The U.S. Department of Commerce is expected to lift — temporarily — export restrictions imposed on China‘s state-controlled ZTE Corporation. This development follows the recent mandated release of classified company documents detailing how U.S. export laws were circumvented to sell controlled items to sanctioned countries. Clearly, this action was a function of vigorous Chinese government protest and possibly threats of retaliation.
The documents indicate that these violations are not exclusive to ZTE, but are committed by several Chinese companies with links to the Chinese government that are kept deliberately ambiguous. Specifically, the document cites a company it calls ‘‘‘F7‘ that has made use of a similar scheme. The New York Times has strongly indicated that F7 is Chinese telecommunications giant, Huawei Technologies.
Descriptions of F7 activities inexorably leads to the conclusion that F7 is Huawei:
- F7 had a failed bid to buy the American company 3Leaf; Huawei withdrew its bid for the same company in 2011 following opposition from U.S. officials
- F7 and the digital security company, Symantec, had a joint venture; In 2012, Symantec dissolved a joint venture that it held with Huawei
Huawei has been using ‘‘‘cut-off companies‘ as devices to continue selling U.S. products in embargoed countries such as Iran, Syria, and North Korea. In 2015, Huawei publicly signed an agreement with the Syrian government to rebuild its telecommunication infrastructure. ZTE documents indicate that in order to protect its relationship with U.S. trade authorities, Huawei is likely motivated to hide similar transactions.
Although Huawei maintains that it is a privately-owned company, U.S. intelligence strongly argues that the company has close ties with the Chinese government, and facilitates Chinese surveillance through the communication networks it builds. The use of such shell companies frequently results in the illicit transfer of technology to regimes that pose a direct threat to U.S. and allied security interests.