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
    +5

    Comment number 230.

    It is foolish to think China is more innovative or inventive. Till now they have done well by stealing technology from western companies and enticing those companies to operate in China to facilitate their theft of intellectual property. Leave chinese alone and they will bury themselves.

  • rate this
    +1

    Comment number 229.

    The world is complicated. Some people can blame protectionism when in fact there is much more to it than that. Of course all countries have security concerns especially since the modern world relies on electronics and computers etc. All countries have the right to ban foreign companies from controlling these critical areas and from operating a business or owning land near a miltary base.

  • rate this
    -1

    Comment number 228.

    @222

    I think we need to recognise that Western governments pump vast sums into subsidising many of our own 'private' industries..and its not the Chinese government whose 'spell check' tech, keeps telling me I should be using a 'z' rather than an 's'.. *growlz!*

    If you want any government to co-operate on copyright issues you need to make sure its more valuable for them to comply, than cheat.

  • rate this
    +7

    Comment number 227.

    I wouldn't trust China.
    Remember, they bought a Ukrainian Aircraft carrier and supposedly to turn it into a floating casino....riiiight....look at it now. It is a full blown naval aircraft carrier.
    The Chinese guy trying to buy a land in the size of England and make it into an eco park. It was a way for them to get a piece of the arctic oil. Good on Iceland for rejecting it.
    Never trust commies.

  • rate this
    0

    Comment number 226.

    US universities & higher education infrastructure has become more of an white elephant- always asking for "more money" without much productivity that pave ways for future technology. Check this one: Chatterjee, J. (2012). India needs to be cautious while following American model of higher education and research. Current Science 102, 1500-1501. http://cs-test.ias.ac.in/cs/Volumes/102/11/1500.pdf

  • rate this
    +5

    Comment number 225.

    aberguy thinks China is cuddly and beneficent and can do no harm, well take a long hard look at what it does in Tibet.

  • rate this
    +2

    Comment number 224.

    @56.
    Andy

    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???

    Your name's not really Andy is it?

    Your multiple pro China posts give the game away.

  • rate this
    +4

    Comment number 223.

    It's not only China-phobia & control of communist party over its business houses, but also inability of US companies to invent & innovate fast enough.
    It's also about US businessman using US as market/consumer only while exporting manufacturing & other jobs to China & other cheaper countries. All countries that 'used' globalization for its benefit, used US only as market. It need to be addressed.

  • rate this
    +3

    Comment number 222.

    If these companies are state controlled then security is an issue, but so is competetive issues. State run companies have an unfair financial advantage.

  • rate this
    +8

    Comment number 221.

    Anything that comes from China with ties to the military needs to be suspect. This is a no brainer.

  • rate this
    0

    Comment number 220.

    @208.
    mpjacko


    ....Just imagine how expensive your ipad would be if Apple built it in the US or even simple electronic devices which we use everyday

    ----------------------------

    I just bought a phone made in Germany which has better reviews than any made in the Far East.

    The cost?

    The same as for a similar specification from anywhere.

  • rate this
    +1

    Comment number 219.

    America's "friend" israel has had electronic "back doors" monitoring ALL U.S. electronic communication since at least the late 90s, so why should we care if China too can monitor us - oh wait, that's right, israel can just sell to China any information they might want the same way israel sold to China our defense secrets

  • rate this
    -1

    Comment number 218.

    When US technologies was supreme we ruled the world. When we are behind we set up barriers such as this. Huawei brings cheaper and better technologies to benefit us. I am ashamed that we practice protectionism and play shameful double standards. Why do we so willfully create more enemies? The Congress is not acting in the interest of the U.S. but playing politics and catering to special interest!

  • rate this
    0

    Comment number 217.

    As self defeating as this may be, I truly believe that the US should impose a two year moratorium on the import/export of any "hi-tech", defense type items to and from China.
    The original concept of "cheap labor" has backfired in our face. Our loss of jobs and our position in the World has done nothing to benefit the majority of US citizens. They are not to be trusted..

  • rate this
    -1

    Comment number 216.

    I hear that all chinese made mobile phones and telecommunications equipment is filled with a hideen canister of gas that is set to explode and gas everyone when the time is right...

    oh sorry I think that was a Doctor Who episode I getting confused with.

  • rate this
    +1

    Comment number 215.

    It really doesn't matter how far technically advanced Chinese telecom firms Huawei and ZTE are over American firms, what matters most is defence against the superpower of the 21st century. And make no mistake, these entities, advanced and technically proficient as they are, are puppets of the Chinese state.

  • rate this
    -2

    Comment number 214.

    Mike86

    Do you think the Chinese hackers so stupid that using the IP addresses of Chiese government institutions & PLA owned? Who are you trying to convince?

  • rate this
    0

    Comment number 213.

    Anyone commenting here actually watch 60 Minutes? What company has the government and military with offices in their headquarters? No European or US company would stand for that unless they were working for the military. Why wouldn't Huawei allow 60 Minutes to talk to anyone working there if they are so OPEN? One guess Government or Military.

  • rate this
    +1

    Comment number 212.

    Everyone who has dealt with these two companies knows that ethical behaviour isn't their forte. From copyright infringements to plain and simple corruption...they have done it all. Add that to the hidden funding and relationship with Chinese government, it's not hard to imagine they will not misuse sensitive information if they had access which they have if they build our telecom networks.

  • rate this
    +2

    Comment number 211.

    Remember the Stuxnet virus (see wikipedia) used to harm Iran's national security was spread inside Microsoft software. Also the company Crypto AG (see wikipedia) is accused of selling encryption software readily decipherable by the National Security Agency. Nor was it the first "investment to be blocked in 22years". Pres Bush blocked Chinese investment in Unocal (californian oil co) in 2005

 

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