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October 30, 2019

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US urged not to stifle Chinese firms

CHINA yesterday accused the US of “economic bullying behavior” after US regulators proposed to cut off funding for Chinese equipment in US telecommunications networks.

China would “resolutely oppose the US abusing state power to suppress specific Chinese enterprises with unwarranted charges in the absence of any evidence,” foreign ministry spokesman Geng Shuang said.

“The economic bullying behavior of the US is a denial of the market economy principle that the US has always advertised,” Geng said, adding the US actions would “undermine the interests” of US businesses and consumers, especially in rural areas. “We would like to urge the US once again to stop abusing the concept of national security,” Geng said.

The Federal Communications Commission votes next month on whether to bar telecom companies from using government subsidies to pay for networking equipment from Huawei and ZTE.

This is the latest in a series of actions by the US government aimed at barring US companies from purchasing Huawei and ZTE equipment.

Huawei and ZTE would have 30 days to contest the FCC’s national security risk designation and a final order compelling removal of equipment is not expected until next year at the earliest.

“In 30 years of business, Huawei has never had a major security-related incident in the 170 countries where we operate,” said a Huawei spokesman in Shenzhen.

“Today’s proposal, released by the FCC Chairman, only impacts the broadband providers in the most unserved or underserved rural areas of the United States,” the spokesman said.

“Such action will further widen the digital divide; slowing the pace of economic development without further securing the nation’s telecommunications networks.”

Citing US media reports, Geng said the US Rural Wireless Association has estimated that 25 percent of its members have Huawei and ZTE equipment in their networks, and that replacing them would cost US$800 million to one billion.

The move mostly affects small, rural companies, since larger US wireless companies do not use equipment from the two Chinese firms.

The agency is also exploring the impact of requiring companies to rip out their current Huawei and ZTE equipment, a demand a trade group for small rural wireless carriers has said would cost up to US$1 billion.

The government is seeking comments on how it can help companies financially if they’re required to do that. Bills in Congress have proposed setting US$700 million to US$1 billion aside for telecom companies to replace their networks.

The US government says Huawei, the world’s biggest supplier of telecom gear and No. 2 smartphone manufacturer, poses an espionage threat. It has presented no evidence of its equipment being used for spying by the Chinese government and both Huawei and ZTE have denied their equipment is used for such purposes.

The US government also has been pressuring allies to ban Huawei from their networks and has restricted exports of US technology to Huawei.

Geng noted that for a large majority of countries, the cases of the PRISM program and Alstom are still fresh in their memories, but until now, the United States has not given a clear explanation to the international community.


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