China Down Under

Huawei’s Aussie problem

National security concerns over new 5G network

Opera House

The attractiveness of Chinese goods used to lie in the fact that they were cheap, with prices low enough to overcome many concerns about quality.

But what if they are both cheap and of high quality? Or in the case of Huawei, China’s leading telecommunications company, both competitively priced and technically advanced?

For countries like Australia, readying a billion-dollar investment in upgrading their telco infrastructure, Huawei’s new 5G network meets both standards.

But there is a third factor that the Australians are weighing in making their decision which goes beyond cost and technology: the fact that Huawei is Chinese.

In today’s world, many government and commercial decisions take place in a kind of clash-of-civilisations cauldron, pitting China against the West.

Telecommunications is especially sensitive. Even though Huawei is a private company, not a state enterprise, Western intelligence agencies consider it to be at the beck and call of the Chinese state.

In turn, they view Huawei’s equipment as potentially compromised. Commercially attractive, yes, but also armed with technical ‘back doors’ that the Chinese security services could force the company to put at its disposal should they demand it.

As one of the Australian parliament’s most strident China critics, Michael Danby, a Labour MP, said: “Both Huawei and ZTE [another Chinese telco] must report to a Communist Party cell at the top of their organisations. Let me issue a clarion call to this parliament: Australia’s 5G network must not be sold to these telcos.”

The boss of Huawei’s Australian business, John Lord, has been doing his best to counter perceptions that Huawei represents a national security risk.

“Huawei is owned by employees,” Lord told ABC, Australia’s national broadcaster, in a lengthy interview. “There is no ownership by the government whatsoever. We would term our form of ownership a cooperative in Western societies.”

Huawei wouldn’t operate the network in Australia. Instead, it would provide technology to local service providers, like Optus, Vodafone, TPG and Telstra.

Huawei also wants Australia to do what the UK has done – set up an independent technology centre operated by the national intelligence services which can screen and check all the equipment Huawei might want to put into the network.

“We’re happy to have our equipment tested, we’re happy to have it analysed,” Lord said. “That’s the way to enter the market and be as open as possible and that’s what we’re offering around the world.”

Certainly, the model has worked for the UK. Thus far, the US, which is the UK’s most important security partner, hasn’t interrupted intelligence sharing between the two countries. Australia is part of the same intelligence sharing network. But its intelligence agencies have advised the government in Canberra that the UK model is not appropriate and should not be replicated.

The fear that Huawei could be manipulated by the Chinese intelligence services is not irrational. After all, Edward Snowden, in the trove of documents that he leaked, unveiled all manner of enforced cooperation between US intelligence and the country’s telco and internet companies.

In China, the power of the state far outweighs that of the US, so it stands to reason that Beijing would keep a close eye on the likes of Huawei and ZTE, and want to exploit their networks.

The likelihood that Australia will keep Huawei’s 5G out of its networks, even though local providers would like to buy it, will no doubt anger Beijing. But one might ask in return – would China allow a foreign company, say an American one, to provide key technology for its networks? Doubtless they would not, but Beijing will not be happy anyway.


Richard McGregor is a senior fellow at the Lowy Institute and the author of books on Chinese politics and foreign policy, ‘The Party’ and ‘Asia’s Reckoning’.

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