U.S. House of Representatives' Intelligence Committee has just published a damning report on two major Chinese telecom companies, Huawei Technologies Co Ltd and ZTE Corp.
You can see the full report at the committee's website (pdf).
We've seen a draft of the report, and it really is pretty damning. One notable section is titled "China has the means, opportunity, and motive to use telecommunications companies for malicious purposes".
While it does not find outright instances of criminality, the report criticizes at length the level of cooperation both companies gave the investigation, including a refusal to acknowledge the "precise role of each company’s Chinese Communist Party Committee". It states that it received a large amount of information that suggested that Huawei in particular could be "violating United States laws".
Here's the report's conclusion:
The Committee launched this investigation to seek answers to some persistent questions about the Chinese telecommunications companies Huawei and ZTE and their ties to the Chinese government. Throughout the months-long investigation, both Huawei and ZTE sought to describe, in different terms, why neither company is a threat to U.S. national-security interests. Unfortunately, neither ZTE nor Huawei have cooperated fully with the investigation, and both companies have failed to provide documents or other evidence that would substantiate their claims or lend support for their narratives.
Huawei, in particular, provided evasive, nonresponsive, or incomplete answers to questions at the heart of the security issues posed. The failure of these companies to provide responsive answers about their relationships with and support by the Chinese government provides further doubt as to their ability to abide by international rules.
The report makes a number of recommendations, including a call on Congress to look into "potential legislation to better address the risk posed by telecommunications companies with nation-state ties or otherwise not clearly trusted to build critical infrastructure".
Huawei is unlisted and the world's second-biggest maker of routers, switches and telecoms equipment, according to Reuters. The bulk of both companies US revenue comes from selling mobile handsets. In the global mobile phone sector, ZTE is fourth and Huawei sixth.
Hauwei has reportedly been considering an IPO to calm US suspicions, though ZTE is listed and remains under suspicion. Hauwei spokesperson William Plummer emailed this statement to Reuters:
"Baseless suggestions otherwise or purporting that Huawei is somehow uniquely vulnerable to cyber mischief ignore technical and commercial realities, recklessly threaten American jobs and innovation, do nothing to protect national security, and should be exposed as dangerous political distractions from legitimate public-private initiatives to address what are global and industry-wide cyber challenges."
ZTE, unable to immediately supply a statement, instead supplied a letter it wrote to the committee in September to Bloomberg:
“ZTE is committed to provide maximum cybersecurity through transparent, comprehensive, and continuous standards-based assessments of ZTE software, firmware, and hardware.”
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