US Moves to Block China Mobile’s Entry Into US Market on Security Concerns

July 3, 2018 Updated: July 3, 2018

SHANGHAI/HONG KONG—The U.S. government has moved to block China Mobile from offering services to the country’s telecommunications market, recommending that its application be rejected because the firm posed national security risks.

The move by President Donald Trump’s administration comes amid growing trade frictions between Washington and Beijing. The United States is set to impose tariffs on $34 billion worth of goods from China on July 6, which Beijing is expected to respond to with tariffs of its own.

The National Telecommunications and Information Administration (NTIA), an agency under the U.S. Department of Commerce,  said in a statement that the Federal Communications Commission (FCC) should deny the state-owned Chinese firm’s 2011 application to offer international voice call services between the United States and other countries. The FCC is a government agency that regulates internet, television, radio, and other forms of communication.

“After significant engagement with China Mobile, concerns about increased risks to U.S. law enforcement and national security interests were unable to be resolved,” said the statement, quoting David Redl, assistant secretary for communications and information at the U.S. Department of Commerce.

The NTIA said its assessment rested “in large part on China‘s record of intelligence activities and economic espionage targeting the U.S., along with China Mobile‘s size and technical and financial resources.”

It said the company was “subject to exploitation, influence, and control by the Chinese government” and that its application posed “substantial and unacceptable national security and law enforcement risks.”

An FCC spokesperson told Bloomberg that the agency would review the filing.

China Mobile, the world’s largest telecom carrier with 899 million subscribers, did not immediately respond to Reuters’ request for comment.

The state-owned firm China Mobile Communications Corp. owns almost 73 percent of China Mobile as of December, according to Thomson Reuters data.

China Mobile shares closed down two percent on July 3, their lowest close in more than four years, after news of the NTIA recommendation to block the firm’s U.S. entry.

Another Chinese firm that has been caught in the crosshairs of the trade spat is ZTE.

China‘s No. 2 telecommunications equipment maker was forced to cease major operations in April after the United States slapped it with a supplier ban saying it broke an agreement to discipline executives who conspired to evade U.S. sanctions on Iran and North Korea.

ZTE is in the process of getting the ban lifted and recently announced a new board, but its settlement deal with the United States is facing opposition from some lawmakers in Washington.

U.S. senators and spy chiefs warned in February that China was trying, via means such as telecommunications firms, to gain access to sensitive U.S. technologies and intellectual properties.

Such concerns, however, are not deterring Chinese smartphone maker Xiaomi, which is set to press ahead with plans to enter the United States market next year.

By Brenda Goh and Sijia Jiang. Epoch Times staff member Annie Wu contributed to this report.

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