Editor's Note

EAI is publishing a special report series as part of its ongoing long-term research on US-China competition and the role of South Korea as a middle power. Regarding competition in advanced technologies, particularly in ICT and 5G, Professor Lee Seung-ju predicts that US-China technological competition will expand beyond securing advantages in individual advanced technologies to encompass competition for leadership in the securitization of advanced technologies and the establishment of multilateral institutions for international norms related to advanced technologies.

I. Introduction

The United States and China, engaged in strategic competition, have rapidly expanded their arena from trade wars to technological competition. The 5G competition is significant not only in a narrow sense, determining the direction of competitive advantage in IT and related technologies, but also in a broader sense, serving as a litmus test for understanding the dynamics of future technological competition by examining the industrial strategies, bilateral interactions, and multilateral cooperation pursued by the US and China in the process of 5G competition. Indeed, both the US and China have shown dynamic evolution by flexibly adjusting their strategies in the 5G competition. In particular, they have moved beyond a purely offensive strategy of increasing pressure on each other to strengthening domestic technological and industrial capabilities and expanding/reinforcing cooperation with allies and partner countries on the international stage.

The evolution of 5G strategies was a response to the limitations and successes of previous unilateral approaches. The Trump administration's unilateral sanctions against Huawei, while inflicting significant damage on the company due to their intensity, have yielded mixed results in achieving policy objectives, as Huawei has secured market share in its home market and developing countries, and the sanctions have shown limitations in eliciting concessions from the Chinese government (Drezner 2019). The Biden administration's evolution of 5G strategy has largely occurred on three fronts. First, to compensate for the limitations of a unilateral approach, the Biden administration has attempted to closely link its 5G strategy with supply chain strategies for advanced industries. The Biden administration's immediate launch of the '100-Day Supply Chain Review' was based on the judgment that approaching the issue from a supply chain perspective might be more effective than directly confronting Huawei's 5G network equipment. This can be seen as a strategy of pressure utilizing networks, as US companies dominate key links in the supply chain for core technologies and equipment in advanced industries (Farrell and Newman 2019). A supply chain-based strategy has the advantage of expecting to maximize the effect of sanctions while reducing their scope (“small yard, high fence”) (Zhihang and Walsh 2021). It also signifies an attempt to shift to a more agile, customized strategy that can respond to changing circumstances, reflecting the reality that US-China decoupling is practically difficult.

Second, as the 5G competition has become prolonged, both the US and China have shown a shift towards strengthening domestic technological and production capabilities. While the initial 5G competition centered on the US's offensive to block the installation of Huawei's 5G network equipment and China's response, the need to integrate the enhancement of domestic technological and production capabilities into the 5G competition has grown. In June 2021, the Biden administration announced plans to invest $172.1 billion in federal R&D funds in areas such as 5G, AI, and quantum computing. The Biden administration's decision to significantly increase R&D funding in advanced industries is based on the judgment that cultivating future technological competitiveness, beyond the current market share issue of 5G network equipment, is essential for ultimate victory in the 5G competition (Vincent 2021). The early entry of the US and China into competition to secure dominance in the 6G race symbolically demonstrates that both countries are pursuing a long-term approach.

Third, the US and China are showing strategic evolution by linking international cooperation to the 5G competition. Moving away from an initial strategy of pressuring allies, the US recognizes the critical importance of expanding international cooperation to organically integrate technology and production, and is strengthening international cooperation at bilateral, regional, and multilateral levels. The Biden administration is particularly strengthening multilateral cooperation with democratic countries, and in response, China is prioritizing cooperation with Belt and Road Initiative participating countries, demonstrating a dynamic response to each other's international cooperation strategies.

II. US 5G Strategy: From Containment to Cooperation and Innovation

1. Basic Direction of 5G Competition Strategy

The US's objectives in the 5G competition with China can be broadly summarized into three points. First, to fundamentally eliminate security threats as 5G is rapidly expanding not only in the US but also in major countries. This objective has been consistently pursued by the US government since the Trump administration, sometimes at the expense of conflicts with allies. The US government has defined the 5G issue as both a technological competition and a national security matter. This is because 5G technology is not merely about providing faster communication services but will form the backbone of major industries, economies, and public services in the 21st-century network society, making the security of 5G networks a pressing concern, as exemplified by the views of then-US Secretary of State Mike Pompeo (Pompeo 2019). The US government believes that 'trust,' 'mitigation,' and 'partnership' are necessary to enjoy the future promised by 5G.

Second, another US objective in approaching the 5G issue is to curb the spread of Chinese 5G technology and effectively attempt to bifurcate 5G networks between the US and China. In the 5G network equipment sector, Huawei already holds the largest global market share. Therefore, the US aims to prevent Huawei's market share from increasing further while offering alternatives through cooperation with companies like Ericsson, Nokia, and Samsung Electronics. The US government is employing a dual strategy: requesting cooperation from European and Asian allies to adopt non-Huawei 5G networks in the short term, and simultaneously proposing new, open, and cost-competitive alternatives through the development of ORAN (Open Radio Access Networks).

Third, in the medium to long term, the US government aims to strengthen domestic innovation capabilities to secure a competitive edge in 5G technology. 5G has not only significant economic and industrial ripple effects beyond security, but advanced technologies are also expected to form a major axis of US-China strategic competition by 2040. The US government considers securing a competitive edge in technology crucial, especially since 5G is central to various advanced technologies such as telecommunications, autonomous vehicles, mobility, and online services. However, given Huawei's competitiveness in 5G network equipment, the US is pursuing a strategy of strengthening and expanding 5G technology innovation and production capabilities through international cooperation in the short term, while striving to lead in the 6G competition in the medium to long term. The joint investment plan of $4.5 billion announced by President Biden at the US-Japan summit in April 2021 for the research, development, testing, and stable deployment of next-generation 6G falls within this context.Nikkei Asian Review 2021/4/18).

2. Evolution Process of 5G Strategy

1) Flexible Expansion of Sanctions

The pressure tools available to the US in the 5G competition can be broadly divided into export restrictions and strengthening international cooperation. In May 2019, the US Department of Commerce's Bureau of Industry and Security added Huawei to the 'Entity List,' officially initiating US government sanctions by prohibiting the provision of US technology to Huawei without government approval. However, this measure was not a complete blockade of transactions with Huawei, as US companies could apply for temporary licenses. Indeed, the US Department of Commerce began issuing temporary licenses primarily to semiconductor companies most affected by the halt in trade with Huawei approximately six months later, in November 2019.

In the first half of 2020, the US government's expansion and strengthening of sanctions against Huawei coincided with major countries' policy shifts regarding Huawei, ushering in a new phase of US-China 5G competition. In May 2020, the US Department of Commerce further expanded and strengthened trade restrictions against Huawei. The Trump administration added a regulation prohibiting foreign companies from exporting semiconductors manufactured using US equipment and technology to Huawei. This measure applied to both US companies and foreign companies using US technology and equipment (Whalen 2020), expanding and strengthening the scope and intensity of sanctions by limiting Huawei's 5G supply capabilities.

However, examining the specific details of export restrictions reveals inconsistencies in the Trump administration's policies. While the Trump administration suspended export licenses worth $119 billion to China in 2019, it issued temporary licenses worth approximately $87 billion to companies exporting to Huawei during the 2019-2020 period (Freifeld 2021). This demonstrates a dual approach where the Trump administration pursued a hardline policy against Huawei, a key target of export restrictions to China, while also accommodating the interests of US companies by easing export restrictions.

Since taking office, the Biden administration has continued its tough stance against Huawei, issuing an executive order for a '100-Day Supply Chain Review' in four areas, including semiconductors, and modifying the export licensing system to restrict the supply of components that could be used in Huawei's 5G equipment manufacturing. In March 2021, the Biden administration imposed new sanctions on Huawei, restricting the supply of items 'that could be used' in 5G devices. This is considered a considerably strong measure, as it can also apply to existing contracts for which export licenses have been obtained (Freifeld 2021).

Furthermore, in June 2021, the Biden administration issued an executive order prohibiting US persons from investing in Chinese companies linked to the Chinese military or involved in suppressing dissidents and ethnic minorities. This order expands the blacklist of 59 Chinese companies whose US investment was banned by the Trump administration (Sanger and McCabe 2021) and marks the beginning of the 'democracy versus authoritarianism' competition foreshadowed by the Biden administration. The Biden administration's approach differs from the indiscriminate restrictions imposed by the Trump administration in that it employs a more sophisticated structural approach to implementing sanctions against Huawei while simultaneously expanding their scope. Thus, while strengthening direct sanctions against Huawei, the Biden administration is pursuing democratic cooperation as a means of effectively developing such cooperation.

2) Strengthening International Cooperation: Pursuing a 'Democracy vs. Authoritarianism' Confrontational Framework

The Trump administration faced limitations in expanding the anti-Huawei front in the first half of 2020. While there were successes in aligning Japan, Canada, Australia, New Zealand, and Poland with the US, it struggled to garner the expected cooperation from allied nations, as Huawei continued to win 5G network construction contracts in European countries by early 2020 (Sanger and McCabe 2020). Although international cooperation did not significantly expand beyond the Five Eyes alliance by the first half of 2020, the US pursued a change in its international cooperation strategy by focusing on major European countries like the UK and Germany. As the Biden administration pursues multilateral international cooperation, it is expected to maintain this policy stance regarding sanctions against Huawei.

The US's international cooperation strategy began to show some results, as evidenced by the UK government's reversal of its previous decision regarding the adoption of Huawei equipment in July 2020. In the first half of 2020, a significant shift occurred in the international dynamics surrounding US-China 5G competition, with an increasing number of countries, led by Australia, Japan, and the UK, explicitly banning Huawei's 5G network equipment, and others, including India, France, Vietnam, and Canada, effectively prohibiting it.[1]The decision by the UK, which had a long-standing cooperative relationship with Huawei, and Italy, which had shown the most enthusiasm for the Belt and Road Initiative among Western European countries, not to use Huawei equipment caused a significant international reverberation (Chikermane 2020; Fonte 2020).

In particular, the UK's policy change served as a turning point, altering the dynamics of US-China technological competition centered on Huawei, by prompting major countries to reconsider their policies toward Huawei. The UK adopted an 'intelligence-led approach' to network security for its 5G transition, focusing on balancing the commercial interests of network operators with the security risks inherent in the 5G supply chain. The UK had made multifaceted efforts to manage the potential risks of Huawei equipment, including adopting Huawei network equipment in 2007 and establishing the 'Huawei Cybersecurity Evaluation Centre' in 2010. In January 2020, it announced that Huawei equipment could be used for peripheral components up to 35% of the network, and that the core parts of the 5G network could be separated from peripheral parts, based on the judgment that its high level of understanding of Huawei network equipment allowed for effective risk detection and assessment.

However, in July 2020, it decided to exclude Huawei based on the judgment that it would undermine the stability of national critical infrastructure. This decision was made amidst escalating US sanctions against Huawei and intensifying US-China technological competition. The fact that the UK government's policy shift did not face significant domestic backlash also played a role. The UK government's gradual policy change ultimately provided telecommunications service providers with sufficient time to prepare. Although UK telecommunications service providers opposed the exclusion of Huawei equipment due to financial and time losses, they began preparing for the possibility of Huawei's exclusion after the UK government announced the 35% policy.

As a result, UK telecommunications service providers did not strongly oppose the UK government's decision in July 2020 to exclude Huawei and instead showed agile adaptation by utilizing it as an opportunity to diversify their supply chains. New Zealand, Taiwan, Japan, Thailand, and Australia had previously decided to exclude Huawei for national security reasons, and the UK's policy shift signifies the alignment of policies among US intelligence allies and partner countries (Naylor 2020).

The UK government's policy shift also served to change the overall sentiment in Europe towards Huawei, as seen in the EU's urging of member states to diversify their 5G suppliers. While European countries have been cautious about making direct exclusion decisions like the UK, France, for example, has urged its telecommunications service providers not to switch to Huawei while not mandating the discontinuation of existing technology. Most European countries are implicitly or indirectly excluding Huawei, but the UK government's policy shift has clearly led to changes in the stance of European countries towards Huawei. The UK government has leveraged this by proposing D10, a forum for like-minded states, and has begun to take the lead in responding to Huawei.

3) Harmonizing Reshoring and International Cooperation

The Biden administration's 5G strategy shows both continuity and differentiation compared to the Trump administration's policies. The Biden administration is expected to pursue a balance between reshoring and international cooperation. The Biden administration is conducting a 100-day review of key industries, including 5G, with the core objective of identifying, analyzing, and developing response strategies for risks inherent in the supply chains of major industries. Reshoring is expected to be the primary focus of supply chain restructuring. Reshoring is a viable alternative for minimizing security threats to the supply chain and also essential for creating quality jobs that are crucial for the restoration of the middle class, a key domestic political priority for the Biden administration.

Meanwhile, the goal of reshoring is to reduce dependence on China for the production of core technologies and components. In this regard, the supply chain restructuring strategy pursued by the Biden administration can be characterized as focusing on 'resilience, security, and diversity' rather than decoupling. As Tony Blinken stated in a speech hosted by the US Chamber of Commerce, complete decoupling is 'unrealistic' and 'ultimately counter-productive,' and therefore the Biden administration will seek ways to expand US strategic influence, including establishing global technology standards in cooperation with allies (Shalal 2020). While reshoring has significance in advancing the Biden administration's domestic political agenda, it has limitations in fully reflecting the diverse aspects of US-China technological competition. Therefore, cooperation with democratic countries is crucial for supply chain restructuring. Furthermore, while reshoring shortens supply chain distances, mitigating security risks to the supply chain, it also has the limitation of increasing risks due to supply chain concentration. To enhance supply chain resilience, diversification is necessary, and given the geopolitical environment of US-China strategic competition, cooperation with key allies and partner countries is essential.

This is why the Biden administration is expected to make considerable efforts in international cooperation, unlike the Trump administration, which exhibited unilateralism and an 'America First' approach. The Biden administration is increasingly likely to pursue a strategy of expanding the scope of cooperation beyond the Five Eyes-centric cooperation. This is because the containment policy against China can be more effective when supported by the cooperation of allies and partner countries in the US-China strategic competition, and it is also effective in enhancing supply chain resilience.

III. China's Response: Practical Expansion of 5G Technology and Formation of an Independent 5G Ecosystem

China's objectives in the 5G competition are to circumvent US pressure and practically expand Chinese 5G technologies, including Huawei's 5G network equipment, while simultaneously forming an independent 5G ecosystem to prepare for the long-term continuation of US pressure. First, China initially responded strongly to the Trump administration's tariffs on Chinese goods and trade restrictions on Chinese companies, including Huawei, during the early stages of the US-China trade war. However, considering that temporary export licenses were issued amidst strengthening export restrictions on Huawei, China is showing signs of moving away from a purely hardline response. China's vast 5G market is expanding faster than in other countries, and it is circumventing US sanctions by exporting Huawei network equipment to Belt and Road Initiative participating countries. If Huawei continues this trend, it can expand its market, primarily among Belt and Road Initiative participating countries, without resorting to strong responses against the US.

Second, China is striving to build an independent 5G ecosystem that reduces its dependence on the US, in preparation for prolonged US sanctions. Huawei is developing its own smartphone OS, attempting to build its own 5G-based IoT system, and making multifaceted efforts to strengthen its capabilities in the development and production of materials and components. Government-enterprise cooperation is essential in forming an independent technological, production, and consumption ecosystem, and the 'state capitalism' nature, which the US criticizes, may intensify in this process, potentially escalating US-China conflict.

1. Preempting the Domestic Market

While the US containment strategy has been largely successful in slowing Huawei's overall growth, it remains uncertain whether it can significantly impact Huawei's technological capabilities. Although Huawei faces considerable obstacles in exporting network equipment and its 5G smartphone business is experiencing severe difficulties due to US export controls and international cooperation, Huawei is capitalizing on the rapidly expanding Chinese domestic market and diversifying its business into various fields such as IoT. Huawei has internally and externally declared the need for survival-level responses and has had to formulate new strategies to minimize the impact of sanctions (Pham 2020). In particular, the enhanced US measures not only fundamentally disrupt Huawei's supply chain but also indirectly lead third countries to make more cautious decisions when choosing Huawei network equipment by eroding confidence in Huawei's supply capabilities.

Amidst expanding and strengthening US sanctions, Huawei has responded by focusing on expanding its domestic market. Huawei's share of revenue from the Chinese domestic market increased from 59% in 2019 to 66% in 2020, while its revenue share in Europe, the Middle East, and Africa (EMEA) decreased from 24% to 20%. This appears to be primarily due to a decrease in revenue from Europe. The revenue share in the Americas also decreased from 6% to 4% (Knight 2021). In particular, mobile phone revenue, which saw the largest decline, decreased by 41.1% in the fourth quarter of 2020, with revenue falling in all regions except China. According to Huawei's annual report, the company recorded revenue decreases ranging from 8.7% to 25% in Europe, the Middle East, Africa, Asia-Pacific, and the Americas (Kwan 2021).[2]

China's vast domestic market serves as a minimum buffer, allowing Chinese technology companies like Huawei to withstand US sanctions for a considerable period. The Chinese government plans to have 50% of the world's 5G service users by 2025. In the smartphone sector, Huawei's global sales volume decreased by 18% year-on-year to 72.6 million units in the first quarter of 2020 due to US sanctions and COVID-19. Huawei's market share in China increased from 11.8% in the first quarter of 2018, when the US-China trade war began, to 17.8% in the first quarter of 2020, just before the intensification of US sanctions (Vendor Data Overview 2020).

Increasing market share domestically can serve as a short-term mitigation strategy for the effects of sanctions imposed by the US and other major countries. Even if Asia and Western countries fully adopt 5G communication services starting in 2021, China's 5G subscriber numbers are projected to reach 800 million by 2025, accounting for about 50% of the global market. This suggests that Huawei may be able to mitigate the impact of US sanctions by increasing its domestic market share over the next four to five years (Kawakami 2020).

This strategy is also evident in the 5G communication equipment sector. China has reportedly invested approximately $40.2 billion in 5G network construction (Hong 2021), which has become a factor enabling Chinese network equipment manufacturers like Huawei to mitigate the impact of US sanctions by increasing their domestic market share. As of April 2020, Huawei accounted for 57.2% of the 5G service base stations in 28 cities within China operated by China Mobile, the largest mobile carrier in China, while ZTE and Datang accounted for 28.7% and 2.62% respectively. Chinese companies, including Huawei, hold a combined market share of 89%.

Given the significant role of the Chinese market in the current semiconductor supply chain, it is crucial to understand the extent to which the US's technological alliances envision US-China decoupling. Reports from the NSCAI and the Semiconductor Industry Association (SIA) argue that complete self-sufficiency in the global value chain, including the semiconductor sector, is neither desirable nor feasible for the US. Indeed, a report by the Boston Consulting Group predicted that US-China decoupling in the semiconductor sector would lead to a roughly 30% reduction in the size of the US semiconductor industry, and the SIA report emphasizes that complete self-sufficiency is not a solution, estimating that producing all currently externally sourced semiconductors domestically would increase overall production costs by 35-65%. The deep interdependence formed between the US and China within the global value chain over decades, forming the foundation of both economies, means that any artificial separation at an excessive level would impose enormous costs and damage on both countries and the global economy as a whole.

Compared to the first phase of China Mobile's 5G network construction in June 2019, where Huawei held 51.7% and ZTE held 3.1%, the market share of Chinese companies increased by approximately 27%, while the market share of Ericsson and Nokia, which held 33.8% and 10.2% respectively, decreased by about 32%. This indicates a sharp reduction in the market share of foreign companies and an increase in the market share of Chinese companies such as Huawei, ZTE, and Datang in China Mobile's second phase of 5G network construction (Kwak Ye-ji 2020).[3] During this process, Chinese consumers' loyalty to Chinese smartphones, including Huawei, is showing a trend of gradual strengthening. Huawei smartphone user loyalty has continuously increased, reaching 52.4% in the first quarter of 2020, a 10.0% increase compared to the same period in 2019. Conversely, the proportion of users replacing Huawei smartphones with iPhones has continuously decreased, falling from 22.2% in the first quarter of 2019 to 14.7% in the first quarter of 2020.

2. Strategic Utilization of the Belt and Road Initiative

Amidst the US's export control, alliance-building, and domestic manufacturing capacity enhancement strategies, and the various means employed for these purposes, China does not have many countermeasures. China's objectives in the semiconductor sector are to ensure a stable supply of cutting-edge semiconductor chips, continuously upgrade to high-value-added manufacturing and equipment sectors within the semiconductor value chain, and catch up with Korean and Taiwanese companies to produce cutting-edge semiconductors domestically. Semiconductors have surpassed crude oil as China's top import item, and securing cutting-edge semiconductor manufacturing capabilities is crucial for China's development as an advanced manufacturing nation. Indeed, 'Made in China 2025' set a goal for China to meet 70% of its semiconductor needs through domestic production.

Given that countries excluding Huawei are primarily concentrated in Europe and some parts of Asia, China's 5G strategy targeting Belt and Road Initiative participating countries is likely to be a medium to long-term strategy after the Chinese market enters a mature stage. In the medium to long term, it is possible that an unintended consequence of increasing China's self-sufficiency will arise. Considering that the goal of 'Made in China 2025' (中国制造 2020) is to reduce foreign dependence and increase domestic self-sufficiency in core technologies and advanced industries, US sanctions on Huawei could paradoxically promote 'Made in China 2025' (Bajak 2019). In the satellite industry, the US, which dominates the market, implemented strong export control measures, but this inadvertently promoted transactions that bypassed US companies, resulting in a decrease in the market share of US companies. Some US companies are concerned that a similar phenomenon could occur in 5G.

3. Forming and Diversifying an Independent Ecosystem

China also pursues a strategy of maintaining an ecosystem for 5G network equipment, communication services, and smartphones by rapidly expanding the 5G communication service market centered around China Mobile, China Unicom, and China Telecom. Specifically, the Chinese government plans to invest over 180.3 billion yuan (approximately $25.8 billion), more than three times the investment in 2019, to commercialize 5G services nationwide in 2020 and expand the number of 5G communication service users to 120 million. To achieve this, approximately 300,000 5G base stations need to be installed, and Chinese communication equipment companies like Huawei are expected to benefit (Kwak Ye-ji 2020).

In response to two years of US pressure, Huawei is implementing self-help measures by attempting to develop and diversify its own supply chains while simultaneously forming its own digital technology ecosystem ('Huawei to continue Diversifying Supply Chains, discusses future prospects' 2020). US sanctions have acted as a catalyst for Huawei to develop and diversify its own supply chains and diversify its business. In the medium to long term, Huawei's strategy of diversifying its supply chains and increasing technological self-sufficiency is inevitable. The US Department of Commerce's expansion of the export control list reflects the recognition of the need to control computer, telecommunications, electronic, and semiconductor-related components, software, and technologies produced overseas within Huawei's supply chain. Huawei is particularly focusing on the independent development of six major digital technology ecosystems: Kunpeng, Ascend, HMS, HarmonyOS, Huawei Cloud, and MDC (Dan and Yang 2021). Huawei maintains that smartphones are only one part of its business, and its core businesses are telecommunications and cloud services, thus while the US offensive presents a significant challenge, it can be countered through self-help measures.

Huawei's HarmonyOS is central to connecting IoT devices, and Huawei has announced plans to connect approximately 300 million digital devices by the end of 2021. To achieve this, Huawei is pursuing a '1+8+N' strategy (Hong 2021).[4]The e-commerce company JD.com has also launched an app linked to HarmonyOS (Dan and Yang 2021). Huawei is developing smart devices such as AR/VR headsets, tablets, laptops, TVs, smartwatches, speakers, and headphones (Liao 2021), and is entering business areas such as IoT, cloud computing, AI, and autonomous vehicles. Huawei has announced plans to invest $1 billion in research and development for autonomous driving and electric vehicles. It is known to collaborate with Chinese automakers BAIC, Changan Automobile, and GAC Group for this purpose (Shead 2021). Huawei is also diversifying its business into various sectors, including mining, transportation, and healthcare. Huawei's business diversification has the effect of offsetting the impact of US sanctions on its smartphone business.

IV. The Future of 5G and US-China Technological Competition

1. Strategic Recoupling for Securing 5G Influence

The US and China are expected to pursue a 'strategic re-engagement' to reduce their mutual dependence and secure space to expand their respective influence. The key to mitigating dependence on the other country lies in enhancing domestic innovation capabilities for technological superiority and continuously expanding production capacity, while simultaneously strengthening international cooperation to limit the other country's expanding influence. To this end, both the US and China will reduce interdependence in core technologies and advanced industries to a lower level than at present, and a shift will occur to reorganize economic ties between the two countries, focusing on areas less sensitive to national security and technological competition. These attempts by the US and China could lead to a systemic outcome of strategically reorganizing globalization based on global value chains (GVCs) on a global scale.

First, in pursuit of strategic re-engagement, the Biden administration is focusing on enhancing domestic innovation capabilities in the US to mitigate security threats to key industries. From the perspective of US-China strategic competition, while the Trump administration focused on restricting China's access to US technology, the Biden administration is pursuing a strategy to secure a competitive advantage by strengthening US domestic innovation capabilities while maintaining the Trump administration's policies. This is why the Biden administration has decided to invest a historically unprecedented $325 billion in research and innovation funds (Kelly and McCabe 2021). By strengthening innovation capabilities, the Biden administration is expected to not only secure industrial superiority in the 5G competition but also lead the 6G competition, which will have greater applications in the space and military sectors. Considering the Biden administration's policy direction towards China and its technological competition strategy, the 5G strategy will likely involve promoting reshoring for industries and products essential for national security and carbon neutrality policies, and for this purpose, it will request US companies as well as companies from major countries to expand production facilities within the US.

Second, regarding the 5G supply chain strategy, the Biden administration is expected to pursue a strategy of forming an ecosystem that integrates production and consumption. While the supply chain strategy can be seen primarily as a strategy to form production alliances, its completeness is enhanced only when it is combined with the consumption of products and services produced within the supply chain. The reason the Biden administration must pursue an international cooperation strategy that forms an ecosystem combining production and consumption is the anticipated economic sanctions or retaliation from China against countries that cooperate in reorganizing the supply chain. When a consumption structure is formed within the countries participating in the supply chain, a safety net against China's threat of sanctions can be established, which can lead to more countries participating in the US-led supply chain reorganization.

The Biden administration is expected to attempt to diversify cooperation at the multilateral and regional levels, focusing on democratic countries. This is why the US Department of State is making efforts to form a broad coalition with like-minded countries on measures to trade with 'trusted' manufacturers to enhance the security of telecommunications, cloud computing, data analytics, mobile applications, IoT, and 5G. A representative example is the announcement of the '5G Clean Networks' initiative by the US Department of State. 5G Clean Networks aims to establish international 'Digital Trust Standards' that can assess reliability and security levels. Digital Trust Standards are a further enhancement of the 'Prague Proposals on 5G security' drafted in May 2019 with the participation of representatives from approximately 30 countries, including EU and NATO member states, concerning the design, construction, and management of 5G infrastructure (US Department of State 2020).

Regarding 5G cooperation, the UK has indicated its intention to utilize the D-10 as a coalition to mitigate vulnerabilities in 5G equipment and supply chains (Erik 2020). The Johnson government proposed the creation of the D10, composed of the G7 and 10 democratic countries including South Korea, Australia, and India, to reduce dependence on Huawei for 5G technology and equipment (Khanna 2020), and the Biden administration is expected to actively utilize this. The Johnson government expects the D10 to serve as a platform that not only represents a significant portion of the global economy while maintaining internal cohesion but also can address common issues that cannot be solved independently, such as 5G and core supply chains. The UK government's strengthening of cooperation with democratic countries is closely related to the reassessment of Huawei.

Meanwhile, the Biden administration is expected to pursue a technology cooperation strategy in the Indo-Pacific region centered around the Quad. Regarding 5G, a Quad technology summit is scheduled to be held, and the Biden administration is expected to utilize the Quad as a platform to lead future global technology standards. The US Department of Commerce is creating rules that allow US companies to participate in international standard-setting organizations that include Huawei (Freifeld 2020). The US Department of Commerce has previously prohibited US companies from cooperating with Huawei in setting next-generation 5G network standards. In fact, US companies such as Sprint, AT&T, and FirstNet did not participate in the 3GPP meeting held in Shenzhen, China (Dano 2019). This has led to US companies adopting a passive stance in international standard-setting, resulting in Huawei leading the standard-setting process.

This is the background behind the self-reflection emerging within the US that cooperation with allies in setting international standards has not been effectively carried out recently. The trend of strengthening efforts to actively participate in international organizations for establishing 5G-related international standards and rules through cooperation with allies, and to prevent the expansion of Huawei and Chinese state-owned enterprises, is gaining momentum. Reflecting this, the US is increasingly likely to pursue a change towards leading the establishment of 5G international standards through cooperation with major countries. The formation of the 'ORAN Policy Coalition' led by US companies is one example. However, if the US-China competition in the 5G field continues, concerns are being raised that the global standards could be divided in the 6G era, and furthermore, could lead to the fragmentation of international standards (Doffman 2020).

In response to these U.S. efforts, China is expected to continue its competition to expand its 5G influence by leveraging the Belt and Road Initiative (BRI) to pursue cooperation in adopting Huawei's 5G network equipment. As shown in Figure 1, a significant number of BRI participating countries, including those in Central Asia, Africa, South America, and some European nations, are already using Huawei equipment or are unlikely to ban it.

<Figure 1> Distribution of Countries Using/Not Using Huawei Equipment

• Countries banning Huawei: United States, Japan, Australia, United Kingdom, Sweden, Poland, Czech Republic, Lithuania, Latvia, Romania
• Countries not using Huawei: Cambodia, Saudi Arabia, Oman, Uzbekistan, Bolivia, South Africa
• Countries unlikely to ban Huawei: France, Spain, Indonesia, Pakistan, Iran, Kazakhstan, Russia, Brazil, Argentina, Uruguay, Venezuela, Colombia, Ecuador, Peru, Egypt, Tunisia, Cameroon, Gabon, Morocco, Kenya, Uganda, Angola, Namibia, Zambia

It is true that the number of countries officially banning or effectively banning Huawei's 5G network equipment is increasing. Nevertheless, given that there are a considerable number of countries that have already adopted Huawei's 5G network equipment or are unlikely to ban it, the Chinese government and Huawei are expected to expand Huawei's 5G network equipment to these countries. The Chinese government is mobilizing various policy incentives to encourage Belt and Road participating countries to adopt Huawei's 5G network equipment. Linking the provision of COVID-19 vaccines to Brazil with the adoption of Huawei's 5G network equipment is a representative example (Londoño and Casado 2021).

In the short term, the US and China are expected to engage in fierce competition to reduce their technological and production dependence on each other and to prevent and curb the adoption of Huawei's 5G network equipment. In the medium to long term, both the US and China are expected to strengthen domestic innovation capabilities to secure an advantage in the 6G competition, form independent technological ecosystems, and continue to compete to establish their respective technologies as international standards.

2. Towards an Era of Technological Competition

In the future, US-China technological competition will expand beyond securing superiority in individual advanced technologies to competing for leadership in establishing multilateral institutions for the securitization of advanced technologies and the formulation of international norms related to advanced technologies. First, after the strategic re-engagement, including the 5G sector, is concluded, both the US and China are expected to strive to secure a competitive advantage in technological competition and continuously enhance their innovation capabilities for competitive advantage. As strategic re-engagement progresses significantly, both the US and China are expected to focus more on allocating resources to strengthening domestic capabilities to gain an edge in advanced technology competition, which is the key to US-China strategic competition, rather than engaging in full-scale conflict.

Second, as dual-use technologies are expected to expand significantly in the future, both the US and China are expected to respond more sensitively to the impact of advanced technologies on security, leading to increased uncertainty in their bilateral relations as well as at the multilateral level. Furthermore, as 6G is expected to be widely used after 5G, revolutionizing inter-weapon connectivity and making hybrid warfare a reality, the need for control, as well as the enhancement of innovation capabilities in advanced technologies including communication technologies, will become even greater. The US and China will not only enter into competition to preemptively secure superiority in 6G but will also simultaneously pursue strategies for strengthening innovation capabilities across the advanced technology spectrum, checking the opposing country, and maintaining/expanding international cooperation.

Third, competition to establish multilateral institutions for the formulation and adherence to international norms and rules regarding the export and control of dual-use technologies is expected to reach its peak. The export and control of dual-use technologies require strengthened cooperation with allies, and thus, both the US and China will compete to secure leadership in this regard. Based on this, the US and China will engage in competition to lead multilateral institutions for the distribution and management of advanced technologies.

[1]Among NATO member states, Hungary, Iceland, and the Netherlands, and among US allies, Saudi Arabia and the UAE are also using Huawei equipment. Sacks (2021).

[2]According to Huawei's explanation, the decrease in sales outside China is a result of not having access to the Android ecosystem.

[3]Nokia's market share in China (including Taiwan) is only 6% (Satake 2020).

[4]'1' refers to smartphones, '8' to Huawei's digital devices, and 'N' to third-party devices powered by Huawei solutions (Hong 2021).

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■ Author: Seungjoo LeeDirector, EAI Trade, Technology, and Transformation Center; Professor, Department of Political Science and International Relations, Chung-Ang University. He received his Ph.D. in Political Science from the University of California, Berkeley. His main research areas include international political economy, the international politics of trade, and global digital governance. His major works and edited volumes include "The Political Economy of Cyberspace" (edited by Seungjoo Lee), "Institutional Balancing and the Politics of Mega FTAs in East Asia," "Northeast Asia: Ripe for Integration?" (co-edited), and "Trade Policy in the Asia-Pacific: The Role of Ideas, Interests, and Domestic Institutions" (co-edited).

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