This report details how the U.S. federal government-particularly the FCC, Department of Justice ("DOJ"), and Department of Homeland Security ("DHS")—historically exercised minimal oversight to safeguard U.S. telecommunications networks against risks posed by Chinese state-owned carriers. Three Chinese state-owned carriers have been operating in the United States since the early 2000s, but only in recent years have the FCC, DOJ, and DHS focused on potential risks associated with these carriers. DOJ and DHS did enter into security agreements with two of the Chinese state-owned carriers prior to 2010, but they conducted only two site visits to each carrier since that time (or four total). Three of those visits occurred between 2017 and 2018. This lack of oversight undermined the safety of American communications and endangered our national security.
Since the Subcommittee launched its investigation, the agencies have increased their oversight of the Chinese state-owned carriers. The administration also recently issued an executive order establishing a formal committee to review the national security and law enforcement risks posed by foreign carriers operating in the United States. Still, the new committee's authorities remain limited, and as a result, our country, our privacy, and our information remain at risk.
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The Chinese government exerts control over China's domestic telecommunications industry and state-owned carriers. China aims to be a world leader in technology by 2050, including in the telecommunications sector. To achieve this goal, China controls who can provide domestic services by maintaining one of the most restrictive foreign investment regimes in the world. Although the Chinese government may publicly state that it is opening the telecommunications market, foreign companies are subject to burdensome regulatory requirements; required to enter into joint ventures majority owned by Chinese parties; and often forced to transfer both technology and know-how to Chinese counterparts. State-owned carriers are equally controlled, as the Chinese government selects their management, sets target returns and growth rates, and compels companies to put state interests ahead of the carriers' market interests.
The Chinese government has encouraged state-owned telecommunications carriers to expand internationally. In 1999, the Chinese government issued a "Go Out" policy, through which it pledged financial support to entities to expand into global markets. Telecommunications carriers took advantage of this, with major state-owned carriers establishing operations across the world, including in the United States.
The Chinese government targets the United States through cyber and economic espionage activities and enlists state-owned entities in these efforts. Many U.S. government officials have highlighted the "persistent" threat posed by China.
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