US blacklists China's tech giants
VIDEO: US BLACKLISTS CHINA’S TECH GIANTS CCTV News - CNTV English
US lawmakers have alleged so-called
security threat from Chinese telecom giants Huawei and ZTE. The two
Chinese tech companies have denied such allegations.
But the U.S. House of Representatives’
Intelligence Committee said it will release findings of a nearly
year-long investigation of the alleged security risk on Monday local
time.
Huawei and ZTE have had a tough time in the US, and now, it’s going to get even tougher.
The black listing of the two Chinese
tech giants, comes amid U.S. allegations that the companies are involved
in economic espionage and could pose a risk to the country’s
telecommunication infrastructure.
A draft report by the House Intelligence
Committee dominated by the Cold-War thinking, says the two firms "can’t
be trusted" to be free of influence from the Chinese government and
could be used to undermine US security.
In response, China’s foreign ministry has warned the US not to harm the interests of both countries.
Hong Lei, spokesman of Chinese Ministry
of Foreign Affairs, said, "Investment by China’s telecommunications
companies in the United States showed the countries have mutually
beneficial relations. We hope the US will do more to benefit the
interests of the two countries, not the opposite."
The firm’s top executives appeared at a
hearing held by the panel last month, stressing that they were focused
on business, not politics.
Charles Ding, Huawei Vice President,
said, "It would be immensely foolish for Huawei to risk involvement in
national security or economic espionage."
Zhu Jinyun, ZTE Vice President, said,
"Would ZTE grant China’s government access to ZTE telecom infrastructure
equipment for a cyber attack? Mr. Chariman, let me answer emphatically:
no!"
Both Huawei and ZTE have rejected the
allegations that their expansion in the United States poses a security
risk and have denied any ties with the Chinese government.
Huawei said that it was "globally trusted and respected."
Although being the second largest
telecom equipment maker in the world, the company has already had to
drop several of its attempts to expand in the US -- due to allegations
from U.S. lawmakers.
US report accusing firms of being security threat sparks angry denial
Two telecom giants rejected as "baseless" the findings of a US
congressional investigation that accused them of posing a national
security risk.
The allegations indicated growing commercial disputes between China and
the United States, especially in the high-tech sector, trade experts
said.
Huawei Technologies Co, the world's second-largest telecom equipment
manufacturer in terms of revenue, described the US congressional report
as containing "dangerous political distractions” from normal business
practice.
"Baseless suggestions purporting that Huawei is somehow uniquely
vulnerable to cyber mischief ignore technical and commercial realities,
recklessly threaten American jobs and innovation, do nothing to protect
national security, and should be exposed as dangerous political
distractions from legitimate public-private initiatives to address what
are global and industry-wide cyber challenges,” Bill Plummer, Huawei's
US vice-president of external relations, said in an e-mail to China
Daily.
The US House of Representatives’ Intelligence Committee said that Huawei
and ZTE Corp, the world's fifth-biggest telecom gear maker, should be
excluded from the US market because they pose a security threat.
ZTE urged the committee to extend equal treatment to all telecom
equipment makers because "most or all US telecom equipment is made in
China, including that provided by Western vendors”, it said in an e-mail
to China Daily.
China hopes the US will "respect reality, discard biases and improve
economic relations between China and the US, not vice versa”, Foreign
Ministry spokesman Hong Lei said on Monday.
The report, which came amid rising trade disputes between the two countries, surprised experts.
"The report is not just about economic issues, but goes further with
guesswork about alleged conspiracy," said Huo Jianguo, director of the
Chinese Academy of International Trade and Economic Cooperation
Institution. "It has obvious political intentions because displaying a
tough attitude to Chinese companies may help win more votes with a
presidential election campaign going on,” he said.
More trade disputes are likely to happen in the advanced industries like
telecommunications, compared to low-end manufacturing, as Chinese
companies move up the value chain and expand globally, Huo said.
There has been an increasingly large number of trade investigations into Chinese exports, led by the US, since 2009.
The committee launched a security probe into the two companies in
November. In May, a congressional delegation, including some of the
committee members, went to China where they met Ren Zhengfei, Huawei's
board chairman, and the top management of ZTE.
On Sept 13, Charles Ding, Huawei's corporate senior vice-president, and
Zhu Jinyun, ZTE's senior vice-president for North America and Europe,
testified at the House committee hearing. This was the first time the
Chinese telecom companies had the chance to communicate with US
authorities in public.
In an interview after the hearing, Zhu told reporters that, due to
different social and cultural backgrounds, there was one thing he felt
difficult to explain to Americans: the relationship between the
government, the Communist Party and the enterprise in China, especially
when many Congress members still harbor a Cold War mentality and know
little about China's development.
"ZTE really understands American concern about cyber security, but we
expected more constructive solutions from the US government to address
the issue instead of just finger-pointing,” Zhu said.
In a draft of the report made available to Reuters, the panel leaders
said that US intelligence must stay focused on efforts by Huawei and ZTE
to expand in the US and tell the private sector as much as possible
about the purported espionage threat.
"US network providers and system developers are strongly encouraged to seek other vendors for their projects," it said.
The report is likely to have an impact on Huawei and ZTE, both of which
are expanding aggressively overseas to fuel growth, said analysts.
"The two companies have been trying to build a larger presence in the US
market but failed, and the report is likely to make their business in
the US even harder,” said Xiang Ligang, a Beijing-based industry
specialist and president of industry website cctime.com.
The companies may find it more difficult to win deals with US telecom
carriers and their mobile phone business will be affected, he added.
Huawei, which ranks only after Sweden's Ericsson in the global market,
conducts 70 percent of its business outside China. It reported sales of
$1.3 billion in the US last year.
The Wall Street Journal reported earlier that Huawei is preparing for a
public offering, but the company denied the report later. ZTE has a
smaller footprint in the US, mainly through sales of devices like
smartphones. Its sales in the US were $30 million last year.
The document cited what it called long-term security risks associated
with the companies’ equipment and services but it did not provide
detailed evidence, at least not in an unclassified version.
A classified annex provides "significantly more information adding to the committee's concerns,” the draft said.
Based on 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 US and to our systems”, it said.
CBS aired a segment on Huawei on Sunday evening during 60 Minutes. The
committee's chairman Mike Rogers told the program's host Steve Kroft:
"If I were an American company today, and I’ll tell you this as the
chairman of the House Permanent Select Committee on Intelligence, 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.”
Plummer, the only person from Huawei who appeared on the show, insisted that Huawei is a company just doing business.
The company's "$32.4 billion in revenues last year” was obtained from
"150 different markets, 70 percent of our business is outside of China.
Huawei is not going to jeopardize its commercial success for any
government, period”, he told Kroft.
By TAN YINGZI in Washington and CHEN LIMIN in Beijing
Contact the writers at tanyingzi@chinadailyusa.com and chenlimin@chinadaily.com.cn
Reuters contributed to this story.
