Countries are successfully blocking China without bans---plan not key.

These measures are buying time for a third aspect of U.S. strategy: the multilateral development of alternatives to Huawei. The International Development Finance Corporation is offering financing to countries that choose non-Chinese options for their 5G networks. If Huawei can be stymied, then firms in democratic countries will have a better shot at setting the technological standards that will shape the telecommunications industry in the future. The Biden administration is also betting on something called Open Radio Access Networks, or O-RAN, an effort to develop common standards that promote greater compatibility between different types of telecommunications equipment. In effect, O-RAN allows different companies to plug and play in a single network, making it harder for Huawei or any other firm to dominate global telecommunications infrastructure. O-RAN has yet to be deployed commercially at any scale. Feasibility and affordability remain significant concerns; it may work better for big countries than for small ones. Yet the pace of deployments is predicted to accelerate rapidly over the next three to five years, so Biden has put it high on the agenda for U.S. diplomacy with key countries (South Korea, Japan, India) as well as institutions such as the European Union and the Quadrilateral Security Dialogue. America’s strategy, then, is about running faster as well as slowing its rival. Washington aims to break Huawei’s momentum until the U.S. and its friends can develop alternatives that will limit the Chinese firm’s global appeal. The effects of U.S. policy are starting to accumulate. As of 2021, eight of the world’s 10 largest economies, countries representing over 60% of the world’s cellular equipment market, and nearly all members of the European Union, had either banned or restricted Huawei from their 5G networks. Many countries that have not imposed formal restrictions, such as Germany and Canada, have subtly made it very difficult for Huawei. The company’s sales of network gear fell 14.2% between mid-2020 and mid-2021. Its overall revenue fell roughly 29% and earnings have slumped in regions from the Middle East to the Americas. Huawei’s founder, Ren Zhengfei, has declared that there is “no chaos within the company,” but the numbers tell a different story. Huawei’s predicament could get much worse. Probably next year, the company will run out of the advanced semiconductors it stockpiled as U.S. hostility grew. That will force it to fulfill existing contracts with older, less efficient components — or not fulfill them at all. Huawei may be too important for the Communist Party to let it fail. But its global expansion will become increasingly problematic. Meanwhile, there has been less collateral damage from the anti-Huawei campaign than some observers initially feared. U.S. and foreign chipmakers worried that the sanctions would crush their sales, given that Huawei was the world’s third-largest chip purchaser.

Allied governments chafed at Washington’s push to make its sanctions extraterritorial. But the chipmakers have not been massacred, in part because Huawei’s now-thriving competitors are buying more, and in part because the U.S. has allowed Huawei to purchase older chips not suitable for its 5G business. And American policies have often benefited major foreign firms, such as Samsung Electronics Co., Ericsson AB and Nokia Oyj, by hobbling their principal rival.

O-RAN remains the least developed part of U.S. strategy. But even here, there are encouraging signs. This year, several major European telecom firms agreed to build O-RAN networks spanning the continent. Major mobile carriers in India have also decided to invest in the technology for their domestic networks and develop products for export.

As they do so, O-RAN will start to profit from scale effects of the sort Huawei enjoyed. And because the Indian telecom market has a low average revenue per user, an approach that is economically viable there could be viable almost anywhere. If that happened, Huawei’s price advantage in developing markets — so far, its trump card — may become a thing of the past.

Two years ago, Huawei was a symbol of China’s global tech ambitions. Today, it is an example of persistent Chinese vulnerability, as well as a marker of how America has begun to fuse the unilateral coercion and multilateral construction necessary to wage a technological cold war. Yet Huawei’s story also underscores a final lesson, on the need for speed in U.S. strategy.

The 5G network is a classic example of a technology with first-mover advantages. Companies that build and install the hardware on which 5G networks sit will enjoy lasting influence over the countries those networks serve. The U.S. nearly waited too long to meet the threat — and even as Huawei struggles, the battle isn’t through.

Washington is just beginning to promote alternatives to Huawei, and to make the generational investments needed to keep America and its allies far ahead in designing and producing top-shelf semiconductors. Beijing isn’t conceding defeat: It is quadrupling down on indigenous innovation in hopes of becoming the world’s leader in advanced semiconductors by 2030.

Other battles await. China is bidding for control of the world’s data, through investments in cloud computing, data centers and fiberoptic cables. AI, biotech and quantum computing loom large. The U.S. has begun, albeit belatedly, to address the challenge of Chinese-dominated 5G networks. The lesson for the broader tech competition is not to wait until it is too late.