The House panel released the report Monday. The report calls out both Huawei and ZTE, Chinese telecommunications firms that provide infrastructure to build out 4G wireless networks.

The overarching allegation is that China could use equipment these companies manufacture to spy on U.S. communications systems and threaten U.S. technology infrastructure. Some U.S. analysts are saying the report is steeped in protectionism and neither China nor Huawei is taking the report lying down.

China Speaks Out

Although the House investigation concluded there are "credible reports" of Huawei's illegal behavior, there is no conclusive evidence that either Huawei or ZTE are installing telecom equipment with hidden codes to transmit information back to China.

"This report by the relevant committee of the U.S. Congress, based on subjective suspicions, no solid foundation and on the grounds of national security, has made groundless accusations against China," said Shen Danyang, a spokesman for China's Commerce Ministry, in a statement on the ministry's Web site.

"I hope the United States will abandon the practice of discrimination against Chinese companies, act on the open principles of cooperation to earnestly create a fair and equitable market environment for the businesses of the two countries, and promote the smooth development of Sino-U.S. bilateral economic and trade cooperation."

Huawei Responds

In a lengthy statement, Huawei said the report failed to provide clear information or evidence to substantiate the legitimacy of the committee's concerns. Huawei said despite its cooperation with authorities, the committee appears to have been committed to a predetermined outcome.

"The report released by the committee today employs many rumors and speculations to prove non-existent accusations. This report does not address the challenges faced by the [information and communications technology] industry. Almost every ICT firm is conducting R&D, software coding and production activities globally; they share the same supply chain, and the challenges on network security is beyond a company or a country," Huawei's statement said. "The committee's report completely ignored this fact. We have to suspect that the only purpose of such a report is to impede competition and obstruct Chinese ICT companies from entering the U.S. market."

Huawei went on to point out its track record in 140 countries and said it is no different than any start-up in Silicon Valley -- its growth and development relies on its entrepreneurial spirit, hard-working employees and commitment to innovation. The company vowed to continue pushing for open markets, cooperative innovation and equal opportunities for all companies in the U.S. and internationally.

Analysts Suspicious

Zeus Kerravala, principal analyst at ZK Research, said he believes the committee's stance is disingenuous.

"I find it interesting that Congress would dissuade companies from buying Huawei based on fears of espionage, because it's not like there is a U.S. alternative," Kerravala told us.

"If you don't buy from Huawei you are basically handing the market to Alcatel and Ericsson, and that creates an almost unfair advantage that seems somewhat un-American. Also, if you look at what we are accusing Huawei of doing, can you imagine if the Chinese said that about our companies?"

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