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Will Pressure on Huawei Disrupt China's 5G Plans?

© REUTERS / Aly SongA Huawei company logo is seen at a shopping mall in Shanghai, China June 3, 2019. Picture taken June 3, 2019
A Huawei company logo is seen at a shopping mall in Shanghai, China June 3, 2019. Picture taken June 3, 2019 - Sputnik International
China is set to soon issue licenses for the commercial use of 5G networks. This was announced by the Ministry of Industry and Information Technology (MIIT) on Monday, meaning that China will officially enter the era of commercial use of fifth-generation communication technologies, the ministry said.

Three major telecom operators in China — China Mobile, China Unicom, and China Telecom — will get licenses to deploy 5G networks. China Mobile plans to set up from 30,000 to 50,000 5G base stations and invest 17.2 billion yuan ($2.5 billion) in infrastructure by the end of 2019.

Another 20,000 base stations will be built by China Unicom and China Telecom. Operators have already carried out 5G network tests in large cities. The granting of licenses for commercial use is the last step and it gives telecom companies a "green light" for the mass deployment of 5G networks, the Global Times reported.

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5G is the fifth generation of mobile technology with a high wireless data transfer speed, and is a necessary base that will allow other modern technologies to develop. The Internet of Things (IoT), self-driving cars, "smart cities" — all of these technologies operate through high-speed Internet networks that 5G will provide.

At the moment, China is the world leader in this technology and in the level of readiness of 5G network infrastructure. Ernst & Young had previously predicted that by 2025 there would be over 576 million 5G users in China, which would account for more than 40% of the total number in the world.

The Global Times, in turn, with reference to Chinese experts, noted that this new technology will create tens of thousands of new jobs and generate $130 to 180 billion dollars of new added value. In many ways, Huawei has been the driving force behind 5G networks.

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The company has developed the vast majority of technological solutions in this area. As IPlytics [German market intelligence company] wrote in its April report, it was Huawei that developed the largest number of technical standards that ensure the operation of 5G networks. Huawei owns more than 1,500 patents in this area.

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However, the blacklisting of Huawei by the US Department of Commerce may complicate doing business for the company, because this, in effect, prohibits US companies from supplying components to Huawei without a special permit from American authorities.

The Chinese company, in the manufacture of its telecommunications equipment, uses many important parts from American suppliers.

However, the US sanctions against the Chinese company are unlikely to be able to disrupt China's plans to launch mobile 5G, Zhou Nianli, professor at the University of International Business and Economics' WTO research institute, said.

"The decision of the US Department of Commerce to blacklist Huawei, of course, will affect the company, but the effect will not be too strong. And even more so there won't be much influence on the development strategy of 5G networks in China, on the scope and the application of these technologies.

READ MORE: Pentagon Chief Claims Huawei 'Too Close' to Beijing to be Trusted in New Attack on Tech Giant

With regards to the issues around the commercial use of networks, China had earlier determined that this year there will be an official launch of commercial 5G service.

The advantage of the technology is that it will provide fast data transfer, [which] will be an incentive for the development of the Internet of Things era. From an economic point of view, this is a cross-cutting technology that will ensure significant development of the service sector. So there lies huge commercial potential in 5G, and for many consumers it is just another source of economic benefits".

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One may argue that the US was too late with imposing sanctions against Huawei — everything is almost ready for the commercial launch of fifth-generation networks in China.

In addition, Huawei, foreseeing the possibility of an escalation in the conflict with US authorities, overstocked its warehouses a year in advance. Therefore, the company can operate without losses for at least a year, even if all deliveries cease right now. In addition, HiSilicon, a Huawei chip subsidiary, has been developing its own phone chips for several years.

So far, they may not be as technologically advanced as the US ones, but they can nevertheless become substitutes under force majeure circumstances.

Views and opinions expressed in this article are those of the speakers and do not necessarily reflect those of Sputnik.

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