AILSA CHANG, HOST:
There has been another twist in the long-running story about the Chinese electronics company Huawei. The U.S. is telling its allies that using Chinese equipment to upgrade their telecommunications infrastructure presents a security threat, though Huawei denies it has direct links with the government in Beijing. In Germany, Chancellor Angela Merkel was on course to allow Huawei to build Germany's 5G network. But now her own party says that is a decision that should be made by the German Parliament. The move means it's increasingly unlikely that Huawei will have a role in upgrading Germany's telecom systems. NPR's Rob Schmitz joins us from Berlin to talk about all this.
ROB SCHMITZ, BYLINE: Hey, Ailsa.
CHANG: So just help us understand. What was Chancellor Merkel's plan here?
SCHMITZ: Well, I think to understand her position on Huawei, it helps to understand that Germany's biggest companies have an extraordinary amount of dependence on the Chinese market. One out of every four Volkswagen cars, for example, is sold in China. Nearly a third of Siemens' global sales is made in China. China's the largest market for Mercedes Benz. You know, the list goes on. I spoke to Thorsten Benner about this. He's the director of the Global Public Policy Institute in Berlin. And he says Merkel understands how exposed to China Germany's economy really is.
THORSTEN BENNER: Chancellor Merkel is extremely afraid of retribution by the Chinese party state in case Germany decides to exclude Huawei from 5G critical infrastructure.
CHANG: So why is Merkel's party so opposed to this plan?
SCHMITZ: Well, opponents in her own party say the threat of retribution is a price that's worth paying because it's clear to them that under Chinese law, Huawei would have to take orders from China's government if China's government wanted to compromise Germany's telecommunications network. And as it stands, all three of Germany's big telecoms companies have spent years installing Huawei equipment into routers, cell phone towers and other infrastructure already. And the cost of ripping all of that out could be big...
SCHMITZ: ...If Germany's Parliament bans Huawei's equipment.
CHANG: So where do German people in general stand on this issue? I mean, do you get a sense that there are strong feelings there about Huawei?
SCHMITZ: Well, it's interesting. Just today the results of a survey were released by a Berlin-based foundation that showed that 76% of Germans feel that Germany should defend its political interests more strongly, vis-a-vis China, even at the expense of German economic interests. So it appears that Germans themselves don't agree with Chancellor Merkel on this issue.
CHANG: So if Huawei gets banned in Germany, what kind of fallout might we see in the country?
SCHMITZ: Well, of course, there could be substantial economic losses for German companies in China. And that's a little scary, especially since Germany's economy is teetering on the edge of recession at the moment. But a Huawei ban is also not how Merkel wants to go out as chancellor. Merkel is in the final year or two of her leadership. She had hoped to conclude her term in office with a big China-EU investment summit scheduled for next autumn here in Germany, which would have left a positive legacy between the EU and China. But a ban on China's most important company could threaten that.
CHANG: That's NPR Berlin correspondent Rob Schmitz.
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