Amid the political chaos last week, Malcolm Turnbull’s National Security Committee delivered an essential, decision to exclude Chinese telecommunication companies Huawei and ZTE from participation in the 5G network.

The Global Times, the English language media organ of the Chinese Communist Party, declared that this was a “stab in the back” and threatened that “those who wilfully hurt Chinese companies with an excuse of national security will meet their nemesis.” 

It’s unlikely, though, that Chinese officials really expected their telcos to be given access to Australia’s 5G network. Just as Beijing guards their own communications security, so would they expect other countries to protect the future backbone of Australia’s economy and social well being.

The government’s decision to exclude Huawei and ZTE from 5G came only after attempts to see if steps could be put in place to mitigate worries about Chinese cyber intrusion. But 5G technology is such that critical components can’t be isolated. The ‘core’ of the 5G system, which will be typically housed in data centres, and ‘edge’ technology used to connect handsets, laptops and tablets to the core network, will be equally vulnerable to penetration by hostile intelligence services. 

Chinese companies cannot say no when the Communist Party’s Ministry of State Security comes knocking at the door. 

For all of Huawei’s denials that it ‘has never received any request from the Chinese government to gather information’ it’s clear that all Chinese companies are bound by Beijing’s National Security Law of 2017 to assist intelligence agencies when so directed. Chinese companies cannot say no when the Communist Party’s Ministry of State Security comes knocking at the door. 

That’s the meaning of the coded language in Scott Morrison’s press release of last Thursday, which said that ‘the Government considers that the involvement of vendors who are likely to be subject to extrajudicial directions from a foreign government that conflict with Australian law, may risk failure by the carrier to adequately protect a 5G network from unauthorised access or interference.’

Beijing has not helped itself by brazenly continuing industrial-scale espionage against Australia and any other country which has intellectual property worth copying, and military, political and business secrets worth stealing.

Chinese espionage efforts directed by the signals intelligence arm of the People’s Liberation Army has, in the last few years, successfully infiltrated the Federal Parliament’s IT network as well as the Bureau of Meteorology. Chinese intelligence so thoroughly penetrated the Australian National University’s networks that the University still can’t be sure they have effectively excluded Chinese spy’s from the system.

This is just the publicly known tip of a much larger Chinese intelligence gathering iceberg. Australian businesses, universities and state and federal government agencies should assume that Chinese intelligence gathers either have or will will try to infiltrate their IT networks.

China’s interest is not just intellectual property theft. It’s also to monitor the ‘chat’ of their own students, to cultivate useful contacts and to look for further access into more sensitive networks. 

The Chinese Communist Party’s well-practiced and all-pervading domestic surveillance regime means that Chinese intelligence services have a deep interest in mining big data. You may not think that the details of your gas, electricity and phone bills will be valuable to an intelligence service, but aggregate that information across millions of users and cross reference it to yet other data sources and material of genuine intelligence use emerges. 

This is the broader context for the Government’s decision to exclude Huawei and ZTE from 5G, and notwithstanding the inevitable whining from China’s red brigade of useful idiots in Australia, this was absolutely the right call.

...protecting the network is an essential part of national security.

It’s hardly a stab in the back to China that Australia will take all steps necessary to protect its information systems from their intrusion. As 5G will be the information spine for everything from automated vehicles to modern agriculture, protecting the network is an essential part of national security.

As Scott Morrison moves into the Prime Ministerial suite one of the biggest policy challenges he faces will be to make Australia’s China policy more consistent and focussed on doing what’s necessary to protect Australia’s national interest. 

Malcolm Turnbull struggled with China. He began his time as Prime Minister with a businessman’s intuition that China was simply a market and a way to make money. Three years of access to defence and security briefing made it clear to Turnbull that Beijing was a tough intelligence rival and an increasingly malign influence in Asia Pacific security. 

Morrison’s job must be to recognise that Australia has built an unhealthy economic dependency on China. Our national way forward must be to diversify economic ties and to limit the extent to which Chinese business is becoming so central in Australian critical infrastructure.

The rise of an assertive and increasingly authoritarian China will force Australia to make some difficult policy decisions. In the next few weeks Morrison will have to decide whether to allow a Hong Kong company, CKI, take over Australian gas and electricity giant APA.

While Treasury’s Foreign Investment Review Board deludes itself with the fantasy that Chinese business is no different from any others, having the bulk of our gas and electricity assets owned by Beijing’s state owned entity, State Grid, and Hong Kong’s CKI exposes Australia to yet more Chinese intelligence gathering and, potentially, sabotage. 

China doesn’t have to own the grid to damage it by cyber means...

Russia used cyber means in December 2015 to damage part of Ukraine’s electricity grid. China is developing similar cyber weapons. China doesn’t have to own the grid to damage it by cyber means, but ownership makes it easier to access the hardware and software of the industrial control systems that run critical infrastructure.

As Beijing erodes Hong Kong’s autonomy, CKI is no better placed to avoid the predations of Chinese intelligence services any more than Huawei. Morrison will need to step in to prevent the take over of APA to prevent any further Chinese control of Australia’s gas and electricity infrastructure.