Trump moves to block China Mobile's U.S. entry on security concerns

United States tariffs against billions of dollars worth of Chinese goods are set to kick in on Friday and China has vowed to retaliate.

China Mobile is the world's largest mobile phone operator by customers, with about 899 million subscribers.

The Trump administration has said it does not want one of the world's biggest phone carriers, China Mobile, to provide telecom services within the United States, citing national security concerns.

Though hardly as threatening as the U.S. measures against telecom equipment maker ZTE - China Mobile generates virtually all of its revenue at home - the move comes as the US'/99 is set to impose tariffs on $34bn of Chinese goods on Friday, with China vowing to retaliate in kind.

State-owned China Mobile applied to the US Federal Communications Commission (FCC) for a licence to do so in 2011.

The world's biggest mobile network operator, China Mobile, probably won't get to enter the USA market after the Trump administration moved to block it on national security grounds. China Mobile isn't commenting, but Chinese foreign ministry spokesman Lu Kang is, suggesting the U.S. "abandon Cold War thinking and zero sum games".

Another Chinese firm that has been caught in the crosshairs of the trade spat is ZTE Corp. ZTE, the Chinese telecom equipment maker that was blocked off from USA suppliers in April for violating a sanctions settlement, has seen its stock fallen by about half since the ban was announcement.

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If China Mobile's application went through, it would enable the Chinese government to use it to spy on U.S. government agencies and other targets on domestic phone networks, the agency alleged. ZTE is in the process of getting the ban lifted and announced a new board last week.

While ZTE has been hit hard by the ban as nearly a third of the components used in its equipment come from US suppliers, China Mobile, according to an analyst, will not be hurt much if blocked since it derives most of its income from home.

According to Bloomberg, China Mobile-a state-backed Chinese company-sought to "offer global voice traffic between the US and foreign countries".

The impact of the ruling on China Mobile's business is "very tiny", said Ramakrishna Maruvada, a Singapore-based analyst with Daiwa Securities. "To the contrary, the authorization would pose substantial, unacceptable national security and law enforcement risks". Its shares fell by 2.6 percent on Tuesday morning to their lowest level in more than four years.

In its recommendation, the NTIA said that its assessment rested "in large part on China's record of intelligence activities and economic espionage targeting the U.S., along with China Mobile's size and technical and financial resources".

China and the USA continue to spar over larger trade issues, raising concerns of a looming global trade war.

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