A China-controlled internet? Why tech giant Huawei roils Western fears.

Why We Wrote This

The next generation of wireless networks will help power the “internet of things,” with links to everything from home thermostats to critical national infrastructure. That sets up a tussle over who should be trusted to build it. 

Andy Wong/AP
Geng Shuang, spokesman for the Chinese Foreign Ministry, speaks at a briefing in Beijing Jan. 29. China's government called on Washington to ‘stop the unreasonable crackdown’ on Huawei following that tech giant’s indictment in the US on charges of stealing technology and violating sanctions on Iran.

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The US arrest warrant for a leading Chinese business executive revolves around alleged violations of American-imposed sanctions on Iran. But s​ince the detention of Meng Wanzhou in Canada in December, the uproar surrounding her c​ase​ has ​widened. Ms. Meng is the chief financial officer of Hauwei, a leader in wireless networking.​ Beijing sees Washington’s campaign against Huawei as a political ploy with protectionist purposes.​ But some Western governments suspect that Huawei might build hidden “back doors” into its equipment for Chinese intelligence services. FBI Director Christopher Wray warned on Monday that “we should all be concerned by the potential for any company beholden to a foreign government – especially one that doesn’t share our values – to burrow into the American telecommunications market.” Governments’ mistrust is prompted more by the nature of China’s authoritarian and opaque government than by the firm itself. The question is, Can China carve itself an influential place in the world on its own terms? Or will the rest of the world decide that even if the “China price” is attractive, the hidden costs are too high?

Huawei, the world’s biggest producer of telecommunications equipment, has been in the headlines as the United States proceeds with a case against one of its executives. Here’s a look at the case, the company, and the global issues at stake.

Q: Who is Meng Wanzhou and why was she arrested?

Ms. Meng, who is also known as Sabrina Meng, is the daughter of the founder of Huawei, the Chinese tech giant. She is also the company’s chief financial officer.

The US Justice Department issued an arrest warrant for Meng late last year, charging her with violating US sanctions against Iran by doing business through a hidden subsidiary.

So when, last December, she flew into Vancouver, British Columbia, where she owns two luxury homes, Canadian authorities detained her under the terms of Canada’s extradition treaty with the US. She is under house arrest on $7.5 million bail, wearing an electronic ankle bracelet.

In the teeth of furious objections from Beijing, Washington formally requested Meng’s extradition on Monday. The Canadian Justice Department must decide within 30 days whether to proceed; if it does proceed, a judge will hold an extradition hearing. Meng can appeal any move to expel her to the US; legal procedures are likely to drag on for several months at least.

If she is tried in the US and found guilty, she faces a jail sentence of as many as 30 years.

Q: Why has the case attracted so much global attention?

Huawei is a flashpoint in what is arguably the biggest current threat to the global economy – a looming trade war between the US and China. The US unsealed fraud and corporate espionage indictments against Meng and Huawei on Monday, just as a top Chinese official arrived in Washington for talks to try to defuse the trade crisis.

US officials say that Huawei has close ties to the Chinese government and cannot be trusted to build securely the next set of wireless networks – fifth generation, or 5G – in the US or anywhere else. Washington has led a drive to dissuade allied nations from incorporating Huawei equipment in their 5G networks.

China believes the US is trying to block Beijing’s emergence as a top-flight technological power out of fear of competition. It sees Washington’s campaign against Huawei as a political ploy with protectionist purposes, and the case against Meng as a leverage tool in trade talks.

President Trump fed that impression when he said in December that he might intervene with the Justice Department in Meng’s case if that would help close a trade agreement with China or serve US national security interests.

China is going head-to-head with the US over Meng. “Beijing’s reaction will shape the world’s understanding of China’s national strength and will,” according to a Jan. 23 editorial in the Global Times, a Chinese Communist Party-owned daily in Beijing.

Q: What is Huawei known for?

Huawei makes reasonably priced, advanced wireless network equipment, mobile phones, and laptops, which it sells all over the world. The company is China’s international flagship, a shining symbol of its global reach and technological prowess.

Huawei was founded in 1987 by Ren Zhengfei, a former engineer in the Chinese People’s Liberation Army. Mr. Ren’s background is one reason that some Western governments suspect that Huawei takes orders from the Chinese government. (Indeed, all Chinese companies take orders from their government if push comes to shove.)

This has sparked fears that Huawei might build hard-to-detect “back doors” into its equipment, giving Chinese intelligence services unparalleled access to – and possibly control over – all manner of devices worldwide that depend on wireless communications.

Huawei has repeatedly denied such suggestions, insisting that it is a private, employee-owned company that has never done anything underhanded.

But experts, including the European Union’s technology chief and the head of Britain’s counter-espionage agency, have recently voiced doubts about Huawei’s trustworthiness. FBI Director Christopher Wray warned on Monday that “we should all be concerned by the potential for any company beholden to a foreign government – especially one that doesn’t share our values – to burrow into the American telecommunications market.”

Q: How has China reacted to Meng’s arrest and the US indictments?

It's showed extreme anger and threatened “grave consequences” for Canada and the US if Meng is extradited.

As Canadian Justice officials consider the US extradition demand, they are under heavy pressure. Within days of Meng’s arrest, Chinese police had arrested three Canadian citizens. Two of them are still being held incommunicado in unknown locations.

Another Canadian, who had been sentenced in November to 15 years for drug smuggling, was hastily retried and sentenced to death this month.

The Chinese Foreign Ministry responded to the Huawei indictments by accusing Washington of trying to “kill” Chinese businesses. Hu Xijin, editor in chief of the Global Times, tweeted, “The US indictment ... is like putting legal lipstick to a pig of political suppression.”

Q: What is 5G?

The shift to 5G wireless networks is a once-in-a-decade upgrade that will make everything work much faster (think downloading a film in a few seconds) and make the “internet of things” a reality of daily life. Operators will be rolling out 5G in the US this year.

5G will be used to control and monitor everything from games on smartphones and the contents of consumers' refrigerators to nuclear power stations and other critical national infrastructure. It will be deeply embedded in society. That is why some regulators are worried about Huawei building such networks.

The US and Japan have banned Huawei from supplying government-owned wireless networks; Australia and New Zealand have forbidden their mobile operators to use Huawei gear in their 5G networks, citing national security; BT, the largest mobile operator in Britain, will not invite Huawei to bid on its core 5G equipment; and Vodafone announced last week it would “pause” purchases of Huawei's core 5G kit.

Polish police arrested a Chinese Huawei employee on espionage charges, and the Polish government has called on the EU and NATO to reconsider their members’ reliance on Huawei technology.

There is little Huawei can do to overcome Western misgivings. Governments’ mistrust and fear is prompted more by the nature of China’s authoritarian and opaque government than by the firm itself.

But as Beijing girds itself for battle on behalf of its national champion, the stakes could not be higher. Can China carve itself an influential place in the world on its own terms? Or will the rest of the world decide that even if the “China price” is attractive, the hidden costs are too high?

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