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Gingrich Praise of Huawei is Dangerously Misguided

After attempting to cover up the spread of the novel coronavirus responsible for the COVID-19 pandemic, the Chinese Communist Party is now engaged in a global propaganda campaign to improve its image and future economic position. Such behavior isn’t surprising from that regime. What is surprising is that former Speaker of the House Newt Gingrich seems to have fallen for it. Yesterday, Gingrich tweeted this:

The tweet is misleading in a number of areas. First and foremost, it is unclear to which action of AT&T Gingrich is referring. There are reports that AT&T has canceled plans to engage in stock buybacks in order to be eligible for government loans under forthcoming stimulus legislation. However, there is no indication that AT&T has secured any sort of preferential terms in the legislation that is expected to pass.

Regardless of the merits or efficacy of the legislation, if the government is set to make hundreds of billions of dollars in low-cost loans widely available to companies across various industries, one can hardly blame any individual company for positioning themselves to benefit from that program. In fact, one could argue it would violate the fiduciary duty of the company’s leadership to not take such action. Given the circumstances, singling out AT&T is simply bizarre.

Then there’s Gingrich’s decision to contrast Huawei against AT&T. Even if one believes AT&T’s actions constitute an egregious example of corporate welfare or rent-seeking, Huawei is perhaps the worst champion one could choose.

For those unfamiliar, Huawei is a telecommunications giant based in China. While nominally a privately owned company, major questions linger about who actually controls the behemoth. According to academic research published last year, Huawei is owned by a holding company, which in turn is 99 percent owned by a trade union committee representing Huawei employees. The researchers concluded:

Given the public nature of trade unions in China, if the ownership stake of the trade union committee is genuine, and if the trade union and its committee function as trade unions generally function in China, then Huawei may be deemed effectively state-owned.

Regardless of whether or not the company is truly owned or controlled by the Chinese Communist Party, Huawei certainly receives the kind of preferential treatment of a state actor. According to a Wall Street Journal report published late last year, “China’s tech champion got as much as $75 billion in tax breaks, financing and cheap resources” at Beijing’s behest. According to the Group Good Jobs First, a well-recognized organization that tracks and compiles government subsidies, AT&T has received just over $1.8 billion in federal, state, and local support since 1988, the year after Huawei was founded. In addition to the Chinese government’s largesse, Huawei is also set to cost American taxpayers quite a bit in just the next few years.

Huawei’s close relationship with the Chinese government has raised red flags with national security experts across the globe. As a result, Congress recently passed legislation to establish a $1 billion fund to assist telecommunications companies in ripping and replacing potentially compromised Huawei equipment in their networks. The legislation has since been signed into law.

As if his patently absurd juxtaposition wasn’t enough, Gingrich insultingly omits all that AT&T and other telecommunications companies in America are doing to help ease the impact of the COVID-19 pandemic. According to the Federal Communications Commission, AT&T is one of over 500 companies to sign the voluntary “Keep Americans Connected Pledge.” Pledged companies agree to do the following for the next two months:

  1. not terminate service to any residential or small business customers because of their inability to pay their bills due to the disruptions caused by the coronavirus pandemic;
  2. waive any late fees that any residential or small business customers incur because of their economic circumstances related to the coronavirus pandemic; and
  3. open its Wi-Fi hotspots to any American who needs them.

In addition to signing the pledge, AT&T has provided a 20 percent bonus “until further notice” to roughly 100,000 workers. The company is also working to assist families and schools, creating a $10 million fund to help with remote learning needs and providing unlimited data to school districts.

The COVID-19 pandemic is an unprecedented crisis that is bound to shape public policy and politics for decades to come. This means that accurate information from trusted sources and political leaders is critical, especially in light of the major government blunders at the outset of this crisis. Americans must know which institutions are truly stepping up to the plate and providing help. This is why former Speaker Gingrich’s tweet is not only misleading, but downright dangerous. He should retract it and apologize as soon as possible.