News / Asia

Congressional Warning on Chinese Telecoms Could Prompt Retaliation

Bill Plummer, Huawei's vice president for external affairs in the US speaks on Capitol Hill in Washington, October 8, 2012
Bill Plummer, Huawei's vice president for external affairs in the US speaks on Capitol Hill in Washington, October 8, 2012
Analysts say this week's U.S. congressional report that called two Chinese telecoms a threat to national security is likely to prompt China to retaliate against U.S. businesses.

The House Intelligence Committee report warned U.S. companies against doing business with China's largest phone equipment companies, Huawei and ZTE.

Released Monday, the bipartisan report said the telecom giants could use their equipment to spy on the U.S., citing what it described as "a close relationship" with China's Communist Party.

Retaliation

So far, Beijing has only issued stern complaints about the report in official press briefings and state media editorials. But analysts say more moves are likely to come.

"I think it would be surprising if there wasn't retaliation," says Stan Abrams, a Beijing-based corporate IT lawyer. "It might not be tomorrow or next week, but at some point, something will happen and it will be to the detriment of U.S. companies."

Abrams, who is also a foreign investment law professor, told VOA that China's government has a reputation for responding in kind when a country makes a decision it views as antagonistic.

"China's foreign policy and its economic policy in terms of other countries is all about reciprocity. They're very much into a reciprocal type arrangement with other nations," Abrams said.

Consequences

Observers say the stakes are large, and could affect U.S. tech firms that the Commerce Department estimates sold $20 billion in advanced technology to China last year alone.

One U.S. business that could be affected is network equipment company Cisco, a competitor of Huawei that has relied on China for sales. The California-based company this week cut ties with ZTE, saying an internal investigation led it to believe the Chinese firm had re-sold Cisco equipment to Iran in violation of U.S. sanctions.

But Patrick Chovanec , a business professor at Tsinghua University, tells VOA it is tough to say how China would retaliate, given its already restrictive stance toward foreign investment.

"Perhaps they can tighten that up, and perhaps they may selectively retaliate in order to send a signal. But that's really just a continuation of policies that have already existed that prohibit foreign companies and American companies from competing on an even playing field in China," Chovanec said.

Others say that China could also respond indirectly by failing to make progress on other unrelated trade issues that have angered Washington, including currency valuation and intellectual property rights.

Trade war

But analysts do not expect a trade war between the U.S. and China, the world's two largest economies, since China relies on U.S. technology for its infrastructure and U.S. companies depend on Chinese components for their products.

Abrams says he thinks the issue will eventually die down, not least of all because China's Communist Party is busy working on putting the finishing touches on a sensitive once-a-decade leadership transition.

"I don't think China will complain about it for very much longer," he says."China right now has much bigger fish to fry and much bigger domestic concerns."

You May Like

Obama: Alaskans Feel Signs of Climate Change

They're seeing bigger storm surges as sea ice melts, more wildfires, erosion of glaciers, shorelines More

Katrina Brought Enduring Changes to New Orleans

The city’s recovery is the result of the people and culture the city is famous for, as well as newcomers and start-up industries More

Magical Photo Slides Show Native Americans in Late 1800s

Walter McClintock spent 20 years photographing the Blackfoot Indians and their vanishing culture at the dawn of the modern age More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Colombians Flee Venezuela as Border Crisis Escalatesi
X
August 27, 2015 2:08 AM
Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Is China's Economic Data Accurate?

Some investors say China's wild stock market gyrations have been made worse by worries about the reliability of that nation's economic data. And some critics say the reports can mislead investors by painting an unrealistically-strong picture of the economy. A key China scholar says Beijing is not fudging ((manipulating)) the numbers, but that the economy is evolving quickly from smoke-stack industries to services, and the ways of tracking new economic activity are falling behind the change. V
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Shipping Containers Provide Experimental Housing

Housing prices around the San Francisco Bay area are out of reach for many people, so some young entrepreneurs, artists and tech industry workers are creating their own houses using converted shipping containers. But as VOA's Mike O’Sullivan reports from Oakland, the effort requires ingenuity and dealing with restrictive local laws.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video Technique May Eliminate Drill-and-Fill Dental Care

Many people dread visiting dentists because they're afraid of drills. Now, however, a technology developed by a British firm promises to eliminate the need for mechanical cleaning of dental cavities by speeding a natural process of tooth repair. VOA’s George Putic reports.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.
Video

Video French Experiment in Integrating Roma Under Threat

Plans to destroy France’s oldest slum have sparked an outcry on the part of its Roma residents. As Lisa Bryant reports from the Paris suburb of La Courneuve, rights groups argue the community is a fledgling experiment on integrating Roma who are often outcasts in many parts of Europe.
Video

Video Kenyans Turn to Agriculture for Business

Each year Kenyan universities continue to churn out graduates for the job market despite the already existing high rate of unemployment among youth in the country. Some of these young men and women have realized that agriculture can be as rewarding as any other business or job, and they are resorting to agribusiness in large numbers as a way of tackling unemployment. Rael Ombuor reports for VOA.
Video

Video First Women Graduate Elite Army Ranger School

Two women are making history for the U.S. Army by proving they are among the toughest of the tough. VOA's Carla Babb reports from Fort Benning, Georgia as 94 men and those two women rise as graduates of the difficult Ranger school.

VOA Blogs