"US Lawmakers Press Chinese Telecoms Over Military, Government Ties"

The escalating tensions between the United States and China over the alleged ties between Chinese telecom companies and the Chinese military and government have reached a new peak. A bipartisan group of U.S. lawmakers has demanded answers from major telecom providers such as AT&T, Verizon Communications, and Lumen Technologies following a report that Chinese hackers accessed the networks of U.S. broadband providers. This development underscores the deepening mistrust and the complex geopolitical dynamics at play in the global telecommunications market.

The Wall Street Journal reported that hackers obtained information from systems used for court-authorized wiretapping, implicating the three companies whose networks were breached. The lawmakers, led by House Energy and Commerce Committee Chair Cathy McMorris Rodgers and the top Democrat on the committee, Representative Frank Pallone, along with Representatives Bob Latta and Doris Matsui, have called for a briefing and detailed answers by next Friday. They are seeking information on what data was seized and when the companies became aware of the intrusion.

The allegations of ties between Chinese telecoms and the Chinese military and government have significantly impacted investor confidence and the financial performance of these companies. For instance, the U.S. government's actions, such as the Secure Equipment Act and the delisting of Chinese telecom companies from U.S. exchanges, have created uncertainty and concern among investors. The NYSE decision to delist several major Chinese companies, including China Mobile, China Telecom, and China Unicom, has drawn attention from portfolio managers and highlighted the fraught politics of the U.S.-China relationship. This decision underscores the challenges these companies face in the U.S. market, which, although negligible in terms of their overall business, still affects investor sentiment.

The financial performance of these companies has also been affected. For example, China Mobile's U.S. stock has seen a 29% decline over the past year, while China Telecom dropped 30% and China Unicom fell 39%. In contrast, the S&P 500 index returned 18% and the communications-services sector of the MSCI World Index rose 22% over the same period. This underperformance can be attributed to the mounting pressure from Washington, which has stymied their ability to operate in the U.S. and raised concerns about their compliance with U.S. audit rules.

Furthermore, the allegations have led to increased scrutiny and regulatory actions, such as the FCC's revocation of licenses for China Unicom Americas, Pacific Networks, and ComNet. These actions have further eroded investor confidence and highlighted the risks associated with investing in Chinese telecom companies. The U.S. government's efforts to remove Chinese telecom equipment from U.S. networks, as well as the ongoing crackdown on Chinese tech companies, have also contributed to the uncertain environment for these companies.

The U.S. government's actions against Chinese telecom companies have significant economic and geopolitical implications, which could influence future trade relations between the U.S. and China in several ways:

1. Economic Implications:
- Increased Costs for U.S. Telecom Operators: The U.S. government's efforts to remove Chinese telecom equipment from U.S. networks have resulted in significant challenges and increased costs for American telecom carriers. For instance, the FCC's $1.9 billion program to rip out and replace equipment from Chinese telecom companies has not been completed five years later, highlighting the considerable challenges faced by American telecom carriers. Ma Jihua, a telecom industry veteran, noted that "replacing them requires significant cost increases in various areas, including subsequent maintenance. Forcible removal of these devices would also affect user experience" (Global Times, 2024).
- Impact on U.S. Consumers: The U.S. government's actions could ultimately harm the rights and interests of U.S. consumers. Bai Ming, a senior research fellow with the Chinese Academy of International Trade and Economic Cooperation, stated that "It is mixing politics with normal business cooperation, and such practices will ultimately harm the rights and interests of US consumers" (China Daily, 2024).
- Impact on Chinese Companies: The U.S. government's actions have limited impact on the business of Chinese telecom companies in the U.S. market, as the U.S. market accounted for less than 1 percent of ZTE's revenue from January to September 2024. Huawei also stated that its revenue in the U.S. is negligible (China Daily, 2024).

2. Geopolitical Implications:
- Strategic Competition: The U.S. views its relationship with China through the lens of strategic competition, aiming to counter China's unfair trade practices, malicious cyber activity, and global trafficking of fentanyl precursors. The U.S. is committed to countering China's efforts to obtain U.S. technologies to advance its military modernization and enhancing the U.S.'s leading edge in critical and emerging technologies (U.S. Department of State, 2025).
- Manipulation of International Organizations: China has increasingly attempted to manipulate and subvert international organizations and standards-setting bodies to advance its goals globally. The U.S. is committed to promoting accountability for China's violations of human rights within China and around the globe (U.S. Department of State, 2025).
- Impact on U.S.-China Relations: The U.S. government's actions against Chinese telecom companies could further strain U.S.-China relations. China's Ministry of Commerce spokeswoman Shu Jueting called on the U.S. side to immediately correct its wrongdoings and provide a fair, open, just, and nondiscriminatory business environment for Chinese companies investing and operating in the U.S. (China Daily, 2024).

3. Future Trade Relations:
- Potential for Increased Tensions: The U.S. government's actions against Chinese telecom companies could lead to increased tensions between the U.S. and China, potentially impacting future trade relations. The U.S. government's actions have been seen as a form of self-isolation that harms the healthy development of the global telecom industry (Global Times, 2024).
- Potential for Cooperation: Despite the tensions, there is still potential for cooperation between the U.S. and China. The U.S. has emphasized the importance of direct and honest communication with China and has called for dedicated crisis communication channels with regular lines of communication to responsibly manage the U.S.-China relationship (U.S. Department of State, 2025).

In conclusion, the U.S. government's actions against Chinese telecom companies have significant economic and geopolitical implications, which could influence future trade relations between the U.S. and China. While these actions could lead to increased tensions and costs for U.S. telecom operators and consumers, there is still potential for cooperation between the two countries. The world must choose: cooperation or collapse.