The U.S. Department of Commerce ruled Monday that China Telecom, the fifth-largest telecommunications provider in the U.S., may no longer be allowed to operate in the country. The ban came in response to repeated government inquiries into the telecom’s involvement in China’s network control, which it did not challenge at hearings, the government said.
China is a major investor in IT hardware and software, including network control systems, software, servers, routers, and data storage.
Chinese telecoms control the vast majority of international telecoms networks, telecommunications equipment markets, and core IT resources. This dominance gives China’s military a unique advantage in operations beyond its own borders.
China Telecommunications allegedly had contacts with China’s Ministry of Defense and the Ministry of Foreign Affairs, the Department of Commerce said. If China Telecom’s operations, including equipment for high-frequency military communications, continue to be subject to “unnecessarily red tape” at the U.S. government level, the Commerce Department said in a statement, the firm could be excluded from business “all together.”
“Today’s decision ensures that U.S. businesses have full and fair access to the Chinese market, and it prevents foreign-controlled companies from gaining access to key U.S. networks through red tape that grows larger with every regulator. This measure helps to protect U.S. national security interests, and allows U.S. businesses to compete fairly for technology and services,” said Keith Cardwell, the Acting Director of the Office of Defense Trade Controls Compliance.
China is an important trading partner with the U.S., and its strength there increases the economic sophistication of its military capabilities. China has become a more and more important strategic partner in advanced electronics, and particularly for high-frequency and highly secure communications. The military use of high-frequency communications for naval exercises and to guide cruise missiles has been evolving very rapidly over the past few years.
The U.S. Army decided in 2016 to acquire new telecom networks for the battlefield, a decision which sparked criticism from China’s government and private industry. “Unfortunately, this decision has created a disruptive source of supply and created a very dangerous situation, which will harm military operations”, China Foreign Ministry spokeswoman Hua Chunying said at the time.
With the Department of Commerce’s decision, China is largely alone among the developed countries in its efforts to acquire high-frequency equipment, make the necessary investment in low-frequency equipment, and control and support it from a multitude of sources.
