Pedestrians walk past a Chinese national flag on an elevated walkway in Shanghai. (Photographer: Qilai Shen/Bloomberg)

U.S. Preparing Trump Order to Restrict Chinese Telecoms, Sources Say

(Bloomberg) -- The Trump administration is preparing an executive order that could significantly restrict Chinese state-owned telecom companies from operating in the U.S. over national security concerns, according to people familiar with the matter.

The order, which hasn’t yet been presented to the president, would not mention companies such as Huawei Technologies Co. or ZTE Corp. by name and would not outright ban U.S. sales by the firms. But it would give greater authority to the Commerce Department to review products and purchases by companies connected to adversarial countries, including China, one of the people said.

Huawei is pushing to take a global leadership position in 5G, but many American officials suspect the company’s products could be used by Beijing to spy on Western governments and companies. Both Huawei and ZTE have also been targeted by the U.S. for alleged schemes to dodge American sanctions on Iran.

Huawei executives have denied that the company is controlled by China’s government or that it’s involved in espionage.

Rumors have abounded that the Trump administration would target Chinese telecom companies with an executive order to ban their U.S. sales. Reuters reported in December that Trump would consider an order declaring a national emergency related to the firms.

Some U.S. companies are preparing for a possible executive order by the Trump administration in the next few weeks that could inflict serious harm on Huawei, perhaps making it impossible for the company to operate, according to James Mulvenon, a China specialist formerly for the Rand Corp. who now works for defense-contractor SOS International of Reston, Virginia.

“The maximal version is that they would have a death sentence for Huawei like they threatened to do to ZTE," the Chinese network-equipment supplier that President Trump spared last year from a threatened cutoff from crucial U.S. parts. “The minimal version is that Huawei will be banned from sales in the U.S.”

An order could be presented to Trump as soon as next month, according to one person familiar with the discussions who asked not to be identified. The order the person outlined would give the Commerce Department discretion to decide which companies and which products to scrutinize.

The preparation of the order comes against the backdrop of Trump’s trade war with Beijing. But national security, not economic concerns, are driving the discussion, the person said.

A spokesman for the White House National Security Council wouldn’t confirm whether an order is in the works.

“The United States is working across government and with our allies and like-minded partners to mitigate risk in the deployment of 5G and other communications infrastructure,” the spokesman, Garrett Marquis, said in a statement. “Communications networks form the backbone of our society and underpin every aspect of modern life. The United States will ensure that our networks are secure and reliable.”

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