U.S. Congress Orders Probe of Satellite Loophole China Exploited

American Quislings: China uses U.S.-built satellites to support its police, military, with the help of Carlyle Group and Boeing 
By Brian Spegele and Kate O’Keeffe

AsiaSat 9, a Hong Kong company’s powerful U.S.-made satellite, was prepared for launch in 2017. 

Congress ordered the Commerce Department to examine a loophole in federal law that has allowed China’s government to use U.S.-built satellites to support its police and military, following an investigation by The Wall Street Journal.
The National Defense Authorization Act—a defense-policy bill passed Tuesday by the Senate and earlier by the House—instructs the Commerce Department to investigate the national-security implications of the current system and make recommendations on potential new export rules to prevent China from using U.S. satellites.
The U.S. effectively bars China from buying U.S. satellites outright.
But a Journal article April detailed how Chinese companies, backed by their government, devised a workaround in which offshore firms legally purchased U.S. satellites, then leased their bandwidth to mainland Chinese entities.
While the Commerce Department is responsible for regulating the export of commercial satellite hardware, it doesn’t monitor how foreign customers use the satellites once they are launched.
American satellites from producers including Boeing Co. have been used to boost communications for Chinese troops in the contested South China Sea, the Journal reported.
They also helped ensure connectivity for authorities as they sought to quell protests and riots in the Chinese regions of Tibet and East Turkestan.
The defense-bill provision was put forward in June by Sen. Michael Bennet (D., Colo.) after seeing the April investigation and an earlier Journal story that showed how a Chinese government-backed financial firm secretly funded the construction of an advanced Boeing satellite.
“Reports that satellites produced by U.S. companies are being used to advance the military and intelligence goals of our adversaries, namely China, demand the highest level of scrutiny,” he said.
The April article also prompted inquiries to the State Department by Sens. Chuck Grassley and Joni Ernst —both Iowa Republicans—and attracted the attention of the U.S.-China Economic and Security Review Commission, a bipartisan panel convened by Congress to provide recommendations on China issues.
In July, the State Department responded to the senators, deferring questions regarding satellite regulation to the Commerce Department.
It also called on China in the letter to “immediately end its campaign of repression in East Turkestan.”
The defense bill, which President Trump is expected to sign, reflects lawmakers’ hardened stance on China.
It also will restrict the removal of Chinese telecom giant Huawei Technologies Co. from a Commerce Department export blacklist until certain conditions are met and bar the use of federal funds for Chinese buses and railcars.
The company at the center of the satellite issue is Asia Satellite Telecommunications Holdings Ltd., which is jointly controlled by a Chinese government-owned conglomerate named Citic Group and the U.S. private-equity firm Carlyle Group.
Since the Journal’s report in April, AsiaSat delisted from the Hong Kong stock exchange, making its business less transparent to the public.
AsiaSat, Carlyle, Boeing and the Commerce Department declined to comment on the National Defense Authorization Act provision, which also directs the Commerce Department to assess the “potential harm” to U.S. commercial-satellite producers of any new licensing requirements regulating bandwidth use.

Greedy America's Money Cult: The Long List of Beijing Ass-Kissers

Don’t be mad at the NBA. Hundreds of U.S. companies have sold out to Chinese tyrants.

By Sally Jenkins

Get off the NBA’s back, all you people who want sports to be the children’s literature of your lost youth.

Somehow, because the Houston Rockets capitulated to their Chinese business partners, the league is now supposed to be a gutless violator of human rights?

You better start with General Electric.
Or KFC. 

Or how about Walmart?
It’s more than a little ludicrous for everyone from Ted Cruz to Beto O’Rourke to suddenly hand the NBA and the Rockets the tab for American toadying to authoritarians in Beijing. 

If they want to draw that line in the sand, they can draw it with any of their favorite dozen American corporations — only that wouldn’t be so politically convenient, would it?
It’s easier to hurl righteous outrage and umbrage at a large target such as Rockets star James Harden, who on Monday apologized to China for "hurt feelings" at the behest of his bosses. 

“We love China,” he said. 

It’s far more pat and satisfying to go all-in at Rockets management for making General Manager Daryl Morey apologize for his tweet over the weekend in support of pro-democracy protesters in Hong Kong. 

“I did not intend my tweet to cause any offense to Rockets fans and friends of mine in China,” he said in a statement.
And, boy, isn’t it an easy viral sound clip to accuse the entire NBA of “blatant prioritization of profits over human rights,” as O’Rourke did, and call it an embarrassment, simply because the league called the incident “regrettable” and tried to patch things up with Chinese dictators?
You want to be angry at the NBA for cowering in the face of China’s authoritarian regime? 

You want to accuse NBA Commissioner Adam Silver of supporting a murderous dictatorship simply to further business interests in China? 

Fine. 

Good for you.
But understand the NBA is only imitating that smooth move patented by dozens of other fine, flag-waving American corporations in their dealings with China. 

A half-dozen American corporate sponsors set the template a decade ago at the Beijing Olympics, when they colluded in the silencing of U.S. athletes and were far more directly complicit in a host of human rights violations.
Remember what champs Visa and General Electric were when the Chinese refused to grant entry to American athlete Joey Cheek because he had been too audible of an activist against abuses in Darfur? 

And how about the courageous support Coca-Cola gave to Chinese dissidents when Beijing authorities cracked down on them in advance of those Games?
Never forget the standup position Johnson & Johnson took when Steven Spielberg quit as artistic director of the Opening and Closing Ceremonies because Beijing not only failed to honor a single one of the reform promises it had made in procuring the right to host the Games but actually went on a terroristic bender against its own citizens, destroying whole neighborhoods, enlisting slave labor and throwing anyone who didn’t like it into a camp.
Ford. 

GM. 

Starbucks. 

Papa John’s. 

All of them do massive business with China. 

Abercrombie & Fitch. 

Boeing. 

Procter & Gamble. 

Start with them. 

All of them have long known what the conditions and equations are for doing business in the China market.
Australian journalist Geremie Barmé, who has covered China for many years, sums it up in a phrase: “contentious friendship.”
“To be a "friend" of China, the foreigner is often expected to stomach unpalatable situations, and keep silent in the face of egregious behavior,” he has written. 

“A "friend" of China might enjoy the privilege of offering the occasional word of caution in private; in the public arena he or she is expected to have the good sense and courtesy to be ‘objective.’ That is to toe the line, whatever that happens to be. The concept of ‘friendship’ thus degenerates into little more than an effective tool for emotional blackmail and enforced complicity.”
Throughout the Beijing Olympics, American companies remained silent. 

So did IOC President Jacques Rogge. 

When Rogge finally did open his mouth to protest someone’s conduct, it wasn’t anyone in China’s leaderships. 

The man he decided to pick was Jamaican sprinter Usain Bolt, for his bad manners in celebrating too boldly. 

The outrage at the NBA is more than a little remindful of that.
Yes, the NBA has made a mutually beneficial commercial accommodation with China. 

There are 800 million Chinese viewers of the league, according to Time, and there is a 30-year media partnership. 

You have a problem with that or consider it gutless? 

Then you have a problem with literally hundreds of American companies.

How Trump Will Win the Trade War with China

Beijing has not yet realized that lobbyists, even lobbyists for Blue Chip companies like Boeing and Apple, are not high on Trump’s list of favorite people. 

By STEVEN MOSHER

The American business press is filled with doomsday scenarios about the trade war that the President-elect is supposedly about to unleash on the world.

• “Trade War’s Biggest Loser—Stocks,” blared The Wall Street Journal on Friday, predicting falling stock prices if Trump follows through on trade.
• “A Trade War with China is Likely Under Donald Trump,” writes Minxin Pei in Fortune magazine, predicting that each countries exports to the other will “collapse,” and a “dangerous military confrontation” over the South China Sea or Taiwan may follow.
• “8 Reasons Why Starting a Trade War with China is a Bad Idea,” editorialized CNN, giving as reason number one the fear that China will “respond” in kind, and ending by arguing that the yuan is already “fairly valued,” a statement most economists would take issue with.

Most of these stories envision a vicious circle of tariffs and countertariffs – a kind of economic mutual assured destruction – that ends in a global recession.
The Smoot Hawley tariffs are invariably invoked, even though we now know that these did not cause the Great Depression.
A few imaginative souls have even speculated that lowering the boom on Chinese cheating will actually benefit China.
 Bloomberg, for example, published an article by Michael Schuman entitled, “Who Wins a Trade War? China.”
In the article, Schuman argues that any effort to level the trade playing field will only accelerate China’s effort to develop “national champions.”
These are the government-subsidized behemoths that Beijing imagines will one day soon be able to flood the American market with cheap smart phones, medical devices, and electric cars.
(Someone in the Chinese leadership ought to ask Japan’s mighty Ministry of Economy, Trade and Industry (METI) how its enormously expensive effort to pick winners and losers over the decades has worked out. The answer: not very well.)
As the countdown to the inauguration continues, it is dawning on American business circles that President Trump is actually serious about stopping China’s cheating on trade.
Their nervousness over the prospect of a confrontation with one of America’s largest trading partners is real and growing.
Beijing, for its part, is doing everything it can to stoke their anxiety.
The Chinese Communist Party’s Global Times has already started issuing threats, promising to retaliate if tariffs of 45% are imposed on Chinese-made goods.
“A batch of Boeing orders will be replaced by Airbus,” the paper threatened on November 13th. “U.S. auto and iPhone sales in China will suffer a setback, and U.S. soybean and maize imports will be halted.”
Apparently Beijing has not yet realized that lobbyists, even lobbyists for Blue Chip companies like Boeing and Apple, are not high on Trump’s list of favorite people. 
Nor have they grasped that the businessman does not respond well to threats.
Trump, on the other hand, understands perfectly well that the Chinese leadership does not merely cheat on trade: it is the biggest trade cheater in the history of man. 
He is under no illusions about the fact that Beijing is engaged in all-out economic warfare against the United States.
The numbers don’t lie.
The Chinese sold us $367 billion more stuff in 2015 than we sold them, $483 billion versus a paltry $116 billion.
The shipping containers from China arrive full and go back empty.
America’s trade deficit with China is spiraling out of control.
Trump advisor Peter Navarro has explained how China is cheating on trade, and it has nothing to do with a lack of American competitiveness.
Nor is it solely a matter of Beijing manipulating its currency.
Rather, Navarro says, Beijing engages in five unfair trading practices.
Besides manipulating its currency and providing illegal export subsidies, it engages in massive intellectual property theft, avoiding research and development costs.
Add to this lax worker safety standards—tens of thousands of Chinese workers are killed each year on the job—and environmental regulations that go unenforced.
Taken together, these unethical and illegal practices reduce the price of Chinese goods sold in American stores by 45%.
President-elect Trump has proposed a simple yet elegant solution to this inequity: he promises to impose a tariff of 45% on all Chinese-made goods coming into the United States.
My prediction is that China, recognizing that for the first time they are dealing with an American president who is serious about righting the trade imbalance, will come to the negotiating table before this happens.
First of all, China’s leaders know that, as President, Donald Trump will enjoy broad authority on trade matters.
He can, on his own authority and without consulting Congress, raise tariffs, impose quotas, and terminate trade agreements.
His promised renegotiation of the North American Free Trade Agreement with Mexico and Canada will be a further wake-up call for the Chinese, signaling that he is serious about righting the trade imbalance not just with American’s near neighbors, but with China as well.
Another reason to expect China’s leaders to blink is that their export-oriented economy is far more vulnerable than ours to a trade war.
According to the World Bank, 41.2% of China’s GDP comes from exports and imports.
The comparable figure for the U.S. is only 27%.
In fact, these numbers understate the risk to China’s economy.
For while the United States is China’s most important economic partner, the converse is not true.
Beijing desperately needs American consumers to keep buying massive amounts of Chinese-made goods, especially now.
China’s export sector is essentially stagnant, its factories suffer from overcapacity, and the country as a whole is running at a significant fiscal deficit.
The last thing the Chinese leadership wants is for their country’s already fragile economy to be disrupted by a trade war.
If China actively takes steps to avert a trade war with the United States, as I expect it will, it will not be the first time that Beijing has chosen negotiation over confrontation.
Beijing has a long history of resolving trade imbalances with its East Asian neighbor, Japan, in exactly this fashion.
When the balance of payments between the two countries skews in one direction or the other, trade officials from both countries sit down and draw up plans to bring trade back into balance.
Negotiations between American and China will necessarily be more complicated, not least by the enormity of the trade deficit in question, but can in principle be resolved the same way.
There is one final reason, less tangible perhaps, why I expect Xi Jinping to eschew retaliation in favor of negotiation.
He and the other members of the top echelon of the Chinese leadership live in a world defined not by rules but by interpersonal relationships.
It is a system where the strong are respected, while the weak are mercilessly crushed.
I believe that President Trump will, more than Obama, Bush, or Clinton, enjoy the respect of the CCP leadership.
After all, a strong-willed, no-nonsense, deal-maker is a type that Xi Jinping and his colleagues will instantly recognize.
In fact, Trump may well turn out to be precisely the right person to strike a bargain with China, saving American jobs and factories.
For the time being, expect China’s leaders to continue to bluster and bully, even as it becomes increasingly clear to them that their threats are having absolutely no effect on President-elect Trump. Then, just before Trump slaps them with tariffs—and serious damage is done to China’s economy–they will agree to sit down and negotiate a reasonable accommodation on matters of trade.

Stop Technology Ripoffs By China

Congress should make CFIUS review a requirement prior to the sale of any U.S. company to a Chinese-controlled entity — not just to SOEs.

By Anders Corr

On November 16, a U.S. Government advisory body, the U.S.-China Economic and Security Review Commission, recommended that “Congress amend the statute authorizing the Committee on Foreign Investment in the United States [CFIUS] to bar Chinese state owned enterprises from acquiring or otherwise gaining effective control of U.S. companies.” .”

But Congress should go one step further than just banning Chinese SOEs from buying U.S. companies. 

Congress should reverse prior sales of U.S. technology firms to China, especially those in critical industries like aviation and semiconductors. 

It is because of Chinese acquisition of U.S. technology on the cheap that China can now out-compete U.S. manufacturing. 

This is not a matter of protectionism, but a matter of protecting U.S. democracy and workers from China’s autocratic government.
China’s authoritarian economy benefits because Chinese-owned U.S. companies can innovate and design new technologies in U.S. labs, and with U.S. scientists. 

These new technologies never undergo CFIUS review before getting transferred to China. 

Congress should mandate that CFIUS review, and have the authority to stop, joint development programs between U.S. and Chinese technology companies.
According to the commission, “Overall, the data do not demonstrate that CFIUS has been a significant obstacle for Chinese investment in the United States. 

In 2014, the latest year for which data are available, China led foreign countries in CFIUS reviews with 24 reviewed transactions out of more than 100 total Chinese acquisition deals.” 

As noted by the commission, CFIUS fails to review most Chinese acquisitions. 

Many technology companies, especially little-known startups, can be legally acquired by China without CFIUS ever knowing. 

The startups may not even be aware of CFIUS. 

Congress should make CFIUS review a requirement prior to the sale of any U.S. company to a Chinese-controlled entity — not just to SOEs.
Stopping the loss of U.S. technology to China is about protecting the economy, but also about protecting U.S. national security. 

“The CCP [Chinese Communist Party] continues to use SOEs [state-owned enterprises] as the primary economic tool for advancing and achieving its national security objectives,” according to the commission’s report. 

“Consequently, there is an inherently high risk that whenever an SOE acquires or gains effective control of a U.S. company, it will use the technology, intelligence, and market power it gains in the service of the Chinese state to the detriment of U.S. national security.”
Congress, which created CFIUS in 2000, typically takes a harsh view of Chinese acquisitions of U.S. technology companies. 

But recent presidential administrations respond with greater alacrity to big business lobbies like Boeing and Apple that stand to make over a trillion dollars in revenue in China over the next 20 years. 

U.S. voters, therefore, cannot trust Boeing, Apple, and their lobbyists to influence U.S. national security decisions. 

Voters should take back their government from these special interests and their Chinese conflicts of interest.
The U.S. Treasury Department chairs the CFIUS review process. 

Timothy Geithner was Secretary of the Treasury at the time that CFIUS reviewed and ultimately approved the sale of of one aviation company in 2011, Cirrus Industries of Minnesota, to the biggest Chinese state-owned aerospace-defense company, Aviation Industry Corporation of China (AVIC). Cirrus has since gained access to Oak Ridge National Laboratory (ORNL) officials, from whom they are seeking joint research and development, that is, technology transfers. 

ORNL is funded by U.S. taxpayer money, not to help Chinese defense companies, but to develop our most sophisticated materials science for U.S. military and commercial use.
Geithner joined the private equity firm Warburg Pincus after he left government service in 2013. 

There, he led the 2014 acquisition of a $680 million share of a Chinese state-owned enterprise, Huarong Bank. 

China had it in their power to handsomely reward Mr. Geithner in the 2014 transaction. 

That fact is doubtless not lost on current high government officials in Washington who hope to cash in with Chinese clients after they leave government service.

Appointments of former U.S. Secretary-level individuals to boards of directors or upper-management of U.S. companies doing business in China help China’s influence in Washington. 

It is in U.S. voter interests, therefore, to reform this and other possible paths of monetary influence on U.S. politics, and with it, end the chance of Chinese influence in the beltway. 

Campaign finance reform is needed, not just to keep corporate influence out of critical domestic issues like tax and social spending reform, but to keep Chinese and other international competitor influence out of U.S. national security decisions. 

We also need to pass stronger conflict of interest laws against high government officials taking lucrative post-government positions that profit from Chinese clients. 

The same should apply to Russian clients.
The November 16 recommendations of the U.S.-China Economic and Security Review Commission make headway against the threat of losing yet more technology to China. 

CFIUS has stopped some deals, which is to their credit. 

But the commission and CFIUS don’t go nearly far enough. 

They will need public mobilization to get the job done properly.