US bans China Telecom

US bans China Telecom

The China Telecom logo seen in Shanghai. Its US unit was targeted by regulators.
The China Telecom logo seen in Shanghai. Its US unit was targeted by regulators.

WASHINGTON: US regulators on Tuesday terminated the authorization for China Telecom's American subsidiary to conduct business in the United States, citing "significant" national security risks.

The Federal Communications Commission (FCC) vote orders Beijing-controlled China Telecom Americas to discontinue service within 60 days, ending a nearly 20-year operation in the United States -- and undoubtedly ratcheting up tensions between the economic superpowers.

The firm's "ownership and control by the Chinese government raise significant national security and law enforcement risks" by providing opportunities for Beijing "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 FCC said in a statement.

"Promoting national security is an integral part of the Commission's responsibility to advance the public interest, and today's action carries out that mission" to safeguard US telecoms infrastructure.

Hong Kong stocks opened lower on Wednesday morning on the FCC's announcement.

China Telecom is China's largest fixed-line operator, and its shares jumped some 20 percent in August in its Shanghai stock debut.

But it has faced turbulence in the United States for years, particularly during the recent presidency of Donald Trump who repeatedly clashed with Beijing over trade.

The company was delisted by the New York Stock Exchange in January along with fellow state-owned telecoms firms China Mobile and China Unicom following a Trump executive order.

The order banned investments by Americans into a range of companies deemed to be supplying or supporting China's military and security apparatus.

In April 2020 the US Justice Department threatened to terminate China Telecom's American dealings, saying US government agencies "identified substantial and unacceptable national security and law enforcement risks associated with China Telecom's operations."

US regulators have also taken actions against other Chinese telecoms, notably Huawei.

Trump's White House in 2018 began an aggressive campaign to short-circuit the global ambitions of Huawei, cutting the tech giant off from key components and banning it from using Google's Android services.

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