US companies are being told to avoid doing business with China's two leading technology firms, Huawei and ZTE.
The influential Intelligence Congressional panel in its report says the two companies could be used by China for malicious purposes and pose a national security threat.
And it says US government computer systems should not include any components from the two firms, who are among the world's leading suppliers of telecommunications gear and mobile phones.
The committee received information from industry experts and former employees suggesting that Huawei, in particular, may be violating US laws.
The Chinese foreign ministry dubbed the report prejudiced and called on the US to “respect facts and do more things that are beneficial to Sino-American economic and trade ties”.
Al Jazeera’s Rosiland Jordan reports from Washington DC.