China's Commerce Ministry harshly criticized a bill proposed by U.S. Congress earlier this month which would ban the purchase and installation of all networking equipment manufactured by Huawei and ZTE in any use case involving critical government systems. During a Thursday press conference, spokesman for the ministry Gao Feng said the move will harm the long-standing cooperation between the two countries in the telecommunications segment and possibly discourage Chinese tech giants from future investments in the United States. The comment was made as part of a wider response to recent moves Washington made to weaken its trade relations with China, accusing the Far Eastern country of pushing for unfair deals.
The criticized bill introduced by the U.S. House on January 9th cites espionage concerns related to networking equipment produced by Huawei and ZTE due to their ties with Beijing. ZTE also suffered severe financial penalties imposed by the U.S. Federal Trade Commission in 2017 after the firm was found to be in violation of trade sanctions imposed on North Korea and Iran, having pleaded guilty in both cases and settled for close to $900 million last March. The company still sells its smartphones through both Verizon and AT&T, as well as the latter's subsidiary Cricket Wireless, but has little hopes of winning any federal networking contracts even without the proposed bill. Huawei is facing similar issues but is also being prevented from entering the U.S. smartphone market in any significant way, i.e. through a partnership with one of the four national wireless carriers. Its deal with AT&T was on the brink of completion earlier this month but ended up falling through after the Dallas, Texas-based telecom giant was pressured to drop it by Washington, insiders said earlier this month.
The U.S. government and Congress are now also said to be pushing AT&T to cut all of its commercial ties with Huawei over the company's backing from China's ruling Communist Party and its military background starting from its founder Ren Zhengfei who was an engineer of the People's Liberation Army. Huawei has little hopes for competing in the U.S. smartphone market in the near future following the development and the company is now turning its international focus to Europe, according to recent reports.