Can you trust Chinese computer equipment?

My iPhone to-do app phones home with usage stats. After I sold 5000 copies I had a user inquiring about the suspicious network traffic. There is practically zero chance that something like this goes undetected - you just can't hide this stuff.

The fine people at DARPA are working on this problem: http://www.darpa.mil/MTO/Programs/trust/index.html

No, but it's a start. Raises the barrier, especially in a potential future crisis where the PRC is disconnected from the net.

This kind of thing is playing with fire but that doesn't mean it can't happen.

There were reports that the Chinese attack on Google involved leveraging the law-enforcement door that is in some Google servers. And there's the problem - any time one entity opens a back door, they run the risk of letting another entity take advantage of it. Despite competing with the West and liking the idea of a quiet back door, the Chinese state would likely be unhappy with something the telegraphs their willing to completely steal all Western IP. That would put a bit of damper on Western investment (why Western companies ever imagined that the Chinese wouldn't just take their IP is beyond me, but I think a lot of companies still think their safe in China and that's a benefit to the Chinese economy).

Hardware level trojan is relatively hard to develop.

I mean, it depends on what do you mean as a trojan. I think it is entirely possible to create a hardware trojan that sends some packets somewhere. It'd make a neat DDoS. :-)

Less likely is a classic trojan that gains control over your machine. Do not forget there are many layers between the userland and the hardware (eg, drivers, the network stack etc.).

It is a completely different story if evil Bob created both the hardware and the driver...