Yul Kwon:
The House of Representatives Intelligence Committee is discouraging government agencies from purchasing equipment from China's Huawei Technologies and ZTE. Huawei is the largest manufacturer of telecommunications equipment in the world; everything from smart phones to switchers and routers. And it's anxious to expand its business to the United States. But the Committee is worried about the companies' ties to China’s government and military. It fears that their equipment could be used for cyber espionage. Here’s China’s official state broadcaster with a report by one of its American reporters.

Reporter:
Huawei and ZTE, two major telecommunications companies based in China, each doing business in 140 countries around the world, including the United States. But on Monday an explosive report from the US Congress. Its chief authors alleged a cozy relationship between the corporations and the Chinese government: allowing Beijing to access and meddle with critical US technological infrastructure.

Mike Rogers:
Huawei and ZTE seek to expand in the United States. But as a result of our investigation we do not have the confidence that these two companies, with their ties to the Chinese government, can be entrusted with infrastructure of such critical importance.

Reporter:
The reports evidence: the companies failed to explain their relationship with the Chinese government to the satisfaction of the US Congress. The companies acknowledged communist party offices located on site, which is a common practice even for western companies operating in China. The report also points out that Huawei’s founder, Ren Zheng-fei served in the Chinese Army and the company still has military ties.

Bill Plummer:
Huawei is Huawei. Huawei is not China. Whatever concerns that the Committee and the US government has with a state, or the government of another state, or vice-versa, has nothing to do with my company.

Reporter:
The report acknowledges a reality for every country: that national security is increasingly dictated by computer network security which relies increasingly on parts from a global supply chain, including Asia, Europe, and the US.

Bill Plummer:
The world is deeply interconnected and we are increasingly, and will increasingly, rely on the global telecommunications backbone for our personal data and communications, but also for our national security information as well.

Reporter:
As a result, the report calls on the US Government to block acquisitions, takeovers or mergers by Huawei or ZTE. And says high security computer networks should not contain component parts from those companies. The authors also call on Huawei in particular, to be, quote, more transparent. Company spokesperson said limiting his company’s growth will limit job creation in the US and around the world.

Bill Plummer:
These recommendations put at risk American jobs. These recommendations pout at risk hundreds of millions of dollars in investment from outside the U.S. in this country.

Reporter:
And the Chinese foreign ministry spokesman, Hong Lei, responded to all of this with this quote: "Investment by Chinese telecommunications companies showed the countries have mutually beneficial relations. We hope the U.S. will do more to benefit the interests of the two countries, not the opposite." And we should note the Chinese government has actually allowed three US companies to be part of its critical infrastructure, including the American company Cisco Systems.