WASHINGTON The House Intelligence Committee recommended Monday that the U.S. government be barred from doing business with two Chinese telecommunications firms and U.S. companies should avoid buying their equipment, saying it could be used for spying in this country.
The committee, after a yearlong inquiry, concluded that the Chinese businesses, Huawei Technologies and ZTE Inc., posed a national security threat. The panel’s report said the committee had obtained internal documents from former employees of Huawei that showed it supplied services to a “cyberwarfare” unit in the People’s Liberation Army.
The companies sell telecommunications equipment needed to create and operate wireless networks, like the ones used by Verizon Wireless and AT&T. Many of the major suppliers of the equipment are based outside the United States, creating concerns here about the security of communications.
Those concerns are most acute about Huawei and ZTE because of their close ties to the Chinese government, which the committee said has heavily subsidized the companies. Allowing the Chinese companies to do business in the United States, the report said, would give the Chinese government the ability to easily intercept communications and could allow it to start online attacks on critical infrastructure, like dams and power grids.
The bipartisan report said that the U.S. government should go through the Committee on Foreign Investment in the United States, an interagency panel that reviews the national security implications of foreign investments, to carry out its recommendations. It also said that committee should block any mergers and acquisitions involving the Chinese companies and American businesses.
The House committee also said it had uncovered evidence of online espionage – unauthorized transfer of data from U.S. businesses to computers in China – that it planned to hand over to the FBI.
Rep. Mike Rogers, R-Mich., chairman of the House Intelligence Committee, and Rep. C.A. Ruppersberger of Maryland, the top Democrat on the committee, presented the report on Capitol Hill on Monday morning.
It was the latest development to highlight the sensitive terrain that the United States and China are navigating as they try to build their commercial ties and broaden the discussion of China’s economic expansion plans into the telecommunications sector.
Those efforts have formed part of the political dialogue just weeks before the presidential election, as both candidates have spoken of the importance of U.S. ties with China and have promised to act strongly on Chinese currency and trade practices that are damaging to U.S. business interests.