US report accuses China’s Huawei

BEIJING / HONG KONG - Reuters

House Intelligence Committee Chairman Mike Rogers (L) and Rep. Dutch Ruppersberger arrive at a conference on Huawei and ZTE. REUTERS photo

China’s leading telecom equipment makers accused in a U.S. congressional report of being a potential security risk may face fresh scrutiny in other markets, while American firms operating in China could be vulnerable to retaliation.

The U.S. House of Representatives’ Intelligence Committee on Oct. 8 warned that China could use equipment made by Huawei Technologies Co and ZTE Corp - the world’s second- and fifth-largest makers of routers and telecoms gear - for cyber-espionage through software embedded in Chinese-made network equipment.

‘Asymmetrical advantages’

In its 52-page report, the committee noted that “China’s military and intelligence services, recognizing the technological superiority of the U.S. military, are actively searching for asymmetrical advantages that could be exploited in any future conflict with the United States. ... Malicious implants in the components of critical infrastructure, such as power grids or financial networks, would also be a tremendous weapon in China’s arsenal,” it stated.

China’s official People’s Daily newspaper accused the committee yesterdal of acting on a “presumption of guilt” against Huawei and ZTE. “This foolhardy political step ... will impede the healthy development of Sino-American trade cooperation,” said a commentary in the newspaper, which generally reflects government thinking.

It added that the committee had produced “not an iota” of evidence to back its accusation that Huawei and ZTE products were used for espionage in the United States. “This report, which spurns the facts and is suffused with prejudice, is a vicious expansion of trade protectionism,” it said.

The blow-up - a Xinhua English-language commentary spoke of “a Cold War mentality” in the United States - comes at a sensitive time for U.S.-China relations, ahead of U.S. presidential and congressional elections and a leadership transition in China.