The Conversation

The recommendation by intelligence agency ASIO that Chinese telecommunications company Huawei be banned from tendering in the National Broadband Network because of cyber security concerns, raises serious questions about the nature of our relationship with our largest trading partner.

Treasurer Wayne Swan has said that he doesn’t believe the issue will negatively impact our relationship with China, while Foreign Minister Bob Carr has urged Huawei to continue expanding in Australia.

But how might the Australian Security Intelligence Organisation (ASIO) have arrived at its decision? Would it have liaised with American intelligence counterparts? And importantly, how much of the American suspicion of Huawei — recently expressed by the US House Intelligence Committee — is driven by genuine national security concerns and how much reveals American politicians playing on economic fears of China to a domestic audience?

The Conversation spoke with Dr Adam Lockyer, Lecturer in US Politics and Foreign Policy at Sydney University’s United States Studies Centre about what the Huawei affair tells us about Australia’s difficult balancing act with the competing interests of China and the US.

What does the Huawei case tell us about the way Australian and American intelligence agencies are treating Chinese companies.

It’s interesting from the Australian perspective where there are concerns about Chinese companies and their relationship with Beijing.

This is new territory where most companies within China have previously had very close links with Beijing and have been seen as being hand-in-hand with the Chinese government. As the Chinese economy and companies like Huawei grow, they become more outward looking and they are starting to distance themselves and try to paint themselves as being different, no longer being an arm of the Chinese government or the Chinese military.

Now we are in this area where the intelligence agencies like ASIO are trying to grapple with “how distant are these companies from Beijing?” and from the military; and its an open question, there is a question mark over companies like Huawei.

Is it safe to assume that in a case like this ASIO would liaise with its American counterparts?

It wouldn’t be unusual but it would be interesting to see how much they could actually add on something like this because as a rule the intelligence agencies tend to be risk averse so if there’s even a small sign of smoke they tend to point and say there could be fire.

So when they go across and ask advice of American allies/partners, which wouldn’t be unusual, if there are some concerns there, this will normally be front and centre in their report to their government.

And there are plenty of concerns here. There have been concerns from US about Huawei’s operations in Iran, where they are building a lot of the telecommunications and mobile infrastructure.

There have been concerns raised in America that this technology is being used to hunt down dissidents in Iran. This would have all flowed through into conversation between Canberra and whomever they are talking to in America and this would have found its way into government reports.

In the US Huawei has been banned from being involved in or taking over two telcos. Is that purely a national security concern or are there deeper political concerns at play, such as “defending American jobs”?

It’s a bit of take some from column A and some from Column B scenario. It’s partly because there are legitimate security concerns about cyber-attacks on US companies and the US government.

We are being told it is coming from China, so in terms of cyber-espionage and cyber-security, China is one if the main culprits, if you believe what you read.

When these Chinese companies come over with unclear links to the Chinese government and they want to take over hard infrastructure in US, this raises legitimate security concerns. Once the back doors are potentially being created by these companies, when there are updates of software, what sort of patches are going to be included, that could potentially be exploited by cyber-espionage originating within China? These are all legitimate security concerns.

On the other side there are a lot of politics going on particularly in Congress a lot of this has been played out within the Committee on Foreign Investment. This is a bi-partisan committee and within this platform a lot of the Republicans and Democrats want to show that they are being pretty muscular towards the Chinese.

Is this a microcosm of an issue Australia is going to face again and again in trying to balance having our fundamental security relationship with the US and our fundamental economic relationship with China?

Probably it’s going to be one of the greatest challenges for Australia — how to ride two horses simultaneously. We want to ride the Chinese economy but also ride the US security alliance. This is going to be a huge challenge for Australia, but we are also in a good position to take full advantage of this too.

It is not an impossible circle to square?

Absolutely not. Up until this point we have done a good job; the Chinese understand the Australian relationship with the US and this hasn’t damaged our economic ties with China.

A lot of Chinese diplomats cut their teeth in Australia before being sent off to the US. They come to Canberra, get a feel for how it is to deal with a western country then they get promoted and sent to the US, so we are seen as a bit of a nursery.

And in terms of the economic side the three countries are completely interdependent by this stage. So a lot of the investment in Australia, say like the US company Caterpillar, they are making a fortune. They are then digging up rocks to send to the Chinese, who are then turning this into manufactures, which are then being to sold to the US. It’s a triangle and everyone’s winning or could potentially all win.

A lot of the security concerns can be overblown because while everyone is happy making money off each other, this can be quite a friendly relationship. This is not potentially a cold war — as many people are saying — because unlike the cold war where there were two separate and dissimilar global economies.

China is fully integrated to the world economy and that’s going to make all the difference. While that is working I can’t see why the security fears are going to be allowed to escalate to a point where that is going to damage each other’s ability to trade with each other.