The China Monologues

China, the largest creditor of the United States, has been in the news of late. On Sunday the CBS news program 60 Minutes had a story about a Chinese company called Huawei, a company that makes internet and networking equipment like routers, switches, and has the capability to build things like 4G networks. Huawei has become the largest telecommunications equipment maker in the world.

I’d never heard of Huawei before but apparently my iMac already has. As I write this post the text “Huawei” is already recognized by my inline spellchecker dictionary.

A U.S. congressional report recently released worried that Huawei and ZTE Corp., another Chinese company, have become too powerful and are a potential threat to U.S. national security. The report was produced over the last 11-months by the U.S. House of Representatives’ Intelligence Committee and concludes that the companies could be working with the Chinese government for non-commercial reasons.

The primary concern seems to be that complicated computer networking equipment could be used for espionage or attacks against the United States. The companies deny such allegations but there is some speculation that if the Chinese government ordered them to do so, they would not have the ability to say no. For example, Huawei has a Communist Party office installed in its headquarters in Shenzhen.

Criticisms about Huawei are vehemently called “rumors” by the company and include allegations of intellectual property theft of source code from routers and switches, security concerns that company is compliant to demands from the Chinese government and the Chinese People’s Liberation Army, and that the company has suspect treatment of its workforce and customers.

I’m not going to go into detail about these “rumors.” If you are interested, more information is readily available by searching the internet. Perhaps some Huawei equipment will even help with the process.

Since the U.S. inquiry and the report expressing concerns about over-reliance on a foreign entity for technology now considered vital to our existence, China and the companies have responded by claiming innocence and with some potentially ominous sabre rattling. The Wall Street Journal reports today that the Chinese government itself has entered the fray by warning that U.S. concerns could harm U.S.-China relations.

I have two other points to make regarding this brouhaha that I feel are telling.

In the name of greed U.S. corporations have shipped manufacturing overseas to China for cheap labor rather than allowing U.S. workers to do the job. In return, it is believed that Chinese companies have reverse-engineered technologies for their own gain. Additionally, this year, a new wrinkle was added when there was speculation that computer chips made in China for U.S. companies might contain “backdoors.” The warning came from researchers at Cambridge University and included computer chips potentially used by the U.S. military, weapon systems, nuclear power plants and public transportation.

Other experts disputed the danger posed by the backdoor, stating that backdoors in computer technologies are “common” but “rarely malicious” and that the one identified by Cambridge was probably benign.

If this all sounds rather paranoid, it should be noted that China has been working hard for years on its own computer chips to avoid reliance on U.S. technologies out of concerns that foreign-made chips should not be part of their defense systems and military equipment. The chip project is sponsored by the Chinese government. Link: People’s Processor.

Secondly, China doesn’t want to be reliant on U.S. companies for its own fleet of commercial airplanes, either. China has a plan to develop their own large commercial aircraft by 2020.

… experts said the latest plan appeared to be plausible given the technological prowess China has gained from building parts for foreign makers.

Source: New York Times

Ironically, the concerns raised about a backdoor in a computer chip made in China were specifically related to a Boeing 787 aircraft. Link: The Guardian. The concern may or may not have held up (followups to this story are hard to find) but the report itself is enough to indicate the potential for problems with technology issues in U.S.-China relations.

Perhaps we should listen to China. The lady doth protest too much, methinks. China doesn’t want and/or trust U.S. computer chips for their own military. China doesn’t want to be reliant on U.S. companies like Boeing for their commercial aircraft needs. China is the largest creditor of the U.S. Lastly, China wants Chinese companies like Huawei to maintain a dominance on technologies upon which the U.S. is extremely reliant.

If that’s the way China sees it then perhaps a little prudence and wariness on our part isn’t such a bad thing after all. After all, we’re the home of caveat emptor. Let the buyer beware.