Doing Business With China

"Thirty years ago, Huawei had already leveraged intellectual property theft to leapfrog technological milestones; early versions of Huawei's switches are said to be complete replicas of those developed by Nortel and Cisco, down to the pages of their operating manuals."
"Network switches have an unavoidable inside track -- they necessarily see all of the traffic that passes through them. Even when that traffic is encrypted, as most traffic on the Internet now is, switches can analyze the patterns of flow -- this so-called meta-data is key intelligence."
Christian Leuprecht, Professor in Leadership Royal Military College, Queen's University
David Skillicorn, Professor, School of Computing, Queen's University

A Huawei booth is seen at a China Mobile 5G experience centre in Shanghai. Huawei is important to China as a “poster child” of a company that can succeed in developed and underdeveloped nations alike, one expert says. Stringer/AFP/Getty Images

China has always been in a hurry. Perhaps with good enough reason. As the world's most populous country, one whose vast population was known to live in grinding poverty, the Chinese Communist Party decided that by adopting a Western-style focus on development and free trade prosperity would ensue and it would assume its proper place in the world power structure, as a ferocious economic leader, influential and all-powerful.

China's ambition came up short when balanced against its relative national poverty. Expanding power and influence conventionally came with territorial ambitions that resulted in military action and war. China has employed an alternate strategy that has served it well; it gained strength, and quickly through industrial espionage, through cheap labour, through high production rates and though inexpensive, poorly-made products that raged through the Western world.

The rest of the world simply unable to compete with China's advantage in cheap production and an enormous trade growth with tentacles everywhere in the world, saw their own production and export capabilities shrivel. Now, with wealth and power and influence, China has turned once again to alternate solutions to achieving even greater dominance as a world power; military threats against neighbours for territorial expansion.

And dominance in technological advances from building vital civic infrastructure and extending loans to developing countries to enable Chinese construction to build badly required infrastructure and producing dependencies through financial loans, to buying into high-tech development corporations abroad, while restraining foreign companies from free access to Chinese markets. And now there's the challenge of artificial intelligence and communications, China's latest targets.

As nations develop a growing range of capabilities to be deployed in the leverage of the cyber domain to reflect their specific national interests using techniques including theft of intellectual property and influencing internal politics of other nations while conducting cyber-espionage including the development of cyber weapons capable of inflicting damage to replace the harm that conventional weapons cause, the world is closing in on itself.

The extent to which a country finds itself capable of exploiting or defending their national networks and asset protection is dependent on the extent to which it is capable of asserting safety over its global communications infrastructure and its resultant connectivity. The Russian Federation's shut-down of Estonia in 2007 demonstrated how vulnerable any country can be when its national infrastructure becomes heavily and often solely dependent on computer-based connectivity.

That lesson to the world at large was and remains: be vigilant, and trust none others. Enter China, and its largest, most tenacious and influentially powerful global communication giant, Huawei Industries. A company whose tentacles stretch worldwide, and which has been contracted by many nations to help usher them into the brave new world of superior, upgraded connectivity, in 5G infrastructure. Its equipment is world class, its technology competitive and its corporate culture persuasive.

But their integrated switches while capable of elevating current connections well beyond what they now achieve, are also amenable to slowing traffic, diverting it, or cutting it completely, should any kind of interference be contemplated at any given time by the Chinese Communist Party with which Heuwei is intimately connected. The British government set up a joint organization between its prime intelligence organization and Huawei to determine whether a working level of trust in Huawei's equipment was feasible.

The final report points out the difficulties involved, that even should a switch be proven harmless, all switches must be able to update software over the Internet itself. The conclusion: what appears currently innocuous has the potential to swiftly become vulnerable some time in the future. Australia, the U.S., Japan, Germany, France, Poland and the Czech Republic reached their own conclusions, that Huawei parts place their next-generation communications infrastructure at high risk.

The Canadian Security Review Program undertaken originally in 2013 reached their conclusions as well; that designated equipment in sensitive areas of Canadian networks be excluded, that mandatory assurance testing in independent third-party labs for designated equipment be undertaken before use in less sensitive network areas, that restricting outsourced managed services across government networks and other critical networks be undertaken.

The spectre of cyber manipulation raises its existential head. China's idea of reciprocity is non-existent; non-Chinese companies are barred from Chinese network infrastructure. The 2018 National Defense Strategy by the U.S. National Defense Strategy Commission highlighted the U.S. is likely to lose a war against China or Russia through a pre-emptive cyberattack on critical infrastructure, effectively paralyzing the United States, including its capacity to retaliate.

The Chinese government has mapped critical infrastructure systems including electrical grids and oil pipelines in North America and elsewhere, probing configurations and potential weaknesses. Digital exploitation by China will not be eliminated by banning Huawei in Canada's communication upgrade plans, but it is necessary as one in an array of defensive measures. The Government of Canada has not yet decided whether to fully commission Huawei in Canada's 5G future.

However, it is no mystery how and why diplomatic relations between Canada and China have badly deteriorated since December of 2018, dating from the time the RCMP took Huawei's chief financial officer, Meng Wanzhou into custody during a flight stopover in Vancouver.The U.S. has charged that Ms. Meng knowingly conspired to convince U.S. financial houses that a subsidiary of her company had no connection to Huawei, relating to sanctions imposed by the U.S. government on doing business with Iran.

Canada was responding to a U.S. extradition request. And Canada has now verified it plans to honour that extradition agreement it has with its neighbour. China has damned and condemned Canada at every turn for its blind allegiance to the U.S. with whom China is undergoing a trade war. The Chinese embassy in Ottawa has warned Canada, that should it decide not to commit to Huawei technology would face dire consequences.

A possible federal government ban prohibiting Huawei from building Canada's 5G network is unlikely to have a major financial impact on two of the country's top communication companies, analysts said. (Fred Dufour/AFP/Getty Images)