In One Sentence

• U.S. President Joe Biden signed an Executive Order (EO) to reduce U.S. reliance on Chinese manufactured cranes, citing national security risks and cybersecurity concerns related to U.S. vessels, harbors and ports.
• Citing the national security risk of “autos from China” that seek to “flood” the U.S. market, the Biden administration has tasked the Commerce Department to investigate “the threat to critical infrastructure or the digital economy” from “foreign adversary” configured smart cars—“connected autos” that “incorporate technology from China.”
• A day earlier, the Biden administration signed another Executive Order to restrict large-scale transfer of Americans’ bulk personal data to “countries of concern.”
• The Office of the U.S. Trade Representative (USTR) aims to expand usage of the U.S.-Mexico-Canada Agreement’s rapid response mechanism, arguing that the mechanism has proven fruitful to protect workers rights at auto parts facilities.
• The International Energy Agency (IEA) aims to establish a new program to strengthen supply chain resilience of critical minerals, given the upcoming challenge of transitioning to renewable energy sources.

Mark the Essentials

• In a follow-up fact sheet, the Biden administration announced that it will invest more than $20 billion in U.S. port infrastructure over the next five years, including grants and other awards made available by the Bipartisan Infrastructure Law and the Inflation Reduction Act. The fact sheet specifically highlighted the decision of PACECO Corp., a U.S.-based subsidiary of Japanese company Mitsui E&S Co. Ltd to onshore U.S. manufacturing of cranes. 
• According to the White House, the Department of Justice is also directed to “establish clear protections” for Americans’ “sensitive personal data” and to extend protections to “genomic data, biometric data, personal health data, geolocation data, financial data, and certain kinds of personal identifiers.” 
• According to the IEA, the program aims to address two main concerns: insufficient critical minerals supply to keep up with the demand resulting from the clean energy transition; and the over-concentration of critical mineral supply in “one single country or two.” 
• Representatives of some U.S. importers have told USTR that despite continuous efforts, it will take at least several years to fully move away from Chinese vendors and Chinese imports, citing quality, quantity and product safety issues with suppliers outside of China. 
• Analysts and commentators have called on the U.S. government to require more disclosures and conduct more data gathering on U.S. investments in China, especially portfolio investment, so that a meaningful policy can be devised on restricting and reviewing U.S. outbound investment in China.

Keeping an Eye On…

• Cybersecurity concerns involving China have long risen to the fore in U.S. politics and national security. During the 2010s, the focus was on cyber-enabled commercial espionage, with President Barack Obama winning a pledge from President Xi at the 2013 Sunnylands Summit to clamp down on such theft. In the years since President Trump declared a new great power rivalry in his National Security Strategy of December 2017, the focus shifted to China’s cyber-activities within U.S. government systems and U.S. critical infrastructure. In May 2023, the cybersecurity agencies of the Five Eyes countries issued a joint advisory against Volt Typhoon, an allegedly Chinese state-sponsored actor, that had infiltrated and burrowed itself inside U.S. and Five Eyes’ critical infrastructure systems. In mid-February, FBI Director Christopher Wray delivered a blistering critique of China’s pre-positioning of malware that could be triggered disruptively at a future date to an audience of cyber-chiefs at the Munich Security Conference. Wray’s words may need to be taken with a pinch of salt, given the spectacular implosion of the Justice Department’s various ‘China Initiative’ cases as well as the recent throwing out of the FBI’s-landmark trade secrets theft charges against Fujian Jinhua Integrated Circuit Company. Be that as it may, Wray’s critique was a prelude to three Biden administration Executive Orders in the space of ten days on China-linked cybersecurity concerns. On Feb. 21, an EO that addresses cyber-vulnerabilities linked to ship-to-shore cranes produced in China was rolled out, following media reports as well as a congressional investigation that such cargo cranes deployed at more than 200 ports around the country contained remotely accessible communications equipment (cellular modems) that was unneeded for normal operations. On Feb. 28, an EO accompanied by a 90-page Advanced Notice of Proposed Rulemaking (ANPRM) that is designed to restrict ‘foreign adversaries’ access to Americans’ bulk sensitive data, was released. The ANPRM constitutes the second instance of the U.S. government seeking to directly regulate U.S. personal data for national security reasons (rather than for privacy or other reasons) following the 2018 Foreign Investment Risk Review Modernization Act (FIRRMA) of August 2018 which had listed categories of “sensitive personal data” of U.S. citizens to be effectively kept beyond the acquisitions reach of a foreign adversary. And tucked-in also on Feb. 28, was an EO and accompanying ANPRM that seeks to strip out foreign adversary content from key electric vehicle software systems—vehicle operating system; telematics systems; automated driving systems; advanced driver assistance systems; battery management systems; satellite/cellular telecoms systems—to guard against undue risk of “sabotage,” “subversion” or other “catastrophic effects on the security or resiliency of United States critical infrastructure or the digital economy.” Although a touch overwrought, to say the least, and informed no doubt by the growing protectionist phobia that aims to keep Chinese EV’s out of the U.S. market, the three EO taken together are the latest instance of the U.S. government’s laser-focus on ‘derisking’ important industrial sectors as well as the digital economy of China-linked cybersecurity concerns. Surely, this will not be the last such instance.

Expanded Reading

• FACT SHEET: Biden-⁠Harris Administration Takes Action to Address Risks of Autos from China and Other Countries of Concern, The White House, February 29, 2024 
• U.S. launches investigation of Chinese vehicles, citing security risks, The Washington Post, February 29, 2024
• China’s BYD Confirms Mexico Factory Plan But Rules Out Exports, Asia Financial, February 29, 2024
• Chinese automaker BYD looking for Mexico plant location, executive says, Reuters, February 28, 2024
• Executive Order on Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern, The White House, February 28, 2024
• US ports remain confident in China-made cranes despite security concerns, China Daily, February 26, 2024
• U.S. to Invest Billions to Replace China-Made Cranes at Nation’s Ports, The Wall Street Journal, February 21, 2024
• FACT SHEET: Biden-⁠Harris Administration Announces Initiative to Bolster Cybersecurity of U.S. Ports, The White House, February 21, 2024
• Executive Order on Amending Regulations Relating to the Safeguarding of Vessels, Harbors, Ports, and Waterfront Facilities of the United States, The White House, February 21, 2024