Red scare 2.0: Australia bans China’s Huawei from lucrative gov’t bid

The government of Australia wants to build a nationwide high-speed Internet network, and it’s accepting proposals from all bidders — all except China’s Huawei, a multinational electronics and telecom giant.

Huawei is China’s largest company in the business of supplying networking and telecommunications equipment, and when it comes to mobile telecom and infrastructure equipment, it’s the second-largest supplier in the world. So why is Australia blocking the firm from bidding on this national-scale infrastructure project?

According to Australian Prime Minister Julia Gillard, the country considers the move a “prudent” consideration in light of China’s involvement in international cyber espionage. The Australian network is a $38 billion contract, and late last year, the Australian attorney general’s office told the Chinese company that it wouldn’t be permitted to bid on the project because national intelligence agencies had raised concerns about hacking exploits originating in China.

Huawei, on the other hand, has insisted it is a trustworthy partner. In the recent past, U.S. companies such as AT&T and T-Mobile have worked with the Chinese giant on smartphones and tablets. However, white-label consumer devices are in a totally different ballpark from a national telecom network.

These Western concerns about Huawei are hardly new. Bids from Huawei on a national-scale government project were blocked in India back in 2006 due to fears over Huawei’s close ties to the Chinese government and suspected ties to Chinese intelligence.

Also, a 2008 U.S. intelligence report names Huawei as having “close ties to the PLA” (that’s the People’s Liberation Army, China’s military complex, which includes the country’s land, sea, strategic missile, and air forces). That report further states that Huawei and similar firms “collaborate on research and development” and provide state-of-the-art equipment to the Chinese military.

About a year ago, when Huawei attempted to acquire U.S. computer company 3Leaf, the U.S. government intervened and blocked the sale, a relatively small $2 million deal, citing security concerns. Meanwhile, even though it backed  away from the acquisition, Huawei executives maintained in an open letter that U.S. security fears were the result of “unfounded and unproven … misperceptions.”

Also recently, U.S. company Symantec ended its relationship with Huawei, fearing an ongoing partnership with the Chinese company would prevent it from obtaining government contracts.

Although the Chinese government has shrugged off cyber espionage concerns in the recent past, security professionals consistently cite China as ground zero for the ongoing cyberwar, and even the U.S. Department of Homeland Security has issued warnings about Chinese-made software, saying it may be designed with hacker-friendly backdoors. Until the state of cyber security sees some drastic changes, it’s unlikely that Huawei or any similar Chinese firms will see Western business without significant governmental roadblocks.

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