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China high-tech firms deny spying before Congress

Associated Press Modified: September 13, 2012 at 5:31 pm •  Published: September 13, 2012

WASHINGTON (AP) — Two major Chinese technology companies on Thursday denied allegations that some of their equipment is designed to facilitate spying, but struggled to convince U.S. lawmakers that they are independent from the dictates of Beijing's communist government.

Raising their right hands, executives of Huawei Technologies Ltd. and ZTE Corp took an oath before testifying to the House Intelligence Committee, in what was a rare appearance by Chinese business leaders before a congressional panel. The hearing lasted 3 ½ hours and the executives answered questions through interpreters.

The committee is finalizing a yearlong probe into whether the companies pose a risk to U.S. national security. They are among the world's largest suppliers of telecommunications gear and want to expand their operations in the U.S. Huawei is a private company, founded by a former Chinese military engineer. ZTE Corp. is partly state-owned.

The committee's top Democrat, Rep. C.A. Dutch Ruppersberger of Maryland, said the U.S. National Counterintelligence Executive had issued a report detailing the volume of Chinese-enabled cyberattacks, and the actions of China's government in this regard were the biggest obstacle to the tech giants expanding in the U.S. market.

"If you want to do business in the United States," Ruppersberger said, "then you have to tell your Chinese government to stop cyberattacking our businesses."

Both companies denied being influenced by the Chinese government, receiving special treatment or posing a security threat. Company officials said it would be bad for their global business to compromise their customers' networks to any third party.

Huawei corporate senior vice president Charles Ding said that would amount to "corporate suicide."

But the committee chairman, Rep. Mike Rogers, R-Mich., criticized the companies for citing Chinese state secrecy laws as the reason for failing to supply all corporate documents requested in the investigation. He also said their testimony failed to satisfy concerns that the companies were subject to Chinese state influence.

"Huawei and ZTE provide a wealth of opportunities for Chinese intelligence agencies to insert malicious hardware or software implants into critical telecommunications components and systems. And under Chinese law, ZTE and Huawei would likely be required to cooperate," Rogers said.

Rogers said the committee has received multiple reports that Huawei's equipment has been known to "beacon" back to China, or relay data without the consent of the user. He cited unnamed sources overseas as saying that anomalies of equipment from both Huawei and ZTE appeared designed to allow unauthorized access.

Both executives denied that. ZTE senior vice president for North America and Europe, Zhu Jinyun, said all major high technology firms periodically provide patches to fine tune their software. "A bug is not a back door," he said.

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