U.S. Bans China Telecom Over National Security Concerns

U.S. Bans China Telecom Over National Security Concerns

FCC says company is subject to Chinese government’s control

The Federal Communications Commission revoked the license that allows China’s largest telecom operator to do business in the U.S., citing national security concerns, dealing the latest in a series of blows against major Chinese businesses in the country.

The FCC said it was taking action against the state-owned China Telecom Corp.’s U.S. business because the company was “subject to exploitation, influence, and control by the Chinese government.”

The action follows a recommendation from executive branch agencies during the Trump administration last year and extends from a broader effort to remove Chinese links to U.S. telecommunications infrastructure that has targeted Huawei Technologies Co. among others. The ban comes as communications are stepped up between China and the U.S. and a deal last month between the economic superpowers that led to the release of a Huawei Technologies Co. executive detained in Canada.

China Telecom didn’t immediately respond to a request for comment. Previously, it has denied allegations that it posed a security risk and said it was working cooperatively with U.S. regulators. The company is the world’s largest state-owned telecommunications operator by subscribers, and in the U.S. sells mobile services to U.S. companies and retail customers, targeting Chinese Americans, tourists and businesses.

In May, China Telecom, and its peers China Mobile Ltd. and China Unicom (Hong Kong) Ltd. , lost appeals against being delisted from the New York Stock Exchange, which was moving to comply with an investment blacklist introduced under former President Donald Trump.

The Biden administration has pledged to hold a tough line on China, while earlier this month resuming bilateral trade-policy discussions as the two nations prepare for a long-awaited virtual summit meeting between President Biden and Chinese President Xi Jinping that could happen before the end of the year.

U.S. officials have long harbored fears about the potential for Chinese telecom companies to disrupt or spy on American networks. The FCC has been pushing small rural carriers who use Huawei equipment to replace their gear with that made by Western rivals, and Washington more broadly has sought to hobble Huawei’s 5G business, an effort that has had some success.

The U.S. is also pursuing criminal charges against Huawei, alleging that it stole U.S. technology and violated sanctions on Iran. Last month, U.S. prosecutors agreed to a deal deferring and eventually dropping charges against Huawei’s finance chief, Meng Wanzhou, paving the way for the release of two Canadians held in China for nearly three years.

Members of Congress from both parties have pressed the Biden administration to maintain a hard stance on China despite the deal. Earlier this week, Republicans in Congress sent a letter to Commerce Secretary Gina Raimondo urging a number of actions, including tougher controls on the export of U.S. technology to China.

The U.S. has shown some willingness to allow chip exports to some blacklisted firms, a practice that some members of Congress are trying to rein in. Last week, Republican Rep. Michael McCaul of Texas released data showing the Commerce Department had approved more than $100 billion of export licenses to Huawei and to Semiconductor Manufacturing International Corp., China’s largest chip manufacturer.

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