Huawei will likely be banned from Australia's 5G network
Australia is likely to bar Chinese telecoms giant Huawei from the Australian 5G network for security reasons. Canberra is concerned that Huawei could be pressured by the Chinese government to turn over data. For its part, Huawei insists that data on its networks are secure.
In Australia, Huawei has relied on its strong ties with former officials and business leaders to support expansion efforts. John Lord, Chairman of Huawei Technologies (Australia), is a retired Rear Admiral who served with the Royal Australian Navy for 36 years. Board Director John Brumby served as Premier of Victoria from 2007-10. Board Director Lance Hockridge led Aurizon, Australia's largest rail freight operator, from 2010-2016.
The three men downplayed Huawei-related security concerns in an open letter last month entitled "Huawei is good and safe for Australia." In the letter, they said that many comments about Huawei-related security concerns are "ill-informed and not based on facts."
We're not so sure about "not based on facts." In June 2017, China's National People's Congress passed a sweeping national security law that requires Chinese firms to cooperate with the country's intelligence services.
The letter lauds Huawei's global expansion. "In each of the 170 countries where we operate, we abide by the national laws and guidelines," the authors wrote. They point out that countries including United Kingdom, Canada, Germany, Spain, Italy and New Zealand "have managed to embrace Huawei’s technology within their own national security frameworks. We believe this can be done in Australia also."
In fact, the UK is more closely scrutinizing its ties with Huawei. In a July report, the British government expressed newfound concerns about the Chinese telecoms giant, citing the “identification of shortcomings in Huawei’s engineering processes." Those "have exposed new risks in the UK telecommunication networks and long-term challenges in mitigation and management," the report said.
Now that the Australia 5G ban looks increasingly likely - analysts say it has a 70-80% chance of implementation - Huawei's corporate communications department has shifted gears. Jeremy Mitchell, the company's Australia and New Zealand director of corporate and public affairs, told The Sydney Morning Herald this month that the 5G telecoms supply chain inevitably includes some equipment made in China, even if it's made my foreign firms. "With or without Huawei, the Australian 5G network will be made in China,” he said.
For Huawei, being cut out of Australia's 5G network would surely be a missed business opportunity. But the damage to the company's brand would be more significant, especially as the U.S., Canada, and the UK are all investigating Huawei's presence in their respective territory.
Continental European nations also might decide to reevaluate their relationships with Huawei. In May, Politico reported that leaders of German industry sought to "address growing security concerns about Chinese-built equipment." They will certainly be following the Australian government's decision about Huawei closely.