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Despite ties to China's PLA, Chinese company did not actively engage in spying, yet

fiery Congressional report singled out two top Chinese equipment manufacturers -- ZTE Corp. (SHE:000063) and Huawei Technologies Comp. (SHE:002502) -- as a national security threats. However, new details are emerging which suggest that the worst case scenario -- China leveraging its influence on the telecoms to steal U.S. commercial secrets -- has not yet happened.

I. White House Probe: No Spying by Huawei, but Lots of Security Holes

In Huawei's case, suspicion is heightened by the fact the company's founder and chief executive Ren Zhengfei is a former PLA officer, and subject to contractual relations between Huawei and China's People's Liberation Army.

But according to two sources which spoke with Reuters, an 18-month U.S Intelligence review on behalf of the White House found no evidence that Huawei had spied on U.S. companies.  White House National Security Council spokeswoman Caitlin Hayden released a carefully worded comment, remarking, "The White House has not conducted any classified inquiry that resulted in clearing any telecom equipment supplier."

But the Reuters sources concurred -- Huawei was not cleared of being considered a security risk, but critically it was not for the spying question.  According to the sources Huawei was instead considered to risky for the government to use as a contractor due to vulnerabilities in its firmware and software, which could leave its telecommunication equipment vulnerable to hacker intrusions.

Describes one source of Huawei's code, "We found it riddled with holes."

Huawei router
Huawei's routers are reportedly riddled with security holes -- some of which some analyst claim are deliberate back doors. [Image Source: The Hacker News]

Networking expert Felix Lindner agrees, saying that Huawei's problems appear to be more than likely due to sloppy coding rather than deliberate sabotage.  He reveals, "I'd say it was five times easier to find one in a Huawei router than in a Cisco one."

The supposed classified investigation involved interviewing over 1,000 telecommunications equipment buyers asking them questions regarding Huawei and other top Chinese OEMs.  

China's government, as well as Huawei and ZTE, attacked the Congressional report and the suggestion that the Chinese OEMs should be banned from the U.S. market.  A ZTE spokesperson pointed out that most American electronics firms also manufacture their electronics in China.  Huawei's U.S. spokesperson Bill Plummer commented, "Huawei is a $32 billion independent multinational that would not jeopardize its success or the integrity of its customers' networks for any government or third party. Ever."

The Congressional report suggests its recommendations were based partially on a "classified annex", a source Reuters suggests is likely the 18-month intelligence probe.

II. Possibility for Future Spying is Still Strong

It's important to note that the report does not completely clear Huawei.  One source, who investigated Huawei's products between 4 and 6 years ago on behalf of the intelligence community, claimed to Reuters that he had observed code snippets that appeared to be so-called "back-doors" -- deliberately inserted security flaws that would allow later exploitation.  Huawei has repeatedly denied such holes exist, amid rumors.

Chris Johnson, a form China analyst for the U.S. Central Intelligence Agency tells Reuters that even if the unconfirmed classified report did clear Huawei of any obvious deliberate spying, that it still represents a major threat in the future tense. 

Ren Zhengfei
Ren Zhengfei, founder and CEO of Huawei, is a former PLA officer. [Image Source: CFP]

That line of logic has led Canada and Australia to join the U.S. in banning Huawei's telecommunications equipment from government networks.  However, Britain recently offered up a dissenting take when its government security experts declared Huawei fully vetted and capable of bidding on government contracts.

Source: Reuters



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RE: What?
By Brainling on 10/19/2012 5:20:23 PM , Rating: 3
Holy nationalism batman. As an American, this is EMBERASSING.

We are not infallible, we are not perfect, and we ARE weakened. We've spent 30 years crapping on the rest of the world, starting wars where we weren't wanted, and generally being the World Police. Do as we say or we'll kick in your door!

World War II is long over Cowboy Curtis, we can't ride the coat tales of the greatest generation anymore.

America has NOT been a positive influence on the world for many years, outside of exporting greed and consumerism. I am still proud to be an American, but part of having pride is realizing when you're country screws up, you own up to it, and don't act like your the greatest thing since sliced bread.

Also, greatest country ever, buahaha. Ever heard of Rome? Greece? They lasted just a feewwwww years longer than we did, and we wouldn't have democracy or federal republicanism without them. Learn your history.

There is a difference between patriotism and nationalism, and you are firmly on the side of the latter.


RE: What?
By MechanicalTechie on 10/19/2012 11:28:15 PM , Rating: 1
Nice to know someone realizes that I'm not trying to bash the US but only show a side of the story that a lot of Americans have no clue about.

America has done some amazing things in history but lately... its being downhill.. those who have an interest in politics know full well what is going on.


"Mac OS X is like living in a farmhouse in the country with no locks, and Windows is living in a house with bars on the windows in the bad part of town." -- Charlie Miller














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