A report by the House Intelligence Committee recommended that the U.S. government be barred from doing business with two Chinese telecommunications firms – Huawei and ZTE – and that American companies should avoid buying their equipment; a committee report said the two companies pose a threat to U.S. national security; installing these companies’ technology in U.S. communication network will not only allow these companies, acting on behalf of the Chinese military and intelligence, to steal sensitive national security information and trade secrets of private U.S. companies – it will also allow China to attack and paralyze large portions of U.S. critical infrastructure
A report by the House Intelligence Committee said that two Chinese telecommunications companies – Huawei and ZTE – are a threat to U.S. national security, and said their equipment and technology, if installed in U.S. networks, could be switched on remotely to send data back to China. This will allow the Chinese government and its agencies not only to steal sensitive national security information and private companies’ trade secrets. Even worse, in the event of a conflict between the United States and China, the equipment installed by these two Chinese companies would allow the Chinese military and intelligence to turn off U.S. communication networks in which their technology is installed, and attack and paralyzing large portions of the U.S. critical infrastructure. Representative Mike Rogers (R-Michigan), the committee chairman, and Representative C. A. Ruppersberger (D-Maryland), the ranking minority member, presented the bipartisan report on Capitol Hill.
The New York Times reports that the committee recommended that the U.S. government be barred from doing business with two Chinese telecommunications firms and American companies should avoid buying their equipment.
Monday OCT9 2012, the Obama administration, through the Committee on Foreign Investment in the United States (CFIUS), ordered a Chinese company to divest itself of interests in four wind farm projects near a Navy base in Oregon where drone aircraft training takes place. It was the first time a president had blocked such a deal in twenty-two years. Huawei, the world’s second-largest network equipment vendor, and ZTE, both based near Hong Kong, describe themselves as private entities, with the bulk of their shares owned by their employees.
The congressional committee concluded, however, that “they are not private companies,” and that Huawei, in particular, had much closer ties to the Chinese military than it had admitted. “The committee received internal Huawei documentation from former Huawei employees showing that Huawei provides special network services to an entity the employee believes to be an elite cyberwarfare unit within the PLA,” the report said.
Representative Mike Rogers (R-Michigan), the committee chairman, cited information provided by intelligence sources in Australia and the United Kingdom, information which supported the report’s conclusions. “The testimony and evidence of individuals who currently or formerly worked for Huawei in the United States or who have done business with Huawei also brought to light several very serious allegations of illegal behavior that require additional investigation,” the report said.
“The committee will refer these matters to the executive branch for potential investigation,” the report said.
Huawei, which had global revenues in 2011 of $32.4 billion, and ZTE vigorously rejected the accusations.
“The report released by the committee employs many rumors and speculations to prove non-existent accusations. This report does not address the challenges faced by the [information and communications technology] industry. Almost every ICT firm is conducting R&D, software coding and production activities globally; they share the same supply chain, and the challenges on network security is beyond a company or a country. The committee’s report completely ignored this fact. We have to suspect that the only purpose of such a report is to impede competition and obstruct Chinese ICT companies from entering the U.S. market,” said Scott Sykes, Huawei spokesman.