Huawei and ZTE pose security threat, warns US panel

The House Permanent Select Committee on Intelligence initiated the investigation in November 2011 to analyse the risks posed to US National Security by Chinese telecom firms, Huawei and ZTE as they expand into the US market. 

The comittee hoped to review to what extent the companies are influenced by the state, or provide Chinese intelligence services access to telecommunication networks. The opportunity exists for further economic and foreign espionage by a foreign nation-state already known to be a major perpetrator of cyber espionage.

The comittee was less than impressed with the cooperation of the two companies during the investigation. 

"Despite hours of interviews, extensive and repeated document requests, a review of open-source information, and an open hearing with witnesses from both companies, the Committee remains unsatisfied with the level of cooperation and candor provided by each company."

Stoping short of calling for a boycott of the firms' mobile phone products, the report was highly critical of the two companies.

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

"Based on available classified and unclassified information, Huawei and ZTE cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems."

The panel said their investigation had received credible allegations from current and former Huawei employees of bribery and corruption, discriminatory behaviour and copyright infringement.

This latest report comes in the midst of a US presidential campaign in which China has become a hot topic.

Both President Barack Obama and his Republican challenger Mitt Romney have pledged to increase the pressure on China regarding issues ranging from the nation-state's currency policy to state subsidies for Chinese firms.