Chinese telecom giants call espionage claims 'unsubstantiated'

Charles Ding, corporate senior vice president of Huawei, and Zhu Jinyun, senior vice president of ZTE's North America and Europe operations, testified on their own behalf before the committee in their opening statements. They later relied on the help of interpreters when responding to questions from lawmakers.

"It would be immensely foolish for Huawei to risk involvement in national security or economic espionage," Ding said in his opening statement. "Let me be clear, Huawei has not and will not jeopardize our global commercial success nor the integrity of our customers' network for any third party, government or otherwise, ever."

Ding said that while Huawei complies with the Chinese government's laws and rules, it "has no influence" over the company's "daily operations, investment decisions, profit distributions or staffing." He said that is same case with the People's Liberation Army (PLA).

He added that neither the PLA nor the Chinese government have ownership interest in Huawei.

Huawei's business in the United States has been stymied and "damaged by unsubstantiated, nonspecific concerns suggesting" that it poses a security threat, Ding said.  He declared that Huawei has never harmed any country or any of its customers.

Zhu voiced similar arguments. Throughout his testimony, Zhu repeated that ZTE is the "most transparent" publicly owned company in China and operates independently from the Chinese government. 

He said the Chinese government has never asked ZTE to conduct espionage efforts and the company never expects authorities to make such a request.

Zhu later criticized Congress for considering legislative proposals that would block Chinese companies' access to the U.S. market.

Intelligence Committee Chairman Mike Rogers (R-Mich.) said that sources overseas have told the committee that there's reason to question the safety of the two companies' equipment. These warnings are especially concerning given that Chinese actors "are also the world's most active and persistent perpetrators of economic espionage," he said.

Rogers said Huawei and ZTE have not provided the committee with documentation about its relationships or interactions with Chinese authorities, telling the committee that turning over these internal documents would run afoul of Chinese state secret laws.

"It is strange the internal corporate documents of purportedly private sector firms are considered classified secrets in China," Rogers said. "This fact alone gives us a reason to question their independence." 

The committee is preparing to release classified and unclassified reports in the beginning of October that will summarize the findings of its investigation.

Rep. Dutch Ruppersberger (D-Md.), the ranking member of the committee, said the probe isn't "political jousting or trade protectionism."

"We're doing this for very valid reasons," he said.  

Zhu later said the claims made about ZTE's telecom equipment containing back doors for espionage are manufactured and "not fact-based."

"What they have been calling back doors are actually software bugs and those are the types of bugs you find in all high tech companies," he said, naming Microsoft, Google and Apple as examples of American tech giants that suffer from bugs in software code. "I want to emphasize that a bug is not a back door." 

Rep. Adam Schiff (D-Calif.) asked Ding and Zhu about a section of Chinese law that he said allows the Chinese government to inspect technology instruments, appliances and other equipment produced by private sector companies. Schiff asked if Huawei and ZTE would let Chinese authorities inspect their equipment if they requested to do so.

Both executives said they weren't familiar with the law and therefore could not comment on Schiff's question.

Zhu said that ZTE respects the laws in all of the countries in which the company operates. If the Chinese government made a request to inspect the company's equipment, Zhu said ZTE would have to check to see "what U.S. laws stipulate" first.

Schiff wasn't satisfied with the answer, saying the companies were "too well informed" and well represented by the Chinese government to be unfamiliar with a law that directly applies to the industry it operates in.

—This story was updated at 12:29 a.m.