Reuters reports: China’s leading telecom equipment makers accused in a U.S. congressional report of being a potential security risk may face fresh scrutiny in other markets, while American firms operating in China could be vulnerable to retaliation.
The U.S. House of Representatives’ Intelligence Committee on Monday warned that China could use equipment made by Huawei Technologies Co Ltd and ZTE Corp – the world’s second- and fifth-largest makers of routers and telecoms gear – for cyber-espionage through software embedded in Chinese-made network equipment.
In its 52-page report, the committee noted that “China’s military and intelligence services, recognizing the technological superiority of the U.S. military, are actively searching for asymmetrical advantages that could be exploited in any future conflict with the United States. … Malicious implants in the components of critical infrastructure, such as power grids or financial networks, would also be a tremendous weapon in China’s arsenal,” it stated.
China’s official People’s Daily newspaper accused the committee on Tuesday of acting on a “presumption of guilt” against Huawei and ZTE. “This foolhardy political step … will impede the healthy development of Sino-American trade cooperation,” said a commentary in the newspaper, which generally reflects government thinking.
It added that the committee had produced “not an iota” of evidence to back its accusation that Huawei and ZTE products were used for espionage in the United States. “This report, which spurns the facts and is suffused with prejudice, is a vicious expansion of trade protectionism,” it said.
Bloomberg columnist Paula Dwyer agrees: What the report lacks is evidence. It also smacks of protectionism, despite denials by the committee chairman, Michigan Republican Mike Rogers, that he is invoking national security to shield U.S. telecoms equipment companies from Chinese competition.
The House investigation found “credible” reports of illegal behavior by Huawei, including immigration violations, bribery and corruption. But the original allegations that triggered the investigation a year ago — that Huawei and ZTE were installing equipment with codes to relay sensitive information back to China — are far from proven.
60 Minutes ran a report on Huawei in which it contrasted the way Chinese companies are subservient to the government with the way U.S. companies supposedly operate without much government interference. That might apply to Wall Street, but when it comes to surveillance, the U.S. telecom corporations only concern about fulfilling government requests is that they receive adequate compensation.
In the CBS report, Huawei’s founder, Ren Zhengfei, is portrayed as a sinister character because of his ties with the Chinese military and Communist Party. Maybe Sprint’s CEO, Dan Hesse, should be viewed with equal suspicion. He does after all serve on President Obama’s National Security Telecommunications Advisory Committee. And maybe the $176,700 that the House intel committee chairman Mike Rogers received from the U.S. communications/electronics sector this year has some relevance here.