HONG KONG / SYDNEY (Reuters) – Australia has banned Huawei Technologies Co Ltd [HWT.UL] of supplying equipment for a 5G mobile network indicating national security risks, a movement that criticized the Chinese manufacturer of telecommunications equipment as being "politically motivated".
The ban, announced on Thursday, indicates a hardening of Australia's attitude towards its biggest trading partner at a time when relations between the two are soured against Canberra's allegations that China would interfere in its politics.
This is also in line with the measures taken by the United States to restrict Huawei and compatriot ZTE Corp (000063.SZ) of the lucrative market for similar reasons.
Australia said Thursday in a statement by e-mail that the national security rules that are commonly applied to telecom carriers are now being extended to equipment suppliers.
Companies "that are likely to be subject to extrajudicial directions from a foreign government" would make the national network vulnerable to unauthorized access or interference and pose a security risk, according to the statement.
The statement did not identify the Chinese company, but an Australian government official said the order was aimed at Huawei and prevented its involvement in the network.
Huawei, the world's largest maker of telecommunications network equipment, shot back on Friday and said that the ban of 5G & # 39; politically motivated & # 39; and that was never asked to commit to intelligence work on behalf of a government.
"Chinese law does not give the government the power to force telecommunications companies to install backdoors, listening devices, or engage in behavior that could harm other countries' telecommunication equipment," it added.
Huawei, already a supplier of 4G networks in Australia, also pointed out that there was no fundamental difference between 4G and 5G architecture and that the latter offers stronger guarantees with regard to privacy and security.
However, Western intelligence services have expressed concern over the years of Huawei's ties with the Chinese government and the possibility that its equipment could be used for espionage.
Although there is no evidence to support this suspicion, Chinese law requires organizations and citizens to support, support and cooperate with intelligence.
"You get that when you have a Chinese company strategy in line with the Chinese government," says John Watters, Executive Vice President and Chief Corporate Strategy Officer of cybersecurity company FireEye Inc (FEYE.O).
"(Australia) has basically decided to spend more money to have more control over their national communication system, because they have to take on a competitor that sacrifices a short-term margin for a long-term intelligence advantage."
China expressed its concern about the Huawei 5G ban in Australia and said that Canberra should not use the excuse of national security to create barriers and implement discriminatory practices.
"We urge the Australian government to abandon ideological prejudices and create a fair competitive environment for Chinese companies in Australia," said Lu Kang, Foreign Ministry spokesperson, on a daily newsletter on Thursday.
The Department of Commerce said that Australia had made a wrong decision that would have a negative effect on companies in both countries.
Australia had previously banned Huawei from offering equipment for its fiber optic network and moved to block it from laying submarine cables in the Pacific.
But the exclusion of Huawei from the mobile network comes at a time of particularly tense relations between Australia and China, which the departing Prime Minister Malcolm Turnbull had tried two weeks ago to reinstate with a conciliatory speech.
"It is … out of step with this attempt to reset the relationship," said James Leibold, associate professor of Politics and Asian Studies at La Trobe University.
"They will not soon forget the rather shrewd language of Turnbull," he said.
Turnbull will be replaced as prime minister by treasurer Scott Morrison who won a Liberal Party Leaders vote on Friday.
Reporting by Tom Westbrook and Byron Kaye in SYDNEY; Additional reporting by Sijia Jiang at HONG KONG, Jonathan Barrett at SYDNEY and Ben Blanchard at BEIJING; Edited by Darren Schuettler, Alexandra Hudson and Himani Sarkar