Chinese Imports: Bargains Or Breaches?

How should we defend ourselves against the looming cybersecurity threat from China?

Ric Edelman: It's Monday, March 4th. On today's show, a follow-up from a conversation we had last week. This past Wednesday, I told you that your next car just might be made in China. China is now the world's biggest exporter of cars, selling cars in more than 70 countries. One electric vehicle they sell costs less than $11,000. So yeah, I said your next car just might be made in China. By the way, if you missed that podcast, the link to it is in the show notes.  

But I gave you that podcast last Wednesday morning. Man, am I annoyed, because the very next day, last Thursday, President Biden announced that the US government is worried that these Chinese cars and trucks pose a national security threat, and the federal government is now going to move to prevent these vehicles from entering the country. Apparently, they're software embedded in these EVs that are sold by Chinese car companies. And this software can track not only where you drive and where you charge your vehicle, but what music and podcasts you listen to while you're on the road. In fact, when U.S. carmakers sell cars in China, the Chinese government forces them, Ford and Chevy, to install Chinese software into their cars and trucks.  

So the fear, according to the Commerce Department, is that China is flooding foreign markets with their cars. And these cars, they say, can connect to other cars via your smartphone. This lets the Chinese collect huge amounts of information about you and your car. The US Commerce Secretary, Gina Raimondo, says this is scary to contemplate the cyber risks and espionage risks that these cars impose on the United States. 

Is all this true, or is it just an excuse for the government to limit cheap Chinese imports so that we're all forced to buy more expensive made in USA cars? I mean, obviously Detroit carmakers are scared to death about cheap Chinese cars. I mean, the average price of a new vehicle in the US is $49,000. The cheapest U.S. car right now is the Nissan Versa that sells for $17,000. There are a couple of dozen cars that cost from 18 grand to 25 grand from pretty much everybody - Toyota, Ford, Mazda, Chevy, Hyundai, Volkswagen, Subaru, Kia, Mitsubishi. – cannot sell a car for ten grand except the Chinese. No wonder they've already got a 20% market share in Mexico and Europe. And the US is about to be next unless the government prevents them from importing. Already, Chinese cars are hit with a 27.5% tariff, and now the government might ban these cars outright due to these new security risks.  

And it's not just the Chinese cars that our government is worried about. Joe Biden also announced last week they're now going to spend $20 billion to replace all the cranes at US ports. Why? You guessed it, those cranes were imported from China. And the FBI now says those cranes have sensors that send data about our ports and the cargo to the Chinese government. Who's the Nimrod who approved of Chinese cranes in the first place? It reminds me of the US embassy we built in Moscow in the 1980s. We then had to destroy the whole building because Soviet construction workers had loaded it with bugs that let the KGB listen in to everything that was going on in the embassy. 

So before we all start installing Chinese cranes or downloading China's TikTok or buying cheap Chinese cars, we all better think about the cybersecurity risks to the US. This is a great example of how the wonderful technological innovations that science is bringing us can be so easily saddled by negative implications, and how we need to be diligent and patriotic.  

My question to you is this: In the next several years, as cheap Chinese cars come onto the US market, do you think Americans will refrain from buying them to help us all defend our nation from security risks? Or will they buy these cars because they're mostly focused on saving money for themselves? I think we all know the answer to that.  

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