US told to avoid top Chinese tech firms

9 Oct 2012, 9:42 am   -   Source: AAP

Reflecting US concern over cyberattacks traced to China, a panel has recommended that government computer systems shun components from two top firms.

American companies should avoid sourcing network equipment from China's two leading technology firms because they pose a national security threat to the United States, the House Intelligence Committee says.

The panel said in a report on Monday that US regulators should block mergers and acquisitions by Huawei Technologies and ZTE, which are among the world's leading suppliers of telecommunications gear and mobile phones.

Reflecting US concern over cyberattacks traced to China, the report also recommends that US government computer systems not include any components from the two firms because that could pose an espionage risk.

"China is known to be the major perpetrator of cyber-espionage, and Huawei and ZTE failed to alleviate serious concerns throughout this important investigation. American businesses should use other vendors," the committee's chairman, Mike Rogers, told a news conference.

He said the Chinese companies could not be trusted with access to computer networks that support everything from power grids to finance systems.

The recommendations are the result of a year-long probe, including a congressional hearing last month in which senior Chinese executives of both companies denied posing a security threat and being under Beijing's influence.

Rogers said they are clearly tied to the Chinese government, and that allowing Huawei and ZTE to provide network equipment and services in America risks confidential consumer information and undermines core national security interests.

He said the committee was not concerned about the sales of handsets that make up the bulk of their US businesses but rather network infrastructure where they have made fewer inroads.

William Plummer, vice-president for external affairs for Huawei, said his company, a private entity founded by a former Chinese military engineer, was being victimised because of US government concerns about China's government.

"Huawei is Huawei, Huawei is not China," he told reporters. "My company should not be held hostage to someone's political agenda."

In April Australia barred Huawei from bidding to work on the national broadband network (NBN) due to concerns about cyberattacks traced to China.

Rogers said the release of the bipartisan US report had nothing to do with politics, and was motivated by the need to alert US companies of the risks.

The committee's top Democrat, Dutch Ruppersberger, cited an estimate from the US Cyber Command that more than $US300 billion ($A296 billion) in US trade secrets was stolen last year.

Rogers said information of alleged bribery by Huawei to gain a contract in the US would be forwarded on Tuesday to the FBI, and he was confident it would lead to an investigation.

The committee also planned to forward information on allegations of "beaconing" from Huawei equipment to China - that is the unauthorised transfer of information from a computer network.

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