The Complex

Accused of Cyberspying, Huawei Is ‘Exiting the U.S. Market’

The CEO of the world's biggest telecommunications equipment maker, which for years has been labeled by U.S. officials as a proxy for Chinese military and intelligence agencies, says he's giving up on America.

In a rare interview on Nov. 25 with French journalists, Ren Zhengfei, the 69-year-old founder and CEO of China-based Huawei, said he would no longer look for business in the United States, in the wake of accusations from lawmakers and government officials that the company is a de facto arm of the Chinese authorities. "If Huawei gets in the middle of U.S-China relations," and causes problems, "it's not worth it," Ren reportedly said, according to a Chinese transcript of the interview. "Therefore, we have decided to exit the U.S. market, and not stay in the middle."

It wasn't immediately clear what Ren meant by "exit" the market, but for the company, the U.S. market could easily be described as hostile. Lawmakers have exhorted U.S. firms to stop doing business with Huawei, and federal regulators have tried to block the spread of the company's equipment in the United States

William Plummer, a Huawei vice president and the company's point person in Washington, told Foreign Policy, "It is true that Huawei has adjusted our priority focus to markets that welcome competition and investment, like Europe," adding that Ren is "making a comment on the current market environment." The company's overseas business is thriving. It has offices in 18 countries and has invested billions of dollars building communications networks in Africa.

Ren didn't say that Huawei was shutting down its U.S. offices or entirely ending a particular line of business. And he claimed that the company's mobile phone business was going strong. "Our handsets in the United States are still selling well," Ren said.

"For research and development, and retail handset provision, Huawei will likely stick around" the United States for a long time, said Dan Rosen, a partner and China practice leader at the Rhodium Group, an economic advisory firm.

But Ren's comments were the highest level to date from inside Huawei about the international politics that it feels have unfairly kept it out of the U.S. market, among the largest and most important for any technology company.

The Ren interview, conducted in Paris with several French media outlets, has received wide coverage on Chinese financial and general news sites, but does not appear to have been picked up by U.S. or British media.

Some U.S. officials worry that Huawei's telecommunications equipment, which includes routers and switches, could come preloaded with back doors and hidden surveillance devices, and that if it were installed in the United States, the Chinese government would have an easy avenue for espionage and potentially cyber attacks on U.S. infrastructure.

In 2012, Rep. Mike Rogers, the chairman of the House Intelligence Committee, said U.S. companies who were purchasing equipment from Huawei and another Chinese company, ZTE, should find other vendors. Rogers said that the installation of Chinese equipment in the United States could have disastrous consequences.

"We have to be certain that Chinese telecommunication companies working in the United States can be trusted with access to our critical infrastructure," Rogers said. "Any bug, beacon, or backdoor put into our critical systems could allow for a catastrophic and devastating domino effect of failures throughout our networks."

Dutch Ruppersberger, the intelligence committee's ranking member, said the committee had "serious concerns about Huawei and ZTE...and their connection to the communist government of China. We warn U.S. government agencies and companies considering using Huawei and ZTE equipment in their networks to take into account the effect if could have on our national security."

The intelligence committee began an investigation of Huawei in 2011. A preliminary review "suggested that the threat to the supply chain [of telecommunications equipment] constitutes a rising national security concern of the highest priority," according to a committee statement.

In March 2013, Sprint Nextel and Japan's Softbank told the committee they would try to phase out equipment from Huawei as part of a merger, the Wall Street Journal reported. The concession was seen as a successful play by U.S. regulators to keep Huawei equipment from being used in the United States, in exchange for official blessing of the merger by U.S. government officials.

In a post on his personal blog, Plummer, the Huawei vice president, called the committee's investigation a "comedic sham," and said that Rogers' comments about Huawei's connection to the Chinese government "border on corporate defamation..."

Rogers "has made multiple claims about China-headquartered Huawei's integrity," Plummer wrote. "Not once - not once - with a shred of demonstrable substance."

He added, "If the Chairman can factually and substantively explain why Huawei is somehow more susceptible to cyber-penetration than any and every other telecom vendor that relies on common global supply chains and is subject to common cyber challenges and vulnerabilities, then he should do so."

Ren's comments appear to be only the second time he has given an interview to non-Chinese media. The first was when he spoke with four journalists from New Zealand, during a May 2013 trip to Wellington. "Huawei has no connection to the cyber-security issues the U.S. has encountered in the past, current and future," he said, according to the BBC.

Ren has a penchant for veering off corporate talking points, and his interview with the French press was at times digressive. According to a transcript posted on Huxiu.com, a Chinese news site, and widely republished on the Chinese internet, it includes a lengthy discourse on why Ren decided to go into the telecom business instead of raising pigs; the correct way to say the company's name -- "we should teach foreigners how to pronounce it, so they don't always say 'Hawaii'" (it's Hwa-way); and why he only owns 1.4 percent of the company -- "because one day I will get Alzheimers." The interview ends with Ren inviting the journalists for "afternoon tea" and an appeal for them to embrace of the French spirit of romance. "Why can't you just pay attention to my main ideas and ignore the details?" he asks.

Adam Segal, a senior fellow for China Studies at the Center for Foreign Relations, said he's not sure why Ren doesn't often give interviews, but "maybe he's the type of CEO that the rest of the board is not comfortable with, because they're afraid he's going to say something he shouldn't say."  

The Complex

If China's Airspace Grab Turns Violent, Here's How the Dogfight Could Go Down

Last week China announced a new air defense identification zone over the East China Sea, basically insisting it's in charge of the airspace over the disputed Senkaku Islands claimed by Japan.

Japan and the United States said they would not recognize the ID zone and promptly sent in warplanes to underscore the point. U.S. B-52 bombers flew over the Senkakus, practically inviting a Chinese intervention.

Two days later, the Chinese air force flew J-11 and Su-30 fighters and a KJ-2000 radar plane into the zone.

With tensions mounting, I decided to see what might happen if the maneuvers escalated into actual combat. In my scenario, played out in the ultra-realistic computer game Command: Modern Air/Naval Operations (C:MANO), Beijing decides to teach Tokyo a lesson -- and opens fire on the Japanese planes. When three of the world's most high-tech air arms meet in simulated battle, the results might surprise you.

J-11 fighters. Via Chinesedefence.com.

Battle plan

China plans to ambush one of Japan's air patrols -- a P-3C Orion maritime surveillance aircraft and an accompanying pair of F-15J Eagle fighters -- as it makes its daily flight through the Ryukyu and Senkaku islands, hundreds of miles south of mainland Japan.

The southernmost islands in Japan's archipelago, the sparsely populated Ryukyus and Senkakus are also the closest to China. Japan has limited options in defending them. The daily flight is in many ways just a reassurance to the local population.

If the attack on the Orion is successful and the opportunity presents itself, the Chinese could also shoot down an E-2C Hawkeye airborne early-warning aircraft orbiting southwest of Okinawa. The destruction of four planes and the deaths of as many as 21 aircrew members would be a great loss for Japan.

The Chinese air force plans to send up three groups of planes. The first, with four J-11B fighters, will try to take out Japan's F-15 escorts, leaving the Orion patrol plane defenseless.

The second Chinese group, composed of four J-10 multi-role fighters, will then dart in and shoot down the Orion -- and potentially also the Hawkeye.

Providing radar coverage and command and control will be the third group, with a KJ-2000 airborne early-warning aircraft flanked by fighter escorts. The early-warning group will stay out of the battle zone, instead holding off the coast of China.

All the Chinese fighters will be fully armed, with the J-11Bs carrying four PL-12 long-range radar-homing missiles plus four PL-9 short-range infrared-homing missiles. The J-10s will carry two of each munition.

Air Self-Defense Force F-15J fighters. Via Wikipedia. 

Self-defense forces
The Japan Air Self-Defense Force (JASDF) has recently begun fighter escorts of patrols in the area, protecting the daily Maritime Self Defense Force P-3 flight with a pair of F-15s.

separate pair of F-15s is patrolling directly over the inhabited Ryukyus. The fighters are part of 204 Hikotai, a squadron based in Okinawa.

The F-15s, not expecting air-to-air combat, are carrying a light weapons load of just two AAM-4 long-range radar missiles plus two AAM-3 short-range IR missiles.

A pair of U.S. Air Force F-22 Raptor stealth fighters on temporary rotation in Okinawa are conducting maneuvers southeast of the island. Due to the increased tensions, the F-22s are armed with six AMRAAM long-range missiles and two Sidewinder short-range missiles.

Thanks to the close relationship between the JASDF and the U.S. Air Force, the Raptors can come to the aid of the Japanese, if necessary.

Despite careful planning, the Chinese air force has a less complete picture of the battle space than it thinks. The Chinese are not aware of the second pair of F-15Js or the Raptor flight.


JASDF units begin to track unknown contacts. Yellow icons are China, Blue are Japan and United States. C:MANO screen grab.

Ambush!

It's another tense day over the East China Sea as the Japanese P-3 lumbers toward the Senkakus, 50 miles to the west. Two miles distant at the Orion's eight o'clock are its two F-15 escorts.

The plan is to fly west, overfly the Senkaku Islands of Uotsuri and Kuba, and then return to Okinawa. The F-15s have their sensors off, with radar coverage provided by the E-2 radar plane orbiting west of Okinawa.

The Hawkeye picks up several unknown radar contacts in the distance: eight bogies in three identifiable groups, the closest of which is 120 miles from the Orion.

A Chinese Type 1474 radar signal is coming from one contact, which signals analysts deduce as emanating from a J-11B fighter. Three more contacts are close to the radar source, meaning a possible total of four J-11Bs.

The defenseless Orion immediately turns around and heads for home at full speed. But the big propeller-driven plane can make only 400 miles per hour -- too slow to outrun J-11s. The F-15s will have to cover the Orion's withdrawal until it reaches a safe distance.

The two Japanese fighters turn on their radars and accelerate, heading straight toward the potentially hostile contacts.

With both sides racing toward each other at a combined 1,000 miles per hour, the gap closes pretty quickly. At 56 miles, the closest unknown air group is positively identified as J-11Bs.

At 22 miles, alarms go off in the F-15s' cockpits. Missile launches from the opposing warplanes! The Japanese are under attack.

The F-15s swiftly counterattack. Each Japanese fighter has just two AAM-4 missiles. To maximize their chances of downing a Chinese fighter, the F-15 pilots would want to target only two J-11s with two missiles apiece. But right now it's more important to the Japanese to break up the enemy attack and buy the Orion some time.

They launch one missile at each inbound J-11 and then turn to retreat.

Firing back, the Chinese manage to launch only 10 of their 16 PL-12 missiles before the inbound Japanese missiles force them to take evasive action. The Chinese fighters are unable to fire the last third of their long-range missiles and are soon bobbing and weaving all over the sky to avoid getting shot down.

Still, chances of survival are slim for the F-15s. Despite being an inferior missile, the Chinese PL-12s have the advantage of numbers. The F-15s take evasive action of their own, activating electronic countermeasures to distract the missiles and bursting clouds of radar-defeating chaff.

Each Chinese missile has a low probability of intercept, but there are 10 of them -- and all it takes is one hit. A minute apart, both F-15s wink off radar screens.

In the meantime, the four Japanese AAM-4s down one J-11, leaving three still flying. The three remaining J-11s, followed by four J-10s, roar through the sudden tear in the Japanese air defenses.

Minutes after firing their volley of long-range missiles, the second flight of F-15Js has turned away, following behind the P-3C Orion. C:MANO screen grab.

Counterattack

Seconds after the Chinese fighters have been identified, the second pair of F-15s flying near Miyako island turn north to assist their squadron mates. Lighting their afterburners, the F-15s raced toward the battle at the speed of sound.

The Eagles turn on their radars to get the Chinese jets' attention and hopefully lure some of them away. It doesn't work. The F-15 pilots watch as their comrades disappear from radar.

As the Chinese J-11s chase down the Orion, the surviving F-15s focus their attack, assigning two AAM-4 missiles per J-11, starting with the lead plane. Two Chinese jets go down in flames.

Out of missiles, the second flight of F-15s turns for home. They could in theory press the attack with shorter-range IR missiles, but they're still outnumbered two to five. The odds are not good for the Japanese.

Plus, they know something that the Chinese don't. The moment the Orion turned to escape, the two American F-22s on a training mission east of Okinawa went on a war footing and headed toward the raging air battle at around 1,000 miles per hour.

The Chinese are on a collision course with the deadliest fighters ever made.

F-22 Raptors. U.S. Air Force photo.

Raptor down

Despite the Eagles' best efforts, the Orion is still in danger. At maximum speed, the patrol plane is still slower than the Chinese fighters racing to catch up with it.

But American and Japanese commanders believe the F-22s will tip the battle in their favor. Each Raptor carries six AMRAAM missiles, meaning the Americans have 12 missiles to destroy five Chinese fighters.

The F-22 pilots target two AMRAAMs at each enemy jet. In doing so, they switch on their AN/APG-77 radars -- a potentially unnecessary and dangerous move. Active radar helps you target the enemy, but it also betrays your position.

Incredibly, all six of the AMRAAMs in the first U.S. volley miss their targets. Two of the four missiles in the second volley hit, leaving the Chinese with three fighters. The Americans quickly retarget the Chinese with their last two AMRAAMs and a J-10 fighter goes down in flames.

Now the Chinese are down to two fighters. The American and Japanese commanders believe they have won the battle. Then something even more incredible happens: one of the stealthy F-22s explodes.

The allied officers are stunned by this sudden turn of events. They believed in the superiority -- the invincibility -- of the Raptor. So when the Chinese fired PL-12s at the F-22s, they didn't think too much of it. The Raptors would beat them. Heck, the non-stealthy Eagles had beaten most of the missiles fired at them.

What they should have stopped to consider is that the Chinese fighters had been able to detect the stealth planes, probably because the Americans had unwisely activated their own radars. While Chinese missiles are decidedly inferior, Beijing's Russian-designed sensors are pretty good.

And though Chinese missiles have a low kill probability, the J-10s and J-11s hurled at least a dozen of them at a single Raptor. One got through.

P-3C Orion. Creative Commons photo, Flickr user GT ARTS, Inc.

After-action report

The Chinese ambush of the Orion fails. The patrol plane gets away. For the allies, everything -- including losing three expensive fighters and possibly their pilots -- is secondary to defending the P-3 and its 12 crew members.

Six out of eight Chinese fighters have been shot down.

For Beijing, poor intelligence is to blame. Chinese commanders were not even aware that the United States and Japan had an extra four F-15s and F-22s in the battle zone.

Still, the Chinese have managed to shoot down the first two F-15s lost in air-to-air combat since the Eagle entered service in the 1970s. And they killed an F-22 -- the best and priciest fighter ever made.

So what does my simulation of the battle mean for the current situation in the East China Sea? Simply put, China has a chance of pulling off an aerial ambush. If my scenario is realistic. If the game's modeling is accurate. If the Chinese are little lucky and if U.S. and Japanese commanders make mistakes. And if the first volley of AMRAAMs misses.

To be sure, those are a lot of ifs.

I approached building the scenario with some trepidation. I asked myself just how the Chinese would go about taking down a Japanese plane.

The Japan Air Self-Defense Force is better-trained than the Chinese air force and at least as well armed. To have a chance of winning, Beijing would have to overwhelm its enemies with sheer numbers. Hence the order of battle I devised -- one that favors the Chinese.

In my defense, China probably can muster more numerous forces in any sudden Pacific showdown.

The United States and Japan rely on just two air bases -- Naha and Kadena, both in Okinawa -- to provide fighter cover for the Senkaku Islands. Against that, China has a large number of bases -- and is building more. That's the advantage of waging war in your backyard.

But numbers aren't everything. The United States and Japan count on their technological advantage compensating for the smaller sizes of their forces. They're not necessarily wrong to do so.

The F-22s' presence in my scenario made all the difference. Flying at 1,000 miles per hour, the Raptors arrived in the nick of time. The Chinese didn't know they were there until the Americans unwisely turned on their radars.

This scenario is not meant to exaggerate or glamorize the possibility of armed conflict in the East China Sea. The chances are remote that a shooting war will break out. That said, for years tensions have steadily escalated between China, Japan, and the United States.

Although just a simulation, my skirmish over the Senkakus has brought up some interesting points worth considering. The relative advantages of both sides make for a compelling argument for either side that it just might be successful.

This is not enough to prevent conflict. And if the United States and Japan really want to deter an increasingly aggressive China, they're going to have to figure out how to bring more airplanes to the fight.

Creative Commons via Flickr