US tech supremacy and millions of jobs at stake if China gains 5G lead, congressional hearing told

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The rhetoric against Chinese hi-tech firms has been ramped up under the Trump administration

Zen Soo  – South China  Morning Post

The United States stands to lose millions of jobs and its competitiveness if it does not check the ambitions of China to gain leadership in 5G mobile technology, a congressional hearing was told this week.

China has a coordinated state-led strategy for developing its science and technology that is not matched by the US federal government, Michael Wessel, the commissioner for the US-China Economic & Security Review Commission, said on Wednesday.

The measures employed by China involve both legal and illegal means, ranging from state subsidies to procurement protectionism to outright theft of intellectual property from US firms, said Wessel in his testimony to the Senate committee on commerce, science and transportation.

“China’s government pursues an aggressive development path to become a high-technology leader, but its approach emphasises Chinese technologies, and the companies that develop them, as the core of any future standards,” said Wessel in prepared remarks to the hearing, which was named “Winning the Race to 5G and the Next Era of Technology Innovation in the US”.

 

“China’s approach is the result of long-term planning, policy implementation and funding. In other words, government direction – supported by policy, politics, and generous subsidies – is driving China’s tech development,” he said.

While concerns over China’s technological ambitions have simmered over the years – the commission warned as far back as 2004 about the country’s top-down approach to promoting technological development – the rhetoric against Chinese firms has gained greater intensity during the Trump administration.

Should the US fail to win the race in 5G, it would “delay the benefits of 5G for the American people” and “forever reduce the economic and societal gains that come from leading the world in technology”, said senator Roger Wicker, chairman of the committee who oversaw the hearing.

The congressional hearing comes as President Donald Trump is expected to sign an executive order banning Chinese telecommunications equipment from US wireless networks ahead of the annual industry conference Mobile World Congress, which will be held at the end of February in Barcelona, according to a Politico report on Thursday that cited unnamed sources.

The US has warned its allies not to use Chinese telecoms equipment in critical infrastructure projects or face the consequences.

 

“There are no compelling reasons that I can see to do business with the Chinese, so long as they have the structure in place to reach in and manipulate or spy on their customers,” Ambassador Gordon Sondland, Trump’s envoy in Brussels, said on Thursday.

“Those who are charging ahead blindly and embracing the Chinese technology without regard to these concerns may find themselves at a disadvantage in dealing with us.”

Britain, Germany, Australia, New Zealand and Canada are among US allies that have either banned or are reviewing whether to allow Huawei equipment to be installed in their telecoms networks.

 

On Friday, Bloomberg reported that Chancellor Angela Merkel’s government has ruled out an outright ban targeting Huawei as an equipment supplier to its 5G network because singling out the Chinese company was not legally viable, citing a government official.

Sondland urged European countries to pick Finnish and other Scandinavian companies for their 5G contracts, citing China’s National Intelligence Law that compels companies in China to cooperate with the government “on any intelligence matters in secret and without refusal”.

During the congressional hearing, the China law, which was passed in 2017, was again held up as an example of why Chinese companies like Huawei and ZTE Corp cannot be trusted.

“No Chinese commercial entity can refuse to cooperate with China’s security services,” Wessel said in his prepared remarks.

Addressing those concerns last month, Huawei founder Ren Zhengfei denied that the company spies for China and said that he would rather shut down the Shenzhen-based firm that he founded in 1987 than harm its customers.

Ren Zhengfei, the founder of Huawei Technologies, listens to reporters questions during a round table meeting with the media in Shenzhen last month. Photo: AP

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“China’s Ministry of Foreign Affairs has officially clarified that no law in China requires any company to install back doors. Neither Huawei, nor I personally, have ever received any requests from any government to provide improper information,” Ren said to reporters in January.

“We only provide equipment to telecoms operators, and that equipment does not have an ideology. It is controlled by telecoms operators, not by Huawei.”

Huawei did not immediately comment on Friday, which was a national holiday on the mainland.

However, the move to ban Chinese telecoms equipment from the US in light of national security concerns will impact rural wireless carriers, about 25 per cent of which currently use Huawei equipment because of its lower cost, according to data from the Rural Wireless Association.

“Huawei is probably the world leader in 5G technology, and eliminating [that choice] will put more pressure on us as a nation and on the carriers,” said Steven K Berry, president and chief executive of the Competitive Carriers Association, at the congressional hearing on Wednesday.

The use of Chinese telecoms equipment as a result of cost pressures faced by rural carriers has created a “two-tiered security issue that jeopardises more of the rural areas”, according to Wessel, who said that a security evaluation was needed.

“There are many critical sites with assets that need to be protected,” he said.

This article appeared in the South China Morning Post print edition as: China’s dominance of 5G ‘risks millions of US jobs’

 

 

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