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The Federal Communications Commission on Thursday denied an application from the firm, arguing that allowing China Mobile access to the U.S. wireless market is not in the public interest.
"China Mobile ultimately is owned and controlled by the Chinese government. That makes it vulnerable to exploitation, influence, and control by that government," FCC Chairman Ajit Pai said in a statement. "There is a significant risk that the Chinese government would use China Mobile to conduct activities that would seriously jeopardize the national security, law enforcement, and economic interests of the United States."
The development comes as the U.S. and China prepare for the latest round of trade negotiations and the Trump administration looks to increase tariffs on $200 billion worth of goods from the Asian nation.
Federal officials and lawmakers have long cautioned on the threat that Chinese telecommunications firms pose to U.S. national security. Congress recently banned federal agencies from using equipment from Huawei Tech and other businesses, prompting the company to sue the U.S. government.
Officials, including FCC Commissioner Geoffrey Starks, say allowing China to access to the U.S. market would effectively give their government unfettered access to telephone lines, fiber-optic cables and communications satellites.
"If it offers the least costly path to carry traffic on a particular route, China Mobile could even end up carrying the communications of US government agencies," Starks, who voted in favor of blocking China Mobile's application, said in a statement.
Huawei has denied the accusations that it operates as a conduit for Chinese espionage in the U.S., instead arguing that the federal government is concerned it could hinder the ability of the intelligence community to collect information.
“We have been trusted for the last 30 years in 170 countries,” Huawei's Chief Security Officer Andy Purdy previously told Fox Business. “There have been no major cybersecurity incidents involving Huawei in the world.”
The U.S. has been pressuring allies to block Huawei equipment from pending fifth generation wireless networks. While some like Australia have taken action, the U.K. and others are still allowing the Chinese firm to play a limited role in the roll-out of the technology.