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Congress committee wants China's Huawei & ZTE shut out of US market

Tension between the US and Chinese manufacturers Huawei and ZTE has intensified, with an American Congress committee suggesting the firms cannot be trusted and should be shut out of the US market.

Having conducted an 11-month investigation, the House of Representatives’ Intelligence Committee says the country needs to be wary of the two companies’ expansion into the US while the private sector should be well-informed about their alleged espionage threat, reports Reuters.

Huawei, led by Ren Zhengfei - an ex-officer in China’s People’s Liberation Army, and ZTE, which was founded by a group of state-owned enterprises, have aroused suspicion in the States for their government connections and the motives behind some business dealings.

Recently, US legislators voiced concern over the pair’s relations with Iran, after ZTE reportedly supplied the Islamic Republic’s largest telecom provider with surveillance equipment. Huawei last month defended its own work in Iran by saying global networking helped to connect “different regions” and “different cultures”, which ultimately worked towards “the progress of human civilization”.

Huang Leping, an analyst at Nomura Securities told Reuters that "The impact will be quite limited if the [Intelligence Committee] report is referring just to telecoms equipment, but it's another story if handsets are included as well. Huawei and ZTE handsets have been consistently gaining market share in the United States."

Chinese foreign ministry spokesman Hong Lei has said that fears in the US are unfounded and called for an end to hostility towards the two electronics giants.

"Chinese telecoms companies have been developing their international business based on market economy principles. Their investment in the United States embodies the mutually beneficial nature of Sino-American economic and trade relations," Lei said at a briefing in Beijing. "We hope the US Congress will set aside prejudices and respect the facts, and also do more that is beneficial to Sino-American economic and trade ties, rather than the contrary."