Wed, Jul 04, 2018 - Page 10 News List

Trump moves to block China Mobile

SECURITY CONCERNS:The effect of the ruling to block China Mobile from the US market would be minimal, as most of the firm’s income is from the Chinese market, an analyst said


A woman uses her mobile phone in front of a China Mobile office in downtown Shanghai on Oct. 22, 2012.

Photo: Reuters

The US government on Monday moved to block China Mobile Ltd (中國移動通信) from offering services to the US telecom market, recommending its application be rejected because the government-owned firm posed national security risks.

The US Federal Communications Commission (FCC) should deny China Mobile’s 2011 application to offer telecom services between the US and other countries, the US National Telecommunications and Information Administration (NTIA) said in a statement on its Web site.

“After significant engagement with China Mobile, concerns about increased risks to US law enforcement and national security interests were unable to be resolved,” said the statement, which quoted David Redl, assistant secretary for communications and information at the US Department of Commerce, of which the NTIA is a part.

China Mobile, the world’s largest telecom carrier with 899 million subscribers, did not immediately respond to Reuters’ request for comment.

The move by US President Donald Trump’s administration on China Mobile comes amid growing trade frictions between Washington and Beijing. The US is set to impose tariffs on US$34 billion worth of goods from China on Friday, which Beijing is expected to respond to with tariffs of its own.

ZTE Corp (中興), China’s No. 2 telecommunications equipment maker, was forced to cease major operations in April after the US slapped it with a supplier ban, saying that it broke an agreement to discipline executives who conspired to evade US sanctions on Iran and North Korea. ZTE is in the process of getting the ban lifted and announced a new board last week.

State-controlled China Mobile Communications Corp owned almost 73 percent of China Mobile as of December last year, Thomson Reuters data showed.

China Mobile’s shares yesterday morning fell 2.6 percent to their lowest in more than four years.

However, Ramakrishna Maruvada, a Singapore-based analyst with Daiwa Securities, said the effect of the ruling on China Mobile’s business is “very tiny,” as the company derives most of its income from the domestic market.

“This doesn’t move the needle,” Maruvada said, adding that the timing of the decision was to be viewed in the context of the US-China trade frictions.

In its recommendation, the NTIA said that its assessment rested “in large part on China’s record of intelligence activities and economic espionage targeting the US, along with China Mobile’s size and technical and financial resources.”

The company was “subject to exploitation, influence and control by the Chinese government,” it said, adding that China Mobile’s application posed “substantial and unacceptable national security and law enforcement risks in the current national security environment.”

US senators and spy chiefs in February said that China was trying, via means such as telecom companies, to gain access to sensitive US technologies and intellectual properties.

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