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Home Technology

Chinese EVs have entered center stage in US-China tensions

March 7, 2024
in Technology
Chinese EVs have entered center stage in US-China tensions
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This story first appeared in China Report, MIT Technology Review’s newsletter about technology in China. Sign up to receive it in your inbox every Tuesday.

So far, electric vehicles have mostly been discussed in the US through a scientific, economic, or environmental lens. But all of a sudden, they have become highly political. 

Last Thursday, the Biden administration announced it would investigate the security risks posed by Chinese-made smart cars, which could “collect sensitive data about our citizens and our infrastructure and send this data back to the People’s Republic of China,” the statement from White House claims.

While many other technologies from China have been scrutinized because of security concerns, EVs have largely avoided that sort of attention until now. After all, they represent a technology that will greatly help the world transition to clean and renewable energy, and people have greeted its rapid growth in China with praise.

But US-China relations have been at a low point since the Trump years and the pandemic, and it seems like only a matter of time before any trade or interaction between the two countries falls under security scrutiny. Now it’s EVs’ turn.

The White House has made clear that there are two motivations behind the investigation: the economy and security.

Even though the statement didn’t explicitly mention EVs, it’s undeniable that they are the only reason Chinese automakers have now become serious challengers to their American peers. Chinese companies like BYD make quality EVs at affordable prices, making them increasingly competitive in international markets. A recent report by the Alliance for American Manufacturing, an industry group, even describes EV competition as “China’s existential threat to America’s auto industry.”

“The issue of Chinese EV imports really hits on so many major political factors all at the same time,” says Kyle Chan, a sociology researcher at Princeton University who studies industrial policies and China. “Not just the auto plants in swing states like Michigan and Ohio, but the broader auto manufacturing sector spread over many important states.”

If the US auto industry fails to remain competitive, it will threaten the job security of millions of Americans, and countless other parts of the US economy will be affected. So it’s no surprise Chinese EVs are seen as a major economic threat that needs to be addressed. 

In fact, it’s one of the few issues everyone seems to agree on in this election cycle. Before the Biden investigation, Trump drew people’s attention to Chinese EVs during campaign speeches, vowing to slap a 60% tariff on Chinese imported goods. Josh Hawley, a Republican senator and a longtime China hawk, proposed a bill last Tuesday for a whopping 125% tariff on Chinese cars, including Chinese-branded cars made in other countries like Mexico.

But the new action taken by the Biden administration introduces another factor to the discussion: security threats.

Basically, the argument here is that Chinese cars—especially the newer ones with smart features that collect information from the environment or connect to the telecom and satellite network—could be used to steal information and harm US national interests. 

To many experts, this argument is a lot less supported by reality. When TikTok and Huawei were subject to similar concerns, it was because their products were widely used in the US. But the majority of Chinese-made cars are running inside China. There are barely any Chinese cars being sold in the US today, let alone the latest models. That makes the White House’s position look slightly bizarre. 

Lei Xing, an auto analyst and observer of the EV industry, has very strong opinions about the security accusations in the Biden administration’s announcement. “It is full of subjective and inaccurate statements trying to paint a picture of threat and security risk that is much greater than it actually is, and is obviously aimed at gaining voter favor as the presidential election race heats up,” Xing tells me.

Nonetheless, fears over data security are shared across the political spectrum in the US. “There has been almost an emerging consensus in Washington, across party lines, that is much more concerned about Chinese data collection through potential technology channels,” Chan says. 

This lens has now been used to question almost any technology product with Chinese connections: whether it’s Chinese cars, Chinese e-commerce apps like Shein and Temu, social media platforms like TikTok and WeChat, or smart home gadgets, the sentiment about data security remains the same.

Having watched these other technologies come into the geopolitical crossfire from afar, Chinese EV companies were mostly prepared for what was announced last week. 

“I think the Chinese EV firms have already baked this into their calculations,” Chan says. “As they’ve been ramping up more joint ventures and partnerships and entering other markets of the world, I’ve noticed a very clear reluctance to put that much investment into the US market.”

Recently, BYD Americas’ CEO said in an interview that its new planned factory in Mexico will serve the domestic market rather than exporting to the US; Xing learned recently that NIO, another Chinese car company, removed the US from its initial plan of entering 25 markets by 2025. These are all signs that Chinese EV companies will shy away from the US market for a while, at least until the political animosity goes away. Being unable to sell in the world’s second-largest auto market is obviously not good news, but they have a lot of potential customers in Europe, Latin America, and Southeast Asia.

“[The Chinese auto industry] for now will remain in a ‘watch and study’ mode and strategize accordingly. Mexico will be an important market and a critical production hub for the Americas region whether [the industry] eventually enters America or not,” says Xing.

I had been counting down the days until we’re able to drive Chinese EVs in the US and see how they compete with American cars on their home turf. I guess I’ll be in for a very long wait. 

Do you think this move will help or harm US domestic automakers in the long run? Let me know your thoughts at [email protected].

Catch up with China

1. China started its annual parliamentary meeting today. It’s the highest-level of political meeting in China, and it’s where economic plans and other important policy signals are often released. So watch this space. (NBC News)

For the first time in 30 years, the country has scrapped the annual tradition where the premier briefs the press and answers questions. It was one of the only moments of access to China’s political leaders, and now it’s gone. (Reuters $)

2. A deepfake clone of a Ukrainian YouTuber is being used by Chinese people to express pro-Russia sentiments and sell Russian goods. (Voice of America News)

3. Hundreds of North Koreans are forced to work in Chinese seafood factories while enduring frequent beatings and sexual abuse. These factories supply major US retailers like Walmart and ShopRite. (New Yorker $)

4. The US government wants to stop data brokers from selling sensitive data to China and a few other adversaries. (Wall Street Journal $)

5. In tiny New York studios, American TikTok influencers are learning the tricks of livestream e-commerce from their Chinese counterparts. (Rest of World)

6. The US Department of Justice accused a Chinese chipmaker of stealing trade secrets five years ago. The company was just found not guilty in court. (Bloomberg $)

7. The number of patents filed by inventors in China has been growing rapidly—surpassing the US figure for the first time ever. (Axios)

Lost in translation

When a Chinese college graduate named Lu Zhi moved on from her first job after eight months at PDD (the Chinese e-commerce company that owns Temu), she didn’t realize the company would ask her to pay $36,000 back as a noncompete compensation. As the Chinese publication Caixin reports, Chinese tech companies, particularly PDD, have sparked outrage for how broad their noncompete agreements have become. 

It doesn’t just affect key personnel in critical positions. Almost any employee, no matter how junior or peripheral their role, has to sign such an agreement when hired. To enforce the agreement, PDD has even hired private detectives to follow former employees around and film their commute to the new workplace. People are questioning whether these companies have gone too far in the name of protecting their trade secrets.

One more thing

The new Dune 2 movie is barely out, and people are already making memes comparing the plot to the real-life geopolitical situation between the US, China, and Taiwan. Is it accurate? I’ll report back after I watch it.

>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : Technology Review – https://www.technologyreview.com/2024/03/06/1089487/chinese-evs-security-threat-politics/

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