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.

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  1. identicon
    Michael, 9 Oct 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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