Congressional bill aims to snuff out US government use of Chinese tech

US spending bill could spell trouble for ZTE and Huawei

A recently passed Congressional spending bill will require US government organisations to get approval before buying information technology (IT) hardware from China.

The bill forces groups such as Nasa and the Department of Commerce to get approval from federal law enforcement before making IT hardware purchases made by foreign entities. Language in the bill specially points to fears of cyber attacks from China as a reason for the provision.

A stipulation in H.R. 933 states that any IT hardware that is owned, directed or subsided by the China government must receive approval from federal law enforcement officials.

H.R. 933 comes as China and US relations continue to be strained by cyber espionage attacks. A report last month linked China to a slew of cyber attacks on private enterprise. Security firm Mandiant claimed that the China government has hacked 141 companies.

Chinese businesses have also suffered because of cyber espionage allegations. Late last year, US government officials alleged that Chinese firms Huawei and ZTE had unethical ties with the Chinese government.

Officials warned that they could potentially block sales of Huawei and ZTE products in the US. The sales ban would have been based on the idea that the two firms were working with the Chinese government to initiate cyber spying campaigns in the US.

Both firms denied any wrong doing. They claimed the US government was considering a sales ban in an effort to help US tech makers. The firms alleged that US officials were working to ban their products based on a premeditated protectionist agenda.

While the bill could hurt foreign firms, some also believe that it could affect US companies. According to Stewart Baker, partner at Steptoe & Johnson LLP, the bill could create complications for any company that does business with Chinese tech firms.

"This could turn out to be a harsh blow for companies like Lenovo that have so far escaped the spotlight trained on Huawei and ZTE. But it may also bring some surprises for American companies selling commercial IT gear to the government," wrote Baker in a recent blog post.

"It's not clear that they even know which of their suppliers and assemblers are directed or subsidised by the Chinese government. Where the IT system is manufactured doesn't answer the question; sanctions will depend not on where the system is made but on whether the company that supplies it is tainted by close ties to China's government."

It is common practice for US firms to partner with Chinese firms, though some such agreements have been stressed of late. Late last year, Cisco ended its longstanding sales partnership with ZTE following claims that the Chinese telecommunication firm sold Cisco technology to Iran.