Congress: Fear Chinese Networking Companies! But Ignore That China Makes All Our Networking Equipment!

from the where's-the-smoking-gun? dept

For years, there have been reports or whispers about how Chinese networking giant, Huawei, might not be trustworthy. Specifically, people talked about how China might hide trojan horses in the equipment for economic espionage or even cyberattack reasons. These rumors got so loud that Huawei last year flat out told the US government to investigate it and come to its own conclusion. Well, the House Intelligence Committee has done exactly that... and Huawei is not pleased (pdf). Despite the investigation coming at its own request, with its promises to be as open as it could be, the report slams Huawei and another company ZTE, and basically says "don't trust these companies."

Huawei has hit back hard, claiming that the report is "libel" and "utterly lacking in substance." They also note that it appears to just be political, calling it "an exercise in China-bashing and misguided protectionism." Indeed, some commentators are noting that this has all the indications of blatant protectionism, rather than a legitimate concern, with some pointing out that the Intelligence Committee seems to consistently ask Huawei to prove a negative and then bashes the company for failing.
But again and again, throughout the report, the pattern emerges: an allegation is made, Huawei denies it, without providing evidence deemed detailed enough to substantiate the denial, and the Committee is unimpressed.
As that writeup notes, Huawei has not been found guilty, but is repeatedly asked to prove its innocence, and being unable to prove conclusively that it hasn't done anything, the Intelligence Committee insists that the threat is just too great.

It is, of course, quite possible that something nefarious is going on with Huawei and ZTE. But there doesn't appear to be any detals in the report that actually proves anything. Instead, it's all just baseless allegations, followed by Huawei (and ZTE) not providing enough details to convince investigators that they're innocent. Given Congress' history of grandstanding, this certainly raises some questions.
But... an even bigger issue is that the whole focus on Huawei may be kind of silly. Yes, it's a Chinese company, but as others have noted, basically all of our electronics products are made in China, and if that country really wanted to do something questionable, why not sneak in trojan horses there as well?
One fundamental failure of all this official hand-wringing is that it neglects the fact that many if not most of the components, with the exception of certain higher-value chips like those from Intel, are manufactured in China. Cisco Systems and Juniper Networks in the U.S., Alcatel-Lucent in France and Ericsson in Sweden, all use Chinese-made parts and carry out at least some portion of the final assembly of their equipment in China.
Furthermore, that same report notes that, if this is just kicking off a trade war between the US and China over telco products, the US companies may get hurt a lot more than the Chinese:
Might China respond with its own restrictions against U.S. telecom firms like Cisco and Juniper? Is this the first shot of a telecom trade war? We’ll see.

If that happens, expect Cisco to be hurt more than Huawei. U.S. sales account for only 4 percent of its overall revenue, whereas Cisco’s operations in Asia, the Pacific Rim and China account for more than 16 percent, and China was its second fastest-growing market in that region after Japan.
Yes, it's entirely possible that Huawei and ZTE are doing something bad -- but you'd think any report claiming that would have a lot more evidence than what's in this report. Of course, considering it's by the same FUD-spewing folks responsible for CISPA, perhaps we should get used to the fact that FUD without evidence is their standard operating procedure.


Reader Comments (rss)

(Flattened / Threaded)

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    Ninja (profile), Oct 9th, 2012 @ 4:35am

    Get Hu/ZTE equipment and proof test for suspicious activity. Shouldn't be hard. But that would require dealing with facts and reality, these people don't seem to be good with that.

     

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      Designerfx (profile), Oct 9th, 2012 @ 7:09am

      Re:

      It amazes me that anyone would let a house committee make such blatant statements of protectionism without thinking about any form of the end result. Basically we are harming US companies by trying to attack overseas competitors. Do they not even understand the most basic aspects of intelligence?

      This can do more harm to the US than it can to China, just by creating trade tension. How does anyone in these committees remain there?

       

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    Anonymous Coward, Oct 9th, 2012 @ 5:34am

    America's most diagnosed condition: Nationalistic narcissistic douche-baggary


    Huawei has it. He is not alone.

     

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    Anonymous Coward, Oct 9th, 2012 @ 5:42am

    Of course we can trust the conclusions of a House Investigative committee made with no proof of guilt they assume!

    After all, it worked REALLY well for that senator Joseph McCarthy and his house panel's communist witch hunts! And EVERYONE agrees that all those people got fair 'trials', and that 100% of the people Joseph McCarthy called before his House of Unamerican activities committee were guilty of being evil communists trying to undermine American Capitalism!

    After all, what's the worst that can happen? A few hundred thousand people get their lives ruined for something they weren't guilty of? That sounds pretty low to me considering there's over 300 million people living in the country who could be 'harmed' by Huawei & those evil communists McCarthy was after!

     

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      H. Nelson, Oct 10th, 2012 @ 7:31am

      Re:

      Ironic that you bring McCarthy up. Those "innocent" people were later proven not so innocent. Communists are not touchy-feelly "lets sing kum-ba-ya" kind of folks. Fact- Lenin and Stalin starved 20+ million Ukrainians. Fact- Mao liquidated (killed/murdered) millions of his countrymen to bring about the communist political system in China. What makes you think they are any kinder than they were in 1947? Where's the "harm"? Their track record is an shining example.

      The dragon never sleeps and is constantly looking for opportunities to gain an advantage. You had best wake up and smell the coffee.

       

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        TasMot (profile), Oct 10th, 2012 @ 8:45am

        Re: Re:

        If you stick with McCarthy and what he did in America it is a very different conversation than about Communist Politicians who abused millions for whatever their reasons were.

        The issue with McCarthy and his tactics is that when he and his committee accused you, you were automatically guilty. There was no trial, no ability to defend yourself. You were guilty by accusation. The worst part is that, once called before the committee, you were asked to prove the negative. No "proof" of your guilt was presented except the accusation. Then you had to prove the accusation was not true. There was no evidence to contest, no witnesses to cross-examine. Just an open accusation that you were guilty. The childhood reply of "nah ah" did not work either. Using the obvious counter of "No I'm Not" didn't work either. How do you "prove" your not something that you were accused of? What proof can you present? How do you contest the evidense against you when there are none? The accusation with a few words were enough to make you guilty but nothing you said was enough to make you innocent.

        This is similar to a man being asked the question "Have you stopped beating your wife yet?". If you answer "yes", then you implicitly agree that there was wife beating going on and that you have stopped that activity. If you answer "no", they implicitly you have agreed that there was wife beating going on and that it has not stopped.

        In this case, the company was accused, allowed for an investigation, and as a result of the investigation they were declared bad because. No evidence of any wrongdoing was collected, the investigators "Just Knew" that something bad was going on. So, how to "prove" that nothing bad is going on. Well the first step is to have some evidense of what the "bad thing" was. Show some evidense that they are doing a "bad thing". Find at least one piece of equipment that they did a "bad thing" on (and prove that they did it either by proof that they put on a bad update or something).

        If McCarthy said "you are bad". Then by accusation you were bad. No proof was required. No evidence was presented that could be contested or proven false. The fact that an accusation was made, was by default a guilty verdict. Since the committee could not find anything that it could show as evidence that Huawei did anything wrong we should just accept that there bad anyway, just because. That is very dangerous ground. That kind of power always goes to a person's head that anybody they accuse is automatically guilty.

        The system in the US is supposed to be the presentation of the evidence of guilt in an adversarial hearing with the ability to present counter evidence of innocense. NOT a guilty by accusation system. That system is EXTREMELY open to abuse and mistakes. Even the best "good" person can be swayed or misled when there is no need for valid legal proof of guilt, just an accusation.

         

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    What-the, Oct 9th, 2012 @ 5:53am

    Sure Cisco sells a bunch of products into china.... But the report seems to completely ignore China's protectionist policies.
    Please do your research before stating something like "If that happens, expect Cisco to be hurt more than Huawei."

    Soon as they are able to, the Chinese will likely prohibit Cisco, et. al. from selling into the "biggest market the world has ever seen".
    If China is such a Big-Market, why does every body clamor to get access to the US market? Including China.

     

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      Keroberos (profile), Oct 9th, 2012 @ 6:57am

      Re:

      If China is such a Big-Market, why does every body clamor to get access to the US market? Including China.
      Simple. US dollars. The majority of international trade is done in dollars. Sure, foreign countries and companies can just buy their dollars straight from the US government--but at a disadvantage to their own economy or business, or they can sell their goods to the US and get their dollars with no economic loss to themselves.

      On a related note, this is much of the reason behind the US government's scaremongering about China. If China's Yuan (or any other country's currency) were to emerge as a replacement for the US dollar in international trade, it could be disastrous for the US economy--if no one wants to buy dollars, the US can no longer cover such huge budget deficits with currency sales (we need more money? print it and sell it overseas)--massive economic meltdown in the US.

       

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      anon, Oct 9th, 2012 @ 7:54am

      Re:

      Learn the fundamentals of trade and you will understand that the only reasons lot of people want to sell in America is because the currency is strong at the moment.
      Yes it has a large market, but that means nothing when 47% of the people are classified as poor, i.e receiving benefits to help them live.
      So in reality the market is only around 150 million not 300 million which is not that big if you look at Asian countries.

       

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        Allen (profile), Oct 9th, 2012 @ 5:59pm

        Re: Re:

        No, the US dollar is historically weak at the moment. Companies like to do business in the US because it is a big market and there is money to be made.

         

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    Zakida Paul (profile), Oct 9th, 2012 @ 5:53am

    I have said it once and I will say it again. The real threat to the world does not come from China (or Iran and Syria for that matter); it comes from US imperialism. The US government think they can impose their economic, military and 'cultural' will on the rest of the world with impunity and then they wonder why they have so many enemies.

    I have to marvel at the US hypocrisy here and any idiots who defend it. The US government are criticising Chinese companies for their links to the Chinese government when the big US companies have the US government in their back pockets.

     

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      gorehound (profile), Oct 9th, 2012 @ 6:29am

      Re:

      And the same Big Companies who are Paying-Off Politicians have their stuff either made in china or they buy chinese products.
      Washington is a Cesspool ! The House Committee is a joke.Just go look over that House Committee on Science and Tech that has numerous assholes like Todd Akin sitting in.Guys who do not understand science but they sit and make decisions on it.
      Two Fingers In The Air at the US Government !

       

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    Anonymous Coward, Oct 9th, 2012 @ 6:00am

    i think an equally worrying side is that the USA expects to have any and every piece of equipment made by any and every company meet the USA security agencies specifications, whilst also expecting to have the very things built into hardware and software sold to other countries by the USA to do the very things that they complain about. ie, if other countries stuff can spy on us, it's bad. if our stuff can spy on other countries though, it's good. Jeez, the paranoia and selfishness of the USA seems to know no bounds. when the retaliations start, even though they are the cause, the USA is gonna put out a statement that they dont understand why there are repercussions and/or it proves the guilt of the other countries, but what do they expect? countries to sit back and keep taking accusations and do nothing? said before, the best thing for the USA to do is keep everything it produces 'in-house' and get nothing from anywhere else. i bet there would be a hell of a lot of much more happy countries worldwide!

     

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      anon, Oct 9th, 2012 @ 8:02am

      Re:

      Agreed, I was saying this in comments elsewhere, I think whoever is responsible for bringing this known fact to light has opened a can of worms they are going to regret opening.

      If anything America has been proven to install back-doors in software, just look at what has been happening in Iran as a clear example. Now they are accusing others of doing the same thing without proof. This could come back to haunt the American economy in the very near future.

       

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    Anonymous Coward, Oct 9th, 2012 @ 6:05am

    I Suppose that Facebook, twitter, Google, Microsoft etc. remain free of influence by the USA Government?????

     

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    TasMot (profile), Oct 9th, 2012 @ 6:06am

    The new "Call to Arms"

    But, But, Chinese Pirates.....




    It's easier to "see" chinese pirates, they look different. It's much easier to go after a 'made-up' enemy that anybody can tell from the "us". It makes it easy to point out "us" versus "them". "They" can be picked out in any crowd. Just watch, soon we'll start having the "Chinese" concentration camps just the US used to have the concentration/internment camps to round up the Japanese starting in 1942. Where is McCarthy when you need him.

     

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      Anonymous Coward, Oct 9th, 2012 @ 6:32am

      Re: The new "Call to Arms"

      "It's easier to "see" chinese pirates, they look different."

      Yeah, Chinese pirates are easy to spot because their ships are Junk.

      /rimshot

       

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    :Lobo Santo (profile), Oct 9th, 2012 @ 6:07am

    More likely:

    ZTE and Huewei refused to spy on US citizens for the US Federal Goverment; which has led to their currently being demonized.

     

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    DCX2, Oct 9th, 2012 @ 7:15am

    Apples to oranges?

    U.S. sales account for only 4 percent of [Huawei's] overall revenue, whereas Cisco’s operations in Asia, the Pacific Rim and China account for more than 16 percent


    Am I the only one bothered by the fact that the 16% includes Asia, Pacific Rim, and China? Why not just China? After all, the idea is that China puts in place protectionist policies against Cisco...but can such policies affect other sovereign nations besides China?

    That quote above seems very suspect, like someone wanted to exaggerate the danger to Cisco in order to make a point...

     

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      Wally, Oct 9th, 2012 @ 8:13am

      Re: Apples to oranges?

      The problem is that Cisco was never pressured by China to have all the censorship controls on at full blast. Their "certified" devices from Linksys have throughput issues and last 2 months before bricking their device with new firmware updates. I will NEVER buy any device with the Cisco label on it.

       

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        DCX2, Oct 9th, 2012 @ 10:58am

        Re: Re: Apples to oranges?

        And this is related to my comment...how?

        I asked why we are comparing

        1) Huawei's revenue in the US
        2) Cisco's revenue in Asia, Pacific Rim, and China

        This appears to be an apples to oranges comparison. A true apples to apples comparison would be Huawei's US revenue to Cisco's China revenue. Why muddy the waters by throwing in Asia/Pacific Rim, unless the author of that statement was intentionally trying to create a misleading impression?

         

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    Steve, Oct 9th, 2012 @ 7:41am

    If the U.S. is accusing it, they're doing it!

     

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    Anonymous Coward, Oct 9th, 2012 @ 7:49am

    This is more of a two wrongs don't make a right. US companies are constantly under unfair competition when in China. China sets laws that restrict business. US companies try their best to comply with the laws. Chinese firms ignore the laws and gain a competitive advantage because of it. If US firms ignore the law, they get prosecuted. If Chinese firms do the same, the state generally lets them slide.

    The US is just trying to do the same to Chinese companies...

    Don't fool yourself, there is already a Trade war between the US and China.

     

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    sehlat (profile), Oct 9th, 2012 @ 8:59am

    Don't Give Them Ideas

    Given the fact that the Chinese government has even more links and controls into their manufacturing infrastructure than we do, I can just hear somebody thinking, "If they don't believe in our innocence, it doesn't matter if we really do go ahead and plant trojan horses to prepare for a future cyberattack."

    This is going to backfire on us big time.

     

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    Trendsighter (profile), Oct 9th, 2012 @ 10:04am

    Is Huawei Stealing More Than Data?

    Last Sunday I watched with interest the piece on 60 Minutes concerning Huawei working in the States. I have a few thoughts.

    Propaganda does not only originate from outside and against the US. Some of it actually starts here in the states. Propaganda can operate in opposite directions. Propaganda doesn’t have to be true to be believed.

    The US, we’re told, appears to be behind in telecommunication technology, which is currently one of the most sought after luxuries/staples Americans want. Why would the US government want a known Chinese subsidized company that is deployed in over 140 countries to gain a foothold in the richest telecommunications market in the world?

    The answer is- It doesn’t!

    Why would a Chinese company that currently serves more than 500 operators and over one third of the world’s population risk reputation and retaliation by stealing US government intelligence data, which you’d think should be separable?

    The answer is- It wouldn’t!

    Why would a company who last year had $32.2 billion in revenues and is reportedly wholly owned by it’s more than 65,000 employees bet the house by tainting its name and participating in an international scandal?

    The answer is- It won’t!

    Call me increasingly suspicious about US politicians and their motives, but a bigger question that comes to my mind is why are House Intelligence Committee’s chairman, Michigan Republican Mike Rogers, and Maryland Democrat C.A. “Dutch” Ruppersberger so bent on convincing the American public “that Huawei is somehow uniquely vulnerable to cyber mischief and ignore technical and commercial realities”? The report goes on to say “They (Huawei) recklessly threaten American jobs and innovation, do nothing to protect national security, and should be exposed as dangerous political distractions.”

    I’m not advocating allowing a foreign threat to gain hold of of our telecommunications infrastructure. I am questioning the means by which it’s served to the American public. The US is not in the position to lose more jobs offshore. Yet this seems to be a trait of protectionism and America is unwilling to play fair whenever it finds itself losing the ability to compete with another country.

    Your ears don’t perk up when a state representative named “Dutch” starts denouncing an eastern company in favor of Scandinavian based Ericsson? It seems Mr. Ruppersberger believes “one of the main reasons we are having this investigation is to educate the citizens in business in the United States Of America”. Thank you for that bit of business wisdom representative Ruppersberger.

    And another observation. With who and what part of the world is “Dutch” hanging out with by using analogies like “in the telecommunications world, once you get the camel’s nose in the tent, you can go anywhere”?

    I’m sorry but something just doesn’t add up to me here. It will be interesting to see how this pans out. I believe there’s more to it than the American public is being told. Sometimes propaganda is a two way street.

     

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      Michael, Oct 9th, 2012 @ 11:52am

      Re: Is Huawei Stealing More Than Data?

      I also watched the 60 Minutes special last weekend. One of the things which stands out in my mind was how when 60 Minutes went to Huawei's HQ in China, they weren't allowed to speak to anyone, which I find bizarre.

      How is the US gov acting like they want to protect domestic jobs, all the while companies like Apple, IBM and so many others continually exploit other countries' workforces? Those are jobs which technically could be done here, it's just that the fat-cat CEOs wouldn't get quite as big of a bonus. If the government was truly concerned about sustained economic growth and security issues, they'd start by bringing critical jobs back, e.g. reopen the steel factories.

      It's crazy to spread fear about a Chinese networking giant stealing critical jobs and potentially syphoning critical data when we've allowed ourselves to become dependent upon foreign countries' materials and manufacturing. (Remember when products were made in the USA, when stuff actually fuctioned beyond a few years?)

       

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    Anonymous Coward, Oct 9th, 2012 @ 10:52am

    What!!! companies making electronic components in China ???!!! isn't that patented by Apple? Sue Sue Sue

     

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    Allen (profile), Oct 9th, 2012 @ 6:13pm

    I wonder how much the US security agencies possible success in pressuring US telecom equipment vendors to install back-doors in their equipment lends weight to speculation that the Chinese government has or might do the same to vendors under their jurisdiction...

    *puts on tin foil hat*

     

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    Anonymous Coward, Oct 9th, 2012 @ 7:09pm

    We're worried about China yet about 85% of my stuff is MADE IN CHINA go figure.. I bet yours is as well unless you can afford pure American made products.. Even then you would have to be crazy when many products made in China are better.

    The only thing I fear from China is that someday they will wise up and cut the USA off and that is something we cannot afford.

     

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    Leonardo (profile), Oct 10th, 2012 @ 5:26am

    Huawei CANNOT BE TRUSTED

    The post by Mike Masnick is extraordinarily naive.

    LTE is entirely IP. You can test all you want and find nothing today.

    The one thing tests will not find is what future software migrations and upgrades may bring or trigger. No testing in the world can find this. Logistically impossible to implement testing insitu.

    The fundamental question is can you trust a China company with your Core? Answer: NO.

    Most of the Tier-1 carriers have significant government enterprise business and the risk of installing Huawei "Cores" is like giving the Navy's Carrier Nimitz to China and asking China to provide maintenance and other logistical services.

     

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    tayyaba, Mar 21st, 2013 @ 1:34pm

    Learn the fundamentals of trade and you will understand that the only reasons lot of people want to sell in America is because the currency is strong at the moment.
    Yes it has a large market, but that means nothing when 47% of the people are classified as poor, i.e receiving benefits to help them live.
    So in reality the market is only around 150 million not 300 million which is not that big if you look at Asian countries. cisco-linksys-wireless-n-internet-home

     

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