Chinese Spies Accused of Using Huawei in Secret Australia Telecom Hack

Bloomberg has an article that discusses how Chinese spies were allegedly involved in deploying implants on Huawei equipment which was operated in Australia and the United States. The key parts of the story include:

At the core of the case, those officials said, was a software update from Huawei that was installed on the network of a major Australian telecommunications company. The update appeared legitimate, but it contained malicious code that worked much like a digital wiretap, reprogramming the infected equipment to record all the communications passing through it before sending the data to China, they said. After a few days, that code deleted itself, the result of a clever self-destruct mechanism embedded in the update, they said. Ultimately, Australia’s intelligence agencies determined that China’s spy services were behind the breach, having infiltrated the ranks of Huawei technicians who helped maintain the equipment and pushed the update to the telecom’s systems. 

Guided by Australia’s tip, American intelligence agencies that year confirmed a similar attack from China using Huawei equipment located in the U.S., six of the former officials said, declining to provide further detail.

The details from the story are all circa 2012. The fact that Huawei equipment was successfully being targeted by these operations, in combination with the large volume of serious vulnerabilities in Huawei equipment, contributed to the United States’ efforts to bar Huawei equipment from American networks and the networks of their closest allies.1

Analysis

We can derive a number of conclusions from the Bloomberg article, as well as see links between activities allegedly undertaken by the Chinese government and those of Western intelligence agencies.

To begin, it’s worth noting that the very premise of the article–that the Chinese government needed to infiltrate the ranks of Huawei technicians–suggests that circa 2012 Huawei was not controlled by, operated by, or necessarily unduly influenced by the Chinese government. Why? Because if the government needed to impersonate technicians to deploy implants, and do so without the knowledge of Huawei’s executive staff, then it’s very challenging to say that the company writ large (or its executive staff) were complicit in intelligence operations.

Second, the Bloomberg article makes clear that a human intelligence (HUMINT) operation had to be conducted in order to deploy the implants in telecommunications networks, with data then being sent back to servers that were presumably operated by Chinese intelligence and security agencies. These kinds of HUMINT operations can be high-risk insofar because if operatives are caught then the whole operation (and its surrounding infrastructure) can be detected and burned down. Building legends for assets is never easy, nor is developing assets if they are being run from a distance as opposed to spies themselves deploying implants.2

Third, the United States’ National Security Agency (NSA) has conducted similar if not identical operations when its staff interdicted equipment while it was being shipped, in order to implant the equipment before sending it along to its final destination. Similarly, the CIA worked for decades to deliberately provide cryptographically-sabotaged equipment to diplomatic facilities around the world. All of which is to say that multiple agencies have been involved in using spies or assets to deliberately compromise hardware, including Western agencies.

Fourth, the Canadian Communications Security Establish Act (‘CSE Act’), which was passed into law in 2019, includes language which authorizes the CSE to do, “anything that is reasonably necessary to maintain the covert nature of the [foreign intelligence] activity” (26(2)(c)). The language in the CSE Act, at a minimum, raises the prospect that the CSE could undertake operations which parallel those of the NSA and, in theory, the Chinese government and its intelligence and security services.3

Of course, the fact that the NSA and other Western agencies have historically tampered with telecommunications hardware to facilitate intelligence collection doesn’t take away from the seriousness of the allegations that the Chinese government targeted Huawei equipment so as to carry out intelligence operations in Australia and the United States. Moreover, the reporting in Bloomberg covers a time around 2012 and it remains unclear whether the relationship(s) between the Chinese government and Huawei have changed since then; it is possible, though credible open source evidence is not forthcoming to date, that Huawei has since been captured by the Chinese state.

Takeaway

The Bloomberg article strongly suggests that Huawei, as of 2012, didn’t appear captured by the Chinese government given the government’s reliance on HUMINT operations. Moreover, and separate from the article itself, it’s important that readers keep in mind that the activities which were allegedly carried out by the Chinese government were (and remain) similar to those also carried out by Western governments and their own security and intelligence agencies. I don’t raise this latter point as a kind of ‘whataboutism‘ but, instead, to underscore that these kinds of operations are both serious and conducted by ‘friendly’ and adversarial intelligence services alike. As such, it behooves citizens to ask whether these are the kinds of activities we want our governments to be conducting on our behalves. Furthermore, we need to keep these kinds of facts in mind and, ideally, see them in news reporting to better contextualize the operations which are undertaken by domestic and foreign intelligence agencies alike.


  1. While it’s several years past 2012, the 2021 UK HCSEC report found that it continued “to uncover issues that indicate there has been no overall improvement over the course of 2020 to meet the product software engineering and cyber security quality expected by the NCSC.” (boldface in original) ↩︎
  2. It is worth noting that, post-2012, the Chinese government has passed national security legislation which may make it easier to compel Chinese nationals to operate as intelligence assets, inclusive of technicians who have privileged access to telecommunications equipment that is being maintained outside China. That having been said, and as helpfully pointed out by Graham Webster, this case demonstrates that the national security laws were not needed in order to use human agents or assets to deploy implants. ↩︎
  3. There is a baseline question of whether the CSE Act created new powers for the CSE in this regard or if, instead, it merely codified existing secret policies or legal interpretations which had previously authorized the CSE to undertake covert activities in carrying out its foreign signals intelligence operations. ↩︎