FILE PHOTO: Director of the National Counterintelligence and Security Center William Evanina speaks during the Reuters Cybersecurity Summit in Washington, U.S., October 31, 2017. REUTERS/Joshua Roberts reuters_tickers

This content was published on February 6, 2020 - 19:31

By Mark Hosenball and David Brunnstrom

WASHINGTON (Reuters) - Calling China the biggest threat to America, U.S. Attorney General William Barr said on Thursday the United States should actively consider putting its "financial muscle" behind Finland's Nokia <NOKIA.HE> and Sweden's Ericsson <ERICb.ST> to counter Huawei's dominance in next-generation 5G telecoms technology.

In a remarkable statement underscoring how far the United States may be willing to go to counter Huawei, Barr said in a speech to a Washington think-tank conference on Chinese economic espionage there had been proposals to meet the concerns "by the United States aligning itself with Nokia and/or Ericsson."

He said this was envisaged "through American ownership of a controlling stake, either directly or through a consortium of private American and allied companies."

"Putting our large market and financial muscle behind one or both of these firms would make it a far more formidable competitor and eliminate concerns over its staying power, or their staying power," Barr said.

"We and our closest allies certainly need to be actively considering this approach," he added at the event hosted by Washington's Center for Strategic and International Studies (CSIS).

Barr said China had emerged as the "top geo-political adversary" and added: "China has stolen a march and is now leading in 5G ... They have already captured 40 percent of the market and are now aggressively pursuing the balance."

U.S. government investments in public companies are rare except in the case of bailouts to save ailing firms and jobs, and such investments in foreign companies are even rarer.

The U.S. government added Huawei to an economic blacklist last year, saying the Chinese company was involved in activities contrary to U.S. national security. It has pressed nations not to grant Huawei access to 5G networks and alleged Huawei’s equipment could be used by Beijing for spying, which the Chinese company has repeatedly denied.

President Donald Trump signed an executive order last year declaring a national emergency and barring U.S. companies from using telecommunications equipment made by companies posing a national security risk.

At the same CSIS event, FBI Director Christopher Wray said Beijing was seeking to steal American technology by "any means necessary."

He said the bureau currently had about 1,000 open investigations of Chinese technology theft across its 56 regional offices, while FBI counterintelligence chief John Brown said it had arrested 24 people last year in China-related cases and another 19 already in 2020.

Wray said the investigations spanned "just about every industry sector" and the threat needed to be addressed through action across the whole of the U.S. government.

China was aggressively exploiting U.S. academic openness to steal technology, using "campus proxies" and establishing "institutes on our campuses," Wray added.

William Evanina, director of the National Counterintelligence and Security Center, said that among China's priorities was stealing U.S. aircraft and electric vehicle technology.In advance of Thursday's event, Evanina estimated the theft of American trade secrets by China costs the United States "anywhere from $300 to $600 billion" a year.

The comments from the top law enforcement officials reflect an aggressively stepped-up campaign by the Trump administration to counter Chinese espionage operations.

This has snared a growing group of Chinese government officials, business people, and academics.

The campaign has included charges against a leading American academic at one of the top U.S. universities.

Last month, prosecutors charged Charles Lieber, chair of Harvard University's Department of Chemistry and Chemical Biology, with lying about participating in China's Thousand Talents Plan, which aims to attract research specialists working overseas.

The Chinese embassy in Washington earlier rejected the U.S. allegations as "entirely baseless."

"The people-to-people exchange between China and the US is conducive to stronger understanding between the two peoples and serves the fundamental interests of our two countries," it said.

(Reporting by Mark Hosenball and David Brunnstrom; editing by Chris Sanders and Tom Brown)

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