China’s leading technology firms Huawei and ZTE pose a threat to national security, warns a draft report by a US Congress committee.
The report by the House Permanent Select Committee on Intelligence concludes that both companies should be restricted from doing business in the US.
While the report – due to be published today - is advisory in nature, it might add new hurdles for Huawei’s long-running attempt to break into the US market, according to the Financial Times.
In May, Huawei launched a campaign to penetrate the North American enterprise market. Despite the announcements and its strong North American growth in the first quarter of 2012, concerns about Huawei security remain a major issue for prospective customers.
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Just ahead of the report’s publication, the committee’s chair Mike Rogers said in a television interview that US companies should not do business with Huawei if they want to protect themselves and their country.
“I would find another supplier if you care about your intellectual property, if you care about your consumers’ privacy, and if you care about the national security of the USA,” he said.
The committee is concerned that if Huawei and ZTE control large parts of US telecoms infrastructure, it will make it easier for China to spy on the US government and steal intellectual property from US companies, the paper said.
The Congressional committee’s report calls for investigations against Huawei over allegations by former and current employees and businesses partners of bribery, violation of US immigration laws, and close ties to the Chinese military.
The report also calls for probes of US foreign purchasing agreements, a block of any mergers or acquisitions involving Huawei or ZTE, and an investigation into the trade practices of the Chinese telecom sector.
Huawei and ZTE said they would respond to the full report once it is published, but rejected the accusations revealed so far.
Both companies have built systems to reassure their customers that their equipment carries no security risks, but the report claims those systems are insufficient and may even create a false sense of security.