Chinese Espionage

FCC Blocks China Mobile's Bid For International Phone Services In The U.S.

By SASHA INGBER

Federal Communications Commission Chairman Ajit Pai said Thursday that the commission has rejected China Mobile USA's application to provide phone services between the United States and other countries because of national security risks.

The Federal Communications Commission has blocked a Chinese company from providing international phone services in the United States, citing national security concerns as tensions persist between Washington and Beijing.
China Mobile USA, though a Delaware corporation, is ultimately owned and controlled by the Chinese government. 

The company filed an application in 2011 to provide international communications services.
"There is a significant risk that the Chinese government would use China Mobile to conduct activities that would seriously jeopardize the national security, law enforcement, and economic interests of the United States," FCC Chairman Ajit Pai said.

"Among other things, if this application were granted, the Chinese government could use China Mobile to exploit our telephone network to increase intelligence collection against U.S. government agencies and other sensitive targets that depend on this network."
China Mobile USA does not provide domestic services in the United States, an FCC spokesperson says.
If the application had been granted, the company would have been able to connect to the U.S. network, receiving greater access to telephone lines, cellular networks, fiber-optic cables and communication satellites — heightening the risk of communications being monitored, degraded and disrupted.
In 2018, the U.S. Department of Commerce communicated with the company and the U.S. intelligence community before recommending the application be denied. 

Last month, the FCC indicated that it intended to follow through with that recommendation in a draft order.
Thursday's announcement came after a unanimous 5-0 vote from the FCC's Republican and Democratic commissioners.
After the vote, Mr Pai said the agency was also examining authorizations that had been previously granted to two other Chinese firms, China Telecom and China Unicom.
China Mobile USA is a subsidiary of China Mobile Limited, which did not immediately respond to NPR's request for comment.
Lawyers representing China Mobile USA said the drafted order to reject the company's application was guided "more by tensions in the bilateral U.S.-China relationship than an absence of effective mitigation options."
The denied application is the latest indication of a growing rift between the United States and China. Amid a trade war, the Trump administration has insisted that Chinese telecom company Huawei has ties to the government and that its equipment could be used to spy on people or commit economic espionage.

Congress has banned government agencies and contractors from buying Huawei equipment.
Reuters reported that for more than a year, President Trump has also been considering an executive order that would block American companies from using equipment manufactured by Huawei and its competitor, ZTE.
In March, U.S. authorities warned allies in Europe to ban Huawei from their 5G communication networks or face the possibility of receiving less intelligence from U.S. agencies. 

Germany declined to exclude the company.
A FCC spokesperson told NPR that ownership of China Mobile USA traces to the China Mobile Communications Corporation, which is "subject to the supervision of the State-Owned Assets Supervision and Administration Commission," a part of the Chinese government managed under the State Council.

MIT terminates funding and research links with China’s Huawei and ZTE

• The Massachusetts Institute of Technology (MIT) is terminating all research and funding links with Chinese tech companies Huawei and ZTE in light of federal investigations regarding violations of sanction restrictions.
• MIT is one of several prestigious academic institutions in the U.S. to announce an end to ties with Huawei.

By Shirley Tay

Massachusetts Institute of Technology

The Massachusetts Institute of Technology is terminating all research and funding links with Chinese tech firms Huawei and ZTE in light of recent U.S. federal probes, according to a letter from university officials.
MIT is one of several prestigious academic institutions in the U.S. to announce an end to ties with Huawei. 

Stanford University, the University of California, Berkeley and the University of Minnesota have cut all future research collaborations with the Chinese telecom company as well, according to the Hong Kong-based South China Morning Post.
“MIT is not accepting new engagements or renewing existing ones with Huawei and ZTE or their respective subsidiaries due to federal investigations regarding violations of sanction restrictions,” MIT Associate Provost Richard Lester and Vice President for Research Maria Zuber wrote in a letter to the faculty on Wednesday.
In a 2017 presentation by Huawei, MIT was cited as a collaborator in the Huawei Innovation Research Program. 

The program is a global initiative “to identify and support world-class, full-time faculty members pursuing innovation of mutual interest,” the SCMP reported the tech giant as saying.
The halt in funding to Huawei and ZTE comes at a time of heightening tensions between the U.S. and China.
U.S. lawmakers have said ZTE and Huawei equipment may represent national security risks, alleging that the companies’ products could support Chinese espionage. 

In January, the U.S. Department of Justice charged Huawei with violating U.S. sanctions against Iran and stealing trade secrets from U.S. telecom T-Mobile.
Huawei and ZTE, however, are not the only international entities affected by a halt in partnerships with the university.
MIT’s plans to cut ties with Huawei and ZTE is part of a bigger plan to ramp up its internal evaluation of international partners, the letter to faculty said.
“Engagements with certain countries — currently China, Russia and Saudi Arabia — merit additional faculty and administrative review beyond the usual evaluations that all international projects receive,” the MIT officials wrote.
MIT’s “elevated-risk” review process will pay special attention to “intellectual property, export controls, data security and access, economic competitiveness, national security, and political, civil and human rights,” the letter said.
ZTE declined to comment and Huawei did not immediately reply to CNBC’s emailed request for comment about MIT’s decision.

President Trump could declare a national emergency barring US companies from using equipment made by China's Huawei and ZTE

• President Donald Trump is considering an executive order in the new year to declare a national emergency that would bar U.S. companies from using telecommunications equipment made by China's Huawei and ZTE.
• The two companies work at the behest of the Chinese government and their equipment is used to spy on Americans.
• It would be the latest step by the Trump administration to cut Huawei and ZTE, two of China's biggest network equipment companies, out of the U.S. market.
• The issue has new urgency as U.S. wireless carriers look for partners as they prepare to adopt next generation 5G wireless networks.

By David Shepardson and Diane Bartz

WASHINGTON -- President Donald Trump is considering an executive order in the new year to declare a national emergency that would bar U.S. companies from using telecommunications equipment made by China's Huawei and ZTE, three sources familiar with the situation told Reuters.
It would be the latest step by the Trump administration to cut Huawei and ZTE, two of China's biggest network equipment companies, out of the U.S. market.

The two companies work at the behest of the Chinese government and their equipment could be used to spy on Americans.
The executive order, which has been under consideration for more than eight months, could be issued as early as January and would direct the Commerce Department to block U.S. companies from buying equipment from foreign telecommunications makers that pose significant national security risks, sources from the telecoms industry and the administration said.
While the order is unlikely to name Huawei or ZTE, a source said it is expected that Commerce officials would interpret it as authorization to limit the spread of equipment made by the two companies. 

The sources said the text for the order has not been finalized.
The executive order would invoke the International Emergency Economic Powers Act, a law that gives the president the authority to regulate commerce in response to a national emergency that threatens the United States.
The issue has new urgency as U.S. wireless carriers look for partners as they prepare to adopt next generation 5G wireless networks.
The order follows the passage of a defense policy bill in August that barred the U.S. government itself from using Huawei and ZTE equipment.
Huawei and ZTE did not return requests for comment. 

The White House also did not return a request for comment.
The Wall Street Journal first reported in early May that the order was under consideration, but it was never issued.

A security guard keeps watch at the entrance of the Huawei global headquarters in Shenzhen in China's southern Guangdong province on December 18, 2018.

Chinese are using the American countryside to encircle and finally capture the cities

Rural operators in the United States are among the biggest customers of Huawei and ZTE, and fear the executive order would also require them to rip out existing Chinese-made equipment without compensation. 

Industry officials are divided on whether the administration could legally compel operators to do that.
While the big U.S. wireless companies have cut ties with Huawei in particular, small rural carriers have relied on Huawei and ZTE switches and other equipment because they tend to be less expensive.
The company is so central to small carriers that William Levy, vice president for sales of Huawei Tech USA, is on the board of directors of the Rural Wireless Association.
The RWA represents carriers with fewer than 100,000 subscribers. 

It estimates that 25 percent of its members had Huawei or ZTE equipment in their networks, it said in a filing to the Federal Communications Commission earlier this month.
The RWA is concerned that an executive order could force its members to remove ZTE and Huawei equipment and also bar future purchases, said Caressa Bennet, RWA general counsel.
It would cost $800 million to $1 billion for all RWA members to replace their Huawei and ZTE equipment, Bennet said.
Separately, the FCC in April granted initial approval to a regulation that bars giving federal funding to help pay for telecommunication infrastructure to companies that purchase equipment from firms deemed threats to U.S. national security, which analysts have said is aimed at Huawei and ZTE.
The FCC is also considering whether to require carriers to remove and replace equipment from firms deemed a national security risk.
In March, FCC Chairman Ajit Pai said "hidden 'back doors' to our networks in routers, switches — and virtually any other type of telecommunications equipment - can provide an avenue for hostile governments to inject viruses, launch denial-of-service attacks, steal data, and more."
In the December filing, Pine Belt Communications in Alabama estimated it would cost $7 million to $13 million to replace its Chinese-made equipment, while Sagebrush in Montana said replacement would cost $57 million and take two years.

Pariah Company

Huawei CFO Meng Wanzhou arrested in Canada, faces extradition to United States
By Julia Horowitz

Meng Wanzhou, CFO of Huawei

New York -- The chief financial officer of Chinese tech giant Huawei has been arrested in Canada. 

She faces extradition to the United States.

Meng Wanzhou, also known as Sabrina Meng and Cathy Meng, was apprehended in Vancouver on December 1, according to Canadian Justice Department spokesman Ian McLeod. 

In addition to her role as CFO, Meng serves as deputy chairwoman of Huawei's board. 

She's the daughter of Huawei founder Ren Zhengfei.
Meng "is sought for extradition by the United States, and a bail hearing has been set for Friday," McLeod said in a statement, which was first reported by The Globe and Mail.
McLeod said the Canadian Justice Department can't share details of the case. 

Meng was granted a publication ban after a judge agreed to bar both police and prosecutors from releasing information about the case.
A Huawei spokesperson said Meng was detained by Canadian authorities on behalf of the United States when she was transferring flights in Canada. 

Huawei said she faces unspecified charges in the Eastern District of New York. 

The Wall Street Journal reported in April that the US Justice Department was investigating whether Huawei violated US sanctions on Iran.

The US Justice Department declined to comment Wednesday.
China's Ministry of Foreign Affairs on Thursday called for Meng to be released and urged the United States and Canada to explain why she had been detained.
The Chinese company, which sells smartphones and telecommunications equipment around the world, has been facing increased scrutiny in the United States and other countries, where officials have warned of national security risks from using Huawei products. 

The United States is concerned that the Chinese government is using Huawei's networking technology to spy on Americans.
Huawei's 5G ambitions suffer another big setback

Senator Ben Sasse, a Republican from Nebraska, said Americans are grateful to Canadian authorities for arresting Meng.
"Chinese aggression is explicitly state-sponsored and sometimes it's laundered through many of Beijing's so-called 'private' sector entities that are in bed with Xi's communist party," he said.
Senator Chris Van Hollen — a Democrat from Maryland — said Chinese telecommunications companies represent a fundamental risk to American national security.
"We need a comprehensive plan to hold the Chinese and their state-sponsored entities accountable for gross violations of the law and threats to our security," he said.
The Pentagon in May ordered stores on American military bases to stop selling smartphones made by Huawei and Chinese rival ZTE. 

And in February, top officials from the CIA, NSA, FBI and the Defense Intelligence Agency told a Senate committee that those firms' smartphones posed a security threat to American customers.
New Zealand prevents mobile carrier from buying Huawei 5G tech over security fears

The Trump administration launched an extraordinary campaign, urging America's allies to stop using Huawei telecommunications equipment because the Chinese company poses a security threat, according to the Wall Street Journal. 

Over the past several weeks, New Zealand and Australia have prevented telecommunications companies from using Huawei equipment for their 5G mobile networks.
UK telecom company BT (BT) said Wednesday that it would not buy equipment from the Chinese tech company for the core of its next generation wireless network. 

The company also said it would remove existing Huawei technology from the heart of its 4G network within two years.
China's ZTE also faced accusations of illegal dealings with Iran. 

In April, the United States blocked ZTE from buying US parts because ZTE had lied to US officials about punishing employees who violated US sanctions against North Korea and Iran. 

But the Trump administration lifted the export ban on ZTE in July after striking a deal with the company.

Huawei Connection

U.S. Lawmakers Push to Widen Iran Sanctions Probe Beyond China's ZTE

By Saleha Mohsin and Andrew Mayeda

A group of Republican lawmakers is pushing the Trump administration to investigate and unmask a company that may have violated Iran sanctions laws in the same way as Chinese mobile-phone maker ZTE Corp.
ZTE agreed last month to pay as much as $1.2 billion after pleading guilty to shipping U.S.-origin products to Iran in violation of U.S. laws restricting the sale of American technology to the country. In a letter Tuesday, Republican Congressman Robert Pittenger of North Carolina, Alabama’s Mike Rogers and eight other lawmakers, called on Commerce Secretary Wilbur Ross to probe the actions of an "unidentified company" that ZTE has said also evaded U.S. export controls.
The rival is referred to only as “F7” in a ZTE document posted on the Commerce Department’s website. 

The lawmakers in their letter note that news reports have highlighted the similarities between the company described in the documents and Huawei Technologies Co., which is the largest Chinese networking equipment maker followed by ZTE.
“We strongly support holding F7 accountable should the government conclude that unlawful behavior occurred,” according to the letter. 

“We must publicly identify those who break the law so that their activities be taken into account when public procurement activities occur or where critical infrastructure vulnerabilities might arise.”

Smoother Relations
“We do not comment on any law enforcement matters that we may or may not be working on,” Commerce spokesman James Rockas said in an email.
ZTE declined to comment.
A deeper investigation may complicate Donald Trump’s efforts to smooth relations with China after accusing the nation during last year’s election of manipulating its currency and hurting American manufacturers. 

After meeting with Xi Jinping last week, Trump tweeted that it was a “tremendous” meeting.
As Commerce officials last year gathered evidence to add ZTE to its list of restricted companies, the department posted ZTE documents related to the case on its website. 

In a document dated August 2011, ZTE describes how it conducted business in Iran and other sanctioned countries, and cited F7 as a model for such activities.

Fraught Relations
The U.S. relationship with Huawei has been fraught. 

The government has suspicions about whether Huawei has been sending U.S. technology to rogue nations including Syria, Iran, North Korea and Cuba, people familiar with the matter have said. 

The Commerce Department sent an administrative subpoena to the company’s U.S. operations in Plano Texas, Bloomberg reported in June. 

The company said at the time it cooperates with U.S. export control laws.
In 2012, the House Intelligence Committee concluded that Huawei and ZTE represent national security risks. 

Two years earlier, former Commerce Secretary Gary Locke expressed concern about Huawei’s participation in bids for a network upgrade by Sprint Nextel Corp. 

The bids were awarded to companies from France, Sweden and South Korea.
In Tuesday’s letter, the lawmakers said F7 ’s business structure was similar to ZTE in creating a “cut-off” IT company “serving as its agent to sign contractors for projects in embargoed countries.” 

It adds that F7 hired export-control compliance specialists and expanded its export-control liaison offices.
Here are some of the similarities between F7 and Huawei as described in the ZTE document:

• A U.S. government panel blocked F7’s bid to purchase server technology provider 3Leaf Co. due to national security risks. Huawei backed away from a deal to buy California-based 3Leaf due to pressure from the U.S.
• F7 once had a joint venture with Symantec, a California-based digital security company. Huawei had a similar deal with Symantec, which was dismantled.