Chinese telecoms companies like ZTE and Huawei face severely tightened access to the U.S. market despite the Trump administration's deal this week to give ZTE a lifeline after it agreed to a steep fine. Amid persistent worries that their phones, routers and other products will open a path for Beijing's spying on the United States, analysts say the U.S. government will remain broadly closed to products of the two companies and that the U.S. telecoms industry will remain under pressure to avoid their equipment. Indeed, four Democratic and Republican senators, criticizing the deal that will permit ZTE to resume purchasing U.S. electronics components, proposed legislation Thursday for an outright ban on the government buying products and services from both ZTE and Huawei.
But experts say the move could hinder the growth of next-generation 5G wireless networks in the United States. The two Chinese companies are poised to become global leaders in the 5G rollout, just beginning this year in several countries.
"The overall concern is that these companies are close to the Chinese government," said Paul Triolo, a China security specialist at the Eurasia Group. With fifth-generation mobile technology, he said, "the concern becomes magnified" because the technology is heavily cloud-based, potentially leaving sensitive data accessible by the service provider.
Indeed, US officials have repeatedly suggested that the two companies could design their equipment to allow Chinese intelligence to hack into American networks and siphon off personal data and communications from cellphones. A 2012 congressional report said the use of Huawei and ZTE equipment in U.S. critical infrastructure "could undermine core US national-security interests." In February, six top intelligence and security chiefs told a Senate panel they would not use equipment from either company. And in May the country's top counterintelligence official, William Evanina, likewise confirmed that ZTE phones are too risky. In 2016, U.S. security consultant Kryptowire discovered that millions of Android smartphones made in China contained firmware that relayed their data, contacts and texts back to a Shanghai marketing company every 72 hours, unknown to users.
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