Foreign Aid and Technological Dependence: China’s Telecommunication Assistance and the Global Acceptance of Huawei 5G

Abstract

As the U.S. government considers Huawei a spying corporation aimed at stealing critical national information from foreign countries, its 5G network has become central to the global debate. Many countries have accepted it despite U.S.' opposition. This study seeks to examine why some countries accept Huawei 5G by analyzing China’s aid in telecommunications projects. Chinese aid for telecommunication projects causes recipient countries to depend on Chinese telecommunication technologies, as the devices, facilities, software, equipment, and infrastructure involved in these projects incorporate Chinese technologies. These countries naturally continue to use Huawei's 5G network to avoid higher transaction costs associated with modifying existing Chinese 5G infrastructure. Empirical results demonstrate the significant positive relationship between the number of Chinese aid projects related to telecommunication and the level of acceptance of Huawei 5G networks.