Published on August 9, 2019. This article continues a dialogue from the monthly magazine Hanada between former NHK Chairman Momii Katsuto and China expert Endo Homare. It discusses Trump’s tactical mistake regarding the U.S.–China summit at the G20, Xi Jinping’s negotiating strategy, Huawei’s standard-essential patents, 5G hegemony, and the threat posed by Made in China 2025.

2019-08-09
If Huawei acquires standard-essential patents, patents indispensable for producing products based on standard specifications, Huawei’s standards will become international standards, and it will seize hegemony over the 5G world.
The following is a continuation of the previous chapter.
Trump’s tactical mistake
Momii
Before that, on May 13, Mr. Trump had already told reporters that he intended to meet with Xi Jinping at the G20 summit, hadn’t he?
Endo
That is exactly right.
That was precisely Mr. Trump’s tactical mistake.
The one who says it first loses.
Upon hearing Mr. Trump’s statement, Mr. Xi Jinping must have thought, “I’ve got him.”
The cunning Mr. Xi consistently remained silent.
Momii
I understand this because I have experienced it in business as well.
In negotiations, the side that thinks, “I want to conclude this negotiation,” often loses.
When I was at Mitsui & Co., I once went to negotiate with an owner in Italy in order to buy an iron mine.
I approached it with the stance that “if the conditions do not match, we do not have to buy it,” and in fact, the negotiations did not come together at all.
When I had already put away the documents and declared, “I am returning to Tokyo on the two o’clock flight,” the owner panicked and said, “Wait a moment. Tell me your best price.”
Thinking, “It probably will not be settled anyway,” I stated quite a high price.
In response, the owner lowered the price even further.
At that moment, I should have rejected him and said, “No, even so, it is still impossible. I am leaving.”
Had I done that, the price would certainly have fallen.
But in that instant, I thought, “Having come this far, it would be a waste to give up.”
At that point, I had lost.
In fact, I bought it for a price higher than expected.
On the flight home, I regretted it, thinking, “Perhaps that was a mistake after all.”
Mr. Trump is also a businessman, so he should be accustomed to that kind of negotiation.
In that sense, he is probably a very honest person.
Endo
In terms of cunning, Mr. Xi Jinping was one step superior.
After all, unless one understands “Chinese wisdom,” it is difficult to understand China’s strategy.
Seizing control of the world’s communications infrastructure
Momii
However, there is a sequel to the story of buying the iron mine: after I left the company, Mitsui & Co. sold it for more than the purchase price and made a solid profit.
So, as someone who has been in business, my instinct tells me that, because this is Mr. Trump, there may still be a fourth move against China.
I cannot believe that a man whose priority is national interest will let things end like this.
Endo
I hope so too.
Conversely, if things end as they are, it will become a grave situation from which there will be no going back.
The situation is now becoming quite serious.
For example, when one looks at the market share of base stations that exchange voice and data with communications devices by radio waves, Huawei has 27.9% and ZTE has 13%, meaning that China accounts for a little over forty percent.
The others are Ericsson with 26.6% and Nokia with 23.3%, and astonishingly, not a single American company is included.
That is the reality.
Even in the number of essential patents for 5G, the next-generation mobile communications technology used in diverse fields including the military, Huawei holds the top position in the world.
If Huawei acquires standard-essential patents, patents indispensable for producing products based on standard specifications, Huawei’s standards will become international standards, and it will seize hegemony over the 5G world.
In a world where AI and IoT, the Internet of Things, are rapidly spreading, China would gain control over every kind of communications infrastructure throughout the entire world.
This is an immeasurable terror.
Momii
When Mr. Trump often says “Make America Great Again,” that also includes the meaning of “surpassing China,” does it not?
China must not be allowed to seize hegemony.
Endo
China has raised the national strategy “Made in China 2025,” and by 2025 aims to domestically produce 70% of semiconductors, which are key parts of high-tech products, while seeking world hegemony in the digital economy based on 5G.
At the same time, it is pouring effort into space development, and because the International Space Station, from which China has been excluded, will reach the end of its lifespan in 2024, China is trying to put its own space station into operation by 2022 before that happens.
By 2049, the centennial of the founding of the People’s Republic, China has set forth the ambition to surely surpass the United States not only in GDP economic scale but also in the high-tech world and to dominate the world.
The first person to turn his eyes to such threats and try to stop them was Mr. Trump.
If this is not stopped now, it will be too late.
This article continues.