US to offer loans to lure developing countries to shun Chinese telecom gear

The US government is making efforts to persuade developing countries to stop using Chinese telecommunication equipment, offering financial assistance to use alternatives that Washington deems safer.

The United States is ready to offer loans and other financings, potentially worth billions of dollars in total, to countries to buy hardware from suppliers in democratic countries rather than from China, Wall Street Journal reported citing Bonnie Glick, the deputy administrator at the U.S. Agency for International Development, which is spearheading the effort.

According to the report, the USAID, which is known for providing food assistance than technology, will dispatch staff to meet politicians in the developing countries with an aim to persuade them that using telecom equipment from two Chinese giants, Huawei Technologies Co. and ZTE Corp is a bad idea.

The offer of financial assistance represents a new tool Washington is deploying as it broadens the tech Cold War with China.

The Trump administration has been trying to curb Chinese technological advances over what it says are concerns about spying and trade practices.

From the last two years, the US has lobbied allies to join the US in banning Chinese-made equipment for networks using 5G wireless technology, which promises superfast speeds to enable driverless vehicles, more efficient factories and other innovations.

The American officials say Huawei and ZTE pose threat to national security and the Chinese government can order the two companies spy or conduct cyberattacks, a scenario that the companies and Beijing say would never happen.

The US campaign initially focused on 5G deployments in Europe, where it has had some success, including in Britain and Poland. Other countries, most notably Germany, are still debating whether to restrict or ban Chinese-made equipment.

The USAID this month has signed an agreement with the Federal Communications Commission to jointly counter 5G deployments using Chinese equipment in developing countries, combining the FCC's technical and policy expertise and the aid agency's network of some 10,000 employees in about 100 countries.

Glick said the messages to developing countries will hit two themes: Chinese equipment is vulnerable to espionage, and the loans that Chinese finance agencies such as the state-controlled China Development Bank offer that finance the equipment can trap them.

"There's a lot of fine print," Glick said. "Countries are left in a tremendous amount of debt, and China takes over control of national assets," Glick said.