As the experts of the sector say, all the advanced communication lines and networks are “non-deterministic.”
This means that, when built and completed, they are a whole that is greater than the sum of its parts and is not predictable in its results, given the functions of the parts taken separately.
The complication of the Web is related to the number of the parts composing it and to the number of relations, namely “nodes,” which are present in the elements that make it up.
This is not a phenomenon that can be corrected or controlled. It is a purely mathematical and inevitable effect of the Web and of the interaction between its nodes.
The Communication Assistance for the Law Enforcement Act (CALEA) is a US regulation obliging those who maintain the Networks to keep sound security mechanisms that are defined – together with those who produce them – in specific FBI directories.
Nevertheless, there is much talk about the relationship – which is, indeed, non-existent – between the Chinese intelligence services and Huawei.
According to CALEA, each information network must have a control system – a system to check the data passing through the network, so as to know – at any time – the data running on the specific Network to be controlled.
In other words – and with harsh clarity – it is a matter of allowing interceptions, according to the US law.
Therefore, from the privacy viewpoint, the US law does not impose different and better behaviors than those of which Huawei is accused.
Recently, the UK-based Huawei Cyber Security Evaluation Centre has submitted its fifth annual report.
It has clarified that – as in any Networks – the source code is extremely complex and “long,” written in a language that is naturally “insecure and unsafe,” which can be manipulated by all those who can reach the source code since the aforementioned level of complexity is such that it does not allow any security check. Neither stable nor temporary.
Hence, whoever could inspect the source code of any telephone network or World Wide Web producer could never determine whether it is devoid of bugs or original elements, or of malicious insertions by the producer or others, and could not even trace its origin.
Therefore, every time the source code is reconstructed, it produces something different compared to the previous version. It is a direct function of the complexity of the code itself.
This means that we are never sure that the code that has succeeded the initial check is exactly the one that “works” in the next network.
Hence, data security risks are not and cannot be specific to Huawei alone, but are inherently common to all network builders and to their primary and standard software. Every manufacturer’s check inserts new data and new unpredictable effects.
Therefore, the pure network technique does not matter much and, in any case, the security problem, which is always relative, applies to everyone.
Hence, the questions we must ask ourselves are eminently political, i.e., how long can Huawei withstand pressure from the Chinese government or to what extent Huawei itself intends to support the efforts of Chinese security agencies.
It is unlikely that the Chinese intelligence services want to undermine or restrict the global reach of a global and Chinese company, which is essential for the economic development of the country, by trivially putting it in the service of its networks. It is certainly not worth it.
Moreover, Huawei has developed its 5G model for at least ten years and it has contributed to the definition of the 5G standard globally.
The Chinese research into the 5G started in 2009 and Huawei is second only to Samsung for the number of standard essential patents (SEPs) and has the highest global level of 5G evolution in various areas of use. There are really no credible competitors for Huawei – hence the pseudo-arguments on security or Huawei’s relations with the Chinese intelligence services are used.
Too trivial and too dangerous. If anything, the true goal of the Chinese intelligence services is precisely to support Huawei’s image as an impartial and global operator, certainly not as a tool for its operations.
You cannot understand the Chinese intelligence services at all – which are not childish in their approach – if you assume they behave like this.
It is rather known to all global network and IT operators that five years ago the National Security Agency (NSA) intercepted CISCO’s hardware and also infiltrated and paid RSA – the company processing numerical codes for the global market – to release manipulated cryptology standards, in addition to forcing some American companies, including Yahoo!, to collaborate in the global espionage organized by US agencies. Precisely what of which Huawei is accused.
Who owns Huawei?
One hundred percent of it is owned by a holding company, 1% of which is directly owned by Ren Zhengfei, the founder of the company. The remaining 99% of Huawei is owned by a “union committee” of all employees. The employees’ shares are, in effect, normal contractual rights for profit distribution.
Moreover, the purchase of the Huawei 5G network is particularly interesting from the price viewpoint, which could even offset the unlikely damage of a leak – possibly random – on a node of the Network.
A leak that obviously anyone can put in place – even using the Huawei network, without being part of the company.
Obviously, you can also buy the 5G networks produced by Ericsson or Nokia.
These networks are definitely more expensive, less negatively affected by “external elements” (but is it true, considering that anyone can manipulate a network?) and created by less “dangerous” States – if we see them in a simplistic way – than China, which is currently the monstrum of the Western intelligence services that are now reduced to the minimum, including the US ones.
With specific reference to the relationship between 4G and 5G, it should be noted that, for 10 years, there is an average increase by 64 times in operational capacity for each system that arrives on the market.
The 4G is planned to run until 2023, but the 5G will increase the data processing power by as many as 5,000 times compared to the current 4G.
Nowadays, however, also the 4G has reached the “Shannon limit,” that is the maximum limit of theoretical data transfer on a network, given a predetermined “noise” level within the network itself.
However, the current 5G – namely Huawei’s – can always acquire new additional frequencies, which allow using more channels, even simultaneously.
Nevertheless, it is much more sensitive to the 4G rain.
The second advance of the 5G compared to the 4G network is the fact that the transmission cells have advanced antennas of different design compared to the current ones, capable of optimally managing different networks, even simultaneously.
Furthermore, China is much more internationalized in the IT and Network sector than we may think.
Chengdu, the Chinese city with the highest density of “intel” companies, currently hosts 16,000 companies in the IT sector, including 820 ones fully owned by foreigners, in addition to Huawei’s primary competitors: Cisco, Ericsson, Microsoft, etc.
Nokia-Siemens has 14 joint ventures and directly-owned factories in China. Alcatel-Lucent has its largest factory in China. Ericsson’s largest distribution center in China is the point of reference for the whole network of the Swedish company in the world. Cisco has some Research & Development centers in China, but also 25% of all Cisco production is provided by Chinese factories.
The various quality controls, which in Huawei focus explicitly on the ban and detection of backdoors, i.e., hidden or secret ways to bypass normal authentication or encryption in computer operating system, which are controlled systematically, are managed – also financially – by companies known throughout the global market, such as PriceWaterhouseCoopers for internal finance and accounting, IBM Consulting for IT technologies and many others. Hence, how can we think that a company like Huawei, with this type of relations, controls and checks, is so “impenetrable,” as some Western media report?
Hence, apart from the rumors spread by mass media, what are the real reasons why, according to British intelligence documents, Huawei should not spread its far more cost-effective and functional 5G than the others in the West?
- a) Huawei is the result of the Chinese “political ecosystem.” Well, what is the problem? How many Western companies work in China? A huge number and they all operate on the basis of local laws and China’s economic and political system. It is a hollow and generic argument.
- b) According to its professional detractors, Huawei is the result of the civilian-military merger. However, the same principle applies also to the USA. Certainly, there are CPC committees in 11 of the most technologically advanced companies in China. Nevertheless, as many studies show, including Western ones, this does not automatically transfer the expanding civilian technologies to the Chinese military system.
- c) In 2010, only less than 1% of hi-tech civilian companies were connected to defense-related activities. Certainly, as happens everywhere, the connection between civilian and military activities is at the origin of Xi Jinping’s plans, namely the Made in China 2025 and the Next Generation Artificial Intelligence Plan. President Xi has also created the Central Military Commission for Integrated Military and Civilian Development. However, these are specific projects and predetermined development lines – not for the immediate use of civilian companies’ technology state of the art in military ones.
- d) The Chinese power, however, has always used – and will continue to do so – market forces to reform the old state-owned companies. In fact, this is the real current goal of Chinese power in the civilian-military relationship. This is also the reason why the big global Chinese companies are left free to float and fluctuate in the world market, instead of acting as retrievers for small and minor secrets, which the Chinese intelligence services can know anyway. Indeed, some analyses by the Chinese government itself tell us that, if the public business system does not change rapidly, most of the advanced private companies in China will de factobe cut out from the defense economy and its updating process.
- e) How can we also think that a country like China manipulates one of its major companies, namely Huawei, to gather confidential information? The secrets, if any, are concepts, projects and sets of news, not the talk of some Presidents or some Ministers’ phone calls to their lovers. This is at most pink press, stuff for gossip magazines we can find by hairdressers. It is never intelligence. Obviously, for many Western countries, small personal data has become the substitute for sound strategic thinking, as if the defamation of a leader were the primary goal of an agency.
- f) Again according to the detractors of its 5G leadership, Huawei is supposed to be subject to the 2017 Chinese Intelligence Law. This is a rule that allows, in principle, State control over foreign individuals and companies. What do Western intelligence services do differently instead? Not much, I think. Indeed, I am fairly certain about it.
- g) The 2017 law also allows the operation of the Chinese intelligence services inside and outside China. Hence, what is wrong with it? What do we do differently? Obviously, in China’s legislation, it is also a matter of following and controlling the internal opposition. But, again, what do Western intelligence services do differently? Do they distribute snacks? Indeed, here is the connection between the various oppositions inside China and their use of, or even connection with, some Western intelligence agencies.
- h) Furthermore, Western sources and media also state that the aforementioned Huawei’s structure is “opaque.” It may be so, but how is the structure of the other global hi-tech companies? Apple provides exactly the same internal data that is available to Huawei’s analysts. Considering the habit and style of granting substantial shareholdings to managers, the share ownership is equally opaque and often permits severe insider trading, often in favor of competitors. There is no reason to differentiate between Huawei’s corporate data and the one from other global IT and phone companies. Indeed, Huawei’s technical documentation is often much more detailed than the one of its global competitors. Certainly, the public officials belonging to Huawei’s internal unions and control structures are accountable vis-à-vis the CPC and the State, but this holds true also for all the other Western companies that produce or sell in China. Do CISCO and Apple, who have been operating in China for many years, also in the R&D field, believe they are exempted from some security checks?
- i) An apparently rational argument of Huawei’s Western competitors regards the willingness of Chinese banks to fund this company. Just think about the notorious and stupidly ill-reputed “State aid.”
- j) Indeed, Chinese banks certainly fund Huawei – the last time to the tune of some billion yuan, but only and solely based on official budgets. Nowadays, Western financial companies have free access to as many as 44 trillion US dollars, which is exactly the current size of the Chinese financial market. They can also have the majority of shares. In 2030, Western financial companies plan to reach 10 billion US dollars of profits in China. The problem is that China is liquid, while Western countries are so to a lesser extent. Yet the credit institutions prefer not to invest in companies and prefer to do so in opaque financial instruments and government bonds.
- k) Furthermore – and here we can see the solely political drift of the controversy against Huawei – it is supposed to have produced and updated the e-control networks operating in Xinjiang. Is it possible that the Uyghurs are wrong and China is right? What is the West’s positive bias vis-à-vis an Islamic population that is often refractory to the Chinese system, with decades of terrorism behind it, even after a great economic boom, while the Hui – another Islamic population – do not cause any problem to China? Hence if we do not accept the “authoritarian” values of the Chinese system, we should not massively invest in that economic system. This is exactly what the Western companies are increasingly doing. Conversely, if the Western companies appreciate China’s stability and efficiency, they should resign themselves to accepting also the sometimes necessary repression of vociferous or basically jihadist minorities. If the West wants the jihad liberation, possibly to counter the new “Silk Road,” it shall have the courage to openly say so.
Moreover, Google is planning to re-enter the Chinese market with a version of its search system that adapts to the new Chinese laws on censorship or on the control of dangerous news. Or even on “enemy” propaganda.
Reverting to Huawei, as already mentioned, the Chinese company has set up the Centre for Cybernetics Security in Great Britain, which is anyway in constant connection with the Government Communication Headquarters (GHCQ), the British intelligence and security organization responsible for providing signals intelligence and information assurance, as well as for controlling networks, ciphers and the Internet.
It should also be recalled that the 5G is not only a much faster Internet downloading system than the previous ones, but it is a network that will transform companies and the information technology.
Remote medicine, self-driving vehicles, Internet of Things (IoT), new automated production systems.
These are the fields in which the outcome of the struggle between Huawei and Western companies will be decided, in a phase in which – for the first time in recent history – the USA and European allies have significantly lower leading technology than the Chinese one. This is precisely the core of the issue – not the talk about Chinese intelligence services or the rhetoric about mass control systems in Xinjiang.
Giancarlo Elia Valori
Manager, economist and eminent professor at the Peking University