November 14, 2018 / 5:11 AM / a month ago

U.S. should create fund to counter China's Belt and Road push: commission

(Reuters) - The United States should create a fund to counter China’s infrastructure financing deals in the developing world that export its “model of authoritarian governance,” a bipartisan commission told the U.S. Congress in a report on Wednesday.

The U.S.-China Economic and Security Review Commission, tasked with monitoring the national security implications of U.S.-China trade relations, has complied a report almost every year since 2002.

This year it said China’s efforts, as part of its Belt and Road initiative, to fund bridges and even digital networks in Asia, Africa, the Middle East and Europe have given its government an excuse to maintain a military presence there.

The report recommended that Congress create a fund to assist countries in parts of the world where China is expanding its influence.

It also warned about the threat China’s push into the next-generation 5G wireless technology poses to U.S. security and business interests.

China says it wants the Belt and Road initiative, launched in 2013, to improve global transport and trade links.

Many of its firms and banks are engaged in building and financing major ports, rail, highways and bridges in countries ranging from Kenya to Malaysia and Russia.

The U.S. commission, however, said China was using the initiative not just to “encourage and validate authoritarian actors abroad,” but also to export standards for technology applications that could threaten U.S. businesses and market access across the globe.

The commission, created by Congress in 2000, said Beijing was using the initiative to justify a military presence in some of the countries.

It recommended that Congress create a fund to assist countries, especially in the Indo-Pacific region, on issues of digital connectivity, infrastructure and energy access.

In Beijing on Wednesday, foreign ministry spokeswoman Hua Chunying said she had not seen the report.

China cooperated with other countries based on principles of mutual respect and mutual benefit, Hua told a daily news briefing, adding that if the U.S. wanted to invest in, and help with, projects in other countries, it was welcome to do so.

“But we hope that when the U.S. does this, their intentions are pure and the results are good.”

TECH DOMINANCE

Washington has voiced concerns over China’s growing influence. Last month, the U.S. Senate passed a measure overhauling how the federal government lends money for foreign development, in a move some analysts saw as a response to the Belt and Road initiative.

The commission’s report also warned about China’s rising dominance in 5G wireless technology and the proliferation of devices connected to the internet that could be used to launch a cyber attack.

“U.S. telecommunications providers’ reliance on imports from China raises serious supply chain concerns about the secure deployment of U.S. critical next generation telecommunications infrastructure,” the panel said.

Concern about Chinese cyber attacks and cyber espionage has forced Chinese telecom equipment makers Huawei Technologies Corp [HWT.UL] and ZTE Corp (000063.SZ) to scale back some of their business in the United States.

This year President Donald Trump blocked microchip maker Broadcom Ltd (AVGO.O) from taking over Qualcomm Inc (QCOM.O) amid worries it would give China the upper hand in 5G mobile communications.

Reporting by Jane Lanhee Lee in San Francisco; Additional Reporting by Ben Blanchard in Beijing and Brenda Goh in Shanghai; Editing by Leslie Adler and Clarence Fernandez

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