U.S. panel may block Huawei-3Leaf deal, report says

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STEVE CHIOTAKIS: Today a U.S. government panel's expected to recommend President Obama step in to stop the Chinese telecom company Huawei from taking over an American tech company. Pentagon officials and some in Congress say it could pose a national-security threat.

Marketplace China Bureau Chief Rob Schmitz explains why.


ROB SCHMITZ: Huawei is run by a former officer of the Chinese military. The fear is that if his company gains a foothold in the U.S. tech market, it'll allow the Chinese government to eavesdrop on classified emails, phone conversations, you name it. David Wolf is a tech consultant in Beijing.

DAVID WOLF: To most U.S. lawmakers, what Huawei and companies like it look like is simply an extension of the long arm of the Chinese government, and that makes them uncomfortable.

A Huawei spokesman denies the company has ties to the Chinese government, but a 2008 pentagon report claims Huawei retains close ties to the Chinese People's Liberation Army. The U.S. isn't the only country that has problems with Huawei. Last week, an EU commission investigation found Huawei uses an enormous line of credit from China's state-run banks to put itself at an unfair advantage over European companies. As a result, Huawei controls almost the entire wireless modem market in the EU and it's become the second largest telecom equipment maker in the world.

In Shanghai, I'm Rob Schmitz, for Marketplace.

About the author

Rob Schmitz is Marketplace’s China correspondent in Shanghai.

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