China denounces US govt rejection of Lenovo

May 30, 2006

China denounced Tuesday a US government decision not to use computers made by Chinese firm Lenovo due to security risks as a violation of fair trade and smacking of a “Cold War mentality”.

"This is a discriminatory policy against the normal business of the Lenovo (Group)," Ministry of Commerce spokesman Chong Quan said in a statement.

"It embodies a Cold War mentality and is arbitrarily invoking national security as a reason.

"This decision is unwise, it is an obstacle that violates fair competition and the principles of free trade."

Chong’s comments, posted on the ministry website, were the government’s first on the issue since Washington announced on May 18 that the State Department would not go ahead with a plan to install 16,000 Lenovo computers.

The State Department bowed to angry objections from the US-China Economic and Security Review Commission, a bipartisan panel of experts appointed by Congress, to review the deal for the computers signed in March.

US politicians had said the plan to install the Lenovo computers raised serious concerns given accusations that China was aggressively spying on the United States.

Lenovo last week also voiced its anger over the decision not to install the computers.

"The attitude of the US government is very unfair to a company like Lenovo, which is totally based on market operations. We are deeply concerned," Lenovo Group chairman Yang Yuanqing said in comments reported in the state press.

In 2004, Lenovo acquired the personal computer business of US computer giant IBM for $1.75bn, in what was then the largest buyout of an overseas concern by a mainland Chinese firm.

The takeover was cleared by Washington despite objections from members of Congress about Lenovo being owned by Legend Holdings, which in turn is majority-owned by the state’s Chinese Academy of Sciences.

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