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Huawei and ZTE: Spies? Us? Nah. It's just software bugs

Posted By TelecomTV One , 14 September 2012 | 4 Comments | (4)
Tags: Huawei ZTE equipment manufacturers markets legislation spyware & surveillance money

Yesterday a US Congressional committee quizzed a couple of executives from Chinese telecoms companies Huawei and ZTE about allegations that their companies could use networking equipment installed in America both to spy on the country and to help trigger cyber attacks. Martyn Warwick reports.

Charles Ding of Huawei Technologies and Zhu Jinyun of ZTE denied allegations that equipment from their respective companies comes complete with secretly embedded coding to enable them to conduct covert surveillance on US communications traffic and to help bolster the efficiency and disruption of cyber attacks against US interests. They also sought to refute allegations that they have direct links to, or take orders from, the Chinese government or military.

However, try as they might, their answers failed to convince the committee of their bona fides. Mike Rogers, the Chairman of the House Intelligence Committee commented, "I'm disappointed. I was hoping for more transparency, more directness."

He told Mssrs. Ding and Jiyun, "There is a sphere of government influence in your companies of which you either can't identify their roles and responsibilities or won't. Either way, its unacceptable."

Thursday's hearing was the latest move in the now year-long probe being carried out by the US authorities to determine if Huawei and ZTE pose a security threat to the country.

Mr. Ding, a corporate senior VP at Huawei said, "Huawei is an independent private employee-owned company. Neither the Chinese government nor the People's Liberation Army has an ownership interest in our company, or any influence on daily operations, investment decisions, profit distributions or staffing."

Now there's an answer that reveals a darned sight more by what it omits than in what it actually says. For instance, since when did not having an ownership interest in a company prevent the Politburo from leaning on corporate executives? And maybe there is no influence of daily operations but what about weekly, monthly, yearly or even over the course of a generation?

In his turn, Zhu Jiyun, ZTE's senior VP for North America and Europe insisted, "Would ZTE grant China's government access to ZTE telecom infrastructure equipment for a cyber attack?" No! China's government has never made such a request. If such a request were made, ZTE would be bound by US law."

Both men vehemently denied they or their companies have ANY links to the Chinese government, swore that they and their companies would never stoop so low as to sabotage a client's network, embed spy codes or help promote cyber attacks.

Indeed, it seems both Hauwei and ZTE are committed to improving their customer's cyber security and follow US law to every last letter, full stop and exclamation mark!

None of this seemed to change Mike Rogers' mind and he complained that both companies had provided "little actual evidence" in answer to the committee's questions and pointed out that both Huawei and ZTE had flatly refused to supply it with various documents asked for because, they claimed, to do so would be in breach of China's state-secret legislation.

As Mike Rogers observed "It is very strange the internal corporate documents of purportedly private sector firms are considered classified secrets in China. This alone gives us a reason to question their independence."

Messrs Ding and Jinyun also denied allegations that the Chinese government directly funds some company initiatives and averred that neither company sells, nor have they ever sold any products at a loss in the US or in other parts of the world.

Another Committee member, Adam Schiff, pointed out to the two executives that Chinese state security law gives the Chinese government the power and right to "inspect  and examine" any communication equipment belonging to any company or individual.

Mr. Ding and Mr. Jinyun said they didn't know of the existence of any such legislation and that they would "never" interfere with or do any harm to equipment and networks belonging to any customer.

Huawei and ZTE are desperate to get a bigger foothold in the enormous, and enormously lucrative, US market but their efforts have been dogged by controversy and claims that they are far too close to the Chinese government for their products to be entrusted with the carrying of US data. In 2011, Huawei was banned from participating in the build-out of a US national wireless network directly because of security concerns voiced by the US Department of Commerce and other government agencies.

Huawei has spent big money on lobbying its cause in various US fora and Dan Steinbock, an acknowledged expert on US-China trade relations, was commissioned to write a report on the company. Serendipitously, it was published on Thursday, the day before yesterday's hearing. In it Mr. Steinbock argues that the US authorities have failed to bring forward any convincing evidence to show that Huawei is any sort of credible threat to US interests. He writes,"Today, Huawei is one of the most misunderstood companies in America. Huawei's activities in America are not a threat, but an opportunity to the United States."

Meanwhile, back at the Committee hearing, Mr. Schiff said, “Huawei and ZTE provide a wealth of opportunities for Chinese intelligence agencies to insert malicious hardware or software implants into critical telecommunications components and systems. We have heard reports about "back doors" or unexplained beaconing from the equipment sold by both companies. Our sources overseas tell us that there is a reason to question whether the companies are tied to the Chinese government and whether their equipment is as it appears.”

The response from Zhu Jinyun of ZTE almost beggars belief. He said, "What they have been calling back doors are actually software bugs. They are commonplace."

Yes, and some are more commonplace than others.


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(1) 14 September 2012 16:18:19 by Lu CHEN

A funny article in my view. US government never showed any evidence except taking the advantages of fears of people on Chinese companies to protect their own trade interest. Both Huawei and ZTE equipment are now widely deployed around the world, Fortunately because people are not all as stupid as US officials who see the only way to keep them out of US is to invent stories.
BTW, the world can also question on all US IT product sold worldwide...knowing that US firms are much more under gov influence than any other country in the wolrd. Are we all spied by uncle ben? Yes.

(2) 14 September 2012 16:26:12 by Lu CHEN

BTW, we discover on Windows OS more than 10 new bugs per day, some of them are serious opportunities to get back door openned, no one has questioned what is the reason behind?

(3) 14 September 2012 16:28:16 by Steve Robinson

So how much is Huawei investing in the UK??
Who do we think was really spying on Nortel for 10 years from Chinese IP addresses? China's response to those accusations was similar - "you can't prove it", as opposed to "we didn't do it".
In 2005, CSIS, the Canadian security agency,in seminars to hi-tech managers, estimated that Canada was losing $1B/year to industrial espionage, mostly from China.
"Allegations" that the Chinese government directly funds ZTE??? In just one example, the Chinese government offered the Philippines government a $300M grant to revamp its entire IT infrastructure as long as the equipment used was from ZTE. This un-tendered project became a major scandal and ongoing court case on the public record!
The only problem with objections to this behavior is that it is hypocritical, since most all vendors and their governments have engaged in this behavior in the past.
But now 2/3 of Canada's mobile infrastructure and much more in other parts of the world are controlled by a company that is controlled by a government that makes you pay for the bullet if you dare to disobey...

You could hardly see Mr. Hu's lips moving when Mr. Ding and Mr. Zhu were talking.

(4) 14 September 2012 18:02:07 by Don Clarke

The UK has nearly 100% DSL broadband coverage and next generation technology is already being rolled out to further boost UK competitiveness. This has been affordable, in part, because of the availability of competitive solutions from Chinese vendors. Moreover, very high calibre western scientists and engineers are employed by these companies to help develop and support these systems. And all systems, whatever the source, undergo extensive testing including security assessments by deploying carriers. Moreover the systems in question are primarily Layer 2 transport systems which cannot readily be subverted by software bombs except via the management system. And threats to telecoms management systems can originate from any source and equipment from western vendors are equally vulnerable. Hysteria on outside threats is easily orchestrated in the USA due to a relatively unsophisticated population. And the hysteria is being cheered on by incumbent US suppliers who do not want low price competition anytime soon. This is nothing more than a trade blocking initiative that suits everyone except the long suffering American consumer.