Huawei Scraps Bid for 3Leaf

A major Chinese telecoms equipment maker is scrapping its effort to acquire a American computer company after a security panel refused to approve the deal.

American critics said Huawei Technologies Ltd's bid to acquire 3Leaf Systems might allow sensitive technology to be transferred to China.

Huawei had said it hoped to win White House approval despite the recommendation by the Committee on Foreign Investment in the United States to cancel the deal. But in a weekend announcement, Huawei reversed course and said it would withdraw its application.

"This was a difficult decision, however we have decided to accept the recommendation of CFIUS to withdraw our application to acquire specific assets of 3Leaf," the firm said in a statement. "The significant impact and attention that this transaction has caused were not what we intended. Rather, our intention was to go through all the procedures to reveal the truth about Huawei."

China's Ministry of Commerce said Monday it regrets Huawei's withdrawal of its agreement to buy the assets of 3Leaf Systems while under pressure from a US panel.

The ministry said in a statement on its website that it hopes "relevant parties" in the US would "abandon prejudice, avoid protectionist measures and treat properly investments from China and other countries" with a fair, just and open attitude.

In the statement, the ministry called Huawei's planned acquisition of 3Leaf's technological assets "a normal business move" based on market economy rules and its own development needs.

"In recent years, some relevant parties in the United States have used various reasons, such as national security, to hamper Chinese firms' trade and investment activities in the United States," the statement said, adding: "Such obstructions have already had an impact on the Sino-US economic and trade cooperation."

"We believe an open, just and transparent trade and investment environment is good for economic growth for both China and the Untied States and can help facilitate the world economic recovery," the statement added.

Huawei said it "will remain committed to long-term investment in the United States."

Huawei has struggled to gain a foothold in the US against rivals such as Cisco Systems Inc.

In 2008, Huawei and an American partner, Bain Capital, withdrew a request for US government approval of a bid to buy 3Com. The companies said they failed to satisfy national security concerns.

Companies that fail to receive CFIUS approval usually withdraw proposed deals.