[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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