Chinese Telecoms Kit Makers, Huawei, ZTE, Should Be Shut Out of U.S., Says Draft Congress Report

A U.S. House of Representatives Intelligence Committee report recommends that top Chinese telecoms equipment makers Huawei and ZTE are shut out of the U.S. market because of the risk of espionage, Reuters is reporting. This follows an 11-month investigation of the two firms. The draft report is due to be released later today.

Huawei is the second largest global maker of telecoms equipment, while ZTE is fifth-largest. Both companies also make mobile phones and smartphones. The pair are keen to expand their presence in Western markets, and Huawei reportedly quadrupled its spend on Washington lobbyists this year. According to a Washington Post report from August, Huawei spent $820,000 on lobbying in the first six months of 2012 — up from $200,000 for the same period in 2011.

But despite lavishing all this cash in a bid to influence political opinion in Washington, the suspicion that Chinese telecoms companies are not pure-play profit seekers but are in fact high tech eyes and ears for the Chinese government is proving hard for them to unseat.

The Intelligence Committee’s draft report notes that while Huawei and ZTE may not be the only companies that present a risk to U.S. infrastructure, they are the two largest Chinese-founded, Chinese-owned companies seeking to market critical network equipment to the U.S., and noting that the Chinese government has the “means, opportunity and motive” to use them for its own ends.