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 130.

    Just more American paranoia. China is rapidly becoming the World's leader. Nothing is going to stop them. Better start learning Mandarin now guys. LOL

  • rate this

    Comment number 129.

    There are clear differences between US and Chinese companies. Chinese law requires any Chinese company that invests abroad to be monitored by a gov't agency (State-owned Assets Supervision and Administration Commission). Also, Chinese gov't officials are appointed as company executives in their businesses that invest abroad. As an American, I am glad the US is protecting us from these threats.

  • rate this

    Comment number 128.

    I recall something similar happening with Dubai ports authority - a perceived threat to US interests. I think this can be explained by protectionism, which is one side of over-the-top nationalism - a mark of an unsophisticated society.

  • rate this

    Comment number 127.

    Dont forget how it always starts

    Recession - depression - currency war - trade war - WORLD WAR 1
    Recession - depression - currency war - trade war - WORLD WAR 2
    Recession - depression - currency war - trade war ..........................

    We ll looks like we are at the beginning of a trade war now. Currency war still raging. You people can figure whats next.

  • rate this

    Comment number 126.

    But English mass manufacturing quality is mostly rubbish too..... Too many admins and managers, not enough experienced (and paid what they deserve) workers.

  • rate this

    Comment number 125.

    At last the fight bk begins and they should ban all chinese products where the workers are not paid the minimum wage of the country the products are going to. The chinese rip off n steal all designs and inventions from the west with no care for copyright laws.

    China wants to be a superpower n take on Europe n america by taking shortcuts, sorry it takes decadeds if not hundreds of years.

  • Comment number 124.

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

  • rate this

    Comment number 123.

    I believe US intelligence (and others) can intercept easily any voice or digital communication anywhere in the world and I bet they are doing it by tapping into the routers they through. I also believe that using easily obtainable data from email services, like yahoo, gmail, facebook, etc, vast databases are being built with any data they can collect about us and links to other people.

  • rate this

    Comment number 122.

    113. johnnybgoode83

    US citizens don't do that? Talk about hypocrisy, as well as one sided blinkeredness.

    Actually I'm English. But I've personally experienced British hypocrisy similar to yours many times over the years. Are you saying that if you came to the US you would still call Americans hypocrites. I suspect you would try to be very polite and nice, thus exposing your hypocrisy.

  • rate this

    Comment number 121.

    To everyone going on about Apple & IPhone being made in China: It's just assembled there, not made. The components come from companies all over the world: Japan, Korea, Germany, USA, & are assembled at Foxconn, a Taiwanese owned company.
    The actual amount of trade deficit this creates between China & US is debatable. The US claims all of it is Chinese; in reality just 5 - 10% is actually Chinese.

  • rate this

    Comment number 120.

    I see this as US politicians playing anti-China card again in election year. An economy must be an open one to be resiliant and to grow. China becomes the world's second largest economy by opening up its market to forign compitetions, but it seems the US is doing the opposit. This will put America in disadvantage in competing with China rather than helping itself. I'm glad UK is still open economy

  • rate this

    Comment number 119.

    @weeljing - Its not big to make people feel small no matter what race / culture etc. I think you will find its 6 of one and half dozen of the other!

    As others have said why should the Chinese 'trust' Cisco / HP / Dell etc by the same measure? I think its more to do with them undercutting and even providing a better product than available form a US manufacturer (normally made in china anyway),

  • rate this

    Comment number 118.

    For the last 5 years I was talking of this that ZTE is sent info back to some where . I hocked up my zte to my PC over wifi my PC software say that info went out I call my phone network and tell them of this and there tell me I am not right . So let us buy Phones what are made in England , Europe and the u s a . Let as make jobs in England. BUY ENGLISH MADE .

  • rate this

    Comment number 117.

    If Hauwei denies it, they will run into more trouble as it has been known that their equipment, or at least their Videoconferencing devices, send network topology information secreted in their packets/datagrams to Chinese IP addresses. This is known by certain specialists in the Videoconference and Telepresence trade. In my mind the fact that they are cheaper or Chinese is irrelevant.,

  • rate this

    Comment number 116.

    102. Joseph_F

    I agree that no-other military can compare to the US. The point is though that US spending is unsustainable yet Chinas is rising. China owns £3 trillion of US debt. If they choose to dump it the $U.S will become worthless and you wont be able to fuel your jets next year.

    Its this perceived threat of a change in superpower status that makes the world so dangerous.

  • rate this

    Comment number 115.

    americans cannot get over their fear of any foreign country that shows a little intelligence, they fear all forms of tech they have not got, they fear anything they do not understand, the arrogance they show is incredible. are they gonna shutdown Cisco? of course not. as part of the 'rest of the world' we need to stand by china in this

  • rate this

    Comment number 114.

    #102. Joseph_F

    "As an American, let me say this...... Really, when was the last time you all compared our forces to theirs?"

    Are these the same 'forces' that ran from Vietnam with their tails between their legs? Or about to run from the Middle East leaving Afghanistan to descend into civil war?

    Your military is only as strong as the politicians that run it. My money would be on the Chinese.

  • rate this

    Comment number 113.

    "Not to mention the thousands of Brits that come to the US each year who patronize US citizens to their faces and revile them behind their backs. Talk about hypocrites."

    US citizens don't do that? Talk about hypocrisy, as well as one sided blinkeredness.

  • rate this

    Comment number 112.

    It is indeed very easy to tap into any communications network if you have the right equipment and even easier if you 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 111.

    99. the-moog

    "The US is so mistrustful YET thousands of chinese seek refuge there every year!

    I hope all the commentators on here give up their UK citizenship and move to china (the land of fairness!). Ha!"


    Not to mention the thousands of Brits that come to the US each year who patronize US citizens to their faces and revile them behind their backs. Talk about hypocrites.


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