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China urges U.S. to respect market economy after China Mobile denied entry

By David Shepardson and Sijia Jiang

WASHINGTON/HONG KONG (Reuters) - China urged Washington on Friday to stop putting "unreasonable pressure" on Chinese companies after U.S. regulators voted to deny market access to China Mobile Ltd and suggested they could revoke approvals given to two other Chinese carriers.

The Federal Communications Commission voted unanimously on Thursday to deny an eight-year long bid from China Mobile, the largest Chinese telecom carrier, to provide services in the United States, citing risks that the Chinese government could use the approval to conduct espionage against the U.S. government.

The decision occurred amid an escalation of the trade war between the two countries that is centred around issues including market access. It also adds to a broader U.S. campaign to limit the role of Chinese telecommunications firms led by Huawei Technologies in the global build-out of 5G networks on national security grounds.

In response, Chinese Foreign Ministry spokesman Geng Shuang said on Friday that China urges the United States to respect market economy principles and stop putting “unreasonable pressure” on Chinese companies, and provide a fair, non-discriminatory investment environment for them in the United States.


State-owned China Mobile sought approval in 2011 to provide interconnection services for phone calls between the United States and other countries. It had not sought approval to provide wireless services to U.S. consumers. The approval would have given it enhanced access to U.S. telephone lines, fibre-optic cable, cellular networks and communications satellites.

FCC Chairman Ajit Pai said on Thursday the commission was "looking" at the previously approved authorisations for China's two other state-owned carriers, China Unicom and China Telecom Corp, but declined to elaborate. The FCC cited reports that "China Telecom has been hijacking U.S. traffic and redirecting it through China", according to Commissioner Brendan Carr.

China Unicom Chairman Wang Xiaochu said at a press conference in Hong Kong on Friday the company abides by local law in every country it operates in and that there is no reason for the U.S. to revoke its authorisation.

"In the U.S., we do not have our own network. We mainly work with local partners to provide services to multinationals," he said. "I do not think we have any non-compliance in the U.S. So I do not think this [revocation of the license] is a risk."

A spokesman for China Mobile said the company had no immediate comment.

China Telecom said in a statement it complies with local laws in every market and has operated in accordance with U.S. laws.

"Besides, China Telecom Americas receives and passes inspection every year according to the examination agreement with relevant U.S. government departments," it said.

FCC Commissioner Geoffrey Starks said Thursday "the national security environment has changed since those applications were granted" to other Chinese carriers. He said it was a "top priority" to address national security concerns regarding other carriers.

Starks noted that if China Mobile had won approval, it "could even end up carrying the communications of U.S. government agencies" if it offered the least costly path to carry traffic on a particular route.

For more than a year, the White House has been considering an executive order to declare a national emergency that would bar U.S. companies from using telecommunications equipment made by China's Huawei and ZTE Corp.

The FCC has also been considering for more than a year whether to require carriers to remove and replace equipment from companies deemed a national security risk. Pai said he is waiting on the Commerce Department for a list of companies that would be covered by the order.

China's telecom market, the world's largest, is highly regulated and the government is slowly opening parts of it to foreign participants. In January, BT Group Plc became the first foreign carrier to win a local operation license in China.


(Reporting by David Shepardson in WASHINGTON, Sijia Jiang in HONG KONG and Ben Blanchard in BEIJING; Editing by Jonathan Oatis and Christian Schmollinger)