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 50.

    Well done Mitt Romney for raising this issue in the Presidential Debate!

    We are fed up with 30 years of having UK jobs handed over to cheap Far East manufacturers so that they can own our government debt and dictate future policy.

    Its time to grow up!

  • rate this

    Comment number 49.

    What has the wests actions in the past got to do with the actions of China in ther present?
    Pointing out the past negatives of one, does not excuse the currect negatives of the other.

  • rate this

    Comment number 48.

    Really ... it's been going on for years . They spy on us ... we spy on them and our own goverments spy on their own people . If you don't like it ... Move to Mars ... oh wait the US are up their too probably spying on the Martians ..... Paranoia reigns supreme :-)

  • rate this

    Comment number 47.

    I was sitting in a bar with an Etonian half Chinese guy who grew up partly in China and partly here.
    It was interesting to hear how little he trusted the Chinese political party members (govt) and felt they were a brutal and self beneficial group of people who walked on the poor people of China.
    If they are prepared to do that to their own people they will have little regard for foreigners.

  • Comment number 46.

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

  • rate this

    Comment number 45.

    uh-oh here we go

    International Trade barriers

    The US is communist in many ways, especially when it's losing

  • rate this

    Comment number 44.

    Time to ban Facebook and Google for spying on the rest of the world....

  • rate this

    Comment number 43.

    The accusations are quite probably true, but is anyone seriously suggesting that big US companies are not under the influence of (and influencing) the US government?

  • rate this

    Comment number 42.

    @25 the-moog

    "Two articles (out of thousands) regarding China's abuse of foreigners, where's the outrage and talk of 'fairness'??"

    Right - because the US and Britain never earned the positions they have now abusing foreigners. Head taxes, slavery, and Imperialism... what justifies this "do as I say, not as a I do" attitude?

    Btw, would you like to see articles of other countries abusing people?

  • rate this

    Comment number 41.

    Every time China company wanted to merge or buy USA company, USA government will use security as a lame excuse to prevent it! They worry China company penetrate USA market.

    And the same time USA is the one always complains China's protectionism!

    What a hypocrite!!!

    And what is Free Trade mean again???

  • rate this

    Comment number 40.

    It is indeed very easy to tap into any communications network if we have the right equipment and even easier if we supplied it.
    As a major supplier, Huawei has the means and the opportunity, but the same applies to Cisco and any other US router manufacturer.

  • rate this

    Comment number 39.

    Picking on a few companies might win a battle but who is winning the war? The biggest strategic threat to the US from China is global free trade. It is pouring astronomic sums of money into China and paying for their advanced research, up-skilling the work force, mineral rights and global distribution. The West gets in debt to pay for the unemployed and squeezed for oil. And nobody cares.

  • rate this

    Comment number 38.

    Microsoft, apple, google, facebook and any other american company you can name are all subject to the patriot act, which means the american government can access at any time your private data.

  • rate this

    Comment number 37.

    21. Stephen Page...
    How will the US respond to BTs use of this equipment? I would imagine that UK agencies have similarly vetted these companies given the nature of BT’s infrastructure.

  • rate this

    Comment number 36.

    But sure the US has facebook.... Biggest data mining tool of them all.

  • Comment number 35.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 34.

    An also stopping all foreign aid humanitarian and military. Also no more immigration. An no more worldwide policing of other countries. Let us alone and let the rest of the world fight among themselves.
    Rebuild the USA.

  • rate this

    Comment number 33.

    @26 "Make products outside of China."

    Even if everyone stopped using Chinas cheap manufacturing, eventually somebody would go back in order to undercut the competition, MANY businesses have been forced to take this path JUST to stay in business.

  • rate this

    Comment number 32.

    It's not just BT....
    Huawei ranks as one of the world's biggest companies most people in the West have never heard of.

    In the UK alone, for example, its customers include BT, Everything Everywhere, O2, Orange, TalkTalk, Virgin Media and Sky.

    I know, I'll hide under a pillow, that'll help.

  • rate this

    Comment number 31.

    For a country that claims to be the greatest in the world, America really goes out on a limb to protect itself against unseen threats. If it were that great & good, it's secrets would be of no use or harm to anyone and it would welcome the chance to add cultural diversity to its current meting pot.
    Explains why they hang on to outdated religious beliefs though!


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