The Five Eyes intelligence alliance, which comprises Australia, Canada, New Zealand, the United Kingdom and the United States, has perpetuated 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 in the United States).[1]
These allegations came in the wake of China's wide investments into the development and deployment of 5G networks motivated by a goal for the country to become more competitive on the global market. Vendors such as Huawei and ZTE have taken advantage of these efforts to market 5G equipment, such as base stations, for international deployment. A main basis of these allegations are Chinese laws compelling companies to assist the state intelligence agency on the collection of information when warranted, as well as claims that the operations of these companies are "directed" by the Chinese government. Huawei, in particular, has also faced allegations of intellectual property theft and industrial espionage.
Huawei has accused the United States of not providing any evidence of these claims, and allege that they are politically-motivated. Executives of the company have stated that Huawei has never placed backdoors in its products, would never give the Chinese government access to user data, and accused the U.S. of being hypocritical due to its own surveillance programs.
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.[2][3]
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.[4][5] 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 (just as U.S. companies leveraged their access to 4G networks).[5]
Domestic vendors such as Huawei and ZTE have subsequently leveraged China's position to market 5G-compatible equipment for international deployments. This strategy is consistent with the Belt and Road Initiative, which emphasizes Chinese investments in foreign infrastructure projects to improve international trade.[6] 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.[4] 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.[4]
Huawei has faced various allegations of intellectual property theft and industrial espionage, including copying proprietary source code from Cisco Systems equipment, stealing internal files from the Canadian telecom firm Nortel, and an employee stealing a robotic arm developed by T-Mobile US for smartphone stress testing.[7][8][9] In January 2019, U.S. authorities indicted Huawei and its vice-chairwoman and CFO Meng Wanzhou on charges of theft of trade secrets, and having used a shell company to mask investments in Iran (in violation of U.S. sanctions; in October 2011, The Wall Street Journal reported that Huawei was the largest provider of telecommunications equipment in Iran).[10][11][12]
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,[13] 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."[14]
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.[15]
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.[16] 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."[17] 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."[18][19]
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."[17] 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."[20] The country has threatened to withdraw some co-operations with its allies if they install Huawei equipment on telecommunication networks.[21]
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.[22][23][24] On 15 May 2019, president Donald Trump signed executive order 13873 to declare a "national economic emergency" under the International Emergency Economic Powers Act. While Trump did not refer to any specific parties by name, he did allude to a need for the U.S. to seek restrictions against "foreign adversaries" who pose "unacceptable risks" to national security. Trump did not reference any specific company.[25]
The same day, the U.S. Department of Commerce added Huawei and its affiliates to its entity list under the Export Administration Regulations, restricting the ability for U.S. companies to provide products and services to Huawei (such as components for equipment) without government permission.[26] Due to these restrictions, a large number of U.S. based companies froze their business with Huawei, including chipmakers, as well as Google — which suspended Huawei's ability to use the Android operating system on its smartphones with licensed Google Mobile Services (although Google later obtained a three-month waiver to allow continued service of security patches and other updates for existing devices).[27][28][29][30] Arm Holdings, who licenses the ARM architecture used by Huawei's system-on-chips, also froze its business with Huawei, with the British company arguing that its intellectual property contained technologies of U.S. origin that may be subject to the order.[31]
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.[32]
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."[33][34]
In a speech at MWC, 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".[35][36][37] 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."[38]
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.[39][40]
Houlin Zhao, secretary-general of the International Telecommunication Union, has also suggested that the U.S. allegations are politically motivated.[41]
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".[26]
Some countries (Australia), have banned network operators from using Huawei or ZTE equipment. Australia highlighted the fact that Chinese internet laws require technology companies to help the Chinese government with "intelligence work," meaning companies could be forced to hand over network data.[14][42] Other countries like Japan have cited security concerns and have successfully persuaded carriers to exclude Huawei or ZTE equipment in their 5G networks, without officially banning their use.[42][43]
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 allows for surveillance.[44]
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.[45][46] LG Uplus does not believe that there are problems in the security of Huawei equipment,[47] which has resulted in boycott movements against the carrier for their perceived negligence in security by choosing Huawei as its supplier.[48] 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.[49]
In March 2019, Germany's Federal Network Agency announced that all wireless networks will be subject to heightened security requirements. This includes mandatory security testing by the Federal Office for Information Security, and operators being required to report any abnormalities, and being encouraged to source equipment from multiple vendors.[50]
In an op-ed for the South China Morning Post, Chandran Nair, founder of the 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.[51]
In a review of the two aforementioned intelligence laws, attorneys of the London-based law firm Clifford Chance concluded that there was no law requiring companies to place backdoors in their hardware, Chinese law distinguishes between the actual provider of a telecommunications service and those who provide equipment for it, and that these two laws were not extraterritorial.[52]
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.[53]