Citing security concerns, Trump bans China Mobile in US

05 July, 2018, 11:38 | Author: Mary Valdez
  • GUILIN CHINA- NOVEMBER 16 2016 China Mobile. China Mobile is a Chinese state-owned telecommunication company providing mobile voice and multimedia services

Giving China Mobile access to the United States telecommunications market could lead to a spike in Chinese spying, it said.

But the US Department of Commerce has recommended the licence request be denied.

The National Telecommunications and Information Administration (NTIA) of the U.S. said that FCC should deny the entry.

The news comes in the middle of growing tensions between the United States and China, following a supplier ban placed on its global telecoms vendor ZTE in April.

United States tariffs against billions of dollars worth of Chinese goods are set to kick in on Friday and China has vowed to retaliate.

The stock of China Mobile closed Monday at $44.27 per American depositary share, down 12 cents.

The Trump administration has moved against Chinese telecom companies on a number of fronts in recent months, including a decision (later reversed) to bar ZTE from sourcing components to USA suppliers - essentially a death sentence for the firm.

Still, the 205-page, heavily redacted document offered a window into the U.S. government's assessment of national security risks of doing business with Chinese entities, especially one with ties to the Chinese government as close as China Mobile's and in an industry as critical as telecommunications.

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China Mobile, whose shares also trade on the New York Stock Exchange, had applied for a Section 214 facilities-based licence, which would give it the authority to build its own telecommunications network in the United States, connect this network to those run by domestic operators, and offer mobile, broadband and other telecoms services to consumers and commercial enterprises in the country. Customers could include fixed and mobile network operators, calling-card companies, and business customers.

The Chinese government could use links established by China Mobile for economic espionage and intelligence collection, according to the filing.

NTIA, a branch of the Commerce Department, said China Mobile's entry "would pose unacceptable national security and law enforcement risks".

NTIA further said that its assessment rested "in large part on China's record of intelligence activities and economic espionage targeting the USA, along with China Mobile's size and technical and financial resources". China Mobile offered potential solutions to mitigate the presumed risk, but the NTIA found these were not sufficient.

The NTIA's filing certainly makes it clear that the US had national security concerns about China Mobile all along, for years before Trump ascended to the presidency.

The Trump administration is expected to bring into effect the first tranche of 25% tariffs on $34bn of Chinese goods.

Alan is editor at Inkstone. The Hong Kong-based company trades publicly in both NY and on the Hong Kong Stock Exchange.

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