The Times reported that Prime Minister Boris Johnson plans on imposing a stringent new law that will compulsorily require local companies to notify the authorities in case a foreign company aims to take-over its shares. The current proposal, supported by Johnson’s adviser, Dominic Cummings, and Finance Minister, Rishi Sunak, mandates reporting any incident where a foreign company attempts to purchase more than 25% of the company’s shares. The legislation aims to restrict foreign companies’ activities that threaten the UK’s “national security”. In case companies fail to abide by the guidelines, it could lead to criminal implications such as the directors being “jailed, disqualified, or fined”.
The legislation comes amidst fears brewing amongst Conservative leaders, opposition members, and human rights activists that China may use Huawei’s growing control in the British mobile network for surveillance and sabotage. However, Huawei is not a new player in the British mobile network market. The involvement of Huawei in the UK began more than ten years ago with British Telecom’s decision to upgrade the country’s telecom infrastructure. Bloomberg reports that “Huawei equipment currently makes up about a third of Britain’s 4G mobile broadband antennas, and rules introduced in January meant it would be able to supply up to 35% of those for 5G, as well as full fiber broadband.”
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However, the decision to increase Huawei’s share in the market was highly condemned by leaders in the US, with Mike Pompeo warning that the UK risks compromising its sovereignty. The US also warned that if Huawei is brought on board, the US will review its intelligence-sharing programs with the UK. These warnings were linked with the ongoing trade war between the US and China and have impacted the British government’s approach to its deal with Huawei.
In accordance with these threats, in May, Boris Johnson declared his plan to gradually minimize Huawei’s role in the British mobile network market. He said that he instructed the officials to formulate a plan to ensure that Huawei’s involvement in the market is brought down entirely by 2023. The British authorities are already conversing with Huawei’s Japanese rivals NEC Corp and Samsung Electronics Co. Ltd.
Also Read: US Considering Pulling Military and Intelligence Operations out of UK Due to Huawei Deal
This legislative proposal comes amidst soured relations between the UK and China. The UK did not shy away from taking a strong stand against China’s new law to limit the autonomy of Hong Kong.
In a joint statement, UK Foreign Secretary Dominic Raab, Australian Foreign Minister Marise Payne, and Canadian Foreign Minister François-Philippe Champagne, expressed their “deep concern” at the proposed new security law. Raab also referenced the “legally binding Joint Declaration, signed by the China and the UK”, which stipulates that Hong Kong must continue to enjoy a “high degree of autonomy”, and “rights and freedoms, including those of the person, of the press, of assembly, of association and others”.
The UK also vowed to admit around three million Hongkongers and permit them to live and work in the UK if China goes ahead with its plans to implement the new security law.
Also Read: UK Vows to Admit Nearly 3 Million Hongkongers if China Imposes New Security Law
The Johnson government’s wariness of Chinese takeover of local businesses is not without precedent. In April, the Indian government amended its foreign direct investment (FDI) policy to mandate that all investments from neighbouring countries, including China, now require government approval. The revision in policy was seen as a response to reports about Chinese attempts to take over Indian companies that are in stress due to the coronavirus lockdown and the ongoing cycle of economic slowdown in the country.
Also Read: China Objects to India’s Revised FDI Policy
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