Australia has banned China's Huawei Technologies Co (華為) and ZTE Corp (中興) from supplying next-generation wireless equipment to the nation's telecom operators, the latest blow in an escalating global battle over network security.
Official statements by Chinese Ministry of Commerce spokesperson has conveyed that this ban abiding the use of national security as a pretext would "exert negative influence" on both Chinese and Australian companies.
The sanction was based on political considerations, the Shenzhen-based firm said in a statement yesterday, adding that Australian businesses and consumers will now have to suffer slower network connections.
The Australian 5G ban is probably too small to hurt either Huawei or ZTE much.
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Interpreting Chinese law should be left to qualified and impartial legal experts.
Chinese law requires organizations and citizens to support, assist and cooperate with intelligence work, which analysts say can make Huawei's equipment a conduit for espionage.
"Moreover, 5G has stronger guarantees around privacy and security protection than 3G and 4G", the company said.
Huawei denied being financed to undertake research and development for the Chinese military, but the committee said it had received internal Huawei documents showing the company provided special network services to an entity alleged to be an elite cyber-warfare unit within the People's Liberation Army.
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VHA chief strategy office Dan Lloyd said the decision was a significant change "which fundamentally undermines Australia's 5G future, and we will consider what it means for our business".
The cost of 5G networks will rise as a result of the lack of competition and further impact Australia's "transition to a digital economy", Huawei, one of top telecommunication gear vendors in the world, argued. "We urge the government to take an objective and fact-based approach to security issues, and work together on effective long-term solutions".
But editorials in China's state-controlled press - which are normally a better guide of Communist Party and, hence, government thinking - described the move as a "stab in the back" for Huawei that would attract retaliation against Australia and Australian companies.
Australia is not the only country to restrict Huawei - it's actually following in the footsteps of the U.S., which restricted both Huawei and ZTE for similar reasons. "Has safely & securely delivered wireless technology in Aust for close to 15 yrs".
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The government's Telecommunications Sector Security Reforms (TSSR) give it extensive powers to issue security-related directions to telcos - including directions relating to procurement decisions.