China Is Coming for Our Auto Industry and Our High Tech
In this midterm election season, bipartisan issues are few and far between. Fortunately, one that persists is America’s interest in technology leadership and a strong auto industry. For that reason, all Americans should be concerned about a proposed acquisition by a Chinese citizen of an American company, GEO Semiconductor (“GEO”).
Although the proposed buyer is a Chinese citizen, the Chinese government has repeatedly demonstrated its real and practical control over Chinese businesses. So allowing a Chinese citizen to purchase a business is effectively no different than selling it directly to the Chinese Communist Party or Xi Jinping.
Allowing GEO to fall into the hands of the Chinese government would diminish America’s high tech leadership, do great harm to America’s auto industry, and kill American jobs. That’s bad enough, but it gets worse. Because the technology has dual uses for military applications, the deal would harm America’s national security interests, placing Americans and our allies at greater risk.
To review these sorts of sales to guarantee that they do not harm America’s economic and national security interests, the Committee on Foreign Investment in the United States (“CFIUS”) was established in 1975. CFIUS is comprised of government officials, including representatives from the Departments of Treasury, Defense, Commerce, and Homeland Security. CFIUS has the power to block the sale of American businesses and technologies to foreign interests that would harm America’s economy or national security.
GEO’s technology is used in autos to flatten or correct the fisheye effect from a camera that is trying to obtain a wide angle perspective. Beyond improved backup cameras, this technology plays a key role in driver assist safety features and future autonomous vehicles.
GEO’s technology also includes the ability to recognize individuals from a distance even when they are moving. This is used for an important safety feature — to alert a driver of people crossing the road up ahead — something that might be missed by the human eye at night if the pedestrian were wearing dark clothing. The technology also allows facial recognition and in the future will permit identification of specific individuals at a distance.
But as important as these technologies are to the future of the American auto industry and American workers, they also have military applications.
Military drones rely upon high resolution image processing which is critical for battlefield monitoring and targeting. Drones have become an increasingly important military tool most recently seen in Russia’s use of Iranian drones in Ukraine. This proposed sale would have the effect of helping the Chinese Communist Party obtain America’s high technology for use in its own drones. Helping China improve its drones so that it could more effectively attack Taiwan — as Xi has repeatedly warned of his desire for “unification” — is a self-evidently horrible idea.
Looking ahead, GEO’s technology could also be used by the Chinese government to surveil and monitor the movements of its citizens. Several years ago, the US government took action against the Chinese facial recognition company, Hikvision, because the Chinese government was using its technology to monitor dissidents and minorities so that they could be targeted for oppression. GEO’s technology would make such surveillance and oppression easier and more effective.
Permitting this deal to proceed would be at odds with recent bipartisan efforts to maintain America's leadership in high-tech chip technology. For example, the recently enacted CHIPS Act included billions in funding for automotive chip technology and had the stated purpose of improving America's high-tech chip technology capacity. There’s simply no good reason to spend billions of taxpayer dollars to promote American chip technology, while allowing it to walk out the back door at the same time to a very dangerous adversary. Additionally, the Biden Administration recently issued an Executive Order — applauded by Republicans — to stop the sale or transfer of high-tech chips going to China. CFIUS ought not now allow chips to be bought by China — even if it is ostensibly being sold to a private Chinese citizen.
Americans of all stripes must hope that CFIUS is going to put a stop to this potential acquisition of American technology. It would be bad for the American economy, bad for the American worker, bad for American leadership in the high tech arena, and bad for America’s national security interests. There is simply no good reason to make America less safe, less secure and less prosperous. So let’s all hope that the Biden Administration and the CFIUS do the right thing!
George Landrith, President, Frontiers of Freedom
