US President Biden signs legislation to tighten U.S. restrictions on Huawei, ZTE

U.S. President Joe Biden on Thursday signed legislation to prevent companies like Huawei Technologies Co or ZTE Corp that are deemed security threats from receiving new equipment licenses from U.S. regulators. The legislation, Secure Equipment Act of 2021, will require the Federal Communications Commission (FCC) to adopt new rules that clarify it will no longer review or approve any authorisation applications for networking equipment that pose national security threats.

Last year, the FCC formally designated Huawei and ZTE as national security threats, with that decision being made as the agency found that both companies had close ties to the Chinese Communist Party and China’s military apparatus. Since March, FCC commissioner Brendan Carr has made repeated calls for the legislation to be passed, saying at the time that the FCC has authorised 3,000 applications for Huawei networking equipment to be used.

“Once we have determined that Huawei or other gear poses an unacceptable national security risk, it makes no sense to allow that exact same equipment to be purchased and inserted into our communications networks as long as federal dollars are not involved. The presence of these insecure devices in our networks is the threat, not the source of funding used to purchase them,” Carr said at the time.

Besides Huawei and ZTE, other Chinese companies flagged as national security threats are Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, and Dahua Technology Company. At the end of last month, the FCC also removed the authority for China Telecom to operate in the US, with the telco required to pack its bags and stop providing domestic and international services by the end of Christmas.

Citing a recommendation from the Trump-era Justice Department, the Commission said China Telecom America “failed to rebut” a series of concerns raised.

“China Telecom Americas, a US subsidiary of a Chinese state-owned enterprise, is subject to exploitation, influence, and control by the Chinese government and is highly likely to be forced to comply with Chinese government requests without sufficient legal procedures subject to independent judicial oversight,” the FCC said.

With the US clampdown especially focused on Huawei, alongside other countries following suit, the Chinese tech giant reported a steep decline in its first-half revenue, with its business to the end of June reporting 320 billion yuan in sales, compared to 454 billion yuan at this time last year. In providing the financial results, rotating chair of Huawei Eric Xu said the aim of the company moving forward would be to survive sustainably.