China has moved into the spotlight in Australia as a security threat to national networks and technology infrastructure, casting further doubts about any significant benefits that might flow from last year’s so-called free trade agreement.
The former Labor Government, under then Communications Minister Stephen Conroy, shut out Chinese telecoms equipment maker Huawei Technologies from tendering for the National Broadband Network’s infrastructure on national security grounds.
The Shenzhen-based behemoth invoked a massive but unsuccessful lobbying effort to overturn the decision. This included employing former Foreign Minister Alexander Downer, former Victorian Premier Jon Brumby and former Admiral John Lord to form a ‘local board’ for Huawei’s Australian operation.
It did not cut any mustard with security agencies or the government. The decision to exclude Huawei remained.
Since then, the calculus regarding China as a regional, indeed global, security problem – if not outright threat – has only escalated with its aggressive island building program in the South China Sea and its increasingly anti-foreign nationalistic propaganda.
Just look to last week’s Olympic spat between Australian swimmer Mack Horton and his Chinese rival Sun Yang, a banned, verified drug cheat now back swimming, for how effectively Beijing can be in its propaganda arm to mobilise state-owned media outlets and citizens in a campaign against foreigners.
Now Chinese companies are back under the security spotlight in Australia as well as the United Kingdom under its no-nonsense new Prime Minister Theresa May.
Australia and the UK are two of the five member of the Anglo sphere’s Five Eyes spy network (the others are the US, Canada and News Zealand.)
Mrs May has put contracts under the microscope for the £18bn Hinkley Point C nuclear reactor project where a Chinese company is to finance a third of the new facility and may later build a Chinese-designed nuclear power station in Essex.
Mrs May was a critical of Chinese involvement when she was Home Secretary for six year ahead of her move into No. 10 Downing Street.
She has since said that the UK needs China’s money rather than its friendship.
Yet china does see the world quite like this. Beijing believes that its money should buy friendship, and some level of political or diplomatic compromise towards its unilateral, utterly self-motivated actions across the trade, investment and security sectors.
There is now much chatter in global telecoms circles that Huawei’s contracts could be next to come under Mrs May’s spotlight.
The reason Senator Conroy gave for blocking Huawei was a coded warning – although never actually explained – that Australia’s spy agencies were against allowing the Chinese firm into the network, fearing ‘backdoors’ might be put into the network to enable the Chinese government to spy on Australians, corporations and government agencies.
The advice was largely based on the blanket decision by US agencies to effectively keep Huawei out of America’s networks.
And the US should know having co-opted, over the years, major IT&T companies, such as one-time Huawei competitor Lucent Technologies (now part of Alcatel Lucent/Nokia Siemens) reliable sources and reports have noted consistently.
One of Huawei key defences of its position – that its networks were transparent and auditable – was that OpenReach, the whole division of BT (formerly British Telecom) had given Huawei a key contract to build its (retrospectively flawed) broadband network.
Those contracts are now likely to come under scrutiny from Mrs May, according to former UK Business Secretary Vince Cable in the UK’s right wing broadsheet Daily Telegraph.
Sir Vince noted that Mrs May was “never completely satisfied about Huawei” adding “I and others thought they were a good thing but I think she was worried about them.”
He went on to say that early on in the previous UK coalition government between the Conservative and Liberal Democratic Parties, Mrs May wanted to introduce a more stringent test for foreign investment “based on the American model of screening out projects that threaten national security.”
She was “very hot” on this issue, Sir Vince said, but “was basically overruled by (then Chancellor of the Exchequer) George Osborne and my own department. Secondly, my recollection was that when approval was sought for Hinkley, she raised objections on grounds of national security issues and China.”
Mrs May has also criticised the “gung-ho” approach by Mr Osborne and his PM David Cameron to wooing Chinese investment.
“She has expressed in several different contexts severe reservations about China getting too close to the UK,” he said, arguing Mrs May’s stance was “bound to” lead to a cooling in relations between the UK and China, putting in doubt Chinese plans to invest tens of billions of pounds in Britain.
With growing warnings from Australian security agencies about Chinese interests, lead by the confusing advice from Treasurer Scott Morrison on Ausgrid where the Chinese bid for poles and wires has been nixed, while a previous Chinese investment in the core electricity wires has been approved.
Expect more confusion as security concerns over China rise as other parts of government – lead by the gungo-go Department of Investment, Trade and Tourism and its new chief cheerleader, Trade Minister Steve Ciobo.
And there’s more. Last week’s census disaster, which saw the Australian Bureau of Statistics website quinnenial survey of people in Australia taken off line at about 7.30pm as many Australian getting ready to fill it in, was blamed on denial of service attacks.
The name of the Australian Defence Signals directorate, the Australian military’s spy arm, has been invoked, but so far we really know little beyond this. Many cynics see this a smokescreen for effective government incompetence in outsourcing far too much core knowledge to corporates, lead by IBM.
The upshot of this all is that Australia is still sadly lacking in any grown-up conversations from this government about China, its investments its growing security threat and how Australia – as nation overly dependent on Chinese trade – is going to deal with this.
This is an issue that has been bubbling for years, and it’s been ignored at the nation’s peril. Or at least the pickle Australia now finds itself in. We now appear to have reached an inflexion point.
The UK may be lagging behind Australia in its understanding of Chinese security threats, but so far it looks to be dealing with them in more open way, although we shall see.
In the meantime, beyond the increasingly compromised FTA (if you believe the commentary coming from China more aggressive state press), the Turnbull Government remains all at sea on China.
We have no idea how much Cabinet discussion there has been on this critical issue and we have a right to know.
There’s an easy first step. That is issuing an edict that if it’s critical national infrastructure that China or other nominated countries cannot invest in, then it understand this.
This has to be made clear, rather than keeping decisions behind the opaque veil that is the Foreign Investment Review Board and the Treasurer’s addled mind.
Hopefully a grown-up will take charge of the issue, and it should be the Prime Minister.
Do you know more? Contact James Riley via Email.