The Chinese Telecom Invasion: U.S. Says Avoid ZTE, Huawei

by Matt Klassen on October 9, 2012

While the James Bond-esque days of the Cold War between Russian and America are long over, the fight between capitalism and communism still wages on, the enemy now no longer behind the Iron Curtain, but behind the Great Wall; that, of course, being China.

It was several years ago that Chinese telecommunications companies ZTE and Huawei went public with complaints of discrimination in the American market, stating that American regulators were suspicious of both companies’ supposed connection to the Chinese government. As both companies have increased their investment presence here in North American, governmental bodies have argued that both companies could, in fact, become a Chinese front for market espionage, including spying on American companies, individuals, and infrastructure.

While since then things had gone quiet, recently the Canadian government voiced its security concerns over both companies, concerns that were finally echoed this week in a report issued by America’s House Intelligence Committee, accusing both companies of “posing a national security threat and discouraging American businesses from buying their equipment.”

In a 52-page report, the House Intelligence Committee stated that neither ZTE or Huawei addressed the serious concerns raised by lawmakers, particularly related to their ability to resist the Chinese government should the latter enlist either company to aid in its industrial espionage efforts; a relic of the Cold War supposedly still alive and well in modern industry.

“Neither company was willing to provide sufficient evidence to ameliorate the Committee’s concerns,” the committee wrote in its report. “Neither company was forthcoming with detailed information about its formal relationships or regulatory interaction with Chinese authorities. Neither company provided specific details about the precise role of each company’s Chinese Communist Party Committee.”

So how should we view this? Is this all just fear-mongering as part of a communist witch hunt, or simply corporate security due process? Granted I have limited knowledge of the covert espionage activities currently taking place in the global telecommunications market, but as I said almost two years ago when these concerns first came to light, shouldn’t everyone be given an equal opportunity to become successful?

Unless there is clear evidence that either of these companies has or is poised to engage in espionage activities on behalf of China, it truly seems like many of the unjustified fears of the Cold War still remain. The situation makes even less sense when you take into account the symbiotic trade relationship America and China already have, making me wonder why very facet of Chinese involvement in the American market is not subject to the same scrutiny.

As I’ve written before, there’s little question in my mind that America fears the emerging Chinese market. Sure American companies wouldn’t mind getting their fingers into the Chinese economic pie, but to let Chinese companies come to America to succeed, now that just seems preposterous.

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{ 11 trackbacks }

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{ 1 comment }

Ian Preston October 10, 2012 at 11:33 am

I remember when Huawei first came to market with their brand of switches and routers. I seem to recall they were marketed with Cisco power at prices around 60% cheaper.
Is this part of the real issue I wonder?

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