The House of Representatives' Intelligence Committee issued a report earlier this month urging U.S. companies to stop doing business with Huawei and ZTE Corp, the world's No.2 and No.5 telecommunications equipment vendors respectively, over security concerns.

The move has prompted Canada and Britain to also look into similar issues, sparking concerns that it could affect Huawei's business in other markets.

"No, I don't think there will be an impact," Huawei's Senior Vice President Zhang Chunxiang told Reuters, responding to a question on whether its other overseas business would be hit.

Zhang, who spoke on the sidelines of a business event in China's eastern city of Hangzhou, said both sides were still talking and that the U.S. investigation was a sign of trade protectionism.

"They investigated for 11 months and they didn't consider all the different material supplied by Huawei and they still came to that conclusion. They investigated like they never investigated at all," he said.

BLOCKING HUAWEI FOR YEARS

After the almost year-long investigation, the committee warned in a 52-page report that China could use equipment made by both companies to spy on certain communications and threaten vital systems through computerized links.

A staff member of the House of Representatives Intelligence Committee said the panel has been receiving "dozens and dozens" of calls from current and former employees and customers reporting supposedly suspicious equipment behavior, chiefly involving Huawei.

Huawei and ZTE have denied the allegations in the report. Huawei's U.S. spokesman, William Plummer, warned the panel's recommendations would set a "monstrous, market-distorting, trade-distorting policy precedent that could be used in other markets against American companies".

Currently, the U.S. market contributes single-digit percentages to both companies' overall revenues, with the bulk of their sales coming from mobile phones.

Huawei has made previous attempts to sell telecoms equipment to major U.S. carriers, but failed.

"For many years, U.S. has been blocking the entry of Huawei," Zhang said.

The U.S. investigation comes at a time when the United States is headed for presidential and congressional elections In November, with campaign rhetoric heightening trade tensions between Washington and Beijing.

President Barack Obama blocked a privately owned Chinese firm from building wind turbines close to a U.S. military site, and challenged Beijing on Chinese auto and auto-parts subsidies in a World Trade Organization case.

His Republican opponent, Mitt Romney, says if elected he will label China a currency manipulator "from day one".

(Writing by Lee Chyen Yee; Editing by Alex Richardson)

• A Permanent Economic Emergency