Security & Fraud

Senators Raise IP Concerns Over Chinese Access

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Telecommunications firms and joint ventures are serving as conduits for China to gain insight and access to intellectual property and sensitive U.S. technologies, according to U.S. senators and intelligence officials.

As reported by Reuters, the alarm bells were raised at a Tuesday Senate Select Committee on Intelligence hearing, where Sen. Richard Burr, a North Carolina Republican, said that “the focus of my concern today is China, and specifically Chinese telecoms (companies) like Huawei … and ZTE Corp., that are widely understood to have extraordinary ties to the Chinese government.”

In other remarks delivered Tuesday, Burr said that within the United States, there has been growth in “counterintelligence and information security risks that come prepackaged with the goods and services of certain overseas vendors.”

The hearing was focused on worldwide threats, and some who testified said China has in place an “all-of-society” approach that looks to utilize subsegments of business and academia to gain hold of intellectual property.

Elsewhere, Sen. Mark Warner, who serves as the Senate Committee’s Democratic vice chairman, also voiced concern over surveillance technologies, remarking on extant relationships between that country’s government and Chinese enterprises focused on technology.

“Some of these Chinese tech companies may not even have to acquire an American company before they become pervasive in our markets,” Warner said, as quoted by the newswire.

U.S. intelligence officials voiced similar reservations, FBI Director Christopher Wray said, in reference to Chinese students: “The reality is that the Chinese have turned more and more to more creative avenues using non-traditional collectors.” The FBI director added that U.S. officials need to look beyond examining transactions on a case-by-case basis and must obtain a “strategic perspective on China’s efforts to use acquisitions and other types of business ventures.”

As has been reported, the hearing came in the wake of legislation last week that had been introduced by Senators Tom Cotton, Republican of Arkansas, and Marco Rubio, Republican of Florida, that would block the U.S. government from buying or leasing telecommunication equipment from Chinese firms Huawei and ZTE, citing security concerns.

“ZTE is proud of the innovation and security of our products in the U.S. market,” said ZTE USA in an official statement. “As a publicly traded company, we are committed to adhering to all applicable laws and regulations of the United States, work with carriers to pass strict testing protocols and adhere to the highest business standards. Our mobile phones and other devices incorporate U.S.-made chipsets, U.S.-made operating systems and other components. ZTE takes cybersecurity and privacy seriously and remains a trusted partner to our U.S. suppliers, U.S. customers and the people who use our high quality and affordable products for their communications needs.”

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