By Jim Wolf
WASHINGTON (Reuters) - China's biggest telecommunications equipment maker said its 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 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 <000063.SZ>, 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."
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 Huawei paper said.
The Huawei 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 by Huawei. "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)