Germany’s cabinet yesterday sent legislation to the Bundestag that will allow China’s national champion Huawei to build 5G networks in Europe’s largest economy, under strict security guarantees. Washington had lobbied Chancellor Angela Merkel’s government to exclude the Chinese firm altogether.
The proposed legislation would make Huawei and other providers of network gear financially liable for compromised security. It would also give German security agencies complete network access to determine the networks’ integrity.
American media decried the proposed German law as “a setback for the outgoing U.S. administration,” as William Boston wrote in the Wall Street Journal. The Merkel government might have decided differently if Donald Trump had been re-elected.
Asia Times broke this story in the global media on Nov. 30 (Huawei hits 5G critical mass with Germany’s approval), after copies of the proposed law leaked in Germany.
Chancellor Merkel and Economics Minister Peter Altmaier, who favored including Huawei in the country’s 5G buildout, faced opposition from two sides of the German political spectrum. Social Democratic and Green Party members of the Bundestag bristled at Huawei’s equipment sales to Chinese security services, and some of Merkel’s Christian Democrats supported American demands to exclude Huawei on national security grounds.
Although the security conditions required in the draft legislation seem onerous, they play into Huawei’s strategy of seeking security checks by independent laboratories. The American intelligence community has accused the Chinese firm of plotting to steal data transmitted through it is hardware, and US officials last February claimed to have “smoking gun” evidence of Huawei’s ability to steal information, in the form of a “back door” for law enforcement monitoring of communications.
Huawei officials retorted that the company is required to comply with the lawful demands of police for access to information wherever it operates, and that security laws impose the same requirement on all equipment vendors. Huawei employees only can access network traffic when law enforcement agencies make a legitimate demand for information.
If Huawei passes through the German hurdles, as company officials predict, it will claim that the rigorous German tests prove that Washington’s allegations about Huawei malicious intent are unfounded.
In a November post on Huawei’s website, the company’s chief security officer Andy Purdy wrote, “Other countries embrace uniform testing across vendors – not discriminating on their country of origin… Huawei also opened a testing center in Bonn, Germany last November and another in Brussels earlier this year. It should be able to open similar centers in the US. At the very least, the US should take an approach similar to how Germany encouraged all telecom vendors to establish independent verification labs where third-party experts could vet code for vulnerabilities.”
US security officials have rejected Huawei’s proposal for independent testing. Some point out that “back doors” on sophisticated computer chips are practically undetectable. In 2016 a University of Michigan study showed that remotely-activated “back doors” can be implanted among the billions of transistors in a chip, invisible to any existing security screen.
The University of Michigan researchers write, “To guard against shipping chips with errors (intentional or otherwise) chip design companies rely on post-fabrication testing. Unfortunately, this type of testing leaves the door open to malicious modifications since attackers can craft attack triggers requiring a sequence of unlikely events, which will never be encountered by even the most diligent tester.”
If back doors in sophisticated chips are undetectable, US officials argue, the independent verification that Huawei proposes can’t be trusted. Other security experts, though, argue that this argument cuts two ways. A single employee in a chip fabrication plant in Taiwan, the main source for the sophisticated chips that power telecommunications network, can insert a “back door” into a chip destined for the network of any equipment provider. Banning Huawei equipment won’t make networks secure, because bad actors can infiltrate tainted chips into other equipment as well.
Germany’s largest mobile network provider Deutsche Telekom relies on Huawei for about two-thirds of its existing 4G network equipment, and Huawei provides about half the gear for the other two largest networks, Vodaphone and Telefonica. The new 5G network needs to communicate with the old 4G system so that the cost of eliminating Huawei gear would be high.
The draft legislation states that network providers can be excluded from the German system “when the predominant public interest, especially the security interests of the German Federal Republic, oppose granting access.” Thomas Reichart wrote in the Munich daily Südduetsche Zeitung Dec. 16 that equipment providers “will be examined for political trustworthiness as well as technical reliability… the political reliability test is a big problem for Huawei… China’s national security law obliges Huawei to provide data when the Chinese authorities demand it.”
In an open letter published on its German-language website, Huawei claimed that the Chinese national security law applied only to its operations in China and that its German subsidiary headquarters in Düsseldorf “is not subject to Chinese law and its requirement to cooperate, but is subject exclusively to German law.”
The political stipulation in the proposed legislation is a concession to CDU members who support Washington’s demand for a total ban on Huawei, but it is unlikely to have practical consequences. Huawei’s German subsidiary is a German company under German law. Unless the technical inspection reveals violations of German law, it will be difficult for any German government to demonstrate that it is politically untrustworthy.
Germany’s dependence on China’s export trade has increased during 2020, as China’s economy expanded while the economies of Germany’s other trading partners shrank. Germany exported €110.1 billion of goods to China in 2019, compared to €71.3 billion to the United States. Germany’s exports to China increased by 13% between November 2019 and November 2020, while exports to the United States were flat on a year-on-year comparison.
Just as important as Germany’s exports to China are the sales of German products manufactured in China, including a third of all Chinese car sales. German automakers draw heavily on Chinese technology, including batteries for electric vehicles and computer systems for German cars. Chinese officials warned the German government that it would “draw the appropriate consequences” if Berlin excluded Huawei, presumably by penalizing German corporations. Germany’s business community has lobbied against the exclusion of Huawei.
Germany’s economy is so integrated with China that a rupture in economic relations would be painful, especially as Europe struggles to recover from the COVID-19 recession. A laggard in mobile broadband, Germany hopes to improve its industrial competitiveness by adopting Fourth Industrial Revolution technologies, including Artificial Intelligence applications to industrial production, pharmaceutical research, and logistics. The gravitational pull of China’s expanding home market and its leading position in key digital technologies is hard for Germany to resist, despite a broad distrust of China among the German public.
Most Germans distrust China, but their opinion of the United States isn’t much better. Without a compelling sympathy for either Washington or Beijing, Germans will choose to follow their economic interests.
An opinion poll financed by the European Union published last month found that only 35.4% of Germans had a positive opinion of China. But roughly the same proportion, or 39.2%, had a positive opinion of the United States. 46% of those polled said that their opinion of China had worsened during the past year. 62.5% of Germans said they had a negative view of China, compared to 54.1% with a negative view of the United States.