Lawmaker says Huawei, ZTE may be getting Chinese subsidies

A senior House member conducting a probe into the national security threats potentially posed by equipment from Huawei and ZTE suggested that the Chinese government may subsidize their gear.

Rep. Mike Rogers (R.-Mich.), chairman of the House Permanent Select Committee on Intelligence, suggested that China may be subsidizing network equipment "so it can be multiple times cheaper than any local competitor," and that the probe is looking into whether the gear can be sued to steal information and "establish the ability to do cyber-attacks." Rogers, who was speaking at a conference in Washington, D.C., hosted by Bloomberg Government, said he hopes to complete a report on the topic by late summer, in both classified and unclassified form. He also said legislation may be introduced to combat the possible threats to national security.

Rogers' comments come amid a possible probe by the European Union into whether Huawei and ZTE have engaged in dumping--exporting gear to the market below what they charge at home, in order to undercut European competitors. Earlier this week, Huawei explicitly denied such allegations. Last month Ericsson (NASDAQ:ERIC) and Sweden's trade minister raised concerns that the investigation could cause a trade war with China.  

Huawei spokesman William Plummer told Reuters: "Given that Huawei has publicly and repeatedly and in a detailed fashion debunked this type of misinformation with solid facts, it would be truly unfortunate if such unsubstantiated and unclearly motivated statements persist."

ZTE spokesman David Dai Shu similarly said his company "receives no illegal or hidden subsidies, nor does it dump products in any markets where it operates."

Both Huawei and ZTE have long emphatically denied any direct ties to the Chinese government or military, yet both have had minimal success securing network infrastructure contracts from Tier 1 carriers in the U.S. market. However, both companies' device businesses have found favor with U.S. carriers.

For more:
- see this Reuters article

Related Articles:
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Huawei, ZTE probed on possible Chinese government ties, business in Iran
Huawei's Plummer: Our products are secure, and our handset biz is growing
Huawei acknowledges U.S. missteps, but has hopes for future growth
House Intelligence probe targets Huawei, ZTE over national security concerns

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