Sources in Australian intelligence agencies have confirmed that Australia is preparing to ban Chinese mobile phone company Huawei Technologies from supplying equipment for the Australian 5G network.

The move is a result of concerns that the Chinese communist government would be able to force Huawei to hand over sensitive information gathered in Australia, despite assurances to the contrary from Huawei Australia Chairman John Lord.

Bidders are vying for a piece of the 5G network action, so much so that the Australian government is having to place limits on how much of the mobile spectrum that individual companies can access.

For years, intelligence agencies in the West have flagged up concerns about ties that Huawei has to China’s ruling Communist Party, worrying that the Chinese government could use Huawei’s equipment for espionage, although no evidence that this is the case has come to light. Similar concerns over Chinese espionage have resulted in Huawei’s near exclusion from the telecoms market in the US.

Huawei, the world’s largest manufacturer of communications network equipment, has assured the Australian government complete oversight of all equipment for the 5G network, including mobile phone towers, base stations and transmitter equipment. Other countries have agreed to the oversight model, including the UK, where intelligence staff undertake reviews of all Huawei technology.

Canada, New Zealand and Germany also operate Huawei hardware, saying that they believe that their safeguards prevent any ‘back doors’ for the manufacturers to access sensitive equipment.

However, two Australian sources with inside knowledge told news agency Reuters that Australian intelligence agencies do not feel that mere oversight will prevent unauthorized access. One of the government sources said: “It is a Chinese company, and under Communist law, they have to work for their intelligence agencies if requested. There aren’t many other companies around the world that have their own political committees.”

Both sources said that they could not reveal their identities, as they did not have permissions to speak to the media.

The 5G network in Australia will involve a concentrated network of towers, which companies offering mobile services such as Telstra and Optus would lease. Mobile phone providers usually have access to personal information about customers that could be sensitive in nature, such as browser history and email logs, although most countries, including Australia, have strict privacy laws regarding access to this information.

The Australian government has concerns about a Chinese law declaring that citizens and organizations must cooperate, assist with and support intelligence work that China may be carrying out. However, Lord said that the law only covers activities within China and does not apply abroad. He added: “That law has no legitimacy outside of China. Within that country, any information coming through us and any equipment we put into their national infrastructure is safe to the best of our ability, and it’s secure.”

It is still possible that Prime Minister Malcolm Turnbull may decide not to formally endorse the ban of Huawei products, despite the advice from Australia’s intelligence agencies. One source with knowledge of the process in Canberra said that the government “is in no great rush to confirm the ban’.

Adam Ni, visiting fellow in the Strategic and Defence Studies Centre at the Australian National University, added: “It is going to highlight the anxiety that Australian lawmakers have about the rise of China, and it is not going to do any good for the Australian-China relationship.”