U.S. lawmakers seek to block China Huawei, ZTE U.S. inroads

Mon Oct 8, 2012 5:33pm EDT
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By Jim Wolf

WASHINGTON (Reuters) - U.S. telecommunications operators should not do business with China's top network equipment makers because potential Chinese state influence on the companies poses a security threat, the U.S. House of Representatives Intelligence Committee said in a report on Monday.

The report follows an 11-month investigation by the committee into Huawei Technologies Co Ltd and its smaller rival, ZTE Corp.

The companies have been fighting an uphill battle to overcome U.S. lawmakers' suspicions and expand in the United States after becoming key players in the worldwide market.

The House Intelligence Committee's bipartisan concerns are bound to set back the companies' U.S. prospects and may also lead to new strains in trade ties between the United States and China, the world's two biggest economies.

Committee Chairman Mike Rogers, at a press conference to release the report, said companies that had used Huawei equipment had reported "numerous allegations" of unexpected behavior, including routers supposedly sending large data packs to China late at night.

The panel cited what it called long-term security risks supposedly linked with the companies' equipment and services. It did not provide any hard evidence to back up its concerns, at least not in the unclassified version of the report.

Rogers, a Michigan Republican who is a former FBI agent, said lawmakers' concerns had been heightened by what he and the panel's top Democrat, C.A. Ruppersberger of Maryland, described as the companies' lack of full cooperation with the investigation.

If the committee's warnings about doing business with Huawei and ZTE prompt the Chinese government to get out of the business of cyber espionage, a growing U.S. concern, "then that's great," he added.   Continued...

House Intelligence Committee Chairman Mike Rogers (R-MI) (L) and Rep. Dutch Ruppersberger (D-MD) hold a news conference to release a report on "national security threats posed by Chinese telecommunications companies Huawei and ZTE" on Capitol Hill in Washington October 8, 2012. REUTERS/Yuri Gripas