US bars Chinese-owned telecom over ‘security risks’

WASHINGTON

U.S. regulators have stripped Chinese state-owned Pacific Networks of its telecommunications license, the latest blow in the simmering confrontation between Beijing and Washington.

Washington had previously revoked the permits of China Telecom and China Unicom, and the Federal Communications Commission has now given 60 days to Pacific and its subsidiary ComNet to cut service.

“The companies’ ownership and control by the Chinese government raise significant national security and law enforcement risks,” the FCC said in a statement on March 16, adding Beijing could monitor or disrupt U.S. communications.

The revocation of Pacific’s operating authority comes as U.S. President Joe Biden has pressed ahead with a strategy of confronting China broadly in line with that of his predecessor Donald Trump, whose approach sent tensions soaring.

Relations have been fraught between the world’s two biggest economies on multiple fronts, including trade, human rights, Taiwan and the COVID-19 pandemic.

China Telecom is China’s largest fixed-line operator, but it had faced trouble in the United States for years, particularly during Trump’s presidency, as his administration repeatedly clashed with Beijing over trade.

The telecoms companies have fought back against the restrictions, with China Unicom saying in a statement in January that the FCC’s decision was “without any justifiable grounds and without affording required due process.”

Yesterday, a Chinese foreign ministry spokesman accused American regulators of improperly invoking national security to hurt Chinese companies without providing evidence they broke any law.

Regulators are “abusing national power” to hurt Chinese companies and “severely destroying international economic rules and harming the legitimate rights of consumers including American consumers,” said the spokesman, Zhao Lijian.

Zhao said Beijing would help Chinese companies protect their “rights and interests” but gave no indication of possible retaliation.

Pacific Networks owns an American company, ComNet (USA) LLC, which provides international service, calling cards and global SIM cards, as well as network management, business phone systems and website services, according to a U.S. Senate report in 2020.

The companies ultimately are owned by the Chinese Cabinet’s main holding company, CITIC Group, which “may be able to access U.S. customer records,” said the report by the Senate’s Permanent Subcommittee on Investigations.

The companies are obligated by Chinese law to “support the Chinese government’s intelligence work,” the report said.