Former Secretary of State Mike Pompeo claimed that Xi Jinping’s central theory involves importing stolen US intellectual property from China and distributing it globally to consolidate political power. Huawei, China’s telecom infrastructure giant, built 70% of Africa’s mobile broadband capacity.
Huawei was accused of copying some Cisco code twenty years ago and paid up after a court case. However, its intellectual property for digital broadband doesn’t come from the US because China doesn’t manufacture any telecom equipment.
Huawei spends $25 billion a year on R&D, building an entire village outside Shenzhen with replicas of famous European buildings to house part of its R&D staff.
The plant turns out 2,400 5G base stations per day, about a quarter of the world’s installed capacity. The plant is fully digitized, with robots doing almost all the work. One assembly task is still done by hand.
China sells infrastructure at a profit, with Huawei having a $6 billion profit and a 6.6% operating margin in 2022. China has shown no interest in meddling in African countries’ governance, and its exports to the Global South have increased by nearly 20% in the past year.
This shift is attributed to the re-routing of trade to the United States through intermediaries like Vietnam, India, and Mexico, which buy and assemble Chinese components for resale to the United States.
This “friend-shoring” has strengthened China’s hold over global supply chains. China’s exports primarily represent digital and physical infrastructure, with mobile broadband turning marginalized people in the developing world into actors in the global economy.
China’s trillion-dollar investment in the Belt and Road Initiative has digitized communications in many developing countries, with transformative effects.
China’s economic growth, starting in the late 1970s, was the great economic event of the second half of the twentieth century, with the per capita GDP of the world’s most populous country growing 27-fold between 1979 and 2022 in terms of real purchasing power parity, according to the World Bank.
The Global South is experiencing a second wave of economic transformation, potentially the greatest economic event of the first half of the twenty-first century. The United States is largely a bystander in this transformation, with the former secretary of state and other American analysts making misstatements.
China is transforming economic life in developing countries from the grassroots up, challenging the United States’ world standing in a more dramatic way. America’s failure to grasp this may be the single greatest blunder in American foreign policy history.