Regulators say allowing company owned and controlled by Beijing into U.S. market raises too many risks
U.S. regulators on Thursday denied a request by China Mobile to operate in the U.S. market and provide international telecommunications services, saying links to the Chinese government pose a national security risk.
The Federal Communications Commission said that because of China Mobile USA’s ownership and control by the Chinese government, allowing it into the U.S. market “would raise substantial and serious national security and law enforcement risks.”
The decision brings the Chinese telecoms giant’s eight-year effort to crack the U.S. market to an end, but was not really a surprise since FCC Chairman Ajit Pai had publicly opposed the company’s application last month.
China Mobile—the world’s largest mobile operator with nearly 930 million customers as of February—first filed an application for permission to operate in the United States in 2011. The five-member FCC said in a statement that the decision was made after “extensive review” and “close consultation” with national security and law enforcement agencies.
It also marks the first instance in which executive branch agencies have recommended that the FCC deny an application due to national security and law enforcement concerns, the statement said.
The move comes as Chinese tech firms—such as Huawei and ZTE—have faced stiff resistance from U.S. government agencies, which have described them as security threats. ZTE came close to collapse last year after American companies were banned from selling it vital components over its continued dealings with Iran and North Korea.
Federal authorities unveiled sweeping charges against Huawei in January for allegedly stealing technology and violating U.S. sanctions on Iran. The company has also been under fire as it faces a global U.S. campaign to blacklist Huawei over espionage fears.
Washington has barred the Chinese networking equipment company Huawei from developing the new ultra-fast 5G mobile network in the United States and has blocked U.S. government purchases of its services.
Defense of intellectual property in China and getting fair access to that country’s markets have long been points of concern for U.S. tech companies. They are also considered hard-to-fix problems when it comes to trade between the U.S. and China.
Meanwhile, technology has become increasingly vital to national security and economies.
Denial of the China Mobile request came as U.S. President Donald Trump held out hopes of salvaging a trade deal with China, just hours before Beijing’s negotiators were due to return to the bargaining table amid a sudden flare-up in hostilities.
Since last year, the two sides have exchanged tariffs on more than $360 billion in two-way trade, gutting U.S. agricultural exports to China and weighing on both countries’ manufacturing sectors.
The International Monetary Fund also repeated its warning on Thursday that the trade battle between the world’s top economies was a “threat” to global growth.