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* UK to purge Huawei from 5G by end of 2027
* No new 5G components to be bought from end of 2020
(Adds Chinese ambassador and Pompeo comments, background)
By Paul Sandle and Guy Faulconbridge
LONDON, July 14 (Reuters) - Prime Minister Boris Johnson
ordered Huawei equipment to be purged completely from Britain's
5G network by the end of 2027, risking the ire of China by
signalling that the world's biggest telecoms equipment maker is
not welcome in the West.
As Britain prepares to cast off from the European Union,
fears over the security of Huawei have forced Johnson
to choose between global rivals the United States and China.
He had been under intense pressure from U.S. President
Donald Trump, while Beijing had warned London, which has sought
to court China in recent years, that billions in investment
would be at risk if it sided with Washington.
Reversing a January decision to allow Huawei to supply up to
35% of the non-core 5G network, Johnson banned British telecoms
operators from buying any 5G equipment from Huawei by year-end
and gave them seven years to rip out existing gear.
"This has not been an easy decision, but it is the right one
for the UK telecoms networks, for our national security and our
economy, both now and indeed in the long run," digital minister
Oliver Dowden told parliament.
"By the time of the next election, we will have implemented
in law an irreversible path for the complete removal of Huawei
equipment from our 5G networks".
The reason given for the about-turn was the impact of new
U.S. sanctions on chip technology, which Britain's National
Cyber Security Centre, part of the GCHQ eavesdropping agency,
had told ministers meant Huawei was not a reliable supplier.
White House National Security Adviser Robert O'Brien said
Britain's action reflected a growing consensus that Huawei and
other untrusted vendors posed a threat to national security
because they remained "beholden to the Chinese Communist Party".
According to a law introduced in 2017 under Chinese
President Xi Jinping, Chinese companies have an obligation to
support and cooperate in China's national intelligence work.
China's ambassador to Britain Liu Xiaoming called the
decision "disappointing and wrong".
"It has become questionable whether the UK can provide an
open, fair and non-discriminatory business environment for
companies from other countries," he said.
The ban will delay the roll-out of 5G - cast as the nervous
system of the future economy - by two to three years, and add
costs of up to 2 billion pounds ($2.5 billion).
The Dec. 31, 2027 deadline was not as bad as British
telecoms operators such as BT, Vodafone and Three
had feared. They were concerned that they would be
forced to spend billions of pounds to rip out Huawei equipment
much faster.
BT said 500 million pounds already earmarked to comply with
the earlier cap would cover its costs. Its shares closed up 4%.
5G PROXY WAR?
Hanging up on Huawei marks an end to what former Prime
Minister David Cameron cast as a "golden era" of ties which saw
Britain pushed as Europe's top destination for Chinese capital.
But London has been dismayed by a crackdown in Hong Kong and
the perception China did not tell the whole truth over the novel
coronavirus outbreak.
Huawei said the decision was more about U.S. trade policy
than security. "It threatens to move Britain into the digital
slow lane, push up bills and deepen the digital divide," a
spokesman said.
In what some have compared to the Cold War antagonism with
the Soviet Union, the United States is worried that 5G dominance
could lead towards Chinese technological supremacy.
After Australia first raised alarms about the risk of 5G
being hijacked by a hostile state, worries in the West about
Huawei have mounted. https://www.reuters.com/investigates/special-report/huawei-usa-campaign/
The United States calls the company an agent of the Chinese
Communist state - a view widely supported in Johnson's
Conservative Party. Huawei denies it spies for China and says
the United States wants to frustrate its growth because no U.S.
company offers the same technology at a competitive price.
In a tweet, U.S. Secretary of State Mike Pompeo said the
British decision "advances Transatlantic security in the #5G era
while protecting citizens’ privacy, national security, and
free-world values."
HUAWEI ALTERNATIVE?
British ministers say the rise to global dominance of
Huawei, founded in 1987 by a former People's Liberation Army
engineer, has caught the West off-guard.
Dowden said Britain was working with its allies to foster
stronger rivals to Huawei, naming firms from Finland, Sweden,
South Korea and Japan.
"The first thing we need to do is ensure that we protect the
other two vendors in this market, so Nokia, and
Ericsson," Dowden said. "Secondly we need to get new
suppliers in, that starts with Samsung, and it
starts with NEC."
Nokia and Ericsson said they stood ready to replace Huawei
gear.
By allowing Huawei's equipment to remain in the 5G network
until end-2027 and in older mobile networks, Johnson stopped
short of demands from some lawmakers for a ban in four years.
Chinese imports to Britain doubled in the 15 years to 2018,
to about 9% of all goods imported, worth 43 billion pounds.
($1 = 0.7978 pounds)
(Additional reporting by William James and Steve Holland;
Writing by Paul Sandle, Guy Faulconbridge and Michael Holden;
Editing by William MacLean, Peter Graff and Catherine Evans)
