While this House intelligence report is ostensibly about two telecommunication firms, it includes broad assertions about the increasing sophistication and intensity of China's intelligence gathering efforts. It describes an "ongoing onslaught" of network intrusions originating in China.
Mario Mancuso, a former Under Secretary of Commerce for Industry who was a senior decision-maker on the committee that oversaw export controls of critical technologies, said: "This [House intelligence] report makes plain a simple fact -- that U.S.-China technology transactions and relationships are subject to U.S. government scrutiny generally."
"I think there is a very significant impact beyond Huawei and its prospective U.S. customers," said Mancuso, a partner at the law firm Fried Frank. For Chinese companies looking to invest in the United States, seeking to acquire U.S. assets, patents, and other tech firms, "the issues of U.S.-China technology transfer are squarely on the table. I think they are on the table in a more acute way today than they have ever been."
Darren Hayes, the Computer Information Systems Program chair at Pace University, said the House report adds a new dimension to economic espionage, and could lead to new laws that impact Chinese investment in the U.S. Hayes said there are already some federal agencies that won't purchase some overseas telecom products because there are areas of memory that they can't access and read the code.
What happens next between the U.S. and China over this report is hard to say, but Rob Enderle, the principal analyst at the Enderle Group, said "you shouldn't assume that this problem will spread" to other companies in China. Lenovo, for instance, "is far more expert at dealing with U.S. agencies and much of their executive team is located here not there," he said.
Lenovo is increasing its presence in the U.S., and this month announced plans to open a manufacturing plant in North Carolina. It already has operations in that state that employ about 2,000. "The announcement defies a trend that has seen electronics manufacturing jobs migrate overseas for more than two decades," said North Carolina officials in a statement.
Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed. His email address is email@example.com.
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