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China's Huawei Is Flush with Cash to Spy on America
April 22, 2019

Here's what we know.
by War Is Boring

Chinese tech company Huawei has been on America’s radar for some time, and not in a good way. Now, the Central Intelligence Agency has found proof that the company is funded in part by Chinese military and intelligence assets.

Huawei, which has tried to elbow its way into Europe and the United States as a legitimate tech company capable of building infrastructure at low prices, particularly in the United Kingdom, where Huawei seeks to set up a 5G network.

The allegations have caused for alarm for the UK, who are still trying to decide if a Chinese telecom company building the Isles’ 5G network is a good deal- or a massive security risk.

According to sources compiled by Forbes, the CIA has warned top British officials that “the Chinese ministry of state security -its principle security and espionage organization- had approved government funding for Huawei.”

The sources claim that “Only the most senior UK officials are believed to have seen the intelligence, which the CIA awarded a strong but not cast-iron classification of certainty.”

China has been accused of running “private” companies under government control in the past, as well as creating deliberate “backdoor” vulnerabilities in software and components, which are sold abroad for civil, private, and even defense purposes.

“We are going to have to figure out a way in a 5G world that we’re able to manage the risks in a diverse network that includes technology that we can’t trust,” US Principal Deputy Director of National Intelligence Susan Gordon said in a related conversation in March. “You have to presume a dirty network.”

The United States is asking the UK to follow their advice and prohibit Huawei from operating in their country, which is part of The Five Eyes intelligence network- an alliance comprising Australia, Canada, New Zealand, the United Kingdom, and the United States.

When pressed for comment, a Huawei spokesperson claimed the company “does not comment on unsubstantiated allegations backed up by zero evidence from anonymous sources.”

 

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Belgian cybersecurity agency finds no threat from Huawei
Reuters -
23rd Apr 2019


Belgium’s center for cybersecurity has found no evidence that telecoms equipment supplied by Huawei Technology could be used for spying.
The agency, which reports to the Belgian prime minister, had been tasked with analyzing the possible threat posed by Huawei, which supplies equipment to Belgian mobile operators Proximus, Orange Belgium and Telenet.

“Until now we have not found technical indications that point in the direction of a spying threat,” a spokesman for the agency said on 15 April. “We are not providing a final report on the matter, but are continuing to look into it.”

Global market leader Huawei is the target of a campaign by Washington which has barred it from next-generation 5G networks due to concerns over its ties to the Chinese government and says other Western countries should block its technology.

Germany last month set tougher criteria for vendors supplying telecoms network equipment, but stopped short of singling out Huawei, instead saying the same rules should apply to all vendors.

Britain publicly chastised Huawei for failing to fix long-standing security flaws in its mobile network equipment and revealed new “significant technical issues”.

Belgian cybersecurity agency finds no threat from Huawei - defenceWeb
 

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UK allows Huawei limited access to 5G network

2019-04-24

Huawei Technologies Co posted 179.7 billion yuan in revenue in the first quarter of 2019. [Photo/IC]
British Prime Minister Theresa May has given the green light to Chinese telecom giant Huawei to help build the country's 5G network, said the Daily Telegraph newspaper.

UK's National Security Council, which is chaired by May, agreed on Tuesday to allow Huawei limited access to help build parts of the network such as antennas and other "noncore” infrastructure, the report said.

Huawei is already present in Britain's existing noncore mobile network, said a Reuters report.

Previously, Huawei said it "poses no threat" and the best way to win trust is through "transparency" in response to criticism from some in the United Kingdom.

Germany, another European country, has no plans to block Huawei from participating in the buildup of its 5G ultra-high-speed internet, according to a previous China Daily report citing a Financial Times interview with the president of the Bundesnetzagentur, Germany's telecommunications regulator.

Huawei CEO Ren Zhengfei said the company will comply with European cybersecurity standards and the General Data Protection Regulation laws that govern the EU during a previous interview with CNBC.

Huawei Technologies Co said on April 22 that it posted 179.7 billion yuan ($26.8 billion) in revenue in the first quarter of 2019, a 39 percent growth on a yearly basis.

The company had signed 40 commercial contracts for 5G by April 15, and had shipped more than 70,000 5G base stations to markets around the world, said Huawei last week.

 

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May to ban Huawei from providing 'core' parts of UK 5G network
Telecoms firm will still be able to supply some technology, but decision may anger Beijing

Dan Sabbagh
Defence and security editor
Wed 24 Apr 2019


Several ministers have argued for a total ban on Huawei supplying technology for the UK’s 5G network. Photograph: Aly Song/Reuters

Theresa May has ordered that Chinese telecoms supplier Huawei be banned from supplying core parts of the future 5G mobile phone network, following a meeting of ministers on the National Security Council (NSC).

Huawei will be allowed to supply some “non-core” technology to UK phone companies, insiders said, but several ministers in the meeting on Tuesday raised concerns even about that concession, arguing instead for a total ban on the supplier.

The ban risks agitating both China and the company – which is privately owned – and comes as concern grows in the UK, US and elsewhere about whether the company’s technology poses a long-term security risk.

Britain’s intelligence agencies have taken a cautious approach to Huawei, but not called for a blanket ban. Jeremy Fleming, the director of spy agency GCHQ, argued last month that the UK needs to understand “the opportunities and threats posed” by Chinese technology.

Other countries have taken a tougher stance. Chinese companies are banned from working on critical telecoms infrastructure in the United States. Mike Pence, the vice-president, called on “all our security partners to be vigilant” in February.

The leak of the Huawei decision came just days before Philip Hammond, the chancellor, is due in China this week to attend the country’s Belt and Road investment forum in Beijing and could cause problems for him.

In February, Hammond was forced to cancel a trade meeting with vice premier Hu Chunhua after the defence secretary, Gavin Williamson, had suggested the UK might deploy a new aircraft carrier into waters claimed by China on its maiden voyage in or around 2021.

Ministers said to have raised concerns about Huawei at the NSC meeting include Jeremy Hunt, the foreign secretary, Sajid Javid, the home secretary, Gavin Williamson, the defence secretary, and Penny Mordaunt, the international development secretary.

The decision came on the eve of a speech from Fleming in which he will pledge that indications that a cyber-attack is coming from China or Russia will be shared in a matter of seconds with corporations as he seeks to demonstrate how the spy agency can benefit British business and consumers.
The GCHQ director is expected to promise to increase the agency’s collaboration with the private and public sectors to create “a whole-of-nation, automated cyber-defence system” across the UK.

He will say at a security conference in Glasgow on Wednesday that its National Cyber Security Centre (NCSC) has already “made it simple for our analysts to share time-critical, secret information”.

Intelligence the NCSC picks up – “whether it’s indicators of a nation state cyber actor, details of malware used by cybercriminals or credit cards being sold on the dark web” – will be declassified and shared promptly in the future, Fleming will add.

He is not expected to name any countries as a specific threat, but hackers from Russia, China, North Korea and Iran are generally considered by the intelligence agencies the most likely sources of danger to British cybersecurity.

Extracts from Fleming’s speech provided only limited detail as to how cyber intelligence would be passed on, but the GCHQ boss said it would be done in a matter of seconds and “just one click” based on existing systems.

The NCSC acts as a window for the spy agency’s normally secretive activities, already sharing information with British business and the public sector in an attempt to improve cybersecurity.

But the organisation has already said that, despite its efforts, the UK can expect to face what it calls a category one, or C1 cyber-attack, by the end of the decade, such as interference in elections or an attack on energy, banking or other vital infrastructure.

Serious attacks elsewhere include the Russian hacking of the Democratic party in the run-up to the 2016 US presidential election. The most serious cyber-attack on the UK so far was the WannaCry ransomware attack in May 2017 that disrupted hospitals, which was ranked as a C2 attack because there was no threat to life.

Last October, Hunt, accused Russian military intelligence of being behind a spate of “reckless and indiscriminate” cyber-attacks ordered by the Kremlin, including on the World Anti-Doping Agency.

To demonstrate progress in national cybersecurity, Fleming will claim that fraudulent attempts to obtain sensitive information using phishing emails sent via British computers have fallen markedly in the past three years.

He will tell an audience of security professionals at the start of the CyberUK conference that the proportion of such emails has dropped from 5.4% globally in 2016 – when the NCSC was launched – to less than 2% today.

A particular example of success, Fleming will say, is HMRC. “In 2016, HMRC was the 16th most phished brand globally, accounting for 1.25% of all phishing emails sent. Today it is ranked 146th and accounts for less than 0.1% of all phishing emails.”

Phishing is the attempt to fool individuals into handing over passwords, bank details or other sensitive personal information via email, typically by sending a message that falsely claims to be from an organisation.

 

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UK Defence secretary fired by prime minister after investigation into Huawei leak

Gavin Williamson: 'I was tried by kangaroo court – then sacked'

by Heather Stewart Political editor Dan Sabbagh Peter Walker
Last modified on Wed 1 May 2019 21.49 BST

Gavin Williamson.
Gavin Williamson flatly denied he was involved in the embarrassing leak and had called for a ‘thorough and formal inquiry’. Photograph: James Veysey/Rex/Shutterstock

Gavin Williamson has claimed he was the victim of a “kangaroo court,” after being dramatically sacked by Theresa May over the leak from the National Security Council of Huawei’s involvement in the UK’s 5G network.

May was told the news of what she called “compelling” evidence of Williamson’s involvement before she was due to face a grilling from the backbench liaison committee.

The defence secretary was later summoned to May’s House of Commons office where she confronted him with the evidence, offered him the opportunity to resign – and when he refused, immediately fired him.

It is understood that Williamson has acknowledged speaking to the Daily Telegraph’s Steven Swinford on the phone for 11 minutes on the day of the leak.

But he denies that he revealed what had happened at the national security council when he was asked by the reporter about the Huawei discussion.

In what rapidly escalated into an extraordinary public spat, the ex-minister continued to maintain that the leak came from outside his team. “I think the prime minister has made a serious mistake,” a source said.

Formerly a staunch May loyalist who served the prime minister as her chief whip, Williamson later issued a strenuous public denial. He told Sky News the leak inquiry, overseen by cabinet secretary Sir Mark Sedwill, had been “a witch hunt from the start,” and had taken place, “in a kangaroo court with a summary execution”.

May was determined to reassert her authority over her squabbling ministers, whom Williamson’s successor as chief whip, Julian Smith, recently described as the “worst example of ill-discipline in cabinet in British political history”.

The investigation was launched by Sedwill after a backlash from ministers and the security services, who warned of the risks of allowing a culture of leaks to continue with impunity.

Those anxieties were amplified in the case of the Huawei story, which was regarded as both economically and politically sensitive.
Sedwill, who unusually combines the job of cabinet secretary with that of May’s national security adviser, has insisted on the need for a tough line against leaks.

On Wednesday evening, No 10 published a blunt letter from May to Williamson, in which she accused him of failing to engage fully with the leak investigation.

The prime minister said: “It has been conducted fairly, with the full cooperation of other NSC attendees. They have answered all questions, engaged properly, provided as much information as possible to assist with the investigation, and encouraged their staff to do the same. Your conduct has not been of the same standard as others.”

“In our meeting, I put to you the latest information from the investigation, which provides compelling evidence suggesting your responsibility for the unauthorised disclosure. No other, credible version of events to explain this leak has been identified,” she added.

Williamson later published his reply, saying that he believed a “thorough and formal inquiry,” would have vindicated him.

He said he had declined May’s offer to resign, believing it would have appeared to be an acceptance that he or his staff had been responsible.

Williamson will be replaced as defence secretary by the Brexiter Penny Mordaunt, widely regarded as a potential leadership contender, who previously served as international development secretary.

Mordaunt will retain responsibility for women and equalities in her new role. Prisons minister Rory Stewart, a cerebral former diplomat, will become the new international development secretary.

The Daily Telegraph obtained details of discussions at the NSC, including the claim that the prime minister had overruled several ministers, to allow the controversial Chinese firm to be involved in building “noncore” parts of the 5G network.

Williamson was among those reported to have raised concerns, together with the home secretary, Sajid Javid, the foreign secretary, Jeremy Hunt, the international trade secretary, Liam Fox, and Mordaunt.

All of them subsequently became suspects in the most serious Whitehall leak inquiry in living memory. With Williamson now identified as the culprit, Downing Street said the leak inquiry had been shut down.

“The prime minister thanks all members of the National Security Council for their full cooperation and candour during the investigation and considers the matter closed,” it said.

Hunt, who was travelling between Nigeria and Ethiopia when the dramatic announcement was made, said, “on a personal level I am very sorry for Gavin’s sake for what has happened but given the gravity of the situation there was no other alternative outcome”.

The Liberal Democrat leader, Vince Cable, and the shadow defence secretary, Nia Griffith, said that if Williamson has been found to have leaked the story, he should face prosecution under the Official Secrets Act.

Griffith said: “the Tories are in chaos and incapable of sorting out their own crisis. Conservative infighting has undermined the basic functioning of government, and has now potentially put security at risk. The police must urgently investigate.”

Any criminal investigation would be carried out by Scotland Yard’s counter-terrorism command. As of Wednesday evening the Met had not opened a criminal inquiry and sources added they had not received any allegation from the Cabinet Office, the government department most likely to refer the leak to the police.

May’s spokesman said: “It’s not for the government to determine prosecutions, but the prime minister has said, from her point of view, that she considers the matter to be closed.”

May’s spokesman said the inquiry “was constituted in order to ensure the integrity of the National Security Council in general is upheld and that, vitally, participants can continue to hold full confidence in its operation.”

Those attending included senior defence and security officials, the spokesman said. “It’s very important that they can provide information in a very candid way and in total confidence that that information will not be disclosed. If they do not have that confidence you risk undermining that decision-making process, which in turn potentially harms national security.”

Williamson was closely involved in negotiating the confidence and supply agreement with the Democratic Unionist party, and had recently sought to thaw relations with the DUP’s senior members at Westminster in a bid to secure their support for the prime minister’s rejected Brexit deal.

He was promoted from chief whip after Michael Fallon was forced to leave the cabinet after admitting his conduct had “fallen short” over sexual harassment claims.

Williamson, who was made defence secretary 18 months ago, had been one of those in the cabinet most sceptical about the necessity of engaging in Brexit talks with Labour. He preferred to focus on winning back the support of the DUP, with whom he negotiated the confidence and supply agreement on May’s behalf after she lost her majority at the 2017 general election.

Remainers welcomed the arrival of Stewart to the top table, at a critical time in cross-party Brexit talks, when the government appears to be seriously contemplating a compromise.

“Rory will be good for balance,” said one cabinet source. The Penrith MP, who recently said he believed he would make a good prime minister, has been a prominent public defender of May’s Brexit deal.

 

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Fired UK defense chief denies tie to Huawei leak
By: The Associated Press
02.May.2019

LONDON — Gavin Williamson, the U.K. defense chief fired for leaking security information, has denied any involvement in the leak from a secret government meeting about the Chinese telecommunications firm Huawei.

In a letter posted on his Twitter account, Williamson says he was confident that a formal and thorough inquiry would vindicate him. He says he appreciated being offered a chance to resign but "to resign would have been to accept that I, my civil servants, my military advisers or my staff were responsible: this was not the case."

Earlier Wednesday, British Prime Minister Theresa May said in a letter to Williamson that she “can no longer have full confidence” in the defense minister in the wake of the investigation. In the letter released by her office, May told Williamson that there was “compelling evidence” suggesting his “responsibility for the unauthorized disclosure” from the National Security Council.

Penny Mordaunt, the international development secretary, has been appointed as Williamson's replacement. She becomes the first woman to hold the post.

An investigation was launched last week after British newspapers reported that the security council, which meets in private, had agreed to let Huawei participate in some aspects of Britain’s new 5G wireless communications network. The government insists no decision has been made about Huawei.

Fired UK defense chief denies tie to Huawei leak
 

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UK opposition leaders called for a criminal investigation into Huawei leak
By: Andrew Chuter and Jill Lawless, The Associated Press
03.May.2019

Britain's then-Defence Minister Gavin Williamson stands in the main chamber during a 2018 gathering of NATO defense ministers at NATO headquarters in Brussels. (Francisco Seco/AP)

LONDON — Britain’s former defense secretary ferociously denied allegations that he leaked details from private government discussions about the Chinese telecommunications company Huawei, as opposition leaders called Thursday for a criminal investigation into the scandal.

Meanwhile, military analysts expect little fallout from his departure.

Gavin Williamson was fired from the government’s top defense job Wednesday by Prime Minister Theresa May, who said she had seen “compelling evidence” that he was behind media reports that the government had agreed — against the advice of the United States — to let Huawei participate in some aspects of Britain’s new 5G wireless communications network.

It was the first time in decades that a senior minister has been fired over leaks of sensitive information. Penny Mordaunt was quickly named as his replacement.

Williamson hit back, telling Sky News that the investigation had been a “witch hunt” and claiming he was the victim of a “kangaroo court with a summary execution.”

"I swear on my children's lives I did not" leak, he told the Daily Mail.

At 42, Williamson was Britain’s youngest-ever defense secretary, but had raised hackles among some colleagues with his ambition and occasional gaffes. After former spy Sergei Skripal was poisoned with a nerve agent in Salisbury — an attack that Britain blames on Moscow — Williamson said Russia should “go away and should shut up.”

Critics said that sounded more like playground language than diplomatic rhetoric. Another interesting tidbit: Williamson kept a large poisonous spider as a pet in his office in Parliament when he was Tory chief whip.

That said, Williamson also fought in the Ministry of Defence’s corner against the Treasury and others when it came to trying to secure more funding for the cash-strapped military. He secured an extra £1.8 billion (U.S. $2.4 billion) last year, and was embroiled in a battle to win a significant budget increase in funding for the next three years as part of the governmentwide comprehensive spending review due later this year.

“Williamson’s single merit in my view was that he fought for defense in a manner that few if any of his recent successors had,” said Howard Wheeldon, a defense analyst in the U.K. and consultant at Wheeldon Strategic. “He deserves much credit for that albeit that his lack of understanding for diplomacy and poor communication skills were a major weakness.”

“On the plus side, Penny Mordaunt, his successor, does at least bring some knowledge with her from her time as a defense minister under David Cameron,” Wheeldon added. “As member of Parliament for Portsmouth, she also brings useful Royal Navy-based maritime knowledge and skills to the job. We should welcome that.”

Analysts also expect Mordaunt to continue what Williamson began in driving defense funding, perhaps with greater success in the long term.

“New Secretary of Defence Penny Mordaunt will have a tough job to get more funding for her department, but any failure to do so won’t be for lack of willingness or dedication on her part,” said Alex Ashbourne-Walmsley, a defense consultant at ASC consultancy in London. “Regardless of the incumbent of the top job, defense faces a tough challenge because it is not seen as a ‘vote winner’ by many politicians or the wider public. But it is virtually certain that the new secretary of defense will have a better relationship with the prime minister than the outgoing one, and this can only be good for defense.”

Allies of Williamson rallied to his support Thursday, demanding that May’s government publish the evidence against him.

"Natural justice requires that the evidence is produced so that his reputation can be salvaged or utterly destroyed," said Conservative lawmaker Desmond Swayne.

Williamson was named in a Daily Telegraph report last week as being one of several ministers alleged to have opposed letting Huawei work on Britain's 5G infrastructure.

The United States has been lobbying allies, including Britain, to exclude Huawei from all 5G networks, claiming that the Chinese government can force the company to give it backdoor access to data on its networks.

Opposition Labour Party deputy leader Tom Watson said the leak from a top-secret meeting of Britain’s National Security Council was “indicative of the malaise and sickness at the heart of this ailing government.” He called for a criminal investigation into leaks from the security council, which is made up of senior ministers who receive briefings from military and intelligence chiefs.

Cabinet Office Minister David Lidington said the government did not plan to refer the matter to police. “But we would of course cooperate fully should the police themselves consider that an investigation were necessary,” he told lawmakers.

Metropolitan Police chief Cressida Dick, however, said the force would only investigate if it received a complaint.

Williamson is the second secretary of state for defense in a row to leave in controversial circumstances. His predecessor, Michael Fallon, departed after being accused of inappropriate behavior toward women. ‎Mordaunt was expected to be selected, but the job unexpectedly went to Williamson despite him having no ministerial experience.

“To say that Gavin Williamson was liked by the military would be an overstatement,” Wheeldon said. “He was appreciated by them for the manner in which he stood up to the Treasury, Cabinet Office and National Security Council, but that is where it started and ended. For the rest of the time he was merely tolerated.”

 

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U.S. says Huawei lawyer's prior work at Justice Department poses conflicts
Karen Freifeld

May 11, 2019

(Reuters) - Huawei Technologies Co Ltd lawyer James Cole’s prior work at the U.S. Department of Justice created conflicts of interest that should disqualify him from defending the Chinese company in a case of alleged bank fraud and sanctions violations, U.S. prosecutors said in a filing on Friday.

Last week, the prosecutors filed a motion to disqualify Cole, who served as deputy attorney general, the No. 2 official at the Justice Department, between 2011 and 2015. But the motion was sealed and classified, and prosecutors did not make public the reasons behind the move.

“There is a ‘substantial risk’ that Cole could use ‘confidential factual information’ obtained while serving as DAG to ‘materially advance’ Huawei’s current defense strategy,” the prosecutors said, according to a redacted copy of the U.S. motion filed on Friday in U.S. District Court in Brooklyn, New York.

Cole was not immediately available for comment. But in a statement Huawei said the U.S. wants to strip the company of counsel of its choice while concealing the facts on why.

“The Justice Department’s motion to disqualify Jim Cole makes a mockery of the adversarial process,” the statement said.

“The government has known since 2017 that Mr. Cole represented Huawei in this matter. Now, two years later, not only does the Justice Department seek to strip Huawei of counsel of its choice, but it does so while concealing from Huawei and the public virtually all of the facts on which it bases its motion.”

The case against Huawei, the world’s largest telecommunications equipment maker, has ratcheted up tensions between Beijing and Washington as the world’s top two economic powers try to negotiate a trade deal.

The company’s chief financial officer, Meng Wanzhou, daughter of Huawei’s founder, was arrested in Canada in December at the behest of U.S. authorities for her role in the alleged fraud. Meng has said she is innocent and is fighting extradition.

In Friday’s filing, U.S. prosecutors said Cole’s representation of Huawei poses “irresolvable conflicts of interest.”

As deputy attorney general, Cole “personally supervised and participated in aspects of” an investigation that caused the conflicts, the prosecutors said in the filing.

Details of that probe were redacted, but the filing said the Huawei prosecution is “substantially related” to the matter.

The prosecutors said Cole possessed information from his government work related to his Huawei representation that he could not reveal, and this created the risk he would rely on the information in breach his duties to the Justice Department.

Secondly, because the nature of the conflict is classified, the prosecutors said, Huawei cannot obtain enough information for them to waive any conflict.

The case against Huawei and Meng accuses them of conspiring to defraud HSBC Holdings Plc and other banks by misrepresenting Huawei’s relationship with Skycom Tech Co Ltd, a company that operated in Iran, putting the banks at risk of penalties for processing transactions that violated U.S. sanctions laws.

Huawei has said Skycom was a local business partner. The United States maintains it was an unofficial subsidiary used to conceal Huawei’s Iran business.

U.S. authorities claim Huawei used Skycom to obtain embargoed U.S. goods, technology and services in Iran, and to move money via the international banking system.

Last month, prosecutors said they planned to use information about Huawei in the case that was obtained through secret surveillance.

Cole entered a not guilty plea on behalf of Huawei and its U.S. subsidiary in Brooklyn on March 14.

Reporting by Karen Freifeld; additional reporting by Brendan Pierson; editing by Bill Rigby, Leslie Adler, Cynthia Osterman and Alexandra Hudson

 

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Huawei is not controlled by China, executive says
Reuters
May 14, 2019

  • “There is no obligation on Huwaei’s part to cooperate with the government in the way in which the Americans are indicating,” a Huawei official said
LONDON: Huawei is a private company that is not controlled by the Chinese government and would refuse to hand over information to Beijing although no such request has been made, the firm’s Vice President of Western Europe said on Tuesday.

The United States has told allies not to use Huawei’s technology to build new 5G telecommunications networks because of concerns it could be a vehicle for Chinese spying, an accusation the firm has denied.

“There is no obligation on Huwaei’s part to cooperate with the government in the way in which the Americans are indicating,” Tim Watkins told BBC radio.

“There is no mandate in (China’s national intelligence) law that we have to had over customer data or intelligence that we do not wish to hand over or we think should be sensitive.”

Watkins added that the code used in their products was safe and secure.

 

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Exclusive: Trump expected to sign order paving way for U.S. telecoms ban on Huawei
May 15, 2019
David Shepardson

WASHINGTON (Reuters) - President Donald Trump is expected to sign an executive order this week barring U.S. companies from using telecommunications equipment made by firms posing a national security risk, paving the way for a ban on doing business with China’s Huawei, three U.S. officials familiar with the plan told Reuters.

The order, which will not name specific countries or companies, has been under consideration for more than a year but has repeatedly been delayed, the sources said, asking not to be named because the preparations remain confidential. It could be delayed again, they said.

The executive order would invoke the International Emergency Economic Powers Act, which gives the president the authority to regulate commerce in response to a national emergency that threatens the United States. The order will direct the Commerce Department, working with other government agencies, to draw up a plan for enforcement, the sources said.

If signed, the executive order would come at a delicate time in relations between China and the United States as the world’s two largest economies ratchet up tariffs in a battle over what U.S. officials call China’s unfair trade practices.

Washington believes equipment made by Huawei Technologies Co Ltd, the world’s third largest smartphone maker, could be used by the Chinese state to spy. Huawei, which has repeatedly denied the allegations, did not immediately comment.


The White House and Commerce Department declined to comment.

Chinese Foreign Ministry spokesman Geng Shuang said during a daily briefing in Beijing on Wednesday that the United States had been “abusing its national power” to “deliberately smear” and suppress certain Chinese companies.

“This is not honorable, nor is it just,” he said.

“We urge the United States to stop using the excuse of security issues to unreasonably suppress Chinese companies, and provide a fair, just, non-discriminatory environment for Chinese companies carrying out normal investments and operations in the United States.”

The United States has been actively pushing other countries not to use Huawei’s equipment in next-generation 5G networks that it calls “untrustworthy.” In August, Trump signed a bill that barred the U.S. government itself from using equipment from Huawei and another Chinese provider, ZTE Corp.

In January, U.S. prosecutors charged two Huawei units in Washington state saying they conspired to steal T-Mobile US Inc trade secrets, and also charged Huawei and its chief financial officer with bank and wire fraud on allegations that the company violated sanctions against Iran.

The Federal Communications Commission in April 2018 voted to advance a proposal to bar the use of funds from a $9 billion government fund to buy equipment or services from companies that pose a security threat to U.S. communications networks.

Federal Communications Commission chairman Ajit Pai said last week he was waiting for the Commerce Department to express views on how to “define the list of companies” that would be prohibited under the FCC proposal.

The FCC voted unanimously to deny China Mobile Ltd’s bid to provide U.S. telecommunications services last week and said it was reviewing similar prior approvals held by China Unicom and China Telecom Corp.

The issue has taken on new urgency as U.S. wireless carriers look for partners as they rollout 5G networks.

While the big wireless companies have already cut ties with Huawei, small rural carriers continue to rely on both Huawei and ZTE switches and other equipment because they tend to be cheaper.

The Rural Wireless Association, which represents carriers with fewer than 100,000 subscribers, estimated that 25 percent of its members had Huawei or ZTE equipment in their networks, it said in an FCC filing in December.

At a hearing Tuesday, U.S. senators raised the alarm about allies using Chinese equipment in 5G networks.

The Wall Street Journal first reported in May 2018 that the executive order was under review. Reuters reported in December that Trump was still considering issuing the order and other media reported in February that the order was imminent.

Reporting by David Shepardson, additional reporting by Chris Bing and Diane Bartz, Michael Martina in BEIJING; Editing by Sonya Hepinstall and Nick Macfie

 

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Donald Trump ramps up battle against Chinese telecom giant Huawei
AFP
May 16, 2019

  • ‘This administration will do what it takes to keep America safe and prosperous and to protect America from foreign adversaries’
  • US officials have been trying to persuade allies not to allow China a role in building next-generation 5G mobile networks
WASHINGTON: Donald Trump stepped up his battle against Huawei Wednesday, effectively barring the Chinese telecom giant from the US market and adding it to a blacklist restricting US sales to the firm amid an escalating trade war with Beijing.

An executive order signed by the president prohibits purchase or use of equipment from companies that pose “an unacceptable risk to the national security of the United States or the security and safety of United States persons.”

“This administration will do what it takes to keep America safe and prosperous and to protect America from foreign adversaries,” White House spokeswoman Sarah Sanders said.

A senior White House official insisted that no particular country or company was targeted in the “company- and country-agnostic” declaration.
However, the measure — announced just as a US-China trade war deepens — is widely seen as prompted by already deep concerns over an alleged spying threat from Huawei.

“Restricting Huawei from doing business in the US will not make the US more secure or stronger; instead, this will only serve to limit the US to inferior yet more expensive alternatives,” Huawei said in a statement.

“In addition, unreasonable restrictions will infringe upon Huawei’s rights and raise other serious legal issues,” it said.

The Commerce Department followed up with a more direct hit on the tech giant, adding it to a blacklist that will make it much harder for the firm to use crucial US components in its array of phones, telecom gear, databases and other electronics.

Commerce’s Bureau of Industry and Security (BIS) said it would add Huawei and its affiliates to its “entity list” over alleged Iran sanctions violations.

The listing requires US firms to get a license from BIS for the sale or transfer of American technology to a company or person on the list.

“A license may be denied if the sale or transfer would harm US national security or foreign policy interests,” a Commerce Department statement said.

“This will prevent American technology from being used by foreign-owned entities in ways that potentially undermine US national security or foreign policy interests,” Commerce Secretary Wilbur Ross said.

Huawei did not immediately comment on the blacklisting.

US officials have been trying to persuade allies not to allow China a role in building next-generation 5G mobile networks, warning that doing so would result in restrictions on sharing of information with the United States.

US government agencies are already banned from buying equipment from Huawei, a rapidly expanding leader in the 5G technology.

Beijing was already furious about US moves to limit use of equipment from Chinese firms including Huawei and another company ZTE.
“For some time, the United States has abused its national power to deliberately discredit and suppress by any means specific Chinese enterprises, which is neither honorable nor fair,” foreign ministry spokesman Geng Shuang said ahead of Trump’s executive order.

“We urge the US side to stop the unreasonable suppression of Chinese enterprises on the pretext of national security and to provide a fair and non-discriminatory environment,” the spokesman said.

The US portrayal of Huawei as a national security danger dovetails with Washington’s wider complaint that Chinese companies are unfairly protected by the state, making fair trade impossible.

The move also threatens to further flare trade tensions just days after the US more than doubled tariffs on $200 billion of Chinese imports, which was met with a retaliation in kind by Beijing.

Washington and some European allies fear that Chinese economic expansion, particularly in the Belt and Road global infrastructure program, is part of a bid for geopolitical dominance.

Amid those worries, Huawei is portrayed as a Trojan horse that could leverage its ultra-rapid telecoms technology into a Chinese government spy network reaching deep into American society and business fields.

“Chinese telecom companies like Huawei effectively serve as an intelligence-gathering arm of the Chinese Communist Party,” Senator Cotton said after Trump’s emergency declaration.

“The administration is right to restrict the use of their products.”

So far, the US campaign to lobby other countries to turn their backs on Huawei has had mixed results.

Even Britain, one of Washington’s closest allies, is mired in debate over whether to follow the US lead or allow Huawei to develop the 5G networks.

On Tuesday, the chairman of the company, Liang Hua, visited London to insist that Huawei will “commit ourselves, to commit our equipment to meeting the no-spy, no back-door standards.”

 

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Trump wants to drag US big firms out of China back to the US. Trump issues a $50 billion adjustment, China did a counter move by apply heavy duty on US import.
 

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Trump wants to drag US big firms out of China back to the US. Trump issues a $50 billion adjustment, China did a counter move by apply heavy duty on US import.
They have been caught snoozing, now playing catch up.
 

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Economic sanctions on Huawei could backfire on US firms
By FRANK BAJAK
22 minutes ago
17 May 2019

The Trump administration’s decision to restrict all U.S. technology sales to Chinese telecommunications powerhouse Huawei for national security reasons doesn’t just up the ante in the China trade war.

It’s also bound to hurt U.S. suppliers and accelerate Beijing’s drive toward greater technological independence.

The White House issued an executive order Wednesday apparently aimed at banning Huawei’s equipment from U.S. telecom networks and information infrastructure. It then announced a more potent and immediate sanction that subjects the Chinese company to strict export controls.

The order took effect Thursday and requires U.S. government approval for all purchases of U.S. microchips, software and other components globally by Huawei and 68 affiliated businesses. Huawei says that amounted to $11 billion in goods last year.

Commerce Secretary Wilbur Ross said Thursday in an interview with Bloomberg TV that the sanctions are “not really a part of the trade negotiation” but added that they could be reversed should Huawei no longer be deemed “a significant danger” to U.S. national security.

The U.S. government has long insisted that equipment from suppliers including Huawei poses an espionage threat because it is legally beholden to China’s ruling party. But U.S. officials have presented no evidence of any Huawei equipment serving as intentional conduits for espionage by Beijing.

About a third of Huawei’s suppliers are American including chip makers Broadcom, Qualcomm and Intel. Ironically, many of the computer chips, memory and other components it gets from U.S. companies are made in China, said Roger Entner, founder of telecom research firm Recon Analytics.

The company’s flagship smartphone, the Mate 20 Pro , includes chips made by Skyworks Solutions Inc. and a wireless receiver made by Integrated Device Technologies, both U.S. companies.

Neither company responded immediately to requests for comment. A Qualcomm spokeswoman said the company had no comment.

Kevin Wolf, who was assistant secretary of commerce for export administration under President Barack Obama, described the impact of the U.S. sanctions as “massive.”

He said they would have “ripple effects through the entire global telecommunications network.” If Huawei “can’t get the widget or the part or the software update to keep functioning, then those systems go down,” said Wolf, a partner at the Washington law firm Akin Gump.

Huawei issued a statement Thursday calling the move “in no one’s interest.”

“It will do significant economic harm to the American companies with which Huawei does business, affect tens of thousands of American jobs, and disrupt the current collaboration and mutual trust that exist on the global supply chain,” the company said.

Huawei is already the biggest global supplier of networking equipment, and Entner said it is poised to overtake Samsung as the No. 1 smartphone manufacturer. He said Huawei is now apt to move toward making all components domestically. China already has a policy seeking technological independence by 2025 and Entner said Huawei has its own mobile processors and chips.

The restrictions would also bar Google from licensing value-added components and services of its Android operating system, which Google gives away for free to use on Huawei and other smartphones.

Entner said Huawei would likely be forced to ship its smartphones outside China with a stripped-down Android version used inside China. That package is missing Google’s maps software and its Play Store, from which users buy and download apps, meaning Google could lose revenue.

Google officials did not immediately respond to a request for comment.

While the export controls could keep U.S. technologies away from Huawei, the separate executive order could effectively ban imports of Huawei products into the U.S. That order declares a national economic emergency that empowers the government to ban the technology and services of “foreign adversaries” deemed to pose “unacceptable risks” to national security — including from cyberespionage and sabotage.

Huawei vehemently denies involvement in Chinese spying and said blocking it from doing business in the United States would hamper the introduction of next-generation 5G communications technology. Huawei is a world leader in 5G, and Entner said Huawei’s 5G devices use domestically produced technology, meaning they don’t need U.S. components.

Huawei said the measure would instead limit U.S. companies and consumers to “inferior yet more expensive alternatives.”

European nations have resisted U.S. entreaties to ban the company’s equipment from their 5G networks. The leaders of Germany and the Netherlands made it clear Thursday that they don’t plan to change their stance in light of the newly announced U.S. measures.

All major U.S. wireless carriers and internet providers swore off Chinese-made equipment years ago, following a 2012 report by the House Intelligence Committee that said Huawei and ZTE, China’s No. 2 telecoms equipment company, were enablers of Beijing-directed espionage.

Last year, Trump signed a bill that barred the U.S. government and its contractors from using equipment from the Chinese suppliers.

Huawei’s smartphones are virtually nonexistent in the U.S., and last week the FCC rejected a Chinese phone company’s bid to provide domestic U.S. service .

Huawei says it supplies 45 of the world’s top 50 telecommunications companies. But only about 2 percent of telecom equipment purchased by North American carriers in 2017 was made by Huawei.

The domestic economic impact will be restricted mostly to small rural carriers for whom Huawei equipment has been attractive because of its lower costs. That could make it more difficult to expand access to speedy internet in rural areas.

Many of those carriers also provide roaming coverage for the major wireless companies.
___
Associated Press writers Tali Arbel in New York and Joe McDonald in Beijing contributed to this report.

 

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AP Explains: US sanctions on Huawei bite, but who gets hurt?
By FRANK BAJAK and MICHAEL LIEDTKE
21 May 2019

Trump administration sanctions against Huawei have begun to bite even though their dimensions remain unclear. U.S. companies that supply the Chinese tech powerhouse with computer chips saw their stock prices slump Monday, and Huawei faces decimated smartphone sales with the anticipated loss of Google’s popular software and services.

The U.S. move escalates trade-war tensions with Beijing, but also risks making China more self-sufficient over time.

Here’s a look at what’s behind the dispute and what it means.

___
WHAT’S THIS ABOUT?
Last week, the U.S. Commerce Department said it would place Huawei on the so-called Entity List, effectively barring U.S. firms from selling it technology without government approval.

Google said it would continue to support existing Huawei smartphones but future devices will not have its flagship apps and services, including maps, Gmail and search. Only basic services would be available, making Huawei phones less desirable. Separately, Huawei is the world’s leading provider of networking equipment, but it relies on U.S. components including computer chips. About a third of Huawei’s suppliers are American.
___
WHY PUNISH HUAWEI?
The U.S. defense and intelligence communities have long accused Huawei of being an untrustworthy agent of Beijing’s repressive rulers — though without providing evidence. The U.S. government’s sanctions are widely seen as a means of pressuring reluctant allies in Europe to exclude Huawei equipment from their next-generation wireless networks. Washington says it’s a question of national security and punishment of Huawei for skirting sanctions against Iran, but the backdrop is a struggle for economic and technological dominance.

The politics of President Donald Trump’s escalating tit-for-tat trade war have co-opted a longstanding policy goal of stemming state-backed Chinese cyber theft of trade and military secrets. Commerce Secretary Wilbur Ross said last week that the sanctions on Huawei have nothing to do with the trade war and could be revoked if Huawei’s behavior were to change.
___
THE SANCTIONS’ BITE
Analysts predict consumers will abandon Huawei for other smartphone makers if Huawei can only use a stripped-down version of Android. Huawei, now the No. 2 smartphone supplier, could fall behind Apple to third place. Google could seek exemptions, but would not comment on whether it planned to do so.
___
WHO USES HUAWEI ANYWAY?

While most consumers in the U.S. don’t even know how to pronounce Huawei (it’s “HWA-way”), its brand is well known in most of the rest of the world, where people have been buying its smartphones in droves.

Huawei stealthily became an industry star by plowing into new markets, developing a lineup of phones that offer affordable options for low-income households and luxury models that are siphoning upper-crust sales from Apple and Samsung in China and Europe. About 13 percent of its phones are now sold in Europe, estimates Gartner analyst Annette Zimmermann.

That formula helped Huawei establish itself as the world’s second-largest seller of smartphones during the first three months of this year, according to the research firm IDC. Huawei shipped 59 million smartphones in the January-March period, nearly 23 million more than Apple.
___
RIPPLE EFFECTS
The U.S. ban could have unwelcome ripple effects in the U.S., given how much technology Huawei buys from U.S. companies, especially from makers of the microprocessors that go into smartphones, computers, internet networking gear and other gadgetry.

The list of chip companies expected to be hit hardest includes Micron Technologies, Qualcomm, Qorvo and Skyworks Solutions, which all have listed Huawei as a major customer in their annual reports. Others likely to suffer are Xilinx, Broadcom and Texas Instruments, according to industry analysts.

Being cut off from Huawei will also compound the pain the chip sector is already experiencing from the Trump administration’s rising China tariffs.
The Commerce Department on Monday announced an expected grace period of 90 days or more, easing the immediate hit on U.S. suppliers. It can extend that stay, and also has the option of issuing exemptions for especially hard-hit companies.

Much could depend on whether countries including France, Germany, the U.K. and the Netherlands continue to refuse to completely exclude Huawei equipment from their wireless networks.

The grace period allows U.S. providers to alert Huawei to security vulnerabilities and engage the Chinese company in research on standards for next-generation 5G wireless networks.

It also gives operators of U.S. rural broadband networks that use Huawei routers time to switch them out.
___
COULD THIS BACKFIRE?
Huawei is already the biggest global supplier of networking equipment, and is now likely to move toward making all components domestically. China already has a policy seeking technological independence by 2025.

U.S. tech companies, facing a drop in sales, could respond with layoffs. More than 52,000 technology jobs in the U.S. are directly tied to China exports, according to the Computing Technology Industry Association, a trade group also known as CompTIA.
___
WHAT ABOUT HARM TO GOOGLE?
Google may lose some licensing fees and opportunities to show ads on Huawei phones, but it still will probably be a financial hiccup for Google and its corporate parent, Alphabet Inc., which is expected to generate $160 billion in revenue this year.
___
THE APPLE EFFECT
In theory, Huawei’s losses could translate into gains for both Samsung and Apple at a time both of those companies are trying to reverse a sharp decline in smartphone sales.

But Apple also stands to be hurt if China decides to target it in retaliation. Apple is particularly vulnerable because most iPhones are assembled in China. The Chinese government, for example could block crucial shipments to the factories assembling iPhones or take other measures that disrupt the supply chain.

Any retaliatory move from China could come on top of a looming increase on tariffs by the U.S. that would hit the iPhone, forcing Apple to raise prices or reduce profits.

What’s more, the escalating trade war may trigger a backlash among Chinese consumers against U.S. products, including the iPhone.
“Beijing could stoke nationalist sentiment over the treatment of Huawei, which could result in protests against major U.S. technology brands,” CompTIA warned.

 

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