February 8, 2018 / 2:55 AM / in 10 months

UPDATE 1-Senators propose bill to block U.S. from using Huawei, ZTE equipment

(Adds Xinhua commentary)

WASHINGTON, Feb 7 (Reuters) - Two Republican Senators introduced legislation on Wednesday that would block the U.S. government from buying or leasing telecommunications equipment from Huawei Technologies Co Ltd or ZTE Corp, citing concern the Chinese companies would use their access to spy on U.S. officials.

"Huawei is effectively an arm of the Chinese government, and it's more than capable of stealing information from U.S. officials by hacking its devices," Arkansas Senator Tom Cotton said. "There are plenty of other companies that can meet our technology needs, and we shouldn't make it any easier for China to spy on us," he added.

The companies did not immediately return calls seeking comment. In 2012, they were the subject of a U.S. investigation into whether their equipment provided an opportunity for foreign espionage and threatened critical U.S. infrastructure - something they have consistently denied.

The bill, which Cotton introduced together with Florida Senator Marco Rubio, is similar to one introduced in January by two Republican lawmakers in the House, Representatives Michael Conaway and Liz Cheney.

The administration of U.S. President Donald Trump has taken a harder line on policies initiated by his predecessor Barack Obama on issues ranging from Beijing's role in restraining North Korea to Chinese efforts to acquire U.S. strategic industries.

Earlier this year, AT&T Inc was forced to scrap a plan to offer its customers Huawei handsets after some members of Congress lobbied against the idea with federal regulators, sources told Reuters.

The U.S. government has also blocked a string of Chinese acquisitions over national security concerns, including Ant Financial's proposed purchase of U.S. money transfer company MoneyGram International.

The lawmakers are also advising U.S. companies that if they have ties to Huawei or telecom operator China Mobile, it could hamper their ability to do business with the U.S. government, one aide said.

The aide requested anonymity to discuss the matter without being authorized to speak publicly.

Trump and his advisers have called for U.S. trade relations to be based on reciprocity, a principle supported by many U.S. business advocates in China, who maintain that the Chinese market is among the most closed of any major economy.

China's official Xinhua news agency said in a commentary on Thursday that the efforts to block Huawei and other Chinese companies showed the United States was worried about China's rapid development, and it called into question the U.S. commitment to market economics.

"U.S. President Trump always emphasises 'fair trade'. From these cases it is clear that U.S.-style 'fair trade' sacrifices fairness to other countries," Xinhua said.

Reporting by Chris Sanders; Additional reporting by Michael Martina in Beijing; Editing by Tom Brown

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