US moves to block China Mobile in American market

U.S. President Donald Trump. Leah Millis Reuters

U.S. President Donald Trump. Leah Millis Reuters

China Mobile (chl) is a state-owned enterprise with nearly 900 million subscribers, and there is now no shortage of distrust in the US regarding Chinese companies with ties to the state, particularly in the telecommunications arena. As of June this year, the operator enjoys over 902 million subscribers, but it seems further growth may be blocked, at least to some extent, by President Donald Trump.

As a result, the NTIA argued granting China Mobile's application would "produce substantial and unacceptable national security and law enforcement risks".

The government of the USA moved to block telecommunications company China Mobile from offering its services to the telecommunications market in the US recommending the application it submitted by rejected due to the firm posing a risk to national security.

And now China Mobile has become the latest entity to be targetted by the US. The license allows authorization under Section 214 of the Communications Act of 1934 for a company to provide telecommunications services, which breaks down into a range of different service areas.

The move to block the firm comes amid growing trade frictions between Washington and Beijing.

In response to the United States move, Chinese Foreign Ministry Spokesperson Lu Kang said: "We urge the relevant party in the USA to abandon the Cold war mentality and zero-sum game".

According to the NTIA, China Mobile could easily be "subject to exploitation, influence and control by the Chinese government" and this is why the agency recommended its application be turned down.

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The decision by the NTIA comes amid an ongoing trade dispute between the US and China, with tariffs on billions of dollars worth of USA and Chinese goods set to take effect later this week.

Another firm based in China that has been focused on by White House officials is ZTE Corp. This is clear in China Mobile's shares declined for only 2% today, July 3 and it is the company's lowest close in over four years!

The FCC wasn't immediately available for comment outside of regular office hours.

A USA rejection is expected to have little impact on the company's income.

The Executive Branch said that "the deepening integration of the global telecommunications market has created risks and vulnerabilities". The NTIA disagreed, saying it considered it likely that China Mobile would comply with requests from the Chinese government. "The extreme delay in granting the application is causing significant and unwarranted harm to China Mobile USA's business operations", the company said in its letter to the FCC at the time.

Although China Mobile said in its filing that it could address those risks, the NTIA told the FCC that the company's proposed fixes wouldn't resolve the concerns.

The Chinese operator requested the licence back in 2011, and the FCC asked the NTIA, which coordinates telecom policy for the USA government, to assess whether the licence was in the U.S. public interest.

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