U.S. launches security probe into Chinese vehicle imports amid data privacy fears

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29th February 2024 – (Washington) The White House announced on Thursday a sweeping investigation into the security implications of importing Chinese vehicles. The probe, spearheaded by the U.S. Commerce Department, focuses on whether these ‘connected’ vehicles could jeopardise national security by harvesting sensitive data on American citizens and critical infrastructure.

President Joe Biden emphasised the gravity of the situation, stating, “China’s policies could flood our market with its vehicles, posing risks to our national security. I’m not going to let that happen on my watch.” The statement underscored the administration’s stance on safeguarding U.S. interests in the face of mounting concerns over data privacy and national security.

The investigation is in its nascent stages, and officials have yet to outline specific measures. However, the probe’s broad legal authority could have substantial repercussions for the future of the Chinese automotive industry in the U.S. market.

The focus is primarily on smart vehicles, which are equipped with advanced technologies capable of collecting and transmitting vast amounts of data. Such capabilities have raised red flags over the potential for these vehicles to be manipulated or controlled remotely—a factor that could have profound implications for the safety and privacy of American citizens.

Despite the relatively small number of Chinese light-duty vehicles currently imported into the U.S., Commerce Secretary Gina Raimondo articulated the preemptive nature of the probe: “We’re acting now, before Chinese manufactured vehicles become widespread in the United States and potentially threaten our privacy and national security.”

This announcement comes amid growing scrutiny of Chinese electric vehicle (EV) makers. BYD, the world’s leading EV maker by sales, has previously indicated no intention to enter the U.S. market, focusing instead on other regions like Southeast Asia, the Middle East, and Europe. However, the administration’s concerns extend beyond current market dynamics.

In a separate development, the Biden administration is pondering new tariffs on Chinese-made vehicles and faces increasing pressure to limit Chinese EV imports from Mexico. This dual approach reflects a broader strategy to counter potential threats posed by vehicles that collect and process sensitive data.

The Chinese Embassy in Washington has condemned the proposed restrictions, calling for an end to the propagation of the ‘China threat’ narrative and the unwarranted suppression of Chinese firms.

The concern is not unidirectional. In November, bipartisan U.S. lawmakers aired apprehensions about Chinese companies’ handling of sensitive data through autonomous vehicle testing on U.S. soil.

The Commerce Department’s public consultation period will last 60 days, inviting discourse on the perceived dangers of Chinese-connected vehicles. The findings will guide the drafting of regulatory measures to address any identified risks.

Drawing parallels to previous actions, the U.S. has already excluded Chinese telecom giants from its market due to similar fears, naming Huawei and ZTE as threats and mandating the removal of their equipment from U.S. networks.

In a pointed rhetorical question, President Biden asked, “Why should connected vehicles from China be allowed to operate in our country without safeguards?” This reflects the administration’s broader stance on reciprocity, given China’s stringent restrictions on foreign autos within its borders.

China, for its part, has ramped up data governance, especially within the auto industry, mandating local data storage and seeking permission for any international data transfers.