China's Commerce Ministry rejected accusations in a report from a House Intelligence Committee that U.S. companies should avoid doing business with Huawei Technologies and ZTE due to national security risks.
The Intelligence Committee of the U.S. House of Representatives, in the report based on an 11-month investigation, warned China could use equipment made by the companies to spy on communications and threaten vital systems through computerized links. The panel officially presented the report on Monday but briefed the media on Sunday.
Huawei and ZTE, both based in southern China, denied the allegations and accused the U.S. of obstructing Chinese companies from entering overseas market.
"The United States is a country ruled by law, where all charges and allegations should be based on solid evidence and facts," Huawei said in a statement. The report "failed to provide clear information or evidence to substantiate the legitimacy of the committee's concerns," it said. "The committee appears to have been committed to a predetermined outcome."
The U.S. government report says that neither company cooperated sufficiently with the investigation. It also said the dominance of Huawei and ZTE in the telecom equipment market affords the two an opportunity to spy or conduct malicious activity.
ZTE and Huawei are big producers of mobile phones and a competitor to the Motorola unit of Google (GOOG), among others.
China's Commerce Ministry strongly rejected the report as baseless.
"This report by the relevant committee of the U.S. Congress, based on subjective suspicions, no solid foundation and on the grounds of national security, has made groundless accusations against China," Shen Danyang, a spokesman for China's Commerce Ministry, said in a statement on the ministry's website.
Separately, Cisco Systems (CSCO) said Monday that it has severed its sales partnership with ZTE after an in-house probe into allegations that ZTE has sold banned Cisco networking gear to Iran, as IBD reported.
Cisco also is among companies that have had patent-infringement and copyright legal battles with Huawei over the years.
Read More At IBD: http://news.investors.com/technology/100912-628656-china-rejects-zte-huawei-charges.htm#ixzz28pke7qfI
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