Senators Move to Close ‘Security Loophole’ on Chinese State-Backed Firms

An employee stands inside a Huawei flagship store in Beijing, on April 12, 2021. Andy Wong/AP Photo

A bipartisan bill aims to bar Chinese state-linked firms from exploiting a “security loophole” to enter U.S. technology markets.

The Secure Equipment Act of 2021 (pdf), introduced by Sens. Marco Rubio (R-Fla.) and Ed Markey (D-Mass.), targets major Chinese telecom providers, including Huawei, ZTE, Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, and Dahua Technology Company. The Federal Communication Commission (FCC) has flagged all five as a threat to national security.

Under the act, the FCC, which oversees all interstate and foreign communications by radio, television, wire, satellite, and cable, would cease reviewing or approving any product or services from the named companies.

“The Chinese Communist Party subsidizes these companies and exploits loopholes in our laws to allow malicious actors to sell compromised equipment and services in the U.S.,” Rubio said.

By “loopholes,” Rubio was referring to regulations that the FCC adopted last year mandating U.S. telecom carriers to remove and replace gear from Chinese entities deemed to be a national security risk. The rules, however, didn’t apply to equipment purchased with private funding.

An FCC review found that Huawei alone has seen more than 3,000 of its applications approved since 2018, including on network equipment and tracking devices, FCC Commissioner Brendan Carr said (pdf) on March 30. The FCC similarly greenlighted Hikvision and Dahua applications for video surveillance and facial recognition equipment.

Surveillance cameras are seen near the headquarters of Chinese video surveillance firm Hikvision in Hangzhou, Zhejiang Province, China, on May 22, 2019. Reuters

“The status quo is dangerous, and we need to act now to strengthen our national security and protect our critical infrastructure,” Rubio said.

Markey called the legislation a “commonsense proposal.”

“In today’s increasingly connected world, we must animate our technology with our values, especially in the 5G networks that are critical to our future economic prosperity,” he said. The bill “will make sure all of our devices and equipment are safe for consumers and secure for the United States.”

Carr welcomed the gesture in a May 24 statement, saying it was a “quick and decisive action necessary to safeguard our national security.”

“It is time to close this glaring loophole,” he said. “Once we have determined that Huawei or other gear poses an unacceptable national security risk, it makes no sense to allow that exact same equipment to be purchased and inserted into our communications networks.

“The presence of these insecure devices in our networks is the threat, not the source of funding used to purchase them.”

A growing number of countries, the most recent among them India, Ethiopia, and Romania, have moved to keep Chinese entities out of their 5G infrastructure over security concerns.