A U.S. House of Representatives intelligence report suggests the U.S. should cut off relations with two of China’s top telecom manufacturers Huwaei and ZTE. It particularly states that neither company should be allowed to merge with any U.S. based telecom company. The recommendation comes after nearly a year long investigation into corporate practices of the Chinese based companies amid concerns of espionage and illegal activity.
Congressman Mike Rogers of Michigan, who is also the chairman of the U.S. House Intelligence Committee, laid out the details accusing Huawei and ZTE of being uncooperative and not forthcoming with requested documentation. According to the report, the investigation into these companies began in February 2011 when Huawei “published an open letter to the U.S. Government denying security concerns with the company or its equipment, and requesting a full investigation into its corporate operations.” By November 2011, the U.S. House acted on that request and began to investigate potential security risks posed by doing business with the Chinese companies. There is growing concern that the Chinese are interested in accessing U.S. infrastructure for the purpose of espionage. Below is a quote from the Executive Summary section of the report that lays out many of the concerns:
Prior to initiating the formal investigation, the Committee performed a preliminary review of the issue, which confirmed significant gaps in available information about the Chinese telecommunications sector, the histories and operations of specific companies operating in the United States, and those companies’ potential ties to the Chinese state. Most importantly, that preliminary review highlighted the potential security threat posed by Chinese telecommunications companies with potential ties to the Chinese government or military. In particular, to the extent these companies are influenced by the state, or provide Chinese intelligence services access to telecommunication networks, the opportunity exists for further economic and foreign espionage by a foreign nation-state already known to be a major perpetrator of cyber espionage.
Huawei’s vice-president, William Plummer, said the latest accusations were “dangerous political distractions”. According to a BBC article, Huawei was started by a former member of the People’s Liberation Army. It also reported that U.S. based Cisco Systems cut ties with ZTE after it allegedly sold U.S. equipment to the Iranians which is a clear breach of U.S. sanctions.
The report outlined several recommendations from not allowing any ZTE or Huawei systems to be used in any government facility to warning U.S. businesses about the unfair businesses practices of these companies, particularly intellectual property. All of this comes about at a time when relations with China are already strained due to the Presidential election. Many Americans feel the government needs to do more about China’s unfair trade practices.
For more information and to see the full report, visit http://intelligence.house.gov/.