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Prime Minister Justin Trudeau is increasingly alarmed about the national security threat from Chinese high-tech giant Huawei and is working with key Canadian allies to limit its ambition to become a world leader in next-generation 5G wireless technology, senior government officials say.

In recent weeks, U.S. President Donald Trump’s national security adviser, John Bolton, discussed the issue directly with Canada, stressing the need for both a continental China strategy that deals with the country’s economic might and also more narrowly to block Huawei from dominating 5G telecommunications technology, one senior official briefed on the talks said.

The Globe and Mail has also learned that Huawei and its ties to the Chinese government dominated secret intelligence talks on the sidelines of the Commonwealth summit in London on April 19-20.

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A senior federal official said Mr. Trudeau and leaders of Britain, Australia and New Zealand had a long discussion on the cybersecurity risk from Huawei’s efforts to build new ultra-fast mobile networks. The four countries are part of the Five Eyes intelligence network, which along with the United States comprise an alliance that allows police, prosecutors and spies to exchange information to prevent espionage and terrorism.

The Canadian official said Mr. Trudeau, British Prime Minister Theresa May, Australian Prime Minister Malcolm Turnbull and New Zealand Prime Minister Jacinda Ardern agreed in London that their countries cannot become dependent upon Huawei’s 5G technology because they view the Shenzen-based company as beholden to the Chinese state. Under Communist Party law, Chinese companies must work for their intelligence agencies if requested.

Canadian officials would not say what measures Canada might take against Huawei, but the senior government insider said national security officials have been consulting their counterparts in Australia, which is reportedly preparing to ban Huawei from supplying equipment for its planned 5G wireless network.

Huawei, the world’s largest maker of telecommunications network equipment and the No. 3 smartphone supplier, has already been virtually shut out of the giant U.S. market because of national security concerns and effectively banned from that country’s future 5G network. The telecom conglomerate has benefited from Chinese state contracts, subsidized financing and direct government funding and is helping Beijing supply its “Belt and Road” trading empire through Asia, Africa and Europe with digital infrastructure.

Fifth-generation, or 5G, mobile internet technology, which is not expected to be fully rolled out until 2020, promises to bring massively increased data speed and introduce wireless virtual and even remote surgery, and enable such breakthrough technologies as driverless cars.

Huawei Canada vice-president Scott Bradley has said his firm has been working “openly and transparently” with the Canadian government and domestic telecoms for a decade to satisfy national security concerns. He has noted Huawei does not bid on government telecommunications contracts.

“Similarly, we have had to address these issues in other major markets around the world, including all other G7 nations. In all of these countries, except the United States, we have been able to find a way to meet and address these issues,” he recently told The Globe.

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However, Huawei is excluded from selling its equipment to the Canadian government and Canadian telecoms do not allow Huawei products in its core infrastructure. Canada – like Britain – also has a special laboratory where Huawei products can be tested if necessary to ensure they don’t contain back doors or other mechanisms for secretly monitoring information.

In an open letter to Australian lawmakers in June, Huawei proposed that it could “build an evaluation and testing centre to ensure independent verification of our equipment right here in Australia, just as we have done in other countries.”

American intelligence agencies and U.S. congressional leaders have long warned that Beijing could force Huawei to hand over sensitive customer data and that its smartphones and telecommunications equipment could be used for espionage – a view shared by three former directors of Canada’s spy services.

The director of the U.S. National Security Agency, Lieutenant-General Paul Nakasone, told the U.S. Senate Foreign Affairs committee in March that he would “engage with Canadians” and other members of the “Five Eyes” intelligence-sharing community “to educate them on the threat” and keep Huawei out of their 5G networks.

Earlier this month, a British government report warned technical and supply-chain issues with equipment made by Huawei have exposed Britain’s telecom networks to new security risks. The report was released July 19 after sources told Reuters that senior British security officials say they can now give only limited assurances that Huawei’s operations pose no threat to that country’s national security.

Former Research in Motion Ltd. (now known as BlackBerry Ltd.) co-CEO Jim Balsillie said Canada, Britain, Australia and New Zealand are right to probe China’s intentions, given Beijing’s record of building a surveillance state with state-of-the-art equipment.

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“Given what we know today about how China uses technology to maintain control over its citizens, it’s only reasonable that the Four Eyes are talking about 5G and China,” he said. “When it comes to IP and data, especially as it relates to security and prosperity, the traditional codes of gentlemanly conduct and adherence to transparent rules do not apply."

The Canadian government official said one problem facing the Five Eyes alliance is that North America has few homegrown players poised to play a role in global 5G development and the U.S. is not a major presence. Mobile infrastructure suppliers firms include Huawei, Sweden’s Ericsson and Nokia of Finland. Other participants in 5G technology include China’s ZTE, and the United States' Qualcomm, Cisco and Juniper.

Despite Five Eyes cybersecurity concerns, all major Canadian telecom carriers are now heavily promoting Huawei’s latest smartphone, and, as The Globe reported in May, the firm has established a vast network of relationships with leading research-heavy universities in Canada to create a steady pipeline of intellectual property that the company is using to underpin its market position in 5G technology.

Canadian universities have defended the work they do with Huawei, saying they haven’t been told by Canada’s national-security agencies to avoid producing R&D for the Chinese behemoth.

Since arriving in Canada a decade ago, Huawei has committed about $50-million to 10 leading Canadian universities to fund 5G technology, which it used as the basis for hundreds of patent filings. The amount the company gives to universities is expected to grow to about $18-million this year alone.

With files from Reuters

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