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Australia has not harmed its relationship with Beijing by banning Chinese technology giant Huawei from helping to build a nationwide high-speed Internet network due to concern about cyber attacks traced to China, Prime Minister Julia Gillard said Thursday.
The government late last year told Huawei Technologies Ltd. it was barred from bidding for work on the 36 billion Australian dollar ($38 billion) network, The Australian Financial Review newspaper reported this week.
The newspaper said that decision was prompted by Australian intelligence officials who cited hacking attacks traced to China. The company is one of the world's biggest producers of switching equipment that forms the heart of phone and data networks.
In her first press conference in Australia since she returned from a nuclear summit in South Korea, Gillard said she would not comment in detail on "what ultimately are national security matters."
She said her government's decision was correct and had not broken any international trade rules or agreements with China, Australia's largest trading partner with whom a free trade agreement is under negotiation.
"It is a decision open to the Australian government," Gillard told reporters. "We've taken it for the right reasons through the right process based on the right advice about a piece of critical infrastructure for our nation's future."
She acknowledged that Beijing disagreed with that decision.
"But it would be a great error indeed to move from a moment where we are seeing one thing differently and then extrapolate that to the full dimensions of the relationship -- a very grave error indeed," she said.
Chinese demand for iron ore and other minerals has driven an Australian economic boom but Canberra is uneasy about Beijing's rising military spending and growing assertiveness in Asia. The United States and Australia announced plans in September to include cyber security in their 61-year-old defense alliance, the first time Washington has done that with a partner outside NATO.
Gillard said Australia had a "strong, robust" relationship with China that would continue to "strengthen and grow."
"In China, people also make decisions about their nation's future and who should be involved in the rollout of their own telecommunications," Gillard said. "They want to make those decisions for themselves, completely understandably. So do we."
Huawei, which unlike many big Chinese companies is not state owned, has rejected suggestions it might be a security risk and said it has won the trust of global telecommunications companies.
The ban highlights concern about Beijing's cyber warfare efforts, a spate of hacking attempts aimed at Western companies and the role of Chinese equipment providers, which are expanding abroad.
Beijing's relations with Western governments have been strained by complaints about hacking traced to China and aimed at oil, technology and other companies. A U.S. congressional panel has said it will investigate whether allowing Huawei and other Chinese makers of telecoms gear to expand in the United States might aid Chinese spying.
In 2010, it was blocked from taking part in upgrading a U.S. phone carrier's network and last year was forced to unwind its acquisition of an American computer company after a security panel rejected the deal.
Huawei expressed disappointment with Australia's decision. It has operated in Australia since 2004 and said it already works with the country's major telecoms companies.
Plans approved by Australian lawmakers in 2010 call for building a fiber-optic network to provide high-speed Internet access to 90 percent of the country's homes.
Huawei said it is building similar networks in Britain, New Zealand, Singapore, Malaysia and other countries.
Gillard announced Thursday that construction of the fiber-optic cable section of the network will be under way or completed in areas containing 3.5 million homes and businesses in 1,500 towns and suburbs across Australia over the next three years.
Huawei was founded in 1987 by a former Chinese military engineer but says it has no connection to the military. The company says it is employee-owned but has released few details about who controls it, which has fueled questions abroad.
Huawei, based in the southern Chinese city of Shenzhen, near Hong Kong, reported revenues for the first half of last year of 98.3 billion yuan ($15.8 billion) and says its equipment is used in 140 countries.
Huawei Technologies Ltd.: http://www.huawei.com