An automotive manufacturing plant in Hefei, China. The proposed ban is a major addition to the Biden administration’s efforts to seal off what it views as major cyber vulnerabilities for the United States.
Credit...Qilai Shen for The New York Times

Biden Administration Proposes Ban on Chinese Software in Vehicles

Federal officials acknowledged that few Chinese vehicles were on U.S. roads now, but said that the administration wanted to take proactive measures to strengthen national security.

by · NY Times

The Biden administration announced a sweeping initiative on Monday to ban Chinese-developed software from internet-connected cars in the United States, justifying the move on national security grounds. The action is intended to prevent Chinese intelligence agencies from monitoring the movements of Americans or using the vehicles’ electronics as a pathway into the U.S. electric grid or other critical infrastructure.

The move, most likely the last major cutoff of Chinese products into the United States under the Biden administration, follows the same logic that resulted in the ban on Huawei telecommunications equipment and the investigations into Chinese-made cranes operating at American ports.

Combined with the effort by Congress to force TikTok to cut its ties with its Chinese owners, the initiative is a major addition to the administration’s efforts to seal off what it views as major cybervulnerabilities for the United States. But the effort has, in effect, begun to drop a digital iron curtain between the world’s two largest economies, which only two decades ago were declaring that the internet would bind them together.

Briefing reporters, administration officials said that national security concerns, not politics, drove the Commerce Department to propose the ban, which officials said would probably be made a permanent rule before President Biden leaves office on Jan. 20. This year, Mr. Biden announced 100 percent tariffs on Chinese electric vehicles, saying they were wildly subsidized in China. The announcement was notable because such cars had barely begun to enter the U.S. market — and Mr. Biden explicitly cast it as a way of keeping jobs in America.

“Many of these technologies collect large volumes of information on drivers,” Jake Sullivan, Mr. Biden’s national security adviser, told reporters on Sunday. They also connect constantly with personal devices, with other cars, with U.S. critical infrastructure and with the original manufacturers of vehicles and components.

He added: “And for that reason, connected vehicles and the technology they use bring new vulnerabilities and threats, especially in the case of vehicles or components developed in the P.R.C. and other countries of concern,” he said, using the initials for the People’s Republic of China.

Mr. Sullivan made reference to the U.S. concerns about what is called Volt Typhoon, which American intelligence officials and the F.B.I. say is a Chinese effort to insert code into American power systems, water pipelines and other critical infrastructure. U.S. officials fear that in a time of crisis — for example, a Chinese effort to take Taiwan — the code could be deployed to cripple American military bases, slowing their response.

While they are assessing other industries that could be subject to software and hardware rules similar to those proposed for the Chinese auto industry, officials said that none that they are now contemplating would have the reach of the Chinese automotive ban.

Combating real and perceived Chinese threats is one of the few issues that have won both Democratic and Republican support, though many experts on China believe that the fear of Beijing has gone too far — and that it is also hurting American consumers. Nonetheless, whether former President Donald J. Trump is returned to the Oval Office or Vice President Kamala Harris is elected, experts believe that the expanding list of banned Chinese imports — and the restrictions on what kinds of chips and software can be exported to Beijing — will most likely only accelerate.

Richard Fontaine, the chief executive of the Center for a New American Security who is an author of the recently published book “Lost Decade: The U.S. Pivot to Asia and the Rise of Chinese Power,” said in an interview that the move was an expansion of the U.S. effort to create a “high fence around a small yard” of strategically important goods.

“On China tech, it’s clear that the ‘small yard’ is growing in size and will continue no matter who wins the election in November,” Mr. Fontaine said. “Policymakers of all stripes are increasingly worried about the national security risks that attend Chinese technology, particularly when they imagine what might happen in a confrontation.”

Under the proposed rule, Russian software would also be included — though the Russians produce almost nothing that could be banned.

“The precedent is significant, and I think it just reflects the complexities of a world where a lot of connected devices can be weaponized,” said Brad Setser, a senior fellow at the Council on Foreign Relations. “The security competition and rivalry between the U.S. and China is increasing. So, certainly, there is a possibility that this precedent could expand over time.”

Peter Harrell, who was previously the National Security Council’s senior director for international economics during the Biden administration, said federal officials could examine Chinese-made drones, which pose similar surveillance and safety risks.

“This is likely to be opening the door, over a number of years, to a much broader governmental set of actions,” Mr. Harrell said.

Although he said he was not sure whether the Biden administration would be able to get much more out the door before Mr. Biden’s term ended, he said the country would “likely see a continuation of this under either Trump or Harris.”

The proposed ban would apply to all wheeled vehicles on the road, including cars, trucks and buses. It would exclude vehicles not used on public roads, like those for agriculture or mining.

The ban on Chinese- or Russian-origin software in connected and autonomous vehicles would start in model year 2027. The proposed rule would also ban hardware integrated into vehicle connectivity systems beginning in model year 2030.

Gina Raimondo, the commerce secretary, acknowledged that few Chinese or Russian vehicles were on U.S. roads now, but said that the administration wanted to take proactive measures to “secure the American people, including our children, from potential surveillance.”

Ms. Raimondo said foreign adversaries could use their software in connected vehicles to collect data on where drivers live and where their children go to school, among other things. In an extreme situation, a foreign adversary could shut down or take control of all of its vehicles operating in the United States, a move that could cause crashes and block roads, Ms. Raimondo said.

“This is not about trade or economic advantage,” Ms. Raimondo said on a call with reporters on Sunday. “This is a strictly national security action.”

The proposed rule comes after Mr. Biden ordered the Commerce Department in February to open an investigation into the threat from technology embedded in Chinese vehicles.

It also follows steps the Biden administration has taken to hinder imports of Chinese cars, which officials worry could undermine the administration’s efforts to ramp up the domestic manufacturing of clean energy products.

In May, the Biden administration quadrupled tariffs on Chinese electric vehicles to 100 percent, an effort meant to make those vehicles more cost-prohibitive and to protect American automakers that are set to receive billions in federal subsidies. The federal government is offering lucrative tax credits and subsidies as incentives for companies to deploy more electric-vehicle, solar and wind projects. The initiative is expected to cost hundreds of billions of dollars over the next decade.

The administration has also moved to limit the ability of Chinese companies to benefit from tax credits that consumers can claim to help offset the cost of electric vehicles.

The proliferation of electronics in cars presents a quandary for policymakers and automakers. China is an important supplier of technology like lidar, which uses light to detect objects and is critical to many driver-assistance systems. Chinese automakers have also developed some of the most advanced autonomous driving systems.

Chinese parts, which often enter the United States through suppliers in Mexico or Canada, have the potential to be used for espionage and cyberattacks, some experts warn.

“Foreign adversaries are cornering and leveraging key supply chains to geopolitical and economic ends,” Avery Ash, the executive director of the Coalition for Reimagined Mobility, an advocacy group, said in a statement on Monday.

But U.S. automakers risk falling behind if they do not have access to the latest technology. China is the world’s largest car market and dominates production of electric car batteries. About half of new cars sold in China are electric, allowing Chinese companies to more quickly achieve the scale needed to cut costs and invest more in research and development.

U.S. automakers use “very little” software or hardware from China and support the rules, said John Bozzella, the president of the Alliance for Automotive Innovation, which represents most major automakers in Washington.

“But this rule will require auto manufacturers in some cases to find alternate suppliers,” Mr. Bozzella said in a statement. “You can’t just flip a switch and change the world’s most complex supply chain overnight.”

The lead time in the proposed rule may not be enough for some manufacturers, he added.

In addition to 100 percent tariffs, the rules could prove to be an insurmountable obstacle to Chinese carmakers like BYD that have been eyeing the United States.

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