ASPEN, Colorado, August 19, 2021—In the midst of escalating tensions between the United States and China, experts at the 2021 Aspen Conference suggested Tuesday that the Communist government is increasingly seeking to hold close its technology companies so they align with its long-term objectives.
President Joe Biden has focused parts of his tenure on combating national security and cyber threats, including signing executive orders banning investments in Chinese companies like telecommunications giant Huawei. In June, a Huawei representative said the executive order was a “policy misstep” that would result in the U.S. possibly losing a Chinese chip market of $400 billion a year, while the Chinese will grow more self-sufficient.
Similar sentiments were echoed Tuesday at the Aspen Conference, where experts discussed how the Chinese government is attempting to bring its domestic industries in-line with its own objectives.
Xiaomeng Lu, senior analyst with the geo-technology practice at Eurasia Group, said the long-term objective for the Chinese Communist Party is for the goals of both the party and Chinese tech companies to align.
This is an ongoing effort however, as for many years, China left its tech companies to their own devices—allowing them to compete and engage with American companies and practices as they saw fit.
Now, China is attempting to reel them in, as Lu observes: “They are trying to domesticate this wild animal,” he said. “Sometimes with a slap on the wrist, sometimes a punch to the face.”
She described some of the actions China has taken—both slaps and punches—to align Chinese tech companies with the values and goals of the CCP. She stated, however, that deconsolidation is not really on the table for China’s big tech.
“They do not want to break [these companies] up—they don’t want to kill their golden goose.”
‘Is the private sector enabling the party’s vision?’
Samm Sacks, a cyber policy fellow with New America, argued that most of China’s decisions regarding their tech industry can now be viewed through this lens: “Is the private sector enabling the party’s vision?” She stated that this is the primary consideration that the Chinese government is making when evaluating what kind of action to take in regulating the industry.
Both Sacks and Lu described a dynamic whereby the Chinese government wants to enjoy all the economic benefits of a burgeoning, profit-driven tech industry, while not being forced to contend with any of the drawbacks of engaging in an interconnected and free society.
David Gross of law firm Wiley Rein LLP and former U.S. Coordinator for International Communications and Information Policy at the U.S. State Department’s Bureau of Economic and Business Affairs, said it is possible for American-Chinese relations to emerge harmoniously, insofar that the tech industry is concerned.
“What is in the long-term interest of the CCP is not in the interest of the U.S.,” he said, but added that this does not preclude the possibility of mutually beneficial solutions, particularly in the short-term.
An increasingly domesticated Chinese tech industry
In April, Scott Malcomson, a former senior advisor to the U.S. State Department, said Chinese companies’ growing success at home has proven to be a boon for America because they are inclined to stay there.
He noted that the Chinese have adapted to a number of past executive orders and hostile attitudes toward it from the Trump administration by developing independence in a variety of fields on Chinese soil, including in satellites, undersea fiberoptics and e-commerce.
Joy Tran, a senior vice-president of public affairs at Huawei, has said that the Chinese market now makes up about 65 per cent of the company’s global revenue.
FCC Orders China Telecom to Stop Providing Services in the U.S. Over National Security Concerns
The move is in line with FCC’s tough posture on national security risks emanating from China.
WASHINGTON, October 27, 2021 – The Federal Communications Commission voted Tuesday to revoke the operating authorizations of China Telecom’s U.S. subsidiary, effectively ending its ability to provide services in the country.
The company had initially challenged the process of revoking its authorizations that started last year under the Donald Trump presidency, but lost in court.
The FCC found that China Telecom Americas’ ties to the Chinese government raises “significant national security and law enforcement risks” to U.S. communications. The telecom must discontinue any services within sixty days after the order is released.
The FCC’s analysis concludes that “the present and future public interest, convenience, and necessity” is no longer served by allowing the company’s operations in the U.S. The commission found that China Telecom Americas is “subject to exploitation, influence, and control by the Chinese government and is highly likely to be forced to comply with Chinese government request without sufficient legal procedures subject to independent judicial oversight.”
The order also found that the company’s conduct toward the commission demonstrates “a lack of candor, trustworthiness, and reliability that erodes the baseline level of trust that the Commission and other U.S. government agencies require of telecommunications carriers.”
FCC Chairwoman Jessica Rosenworcel praised the vote, calling the decision to stop China Telecom “ an important and necessary step” to protecting U.S. communications infrastructure.
“This is not a decision we make lightly. It has support from each of my colleagues. It has support across the federal government,” she said. Continuing to allow China Telecom Americas to operate in the U.S. “could lead to real problems with our telecommunications networks through surveilling information, misrouting traffic, or disrupting service,” she added.
Revocation in-line with FCC focus on weeding out threats
The vote to block China Telecom’s services also comes as the FCC fields comments about its proposal to blacklist products and services that pose national security threats.
The U.S. government is also responding to China’s influence over digital services. In July, the Biden administration formally accused the Chinese government of hacking Microsoft’s email system. Digital policy experts have raised concern about how China’s use of digital tools threatens human rights agendas and democracy around the world.
Last June, the permanent subcommittee on investigations released a report finding the Chinese government engages in cyber efforts against the U.S. and may use telecommunications carriers to interfere with U.S. network systems.
The ban on China Telecom follows a Canadian order to ban another company — China Mobile — from operating in the country, citing similar national security concerns. The company, which had an agreement to resell services of telco giant Telus, was told in August that it couldn’t continue operations. The company has since filed an appeal in the federal court.
Hytera and Huawei Respond to FCC Blocking Chinese Equipment as U.S. Players React
Companies, industries, and associations chime in on FCC equipment blacklist proposal.
WASHINGTON, September 21, 2021 – Hytera, a company with ties to China that has been the subject of a national security blacklist proposal and whose partners have vouched for its innocence, said Monday that its United States radio equipment is being unfairly maligned.
Meanwhile, several key industry trade groups – including the leading wireless industry and consumer technology associations – urged a lighter-touch approach to “compliance challenges” involving Chinese companies, saying that under hardline Federal Communications Commission rules, burdens “may be passed on to consumers.”
But other U.S. advocates aren’t satisfied and want even stricter rules by the FCC to weed out alleged threats in America’s networks.
Hytera says that is has been unfairly targeted by the FCC
Hytera US, a supplier of radio equipment to emergency first responders, said in a submission to the FCC on Monday that it has been unfairly targeted because of confusion over the FCC’s authority in its blacklist, which is a product of Congress’ Secure Networks Act of 2019.
The FCC in March proposed a list of equipment and services from certain vendors from which to revoke or to deny future equipment approvals due to the “unacceptable risk” to the country’s national security. Included in the list is video surveillance and telecommunications equipment from Hytera, as well as equipment and services from Huawei, ZTE, Hangzhou Hikvision, and Dahua. Part of its process is to ask the industry for comments on its proposal.
Hytera said in its submission Monday that its radio equipment does not connect to the internet or otherwise can’t be compromised by a foreign government. And it argued Monday that the FCC only has authority to blacklist certain equipment, not paint whole entities as threats.
Hytera has said that its competitors in the radio equipment space have allegedly been using this narrative to paint it as a risky company to deal with, which has resulted in Hytera dealers suffering “greatly, losing deals, being barred from bidding for projects, being maligned.”
Hytera asks for clear distinction between radio equipment and broadband
Hytera is recommending the FCC make the distinction clear to the public and to specifically clarify that the blacklist “only includes equipment and services providing broadband service having a connection speed of at least 200 [kilobits per second] in either direction.”
Diversified and Alpha Prime have argued that Hytera radio equipment does not transmit data over the internet and so cannot be a threat under the FCC’s rules.
In a letter accompanying its submission, Hytera US vice president of sales Thomas Wineland said the FCC’s list has “destroyed our dealers’ ability to sell Hytera. Even if they can convince their customers that the two-way radios they plan to buy are not on the Covered List, the customers, in turn, answer to their bosses.
“They tell the dealer they ‘just can’t take the risk’ that the FCC will demand that Hytera equipment be removed and replaced,” he said. “They see Hytera’s name on the Covered List and choose a different manufacturer.
“Certainly this anti-competitive impact in the two-way radio marketplace was not what was contemplated in creating the Covered List,” Wineland continued. “Hytera US is a good citizen in each of its communities. It does not market broadband equipment in the US. A clarification that the Covered List reaches only broadband equipment would give Hytera the ability to neutralize the Covered List’s anti-competitive impact and allow the free market to operate.”
Huawei says FCC hasn’t shown proof its equipment is a threat
In its own submission on Monday, Huawei said the FCC has allegedly shown no evidence of a threat from its equipment, and its decision makes little sense on a cost-benefit analysis.
“The Commission has no evidence that Huawei has violated any of these rules,” the submission said. “Huawei’s equipment has been recognized by independent third parties, world leading carriers, major enterprise and industry customers as being of the highest technical quality. The identity of a manufacturer, by itself, cannot rationally be connected to any of the purposes of the equipment authorization rules.”
Huawei is one of the world’s largest telecommunications equipment manufacturers. It supplies equipment all over the world, with part of its allure being its relatively low cost.
“The rules would impose substantial costs on carriers, end-users, distributors, suppliers, and resellers of Huawei equipment,” the company said. “Revoking existing equipment authorizations and prohibiting new ones would require these United States entities to divert limited resources, threaten service quality, and increase the cost of service, without equivalent benefits.”
The company also argued that the FCC is exceeding its authority by proposing to prohibit the “importation, marketing, or sale of a company’s products based on the identity of the manufacturer without regard to the technical characteristics of a particular product.”
On the proposal, FCC Commissioner Brendan Carr said the commission, “through its current equipment authorization process, continues to approve for use in the U.S. thousands of applications from Huawei and other entities deemed national security threats.
“The FCC has approved more than 3,000 applications from Huawei alone since 2018…We are launching this proceeding with a simple and important goal in mind—to protect America’s communications networks and, in turn, our national security. The rules we propose are simple: equipment from entities that pose a national security risk will no longer be eligible for FCC approval.”
Industry associations say list could have ‘unintended consequences’
A number of associations that represent the broadband and wireless industries said in a combined submission on Monday that there could be “unintended consequences” with the proposal, including difficulty in implementation, harm to American consumers, and weaker supply chains.
Those groups include the ACT – The App Association, Consumer Technology Association, the Council to Secure the Digital Economy, the USTelecom broadband association, the Internet Association, the Information Technology Industry Council, the Telecommunications Industry Association, and the CTIA.
The CTIA said the FCC should consider more tailored approaches, including addressing “compliance challenges” and observe the costs and benefits of the proposed changes, including “burdens that may be passed on to consumers.”
The proposal “extends far beyond national security concerns, contemplating sweeping regulatory oversight of the cybersecurity features of the connected devices and systems that will drive the 5G future and beyond,” the submission added.
“Cybersecurity is best addressed through public-private partnerships and flexible, risk-based solutions, not prescriptive mandates,” it said. “Rather than duplicating the ongoing work of its federal partners, the Commission should support industry-led efforts, promote the National Institute of Standards and Technology’s leadership on voluntary and flexible guidance for [internet of things] security, and look to the Communications Security, Reliability and Interoperability Council for input.”
China Tech Threat, Blue Path Labs press FCC for more
China Tech Threat, a research institution that focuses on threats from China, and Blue Path Labs, an organization that studies China and that has clients in the federal government, filed a joint submission Monday recommending the commission broaden the list and said all information technology emanating from China is “vulnerable to that government’s intrusion.”
The submission recommends adding to the list laptop manufacturer Lenovo and memory chip maker Yangtze Memory Technologies.
“The FCC has made a good start to propose prohibiting equipment authorizations from 5 Chinese military aligned companies, but there are many more entities operating in the US which pose an unacceptable national security risk,” the submission said.
“The FCC needs to apply these restrictions to all the equipment from vulnerable Chinese government owned and military aligned entities which operate in the U.S. today, as described by the US- China Economic and Security Review Commission, the Department of Commerce Bureau of Industry and Security (BIS) Entity List, and the Department of Defense list of Communist Chinese Military Companies (CCMC).”
Co-founder of China Tech Threat, Roslyn Layton, told Broadband Breakfast following Diversified Communications plea that the ban list isn’t about Hytera per se, but what the Communist party in China requires of its companies.
Another Company Joins Diversified in Criticizing FCC for Hytera Blacklist
Expert says the issue is about what Hytera could be compelled to do by the Chinese government.
WASHINGTON, September 14, 2021 – Alpha Prime Communications said Tuesday the Federal Communications Commission’s addition of Hytera on a list of national security threats is threatening its customers who rely on it for daily communications.
The FCC had designated Hytera, a Chinese manufacturer of radio equipment, as a blacklisted company in March as part of the Secure Networks Act. But on September 7, a client of Hytera, Diversified Communications Group, said the agency erroneously lumped the company with other Chinese firms on the list.
On Tuesday, Illinois-based Alpha Prime, which is a Hytera dealer to schools, small businesses and manufacturers, joined Diversified in condemning the decision to add Hytera to the national security threat list. “This far reaching ban threatens many of our customers day to day communications and safety,” Alpha Prime’s general manager John Hickey said in a letter to the FCC.
“One of our larger logistics companies will need to spend about $100,000 to replace their radios that have worked well and required little or no service,” Hickey added. “Please do not paint us and Hytera with a sweeping ban when you consider your decision in this matter.”
Hickey said his company began working with Hytera when Motorola began raising prices on its radios, and said the Chinese company has been “reliable and sturdy” and “provide a value for the price charged.”
The FCC and the White House have been working to tame any emerging threatens from China, including the Biden administration signing an executive order banning investments in Chinese companies and the FCC introducing a suspension of granting licenses to companies with links to the Communist government, which has been accused of espionage.
Security list function more to do with being under spell of Communist government
Roslyn Layton, co-founder of China Tech Threat, a research institution that studies threats from China and proposes policy solutions, said the issue isn’t about Hytera per se, but what the Communist party requires of its companies.
She explains that the Chinese National Intelligence Law that came into force in 2017 “asserts China’s sovereignty over the internet and its ability to acquire any data on any Chinese made device anywhere in the world for any reason at any time.” Similarly, she noted that under China’s espionage law, Chinese companies must comply with state spying without warrant, due process or judicial review.
“So Hytera may have never done anything wrong, but it is not independent of the Chinese government and cannot reject the Chinese government’s demand,” she said.
While Diversified said its radio devices from Hytera don’t connect to the internet, Layton charged that an examination of Hytera products shows that “many of their devices connect to the internet and collect data.” She also expressed concern about Hytera’s products being used for public safety and emergency services, which poses additional risks to American health and safety.
Experts concerned about China’s data collection possibilities
Social media application TikTok, which was made by Chinese company ByteDance, is one of the world’s most popular applications. But its rise to prominence is concerning experts who say that the company is collecting a vast trove of personal data on American users, which could be used to fashion advanced artificial intelligence to further the Communist government’s aims.
The experts, who were hosted by the Federalist Society earlier this month, were concerned that the companies could be compelled to send the data to the government and that Washington was falling behind on stemming the data flow.
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