Probe seen as deflecting US voter attention
Updated: 2011-11-19 07:54
By Chen Limin, Ding Qingfen and Shen Jingting (China Daily)
BEIJING - Chinese government officials and company leaders have accused the United States of politicizing trade issues to distract public attention from its own economic woes as the US presidential election draws near.
The accusation came after the US House Intelligence Committee on Thursday launched a probe into Huawei Technologies Co and ZTE Corp, two Chinese telecom firms operating in US markets.
The committee announced it was investigating whether the telecom companies posed a national security threat, citing the possibility that Beijing could use them for economic or military espionage.
The investigation is the latest example of intensifying US scrutiny over the expansion of Chinese companies.
"It is common for the US to try to transfer its target onto China and Chinese enterprises when the election comes along, and the Chinese currency is another example," Shen Danyang, spokesman for the Ministry of Commerce, told China Daily on Friday.
"China's investment in the US boosts US employment and economic growth, and we hope the US will not politicize trade issues," Liu Weimin, a spokesman for the Ministry of Foreign Affairs, told reporters.
"The investments by Chinese enterprises in the US are totally in line with the principles of market economy and are carried out in accordance with local laws and regulations," he said.
Last month, the US Senate passed legislation that would allow the US government to charge tariffs on Chinese exports to compensate for an allegedly undervalued currency, despite the fact that the Chinese yuan has gained 10 percent since China ended a two-year peg to the US dollar in June 2010.
"The US move is more motivated by political rather than economic considerations," said Wu Hequan, director of Communications Technology Committee of the Ministry of Industry and Information Technology, the telecom industry watchdog.
"The US has been setting hurdles for foreign companies having operations there in the name of national security," he said. "Chinese companies have been the target of the US investigations in recent years, as companies such as Huawei and ZTE are growing stronger and have posed challenges to their American counterparts."
Huawei didn't comment on the US congress' investigation on Friday.
Huawei, the world's second-largest mobile equipment maker, has been expanding aggressively outside China in recent years.
Its overseas sales increased by 33.8 percent from a year earlier to 120.4 billion yuan ($19 billion) last year, taking up 65 percent of Huawei's total revenues, according to figures provided by the company. In comparison, its domestic sales grew only 9.7 percent.
However, the company has frequently encountered obstacles when it comes to expanding in the US.
In February, Huawei announced it would give up trying to acquire US server technology company 3Leaf System Inc, citing pressures from the US government.
That followed opposition by a group of lawyers in 2010 to Huawei's bid to provide telecom equipment to Sprint Nextel Corp. Previously, in 2008, the company gave up a deal with US networking equipment company 3Com.
Last month, Huawei was barred from participating in a nationwide emergency network by the US government. William Plummer, a Washington-based spokesman for Huawei, was quoted by Bloomberg as saying that the "ill-founded, ungrounded determination could have a chilling effect on our greater US business activities and accountability needs to be defined appropriately".
"The US should provide us a fair and open environment," said Dai Shu, director of corporate branding and communications of ZTE.
The international market has been a key driver of ZTE's growth. During the first half of this year, overseas sales amounted to 20.8 billion yuan, accounting for 55.7 percent of total sales.
In the case of Sprint Nextel Corp, ZTE together with Huawei were both barred from corporate bids for so-called national security reasons.
"Though ZTE did not successfully sell telecom equipment to the major four US operators, such as AT&T and Verizon, due to political concerns, the company has good business relationships with some smaller US carriers," Dai said.
ZTE is promoting its business in the US in less sensitive fields such as smart terminals and enterprise businesses, Dai added.
Yang Hua, secretary-general of TD-SCDMA Industry Alliance, an alliance focusing on promoting the global adoption of China's homegrown third-generation telecom technology, said the US move will hurt itself.
"Huawei and ZTE can provide high-quality and low-cost equipment, exactly what the US carriers really want. If you don't allow them to enter the US market, it will hurt US operators' profit margins," Yang said.