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June 27, 2017

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Huawei rows exposes East-West clash

BEIJING--U.S. security fears over two China telecom firms have spotlighted Western suspicions that Chinese companies are state-influenced, a culture clash that analysts say could loom larger as the country's businesses look overseas.

Telecommunications equipment firms Huawei Technologies and ZTE were put on the defensive this month by a U.S. Congressional committee that labeled them potential national security threats that should be excluded from government contracts and barred from acquisitions in the United States.

Huawei — a private company founded by a People's Liberation Army veteran — and ZTE — publicly traded and less than 16 percent state-invested, according to the corporation — have denied they pose any such security risk.

But countless Chinese companies remain either majority state-owned or maintain intricate government links, a fact noted even by ZTE itself.

ZTE spokesman David Dai Shu said in a statement that the committee's finding that the company may not be free of state influence, "would apply to any company operating in China."

Analysts said the issue could become a recurring stumbling block as more Chinese firms look for expansion opportunities abroad — especially in sensitive sectors — just as China is increasingly viewed as a strategic U.S. rival.

"We've never had a country with a one-party state and a very large state sector that has played such an important role in the global economy, that has been in a position to make investments around the world," said Patrick Chovanec, professor at Tsinghua University's School of Economics and Management in Beijing.

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