It hasn't been a great week for Huawei Technologies. Nor for New Zealand, which now finds itself interposed in the technological Cold War between the United States and China and must find a way to balance its competing security and economic interests.

More: 'Not a ban' - Andrew Little offers hope for Huawei, but Spark dubious

First, Huawei founder Ren Zhengfei, the former PLA engineer who joined the Communist Party in 1978, was left off the list of 100 key contributors to China's economy in the past 40 years.


This list, published mid-week in the party's People's Daily newspaper, initially made headlines for its revelation that Alibaba founder Jack Ma was a member of the Chinese Communist Party (CCP).

Others left off included HNA's charismatic founding chairman Chen Feng — who has relatives in Auckland — and whose company's $660 million bid for ANZ's UDC Finance terminated after the application was declined by the New Zealand Overseas Investment Office.

HNA's finances have been stretched after a huge debt-funded spending spree. But that's not the case with Huawei, which has been a resounding international success.

So much so that it has showcased China's emergence as a global technological super power with the development of world-beating 5G telecommunications infrastructure.

The obvious deduction is that Beijing left Ren off the list because his linkages to the CCP and the Chinese military simply helped cement the US view that Huawei could be commandeered as an agent of the Chinese State for offensive cyber initiatives.

If so, it is far too late.

New Zealand delivered the second slap to Huawei's ambitions.

The Government Communications Security Bureau (GCSB) decision to decline an application by NZ's largest telco, Spark, to use Huawei's technology in the development of its own 5G network was not surprising.


It was because of Huawei's superb technology that Spark CEO Simon Moutter had been so keen to proceed with the company instead of costlier and less effective competitors.

But the GCSB — which briefed senior Cabinet ministers on Monday — cited significant national security risks.

Arguably, if Spark and Huawei can mitigate the GCSB's concerns, the Chinese company may still get to play a part.

But that potential seems wafer slim.

The US argues there is a potential for back doors that would give Beijing access to sensitive information. There is also a view that as the "internet of things" emerges, major hackers could pierce 5G networks and cripple vital infrastructure.

While Washington openly argues that Huawei's technology poses legitimate national security threats, the GCSB — which has done its own investigations — concurs but has shied clear of pointing a direct finger at Beijing.

Cabinet Ministers are trying to do that same.

But it is a stretch.

New Zealand is now the third member of the Five Eyes intelligence alliance to block Huawei, joining the US and Australia. Canada is undertaking a review.

Interestingly, as BBC News reported this week, the United Kingdom's National Cyber Security Centre said in February it would continue to collaborate with Huawei.

The United Kingdom's Huawei Cyber Security Evaluation Centre Oversight Board produces annual reports on whether the company threatens British national security, but three reviews have failed to raise any red flags about the firm.

BBC News suggested the UK could soon be the sole holdout, allowing Huawei to play a key role in delivering the data that everything from self-driving cars to smart city sensors will rely on.

Interestingly, the BBC revealed a facility nicknamed the Cell, in Banbury, Oxfordshire, where staff employed by Huawei but answering to GCHQ hunt for security flaws in the company's products.

It said it had not uncovered evidence of hidden backdoors or other deliberate attempts of subterfuge.

But it did note the last report identified shortcomings that led it to warn that it could offer only "limited assurance" that the company posed no threat.

Fundamentally though, Huawei's success has also been its Achilles heel.

It is not simply security issues which led the US to strongly resisted Huawei's attempts to break into the American market. But China's increasing surge towards technological dominance.

In such a climate, New Zealand is caught.

The GCSB and the Government have to make the right call when it comes to national security.

But on the economic side, NZ will miss out and be lumbered with a less impressive 5G network.