RPT-China rejects U.S. accusations against telecoms firms

(Fixes typo in headline)

BEIJING, Oct 9 (Reuters) - China rejected on Tuesday as"groundless" U.S. accusations that two top Chinese telecomsequipment makers posed a security risk.

The U.S. House of Representatives' Intelligence Committeeurged American companies on Monday to stop doing business withHuawei Technologies Co Ltd and ZTE Corp. , warning that China could use equipment made by thecompanies to spy on certain communications and threaten vitalsystems through computerized links.

"This report by the relevant committee of the U.S. Congress,based on subjective suspicions, no solid foundation and on thegrounds of national security, has made groundless accusationsagainst China," Shen Danyang, a spokesman for China's CommerceMinistry, said in a statement on the ministry's website.

The U.S. recommendation would exclude Chinese businessesfrom carrying out their normal operations in the United Statesand participating in fair competition, Shen said.

"The Chinese side expresses its serious concern and strongopposition," he said.

The urging by the U.S. congressional committee comes at avery sensitive time for U.S.-China relations, ahead of the U.S.presidential and congressional elections and a transition ofpower to a new leadership in China. It has raised fears ofretaliation by China.

The statement from the ministry came a day after the ForeignMinistry said that Huawei and ZTE operated according to marketrules. Both companies have denied the allegations in the report.

The congressional report violates the rules of the freemarket espoused by the United States, Shen said, adding that itwas not conducive to cooperation between China and the UnitedStates.

"I hope the United States will abandon the practice ofdiscrimination against Chinese companies, act on the openprinciples of cooperation to earnestly create a fair andequitable market environment for the businesses of the twocountries, and promote the smooth development of Sino-U.S.bilateral economic and trade cooperation," Shen said.

(Reporting by Sui-Lee Wee; Editing by Robert Birsel)

((suilee.wee@thomsonreuters.com)(+86 10 6627 1281)(ReutersMessaging: suilee.wee.reuters.com@reuters.net))