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Huawei & ZTE deny US espionage accusations as China blasts "groundless" claims

China has hit back at recent claims that American companies should stop doing business with leading Chinese telecoms firms Huawei and ZTE (opens in new tab) to protect US national security interests.

Referring to the claims made in a report by the US House of Representatives' Intelligence Committee that devices produced by firms based in the Communist superpower state were liable to pose an espionage threat, a spokesman for China's Ministry of Commerce said that the findings amounted to "groundless accusations based on subjective suspicions."

The US report warned that manufacturers Huawei and ZTE could use their products to spy on US infrastructure and communications for the Chinese regime, and urged US network providers and private companies to halt all dealings with Huawei and ZTE, essentially shutting them out of the US market.

The decision is a particular blow for Huawei, which already has a presence in the US mobile market. It had hoped the probe would bring an end to suspicions that had previously killed its bid for US communications company 3Com and US server technology firm 3Leaf.

(opens in new tab)Huawei is led by Ren Zhengfei - an ex-officer in China's People's Liberation Army - whilst ZTE was founded by a group of state-owned enterprises. The duo have aroused suspicion in the States for their government connections and the motives behind some business dealings.

The firms have denied the accusations, calling them "trade protectionism masquerading as national security".

Huawei spokesman William Plummer said the panel's recommendations would set a "monstrous, market-distorting, trade-distorting policy precedent that could be used in other markets against American companies."

ZTE's director of global public affairs, David Dai Shu, also posited a rebuttal.

"After a year-long investigation, the Committee rests its conclusions on a finding that ZTE may not be 'free of state influence.' This finding would apply to any company operating in China. The Committee has not challenged ZTE's fitness to serve the US market based on any pattern of unethical or illegal behaviour," he ventured.

The report was released at a particularly sensitive time for relations between the US and China. The combination of America's presidential election and China's generational leadership transition has resulted in increased foreign policy posturing on both sides.

Economic tensions between the two political superpowers seem especially frayed lately, after US President Barack Obama imposed a series of trade actions against China.

Specifically, Mr Obama blocked a privately owned Chinese company from building wind turbines close to a US military site and also challenged the subsidies provided to China's automotive industry in a World Trade Organisation case.

In a statement on the ministry's website, Chinese spokesperson Shen Danyang urged the US to reconsider its position and co-operate with Chinese firms.

"I hope the United States will abandon the practice of discrimination against Chinese companies, act on the open principles of cooperation to earnestly create a fair and equitable market environment for the businesses of the two countries", he said.