Trump moves to block China Mobile from entering US

Andrew Cummings
July 5, 2018

Concerns about national security prompted the Trump administration to recommend preventing China Mobile from entering the US telecommunications market.

Lu encouraged Chinese firms to invest in the United States in accordance with Chinese principles and worldwide rules while observing local laws and regulations.

China Mobile had applied back in 2011 permission to enter the USA market, but this is being blocked over national security grounds.

The recommendation against allowing China Mobile to enter the U.S. telecom market comes amid heightened tensions between the USA and China over trade and telecom.

Back in 2011, China Mobile took the first legal step to make its entrance in the USA market, one that would allow it to offer wireless phone service to individuals within the nation.

A USA setback for China Mobile could set a precedent.

ZTE, the No. 2 telecommunications equipment maker in China, stopped operations in April after the US slapped it with a 7-year ban on technology sourcing saying it broke an agreement to discipline executives who conspired to evade USA sanctions on Iran and North Korea, Reuters reported.

The move comes amid growing tensions between the USA and China, after President Trump imposed tariffs on $34 billion worth of goods from China, as of 6 July.

The Chinese operator requested the licence back in 2011, and the FCC asked the NTIA, which coordinates telecom policy for the United States government, to assess whether the licence was in the USA public interest.

That forced ZTE in May to declare that "major operating activities of the company have ceased", as a effect of the seven year ban on U.S. companies supplying with software and components.

ZTE announced a new board and chairman last week, but its settlement deal with the United States is facing opposition from some lawmakers in Washington.

But Ramakrishna Maruvada, a Singapore-based analyst with Daiwa Securities, said the impact of the ruling on China Mobile's business is "very tiny" since it derives most of its income from the domestic market. "This doesn't move the needle".

The agency said its assessment was also a result of China's "record of intelligence activities and economic espionage targeting the U.S., along with China Mobile's size and technical and financial resources".

"To the contrary, the authorization would pose substantial, unacceptable national security and law enforcement risks".

Shares in China Mobile fell 2.01 percent to HK$68.30 in Hong Kong.

The U.S. and China have quarreled this year over trade, and U.S. officials have alleged that China engages in widespread theft of intellectual property.

The NTIA's filing noted that, were China Mobile to get its "common carrier" license, it would gain more access to USA telecoms network infrastructure-from cables to satellites-that "was created with minimal security features because it was assumed that only trusted parties would have access".

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