U.S. should create fund to counter Chinese infrastructure deals - commission

By Jane Lanhee Lee
Vehicles and pedestrians travel on a road in Changsha, the capital of Hunan province, China May 7, 2018. Picture taken May 7, 2018. REUTERS/Ryan Woo/File Photo

By Jane Lanhee Lee

(Reuters) - The U.S. government should create a fund to counter Chinese infrastructure financing deals in the developing world that export China's "model of authoritarian governance," according to a bipartisan commission report to the U.S. Congress released on Wednesday.

The report from the U.S. China Economic and Security Review Commission has been complied almost every year since 2002 by a group tasked with monitoring the national security implications of U.S.-China trade relations. This year's edition said that China's efforts to finance bridges and even digital networks in Asia, Africa, the Middle East and Europe have given the Chinese government an excuse to maintain a military presence there.

The report recommended that Congress create a fund to assist countries in parts of the world where China is expanding its influence. It also warned about the threat of China's push into the next-generation 5G wireless technology on U.S. security and business interests.

China has been pushing its so-called Belt and Road Initiative that finances major ports, high speed rail, highways and bridges in countries ranging from Malaysia to Kenya and Russia. The commission said China was using it not just to "encourage and validate authoritarian actors abroad," but also to export standards for technology applications that could threaten U.S. businesses and market access across the globe.

The commission, created by Congress in 2000, said Beijing was using the Belt and Road Initiative to justify a military presence in some of the countries.

It recommended that Congress create a fund to provide assistance to countries especially in the Indo-Pacific region for digital connectivity, infrastructure and energy access.

The commission also warned about China's rising dominance in 5G wireless technology and the proliferation of devices connected to the internet that could be used to launch a cyber attack.

"U.S. telecommunications providers' reliance on imports from China raises serious supply chain concerns about the secure deployment of U.S. critical next generation telecommunications infrastructure," said the report.

Concern about Chinese cyber attacks and cyber espionage has forced Chinese telecom equipment makers Huawei Technologies Corp and ZTE Corp to scale back some of their business in the United States.

President Donald Trump earlier this year blocked microchip maker Broadcom Ltd from taking over Qualcomm Inc amid worries it would give China the upper hand in 5G mobile communications.


(Reporting by Jane Lanhee Lee in San Francisco; Editing by Stephen Nellis and Leslie Adler)