US should investigate if Chinese autos pose national data security issues

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US should investigate if Chinese autos pose national data security issues
US should investigate if Chinese autos pose national data security issues

The United States is starting an examination into whether Chinese vehicle imports pose national security risks and may impose constraints, the White House announced.

The United States is conducting an inquiry into whether Chinese vehicle imports pose national security risks and may impose limitations owing to worries about “connected” car technology, the White House announced on Thursday.

The Commerce Department investigation is necessary because vehicles “collect large amounts of sensitive data on their drivers and passengers (and) regularly use their cameras and sensors to record detailed information on U.S. infrastructure,” according to the White House.

The study will also look at autonomous vehicles because they can “be piloted or disabled remotely.”.

“China’s policies could flood our market with its vehicles, posing risks to our national security,” President Joe Biden said in a statement. “I’m not going to let that happen on my watch.”

White House officials told reporters that it was too early to predict what action would be taken and that no decision had been made on a potential ban or limits on connected Chinese automobiles.

Officials warned reporters that the US government has broad legal authority and might take action with a “significant impact.”

The initiative was described as “unprecedented action to ensure that cars on U.S. roads from countries of concern like China do not undermine our national security.”

The Alliance for Automotive Innovation, which represents General Motors (GM.N), Toyota (7203.T), Volkswagen (VOWG_p.DE), and nearly all major automakers, stated that the Commerce Department should “work closely with the auto industry to determine the scope of any action.”

The group encouraged the Commerce Department to target transactions that pose “undue risk to U.S. economic and national security” but not “capture low-risk transactions that could have unintended near-term impacts on advanced vehicle safety technologies.”

There are a few Chinese-made light-duty automobiles imported into the United States. Commerce Secretary Gina Raimondo stated that the administration is taking action before they spread and “potentially threaten our privacy and national security.”

Chinese EV manufacturers have relied on Southeast Asia, the Middle East, and Europe as their main export destinations. BYD, the world’s top EV manufacturer by sales, has consistently claimed it has no plans to sell its cars in the U.S. market, but on Wednesday said it was exploring a location in Mexico.

BYD also said Wednesday that it will begin selling the Dolphin Mini EV in Mexico for 358,800 Mexican pesos ($21,019.33), which is less than half the price of the cheapest Tesla.

The Chinese foreign ministry stated on Friday that Chinese cars were popular worldwide not because of “so-called unfair practices,” but because they came from tough market rivalry and were technologically advanced.

“China urges the US to respect the laws of the market economy and principles of fair competition, stop overstretching the concept of national security, stop its discriminatory suppression of Chinese companies, and uphold an open, fair, and non-discriminatory business environment,” Mao Ning, a spokesperson for the ministry, said.

Cui Dongshu, secretary general of the China Passenger Car Association, stated that targeting cars from a single nation and imposing limits on them exclusively is unfair among all vehicles equipped with clever sensors.

Separately, the Biden administration is considering slapping new taxes on Chinese-made vehicles, and officials are under fresh pressure to limit Chinese electric vehicle imports from Mexico.

The United States has implemented laws to wean the US electric vehicle battery chain away from China, and companies and consumers have been barred from receiving tax breaks if they use materials from China, which dominates the EV battery supply chain.

Last December, China stated that it breached international trade regulations and would disrupt global supply networks.

In November, a bipartisan group of US lawmakers expressed concern about Chinese businesses acquiring and handling sensitive data while testing autonomous vehicles in the United States.

The Commerce Department will collect comments for 60 days before considering crafting regulations to address concerns. The investigation will also look into existing U.S.-assembled automobiles, including where automakers license software.

The United States previously blocked Chinese telecom companies from its market, citing data concerns, and classified Huawei and ZTE (000063.SZ) as risks, requiring carriers to remove their equipment from US networks.

According to the White House, China imposes considerable limitations on US and other foreign automobiles operating in the country. “Why should connected vehicles from China be allowed to operate in our country without safeguards?” Biden stated.

In recent years, China has reinforced its regulation of data management within the country, and most firms must ask for authorization before transferring data abroad.

In May, authorities tightened data regulations for the auto industry and recommended prohibiting smart vehicles in China from transferring data directly abroad, instead requiring them to use domestic cloud services.

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