Tech

U.S. provides loans to attract developing countries from Chinese telecommunications equipment

The U.S. government has embarked on a push to persuade developing countries to avoid China’s telecommunications equipment, providing financial support to Washington use an alternative that says it’s safer and less stringy. ..

Bonnie Glick, deputy administrator of the U.S. Agency for International Development, said the U.S. could potentially add billions of dollars worth of loans and other to buy hardware from democratic suppliers rather than from China. He said he was ready to fund. We are at the forefront of our efforts.

Well-known for providing food aid rather than technology, the agency has dispatched staff to meet politicians and regulators in developing countries, and two Chinese giants, Huawei Technologies Co. She said she was aiming to persuade her to use ZTE’s communications equipment. Co., Ltd.

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It’s a bad idea.

The provision of financial assistance represents a new tool Washington is deploying as it expands the technical Cold War with China. The Trump administration is trying to curb China’s technological progress over concerns about espionage and trade practices.

Washington has urged its allies to join the ban on Chinese-made devices for networks using 5G wireless technology for two years. This promises self-driving cars, more efficient factories, and ultra-fast speeds that enable other innovations.

US officials say the Chinese government can order Huawei and ZTE to spy on or carry out cyberattacks. This is a scenario where companies and Beijing say it never happens.

The US campaign initially focused on 5G deployments in Europe, including the United Kingdom and Poland. Other countries, especially Germany, are still discussing whether to limit or ban Chinese-made equipment.

The United States may face greater challenges in developing countries. In Africa, for example, Chinese wireless equipment manufacturers dominate the market. According to research firm Dell’Oro Group, price-sensitive carriers flocked to Huawei and ZTE, gaining a total sales share of 50% to 60% in Africa and the Middle East earlier this year. U.S. officials also say there appear to be more than China’s counterparts offering irresistible loans to developing countries.

The US effort to curb China’s technical ambitions has grown into the efforts of multiple institutions. The Department of Commerce imposes restrictions on the export of US technology needed to manufacture advanced communications equipment and semiconductors to China. The State Department has instructed diplomats to urge allies to avoid Huawei and ZTE equipment.

This month, USAID combined the Federal Communications Commission with FCC’s technical and policy expertise and a network of aid agencies with approximately 10,000 employees in approximately 100 countries to bring China’s equipment in developing countries. Signed a contract to jointly counter the 5G deployment used.

A mobile phone tower in Johannesburg, South Africa. The country’s first commercial 5G network uses Huawei equipment.


Photo:

Waldo Swiegers / Bloomberg News

Glick said the message to developing countries runs into two themes. Chinese equipment is vulnerable to espionage, and loans provided by Chinese financial institutions, such as the state-owned China Development Bank, to finance equipment can lock them in.

“There are a lot of details,” Glick said. “Countries are in huge debt and China is taking over control of the country’s assets,” Glick said.

She said a representative from USAID would take up an example of the South Asian government being indebted to sell a port to a Chinese state-owned enterprise.

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

USAID does not provide loans on its own, but it works through US financial institutions such as the US International Development Finance Corp. A spokesman said the DFC could provide equity loans directly, leaving about half of the $ 60 billion in investment capital remaining. -Telecom deals. Another institution, the US Export-Import Bank, said the new China-focused initiative would allow it to finance transactions on competitive terms and rates with Chinese institutions.

Western telecommunications equipment executives say Chinese financial institutions usually offer rates and repayment schedules below market prices that US and European financial institutions couldn’t handle.

Washington will fund a deal with Nokia, Finland, a major non-Chinese company, as there are no major wireless equipment manufacturers in the United States to supply 5G equipment. Co., Ltd.

, Sweden Ericsson AB and South Korea Samsung Electronics Co., Ltd.

USAID also has the potential to support small American companies in the early stages of developing open standard 5G technology, Glick said.

The technological battle between the United States and China has defeated TikTok and Huawei and surprised US companies producing and selling in China. The WSJ explains how Beijing is pouring money into tech chips because it wants to be self-sufficient.Video / Illustration: George Downs / Wall Street Journal

Glick aims to travel to Finland on Sunday to visit Finnish government officials and companies such as Nokia to sign a contract to cooperate on telecommunications options in developing countries. A Finnish government spokesman said he was eager to discuss cooperation with the United States and is considering a proposal.

Nokia, Ericsson and Samsung declined to publicly comment on US efforts. Some executives at these companies said they welcomed this initiative from Washington, but it wasn’t sold as to whether it would make a difference in their business.

The US push is expected to continue regardless of the outcome of next month’s presidential election. “It’s not just the Republican and Democratic missions to discourage the United States, our allies, and all nations, whether under development or not, from working with Huawei and ZTE.”

Write to StuWoo at Stu.Woo@wsj.com

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