By Emily Taylor, Chatham House, London, 9 September 2019

Emily Taylor examines the controversy around the Chinese tech giant’s mobile broadband equipment and the different approaches taken by Western countries.


As countries move towards the fifth generation of mobile broadband, 5G, the United States has been loudly calling out Huawei as a security threat. It has employed alarmist rhetoric and threatened to limit trade and intelligence sharing with close allies that use Huawei in their 5G infrastructure.

While some countries such as Australia have adopted a hard line against Huawei, others like the UK have been more circumspect, arguing that the risks of using the firm’s technology can be mitigated without forgoing the benefits.

So, who is right, and why have these close allies taken such different approaches?


The risks


Long-standing concerns relating to Huawei are plausible. There are credible allegations that it has benefitted from stolen intellectual property, and that it could not thrive without a close relationship with the Chinese state.

Huawei hotly denies allegations that users are at risk of its technology being used for state espionage, and says it would resist any order to share information with the Chinese government. But there are questions over whether it could really resist China’s stringent domestic legislation, which compels companies to share data with the government. And given China’s track record of using cyberattacks to conduct intellectual property theft, there may be added risks of embedding a Chinese provider into critical communications infrastructure.

In addition, China’s rise as a global technological superpower has been boosted by the flow of financial capital through government subsidies, venture and private equity, which reveal murky boundaries between the state and private sector for domestic darlings. Meanwhile, the Belt and Road initiative has seen generous investment by China in technology infrastructure across Africa, South America and Asia.

There’s no such thing as a free lunch or a free network – as Sri Lanka discovered when China assumed shares in a strategic port in return for debt forgiveness; or Mexico when a 1% interest loan for its 4G network came on the condition that 80% of the funding was spent with Huawei.

Aside from intelligence and geopolitical concerns, the quality of Huawei’s products represents a significant cyber risk, one that has received less attention than it deserves.

On top of that, 5G by itself will significantly increase the threat landscape from a cybersecurity perspective. The network layer will be more intelligent and adaptable through the use of software and cloud services. The number of network antennae will increase by a factor of 20, and many will be poorly secured ‘things’; there is no need for a backdoor if you have any number of ‘bug doors’.

Finally, the US is threatening to limit intelligence sharing with its closest allies if they adopt Huawei. So why would any country even consider using Huawei in their 5G infrastructure?


Different situations


The truth is that not every country is free to manoeuvre; 5G technology will sit on top of existing mobile infrastructure.

Australia and the US can afford to take a hard line: their national infrastructure has been largely Huawei-free since 2012. However, the Chinese firm is deeply embedded in other countries’ existing structures – for example, in the UK, Huawei has provided telecommunications infrastructure since 2005. Even if the UK decided tomorrow to ditch Huawei, it cannot just rip up existing 4G infrastructure. To do so would cost a fortune, risk years of delay in the adoption of 5G and limit competition in 5G provisioning.

As a result, the UK has adopted a pragmatic approach resulting from years of oversight and analysis of Huawei equipment, during which it has never found evidence of malicious Chinese state cyber activity through Huawei.

At the heart of this process is the Huawei Cyber Security Evaluation Centre, which was founded in 2010 as a confidence-building measure. Originally criticized for ‘effectively policing itself’, as it was run and staffed entirely by Huawei, the governance has now been strengthened, with the National Cyber Security Centre chairing its oversight board.

The board’s 2019 report makes grim reading, highlighting ‘serious and system defects in Huawei’s software engineering and cyber security competence’. But it does not accuse the company of serving as a platform for state-sponsored surveillance.

Similar evidence-based policy approaches are emerging in other countries like Norway and Italy. They offer flexibility for governments, for example by limiting access to some contract competition through legitimate and transparent means, such as security reviews during procurement. The approaches also raise security concerns (both national and cyber) to a primary issue when awarding contracts – something that was not always done in the past, when price was the key driver.

The UK is also stressing the need to manage risk and increase vendor diversity in the ecosystem to avoid single points of failure. A further approach that is beginning to emerge is to draw a line between network ‘core’ and ‘periphery’ components, excluding some providers from the more sensitive ‘core’. The limited rollouts of 5G in the UK so far have adopted multi-provider strategies, and only one has reportedly not included Huawei kit.

Managing the risks to cyber security and national security will become more complex in a 5G environment. In global supply chains, bans based on the nationality of the provider offer little assurance. For countries that have already committed to Huawei in the past, and who may not wish to be drawn into an outright trade war with China, these moderate approaches offer a potential way forward.

 

 

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