October 08, 2012, 9:45 PM — China-based Huawei and ZTE pose a national-security threat to the U.S. because of spying and stealing of data that could be done on behalf of the Chinese government through any network based on vendors' network service provider gear, according to an investigative report issued Monday by the U.S. House Intelligence Committee.
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The U.S. House Intelligence Committee, under the leadership of its chairman, Mike Rogers (R-Mich.), came to this stark conclusion in its "Investigative Report on the U.S. National Security Issues Posed by Chinese Telecommunications Companies Huawei and ZTE." Here's a look into what the 50-plus page report, said to have taken a year to complete, indicates is the basis for defining these Chinese-based firms as a national-security threat to the U.S.:
- There are significant gaps in available information about the Chinese telecommunications sector, history and operation in the U.S. and Huawei's and ZTE's "potential ties to the Chinese state" or whether the companies "provide Chinese intelligence services access to telecommunications networks."
- Neither Huawei nor ZTE "was willing to provide sufficient evidence to ameliorate the Committee's concerns" or provided specific information about its relationship with the Chinese Communist Party Committee.
- Huawei in particular is said to have provided inadequate information about its corporate structure, history, ownership, operations or financial arrangements.
- The House Committee has uncovered what may be evidence that Huawei may be violating U.S. laws "from industry experts and current and former Huawei employees" and these "allegations" will be passed along to U.S. executive branch agencies for further review, including investigation.
The U.S. House Committee report recommends:
- The U.S. "should view with suspicion the continued penetration of the U.S. telecommunications market by Chinese telecommunications companies."
- The Committee on Foreign Investment in the U.S. "must block acquisitions, takeovers or mergers involving Huawei and ZTE given the threat to U.S. national security interests."
- U.S. government's "particularly sensitive systems" shouldn't include Huawei or ZTE equipment.
- The U.S. commercial sector outside of government should consider ZTE and Huawei as a long-term security risk and should seek other vendors for their projects.
- Congress and government agencies should investigate unfair trade practices; Chinese companies should become open and transparent based on Western standards and Congress should consider legislation to "address the risk" from telecom companies with nation-state ties. Such legislation may include an expanded government role by the Committee on Foreign Investment in the United States to include looking at purchasing agreements.