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Communication & Technology

U.S. to offer loans to lure developing countries away from Chinese telecom gear


Telecom Tower

Telecom Tower

The US government is embarking on an effort to persuade developing countries to avoid Chinese telecommunications equipment, offering financial assistance to use alternatives that Washington says are safer and have less restrictions.

The United States is ready to offer loans and other financing, potentially worth billions of dollars in total, for countries to buy hardware from suppliers in democratic countries instead of China, said Bonnie Glick, deputy administrator of the United States Agency for International Development, which is leading the effort.

The agency, better known for providing food assistance than technology, will send teams to serve politicians and regulators in the developing world, she said, with the aim of persuading them to use telecommunications equipment from two Chinese giants, Huawei Technologies Co. and is a bad idea.

The offer of financial assistance represents a new tool that Washington is implementing as it expands the technological Cold War with China. The Trump administration has tried to curb Chinese technological advances what it says are concerns about espionage and trade practices.

For two years, Washington has lobbied allies to join the U.S. in banning Chinese-made equipment for networks using 5G wireless technology, which promises super-fast speeds to enable driverless vehicles, more efficient factories and other innovations.

American officials say the Chinese government can order Huawei and ZTE to spy on or conduct cyber attacks, a scenario that companies and Beijing say would never happen.

The US campaign initially focused on 5G deployments in Europe, where it had some success, including in Great Britain and Poland. Other countries, especially Germany, are still debating whether to restrict or ban Chinese-made equipment.

The United States may face a greater challenge in the developing world. In Africa, for example, Chinese wireless equipment manufacturers dominate the market. Price-sensitive operators migrated to Huawei and ZTE, which held a combined 50% to 60% share of sales in Africa and the Middle East earlier this year, according to research firm Dell’Oro Group. And American officials say they appear to be outnumbered by the Chinese who offer loans too good to resist developing countries.

The US effort to curb China’s technology ambitions has grown to become a multi-agency effort. The Commerce Department imposed export controls on some US technologies for China, necessary to make advanced telecommunications and semiconductor equipment. The State Department instructed its diplomats to lobby with allies to avoid Huawei and ZTE equipment.

USAID signed an agreement this month with the Federal Communications Commission to jointly combat 5G deployments using Chinese equipment in developing countries, combining the technical and political experience of the FCC and the aid agency’s network of around 10,000 employees in about 100 countries.

Glick said the messages to developing countries will address two issues: Chinese equipment is vulnerable to espionage and the loans that Chinese financial agencies, such as the state-controlled Development Bank of China, to finance the equipment can arrest them. .

“There are a lot of fine print,” said Glick. “Countries were left with tremendous debt and China took control of national assets,” said Glick.

She said that USAID representatives will bring examples, such as that of an indebted South Asian government that sells a port to a Chinese state entity.

The Chinese government said it would take action in response to US actions. China Development Bank, China’s largest international financial institution, did not respond to requests for comment.

USAID would not provide loans, but works through US funding agencies, such as US International Development Finance Corp. DFC can grant direct loans and has about half of its $ 60 billion investment capital left, a spokesman said, although such funding also goes to third-party promotions. Another agency, the U.S. Export-Import Bank, said a new initiative focusing on China allows it to finance agreements with competitive terms and rates with Chinese agencies.

Western telecommunications equipment executives said Chinese financial agencies typically offer below-market rates and repayment schedules that American and European counterparts have not been able to match.

Since the United States does not have a large wireless equipment manufacturer to supply 5G equipment, Washington would plan to finance business with the big players outside China: Finland Nokia Corp., From Sweden Ericsson AB and South Korea Samsung Electronics Co.

USAID can also support smaller American companies in the early stages of development 5G open standard technology, Said Mrs Glick.

The technological battle between the U.S. and China shook TikTok and Huawei and surprised American companies that produce and sell in China. WSJ explains how Beijing is pouring money into high-tech chips to become self-sufficient.

Glick plans to travel to Finland on Sunday to visit government officials and companies like Nokia, with the goal of signing an agreement to collaborate on telecommunications options for developing countries. A Finnish government spokesman said he was looking forward to discussing cooperation with the United States and was considering the proposal.

Nokia, Ericsson and Samsung declined to comment publicly on the US effort. Some executives at these companies have said they welcome this initiative from Washington, but have not convinced it would make a difference to their business.

US pressure is expected to last regardless of the outcome of next month’s presidential elections. “Discouraging America, our allies and all nations – whether developing or not – from working with Huawei and ZTE is not just a Republican or Democratic mission,” said Representative Dutch Ruppersberger of Maryland, a leading Democratic voice in security equipment. Chinese telecommunications.

Source: Wall Street Journal – U.S. to Offer Loans to Lure Developing Countries Away From Chinese Telecom Gear

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