Red Star over Canada’s Networks: Huawei or the Highway

Internet network infrastructure

This Monday, a US House Intelligence Committee report was published outlining the case for banning Huawei and ZTE, two major Chinese telecoms, from network infrastructure building in the United States. The report argued that potential ties between these companies and the Chinese government represented a national security risk. If Huawei or ZTE were allowed to lay critical infrastructure in the United States, they might plant secret backdoors or data mining processes in network hardware at the behest of the Chinese government, thus creating a security risk in the event of a future conflict between the two countries.

It took exactly two days for these fears to drift north of the border, thanks in large part to a CBC interview with Rep. Mike Rogers, head of the US Intelligence Committee, in which he claimed that Huawei poses just as much of a risk to Canadian national security as it does his own country. Apparently not one to pull any punches, he also went on to invoke the threat posed to the ordinary Canadians; because:

This is your personal data. [It] could be your medical records, your financial records, everything that you hold dear that you think is locked away in a safe place on your computer that goes across these networks and becomes subject to being gathered by the Chinese government.

All this leaves Canada in a bit of an awkward position, because unlike the United States and Australia who have already banned Huawei from bidding on major telecom projects, Canada’s relationship with the company has yet to sour. Huawei employs about 400 people in its Canadian offices and has provided high-speed networks to Bell Canada, Telus, SaskTel, and Wind Mobile in the past. And even more importantly, Huawei is still legally eligible to bid on contracts resulting from the Harper government’s plan to upgrade and secure Canada’s federal communications network. However, whether this situation changes in the next few days largely depends on how much traction this story has in the Canadian media.

In order to deconstruct whether Huawei and ZTE represent a credible threat to Canadian national security, the first question that must be answered is whether or not such a thing is possible. Can a company plant malicious backdoors in network hardware for future use? According to various experts in the field, the answer is an emphatic ‘yes.’

Next, and a bit trickier, is the matter of whether or not Huawei would seek to do such a thing, which is essentially a question of the extent of its links to the Chinese government. For this, it’s best to refer to the actual findings of the US Intelligence Committee Report.

The report doesn’t offer anything particularly damning in terms of abnormal government influence within either company, yet there’s still a pile of suspicious, though often circumstantial evidence, most of which has to do with Huawei. Neither ZTE nor Huawei seemed particularly inclined to cooperate with the committee’s information disclosure requests, sometimes citing proprietary privilege, and as a result the committee didn’t have much hard information to go on. When it came time for them to fill in the blanks with their own conjecture, they often assumed the worst.

Red flags or not, the information contained in the report still is enough to raise eyebrows. Ren Zhengfei, Huawei’s founder, was a former director of the People Liberation Army’s (PLA) Information Engineering Academy, an organization that is believed to be associated with the signals intelligence division within the PLA. Mr. Ren was also invited to attend the 12th National Congress of the Communist Party in 1982, five years before he founded Huawei in 1987. More recently, Huawei has provided ‘special network services’ to an alleged elite unit of cyber-spies and hackers within the PLA. The company’s acting Chairwoman, Sun Yafang, is also thought to have links to the Ministry of State Security. These facts taken together seem to, at the very least, indicate a working relationship between Huawei and certain parts of the Chinese intelligence apparatus.

The report also dwells on the existence of a Communist Party Committee within the Huawei bureaucracy; something that is not rare in China. Generally speaking, these committees are more a case of CCP monitoring than arbiters of corporate strategy, yet they can still exert a small level of influence. Just how much influence in the case of Huawei may never be known however, for the company refused to comply with Intelligence Committee disclosure requests concerning the Party Committee’s past membership and decision-making record.

Perhaps the best example of the circumstantial nature of the evidence contained within the report pertains to a tax fraud investigation into Huawei that was initiated by the Chinese government in 1998. The investigation ended suddenly a year later without the imposition of any penalties, and the Intelligence Committee requested a copy of the government findings exonerating Huawei of any wrongdoing. When none were delivered, the committee concluded that Huawei had ended the investigation by way of its own government connections; perhaps in exchange for some unknowable future conditions that were placed on the company by the government.

Yet the report’s findings on the 1999 tax evasion case contain a more holistic lesson regarding capitalism in the Chinese context, and that is: Huawei claimed that the charges had been politically motivated.

They may well could have been.

That large Chinese companies have substantial, albeit informal, links to the government should come as a surprise to no one. Holding government office, or at least being related to someone who does, can often be a door-opening affair in a country where the rule of law is a work in progress. If a company isn’t well-connected it will just get swallowed up by another one that is, and it’s highly unlikely that Huawei, ZTE, or any other major Chinese private enterprise have chosen to forgo the advantages of having well-placed guanxi in order to shore up their credibility in the eyes of Western audiences.

Thus, returning to the question of Huawei’s involvement in critical network infrastructure in Canada. Whether it’s Huawei or another Chinese telecom, we should not expect these companies to be completely bereft of connections with the Chinese government, for it was likely these very connections that allowed the company to become large enough to be building our networks in the first place.

Going forward, this is a security matter that merits careful consideration, for there is a risk involved in handing the keys to Canada’s critical network infrastructure to any company that maintains links to a foreign government, China or otherwise.

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