Chinese telecoms cannot be trusted, congressional study finds

A report by the House Intelligence Committee found Chinese telecoms, Huawei and ZTE, pose a significant security threat to the United States.

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Two China-based telecoms, Huawei and ZTE pose a significant threat to the United States and should be barred from U.S. government work, according to a congressional report.

We warn U.S. government agencies and companies considering using Huawei and ZTE equipment in their networks to take into account the affect if could have on our national security.

C.A. Dutch Ruppersberger (D-MD)

A report issued by The House Intelligence Committee was obtained Sunday by the AFP, and found that the two firms "cannot be trusted" to be free from influence by Chinese government officials in Beijing. The two firms could undermine U.S. national security, according to the report.

The report was published today on the committee's website.

The report also says U.S. private-sector companies "are strongly encouraged to consider the long-term security risks associated with doing business with either ZTE or Huawei for equipment or services."

Security firms have long suspected nation-state sponsored cyberespionage attacks targeting both public and private sector companies. In the private sector, intellectual property is at risk of being pilfered and used by a host of Chinese firms, including manufacturers, suppliers and services firms. China claims the U.S. is conducting similar activities on its country's systems. A panel of experts at the 2011 RSA Conference debated how economic and political forces are driving the discussion about corporate and government espionage activities.    

"As this report shows, we have serious concerns about Huawei and ZTE, two Chinese telecommunications companies looking to gain market share in the United States, and their connection to the communist government of China," C.A. Dutch Ruppersberger (D-MD), a ranking member of the committee said in a statement.  "We warn U.S. government agencies and companies considering using Huawei and ZTE equipment in their networks to take into account the affect if could have on our national security." 

Committee recommendations 

The congressional report recommends that Huawei or ZTE equipment not be used by the U.S. government or enterprises. In addition to dealings with Iran and ties with China's military and Communist Party, the draft report cites the potential for "malicious Chinese hardware or software implants" that could be used in espionage activities and providing access to corporate networks.

  1. U.S. government systems and U.S. government contractors, particularly those working on sensitive systems, should exclude any Huawei or ZTE equipment or component parts.  Additionally, the Committee on Foreign Investments in the United States (CFIUS) must block acquisitions, takeovers, or mergers involving Huawei and ZTE given the threat to U.S. national security interests.
  1. U.S. network providers and systems developers are strongly encouraged to seek other vendors for their projects.
  1. Unfair trade practices of the Chinese telecommunications sector should be investigated by committees of jurisdiction in U.S. Congress and enforcement agencies in the Executive Branch.  Particular attention should be paid to China’s continued financial support of key companies.
  1. Chinese companies should quickly become more open and transparent. Huawei, in particular, must become more transparent and responsive to U.S. legal obligations.
  1. Committees of jurisdiction in Congress should consider potential legislation to better address the risk posed by telecommunications companies with nation-state ties or otherwise not clearly trusted to build critical infrastructure, including increasing information-sharing among private sector entities and expanding a role for the CFIUS process to include purchasing agreements.

Both Huawei and ZTE have reportedly denied any ties with the Chinese government. Top executives of the firms appeared at a hearing held by the panel last month, stressing that they were focused on business, not politics.

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