Huawei and ZTE, China's top makers of telecoms kit, should be locked out of the US market because their technology poses a security risk, a US House of Representatives group said today.
The Intelligence Committee believes there is a threat of Chinese state influence on the two companies that would make them a liability in the American telecommunications market, and that businesses need to be aware of the potential for espionage.
The committee came to its conclusions following an 11-month investigation, during which ZTE and Huawei defended themselves and answered the government's questions.
Charles Ding, corporate senior VP for Huawei, told the committee that his company was an independent enterprise and wasn't influenced by the Chinese government.
"Huawei is entirely owned by its employees. No third party - including government institutions - has any ownership interest in Huawei," he said. "Huawei’s success has not been based on favouritism or subsidisation by the Chinese government."
Zhu Jinyun, senior VP for North America and Europe at ZTE, insisted that the company was the "most transparent publicly owned telecoms company in China".
"The committee’s central question has been: would ZTE grant China’s government access to ZTE telecom infrastructure equipment for a cyber attack?" he explained. "Let me answer emphatically: no! China’s government has never made such a request. We expect the Chinese government never to make such a request of ZTE. If such a request were made, ZTE would be bound by US law."
Both Huawei and ZTE have consistently denied that they are a threat to the US's cyber security, while the American authorities have given every impression of having found the pair of firms guilty even before the investigation concluded. Allegations against the Chinese firms have ranged from enabling espionage attacks to receiving government subsidies so they can undercut the competition.
The Intelligence Committee's report claims that the companies didn't hand over all the documents requested, including information about their relationships and regulatory interaction with the Chinese government.
“As this report shows, we have serious concerns about Huawei and ZTE, and their connection to the communist government of China," committee chairman Mike Rogers said. "China is known to be the major perpetrator of cyber espionage, and Huawei and ZTE failed to alleviate serious concerns throughout this important investigation. American businesses should use other vendors.”
The panel is planning to forward allegations it received from industry experts, and current and former employees of Huawei, to the Justice Department and the Department of Homeland Security, the draft said. The committee is also calling on the Committee on Foreign Investments to block acquisitions, takeovers or mergers involving Huawei and ZTE.
According to the report, there are security risks linked to the companies' equipment and services, but detailed evidence of these risks were not given in the unclassified version made public today. ®