Huawei would have no choice but to hand over network data to the Chinese government if Beijing asked for it, because of espionage and national security laws in the country, experts told CNBC.
Major governments including the United States, Japan and Australia have blocked the Chinese telecommunications equipment maker from providing hardware for next-generation mobile networks known as 5G. The U.S. has said Huawei equipment could provide backdoors for the Chinese government into American networks — a claim the company has repeatedly denied.
Australia did not cite specific countries or companies, but last year it gave guidance to domestic carriers saying that “the involvement of vendors who are likely to be subject to extrajudicial directions from a foreign government that conflict with Australian law, may risk failure by the carrier to adequately protect a 5G network from unauthorized access or interference.”
The Australian government is highlighting a concern on the top of minds of several governments — China’s wide-ranging internet laws, which require tech firms to help Beijing with vaguely-defined “intelligence work,” meaning companies could be forced to hand over network data whether they want to or not.
Two pieces of legislation are of particular concern to governments — the 2017 National Intelligence Law and the 2014 Counter-Espionage Law. Article 7 of the first law states that “any organization or citizen shall support, assist and cooperate with the state intelligence work in accordance with the law,” adding that the the state “protects” any individual and organization that aids it.
And it appears that organizations and individuals don’t have a choice when it comes to helping the government. The 2014 Counter-Espionage law says that “when the state security organ investigates and understands the situation of espionage and collects relevant evidence, the relevant organizations and individuals shall provide it truthfully and may not refuse.”
The company strenuously contends that it will not hand over customer data, and Huawei told CNBC that it has never been asked to do so.
Huawei’s billionaire founder Ren Zhengfei and other senior executives “have stated unambiguously that Huawei will not build backdoors or hand over customer data. It doesn’t get much clearer than that,” a Huawei spokesperson said. “We have never been required to do so, they have stated. We are not going to speculate on future possible scenarios beyond repeating the reassurances of Huawei’s most senior management.”
In an interview last month with CBS News, Huawei’s Ren said the company would never help China spy on the United States — even if required by law.
“We never participate in espionage, and we do not allow any of our employees to do any act like that. And we absolutely never install backdoors. Even if we were required by Chinese law, we would firmly reject that,” Ren told the American television network.
Sources within China contacted by CNBC declined to comment. But experts from outside the country suggested it would be near-impossible for Huawei to reject a request for data from Beijing.
“There is no way Huawei can resist any order from the [People’s Republic of China] Government or the Chinese Communist Party to do its bidding in any context, commercial or otherwise. Huawei would have to turn over all requested data and perform whatever other surveillance activities are required,” Jerome Cohen, a New York-based lawyer at Paul, Weiss, Rifkind, Wharton & Garrison, told CNBC by email.
“Not only is this mandated by existing legislation but, more important, also by political reality and the organizational structure and operation of the Party-State’s economy. The Party is embedded in Huawei and controls it,” said Cohen, who has represented corporate clients in China and elsewhere in Asia.
The relationship between Huawei and the government has been questioned because of Ren’s past as a former soldier in the People’s Liberation Army and a current Communist Party member. In a question and answer session with international media in January, Ren said that his relationship with China’s ruling party would not stop him from refusing any request from them for user data.
“I don’t see close connection between my personal political belief and our business actions we are going to take as a business entity,” Ren said.
In the same session, Ren said that he “would rather shut Huawei down than do anything that would damage the interests of our customers in order to seek our own gains.”
The problem for Huawei is that there does not appear to be legal recourse if Beijing comes knocking.
“The idea of fighting a request of this nature in the courts is not realistic. In truth the law only confirms what has long been true — that one must submit to the Party if called upon. Added to this, a company of Huawei’s size, working in what is considered a sensitive sector, simply cannot succeed in China without extensive links to the Party,” Martin Thorley, an expert on international engagement with China at U.K.-based University of Nottingham, told CNBC by email.
“For anyone at Huawei to oppose a serious request from the Party would require bravery bordering on recklessness — what do you do when your adversary is the police, the media, the judiciary and the government?” he added.
China’s government addressed the National Intelligence Law during a press conference on Monday.
“According to China’s National Intelligence Law, organizations and citizens have the obligation to support, assist and cooperate with national intelligence work. At the same time it also explicitly stipulates that intelligence work should be conducted according to law and in a way that respects and protects human rights and the lawful rights of individuals and organizations,” government spokesperson Zhang Yesui said, urging people to “not take anything out of context.”
Zhang was responding to reporters’ questions ahead of China’s National People’s Congress, a big annual event where Beijing formally announces major policy elements such as economic growth targets. The comments were made in Mandarin and translated into English by an official translator.
“Some U.S. government officials have been playing up the so-called security risk associated with products of certain Chinese companies and linking it with Chinese national intelligence law,” Zhang said. “This kind of behavior is interference into economic activities by political means and it is against WTO (World Trade Organization) rules. And it disrupts international market order that is built on fair competition. This is a typical double standards (sic). It is neither fair nor ethical.”
Many of China’s largest tech companies have flourished over the last decade within the country in the absence of foreign competition. China has for years blocked some of America’s largest internet giants — on claims that those U.S. companies pose national security risks.
The battle between the U.S. and Huawei is bigger than worries over national security risks, according to geopolitical analysts. It’s about who has control of the critical infrastructure that runs 5G. The new network will not only support super-fast mobile internet but it will be the backbone behind other technology like driverless cars.
“Huawei involvement in the core backbone 5G infrastructure of developed western liberal democracies is a strategic game-changer because 5G is a game-changer,” Nigel Inkster, a senior adviser to the International Institute for Strategic Studies, told CNBC by email.
Inkster, a former senior British intelligence official, explained that China has “embarked on an ambitious strategy to reshape the planet in line with its interests” through its massive Belt and Road Initiative. Its “national telecoms champions” are a big part of that.
Because of that drive from China, Inkster said that Huawei is part of this “all-of-nation project.”
“Huawei has indeed said that it would refuse any Chinese government request to facilitate espionage. But such a statement simply cannot be taken at face value. Huawei is a product and instrument of the Chinese state and has been co-opted to achievement of the state’s strategic objectives. The proposition that it is just a telecommunications company has worn beyond thin,” Inkster told CNBC.
—CNBC’s Evelyn Cheng contributed to this report.
