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 170.

    How about Boeing? They are one of the largest US defence company that trying to win contract around the world including China. The Chinese should ban buying Boeing for the same reason that they are a US defence company working for the US government and potentially pass on what the sell to China to the CIA.

  • rate this

    Comment number 169.

    This isn't ZTE or Huawei, but it might as well be. PLUS, they are undecutting all other infrastructure manufacturers using govt subsidies and stacking our mobile networks with their products.

  • rate this

    Comment number 168.

    Before people paint one side black and the other white, recall that US troops slaughtered countless innocents in Iraq and Afghanistan, whilst claiming oil. Much of Iraq's wealth (including priceless ancient relics) disappeared during the US invasion. They give weapons to Israel, including presumably the white phosphorus that was dropped on civilians. Vietnam: napalm on children; Pakistan ... etc.

  • rate this

    Comment number 167.

    For the US everybody represents a National security threat when it comes to commercial interest. Do not forget that the WTO was invented by them to try to block anybody that was a threat to their commercial interests. Now they tend to forget that WTO exists. As usual they look only after their own interest. And they call it (as the British) fair play (sic!)

  • rate this

    Comment number 166.

    The same country who is now busy trying to ensure that no other company can rival the mighty US is doomed to fail, Chinese are here to stay no matter what, whatever policy you put in place to contain them technologically the truth is that it will not work.

  • rate this

    Comment number 165.

    I wonder if our government needs to investigate BT's relationship with Huawei now (they won a contract in 2005 to upgrade BT's UK network)?

  • rate this

    Comment number 164.

    Now let's talk: who is spying in every part of the world from Latin America to Asia including on its allies? They like to label others as criminal and themselves as innocent. I think China is far better than USA despite all the deficiencies they have to global peace.

    They have to move the likes of Apple, Dell, HP, etc from China first before they talk.

  • rate this

    Comment number 163.

    The USA opens its arms wide open to Chinese millionaires to live and invest in their country but create obstacles using fear as an excuse to ban Chinese companies buying up failed American companies or getting contracts in the US. This is protectionism and America is unwilling to play fair whenever it finds itself losing the ability to compete with another country.

  • rate this

    Comment number 162.

    No American firms have the ability to offer what Huawei can offer as far as 4G networks
    We (U$A) are buying from a French Company, so we will have 4G networks for U$A Corporations to use
    I agree that I would not want all of the private & corporate secrets stored on a Chinese network. I do not trust the Chinese to be honest, moral or ethical! Look at Bo Xilai scandal
    they are proven not trustworthy

  • rate this

    Comment number 161.

    China has and will continue to be a culture out for itself, and has amply demonstrated its capacity for mischief. The invasion and massacre of Tibet is just one of their accomplishments. The nonsense with the Japanese islands is just one more act in a play of a thousand acts. I can guarantee no curtain call. To trust any of them is mental castration. They care for no one, not even each other.

  • rate this

    Comment number 160.

    So what's new? The USA, controlled by dictatorial capitalist feudal-lords, is waging economic war with other nations as they have been since before WW2. There is a pattern here - the fat-cats who really control America use American troops to invade country after country, pillaging the resources of other nations. They use propaganda, sanctions and economic warfare to destroy other economies.

  • rate this

    Comment number 159.

    @ 145.tedmscott

    I'm just wondering, since a lot of other telecommunication equipments are manufactured in China as well, including Cisco, Ericsson, HP, etc, if the the Chinese government does "monitor" n "supervise" all Chinese companies, would that apply to those foreign invested companies as well? If so, can the US still trust products made by Cisco/HP in China...

  • rate this

    Comment number 158.

    Of course this is protectionism, and why on earth not? Free trade is all very well when you're trading under the same rules but is an idealistic stupidity where the playing field is distinctly un-level . This is the only way Cisco, Juniper, etc can compete unless they move R&D, etc out of the US.

  • rate this

    Comment number 157.

    I am missing the technical part of the story...there must be some hard or conclusive evidence backing up the statement and that is barely mentioned in the above story....So the question is still "why"?

  • rate this

    Comment number 156.

    116. ballpark10
    You have a very good point there.
    China owns so much US government debt that, it they start dumping large chunks of that. it would be apocalypse for the US (and for themselves).
    They are already doing that, but slowly, bit by bit ... to buy gold instead.
    In the first six months of 2012. China reduced their stock of US bonds and bought more gold than the total UK reserves.

  • rate this

    Comment number 155.

    The Chinese Government and Business leaders are NOT to be Trusted
    From Poison and/or contaminated products that they sell at home or abroad to murdering British subjects
    Copyright infringement and cyber spying
    I would not expect them to NOT break the law and spy at any opportunity
    Keep them out of the USA

  • rate this

    Comment number 154.

    "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."

    If I went to America and saw an example of US hypocrisy you bet I would call them out on it.

  • rate this

    Comment number 153.

    It would be my opinion that China has more to fear from United States' espionage than United States has to fear from Chinese espionage. The United States accuses, but there never seems any proof. China seems capable of doing what the United States cnanot i.e. creating employment opportunities in technology. As far as I'm concerned, let China invest.

  • rate this

    Comment number 152.

    Oh dear - the pot calling the kettle black.

    The rest of us are fools for putting up with it and buying both sides products.

  • Comment number 151.

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


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