Why is Germany increasing its reliance on Huawei despite the security risks?

Question

https://www.reuters.com/technology/germany-ups-reliance-huawei-5g-despite-security-fears-survey-2022-12-16/

BERLIN, Dec 15 (Reuters) - Germany has become even more dependent on Huawei for its 5G radio access network equipment (RAN) than in its 4G network despite growing worries about Chinese involvement in critical infrastructure, according to a new report.

Many European countries have banned Chinese companies from all or part of their 5G networks on security grounds, amid intense diplomatic pressure from the United States.

Is there something Germany has to gain by pleasing the Chinese government and buying Huawei equipment, which may be compromised? What are the benefits Germany stands to gain from doing this unlike many other European countries?

Answer 1

CGTN tells us in a Sep 2022 article that

German firms lead a shrinking group of European investors in China [...]

Germany, the Netherlands, the UK and France make up 87 percent of the total investment value, on average, over the past four years.

While many European firms are withholding investment, German firms continue to pour money into Chinese markets with Volkswagen, BMW and Daimler accounting for 34 percent of all European FDI into China between 2018-2021. [...]

While German firms stand out as the top investor, accounting for more than half of all European investment in China in 2018, French, UK and Dutch firms ranked among the top 10 investors.

So there's almost certainly a degree of reciprocity here.

Answer 2

Germany does not completely ban Huawei or ZTE from 5G networks unlike the US but is also not blindly trusting them.

They recently started critically testing critical components (independently of who produces them) for security issues. Before they already tested new components (and so far did not find anything) but now they are also testing older components and maybe a bit more thoroughly. This might mean an end to Huawei telecommunication network components in Germany but it's not sure yet.

Source: Aus für Huawei im deutschen 5G-Netz?

To answer the question: Germany seems to so far to assess the security risks differently from the US. What they have to gain is probably saving some money, the next best alternative to Huawei (Qualcomm?) might be more expensive or more difficult to handle. That way it might be possible to quicker build up a 5G infrastructure at a reasonable risk. That's probably what they are thinking.

Answer 3

Essentially the German government does not blindly follow the American assessment. The US government has claimed security risks in Huawei technology for years and did a lot of research into it. Various other groups also looked into this. So far nobody has found anything (and said so publically).

The main alternative to Huawei for 5G technology is the US-based company Qualcomm. If you only look at the publically available technical specs and prices, Huawei offers the much better deal.

Hence the German government decided that they will thoroughly check critical components from all manufacturers. If they find anything suspicious the manufacturer will be blocked. As long as nothing is found, they will let German phone companies buy whatever they think fits best for their particular needs.

Answer 4

One unmentioned factor here is that the US ban on Huawei (the largest market for their products) has caused a drop in demand. As such, prices have steadily dropped

Huawei sees 29 per cent drop in 2021 sales after two years of US trade sanctions, as it moves deeper into digital services

A lot of that is in their smartphone division, but the US has strongly hinted it will block any use of Huawei 5G for cell networks. That would, in turn, make Huawei equipment cheaper.

Answer 5

Germany (as many other countries) finds itself in a position where it cannot avoid to depend on others and has to chose how it distributes dependencies.

It was difficult for Germany to handle the situation where they had to replace their dependency on Russian energy resources. But we tend to overlook that Germany actually could replace it. And still, Germany does not buy gas from the US, not only because it's more expensive but also because if the US would chose to capitalize on that dependency, Germany would risk to trigger other dependencies to the US in an escalation spiral.

Germany tries hard to balance its dependencies such that it does not depend more on one single entity that is absolutely necessary. It has to act like this, because it cannot trust any such entity that they would not use these dependencies to blackmail Germany. And this is not a conspiracy theory, there are plenty of examples where political or economical capital has been invested in order to unduly influence governments.

Whether Germany's stance towards China/Huawei/5G in particular is wise is a different question, but everybody makes mistakes.

The strategy to include China in the western global economy was not a singularly German strategy, but Germany fully supported it. Because of its economic layout, Germany really didn't have much choice. Now that there is a new hopefully cold war between the west and China looming over us, this is especially problematic for Germany. In such a war, Germany would not be so much an actor as it would serve as a battlefield (economically). That's why Germany does everything it can to avoid fueling the conflict. If that means letting the Chinese intelligence roam in their underpants, where US, Russian, UK and all other intelligence agencies are at home already, that's not really an issue.