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Communists operate freely in US outfits' China operations, not just at Huawei

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Critics of a recent report by US lawmakers highlighting serious national security concerns with Huawei and ZTE have argued that their internal Communist Party committees, which are slammed in the report, are actually a feature of most foreign firms in China.

The House of Representatives Intelligence Committee finally released its verdict on the Chinese telecoms kit makers on Monday after almost a year of probing, and it wasn’t good for the Shenzhen duo.

It warned US firms and government bodies off doing business with the two, claiming that they were unable to allay concerns that the Chinese state has undue influence over them.

This influence seems to boil down to the presence of internal Communist Party committees within the two. The report said such committees “exert influence, pressure, and monitoring of corporate activities” throughout organisations in the People’s Republic:

In essence, these Committees provide a shadow source of power and influence directing, even in subtle ways, the direction and movement of economic resources in China.

It is therefore suspicious that Huawei refuses to discuss or describe that Party Committee’s membership. Huawei similarly refuses to explain what decisions of the company are reviewed by the Party Committee, and how individuals are chosen to serve on the Party Committee.

However, Huawei argued to US lawmakers that Communist Party committees are required by Chinese law to exist in all companies in China.

Moreover, big name foreign tech firms such as IBM also have such committees in their China businesses, according to Tea Leaf Nation.

By way of proof it includes a photo taken last year of IBM's Communist Party branch on the FESCO (Foreign Enterprise Human Resources Service Co.) web site.

The article also references a separate piece in Chinese paper the Southern Weekly which mentions Nokia Siemens Networks (NSN), as well as non-tech firms such as Carrefour and Standard Chartered, as having the same kind of exposure to the Party. NSN has denied the report, telling the Reg it is aware some employees are members of local government or FESCO Party committees but that no committee exists in its Chinese operations.

The US report authors will no doubt argue that an American firm like IBM having a Communist Party committee in its China outpost does not represent the same kind of risk as a died-in-the-wool Chinese business seeking to sell critical infrastructure technologies to the US.

However, critics could point to this as another example of an inherent and unfair bias in the report, which Huawei claimed had a “predetermined outcome”.

On a similar note, the Chinese tech giant has in the past also pointed out that most of its rivals including US flag-bearer Cisco have at least some part of their supply chain located in the People’s Republic and so should be subject to the same scrutiny by Washington.

The Reg was waiting to hear back from IBM at the time of writing. ®

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