A U.S. congressional report has reportedly determined that two major Chinese companies, Huawei Technologies and ZTE Corp, pose grave economic and security risks to the United States and should, therefore, be prevented from further making inroads in the country, reports said.
Citing a draft of the panel report that the U.S. Congress will release on Monday, Reuters said the findings of the 11-month investigation has indicated that both Huawei and ZTE failed to dispel allegations that their U.S. expansion plans could be used by Beijing to obtain significant intelligence data.
The panel report specifically blamed Huawei and ZTE, presently two of the world's biggest telecommunication firms, for not doing enough to cooperate with investigating authorities that would have clearly defined their relationship with the Chinese government.
Over the course of the congressional inquiry, the two Chinese telcos did not submit the necessary documents that would have allowed clear insight on how they operate or how much influence Beijing exercises over the firms' key executives, the panel report said.
The report also pointed to credible allegations that Huawei top officials may have been engaged in "bribery and corruption, discriminatory behaviour and copyright infringement."
Partnership with the two firms must be strongly considered in light of the findings, the report said, insisting too that "U.S. network providers and system developers are strongly encouraged to seek other vendors for their projects."
In an interview with U.S. network CBS on Sunday, panel chair Rep Mike Rogers said American firms planning to work with Huawei and ZTE would do well to scuttle any deal they have with the Chinese telcos.
"Find another vendor if you care about your intellectual property ... if you care about your consumers' privacy and you care about the national security of the United States of America," Mr Rogers was quoted by Reuters as saying.
The panel report claimed too that based on classified and unclassified materials, purportedly provided by U.S. intelligence agencies, "Huawei and ZTE cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems."
The report also noted that the Chinese telcos have become "dominant global players in the telecommunications market, which is intertwined with computerized controls for electric power grids; banking and finance systems; gas, oil and water systems and rail and shipping."
But the findings, ZTE said in a statement on Monday, were too focused on Chinese players and should be broadened if indeed Washington is bent on further improving it national security firewall.
"ZTE should not be a focus of this investigation to the exclusion of the much larger Western vendors," the company was reported by Reuters as saying.
For its part, Huawei has consistently maintained that it "will not jeopardize our global commercial success nor the integrity of our customers' networks for any third party, government or otherwise."
In the past weeks, the telco even broached the idea of listing on U.S. and Australian bourses to gain more trusts in the two markets where it is encountering rigid regulatory reviews, which were attributed national security concerns.
The new report, Huawei told Reuters, "should be exposed as dangerous political distractions from legitimate public-private initiatives to address what are global and industry-wide cyber challenges."
At best, the congressional findings will only "recklessly threaten American jobs and innovation, do nothing to protect national security," the Chinese stressed in a statement.
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