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By Eric Barger

Besides the obvious implication that many of the states now looking to Beijing for updated technology might likely never be able to pay for what they receive, China is presently establishing a firm foothold in strategic places that could possibly turn into military operations points in Africa, South America, and Asia. Perhaps even more alarming in the near term is that analysts say, judging from past history, the installation of Chinese infrastructure, hardware, and systems would create credible and far-reaching security issues wherever they are placed - a charge the Chinese are hotly disputing. Perhaps smaller, poorer nations longing for a technological upgrade won’t mind - but we should.

Though many of the projects in the pipeline from Beijing include roads, hospitals and airports, each would include communications infrastructure. As I alluded to previously, that should raise a red flag, a big one adorned with one large and four small yellow stars. Though the Chinese are certainly building alliances and closing deals that could feasibly make countries and governments beholden to them along the way, we can be certain that they aren’t just trying to make sales. China’s determination to install infrastructure and communications hardware in third world nations is to enable them to electronically intercept and glean from communications whatever useful information they can to best assure China a political, military, economic, and public relations advantage. Following is a little background on why we should be concerned and vigilant in the new high-tech world of surveillance.

When Meng Wanzhou, the CFO of Chinese tech firm, Huawei, was arrested and detained for extradition to the United States by Canadian agents at the Vancouver airport on December 1, 2018, there was certainly more to the story than the public explanation. Though this news has long since left the headlines, please note that it remains a pivotal event, not only when it comes to China’s blatant disregard of US sanctions placed on terrorist states, but also in the battle against intellectual property theft and, most importantly, in the intelligence war to protect US national security. The charges indicate that Huawei, the largest manufacturer of telecommunications equipment in the world, had violated US sanctions concerning trade with Iran and sought to conceal it in order to do business with US banks and corporations.

Meng, the longtime co-chair of the company’s board and daughter of Huawei’s founder, was originally held on $10 million bond. She is now out on $7.5 million bail after agreeing to surrender her passports (seven of them in total), pay for a 24/7 security detail, and wear a GPS tracking ankle bracelet while confined to house arrest as she fights extradition to the US.

In a shroud of mystery, Meng was originally granted a publication ban (news blackout) after a judge agreed to bar both police and prosecutors from releasing information about the case. Though the ban was lifted shortly thereafter [3], it is speculated that Huawei’s lawyers lobbied for the publication ban because they believed that a PR firestorm would ensue if words like “spying” and “espionage” appeared in whatever evidence had been gathered against Meng. Likely so.

On January 24, 2019, Meng was formally indicted for bank and wire fraud and conspiracies to commit bank and wire fraud. The same day, the US government announced a different indictment against Huawei relating to theft of trade secrets. Meng’s next court appearance has been scheduled for September 23, 2019.

Shortly after Meng’s arrest, China retaliated by arresting and detaining two Canadian citizens, charging them with espionage, a crime punishable by death in China. The two incarcerated Canadians have no access to lawyers or bail, are questioned every morning, afternoon, and evening, and are held in a room where the lights are kept on 24/7. Canadian diplomats have only been allowed to visit the men at a police station - not at the facility where they are actually being held.  

Conversely, Meng, a former resident of Canada (2001-2009) who owns two multimillion-dollar residences in Vancouver, has complained that her confinement has been “restricted to a limited space.” In recent weeks, she has been allowed to move from her smaller $5.6 million home to her newly renovated, 8170 square foot, $13.2 million, seven-bedroom mansion, in one of Canada’s most exclusive neighborhoods.

(Incidentally, though I commenced writing this article in December, I am actually working on it during a flight delay in the very airport where Meng Wanzhou was arrested.)

Huawei, the largest private corporation in China, has been responsible for much of the completed communications infrastructure work China has contracted for abroad. As a main player, Huawei is projected to participate in future telecommunication infrastructure contracts outside of China, including the wiring of even more third world countries. While Huawei and Chinese tech giant, ZTE, have proven to be great financial successes, evidence suggests they have long participated in the theft of intellectual property and hold little regard for regulations in various countries where they are established. Far more serious though are the allegations that they are fronts for a well-organized Chinese spy ring that has been operating internationally for some time, a revelation that makes the Meng Wanzhou case all the more intriguing.

The Reach and Influence of Chinese Tech

Understanding the full extent that Chinese tech hardware has been constructed and programmed to surveil users and then convey information to its makers may never fully be known but it is likely astronomical in scope. If so, consider the far-reaching security and privacy implications in the fact that Huawei equipment alone is currently in use by customers in 170 countries and by 46 of the world's 50 largest telecommunications companies. Huawei’s aggressive cell phone marketing has made their products #1 in many markets, including Australia. They have bypassed Apple in sales and are now second only to Samsung with over 200 million cell phones shipped worldwide in 2018. [4]

However, the tide may be turning against the questionable Chinese telecom companies. On December 26, 2018, the NFL’s Washington Redskins football team canceled an arrangement they’d made with Huawei to offer free high-speed Wi-Fi to fans in the high-dollar luxury boxes at DC’s Fed Ex Field. This contract, penned in 2014, was canceled on advice received from a member of the US-China Economic and Security Review Commission. The arrangement had been implemented for only nine weeks but upon learning of the probable Chinese cyber security threat, the team pulled out of the agreement. [5] In addition, the Australian government has rejected installation of new 5G cell hardware made by Huawei and ZTE due to what Frances Adamson, Australia’s top diplomat, called a “careful, objective and extensive review of national security risk.” [6] In early 2018, both Huawei phones and network gear were banned from use by Taiwanese government offices and were restricted by Japan. The UK, Canada, the Czech Republic, and Norway are all reportedly reconsidering their relationships with Huawei as well. [7]

Thankfully, the Trump Administration is rejecting important elements of China’s diverse and widespread technology and encouraging our allies to do likewise. To China’s chagrin, headlines like “China tells Donald Trump: We Can Help Make America’s Infrastructure Great Again” have given way to those like “Trump Administration Cracks Down on Giant Chinese Tech Firm, Escalating Clash with Beijing.”

Last August, President Trump signed the Defense Authorization Act into law, which, in part, bans devices and equipment used to route or view user data that are manufactured by Huawei, ZTE, and numerous other Chinese manufacturers from being used in US government facilities. [8] Earlier in 2018, the Pentagon banned Huawei phones from being sold at US military base retailers, citing security concerns. In a most recent development, the Federal Communications Commission (FCC) voted 5-0 on May 9, 2019, to deny a petition by China Mobile USA to provide telecom services in the United States, citing security concerns rising from the company’s “ownership and control by the Chinese government.” [9] Additionally, the Democratic National Committee advised candidates running for election in 2020 not to allow their staff to use devices or hardware manufactured by either Huawei or ZTE - especially after what allegedly transpired during the 2016 Presidential Elections. [10]

In March 2017, ZTE Corporation agreed to plead guilty and pay $892,360,064 to the U.S. for conspiring to violate the International Emergency Economic Powers Act (IEEPA) by illegally shipping U.S.-origin items to Iran, obstructing justice, and making a material false statement. The combined sanction enforcement by the Department of Commerce and the Department of Treasury also included a suspended payment of $300 million, which ZTE will pay if it violates its settlement agreement. [11] Keep in mind that Huawei CEO, Meng’s, 2018 arrest in Canada was, at least in part, in connection with the violation of these same sanctions.

Huawei, along with ZTE (world 5G broadband leader and maker of popular Tracfones), state-owned China Mobile (employing 240,000), and others such as camera maker Dahua Technology, appear to offer the best in Chinese tech expertise. However, numerous recent reports focus on Huawei and ZTE being unquestionably tied to the Chinese government and Chinese Communist Party and pinpoint the companies as likely being responsible for much of China’s dirty dark-web dealing.

Going back to October 2012, The US House Permanent Select Subcommittee on Intelligence released a report titled “Investigative Report on the U.S. National Security Issues Posed by Chinese Telecommunications Companies Huawei and ZTE.”

The Committee’s report repeatedly used language that substantiates the concerns reflected in the report’s title such as:

- The companies failed to provide details…

- They failed to explain…

- They failed to cooperate…

- They failed to sufficiently document their responses to official Committee enquiries…, etc., etc.

In fact, the Committee states, “Evidence shows that Huawei exhibits a pattern of disregard for the intellectual property rights of other entities and companies in the United States” and that “former and current Huawei employees provided evidence of a pattern and practice of potentially illegal behavior by Huawei officials.”

The illegal behavior listed includes:

- Immigration violations

- Bribery and corruption

- Discriminatory behavior

- Copyright infringement

The report states, “China has the means, opportunity, and motive to use telecommunications companies for malicious purposes” and that “Chinese intelligence collection efforts against the U.S. government are growing in ‘scale, intensity and sophistication.’”

The House Subcommittee concludes, “Chinese actors are also the world’s most active and persistent perpetrators of economic espionage.” [12]

You may be wondering the obvious here: WHY ARE THESE COMPANIES STILL ALLOWED TO OPERATE - IN ANY WAY - IN THE UNITED STATES?

On the day I began writing this article (Dec. 27, 2018) Reuters reported that President Trump was about to issue an Executive Order that would target Huawei and ZTE. The EO, apparently months in the making, would invoke the “International Emergency Economic Powers Act” and thus prohibit US telecom companies from installing products manufactured by Chinese companies, alleging they are working for the Chinese government to commit espionage in the United States.

As promising as this action appeared to be, days turned into weeks and then months with no news until May 15, 2019, when the White House finally announced the signing of the executive order by President Trump. [13] Ajit Pai, chairman of the FCC, described the move as “a significant step toward securing America's networks.” However, many questions and roadblocks remain. Writing in Forbes, security and surveillance expert, Zak Doffman, discussed some of the factors involved in implementing the EO.

Doffman wrote, “Now that U.S. companies will be prohibited from using Huawei, the question will be how that impacts their operations overseas, and, just as critically, how it may impact on overseas companies operating in the U.S.” [14]

One way the action against Huawei would affect users is that under the Executive Order US-based companies are prohibited from doing any business with Huawei. Since Huawei phones run Google’s Android operating system, it appeared that when the grace period was set to expire on August 19, 2019, Huawei phone users worldwide would be unable to receive Android updates or utilize other Google services.

Computers and tablets manufactured by Huawei run on Microsoft’s Windows operating system. Preemptively, on May 24, 2019, Microsoft stopped accepting new orders from Huawei. They also pulled Huawei's MateBook and MateBook X Pro laptops from their online store. [15] [16] Additionally, Microsoft’s services team for the Chinese company had already moved out of its Shenzhen-based headquarters. Considering the force of President Trump’s Executive Order, Microsoft would not be able to continue providing system and security updates for Windows and other Microsoft software on existing Huawei PC’s. The company’s own actions indicate that they are effectively finished doing new business with Huawei, at least for now.

Though Huawei had been working feverishly to perfect and install its own operating systems to replace Google’s Android and Microsoft’s Windows, [17] Huawei phones would be severely hampered (if not dead) without access to the over 2 ½ million Android applications available in the Google Play Store. Without access to Android and Windows to power their products, Huawei would face a monumental logistical and marketing nightmare that alone would sink the majority of companies. But using this fact as a bargaining chip, on June 29^th at the G20 meeting in Osaka, Japan, President Trump announced that while the ban on Huawei products being marketed and sold in the United States remains firmly in place, US companies would be allowed to sell services and products to Huawei.

Having faced the reality of what no Android and no Windows would mean to Huawei, the Chinese recognize that as long as Trump is in office they’d be wise not to follow the path the company took that landed them on the blacklist banned from operating in the United States. Perhaps company executives and their Chinese government controllers should have considered that not all US Administrations would be as passive as the last. They’ve now been exposed and shouldn’t wonder why their company and others are not trusted since they are now known as the kingpins of intellectual property theft and digital spying at the behest of China’s Communist Party. ^[18]