China cyber security rules could backfire, says Huawei

Shenzhen - China can only ensure its information security in the long run if it keeps its market open to the best technology products, be they foreign or domestic, Huawei's rotating CEO Eric Xu said on Tuesday.

Xu's remarks are a rare example of a top Chinese CEO openly questioning the direction of Beijing's information security policy, already a source of concern for countries who fear it will limit opportunities for their technology firms.

In recent months Chinese leaders have advanced, albeit fitfully, several technology "localisation" measures to minimise the threat of foreign cyber spying, by encouraging or requiring use of domestic products in important systems.

But such policies could hamper free competition and innovation in Chinese industry and undermine Chinese security in the long term, Xu said in an interview on the sidelines of Huawei's annual global analyst summit in Shenzhen.

Technology push

"If we're not open, if we don't bring in the world's best technology, we'll never have true information security," Xu said, comparing China's enterprise (corporate) computing industry to primary school students competing against foreign rivals at university level.

"Even if you localise, make your own CPUs [central processing units], make your own operating systems, make your own database software, it would still be at a grade school level, [with] your [security measures] transparent to the college students," Xu said.

"The only way you can answer the security problem is to keep improving your technology."

Xu's scepticism comes despite the fact that his company should, in theory, be one of the biggest beneficiaries of China's domestic technology push.

The world leader in manufacturing equipment for telecommunications carriers like Telefonica and British Telecom, Huawei in recent years has expanded into enterprise technology, offering competitive alternatives to Western-made servers and data storage for banks and government agencies.

Although Huawei would gain more contracts if foreign products were kept out, Xu said, the overall quality of technology used in China could drop.

"From China's perspective, to determine whether this is a good thing or bad thing we have to look at whether the market has healthy competition," he said. "Is this good money replacing bad money or bad money replacing good money?"

He also feared the repercussions for international trade.

"If the Chinese market is not open, then the European market won't be open, other markets won't be open, then what's the result?" he said. "The result is everyone draws a line around their own territory."