Heritage Report Address China’s Aspirations of Tech Dominance, Part 2 of 2: State Tech Purchases

Today CTT releases our summary – Part 2 of 2 – of some of a new Heritage Foundation report, “Winning the New Cold War: A Plan for Countering China.” Today’s post focuses on prohibiting U.S. state government purchases of Chinese technology. 

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“In July 2022, the National Counterintelligence and Security Center issued a bulletin warning that “Leaders at the U.S. state, local, tribal, and territorial levels risk being manipulated to support hidden PRC agendas….The advisory concluded that ‘geopolitical reality has placed state and local officials in the United States on the front lines of national security.” (p. 66)

Engage State and Local Governments

The Heritage paper does an excellent job of identifying and offering policy solutions for various Chinese malign activities at the sub-national level, including banning untrusted Chinese technologies from U.S. state contracts. Building on a Heritage Foundation paper released just months ago, “Why State Legislatures Must Confront Chinese Infiltration,” the “Winning the New Cold War” report states,

State governments must prevent Chinese companies from obtaining contracts to build critical infrastructure, resist purchasing Chinese products and technology that  can pose espionage or national security risks, limit and roll back nefarious PRC activities on U.S. university campuses, encourage public funds—particularly pension funds—to divest from problematic Chinese entities, prevent the purchase of sensitive land or property near critical infrastructure or strategic farmland by PRC agents, and identify and halt lobbying of state and local governments by Chinese agents. (37)

This work dovetails with CTT’s report from February 2023 detailing the presence of dangerous Chinese technology in U.S. state government systems and rising efforts to counter companies like Lexmark, Lenovo, DJI, and Hikvision from getting their claws into U.S. state contracts. Writes Heritage, “Although Chinese attempts to infiltrate data portfolios and information systems within the U.S. will continue, eliminating drones will significantly reduce their collection capabilities and the associated threat to the US.” (43)

Ban the Import and Sale of Chinese Manufactured Drones

The Heritage Foundation report is also commendable for raising a red flag on Chinese drone maker DJI. The report makes clear, “The data collected by those systems is stored on servers owned by Chinese corporations that are legally obligated to share that data with the CCP upon request, effectively giving the Party access to government, corporate, and private data on request.” (43)

In February, CTT detailed the dangers of DJI in our report on state contracts, writing

In 2020, The Wire China reported that more than 900 U.S. state and local governments and emergency services used DJI products. Just as Huawei, state-backed chipmaker YMTC, and Lenovo have done in their respective industries, DJI prices its products far below its competitors’ in hopes of driving its rivals from the space. DJI has also helped carry out in the acts of genocide the Chinese Communist Party is perpetrating in Xinjiang by providing equipment to the Xinjiang Public Security Bureau, thus landing the company on the Commerce Department’s blacklist in 2021.

CTT plans to release data this summer detailing state government contracts with DJI.

The problem with DJI applies to all Chinese-owned and operated companies seeking to obtain state contracts – with no firewall between Chinese companies and the Chinese state, American sensitive data can find its way into Beijing’s hands.

For this reason, one would think that state and local law enforcement agencies would be more wary of buying Chinese drones, but DJI has run a powerful lobbying campaign in Washington to prevent legislation that would restrict federal funds being used by the states to buy Chinese drones. The Heritage report helpfully insists: “Language preventing federal government acquisition of these systems should be reinserted the next time the NDAA is re-authorized and signed into law. Once implemented, Congress should task federal agencies with educating officials at the state and local level about the goal of both preventing the purchase of future systems and removing existing platforms.” (p. 44) The Heritage Foundation is on the right track with its new report. The relevant federal agencies should take up its excellent recommendations.