Sat, Nov 24, 2018 - Page 10 News List

US urges allies to avoid Huawei

CYBERSECURITY RISKS:US officials are concerned about the use of the Chinese equipment in nations that host US military bases such as Germany, Japan and Italy

Bloomberg

The US government is contacting key allies to get them to persuade telecoms in their nations to avoid using equipment from China’s Huawei Technologies Co (華為), the Wall Street Journal reported.

US officials have reached out to counterparts and executives in nations including Germany, Italy and Japan about perceived cybersecurity risks, the Journal said, citing unidentified people familiar with the matter.

The US might boost aid for telecommunications development in nations that shun Huawei equipment, some of the people said.

Huawei has long been labeled a security risk by US lawmakers because of alleged links to the Chinese government, in part because it was founded by former military engineer Ren Zhengfei (任正非).

While the Shenzhen-based company has denied any inappropriate connections, it has been banned in Australia from supplying fifth-generation wireless equipment, faced scrutiny in Britain and found itself largely shut out from the US market.

Scrutiny of Huawei has increased since US President Donald Trump came to power as trade tensions between Washington and Beijing escalate.

The closely held company is now the world’s second-largest maker of smartphones and is one of the biggest producers of equipment for running telephone networks.

Huawei did not immediately respond to an e-mailed request for comment.

Asked for comment on the Journal report, Chinese Ministry of Foreign Affairs spokesman Geng Shuang (耿爽) yesterday said that China hoped the relevant nations could provide a fair environment for its companies, Reuters reported.

The spread on Huawei’s 3.25 percent US dollar bonds due in 2022 widened, with investors demanding the biggest yield premium since early July, according to data compiled by Bloomberg.

Analysts cited the story as adding to weak sentiment in Chinese and Hong Kong equity markets, which led regional losses.

US officials are concerned about the use of the Chinese equipment in nations that host US military bases such as Germany, Japan and Italy, the Journal reported.

There is concern about China’s ability to force companies to comply with government requests, it said.

A number of major telecoms directed more than 5 percent of their capital expenditure to Huawei, according to Bloomberg supply chain data.

That includes Telecom Italia SpA, and Japan’s NTT Docomo Inc and KDDI Corp, the data showed.

Huawei has been pouring billions of dollars into developing fifth-generation technology and its potential to become the global leader in the space is said to be a reason why Trump blocked the biggest ever chip deal earlier this year.

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