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Local US governments keep buying Chinese telecoms gear despite warnings

Local and state governments in the US have continued to buy Chinese telecoms gear despite Washington’s efforts to purge the equipment from national supply chains, a new academic study has found.

The findings were released just weeks after reports that the US Federal Communications Commission will vote to block all new sales of Huawei and ZTE telecoms equipment on national security grounds.

According to the study by George Washington University’s Centre for Security and Emerging Technology, between 2015 and 2021 at least 1,681 state and local entities bought equipment and services from Huawei, ZTE, Hikvision, Dahua and Hytera.

There were 5,700 transaction involving a range of covered equipment, including smartphones, surveillance cameras, temperature scanners, handheld radios and networking equipment, the report said, with the purchases totalling US$45.2 million.

Federal agencies are barred from procuring “substantial or essential components of any system” from the five Chinese tech firms over spying fears.

The report found that although the number of transactions has fallen since the ban was imposed in 2018, “there were still more than 600 procurements in 2021 and there is no indication the transactions have stopped”.

Federal regulations do not apply to state governments, but President Joe Biden’s administration has urged local leaders to align their policies with national security efforts and weed out Chinese tech gear from critical infrastructure.

The study also found that three-quarters of the purchases were made by public school districts, colleges and universities. Prisons, public hospitals and transit systems also bought equipment.

One of the largest buyers was an unnamed midsize public university in Michigan, which invested more than US$15 million in Huawei networking equipment and services during the period covered in the report.

Chinese gear is “generally cheaper” than equivalent products from non-Chinese companies, the study noted, “making it an appealing option for cash-strapped government agencies”.

“A basic Hikvision dome camera retails for about US$90, while similar cameras made by firms in Canada, Japan and South Korea sell for more than double the price,” the report said.

According to an FCC estimate in July, it will cost almost US$5 billion to replace all Chinese gear in US systems.

Only Florida, Georgia, Louisiana, Texas and Vermont have enacted any regulations regarding acquisition of tech gear on national security grounds.

In a majority of transactions, public entities do not award contracts directly to the Chinese manufacturers, but rather to third-party distributors of their technology, the study found.

Wrote its authors: “These middle-man vendors can mask the origin of their products, which creates major challenges for organizations aiming to keep certain equipment and services off their networks.” SCMP

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