China's Huawei Raises New Security Concerns Among U.S. Allies

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Chinese telecom giant Huawei has long caused tension between Washington and Beijing. WSJ’s Shelby Holliday explains what the company does and why it’s significant. (Photo: Aly Song/Reuters)

U.S. allies from Australia to Japan to the European Union raised new security questions about Huawei Technologies Co. on Friday, putting fresh pressure on the Chinese telecommunications giant.

The head of Australia’s top military cyber defense agency, Mike Burgess, said Chinese companies were blocked from the rollout of 5G mobile-phone capabilities in August because the new technology would underpin not only communications, but also critical infrastructure that could be brought down in a cyberattack. That makes the technology more strategically important than previous innovations, he said.

“If the 5G network of the future isn’t there, there’s a good chance electricity supply might be interrupted, water supply might be interrupted, the financial sector or elements of it might be impacted,” said Mr. Burgess, the head of the Australian Signals Directorate, in a rare television interview. “That’s why it was important to get security right at the start. It was a foundational issue.”

U.S. lawmakers have accused Huawei of spying and criticized it over suspected links to the Chinese government and the People’s Liberation Army. American officials have launched a global campaign to persuade the country’s allies to shun Huawei. The U.S. has briefed government officials and telecom executives in countries including Germany, Italy and Japan about what they see as cybersecurity risks, The Wall Street Journal reported in November.

Huawei has repeatedly said it is owned by its employees, operates independently from the government in Beijing and that its equipment is safe.

Doubts over Huawei also emerged in Brussels on Friday, where European Commission Vice President Andrus Ansip said, “I think we have to be worried about” Huawei and other Chinese companies who, he said, have been ordered to cooperate with Chinese intelligence services.

This partly concerns “chips they can put somewhere to get some…of our secrets,” said Mr. Ansip, who covers digital issues. “It’s not a good sign when companies…had opened their systems for some kind of secret services,” he said.

As Washington-Beijing relations teeter, Chinese tech titan Huawei’s chief financial officer has been arrested in Canada and faces extradition to the U.S. But Meng Wanzhou, aka Sabrina Meng, isn’t your garden-variety executive; she’s the company founder’s daughter. Photo: EPA

In a statement, Huawei Europe said it was “surprised and disappointed” by Mr. Ansip’s remarks. “We categorically reject any allegation that we might pose a security threat. We are open to a dialogue with Vice President Andrus Ansip to address these misunderstandings.”

Meanwhile, Japan is moving ahead with changes to its procurement guidelines that could restrict its use of Huawei and Chinese rival

ZTE
Corp.

, which last year pleaded guilty to breaching U.S. laws relating to sale of technology to Iran.

Japanese government officials said Friday that a meeting was planned for as soon as Monday to discuss ways to lower the risk that government agencies would be infiltrated through imported equipment. The changes under discussion wouldn’t specify companies, they said. The Yomiuri daily earlier reported that Japan has effectively decided to ban Huawei and ZTE equipment from being used in government contracts.

In Canada, the country’s top spy, Canadian Security Intelligence Service director David Vigneault, used his first public speech earlier this week to warn this week of the rising espionage risks being channeled across new 5G mobile networks.

Huawei’s chief financial officer, Meng Wanzhou, the 46-year-old daughter of the company’s founder, was detained in Canada this month at the urging of U.S. authorities seeking her extradition as part of an investigation into allegations of sanctions-busting sales to Iran. Huawei has said it isn’t aware of any wrongdoing by Ms. Meng and that it complies with laws everywhere it operates.

Huawei security was discussed in the Australian capital of Canberra this week during a regular meeting of the “Five Eyes” intelligence-sharing network comprising the U.S., U.K., Canada, Australia and New Zealand, one participant said, with attendees uniformly concerned about security risks. Australian government and military officials declined to comment.

In Britain, Huawei met this week with officials at Britain’s National Cyber Security Centre, an intelligence-agency division, and agreed to technical changes in all its equipment to improve security, said a person familiar with the matter. Huawei agreed to send the British officials a formal letter that states the steps it will take to address, the issue, the person said.

A spokesman for the U.K.’s National Cyber Security Center said the British government has “concerns around a range of technical issues and has set out improvements the company must make.” It also said it was in regular dialogue with Huawei about their products and how they should meet government criteria.

Britain’s

BT Group

said this week that it might pull Huawei equipment from its 4G mobile network, and the head of the overseas spy agency MI6 questioned whether the U.K. should re-examine use of the company’s equipment.

Australia was one of the first Western countries to move against the company, barring it as far back as 2012 from supplying equipment for Australia’s high-speed national broadband.

In August, the conservative government excluded the company from the rollout of 5G mobile technologies that will underpin everything from self-driving cars to hospital networks. That preceded similar moves in the U.S. against Huawei and ZTE.

While Huawei surpassed Apple as a supplier of cellphones this year, intelligence agencies fear its telecommunication networks and equipment could be used for cyberattacks and espionage.

Write to Rob Taylor at rob.taylor@wsj.com and Mayumi Negishi at mayumi.negishi@wsj.com