It’s not being called the “red scare,” but Lenovo is once again caught up in concerns about cybersecurity, cyberspying, cyberespionage, cyberfear, cyberpolitics and cyber (add your own word) between China and the U.S.

Lenovo declares on its website: “Find leading federal government computing solutions including laptop, desktop and tablet computers, servers and more. Call for details … Our experience in the Federal sector has taught us to expect the unexpected …”

But is that target market at risk for Lenovo now?

This security threat issue has happened before.

Remember when shortly after Lenovo acquired IBM’s PC business when Washington went nuts about concerns that Lenovo hardware sold to the government might be packed with secret Chinese spy tools?

“The U.S. Department of State will not use Lenovo Group Ltd. computers on a classified network because of ongoing concerns about the company’s Chinese government ties, a U.S. congressman has announced,” Cnet reported in 2006.

Is high-tech Chinese espionage a real threat?

Well, read this passage from The Wall Street Journal just a year ago:

“Using seven passwords stolen from top Nortel executives, including the chief executive, the hackers—who appeared to be working in China—penetrated Nortel’s computers at least as far back as 2000 and over the years downloaded technical papers, research-and-development reports, business plans, employee emails and other documents, according to Brian Shields, a former 19-year Nortel veteran who led an internal investigation.”

Nortel is bankrupt and finished.

Lenovo’s crisis ultimately passed, but a newer, potentially bigger one has emerged, writes lawyer Stewart A. Baker, a former assistant secretary in the Department of Homeland Security in the George W. Bush administration.

Regarding legislation raising concerns about China, Baker points out in a blog:

“This could turn out to be a harsh blow for companies like Lenovo that have so far escaped the spotlight trained on Huawei and ZTE. But it may also bring some surprises for American companies selling commercial IT gear to the government. It’s not clear that they even know which of their suppliers and assemblers are directed or subsidized by the Chinese government. Where the IT system is manufactured doesn’t answer the question; sanctions will depend not on where the system is made but on whether the company that supplies it is tainted by close ties to China’s government.”

Huawei and ZTE both ran into a buzz saw when A proposed Sprint-Softbank deal might have led to inclusion of Chinese gear in its network. Sprint just hours ago said it would exclude the two firms from its network, hoping to land government approval for its big investment deal with Softbank.

The Wall Street Journal reported on Thursday that the government wanted the right of approval on network purchases.

So what does all this have to do with Lenovo?

Lenovo is an international company which employs thousands of Americans and operates its executive headquarters in Morrisville. But the world’s No. 2 PC manufacturer was founded in China and maintains most of its operations there.

But Baker says Lenovo is caught up in the anti-China frenzy. 

“Demonstrating remarkable bipartisan angst about Chinese hacking and the risks in Chinese high tech equipment, Congress has added tough sanctions to the continuing resolution that funds the federal government and is now awaiting the President’s signature,” he wrote. “The sanctions provision bars federal government purchases of IT equipment ‘produced, manufactured or assembled’ by entities ‘owned, directed, or subsidized by the People’s Republic of China’ unless the head of the purchasing agency consults with the FBI and determines that the purchase is ‘in the national interest of the United States.'”

He then cited passages in the appropriations legislation:

“Sec. 516. (a) None of the funds appropriated or otherwise made available under this Act may be used by the Departments of Commerce and Justice, the National Aeronautics and Space Administration, or the National Science Foundation to acquire an information technology system unless the head of the entity involved, in consultation with the Federal Bureau of Investigation or other appropriate Federal entity, has made an assessment of any associated risk of cyber-espionage or sabotage associated with the acquisition of such system, including any risk associated with such system being produced, manufactured or assembled by one or more entities that are owned, directed or subsidized by the People’s Republic of China.

“(b) None of the funds appropriated or otherwise made available under this Act may be used to acquire an information technology system described in an assessment required by subsection (a) and produced, manufactured or assembled by one or more entities that are owned, directed or subsidized by the People’s Republic of China unless the head of the assessing entity described in subsection (a) determines, and reports that determination to the Committees on Appropriations of the House of Representatives and the Senate, that the acquisition of such system is in the national interest of the United States.”

Baker says President Obama faces a tough choice: Sign the bill which is part of avoiding a government shutdown or take political heat for a veto. 

Concludes Baker: “A veto is even less palatable than living with the provision.”

That doesn’t sound like good news for Lenovo. 

[LENOVO ARCHIVE: Check out eight years of Lenovo stories as reported in WRAL Tech Wire.]