Sat, Jan 19, 2019 - Page 8 News List

Stricter checks on telecoms needed

By Joseph Tse-Hei Lee 李榭熙

Two of China’s leading telecommunications companies, Huawei Technologies Co and ZTE Corp, were once praised as integral parts of China’s ambitious strategy to achieve global technology dominance in the early 21st century. Both companies are now treated with great suspicion in the West, following allegations that they might serve as the powerful arms of the mighty Chinese Communist Party (CCP) to undermine privacy and security in the information age.

It has been widely reported that US President Donald Trump is considering using an executive order, which has been discussed for months, to formally block US companies from using equipment manufactured by Huawei and ZTE due to national security threats.

Such a decision would kick China’s tech giants out of the vast US market at a time when many commercial wireless carriers are looking for partners to prepare new 5G wireless networks.

Ever since the arrest of Huawei chief financial officer Meng Wanzhou (孟晚舟) in Vancouver, British Columbia, on Dec. 1 last year, the Huawei controversy has exacerbated US-China trade tensions. As the daughter of Huawei’s founding president, Ren Zhengfei (任正非), Meng also serves as deputy chairwoman and is likely to be named as her father’s successor.

Worrying about the fate of this prominent member of the elite, the Chinese Ministry of Foreign Affairs expressed indignation over Meng’s arrest and called on Canada to release her. This diplomatic fiasco has triggered speculation over succession at Huawei and its future as a major player in global telecommunications.

What has been overlooked in this public discourse is the years-long investigation of Huawei’s activities by the US government. A 2012 report on national security issues posed by Huawei and ZTE was released online by the US Congress long before the start of the US-China trade spat.

This timely and informative report refers to a wide range of counterintelligence and security threats posed by Huawei and ZTE in the US, and describes numerous unlawful practices that Huawei managers have engaged in. A closer look at the investigative findings raises many legitimate concerns about security risks and privacy rights.

One major issue concerns Huawei’s secretive relationship with the CCP. Little is known about company founder Ren’s personal ties to the Chinese military and the role of a CCP committee within the Huawei headquarters in Shenzhen.

Neither is there any public information about the company’s formal and informal channels of communication with Beijing or its extensive business dealings with the Chinese security and intelligence services.

The lack of transparency about internal decisionmaking processes gives an impression that Huawei’s branches in the US remain heavily controlled by the CCP committee at its headquarters and that this global Chinese enterprise is monopolized by an elite subset of its tightly controlled management.

In this hierarchical structure, common shareholders have absolutely no say in Huawei’s governance and its US subsidiaries might be pressured by the Chinese parent company to pass ordinary customers’ personal data to Beijing.

Equally worrying are alleged infringements of intellectual property rights and the widespread use of pirated software at Huawei’s US facilities, causing considerable loss of profits to the high-tech industry there.

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