Growth hopes, spying risks mix for Huawei in SE Asia
Chinese telecom giant looks to neighboring region to roll out 5G networks US, Australia and others have blocked due to national security concerns
When Australia banned China’s Huawei from supplying equipment to its planned 5G mobile network for reasons of national security, it resurrected stubborn questions about whether Chinese tech firms can be trusted as neutral operators.
Huawei, China’s and the world’s largest telecoms equipment manufacturer, has also faced difficulties this year in the United States, where there are similar concerns about how close the private-owned company is to China’s communist rulers.
But while some Western nations are increasingly concerned about China’s technological reach and intent, neighboring Southeast Asian countries are less alarmed, as they reach to China to help build 5G networks they lack the know-how to do independently.
But technology analysts warn that could come at a cost to cybersecurity and as a result national sovereignty.
Tim Wellsmore, director of threat intelligence for the Asia-Pacific at FireEye, an internet security research company, says that Southeast Asian nations should think carefully about who develops their telecoms infrastructure because “it provides a reliable means to access the crown jewels of any government covertly.”
“China, as do others within the Asia-Pacific region, has a strong interest in the political, economic and military posture of the emerging nations,” he added. “It is…certainly not beyond the capabilities of advanced nations to use new infrastructure projects, such as 5G rollout, to increase their telecommunication network accesses for espionage purposes.”
Huawai is eager to help build 5G infrastructure in neighboring Southeast Asia, particularly as it loses potential opportunities in Western countries like the US. The firm’s regional president, James Wu, said at a conference in February that he is “very confident in economic growth of Southeast Asia as well as our capability in building telecommunication infrastructure there.”
At the 4G/5G International Conference 2018 held in Hanoi in April, Huawei’s representatives spoke of the firm’s plan to help bring 5G technology to Vietnam by 2020. In Thailand, Huawei reckons it can help unfurl a nationwide 5G network within four years, the company said in March.
In the Philippines, Huawei has partnered with two locals telecom companies, Smart Communications and Globe Telecom, to fast-track 5G infrastructure development. Hand-in-hand with Huawei, Smart trialed a 5G network at its headquarters in June, has opened a 5G Technolab for research and aims to launch a nationwide network by next year.
Outside of Southeast Asia, Huawei took part in a test run for 5G mobile internet in Bangladesh in July, the first such trial in South Asia.
Huawei’s “Global Industry Vision 2025” plan predicts there will be around 40 billion personal smart devices and 100 billion connections globally in the next seven years. “The Industrial Internet will be the major source of these 100 billion connections,” says its plan, which was released in April.
5G technology networks will drive the so-called “industrial internet”, which many experts think China could unroll by 2020, most likely before the US.
Beijing has staked plenty of nationalist posturing on beating America to the 5G goal. “In the past, we tightened our belts, gritted our teeth and built the two [atomic and hydrogen] bombs and a satellite,” President Xi Jinping said in April. “In the next step of tackling technology, we must cast aside illusions and rely on ourselves.”
Functioning 5G networks could be a boom for Southeast Asian economies, many of which were late in launching 4G networks, and would be instrumental in expanding already fast-growing e-commerce markets.
A joint report published last year by Google and Temasek, Singapore’s sovereign wealth fund, predicted the region’s internet economy to be worth US$200 billion by 2025, up from US$50 billion in 2017. Southeast Asia already has the world’s fourth-largest internet population by region.
Frost & Sullivan, a consultancy group, expects there to be 280 million 5G subscriptions in the Asia-Pacific region by 2022, which will bring in revenues of US$4.5 billion, it asserted in a recent report. Of these, the majority will be based in China, Japan and South Korea, though Southeast Asian nations won’t lag far behind.
Kim Andreasson, managing director at DAKA advisory, a cybersecurity and e-government consultancy, reckons “market competition should decide who will develop 5G infrastructure [in Southeast Asia], as there are other ways to monitor national security concerns rather than simply banning foreign companies.”
Western countries are clearly split in this regard. In 2012, six years before last month’s announced ban, Australia blocked Huawei from providing technology to its National Broadband Network, likewise over national security and spying concerns.
That same year, the Economist magazine wrote: “Westerners fret that the networks [Huawei] is building are used by Chinese spooks to eavesdrop during peacetime and could be shut down suddenly during wartime. They see the firm as a potent weapon in China’s burgeoning cyber-arsenal.”
Those worries were amplified by a new national intelligence law passed by Beijing last year that requires its nationals and businesses to “support, co-operate with and collaborate in national intelligence work” at its request, effectively drawing them into China’s intelligence network.
Not all Western nations have closed their doors to China. Canada, for one, has opposed any outright ban on Chinese tech firms from being involved in infrastructure development, but has stressed it possesses the necessary safeguards against Chinese spying.
In fact, Canada has bucked pressure from the US that partners in the so-called “Five Eyes” intelligence-sharing alliance, namely Canada, Britain and New Zealand, join the US and Australia in banning Huawei and other Chinese firms from supplying infrastructure equipment.
The potential risk for Southeast Asia is that most are lacking in regard to cybersecurity.
“As countries in Southeast Asia improve on their digital development journey it is important to pay closer attention to cybersecurity, or the potential negative consequences will rise tremendously,” Andreasson says.
A recent report by AT Kearney, a global management consulting firm, found that while countries globally spend on average 0.13% of gross domestic product (GDP) on cybersecurity, Southeast Asian nations spend just 0.06%. Only Singapore spends more than the global average, the study found.
The same report asserted that if regional businesses don’t move soon to improve their cybersecurity, then it could cost the top 1,000 firms roughly US$750 billion combined in market capitalization. The firm’s complex calculation accounts for the cost of data breaches, investment shortfalls after cybercrimes, and possible financial losses caused by the event, among other factors.
It’s not just Southeast Asian businesses that stand to lose. Recent years have also seen rising levels of cybercrime committed against state actors in the region.
“China has an exceptionally active state-sponsored cyber-threat capability, which often includes Southeast Asian governments in its targeting scope. They run a high volume collection operation which helps inform their strategic decision-making, and is a key part of their government capability,“ says Wellsmore, of FireEye.
FireEye asserted in a recent report that Chinese cyber-espionage groups, some of which may be state-aligned, have attacked political and non-governmental organizations in Belarus, the Maldives and Cambodia.
It is thought these attacks were related to gaining an “information advantage and [to] collect business intelligence on individual projects and agreements” from foreign nations in which China has invested big as part of its US$1 trillion Belt and Road Initiative (BRI), the report states.
The Cambodia attack, which took place weeks before the country’s general election this July, reportedly breached the computers of the National Election Committee, several important ministries as well as opposition politicians.
There are also analyst claims that Chinese hackers were behind the recent cyber-attack on SingHealth, Singapore’s largest public health care provider, in which the information of more than 1.5 million patients was stolen, including the health records of Prime Minister Lee Hsien Loong.
Analysts say this could have been done to blackmail politicians or business leaders with sensitive information. The FireEye report also claims that Chinese hackers could now be targeting the new Malaysian government, which ousted the pro-China administration of Najib Razak at May’s general election.
Malaysian Prime Minister Mahathir Mohamad has since scrapped several Chinese-funded megaprojects worth roughly US$22 billion. In a not-so-subtle jab at China, he said while in Beijing that “unfair” deals could create “a new version of colonialism” if poorer nations cannot compete with richer countries.
With Mahathir’s stand against Chinese investment, “expect espionage activity against Malaysian organizations [to] increase in an attempt to gain insight into current events,” Sandra Joyce, FireEye’s head of global intelligence operations, said in a report.
Huawei has long denied that its technology is compromised or that it is working on behalf of the Chinese Communist Party. It made the same assertion at a US House Intelligence Committee in 2012.
But not everyone is convinced. There are suggestions that China’s ruling Communist Party now thinks its tech companies have grown so large that they now pose a political threat and need to be managed more tightly.
Indeed, when Jack Ma announced earlier this month that he will resign as chairman of Alibaba Group, a US$420 billion internet company that rivals US e-commerce giant Amazon, it was widely rumored to be at the behest of the Communist Party.
“Under President Xi Jinping, China’s internet industry has grown and become more important, prompting the government to tighten its leash,” the New York Times reported after Ma’s decision to step down.
Southeast Asian governments will need to weigh carefully the risks associated in dealing with Chinese telecom and technology companies, with potentially more hazards on the horizon if the region doesn’t significantly bolster its cybersecurity apparatus.
With the region increasingly at the center of a geopolitical contest between China and the US, much of which is now being played out in the cyber-sphere, the stakes are high and rising.
“There is a cyber superpower battle between China and the US, not only in Asia but across the world. Cyber has been labelled as the ‘fifth dimension of warfare’ and we are only in the early days,” says Andreasson.
The cyber superpower contest will likely be fought on many fronts, but a blitzkrieg first strike assault will be launched by the first country which can start deploying nationwide 5G networks worldwide.
A leaked US National Security Council document from January asserted that if China dominates 5G networks, then Beijing “will win politically, economically, and militarily.” Some experts don’t expect America to unroll a nationwide 5G network before 2020; projections for China are for much sooner.