The US communications regulator has voted to revoke China Telecom’s licence in America over national security concerns in the latest pushback by Washington against what it deems possible infiltration of key networks by Chinese companies.
The decision by the US Federal Communications Commission (FCC) means China Telecom Americas must now discontinue US services within 60 days. China Telecom, the largest Chinese telecommunications company, has had authorisation to provide telecommunications services for nearly 20 years in the United States.
The news sent stocks in US-listed Chinese tech firms down sharply and their stocks in Hong Kong also suffered hefty selling, pulling the Hang Seng index down more than 1% lower.
The Hang Seng tech index lost more than 3%, with Tencent, Alibaba, JD.com and XD among those taking a hit.
The FCC found that China Telecom “is subject to exploitation, influence, and control by the Chinese government and is highly likely to be forced to comply with Chinese government requests without sufficient legal procedures subject to independent judicial oversight”.
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The regulator added that Chinese government ownership and control “raise significant national security and law enforcement risks by providing opportunities” for the company and the Chinese government “to access, store, disrupt, and/or misroute US communications”.
In response, a China Telecom America spokesperson said the FCC’s decision was “disappointing” and that it would “pursue all available options while continuing to serve our customers”.
Former US president Donald Trump moved the issue to the top of the political and diplomatic agenda in 2019 when he declared a national emergency to ban technology from “foreign adversaries” and subjected the Chinese telecommunications company Huawei to strict export controls. In May 2019, the FCC banned another state-owned Chinese telecommunications company, China Mobile, from providing US services.
Trump then successfully piled pressure on American allies such as the UK and Australia to follow suit and ban Huawei from their 5G networks.
China Telecom served more than 335 million subscribers worldwide as of 2019 and claims to be the largest fixed line and broadband operator in the world, according to a Senate report. It also provides services to Chinese government facilities in the United States.
The US government said in April 2020 that China Telecom targeted its mobile virtual network to more than 4 million Chinese Americans; 2 million Chinese tourists a year visiting the United States; 300,000 Chinese students at American colleges; and the more than 1,500 Chinese businesses in America.
The FCC warned at the same time that it might shut down US operations of three state-controlled Chinese telecommunications companies, citing national security risks raised by US agencies. They were China Telecom Americas, China Unicom Americas, Pacific Networks Corp and its wholly owned subsidiary ComNet (USA) LLC.
The FCC commissioner, Brendan Carr, a Republican, said the regulator “must remain vigilant to the threats posed” by China. The Chinese embassy in Washington did not respond to a request for comment.
US senators Rob Portman and Tom Carper, who issued a report in 2020 on the US operations of Chinese telecom companies, praised the FCC decision in a joint statement that cited “substantial and serious national security and law enforcement risks”.
In March, the FCC began efforts to revoke authorisation for China Unicom Americas, Pacific Networks and its wholly-owned subsidiary ComNet to provide US telecommunications services. It also designated five Chinese companies as posing a threat to national security under a 2019 law, including Huawei, ZTE, Hytera Communications, Hangzhou Hikvision Digital Technology and Zhejiang Dahua Technology.