U.S. Ban on Chinese Spy Cameras Will Ultimately Backfire

(Bloomberg Opinion) -- U.S. regulators are toughening their stance on Chinese makers of surveillance cameras and other hardware. By turning to an old playbook, though, Washington is diverting focus from the future and diminishing America’s ability to remain a global technology leader.

The Federal Communications Commission on Thursday proposed a ban on use of certain telecommunications products and other electronics made by Chinese companies, including one of the world’s largest makers of surveillance cameras, Hangzhou Hikvision Digital Technology Co., and Dahua Technology Co. The order, which cites alleged national security risks, also seeks to forbid future U.S. sales and could revoke prior authorizations for the equipment. Hikvision said it “strongly opposes” the FCC's measure while Dahua called it “unwarranted.”

Attempting to rid the U.S. of existing equipment and electronic cameras — on street corners, in schoolyards and at local government facilities — will be more disruptive than proactive. For one thing, there aren’t many better alternatives, and looking for new products or phasing out old ones will be a long process that wouldn’t necessarily undo any alleged damage to privacy or security — if there's been any at all. In some cases, such technology has been seen as a benefit. In 2018, the Memphis Police Department, which had bought hundreds of Hikvision cameras in the preceding decade, said the devices helped it make up to 100 arrests a year, according to a Wall Street Journal report at the time. 

Over the past few years, various U.S. government departments have tried to shut out Chinese companies through similar restrictions. Rather than waiting around for narrow paths of overseas revenue to open up, these firms have simply moved on. Now, they’re progressing in other areas like robotics, intelligent vehicle systems and detector technologies, and widely implementing their so-called multidimensional perception technologies, which would improve artificial intelligence capabilities for industrial and other uses. 

Hikvision has found support domestically, and has beefed up its research and development efforts. In its latest annual report, it noted that R&D spending was 6.38 billion yuan (around $1 billion), or 10.04% of its total operating income, with expenses up 16%. The company also noted it had over 20,000 personnel focused on this area and other technical services. Operating income from innovative businesses grew almost 40% last year, compared with around 8% for older technologies and equipment. 

Meanwhile, Huawei Technologies Co. is bolstering its dominant position and expanding in other parts of the world, such as Africa. It has made cloud services a strategic priority and last year, amid the pandemic, revenue from this line grew 168%.  

At this point, sinking time, money and effort into unraveling the past, or any anxieties it may harbor, is all but futile. While the U.S. sets the global technology standard, it’s still catching up in areas like fifth-generation networks and equipment. Meanwhile, China’s state planners are well on their way to creating wide 5G infrastructure, importing machines from Japan and constructing tens of thousands of base stations — the nuts and bolts of building out the next generation in telecommunication. It has now become a central part of China’s industrial policy for the next five years.

The real risk for the U.S. is that Chinese companies develop yet another new technology at massive scale that American manufacturers will have to chase. Looking in the rear-view mirror won’t help the U.S. get ahead.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal.

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