US bans China Telecom over national security concerns

Gulf Today Report

US regulators are expelling a unit of China Telecom Ltd., one of the country's three major state-owned carriers, from the American market as a national security threat amid rising tension with Beijing.

The move marks the latest salvo in a long-running standoff that has pitted the world's biggest two economies against each other over a range of issues including Taiwan, Hong Kong, human rights, trade and technology.

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China Telecom (Americas) Corp. is required to stop providing domestic interstate and international service in the United States within 60 days, under an order approved Tuesday by the Federal Communications Commission (FCC).

It also comes as US President Joe Biden presses ahead with a hardline policy against Beijing broadly in line with that of his predecessor Donald Trump, whose bombastic approach sent tensions soaring.

US President Joe Biden speaks during a meeting. File photo

The FCC ordered China Telecom Americas to discontinue its services within 60 days, ending a nearly 20-year operation in the United States.

The FCC cited the danger that Beijing might use the company eavesdrop or disrupt US communications and "engage in espionage and other harmful activities against the United States.

Jessica Rosenworcel, a champion of broadband access for low-income American households, is Biden's choice for permanent chair of the Federal Communications Commission, the White House confirmed on Tuesday.

A Democrat who already serves as acting FCC chairwoman under Biden, she is expected to win US Senate approval for a new term on the five-member telecoms regulator. Biden announced he intends to nominate her for a new term and a White House official said Biden will tap her to become the first woman to serve as permanent FCC chief.

Jessica Rosenworcel testifies during an oversight hearing held in Washington. File/Reuters

The Biden administration has extended efforts begun under then-President Donald Trump to limit access to US technology and markets for state-owned Chinese companies due to concern they were security risks or helping with military development. China Telecom is among companies that were expelled from US stock exchanges under an order by Trump barring Americans from investing in them.

It will also raise the stakes for virtual talks planned to take place later in the year between Biden and his Chinese counterpart Xi Jinping.

"The FCC's decision is disappointing," China Telecom spokesman Ge Yu said in an email, according to Bloomberg News. "We plan to pursue all available options while continuing to serve our customers." There was no response to an email sent to the press contact at the Chinese embassy in Washington.

Tuesday's announcement ramped up concerns about further measures against Chinese tech firms and battered shares in such firms listed in New York. The selling continued Wednesday in Hong Kong, where the Chinese technology firms, and the selling continued in Hong Kong with the Hang Seng tech Index losing more than three percent.

But it has faced turbulence in the United States for years, particularly during Trump's presidency as the former president repeatedly clashed with Beijing over trade.

The company was delisted by the New York Stock Exchange in January along with fellow state-owned telecoms firms China Mobile and China Unicom.

That followed a Trump executive order banning investments by Americans in a range of companies deemed to be supplying or supporting China's military and security apparatus.

The US Justice Department had already threatened to terminate China Telecom's American dealings in April last year, saying US government agencies "identified substantial and unacceptable national security and law enforcement risks associated with China Telecom's operations."

This photo shows a Google sign on the campus in Mountain View, California. File photo

US regulators have also taken action against other Chinese telecoms, notably private giant Huawei.

Trump's White House in 2018 began an aggressive campaign to short-circuit the global ambitions of Huawei, cutting the tech giant off from key components and banning it from using Google's Android services.

"(The move) sends a broader message to Beijing, that regardless of who's president, the US continues to be concerned about the risks posed by Chinese tech firms operating in the US," Martijn Rasser, of the Center for a New American Security in Washington, told Bloomberg.