In 2020, the US government spearheaded the Clean Network initiative in response to growing security concerns about Chinese technology. 

Addressing the “long-term threats to data privacy, security, and trusted collaboration posed by malign state actors,” the legislation was developed on the premise that China’s National Intelligence Law could be used to force companies like Huawei, ZTE, and other Chinese telecommunication equipment vendors operating "domestically and abroad" to turn over any information or data upon the request of the communist Chinese government.

While Huawei, in particular, countered that both independent law firms and the Chinese government state the law would not compel them to hand over such information, the U.S. State Department argued that the existence of such laws could make Huawei and similar vendors "an arm of the People’s Republic of China (PRC) surveillance state." 

Gaining global traction 

The controversial policy was announced amidst an increasingly acrimonious U.S.-China trade war which, understandably, resulted in some scepticism as to the motivations behind the initiative. However, as the Clean Network intended to emphasise the importance of securing the entire 5G information technology ecosystem, including all extensions and accessories, it rapidly gained the endorsement of democratic governments and global telcos the world over.  

By December 2020, more than 60 nations (representing two-thirds of the world's GDP) and 180 telecom companies had publicly committed to the principles of the Clean Network. These included countries such as the UK, Greece, Singapore, Australia and Taiwan and telcos such as Orange in France, Telefonica in Spain and TDC in Denmark. 

The European Commissioner, Thierry Breton, went so far as to say that banning “high-risk” Chinese telecommunications companies Huawei and ZTE from the EU's 5G network builds was "justified" and in line with EU guidelines.

Hidden costs

Are concerns around Chinese tech justified or politically-motivated paranoia and fearmongering? Whatever the motivations, the business realities are evident. 

IT decision makers are having to invest in technologies that support the business’s digital transformation initiatives, particularly as workforces remain hybrid and agile. But with budgets increasingly stretched in our challenging economic climate, greater scrutiny is being placed on executing these initiatives swiftly but as cost-effectively as possible. 

Historically, technology manufactured in China has been able to be produced – and purchased – cheaply and available at scale. As a result, it has been the obvious choice for businesses and governments alike. But as these organisations are finding, there may be hidden costs in achieving short-term gains. 

Surveillance equipment from Hikvision - owned in part by the Chinese government - is the most recent Chinese tech manufacturer to be banned by the US and UK governments, thanks to the discovery of major security flaws, as well as ethical concerns about the company. 

These security concerns, rising labour costs, the ongoing trade war between the United States and China and wider concerns about China's political and economic stability are seeing companies move their manufacturing to alternative markets, including India, Mexico and Vietnam – putting China’s long-held standing as the “world’s factory” at risk. These competitive alternatives are allowing companies to slowly diversify their manufacturing base, and crucially, keep costs low. 

With cost benefits eroding, more businesses – particularly those that regularly manage sensitive data – could stand to follow the lead of governments around the world and treat new and existing Chinese technologies with a degree of caution.  

The road ahead 

In early 2020, Huawei and ZTE seemed poised to lead the globe in 5G technology. But in a few short years, Huawei was effectively locked out of 5G builds, radically altering the competitive landscape. Today, restrictions and even outright bans on the use of Chinese-owned and established technologies continue to be rolled out. 

Suffice to say, while the Clean Network initiative itself has been more or less abandoned, the legacy of the legislation remains very much intact. Governments around the world remain sceptical about the independence of Chinese-owned businesses operating in their respective jurisdictions. ByteDance’s TikTok is the latest under the spotlight. Countries and government bodies — including the UK Parliament, Australia, Canada, the executive arm of the European Union, France and New Zealand’s Parliament — have all banned TikTok from official devices, with India banning its use for citizens outright in 2020.

All this is not to say that technology developed in China should be eschewed outright. The innovations, creativity and advancements of Chinese tech should be utilised and valued. But business leaders operating in industries that regularly handle sensitive data would be prudent to be mindful of concerns that show no signs of abating.