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Tech / TELECOMMUNICATIONS

Chinese Telecom Execs Deny Spying Claims

House Intelligence Committee Chairman Rep. Mike Rogers, R-Mich. (top center) and the committee's ranking Democrat, Rep. C.A. "Dutch" Ruppersberger, D-Md. (left), question executives of two major Chinese technology companies as they as lawmakers probe whether China's fast-growing expansion in the U.S. hi-tech market pose a threat to national security, on Sept. 13, 2012.(AP Photo/J. Scott Applewhite)

photo of Josh Smith
September 13, 2012

Representatives of two of China’s largest telecommunications companies on Thursday denied that their products or services could give Chinese spies a backdoor into American computer networks.

Appearing before the House Intelligence Committee, executives from ZTE and Huawei categorically denied that they would ever risk their businesses by collaborating with the Chinese government to steal information from American individuals, companies, or government agencies.

“China’s government has never made such a request,” ZTE Senior Vice President Zhu Jinyun told lawmakers. “We expect the Chinese government never to make such a request of ZTE.  If such a request were made, ZTE would be bound by U.S. law.” The executives delivered prepared remarks in English and then relied on translators to respond to lawmakers’ questions, stretching the hearing to more than three hours.

 

ZTE acknowledged earlier this year that one of its phones contained a security flaw that could allow others to control the device. Analysts said the vulnerability was deliberate, but at Thursday’s hearing Zhu insisted it was a basic software bug, not an intentional backdoor for hackers. Security researchers have also questioned the security of Huawei devices like Internet routers.

Huawei Vice President Charles Ding argued it would be “immensely foolish” for his company to risk its $32.4 billion in revenue by engaging in cyberespionage. Both Ding and Zhu sought to characterize their operations as purely business, without any government ownership or ulterior political motives.

“We are fully aware that, in a high-end market like the U.S., we can only win customers’ trust and sustain our development by providing high-quality products and services,” Ding testified.

Lawmakers, however, weren’t buying it.

Intelligence Committee Chairman Mike Rogers, R-Mich., has been one of the most vocal critics of what he calls an “intolerable” level of cyberespionage. While intelligence agencies have reported that a majority of cyberespionage emanates from computers in China, they have stopped short of directly accusing the Chinese government.

Rogers, however, has accused the Chinese government of “blatantly” launching a massive effort to steal commercial information and intellectual property. He pressed Ding and Zhu on their companies’ ties to the Chinese government.

“Every piece of this equipment, every code of software, every update, provides that country a means to act against the United States," Rogers said.

Huawei and ZTE have been operating in the United States for years, but the growing tide of cyberattacks as well as concern over Chinese economic growth has increased scrutiny of the companies’ efforts to expand.

Zhu acknowledged that foreign companies deserve scrutiny, but he said that U.S. officials are missing the point by focusing on the two Chinese telecom giants. Most devices in the United States, including those offered by Western companies, use components from China or other countries.

The answer, Zhu said, is to recognize third-party analysts who spot-test all foreign-built components or software. That shifts the focus onto the actual devices or software, rather than the company.

“Proposals that specific Chinese companies be excluded from the U.S. market, either directly or indirectly, would constitute obvious unfair trade practices and are so narrow that they would provide no meaningful solution in support of U.S. cybersecurity,” Zhu said.

The two companies have been waging a public relations battle to overcome the suspicion. In the days before Thursday’s hearing, for example, ZTE and its American consultants arranged media briefings, and Huawei bought advertising in the Washington area touting its investment in the United States. “A message from Huawei: We've put $230 million into innovation in the U.S. and bought $30 billion from U.S. suppliers. And that's just the beginning,” read an ad in Politico’s Morning Tech newsletter.

But House Intelligence ranking member Dutch Ruppersberger, D-Md., said that even with no official government ties, Chinese companies could be compelled to turn over information and too many unanswered questions remain. “We already know the Chinese are hacking into our networks,” he said. “This is not political jousting or trade protectionism masquerading as national security.”

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