Concerns over Chinese involvement in 5G wireless networks
Concerns over Chinese involvement in 5G wireless networks stem from allegations that cellular network equipment sourced from Chinese vendors may contain backdoors enabling surveillance by the Chinese government (as part of intelligence activity internationally) and Chinese laws which compels companies to assist the state intelligence agency on the collection of information when warranted. The allegations came against the backdrop of the rising prominence of Chinese telecommunication vendors Huawei and ZTE in the 5G equipment marketspace, and the controversy has led to other countries debating whether Chinese vendors should be allowed to participate in 5G deployments; Australia formally barred Chinese companies from providing its 5G equipment due to security concerns, while Japan has heavily discouraged use of Chinese equipment.
5G succeeds 4G LTE wireless technology; developments have been focused on enabling low-latency communications, and promises of a minimum peak network speed of 20 gigabits per/second (20 times faster than the equivalent on 4G LTE networks), and uses within Internet of things and smart city technology.
The initial development of 2G, 3G, and 4G technologies were centred upon Japan, Europe, and the United States, respectively. China's five-year plan for 2016–2020 and the Made in China 2025 initiative both identified 5G as a "strategic emerging industry", with goals for Chinese companies to become more competitive and innovative in the global market, and avert the country's prior reputation for low-quality and counterfeit goods. All wireless carriers in China are state-owned, which has helped the government to expedite the development of 5G networks, and access to wireless spectrum. It has been argued that early access to 5G would give China an advantage in developing services that can leverage the technology. Domestic vendors such as Huawei and ZTE have subsequently leveraged China's position to market 5G-compatible equipment for international deployments; Huawei had seen significant growth in the 2010s, aided by its ability to undercut competitors, a large number of international partnerships, the increasing success of its smartphone business, and investments by the China Development Bank. As of 2019, the only other major manufacturers of 5G equipment are the European rivals of Ericsson and Nokia: they, along with Huawei and ZTE, account for two thirds of the overall market.
Huawei has faced various allegations of intellectual property theft and corporate espionage, including copying proprietary source code from Cisco Systems equipment, and an employee stealing a robotic arm for smartphone stress testing from a T-Mobile US laboratory. In January 2019, U.S. authorities indicted Huawei and its vice-chairwoman and CFO Meng Wanzhou on charges of theft of trade secrets (including allegations that Huawei's Chinese division had a program to issue bonuses for employees who successfully obtain confidential information from competitors. In regards to the aforementioned T-Mobile robotic arm, Huawei's U.S. division disavowed the employee's actions and this program, as it is not in line with local business practices), and having used a shell company to mask investments in Iran that violated U.S. sanctions (including resale of technology of U.S. origin); in October 2011, The Wall Street Journal reported that Huawei was the largest provider of telecommunications equipment in Iran.
In 2012, it was reported by the Wall Street Journal that Canadian telecom equipment firm Nortel Networks had been the subject of an intrusion by Chinese hackers from 2000 through its bankruptcy in 2009, who had accessed internal documents and other proprietary information. The company's former security adviser Brian Shields alleged that the intrusion was a state-sponsored attack that may have benefited domestic competitors such as Huawei and ZTE, and acknowledged that there was circumstantial evidence that connected the company's downfall to the beginning of Huawei's international growth. He warned against cooperation with Chinese vendors, arguing that "they've got this Communist Party over there right in their corporate offices. What are these people doing? Why is it such a close relationship with the Chinese government?"
Allegations surrounding Chinese surveillance via network infrastructure cite the 2017 National Intelligence Law, and the 2014 Counter-Espionage Law. The National Intelligence Law gives intelligence agencies the ability to compel citizens and organizations to cooperate in investigations, and that China will protect any organization or individual that helps the Chinese government. The 2014 Counter-Espionage law states that "when the state security organ investigates and understands the situation of espionage and collects relevant evidence, the relevant organizations and individuals shall provide it truthfully and may not refuse." Softbank CTO Miyagawa Jyunichi explained that unlike a 4G core network (where data is encrypted and transmitted using a tunneling protocol that makes it difficult to extract communication data from the network), if technology like mobile edge computing is used, processing servers could be placed near 5G base stations, in order to enable information processing on the base station side of the carrier network. This makes it possible to extract user data via these servers, which theoretically allows for surveillance.
United States allegations and responses
The United States government claims that the Chinese government can force wireless infrastructure vendors to incorporate software backdoors or hardware that would allow China to spy on the U.S. or its allies.
U.S. security concerns surrounding Huawei have pre-dated the current 5G-related controversies; in 2007, Bain Capital attempted to acquire network equipment vendor 3Com with minority financing from Huawei. However, the transaction faced scrutiny from the Committee on Foreign Investment in the United States, which deemed it a threat to national security due to Huawei founder Ren Zhengfei having been a former engineer for the People's Liberation Army, and concerns that China could gain access to intrusion detection technology that 3Com had developed for the U.S. government and armed forces. When Huawei bought out its joint venture with Symantec in 2012, The New York Times reported that Symantec had fears that the partnership "would prevent it from obtaining United States government classified information about cyberthreats".
It has been argued that Huawei has ties to the Chinese government: the CIA has cited anonymous British sources claiming that entities such as the National Security Commission of the Communist Party of China and the People's Liberation Army have provided funding to Huawei. U.S. senator Marco Rubio referred to Huawei and ZTE as being "state-directed", and warned that the U.S. had to be "vigilant" in preventing them from "undermining and endangering America's 5G networks". He also stated that Huawei "undermine[s] foreign competition by stealing trade secrets and intellectual property, and through artificially low prices backed by the Chinese government." During testimony to the Senate Intelligence Committee in 2018, U.S. intelligence chiefs warned against the company, with FBI director Christopher A. Wray stating that they were "concerned about the risks of allowing any company or entity that is beholden to foreign governments that don’t share our values to gain positions of power inside our telecommunications networks."
Fellow senator Mark Warner argued that "no major Chinese company is independent of the Chinese government and Communist Party", and warned that the Chinese government can exploit consumer electronics products from these companies, such as smartphones. He claimed that "software reviews of existing Huawei products are not sufficient to preclude the possibility of a vendor pushing a malicious update that enables surveillance in the future. Any supposedly safe Chinese product is one firmware update away from being an insecure Chinese product." Robert Strayer, U.S. State Department ambassador for cyber and international communications, stated at MWC Barcelona in 2019 that they were "asking other governments and the private sector to consider the threat posed by Huawei and other Chinese information technology companies." The country has threatened to withdraw some co-operations with its allies if they install Huawei equipment on telecommunication networks.
The United States has engaged in several domestic actions designed to hinder Chinese telecom providers from doing business in the country. The National Defense Authorization Act for Fiscal Year 2019 barred the U.S. federal government from obtaining equipment from several Chinese vendors, including Huawei and ZTE.
On 15 May 2019, president Donald Trump signed executive order 13873 to declare a national emergency under the International Emergency Economic Powers Act, allowing for restrictions to be imposed on commerce with "foreign adversaries" that involve information and communications technology. Trump stated that the U.S. needed to protect itself against "foreign adversaries" that create and exploit security vulnerabilities in information and communications systems: the order made no specific references to any country or vendor. The same day, the U.S. Department of Commerce also added Huawei and various affiliates to its entity list under the Export Administration Regulations (restricting its ability to perform commerce with U.S. companies), citing that it had been indicted for "knowingly and willfully causing the export, reexport, sale and supply, directly and indirectly, of goods, technology and services (banking and other financial services) from the United States to Iran and the government of Iran without obtaining a license from the Department of Treasury's Office of Foreign Assets Control (OFAC)". Some U.S. media reports suggested that the timing of the latter was not coincidental..
Huawei has encouraged the U.S. to present evidence regarding its espionage claims. Founder Ren Zhengfei felt that these allegations were politically-motivated, and that the U.S. was treating 5G as a strategic advantage akin to an atomic bomb, since they wanted to remain a global leader in technology. He argued that the west could face a "second Cold War" if they did not accept new entrants such as China.
Ren also stated in an interview that Huawei had never given data to the Chinese government, would not allow the Chinese government access to data (noting that his membership in the Communist Party would not affect this ability), nor would it assist in espionage against the United States, even if required by law. He explained that "China's ministry of foreign affairs has officially clarified that no law in China requires any company to install mandatory back doors. Huawei and me personally have never received any request from any government to provide improper information", and that "when it comes to cybersecurity and privacy protection we are committed to be sided with our customers. We will never harm any nation or any individual."
In a speech at the Mobile World Congress 2019, Huawei's rotating chairman Guo Ping similarly addressed the allegations, stating that innovation "is nothing without security", and pledging that Huawei had never placed backdoors in its equipment, would never place backdoors, and would not allow other parties to do so. Ping also called out the U.S. government for engaging in surveillance activities of its own, including PRISM, and the National Security Agency having hacked Huawei in the past, arguing that "if the NSA wants to modify routers or switches in order to eavesdrop, a Chinese company will be unlikely to co-operate". In a Financial Times editorial, Ping stated that Huawei "hampers US efforts to spy on whomever it wants," and stated again that it "has not and will never plant backdoors."
On 14 May 2019, chairman Liang Hua stated at a conference in London that Huawei was willing to accept a "no spy" pact with the British government to ease concerns over its involvement in local 5G deployments. The National Security Council had made a decision to only allow Huawei to provide "non-core" components due to the security concerns.
In a statement published by Chinese state-owned newspaper Global Times in response to Trump's May 2019 executive order, Huawei stated that the move would "only force the US to use inferior and expensive alternative equipment, lagging behind other countries", and that they were willing to "communicate with the US to ensure product security".
Comments and actions from other parties
Australia banned Chinese vendors from providing equipment for 5G networks, citing the aforementioned intelligence laws as a factor. Other countries like Japan have cited security concerns and have successfully persuaded carriers to exclude Huawei or ZTE equipment in their 5G networks. while Taiwan has issued guidelines banning the use of Mainland Chinese telecommunications equipment for all its government departments, organizations and government-controlled companies.
In South Korea, LG Uplus is the only carrier to have adopted Huawei equipment for its 5G equipment due to its favourable pricing, unlike the other two carriers that have rejected Huawei for security reasons. LG Uplus does not believe that there are problems in the security of Huawei equipment, which has resulted in boycott movements against the carrier for their perceived negligence in security by choosing Huawei as its supplier. It is reported that the South Korean government is not willing to ban Huawei equipment, fearing a repeat of the Chinese retaliation that resulted from the deployment of THAAD.
In March 2019, Germany's Federal Network Agency announced that all wireless networks, including 5G and all other standards, will be subject to heightened security requirements. This includes mandatory security testing by the Federal Office for Information Security before equipment is deployed, and operators being required to report any abnormalities. Operators are also being encouraged to source equipment from multiple vendors.
In an op-ed for the South China Morning Post, Chandran Nair, founder of the self-described pan-Asian Hong Kong-based think-tank The Global Institute for Tomorrow, described the dispute as being "a sequel of the Yellow Peril", and compared it to examples of U.S. anti-Japanese sentiment in the 1980s. Nair has in other op-eds questioned the legitimacy of Meng's arrest and supported China's model of development.
An opinion piece published in Wired Magazine written by the vice President of the Law institute at the state-backed Chinese Academy of Social Sciences concluded that the Chinese government couldn't force Huawei to make backdoors and cited two reviews which were both commissioned by Huawei of the two aforementioned intelligence laws by attorneys from Zhong Lun and Clifford Chance which also concluded that there was no law requiring companies to place backdoors in their hardware. The opinion was criticized by three current and former American law professors.
On 21 May 2019, as the result of an inquiry performed in cooperation with other foreign law enforcement agencies, the Philippine National Police concluded that there was no evidence that Huawei has been involved in espionage.
The following week, Japan announced that effective 1 August 2019, the telecom, integrated circuitry, and mobile phone manufacturing industries would be added to laws allowing the government to block foreign investments within sensitive sectors for security reasons. The government stated that these regulations were due to "the increased importance of securing cyber security in recent years", but did not name any specific companies or countries. The announcement followed trade talks the same day between Trump and prime minister Shinzō Abe.
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