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Congressional committee suspicious of Chinese companies' intentions

A receptionist sits behind the counter at the Huawei office in Wuhan, central China's Hubei province. Beijing on October 8 urged Washington to 'set aside prejudices' after a draft Congressional report said Chinese telecom firms Huawei and ZTE were security threats that should be banned from business in the U.S.

The allegations strengthen suspicions in the U.S. that Huawei is an agent of the Chinese military and would use U.S. market access for espionage and network attacks on behalf of the Chinese government.

“I would say that Huawei, given that 70 percent of its business is outside the PRC, would sooner give up its business in China and give up its domicile in China, than cave into a request like this from the government,” says David Wolf, president of the Beijing-based Wolf Group Asia, a tech consultancy firm. Wolf has received funding from a Huawei-backed grant for a past book project.

Huawei is the world’s second-largest network equipment seller, operating in nearly 150 markets worldwide. Bill Bishop, a digital media entrepreneur in Beijing, says the U.S. government’s case against Huawei is questionable.

“Our government claims it’s doing it for national security reasons,” says Bishop, “but we can probably be confident that the U.S. government is maybe the best at exploiting telecommunications networks, so if anyone’s going to know how to do this it’s the U.S. government.”

In other words, says Bishop, we can do it, so why wouldn’t they? “The U.S. government is saying ‘trust us.’ Part of it from Huawei’s perspective is they’re saying ‘trust us.’ So who are you going to trust more?”

Whatever the outcome, says Bishop, this may hurt the prospects of U.S. companies like Cisco in China, which already make network equipment and chips there.

Then again, maybe not. Cisco’s been sued for helping China’s government censor the Internet. The company denies the claims.

Rob Schmitz: The allegations strengthen suspicions in the U.S. that Huawei is an agent of the Chinese military and would use US market access for espionage and network attacks.

David Wolf is president of the Beijing-based Wolf Group Asia, a tech consultancy firm. He’s received funding from a Huawei-backed grant for a past book project. He says if Huawei were allowed to do business in the U.S., it would not operate on behalf of China’s government.

David Wolf: I would say that Huawei, given that 70 percent of its business is outside the PRC, would sooner give up its business in China and give up its domicile in China, than it would to cave into a request like this from the government.

Huawei is the world’s second-largest network equipment seller, operating in nearly 150 markets worldwide. Bill Bishop, a digital media entrepreneur in Beijing, says the U.S. government’s case against Huawei is questionable.  

Bill Bishop: Our government claims it’s doing it for national security reasons, but we can probably be confident that the U.S. government is maybe the best at exploiting telecommunications networks, so if anyone’s going to know how to do this it’s the U.S. government.

In other words, says Bishop, we can do it, so why wouldn’t they?  

Bill Bishop: Part of it is, from the U.S. government is saying trust us. Part of it from Huawei’s perspective is trust us. So who are you going to trust more?

Whatever the outcome, says Bishop, this may hurt the prospects of U.S. companies like Cisco in China, which already make network equipment and chips there. Then again, maybe not. Cisco’s been sued for helping China’s government censor the Internet. The company denies the claims.

In Shanghai, I’m Rob Schmitz for Marketplace.          

About the author

Rob Schmitz is Marketplace’s China correspondent in Shanghai.
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