House Report Says Huawei, ZTE Pose Security Risk

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On Monday, the U.S. House of Representatives Intelligence Committee is releasing a draft report which claims that Chinese technology firms Huawei and ZTE pose a security threat to the United States. As a result, the report recommends that U.S. firms not do business with the companies.

CBSNews’ 60 Minutes program ran a story on the investigation and report on Sunday night. As part of the broadcast, Mike Rogers stated, “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.” The report added, “[The committee’s] overriding concern is this: that the Chinese government could exploit Huawei’s presence on U.S. networks to intercept high level communications, gather intelligence, wage cyber war, and shut down or disrupt critical services in times of national emergency.”

In the Wall Street Journal, Juro Osawa reported, “Also on Monday, ZTE said that Cisco Systems Inc. severed a strategic cooperation agreement because of U.S. allegations the Chinese company sold equipment to Iran. Cisco notified ZTE several days ago that it would end a strategic partnership agreement with the Shenzhen-based company that dated to about 2005 and included resale of equipment produced by the U.S. company, a ZTE spokesman said Monday.”

Reuters noted, “Employee-owned and unlisted Huawei is the world’s second-biggest maker of routers, switches and telecoms equipment by revenue after Sweden’s Ericsson. ZTE ranks fifth. In the global mobile phone sector, ZTE is fourth and Huawei sixth.” Both companies have been attempting to expand in the U.S., and Huawei is said to be considering an IPO.

According to the Global Times, the Chinese Foreign Ministry disputed the claims in the report. “The investment of Chinese telecom companies in the United States has reflected the mutual benefit and win-win nature of Sino-US economic and trade relations,” said spokesman Hong Lei. “We hope the US Congress can respect the truth and overcome biases so as to boost bilateral economic and trade cooperation, and not the reverse,” Hong added.