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SAN JOSE, Calif. (

TheStreet

) -- Amid ongoing debate about how Silicon Valley works with China's controversial regime,

under-pressure

networking giant

Cisco

(CSCO) - Get Free Report

nixed a media report Wednesday that said it is helping build a video surveillance network in the Chinese city of Chongqing.

The

Wall Street Journal

reported Tuesday that Cisco is poised to help build the surveillance network, which is one of the largest and most sophisticated of its type, and will contain up to 500,00 cameras. Officials say that this will be used to fight crime. Human rights advocates, however, have warned that the surveillance network could be used to target political dissent, said the

Journal

.

Cisco has nixed a media report that it is helping build a video surveillance network in the Chinese city of Chongqing.

In a blog post, Marc Chandler, Cisco's general counsel, denied that the company is providing video surveillance technology to the booming city of more than 31 million people.

"As a matter of policy, Cisco has not and will not sell video surveillance cameras or video surveillance management software in its public infrastructure projects in China," he wrote. "We were offered an opportunity to supply those products in Chongqing and, contrary to the suggestion in the article, declined that opportunity."

Cisco, he added, is providing routing and switching gear to support the city's e-government efforts in areas such as education, health care, public safety and transport.

Chandler also pointed out that this is the same equipment that Cisco supplies to other governments and public sector customers, which is in full compliance with U.S. export regulations.

Cisco, however, is no stranger to allegations that its technology has been customized to track dissidents in China -- claims that the company

vehemently denied

in a blog post last month.

The

Journal

reported that the U.S. prohibited the export of crime-control products to China since 1989's Tiananmen Square clampdown, but notes that multi-use technology, like cameras, do not fall into that category.

Talk of a Cisco/China surveillance deal fueled discussion about the ethics of working in a country with a less-than-stellar human rights record. One tech analyst, who asked not to be named, warned that Silicon Valley firms have to play a careful game. "I don't think it's Cisco's role to define law in China," he told

TheStreet

. "If it's obvious that the technology is being used for nefarious purposes by the authorities,

that's a different thing, then you could say 'I am not going to sell this to you'."

Cisco has chatted about China for years, with CEO John Chambers predicting that the country will become the

"crucible" of the tech sector

by the end of this decade. In 2007, Cisco announced a $16 billion, multi-year investment in China, which included a stake in Chinese giant Internet giant

Alibaba.com.

During its recent third-quarter results, Cisco's China orders grew 16% compared to the prior year's quarter, and the networker is one of a host of Western companies vying for a slice of the country's technology build-out.

In addition to Cisco, the

Journal

reported that another U.S. giant,

HP

(HPQ) - Get Free Report

, is also tied to the video surveillance deal. HP has not yet responded to

TheStreet's

request for comment on this story.

Cisco shares were dropping 18 cents to $15.49 in late afternoon trading Wednesday.

--Written by James Rogers in New York.

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