China’s State Hackers “Huawei” Rigging 5G Tests Against Nokia And Ericsson

LONDON – The central theme of the U.S. case against Huawei is the company’s alleged links with the Chinese state. These links include national security and intelligence collection, subsidies and soft loans, access to closed state procurements and the strong support of the state in promoting exports and defending the company’s market position.

The Shenzhen telecoms giant thoroughly denies any and all such links, painting itself as fully independent of the Chinese state. But with every twist and turn in the company’s battle with Washington, the Chinese state is right there by its side.

Now, a story in the Sunday Telegraph is just the latest to pose serious questions. The newspaper reports that China has been “rigging” 5G equipment testing to discredit Huawei’s rivals, including Nokia and Ericsson. According to government and industry sources, “Beijing is feeding secret details of security vulnerabilities” to the testers to tip the balance in Huawei’s favor. The testing encompasses “hacking techniques used to check for weak spots… vulnerabilities discovered by China’s secret state hackers have been passed to the 5G testers to ensure Nokia and Ericsson’s equipment is found to be insecure.”

Huawei’s security issues have always been separated into two very different areas. First, standard software and hardware vulnerabilities stemming from poor development and testing. This is the crux of a scathing British intelligence report earlier this year that seriously criticized the quality of the technology, and it is the area where Huawei has committed to a multi-billion-dollar investment program to make improvements. It is also the area where the company’s rivals will have similar issues and concerns. The second area is the shadowy world of national espionage, where Huawei stands accused of either current or potential future collaboration with China’s defense and spy agencies. This is where the so-called smoking gun that has not been publicly produced as yet comes in.

The 5G testing is due to complete this month and China’s hope is that it can be used to inform European assessments of Huawei’s suitability for 5G deployments. Ahead of the recent U.S. blacklisting of Huawei and its affiliates, it had seemed that key European markets, led by Germany, had secured a pass from Washington, where a rigorous testing regime was seen as good enough, with the U.S. publicly stating that they expected Huawei to fail such a test. The accusations of cheating would seem to be an alternative way around the problem – if Huawei is only as bad as everyone else, the argument would run, why single them out.

Huawei is a very cost-effective option for telecoms execs worldwide, essentially their products give more for less. The accusation here, of course, being that this is enabled by Chinese state subsidies. But more for less is still more for less. Huawei has also invested so heavily in R&D in recent years, that there is genuine market-leading innovation at stake. If the Chinese equipment is to be removed from networks it will lead to billions in cost and months, maybe even years in delays. It will also make negotiating terms more difficult with rivals by making the landscape much less competitive.

Beijing started a more public fight back last week, threatening to target foreign firms that adhere to the U.S. blacklist and withdraw support from Huawei, denying them access to China’s vast market and industrial base. First came a proposal for enhanced cybersecurity regulation, and this was quickly followed by a blatant entity list. The common theme was that foreign entities that cut ties or disadvantaged Chinese firms for “non-technical” reasons, read politics and sanctions, would fall foul of the new rules.

It has been clear for many months, and more so after U.S. sanctions saw Google, Microsoft, Qualcomm, Intel, ARM and others pull future support for Huawei, that only action by Beijing, dove-tailing into a trade agreement compromise, can prevent Huawei from tipping into a major downward spiral.

U.S. President Donald Trump visits Britain in the coming days and will reportedly threaten to curb intelligence-sharing with its closest ally unless Huawei is cut from the country’s 5G plans, both at the core and the edge. This would cause chaos for the country’s networks which are just now in launch mode. It is expected that a series of “emergency” discussions between U.S. and U.K. intelligence officials will take place in the coming days to understand how to move forwards practically.

With U.S. sanctions now beginning to damage Huawei’s business, the company needs all the help it can get. One had assumed this would be blatant diplomacy – the cybersecurity regulations and entity list fit that bill. The allegations of more malicious behind the scenes dealings will come as little surprise, but will not help Huawei’s protestations of independence. All of which risks sending the debate all the way back to the beginning.

By Zak Doffman
Forbes.com