US Warns Two Chinese Companies Pose Security Risk

CAPITOL HILL —  U.S. companies considering doing business with Chinese telecommunications companies Huawei and ZTE are being warned to find another vendor. A U.S. House of Representatives report said the companies pose a long-term corporate and national security threat.

At a news conference on Capitol Hill, House Intelligence Committee Chairman Mike Rogers, a Republican from Michigan, said the committee began investigating concerns about the telecommunications companies Huawei and ZTE a year ago, interviewing former Huawei employees, industry experts and intelligence officials.

Rogers said the panel was disappointed by the incomplete, contradictory and evasive answers provided by Huawei and ZTE during the investigation.

"The investigation concluded that the risks associated with these companies providing equipment and services to U.S. critical infrastructure undermines the core U.S. national security interests," Rogers said.

An Intelligence Committee report recommends U.S. government systems, especially sensitive systems, exclude Huawei and ZTE equipment and component parts. The report pointed out critical infrastructure, everything from electric-power grids to banking and finance systems to water systems, is extremely inter-connected, and said the risk is high that a failure or disruption in one system could have a devastating ripple effect.

Congressman Dutch Ruppersberger, a Democrat from Maryland, warned of a heightened risk of cyber-espionage or cyber-attack from the two firms that he said clearly have ties with the Chinese government.

"We already know the Chinese are aggressively hacking into our nation's networks, threatening our critical infrastructure, and stealing millions of dollars worth of trade secrets and other sensitive information from American companies," he said.

Ruppersberger said $300 billion worth of U.S. trade secrets are stolen every year, and that most of the cases prosecuted involve China.

Huawei Vice President for External Affairs William Plummer attended the news conference and spoke to reporters afterwards. Plummer strongly rejected the conclusions of the investigation, and said it was motivated by political suspicions of China during an election year in the United States.

"There are politics and then there are facts," said Plummer. "The facts are that this company is globally-trusted, and that our product is world-proven in terms of its security and integrity."

Plummer said Huawei has too much to lose to collaborate with Chinese cyber-espionage. He said it is an independently-owned company that has been operating in the United States for years.

Chinese Foreign Ministry spokesman Hong Lei also rejected the report, saying Chinese companies do not pose a national security threat to the United States. He said he hopes the U.S. Congress will, in his words, "set aside prejudices and respect the facts."

U.S. national security policy officials say Huawei works closely with the Chinese military on research and development projects. Huawei is looking to expand in the U.S. telecommunications market, and its cellphones and 4G networks are popular worldwide.