- The Washington Times - Thursday, September 1, 2011

A Pentagon report has found that a multibillion-dollar Chinese telecommunications company that has been seeking to make major inroads in the U.S. market has close ties to China's military, despite the company’s denials.

The Pentagon’s annual report to Congress on China's military, released last month, identifies Huawei as a high-tech company linked to the People’s Liberation Army (PLA).

“The shipbuilding and defense electronics sectors, benefiting from China’s leading role in producing commercial shipping and information technologies, have witnessed the greatest progress over the last decade,” the report states. “Information technology companies in particular, including Huawei, Datang, and Zhongxing, maintain close ties to the PLA.”

That last sentence prompted Huawei’s vice president for external relations, William Plummer, to write a letter last week urging Defense Secretary Leon E. Panetta to rescind the allegation.

“This reference has no basis in fact and unjustly perpetuates an aura of doubt and distrust around Huawei that has the effect of prejudicing potential U.S. customers away from the products and solutions that will modernize our communications infrastructure,” Mr. Plummer wrote.

At issue for Huawei is widespread concern among U.S. military and intelligence agencies that Huawei’s switches, chips and firmware contain “back doors” that can give China's military the equivalent of listening posts all over the U.S. telecommunications infrastructure.

Huawei’s defenders have countered that the company is being singled out because it is based in China and that U.S. companies such as Cisco Systems contract the development and production of their equipment to foreign countries and are at the same risk for back doors as the gear sold by Huawei.

In the past four years, Huawei has tried to acquire American high-tech companies and win contracts to build up the U.S. 4G wireless network. The company’s efforts, however, have run into resistance from the U.S. government.

In 2008, the Treasury Department-led Committee on Foreign Investment in the United States blocked a proposed sale of the software company 3Com to Huawei, based on national security concerns.

Last year, representatives of the National Security Agency urged major telecommunications companies such as AT&T and Sprint to cancel a deal that would put Huawei firmware and hardware on the cell towers of the 4G wireless network.

“U.S. businesses and government entities should be very wary of entering into business with any of the companies identified by the Pentagon’s report on Chinese military power as having ties to the People’s Liberation Army,” said Dan Blumenthal, a resident fellow at the American Enterprise Institute and a former China policy official at the Pentagon.

“The report is vetted by the secretaries of state and defense and the national security adviser. It represents the consensus view of the U.S. intelligence community,” Mr. Blumenthal said.

In his letter to Mr. Panetta, Mr. Plummer said: “Huawei has always operated and continues to operate, independent of any ownership, control, or linkage with the Chinese government or military.”

He added that Huawei’s equipment has “been audited and passed the security requirements of 45 of the top 50 global telecommunications operators. No customer or government has ever found any variance from international standards at any time, including those material to national security.”

Huawei was founded in 1988 by Ren Zhengfei, a former PLA engineer. The company has provided wireless network products to many countries in the Third World and more recently has helped build the wireless network for the United Kingdom.