Australia’s Ban on Huawei Is Just More Bad News for China

As the US-China trade war rages on, two Chinese tech companies are facing a new headache: Australia’s government has joined the US in effectively banning its wireless carriers from buying gear for 5G networks from Huawei and ZTE.

The decision is more than spillover from the US-China dispute. It’s part of a bigger controversy over the role of China in Australia, which is in the midst of political turmoil. On Friday, Prime Minister Malcolm Turnbull stepped down after lawmakers from his conservative Liberal Party voted to replace him with Scott Morrison, who had been treasurer and acting minister for home affairs.

News of the ban on Chinese 5G equipment came via a tweet from Huawei on Wednesday. A statement from Morrison, before he became prime minister, and Australian Senator Mitch Fifield confirmed that carriers may be restricted from buying equipment from companies operating in certain countries under new telecommunications regulations set to take effect in September, but the announcement doesn’t mention Huawei, ZTE, or China by name. Instead it refers to “vendors who are likely to be subject to extrajudicial directions from a foreign government that conflict with Australian law.”

The news follows ongoing efforts to keep the two companies out of the US, purportedly over security concerns. ZTE briefly shut most of its operations in May after the US banned companies from selling it components. Talks this week between US and Chinese officials over the larger trade disputes failed to reach any agreement.

The US likely influenced Australia’s decision, says Bates Gill, an expert on China and Asia-Pacific security issues at Macquarie University in Sydney. Australia is part of the “Five Eyes” intelligence alliance along with Canada, New Zealand, the UK, and the US, and it’s a close trade partner with the US. “There is an inclination to follow the US on sensitive intelligence issues,” says Gill.

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But that’s not the whole story. China and Australia have their own tense, complicated relationship. Nearly 30 percent of Australian exports last year were to China, according to a government report, and China and Hong Kong are among the largest foreign investors in Australia, according to another report.

In June, the Australian government passed two bills aimed at curbing foreign political influence by toughening espionage laws, banning covert activities on behalf of foreign governments, and requiring foreign lobbyists to register with the government. The bills didn’t specifically name China, but earlier this year the Australian Broadcasting Company reported that the legislation was driven by a top secret government report that concluded that China had attempted to infiltrate multiple layers of the Australian government. Shortly after the bills were introduced last December, Australian Senator Sam Dastyari resigned over reports that he warned one of his Chinese-Australian donors that his phone might be tapped by the government.

Gill says this atmosphere of concern about Chinese influence, combined with the mood in the US, likely led to the decision to ban ZTE and Huawei from Australia’s 5G networks. But he says it’s a relatively small part of the current political drama unfolding in the country, and he doesn’t expect much fallout in either country.

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