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ZTE slams Congress spying claims, doubles down on sales ban

'Ban all Chinese hardware and see where it gets you'

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ZTE has defended itself against claims that its hardware is a security risk and has suggested that if Congress is that concerned, it should recommend not buying any Chinese-manufactured equipment, which would include tech sold by Western companies who have outsourced their manufacturing.

On Monday the US House of Representatives Intelligence Committee issued a report recommending that ZTE and Huawei should be banned from selling in the US over fears that they will enable attacks against the US and that their businesses are unfairly subsidized. Huawei immediately declared the committee was biased from the start, and now ZTE has stuck its oar in.

ZTE issued a strongly worded denial of the charges against it, saying the committee broke its own rules of evidence. It then doubled down by pointing out the uncomfortable truth that most networking equipment is manufactured in China anyway, including that sold by most major US vendors under their own branding.

"Particularly given the severity of the Committee’s recommendations, ZTE recommends that the Committee’s investigation be extended to include every company making equipment in China, including the Western vendors. That is the only way to truly protect US equipment and US national security," said David Dai Shu, ZTE’s director of global public affairs, in a statement.

The committee's finding that ZTE wasn't "free from state influence," could be applied to any Chinese company, he said, arguing that at no point in the report had Congress challenged the company's fitness to sell in America ethical or legal grounds. It had complied fully with Congress and wasn't holding anything back, he asserted.

ZTE is "China’s most transparent, independent, globally focused, publicly traded telecom company," he said, adding that the company advocates a trusted delivery system whereby equipment is inspected for security issues by a third-party laboratory under US government oversight. This system already works for over 500 network carriers in 140 countries, he pointed out.

Just after the US House of Representatives delivered its report, Cisco cut all sales contracts with ZTE, reportedly after an internal investigation showed it was likely that the Chinese vendor had resold Cisco's hardware to Iran in defiance of international sanctions. The FBI is currently conducting a criminal investigation into the case.

But in a bit of good news for the company (for a change), Reuters reports that the EU has put a hold on its own investigation into Huawei and ZTE's business practices. EU trade commissioner Karel De Gucht has been investigating reports that the two Chinese suppliers are dumping low-cost kit onto European markets.

According to EU officials, the Chinese government is sponsoring the practice with generous credit lines in an attempt to distort competition. One source told Reuters that one Chinese supplier had offered to replace all of a European telecommunications carrier's network for free in an attempt to gain market share.

The only problem is no one has actually complained about these allegations. World leader Ericsson has said it does not want any such investigation, and the third and fourth largest suppliers – Nokia Siemens Networks and Alcatel-Lucent – don’t look keen to complain to regulators, either. Without a complaint, launching an investigation would break EU protocol.

EU diplomats told the news service that the investigation will most likely be put on hold until at least the middle of next year, at the earliest. ®

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