News Analysis: Contagion effects from "demonized" Chinese enterprises feared

by Hu Juanxin

SINGAPORE, Oct. 15 (Xinhua) -- Although the congressional intelligence committee report, which concluded that Chinese ICT enterprises Huawei and ZTE are threats to U.S. national security, is still not binding, the world should be warned of the contagion effect from such "demonizing" of Chinese enterprises, Wang Jiangyu, Deputy Director of Center for Asian Legal Studies, told Xinhua in recent interview.

As an expert in international trade law and economics, Wang pointed out that the report is a biased assertion with a political end rather than one based on facts and careful analysis.

"He who has a mind to beat his dog will easily find a stick," Wang said, using an old Chinese saying.

A staff from Huawei International based in Singapore said during the past 11 months when the U.S. committee conducted the investigation against Huawei, they had provided lots of resources to the investigators, including documents on the sales numbers, share holders' stakes and financial statements.

They also allowed the U.S. investigators to inspect their research and development centers, training centers, and assembly lines.

"However, their final report was full of rumors and speculations. They did this for only one reason: restraining Chinese ICT enterprises from expanding their market in the U.S.," the Huawei executive said.

Some commentaries also said it is unfair for the U.S. to single out Chinese enterprises in being branded as security risks. The Financial Times raised the example of French Alcatel-Lucent which has more than a third of its sales coming from the U.S. but has not been subjected to the same American investigation.

Besides, Fitch in its recent statement also said "in January, India's Department of Telecommunications warned of potential security issues not just with the Chinese manufacturers, but also with vendors from the U.S., Europe and Japan, and hence emphasized the need for India to become more self-sufficient in telecoms network technology."

"Although the report is not a judicial decision or a legislation, which is legally-binding, it may still cast a shadow on the overseas development of Chinese enterprises," Wang said.

The report may affect not just the short term but also the long- term expansion of Chinese enterprises in the United States. As a result, people may naturally think that it is incorrect, in political term, to cooperate with Chinese enterprise like Huawei and ZTE., Wang said.

"What's even worse is that the judgment may spread to the other countries all over the world, where people, companies and governments may no longer do business with these Chinese companies, " Wang added.

"Yet a more meaningful impact could arise if more countries decide to avoid the Chinese manufacturers over alleged national security concerns," Fitch said.

According to Wang, if the report would be adopted by the U.S. Congress as official U.S. government policy, the Chinese companies may face higher compliance costs than their competitors, which mean that they may find it extremely difficult to do business there.

The Chinese companies can go to court to complain against discrimination, which is theoretically against the principles of the World Trade Organization (WTO), Wang added.

An editorial from Singapore's Lianhe Zaobao said on Friday that once politicians discussed something under the cover of co-called fear, they may prefer political benefits rather than economic gains. Lots of non-tariff trade barriers have been established by several countries in order to protect their own sluggish productivity nowadays.

To paraphrase, the editorial said that the so-called potential national security issues are nothing but non-tariff trade barriers imposed by the government of the U.S., Canada and Australia, countries that are supposed to be the champions of free trade.