Australia angers China over broadband contract

by Mark Benson on March 28, 2012

in General Information

Is the special relationship on the line?

The Australian authorities have angered their Chinese counterparts with a decision to block Chinese telecoms giant Huawei from any involvement in the forthcoming $38 billion national broadband network project. The situation has been discussed at the highest political level and while there is some mystery regarding the decision to block the company from involvement in the project it has caused major displeasure in China.

The Australian broadband network project

The $38 billion national broadband network project is one of the largest infrastructure projects ever released to the commercial market. It will see high-speed Internet access across the vast majority of Australia with only the most rural and desolate areas of the country missing out. It is part of the Australian government’s ongoing challenge to push forward the economy and attract more and more interest from e-commerce companies and worldwide trade.

The project is currently in the bidding stage and while bids have been welcomed from a whole host of companies around the world, and indeed in Australia, Huawei has been crossed off the list.

National security of protectionism?

The Australian authorities have made this situation even more difficult than it should have been by releasing snippets of information into the public domain. This suggests that the blocking of any bid from Chinese telecoms giant Huawei is based upon security information and security issues but they are not willing or able to issue the raw data upon which the decision was made. There have been general mumblings regarding international security issues and the fact that the Internet is being used on a regular basis by state sponsored gangs around the world to eavesdrop on individual networks – but no evidence.

Is Australia a target for the cyber spies?

The Australian Security Intelligence Organisation seems to be at the centre of the decision to block any bid from Huawei and has recently been commenting upon the threat from cyber spies upon the Australian economy and the Australian government. It is common knowledge that some state funded operations around the world have been eavesdropping on their overseas counterparts using cyber spies and high-tech Internet equipment. But why has Huawei been dragged into the situation?

There are unsubstantiated allegations regarding possible “backdoors” in the source code of the Huawei Internet service which some sceptics believe would allow the Chinese authorities to gain access to Internet data in Australia. The ability to eavesdrop on communications via the Internet could potentially give rogue states access to highly confidential and highly sensitive information. However, the Chinese telecom giant Huawei has already offered to open up its source code for vigourous appraisal to show that there are no “backdoor” entry points.

Why is Huawei still trading in Australia?

One question which remains unanswered by the Australian authorities is the fact that, while the decision to effectively ban Huawei from entering a bid for the $38 billion Internet network project, the company is still very active in Australia. It is one of Australia’s largest vendors of telecoms equipment which is sold to telecom operators and Internet service providers. If the authorities believe that the company may well have compromised, or may in the future compromise, Australian national security then access to the Internet and telecoms network via the vendor market must surely be as dangerous?

Pressure is growing upon the Australian authorities to release more data regarding their decision although they have recently confirmed it was taken after advice from Australian security services. Whether the authorities will continue to hide under the blanket of “national security” remains to be seen but there are major questions which need to be answered as soon as possible.

Is China a threat to Australian security?

There have been unsubstantiated allegations regarding Chinese state sponsored cyber spies for many years and indeed some parties believe that “proof” has been found. There have been cyber attacks around the world, cyber spies have been tracked and much of the rogue Internet activity would seem to emanate from China. However, the Chinese authorities have refuted all allegations of cyber spying and indeed have made their own allegations with regards to US activity and indeed some of the Internet’s largest companies have not escaped the wrath of China.

In reality it is highly unlikely that many countries around the world have not at least looked at the opportunity to spy on their overseas counterparts via the Internet. There are so many security issues and security patches on the Internet today that no network can ever be completely safe.

Will this impact upon Australia’s relationship with China?

It is becoming more and more evident that the Australian economy is very dependent upon China and India with regards to exports of mining materials. Therefore it is all the more bizarre that the Australian authorities would look to launch a stinging attack on Chinese telecom giant Huawei without reliable evidence. Until this evidence is brought into the public domain there will continue to be rumours and counter rumours regarding the reasons for taking this action.

Whatever the reasons for taking this specific action, damage has been done to the relationship between China and Australia and some of Australia’s leading businesses are up in arms. There are serious concerns that projects currently in the discussion stage with Chinese counterparts may well come under pressure and impact the financial viability and profitability of Australian companies going forward. It would be foolish to believe there will be no backlash from the Chinese authorities but without clear evidence of subterfuge or spying it is difficult to see why the authorities would risk this key relationship.


The problem of cyber spying has been around for some time now and despite official denials by a variety of different governments around the world there is irrefutable evidence that it is happening on a regular basis. However, the decision of the Australian authorities to ban Chinese telecom giant Huawei from entering the bidding war for the enormous Internet contract has surprised many people. The decision would appear to have been taken on the grounds of national security, on the advice of the Australian security services, but no evidence has been put forward.

Whether or not this will impact the relationship between China and Australia in the short, medium and longer term is a matter for debate but it certainly won’t help.

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