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Politics, not security, at center of Huawei, ZTE allegations, say analysts

Michael Kan | Oct. 9, 2012
China's Huawei and ZTE pose security threats to the U.S., according to an upcoming report from a U.S. congressional committee

The congressional committee, however, has justified its investigation by pointing to the growing number of cyber attacks allegedly coming from China, along with the "wealth of opportunities" ZTE and Huawei could provide to the Chinese government to sabotage U.S. networks, if their telecommunication equipment was bought.

"One of the main reasons we are having this investigation is to educate the citizens in business in the United States of America," said Dutch Ruppersberger, the ranking member of the committee, during the 60 Minutes interview.

But analysts have also questioned the congressional committee's approach in examining only Chinese companies in its investigation. "This is not a problem that is unique to Huawei and ZTE. In fact, if there is a problem, it's a problem with everybody," said David Wolf, CEO of Wolf Group Asia, a Beijing-based technology consultancy. "Telecommunication equipment manufacturers that make equipment under China would include about everyone in the industry."

It's unclear what evidence the investigation has cited in its findings, with media reports noting that the committee made its conclusion from both classified and unclassified information. Wolf, however, said that in the case of Huawei no hard evidence has been found showing the company's equipment has posed a national security threat.

"The solution that the [committee] is proposing doesn't solve the problem," he added. "One can only be led to believe that there are other motivations at work here, especially since there is no evidence of anything ever happening with the equipment purchased from Huawei. And if there is a problem with information vulnerability, why are we not investigation everything from every foreign information company?"

Matt Walker, an analyst with research firm Ovum, said politics was driving the congressional committee's investigation. " It's election season. Voting is less than one month away in the U.S. And the China threat is a potent political issue in the US nowadays. It's almost a simple math equation," he said.

Both China and the U.S. have political rivalries, which spill over into the commerce sector, Walker added. "But my guess is that this issue will fade away significantly in a few months. If it doesn't, at some point Huawei and or ZTE might be smart to consider whether the US market is worth the effort -- for now, anyways."

 

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