Chinese tech giants caught up in rising US-China tensions

Chinese tech giants caught up in rising US-China tensions

Tensions between the U.S. and China amid the COVID-19 crisis are turning into a major headache for Chinese-owned tech companies such as telecom giant Huawei and social media app TikTok.

Lawmakers were already wary of Chinese tech groups before the outbreak of the coronavirus due to a 2017 law that requires all Chinese companies and citizens to share sensitive information with the Chinese government if asked. 

But the mood on Capitol Hill and in the Trump administration is turning increasingly against these Chinese groups amid tensions with Beijing over the origins of the COVID-19 crisis, the recent crackdown on Hong Kong, and the ongoing trade war. 

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Sen. Angus KingAngus KingSenate falling behind on infrastructure Hillicon Valley: Senators introduce bill to require some cyber incident reporting | UK citizen arrested in connection to 2020 Twitter hack | Officials warn of cyber vulnerabilities in water systems Bipartisan group says it's still on track after setback on Senate floor MORE (I-Maine), a member of the Senate Intelligence Committee, acknowledged that the current relationship between the U.S. and China is “difficult."

“I sense a growing hawkishness towards China," King told reporters on Friday. "I think it would be unrealistic not to acknowledge that right now the relationship with China is not good, and what we are talking about now with Huawei is just one piece of it,” he added.

King signed on as a co-sponsor last week to the Utilizing Strategic Allied (USA) Telecommunications Act, a bill that aims to invest in creating alternatives to telecom equipment from Chinese telecom groups Huawei and ZTE. 

He told reporters that he hoped the bill, which has bipartisan backing from the leaders of the Senate Intelligence Committee, would move forward in the next few months. 

“We are going to try to find a vehicle for sure, and I don’t think it should be terribly controversial, this isn’t a regulatory bill,” King said. “We are going to try to move it one way or another, hopefully sometime this summer.”

Huawei, which is the biggest producer of 5G equipment worldwide, has been a major target of suspicion both before and during the COVID-19 pandemic. 

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The Trump administration and bipartisan lawmakers have taken a multitude of steps to limit the company’s ability to do business in the U.S., including effectively blacklisting Huawei and designating the company as a national security threat. 

In the most recent blow to Huawei, the Commerce Department issued a rule restricting Huawei’s ability to use American technology and software to manufacture semiconductors, blocking the company from accessing a large share of chip production. 

Don Morrissey, Huawei’s director of congressional affairs, told The Hill that he was concerned about the geopolitical situation worsening Huawei’s relationship with lawmakers on Capitol Hill. 

“It does impact how people feel about us specifically,” Morrissey said, pointing to the ongoing trade war and increased conflict over China’s handling of the COVID-19 pandemic. 

“It’s not a comfortable place to be, but we are realistic, and we are hoping that as we get through this that the general atmosphere can improve,” he added. “Any observer could tell you that frictions have increased between the U.S. and China.”

Huawei and ZTE have not been the only major Chinese tech companies to come under scrutiny.

Popular video app TikTok, which has seen its popularity skyrocket during COVID-19 quarantines, and Bytedance, the Chinese company that owns TikTok, have also been viewed with concern by lawmakers in recent weeks.

A coalition of bipartisan lawmakers in the House and Senate recently grilled TikTok over concerns that it had violated a settlement with the Federal Trade Commission around protecting child privacy. 

“Given the reasonable concerns that the Chinese government may have access to the data TikTok collects on Americans, it is all the more troubling that the company appears to intentionally be in violation of U.S. data privacy laws,” a group of House Democrats led by Reps. Jan SchakowskyJanice (Jan) Danoff SchakowskyOmar reflects on personal experiences with hate in making case for new envoy House passes bill to revive FTC authority to recover money for consumers Duckworth, Pressley introduce bill to provide paid family leave for those who experience miscarriage MORE (D-Ill.) and Ann KusterAnn McLane KusterTech industry pushes for delay in antitrust legislation Man charged in Capitol riot says he's running for Congress The Hill's 12:30 Report: Sights and sounds from Inauguration Day MORE (D-N.H.) wrote to FTC Chairman Joseph Simons last month.

Rep. Jim Banks (R-Ind.) went a step further and introduced legislation in April to add a national security warning to TikTok and other apps considered a national security risk. 

A spokesperson for TikTok did not respond to The Hill’s request for comment. The company has previously pushed back against national security concerns, pointing out that it stores data on Americans in the U.S. with a backup in Singapore. TikTok recently hired a former American Disney executive to serve as CEO. 

But concerns around Chinese companies have even spread beyond just tech companies into the realm of transportation.

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Reps. Ron WrightRon WrightTrump pushes support for Wright in home stretch to Texas House runoff Texas Republicans propose audit of Democrat-heavy counties Dallas newspaper endorses Ellzey in special House runoff MORE (R-Texas) and Marc VeaseyMarc Allison VeaseyWe must address the declining rate of startup business launches Ted Cruz accuses Democrats of proposing 'Jim Crow 2.0' voting legislation The Hill's Morning Report - Presented by Goldman Sachs - Voting rights will be on '22, '24 ballots MORE (D-Texas) introduced legislation last month to prohibit the use of federal funds to purchase airport equipment made in countries that may pose a national security threat to the United States, such as China. 

They pointed to the need to shore up American jobs as the country deals with the COVID-19 pandemic, and specifically cited concerns over Chinese-owned company CIMC-Tianda, which manufactures passenger boarding bridges.

"Make no mistake, the CCP will stop at nothing to gain power and control,” Wright said in a statement when introducing the bill. “We cannot afford to give them inroads to our most critical systems."

But while the increased tensions pose a threat to many Chinese-owned companies, Huawei and ZTE are still viewed by King as among the biggest threats due to the use of their equipment by U.S. telecommunication groups. 

“There is a big difference between an app and the heart of your 5G system in terms of access to data, and I just think we need to be aware of this,” King said. “Yes, we need to think about TikTok, but I think that’s a different level of risk than the Huawei and hub of 5G.”