China really not happy with America’s Huawei, ZTE allegations

It has hit the fan. In the wake of the American government releasing a rather scandalous report claiming Huawei and ZTE, two huge Chinese tech companies active around the world, are a threat to U.S. national security based on previous cyberattacks that came from China, the government has responded with anger. Some might even call it rage.

The state-run Xinhua news agency ran a blistering editorial this morning, blasting the American government for releasing what it claims to be a baseless and malicious attack on Chinese enterprise. Behold:

“The lengthy report, however, full of vacant and untenable accusations, could neither prove that Chinese companies are involved in espionage nor that their normal contact with the government has jeopardized the security of the U.S. information system.

Threatening national security is enough to get any foreign business out of the U.S., as it outweighs everything else, no matter how lucrative the business may be for the country.

But when such horrific and sensational charges become a convenient tool to block competitive foreign companies and gain political favor during the election season, it only serves to undermine the credibility of the U.S. Congress and downgrade the U.S. business environment for Chinese investors.

The U.S. Congress concluded its investigation and released its report at a critical time for Huawei, as the company is gearing up to expand its presence in the United States.

In anticipation and fear of Huawei’s huge potential, as the company had run astonishingly successful in 140 countries in the world with their quality but inexpensive products, the congressmen, on behalf of the intertwined domestic interest groups, certainly know how disastrous the the report will mean for Huawei, the world’s second largest telecom equipment maker whose overseas business generates 70 percent of its annual income.”

Yipes.

It’s not like this is your to-be-expected Chinese backlash either–Western outlets are also kind of not-so-subtley pointing out that the report is a little baffling. Check out what Reuters had to say:

“The decision by the US House Intelligence Committee to label Huawei and ZTE as threats to US national security – largely on the premise of potential Chinese state influence – underlines once again the difficulties facing the Chinese telecom equipment makers as they seek to expand across major developed markets.

Exposure to the US is quite small for both companies, at less than 5% of total revenues, so the potential loss of US revenue is unlikely to affect their operations significantly. Yet a more meaningful impact could arise if more countries decide to avoid the Chinese manufacturers over alleged national security concerns.

Earlier this year, the Australian government decided to exclude Huawei from participating in building the country’s national broadband network (NBN) due to concerns that it could impinge on national security, despite assurances to the contrary.”

So what gives? Why all the hate on Huawei and ZTE?

Forbes writer Andy Greenburg argues that if it’s fear of a Chinese takeover, that ship has already sailed. Like, years ago. He makes the point that Sinophobia isn’t going to work in a country that is utterly addicted to Chinese products–like the iPhone:

“To be fair, ZTE and especially Huawei do of course have far tighter connections to China and the Chinese government than any of their competitors. Huawei CEO Ren Zhengfei, for instance, has a career in China’s People’s Liberation Army on his resume and has never given an interview to the Western press. But as many critics have pointed out, there is no ‘smoking gun’ showing active spying by Huawei or ZTE in the congressional report, only evidence of strong resistance to their investigation. And a willy-nilly boycott of Chinese networking gear risks creating a protectionist trade war and skewing the market towards more expensive, less effective technology.

So a better way to express a healthy distrust of the two Chinese firms, says Gartner analyst John Pescatore, is to more rigorously test their products. He points to the United Kingdom, where Huawei and Britain’s NSA-equivalent known as the Government Communications Headquarters have set up a Cyber Security Evaluation Centre to comprehensively audit any gear Huawei wants to sell in the country. In another case, he points to the Chinese security technology firm NSFocus, which had its products analyzed by the code-auditing firm Veracode ahead of offering them internationally.”

What do you think? Should we get rid of Chinese tech, or is that the stupidest idea anyone has ever come up with?

Read more on China, France, America and the world beyond in the latest edition of Carnet Atlantique!

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