China Challenge

Keith Krach, Under Secretary for Economic Growth, Energy, and the Environment, U.S. Department of State

Moderator
Amb. Karen Kornbluh, Senior Fellow and Director, Digital Innovation and Democracy Initiative, The German Marshall Fund of the United States

Welcome remarks
Dr. Ian O. Lesser, Vice President, The German Marshall Fund of the United States

Under Secretary Krach discussed developments in the United States’ approach to the challenges to data security from malign actors. How can the U.S. and Europe meet these challenges? What role should NATO play in protecting networks and critical infrastructure across the Alliance? What are the strategies that will advance our common goals for international security, economic growth, and human rights?

Under Secretary Krach:
I’d like to talk to you today about the reality that NATO faces as an alliance of 30 nations. The Chinese Communist Party presents a real and urgent threat to democracies and companies here in Europe and around the world. The CCP has exploited the institutions of the free world, such as the WTO, to gain an upper hand over the same free nations, that enable its prosperity.

Rather than open up, the Chinese government intensified its aggression. It imposed market restrictions, forced technology transfers and stole intellectual property. I’ve had that experience myself in Silicon Valley. You know, we’re all free traders. But when someone comes into a market and doesn’t play by the rules, the market is no longer free. We all thought capitalism would equal democracy, but in China’s case, we were wrong. As Secretary Pompeo says, it’s time to take off our rose colored glasses. And treat China, not how we’d hope they be, but how they truly are.

Now, both sides of the aisle back in Washington understand: the Chinese Communist Party is playing the long game and they’re playing for keeps. They fancy themselves as masters of a four dimensional game of economic, military, diplomatic and cultural chess. And worst of all, they believe they’re above the rules. In this high stakes competition, there’s nothing static about NATO security. It can vanish in an instant. And there is no substitute for a coalition of freedom. A challenge of this magnitude can not be done alone. It’s a team sport and it will require the synergistic effects across all our governments as well as our powerful private sector. To prevent this CCP’s authoritarianism from winning the day on 5G, NATO’s secretary general Jens Stoltenberg recently remarked, "We have to make sure that Europe and North America stand together to face that China challenge."

For years, the CCP has been putting pressure on telecommunication companies and countries to buy from Huawei. Knowing that it’s national intelligence law can oblige Huawei to share data from these countries and companies at any time. CCP’s stated doctrine is to seduce with money and reinforce with intimidation and retaliation. Untrusted high risk vendors like Huawei and ZTE provide the CCP’s authoritarian, the capacity to disrupt or weaponize critical applications and infrastructure or provide technological advances to China’s military forces. It should surprise no one that Huawei is under indictment the United States for bank fraud, wire fraud, conspiracy, violating sanctions, racketeering and misappropriating intellectual property from six U.S. tech companies. And it’s no secret that Huawei stole intellectual property from T-Mobile, the U.S. subsidiary of Deutsche Telekom.

We know that it deploys these same tactics in Europe or wherever it can get a foothold. Given these dangers, governments and businesses around the world are increasingly asking, "Who do we trust to carry our most personal information and intellectual property?" The primary choices are two-world class European vendors on one side, Ericsson and Nokia, and two CCP-controlled companies on the other, Huawei and ZTE. After this year, there should be no doubt about the answer. From concealing an outbreak that became a pandemic. To eviscerating Hong Kong’s freedoms. To persisting with a ruthless campaign of repression in Xinjiang. The CCP’s human rights abuses are impossible to ignore. This behavior is made possible by an Orwellian Big Brother surveillance state that tracks billions of people worldwide and extends that great one way China Firewall, where all the data comes in for CCP’s use, but none goes out, and reciprocally all of the propaganda goes out. But the truth does not come in.

Since NATO’s foundation in 1949, collective security has been the hallmark of this alliance. Many of our NATO countries have come a long way transitioning at great human and economic costs from an authoritarian regime into a democratic state that we all enjoy today. They know firsthand how authoritarian regimes use data to exert leverage. We will stand firm to protect against this. Modern technology should expand people’s opportunities, not expand a government’s control over them.