U.S. Urges American Firms to Shun Chinese Data Service Companies

The Department of Homeland Security warned U.S. firms against using data services and equipment from firms linked to China.

John Harney

24 Dec 2020, 08:34 PM IST

U.S. Urges American Firms to Shun Chinese Data Service Companies

U.S. and Chinese national flags fly outside a company building in Shanghai. (Photographer: Tomohiro Ohsumi/Bloomberg)

(Bloomberg) -- The Department of Homeland Security warned U.S. firms against using data services and equipment from firms linked to China because of cyber security and other risks.

“For too long, U.S. networks and data have been exposed to cyber threats based in China which are using that data to give Chinese firms an unfair competitive advantage in the global marketplace,” Acting Secretary of Homeland Security Chad Wolf said in a letter with a lengthy advisory released on Tuesday night.

“Practices that give the PRC government unauthorized access to sensitive data – both personal and proprietary – puts the U.S. economy and businesses at direct risk for exploitation. We urge businesses to exercise caution before entering into any agreement with a PRC-linked firm,” Wolf added.

The advisory was issued as the Trump administration, in its last weeks, has imposed further penalties on Chinese companies amid continuing deterioration in relations between the two countries. It also comes as U.S. government agencies and companies are still trying to assess the damage from a massive hacking operation that top American officials have blamed on Russia.

President Donald Trump, however, has downplayed the severity of the assault and suggested that China might have been behind it.

The DHS advisory did not address the recent attack in its discussion of “data-related risks American businesses face as a result of the actions of the People’s Republic of China.”

“The PRC’s data collection actions result in numerous risks to U.S. businesses and customers, including: the theft of trade secrets, of intellectual property, and of other confidential business information,” the advisory’s authors wrote.

China said on Wednesday that it would “firmly safeguard our security, sovereignty and development interests.”

“Containment and oppression will not stop China growing strong,” Chinese Foreign Ministry spokesman Zhao Lijian told a briefing, “which will only provoke more contradictions between the two sides and will only make the Chinese people more determined in building a stronger China.”