It may not please large segments of the Conservative party, but Boris Johnson’s Huawei decision is a realistic attempt to find a compromise between legitimate security concerns about the Chinese company and the need for a fast and affordable roll out of 5G networks in the UK.

The decision to designate Huawei a “high risk” vendor is a statement of the obvious, when accompanied by a warning from the National Cyber Security Centre, an arm of GCHQ, that “the Chinese state (and associated actors) have carried out and will continue to carry out cyber-attacks against the UK and our interests”.

But this is a company that has been supplying mobile phone technology in the UK for 15 years and is already subject to having its code monitored by a special agency. Britain’s security services have long believed the risks of using Huawei can be mitigated by the other measures spelled out in the report, and it would be a bold politician who were to say the intelligence community was wrong.

Huawei will be excluded from supplying kit to military bases and nuclear sites – although the company already faces these restrictions – and other elements of the critical national infrastructure. Its market share in mobile phone antennas and base stations, where it is the market leader, will be capped at the current 35% per operator, when that figure had been expected to nearly double in three years.

Q&A What is Huawei and why is its role in 5G so controversial? Show Hide Fast-growing Huawei is arguably China’s first global multinational. The Shenzhen-based company makes mobile phones, base stations and the intelligent routers that facilitate communications around the world. But its success increasingly concerns the US, which argues Huawei is ultimately beholden to the Chinese Communist party and has the capability to engage in covert surveillance where its equipment is used. Huawei is by some distance the world’s largest supplier of telecoms equipment with an estimated 28% market share in 2019. It was also the second largest phone maker in 2019, after Samsung and ahead of Apple. But Australia banned Huawei from 5G in 2018, with its spy agencies declaring they were worried the company could shut down power networks and other parts of its infrastructure in a diplomatic crisis. Trump banned US companies from working with Huawei last year and has strenuously lobbied others to follow suit, venting “apoplectic fury” in a phone call to Boris Johnson after the UK agreed to allow the Chinese company into 5G. The company had successfully targeted the UK early on. It has supplied BT since 2003 and gradually expanded to the point where it agreed to create a special unit in Banbury, known as the Cell, where the spy agency GCHQ could review and monitor its software code. Vodafone is another key customer. Britain’s intelligence agencies said in January that any Huawei risk could be managed as long as the company was not allowed to have a monopoly. As a result, Boris Johnson concluded Huawei’s market share should be capped at 35% for forthcoming high-speed 5G networks. In July 2020 the UK position changed, and it was announced that Huawei is to be stripped out of Britain’s 5G phone networks by 2027. Oliver Dowden, the UK culture secretary, also announced that no new Huawei 5G kit can be bought after 31 December 2020 – but said that older 2G, 3G and 4G kit can remain until it is no longer needed. Dan Sabbagh Defence and security editor Photograph: Mark Schiefelbein/AP

The fact is that ministers have to balance two realities: that Huawei kit is cheaper and more advanced, and the more notional risk that China will exploit Huawei for global surveillance. There is no doubt that China would have the capacity to try, if not now then in the future; the question becomes whether it can be repelled.

Capping Huawei’s market share and restricting the technology’s application helps. The 35% restriction is also more onerous than it first appears because it applies for each of the UK’s four network operators.

In the case of two, Vodafone and the BT-owned EE, Huawei’s share on 4G had crept up to around 60%, and Whitehall sources were eager to suggest the cap was much lower than anything that would have been imposed under the previous prime minister, Theresa May.

What is less clear is what the response of Donald Trump’s White House will be. The US administration is deeply hostile to Huawei, seeing it as part of a wider geopolitical conflict between Washington and Beijing. But the early noises from the US appear to be carefully calibrated: while the UK and US disagree, the wider economic and security relationship is too important for a major falling out.

Boris Johnson, it appears, has successfully called Trump’s bluff. Three Republican senators wrote on Tuesday morning that they might want to review intelligence sharing between Washington and London, but to do that they will probably need legislation, which has to get through Congress, where their party does not have full control.

The reality, also, is that the US benefits from Britain’s intelligence capabilities, particularly in the Middle East, and as British officials have stressed, special encryption protects the intelligence network, which Huawei is not allowed to supply.

Until now, despite all the pressure, the US had not offered the UK any viable alternative, to the frustration of British officials who were told that London should “prioritise security over cost”. But that would mean higher phone bills in the the future (US bills on some estimates are $50 (£38) a month more than their British counterparts).

It is not an attractive alternative, which is why deploying some Huawei technology in high-speed mobile phone networks makes sense.