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Belt and Road Initiative Featured as Hudson Institute Panelists Debate China’s Economic Sustainability

Adrienne Patton

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Photo of Hudson Institute panelists on China's economy by Adrienne Patton

WASHINGTON, February 18, 2020 – Panelist and Anthony M. Solomon Senior Fellow at the Peterson Institute Nicholas Lardy sparred with Hudson Institute Senior Fellow John Lee on Tuesday over Lee’s recently published reports on China’s economy.

As opposed to China’s communist party’s past approach to underscoring “vulnerability and the challenges facing their country,” now they are “concealing rather than highlighting Chinese vulnerabilities,” suggested Lee.

Lee argues that China cannot be “the dominate power” without a sustainable, strong economy, which he believes has considerable structural flaws. “The main way Beijing has maintaining adequate growth is to support its companies with cheap credit,” said Lee.

Lardy pushed back against Lee’s portrayal of China’s economy.

Lardy said the report fell short of recognizing that “China’s efforts to slow down the growth of credit since 2017 have met with some success.”

“Debt to GDP is no longer rising” in China, said Lardy.

China’s Belt and Road Initiative “began as a scheme to export excess capacity and lock in new regional market for Chinese firms, especially those involving construction, industrial products, infrastructure, and related services,” said Lee.

According to Business Insider, the Belt and Road Initiative (which was announced in 2013) “is a massive trade and infrastructure project that aims to link China to dozens of economies across Asia, Europe, Africa, and Oceania.”

Lee deems this an “attempt to create external commercial opportunities for largely protected and unreformed Chinese firms without the need to reform the country’s economic or political institutions.” Lee sees a deep flaw in China’s economy as the leaders aim to “permanently forestall reform,” said Lee.

In response to Lee’s suggestions in his report to crack down on technology ties with China and limit visas to Chinese students studying in “sensitive areas,” Lardy disagreed. Lardy felt Lee did not acknowledge how such policies would significantly affect the U.S, perhaps more than China, said Lardy.

Lee said that for a long time the U.S. has tried to entertain the idea that there is a “cost-free strategy” to dealing with China, and that is impossible.

Panelists contend with the power of storytelling, especially for a communist regime

Lee pointed out four narratives that “play into the hands of the communist party.”

First, Lee said, “Xi Jinping and the communist party begin from a position of unprecedented strength and national resilience.” However, Lee believes that Jinping is pursuing a risky approach to economic growth and obscuring weaknesses.

Second, “there is a unique economic and governance competence that you have to attribute to the Chinese communist party compared to what we see as the chaos and disfunction of liberal democracy, such as the United States.” But Lee believes that China is reluctant to face grave issues or learn from the past.

Third, the narrative that “China does not need the United States or other advanced economies to achieve its objectives.” However, Lee believes that China cannot attain economic goals without the U.S. and other advanced countries.

Forth, “the United States and other countries have very little ability to influence domestic Chinese politics, especially when it comes to challenging Xi’s authority.” Nevertheless, Lee proposed the idea that there is “internal angst” due to Xi’s approach, and “China is deterrable,” said Lee.

In regards to the Coronavirus, panelists agreed that the outbreak exposed the discomfort that many have with accepting Chinese data and trusting the government. They agreed that China’s focus was on stemming the flow of information and controlling the narrative, rather than openly exposing the issue.

Adrienne Patton was a Reporter for Broadband Breakfast. She studied English rhetoric and writing at Brigham Young University in Provo, Utah. She grew up in a household of journalists in South Florida. Her father, the late Robes Patton, was a sports writer for the Sun-Sentinel who covered the Miami Heat, and is for whom the press lounge in the American Airlines Arena is named.

China

Huawei’s Success In China A Win For Washington, Expert Says

The Chinese telecom giant is finding greater financial success on home turf, keeping it away from the U.S.

Benjamin Kahn

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Photo of Scott Malcomson via Inc.com

April 16, 2021— The Biden administration’s current maintenance of the previous government’s policy on isolating Chinese technology companies is appearing to pay off, according to experts.

Huawei, which has become the American symbol of alleged Chinese espionage, has seen increasing success in its home country of China, which is where the U.S. wants it to stay, experts say.

“The more you isolate Chinese tech companies, the more the [Chinese] government keeps them at home,” said “Splinternet” author and journalist Scott Malcomson at a Techonomy panel on Wednesday. He added that this strategy is beginning to pay off, citing the Chinese market now being more profitable for Huawei than going abroad.

The United States has instituted a number of restrictions against Chinese telecommunications companies like Huawei and ZTE, which has forced these companies to pivot.

He described China’s “soup to nuts” effort to establish a completely independent network: everything from satellites, to undersea fiberoptics, to e-commerce companies—China’s primary goal was to be able to handle all these sectors domestically.

Joy Tran, who is senior vice president of public affairs for Huawei Technologies USA,  corroborated the company’s domestic success, saying the Chinese market is now the biggest part of Huawei’s portfolio, which makes up 65 percent of its global revenue.

But Tran also said the company has always been completely compliant with Chinese and American law. “The US government really never told us about their concerns—we don’t understand [why Huawei is restricted from U.S. networks].”

Tran stated that Huawei has never had any “cybersecurity related issues,” and pointed to Huawei’s long-term operation in the U.K. as evidence that Huawei is not a bad-faith actor. Huawei also has deep relationships with academic and government institutions in Canada, which is the only country in the Five Eyes intelligence pact – which includes the U.S., Australia, New Zealand, Australia – that has yet to make a determination about whether to ban Huawei from parts of its 5G networks.

Security concerns with Huawei

Tran also attempted to dispel the notion that the Chinese government forced Huawei to maintain backdoors into their hardware and software for spying purposes.

Though the U.S. government has long maintained the opposite, Malcomson argued that the point was moot. “Frankly, if you have a front door, you don’t really need a back door.” Malcomson said that the backdoor argument was merely a red herring that distracted from China’s aspirations and behaviors it had engaged in over the past several years.

Zachary Karabell, another author and former head of a financial services firm, argued Wednesday that the ongoing duel between the U.S. and China over Huawei’s standing was emblematic of the entire U.S.-China relationship.

Karabell’s position is that the question needed to be reframed: the question that needs to be asked is not, “Is the U.S. spying on China and is China spying on the U.S.?” The answer is clearly, yes.

The question that Karabell believes has not been sufficiently addressed is whether the production of equipment and the location of where said equipment is produced offers a competitive edge for intelligence gathering efforts.

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Loopholes Allowing Private Purchase Of Chinese Goods Must Be Closed: Commissioner Carr

Derek Shumway

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Screenshot taken from CSIS event

April 5, 2021 – Loopholes that allow U.S. companies to use private funds to purchase equipment from Chinese-based companies like Huawei and ZTE should be closed, Federal Communications C Commissioner Brendan Carr said Tuesday.

Carr said last week at a virtual event hosted by the Center for Strategic and International Studies that while the U.S. government has been able to prevent companies from spending federal dollars on Chinese telecom equipment, legal loopholes still persist that allow companies to use private funds to purchase such equipment, leaving agencies like the FCC helpless in preventing these transactions.

Communist China has made it clear it wants to dominate the global semiconductor and chip market, and it is not opposed to using forced labor to achieve that goals. Be it garage door openers or computers, nothing should be allowed if it has ties to Uighur-related forced labor, Carr said.

“The CCP is committing genocide—crimes against humanity—in Xinjiang,” he noted.

Carr spoke broadly about the continued threats Chinese telecom equipment poses to U.S. national security interests.

Secretary of State Antony Blinken outlined the new Biden administration’s strategic vision for U.S. foreign policy and identified China as the top geopolitical challenge facing the United States.

Commissioner Carr said there are bipartisan commitments to address threats from China, and that the FCC can continue to take steps to protect the U.S.’s 5G network infrastructure, including moving to block approval of devices that contain parts made from companies with ties to “Communist China,” or forced labor from places like Xinjiang.

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FCC February Meeting Targets 911 Fee Diversion and Replacing Foreign Telecommunications Equipment

Tim White

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February 17, 2021 – The Federal Communications Commission adopted two proposals in Wednesday’s meeting: Seeking comments on rule changes for 911 fee diversion, and also the secure and trusted network reimbursement program.

The first proposal seeks comment on a 911 fee diversion rule that would define what constitutes a diversion of those funds from their intended use. Part of the Consolidated Appropriations Act of 2021, passed in December 2020, requires the FCC to issue these rules. Fees from 911 are levied by state and local governments to help pay for the operating costs of emergency services, which consumers pay through their phone bills.

The rule change intends to prevent states from diverting some of those funds for purposes other than 911 operations.

“Both Congress and the commission have long recognized that 911 fees should serve 911 purposes and have worked to combat fee diversion,” said Commissioner Geoffrey Starks.

According to the FCC’s 2020 report, five states diverted over 200 million dollars from the 911 fees they collected. The vast majority of fee diversions occur in New York and New Jersey, according to National Emergency Number Association’s Brian Fontes.

The second proposal seeks comment on the secure and trusted network reimbursement program, which subsidizes funds to companies for replacing communications equipment due to national security concerns.

Several of the commissioners expressed concern about Chinese companies Huawei and ZTE technologies being used in the United States due to their ties to the Chinese government.

The Consolidated Appropriations Act of 2021 allocated $1.9 billion to “remove, replace, and dispose of communications equipment and services that pose a national security threat,” said the FCC’s news release.

Both proposals received 4-0 affirmative votes.

Also notable during Wednesday’s meeting was Acting Chairwoman Jessica Rosenworcel’s announcement of a new task force to address poor broadband mapping data. Jean Kiddoo was named chair of the task force.

During a press call following the meeting, Rosenworcel said that she supports spectrum sharing, which would allow providers to share space in certain areas of the radio wave spectrum. There are a lot of entities interested in the popular bands of the spectrum, and we need to be creative and efficient in how we use that space, she said.

Rosenworcel’s position conflicts with the Cellular Telecommunications Industry Association, a trade association comprised of many communication companies, which supports exclusive access to parts of the spectrum.

Wednesday’s meeting marks the first FCC meeting chaired by Rosenworcel in her new position as acting chairwoman. She can serve in that position until President Biden puts forward a candidate to serve as chairman or chairwoman, and that candidate is confirmed by the Senate. Because Rosenworcel was already confirmed as a commissioner, she can serve in that role until her term expires.

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