China Restricts Tesla Use at Sensitive Facilities, Citing Spying Concerns

Another day, another country restricting foreign-made technology due to national security concerns.

Last Friday, the Chinese government said it would bar military staff and employees of important state-owned companies from driving Teslas. Chinese officials worry about Teslas capturing videos of their surroundings, logging location data, and storing contact lists from phones synced to the vehicles.

• Elon Musk, whose company has otherwise enjoyed good relations with Beijing, insists Tesla complies with Chinese data protection laws.

Zoom alllll the way out

The Tesla-Beijing tiff isn’t an isolated event. Also last week, the FT reported that UK spy agencies want local authorities to ditch Chinese smart city tech, fearing it could be a conduit for espionage.

The US has issued its fair share of bans in recent years, too. At the end of 2020, the Commerce Department’s Entity List included 275 China-based companies. Washington has offered a host of reasons for restricting those companies, but one common fear is that foreign tech will phone home with sensitive data.

• That’s why you won’t see the Pentagon flying DJI drones, and soon, you won’t see Teslas at China’s sensitive military and industrial sites. It was also the justification for the US sorta-kinda “banning” TikTok.

The road ahead: export controls

Biden will reportedly let a broad and potentially burdensome Trump-era trade rule take effect soon. The rule, aimed primarily at China, would force US businesses to get governmental approval for deals and purchases of technology linked to a “foreign adversary.”

It’s not clear how aggressively Biden’s admin will enforce the policy, which would affect everything from networking technology to robotics. The business world is lobbying for a light touch, with the Business Roundtable calling the rule “unworkable.”

Thought experiment: Every company in question—from Tesla to DJI—denies it’s spying on behalf of its home country.If that’s true, and concerns about espionage are overblown, then you could view these bans as something closer to industrial policy than natsec interventions. But both things can be true at the same time.