Last summer, a Chinese telecommunications giant founded by a former People’s Liberation Army (PLA) engineer was rebuffed in its effort to sell vast quantities of equipment to Sprint Nextel - an American company that provides communication services to the U.S. Defense Department and other government agencies. An interagency group known as the Committee on Foreign Investment in the United States (CFIUS) took a hard look at the proposal and, quite sensibly, rejected it on national security grounds.
Unbeknownst to CFIUS at the time, Huawei was making another, unscrutinized and problematic investment in the United States. It bought pieces of 3Leaf, a now-insolvent pioneer in “cloud computing” technology, including intellectual property with obvious military applications.
When this transaction serendipitously came to the Pentagon’s attention, alarm bells went off. CFIUS took a look at it as well and came to the same conclusion as it had with the Chinese company’s previous play with Sprint Nextel and two earlier initiatives - its effort to buy a stake in 3Com and bid to invest in some of Motorola’s assets: No way.
Huawei initially declared that it intended to appeal to President Obama to overrule his interagency experts. Perhaps in doing so, it was counting on his well-established proclivity to yield to Chinese demands. Perhaps the company was banking on the political influence of the prominent former American officials it had indirectly hired through a firm called Amerilink to tamp down their successors’ security concerns about Huawei. These advocates include a former vice chairman of the Joint Chiefs of Staff, Adm. William Owens; a former House majority leader, Rep. Richard A. Gephart; and a former deputy secretary of defense, Gordon England.
Five days after floating this idea, however, the Chinese were persuaded to abandon their latest gambit. Huawei’s American guns-for-hire or perhaps Obama’s own advisers presumably impressed upon them that Mr. Obama could hardly afford to ignore CFIUS’ conclusions in order to do the PRC’s bidding.
Now, Huawei is trying a new tack. Its deputy chairman, Ken Hu, published last week an audacious open letter on the corporate website. Mr. Hu professes the company’s commitment to free enterprise and insistently denies any wrongful expropriation of proprietary information or ties to the PLA. He decries the “longstanding and untrue rumors and allegations” that, among other things, suggest the company would use access to U.S. computer networks for nefarious purposes. He goes so far as repeatedly to call on Washington to conduct a “thorough government investigation [that] will prove that Huawei is a normal commercial institution and nothing more.”Mr. Hu essentially has challenged the U.S. government to make public what it knows about the security threat posed by this Chinese behemoth.
What a splendid idea. The more the American people know about Chinese enterprises like Huawei and the full extent of their efforts to penetrate the U.S. market (for example, for the purpose of acquiring technology, both legally and illegally) and the security implications of our relying upon their products and services, the better.
Here are a few suggestions concerning information - at least some of which has evidently driven past CFIUS decisions to parry Huawei’s U.S. machinations - that it would be helpful to share with the American people:
What is the actual relationship between Huawei and the Chinese government? Mr. Hu declares that his enterprise is “a private company owned entirely by its employees.” While he acknowledges that it benefits from tax incentives and loans made available to its customers from China’s “commercial banks” (read: state-owned enterprises routinely used as financial instruments of the communist government in Beijing), Mr. Hu suggests that there’s nothing for us to worry about. That is assuredly not the case, and we need to know the truth.
How about the true extent of ties between the People’s Liberation Army and Huawei? At a moment when the PLA is increasingly ascendant and aggressive, both at home and abroad, Mr. Hu’s assurances of no connection beyond its founder’s past service in the military’s now-disbanded engineer corps ring hollow. Huawei’s massive state-supported telecommunications research and development activities have clear military applications. And its commercial transactions assuredly afford Chinese intelligence opportunities for insinuating trap doors and other means of penetrating Western computer and communications networks.
China evidently is prepared to play hardball. It has announced that it will establish an inter-ministerial committee similar to CFIUS. Presumably, it will become an instrument for selectively restricting foreign investment in the PRC - retaliating against U.S. business interests in the event of future CFIUS rejections on security grounds and creating still-greater leverage on U.S. companies to support its predatory trade and “commercial” activities. Only by making plain what Huawei and similar enterprises are up to can the threat they pose be properly understood - and countered. The place to start is by saying “No way, Huawei.”