U.S. lawmakers are sounding the alarm after Spain awarded Huawei a contract to store judicial wiretap data — a move critics say hands sensitive information to a company with documented ties to the Chinese Communist Party.
A report by the U.S. House Intelligence Committee warned that Huawei telecom equipment and networks on foreign soils could “provide a wealth of opportunities for Chinese intelligence agencies.”
Congressional leaders on the House Energy and Commerce Committee recently called on the Department of Commerce to “investigate the Spanish government’s decision, and similar actions by EU governments, that negatively impact U.S. digital trade, data security, and telecommunications interests, as well as the interests of American workers.”
They’re right to be concerned. The United States and Communist China are currently engaged in a significant power competition, with the country that leads in technology and innovation poised to emerge as the victor. The U.S. has maintained a comfortable lead in the tech sector for many years. However, the Chinese Communist Party’s relentless pursuit to close this gap and ultimately surpass the U.S. in technological supremacy by any means raises serious concerns.
Instead of focusing on genuine innovation, Beijing has implemented a state-sponsored espionage campaign to steal intellectual property (IP) from Western companies, a strategy that dates back to 1978. The rise of the internet has facilitated this systematic IP theft, with Chinese hackers infiltrating Western firms to steal valuable trade secrets. This stolen technology is then directed to state-run enterprises or “private” Chinese businesses, granting them an unfair competitive advantage.
A prime example is Huawei, founded in 1987 by Ren Zhengfei, who has close ties to the Chinese Communist Party (CCP) and the People’s Liberation Army (PLA). Huawei initially assembled low-margin products like phone switches. At that time, the global telecom industry was largely dominated by Nortel, which accounted for about 70 percent of worldwide internet traffic relying on its equipment.
Yet, in a dramatic turn, Nortel filed for bankruptcy in 2009. Investigations revealed that Chinese military hackers had infiltrated Nortel’s systems in 2000 or earlier, spending nearly a decade stealing its intellectual property. This stolen information was relayed to Huawei, enabling the company to produce similar telecommunications equipment at significantly lower costs, ultimately outbidding Nortel on key global projects and leading to Nortel’s downfall.
Nortel’s fate was not an isolated incident. In 2020, the U.S. Department of Justice indicted Huawei, alleging that the company had been misappropriating the intellectual property of U.S.-based firms for commercial purposes since the early 2000s as well.
Huawei has not only benefited from the Chinese government-sponsored IP theft, but it has also garnered substantial financial backing from the CCP and the PLA. Today, it dominates the global telecommunications market, commanding nearly one-third of the share, far surpassing the 6 percent its next closest competitor has. Additionally, Huawei is a dominant force in the 5G mobile core network, a technology set to underpin critical infrastructures, including energy supply.
Huawei’s extensive reach and its close connections with the CCP and the PLA present alarming national security threats. Reports have surfaced indicating that Huawei’s network equipment has inherent security flaws, potentially facilitating state-sponsored espionage by transferring sensitive data back to China. Compounding these concerns is China’s 2017 National Intelligence Law, which requires all entities operating in the country, including Huawei, to comply with the government’s data sharing requests. This law creates an environment where utilizing Huawei’s technology could lead to severe security risks for nations that deploy their services.
A report by the U.S. House Intelligence Committee warned that Huawei telecom equipment and networks on foreign soils could “provide a wealth of opportunities for Chinese intelligence agencies to insert malicious hardware or software implants into critical telecommunications components and system.” In scenarios of military conflict between the U.S. and China, the Chinese government could leverage Huawei’s technology to “deny service” and “exert control over essential infrastructure” in the U.S. and allied nations. This underscores an urgent need to address these pressing security threats.
Throughout President Trump’s first term and continuing under former President Biden, the U.S. government has taken a series of actions against Huawei, including blacklisting the company and restricting American technology firms from providing critical components to it. Moreover, Washington urged key allies to exclude Huawei equipment from their telecommunications networks.
These measures had only temporary effects. Although Huawei initially faced declining sales, it has since rebounded due to Beijing’s financial support and its “self-reliance” policy, which requires Chinese companies to gradually replace foreign technology with domestic alternatives.
In 2023, Huawei made headlines by launching a groundbreaking smartphone featuring made-in-China semiconductor chip that purportedly supports 5G connectivity. A year later, the company reported record revenue of over $118 billion and profits exceeding $8 billion.
Huawei’s ongoing success underscores the need for the U.S. government to move beyond sanctions on Chinese tech firms to lead in the technology race and protect national security. Here are two key recommendations.
To boost technological advancement and innovation, the U.S. government must take decisive action by eliminating unnecessary regulatory barriers and allowing businesses to operate independently, free from government interference.
Attorney General Pam Bondi and the rest of the Trump Justice Department already took a massive step in this regard by approving a deal that allowed the merger between U.S. telecom companies Hewlett-Packard Enterprise (HPE) and Juniper to move forward. The U.S. intelligence committee told the DOJ that this merger is imperative for national security, and it’s correct. The new combined company, with its increased size and influence, will be able to compete better with Huawei on the national stage, giving the U.S. a far better shot at keeping the predatory company at bay.
Still, much more must be done.
The U.S. government must adopt a robust approach to combat cyber espionage sponsored by the Chinese government. Prompt and meaningful actions are crucial.
The U.S. government must also prioritize sharing crucial cybertheft intelligence with American businesses and rigorously prosecute those engaged in these illicit activities. These measures will send China message that IP theft is unacceptable, while instilling confidence among American businesses and the general public.
By championing free market principles, removing excessive legal roadblocks, while holding those who commit cyberthefts accountable, we can solidify our leadership in technology and innovation. This, in turn, will enhance national security, maintain our economy’s competitiveness, and ensure America prevail in the strategic competition with Communist China.
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Helen Raleigh is an American entrepreneur, writer, and speaker. She has authored five thought-provoking books, including the award-winning autobiography Confusius Never Said and her latest work, Not Outsiders: Asian Americans’ political activism from the 19th century to today. You can find columns and interviews at HelenRaleighSpeaks.com or her Substack newsletter, Confucius Never Said. Follow Helen on Twitter: @HRaleighspeaks.