January 21st, 2011
04:22 AM GMT
New York (CNN) – “We are very concerned that these companies are being financed by the Chinese government and are potentially subject to significant influence by the Chinese military.”
The accusation leveled against two Chinese telecoms firms – ZTE and Huawei – in a letter published by some U.S. lawmakers last October. It was designed to undermine a lucrative deal with a U.S. telecommunications company and illustrates the unease and suspicion still present as Chinese President Hu Jintao begins the last day of his high-profile visit to the U.S.
Today, ZTE – the world's fifth largest telecommunications equipment maker – is still pressing ahead with attempts to expand in the United States. But the experience has clearly left its mark on Lixin Cheng, the company’s CEO for North America.
“In the U.S., the fundamental principle is a free economy, free market and a free country,” he told CNN at the firm’s U.S. headquarters outside Dallas. ”Surprisingly I learned from the press that for some projects the government intervenes. I do not believe that should happen.”
Cheng has lived in the United States for ten years, first moving with Swedish telecoms firm Ericsson. And it’s his chosen area of expertise which is proving a flashpoint: The lawmakers say the sensitive nature of the U.S. telecommunications network is vulnerable to espionage. The Pentagon tells CNN they remain concerned about China’s cyber capabilities.
“We're not coming here trying to be a spy,” Cheng said. “We want to be part of the local community and fully comply with all of the regulations and requirements.”
The company says it has made its coding available to a 3rd party audit and – as the United States struggles with stubborn unemployment – can promise jobs. A manufacturing plant is planned. But it comes as Washington grows increasingly wary of the Chinese military, which has historic links to technology companies in China.
State-owned entities do still own a 16% stake in ZTE, but the company denies any influence from the government or military.
This tension between liberal trade and U.S. national security is hardly new: In 2006, the UAE-based Dubai Ports World applied for the management contracts of six U.S. seaports as part of a takeover deal of a British shipping company.
President George W Bush supported the move, pointing out that Dubai was an ally of the United States in the War on Terror. But it triggered a firestorm of controversy, as U.S. lawmakers maintained national security would be compromised.
DP World eventually withdrew their bid and has no presence in the United States. ZTE is growing and is remains optimistic.
“I think the only challenge I see is that people didn't know us enough,” Cheng said. “So we come here today, to talk with you.”
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