China will dominate the next generation of telecommunications infrastructure in the absence of U.S. industrial policy to help finance construction of a nationwide 5G network, said retired Air Force Brig. Gen. Robert Spalding, senior fellow at the Hudson Institute, in a Friday interview on SiriusXM’s Breitbart News Tonight with host Rebecca Mansour and special guest host Rick Manning.
“[Robert Spalding] was the chief architect of the framework for national competition in the Trump administration’s National Security Strategy (NSS),” notes Spalding’s profile at the Hudson Institute.
“[I recommended] building the first secure nationwide 5G network in the world in the United States as an accelerant for returning microelectronic production back to the United States,” said Spalding of his guidance to President Donald Trump in his former capacity as a strategic adviser to the president.
Telecommunications infrastructure manufacturers developing 5G technologies will be drawn to states offering them financial incentives given the capital costs of building 5G networks, explained Spalding, describing the need to win the race for 5G as an American national security imperative.
“I spoke to equipment manufacturers that are currently doing that,” said Spalding. “They were all willing to relocate manufacturing to the United States if the United States would commit to building a nationwide network in a short amount of time. [We need] an industrial policy and an economic policy that [seeks] to create structural change in the United States. … It really requires that we think of the global economy differently, and realize that in order to protect ourselves, we need to have the ability to manufacture the means of protecting ourselves.”
Spalding remarked, “If you think back to World War II, one of the things that actually served us well was the fact that we were an arsenal of democracy, and we could turn to the manufacturers of automobiles and other things to manufacture the planes and tanks and ships that we needed to protect ourselves. Unfortunately, because of the way we’ve globalized the supply chain and really eliminated a lot of that manufacturing capability, we can’t do that anymore.”
“The Defense Department has the authority and the resources to actually do this,” said Spalding of federal powers to incentivize domestic equipment manufacturing. “When you essentially make tariffs permanent, when you set contracting regulations in the Department of Defense in the General Services Administration to only purchase U.S.-made products in the certain categories, you want to make sure that you’re manufacturing, and then you stimulate using the Defense Production Act and Title III. So, in other words, you provide to manufacturers either credit facilities or grants so that they can return manufacturing [to the U.S.], and you stimulate that.”
Spalding continued, “Once you begin to demonstrate that manufacturers can return to the United States and actually be profitable, they will be profitable. They will return [to America] and be profitable, but just trying to strong-arm them or browbeat them is not going to get manufacturing returned; [neither will] having tariffs on a temporary basis. With no promise that [tariffs] will be permanent — particularly when you’re faced with, in a couple of years, them going back to essentially allowing [restoration of] predatory behavior by the Chinese — you can’t create the incentive for the business community to invest the money that would be required to bring the manufacturing back.”
“Structural work needs to be done in our economy to force this to occur, and so far, we haven’t been willing to do that,” Spalding added.
The Department of Defense’s (DOD) reliance on Chinese manufacturing of components and equipment used in military technology is a national security vulnerability, explained Spalding, highlighting China’s opportunity to sabotage the U.S. military’s apparatus via insertion of malware and other compromised components.
“Certainly, there are enough [Chinese-manufactured components in the F-35] that it’s concerning about whether you could have technology or equipment that’s in the aircraft that can be used to otherwise sabotage its performance,” warned Spalding.
The DOD should leverage its aforementioned authorities to encourage an increase in U.S.-based manufacturing of microelectronics, advised Spalding, highlighting the U.S. military’s procurement of such technologies as a financial incentive towards this end.
Spalding explained China’s predatory behavior targeted U.S.-based manufacturing of circuit board components. “In microelectronics … the components that are manufactured in the United States and then shipped to China to manufacture into circuit boards — component prices, themselves — China negotiates a China price with those suppliers, so if a manufacturer wants to turn around and then manufacture those circuit boards in the United States, they are charged a higher price for those components. So some manufacturers have actually gone to China to purchase components manufactured in the U.S. because they are able to get them at a premium to the China price, which is far below [the price offered to them by the U.S.-based component manufacturer]. So we have a structural flaw in the system that allows this to continue to happen.”
Spalding concluded, “What has to happen is that the Department of Defense needs to be much more proactive in ensuring that the manufacturing base actually returns to the United States, and they have the Defense Production Act — Title III or II authorities — that the Defense Department does have to actually ensure that we have a vibrant, robust, and resilient defense industrial base. Unfortunately, they haven’t actually used these authorities in the manner that would protect our industrial base since the Cold War.”
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