A Biden official claims that China is putting forth a determined effort to control crucial US port equipment.

• At a House hearing on Thursday, Coast Guard officials stated that over half of the 200 cranes made in China and currently being used at major US ports have undergone inspections.
• Despite ongoing concerns from the military, White House, and Capitol Hill about Chinese surveillance through port technology and equipment, no vulnerabilities have been discovered.
• The top trade official at the Department of Homeland Security informed the House that the Biden administration believes there is an excessive dependence on PRC manufacturer cranes.

On Thursday, a senior trade official from the Department of Homeland Security testified on Capitol Hill that the Biden administration is worried about the level of Chinese manufacturing presence in crucial U.S. port operations.

In a House hearing concerning the use of cranes at U.S. ports, officials from Homeland Security and the Coast Guard were questioned about the country's dependence on China for these machines, including spare parts, and how it may affect the resilience of American ports.

Christa Brzozowski, acting assistant secretary for trade and economic security at the Department of Homeland Security, stated that there is an overreliance on People's Republic of China (PRC) manufacturer cranes, and they completely agree with this viewpoint during the House Subcommittee on Transportation and Maritime Security hearing on the port cybersecurity threat.

Over 99% of the cargo entering the U.S. from abroad is handled by seaports, which support 31 million American jobs and contribute $5.4 trillion to the economy, accounting for more than a quarter of the nation's GDP.

In early 2023, U.S. defense officials expressed concern that Chinese ship-to-shore crane manufacturer Shanghai Zhenhua Heavy Industries Co. (ZPMC) could be used by Beijing as a possible spying tool, resulting in increased pressure on the administration from Capitol Hill. China dismissed the concerns as "paranoia-driven."

ZPMC has not responded to CNBC's requests for comment.

The AAPA, representing the country's major container ports, has previously stated that there is no evidence to support the assertions about Chinese-made crane cyber vulnerabilities, describing the remarks as "exaggerated."

The Port of Los Angeles' executive director, Gene Seroka, stated on CNBC that Biden's executive order serves as a warning to the port and supply chain sector.

"Today's high-tech cranes can collect data, which is why this executive order is crucial," Seroka stated. "The Port of Los Angeles opened the nation's first port Cyber Security Operations Center in 2014, and in 2023, the center successfully stopped nearly three-quarters of a billion intrusion attempts, an average of about 63 million intrusion attempts each month," he added.

2023 was the highest number of cyberattacks the port ever recorded.

Brzozowski said reliance on China for shipping cranes is not an anomaly.

The PRC has demonstrated its commitment to becoming the leading manufacturer of not only cranes like this, but also other types of maritime equipment, as stated by the subcommittee member.

According to Brzozowski, no threats have been confirmed in the current cranes in use.

She added, "The potential for risk and the known exploitation by the PRC of critical infrastructure, even domestic sectors, are why we're closely examining this issue."

According to Coast Guard testimony at the hearing, nearly half of the cranes manufactured in the PRC have been evaluated. The hearing took place a week after the Biden administration issued an executive order on port cybersecurity, which emphasized the need for all critical port infrastructure owned and operated to comply with international and industry recognized safety regulations, particularly with regards to shipping cranes.

Brzozowski was questioned by Subcommittee Chairman Carlos Gimenez (R-FL) about whether the "enthusiasm" of the Belt and Road initiative could put the U.S. at a disadvantage, as China would be able to process its trade faster than U.S. trade.

"According to Brzozowski, it's not only possible, but happening worldwide, that China has the ability and desire to challenge the rules-based trade system. They are utilizing all their national power to achieve this goal. Specifically, they are seeking access to technology, data, and the vulnerabilities discussed today."

She stated that China is "undercutting American workers and businesses through various other practices."

The secretary mentioned the surge of fentanyl production entering the country via American ports and the use of forced labor to undermine U.S. and international businesses, and to market products that go against American values.

The Biden administration has framed the executive order as a key component of a comprehensive strategy to safeguard the country's ports. A newly established White House cabinet-level Supply Chain Resilience Center is collaborating with interagency partners, including the Departments of Commerce, Transportation, and Defense in this endeavor.

Rear Admiral John Vann, Coast Guard Cyber Command, stated at the House hearing that the Executive Order (EO) enables a captain of the port to take action to secure a crane or terminal if there is a threat or disruption due to a cyber intrusion. The operator, with the assistance or validation of the EO, can then secure the particular node of the system.

The increased automation of port operations presents both efficiencies and an increased cyber terrain that must be protected. It is crucial for all stakeholders, including government and private companies, to take the vulnerabilities created by this increased surface seriously and incorporate them into their security plans.

Rear Admiral Wayne R. Arguin Jr., the assistant commandant for prevention policy of the US Coast Guard, informed U.S. representatives that the Coast Guard maintains a constant presence in all ports and would decide which teams to involve and what measures to take to minimize any disruption if they were faced with a challenge.

"Any disruption, whether cyber or natural, would have diverse impacts on a tightly fine-tuned system, as stated by Arguin Jr. We are highly focused on this and the Supply Chain Resilience Center is also taking measures to minimize disruptions."