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Crime

House Report: China Tech Giants Pose National Security Threat

Oct. 7, 2012 8:42pm

(TheBlaze/AP) — American companies should avoid doing business with China’s two leading technology firms because they pose a national security threat to the United States, the House Intelligence Committee is warning in a report to be issued Monday.

The panel says U.S. regulators should block mergers and acquisitions by Huawei Technologies Ltd. and ZTE Corp, among the world’s leading suppliers of telecommunications gear and mobile phones.  Reflecting U.S. concern over cyber-attacks traced to China, the report also recommends that U.S. government computer systems not include any components from the two firms because that could pose an espionage risk.

“China has the means, opportunity, and motive to use telecommunications companies for malicious purposes,” the report says.

The recommendations are the result of a yearlong probe, including a congressional hearing last month in which senior Chinese executives of both companies testified, and denied posing a security threat.

House Intelligence Committee: China Tech Firms Huawei Technologies & ZTE Corp Pose National Security Risk

executives of two major Chinese technology companies, Charles Ding, Huawei Technologies Ltd senior vice president for the U.S. , left, and Zhu Jinyun, ZTE Corporation senior vice president for North America and Europe, are sworn in on Capitol Hill in Washington. (Photo: AP)

The bipartisan report is likely to become fodder for a presidential campaign in which the candidates have been competing in their readiness to clamp down on Chinese trade violations. Republican Mitt Romney, in particular, has made it a key point to get tougher on China by designating it a currency manipulator and fighting abuses such as intellectual property theft.

The panel’s recommendations will likely hamper Huawei and ZTE’s ambitions to expand their business in America, but their products are still being used in scores of countries.

A private company founded by a former Chinese military engineer, Huawei has grown rapidly to become the world’s second largest supplier of telecommunications network gear, operating in more than 140 countries. ZTE Corp is the world’s fourth largest mobile phone manufacturer, with 90,000 employees worldwide.

The congressional report states that malicious hardware or software implants in Chinese-manufactured telecommunications components and systems headed for U.S. customers could allow Beijing to shut down or degrade critical national security systems in a time of crisis or war.

House Intelligence Committee: China Tech Firms Huawei Technologies & ZTE Corp Pose National Security Risk

In this June 10, 2011 file photo, mobile phones and tablets are displayed in the exhibition room of the Huawei Technologies Co. headquarters in Shenzhen, southern China. (Photo: AP)

The committee reportedly received information from industry experts and current and former Huawei employees suggesting that Huawei, in particular, may be violating U.S. laws.  The report mentions allegations of immigration violations, bribery and corruption, and of a “pattern and practice” of Huawei using pirated software in its U.S. facilities.

“The committee finds that the companies failed to provide evidence that would satisfy any fair and full investigation. Although this alone does not prove wrongdoing, it factors into the committee’s conclusions,” the report reads.

But Plummer complained that the volume of information sought by the committee was unreasonable, and it had demanded some proprietary business information that “no responsible company” would provide.

House Intelligence Committee: China Tech Firms Huawei Technologies & ZTE Corp Pose National Security Risk

A promoter displays a Huawei Ascend P1 smartphone at the CommunicAsia telecom expo on June 19, 2012. (Photo: AFP/Getty Images)

In Washington, Huawei executive Plummer said Friday the company cooperated in good faith with the investigation, which he said had not been objective and amounted to a “political distraction” from cyber-security problems facing the entire industry.

All major telecommunications firms, including those in the West, develop and manufacture equipment in China and overlapping supply chains require industry-wide solutions, he added. Singling out China-based firms wouldn’t help.

In justifying its scrutiny of the Chinese companies, the committee contended that Chinese intelligence services, as well as private companies and other entities, often recruit those with direct access to corporate networks to steal trade secrets and other sensitive proprietary data.

“The investigation concludes that the risks associated with Huawei’s and ZTE’s provision of equipment to U.S. critical infrastructure could undermine core U.S. national-security interests,” the report summarizes.

House Intelligence Committee: China Tech Firms Huawei Technologies & ZTE Corp Pose National Security Risk

Charles Ding, Huawei Technologies Ltd's senior vice president for the U.S. , testifies on Capitol Hill in Washington, before the House Intelligence Committee as lawmakers probe whether Chinese tech giants' expansion in the U.S. market pose a threat to national security. (Photo: AP)

The committee determined that Huawei, specifically, has likely benefited substantially from the support of the Chinese government.

However, ZTE has also enjoyed growth in its sale of mobile devices– though in recent months it has faced allegations about banned sales of U.S.-sanctioned computer equipment to Iran. The FBI is probing reports that the company obstructed a U.S. Commerce Department investigation into the sales.

The intelligence panel says ZTE refused to provide any documents on its activities in Iran, but did provide a list of 19 individuals who currently serve on the Chinese Communist Party committee within the company. ZTE’s citing of China’s state secrecy laws for limiting the information it is allowed to release only added to concern over Chinese government influence over its operations, the report adds.

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Comments (57)

  • TheFederalist
    Posted on October 8, 2012 at 7:42am

    “China has the means, opportunity, and motive to use telecommunications companies for malicious purposes,”
    American companies should avoid doing business with China’s two leading technology firms because they pose a national security threat to the United States, the House Intelligence Committee is warning.

    Here is a novel idea; how about avoiding all telecommunications business with China. Start manufacturing and innovating in the U.S.!

    Report this comment

    TheFederalist  
    • The_Jerk
      Posted on October 8, 2012 at 7:51am

      No one remember Clinton and the Rosenberg-type, Bernard Schwartz’s, Loral? And, yes, like the Rosenberg’s, he wasn’t Muslim.

      Report this comment

      The_Jerk  
    • Joel Knows
      Posted on October 8, 2012 at 9:31am

      It would be hard to start manufacturing almost anything here in the US again. Tax laws, regulations, and other costs including labor won’t make it a competitive or profitable venture for anyone to try a start-up company. Besides, who do we have trained to do the work? Most of the labor force with any knowledge, expertise, and experience can be found in plots of land 6’x6’x3’. We have been teaching our youth how to push papers and fill out forms electronically, not work with their hands from ideas in their heads.
      Besides, most of the mentality of the American worker is to obtain a paycheck by producing as little as possible in the greatest amount of time they can get away with. Thank you propaganda centers better known as the public education system, administered by our very own Federal Department of Health, Education, and WELFARE.

      Report this comment

      Joel Knows  
  • Detroit paperboy
    Posted on October 8, 2012 at 5:49am

    The single biggest threat to our national security is Barack hussein Odumbass ……….PERIOD.

    Report this comment

    Detroit paperboy  
    • The_Jerk
      Posted on October 8, 2012 at 8:37am

      The marriage between Wall Street and the Federal Reserve trumps anything that Obama can do.

      Report this comment

      The_Jerk  
    • acidovorax
      Posted on October 8, 2012 at 6:36pm

      JERK wrote: “The marriage between Wall Street and the Federal Reserve trumps anything that Obama can do.”

      What “marriage”? The Fed is a government entity (regardless of it’s ‘private’ status). Wall Street attempts to rent seek from government as often as possible, but in the end the government holds the cards.

      Report this comment

      acidovorax  
  • Metalstr8jckt
    Posted on October 8, 2012 at 1:56am

    In my best Chinese voice: “You Americans vote for obama#1 He keep America cleen and tidee…Lots of Oil and twees…and good stuff for Chinese people. You keep nice cleen countree sow we come over and live in your house when we bury you okays?” Keep buying I-phones sexting, and watch porno’s while We build big Army kick you in face, shoot and infect you with virus, You tired, take long dirt nap.” We run world now. Peoples army say so. [ Sarcastic, but oh- so factual. ] China must expand or die. Lessons learned from Roman empire’s failure.

    Report this comment

    Metalstr8jckt  
  • psadie
    Posted on October 8, 2012 at 12:29am

    I REALLY hope that the military is watching the skies. China is in desperate times because of riots and discontent within the population.

    Report this comment

    psadie  
  • semihardrock
    Posted on October 8, 2012 at 12:14am

    So does Obama….. under “Homeland Security”……

    Report this comment

    semihardrock  
  • TerryJ70
    Posted on October 7, 2012 at 11:50pm

    Could this be something other than what it states it is. It makes sense that with the administration’s war on the rich, that this could be a way to bring Apple down to size. Just a thought.

    Report this comment

    TerryJ70  
    • SCREW-WINDOWS
      Posted on October 8, 2012 at 3:02am

      This is old news they were warned about ZTE over four years ago in the Bush Administration not to purchase Telecom devices from ZTE or used their chips and it’s now just getting attention.

      Report this comment

      SCREW-WINDOWS  
  • TheycallmeJoker
    Posted on October 7, 2012 at 11:29pm

    This is what happens when all of our latest tech gets manufactured in a country that’s not well intentioned! That’s putting it lightly they are copying all our tech I would bet.

    Report this comment

    TheycallmeJoker  
    • Metalstr8jckt
      Posted on October 8, 2012 at 2:47am

      AMD and Intel maintain some control over CPU manufacturing. The problem is …That the Motherboard chip-set is usually farmed out to third party silicon chip countries in most of the Asian-pacific rim. Therein lies the problem. The “BIOS” or basic set of instructions and the security of the device, can be maliciously coded by those with nefarious intent. This creates a proprietary gateway known only to the code writer and possibly the technician(s) creating the imprint from which all the other chips on that production run are then copied. No matter how secure the CPU is, the BIOS could already be compromised yet, “sleeping” in millions of consumer or military devices. They just need the “secretive” string of code activated to allow remote access. Nice feeling when there are perhaps hundreds of devices you personally come within “close contact” everyday huh? Feeling safe?

      Report this comment

      Metalstr8jckt  
    • SCREW-WINDOWS
      Posted on October 8, 2012 at 11:04am

      This was news last month.
      http://bits.blogs.nytimes.com/2012/09/13/microsoft-finds-pcs-that-ship-pre-infected/

      Report this comment

      SCREW-WINDOWS  
  • Ballot_Box_Revolution
    Posted on October 7, 2012 at 11:28pm

    SO?!?!?! I will not give up my internet…

    Report this comment

    Ballot_Box_Revolution  
  • BannedByHuffpo
    Posted on October 7, 2012 at 11:02pm

    The filthy SOB traitor CEOs of the companies “outsourcing” and divulging sensitive technologies to our enemies need to be outed and “dealt with”. These disgusting smug pigs making a profit off of selling the United States security down the toilet are worse than islamic terrorists and need to be exposed.

    Report this comment

    BannedByHuffpo  
    • Verceofreason
      Posted on October 8, 2012 at 2:48am

      Especially Romney’s BAIN,
      Did you know that?

      Report this comment

      Verceofreason  
    • Metalstr8jckt
      Posted on October 8, 2012 at 3:02am

      234 or so years ago, The founders would have sought out [ domestic-patriotic ] American “drummers” for lengths of strong imported hemp rope [ Not for smoking either ] and some sturdy American timber like handy trees in the town square, or those on Pennsylvania avenue. Treason was not ignored but considered a threat to the Republic, and was swiftly dealt with.

      Report this comment

      Metalstr8jckt  
    • acidovorax
      Posted on October 8, 2012 at 6:44pm

      “The filthy SOB traitor CEOs of the companies “outsourcing” and divulging sensitive technologies to our enemies need to be outed and “dealt with”. These disgusting smug pigs making a profit off of selling the United States security down the toilet are worse than islamic terrorists and need to be exposed”

      Spoken like a true conservative protectionist who schizophrenically hates capitalism while praising capitalism. This “national security risks” nonsense pops up every other year and is a way to make the ignorant masses leary over “furrenurs” and accepting of rent seeking from “American” companies or “trade restrictions”. And its hilarious to hear about concerns of “cyber attacks” from China, when the evidence points to the US and Israel developing Stuxnet and Flame.

      Report this comment

      acidovorax  
  • Seabass82
    Posted on October 7, 2012 at 10:51pm

    I got an idea. How about we remove some regulations and allow us to innovate and create. Perhaps WE could manufacture these things here!

    Report this comment

    Seabass82  
  • chicago76
    Posted on October 7, 2012 at 10:32pm

    No s***. They actually think the Chinese army run companies actually might be a security threat. Our country is so Oblivious about China it is laughable. They steal all our tech from the companies we let do business with them and give nothing in return. They are buying up our power plants and the government says to them. “Well we gave you all that money for crap. Duh,I guess we have to let you buy something important with it.” Idiots, morons and just plain criminal traitors run our foreign policies. They have been running it for the last 20 years. Clinton started it and Bush did not have the brains or will power to stop it. It is amazing how presidents rubber stamp the idiocy of other presidential executive orders before them.

    Report this comment

    chicago76  
    • Seabass82
      Posted on October 7, 2012 at 10:46pm

      I echo your first two words!

      Report this comment

      Seabass82  
    • woodyee
      Posted on October 7, 2012 at 11:05pm

      The first inkling I ever got to our gobblements self-destructive tendencies was when Clinton allowed Loral Corp. to help the Reds stabilize their satellites in orbit – remember that? How much did Loral give to the Clinton campaign? $600k

      Remember the Hainan Island incident? ( https://en.wikipedia.org/wiki/Hainan_Island_incident )
      Clinton didn’t give the Navy permission to activate self-destruct. So they spent 20-some-odd minutes trying to conventionally destroy sensitive materials before bailing out, the pilot remaining in the ship and landing it intact, giving the Chinese almost a month to tear it apart.

      Report this comment

      woodyee  
    • PaxInVeritate
      Posted on October 8, 2012 at 12:30am

      Right on all counts.

      Report this comment

      PaxInVeritate  
  • Sgt_Rock
    Posted on October 7, 2012 at 10:29pm

    We gave these mutts a good deal of the technology they have. Anything we send for manufacture in china gets reverse engineered. Then we have our “good friends” like the Pakis giving them access to our tech. Remember the MH60 that went down on the Bin Laden raid. The Pakis let the chinese look at the remnants that were left in the compound. Does anyone really believe the ChiComs came up with the stealth technologies for their J20 fighter all by themselves? Their manufacturing “innovations” are all stolen, reverse engineered products. Many of their auto factories are now building copies of other manufacturers cars, without license and simply renaming them. Funny how GE aircraft engines built in China are giving Boeing fits on the new airplanes they build. Worse however is the progress the PRC is making in jet engine technology and we’re supplying the technology to upgrade their capabilities. Wake up America…these mutts are not our friends.

    http://www.dodbuzz.com/2011/09/28/chinas-ability-to-make-quality-jet-engines/

    Report this comment

    Sgt_Rock  
  • justangry
    Posted on October 7, 2012 at 10:08pm

    Convenient timing… CISPA, and the threats of an Obama EO… Then all of a sudden the evil Chinese pose a national security threat. Hey federal government… Unplug your sensitive **** from the internet, you morons.

    Report this comment

    justangry  
  • Anonymous T. Irrelevant
    Posted on October 7, 2012 at 9:57pm

    They are only just REALIZING THAT? Hell, I cold have told them that 10-15 years ago. China could put an “off switch” in any of it’s chips, turn them off at the right time and catch us with our pants down. We need o quit relying on technology so much. I mean ,it’s nice to use, but we need something to fall back on. One EMP and it’s gone.

    Report this comment

    Anonymous T. Irrelevant  
  • woodyee
    Posted on October 7, 2012 at 9:57pm

    Well if the US gobblement is really concerned about national security, why not make it easier for US companies to do business IN the US? Oil, gas, electricity and water are all VITAL US national security concerns, too, but the gobblement is currently keeping a promise made by Gaybama to squelch oil and coal and nuclear, and has done nothing to provide incentives to states to build more reservoirs. They DEMONIZE corporations that are better kept within our borders, not out of interest of our people, but out of interest in staying in power!

    There are too few, if ANY redundant systems in place to keep any vital interest running in the event of a cyber-attack or natural disaster! The same gobblement tells you to prepare to be on your own for 3 days to a week just in case…that’s a laugh. Try 30 days to a couple of months AT LEAST, is more like it.

    If the gobblement is really interested in protecting US interests, then they should safeguard communications by making it illegal for foreigners to own a majority stake in any US media companies. Just as important, is for gobblement to cease and desist the un-American practice of providing incentives for illegal aliens to come and raid our coffers!!!!

    Report this comment

    woodyee  
    • chicago76
      Posted on October 7, 2012 at 10:37pm

      The government is letting the Chinese buy up all that stuff. We don’t need it. What we need are cheap crap that breaks before you use it from China. The government knows that without cheap Chinese commodities the inflation rate would skyrocket and people would realize just how screwed we all are. Things here could get real ugly real fast.

      Report this comment

      chicago76  
  • repairsea
    Posted on October 7, 2012 at 9:52pm

    The Obama Administration is our biggest threat to US security. How do all those Navy SEALS conveniently end up on the same antiquated helicopter where they are killed? Why was the security team and Marines removed from Lybia’s US embassy before the killing of our ambassador? Why is Holder not fired?

    Report this comment

    repairsea  
  • The-Monk
    Posted on October 7, 2012 at 9:37pm

    What this story failed to mention is that if you have a 4G Smartphone you are using Huawei Technologies equipment from China.

    The US does not have any manufactures of 4G technology telecommunications equipment.

    Only Chine does. Cisco doesn’t even build this 4G telecommunications equipment. : (

    Glad I’ve got a dumb-phone…..

    Report this comment

    The-Monk  
  • CulperGang
    Posted on October 7, 2012 at 9:32pm

    The only way this treason makes sense is if everyone understands that corporations and most US poltiicians are globalist and have no problem with the chinese “hacking” or taking technology as long as THEY are making money……….oh and they are, because at the end of the day if the globalist get their way there will be no China or America. ARREST THE CLINTONS. THEY were the first to give US technology to China.
    The whole Hill/WH/Pentago/Supreme Court needs to be in cuffs. THEY DESTROYED AMERICA DELIBERATELY with the end result people suffering NEEDLESSLY.
    We are suffering and the congress is still sending our money all over the world as ‘foreign aid.” BASTARDS.

    Report this comment

    CulperGang  
    • Exrepublisheep
      Posted on October 7, 2012 at 9:39pm

      You’d think it was a no-brainer. I guess it’s not.

      Report this comment

      Exrepublisheep  
    • chicago76
      Posted on October 7, 2012 at 10:45pm

      Those Chinese companies have our politicians over a barrel. Without their cheap goods inflation would skyrocket. Prices would double or more likely triple overnight. All those industries dependent on cheap foreign slave made products would start falling. No one could afford a TV or a computer or clothing for that matter. There probably would be protests and rioting in the streets. People would begin to realize just how our government and the global corps have screwed our country and our people. Without Cheap slave made goods we would have hyper-inflation.

      Report this comment

      chicago76  
  • The-Monk
    Posted on October 7, 2012 at 9:22pm

    60 Minutes did a story on Huawei Technologies tonight.

    Report this comment

    The-Monk  
    • repairsea
      Posted on October 7, 2012 at 10:27pm

      The whole show has turned into irrelevant fluff pieces. I want to hear about Holder and the Libya scandal. How about the Afghan war or a follow up on Obama’s donors getting monetary rewards with our tax dollars?

      Report this comment

      repairsea  
    • Sgt_Rock
      Posted on October 7, 2012 at 11:03pm

      I just watched the report and the entire time my wife and I were saying…DUH!!! I was especially pi**ed off at the “vie president of communications” i.e. the white guy, front man in the U.S. After listening to him I felt like someone had just tried to throw poo at me. The guy must have been a used car sales man before he went to work for the Chinese. I laughed the hardest when he insisted that the company had no ties to the chinese gov’t. As my daughter used to say…”yeah, whatever!”

      Report this comment

      Sgt_Rock  
  • LoveBringsTruth
    Posted on October 7, 2012 at 9:21pm

    This interview with the VP (or whatever his title was) came across as a real deceptive dirt bag.

    Report this comment

    LoveBringsTruth  
    • CulperGang
      Posted on October 7, 2012 at 9:34pm

      keep the traitors name in mind when we the peeps decide to wipe the floor of the hill with some of these traitors.

      Report this comment

      CulperGang  
  • Ivehadenoughtofthisgovenmentcrap
    Posted on October 7, 2012 at 9:20pm

    We owe so much to everyone now……I don’t see a way back.

    Report this comment

    Ivehadenoughtofthisgovenmentcrap  
  • Thighmaster
    Posted on October 7, 2012 at 9:07pm

    If they can just wait until after the election, Obama can be more flexible ….

    Report this comment

    Thighmaster  
    • muffythetuffy
      Posted on October 7, 2012 at 9:19pm

      AS IF THE HARD WORKING AMERICAN PEOPLE OUT OF WORK DIDN’T KNOW THIS

      The Rogue Federal Government and non-functional brain dead Congress deliberately did this to our nation. Soon Chinese nuclear powered aircraft carriers will be sailing up and down the West Coast and Russian aircraft carriers will be joining Iranian naval forces patrolling off of the East Coast. This is what the High Treason Democrat Party has done to us. America will never be able to re-arm China will not lend us the money.

      Report this comment

      muffythetuffy  
  • U.N.hater
    Posted on October 7, 2012 at 8:57pm

    Why is a free nation doing any buisness what so ever with a communist nation?

    Report this comment

    U.N.hater  
  • LeadNotFollow
    Posted on October 7, 2012 at 8:56pm

    …
    America borrowed Trillions of dollars from China.
    We signed trade agreements with China.
    We share our technology with China.
    We sent many of our jobs to China.
    Now China is a major security threat.
    In my opinion, the liberal Demoncrats created the whole mess.

    Report this comment

    LeadNotFollow  
  • progressiveslayer
    Posted on October 7, 2012 at 8:52pm

    I’m all in favor of free trade but the Chinese government runs that company and only a naive Obama voter would believe otherwise.That industry is too sensitive to let the Chinese government build our systems,it’s foolish to allow it.

    Report this comment

    progressiveslayer  

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