Published 18:18 IST, September 2nd 2020
Why the world finds it extremely difficult to trust Chinese technology companies anymore
There has been controversy surrounding many of the Chinese technology companies and their exponential growth. The simple reason being China is not a democracy.
- Opinion
- 15 min read
On June 30, 2020, the US Federal Communication Commission (FCC) designated Huawei and ZTE as ‘national security threat’. In its official press release, it stated, ‘FCC’s Public Safety and Homeland Security Bureau formally designated two companies- Huawei Technologies Company (Huawei) and ZTE Corporation (ZTE), as well as their parents, affiliates, and subsidiaries- as covered companies for purposes of the agency’s November 2019 ban on the use of universal service support to purchase equipment or services from companies posing a national security threat.’
Back in 2018, when President Trump signed the John McCain National Defence Authorisation Act, it formalised imposition of restrictions on US Government Departments and Contractors from using federal resources for the acquisition of any kind of equipment in the realm of surveillance and telecommunication from Chinese companies such as Huawei, ZTE, Hytera, Dahua, and Hikvision.
In June 2020, Pentagon came out with a list of Chinese companies which ‘are owned or controlled by China’s military that includes the likes of Aviation Industry Corporation of China, China Aerospace Science and Technology Corporation, China Aerospace Science and Industry Corporation, China Telecommunications Corporations, China Mobile Corporations Group, China Electronics Technology Group Corporation, Huawei Technologies, Hangzhou Hikvision Digital Technology Corporation, China Nuclear Power Corporation, China Mobile Communications Group to name a few.
After the FCC of the US, designated Huawei as a national security threat, the UK Government banned Huawei for 5G as was also done by Australia and New Zealand much earlier. Later, in early August, US Administration came out with Executive Orders signed by US President that declared complete barring on transactions with WeChat and Tiktok in 45 days’ time. Later Tiktok was given a revised time extension of 90 days to divest its US operations.
The Real Issue: Role of the Chinese Communist Party
Over the years there has been much controversy surrounding many of the Chinese technology companies especially in the realm of telecommunications and information technology (IT) sector, their exponential growth as well as the mystery surrounding their ownerships. In most democracies, there are clear cut distinctions between civilian and military sectors and mostly they are kept segregated, but not in China. The simple reason being China is not a democracy, and it would be futile or foolhardy to analyse China through the prism of a democratic society.
From Trojan Horse to Trojan Technology?
From networking companies like Huawei to mobile handset companies like ZTE to surveillance equipment makers such as Hikvision to mobile apps like Tik-Tok, the suspicion surrounding the surreptitious transmission of information to servers back in China and their alleged use by China Communist Party or People’s Liberation Army (PLA) for their unknown purposes has made many countries extremely uncomfortable on the issue of data sovereignty and integrity of networks with Chinese components in them.
Even in the case of critical sectors such as the power sector, with increased application of SCADA (Supervisory Control and Data Acquisition) systems and digitization of utilities in smart cities, there have been concerns surrounding the use of Chinese equipment and components due to threat to such sectors from a cyber vulnerability point of view, which can debilitate such systems during times of conflict as well as due to issues related to data generated in the system getting transmitted to servers elsewhere.
Mystery Surrounding China’s 863 Program
At the core of the concerns surrounding Chinese companies and their alleged deep bonding with the Chinese Communist Party (CCP) and PLA, lay the 863 programme that was initiated in the eighties of the 20th Century. The prime objective of the program was to develop China’s proficiency and leadership in the realm of cutting edge technology development and liberate China from compulsive dependence on western technology companies. As QIANG ZHI and MARGARET M. PEARSON of the University of Maryland, explains in their paper titled, 'China’s Hybrid Adaptive Bureaucracy: The Case of the 863 Program for Science and Technology', slogans related to the 863 programme include the need to “catch up to the West in science and technology” to “leapfrog” to benefit China’s industrialization and commercialization and to promote “indigenous innovation".
In an article published on May 15, 2013, by The Economic Times and titled, ‘NSC points to Huawei, ZTE’s links with Chinese military’, on the issue of 863 Program or PLA-863, the then National Security Council Secretariat of Government of India was quoted the following, "As per this programme, Huawei was mandated to focus on switches and routers, ZTE on mobile and fiber networks, Julong on switchboards and Legend on computers with the objective of dominating world telecom scene and strengthening its electronic warfare capabilities”.
The Impact of 863 Program
Over the decades, China’s incredible strides in the realm of telecom and computer hardware resulted in Huawei emerging as an entity with a $121 billion annual turnover and a pioneer in 5G technology while ZTE had a turnover of around $13 billion. There are several other companies of Chinese origin that have started dominating the global market in areas like routers, switches, mobile handsets, personal computers, social media apps.
Was there a Sinister Agenda Behind 863 Program?
The fundamental issue of concern is not the rise of the Chinese companies but their alleged deep linkages with the Chinese Communist Party (CCP) and People’s Liberation Army (PLA) as well as the manner in which communist China operates, which is fundamentally different from the way commercial organizations of democratic countries function.
As Taiwan’s Digital Minister was quoted by Nikkei Asian Review on the issue of Huawei in particular and Chinese companies in general, "There's no such thing as pure private companies in China. From the perspective of the PRC, the ruling party can change your leader whenever the situation is intense”. She was further quoted stating, “If you include them [China-linked companies] in the infrastructure then you have to be very careful every time you update the system, as that could make the network vulnerable to allowing a Trojan horse inside the system."
The Concept of ‘Backdoor’ and China’s Suspected Global Digital Surveillance Agenda
At the core of the concerns lies the concept of ‘Backdoor’ which in a generic parlay would mean a ‘method’ which surreptitiously bypasses all points of authentication to get access to critical information stored in computers, smartphones, or any other smart device associated with critical infrastructures and then passing off the information elsewhere without the knowledge of the device owner.
Getting access to privileged information stored in systems can severely compromise the financial and social integrity of people and can have a debilitating impact on national security, and functioning of critical infrastructures due to tampering, deletion, or transfer of data as well as unauthorized elements or adversaries getting remote access to systems that can devastate a country during times of conflicts especially in this era of network-centric warfare and ‘smart devices’ based utilities.
For long, there has been a huge concern surrounding integrity of Chinese devices, equipment, and Apps especially related to this very ‘backdoor’ transmission of data into servers in China. This concern was also recently vindicated by the US Secretary of State on whether American citizens should download the TikTok app, he replied, “Only if you want your private information in the hands of the Chinese Communist Party”.
Also, during a recent speech at The Richard Nixon Presidential Library & Museum, Mike Pompeo stated, "……we have urged countries to become Clean Countries so that their citizens’ private information doesn’t end up in the hand of the Chinese Communist Party. We did it by setting standards."
Suspected Role of Theft of Proprietary Technologies in China’s Technological Progress
It would be wrong to presume that China’s technological prowess is a purely indigenous development of systems and products. Espionage, reverse engineering, and stealing of intellectual property have all been part of it. In fact, even the recent face-off between the US and China over the American directive to China to close its consulate in Houston has a lot to do with China’s alleged ‘stealing’ of intellectual property. Earlier this year, the FBI had stated that China’s stealing of intellectual property is the ‘biggest law enforcement threat to United States’ with over 1000 cases of on-going investigations on China’s technological theft (guardian). Shockingly, in March 2019, as per CNBC, ‘One in five North American-based corporations on the CNBC Global CFO Council says Chinese companies have stolen their intellectual property within the last year. In all, 7 of the 23 companies surveyed say that Chinese firms have stolen from them over the past decade’.
China’s National Intelligence Law & Concerns Surrounding Chinese Technology Companies
The concern surrounding Chinese technology companies is more profound because of what China’s stringent National Intelligence Law of 2017 mandates. Of specific concerns are Article 7 and Article 14. While Article 7 mandates that “any organization or citizen shall support, assist, and cooperate with state intelligence work according to law”, Article 14 empowers the intelligence authorities to make sure that Article 7 is enforced and complied with. It states, “state intelligence work organs, when legally carrying forth intelligence work, may demand that concerned organs, organizations, or citizens provide needed support, assistance, and cooperation.”
Therefore, the scenario as it stands is that there are a bunch of proficient technology companies of Chinese origin netting the world in their web of technology-based services and in turn, the data generated from people across the world is allegedly transmitted back to servers back in China with the CCP backed authorities having unbridled legal authority to access that information and the Chinese companies bound by Chinese laws to share them. With the information of all kinds of every major individual across countries, across professions, and influencers at their disposal, would it be too wrong then to guess that the Chinese Communist Party (CCP) would use it to plot their unchallenged journey towards the 2049 goal of dominating the whole world through information war and unbridled access to critical information of even key policymakers of other countries at the touch of the screen?
The Alarming Level of Penetration of Chinese Technology Companies
In fact, the level of penetration those Chinese companies have been allowed by even major countries of the world in spite of being aware of their opaque culture and suspected links with Chinese PLA and CCP is shocking. Take for example the case of British Police agencies whose ‘thousands of officers’ uses radio sets made by a Cambridge based entity called Setura, which in turn is owned by Shenzhen based Hytera, an entity that has been blacklisted by the Trump Administration from all kinds of Government contracts. Major concerns surrounding this have been raised in British newspapers. In the realm of ‘digital backdoor’ is it impossible that such radio sets of Chinese origin end up passing off critical information, related to critical VVIP movements or security situation in such countries, back to Chinese leadership, even as security officials would be communicating through the Chinese made handsets being unaware of the dangers associated with it?
This is exactly the fear that Mike Pompeo echoed when he stated on the issue of Huawei the following, ‘“We don’t have an end state that we seek from Huawei. We have an instinct for the people in the United States, which is to make sure that ... the private data that belongs to Americans doesn’t end up in the hands of the Chinese Communist Party”. The government of India has also done the right thing in the same line by banning several Chinese Apps.
The Chinese threat in the Realm of Network Centric Warfare and Digitized Infrastructure
In this era of network-centric warfare and increasing digitization of cities, no country can afford to have a backbone of IT infrastructure procured from a country like China ruled by a regime with a sinister objective of dominating the world and having utter disregard to liberal values or consumer privacy. Also, over the last decade, cyber-attacks on critical infrastructures have become a norm than an exception whose threat becomes more profound when network hardware or software is compromised. In case of a major conflict, unless properly taken care of, state-funded hackers of an adversary state can target critical power, telecom, transport, and industrial infrastructures to debilitate the host country’s economy and warfighting machinery.
This becomes especially relevant in the case of China because of the manner in which Chinese hackers have become a menace for the world over the last decade. It is also important to remember that in an era of hybrid warfare, the distinction between military and civilian infrastructure gets redundant. Critical infrastructures in the sphere of civilian sectors such as the power sector or telecommunication sector are as critical as military infrastructures are. In conflict scenarios, the adversary may attempt to target civilian critical infrastructures to destroy a nation’s economy and industrial ability to sustain a war.
China’s Information and Cyber Warfare Amidst Global Spread of Chinese Technology
It goes without saying that China’s cyber warfare and cyber espionage machinery has proliferated almost at the same pace and time when Chinese telecom and IT infrastructure companies were casting their web far and wide and expanding their footprint across the world. The key question is whether there a sinister connection between the two and whether digital backdoor has a role to play in it.
Also, price undercutting and subsidy from the state made sure that Chinese companies could easily bid for and grab global contracts in other countries because neither finance nor profit-margins were an issue since the Chinese state allegedly compensate Chinese companies for both. While the world played by the rulebook related to global bidding of tenders, China allegedly used it to kill competition and gain access to other countries’ markets through price undercutting to install their own technology and perhaps with ulterior motives not noble enough. However, it is only now that the world is waking up to reality.
One has to remember that suspicions of close linkages between many of China’s global companies and the Chinese Communist Party are not without any reason. Recent revelations surrounding how ByteDance, which owns Tiktok, censored all kinds of information in Indonesia that were even remotely critical of China, shows how the Chinese technology companies and CCP in Beijing coordinate to farther the Chinese agenda.
How India is Countering the threat from Chinese Technology Companies
Over the last few years, India has been extremely nuanced, measured, and yet assertive while dealing with China. It even put efforts to improve relations with China but after what China did in Ladakh in addition to its alleged cover-up on the COVID issue that has put the entire world at risk, it is extremely difficult for India to trust China anymore.
The government of India, therefore, has done the right thing by banning Chinese equipment in the power sector and by banning several Chinese apps. It is also expected that India would not have Huawei in its future 5G networks and it is also imperative that India over the next few years develop that kind of proficiency in the realm of telecom hardware as it has developed in IT services of automobile manufacturing.
While India is already one of the largest manufactures of mobile phones in the world, it should ideally emulate its success in the automobile sector by forging alliances with countries like Taiwan, South Korea, and Japan to develop domestic capabilities in semiconductors and chip manufacturing. One can already witness some of that happening with some major Taiwanese telecommunication equipment manufacturers like Pegatron, Foxconn, and Wistron gradually shifting their base of operations in India.
In this respect, it is also important to mention here that the announcement of Reliance JIO that it has developed a completely indigenous 5G solution has shown that Indian companies have the proficiency to develop cutting edge technology and it would not be much of a problem for India to eventually replace Chinese equipment in the sphere of critical infrastructure.
Chinese Technology Comes with Baggage of Chinese Agenda
On a concluding note, it can be stated, that China’s objective of advancing the 863 Program seems nothing more than a tool to farther its own political agenda of global subjugation through technological. Amidst the crisis all around with Chinese hegemony and diabolical objectives getting exposed like never before, countries across continents are taking the right decision in shunning Chinese companies.
Is Free Trade with Communist China Possible in the Future?
The concept of free trade in a free world, as well as free flow of ideas and technologies, can only make sense if transacting countries are all democratic and transparent. China is neither. That is good enough reason to maintain an arm’s length distance from them in the sphere of procuring critical technology applications and equipment from them. One never knows what Trojan Horse or ‘Trojan Technology’ they are pushing in to be used later by the masterminds sitting in Beijing for their own sinister agenda. What they have done in Hong Kong in the recent past through the imposition of National Security Law and the manner they are threatening war on Taiwan are proof enough of the global concerns surrounding the Chinese game plan. China may have sold goods across the globe but they have completely failed to buy the trust of the world.
(Image credits: AP)
Disclaimer: The author of this article, Pathikrit Payne is a New Delhi based Geopolitical Analyst. The views and opinions expressed within the article are the personal opinions of the author. The facts, analysis, assumptions and perspective appearing do not reflect the views of Republic TV/ Republic World/ ARG Outlier Media Pvt. Ltd.
Updated 18:18 IST, September 2nd 2020