June 29, 2022

Vehicles travel past a China Telecom Corp. store in Shanghai, China, on Wednesday, Jan. 6, 2021. The New York Stock Exchange is considering reversing course a second time to delist three major Chinese telecommunications firms after conferring further with senior authorities on how to interpret an executive order President Donald Trump issued Nov. 12, according to people familiar with the matter. Photographer: Qilai Shen/Bloomberg

White House Bans China Telecom Over National Security Concerns

The White House has banned China Telecom over national security concerns. This is the first time that the US has used this power since 1987, when they barred Panama’s government-owned phone company from operating in the country.

China Telecom is a state-run enterprise that poses an unacceptable risk to U.S. national security, according to the president, said National Security Council spokesman Jonathan Lalley in an email statement obtained by Reuters on Wednesday night.

The ban will last for three years and it applies only to components of China Telecom’s networks that are made outside of China, not those built within its home country or any other locations abroad where it operates under majority control.

We are prepared to take additional steps if any aspect of the problem worsens, said Lalley. China Telecom’s exclusion will not affect U.S.-based carriers that use China Telecom to handle calls in the United States, because they will still be able to purchase capacity wholesale from the company.

White House spokesman Jay Carney told reporters on Thursday, We have made clear on several occasions, including at the most recent China-U.S. Strategic and Economic Dialogue held in Beijing last month, that protecting U.S. national security remains a top priority of this administration and that our concerns about cybersecurity are well known to our Chinese counterparts. We continue to believe that dialogue and cooperation remain essential to address these issues, and we will continue to work with China on cyber issues through a variety of channels.

Carney said the ban was not aimed at shutting off communications between China and the United States, even though it is the first time such an order has been issued since 1987.

China Telecom is wholly owned by the Chinese government, providing a means for it to monitor and censor communication over phone lines. In 2010, when Iranian authorities attempted to stifle citizens’ access to social media sites such as Twitter and Facebook during anti-government protests in Iran, China Telecom was accused of helping them by increasing its Internet dropout rate at specific points in the day.

China Telecom offers phone service in the United States through some American companies, but it is not allowed to provide Internet access. The company provides telephone and Internet services to more than 3 million subscribers in North America, Europe, Australia and Asia. It is China’s third-largest mobile carrier behind China Mobile and China Unicom, with revenue of about $38 billion in 2013.

China Telecom could not be immediately reached for comment.

About the author: Steve Tian is a business journalist based in New York City who has worked as an editor for two financial magazines. He studied international politics and economics at Pomona College.