Huawei Theft Saga

US in advanced stages of inquiry over Huawei theft of trade secrets
By Lily Kuo and agencies

Chinese thieves: Xi Jinping, is shown around Huawei’s London offices by the company’s boss, Ren Zhengfei. 

China has accused the US of trying to suppress its tech companies, as US prosecutors investigate allegations that Huawei stole trade secrets from US businesses.
Adding to pressure on the Chinese telecoms firm, US lawmakers have proposed a ban on selling US chips or components to the company.

According to the Wall Street Journal, which cited anonymous sources, the US Department of Justice (DoJ) is in the advanced stages of a criminal inquiry that could result in an indictment of Huawei.
The newspaper said the DoJ was looking into allegations of theft of trade secrets from Huawei’s US business partners, including a T-Mobile robotic device used to test smartphones.
Huawei and the DoJ declined to comment directly on the report.

The move would further escalate tensions between the US and China after the arrest last year in Canada of Huawei’s chief financial officer, Meng Wanzhou, the daughter of the company’s founder.
The case of Meng, under house arrest awaiting proceedings, has inflamed US-China and Canada-China relations.
Two Canadians have been detained in China since Meng’s arrest and a third has been sentenced to death on drug trafficking charges – moves observers have seen as attempts by Beijing to pressure Ottawa over her case.
China’s vice-premier and economic czar, Liu He, will be traveling to the US on 30 and 31 January for the next round of trade talks between the two countries, the ministry of commerce has said.
Huawei, the second-largest global smartphone maker and biggest producer of telecommunications equipment, has for years been under scrutiny in the US over purported links to the Chinese government.
Huawei’s reclusive founder Ren Zhengfei, in a rare media interview on Tuesday, forcefully denied accusations that his firm engaged in espionage on behalf of the Chinese government.
The tensions came against a backdrop of Donald Trump’s efforts to get more manufacturing on US soil and apply hefty tariffs on Chinese goods for what the US president has claimed are unfair trade practices by Beijing.
In a related move, US politicians introduced a bill to ban the export of American parts and components to Chinese telecoms companies that were in violation of US export control or sanctions laws – with Huawei and ZTE the likely targets.

China's ZTE is first major casualty of trade war with US

The Republican senator Tom Cotton, one of the bill’s sponsors, said: “Huawei is effectively an intelligence-gathering arm of the Chinese Communist party whose founder and CEO was an engineer for the People’s Liberation Army.”
The Democratic senator Chris Van Hollen said in the same statement: “Huawei and ZTE are two sides of the same coin. Both companies have repeatedly violated US laws, represent a significant risk to American national security interests and need to be held accountable.”
Last year Trump reached a deal with ZTE that eased tough financial penalties on the firm for helping Iran and North Korea evade American sanctions. 

Trump said his decision in May to spare ZTE came following an appeal by Xi Jinping to help save Chinese jobs.

The Eternal Criminal

China's Huawei targeted again in US criminal probe

By Jackie Wattles

New York -- US federal prosecutors are working on a criminal investigation into Chinese telecom equipment giant Huawei.
Investigators are looking into whether the firm stole trade secrets from US business partners, The Wall Street Journal reported Wednesday, citing unnamed sources.
The reported probe would complicate efforts by the US and Chinese governments to reach a deal to end the trade war that has shaken financial markets around the globe. 

Intellectual property theft is one of the issues at the heart of the dispute between the two economic superpowers, and Huawei has already come under pressure from the US government on other fronts.
The Journal reported that the investigation was spurred in part by civil litigation between Huawei, which makes phones and other telecom equipment, and T-Mobile. 

T-Mobile had accused Huawei of stealing information related to a robot used for testing mobile phones.
The Journal reported that the criminal probe is at an "advanced stage."
Huawei, the world's biggest maker of telecommunications equipment, declined to comment directly on the report. 

But it said in a statement that the disputes with T-Mobile were settled in 2017 "following a jury verdict finding neither damage, unjust enrichment nor willful and malicious conduct for T-Mobile's trade secret claim."
The Department of Justice did not immediately respond to a request for comment from CNN Business. 

It declined comment to The Wall Street Journal.

The report was published one day after the reclusive founder of Huawei, Ren Zhengfei, shrugged off allegations from Washington that Huawei is a threat to US national security.

The company has also been prevented from supplying next-generation 5G equipment to Australia and New Zealand.
In another sign of the suspicion Huawei faces in Washington, a group of US lawmakers on Wednesday introduced legislation aimed at tightening the rules for Chinese telecommunications companies.
The proposed law, the Telecommunications Denial Order Enforcement Act, would ban the sale of US parts to any Chinese telecom firm that has violated US export control laws or sanctions.
Last year, the US government imposed such a ban on Huawei's smaller rival ZTE but lifted it a few months later after Donald Trump intervened. 

Trump described the move as "a favor" to Chinese dictator Xi Jinping.

The new legislation, introduced by a bipartisan group of lawmakers including Sen. Tom Cotton of Arkansas and Sen. Chris Van Hollen of Maryland, aims to prevent the penalties being withdrawn until the Chinese company in question has shown a pattern of compliance with US rules and cooperation with US investigations for one year.
"Huawei is effectively an intelligence-gathering arm of the Chinese Communist Party whose founder and CEO was an engineer for the People's Liberation Army," Cotton said in a statement. 

"It's imperative we take decisive action to protect US interests and enforce our laws."
The new bill follows the arrest of Huawei chief financial officer, Ren's daughter Meng Wanzhou, last month in Canada.
She's accused of helping Huawei cover up violations of sanctions on Iran, according to Canadian prosecutors. 

Meng was released on bail in mid-December, setting her up for a lengthy legal fight over extradition to the United States.
The Chinese Foreign Ministry called Meng's arrest "lawless, reasonless and ruthless." 

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.

Lawmakers Take Aim at Chinese Tech Firms

Bipartisan groups introduce amendment to scuttle Trump’s deal with ZTE, scrutinize Huawei’s ties to Google
By Siobhan Hughes, Kate O’Keeffe and John D. McKinnon

The deal that the Trump administration announced Thursday with China’s ZTE Corp. was immediately opposed by a bipartisan group of U.S. lawmakers as a threat to national security. 

WASHINGTON—Lawmakers in Congress lost a battle over ZTE Corp. when the Trump administration announced a deal Thursday to resuscitate the Chinese telecommunications giant, but they made it clear their war against Chinese technology companies is far from over.
Hours after the Commerce Department announced a deal that would prevent ZTE’s collapse by allowing it to resume buying components from U.S. suppliers, a bipartisan group of lawmakers introduced an amendment to a must-pass bill in an effort to undo the deal.
Members of Congress have also begun scrutinizing Google’s relationship with China’s Huawei Technologies Co. 

A group of lawmakers that includes some of the biggest critics of Huawei—Sens. Tom Cotton (R., Ark.) and Marco Rubio (R., Fla.) and Reps. Mike Conaway (R., Texas) and Robert Pittenger (R., N.C.)—is looking at Google’s operating-system partnership with Huawei.
Sen. Mark Warner (D.,Va.) issued his own open letter early Thursday to Google parent Alphabet Inc. and Twitter Inc., asking for information about any data-sharing agreements between the two companies and Chinese vendors. 

He also asked for information from Alphabet about separate partnerships with Chinese phone maker Xiaomi Corp. and Chinese tech giant Tencent Holdings Ltd.
The effort to reverse the ZTE deal marks the second time this week that the Republican-led Senate has threatened direct confrontation with Donald Trump over a signature policy issue.
A group of senators is also seeking to undo tariffs that Trump recently imposed on aluminum and steel imports from Canada, the European and Mexico. 

They have taken a dispute that was a war of words into the more serious realm of legislation that could handcuff the president.
Trump has made trade, and particularly fixing what he views as an unfair global trading system, a centerpiece of his agenda. 

That has entailed confronting both China and close allies, and threatening tariffs on a range of goods. When Trump last month said he was planning to reverse the penalties on ZTE, as the administration was pushing Beijing to commit to buy more U.S. exports, lawmakers from both parties accused him of conflating trade and national-security issues. 

The administration denies that.
While some Republicans have shied away from confronting Trump over his trade agenda, they appeared more prepared on Thursday to challenge the deal with ZTE, where national- security issues are more clear-cut. 

U.S. officials have warned for years that the telecom firm’s equipment, along with equipment made by rival Huawei, could be used to spy on Americans.
In mid-April, the U.S. banned exports to ZTE as punishment for the Chinese company breaking the terms of a settlement to resolve its sanctions-busting sales to North Korea and Iran. 

The penalty, which the Commerce Department said Thursday it would now lift as part of a new deal, amounted to a death knell for ZTE.
Backers of the ZTE amendment introduced Thursday, led by Mr. Cotton along with Senate Minority Leader Chuck Schumer (D., N.Y.) and Sen. Chris Van Hollen (D., Md.), are hoping to attach it to the National Defense Authorization Act, which could get a vote as soon as next week. 

Senate Majority Leader Mitch McConnell (R., Ky.) hasn’t said whether he expects the amendment to go to a vote, or whether it could make it into the package by other means.
Sen. Lindsey Graham (R., S.C.), who urged his colleagues to back off their effort to void Trump’s aluminum and steel tariffs after meeting with the president this week, said he wasn’t yet comfortable with the ZTE deal.
“I don’t know,” Mr. Graham said. 

“I want to give the president as much latitude as we can to negotiate with China and get a good deal with North Korea. Our intelligence community is very concerned. I want to know from them: do these changes alleviate their concerns?” he said.
The Commerce Department agreement announced Thursday requires ZTE to pay a $1 billion fine and allow U.S. enforcement officers inside the Chinese company to monitor its actions. 

In exchange, it allows ZTE to resume buying components from U.S. suppliers that it needs to make smartphones and build telecoms networks.
“I’m not comfortable yet,” said Sen. Roy Blunt (R., Mo.), a member of the Senate Intelligence Committee who has declined to back an effort to subject Trump’s metals tariffs to congressional approval. 

“I want to know more about the U.S. presence inside the company and why we should believe that that creates a level of assurance that we need to have about their capacity to do things that we wouldn’t want to have them do.”
The amendment introduced by lawmakers on Thursday would also prohibit U.S. government agencies from purchasing or leasing telecom equipment or services from ZTE or Huawei, and ban the U.S. from subsidizing those firms with grants or loans.
A ZTE spokeswoman didn’t immediately respond to a request for comment.
The fight over ZTE between Trump administration officials and China hawks in Congress began last month. 

Just weeks after the Commerce Department had banned U.S. companies from selling to ZTE, Trump suggested he was considering reversing the penalty. 

He tweeted May 13 that he and Chinese dictator Xi Jinping were “working together to give massive Chinese phone company, ZTE, a way to get back into business, fast.” 

He added: “Too many jobs in China lost. Commerce Department has been instructed to get it done!”

The tweet incensed many members of Congress, as well as intelligence and military officials, who moved swiftly to denounce any prospect of a reprieve through a series of legislative actions and an aggressive publicity campaign.
The debate over ZTE in Congress likely will have ramifications for the fall elections, as well as for trade policy. 

Polling has suggested that voters remain wary of China, a fear that Trump is tapping with his get-tough rhetoric.
The Wall Street Journal/NBC poll in April found that most U.S. voters view China as an adversary rather than an ally. 

Fear of China is especially intense among Trump supporters. 

But it is also substantial among older voters, whites and Republicans in general.
In private meetings with GOP senators this week, Trump argued in favor of reaching a deal with ZTE, which his administration struck after the president personally negotiated with Xi. 

The White House has also argued that if ZTE goes out of business, it will simply be absorbed by Huawei, lawmakers said, leaving the U.S. without protections included in the deal, such as the installation of Chinese-speaking American enforcement officers inside the company to monitor its actions.
That carried little weight with Mr. Rubio, who co-sponsored Thursday’s amendment and who has been among the most vocal members of Congress on the issue. 

“If Huawei is an even bigger problem than ZTE, we shouldn’t be selling them semiconductors either,” he said.
Lawmakers said the administration’s handling of the ZTE issue was evidence of dysfunctional trade policies. 

In a speech on the Senate floor Thursday, Mr. Schumer said: “Trump has directed far too much of the administration’s energies on trade toward punishing our allies, like Canada and Europe, instead of focusing on the real menace, the No. 1 menace: China.” 

Mr. Schumer was referencing Trump’s decision last week to impose tariffs on America’s closest allies.
While the ZTE drama unfolded Thursday, lawmakers’ ramped-up scrutiny of Google’s deal with Huawei represented another front in the offensive against Chinese tech companies: data sharing. 

Trump administration officials and lawmakers had earlier largely limited their actions to trying to reduce ZTE’s and Huawei’s U.S. footprints. 

Now, members of Congress appear more willing to examine partnerships between U.S. firms and the two companies that have nothing to do with U.S. sales.
A representative for Huawei wasn’t immediately available to comment.
A Google spokesman said in a statement the company looks forward to answering lawmakers’ questions, adding: “We do not provide special access to Google user data as part of these agreements, and our agreements include privacy and security protections for user data.”
Derek Scissors, a China scholar at American Enterprise Institute, said the ZTE deal makes little sense if U.S. policy goals are to both keep Chinese firms out of the U.S. telecom network and keep them from getting access to Americans’ personal data.
“If we don’t trust Chinese telecommunications firms, why are we helping them become more capable?” he said.