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 90.

    Sure the US and UK have never spied on other countries, sent in government assassins to kill foreign leaders, install dummy governments etc etc. Endless list. If u don't like it don't buy it ! There is no proof provided just false claims in fear of competition taking over. Yes the Chinese have a track record of spying but the US,UK have 4 fingers pointing to them when they point one at China !

  • rate this

    Comment number 89.

    Looking after your own interests is selfish by nature. Britain should try it some time. It's all very well knocking the US, but Britain should look at it's own situation first. No friends in the EU. The special relationship: fictional. Perhaps Britain's future would be better served by aligning itself with China, then it can stop being Americas boy.

  • rate this

    Comment number 88.

    Originally, the stated aim of trading with China was to progress a capitalist agenda so they could become more like the rest of us. Well didn't we suceed? Our fat cats got rich from the sale of our manufacturing base, and we all got cheap consumer goods... It just remains to hand over what's left our intellectual capital in mergers and aquisitions then learn how to bow and say yes sir in Chinese.

  • rate this

    Comment number 87.

    @79 "Meanwhile Huawei continue to be a major supplier to BT"

    We put profit over security, because most people in the UK don't beleive that any security threat exists and that the whole world is full of fluffy bunnies, ice cream and cheeky little monkeys who just want to be friends.

  • Comment number 86.

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

  • rate this

    Comment number 85.

    hold the phone a moment wait sorry that was funny but are the americans now running global telecoms systems is it becouse these firms are just out selling american companies, Aint Apple products made in china? i mean it seems wierd usa wants us all to buy there products only most are made in china so its loss of revinue they fear.
    paranoid or what.

  • rate this

    Comment number 84.

    This couldn't possibly be about cheaper competitors entering the market and affecting the profit margins and dominance of US mega corporations like Cisco and HP in the IT sector, or could it?

  • rate this

    Comment number 83.

    ...and American technology companies are not working with the US government?

    Yeah sure - double standards.

  • rate this

    Comment number 82.

    BT chose Huawei instead of a British company for their 21CN project, effectively consigning a domestic R&D and manufacturing capability to the annuls of history... Brilliant.

  • rate this

    Comment number 81.

    77 Guy Hancock

    Sure the Chinese are involved in probing US computer systems daily. And the reverse is also true and you can be sure that China is not the only target of the USA either. Have to be really innocent to assume the UK would be exempt either from the USA's covert activities.

  • rate this

    Comment number 80.

    On that basis, no-one should do business with Boeing, Hughes, McDonnell Douglas, Hewlett-Packard, IBM, Northrop Grumman as they are all embedded within the American defence industry with all that that entails

  • rate this

    Comment number 79.

    Meanwhile Huawei continue to be a major supplier to BT

  • rate this

    Comment number 78.

    "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."

    I guess GOOGLE,MICROSOFT AND BOING have no ties to US Government

  • rate this

    Comment number 77.

    The Chinese are involved with cyber-attacks on the United States EVERY single day. They've breached White House and Pentagon systems, conduct wide-scale, massive industrial espionage programs, and have been working to hack US power and telecommunications grids... But the US has never really done much about it, and one election-year report won't make a dent in a war that China is clearly winning.

  • rate this

    Comment number 76.

    @69 Well, that's a load of rubbish. Why should America be exempt from criticism when they do many of the same things done by China? Also, why shouldn't we want to see the UK stand on it's own two feet rather than always being America's loyal lapdog.

  • rate this

    Comment number 75.

    @ 44. Chris with "Time to ban Facebook and Google for spying on the rest of the world..."

    The Chinese have pretty much already banned these companies (and a whole other bunch of international companies) from working within their country. Anything America is seen to be doing now is, dare I say it, simply retaliatory.

  • rate this

    Comment number 74.

    Regardless, how you turn it China is as communist as was years ago. Chinese octopus is spreading trying to take it over the world. It may sound ridiculous. You cut off one arm of that communist octopus, and ten new ones will instantly grow. You may call me warmongering, but then you don't know a bit about communism. Just look at another variety, and Mr. Putin and his version.

  • rate this

    Comment number 73.


    Yes, because every time they bomb an enemy convoy or compound, they actually hit a school full of children instead. Considering how many schools the Taliban closed/banned, you have to wonder how the US keep managing to hit them with such pinpoint accuracy......

    Anyhoo, yet again the topic is shifting the focus from the truth, to the irrelevant.

  • rate this

    Comment number 72.

    I wonder how many US companies have added back doors into their equipment at the request of the US government?

  • Comment number 71.

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


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