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Charter Cities Could Help America Counter Chinese Soft Power, Says Lincoln Network Panelist

Jericho Casper

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Screenshot of Mark Lutter in a Lincoln Network webinar on Tuesday

July 22, 2020 — The coronavirus pandemic has challenged the existing global order, with some believing that the responses of Western nations have left their constituents distracted.

In a recent op-ed, author Mark Lutter, founder and executive director of Charter Cities, argued that the Chinese government was exploiting the chaos brought about by COVID-19 to advance its global ambitions.

After conquering the coronavirus at home, China is using the global, political and economic disruption of the pandemic to aggressively advance long term geo-political interests, Lutter wrote.

One way in which China is furthering soft power is through the Belt and Road Initiative, a global infrastructure development strategy adopted in 2013, Lutter said in a Lincoln Network webinar Tuesday.

As part of the initiative, China is investing in infrastructure in developing nations across the globe, funding the development of modernized ports, rail systems and airports.

In exchange for building infrastructure, Chinese businesses secure access to natural resources and reach potential markets for goods.

China is currently offering a better model for development than the United States, Lutter claimed.

Chinese investment is extremely attractive to developing nations, Lutter said, as these nations have watched Chinese governance lead to 40 years of unprecedented growth within the country.

Luther said that in order to counter China’s increasing presence on the world stage, the U.S. needs a strategic vision to promote development and influence.

He suggested that one tool the U.S. can utilize in its attempt to exert influence are charter cities.

Charter cities, like Singapore, Hong Kong, Shenzhen and Dubai, are cities granted special jurisdiction to create new governance systems.

Luther found that the creation of charter cities allows cities to achieve prosperity more quickly, by allowing city officials to adopt the most competitive practices in commercial regulation.

“They combine the governance reforms necessary to attract foreign investment, encourage job creation and generate economic growth with the infrastructure that is needed to support growth over the long run,” Luther said.

Charter cities are a tool for economic development and global influence, he added, which can also help demonstrate that civil liberties and economic development are not mutually exclusive.

Assistant Editor Jericho Casper graduated from the University of Virginia studying media policy. She grew up in Newport News in an area heavily impacted by the digital divide. She has a passion for universal access and a vendetta against anyone who stands in the way of her getting better broadband.

China

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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FCC Chair Ajit Pai Says U.S. Sentiment Towards China Changed Under Trump

Jericho Casper

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Screenshot of Ajit Pai from his presentation

January 8, 2021 — Outgoing Federal Communications Commission Chairman Ajit Pai recalled a shift in American views towards China, which he says largely occurred over the course of his past four years in office, during an interview with the Center for Strategic and International Studies on Wednesday.

“The United States government’s orientation toward geopolitical threats and the FCC’s orientation toward national security were entirely different before I came into office,” said Pai.

The official position of the U.S. government during the previous Administration was that the United States “welcomes the rise of a China that is stable, prosperous and peaceful,” and that “our two great nations, if we work together, have an unmatched ability to shape the course of the century ahead.”

The Obama FCC issued a white paper on cybersecurity on January 18, 2017, two days before Inauguration Day, that didn’t mention China at all.

“Things are different now—much different,” said Pai, adding that Americans today hold increasingly negative views of China.

Pai referenced statistics, saying “In the U.S., the percentage of people with an unfavorable opinion of China increased from 60 percent to 73 percent over the past year.” He questioned where the sentiment came from.

The change may be a result of China ‘showing its hand’ over past years, as the People’s Republic of China aimed to have more of a stake in publicly-available technology. There is increasing recognition that the Chinese state government is using its growing influence over global commerce to become a leading international tech supplier.

In May 2015, China’s State Council issued Made in China 2025, a national strategic plan to further develop the manufacturing sector of the PRC, by upgrading the production capabilities of Chinese industries from labor-intensive workshops into more technology-intensive powerhouses.

To help achieve independence from foreign suppliers, the initiative encourages increased production in high-tech products and services, with its semiconductor industry central to the plan, partly because advances in chip technology may “lead to breakthroughs in other areas of technology, handing the advantage to whoever has the best chips.”

In response, in 2018, the Council on Foreign Relations, an American think tank, stated that MIC 2025 is a “threat to U.S. technological leadership.” In June 2018, the Trump administration imposed higher tariffs on Chinese goods, escalating trade tensions between China and the U.S. The tariffs primarily apply to the manufactured goods included in the MIC 2025 plan, such as those integral to IT and robotics industries.

Pai’s FCC has played a known role in promoting anti-China rhetoric. Over the past four years, the FCC has gone from essentially not acknowledging China to holding a bipartisan consensus that the PRC poses national security threats to U.S. communications infrastructure.

The Trump FCC has hyper-focused on issues related to larger, geopolitical U.S.-China altercations, such as Pai’s ‘Rip and Replace’ and ‘open radio access networks’ initiatives, promotion of rhetoric surrounding a ‘5G race’, signaled approval of blocking TikTok and WeChat, and more.

Under Pai, the FCC prompted and largely completed ‘Rip and Replace’ initiatives, which barred, and further ordered the removal, of telecommunications equipment from Chinese manufacturers, like Huawei and ZTE, in U.S. networks.

Pai’s FCC further prioritized streamlining 5G deployments, through pole citing and other infrastructure provisions, in what became the ‘race to 5G’ between the U.S. and China. Pai’s open RAN initiative, announced in September 2020, mirrors MIC 2025, in the sense that it attempts to reignite American tech manufacturers to lead in software and hardware development to support 5G.

“As part of the FCC’s 5G FAST Plan, the agency has taken many actions to promote American leadership in next generation wireless services,” said Pai. “To that end, we want the United States to lead the way in researching and developing innovative approaches to mobile network deployment.”

Pai says U.S. manufacturers are having a hard time competing with Huawei

“As this market has consolidated, Huawei is in a position of strength,” said Pai.

In conversation with CSIS President and CEO John Hamre, Pai compared American company’s attempting to compete with Huawei, which is directly subsidized by the Chinese government, to fighting with “one-hand tied behind your back.”

“China’s subsidizes Huawei which gives them a leg up,” said Pai, adding that Huawei wireless equipment is often 30 to 70 percent cheaper than technology from competitors Ericcson and Nokia.

“We’re trying to address things defensively, by taking Huawei equipment out,” said Pai, going on to detail the U.S. strategy for a strong offense.  “Given that we have an advantage in software, and given that open RAN technologies generally have shown great promise, why don’t we pursue that area as well to enable us to break that consolidation, which has given Huawei an advantage.”

Pai noted that in order to compete with Huawei, the U.S. must build at a certain scale, and continually invest in research and development.

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