Huawei may be a security risk, but the West should seek to compete with it and other Chinese companies, rather than banning it, said Eric Schmidt, chair of the Pentagon's Defence Innovation Board and former CEO of Google.
Speaking to the BBC, Schmidt said: "There's no question that Huawei has engaged in some practices that are not acceptable in national security."
"There's no question that information from Huawei routers has ultimately ended up in hands that would appear to be the state," he added, although he did not go into detail as to how the US might know this.
However, the main threat posed to the US is its role as technological leader, he went on, saying that like many others he had underestimated the country's capabilities in the past, considering the Chinese to be simply "very good at copying".
"The Chinese are just as good, and maybe better, in key areas of research and innovation as the West," Schmidt said. "They're putting more money into it. They are putting it in a different way, it is state-directed in a way that is different from the West. We need to get our act together to compete."
Rather than turning inwards and seeking to ban Huawei, as the US and the UK are moving to do, Schmidt suggested western countries invest more in research and development, foster greater collaboration between private sector, the state and academia and look to attract the top talent from around the world, including China.
British officials are reported to be in talks with telecoms firms in Japan and South Korea about replacing Huawei in the UK's 5G networks through a trial programme, called "5G Create", which will focus on developing technical capabilities for British 5G networks.
US Republican Senator Tom Cotton warned that allowing Huawei to build 5G infrastructure in Britain could hurt military ties between the two countries.
Huawei has always denied links with the Chinese government. "The allegations made by Eric Schmidt, who now works for the US government, are simply not true and as with similar assertions in the past, are not backed by evidence," said Victor Zhang, Huawei VP, in a media statement.
"Where we do agree, and something we've always said, is that applying standards globally ensures innovation, fosters competition and benefits everyone."
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