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 70.

    We Live In A Two Faced World!

  • rate this

    Comment number 69.

    Why is it that whenever the BBC puts out a report on something extremely serious that just happens to involve the USA the anti-American bigots dismiss it and pour their hatred into the comments section?
    This story has extremely serious security implications for the UK yet what do we get instead? More blind hatred for our greatest strategic ally. Our enemies must be rolling over with laughter.

  • rate this

    Comment number 68.

    All CISCO kit is manufactured in China, so if they had wanted to put Malware or code in any kit they would have done it already years ago. The US just don't like competition and when their industries are challenged they just pull stunts like this?!

  • rate this

    Comment number 67.

    The big corporate boys wanted access to the Chinese market and pushed our governments to bring down trade barriers. Yes sure, Airbus will sell planes to China thats great news oh wait the bad news is China demands that they are made in China. In the end they will lose the European/US markets becuase there is no work but they will still have the big Chinese (and Indian) markets.

  • rate this

    Comment number 66.

    You could say the same of food and supermarkets, how many independant butchers and greengrossers are there left in the UK?
    They came in offering low prices and convenience, they put others out of buiness, then they ramped up the prices. Yet we all flock to the non-deals, the non-special offers and the price fixing.
    China is merely the final nail.

  • rate this

    Comment number 65.

    @59 The US does that too and more. What about the billions spent on two pointless wars half way around the world. If we really want to save money we should stop following the US into these silly conflicts.

    @62 Have you forgotten about the extent to which our electronic communications are monitored, not to mention our movements through CCTV. Then there is the Draft Communication Bill.

  • rate this

    Comment number 64.

    True, in some cases China human right violation by locking activists in prison.

    But USA military actions they dropping bombs to killing thousands of civilians.

    Which is worst human violations? killing thousands and thousands innocent civilian no human right violations? By the way, USA is still continuing doing killings innocent (of course by accident!) in Afghanistan!

  • rate this

    Comment number 63.

    Personally I think this is the US playing silly games. Will they trust the TVs, mp3 players, phones...oh and IPHONEs etc etc etc that are made in China. The US needs to get a grip.

  • Comment number 62.

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

  • rate this

    Comment number 61.

    Whist having dinner at one of my friend's house we looked around and asked what was made in England,practically nothing.The TV,the furnishings,the plumbing,the electrics,the paint all made in China forget spying this is real economic warfare.Soon there will be no factories in england and NO WORK .What happened to import taxes to protect our industries.

  • rate this

    Comment number 60.

    America has already been infiltrated by Israel. look how much aid it receives and how much political influence it has

  • rate this

    Comment number 59.

    200 years of culture is not a lot to impose.....
    You forget that the USA is so big that it really doesn't give a flying one about other countries as long as they're not a future threat.
    In many respects I wish the UK would adopt the same attitude, instead of flinging open the border gates and sending billions in aid which often ends up in the hands of African warlords.

  • rate this

    Comment number 58.

    @53 "The Chinese Government do have a 'Big Brother' like attitude."

    So do the Americans, and the British, and just about every government on the planet. Hypocrisy, thy name is Politics.

  • rate this

    Comment number 57.

    I don't see why anyone is surprised. Many accused the US of protectionism after the Apple $1bn lawsuit ruling, and now this.

  • rate this

    Comment number 56.

    Do you know that Apple Iphone are produced in China? Don't USA worry security issues? Million...and...Million are using Iphone!

    Why there are so many westerners living, studying, doing business, invest in China if they complain so much about China human right???

  • rate this

    Comment number 55.

    Meanwhile Huawei and the UK have signed a procurement deal worth £1.25bn

  • Comment number 54.

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

  • rate this

    Comment number 53.

    Huawei and ZTE seem to be doing things for free or subsidising to build telecom networks .There has to some rationale behind it.The Chinese Government do have a 'Big Brother' like attitude.

  • rate this

    Comment number 52.

    The real threat to this world comes from US imperialism (not China, Iran etc). The US think they can impose their economic, military and 'cultural' will on the rest of the world with impunity but the world is slowly waking up to this. Perhaps the US should get it's own corrupt house in order before interfering with anyone else's.

  • rate this

    Comment number 51.

    This is the US protecting there own jobs, nothing more, nothing less. As if american companies are so innocent! How many americans do these companies employ in the US if any?
    US political parties are controlled by US big business telling them what is what as evidenced in recent events when they have lost orders to foreign companies and then sued US gov to get them overturned


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