NEW: Investigation by House Homeland, Select Committee on the CCP Finds Potential Chinese Threats to U.S. Port Infrastructure Security

WASHINGTON, D.C. - Today, House Committee on Homeland Security Chairman Mark E. Green, MD (R-TN), Subcommittee on Transportation and Maritime Security Chairman Carlos Gimenez (R-FL), and Select Committee on the Chinese Communist Party Chairman John Moolenaar (R-MI) issued the following statement upon releasing a joint investigative report exposing a rising threat to U.S. economic and homeland security posed by the Chinese Communist Party (CCP). Read the full report here.

The report reveals how Shanghai Zhenhua Heavy Industries (ZPMC)--a company owned and operated in the People's Republic of China (PRC)--dominates the global market share of ship-to-shore (STS) port cranes, and how the PRC's broader maritime infrastructure dominance creates significant cybersecurity and national security vulnerabilities for both the United States and our allies. ZPMC currently accounts for nearly 80 percent of the STS cranes in operation at U.S. ports. The report also outlines strategies for how the United States can lead the way in addressing the risks posed by the CCP's maritime activities and promote a more secure global maritime infrastructure. In addition, a classified annex is available to members and appropriately cleared staff.
"The evidence gathered during our joint investigation indicates that ZPMC could, if desired, serve as a Trojan horse capable of helping the CCP and the PRC military exploit and manipulate U.S. maritime equipment and technology at their request. This vulnerability in our critical infrastructure has the potential to affect Americans from coast to coast.
"By potentially sacrificing long-term economic security for short-term financial gain, we have given the CCP the ability to track the movement of goods through our ports or even halt port activity at the drop of a hat. Amid China's aggression in the Indo-Pacific, our greatest geopolitical adversary could wield this power to influence global military and commercial activity in the event of escalation. Unfortunately, solutions are not always simple. China maintains unprecedented malign influence over competitors and suppliers.
"During our investigation, the Committees requested that ABB, a Swedish-Swiss company, take concrete steps to remedy significant vulnerabilities in its China-based supply chains involving U.S.-bound cranes. Sadly, ABB refused and, by doing so, put dollars ahead of the security of the American people.
"While the Biden administration's executive orders on maritime security are an important step forward, our investigation proves immense damage may have already been done. This report must be a wake-up call for maritime sector stakeholders and the federal government to address this threat with far more urgency. Our homeland security depends on it."

Read more in the Wall Street Journal via Dustin Volz.

HIGHLIGHTS FROM THE REPORT:

1. BEIJING WIELDS UNPRECEDENTED POWER IN THE MARITIME SECTOR: The investigation revealed that two PRC state-owned enterprises control portions of five U.S. ports and lead tens of billions of dollars in PRC overseas seaport investments. Alarmingly, many of these seaports use equipment and technology originating from the PRC. In most cases, these ports entered multimillion dollar contracts with ZPMC, granting it the contractual authority to produce, manufacture, assemble, or install the equipment and technology in the PRC and deliver it upon completion.

• The U.S. maritime sector is dangerously reliant on equipment and technology produced, manufactured, assembled, or installed in the PRC. This includes ship-to-shore cranes, container handling equipment, and various other critical maritime infrastructure components.
• The contracting practices between PRC state-owned enterprises (SOE) and U.S. ports, as well as other maritime stakeholders, fail to adequately prioritize security. During the Committees' investigation, we reviewed multiple contracts between ZPMC and U.S. ports and were alarmed to find no provisions prohibiting or limiting unauthorized modifications or access to equipment and technology bound for U.S. ports. Consequently, ZPMC and other PRC SOE's are not contractually barred from installing backdoors into equipment or modifying technology.

2. ZPMC BENEFITS THE CCP & AMERICA'S ADVERSARIES: ZPMC is a wholly owned subsidiary of China Communications Construction Group (CCCG), aka, China Communications Construction Company (CCCC), a company with significant involvement in militarizing the South China Sea. In August 2020, CCCC was named a "Communist Chinese Military Company" by the Department of Defense (DoD).

• The company's board includes senior members of the Chinese Communist Party (CCP) and individuals with roles in defense contracting, highlighting its strategic alignment with Beijing's ambitions. ZPMC's operations have included collaboration with the People's Liberation Army Ground Force (PLAGF) and other military entities, and it has entered into agreements with sanctioned entities involved in human rights abuses.
• The company's partnerships with tech firms, such as Microsoft, to develop real-time port activity monitoring tools, further intensify national security concerns.

3. ZPMC IS A CYBERSECURITY RISK: ZPMC, or a third-party company contracted with ZPMC, installed cellular modems onto STS cranes that are currently operational at certain U.S. ports. These installations fall outside the scope of any existing contract between the affected U.S. ports and ZPMC.

• This incident is not isolated-in February 2021, the FBI discovered intelligence gathering equipment near or on ZPMC STS cranes on arrival to the Port of Baltimore.
• ZPMC has repeatedly requested remote access to its STS cranes operating at various U.S. ports, with a particular focus on those located on the West Coast. If granted, this access could potentially be extended to other PRC government entities, posing a significant risk due to the PRC's national security laws that mandate cooperation with state intelligence agencies.

4. ALTERNATIVES ALSO CONTAIN VULNERABILITIES CAUSED BY THE CCP'S INFLUENCE: Most, if not all, global crane manufacturing companies that serve as alternatives to ZPMC maintain ties to the PRC. These companies are either directly vulnerable to supply-chain disruptions or indirectly susceptible to PRC pressure due to their business dealings within PRC.

• When questioned about the risks of using PRC-origin equipment, many strategic seaports claimed to mitigate risks by using critical internal STS crane components from Swiss (ABB), German, or Japanese manufacturers, rather than those produced by ZPMC. Contracts reviewed by the Committees revealed that many agreements allowed critical internal components from third party contractors to be sent to the PRC for installation by ZPMC.
• ABB's operations in the United States include extensive contracts with multiple government agencies such as the United States Navy, NASA, Tennessee Valley Authority, Department of State, Department of Treasury, Environmental Protection Agency, Federal Aviation Administration, National Oceanic and Atmospheric Administration, Electrify America, Army Corp of Engineers, Coast Guard, and the United States Air Force.

5. THE INDO-PACIFIC COULD BE AT RISK: The PRC's geopolitical ambitions and assertiveness, particularly regarding Taiwan, raise concerns about the security of U.S. maritime supply chains.

• The Committees' investigation found that in a potential future dispute with the United States over Taiwan, the PRC could restrict or manipulate the supply of critical components or materials essential to U.S. maritime infrastructure, including STS cranes. Such actions could severely disrupt U.S. commercial activities and hinder the DoD's ability to deploy supplies and resources to the Indo-Pacific region.
• The Committees found that due to inadequate management by the port authority, MARAD, and DoD, Guam struggles to consistently receive grant funding, achieve strategic port status, maintain or enhance its cyber security posture, and avoid the risks associated with installing PRC-made equipment at its port.

BACKGROUND ON THE COMMITTEES' INVESTIGATION:
For more than a year, the Committees conducted oversight of, interviewed, and requested information from key stakeholders in the maritime sector, in addition to the Department of Homeland Security (DHS), including the U.S. Coast Guard, Department of Transportation Maritime Administration, Department of Defense, Federal Bureau of Investigation (FBI), and the National Security Agency, as well as 10 U.S. strategic seaports, three international port equipment manufacturers, and more.

• In 2023, outlets such as the Wall Street Journal reported on the national security risks of Chinese state-owned cranes, revealing that the FBI reportedly discovered intelligence collection devices on ZPMC cranes at the Port of Baltimore. Following these reports, then-Chairman of the Select Committee on China Mike Gallagher (R-WI) and Subcommittee Chairman Gimenez visited the U.S. Port of Miami in March 2023, to learn about the security of critical infrastructure and the pervasive threat of PRC-linked technology in port infrastructure.
• In April of 2023, Chairman Green, Subcommittee Chairman Gimenez, Subcommittee on Cybersecurity and Infrastructure Protection Chairman Andrew Garbarino (R-NY), and Subcommittee on Oversight, Investigations, and Accountability Chairman Dan Bishop (R-NC) sent a letter to DHS Secretary Alejandro Mayorkas, demanding answers on threats to U.S. ports from China caused by ZPMC cranes.
• In June 2023, staff from both Committees visited the U.S. Port Newark-Elizabeth Marine Terminal to learn about the cybersecurity risks related to PRC-linked port infrastructure and ZPMC's presence at the port.
• Following a July 2023 letter to ABB regarding its relationship with ZPMC, the company failed to cooperate in good faith with the Committees and lacked the appropriate urgency in responding to calls for increased security. In a January 16, 2024, letter transmitted to ABB, the Committees requested that the company's U.S. Country Holding Officer testify in an upcoming public hearing. ABB subsequently communicated to the Committees it did not intend to comply with this request.
• In February 2024, Chairman Green, Subcommittee Chairman Gimenez, and then-Chairman Gallagher sent a letter to ZPMC, demanding answers regarding numerous findings of the joint investigation.
• That month, the House Homeland Security Subcommittee on Transportation and Maritime Security also held a hearing to examine security vulnerabilities at U.S. maritime ports. In the hearing, Subcommittee Chairman Gimenez asked U.S. Coast Guard Rear John Admiral Vann about the security of ZPMC cranes, to which he answered, "We have found…openings to vulnerabilities that are there by design."

###

Public link

Please use the above public link if you want to share this noodl on another website.