The Chinese Government has “pervasive access” to 80 percent of the world’s communications even military-grade encryption no longer provides sufficient protection to sensitive data, a former Pentagon analyst warns.
Speaking on the Cyber Jungle podcast with host Ira Victor, former Pentagon analyst F. Michael Maloof claims that two mainland Chinese companies: Huawei and ZTE Technologies are providing the Chinese government with the ability to access deployed equipment and services, which are used by 45 of the top 50 telecommunications centers in the world. This, Maloof argues, gives the Chinese government and People’s Liberation Army unbridled, backdoor access into data and proprietary information belonging to some 140 nations. That access could enable widespread spying and sabotage in the event of hostilities, he said.
Maloof, a former senior security policy analyst in the Office of the Secretary of Defense, isn’t the first to sound alarms about the danger of China using its technology exports as a beachhead for cyber espionage or national defense. Secretary of Commerce John Bryson told a Congressional subcommittee (PDF) in April that the Commerce Department is “very focused” on Huawei and said the company has “capabilities that we may not fully detect to divert information.”
Maloof did little to add meat to those opaque warnings. He cited anonymous sources as saying that any information travelling through a network that uses Huawei equipment should be considered compromised unless it uses military encryption, and “even then, here is no doubt that the Chinese are working very hard to decipher anything encrypted that they intercept.”
Maloof said that the equipment produced by Huawei and ZTE Corporation is subsidized by the Chinese government, which decreases the cost of such equipment and makes it difficult for western firms to compete. The companies are also benefiting from generous, government-backed domestic and international development projects. State-backed Chinese banks finance national infrastructure deals that don’t ask for any equipment payment for years, he said.
The deals have helped Huawei and ZTE win their way into a number of big, international telecommunications deals including at Malaysia’s DiGi, the Philippines Globe, Russia’s Megafon, the UAE’s Etisalat, Brazil’s Tele Norte, and Reliance in India. The deals are good business for China’s fledgeling high tech industry, and also good strategy for the PLA, according to Maloof’s report, which can be read here.
Huawei officials have consistently denied that the company uses government subsidies to tip the scales in its favor. In June, Huawei’s global board director, Chen Lifang, told Reuters that the company benefits from the same kind of legal subsidies as its U.S. and European rivals. The company has also denied cooperating with the PLA or the Chinese government in any way.