Security fears spark crackdown on Chinese tech

Security fears spark crackdown on Chinese tech
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The federal government is taking steps to reduce the presence of some Chinese technology firms in American markets.

Earlier this month, AT&T scrapped a deal with Chinese phone maker Huawei, reportedly as a result of pressure from anonymous U.S. lawmakers who cited national security concerns. Reuters reported this week that lawmakers are now pressing AT&T to sever all of its commercial ties with Huawei.

And the White House blocked two acquisitions of American companies by Chinese firms in recent months, also citing “national security concerns.”

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Lawmakers reportedly are pushing to keep Chinese telecommunications firm China Mobile out of the U.S. for similar reasons.

The efforts come on the heels of a federal ban on anti-virus software produced by Russia's Kaspersky Lab, and underscore heightened concerns in Washington about privacy and spying threats.

On Friday, Rep. Mike ConawayKenneth (Mike) Michael ConawayRussia probe accelerates political prospects for House Intel Dems Congress prepares to punt biggest political battles until after midterms Gowdy: House Intel panel should release all transcripts from Russia probe MORE (R-Texas) told The Hill he would discourage American companies such as AT&T from making deals with Chinese tech firms like Huawei.

“We don’t want undisclosed back doors into our systems,” Conaway explained.

“The relationship those companies have with different Chinese intelligence agencies themselves and their government — it’s opaque. We don’t know what is or isn’t there," he continued.

"Out of an abundance of caution, we don’t want to make ourselves vulnerable to backdoor entrances to our systems.”

Earlier this month, Conaway introduced legislation that would bar the federal government from contracting with firms that use equipment produced by Huawei or its smaller Chinese competitor, ZTE. As of Friday, the bill had attracted 11 co-sponsors, including one Democrat.

National security experts worry that, despite the companies being private entities, data stored on devices produced by Chinese providers could potentially end up in the hands of the Chinese government.

“Based on what we do know about China’s systematic use of electronic communications technologies to steal intellectual property, among other things, and based on how modern intelligence services tend to operate, there is good reason to surmise that there is no perfectly clean divide between the state and companies like those mentioned above in places like China,” said Michael O’Hanlon, a senior fellow in foreign policy at the Brookings Institution.

The concerns about the firms are not new. A 2012 House Intelligence Committee report identified both companies as a national security threat, encouraging private companies to consider the “long-term security risks” of doing business with either Huawei or ZTE.

Tai Ming Cheung, director of the Institute on Global Conflict and Cooperation at the University of California, San Diego, who researches East Asian national security affairs, says officials’ renewed interest in corporate threats is a result of China's rising economic profile.

“The increased scrutiny of China is from an integration of national security and economic security,” Cheung said. “To the U.S. before, China was a military threat. Now its threat has broadened to the economic side of things as well.”

Still, efforts to restrict Chinese access to the U.S. market broadly could create trouble for the tech sector, which is increasingly doing business in that country.

“While the suspicion is valid, I very much disagree with the government getting involved,” said Jon Lindsay, a professor at the University of Toronto who specializes in cybersecurity and Chinese relations.

“What I’m most concerned about is the backlash that comes from this, because China has a long history of trying to ban foreign competitors and champion their own companies. This just gives China a reason to retaliate,” he continued.

Lindsay said he believes retaliation could come by China banning U.S. companies and also claiming it is trying to prevent espionage. Such a move would cost U.S. businesses access to coveted Chinese markets worth billions of dollars.

Keeping Huawei out could have impacts on domestic business as well.

Huawei, the largest telecommunications equipment maker in the world, has business relationships with 45 of the 50 top telecom operators. The firm has been actively courting smaller providers in the United States and claimed to be working with more than 50 U.S. carriers back in 2015.

Until recently, the company was poised to sell its new Mate 10 smartphone to customers in the United States via a deal with AT&T. That deal, though, collapsed in early January.

The firms have vehemently pushed back on the suggestion that they pose a security threat.

“ZTE is committed to adhering to all applicable laws and regulations in the countries where it operates,” a ZTE spokesman told The Hill in a statement. “ZTE takes cybersecurity and privacy seriously and remains a trusted partner to our US customers.”

The spokesman added that the company has “no plans” to sell products to the U.S. government.

Representatives for Huawei did not return a request for comment.

The government's efforts run parallel to the most recent actions with respect to Kaspersky Lab, a global cybersecurity firm with headquarters in Moscow that has been subject to scrutiny because its founder was educated at a KGB-backed school.

Kaspersky has long maintained that it has no ties to the Russian government.

In September, the Department of Homeland Security directed federal agencies and departments to begin removing Kaspersky software from their systems, citing the risk that the Russian government could use the company’s products to infiltrate federal systems “whether acting on its own or in collaboration with Kaspersky.”

The decision was welcomed by lawmakers but rankled members of the cybersecurity community, who argued it could set a dangerous precedent for governments to crack down on foreign-made products.

Since then, reports have emerged that Russian hackers exploited Kaspersky software to steal classified U.S national security files.

“The question is, if you allow Huawei into the American telecommunications network, does this open up vulnerabilities?” said Dean Cheng, an expert on Chinese political and security affairs at the right-leaning Heritage Foundation.

“There has always been some concern about Huawei and ZTE,” Cheng continued. “But the Kaspersky [ban] basically highlights the vulnerability issue.”