A US congressional committee has reported that Chinese telecommunications equipment providers Huawei and ZTE pose a security threat to the US, following a year-long investigation.
A draft of the report from the House Intelligence Committee, which has been widely reported around the internet, said the Chinese firms "cannot be trusted" to be independent of the Chinese government and military, and could be used to undermine US security.
"China has the means, opportunity and motive to use telecommunications companies for malicious purposes," said the report, which is due to be published later today on the committee's website.
The report adds that US authorities "must block acquisitions, takeovers or mergers involving Huawei and ZTE given the threat to US national security interests".
It also warned that the firms could be used for "malicious Chinese hardware or software implants" that could create "a potent espionage tool for penetrating sensitive US national security systems, as well as providing access to the closed American corporate networks".
Both firms have grown quickly over the past decade, becoming dominant in their sectors, despite security fears in some countries. Last year, a US security panel refused to allow Huawei to purchase US IT firm 3Leaf Systems.
Last month, Huawei senior vice president Charles Ding denied that his firm would pass sensitive information onto the Chinese authorities, in a hearing with the congressional panel.
"Huawei has not and will not jeopardise our global commercial success nor the integrity of our customers' networks for any third party, government or otherwise."
ZTE's senior vice president for North America and Europe, Zhu Jinyun, also denied accusations that his firm had put back-door channels into its equipment at the time.
"What they have been calling back doors are actually software bugs," said Zhu, likening them to the sort of vulnerabilities that cause Microsoft to issue patches on a regular basis.
Huawei has also been blocked in other western markets such as Australia, where it was barred from bidding for work on the National Broadband Network, and both Huawei and ZTE face restrictions in India. In the UK, meanwhile, Huawei's telecoms equipment is being examined for hidden back doors by government spy agency GCHQ.
However, in talks last month with prime minister David Cameron, Hauwei's CEO, Ren Zhengfei, announced a UK investment and procurement deal worth £1.25bn, with the potential to create 700 jobs.
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