US regulators acted on Wednesday to start expelling a unit of China Telecom Ltd., one of the country’s three major state-owned carriers, from the American market after labeling them a national security threat.
China Telecom (Americas) Corporation is required “to discontinue any domestic or international services that it provides pursuant to its Section 214 authority within 60 days”, an order approved on Tuesday by the Federal Communications Commission or FCC stated.
The FCC cited the danger that Beijing might use the company to eavesdrop or disrupt US communications and “engage in espionage and other harmful activities” against the United States.
FCC order finds that “China Telecom Americas, a US subsidiary of a Chinese state-owned enterprise, 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”.
According to the order dated October 27, China Telecom Americas’ ownership and control by “the Chinese government raise significant national security and law enforcement risks by providing opportunities for China Telecom Americas, its parent entities, and the Chinese government to access, store, disrupt, and/or misroute US communications, which in turn allow them to engage in espionage and other harmful activities against the United States”.
The Biden administration has extended efforts begun under then-President Donald Trump to limit access to US technology and markets for state-owned Chinese companies due to concern they were security risks or helping with military development. China Telecom is among companies that were expelled from US stock exchanges under an order by Trump barring Americans from investing in them.
The FCC said in 2019 that due to security concerns it planned to revoke licenses granted two decades earlier to China Telecom and another state-owned carrier, China Unicom Ltd. It rejected a license application by the third carrier, China Mobile Ltd.
“China Telecom Americas’ ownership and control by the Chinese government raise significant national security and law enforcement risks,” said an FCC announcement.
The company’s conduct and communications to U.S. government agencies “demonstrate a lack of candor, trustworthiness and reliability,” the FCC said, without giving details.
The Chinese government has said it would take steps to protect its companies but has yet to announce any retaliation over their status in the U.S. market.
The telecom companies are on a U.S. government blacklist of entities deemed by the Pentagon to be involved in military development. Others include state-owned oil companies, suppliers of processor chips and video technology and construction, aerospace, rocketry, shipbuilding and nuclear power equipment companies.