Taiwanese legislators expressed their worries over the Chinese telecom sector after last week’s release of a US congressional report saying two of China’s largest telecom operators, Huawei and ZTE, posed security threats to America through the use of “backdoor” systems in the equipment being sold.
Hsu Chung-hsin, from the Taiwan Solidarity Union, opposed plans by the national government allowing China to continue investing in the island-nation’s telecom industry. The Taiwanese government is working on the details of opening Type 1 Telecommunications enterprises to Chinese investors.
Hsu cited the recent US intelligence report that Chinese telecom operators were using the equipment they sold to business and government agencies for espionage purposes. The year-long investigation on Huawei and ZTE by the US House of Representatives recommended that both telecom operators be barred from any business activities like mergers, acquisitions, and takeovers in the US Market.
Critiques of the report point out to the timing of its release, as Huawei mulls over an IPO in the States.
According to Hsu, confidential information being held by the Taiwanese government may be compromised in Chinese investment was allowed. He further recommended that the government pass an economic espionage act to protect local businesses from the possible Type 1 investment plans.
Huawei has long penetrated the Taiwanese market. Majority of the island’s 3G wireless network cards are manufactured by the Chinese telecom giant. It has also secured millions of dollars in wireless equipment contracts from Taiwanese telecom operators.