China clashes with US over new Huawei accusations of intellectual property theft and North Korea dealings

Jodi Xu Klein

Chinese and US officials clashed on Friday over the US Justice’s Department new criminal charges against Huawei Technologies.

On Thursday, the US unsealed a federal indictment accusing the Chinese telecoms giant of conspiring to steal intellectual property from six unnamed US companies and of covering up its business involvement with North Korea. The latest move adds to a series of existing charges against the company, including financial fraud.

Counts of racketeering, obstruction of justice and money laundering were also added to the case.

Chinese State Councillor Wang Yi, who also serves as China’s foreign minister, said he did not understand why the United States was trying to get its allies to attack a private company, according to Reuters.

Chinese Foreign Minister Wang Yi with Austrian Chancellor Sebastian Kurz (left) and Austrian Foreign Minister Alexander Schallenberg at the Munich Security Conference on Friday. Photo: Michael Gruber/Aussenministerium via APA/dpa

He said there was no credible evidence that Huawei has a so-called back door that harms US security.

In a 433-word rebuke on Friday, Huawei called the new charges “political persecution”.

“For quite a while, the US government has been using the strength of an entire nation to come after a private company,” it said in a statement.

The US government “has used every tool at its disposal, whether they be legislative, administrative, judicial or diplomatic, and has even tried to turn public opinion against Huawei to disrupt our normal business operations,” it said.

Pelosi joins Trump in Huawei threat warning in rare bipartisan moment

At a global security gathering in Munich on Friday, Huawei Senior Vice-President John Suffolk dismissed the charges against the company as meritless, saying they were predominantly recycled from civil disputes that had been litigated and settled over the past 20 years.

“They are hoping that if they throw enough mud, some of the mud will stick,” Suffolk said at the conference.

Senior US officials pushed back against Huawei’s defence.

“Over the last couple of years there’s been more than enough evidence of the way the Chinese government has been using its national champions,” said Robert Blair, US special representative for international telecommunications policy, told a press conference.

“So, really, the onus is on Huawei now. They have to show they are a trustworthy partner. They have to separate themselves from the Chinese government.”

Federal prosecutors in Brooklyn said the new charges were related to a decades-long effort by Huawei and four of its subsidiaries, in both the US and in China, to engage in racketeering activities aimed at building the company into one of the world’s most powerful telecoms equipment and consumer electronics concerns.

As a result, Huawei obtained nonpublic intellectual property about robotics, cellular antenna technology and internet router source code, according to the prosecutors.

In response, Huawei released a statement accusing the US of “reintroducing previously resolved civil cases as criminal cases”.

The US accused Huawei of covering up its business involvement with North Korea. Pictured: North Korean leader Kim Jong-un. Photo: KCNA

“This is selective, politically motivated enforcement of the law, and contrary to common judicial conventions,” Huawei’s statement said.

The US allegations “are based largely on resolved civil disputes from the last 20 years that have been previously settled, litigated and in some cases rejected by federal judges and juries,” the statement said.

The company stated that no court had ever found that Huawei had engaged in malicious intellectual property theft, or had required Huawei to pay damages for infringing on others' intellectual property rights.

Why Washington is paranoid about Huawei

Huawei, however, did not comment on the new charges regarding its business dealings with North Korea. Thursday’s indictment accused the company of being involved in a number of projects in the hermit kingdom since at least 2008 and of covering up its activities there.

The new indictment also charged Meng Wanzhou, a daughter of company founder Ren Zhengfei, with making false representation to a bank, leading to the financial institution’s decision to continue doing business with Huawei.

The US government has previously alleged that Meng lied to banking giant HSBC about Huawei’s dealings with Iran because a truthful disclosure might have dissuaded the financial institution from continuing to work with the telecoms supplier.

Washington has been engaged in a global pressure campaign against Huawei after taking a series of tough measures against the company in the last year. In May it placed Huawei on a so-called Entity List to prohibit it from doing business in the US.

US charges Huawei with racketeering, doing business in North Korea

The Trump administration has been cracking down on what it calls “unfair” trade and business practices by Chinese companies to prevent China from gaining an edge over the US in global technology advancement. It is especially concerned about falling behind China in next-generation 5G cellular technology, an area in which Huawei is the world leader.

On Thursday, US Senator Rick Scott of Florida introduced legislation to further restrict US companies from selling products to the Chinese company. The bill attempts to close a loophole that has allowed US semiconductor companies to continue doing business with Huawei through foreign units.

US Senator Rick Scott has introduced legislation to further restrict US companies from selling products to Huawei. Photo: AP

“We know Huawei is supported and controlled by the communist regime in Beijing, which continues to violate human rights and steal our data, technology and intellectual property,” Scott said in a statement. “Companies in the United States should not be allowed to sell to Huawei, and my legislation will further restrict their ability.”

Huawei refuted US claims that any of its products or technologies “have been developed through the theft of trade secrets”.

Britain approves restricted use of Huawei gear in 5G mobile networks

“Huawei's development is the result of our huge investment in R&D and the hard work of our employees over the past three decades,” it said in the statement.

The company said intellectual property disputes are common in the international business sphere. It said data showed that while Huawei is involved in 209 IP lawsuits, Apple has 596 such cases pending and Samsung 519.

The Department of Justice declined to comment beyond the released indictments. Representatives with Apple and Samsung did not respond to requests for comment.

Purchase the China AI Report 2020 brought to you by SCMP Research and enjoy a 20% discount (original price US$400). This 60-page all new intelligence report gives you first-hand insights and analysis into the latest industry developments and intelligence about China AI. Get exclusive access to our webinars for continuous learning, and interact with China AI executives in live Q&A. Offer valid until 31 March 2020.

More from South China Morning Post:

This article China clashes with US over new Huawei accusations of intellectual property theft and North Korea dealings first appeared on South China Morning Post

For the latest news from the South China Morning Post download our mobile app. Copyright 2020.