SAN SALVADOR DE JUJUY, Argentina (Reuters) - In Argentina’s remote northern province of Jujuy, Chinese telecoms giant ZTE is installing a little slice of the Asian nation’s vast surveillance state - security cameras that the local government says will help to curb street crime.
Even this relatively small, little-reported deal is raising concerns in Washington, which is increasingly warning allies not to buy Chinese technology that it says could be used by Beijing to spy on its customers.
ZTE Corp (000063.SZ) sealed a nearly $30 million surveillance contract with Jujuy in March to provide cameras, monitoring centers, emergency services, and telecommunications infrastructure. ZTE first made its sales pitch three years ago.
The deal is an example of the tech inroads China is making in Latin America even as the United States warns about the dangers of using Chinese technology, especially related to surveillance. A Chinese official in Buenos Aires told Reuters the Jujuy project could help China expand its tech footprint in the country, by encouraging other cities to adopt similar technology.
Washington has “concerns” about ZTE’s project in Jujuy, a spokeswoman for the U.S. State Department’s Western Hemisphere Affairs Bureau said in a statement.
“China gathers and exploits data on an unrivaled scale, and uses the information to promote corruption, support arbitrary surveillance, and silence dissent,” the spokeswoman said.
The U.S. worries about the project, which have not been previously reported, show how the United States is scrutinizing both big deals and small in its efforts to slow the spread of Chinese security technology around the globe.
The United States has offered little public evidence to support its warnings to allies, and Argentine and Chinese officials played down concerns about the Jujuy project in interviews and statements to Reuters.
ZTE, which has a small presence in Argentina, declined to share company data on its surveillance technology projects in Latin America or to comment for this story.
At an event in the provincial capital San Salvador de Jujuy in May, ZTE’s general manager in Argentina, Dennis Wang, alongside Governor Gerardo Morales, his security minister and police officials, made a presentation and described how the technology had helped cut crime rates in China.
Jujuy already has close ties to China. A Chinese company is heavily invested in lithium mining in the province and China has provided the financing and technology for a huge solar farm, South America’s largest.
Now Jujuy can be “safe like China,” the local government said in an announcement about the event.
China’s lower crime rate is due in part to its sprawling - and contentious - surveillance apparatus of cameras, facial recognition software, citizen databases and courts controlled by the ruling Communist Party that have high conviction rates.
To be sure, authorities in many democratic nations including the United States and Britain also make wide use of surveillance technology. However, human rights watchdogs say China abuses these powers to suppress dissent and protest by its own citizens.
China has built an extensive video surveillance system and installed smartphone monitoring technology in the northwestern region of Xinjiang, where more than a million Uighurs and other Muslims have been detained in so-called vocational training centers. ZTE and its subsidiaries have been heavily involved in building China’s internal surveillance project, according to procurement documents, including the surveillance infrastructure in Xinjiang.
The Chinese official in Buenos Aires dismissed U.S. worries as “anxiety” over the success of Chinese firms, especially in the race towards 5G telecommunications technology that firms like ZTE and Huawei Technologies Co Ltd [HWT.UL] are spearheading.
The official, who asked not to be named, said Latin American countries had a growing need to improve security, creating an opportunity for China to sell surveillance technology at a competitive price.
China’s foreign ministry said the U.S accusation that China exploited data gathered by its companies was “absurd.” The country was a “firm safeguarder of internet security”, it said.
There have been no expressions of concern about the deal in Argentina, where China - a major trading partner and financier - is viewed as an important ally and not a threat.
Argentina’s foreign ministry declined to comment on the U.S concerns.
Jujuy officials have reason to be open to affordable Chinese tech. The province is one of the poorest in Argentina and has crime rates slightly above the national average.
Security Minister Ekel Meyer said in an interview in San Salvador de Jujuy that residents accepted the watchful eye of the security cameras in exchange for safer streets.
He wants to take it even further by expanding the system to include facial recognition technology, a tool China has been rolling out as part of its domestic surveillance web.
Meyer said any citizen who was law abiding had nothing to fear from the surveillance system. “This protects him,” he said.
ZTE had already set up a small test zone in a local public city park and shipments for the first phase of the project arrive in September, the government said.
A source with knowledge of the Jujuy project said government officials had not carried out any kind of assessment of the technology’s vulnerabilities.
Joseph Cannataci, a UN Special Rapporteur for data privacy, told Reuters during a recent visit to Argentina that the country needed to do a better job of vetting security equipment and software that it purchased.
“I don’t care who you buy it from ... You should not assume that the vendor you are buying from is to be trusted. You should carry out your privacy impact assessment,” he said, referring to a U.N.-recommended test to ensure people’s right to privacy is not violated.
U.S.-CHINA TECH WAR
The United States and China are in the middle of protracted trade standoff, with tech at the core. ZTE itself was hit with a crippling supplier ban last year, and the White House has since taken aim at even larger rival, Huawei.
This has seen the United States look to persuade, often loudly, global trade partners to shun Chinese-made technology, with Secretary of State Mike Pompeo firing such warnings during a Latin America tour earlier this year.
“The Chinese Communist Party is using technology equipment and services exports to promote Tiananmen-style repression across Latin America,” a White House official told Reuters.
China launched a deadly crackdown on protesting students in Beijing’s Tiananmen Square in 1989 in which rights groups say possibly thousands of people were killed. There have not been any similar incidents in Latin America this century.
“Telecommunications equipment purchasing decisions being made today will have a lasting impact on how the United States works with partners and who it chooses to partner with in the future,” the U.S. official said.
In South America those warnings, however, appear to be falling on deaf ears.
In Venezuela, ZTE also helped the government of President Nicolas Maduro roll out a smart-card ID known as the “fatherland card.” The ID transmits data about cardholders to servers supplied by ZTE and is increasingly linked by the government to subsidized food, health and other social programs.
In Ecuador, Huawei and state-owned China National Electronics Import & Export Corporation built a surveillance system of more than 4,000 cameras for the government that was installed in 2011. In Uruguay, the government announced in February a Chinese donation of 2,100 Huawei security cameras for installation in four cities.
In Brazil, despite Trump calling for President Jair Bolsonaro to sideline Huawei, Brazilian Vice President Hamilton Mourao said in June the government would not exclude the Chinese firm from operating a 5G mobile telecoms network.
Analysts said the United States had taken its eye off the ball in the resource-rich region as China had increased its global clout.
“Team China is offering good technology, at a very reasonable price with very favorable financing. It’s a pretty compelling package and the U.S. doesn’t really have alternatives to that,” said Paul Triolo, head of global technology policy at the Eurasia Group.
Reporting by Cassandra Garrison; additional reporting by Catherine Cadell and Ben Blanchard in Beijing, and Matt Spetalnick in Washington; Editing by Adam Jourdan and Ross Colvin