The Chinese telecommunications company Huawei is under scrutiny around the globe over concerns that its close ties with the Chinese government present national security threats to the U.S., Europe and allied countries. President Donald Trump has issued an executive order banning any electronic or digital technology that the Secretary of Commerce deems a national security threat, a move widely viewed as aimed at Huawei. In January 2019, the U.S. Department of Justice charged the company and its chief financial officer, Meng Wangzhou, who is also the daughter of the company’s founder, with fraud.
Huawei, which denies all the allegations against it, is “the world’s biggest supplier of telecoms gear” and has plans to “dominate the market” for the next generation of wireless communications, called 5G. But its hopes are threatened by governments around the world, which are restricting the company’s prospects and even banning it from operating in some areas.
No Chinese company is fully independent of its government, which reserves the right to require companies to assist with intelligence gathering. Huawei is even more closely tied to the government than many Chinese firms: Its founder, Ren Zhengfei, is a former technologist in the People’s Liberation Army. As his company grew, so did international concerns about whether Huawei equipment could be used to spy on companies and governments around the world.
As far back as 2003, the company was accused of stealing intellectual property, including from U.S.-based network hardware maker Cisco. The companies settled out of court, but Huawei has been accused of stealing other firms’ intellectual property and violating international economic sanctions. Throughout 2018, a flurry of activity has signaled the level of concern in the international intelligence community, and pressure on the company – and other Chinese technology firms – has mounted.
Months of setbacks
In February 2018, the heads of six U.S. intelligence agencies told a Senate committee they didn’t trust Huawei or its rival ZTE, which is also based in China, and would recommend Americans not use the company’s smartphones or other equipment.
On July 17, 2018, the intelligence chiefs of the U.S., Canada, the U.K., Australia and New Zealand reportedly met in person, in part to make plans to publicize their concerns about allowing Huawei equipment to operate in their countries and governments.
Two days later, the United Kingdom’s government-run lab specifically set up to evalute Huawei hardware and software reported finding “shortcomings” in Huawei’s engineering processes that raised security risks. After a big push from the British government, Huawei agreed to spend US$2 billion to address those problems.
In mid-August 2018, the U.S. Congress passed, and President Donald Trump signed, a law specifically prohibiting U.S. government agencies from purchasing or using telecommunications and surveillance products from Chinese companies like ZTE and Huawei – both of which are named in the law.
A week later, Australia announced a similar ban, barring firms “who are likely to be subject to extrajudicial directions from a foreign government” from supplying equipment for its nationwide 5G rollout. The announcement did not specifically name Huawei or ZTE, but Huawei criticized the decision as political and based in “ideological prejudices,” rather than actual security concerns.
In late November 2018, New Zealand’s intelligence agency barred Huawei from participating in its 5G development, citing “significant national security risks.”
In Canada, where telecommunications companies use Huawei equipment extensively, the government is still discussing a possible ban. In December 2018, Canadian police arrested Meng, the Huawei CFO, as a result of a U.S. allegation that she violated international sanctions against Iran. China threatened Canada with “severe consequences” if Meng was not released immediately. She is out on bail with extradition proceedings pending.
Days after Meng’s arrest, the private company that dominates U.K. telecommunications, BT Group, announced it was removing Huawei equipment from its existing mobile networks, and would not use Huawei technology in future mobile systems.
In early December 2018, Japan also announced it was poised to ban Huawei and ZTE from its 5G networks.
In mid-December 2018, French telecommunications company Orange, previously known as France Telecom, announced it would not use Huawei equipment in its 5G network.
On Dec. 17, 2018, Czech authorities warned their citizens against using Huawei equipment for security reasons.
In mid-January 2019, the Polish government arrested a Huawei employee on spying charges.
The executive order is the latest development raising pressure on the company and the Chinese government.
Tensions over evidence
Tensions between free commerce and national security are not new. Security skeptics, and those who favor free and open trade, will ask to see evidence supporting the claims that Huawei, ZTE or other foreign companies have spied, or might spy, on conversations and data transmissions. Security proponents will counter that the evidence must remain secret, to protect intelligence operations.
The situation with these Chinese companies is even more challenging, because the full extent of any relationship between Huawei and the Chinese government is masked. However, it’s extremely rare for the U.S. and allied governments to take the sorts of steps they have taken to restrict specific companies. Those moves suggest that – even without detailed public proof – there is solid evidence supporting the intelligence community’s worries.
The focus of many security agencies and countries on Huawei’s involvement in 5G systems raises the stakes, too: The next generation of wireless technology is expected to fuel even more connectivity in the “internet of things,” linking smart cars, smart homes and smart cities together. Billions of devices will be involved, all communicating with each other, forming what could become a surveillance web over much of the planet, and exponentially expanding the number of potential targets for spying. As governments seek to ensure 5G is secure and trusted around the world, Huawei may find its prospects limited by its links to the Chinese government.
Editor’s note: This is an updated version of an article first published Dec. 19, 2018, and further updated on Jan. 29, 2019.