Huawei and ZTE pose security threat, warns US panel

Charles Ding of Huawei Technologies and Zhu Jinyun of ZTE Officials from Huawei and ZTE have been questioned by US lawmakers as part of the probe

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Chinese telecom firms Huawei and ZTE pose a security threat to the US, a congressional panel has warned after an investigation into the two companies.

The two firms should be barred from any US mergers and acquisitions, according to a House Intelligence Committee report.

The panel says the firms failed to allay fears about their association with China's government and military.

Huawei and ZTE denied the accusations in front of the panel in September.

On Monday ZTE issued a statement insisting its equipment met all US standards and posed no threat.

'National security' fear

"ZTE has set an unprecedented standard for co-operation by any Chinese company with a congressional investigation," China's Xinhua news agency quoted the firm as saying.

Start Quote

Huawei and ZTE cannot be trusted”

End Quote House Intelligence report

Huawei's vice-president, William Plummer, said the latest accusations were "dangerous political distractions".

"Purporting that Huawei is somehow uniquely vulnerable to cyber mischief ignores technical and commercial realities, recklessly threatens American jobs and innovation, does nothing to protect national security."

While the House Intelligence report stopped short of calling for a boycott of the firms' mobile phone products, it was highly critical of the two companies.

"China has the means, opportunity and motive to use telecommunications companies for malicious purposes," the report says.

"Based on available classified and unclassified information, Huawei and ZTE cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems."

The panel said their investigation had received credible allegations from current and former Huawei employees of bribery and corruption, discriminatory behaviour and copyright infringement.

Republican committee chairman Mike Rogers said they had passed on information to the FBI to investigate the allegations.

"We've come to the conclusion, unfortunately, they are not private entities," Mr Rogers said on Monday.

On Sunday, Mr Rogers delivered a blunt verdict to the 60 Minutes programme on US network CBS.

"If I were an American company today... and you are looking at Huawei, I would find another vendor if you care about your intellectual property, if you care about your consumers' privacy, and you care about the national security of the United States of America," he said.

Among the report's recommendations were to exclude any Huawei or ZTE equipment or component parts from being used by government contractors, as well both companies becoming "more transparent and responsive to US legal obligations".

China's Foreign Ministry urged the US to "set aside prejudices" regarding the two firms.

"Chinese telecoms companies have been developing their international business based on market economy principles," ministry spokesman Hong Lei said.

"Their investment in the United States embodies the mutually beneficial nature of Sino-American economic and trade relations."

Espionage fears

Huawei was started by Ren Zhengfei, a former member of the People's Liberation Army, in 1987.

House Intelligence Committee Chairman Mike Rogers and Representative Dutch Ruppersberger hold a news conference 8 October 2012 "We've come to the conclusion, unfortunately, they are not private entities," Mr Rogers (left) said

As the firm has grown to become one of the largest global players in the sector, fears about its ties with the Chinese military have frequently surfaced.

There have been concerns and allegations that it was helping China gather information on foreign states and companies, charges that the firm has denied.

Last year, its purchase of American computer company 3Leaf systems, was rejected by a US security panel.

Earlier this year, it along with ZTE, faced allegations that some of their equipment had been installed with codes to relay sensitive information back to China.

Senior executives from the two companies denied those allegations when they appeared before US lawmakers in September.

ZTE is also facing accusations it sold US telecoms equipment to Iran, in breach of US sanctions. Telecoms giant Cisco on Monday ended its relationship with ZTE, Reuters reported, after its equipment was included in the Tehran deal.

Political distraction?

This latest report comes in the midst of a US presidential campaign in which China has become a hot topic.

Both President Barack Obama and his Republican challenger Mitt Romney have pledged to increase the pressure on Beijing on issues ranging from China's currency policy to state subsidies for Chinese firms.

Earlier this month, Mr Obama signed an order blocking a deal by a Chinese firm, Ralls Corp, to acquire four wind farm projects near a US naval facility in Oregon.

It was the first foreign investment to be blocked in the US for 22 years.

The Chinese firm has since sued Mr Obama, alleging the US government overstepped its authority.


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  • rate this

    Comment number 30.

    Yer because the US don't send a Fighter Jet rigged with Tracking devices going "Here we go Friends" (Sarcasm!)

  • rate this

    Comment number 29.

    If the USA has adequate and efficient regulators, they wouldn’t need to worry about companies performing espionage. The fact is they have produced no proof of their claim. Maybe China should say they also have "hidden" proof that Microsoft and Apple are a security threat and ban them? USA just want it all their way all of the time, and no-one else is aloud to use their methods

  • rate this

    Comment number 28.

    The US atleast has some industry left and to their credit they try to protect it unlike us.

  • rate this

    Comment number 27.

    @#15 - the-moog

    Oh Moog - what government can be trusted? I recall a little thing about WMDs in Iraq...

    The fact is, you can't have the James Bond countries of the world righting wrongs and freeing the oppressed if you don't have the Blofeld or SPECTRE countries to fight against. North Korea isn't a big enough threat, and the radical Islamic terrorist is too amorphous. What does that leave?

  • rate this

    Comment number 26.

    Pot kettle black. It seems lame that the US is using this excuse to curb competition from abroad. However it is fine for US companies to aggressively invade other countries and swamp their national industries especially those born of the military?
    On the other hand, if "we" do not trust China and there are some good reasons not to, then the solution is simple. Make products outside of China.

  • Comment number 25.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 24.

    This isn't protectionism this is commonsense. All countries need to guard their infrastructure(i.e. power-grid,etc) and telecommunications. Especially sensitive electronics industries.The Chinese have proven in the past that they can not be trusted. Awhile back we deported a Chinese scientist for selling US secrets that he got from Los Alamos Labs. An yes I am all for the US closing it's borders.

  • rate this

    Comment number 23.

    America is a nation that will forever be motivated only by fear. They're afraid of the Chinese market growing more powerful, which it is. At the same time, however, they owe China so much money it beggars belief - why would you owe so much to a nation you can't trust? Hypocrisy.

  • rate this

    Comment number 22.

    "Chinese telecom firms Huawei and ZTE pose a security threat to the US"

    This is old news I can remember coming across this about 3 years ago so why all the furore about it now then?
    I have no doubts that there is a contingency plan to do all sorts of underhand things with computer and telecoms equipment in the event of a conflict the most crude being EMP weapons to destroy electronic hardware.

  • rate this

    Comment number 21.

    How will BT respond to this report?

    In 2005 British Telecom signed a multi-million pound deal with Huawei for them to provide multi-service access network (MSAN) and Transmission equipment for BT's 21Century Network (21CN), providing BT and the UK telecommunications industry with infrastructure necessary to support future growth.

    BT's network routes to government, military and business.

  • rate this

    Comment number 20.

    8. dave87
    And the USA does not use it's businesses to spy on other countries businesses? Yeh right.
    Which rather suggests the US are correct in their risk assessment.

  • rate this

    Comment number 19.

    Well done America!

    Rest assured the Chinese military will have read 'the art of war' by sun tzu, and one of the most important things in this book to the General is information about what your enemy is up to so he knows when to strike!

  • rate this

    Comment number 18.

    every country must be viglent for ever, US must have strong and irrefutable facts on the two companies. In the interest of the safety of their country what they have done is correct. I feel India also must be very careful about foreign companies.

  • rate this

    Comment number 17.

    The way this reads you would swear that iPhones were not made in China. But they are.

  • rate this

    Comment number 16.

    "“The biggest single threat to security at the present time is probably a general lack of conviction that any substantial threat exists"

    It was true in 1959 and it's even more relevent now.

  • Comment number 15.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 14.

    The cynic inside me suggests that with Apple hitting their peak of development, other companies will innovate eat in to the US market. Easiest way to combat this is by banning them. USA just make the rules up as they go along when someone challenges their domination.

  • rate this

    Comment number 13.

    The next world war will be fought on a digital battlefield, so I find this perfectly unstandable.

    I have personally stopped using paid for software after company buy outs that leave the software in the hands of companies in the Middle East, parts of Asia, India and Eastern Europe. I have friends who work in cyber security and im no fool myself.

  • rate this

    Comment number 12.

    As the expression goes, "Ill doers are ill deemers". The US suspects others - rightly or wrongly - because they know what they themselves do. Stuxnet anyone?

  • rate this

    Comment number 11.

    Paranoia, maybe, but laced with a large measure of protectionism. Furthermore, an huge dollop of cant and hypocrisy - would anyone believe that the CIA doesn't already have a file on every living (and dead?!) person. Then there's the long-standing suspicion that M$Windows, maybe Intel microcode, contains back-doors to every user. Snooping not like in James Bond, perhaps it's far in advance...


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