In 2019, the White House explained that telephone and internet equipment belonging to Chinese tech companies should be ripped from all corners of the US because it posed an unacceptable risk of snooping or sabotage by the Chinese government.
More than three years later, most of that equipment is still there.
Today I’m going to look at how the US has handled the equipment of two Chinese companies, Huawei and ZTE. I’ll explore what this can tell us about America’s ability to effectively deal with concerns about other Chinese technology, such as: apps like TikTokand her efforts to become more self-sufficient in computer chip manufacturing and design.
Technology will no longer be a US near-monopoly as it has been for the past half century, and the US must devise and execute plans to capitalize on global technological advancements while preserving America’s security and innovation. But the story of Chinese equipment shows that we still have a long way to go.
Some US officials believe that the continued use of Huawei and ZTE equipment is a serious matter threat to American national security. Other policy experts I’ve spoken to say it poses a negligible risk and it may not be worth trying to remove all the equipment right away.
What is clear is that the US said the Chinese technology ban was urgent and then failed to keep it.
Removing Huawei and ZTE equipment, which is mainly used in rural areas of the US, would never be easy, and pandemic-related complications made matters worse. But critics of the US approach also said the way officials handled it hurt US businesses and consumers without making the country much safer.
Let me come back to how this all started. For about a decade, US officials repeatedly said that Huawei and ZTE telephone and Internet equipment could be used as gateways Chinese government spying or disrupting essential US communications. Those warnings persuaded the largest US telephone and Internet companies, such as AT&T and Verizon, not to buy such equipment.
Almost everyone in the US government and business working on this issue says it was the right choice. (There is less consensus on the wisdom of restrictions on Huawei smartphones.) Huawei and ZTE have consistently said that those security concerns were unfounded and that the US government has never provided public evidence of its allegations.
Smaller companies, mostly in rural areas, were not so strongly discouraged from buying Huawei and ZTE equipment. A significant minority of them continued to purchase items from the companies, such as devices similar to home Internet modems and mobile signal transmission devices.
The US government stated that it was too great a risk. As of 2019, the US has effectively ordered all companies with Huawei and ZTE gear to replace everything. The government promised taxpayers’ money to help pay for similar equipment from US or European companies.
The Federal Communications Commission once estimated the cost of replacing Chinese equipment be about $2 billion. An updated estimate revealed last month it turned out that it was about $5 billion. It will take time for the FCC and Congress to figure out how to afford the amounts small telcos say they need. In the meantime, many such carriers have not even started replacing Huawei and ZTE equipment, such as Politico reported last month.
There is a lot of finger pointing about how this happened. Congress imposed a mandate on small businesses, then went ahead with the money. US officials were unsure about what types of Huawei and ZTE equipment should be replaced. The delay and muddled official messages slowed down the process.
Naomi Wilson, Asia policy specialist at ITI, a trade group of US technology and telecommunications companies, told me that the initial estimates for replacing the equipment were the best estimates, which turned out to be far too low. Inflation, supply chain problems and a trade war between the US and China pushed the price up.
A big question is whether this drama could have been avoided. I asked Paul Triolo, senior vice president for China at Albright Stonebridge Group, a strategy firm, if the US had a good plan with shaky execution or if the strategy was misleading to begin with. He said it was a bit of both.
Triolo said the US government could have phased out Huawei and ZTE’s equipment over many years – similar to Britain’s approach — and rapid removal of some types of Chinese equipment or equipment near sensitive locations, such as near military facilities. While the US said it needed to quickly eliminate the risk from the equipment, all that stuff will remain in place anyway, he said.
Triolo and some other China policy experts I spoke to are concerned about the US approach to Chinese technology are not always effective or focused on the right things.
The US is also concerned about the possibility of TikTok or other apps from Chinese companies transferring sensitive data about Americans or spreading Chinese government propaganda. Policymakers have not yet figured out how to address those concerns or have made great strides in China’s relentless cyberattacks against US government agencies and businesses.
Civil servants do not always have coherent messages about building a homegrown computer chip industry to counter China. And if the US wants to keep US technology strong, it could do more to support the immigration of technical experts or revoke Chinese tariffs that hurting Americans.
The US could theoretically do anything. Officials could shield the country from potential foreign dangers and spend the time, money and ingenuity needed to support the best policies for American innovation. Instead, we have bits and pieces that don’t matter much yet.
Read previous On Tech newsletters on how the US is responding to Chinese technology:
Before we go…
Taiwan produces the most important electronic devices on the planet: My colleagues Paul Mozur and Raymond Zhong explained why advanced computer chips were part of the setting for Speaker Nancy Pelosi’s controversial visit to Taiwan this week.
There is no simple blueprint for internet fame and wealth: Instructional courses suggest that people can become famous online by paying freelancers to create YouTube videos with similar ingredients, such as an invisible narrator, a catchy headline, or a Top 10 celebrity list. My colleague Nico Grant reported that this can’t-lose proposition can certainly lose.
She earns a living by scheduling guests online. Drew Afualo makes some of TikTok’s most popular videos verbally berating people for their displays of racism, fat phobia and misogyny, Bloomberg News reported. (A subscription may be required.)
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