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Chinese Military Tied to Telecoms, Says Former Intelligence Agent

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The structure of modern Chinese society makes state control -- or at the least, involvement -- a near-certainty.

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MINYANVILLE ORIGINAL Last week on Capitol Hill, executives from Huawei Technologies Co. (002502.SZ) and ZTE Corp. (0763.HK) testified before the House Intelligence Committee in an attempt to assuage US lawmakers' concerns over the telecom companies' continued attempts to capture an increasing share of the US market.

First, a little background by way of Committee Chairman Rep. Mike Rogers's (R-Mich.) opening statement:

We invited these companies today as part of our ongoing investigation into the threat posed to the United States by telecommunications equipment manufactured by companies with believed ties to the Chinese government.

We have heard reports about backdoors or unexplained beaconing from the equipment sold by both companies. And our sources overseas tell us that there is a reason to question whether the companies are tied to the Chinese government or whether their equipment is as it appears.

Huawei and ZTE provide a wealth of opportunities for Chinese intelligence agencies to insert malicious hardware or software implants into critical telecommunications components and systems.

Ranking Member Rep. C.A. "Dutch" Ruppersberger (D-MD) followed Rep. Rogers by voicing his disappointment with "the lack of direct answers" and "vague responses" to the previous questioning of Huawei and ZTE.

"We are here today to give them another opportunity to thoroughly and accurately answer our questions," Ruppersberger said.

The men representing the two firms -- Huawei corporate senior vice president Charles Ding and ZTE senior vice president Zhu Jinyun -- spent several hours making the case for obtaining increased access to the US market.

"We have been hindered by unsubstantiated, non-specific concerns that Huawei poses a security threat," Ding testified.

Are the Concerns Unsubstantiated? Or Are Huawei and ZTE Under Beijing's Control?

"Huawei is an independent private employee-owned company. Neither the Chinese government nor the People's Liberation Army has an ownership interest in our company, or any influence on daily operations, investment decisions, profit distributions, or staffing," Ding told the Committee.

But Michel Juneau-Katsuya, a former senior intelligence officer who served as Asia-Pacific Bureau Chief for the Canadian Security Intelligence Service, says "it cannot exist any other way."

"The Chinese are masters at hiding their true intentions and they have been practicing it since Sun Tzu wrote The Art of War 2,000 years ago," Juneau-Katsuya, who is the founder and CEO of The Northgate Group, a security consulting concern in Ottawa, tells me. "What we saw was a masquerade, a smokescreen to make us believe these companies are not linked to the Chinese government."

Indeed, the military may not get involved in Huawei's day-to-day business, though it appears that American officials have been well aware of numerous ties for years.
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