[Congressional Record Volume 158, Number 45 (Monday, March 19, 2012)]
[House]
[Pages H1376-H1378]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 1610
THREAT FROM HUAWEI
(Mr. WOLF asked and was given permission to address the House for 1
minute and to revise and extend his remarks.)
Mr. WOLF. Mr. Speaker, I rise today to share troubling information
that has come to my attention about Huawei, a Chinese telecom firm
which is attempting to increase its market share in the U.S.
Yesterday, The Wall Street Journal reported that, ``Huawei's network
business has thrived at the expense of struggling Western network
companies,'' and is ``quietly building and investing in its own brand
of high-end smart phones and tablets.'' But many Americans may not be
aware that numerous government reports have linked Huawei's corporate
leadership to the People's Liberation Army, raising serious concerns
about its products being used for espionage by the Chinese Government.
Last week, respected national security reporter Bill Gertz wrote:
New information about Chinese civilian telecommunications
companies' close support of the Chinese military and
information warfare programs is raising fresh concerns.
That is why both the Bush administration and the Obama administration
have repeatedly intervened to block Huawei's growth. Huawei is
controlled by the same government that jails Catholic bishops and
Protestant pastors, oppresses the Uyghur Muslims, has plundered Tibet,
and that is providing the very rockets that Sudanese President Bashir
is using to kill his own people.
Mr. Speaker, the American people have a right to know whether their
government is doing everything it can to protect their cell phone and
data networks from foreign espionage and cyberattacks. As Huawei
increases its lobbying presence in Washington, the American people
should be fully aware of the firm's intimate links to the PLA and the
serious concerns of our defense and intelligence community.
I rise today to share troubling information that has come to my
attention about Huawei, a Chinese telecom firm, which is attempting to
increase its market share in the United States and around the world.
Numerous government reports have linked Huawei's corporate leadership
to the Chinese intelligence services and the People's Liberation Army
(PLA), raising concerns about Huawei networks and devices being subject
to espionage by the Chinese government.
These connections are particularly noteworthy given Huawei's rapid
rise as a telecom giant. According to an article in yesterday's Wall
Street Journal, ``Huawei Technologies Co. has almost doubled its work
force over the past five years as it strives to become a mobile
technology heavyweight.''
The article also noted that, ``Huawei's network business has thrived
at the expense of struggling Western network companies such as Alcatel-
Lucent Co. and Nokia Siemens Networks. Initially, Huawei supplied low-
cost phones to telecommunications operators in the West under their own
brand, but over the past year, Huawei has also been quietly building
and investing in its own brand of high-end smartphones and tablets.''
Huawei executives make no secret of their goal to dominate the
telecom market. In a March 6, 2012, interview with the technology news
Web site, Engadget, Huawei device chief Richard Yu said, ``In three
years we want Huawei to be the industry's top brand.''
However, Huawei's growth in the U.S. market should give all Americans
serious pause. Last week, respected national security reporter Bill
Gertz wrote in the Washington Free Beacon that, ``New information about
Chinese civilian telecommunications companies' close support of the
Chinese military and information warfare programs is raising fresh
concerns about the companies' access to U.S. markets,'' according to a
report by the congressional US-China Economic and Security Review
Commission. ``One of the companies identified in the report as linked
to the People's Liberation Army (PLA) is Huawei Technologies, a global
network hardware manufacturer that has twice been blocked by the U.S.
government since 2008 from trying to buy into U.S. telecommunications
firms.''
[[Page H1377]]
The congressional report noted that, ``Huawei is a well established
supplier of specialized telecommunications equipment, training and
related technology to the PLA that has, along with others such as
Zhongxing, and Datang, received direct funding for R&D on C4ISR [high-
tech intelligence collection] systems capabilities.''
The report further added, ``All of these [Chinese telecom] firms
originated as state research institutes and continue to receive
preferential funding and support from the PLA,'' the report said.
Huawei's efforts to sell telecom equipment to U.S. networks have long
troubled the U.S. defense and intelligence community, which has been
concerned that Huawei's equipment could be easily compromised and used
in Chinese cyberattacks against the U.S. or to intercept phone calls
and e-mails from American telecom networks.
According to a 2005 report by the RAND Corporation, ``both the
[Chinese] government and the military tout Huawei as a national
champion,'' and ``one does not need to dig too deeply to discover that
[many Chinese information technology and telecommunications firms] are
the public face for, sprang from, or are significantly engaged in joint
research with state research institutes under the Ministry of
Information Industry, defense-industrial corporations, or the
military.''
In fact, in 2009, the Washington Post reported that the National
Security Agency ``called AT&T because of fears that China's
intelligence agencies could insert digital trapdoors into Huawei's
technology that would serve as secret listening posts in the U.S.
communications network.''
Over the last several years, Huawei's top executives' deep
connections to the People's Liberation Army and Chinese intelligence
have been well documented. As Gertz summarized in his article, ``A U.S.
intelligence report produced last fall stated that Huawei Technologies
was linked to the Ministry of State Security, specifically through
Huawei's chairwoman, Sun Yafang, who worked for the Ministry of State
Security (MSS) Communications Department before joining the company.''
That is why senior administration officials in the Bush and Obama
administrations have repeatedly intervened to block Huawei's access to
U.S. networks. ``In 2008, the Treasury Department-led Committee on
Foreign Investment in the United States (CFIUS) blocked Huawei from
purchasing the U.S. telecommunications firm 3Com due to the company's
links to the Chinese military,'' Gertz reported. ``Last year, under
pressure from the U.S. government, Huawei abandoned their efforts to
purchase the U.S. server technology company 3Leaf. In 2010, Congress
opposed Huawei's proposal to supply mobile telecommunications gear to
Sprint over concerns that Sprint was a major supplier to the U.S.
military and intelligence agencies.''
It's not just Huawei's longstanding and tight connections to Chinese
intelligence that should trouble us. Huawei has also been a leading
supplier of critical telecom services to some of the worst regimes
around the world. Last year, the Wall Street Journal reported that
Huawei ``now dominates Iran's government-controlled mobile-phone
industry . . . it plays a role in enabling Iran's state security
network.''
Gertz reported that Huawei has also been ``linked to sanctions-
busting in Saddam Hussein's Iraq during the 1990s, when the company
helped network Iraqi air defenses at a time when U.S. and allied jets
were flying patrols to enforce a no-fly zone. The company also worked
with the Taliban during its short reign in Afghanistan to install a
phone system in Kabul.''
Mr. Speaker, given all of this information, there should be no doubt
Huawei poses a serious national and economic security threat to the
U.S. It is no secret that the People's Republic of China has developed
the most aggressive espionage operation in modern history, especially
given its focus on cyberattacks and cyberespionage.
Perhaps that is why Beijing has ensured that Huawei is able to
continue its global market growth by ``unsustainably low prices and
[Chinese] goverment export assistance,'' according to January 2011
congressional report on the national security implications of Chinese
telecom companies. Due to China's secrecy, the full extent of Huawei's
subsidies are not be fully known. But given its unrealistically low
prices, it remains unknown whether Huawei is even making a profit as it
seeks to dominate the telecom market. Why would the Chinese government
be willing to generously subsidize such unprofitable products?
Earlier this year, The Economist magazine published a special report
on Communist Party management of Chinese corporations. The Economist
reported that, ``The [Communist] party has cells in most big
companies--in the private as well as state-owned sector--complete with
their own offices and files on employees. It holds meetings that shadow
formal board meetings and often trump their decisions''
The Chinese even have an expression for this strategy: ``The state
advances while the private sector retreats.''
Author Richard McGregor wrote that the executives at Chinese
companies have a ``red machine'' with an encrypted line to Beijing next
to their Bloomberg terminals and personal items on their desks.
Last year, the Financial Times reported that the PLA has even
documented how it will use telecom firms for foreign espionage and
cyberattacks. A paper published in the Chinese Academy of Military
Sciences' journal noted: ``[These cyber militia] should preferably be
set up in the telecom sector, in the electronics and internet
industries and in institutions of scientific research,'' and its tasks
should include ``stealing, changing and erasing data'' on enemy
networks and their intrusion with the goal of ``deception, jamming,
disruption, throttling and paralysis.''
The same article also documented the growing number PLA-led cyber
militias housed in ``private'' Chinese telecom firms. The article
reported on one example at the firm Nanhao: ``many of its 500 employees
in Hengshui, just south-west of Beijing, have a second job. Since 2005
Nanhao has been home to a cybermilitia unit organized by the People's
Liberation Army. The Nanhao operation is one of thousands set up by the
Chinese military over the past decade in technology companies and
universities around the country. These units form the backbone of the
country's internet warfare forces, increasingly seen as a serious
threat at a time of escalating global cybertensions.
Senior U.S. military and intelligence officials have become
increasingly vocal about their concerns about the scope of Chinese
espionage and cyberattacks. According to recent testimony given before
the Senate, Defense Intelligence Agency chief General Ron Burgess said,
``China has used its intelligence services to gather information via a
significant network of agents and contacts using a variety of methods .
. . In recent years, multiple cases of economic espionage and theft of
dual-use and military technology have uncovered pervasive Chinese
collection efforts.''
Last year, the reticent Office of the National Counterintelligence
Executive issued a warning that, ``Chinese actors are the world's most
active and persistent perpetrators of economic espionage.'' The
counterintelligence office took this rare step of singling out the
Chinese due to the severity of the threat to U.S. national and economic
security.
And March 8, 2012 Washington Post article described how, ``For a
decade or more, Chinese military officials have talked about conducting
warfare in cyberspace, but in recent years they have progressed to
testing attack capabilities during exercises . . . The [PLA] probably
would target transportation and logistics networks before an actual
conflict to try to delay or disrupt the United States' ability to
fight, according to the report prepared by Northrop Grumman for the
U.S.-China Economic and Security Review Commission.''
We are beginning to witness the consequences of this strategy.
According to a March 13, 2012 New York Times article, ``During the
five-month period between October and February, there were 86 reported
attacks on computer systems in the United States that control critical
infrastructure, factories and databases, according to the Department of
Homeland Security, compared with 11 over the same period a year ago.''
[[Page H1378]]
In an interview with the New York Times, Homeland Security Secretary
Janet Napolitano said, ``I think General Dempsey said it best when he
said that prior to 9/11, there were all kinds of information out there
that a catastrophic attack was looming. The information on a
cyberattack is at the same frequency and intensity and is bubbling at
the same level, and we should not wait for an attack in order to do
something.''
A 2010 Pentagon report found ``. . . In the case of key national
security technologies, controlled equipment, and other materials not
readily obtainable through commercial means or academia, the People's
Republic of China resorts to more focused efforts, including the use of
its intelligence services and other-than legal means, in violation of
U.S. laws and export controls.''
The report also highlighted China's cyber-espionage efforts. The U.S.
intelligence community notes that China's attempts to penetrate U.S.
agencies are the most aggressive of all foreign intelligence
organizations.
Notably, Chinese espionage isn't limited to government agencies. In
an October 4 Washington Post article, Rep. Mike Rogers, chairman of the
House Intelligence Committee, remarked, ``When you talk to these
companies behind closed doors, they describe attacks that originate in
China, and have a level of sophistication and are clearly supported by
a level of resources that can only be a nation-state entity.''
This prolific espionage is having a real and corrosive effect on job
creation. Last year, the Washington Post reported that, ``The head of
the military's U.S. Cyber Command, Gen. Keith Alexander, said that one
U.S. company recently lost $1 billion worth of intellectual property
over the course of a couple of days--`technology that they'd worked on
for 20-plus years--stolen by one of the adversaries.' ''
That is why, in February 2012 testimony before the Senate Select
Committee on Intelligence FBI Director Robert Mueller said that while
terrorism is the greatest threat today, ``down the road, the cyber
threat will be the number one threat to the country.''
Mr. Speaker, I firmly believe that Huawei is one face of this
emerging threat. And the American people have a right to know whether
their government is doing everything it can to protect their cell phone
and data networks.
As Huawei increases its lobbying presence in Washington, members
should be fully aware of the firm's intimate links to the PLA and the
serious concerns of our defense and intelligence community.
Verizon, Sprint, AT&T, T-Mobile and other U.S. network carriers
should not be selling Huawei devices given these security concerns. But
if they do, they have an obligation to inform their customers of these
threats. This is especially important when carriers are selling Huawei
phones and tablets to corporate customers.
They have a right to know that Beijing may be listening.
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