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Chinese Telecoms Firms under US Congressional Investigation

21 November 2011

The Chinese phone manufacturer ZTE plans to focus on manufacturing smartphone in a bid to crack the US telecommunications market. ZTE will move from producing lower-end ‘feature phones’ – a hugely successful export to emerging economies like India – and concentrate on fourth generation smartphones.

This latest phase of ZTE’s phenomenal rise from its origins as a trader of accordions and low grade telephones, coincides with growing political tensions between the US and China. The US House intelligence committee recently launched an investigation into the security threat posed by the Chinese technology firms operating in the US market. ZTE and Huawei, another multi-national telecommunications firm, are both under scrutiny.

These developments highlight the sheer structural breadth of the Chinese economy, simultaneously industrialising from subsistence agriculture at one end to manufacturing cutting edge smart phones at the other. It also reveals US concern about losing its primacy in hi-tech innovation. For all the rhetoric about ‘threats to national security’, it is the threat to US business interests that really concern American lawmakers.

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