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Huawei scrambles to remain a player in Australia's 5G rollout

Security concerns are causing Canberra to rethink the role of Chinese telecom giant

Sign outside a Huawei store
Huawei may become a victim of rising tensions between Australia and China.   © AP

TOKYO -- Huawei Technologies is reaching out to politicians in Australia after reports emerged that the Chinese telecom giant may be blocked from participating in the rollout of the country's fifth-generation, or 5G, wireless network over security concerns.

"Recent public commentary around China has referenced Huawei and its role in Australia and prompted some observations around security concerns," Huawei said in an unusual letter on Monday. "Many of these comments are ill-informed and not based on facts."

Australian Trade Minister Steven Ciobo played down the issue. "I'm not going to pretend that there aren't some differences" between Beijing and Canberra, he told the Australian Broadcasting Corporation on Tuesday. "But broadly speaking, in terms of the relationship, it's very strong."

Huawei's letter seems to indicate otherwise, the latest twist in the simmering tensions between the two countries. Although China imports a large amount of natural resources from Australia, this has not stifled concerns over Chinese influence in the country amid a flood of investment and political donations.

Being shut out from the 5G project will have huge implications, dealing a major blow to both Huawei and China, which is vying in the global race for 5G network development. Other countries could follow suit, notably the U.S., where the administration of President Donald Trump temporarily banned ZTE, another Chinese telecom giant, from doing business with U.S. companies.

Huawei is the world's largest telecom equipment supplier and third-largest smartphone maker. It is not state-owned, but worries over national security have prevented Canberra from cozying up to the company, which was banned from Australia's national broadband tender in 2012. More recently, Huawei was blocked from constructing an undersea cable from the Solomon Islands to Australia, with the government confirming in April that it would take on the project instead.

Some Australian politicians have argued that Huawei should also be denied participation in the 5G project, which is expected to form the backbone of the country's advances in autonomous driving, health care and other industries, according to local media reports.

In the letter, Huawei defended its track record in 170 countries, highlighting its 5G investments in the U.K., Canada and New Zealand. The company even offered to build an evaluation and testing center in Australia so that the government could monitor its equipment.

The stakes are high for Australia. Excluding a major equipment supplier like Huawei risks delaying the country's network development at a time when carriers are already struggling with intense competition. Telstra, Australia's largest telecom, announced on Wednesday that it will cut 8,000 jobs and sell off assets to pare down debt.

"To completely exclude Huawei from 5G in Australia means excluding Huawei from the entire Australian market," the letter said. "We don't believe this would be in Australia's best interest."

Nikkei staff writer Sarah Hilton contributed to this story

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