China's Huawei blasts Australian security concerns amid Sino-Canberra tensions

By Colin Packham

SYDNEY (Reuters) - Chinese telecoms equipment maker Huawei Technologies Co Ltd said Australian claims it poses a security risk are "ill-informed" as it published an open letter on Monday that threatens to inflame already heightened Sino-Canberra tensions.

Huawei is likely to be banned by Australia from participating in a 5G mobile telecommunications roll-out in the nation as it fears Huawei is de facto controlled by China and sensitive infrastructure will fall into the hands of Beijing, according to Australian media reports.

Huawei denies the allegations, and in a move that threatens to draw Australian politicians into a public spat that will further stains relations with China, dismissed Canberra's security concerns.

"Recent public commentary around China has referenced Huawei and its role in Australia and prompted some observations around security concerns," Huawei Australia Chairman John Lord and board directors John Brumby and Lance Hockridge wrote in the unprecedented letter.

"Many of these comments are ill-informed and not based on facts."

Huawei said it operates in 170 countries, abiding by national laws and guidelines. The company said it has 5G investments in Britain, Canada and New Zealand where it said the respective governments had taken up its offer to evaluate the company's technology to make sure it abided by cybersecurity protocols.

A spokesman for Australian Prime Minister Malcolm Turnbull did not immediately respond to a request for comment on Huawei's letter.

Australia has longstanding concerns about Huawei. In 2012 it banned the company from supplying its massive National Broadband Network, and in May Canberra committed millions of dollars to ensure Huawei did not build an internet cable between Australia and the Solomon Islands.

A decision on 5G would come amid a low in Beijing-Canberra relations. Canberra is preparing to pass laws designed to limit Beijing's influence in domestic affairs following criticism by Turnbull late last year that Beijing was meddling in its affairs.

"It won't be great for the relationship if Australia bans Huawei but it won't come as a huge surprise," said Merriden Virrall, director at Australian think tank the Lowy Institute.

"What is important is how Australia articulates it. Australia can't make sweeping statements about great foreign powers. That will determine the response from China."

Alienating China could herald additional trade restrictions from Beijing, analysts said, as six Australian wines, including some produced by Treasury Wine Estates and Pernod Ricard, continue to suffer in shipping supplies to China.

Australia's wine exports to China were worth A$848 million ($631.17 million) last year and are forecast to top A$1 billion in 2018, government figures show. Some analysts say those figures now look optimistic.

"The bilateral relationship isn't in a great place, and the government's announcement will be another major pothole," said Danielle Cave, a former analyst at an Australian security intelligence agency, the Office of National Assessments.

($1 = 1.3435 Australian dollars)

(Reporting By Jane Wardell and Colin Packham; Editing by Cynthia Osterman and Muralikumar Anantharaman)