SYDNEY (AFP, REUTERS) - Chinese telecom giants Huawei and ZTE have effectively been banned from rolling out Australia's 5G network, after Canberra said Thursday (Aug 23) there were security risks with companies beholden to foreign governments.
Huawei - one of the world's largest telecommunications equipment and services providers - has been under scrutiny in some countries including the United States and Australia over its alleged close links to Beijing.
Huawei was blocked from bidding for contracts on Australia's ambitious national broadband project in 2012, reportedly due to concerns about cyber-security. The company has long disputed claims of any links to the Chinese government.
The federal government said in a statement that the "involvement of vendors who are likely to be subject to extrajudicial directions from a foreign government that conflict with Australian law" posed a security risk.
Acting Home Affairs Minister Scott Morrison and Communications Minister Mitch Fifield added that there was "no combination of technical security controls that sufficiently mitigate the risks".
The statement did not name the Chinese firm specifically, but a government official who declined to be named said the order was aimed at Huawei and precluded its involvement in the network.
Chinese law requires organisations and citizens to support, assist and cooperate with intelligence work, which analysts say can make Huawei's equipment a conduit for espionage.
"That's what you get when you have the aligned strategy of a Chinese company with the Chinese government," said John Watters, Executive Vice President and Chief Corporate Strategy Officer of cybersecurity firm FireEye Inc.
"(Australia) basically made a decision to spend more money to have more control over their national communication system, because they're up against a competitor that will sacrifice near-term margin for long-term intelligence advantage," he said.
Huawei's Australian arm, which strenuously denies it is controlled by Beijing, said on Twitter on Thursday that the action was an "extremely disappointing result for consumers".
"Huawei is a world leader in 5G. Has safely & securely delivered wireless technology in Aust for close to 15 yrs."
Like their US counterparts, Australian security authorities have for months worried Huawei's ties to the Chinese government opened a possibility that its equipment could be used for espionage, drawing increasingly pointed denials from the firm.
Huawei, the world's largest maker of telecommunications network gear and the No. 3 smartphone supplier, had offered Canberra complete oversight of 5G network equipment, which could include base stations, towers and radio transmission equipment.
The development on Thursday came amid tensions between Beijing and Canberra that has seen Australia refocus its foreign aid programmes to win hearts and minds in Pacific nations.
Beijing has been flexing its muscles in the Pacific and extending loans to the impoverished nations, with Australia raising fears some might get trapped with unsustainable debts, handing China influence.
Canberra in June said it would negotiate a security treaty with Vanuatu and also fund and build an underseas communications cable to the Solomon Islands and Papua New Guinea.
The Solomons arrangement came after the Pacific nation was convinced to drop a contract with Huawei.