* Paper published on eve of House Intelligence Committee
hearing
* Huawei-commissioned paper cites McCarthy-era Red Scare
witch-hunting
* ZTE Corp also is focus of intelligence committee
investigation
(Adds details, comment from spokesman, paragraph 9)
WASHINGTON, Sept 12 (Reuters) - A paper published by China's
biggest telecommunications equipment maker said the company's
path into the United States had been blocked by unsubstantiated
"allegations based on allegations" that threatened to harm ties
between the world's two biggest economies.
The complaint published by Huawei Technologies Co - topped
by a reference to McCarthy-era Red Scare witch-hunting - was
spelled out on the eve of the company's scheduled testimony
Thursday at a rare public hearing of the U.S. House of
Representatives' Intelligence Committee.
The committee is completing a nearly year-long investigation
of security threats allegedly posed by equipment sold by
Shenzhen, China-based Huawei, as well as ZTE Corp, a
smaller cross-town rival also frustrated by challenges entering
the U.S. market.
The concern is that their products may be booby-trapped and
provide the Chinese "an opportunity for greater foreign
espionage, threaten our critical infrastructure, or increase the
opportunities for Chinese economic espionage," the
Republican-led House Intelligence panel said in a notice about
the hearing.
Huawei, second only in telecom gear sales worldwide to
Sweden's Ericsson, pushed back with an 81-page paper titled "The
Case for Huawei in America," published on the web site of its
U.S. subsidiary Wednesday night.
"Much of the evidence fueling lawmakers' concerns remains
classified," said the heavily footnoted paper by Dan Steinbock,
described as an authority on trade and investment and
U.S.-Chinese relations.
"However, when one set of allegations are substantiated with
another set of allegations, the line between investigation and
maltreatment grows thin," the Huawei-commissioned paper said,
decrying "allegations based on allegations."
Continued rebuffs of Huawei in the United States, the
document added, "is giving rise to a de facto blueprint for
mirror-like Chinese measures to protect perceived strategic
industries in the mainland."
William Plummer, a spokesman in the United States for
Huawei, said the words in the paper belonged to Steinbock, not
the company.
FIRST TESTIMONY
A spokesman for the Chinese embassy had no immediate comment
on the congressional hearing. Testifying for Huawei will be
Charles Ding, a corporate senior vice president; for ZTE, Zhu
Jinyun, senior vice president for North America and Europe.
The two are believed to be the first representatives of
major Chinese corporations to testify before a U.S.
congressional committee.
Huawei and Bain Capital Partners were forced to give up
their bid in 2008 for computer-equipment maker 3Com Corp after
the Committee on Foreign Investment in the United States - an
interagency group led by the Treasury Department - raised
objections. Last year, Huawei dropped plans to buy certain
assets from 3Leaf Systems, a computer services company, after
more problems with the foreign investment panel.
An unsuccessful outcome for Huawei in the United States
would have "adverse implications" for U.S.-Chinese relations
far beyond Huawei, the paper paid for by Huawei said.
The paper's cover sheet quoted the U.S. journalist Edward R.
Murrow on Senator Joseph McCarthy, whose "Red Scare" hearings in
the early 1950s become synonymous with reckless, witch-hunt
hysteria.
"No one familiar with the history of this country can deny
that congressional committees are useful," said the Murrow quote
reproduced in the paper. "It is necessary to investigate before
legislating, but the line between investigating and persecuting
is a very fine one."
A White House spokeswoman said President Barack Obama's
administration was looking broadly at the opportunities, risks
and implications of reliance on global, commercial markets, not
aiming at "any particular company."
"We understand the potential for risks to our country
introduced via the supply chain for telecommunications equipment
and services," said spokeswoman Caitlin Hayden.
Across the government, efforts are under way to
institutionalize understanding of the telecommunications
environment for a "nuanced response to risk that addresses
national security concerns as well as the competitiveness of
industry and the U.S. economy," she said by email.
(Reporting by Jim Wolf; Editing by Michael Perry)
