FCC PUTS PRESSURE ON CHINA

The Federal Communications Commission (FCC) is ramping up its battle against Chinese telecom companies as the Trump administration pursues an aggressive trade strategy against China.

Analysts say the FCC’s recent action against China Mobile, and its ongoing investigations into two other Chinese telecom giants, could exacerbate tensions between the two countries amid high-stakes trade negotiations.

“If the FCC effectively wages war on Chinese tech companies in general, then that could make the Chinese government sit up and start to take notice,” Matthew Kendall, chief telecoms analyst at The Economist Intelligence Unit, told The Hill.

Where the trade talks stand: U.S.-China trade negotiations broke down without a deal last week after months of talks. The U.S. increased tariffs on $200 billion in Chinese goods and Beijing on Monday morning retaliated with tariffs on $60 billion of U.S. imports.

Neither side shows any sign of backing down.

The FCC’s role: The U.S. is escalating its pressure campaign against China on multiple other fronts, including the FCC’s increased scrutiny of Chinese telecom companies alleged to be closely tied to the ruling Communist Party of China.

FCC commissioners last Thursday voted 5-0 across party lines to block China Mobile, one of the largest telecom companies in the world, from U.S. markets over alleged national security concerns.

And at a press conference after the vote, FCC Chairman Ajit Pai revealed that the commission is looking into two other Chinese telecom companies — China Unicom and China Telecom — both of which have the same authorization that China Mobile USA was seeking.

“We must have a clear-eyed view of the threats that we face and be prepared to do what is necessary to counter those threats,” Pai said before casting his vote on China Mobile.

The application from China Mobile’s U.S. subsidiary, China Mobile USA, had languished at the FCC for eight years. The Delaware-based company first asked for authorization to provide services between the U.S. and other countries in 2011.

But the FCC didn’t pick up the matter until last week, as the U.S. and China turned up the heat in their trade talks, a decision that Gordon Smith, the CEO of telecom solutions provider Sagent, said likely was “not coincidental.”

“The telecom industry is strategic to all of our economies, and I think it’s a major trade chip that’s being used,” Smith told The Hill. “And I think U.S. action now is to get action from China on other matters.”

China Mobile weighs in: China Mobile in a statement also pointed to the amount of time it took the FCC to address its application.

“After 7 years and 8 months of application, FCC now denies CMI’s bid to operate in the U.S. without apparent reasons and basis,” China Mobile said. The company added that it hopes “the U.S. government will stop putting ‘unreasonable pressure’ on Chinese companies.”

What’s next: Experts who spoke to The Hill said the FCC’s decision to block China Mobile USA is only the latest broadside by the commission against Chinese telecom influence, and one of the many ways the Trump administration is putting pressure on China as trade talks deadlock.

“I think it’s just going to make the trade talks even more difficult,” Kendall said.

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