Former top MI6 spy reveals Huawei 99% owned by China communist union

Sir Richard Dearlove, former Head of British secret intelligence service MI6 warns that 99 percent of Huawei is directly owned by the Chinese Communist Party.

In "Defending Our Data: Huawei, 5G and the Five Eyes," Dearlove reports that by undercutting the prices of once dominant European telecom network equipment by 18–30 percent, Huawei's sales rose from $4.6 billion in 2014 to $105 billion in 2018.

Although customers give high marks to Huawei for quality and reliability, the key to achieving its 41-percent global telecom network infrastructure share has been Chinese state-owned banks lending $10 billion directly to Huawei or indirectly to its customers.

With a purported a $100-billion Chinese bank credit line, Huawei was positioned to gain an even more dominant market share with the roll-out of fifth-generation cellular network technology (5G), before President Trump placed Huawei Technologies, Inc. on the U.S. Commerce Department's "Entity List" that bans American companies from selling components to Huawei without a U.S. government license.

President Trump's actions may have reduced Huawei's potential sales by up to 60 percent, due to follow-on bans by U.S. allies in Europe, Japan, Australia, and Canada and others.  But given that Huawei runs on Google Android software and gets its chips from Intel and Qualcomm, the U.S. ban may be the equivalent of a technological death sentence.

According to Dearlove, who ran MI6 from 1999 to 2005, Huawei Technologies with 177,000 employees officially is privately owned in China.  But it is 100 percent owned by a shadowy firm with a few hundred employees named "Huawei Investment & Holding."

Huawei founder Ren Zhengfei owns only 1.01 percent of HI&H; the 98.99 percent balance is owned by "Huawei Investment & Holding Company Trade Union," whose officers are appointed by the "All-China Federation of Trade Unions."  But under China's "Trade Union Law of 1992," the "unions shall be related to one another in terms of Lenin's concept of democratic centralism," and the Chinese Communist Party "shall have supremacy over the unions and the latter shall accept the leadership of the Party."

President Obama signed a voluntary cyber-anti-theft agreement with Chinese president Xi Jinping in a White House Rose Garden ceremony in September 2015.  Obama stated:

We've agreed that neither the U.S. or the Chinese government will conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information for commercial advantage.

The agreement did prohibit direct attacks on computer networks.  But according to a Journal of the Military Cyber Professionals Association paper in 2018, "it did nothing to prevent the hijacking of the vital internet backbone of western countries."

China has only two Border Gateway Protocols (BGPs), located in Beijing and Shanghai, where foreign telecommunications data packets can enter China's internet and be redirected by Huawei internet protocol equipment to the appropriate China destination. 

But China communication data packets can cross America's BGP by accessing "ten strategically placed, Chinese-controlled Internet 'points of presence' (PoPs) across the Internet backbone of North America."

Once inside the U.S., the route packets take is controlled by network infrastructure equipment, often made by Huawei, that chooses the shortest physical route to most efficiently transfer the packets of electrons to their ultimate U.S. destinations.

But the severe risk of the ultra-efficient U.S. system is network equipment falsely specifying what the shortest distance is, allowing "hijacking, diverting, and then copying of information-rich traffic — "often unnoticed and then delivered with only small delays."

Given the catastrophic impact of a full ban on Huawei, President Trump issued a 90-day "temporary general license" late last week to allow some American companies to continue working with Huawei.

But the tech executioners' clock is ticking on Huawei.

Chriss Street is an economist and cofounder of the New California movement.