The newly-founded US International Development Finance Corporation plans to help developing countries and businesses purchase equipment companies other than China’s Huawei.
Background: The use of network equipment produced by Chinese companies (especially Huawei) in 5G networks has been the subject of lively discussions in the last two years. In particular, the US are taking a tough stance against Huawei, and are trying to persuade their international partners that the vendor should be excluded from their 5G networks. While such stance is motivated by security concerns, the ongoing trade war between the US and China is also a significant factor.
From persuasion to funding: This week, details emerged of a plan to use part of a $60bn government fund to help businesses and governments in developing countries purchase equipment from other vendors. The International Development Finance Corporation (DFC), which replaces the Overseas Private Investment Corporation (OPIC), will be the instrument to make this happen. At present, there is no clear detail about how the money would be spent; this could be in the form of loan guarantees, or the acquisition of stakes in emerging vendors. The Financial Times reported that the DFC could even issue credit to Huawei’s rivals in Europe, although this has not been confirmed.
Emerging markets are a proxy for the rest of the world: While the DFC’s plans appear to focus on developing countries, the fight between the US and China (and Huawei in particular) is global. In Europe for example, operators in Germany and in the UK are still waiting for their respective governments to decide whether the use of Huawei equipment should be restricted; in Estonia, the government recently banned Huawei from core mobile networks based on a ‘memorandum of understanding’ with the US.
