A visitor uses his mobile handset to take a photograph at the Huawei Technologies Co trade stand at the Mobile World Congress in Barcelona, Spain, on Wednesday. [Photo / Agencies]
NEW YORK - Political resistance in the United States to Huawei's latest effort to acquire technology assets from a US company is another instance of intentional efforts to block Chinese investment in advanced technology, according to experts.
Chinese officials appealed to Washington on Thursday for a fair review of Chinese investments after the Shenzhen-based telecommunications company was asked to divest the assets that it acquired in a $2 million patent deal with 3Leaf Systems last May.
The Committee on Foreign Investment in the United States (CFIUS) appears not to be in favor of Huawei's purchase of 3Leaf's technology and has ruled against the deal.
Huawei has referred the CFIUS decision to President Barack Obama, who has the final say on the ruling. "It's clear that there are many cases where the US is using a security review to refuse investment by Chinese companies," said Yao Jian, spokesman for the Chinese Ministry of Commerce, at a briefing in Washington.
"We hope that the US can increase the transparency of the approval process and give Chinese companies investing in the US fair treatment."
Derek Scissors, research fellow at The Heritage Foundation, a Washington-based think tank, said "There is an implicit American prohibition on Chinese participation in advanced technology."
"There is no law barring Chinese investment in advanced technology. The prohibition takes place because the US doesn't trust the Chinese government."
"Huawei is considered to be a State-controlled firm," said Scissors. "If it were a State-controlled French firm, could it have been different? I don't know."
Scissors said Huawei should have been more open in their actions, but that the real problem was the lack of transparency on the US side.
"The US should have clear regulations, rather than hidden barriers. I don't have a problem with any government using real security concerns to block investment. The danger is, if you have an unclear situation, you can abuse your regulations," said Scissors.
"We should have a rule that says, these are the kind of companies that require a review under such and such circumstances. Investors like transparency. China has been criticized for not being transparent. In this particular case, the US is not transparent and we should fix this."
For years, the US government has alleged Huawei has links with China's military.
But, although Huawei's founder, Ren Zhengfei, is a former military officer, the company denies any such ties. Nevertheless, the allegations have resulted in the company's US deals being revoked a number of times.
In 2008, Huawei was forced to abandon a joint takeover of US technology company 3Com, while last year it failed in a bid to tie-up with Sprint, the US telecommunications group.
Other Chinese companies have also been barred from US investments on the grounds of national security concerns. In 2005, China National Offshore Oil Corporation (CNOOC), one of the major State-owned oil companies, was prevented from acquiring US-based Unocal Corporation.
"Given the failure of CNOOC to buy Unocal due to a large degree of political resistance, many Chinese companies have decided not to consider the US as a first choice for investment in sensitive sectors," said David Hofmann, director of InterChina Consulting.
