A new U.S. congressional report warns U.S. companies not to do business with two major Chinese telecommunications firms because they pose a security threat.

The report by the House Intelligence Committee also recommends that U.S. government computer systems not include any components made by China's largest phone equipment companies, Huawei and ZTE.

House members say technology in Chinese-manufactured phone components could allow Beijing authorities to intercept high-level communications, gather intelligence and shut down network systems during national emergencies. Lawmakers also accuse both companies of providing evasive responses to the committee's questions during a nearly year-long investigation.

China's foreign ministry rejected the report and said it hopes the U.S. Congress will “set aside prejudices and respect the facts.”

Huawei executives also denied the allegations. They said the company would have too much to lose to collaborate with Chinese cyber-espionage.

Huawei has rapidly grown to become the world's second largest telecommunications equipment manufacturer, with operations in 140 countries. ZTE is the world's fourth largest mobile phone maker.

Huawei employs 1,700 people in the United States. Its U.S. revenues rose to $1.3 billion last year.