China Threat to Telecoms Cited in EU Parliament Draft Resolution

• European assembly plans to warn about risks to 5G networks
• Initiative reflects growing Western concerns about Chinese Huawei spying

By Jonathan Stearns and Alexander Weber

The European Parliament plans to add its voice to growing concerns in the Western world about alleged security threats posed by Chinese telecommunications companies such as Huawei Technologies Co. and ZTE Corp.
The European Union assembly will stress the need for the bloc to protect the next generation of wireless networks, known as 5G, from intruders and to bolster cybersecurity defenses in general, according to the draft of a resolution slated for a vote on Tuesday in Strasbourg, France.
In the draft, the 28-nation Parliament “expresses deep concern about the recent allegations that 5G equipment developed by Chinese companies may have embedded backdoors that would allow manufacturers and authorities to have unauthorized access to private and personal data and telecommunications from the EU.”
The assembly “is equally concerned about the potential presence of major vulnerabilities in the 5G equipment developed by these manufacturers if they were to be installed when rolling out 5G networks in the coming years,” according to the text.
The EU’s increasing alarm about technology-related security risks from China follows U.S. revelations that Huawei enables Chinese espionage and calls for European allies to avoid partnering with the company.
Western jitters have mushroomed since a 2017 Chinese law requiring organizations and citizens to support national-security investigations.
The draft EU Parliament resolution, drawn up by four of the assembly’s main political groups including the No. 1 Christian Democrats and second-ranking Socialists, says European authorities should develop a certification system for 5G equipment to enhance its security.
“If there’s the slightest suspicion that Trojan horses end up in critical infrastructure due to Chinese technology, all alarm bells should ring,” Markus Ferber, a German member of the assembly’s Christian Democratic faction, said by email on Monday. 

“The EU has to make sure it becomes more independent from third countries when it comes to infrastructure and central technologies.”

Trade War Punctures China’s Pride in Its Technology

There is a big gap between the science and technology of China and those of the United States
By Yoko Kubota

China’s tech businesses have been on tenterhooks in recent months. Here, a Foxconn factory in Guizhou province. 

BEIJING—To the list of casualties in the trade battle between the U.S. and China add another: Chinese chest-thumping about the country’s prowess in innovation.
More sober assessments of China’s technological capabilities have emerged from China’s tech community in recent weeks, as the U.S. has ratcheted up pressure, threatening tariffs and export restrictions to punish Beijing for what it says are theft of technology and unfair trade practices.
“There is a big gap between the science and technology of China and those of the United States, as well as other Western developed countries. This is common sense, not a problem,” said Liu Yadong, the editor in chief of the government-run Science and Technology Daily, in a speech last week that set off debate on the internet.
China’s tech businesses have been on tenterhooks in recent months. 

Threats by the Trump administration to impose tariffs on as much as $450 billion in Chinese products and to restrict Chinese investment in the U.S. and American technology exports to China potentially stand to disrupt supply chains crucial to China’s telecommunications-gear makers, its microchip industry and aircraft manufacturing.
While President Donald Trump backed away from those investment and export restrictions on Wednesday, he said those issues would be addressed through existing institutions.
Some Chinese officials greeted the move with wary relief. 

A Commerce Ministry spokesman said Thursday that Beijing is watching developments in the U.S. and warned that investment restrictions would likely affect global perceptions about the U.S.’s business environment.
Still, disruptions loom. 

U.S. tariffs on $34 billion in Chinese goods kick in July 6, and China has vowed to retaliate dollar for dollar. 

The biggest casualty thus far in the trade fight is Chinese telecom-equipment maker ZTE Corp., which nearly stopped operating after the U.S. Commerce Department prohibited its access to American components because of sanctions violations.
Liu, the Science and Technology Daily editor, sought to address the foreign foundations of many Chinese industries at a seminar on China’s reliance on critical technologies.
“The house is built on other people’s foundation, but some insist that we have complete and permanent property rights,” Liu said, according to a transcript on the website of the newspaper, which belongs to the Ministry of Science and Technology. 

“What’s troublesome is that people with those kind of opinions have fooled leaders, the public and even themselves.”
His was a striking admission considering that state media and senior officials have played up China’s advances in innovation for much of the past year to meet Xi Jinping’s objective of making the country a global technology power. 

The government news agency Xinhua last year praised China’s “four great new innovations” in modern times: dockless shared bikes, high-speed rail, online payments and e-commerce. 

All were invented elsewhere, and China’s high-speed rail uses technology from Germany’s Siemens AG , Japan’s Kawasaki Heavy Industries Ltd. and other foreign companies.
In March, a government-produced documentary “Amazing China” lauded China’s advanced technologies in ports, bridges, cars and the internet.

ZTE nearly stopped operating after the U.S. Commerce Department prohibited its access to American components because of sanctions violations. 

“Our Amazing China also has areas that are not amazing,” Beijing Daily, the Communist Party’s official newspaper in the capital, said this week. 

It said that while China has made strides in development, “our shortcomings are more noticeable. 

Just one microchip is enough to put China in a corner, let alone other items.”
A core U.S. concern is what the Trump administration says are attempts by China to steal U.S. technology and use subsidies to build up national champions to conquer world markets. 

Particular criticism has been directed at Beijing’s “Made in China 2025” plan to dominate 10 cutting-edge areas including information technology and aerospace.
Given the glare, senior Chinese officials have recently started playing down “Made in China 2025” in meetings with the U.S. business community and European diplomats, people familiar with the matter said. 

Authorities have also ordered media to tone down coverage of the policy.
China’s State Council Information Office didn’t respond to a request for comment.
The shift in tone is more tactical and doesn’t mean China is scrapping its global technology ambitions. 

“The wrestling between the U.S. and China on technology issues is inescapable, and we for sure shouldn’t chicken out at this moment,” said Fang Xingdong, who runs ChinaLabs, a technology think tank. 

But, he said, China has said too much about the importance of Made in China 2025.
The U.S. is mistakenly targeting Made in China 2025, he said, because the real strength in China’s technology sector comes from market-oriented companies.
The Finance Ministry offered tax relief Thursday for companies in high-end manufacturing and technology sectors, particularly those in fields covered by “Made In China 2025.” 

In a notice, the ministry said it would refund to companies overpayment of value-added taxes, instead of applying the excess amount to next year’s tax bill, as in the past.
As part of the new messaging, Xi, senior officials and state media have said the trade fight should spur China to reduce its U.S. dependence, not curb its technological ambition.
“If the U.S. keeps providing us with core technology, it might hinder China’s technology development,” Liu, of the Science and Technology Daily, said in an interview. 

“If the U.S. does not provide, China will devote our own efforts to technology development, and the process to catch up might be shortened.”