The politics and economics behind Biden’s China-car espionage probe

WASHINGTON - United States President Joe Biden, vowing to “do right by US auto workers”, has launched a probe into whether Chinese-made vehicles could be used to spy on Americans, a far-off threat given there are few such cars on US roads now.

The White House announced

the investigation on Feb 29,

citing national security risks about “connected” cars creating “new avenues for espionage and sabotage”.

Mr Biden is campaigning for re-election, and US automakers have voiced fear bordering on panic about having to compete at home with Chinese electric vehicles (EVs). An auto lobbying group recently said this could cause an “extinction event”.

China’s EV industry has surged past all others in recent years and aims to export vehicles globally, often at far lower prices than American EV offerings.

Mr Biden nodded to that economic threat in his statement voicing concerns about espionage. “We’re going to make sure the future of the auto industry will be made here in America with American workers.”

Political and policy experts acknowledge the threat of Chinese spying but also see his sabre-rattling as another opportunity to demonstrate he is tough on China.

“The announcement seems as much oriented at blunting accusations of being weak against China as it is at finding a solution to this challenge,” said Dr Scott Kennedy, a China specialist at Washington’s Centre for Strategic and International Studies think-tank.

The Chinese Embassy in Washington criticised Mr Biden, saying he was “hyping up the ‘China threat’ theory” to suppress competition.

Dr Kennedy said the probe is reasonable, but he did worry it could also spur protectionism based on “overstated national security concerns”. He warned this could upend global supply chains and hurt US production.

Many industry officials urged higher trade barriers against Chinese automakers, and the US and Europe are considering them. Tesla chief executive Elon Musk said in January that otherwise, China would “demolish” global auto rivals.

Mr Biden’s administration offered no evidence of spying involving the very few Chinese-made cars on American roads today.

Still, China has a history of using technology for US surveillance. Washington in 2023 launched an operation to fight a Chinese hacking campaign that compromised thousands of Internet-connected devices, Reuters reported in January.

Democratic strategist Jennifer Holdsworth said the administration’s probe aligns with Mr Biden’s backing of union manufacturing jobs: “Good policy is often good politics.”

Battleground Michigan

Restrictive trade policy towards China is a rare area of partisan agreement in a deeply divided America. Mr Biden has essentially continued the trade war against China started by his predecessor – and now 2024 campaign opponent – Donald Trump.

Mr Biden’s rhetoric seeks to build support in Michigan, the hub of the US auto industry and one of a handful of competitive states that will decide the 2024 election, said Michigan pollster Bernie Porn. GM, Ford and the US operations of Chrysler parent Stellantis are all headquartered in the state.

“He really needs to go on the offensive and disarm Trump’s argument that their jobs are going away to places like China,” he said.

Trump often ridicules EVs on the campaign trail, calling them a job-killing “hoax” and a capitulation to China. Mr Biden, who has the endorsement of the United Auto Workers labour union, has repeatedly emphasised the importance of the Detroit Three automakers and their factory workers.

Senator Gary Peters, a Michigan Democrat, said Chinese EVs posed both an economic and a security threat. “The bottom line is there’s no place in the US for vehicles made by Chinese Communist Party-backed companies.”

Chinese EV makers’ export surge is adding to the industry’s fears and political pressure on Mr Biden.

BYD, the world’s largest EV maker

, confirmed plans last week to open a plant in Mexico at the US’ doorstep, and launched its least expensive car, the Dolphin Mini hatchback, in Latin America. BYD has denied it plans to use Mexico as a springboard to gain access to the much larger American market.

Mr Biden faces a gauntlet of conflicting political incentives in crafting his EV policy. He has tried to balance the environmental goal of forcing rapid EV adoption with trade policies aimed at effectively banning cars and components from China, which has developed the world’s most advanced and affordable supply chain for batteries and other EV components.

In reforming a US$7,500 (S$10,100) subsidy for EV buyers starting in 2024, the administration denied the incentive to cars with batteries or critical battery minerals from “foreign entities of concern”, including China. This initially knocked dozens of vehicles off the eligibility list, including some from the Detroit Three, and sent automakers including Tesla scrambling to build China-free EV component supply chains.

As such rules raise the challenge for US automakers in building affordable electric cars, the administration is separately negotiating with Detroit automakers on emissions rules meant to force them to speed up their EV transitions.

The proposed regulations would dramatically restrict exhaust emissions with the goal of raising US EV market share from less than 8 per cent now to 67 per cent in 2032.

‘Scary’ scenarios

As pressure builds from US automakers and unions for more anti-China trade barriers, the administration is raising alarms about espionage threats, or even darker scenarios, involving high-tech Chinese cars.

Commerce Secretary Gina Raimondo recently suggested that the Chinese government might try to wreak havoc by cutting off hundreds of thousands of Chinese-connected vehicles on American roads. High-tech Chinese cars, she said, “could be immediately and simultaneously disabled by somebody in Beijing”. “It’s scary to contemplate,” she added.

She also raised the threat of everyday privacy invasions by “bad actors” from “abroad”.

Connected vehicles collect huge amounts of sensitive data, she said, possibly including where a parent drops off children at school, common routes to the office and calls to drivers from a doctor about a medical issue or a bank about an overdue loan. 

“It’s an incredible amount of information that you think is private, but that could be transmitted abroad,” Ms Raimondo said, adding that text messages, location data and e-mails are all vulnerable.

Former US counter-intelligence official Anna Puglisi said Ms Raimondo’s national security concerns were valid as cars incorporate more sensors and track location and personal contact details, especially when the companies involved come from a “strategically motivated nation state” like China.

Some Chinese automakers are state-owned and the government wields broad authority over the whole sector.

“The broader issue is how do you deal with a nation state that blurs public and private, civil and military, and commandeers its commercial sector to serve the strategic goals of the state?” Ms Puglisi said. REUTERS