US lawmakers want to block Sprint and Huawei deal

Huawei, top vendor of telecoms equipment, is being put under pressure from four US lawmakers – Jon Kyl, Joseph Lieberman, Susan Collins and Sue Myrick – over trading concerns on its links to the Chinese military and government.

The letter, sent to the Federal Communications Commission (FCC), was sent before Sprint chose supplies for its latest networks – Chinese Huawei and ZTE are both underlined as cause for concern.

It claims that supplying on a large-scale American network opens up the US to the potential for foreign espionage. “The sensitivity of information transmitted in communications systems requires that the US government take decisive action to ensure the security of our telecommunications networks,” it says.

There’s a strong possibility, say the lawmakers, that telecoms manufacturers are subject to the influence of the Chinese military, which could “create an opportunity for manipulation of switches, routers, or software embedded in American telecommunications networks so that communications can be disrupted, intercepted, tampered with, or purposely misrouted.”

The Wall Street Journal reviewed a report that says Huawei has very close ties to the Chinese government. “The report found that Huawei’s current chairwoman, Sun Ya-Fung, served as a captain in the People’s Liberation Army and worked in the Ministry of State Security in telecommunications before joining Huawei in 1992,” says the WSJ.

Chinese banks also have had close ties with Huawei, with Export-Import Bank of China giving Huawei a $600 million credit line used to offer cheap financing to some customers.

The US has previously blocked interactions with Huawei. US maker of electronics 3Com was stopped from a merger in 2008 – but blocks on equipment deals are tougher. That’s why the FCC is being asked to review purchases of foreign technologies in case of security breaches. The letter raises Sprint’s ties with Huawei is an example, and raises questions about whether Huawei receives subsidies from the Chinese government that could violate trade rules.

Outside of government, Huawei has been accused by Motorola of fostering an espionage-driven corporate culture and stealing company secrets.

China recently responded with measured hostility to the US’ subsidies scandal claims, pointing the finger straight back at the States. Still – the letter hopes to make trade between organisations with strong Chinese government ties and the United States that bit trickier.