FCC bans Chinese telecom gear in historic decision, US military “likely” to return to Subic Bay amid China concerns & Protesters in China demand Xi step down -- China Boss News 11.28.22
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The Big Story in China Business
FCC bans Chinese telecom equipment in historic national security decision
In a press release published on Friday, the United States’ Federal Communications Commission (FCC) said it banned “future authorizations” of telecommunications equipment from several China-based companies, including Huawei and ZTE, to protect national security. “The new rules prohibit the authorization of equipment through the FCC’s Certification process, and makes clear that such equipment cannot be authorized under the Supplier’s Declaration of Conformity process or be imported or marketed under rules that allow exemption from an equipment authorization,” it said.
FCC Press Statement, Nov. 25, 2022:
The Federal Communications Commission adopted new rules prohibiting communications equipment deemed to pose an unacceptable risk to national security from being authorized for importation or sale in the United States. This is the latest step by the Commission to protect our nation’s communications networks. In recent years, the Commission, Congress, and the Executive Branch have taken multiple actions to build a more secure and resilient supply chain for communications equipment and services within the United States.
“The FCC is committed to protecting our national security by ensuring that untrustworthy communications equipment is not authorized for use within our borders, and we are continuing that work here,” said Chairwoman Jessica Rosenworcel. “These new rules are an important part of our ongoing actions to protect the American people from national security threats involving telecommunications.”
The FCC identified Chinese companies Huawei, ZTE, Hytera, Hikvision, Dahua, China Mobile, China Telecom, Pacific Network, ComNet, as well as China Unicom, as the companies providing banned equipment and services. Cybersecurity attorney Michael McLaughlin said that the FCC’s “unanimous decision” was significant because it “represents the first time in history the FCC voted to prohibit the authorization of new equipment based on national security concerns.”
Approved by both Democrat and Republican FCC commissioners, this decision shows the threat from China is existential and rises above partisan politics.
At this time, it is unclear if the FCC will require a “rip and replace” of all banned equipment; however, companies should begin looking at their inventories and preparing themselves for that possibility.
China Boss thinks the implications of the FCC’s decision are enormous, given China’s role in manufacturing and developing products for the latest global telecom trends, like 6G and internet of things (IoT). In a recent op-ed for Financial Times, Alexi Drew, director of Penumbra Analysis, a consultancy specializing in geopolitical risk and emerging technologies, said the threat inherent in “the tiny components made by Chinese companies in devices connected by the Internet of Things” has “gone under the radar,” despite the fact that the products containing them “are also a critical component of our national infrastructure.”
Drew, FT:
In a clear parallel with the market domination of telecoms suppliers such as Huawei and ZTE, three Chinese manufacturers hold over 50 per cent of the global market share of cellular IoT modules. Between them Quectel, Fibocom, and China Mobile provide modules to a number of Chinese companies including Huawei, Hikvision and DJI, which have been linked to the repression of Uyghurs in Xinjiang (although the three companies have disputed these ties). While the products of these latter three companies are already either under scrutiny or actively restricted in either the US, UK, or Europe, the same underlying cellular IoT modules are also used by western producers including Tesla, Intel, Dell and Parrot.
For the rest of the FCC’s press release, FCC Bans Equipment Authorizations for Chinese Telecommunications and Video Surveillance Equipment Deemed to Pose a Threat to National Security, click here. For Michael McLaughlin post on LinkedIn, click here. For the rest of Drew’s FT op-ed, Chinese technology in the ‘Internet of Things’ poses a new threat to the west, click here.
Law and International Xi
Shein “explodes” legal loophole to import Xinjiang cotton garments to US
“Laboratory testing conducted for Bloomberg News on two occasions this year found that garments shipped to the US by Shein were made with cotton from China’s Xinjiang region,” Bloomberg last week reported. Because Shein’s “individual shipments to customers fall below an $800 threshold that triggers reporting requirements to US Customs and Border Protection,” the company is able to exclude imports from the scrutiny given retailers’ bulk imports, news staff said.
Bloomberg:
For Shein, the porous US approach presents a challenge: Acknowledging its cotton comes from Xinjiang would risk alienating consumers. Disputing it would risk angering Beijing, where China’s government has vehemently denied the allegations and said there is no forced labor in Xinjiang, only jobs-creation programs. For US policymakers, Shein’s position demonstrates the limits of government attempts to keep the products of forced labor out of the domestic market, disappointing human rights activists, textile makers and brick-and-mortar apparel retailers that complain of having to compete with unfair labor practices.
“Chinese companies like Shein have taken this loophole and exploded it,” said Kim Glas, president and chief executive officer of the National Council of Textile Organizations, which represents the US textile industry. “Products are making their way to our closets with no scrutiny.”
The Uyghur Forced Labor Prevention Act (UFLPA) went into effect in June. It assumes that any product, including materials used to create textiles, that is partly or wholly made in Xinjiang is linked to China's human rights abuses, unless the importer can prove otherwise. To rebut that presumption, however, is practically impossible under present conditions where global supply chains are connected by many moving parts and deeply integrated with China. Brands would need to show a “complete digital chain of custody” and be "in control” of their entire supply chain “from the farm onwards,” industry experts say.
“Shein isn't the only retailer that can avoid scrutiny from US Customs via the loophole, but it’s by far the largest,” Bloomberg staff said.
Bloomberg:
Backed by investors including Sequoia Capital and IDG Capital, Shein conducted a funding round this year that put its value at $100 billion, exceeding that of rivals H&M and Zara combined. Buoyed by its ability to spot trends and respond quickly with inexpensive merchandise, the company’s global revenue topped $16 billion last year, and it’s on track for $24 billion this year, according to people familiar with its performance. A third of that is estimated to come from the US.
For the rest of Bloomberg’s report, Shein’s Cotton Tied to Chinese Region Accused of Forced Labor, click here.
UN: China told to free Xinjiang, make reparations and fails to stop probe into Iran’s human rights abuses
“A United Nations committee urged China on Thursday to release people held in detention facilities in its Xinjiang region and recommended that it provide victims with ‘remedies and reparation,’” Reuters has reported. “The committee's statement adds to pressure on China, a permanent member of the U.N. Security Council, to enact reforms following a report from the global body's human rights chief in August which said its treatment of Uyghurs and other Muslims may constitute crimes against humanity,” news staff said.
OHCHR Press Statement, Nov. 24, 2022:
The UN Committee on the Elimination of Racial Discrimination (CERD) today called on the Peoples’ Republic of China to immediately investigate all allegations of human rights violations in the Xinjiang Uyghur Autonomous Region (XUAR), including those of torture, ill-treatment, sexual violence, forced labour, enforced disappearances and deaths in custody.
Acting under its early warning and urgent action procedure, the Committee also called on China to immediately release all individuals arbitrarily deprived of their liberty in the XUAR, whether in so-called Vocational Education and Training Centres (VETCs) or other detention facilities, and to provide relatives of those detained or disappeared with detailed information about their status and well-being.
The Committee further:
Urges the State party to immediately cease all intimidation and reprisals against Uyghur and other ethnic Muslim communities, the diaspora and those who speak out in their defence, both domestically and abroad;
Urges the State party to ensure that victims of human rights violations, including Uyghurs and other ethnic Muslim communities, are provided with adequate and effective remedies and reparation . . .
Meanwhile, China was unable to help defeat a motion to investigate Iran’s human rights violations at the UN Human Rights Council on Thursday, Iran International said.
Iran International:
The last-minute amendment was rejected with 25 against, six in favor and 15 abstentions.
China's envoy Jiang Yingfeng told the council that the motion led by Germany was "overwhelmingly critical" of Iran. "It obviously will not help resolve the problem," he added, calling for a key paragraph to be deleted.
The paragraph in question would establish an "international fact-finding mission" that would be operational until early 2024. Iran's representatives also repeatedly criticized the motion which it called "completely biased".
For the rest of Reuters’ report, UN committee urges China to free Xinjiang detainees, recommends reparations, click here. For OHCHR’s press release, China: UN Committee on the Elimination of Racial Discrimination calls for probe into Xinjiang rights violations, click here. For Iran International’s UN update, China Fails To Stop Motion Of UN Probe Into Iran's Rights Violations, click here.
Geopolitics
US military likely to return to Philippines base amid China concerns
“The U.S. military will likely return to Subic Bay 30 years after relinquishing what was once their largest military base in Asia due to concerns over China's increasing maritime assertiveness,” according to local port officials interviewed by Kyodo News.
Kyodo News:
Manila and Washington have been in negotiations over setting up five more locations in the Asian country to build U.S. military facilities and preposition weapons under the Enhanced Defense Cooperation Agreement.
Rolen Paulino, chairman of the SBMA, told Kyodo News on Wednesday that he would be "very surprised" if Subic Bay does not become an EDCA site, as "during war, time is of the essence," a day before the 30th anniversary of the U.S. Navy's departure from the harbor that it had controlled for nearly 94 years.
The U.S. military operated a naval base in Subic Bay for over 90 years, relinquishing control in 1992, after which “the area was redeveloped as a free-enterprise zone that included establishing a free port and manufacturing plants, building tourist facilities in the coastal areas, and converting the air base there to an international airport,” according to Encyclopedia Britannica. “In 2012 the Philippine government agreed to begin allowing U.S. warships limited access to the Subic Bay port facilities,” it said.
But a visit by the U.S. Ambassador to a shipyard in the area earlier this month may be an indicator of new plans for the old site as Washington’s efforts to counter China’s presence in the South China Sea accelerate, Kyodo news staff said.
For the rest of Kyodo News’ report, U.S. military poised to return to Subic Bay, counter China's presence, click here. For Encyclopedia Britannica’s Subic Bay entry, click here.
The Week’s Best China Reads
China is erasing their culture. In exile, Uyghurs remain defiant. (John Beck with photographs by Patrick Wack, National Geographic)
Read for the gorgeous photos and inspiring report on how Uyghurs are preserving their culture despite China’s brutal repression.
Is a Wealth Tax Xi’s Answer to Fill China’s Empty Coffers? (Shuli Ren, Bloomberg)
Read Shuli Ren’s explanation of how China is having trouble coming up with the cash to keep things running.
2021: Teaching the “Leadership of the Communist Party” (David Cowhig, Gaodaiwei)
Read about Chinese translator David Cowhig’s legendary experiences in China and for some recommended (tongue-in-cheek) reading, like The Eunuch’s Big Cock – Whole Process Democracy”.
Middle Kingdom Surreal
Mass Covid demonstrations in China: Protesters openly demand Xi step down
“Thousands of protesters took to the streets of Shanghai, where people were heard openly shouting slogans such as ‘Xi Jinping, step down’ and ‘Communist party, step down,’” BBC has reported. The powerful images caught on social media and by foreign journalists came on the heels of a deadly Xinjiang fire where the government’s response was believed to have been “delayed” by Covid controls.
Over the weekend, the protests in Shanghai and Beijing also spread to Wuhan, the city where the pandemic first began. Social media video uploaded to YouTube by The Telegraph show hundreds of people taking to the streets in defiance of lockdown orders, removing the barriers that stood in their way. A damaged megaphone with a automated voice calling for people to show their healthcode lay near the barricades, all but ignored. Meanwhile, in a scene reminiscent of the 2020 national security law demonstrations in Hong Kong, protesters at universities in Beijing and Nanjing held blank sheets of paper to express their frustrations with Covid restrictions and government censorship, and the BBC announced that one of its journalists had been “beaten and kicked by police” after being arrested at the protests in Shanghai.
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Have a great week.