US to offer loans to lure developing countries away from Chinese telecom gear
The U.S. government is embarking on a push to persuade developing countries to shun Chinese telecommunications equipment, offering financial assistance to use alternatives that Washington says are safer and have fewer strings attached.
The U.S. is ready to offer loans and other financing,
potentially worth billions of dollars in total, to countries to buy hardware
from suppliers in democratic countries rather than from China, said Bonnie
Glick, the deputy administrator at the U.S. Agency for International
Development, which is spearheading the effort.
The agency, better known for providing food assistance than
technology, will dispatch staff to meet politicians and regulators in the
developing world, she said, aiming to persuade them that using telecom
equipment from two Chinese giants, Huawei Technologies Co. and ZTE Corp., is a
bad idea.
The offer of financial assistance represents a new tool
Washington is deploying as it broadens the tech Cold War with China. The Trump
administration has been trying to curb Chinese technological advances over what
it says are concerns about spying and trade practices.
Washington for two years has lobbied allies to join the U.S.
in banning Chinese-made equipment for networks using 5G wireless technology,
which promises superfast speeds to enable driverless vehicles, more efficient
factories and other innovations.
U.S. officials say the Chinese government could order Huawei
and ZTE to spy or conduct cyberattacks, a scenario that the companies and
Beijing say would never happen.
The U.S. campaign initially focused on 5G deployments in
Europe, where it has had some success, including in Britain and Poland. Other
countries, most notably Germany, are still debating whether to restrict or ban
Chinese-made equipment.
The U.S. may face a bigger challenge in the developing
world. In Africa, for example, Chinese wireless-equipment makers dominate the
market. Price-sensitive carriers flocked 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 U.S. officials say they
appear outnumbered by Chinese counterparts offering developing countries
too-good-to-resist loans.
The U.S. effort to curb China’s tech ambitions has grown
into a multiagency effort. The Commerce Department has imposed export controls
on some U.S. technology to China needed to make advanced telecom equipment and
semiconductors. The State Department has instructed its diplomats to lobby
allies to shun Huawei and ZTE gear.
USAID this month signed an agreement with the Federal
Communications Commission to jointly counter 5G deployments using Chinese
equipment in developing countries, combining the FCC’s technical and policy
expertise and the aid agency’s network of some 10,000 employees in about 100
countries.
Ms. Glick said the messages to developing countries will hit
two themes: Chinese equipment is vulnerable to espionage, and the loans that
Chinese finance agencies such as the state-controlled China Development Bank
offer that finance the equipment can trap them.
“There’s a lot of fine print," Ms. Glick said.
“Countries are left in a tremendous amount of debt, and China takes over
control of national assets," Ms. Glick said.
She said USAID representatives will bring up examples, such
as that of an indebted South Asian government selling a port to a Chinese
state-owned entity.
The Chinese government has said it would take measures in
response to U.S. actions. The China Development Bank, China’s largest
international finance institution, didn’t respond to requests for comment.
USAID wouldn’t provide loans itself but work through U.S.
financing agencies such as the U.S. International Development Finance Corp. DFC
can give direct equity loans and has about half its $60 billion investment
capital remaining, a spokesman said, though such financing also goes toward
non-telecom deals. Another agency, the U.S. Export-Import Bank, said a new
China-focused initiative allows it to finance deals with terms and rates
competitive with Chinese agencies.
Western telecom-equipment executives have said Chinese
finance agencies have typically offered below-market rates and repayment
schedules that U.S. and European counterparts haven’t been able to match.
Because the U.S. lacks a major wireless-equipment maker to
furnish the 5G equipment, Washington would plan to finance deals with the big
ones outside China: Finland’s Nokia Corp., Sweden’s Ericsson AB and South
Korea’s Samsung Electronics Co. USAID may also support smaller American
companies in the early stages of developing open-standard 5G technology, Ms.
Glick said.
Ms. Glick plans to travel to Finland on Sunday to visit
government officials there and companies including Nokia, with the goal of
signing an agreement to collaborate on telecom options for developing
countries. A spokesman for the Finnish government said it was eager to discuss
cooperation with the U.S. and was reviewing the proposal.
Nokia, Ericsson and Samsung declined to publicly comment on
the U.S. effort. Some executives from these companies said they welcome this
initiative from Washington, but aren’t sold on whether it would make a
difference to their business.
The U.S. push is expected to last regardless of the outcome
of next month’s presidential elections. “Discouraging America, our allies and
all nations—developing or otherwise—from working with Huawei and ZTE is not
just a Republican or Democratic mission," said Rep. Dutch Ruppersberger of
Maryland, a leading Democratic voice on Chinese telecom equipment.
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