similar approach. China strongly denies the charge.

In particular, Washington is insistent that no member of the elite Five Eyes intelligence-sharing network, which was set up during the Second World War and involves Australia, Canada, New Zealand, the UK and US, should have any dealings with Huawei.

Australia and New Zealand have responded by ending their associations with the company, while the Canadian government is still reviewing its position.

Mr Johnson’s willingness to allow Huawei to continue working in Britain therefore provoked a fierce response from Washington, with senior officials warning that Britain’s continued participation in the Five Eyes alliance might even be in doubt.

The final straw, so far as the Johnson government is concerned, came in May when Washington placed a new round of sanctions on China that specifically targeted Huawei, denying the company access to vital American electronic components. As a consequence, British security officials claimed that they could no longer guarantee the company's continued involvement in building the 5G network would compromise national security concerns.

This was the main reason cited by Mr Johnson when announcing his decision earlier this week. But the fact that he has been obliged to make a politically damaging U-turn is testament to the intense pressure Washington is able to bring to bear on its allies.

Mr Trump certainly left no one in any doubt about who was really responsible for Britain’s decision, an act that could prove highly damaging to the future of UK-China relations. Speaking in the White House Rose Garden shortly after Mr Johnson made the announcement, Mr Trump was quick to claim the credit for himself.

Huawei's chief financial officer Meng Wanzhou has been under house arrest in Canada since 2018. Reuters Meng Wanzhou, Huawei’s chief financial officer, who was arrested by Canadian police in December 2018 on an extradition request from the US. Her case, based on fraud charges connected to her alleged violation of US sanctions on Iran, has infuriated Beijing and damaged the Canada-China diplomatic relationship.

As it makes the final preparations for Brexit at the end of the year, it is London, not Beijing, that can ill-afford a trade war between the two countries

“We convinced many countries, many countries – I did this myself for the most part – not to use Huawei, because we think it’s an unsafe security risk, it’s a big security risk,” he said. “I talked many countries out of using it: if they want to do business with us, they can’t use it.”

Canada is expected to be the next country to come under pressure to review its relationship. It is currently in the midst of its own diplomatic stand-off with Beijing over the case concerning Meng Wanzhou, Huawei's chief financial officer, who was arrested by Canadian police in December 2018 on an extradition request from the US. Her case, based on fraud charges connected to her alleged violation of US sanctions on Iran, has infuriated Beijing and damaged the Canada-China diplomatic relationship.

Now, Britain is also likely to be the recipient of Chinese ire. Beijing has already reacted angrily to Mr Johnson’s announcement, warning that it could cost Britain dearly in terms of future Chinese investment, and that it would take all necessary measures to safeguard its interests. Chinese foreign ministry spokeswoman Hua Chunying said that China strongly opposed Britain’s decision, which she said was driven by the politicisation of commercial and technological issues by Washington, and not by national security.

Huawei's newest flagship store building in Shanghai, China. Britain's telecom network will not be allowed to purchase new Huawei 5G kit in the future. EPA

Given the size of the Chinese economy, and Britain’s increased reliance on Chinese goods in recent years, the Johnson government may yet come to regret its decision. With an economy valued at $15 trillion, China’s wealth is five times the size of Britain’s and, as it makes the final preparations for Brexit at the end of the year, it is London, not Beijing, that can ill-afford a trade war between the two countries.

At the very least Mr Johnson will have learnt that there is a high price to be paid for being an ally of the Trump administration.

Con Coughlin is the Telegraph’s defence and foreign affairs editor