Dramatic events in the United States have heightened concerns about Chinese tech giant Huawei's involvement in government telecommunications networks.

The West Australian Government announced yesterday it is reviewing its contract with Huawei, after allegations of fraud, theft of trade secrets and breaches of international sanctions by the company were released by US prosecutors.

The Government has always maintained its $205 million contract with Huawei to upgrade the radio network for its trains was not a security risk, but should we now be concerned?

What is Huawei doing for the WA Government?

Last July, Huawei won a contract to build and maintain a new digital 4G radio network for the Perth train system, including the new railway line to the airport.

It will build around 80 radio masts and base stations throughout the metropolitan network and replace radio devices in trains, security vehicles and handheld radios.

The Perth trains contract was negotiated before any concerns about Huawei were raised. ( ABC News: Andrew O'Connor )

The Public Transport Authority's website said the network, which will be up and running in 2021, will be a closed system for transmitting operational data.

It will be used by train drivers, as well as customer service, security and train control staff.

So what has prompted the review?

Some sensational allegations by the United States Justice Department were released earlier this week, leading to greater scrutiny of how the Chinese tech giant does business.

The department's indictments accuse Huawei of defrauding banks to violate US sanctions against Iran, stealing trade secrets and money laundering.

Transport Minister Rita Saffioti says the Federal Government may be asked to review the WA contract. ( ABC News: Eliza Laschon )

One indictment alleges Huawei offered bonuses to employees who stole information from other companies.

The allegations have also intensified the trade dispute between the US and China.

WA Transport Minister Rita Saffioti told ABC Radio Perth that, as a result of this week's developments the Government was examining the impact of a potential trade embargo and considering asking Federal Government agencies to review the contract.

The agencies had examined the contract for security risks before it was awarded to Huawei.

So is Huawei's involvement a problem for the WA Government?

Yes and no, according to Australian Strategic Policy Institute senior analyst Tom Uren.

Mr Uren said the US allegations raised important questions about the business ethics of Huawei.

"The two indictments really paint a picture of Huawei as a company which would do anything for its advantage — lie, cheat and steal, and cover things up," he said.

"To me there's an ethical question of what kind of company you want to contract things out to do things.

"It doesn't seem to me to be right for a government to be employing an apparently quite deceitful and unethical company to do things."

But from a security point-of-view, Mr Uren said the project did not appear to be a problem because the allegations did not appear to raise cybersecurity breaches and Huawei's WA contract did not involve highly sensitive data.

The Federal Government banned Huawei from taking part in the rollout of the 5G mobile network. ( Reuters )

What are the concerns with Huawei?

They are mostly around the 5G network, which will build on the existing 4G network to provide faster connection speeds.

The concerns hinge on the ability of governments to be able to protect sensitive parts of the network from security threats, which is difficult with the interconnected nature of the 5G network.

David Glance, director of the University of Western Australia Centre for Software Practice, said 5G would be crucial infrastructure for not only mobile phone networks but also autonomous vehicles and other smart city applications.

"Because it's so critical, it's a potential target for other foreign governments to potentially interfere with in times on conflict," Dr Glance said.

"So security forces are particularly concerned about the potential for foreign governments to be involved with critical infrastructure in Australia and Huawei certainly has been labelled as being part of the Chinese Government's state apparatus."

The allegations against Huawei released in the US have intensified the trade dispute between the US and China. ( Reuters: Philippe Wojazer )

Last August the Federal Government banned Huawei from taking part in a rollout of the 5G mobile network because of security concerns.

International events — such as the trade dispute between China and the US, and the arrest of Huawei chief financial officer Meng Wanzhou in Canada — have led other governments, like Japan and New Zealand, to re-examine their business relationships with Huawei.

There are also concerns about a new Chinese law introduced last year which requires companies to help with intelligence gathering when requested.

While not naming Huawei, the Australian Government last year highlighted the risk of "the involvement of vendors who are likely to be subject to extrajudicial directions from a foreign government that conflict with Australian law".

Why would WA choose Huawei?

The WA contract is for digital 4G radio communications for Perth's trains —and not 5G — and is not dissimilar to an agreement Huawei has with the NSW Government.

Dr Glance said it was negotiated before many of the concerns about Huawei were raised and the company probably presented the best technological and financial solution.

"We haven't actually seen any evidence that Huawei has used this technology in any way, shape or form to carry out any spying," he said.

Premier Mark McGowan has consistently said WA sought Federal Government advice before Huawei was awarded the contract.

"We then sought the advice of the federal security agencies and they said there was no problems with this contract and no problem with Huawei winning this contract," Mr McGowan said.

"So there's not a great deal more we could have done to get value for taxpayers and seek the appropriate security advice."

Huawei insists there is no problem

John Lord, chairman of Huawei Australia, said on ABC Radio yesterday that security agencies told the company they had no problem with the contract.

Huawei Australia chairman John Lord says Government showed no security concerns about the WA contract. ( ABC News: Nick Haggarty )

"After we won this project, the office of Home Affairs and the Prime Minister reiterated there was no security aspects of concern with Huawei participating in this West Australian project," he said.

Mr Uren said there appeared to be a disconnect between how state governments and the Commonwealth handled their relationship with China and Chinese companies.

"I don't think [state governments] have the same access to different sorts of intelligence that the Federal Government does," Mr Uren said.

"And so a lot of what informs Federal Government is secret, so they've got different access to information and if you've got different information, you'll make different decisions."