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 310.

    Once while checking for hacking attempts on home computer there was constant access attempts from what appeared to be packets originating in China.

  • rate this

    Comment number 309.

    One has to be wary of any company that is associated with any Govt - communist or otherwise. Will the Chinese allow companies owned & operated by the US military? Give me a break!

  • rate this

    Comment number 308.

    10 Minutes ago

    How funny ... I think we should be more worried about America and the technology that it pushes."

    And which you benefit from.

  • rate this

    Comment number 307.

    How funny ... I think we should be more worried about America and the technology that it pushes.

  • rate this

    Comment number 306.


    Why is it China's fault if the USA is no longer capable of producing high-tech telecommunications hardware?
    Hogwash. Chinese companies dump stuff killing industries then people above say "why is it china's fault..." Many Chinese companies are also linked to their Military. When US security is at risk throw all these companies out - USA will produce what it needs!

  • rate this

    Comment number 305.

    The USA basically abandoned high-tech manufacturing in pursuit of higher profits through slave labor in third-world countries. Hurray. I have no job but I have a cheap DVD player and plenty of counterfeit DVDs.

    Security? There's none. You think US and UK manufacturers don't do exactly what China is doing? Backdoors, trojans, wiretaps. You want your network secure? Pull the plug.

  • rate this

    Comment number 304.

    I agree with other commenters that America has already been infiltrated by Israel. All of the mainstream media networks are 100% pro-Israel. The largest and most powerful lobbyist group in Washington is AIPAC (American Israel Public Affairs Committee).

    Anyone who dares criticizes Israel is called "anti-semetic" or "racist" by the ADL or SPLC (headed by Jewish men).

    Most Americans do not want war

  • rate this

    Comment number 303.

    This is just to help Obama score votes in the upcoming US elections. The US always tells China to play fair, but then again the US is totally unfair towards Chinese companies operating in the US. In the eyes, of the US government, any threat to the their number 1 spot in the world is seen as a national security threat. China should repsond in kind because 2 can play at that game.

  • rate this

    Comment number 302.

    The naivete in many of the comments here is astounding. Many people don't understand that Chinese telecom companies such as Huewei are seen in the U.S. as simply tools of the Chinese government for engaging in industrial and military spying. The Chinese govt has a long history of hacking and other spying activities. The U.S. is absolutely right here. The Chinese govt cannot be trusted.

  • rate this

    Comment number 301.

    So let me get this straight...

    Nominally "American" firms like Apple and HP who build most of their products and have all of their production and most of their employment in China, at factories owned by the Chinese Army, are trustworthy stalwarts of national security. We can trust their Chinese-Army-built technology as safe. But Chinese companies who want to hire here are "dangerous." Riiight.

  • rate this

    Comment number 300.

    6 Minutes ago

    A wake up call to China, the US and Australia are ganging up on China made high tech products.

    And the iPhone in China is a spy device, used by the US spy on the Chinese companies that do business with the US."

    You're wrong, the iPhone is reversed alien technology, used by the US govt and the Chinese want it.

  • rate this

    Comment number 299.

    The BBC doesn't have a duty to present the fairytale take on US government policies..that is Fox News' job surely?

    If both the Democrats and the Republicans don't want Chinese investment, why have they been selling them government bonds?.. smells like jingoistic election posturing, nothing more...

  • rate this

    Comment number 298.

    Why do the American commenters think we here in the UK would support them in this after all the dirty bully tactics they have used against us?

    You polluted our coasts with oil spills and never paid to clean them.
    You steal our tech.
    You banned Concorde because we refused to let you look at it.
    Many, many more examples.

    We are not friends, you make that clear in the business world.

  • rate this

    Comment number 297.

    I have worked in China and by the comments posted most people know nothing about China and business. China will steal anything they want and forbid westerners to compete. As for INTEL and AMD... they DO NOT build new microchips there. My company will only ship 3rd generation machines there. China has only rules for outsiders and will do anything they can to get ahead .... except do it themself.

  • rate this

    Comment number 296.

    I see what they did there. America realises it made a mistake by not supporting "Made In America" and so how do you illegally cancel a contract in a so called legal way? Simples, just accuse the foreign company of spying.

    China should retaliate by blocking exports of essential rare earths, then America would shrink a few notches at last. It would be good for world security.

  • rate this

    Comment number 295.

    Funny how all the Editor's Picks are all anti-American in nature. Just another article to get all the America haters rallied around the BBC's anti-American agenda and crusade.

  • rate this

    Comment number 294.

    Sounds like politics to me.

  • rate this

    Comment number 293.


    May 2012?.. same month as this -

    'Researchers claim chip used in military systems and civilian aircraft has built-in function that could let in hackers'

    ..of course Actel, are a US chip manufacturer.. so it may have slipped under your radar...

  • rate this

    Comment number 292.

    The fears over ZTE and Huawei are well-founded - earlier this year a backdoor was found in the ZTE Score M handset:

    Who knows what backdoors they're hiding in their telcom equipment? China is one of the worst offenders for flagrant malicious network attacks and IP theft.

  • rate this

    Comment number 291.

    ha, its finally got thru to them. You've fed your future enemy and why not leave the door open too!


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