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Huawei and ZTE deny US spying allegations

Executives from Chinese firms tell US lawmakers they operate independently


Executives of ZTE and Huawei Technologies, China's two largest phone-equipment makers, tried to dispel allegations by US lawmakers that their potential expansions may increase cyberattacks and spying.

Instead, in what was described as the first appearance by Chinese executives at a congressional hearing, they heard accusations that they have not co-operated with an investigation or shown that they are independent from a government accused of stealing US intellectual property.

After Thursday's hearing, one member of the House Intelligence Committee joined a colleague in urging law firm DLA Piper's Washington office to reconsider representing ZTE, citing "threats your client may pose to the national security of the United States."

"We have been hindered by unsubstantiated, non-specific concerns that Huawei poses a security threat," Charles Ding, a corporate senior vice-president who testified for Huawei, said in his testimony.

The exchanges showed the Chinese companies may face more restrictions on supplying the gear that powers networks used by US consumers as well as banks, utilities and technology companies shifting data around the country.

The hearing also continued a pattern of tension between the US and China on a variety of economic matters. On Thursday in Washington, US Ambassador to China Gary Locke said the yuan needs to appreciate against the US dollar. Republican presidential candidate Mitt Romney has said he would label China a currency manipulator on his first day in office if elected.

Huawei and ZTE, both based in Shenzhen, told lawmakers at the hearing the companies are not controlled by the Chinese government, which Mike McConnell, a former US director of national intelligence, has called the "the most prolific" state thief of US intellectual property.

The companies have not provided full answers and supplied "very few" documents that relate to the committee's probe, committee chairman Mike Rogers, said during the hearing.

"We need answers to very specific questions. And when they don't answer those, it just raises more suspicions," Rogers told reporters after the hearing.

Huawei, which was banned from tendering for work on Australia's national broadband network, also urged Australia not to discriminate against foreign communications companies.

Last year it was blocked from participating in Australia's US$38 billion broadband network.

"We were disappointed. We were not given the reasons for the decision," Huawei Technologies Australia chairman John Lord told an Australian parliamentary intelligence committee yesterday.

This article appeared in the South China Morning Post print edition as: Huawei and ZTE deny US spying allegations