GLENDA KORPORAAL

The Weekend Australian - - FRONT PAGE - GLENDA KORPORAAL

The ar­rest of Huawei ex­ec­u­tive Meng Wanzhou con­firms that a new Cold War is be­ing played out in the tech­nol­ogy sec­tor.

Busi­ness ex­ec­u­tives in Western coun­tries such as Aus­tralia will now have to think twice about us­ing Chi­nese tech­nol­ogy — be­ing forced to make a Cold Wardriven choice re­gard­less of the fact that the Chi­nese tech­nol­ogy maybe cut­ting edge and bet­ter value. While Meng still faces ex­tra­di­tion to the US on un­known charges, the move by the US Jus­tice De­part­ment is be­lieved to have been part of its in­ves­ti­ga­tion into whether she was in­volved in breach­ing sanc­tions against Iran.

The move — which comes af­ter gov­ern­ments in Aus­tralia and New Zealand have banned Huawei and fel­low Chi­nese tech gi­ant ZTE from sup­ply­ing equip­ment for the next gen­er­a­tion 5G net­work, on the grounds that their tech­nol­ogy could be open to in­ter­fer­ence from the Chi­nese gov­ern­ment — raises con­cerns that the Jus­tice De­part­ment has new un­spec­i­fied in­for­ma­tion against Huawei, or at least Meng as the com­pany’s chief fi­nan­cial of­fi­cer, deputy chair and daugh­ter of the com­pany’s founder.

While the is­sues and al­le­ga­tions have yet to be aired in a court and Huawei in­sists that it has com­plied with the law in all the coun­tries it op­er­ates in, Aus­tralia is in­evitably be­ing drawn into a US-led Cold War on the tech front with China.

As the China Daily spelled out in its ed­i­to­rial, US al­lies in­clud­ing Aus­tralia are be­ing drawn into a Cold War by Wash­ing­ton press­ing its al­lies to cut ties with Huawei “claim­ing its equip­ment poses strong cy­ber se­cu­rity risks”.

Re­gard­less of whether the con­cerns about Huawei are jus­ti­fied or not — and Meng has not had a chance to de­fend her­self — the fact that Aus­tralia is part of the Five Eyes in­tel­li­gence shar­ing pact be­tween the US, Bri­tain, New

Zealand and Canada is draw­ing it into a tech­nol­ogy fu­ture where the US view of se­cu­rity is­sues will in­creas­ingly in­flu­ence busi­ness de­ci­sions.

The red lines are be­ing drawn by the se­cu­rity sec­tor be­tween Chi­nese and Western tech­nol­ogy sup­pli­ers.

US-based China watcher Bill Bishop spelled this out in the lat­est edi­tion of his news­let­ter Sinocism.

“Any for­eign and es­pe­cially US tech­nol­ogy firm that has sup­ply chain re­liance on China needs to be deep into plan­ning for re­duc­ing that re­liance, no mat­ter how hard, painful and ex­pen­sive such a shift would be,” he wrote.

“Boards of di­rec­tors of those com­pa­nies are neg­li­gent at this point if they are not push­ing the com­pany to do this plan­ning.”

Con­cerns about Chi­nese anger at Meng’s ar­rest have al­ready raised fears that US tech­nol­ogy ex­ec­u­tives could be vul­ner­a­ble to ar­rest if they vis­ited China.

While Bishop re­jected the idea, he warned that ex­ec­u­tives should hold off planned vis­its to China. “If I were a US tech ex­ec­u­tive I would de­lay travel to China or go on a va­ca­tion if I was based there,” he said.

Meng’s ar­rest has capped off a hor­ror week for Huawei, the world’s largest sup­plier of tele­coms equip­ment which has a long his­tory of op­er­at­ing in Aus­tralia, in­clud­ing sup­ply­ing Op­tus and Voda­fone with their 3G and 4G tech­nol­ogy, and sup­ply­ing ser­vices to state gov­ern­ments in­clud­ing NSW and Western Aus­tralia.

In Au­gust this year the Trump ad­min­is­tra­tion passed leg­is­la­tion ban­ning Huawei and ZTE from sup­ply­ing equip­ment for gov­ern­ment oper­a­tions.

While Huawei has op­er­ated in Bri­tain for years, net­work gi­ant BT — which has used Huawei equip­ment for al­most 15 years — an­nounced this week that it will not con­sider bids from Huawei for its 5G net­work.

This fol­lows pres­sure by UK in­tel­li­gence and se­cu­rity of­fi­cials.

BT also con­firmed it would be re­mov­ing Huawei com­po­nents from its core 4G tech­nol­ogy net­work although it will con­tinue to use its equip­ment for other parts of the net­work.

The de­ci­sion fol­lowed com­ments by Alex Younger, the head of the UK se­cret in­tel­li­gence ser­vice MI6, that the gov­ern­ment should ques­tion Huawei’s in­volve­ment in Bri­tain’s 5G roll out.

“We need to de­cide the ex­tent to which we are go­ing to be com­fort­able with Chi­nese own­er­ship of these tech­nolo­gies and these plat­forms in an en­vi­ron­ment where some of our al­lies have taken quite a def­i­nite po­si­tion,” he said.

Yes­ter­day also saw re­ports from Japan that the gov­ern­ment was also set to ef­fec­tively ban gov­ern­ment pur­chases from Huawei and ZTE over fears of in­tel­li­gence leaks and cy­ber at­tacks.

Japan’s Yomi­uri news­pa­per said the gov­ern­ment was ex­pected to re­vise its pro­cure­ment poli­cies.

In an in­ter­view with The Aus­tralian at a con­fer­ence hosted by ANZ in Sin­ga­pore in Oc­to­ber, New York po­lit­i­cal sci­en­tist Ian Brem­mer warned that Aus­tralia’s eco­nomic ties with China could suf­fer if it was forced to choose sides in a global “tech­nol­ogy Cold War”.

Mr Brem­mer, who is pres­i­dent of po­lit­i­cal risk firm Eura­sia Group, said it was in­creas­ingly likely that the world would see two dif­fer­ent tech sys­tems — one dom­i­nated by the US and an­other by China — cit­ing Aus­tralia’s de­ci­sion to ban Huawei from sup­ply­ing the 5G net­work as a prime ex­am­ple of the trend.

“Over the next 10 years, it is plau­si­ble that we will end up with a frag­mented tech­nol­ogy sys­tem — with two in­ter­nets, one Amer­i­can and one Chi­nese, two sys­tems of big data,” he said.

“Coun­tries will have to choose which sys­tem they want to be on.” Mr Brem­mer said if Aus­tralia were forced to choose it would most likely opt for a USled tech­nol­ogy sys­tem.

“If Aus­tralia has to choose, it would most likely choose the Amer­i­can sys­tem be­cause of its Amer­i­can na­tional se­cu­rity ori­en­ta­tion, which will prob­a­bly have neg­a­tive im­pli­ca­tions for a lot of your other in­dus­tries do­ing busi­ness with China,” he said.

“Right now, Aus­tralia has a great se­cu­rity re­la­tion­ship with the US and a great eco­nomic re­la­tion­ship with China.

“It is not clear, in 10 years’ time, if the US ver­sus China is go­ing to be a big tech­nol­ogy play, that Aus­tralia is go­ing to be able to do the same.

“If there is a tech­nol­ogy war be­tween the Amer­i­cans and the Chi­nese, coun­tries like Aus­tralia have to choose. And that is re­ally dan­ger­ous,” Mr Brem­mer said.

“It means they don’t have the abil­ity to be as flex­i­ble in hedg­ing be­tween the great pow­ers as they do now,” he said.

“If you have to make a tech­no­log­i­cal choice, it will have eco­nomic im­pli­ca­tions.

“It will ob­vi­ously have knock on ef­fects. If your coun­tries are fun­da­men­tally fight­ing in tech­nol­ogy, then prob­a­bly the Chi­nese are go­ing to be more in­ter­ested in send­ing their tourists to other places.”

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