Is London′s LSE helping Huawei clean its reputation? | Business| Economy and finance news from a German perspective | DW | 20.02.2020
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Is London's LSE helping Huawei clean its reputation?

The prestigious London School of Economics says it has not decided yet to accept sponsorship from the Chinese IT firm Huawei. But its name is being dragged through the mud nonetheless.

The Chinese IT firm Huawei is in talks to pay the London School of Economics (LSE) £105,000 (€130,000, $143,000) for a three-year project to study the company's "leadership” in the development of 5G technology. The new funding was described by the LSE as a "donation" to cover a "proposed three-year consultancy project," according to documents published in the British media.

The revelations come on the heels of UK Prime Minister Boris Johnson's agreeing to allow Huawei to build part of the UK's 5G network as long as it is restricted to "noncore" infrastructure — a move heavily criticized by US Secretary of State Mike Pompeo, who said the company was a security risk. The criticisms of Huawei are about alleged intellectual property infringement, unfair commercial practices and nefarious intent in league with the Chinese government.

The LSE's ethics committee reportedly approved the project last September, although a spokesman for the London University-affiliated college said this was not the case.

"While ethical approval is an essential part of the process for all commercial agreements, and took place in this instance, it is not the final stage of the process and the proposed project remains under discussion," an LSE spokesman told DW, adding there was no deadline for the decision.

Internal university documents obtained by the UK website openDemocracy and published also by the Financial Times show that a group of four academics met with LSE Director Minouche Shafik in 2019 to warn of "increasing risks to the school's reputation of exposure to China." In an email to Shafik last June after the meeting, the four wrote: "Particularly pressing is the need for a rigorous and meaningful review of the Confucius Institute for Business, the [Peking University] summer school ... and the ethical implications of having joint MSc programs with institutions in which academic freedom is increasingly constrained by the Chinese Communist Party."

Last year the university was forced to "put on hold” a proposed China program. The would-be funder was a pro-Beijing venture capitalist who had previously defended the 1989 crackdown in Tiananmen Square.

Huawei 5G (picture-alliance/Photoshot)

Criticisms of Huawei are about alleged intellectual property infringement and unfair commercial practices

‘LSE has form'

The LSE has a number of ventures in China, including joint academic degrees with Chinese universities such as Peking University and Tsinghua University and a long-running joint journalism degree with Fudan University. The LSE's Confucius Institute is run in partnership with an agency under China's Ministry of Education.

The internal documents seen by openDemocracy show that the LSE has been chasing philanthropic funding from China. "Foundations and corporations from China have supported research and policy-oriented work among LSE academics," the documents state. "China and East Asia, in general, will be an important philanthropic market for LSE."

OpenDemocracy's Peter Geoghegan now asks what LSE would be willing to do for 10 million pounds if they already stake their reputation for "this small amount of money."

"I am very surprised, but the LSE is highly reliant on Chinese students and management is very keen on maximizing profits. Added to this, these sponsorships tend to be very much research focus, not unusual and this is different, about leadership," he tells DW.

In a 2011 report by former Lord Chief Justice of England, Harry Woolf, LSE was criticized for accepting donations from sources linked to Muammer Gaddafi, the late Libyan dictator. The report found that the university was guilty of a "chapter of failures" over its links with the regime of Gaddafi. The school had accepted 1.5 million pounds from a foundation led by Gaddafi's son Saif, a former student. The LSE's commercial arm had also secured a contract worth 2.2 million pounds to train Libyan civil servants.

Knee-jerks?

Labour lawmaker Chris Bryant claimed that Chinese companies were "deliberately seeking well-respected UK universities to launder their reputation." The LSE would be "daft" to cooperate with Huawei, Bryant added. 

Christopher Hughes, a professor of international relations at LSE and a former director of the university's Asia Research Centre, said that the university has continually failed to inform academics about its Chinese work.

"LSE's approach is to freeze out the academics. The people who work on China are the last ones to be told about these projects," said Hughes, who was among the academics who brought their concerns about LSE's exposure to China to Shafik.

"Universities must be especially cautious to defend academic freedom and ensure that they don't allow themselves to be attack surfaces of the Chinese Communist Party in future — whether that's economic, digital, informational or societal."

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Fooling some of the people some of the time

Jonathan Liebenau, an associate professor in technology management at LSE's department of management, believes though that Huawei is not "a snake-in-the-grass of Chinese imperialism."

"It is not, at least overtly (and I don't believe covertly, either), state-owned, — a tool of the Chinese Communist Party or of the People's Liberation Army" , he wrote in his blog, argueing that the company "does pay taxes and abides by corporate and other laws" both in China and on an international level.

"What we do know is that Huawei has long been in competition — and indeed in collaboration — with network equipment manufacturers around the world," Liebenau says, and adds: "The failure of US companies to meet this competition has become a major concern with all kinds of discussion about how to regain technical supremacy, especially for Cisco."

Fair competition issues have come to the fore because of pressure put on China in relation to terms of trade, Liebenau argues. But they are also a factor from the perspective of innovative Chinese companies, such as Huawei, who have moved away from the position of technology followers.

As Huawei has become a leader, especially in the 5G technology development, the company is the best example of how long-term strategies to invest in leadership could pay off Liebenau notes. 

"The recent interest follows the decision to allow Huawei to sell equipment to UK telecommunications network operators up to a market share of 35%, which has brought relief to the industry as well as anger amongst those who either agree with claims that the company poses a threat or that countering the US position will provoke retaliation."

Liebenau believes that the best hope Britain can have is to profit from "the innovative outputs of Huawei and their economic benefits." 

"We don't know if Huawei poses a threat and we won't know until an Edward Snowden-like character emerges in China who shows that the Chinese government does with its digital economy companies what Snowden showed has been done in the US," he concludes.

In 2019, Oxford placed a ban on accepting research grants from Huawei. It will be interesting to see how the 20 British universities Huawei already provides funding for in the form of research projects and grants, including a £25 million collaboration with the University of Cambridge, will respond to the news.

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