U.S. House Intelligence Committee’s attack on China’s Huawei, ZTE could trigger major crisis

“A congressional report this week recommended in no uncertain terms that U.S. companies and government agencies avoid two of China’s biggest telecommunications companies. Buying equipment from them risks national security, the report said,” Verne Kopytoff opines for Fortune.. “The House Intelligence Committee’s withering attack on the two Chinese companies, Huawei Technologies and ZTE Corp., would seem like a big opportunity for U.S. firms to gain ground. The reality for U.S. businesses, however, could be the very opposite.”

“In response to the congressional assault, China may throw up roadblocks against the U.S. tech imports by raising tariffs or prohibiting certain kinds of equipment, according to trade policy experts,” Kopytoff opines. “Such a tactic would harm U.S. companies, which increasingly count on China for sales and growth. The stakes are huge. Last year, U.S. firms sold $20 billion in advanced technology to China, according to the Commerce Department.”

Kopytoff opines, “The bipartisan congressional report looked exclusively at Huawei and ZTE, two global businesses that sell gear for connecting phone calls and routing Internet traffic. Investigators said that China’s government could tamper with the technology to spy and to steal trade secrets. Both companies failed to provide details about their corporate control and government ties, they said. The presence of Communist Party offices in the companies’ headquarters also raised red flags.”

“Indeed, the situation is complicated by the interdependence of both nations. Cutting off trade is nearly impossible. China needs U.S. technology to keep its infrastructure and factories operating. Meanwhile, U.S. tech manufacturers depend on Chinese components. The lines are so blurry that a product’s origin is often a matter of semantics. Apple’s (AAPL) iPhones and iPads, for example, are largely assembled in China,” Kopytoff opines. “Similar cross-pollination is the norm for U.S. telecommunications equipment makers. Congressional investigators, however, did not look at any security risks created by such ties.”

Read more in the full article here.

Related article:
U.S. House Intelligence Committee: China’s Huawei, ZTE should be ban in U.S. – October 8, 2012

47 Comments

  1. This attack is totally off base. We shouldn’t limit or regulate capitalism at all. All US firms should buy equipment from Huawei and ZTE. So what if that allows the Chinese to steal our trade secrets and cripple our military? That’s just the market at work.

  2. um, it’s a little bit late for wringing hands and wondering if the Chinese have left a few backdoors on telecom rig. Like Apple tossing out Google, I agree that cutting our intelligence losses is probably necessary, however tumultuous the sea change will be.

  3. The only surprising thing here is that a Western government has worked out that having a totalitarian state make all your infrastructure stuff perhaps isn’t the best of ideas.

    1. Actually, government wasn’t governing. Capitalism was, and outsourcing and allowing trade secrets to be stolen improves the profitability of the companies, and passes the risk/expense on to the public. In a capitalist society that is just plain good business. So unless we are willing to accept that a certain amount of Socialism mixed in with our Capitalism is a good thing, let the trade secrets continue to flow. It’s good business and creates jobs! Anything else would be, well, REGULATION! — and we all know that regulation is bad, isn’t it?

      1. Also, if the stuff being used has backdoors that can be used to spy on citizens, that isn’t really a downside for a government heading towards totalitarianism itself. Those backdoors can be discovered and used to spy on citizens in the cases where the courts don’t just let them do it at will already.

        1. Well now you bring up a different point. Can we and should we trust our own government? @Max (a few comments down) commented that maybe the US government wants to spy on us, and the Chinese won’t play ball. Who can you trust?

          The population of each country tends to believe their own country’s propaganda. Statistically, most Americans believe the 9/11 Report. Outside the US, a higher percentage believe that 9/11 was an inside job. Who’s right?

          If the World Trade was a US Embassy in Iran, and both buildings imploded the way they did, and then Building 7 also imploded 7 hours later (47 Stories high), and the Pentagon had a small hole the size of a rocket, and the plane that hit it completely disintegrated without a trace, and the Pennsylvania plane disintegrated without a trace including ALL black boxes, and the Iranians issued the 9/11 Report justifying what happened I think most Americans would laugh in their face and say “I saw the pictures with my own eyes–the buildings were blown up”.

          But since it happened here, and OUR government issued the 911 Report, then of course it must be true. If you want to imagine how the rest of the world sees 9/11, just imagine it all happened in Iran. Would you believe it?

          Each country’s population tends to believe their own liars. Humans have a hard time accepting that 99% of us all over the world are the same. We don’t want to fight, we love are children, we bleed when we get cut, and we hurt when our children die.

          It is the 1% ruling population that are different, power hungry, and will stop at nothing. All governments lie. If they are in power, they got there because they are power hungry, otherwise they wouldn’t be there in the first place.

          So in conclusion, who knows what the real reason is that our government all of a sudden has issues with ZTE network equipment? I trust no government, and I trust no corporation. –and even less, a government run and controlled by greedy corporations and the wealthy.

          Does this mean I need to find a new planet?

      2. The government had a roll for sure. Taxes, EPA…you name it. The government made it cheaper to ship to..then manufacture..then ship back..cheaper than setting up shop in the US. And think of all the oil used and “carbon impact” shipping US goods back to the US…

  4. The problem is probably the other way round. The US government cannot be sure that if they want to remotely kill smartphones or to put a block in place around a geo_fence that the Chinese would play ball.

  5. Apple will eventually have serious problems manufacturing their phones and other products in China. Thus the move to Brazil. But you have potential problems in South America also. The Commies have been at work there for decades. I don’t know what the answer is but they will have problems in the future. When you put all your eggs in one basket you can be threatened and blackmailed in some fashion. I’m not saying to build the products in the USA but that would be nice. Expensive but nice. I’m certain that Tim Cook is fully aware of this and will do what he can for future production. Those commie bastards just won’t give up will they?

  6. And yet, if China applies the same criteria in reverse to U.S. companies hoping to invest in China (ties to military contracting, corporate officials with former military service, general suspicion of hostile intent, etc.) and bans their business, who would be left? Likely not IBM, Intel, Cisco, MS, or Apple. Probably not even Yum or Macdonalds. And what American knows about the 20 listening devices found in the plane built for Jiang Zemin in the U.S,? Every Chinese does for sure. As an American I find our hypocrisy in smearing China wholesale to be sad in its blindness to the long-term enemy we are creating.

      1. Actually I live in South Korea and spend months every year in China and have a Chinese wife. The situation in China is far more complex and diverse than you may realize, and ironically I have found that most ordinary Chinese are quite pro-American. The angry, spiteful anti-Chinese rhetoric found in the US media seems both petty and wide of the mark.

        1. No it’s not. I’ve been studying Chinese cyber-espionage against the world since 2005. China’s cyber-espionage against the world, and the USA in particular, started in 1998, the year the USA granted it ‘Most Favored Nation Status’.

          It sounds like you are particularly BLIND to China’s ambitions in the world taosbob. Open your eyes, ears and mind please. There’s a lot to learn about whats REALLY going on with China, and you’re tuned out.

          1. You’ve jumped the shark. You cannot throw the Chinese people under a bus as a whole. Note Bob said ordinary Chinese, not party leaders, not government agents. Don’t confuse the two.

            It is the US, not China throwing it’s military might around the globe. Our own nefarious ambitions in the world couldn’t possibly have any effect on what they are doing?

            Point us to this “research” which uncovers the vast plot against the world..

            1. Dear Mr. BS,
              Then you would not know what you are talking about. The Chinese are continuously sending ships out disrupting the seas around Japanese islands at the current time. It got so bad a few weeks ago that the US Defense Secretary came to Japan and then to China to have a talk with them about stopping their interference within Japanese territorial waters and to remind the Chinese that attacking a close US friend would not go unchallenged. After he returned to the US the Chinese sent out close to a thousand large Fishing Vessels which are “privately” owned to continue the disruption. They also sent out Chinese Coast Guard ships to protect the private Fishing within the Japanese Territorial Waters. This is going on right now.

            2. Pay attention, anonymous coward ‘I Call BS..’

              I’ve been writing articles about the Red Hacker Alliance and subsequent Chinese cyber-espionage since 2007 HERE:

              http://Mac-Security.blogspot.com

              Go to the start of the blog to follow the history. Follow the links provided for all my source information. Then get a clue and follow the news.

              And stop pretending I’m throwing ‘the Chinese people under a bus as a whole.’ What specifically to I repeat every time I post about China? One thing:

              China: Criminal Nation.

              That’s pointing directly at the Chinese communist government. It’s time China’s criminal scam of a government was overthrown by its people and sanity restored to that nation. I will also point out that a new revolution is required here in the USA to restore actual capitalism and to destroy any future possibility of another Corporate Oligarchy over-ruling We The People, the actual citizens of the USA. You won’t catch me pretending there’s anything perfect about my own country.

              Oh and please go back and actually READ what anonymous coward ‘taosbob’ actually said. There’s your steaming pile of BS.

              [Note how anyone can pretend to be anyone around here as long as the post as anonymous cowards. A ‘gang’ of trolls and tards may well be merely one person. I’m wondering if that is the case here. It would be dirt simple for me to post as ‘taosbob’ and apologize for being ignorant. He’d love that. This allowance of anonymous coward nonsense around here kills reliable and sane conversation. Bad show MDN!]

            3. I like the way you think. You clearly know the difference between the American Government (aka Corporations) and the American people, and the Chinese Government and the Chinese people.

              The question I have is “What does country mean?” Is it the people of the Country or the Government of the Country?

              We all need to think about that question. The longer you think about it, the more angry you become!

  7. Article is hilarious ..

    So what Chinese company does not have any interactions with the Chinese Gov ?
    Even Foxconn have a gov office in their base
    So will the intelligence committee ban Apple products ?

    Election year and anything goes. After Iraq and Afghan , The US gov need another war …eh

  8. In response to the congressional assault, China may throw up roadblocks against the U.S. tech imports by raising tariffs or prohibiting…

    GOOD. The less the USA has to do with China: Criminal Nation, the better. CUT OFF trade with China and the USA will benefit. Remain dependent upon China: Criminal nation and the USA FAILS.

    It doesn’t take ridiculous racism or protectionism to come to this conclusion. It takes insight into EXACTLY what China is: A Criminal Nation. They want the world. They’ll use whatever crime is necessary to get it. Get free of China and get back to REAL business folks. Playing the Slave Wage Labor Game in China is NOT worth it.

    Oh, you want some data on the subject? Start by looking up the history of The Red Hacker Alliance and the subsequent digital espionage by China on the USA and the rest of the world. Notice China’s bad attitude toward the rest of the world. Getting the clue yet? 😕

    Q: Why does the USA still provide China: Criminal Nation with ‘Most Favored Nation Status’? Are we THAT addicted to their slave wage labor? Are we THAT LAZY that we can’t pull out of that hell hole and move on with a better future?

    Why do I rant like this? Because the USA is swiftly becoming irrelevant as China continues to climb toward the domination it desires. And I don’t think that’s a good idea. 😕

    1. Good point, but don’t worry… Americans are too busy watching Jersy Shore and following the Karashians to be bothered with China’s quest for work domination.

      Americans are also already accustomed to a press that is 100% in the government’s pocket and praise their leader daily and cover up and lie for their beloved leader, just like in China.

    2. Also the impact of China taking over he world as he most powerful nation will have minimal impact on Americans.

      The already elected a president that is devoted to the ideals of Marx and Mao, some even call him affectionately Maobama.

      1. That’s where you fell in the ignorance pit. Please actually read Marx and Mao and the history of communism so you can understand what serious leftist lunacy is all about. Obama is, if anything, just another pawn of the Corporate Oligarchy. Obama’s capitulation to the denigration of the US Constitution may not be as grave as that of the radical right nut jobs, but it remains worthy of impeachment on the grounds of treason, IMHO of course. That’s why I consistently consider We The People to be ‘Shot By Both Sides’.

        1. Agreed again. We are “shot by both sides”. Corporations rule both sides. That used to be called Fascism. Today it’s called Democrats & Republicans. — oh Yes, we do have the right to vote. We cast a vote once every 4 years for a person who might take your “suggestion”, but is not at all required to deliver any promises.

          We have two sides each competing to see who can make the best promises that most people will like, and then they take office and do whatever they want anyway.

          By Mitt Romney lying so much he is actually telling the truth. He is actually very honest about promising each audience what they want to hear, so he can get elected and do whatever he wants to do anyway.

          Oh, and just not to pick sides, wasn’t Obama going to close GitMo? Isn’t he a “constitutional scholar”, that is fighting for the right to lock “terrorists” up without a trial indefinitely?

          He also made some pretty good promises. If you think either side is going to think again.

          Drop your “vote” in the suggestion box once every 4 years, and then spend the rest of your life working for the dictatorship of your choice. That is the reality. The so called “American experiment” in democracy that we are so proud of has failed. It never existed, only in our minds.

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