Huawei Too Dangerous

Chinese telecoms seeking access to U.S. markets have close ties to PLA, report says

BY: Bill Gertz  
March 13, 2012 5:00 am

New information about Chinese civilian telecommunications companies’ close support of the Chinese military and information warfare programs is raising fresh concerns about the companies’ access to U.S. markets, according to a congressional report.

One of the companies identified in the report as linked to the People’s Liberation Army (PLA) is Huawei Technologies, a global network hardware manufacturer that has twice been blocked by the U.S. government since 2008 from trying to buy into U.S. telecommunications firms.

The report revealed that “Huawei is a well established supplier of specialized telecommunications equipment, training and related technology to the PLA that has, along with others such as Zhongxing, and Datang, received direct funding for R&D on C4ISR systems capabilities.”

The report on cyber threats was made public last week by the U.S.-China Economic and Security Review Commission.

C4ISR is an acronym for high-tech military systems essential for communicating with forces and gathering intelligence for war.

“All of these firms originated as state research institutes and continue to receive preferential funding and support from the PLA,” the report said.

The report provides new details behind U.S. government efforts to prevent Huawei and other Chinese telecommunications firms from gaining access to U.S. markets. It reflects concerns that the companies will provide equipment and information to the Chinese government that could be used in future cyber warfare against U.S. public and private telecommunications networks.

William Plummer, a Huawei spokesman, said the company is reviewing the China commission report.

“Based on our initial review, in terms of references to Huawei, the report would seem to perpetuate unfortunate misinformation which has been featured in previous USCC and other reports,” Plummer said.

Plummer added that Huawei offers civilian telecommunications equipment, and “no one has ever offered any evidence that Huawei has been involved in any military technologies at any time.”

A U.S. intelligence report produced last fall stated that Huawei Technologies was linked to the Ministry of State Security, specifically through Huawei’s chairwoman, Sun Yafang, who worked for the Ministry of State Security (MSS) Communications Department before joining the company.

Huawei has stepped up lobbying in the United States in recent months in an effort to dispel reports that the company is owned by the Chinese military.

Huawei has been linked to sanctions-busting in Saddam Hussein’s Iraq during the 1990s, when the company helped network Iraqi air defenses at a time when U.S. and allied jets were flying patrols to enforce a no-fly zone. The company also worked with the Taliban during its short reign in Afghanistan to install a phone system in Kabul.

In 2008, the Treasury Department-led Committee on Foreign Investment in the United States (CFIUS) blocked Huawei from purchasing the U.S. telecommunications firm 3Com due to the company’s links to the Chinese military.

Last year, under pressure from the U.S. government, Huawei abandoned their efforts to purchase the U.S. server technology company 3Leaf.

In 2010, Congress opposed Huawei’s proposal to supply mobile telecommunications gear to Sprint over concerns that Sprint was a major supplier to the U.S. military and intelligence agencies.

According to the report, another major Chinese telecommunications manufacturer, ZTE Corp, and Huawei “also provide certification training and related engineering training to PLA personnel assigned to communications and IW related positions.”

The report also identified a Chinese firm called Venus Technologies Inc. as having close ties to the hacker groups XFocus and NSFocus. Venus also provides information security and computer network operations expertise to the PLA and dozens of other units of the Chinese government.

“Venus’ customer list published on their Website includes all PLA service branches, all PLA Staff departments, including the General Staff, Armaments, Logistics, and Political Departments, and the defense consortiums China North Industries Group (NORINCO, a well documented arms exporter), China Aviation Industry Corp I (AVIC I), China Aerospace Science and Technology Group (CASIC), China Shipbuilding Industry Corporation, and the Jiuquan Satellite Launch Base, China’s oldest space launch facility located in Inner Mongolia,” the report said.

China Aviation Industry Corp. recently came under scrutiny from Congress and the Pentagon over concerns that a joint venture with General Electric to develop avionics technology for civilian jetliners will result in boosting Chinese military aviation.

“China’s long term investment in its high technology sectors is paying dividends for the PLA as they have access to increasing numbers of domestic firms able to design, build, and service advanced IT systems in support of PLA C4ISR and [computer network operations] requirements,” the report, produced by the Northrop Grumman for the commission, stated.

“The ability to recruit these employees into militia units is only one benefit that the government is deriving from the growth of the IT sector in China.”

The report said that some companies linked to the military, like Huawei, are well known in the West and hold a significant market share around the world.

“But a host of other smaller firms like Venus Technologies also provide increasingly sophisticated platforms and technology to the PLA and government security organizations,” the report said.

Edward Timperlake, a Pentagon technology security official during the George W. Bush administration, said the Chinese military’s role in telecommunications can be traced to the 1989 Tiananmen massacre.

China’s military had problems communicating with forces during the military operation to put down protests in Beijing’s main square, and as a result began developing civilian cell phone technology.

“The minute the military developed cutting edge [telecommunications] technology, they formed up with a Chinese colonel who founded Huawei,” Timperlake said, referring to Huawei founder Ren Zhengfei.

The close ties between the PLA and Chinese telecoms means “they can infiltrate communications networks at their whim,” he said.

Chinese state-run telecommunications firms’ main mission is to help the communist government control the population by controlling internal communications, Timperlake said.