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U.S. Pressures Europe Over Ties to Chinese Firm

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U.S. Pressures Europe Over Ties to Chinese Firm

The U.S. is raising the alarm about another Chinese company’s growing influence in Europe.

Nuctech is China’s leading manufacturer of security-screening gear. However, U.S. officials are concerned that Europe’s increasing use of the firm’s equipment constitutes a threat to Western security and business. To counter the perceived threat, the National Security Council and a handful of other U.S. agencies are launching a major effort to push the governments in Europe away from using Nuctech’s gear. Nuctech equipment is commonly used to screen cargo, luggage, and passengers at airports, border crossings, and ports in Europe. Although, the U.S. is concerned about the state-controlled firm’s close ties to the Chinese government.

The U.S. launched its campaign against Nuctech last month, but so far, the effort has posted mixed results. According to a State Department memo, Nuctech is currently competing for contracts in more than a dozen countries in Europe. Finland, a NATO ally, recently chose Nuctech to provide cargo scanners for its border with Russia, despite pressure from U.S. diplomats. Nuctech was the only bidder for the Finnish customs office contract. It ultimately won the contract after Finnish customs officials said they found no security grounds to reject the equipment.

Allegations

Nuctech security scanners are used to screen people and goods at checkpoints. Recent estimates indicate that the market for this type of security equipment is worth $7.7 billion globally. However, many feel concerned about the possibility that entities will use these systems to further state security efforts across borders. The Chinese government, in particular, has a history of using pervasive surveillance measures. Many screening systems stay linked to databases that contain information about shipping manifests and passengers. Also, some even include personally identifiable information like passports and fingerprint records. The Chinese government owns and controls Nutech. Therefore, many privacy advocates worry that this information could ultimately end up in the wrong hands.

The State Department believes these networked systems could give Nuctech undue access to personal and commercial information. U.S. officials believe the company could ultimately provide Chinese authorities free access to illegally pilfered data. The State Department feels concerned that Nuctech’s hold on key European infrastructure assets could create security concerns for civilian and military transport. Also, it feels especially worried about this equipment being deployed in NATO-member countries like Finland. A State Department spokesperson said the U.S. “continues to urge its allies and partners to protect themselves against companies that are heavily subsidized by authoritarian regimes.”

Nutech’s Statement

Nuctech has adamantly denied the U.S. claims. The firm says it operates independently and receives no state aid or government instruction. It says its equipment doesn’t have any backdoors or secret access points, and customers maintain control over all of their data.

“All data generated by our devices belong to our customer only—neither to us, nor to the EU member states and by no means to the Chinese government or any other entity,” said Robert Bos, a prominent executive for Nuctech’s Netherlands unit. “Our clients—border control and customs authorities, ports, airports—are the sole owners of the data,” he also mentioned.

The Connection With China

Nuctech has a deep connection with China’s closely-controlled Communist Party-directed system. For much of the 2000s, the son of a prominent communist part official ran the company. Last year, the China National Nuclear Corporation – a state-owner powerplant builder and operator – purchased a controlling stake in the company. Over the past few years, the company has aggressively expanded into other markets by offering extremely competitive pricing and terms.

Nuctech’s all-out blitz helped it capture significant market share from competitors in the U.S. and U.K. The State Department says the company now controls 90% of Europe’s sea-cargo screening market and 50% of the airport passenger luggage and cargo screening market. Nuctech has denied those claims.

The U.S. wants to cut off efforts to install Nuctech equipment in Greece, Hungary, Italy, and Portugal. It’s also particularly focused on blocking the firm’s bid to supply the German Ministry of Defense with cargo X-ray scanners and remote screening equipment, which U.S. officials believe could be used in operations against NATO and U.S. troops.

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