US Official: China’s Race to 5G Raises Global Security Concerns

Michael R. Wessel is a commissioner of the U.S.-China Economic and Security Review Commission, a U.S. government organization that investigates the national security implications of trade and economic relationship between the U.S. and China.

He recently discussed with VOA his concerns about China’s race to 5G, the next generation of wireless connectivity being built worldwide. With a 5G network, users will be able to send and receive more data in less time, which could have implications for self-driving cars, smart cities and other technologies.  

 

Q: How much does it matter which country is first to fully functioning 5G?

 

Wessel: It does matter. First mover advantage is crucial in any new technology, but it is particularly important in 5G because it is foundational for cutting-edge innovation and applications including smart cities, network manufacturing, and integrated warfighting capability.

When standards are created, controlled, and sold by other countries, there is enhanced pressure on the U.S. to adopt those standards, which would have significant economic and national security costs.

For example, U.S. 4G leadership contributed to around $125 billion in U.S. company revenue from abroad and more than $40 billion in U.S. application and content developer revenue, and created 2.1 million new jobs from 2011-2014. And, from a national security perspective, the “control” of technologies raises unacceptable risks.

Q: How far ahead is Huawei or China on 5G?

 

Wessel: China’s leadership in 5G depends on how we define competition. Some U.S. companies are already offering 5G devices and are running pilot projects in select cities, so they have beat China to the punch. However, Chinese investment into 5G is vast.

 

As of early February 2019, Huawei owned 1,529 “standard-essential” 5G patents, the most of any company, according to data-analytics firm IPlytics. By comparison, Qualcomm, a U.S. company, owned 787 standard-essential patents. All Chinese companies together own 36 percent of all 5G standard-essential patents, while U.S. companies (Intel and Qualcomm) own 14 percent.

 

In terms of 5G network build out, China is also racing ahead: China Tower, a monopoly created by the Chinese government to build the country’s 5G infrastructure, said it would likely cover the country by 2023. One estimate said China Tower built more sites in 3 months than U.S. did in 3 years. In the United States, the process is likely to take much longer, with each company handling its own networks, and will need to negotiate with local governments for tower locations.

Q: The U.S. is urging its allies to not work with Huawei in building their 5G networks out of concern that the Chinese technology giant could give the Chinese government access to the new network for spying. Some countries such as Germany say they won’t rule out working with Huawei. Why is this a problem for the U.S.?

Wessel: We tend to focus on the economic cost and not consider the national security cost of something as significant as a nationwide 5G network rollout.

Huawei products, services and activities have already raised significant concerns and our allies have to consider how much more investment they are willing to make into their technology.  

No amount of risk mitigation or false attempts at transparency are adequate. The problem is Germany and other allies have already incorporated some Huawei equipment into their tech infrastructure. Much like a virus, our allies can choose to inoculate themselves against this danger now, or run the risk of painful and costly treatment later. Unfortunately, this is a great risk to intelligence-sharing among allies and partners.  

Hosting

more

GM Announces Jobs, Electric Vehicle After Trump Criticism

Less than a week after a series of critical tweets from the president over an Ohio plant closure, General Motors is announcing plans to add 400 jobs and build a new electric vehicle at a factory north of Detroit.

The company says it will spend $300 million at its plant in Orion Township, Michigan, to manufacture a Chevrolet vehicle based on the battery-powered Bolt.

GM wouldn’t say when the new workers will start or when the new vehicle will go on sale, nor would it say if the workers will be new hires or come from a pool of laid-off workers from the planned closings of four U.S. factories by January.

The company also announced plans Friday to spend about another $1.4 billion at U.S. factories with 300 more jobs but did not release a time frame or details.

The moves come after last weekend’s string of venomous tweets by President Donald Trump condemning GM for shutting its small-car factory in Lordstown, Ohio, east of Cleveland. During the weekend, Trump demanded that GM reopen the plant or sell it, criticized the local union leader and expressed frustration with CEO Mary Barra.

GM spokesman Dan Flores would not answer questions about Trump but said the investment has been in the works for weeks. Indeed, GM has said it planned to build more vehicles off the underpinnings of the Bolt, which can go an estimated 238 miles on a single electric charge. The company has promised to introduce 20 new all-electric vehicles globally by 2023.

In November, GM announced plans to shut the four U.S. factories and one in Canada. About 3,300 workers in the U.S. would lose their jobs, as well as 2,600 in Canada. Another 8,000 white-collar workers were targeted for layoff. The company said the moves are necessary to stay financially healthy as GM faces large capital expenditures to shift to electric and autonomous vehicles.

Plants slated for closure include Lordstown; Detroit-Hamtramck, Michigan; Warren, Michigan; White Marsh, Maryland, near Baltimore and Oshawa, Ontario near Toronto. The factories largely make cars or components for them, and cars aren’t selling well these days with a dramatic consumer shift to trucks and SUVs. With the closures, GM is canceling multiple car models due to slumping sales, including the Chevrolet Volt plug-in gas-electric hybrid.

GM has said it can place about 2,700 of the laid-off U.S. workers at other factories, but it’s unclear how many will uproot and take those positions. More than 1,100 have already transferred, and others are retiring.

The United Auto Workers has sued GM over the closings, which still must be negotiated with the union.

Trump’s latest GM tweet on Monday said GM should: “Close a plant in China or Mexico, where you invested so heavily pre-Trump,” and “Bring jobs home!”

Ohio and the area around the Lordstown plant are important to Trump’s 2020 re-election bid. The state helped push him to victory in 2016, and Trump has focused on Lordstown, seldom mentioning the other U.S. factories that GM is slated to close.

Barra has said that she sees no further layoffs or plant closures through the end of 2020.

Hosting

more

US House to Vote in April to Reinstate Net Neutrality Rules

The Democratic-led U.S. House of Representatives will vote in April on a bill to reinstate landmark net neutrality rules repealed by the Federal Communications Commission under President Donald Trump. 

House Majority Leader Steny Hoyer of Maryland said in a letter to colleagues on Thursday, seen by Reuters, that lawmakers would vote on the “Save the Internet Act” during the week of April 8. 

The bill mirrors an effort last year to reverse the FCC’s December 2017 order that repealed rules approved in 2015 that barred providers from blocking or slowing internet content or offering paid “fast lanes.” 

The reversal of net neutrality rules was a win for internet providers like Comcast Corp., AT&T Inc. and Verizon Communications Inc., but opposed by content and social media companies like Facebook Inc., Amazon.com Inc. 

and Alphabet Inc. 

The bill would repeal the order introduced by FCC Chairman Ajit Pai, bar the FCC from reinstating it or a substantially similar order and reinstate the 2015 net neutrality order. 

Republicans oppose reinstating the 2015 rules that grant the FCC sweeping authority to oversee the conduct of internet providers. 

The Senate, which is controlled by Republicans, voted in May 2018 to reinstate the rules, but the House did not take up the issue before Congress adjourned last year. The White House opposes reinstating the net neutrality rules and it is not clear that proponents will be able to force a vote in the Senate. 

Hosting

more

Malaysian Leader in Pakistan to Sign $900M in Investment Deals 

Malaysian Prime Minister Mahathir Mohamad arrived Thursday in Pakistan on an official three-day visit, where his high-powered delegation is expected to finalize investment deals worth nearly $900 million, officials said. 

 

The Malaysian leader will also be the chief guest at the Pakistan Day military parade Saturday, the Foreign Ministry announced. 

 

Pakistani Prime Minister Imran Khan’s adviser on commerce told reporters that business leaders accompanying Mahathir would sign three memorandums of understanding on Friday covering up to $900 million worth of investments in information technology and telecom sectors.  

The adviser, Razak Dawood, said the deals with Malaysia would also provide Pakistan a new opening toward membership in the Association of South East Asian Nations. He said Malaysian businessmen had also indicated they would like to invest in other sectors, including energy and textiles, to help Pakistan improve its exports. 

 

Officials said that Malaysia’s Proton carmaker signed an agreement late last year with a Pakistani partner to set up an assembly plant in the southern city of Karachi that would be its first facility in South Asia. Khan and his Malaysian counterpart are expected to officiate at a symbolic groundbreaking of the Proton plant Friday.

Looking for investors

Since taking office last August, Khan has approached nations that have warm relations with Pakistan, including China, Saudi Arabia, the United Arab Emirates, Qatar and Malaysia, to bring investment and financial deposits to help reduce a widening current account deficit and shore up foreign reserves.  

Riyadh and Abu Dhabi have deposited or are in the process of depositing $6 billion in loans in recent months. The two countries have also agreed to allow Islamabad to import oil on deferred payments. China is expected to deposit more than $2 billion in the next few days. 

 

Beijing has invested more than $19 billion over the past six years in energy and infrastructure projects under what is known as the China-Pakistan Economic Corridor, as part of its global Belt and Road Initiative. 

 

Last month, Saudi Crown Prince Mohammad bin Salman visited Islamabad and signed investment agreements worth $20 billion, including a $10 billion refinery and petrochemicals complex in the southwestern port city of Gwadar. 

 

Pakistani officials say they are also close to securing a deal with the International Monetary Fund for a bailout package reportedly of up to $12 billion.

Hosting

more

Facebook Left Millions of Passwords Readable by Employees

Facebook left millions of user passwords readable by its employees for years, the company said Thursday, an acknowledgement it offered after a security researcher posted about the issue online.

By storing passwords in readable plain text, Facebook violated fundamental computer-security practices. Those call for organizations and websites to save passwords in a scrambled form that makes it almost impossible to recover the original text.

“There is no valid reason why anyone in an organization, especially the size of Facebook, needs to have access to users’ passwords in plain text,” said cybersecurity expert Andrei Barysevich of Recorded Future.

Facebook said there is no evidence its employees abused access to this data. But thousands of employees could have searched them. The company said the passwords were stored on internal company servers, where no outsiders could access them.

The incident reveals yet another huge and basic oversight at a company that insists it is a responsible guardian for the personal data of its 2.2 billion users worldwide.

The security blog KrebsOnSecurity said Facebook may have left the passwords of some 600 million Facebook users vulnerable. In a blog post, Facebook said it will likely notify “hundreds of millions” of Facebook Lite users, millions of Facebook users and tens of thousands of Instagram users that their passwords were stored in plain text.

Facebook Lite is a version designed for people with older phones or low-speed internet connections. It is used primarily in developing countries.

Last week, Facebook CEO Mark Zuckerberg touted a new “privacy-focused vision” for the social network that would emphasize private communication over public sharing. The company wants to encourage small groups of people to carry on encrypted conversations that neither Facebook nor any other outsider can read.

The fact that the company couldn’t manage to do something as simple as encrypting passwords, however, raises questions about its ability to manage more complex encryption issues — such in messaging — flawlessly.

Facebook said it discovered the problem in January. But security researcher Brian Krebs wrote that in some cases the passwords had been stored in plain text since 2012. Facebook Lite launched in 2015 and Facebook bought Instagram in 2012.

Recorded Future’s Barysevich said he could not recall any major company caught leaving so many passwords exposed internally. He said he’s seen a number of instances where much smaller organizations made such information readily available — not just to programmers but also to customer support teams.

Security analyst Troy Hunt, who runs the `haveibeenpwned.com’ data breach website, said that the situation is embarrassing for Facebook, but that there’s no serious, practical impact unless an adversary gained access to the passwords. But Facebook has had major breaches, most recently in September when attackers accessed some 29 million accounts.

Jake Williams, president of Rendition Infosec, said storing passwords in plain text is “unfortunately more common than most of the industry talks about” and tends to happen when developers are trying to rid a system of bugs. He said the Facebook blog post suggests storing passwords in plain text may have been “a sanctioned practice,” although he said it’s also possible a “rogue development team” was to blame.

 

Hosting

more

US Labor Market Solid; Manufacturing Sector Slowing

The number of Americans filing applications for unemployment benefits fell more than expected last week, pointing to still strong labor market conditions, though the pace of job growth has slowed after last year’s robust gains.

Other data on Thursday showed a measure of factory activity in the mid-Atlantic region rebounding sharply this month after falling into negative territory in February for the first time in more than 2-1/2 years. But manufacturers’ perceptions about the outlook were the least favorable in three years and their expectations for capital spending were also less upbeat.

These findings support the view that the manufacturing sector is slowing in line with softening economic growth.

The Federal Reserve held interest rates steady on Wednesday and its policymakers abandoned projections for further rate increases this year, noting that “growth of economic activity has slowed from its solid rate in the fourth quarter.”

“The U.S. economy has clearly slowed and will cause job growth to moderate, which isn’t alarming as long as it is orderly,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 221,000 for the week ended March 16, the Labor Department said on Thursday. Economists polled by Reuters had forecast claims falling to 225,000 in the latest week. Claims have been drifting in the middle of their 200,000-253,000 range this year.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 1,000 to 225,000 last week.

The claims data covered the survey week for the nonfarm payrolls portion of March’s employment. The four-week average of claims fell 11,000 between the February and March survey periods, suggesting a pickup in job growth after hiring almost stalled last month.

Nonfarm payrolls increased by only 20,000 jobs in February, the fewest since September 2017. The slowdown followed big gains in December and January. Average job growth has moderated to about 165,500 per month from 223,250 per month in 2018.

Despite the slowdown in employment growth, the labor market remains solid. The unemployment rate is at 3.8 percent and annual wage growth in February was the strongest since 2009.

The step-down in hiring reflects a shortage of workers and softening economic growth as the stimulus from a $1.5 trillion tax cut package fades. A trade war between the United States and China, slowing global growth and uncertainty over Britain’s exit from the European Union are also hurting domestic activity.

Ebbing momentum

The slow growth theme was also underscored by another report on Thursday from the Conference Board showing its leading economic index, which measures future U.S. economic activity, rose in February for the first time in five months.

February’s 0.2 percent increase in the leading indicator followed an unchanged reading in January.

The leading indicator’s growth rate has slowed in the past six months, which the Conference Board said suggested “that while the economy will continue to expand in the near-term, its pace of growth could decelerate by year end.”

Gross domestic product estimates for the first quarter are as low as a 0.4 percent annualized rate. The economy grew at a 2.6 percent pace in the fourth quarter.

The dollar firmed against a basket of currencies while stocks on Wall Street rose. U.S. Treasury prices were generally higher.

In a third report on Thursday, the Philadelphia Fed said its business conditions index jumped to 13.7 in March from -4.1 in February, which was the first negative reading since May 2016.

But the survey’s measure of new orders received by factories in the region, which covers eastern Pennsylvania, southern New Jersey and Delaware, rebounded moderately from negative territory in February and unsold goods piled up.

In addition, the survey’s six-month business conditions index dropped to a reading of 21.8 this month, the lowest since February 2016, from 31.3 in February. Its six-month capital expenditures index fell to a reading of 19.5 in March from 31.7 in the prior month. The index dropped below 20 for the first time since 2016.

“The details within the report were much more of a mixed bag, and more downbeat than one might think given the solid improvement in the headline reading,” said Daniel Silver, an economist at JPMorgan in New York.

These readings are in line with other surveys showing signs of slowing national factory activity. A report from the New York Fed last week showed a gauge of factory activity in New York state dropped to a two-year low in March.

The Philadelphia Fed survey also showed more factories experiencing difficulty finding workers, which could weigh on production in the future. Nearly 74 percent of the firms reported labor shortages, up from 63.8 percent last year.

Just over half of the companies also reported they had positions that have remained vacant for more than 90 days. That compared to 47.8 percent in 2018.

Hosting

more

US Negotiators to Visit China Next Week for New Round of Trade Talks

China says a high-ranking U.S. delegation will travel to Beijing next week to resume negotiations aimed at resolving the ongoing trade war between the world’s two leading economies.

Commerce Ministry spokesman Gao Feng announced Thursday that U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will visit the Chinese capital next Thursday and Friday, March 28 & 29, followed by a trip to Washington in early April by Chinese Vice Premier Liu He.

The trade war between the United States and China began last year when President Donald Trump imposed punitive tariffs on $250 billion worth of Chinese imports to compel Beijing to change its trading practices.

China has retaliated with its own tariff increases on $110 billion of U.S. exports. The Trump administration is also pushing China to end its practice of forcing U.S. companies to transfer their technology advances to Chinese firms.

Trump had initially imposed a deadline of March 2 for both sides to reach a deal before imposing a hike in tariffs from 10 to 25 percent, but delayed the increase late last month citing “substantial progress” in the negotiations. But Chinese President Xi Jinping has reportedly cancelled tentative plans to visit Trump’s Mar-a-Lago estate in Florida next month to sign a final deal, a sign that the talks have stalled.

Trump issued a warning Wednesday that U.S. tariffs could remain in place for a “substantial period” to ensure that Beijing lives up to any agreement.

 

Hosting

more