Washington and Beijing in hi-tech showdown

The US and China are trading accusations of espionage and political smears over a move to stop Huawei sales.

Wilbur Ross, Matthew Whitaker, Kirstjen Nielsen, Christopher Wray and US Attorney Richard Donoghue announce the charges against Huawei in Washington yesterday. Picture: Getty Images.

The battle for global hi-tech ­supremacy has intensified, with the US and China exchanging ­accusations of espionage and political smears over Washington’s move to prevent US companies from buying equipment from telecommunications giant Huawei.

China yesterday accused the US of using state power to “smear and attack” Huawei after it ­released a 23-count suite of ­charges against the Chinese company and its chief financial officer, Meng Wanzhou.

The charges, which include ­accusations that Huawei deceived the US government and offered staff bonuses for stealing technology from other companies, came as Australia faces the cost of its move to exclude Huawei from its own technology networks.

TPG Telecom yesterday pulled the plug on its $600 million new mobile network, citing Australia’s ban on Huawei participating in 5G mobile rollouts.

Home Affairs Minister Peter Dutton defended the decision, suggesting it was taken to protect Australia’s information and communications ­infrastructure.

“While the government wants to realise the full benefits of 5G, we need to ensure that Australian’s information and communications is protected at all times,” a spokesman for Mr Dutton said.

China’s Foreign Ministry spokesman, Geng Shuang, criticised as “politically motivated” the sweeping set of charges Washington announced yesterday against Huawei and Ms Meng, who is on bail in Canada after her arrest at Vancouver airport on December 1.

Nine newspapers in Australia report today that Ms Meng was a director of Huawei’s Australian subsidiary between October 2005 and August 2011. As a director, she was responsible for Huawei’s corporate governance and strategy, as well as overseeing its early efforts to take part in Australia’s NBN roll-out. While she worked as a director in Australia, Ms Meng is alleged to have been a central player in a conspiracy to defraud international banks and US officials about Huawei’s Iran operations.

The charges — announced days before US-China trade talks in Washington, to be led by Chinese Vice-Premier and politburo member Liu He — accuse Huawei and Ms Meng of violating US sanctions on doing business with Iran, stealing trade secrets from US ­mobile company T-Mobile and money-laundering.

Acting US Attorney-General Matthew Whitaker said: “Huawei has misrepresented itself for years. Criminals and bad actors can be certain that they are not going to get away.”

But Mr Geng said: “The US has been using state power to smear and ­attack specific Chinese ­enterprises in an attempt to stifle the ­legitimate operations of the companies.

“There are strong political ­motivations behind the charges. China will resolutely defend the legitimate rights and interests of Chinese enterprises.”

Richard McGregor, a senior fellow at the Lowy Institute, said the charges could lead to Australia making more hard choices about its relationship with Beijing.

“The Huawei indictment is just the latest manifestation of the hardening line in Washington against Beijing,” Mr McGregor said.

Canberra is increasingly worried about heightened trade ­tension between the US and China. Defence Minister ­Christopher Pyne urged Washington instead to focus on issues such as the South China Sea.

“When (the US-China tension) spills over into a Cold War mentality … if it did do that, it would be unhealthy,” Mr Pyne told Bloomberg this week.

Yesterday’s charges further angered Beijing, which was ­already furious at Canada’s arrest of Ms Meng, at the request of the US.

It had repeatedly called on Ottawa to release her, denying accusations that the subsequent arrest of two Canadians and the temporary detention of others in China were retaliatory moves.

Ms Meng, 46, the daughter of Huawei’s founder Ren Zhengfei, is due to return to court in Vancouver on February 6 to face a hearing on the US application for extradition to face the charges.

The indictments were unsealed in Washington at a news conference fronted by FBI director Christopher Wray, US Commerce Secretary Wilbur Ross and Homeland Security Secretary Kirstjen Nielsen.

The indictment handed down by a federal grand jury in Brooklyn charged Huawei and Ms Meng with money laundering, bank fraud, wire fraud and conspiracy.

Huawei was also charged with conspiracy to obstruct justice. A separate indictment ­accused Ms Meng, Huawei and its US affiliate, Skycom, with stealing T-Mobile’s robotic technology.

The charges follow a civil lawsuit filed by T-Mobile over a robot, called Tappy, which it was using to test smartphones at its laboratory in Bellevue.

Mr Wray said: “Huawei has repeatedly refused to respect US law. The immense influence the Chinese government holds towards Chinese companies is a tremendous threat to the US. As a country, we have to carefully consider the risks a company like Huawei will impose on our national security.”

Huawei said it was disappointed to learn of the charges, saying it had been trying unsuccessfully to have discussions with the US Justice Department over its investigations since Ms Meng’s arrest. It said the allegations ­Huawei had stolen trade secrets from T-Mobile were the subject of a civil suit settled by the parties after a jury in Seattle found there were neither ­damages nor wilful or ­malicious conduct.

Yesterday’s charges follow ­action taken last year against ­another major Chinese telecommunications company, ZTE, also for violating US sanctions on doing business with Iran.

As well as being locked out of Australia’s 5G network, Huawei has been effectively locked out of the US market after a congressional report alleged that its equipment could be used to spy on Americans. In 2017, TPG Telecom ­announced plans to build a new ­mobile network with ­Huawei as its principal equipment vendor but said yesterday that the federal government’s ­decision had closed the doors for the telco to push on with its network ­rollout.