Huawei could use "100 per cent" Kiwi staff to install 5G equipment in NZ, company says.

Chinese telecommunications equipment giant Huawei would be open to using only New Zealanders rather than Chinese workers to build 5G mobile networks here, if that helped assuage spying concerns, a local representative says.

Huawei New Zealand deputy managing director Andrew Bowater offered the concession in the wake of the arrest of one its employees in Poland on spying charges.

Polish authorities announced on Friday that a Huawei director, Wang Weijing, and a Polish cybersecurity expert were accused of carrying out "espionage against Poland."

Huawei sacked its employee, acknowledging "the incident" had brought the company into disrepute.

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Polish state TV reported both accused men had declared themselves innocent.

SUPPLIED Huawei NZ deputy managing director Andrew Bowater says it still hasn't been able to discuss the GCSB's concerns directly with the spy agency.

Bowater said he was aware of the situation in Poland, but it appeared the individuals' actions had no relation to the company.

It was too soon to say whether the accusations could impact its hopes of building 5G in New Zealand, he said.

New Zealand's Government Communications Security Bureau (GCSB) blocked a proposal by Spark in November to use equipment from Huawei to build its 5G mobile network, which it hopes to have operational by July next year.

However, the GCSB indicated the decision was the "start of process" that might not necessary amount to outright ban.

Spark spokesman Andrew Pirie has previously confirmed its proposal would have seen Huawei staff install as well as supply 5G access equipment on its cellphone towers.

One of the GCSB's concerns – though not its only one – is understood to be China's "National Intelligence Law" passed by China's National People's Congress in June last year.

The law has been interpreted by western intelligence agencies as requiring any Chinese citizen or company linked to China to engage in espionage or to collect intelligence anywhere in the world if requested.​

Bowater said the GCSB had still not spoken to Huawei directly about the reasons why Spark's proposal was declined, which he said would be helpful.

But if the National Intelligence Law was a concern, "even that could be mitigated" by a commitment to use only "100 per cent New Zealanders" for installs, he said.

Other issues have emerged since the GCSB blocked Spark's proposal.

On December 21, the GCSB joined American and British spy agencies in accusing the Chinese Ministry of State Security (MSS) of being linked to a global campaign of cyber-enabled commercial intellectual property theft.

Just one month earlier, the GCSB had declined – when approached by Stuff – to confirm an Australia report that China was behind the espionage attacks on other "Five Eyes" countries dubbed "Operation Cloud Hopper".

The attacks were a "long-running campaign targeted the intellectual property and commercial data of a number of global managed service providers, some operating in New Zealand," director-general of the GCSB Andrew Hampton said.

Any block on Huawei being involved in the roll-out of 5G in New Zealand could disproportionately impact 2degrees, which has largely relied on the Chinese firm to supply the bulk of its network technology.

2degrees has said it would face "significant" costs if it had to switch to another supplier in its upgrade to 5G.

Its chief technology officer Mike Davies has also said a ban would create a duopoly for the supply of 5G gear that could push prices up – as Ericsson and Nokia would be the only alternative vendors for much of the equipment needed.