It is no secret that the Chinese government has been involved in cyber spying and cyber attacks over the past many years. China’s capabilities are only growing exponentially as it sees cyber warfare as a potent weapon in its armor. In 2012, after elaborate efforts by the US computer security firm Mandiant, it was established that the majority of cyber attacks on US corporations and government agencies are emanating out of a specific building on the outskirts of Shanghai. It was also understood that this building is home to Unit 61398 of the People’s Liberation Army (PLA) and the required infrastructure was provided by China Telecom.
In light of the above findings and many others alike, it is only natural that very serious questions are asked and eyebrows raised when the Chinese telecom giant Huawei wants to bid for supplying infrastructure for national security projects across the world.
Huawei was started in 1987 by Reng Zhengfei, a former civil engineer in the PLA and a member of the Communist Party in China. The rise of the company has been meteoric, going from a mere US$ 5000 startup to a global telecom giant overtaking Ericsson, as measured by sales in 2012. Though it might not be appropriate to compare Huawei and Ericsson head to head owing to some of the difference in their products lines and operational domains, but nonetheless Huawei has become the largest player in the world in the telecommunications equipments market.
If Reng’s past association with the PLA (which it must be kept in mind, is the Party’s army unlike other national armies) and his current association with the Communist Party is not worrying enough, its current opaqueness only adds to the concern. The corporate governance structure and transparency and availability of information about the company’s organizational structure and functioning are dubious at best. Mr. Reng is media shy and reclusive and whenever he does interact with the media, he doesn’t have much to say to calm the fears and controversies surrounding Huawei.
The extent of the role that the PLA and Chinese government have played in Huawei’s success and growth in the past two decades or so is debatable, but its role itself cannot be questioned. It is widely accepted that there is no such thing as a purely private company in China and this would hold true also for a company like Huawei, especially owing to Mr. Reng’s affiliations. Various factors like priority bank lending by the major Chinese state owned banks based on government’s wishes, and open and hidden subsidies offered by the Chinese government to the companies it considers of strategic importance make it virtually impossible for any private company to grow the way Huawei has, unless they are in the government’s good books.
Even in a country like the US, where the rule of law is assumed to be very strong and private companies can resort to judicial means to counter any strong arm tactics by the government, companies like Verizon, AT&T, Google, Apple, Microsoft, Facebook, Yahoo and others had to comply with the government’s demands for data and information sharing on the grounds of national security. What are the odds that in China, where the rule of law is not exactly stellar, Huawei can go on not complying with the government’s demands for sharing data and information that it has from its operations in foreign markets?
Further, Huawei’s involvement in supplying telecommunications infrastructure to various companies around the world and its know-how of the global telecommunications systems can very well potentially serve as a guide for cyber corps of the PLA in waging cyber warfare and gathering cyber intelligence. The extent of seriousness with which various national governments view the threats that Huawei and its possible collusion with the Chinese government pose is reflected in their decisions to keep the company at bay from various projects of national strategic value.
In 2011, the US government banned Huawei from bidding for tender for the planned national emergency communications network. The ban is still in place for any such projects of national strategic importance. Similarly, in 2012 the Australian government blocked Huawei from tendering for work for its $38 billion National Broadband Network (NBN). Last year, the new Tony Abbott government announced that the ban would stay owing to the continuing security concerns. In UK, after a Parliamentary committee demand in June 2013, a security review of threats from Huawei’s cyber security centre in Southern England was conducted. In December 2013, the British government based on this security review concluded that the oversight of the company’s cyber security center should be enhanced. Similar concerns have been raised in India from time to time by the security unit of the telecom department and various other agencies including the Ministry of Home Affairs and Ministry of External Affairs. In even more appalling revelations, it was disclosed that only some of the floors are open to access for Indian employees working at the Huawei’s R&D facility in Bengaluru, India, while the rest are kept out of bounds to the company’s own Indian employees. This sort of secrecy hardly serves to install any confidence concerning Huawei’s activities. Recently, South Korea has also heeded the US concerns over involvement of the company in developing advanced wireless neworks in South Korea. To attend to the US concerns, South Korea has agreed to route sensitive U.S. and South Korean communications over separate networks.
In the past, Huawei has tried to tackle these concerns of various national governments by its multi-million dollar public relations (PR) campaign in those countries and hiring lobbyists cutting across party lines to ameliorate the qualms of the governments. Owing to the insincerity of the above measures, they have not really been successful. The basic fact remains that owing to the nature of business Huawei operates in and the affiliations of its boss Mr. Reng, it would hardly be possible for the firm to ever be free from controversies.
If Huawei is indeed serious in dealing with the fears that it arouses in various national governments, it needs to implement more than cosmetic efforts like PR campaigns and lobbying.
One major step could be listing on some of the best global stock exchanges, where it will be held accountable to the highest transparency and disclosure standards. It should also be willing to offer independent third party evaluations of its financial information and cyber security processes.
The short to medium term solution for countries is to work with companies like Cisco, Alcatel-Lucent, Ericson and others who have less interference from their respective national governments and comply with disclosure standards of global stock exchanges. However, by no means can even these companies ever be trusted when it comes to matters of national security as the disclosures about the US National Security Agency (NSA) have shown us. Nevertheless, the only advantage with these companies is that they are more open to genuine scrutiny. The only viable and safe course especially for a country like India in this regard would be to invest more in the research and development of home grown mobile, fiber optics and communications technology rather than being perennially reliant on Huawei or any of the western firms.
The bottom line is that cyber warfare is one of the trickiest threats facing all the countries, especially the ones which are not in the best of relations with Beijing. Considering the extremely advanced Chinese capabilities in waging cyber warfare, it is better to be safe than sorry. Given the current lack of openness and transparency from Huawei, it would be foolhardy for India to trust the company with the country’s advanced wireless networks and telecommunication projects having key stakes in its national security. The only solution in this G-zero world is for each country to be self reliant when it comes to the matter of providing the essential infrastructure for national security.
Those who dispel these genuine concerns as paranoia need to bear in mind the famous words of Joseph Heller, “Just because you are paranoid doesn’t mean they aren’t after you”.
Disclaimer: The views expressed in this article are personal.
Mukul Raheja, researcher at Strategic Asia, a public policy consulting firm based in Jakarta.
