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The government demands the right to tap into all online communication

Mark zirnsak is a lonely man. In September he wrote to the government on behalf of the Uniting Church in Austra-

lia to endorse the Assistance and Access Bill passing through Parliament. The bill, he argued, would help fight crimes such as child pornography and human tra cking. The spread of such horrors is facilitated by “end-to-end” encryption, which allows people to communicate via social media without anyone else, including the police, being able to snoop on them. Forcing tech firms to provide a way for law-enforcers to peer into those encrypted spaces, as the bill does, is reasonable, Mr Zirnsak argued.

He was virtually on his own. Of the 343 letters sent to the government during the comment period, only his was in favour. The fear is that any peephole built for the good guys will inevitably be exploited by bad guys. Apple, an American tech giant, said the law would give the government “extraordinarily broad and vague powers”. Australian academics said it would have “serious negative consequences for the cyber-security of Australians”. Humanrights groups and lawyers railed.

The bill passed anyway and came into force this week. The government can now oblige tech firms to create backdoors to their systems to allow the authorities to spy on their customers. The penalties for non-compliance are sti : A$10m ($7.2m) for defiant firms and A$50,000 for recalcitrant people. Exposing police snooping is punishable with five years in prison.

The boss of Australia’s biggest tech firm, Atlassian, which makes tools for software development, called the law a “self-im- posed black eye for the global image of Australian technology”. Google, Microsoft and ibm all have big Australian o ces, which could in principle be the recipients of requests under the law. Technologists are already asking whether firms should move o ces and personnel out of Australia to avoid awkward demands and to avoid dealings with firms that do not relocate.

The law will be hard to implement anyway. Large American firms are unlikely to comply with it. Apple has faced down the fbi in America over similar issues. Australia is a relatively small market, so big tech firms will be disinclined to put business there before their global reputation. If the cost of providing privacy to a billion potential customers in, say, China or India is to lose access to 25m Australians, so be it. 7

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52 Asia

2sure cookers and hydrogen-gas containers, as well as generators as big as those used by hotels and thousands of tonnes of ingredients, mostly trucked in from China.

The cooking process is sophisticated. The meth produced is of a high purity. Hydrochloric acid, one component, is deadly and explodes if heated to the wrong temperature. Yet no leaks of poisonous gas or chemical blasts have been reported in Shan state. That suggests the chemists are highly skilled, says a Western law-enforcement o cial: “These are not just some guys making meth in a bathtub in the jungle.”

Finding out who is controlling the meth trade is tricky. Major De Khan of the Kwang Hka militia, which is based in Kutkai and has about 4,000 troops, claims to have no idea who is responsible. His group is not involved in the drugs trade, he insists, though individual members have been punished for tra cking. Experts sco at such denials, pointing out that the army and militias maintain checkpoints on the roads and at border crossings. Lorries full of chemicals and equipment could not pass unnoticed.

The most likely explanation is that militias, ethnic insurgents and the army are all involved. The money made is probably laundered through casinos and suspiciously empty restaurants owned by militia groups. Many believe the ringleader is the United Wa State Army (uwsa), an armed group that controls large parts of Shan state and has about 30,000 soldiers. Some call it the biggest international criminal organisation in the world.

In Myanmar yaba is now a feature of life, as it has been in neighbouring Thailand for years. It has spread from partygoers to casual labourers, not always by choice. Some opium farmers in Shan state are said to receive half their pay in pills. Jade-miners are reportedly given the drug to help them work 20-hour days, and then heroin at night to relax. When miners return to their villages, they bring addiction with them.

Out with the old

Smuggling meth out of Myanmar is easy. One way is to convince locals to strap on a meth-filled rucksack and walk through the jungle to Thailand, Laos or China. Another method is to truck it down to the Andaman Sea, where a fishing boat will motor a few miles from shore and transfer the drugs to a bigger vessel.

International tra cking is highly profitable. The retail price of a gram of crystal meth is about $16 in Myanmar, but around $300 in Australia. So distribution networks are fanning out. Drugmakers probably rely on uwsa’s connections with organisedcrime groups abroad, like China’s triads, Japan’s yakuza and Australia’s motorbike gangs. Burmese meth has reached Australia, New Zealand, South Korea and Taiwan (see map).

One fast-growing tra cking route is to Bangladesh. The number of pills recovered by authorities there has jumped from 3m in 2013 to 40m in 2017. Smugglers’ jobs have been made easier by the crisis in Rakhine state, where murdering, raping soldiers have forced 700,000 Rohingya Muslims to flee to Bangladesh. Desperate and destitute, many refugees are paid by tra ckers to take yaba across the border.

The new route has caused a surge in

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consumption. No o cial data exist on users, but some estimate that there are 6m of them, or almost 4% of Bangladeshis. Lowquality pills can cost $1, less than a beer. Better ones go for about $4, says a doctoral student and former addict. Her preferred brands are “cr7”, a reference to Cristiano Ronaldo, a footballer, and “Champa”, Bengali for the frangipani flower. She began taking yaba to increase her creativity and boost her sex drive. The habit soon spiralled and she started “chasing” daily, heating a pill and inhaling the fumes.

Government responses range from promising to awful. In May Bangladesh’s government declared a “war on drugs”, inspired by similar campaigns in Thailand in 2003 and the Philippines since 2016. Like its precursors, the crackdown has become a bloodbath. Suspects are often shot dead, the result, the authorities unconvincingly claim, of shoot-outs. “We find bodies on the side of the road and in the paddy fields,” says Adilur Rahman Khan of Odhikar, a hu- man-rights group. Since May his organisation has counted 380 extra-judicial killings of alleged drug users and sellers. The actual number could be two or three times higher, as ashamed families are reluctant to come forward when loved ones go missing.

Bangladesh would do well to learn from Thailand. The war on drugs there, which killed around 2,500 people, failed to diminish demand in the long run. It did, however, overcrowd the jails. Seven out of ten inmates are locked up for drug-related o ences. The prison budget swallows half the spending of the ministry of justice. There is now a push to decriminalise drug use, and focus more on health and social services. A parliamentary vote on a new drug law is expected in early 2019.

Myanmar may be heading that way, too. Its drug-enforcement agency is understa ed and its rehab centres are underfunded. Communities shun drug users. But the government is slowly coming round, says Tom Kramer of Transnational Institute, a think-tank. In February it rolled out its first drug-control policy and amended its narcotics law. The changes stop short of decriminalisation, but do shift the focus from eradicating drugs to public-health interventions.

Such measures should help users. In time, demand for meth may fall. However, there is little hope of stemming supply. The conditions which make Myanmar’s wild borderlands an ideal place to produce drugs show no sign of changing. Up in the hills of Shan state, U San Maung Hla, the head of a village near Kutkai, shakes his head sorrowfully when asked about the future. He says a tenth of the young men in his village are drug addicts. The local rehab centre has no funding. The police do little to help. “The situation will not get better,” he sighs, “only worse.” 7

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China

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sional body that gives advice to the American government on China policy. It has also made it easier for people to find the ingredients, kit and talent necessary to cook them up illegally.

For years the biggest such business was making stimulants such as amphetamines and methamphetamines, which are also produced in neighbouring countries (see Asia section). Such drugs have been growing increasingly popular among China’s drug-takers and in the rich world. But the synthetic opioid crisis in America has created new business opportunities. America says most illicit fentanyl comes from labs in China. Finished opioids or the ingredients needed to produce them are sold by Chinese distributors to gangs in Mexico and Canada, who smuggle them into America. They can also be bought online and shipped directly to American buyers using international mail services.

Fentanyl’s unusual potency—30 times greater than heroin—makes it easy to smuggle powerful amounts in small, hard- to-detect quantities. It can be disguised, for example, as the tiny sachets of desiccant used to stop many packaged goods from going soggy. In 2017 America’s Department of Justice guessed that fentanyl purchased in China for $3,000-5,000 could be worth around $1.5m on American streets. About 29,000 people in America died from overdosing on opioids such as fentanyl in 2017, up from about 5,000 in 2014.

Chinese o cials say that drugs of this type are not yet commonly abused in their own country (the crisis in America owes1

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54 China

2much to copious prescription of legal painkillers; these have never been as readily available in China). Until recently the production and sale of synthetic opioids was not tightly controlled. For years Chinese distributors sold fentanyl openly to people abroad through their websites. Some still do. They have managed to stay ahead of gradually tightening laws by slightly altering their products’ chemical recipes. The new types of fentanyl that result are not banned under Chinese legislation, but are just as dangerous as older ones.

Exactly how the Chinese government will implement Mr Xi’s promise to close legal loopholes has yet to be spelled out. It appears to be mulling a restriction that would embrace all existing types of fentanyl, as well as fentanyl-like compounds that have yet to be invented (at present it has to introduce a new prohibition each time drug-cooks tweak their product). Lawmakers everywhere have usually preferred to avoid such all-encompassing measures, in part so as not to stifle pharmaceutical research, but lately they have been thinking again. America’s Drug Enforcement Administration introduced sweeping new controls on all fentanyl-type substances in February. It said this was an emergency measure that would initially last two years. The hope on both sides of the Pacific is that China’s new regulations—if and when they are enacted—will persuade at least some of the country’s fentanyl-makers to find alternative work that does not threaten lives.

Yet enforcement will be a tough challenge. Local o cials regard boosting economic growth as their priority. They are often reluctant to step up inspections that might impose costs both on government and industry. Some take kickbacks from manufacturers. Lapses in the regulation of China’s drug and chemical industries are common, despite the government’s incentive to avoid such slips and the public outrage they cause. (This summer Chinese parents found out that more than 200,000 babies may have been given substandard vaccines, the latest of several such publichealth scandals.) Sending illegal materials by post is already banned. But the Chinese postal system handles more than 75,000 new parcels every minute. Finding drugs in them, and tracing them to their source, is fiendishly di cult.

This is a good reason for America to focus on remedies at home. It could invest a lot more in finding ways to reduce the harm caused by opioid addiction, including treatments that reduce the craving of addicts. And China needs to prepare itself for the possibility that powerful synthetic opioids will catch on at home. The country’s punitive drug policies, which include detaining many addicts, look even worsesuited than America’s to handling the health crisis that may result. 7

Pollution

Changing the flow

B E I J I N G

China has appointed over 1m “chiefs” to look after its rivers and lakes

Huo yan, the Communist Party boss of a small district in north-east Beijing, was recently ordered by her bosses to take on a second job. Now Ms Huo must find time in her busy schedule to conduct weekly patrols along the Bahe river—an ancient canal that flows through her patch. She is responsible for protecting the waterway, scooping out garbage (or hiring others to do so) and keeping an eye out for pollutioncausing activities on its banks. The side gig

comes without extra pay.

The “river chief” system began more than a decade ago in the eastern province of Jiangsu. In 2016 the central government decreed that every lake and river, or segment thereof in the case of larger ones, must have someone tasked with keeping them free of visible pollutants. By the end of June every river had at least one local o cial designated as its supervisor.

There are now nearly 1.1m river chiefs. The government says they will be accountable “for life” for any serious pollution that relates to a lapse on their watch, but penalties have yet to be specified. Promotions in their regular jobs will take into account their riverine duties. Liu Dengwei, a researcher at the Ministry of Water Resources, says chiefs will not be unfairly punished for filth from upstream.

It is a tough assignment. Earlier this year a government report said that surface water in nearly a third of “river sections” surveyed was too risky to touch, let alone drink. Water in nearly 15% of them was rated too dirty even for industrial use. Lakes

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are worse. The report says that out of 54 large ones surveyed, 29 contained water deemed unsafe for human contact.

The chiefs’ appointment may be a sign that the government is worried about public anger over its perceived failure to deal with the problem. Surveys by the Pew Research Centre, a think-tank, found that 37% of respondents in 2016 saw water pollution as a “very big problem”, up from 28% in 2008. Those polled expressed less anxiety about smog and the rising cost of living.

Ministries responsible for bodies of water have unclear and sometimes overlapping responsibilities. The result has been buck-passing and finger-pointing, says Mr Liu. This will be more di cult now that named individuals are accountable for water quality, the theory goes. Whether this is really so may become clearer in 2019, when the government is expected to release data from the first nationwide water-quality survey since rivers got their chiefs. But anecdotal evidence is promising. A man fishing in the Bahe river recounts how the water was “opaque green” and fetid just two years ago. Today it is clear and odourless. He credits the river-chief system.

Those with complaints about foul water can easily find out whom to call: noticeboards have been erected by almost every river and lake with the name and mobilephone number of a chief. Ms Huo, to her credit, answers calls. The same cannot be said of many other chiefs in Beijing. Surprise inspections will be carried out next year. Mr Liu says they may involve random test calls. Shirking chiefs, beware. 7

Correction: Our article last week about the anniversary of China’s reforms incorrectly reported that President Xi Jinping, in a speech in November, had failed to refer to Maoist excesses. In fact Mr Xi attributed the death of President Liu Shaoqi to persecution by Mao’s acolytes. We apologise for this error. The piece also said that China’s economy had grown 44-fold from 1978 to 2004 and five-fold since then. We should have made clear that this was based on Chinese yuan at current prices.

To fieldmice, rabbits and voles, every shadow overhead is a hawk until proved otherwise, condemning them to lives of needless panic. Chinese nationalists seem intent on ignoring that lesson from nature. Behind rising tensions with the West, they see dangerous anti-China hawks everywhere. Specifically they feel under attack from hardliners with President Donald Trump’s ear,

who are intent on keeping a rising China down.

Rather than hawks scheming to contain China, jumpy nationalists should be worrying about a di erent group: Americans and Europeans who were once advocates of engagement, but have been disappointed by illiberal, aggressive choices made by Chinese rulers. They are not so much hawks as unhappy ex-doves.

That runs counter to an o cial Chinese narrative that casts China as the peace-loving victim of Americans with a cold-war mindset. In the words of a Chinese speaker at a recent policy forum: “[Cold-warriors’] feet have entered the 21st century but their heads are stuck in the 20th century.” This narrative is used to explain the trade war begun by Mr Trump. It is applied to the recent arrest in Canada of a Chinese businesswoman, Meng Wanzhou, on an American warrant linked to an alleged sidestepping of sanctions on Iran (see Business). The arrest of Ms Meng, chief financial o cer of Huawei, a telecoms giant, and also the daughter of the firm’s founder, has angered public opinion in China. Dismayingly, many responses skip past the legal rights and wrongs of the case to denounce what they call an outrageous, political attack on a Chinese national champion.

More vitriol is poured on anti-China hawks than on Mr Trump in person, in part because China hopes to strike a deal with America’s president. That message discipline is striking but unhelpful. It is true that Mr Trump lends half an ear to anti-China hawks who think communist rulers incapable of changing. But for Chinese leaders, a trickier challenge is posed by ex-doves readying one last attempt to make them change. These diplomats, academics, politicians, executives and entrepreneurs from across the West are not America First unilateralists. Plenty are internationalists, worried that China is co-opting institutions such as the un and the wto to make them safe for authoritarianism, state-backed capitalism and other threats to a rules-based order. Above all, these ex-doves agree

that 20 years of patiently cajoling China to change has not worked. Lines between economic competition and national security are blurring. Western o cials fret about Chinese hacking attacks on the home-country servers of big companies, only some of which have been reported. They murmur about Chinese investors visiting obscure startups or university researchers, o ering to buy very specific technologies. That makes such o cials more willing to endorse the idea that the West should insist on reciprocity in dealings with China—an idea they once heard as code for protectionism. They worry that China is taking advantage of a Western openness that now feels naive. That does not make them anti-China. It

makes them ex-doves who read secret intelligence reports. America’s China-policy machine, involving various branches

of government and members of both parties in Congress, wants to change tactics. Instead of writing wishlists of specific actions— here a new regulation, there a business licence—the machine wants to talk about high-level principles. That means telling China that it cannot rise at America’s expense. It involves explaining that granting foreign firms market access means little if the government is their regulator and (via state-owned enterprises) their competitor. Such scepticism may overshadow a reported Chinese o er to supplant a self-reliant industrial policy, Made in China 2025, with something more foreigner-friendly. Rather than haggle over every concession, America’s machine wants China to explain how it will change.

In recent months Chinese and American o cials talked past each other, as China resisted a substantive discussion about how it operates. A worrying lesson from Western governments’ humanrights dialogues is that China is brilliant at turning debates about principles into empty talkfests. It complicates matters that America’s machine answers to a president who seems so uninterested in principles and norms. On December 11th Mr Trump told Reuters, a news agency, that he would intervene in the Department of Justice investigation of Huawei and Ms Meng if it was good for national security or for reaching a China trade deal. Aghast, Canada’s foreign minister, Chrystia Freeland, urged America not to “politicise the extradition process or use it for ends other than the pursuit of justice.” Soon after China threatened Canada with “serious consequences” for arresting Ms Meng, Michael Kovrig, a former Canadian diplomat turned analyst for the International Crisis Group (icg), a think-tank, was detained in Beijing. icg said he had been picked up by secret state-security police. China’s foreign ministry accused icg of lacking operating permits. A China-based Canadian entrepreneur who has led tours to North Korea, Michael Spavor, is also missing after contacts with Chinese authorities, Canadian officials said on December12th.

No-go for the status quo

At his worst Mr Trump makes his trade war sound like a rent renegotiation, through which he wants to make China pay more for access to the valuable property known as the American economy. But Mr Trump is not the only actor in China policy. Lots of decisions never reach his desk. Indictments of alleged Chinese spies and hackers are said to be on the way, along with tighter visa rules. Wise tech-firms are examining whether sensitive supply chains that run through China are politically sustainable. Tensions may worsen quickly if China sticks with a state-dominated growth model. If so, expect accusations that anti-China hawks have achieved a long-planned victory. In truth, brokenhearted advocates of engagement with China will have failed. 7

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childbirth itself is safer than it has ever been. From 1990 to 2015 the number of maternal deaths around the world fell by almost half, to 216 per 100,000 women, thanks in large part to women delivering their babies in proper medical facilities. Nearly all of these deaths (99%) are in developing countries. However, this article focuses on the rich world, where, with the notable exception of America, maternal mortality has fallen.

A second reason for the new attention being paid to care for new mothers is that women, including famous ones, have been speaking out about their unhappy experiences. Serena Williams, a tennis player, has written of the “funk” of postnatal depression. Keira Knightley, an actor, wrote about her experience of childbirth: “Hide. Hide our pain, our bodies splitting, our breasts leaking, our hormones raging.” Ali Wong, a comedian, delighted and shocked Netflix fans by yelling about women’s “de- molished-ass bodies” and her horror at finding out that new mums who advised her to steal nappies from hospital meant not for the baby but for herself.

The importance of the postnatal adjustment has been implicitly recognised in traditional rest periods such as China’s zuo yuezi (“sitting the month”), when new mothers follow timeworn practices such as refraining from washing their hair or consuming cold drinks, or la cuarentena, a 40day rest, observed in Mexico and other His-1

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2 panic countries.

Yet this is poorly reflected in modern health systems, which tend to o er plenty of check-ups during pregnancy, but very few after it. It is usual for women in countries including America and Britain to receive just one visit from a health worker when their babies are six weeks old. American federal law does not even oblige employers to give women paid time o work.

Journey without maps

After childbirth many women su er men- tal-health problems. Di erent women struggle with di erent things—trauma related to the birth, the di culty of adapting to caring for the baby, or the change in selfimage, says Jacqueline Glynn, a counsellor in London. In Britain, France and Japan a survey is conducted at six weeks to detect postpartum depression. But depression can hit much earlier—or later. Ms Glynn says that many women struggle to tell whether their feelings are normal or something more serious. They may fret that their baby will be taken away if they admit to a professional that they are depressed.

A survey of Britain’s National Health Service found that more than half of firsttime mothers felt they were not given enough information about emotional changes they might experience. Suzi Barling, who was diagnosed with anxiety after her son was born in Australia in 2017, counts herself lucky that she got help. “It is because I have a history of it and so I and my husband recognise the signs,” she says.

Women’s physical health, however, both during pregnancy and after birth, is perhaps even worse catered for. Often mothers are ignorant of basic facts about what will happen to their body during and after childbirth, including tears to their pelvic floors, reckons Emily Oster, an economist at Brown University in Rhode Island, and author of books about pregnancy and birth. She was surprised when she bled for days after giving birth. In 2015 Britain’s Care Quality Commission found that only 51% of women giving birth for the first time thought they were given enough information about their physical recovery. Some care providers use euphemisms, such as “tidying up down there” for stitching up tears. “People say ‘how are you?’ but they don’t really want to hear about what is going on in your vagina,” says Ms Oster.

One result of this reticence is that too many mothers think symptoms such as incontinence are inevitable. Some are actually told as much. When Emma, a 37-year-old British lawyer, went to her doctor to complain of incontinence a year after giving birth, he suggested she ignore it, especially if she were planning to have more children. Her response was: “If I had broken a leg, would you advise I didn’t worry about then running a marathon?”

Dealing properly with postnatal problems means starting with childbirth, says Neel Shah, an obstetrician at Harvard Medical School. In some countries there is too much intervention in the birth itself. Unnecessary medicalisation can make it more traumatic. In contrast, other women have notions of a perfect “natural” birth and are upset if it does not happen as planned. Surprisingly little attention is paid to the factors that make a pelvic tear more likely or to what experience women want to have. They are rarely consulted during labour.

“Childbirth is one of, if not the most, important times of a woman’s life, but too often they feel like they are on a plane being held on the tarmac,” says Mr Shah. He is trying to find how doctors and midwives can involve women more in the birth. The preparation is “labour is going to be di - cult. But bring a Swiss ball,” says Ms Barling, referring to a big exercise ball some women sit on during contractions. “How di erent is that from other areas of medicine where doctors talk you through [the] chances of certain outcomes?”

Some countries do it better. The Netherlands has the most comprehensive postnatal care. Every new mother is assigned a kraamverzorgster, or care worker, who visits her home daily for eight to ten days after birth. Trained to check the health of the mother and baby, the carer will also perform chores such as shopping and cooking.

France leads the way for physical rehabilitation with la rééducation périnéale. All women who give birth get at least ten sessions of rehabilitation for their pelvic floor—a practice in place since 1985—and more than that if needed. Caroline Mollard, a physiotherapist in Paris, says it has become normal in France for women to know that they must make an e ort to rehabilitate after birth. “In the past women would

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have issues, such as prolapse, and struggle with it until they needed surgery,” she says. “Now we are preventing problems.”

Few other rich countries have improved postpartum care in more than patchy ways. Since 2015 Japan’s government has subsidised municipalities that o er postpar- tum-support services. It also encourages them to carry out surveys to detect postnatal depression at two weeks or a month after birth. But uptake is slow.

Rich women receive better postpartum care than poor ones, a gap that is starker in countries, such as America, with scantier public provision. Such disparities could grow. If demand for better care rises and governments fail to provide it, the private sector will fill the gap—but only for those who can pay. In Taiwan the number of private postpartum centres increased fourfold in the decade to 2016.

More data are needed. Ms Verbiest’s work is a rare example of research that asks women what they need. But more solid information on every aspect of childbirth and its e ects is lacking, says Ms Oster. Public authorities in America and elsewhere already record whether a birth is vaginal or by Caesarean section. They could also track pelvic tears and the physical and mental health of new mothers.

In the interim, it would help if women had access to more information. The prenatal classes most countries o er could be improved, to give future parents a better idea of what to expect. Early evidence from Mr Shah’s experiments suggests that some simple steps, such as asking a woman how she feels during childbirth can make the delivery a better experience emotionally, if not physically.

More postnatal care would add costs to strained public-health services, yet besides sparing women unnecessary su ering, it might make economic sense. Better childbirth procedures could prevent problems, and better postnatal services could stop them growing, saving money for medical services in the long term, and allowing women back into the workforce earlier. Moreover, the mother’s well-being a ects her child’s future health and educational attainment. A depressed mum is less likely to stimulate her child. An exhausted one is less likely to breast-feed.

Following Japan

Across the rich world women are having their first child later in life. Older women are at greater risk of pelvic-floor tears and other injuries. Physical recovery takes longer for them, says Ms Nagamori, the midwife. The average Japanese woman first gives birth at 31, up from 26 in1970. Delayed motherhood is a consequence of a happy trend: that women are spending longer in education and forging careers. But like all big changes, it comes with side-e ects. 7

The Economist December 15th 2018

Also in this section

59Altria inhales

60Bartleby: A convenient lie

61Postal privatisation in Japan

61Vice declines

62Winemaking in India

63PayPal’s different path

64Schumpeter: How to keep tabs on business

web of Western worries about national security and China’s economic clout.

Its route to the top was not easy. At first China’s government favoured a stateowned champion, zte. Huawei was one of hundreds of private hopefuls that rose from Shenzhen, a capitalist hub. That lack of mollycoddling, says Dan Wang of Gavekal Dragonomics, a research firm, drove Huawei to develop more competitive products and to seek customers overseas.

China is Huawei’s biggest market, accounting for half its revenues. It has also enjoyed success abroad, signing contracts for network infrastructure from Denmark to India and wolfing market share (see chart on next page) from firms such as Ericsson, a Swedish company, and Nokia, a Finnish one.

Code Red

As more and more data flows over mobile networks and as Huawei has become more ubiquitous in them, governments have grown uncomfortable. Soon after Ms Meng’s arrest, Andrus Ansip, an o cial at the European Commission, said people were right to worry about Huawei, warning of the possibility of malicious code built into its products that might funnel information back to Beijing—or even grant access to state-sponsored hackers.

Some countries, especially America’s allies, have therefore been resisting the firm’s expansion. Australia has banned it from selling equipment to local firms, as has Taiwan. Just before Ms Meng’s arrest an1

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Huawei to go

Mobile-network infrastructure

Global market share, %

40

2 initial request by Spark, a New Zealandbased firm, to buy 5g gear from Huawei was rejected on security grounds. A few days later Japan announced a new policy seemingly designed to bar Huawei and zte from operating within its borders.

Huawei rejects the spying allegations, and points out that no evidence of subversion has ever been found. Vincent Pang, the president of Huawei’s western Europe division, says the firm has strong incentives not to spy on its customers. “We operate in 170 countries,” he says. “It would destroy our markets”. One former senior Western defence o cial admits that it is impossible for Huawei to prove a negative, ie, that it is not spying. That does not reassure the doubters, who point to Mr Ren’s background in the People’s Liberation Army, as well as to Chinese laws compelling private firms to assist the state if asked. As Edward Snowden’s leaks in 2013 showed, America’s spies are not above modifying products made by national tech firms to listen in on their targets. It would be odd if their Chinese counterparts were not at least pondering similar tactics.

Safe house

Other countries have been friendlier. On December 5th Huawei announced a contract with Altice Portugal, a mobile operator, to install 5g kit. After Ms Meng’s arrest France and Germany both stated that the firm is still welcome, although sensitive investments might be blocked. One particularly important market, says Shaun Collins of ccs Insight, a firm of analysts, has been Britain, despite its membership of the “Five Eyes” electronic-spying pact alongside America, Australia, Canada and New Zealand. The British government has insisted that the firm pay for a laboratory, called the Huawei Cyber Security Evaluation Centre, to scrutinise the hardware and software that Huawei supplies. It has never found a back door, only programming errors. A recent report found potential problems with Huawei’s code, which the firm will fix. For Huawei, British scrutiny has

come to serve as a badge of trustworthiness that helps it mollify concerns elsewhere. A similar lab was opened in Germany, in conjunction with the government’s cyber-se- curity agency, in November.

How bad Ms Meng’s arrest might be for Huawei depends on other countries’ reaction. Most important will be decisions made in America, where scepticism about it is strongest. America is ramping up pressure on its allies, particularly in Europe, Huawei’s second-biggest market, to ban or restrict it. That would be painful, says Mr Collins, but not fatal. Prospects elsewhere, especially at home, are still rich. China is expected to be the biggest and fastestgrowing market for 5g networks for years.

But there is another possibility. Looming over Ms Meng’s case is a similar one in 2017 against zte, which was convicted of breaking sanctions on Iran. The firm then lied about having complied with the court’s punishment. As a consequence, in April American firms were banned from selling it goods. That throttled the company, which relies on American chips and software in its products. Relief came only when Mr Trump reversed the ban, reportedly as a favour to Mr Xi. In its most recent earnings report zte said it expects to post a loss of up to 7.2bn yuan for the year, against a profit of 4.6bn yuan last year.

Ms Meng has not yet had her day in court, let alone been convicted of trying to dodge punishments. But that has not stopped some American politicians, including Mark Warner, the Democrat vicechair of Senate Intelligence Committee, from arguing that similar measures may need to be taken against Huawei.

If that happened it could cripple the firm, although the Chinese government or state-owned banks would probably bail it out if necessary. Like zte, Huawei relies on American components, such as Google’s Android and chips from Qualcomm. In a recent report, Je eries, a bank, noted that Huawei would be unable to build smartphones or mobile-phone base stations without these firms. Like many other tech firms, it also relies heavily on chip designs licensed from arm, a British firm owned by SoftBank, a Japanese company. Having previously said it believed Huawei’s gear was safe, SoftBank is now planning to remove at least some of it from its networks.

Huawei, in other words, looks vulnerable. Mr Pang counters that it is a big rev- enue-generator for Western firms. In November Huawei held an awards ceremony for its 92 top suppliers, of which 33 are American. Two—Intel and nxp, both chip- makers—got gongs marking a decade of working together. Mindful of that past cooperation, Mr Pang is optimistic that the current chill will pass. Even in markets that have banned Huawei or which are considering it, he says, “we will never give up”. 7

Business 59

Smoking

When Marlboro Man met Mary Jane

A tobacco giant hashes out a deal with a cannabis company

Those who fret about America’s health must have rejoiced in November when the Centres for Disease Control and Prevention, a federal agency, announced that smoking rates had fallen to their lowest in recorded history. Just 14% of American adults smoked cigarettes in 2017, compared with around 42% in 1965. The trend is a boon for the public’s health but for tobacco

companies it raises existential questions. On December 7th Altria, a tobacco giant

which sells Marlboro in America, pointed to a possible solution. It announced that it was spending $1.8bn to buy a 45% share in Cronos Group, a Canadian cannabis firm, with an option to purchase a further10% in the future. The news boosted Cronos’ share price by 29%; Altria’s crept up by 2%.

As demand for cigarettes has fizzled, Altria has increased its prices and cut costs to try to drive profits. A move into cannabis, which was recently legalised in Canada, is no quick fix but the long-term prospects for the cannabis market, if and when the drug is more widely legalised in America, are tempting. At present recreational cannabis is legal in just ten states. Some reckon the total market could be worth between $40bn-70bn, equivalent to America’s spending on wine or spirits. Altria’s revenues in 2017 were a little over $25bn.

The success of Altria’s move will in part depend on how people decide to consume cannabis in the future. Most still smoke it1

Blazing saddles

for much less time and expense. Holding a meeting with the door

open, as some male managers now practice, is acceptable, provided it is done for all employees. Glass-fronted o ces are another option to ensure “literal” transparency. In practice, the main benefit of these changes will usually be protection for the women not the men. Other precautions are simply common sense. Asking a subordinate sta member on a date is out of the question. If Wall Street professionals cannot work this out for themselves, they are not smart enough to be handling other people’s money.

But avoiding unwanted advances is the very least women should expect. A broader question is how to make it easier for them to achieve success in maledominated sectors like finance. A study* by two Columbia Business School academics compared two approaches. One was to emphasise gender di erences, and to celebrate perceived female qualities of warmth and sensitivity. The other was “gender blindness” which downplays di erences between the sexes. They found the former approach reduces people to a stereotype and sends women into a limited range of roles, such as human resources. Gender blindness was far more e ective in increasing female confidence, while (unsurprisingly) having little e ect on men.

So the lesson to Wall Street leaders is “get a grip”. Do not think of those other people in your o ces as men or women. They are colleagues.

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* What “blindness” to gender differences helps women see and do: Implications for confidence, agency and action in male-dominated environments by Ashley E Martin and Katherine W Phillips

Economist.com /blogs/bartleby