Canada BANS Hikvision: National and Business Security Under Threat. Extrema Ratio: "We Warned You"

Canada has decreed a total blockade of Hikvision, the Chinese surveillance giant, an action imposed by stringent national security reasons. The move is a clear signal in a geo-economic war in which the West faces growing technological dependence on Beijing. Hikvision, while disputing the decision, raises strong suspicions that it is a vehicle for China's Civil-Military Fusion (MCF) strategy to collect data globally and project authoritarian influence. The risks are systemic: espionage, sabotage and the creation of a global surveillance network to serve Beijing. Extrema Ratio has consistently warned policymakers of these existential dangers, urging urgent recalibration of procurement policies. The Canadian ban is not an accident, but a global wake-up call.

Credit Extrema Ratio

The Canadian government has ordered Hikvision, the Chinese surveillance giant, to cease its operations within the country. This ban, driven by pressing national security concerns, means the company must shut down its Canadian activities and its products can no longer be purchased or used by government agencies. Hikvision immediately contested the decision, calling it "factually baseless" and "driven by geopolitical bias." This act isn't an isolated incident; rather, it fits into a growing and justified global distrust of Chinese technology providers, fueled by clear ties to Beijing and implications for data security and critical infrastructure vulnerability. Canada's move reflects a deeper global debate, including systematic human rights violations in Xinjiang and Chinese intelligence laws mandating state cooperation, which pose concrete risks of espionage or sabotage. Beijing, in fact, is executing a plan to generate global technological dependencies, integrating its ICT companies into crucial infrastructures like the Digital Silk Road, aiming to gain access to vast volumes of user data and proliferate digital surveillance tools. The United States, the United Kingdom, and Australia have already imposed similar restrictions, while in Italy, the case of Hikvision cameras in government offices has highlighted vulnerabilities, prompting urgent reevaluation. The European Union, though without a blanket ban, has raised significant concerns about these risks.

The following analysis delves into the strategic motivations behind Canada's decision, examining international precedents and the ramifications of a choice that is reshaping global technology procurement policies, placing national security above immediate economic interests. Extrema Ratio has long warned about the serious risks to national security and individual businesses stemming from the indiscriminate use of Chinese technology.

The Canadian verdict: national security as a priority

Industry Minister Melanie Joly announced on X that "Hikvision Canada Inc.'s continued operations in Canada would be injurious to Canada's national security." This conclusion, resulting from a "multi-step review of information and evidence provided by Canada's security and intelligence community," highlights an inherent risk assessment. While the exact nature of the threats wasn't publicly disclosed, the context is unambiguous: cybersecurity and the protection of sensitive information are considered paramount.

Hikvision, or Hangzhou Hikvision Digital Technology Co, is no stranger to such accusations. The United States, in particular, has imposed sanctions and restrictions on the company for its alleged involvement in the use of its surveillance equipment in China's Xinjiang region, where numerous human rights organizations have documented systematic abuses against the Uyghur population and other Muslim communities. The company strongly rejected the Canadian accusation, stating the decision lacks a factual basis, procedural fairness, and transparency, attributing it to geopolitical tensions and an unjustified bias against Chinese companies. This challenge underscores Hikvision's position, defending itself against security risk accusations and attributing the restrictions to geopolitical motivations rather than intrinsic technological flaws.

The Xinjiang connection: proven complicity and pervasive surveillance

Accusations of Hikvision's complicity in human rights violations in Xinjiang are not mere speculation but are based on in-depth investigations that have uncovered concrete evidence of its involvement. It has been documented that Hikvision directly provides surveillance equipment to Chinese facilities dedicated to the repression of Uyghurs.

A recent report, based on documents from Xinjiang police archives, revealed the deep integration of Hikvision cameras into a vast intelligence program designed to track and detain Uyghurs and members of other ethnic groups in the region. The report details Hikvision's role in human rights abuses, including the surveillance of mosques and internment camps, in massive surveillance networks, and in the use of artificial intelligence for Uyghur ethnic profiling.

Police in the Uyghur region monitor all 23 million residents under the broad accusation of "terrorism," employing facial recognition systems and license plate cameras. Individuals with suspected foreign ties are flagged for "immediate arrest." Hikvision technology, in some cases identified by specific camera serial numbers, captured footage that led to the detention of specific Uyghur individuals. A striking example is the tracing of a Uyghur's car after a Hikvision camera filmed its license plate.

These developments are an integral part of China's mass surveillance program, one of the largest and fastest-growing globally. In 2017, China had 176 million surveillance cameras, a number that rose to 200 million by July 2018. The Chinese leadership, including President Xi Jinping, views the construction of "smart cities" as an essential component of the Belt and Road Initiative (BRI), with President Xi Jinping emphasizing the need to "promote big data, cloud computing, and smart city construction" within this context.

It's crucial to note that Hikvision is a subsidiary of the China Electronics Technology Group Corporation (CETC), a Chinese state-owned entity. For this reason, the U.S. Department of Commerce placed Hikvision on its Entity List in 2019, citing the company's complicity in the "genocide" (the legal term applied by the U.S. government) perpetrated by the Chinese Communist Party against Uyghur Muslims in Xinjiang. Subsequently, in 2022, the Federal Communications Commission (FCC) extended these restrictions, effectively banning the sale and import of new Hikvision products into the United States, thereby precluding their access to U.S. radio frequency spectrum.

China's national intelligence law and military-civil fusion: a systemic risk of technological control

National security concerns, highlighted by Canada and other states, are fundamentally rooted in Chinese legislation and its development strategies. The National Intelligence Law (NIL), adopted in 2017, imposes an unequivocal obligation on all Chinese organizations and citizens to cooperate with government authorities on security matters. This regulation, particularly some of its articles, reinforces the argument that the presence of Chinese companies in national critical infrastructure can pose a systemic risk to control and data access.

Relevant articles of the NIL include:

• Article 7: "All organizations and citizens shall support, assist, and cooperate with national intelligence efforts in accordance with the law, and shall protect national intelligence work secrets that they are aware of." This establishes an unambiguous obligation to cooperate.

• Article 9: Provides incentives (praise and awards) for contributions to intelligence efforts.

• Article 12: Authorizes national intelligence work institutions to establish "cooperative relationships with relevant individuals and organizations and may entrust them to carry out related work," suggesting that private entities can be directly tasked by intelligence agencies.

• Article 14: Allows national intelligence work institutions lawfully carrying out intelligence work to request "necessary support, assistance, and cooperation from relevant organs, organizations, and citizens," turning such requests into binding legal obligations when read in conjunction with Article 7.

The law has global application to all Chinese groups, including overseas subsidiaries, regardless of their geographical location. It applies to all organizations established in China, irrespective of ownership (private, public, or foreign), and to all Chinese citizens, even when residing outside the country.

This regulatory framework is embedded within China's broader strategy of Military-Civil Fusion (MCF), a program aimed at transforming the People's Liberation Army (PLA) into a "world-class military" by 2049. Through MCF, the Chinese Communist Party (CCP) is systematically reorganizing the country's entire scientific and technological enterprise to ensure that new innovations simultaneously advance economic and military development. China pursues MCF to "merge" its economic and social growth strategies with security goals, building an integrated national system to support national "rejuvenation" objectives. The CCP considers MCF fundamental to advancing its regional and global ambitions, believing that artificial intelligence will drive the next revolution in military affairs and that the first country to apply it to next-generation warfare will achieve military dominance. MCF, therefore, aims to pave the way for China to be the first country to transition to "intelligent warfare" and develop the military capabilities deemed critical for achieving these goals.

In this pervasive regulatory and strategic context, the entry of any Chinese technology supplier (e.g., in 5G or surveillance) into a state's domestic market can be interpreted as authorizing a potential infiltration by Beijing, laying the groundwork for the creation of long-term technological dependencies and access to vast volumes of user data. Chinese ICT companies, often the first to enter emerging markets with competitive offerings, manage to "lock-in" users with advantageous deals, excluding competitors. These companies are also uniquely positioned to define regional technical standards that will shape the long-term structure of digital economies and influence the technologies usable within their infrastructure. Such tools, sold under the guise of "smart city" projects, can include surveillance technologies, facial recognition, and integrated social tracking systems that aggregate significant citizen data, replicating abroad the same control mechanisms used in China.

Comparative analysis: global measures, the Italian case, and EU concerns

Canada's decision fits into a pattern of growing global skepticism toward Chinese technology providers, with Hikvision at the center of attention.

• United States: Has led the adoption of restrictive measures. Since 2019, Hikvision has been on the Department of Commerce's "Entity List" for complicity in human rights violations in Xinjiang. In 2022, the FCC effectively banned the sale and import of new Hikvision equipment, citing national security risks. These restrictions aim to exclude Hikvision technology not only from the federal government but also, where possible, from private and commercial networks.

• United Kingdom: Has imposed bans on installing new Hikvision cameras in sensitive government sites, despite widespread deployment in the country.

• Australia and New Zealand: Have adopted similar measures, limiting the use of Hikvision cameras in government contexts and critical infrastructure.

• Other countries: Various Western nations are reconsidering their reliance on Chinese surveillance technologies, with some Central and Eastern European countries, despite having acquired such systems for economic reasons, beginning to raise security concerns (e.g., Lithuania).

The Italian case: government cameras under scrutiny

Italy has also directly confronted the issue. Journalistic investigations revealed the presence of Hikvision cameras in sensitive sites, including government headquarters. Particular concern arose from the discovery that some cameras, for example at Rome's Fiumicino Airport, sent a high volume of connection requests externally, raising suspicions of data exfiltration or use as vectors for cyberattacks. It emerged that, despite a European holding company, Hikvision Italy is controlled by the Chinese parent company, which is in turn linked to the state-owned CETC.

Following these revelations, the Italian government initiated a review and potential tightening of regulations on surveillance cameras in critical buildings and sites (institutional headquarters, law enforcement facilities, courts, airports). The goal is to strengthen security requirements for non-European products, particularly Chinese ones, due to the risk they might communicate with external servers in their countries of origin. While a general ban has not yet been imposed, the direction is clearly toward greater caution and restriction.

Concerns in the European Union

At the EU level, though there is no uniform ban, security concerns are widespread:

• Technological vulnerabilities: Vulnerabilities have been identified in Hikvision cameras, exploitable for unauthorized access or the introduction of malicious code.

• GDPR compliance: Despite Hikvision's claims of GDPR adherence, fears persist regarding potential data exfiltration and control by the Chinese government (given the NIL).

• Deployment in sensitive infrastructure: Despite known risks, Hikvision and Dahua cameras are still widely used in various European countries, including sensitive sites, due to factors like competitive costs and Chinese state subsidies.

• NIS2 Directive: The EU's NIS2 Directive aims to strengthen cybersecurity in critical sectors, and its national implementation could lead to further requirements or restrictions for high-risk suppliers.

Economic impact and transition complexity

Restrictions on Hikvision are not without economic and operational consequences. As a global leader in video surveillance, the company faces a direct impact on its market share and revenues, forcing it to reconsider its penetration strategies in the West. For countries choosing to disengage from or limit Hikvision, the transition involves significant challenges:

• Replacement costs: Removing and replacing thousands of Hikvision cameras and systems already installed in public and private infrastructures implies considerable costs for purchasing new equipment and installation.

• Interoperability and integration: New solutions must be compatible with existing security systems, which may require careful planning and investment in new IT infrastructure.

• Market alternatives: While other surveillance system manufacturers exist (often Western or Korean), the supply might not match Hikvision's scale or competitive pricing, making the choice more burdensome.

The role of private companies and non-governmental infrastructure

The focus is often on government installations, but a vast number of private companies, critical infrastructures (such as transport, energy, logistics), and even residential condominiums use Hikvision products. These actors face similar security risks, although their decisions are less influenced by direct government mandates.

• Risk awareness: Many of these entities may not be fully aware of the vulnerabilities or legal obligations imposed by the Chinese NIL and MCF strategy.

• Guidelines and recommendations: Governments may need to develop clear guidelines and recommendations for the private sector, pushing for greater "cyber-hygiene" and supplier diversification, even in the absence of explicit bans.

• Corporate responsibility: Private companies face ethical and reputational dilemmas, having to balance costs with the need to protect their employees' and clients' data and privacy.

Implications for the Belt and Road Initiative (BRI) and future dynamics

The link between Hikvision, "smart cities," and the Belt and Road Initiative (BRI) is explicit in China's strategy. Western distrust of companies like Hikvision could influence the perception and future implementation of the BRI, especially in Europe.

• Growing skepticism: BRI projects that include digital infrastructure or surveillance components may face increased scrutiny and oversight from partner countries.

• Security standards: The West may push for the adoption of more rigorous and transparent security standards in global infrastructure projects, making it more difficult to integrate technologies deemed high-risk.

• Market fragmentation: Tensions between Western and Chinese technology policies could lead to a progressive fragmentation of the global market, with the creation of separate supply chains and differing standards.

In summary, Canada's decision is not an isolated gesture but reflects a growing awareness and determination among democratic nations to protect their national security and human rights in the face of technology providers linked to authoritarian states. The Hikvision case serves as a warning about the need for rigorous due diligence and clear policies in an increasingly interconnected and complex global technological landscape. Technological sovereignty and collective security are at stake.