Global Thief

From university funding to computer hacking: How China steals Western innovation
By James Cook

China is seeking to "steal its way up the economic ladder" at the expense of Western innovation

China is seeking to "steal its way up the economic ladder" at the expense of Western innovation.
Those were the damning words of FBI Director Christopher Wray who last week said that China poses a "multi-layered" threat to US interests.
His comments were made as Washington's campaign to ban Chinese telecoms firm Huawei intensified.
"China has pioneered a societal approach to stealing innovation in any way it can from a wide array of businesses, universities and organisations," he said.
"They're doing it through Chinese intelligence services, through state-owned enterprises, through ostensibly private companies, through graduate students and researchers, through a variety of actors all working on behalf of China."
It's something known only too well by businesses desperate to crack China's lucrative market of 1.3bn people.
Among them is Apple, who saw Chinese electronics business Xiaomi spend years replicating its iPhone designs.
Its chief executive even modelled himself on Apple founder Steve Jobs, wearing similar clothing and copying his presentations.
For Apple design chief Jony Ive, the constant replication was a source of frustration.
“You spend seven or eight years working on something, and then it’s copied. I have to be honest, the first thing I can think, all those weekends that I could have at home with my family but didn’t. I think it’s theft, and it’s lazy,” he said in 2014.
While Xiaomi was a brazen example of a Chinese business copying Western designs, there are far more advanced ways which Chinese businesses have used to copy Western innovation.
Huawei has been at the centre of a political row over concerns that its closeness to the Chinese government could introduce espionage risks if its hardware is used in the development of 5G networks around the world. 
Many countries, including the US, have taken a firm stance against Huawei’s involvement in the new networks, but other nations including the UK have taken a softer approach.
The political row around Huawei often overlooks the company’s historic practice of stealing Western innovation, however.
Over 15 years ago, Huawei took part in a costly legal battle with US technology firm Cisco over allegations that Huawei copied Cisco’s software for its routers.
Huawei eventually admitted that it had cloned the software and pledged to remove it from its products.
Huawei had been systematically reverse-engineering Cisco’s routers, a practice which would have allowed the Chinese telecoms company to peer into the inner workings of Cisco’s software and cherry pick sections to use in its own products.
Cisco sued Huawei for patent infringement in 2003, only settling the case after Huawei admitted to using Cisco’s source code.
The US government has also accused Huawei employees of attempting to copy “Tappy,” a smartphone-testing robot built by US network T-Mobile.
Huawei employees with access to the robot took photographs of Tappy and one employee has been accused of removing one of its arms. 
Concern around Chinese replication of technology doesn't end with reverse-engineering.
As businesses like Huawei have become more successful and expanded around the world, they have begun investing in academic research.
Huawei has spent millions of pounds in the UK alone funding research into technologies such as mobile phone networks. 
But experts have warned that these donations risk handing British innovations to China.
“China is using broad research relationships with universities and other entities to try and fill in any technological gaps,” said Michael Wessel, a commissioner on the US-China Economic and Security Review Commission.
Companies are trying to “advance Chinese standards so that Huawei and other Chinese-produced equipment will be the equipment of choice as networks get built out,” he said.
The issue of Huawei funding university research has been particularly sensitive in Canada, which has seen a political debate over the hundreds of patents Huawei has been granted thanks to Canadian research it has funded.
A similar debate has not yet taken place in the UK, although Oxford University suspended all research grants and donations from Huawei following a Telegraph report into the financial backing published last year.
Apart from the continued practice of university funding, other Chinese businesses have for years been systematically cloning Western software and hardware for sale in the Chinese market.
Earlier this month, it was reported that a cloned version of popular Nintendo smartphone game Fire Emblem Heroes had been approved by the government and was available for download on iPhones and Android phones.
The app had been reverse-engineered, with the only substantive change being the translation of the game’s text into Simplified Chinese.
Chinese businesses have also grown adept at copying hardware manufactured in Chinese factories.
These factories are given the blueprints for technology hardware, as well as prototype devices that can help to create cloned devices.
Quartz reported in 2016 that an entrepreneur who invented a smartphone case that folds out into a selfie stick was shocked to find a copy of his product on sale through Chinese websites at a cheaper price.
It’s an extremely common issue seen in Chinese factories, which are used to produce counterfeit products that have been designed to be as similar as possible to the original products. 
Often, the cloned products are sold online for a cheaper price.
The nature of China’s laws around foreign businesses are key to helping transfer technology from Western companies to China.
A report to the US Congress by the Department of Justice published in 2018 said that “China uses foreign ownership restrictions, such as joint venture requirements and foreign equity limitations, and various administrative review and licensing processes, to require or pressure technology transfer from US companies.”
Forcing the creation of joint ventures has meant that businesses wishing to operate in China have to transfer information to Chinese businesses, raising concerns that the products may be copied.
The report to Congress also described widespread hacking of computer networks in order to gain access to confidential information that would be extremely useful to Chinese businesses.
In 2014, the US government indicted five members of the Chinese military over charges that they hacked into the networks of large US power and steel companies in order to steal trade secrets.
These hacking attacks are a far cry from the more prosaic copying of devices like crowdfunded selfie sticks, but the ongoing hacks show a continued effort to promote Chinese businesses by handing them closely guarded trade secrets.
The promise of a new law that could grant businesses “fair treatment” inside China is seen as a step in the right direction, but Western businesses don’t anticipate an immediate end to the copying, cloning and hacking which has gone on for years.

The Art of the Deal

President Trump says he is in no rush to complete China trade deal

By Steve Holland, Jeff Mason

WASHINGTON -- U.S. President Donald Trump said on Wednesday he was in no rush to complete a trade pact with China and insisted that any deal include protection for intellectual property, a major sticking point between the two sides during months of negotiations.
Trump and Chinese dictator Xi Jinping had been expected to hold a summit at the president’s Mar-a-Lago property in Florida later this month, but no date has been set for a meeting and no in-person talks between their trade teams have been held in more than two weeks.
Bloomberg reported on Thursday that a meeting between the two was more likely to take place in April at the earliest.
A person familiar with the matter told Reuters that there “were rumblings” in Washington about a possible meeting in late April.
The president, speaking to reporters at the White House, said he thought there was a "good chance" a deal would be made, in part because China wanted one after suffering from U.S. tariffs on its goods.
But he acknowledged Xi may be wary of coming to a summit without an agreement in hand after seeing President Trump end a separate summit in Vietnam with North Korean leader Kim Jong Un without a peace deal.
“I think Xi saw that I’m somebody that believes in walking when the deal is not done, and you know there’s always a chance it could happen and he probably wouldn’t want that,” Trump said.
China has not made any public comment confirming Xi is considering going to meet Trump in Florida or elsewhere.
The president, who likes to emphasize his own deal-making abilities, said an agreement to end a months-long trade war could be finished ahead of a presidential meeting or completed in-person with his counterpart.
“We could do it either way. We could have the deal completed and come and sign, or we could get the deal almost completed and negotiate some of the final points. I would prefer that,” he said.
President Trump decided last month not to increase tariffs on Chinese goods at the beginning of March, giving a nod to the success of negotiations so far.
But hurdles remain, and intellectual property is one of them. 

Washington accuses Beijing of forcing U.S. companies to share their intellectual property and transfer their technology to local partners in order to do business in China. 

Asked on Wednesday if intellectual property had to be included in a trade deal, Trump said: “Yes it does.”
He indicated that from his perspective, a meeting with Xi was still likely.
“I think things are going along very well -- we’ll just see what the date is,” Trump told reporters at the White House.
“I’m in no rush. I want the deal to be right... I am not in a rush whatsoever. It’s got to be the right deal. It’s got to be a good deal for us and if it’s not, we’re not going to make that deal.”

‘MAINTAINING CONTACT’
China’s Foreign Ministry said on Tuesday that Xi had previously told Trump that he is willing to “maintain contacts” with the U.S. president.
China industrial output growth falls to 17-yr low, more support steps expected
Over the weekend, Vice Commerce Minister Wang Shouwen, who has been deeply involved in the trade talks with the United States, did not answer questions from reporters on whether Xi would go to Mar-a-Lago.
Two Beijing-based diplomatic sources, familiar with the situation, told Reuters that Xi would not be going to Mar-a-Lago, at least in the near term.
One said there had been no formal approach from the United States to China about such a trip, while the second said the problem was that China had realized a trade agreement was not going to be as easy to reach as they had initially thought.
“This is media hype,” said the first source, of reports Xi and Trump could meet this month in Florida.
Though Trump said he is not in a hurry, a trade deal this spring would give him a win to cite as an economic accomplishment as he advances his 2020 re-election campaign. 

The trade war has hurt the global economy and hung over stock markets, which would likely benefit from an end to the tensions.
In addition to smoothing over sticking points on content, the United States is eager to include a strong enforcement mechanism in a deal to ensure that Beijing can be held accountable if it breaks any of its terms.
U.S. Trade Representative Robert Lighthizer, who has spearheaded the talks from the American side, said on Tuesday that U.S. officials hoped they were in the final weeks of their talks with China but that major issues remained to be resolved.

Egyptian billionaire: President Trump is right about China

• Egyptian billionaire Naguib Sawiris said President Trump is right in saying that China has taken advantage of other countries.
• He said other countries are justified in their concerns that Chinese telecommunications equipment maker Huawei could be a security risk.

By Everett Rosenfeld

Egyptian billionaire: The world's political situation has 'never been worse

Egyptian billionaire Naguib Sawiris didn't mince words in his evaluation of the ongoing trade war between the U.S. and China and the security concerns about Chinese telecommunications giant Huawei.
Beijing has long taken advantage of other countries and U.S. President Donald Trump is right to seek changes out of Asia's largest economy, he told CNBC's Hadley Gamble on Tuesday.
"President Trump is right about that: This has been a long time where we closed eyes on China raping us. So, by the time you come and tell them, 'You need to change,' I mean, they just used to be so comfortable and do whatever they want," he said.

Overall, he said, "the political situation in the whole world has never been worse."

"People expect wars ... whether it's a trade war or its a real war," Sawiris said, noting a list of geopolitical hot spots including "the Middle East in disarray" and China pressuring Taiwan. 

"It's just not like a very stable world today."

Concerns about Huawei are justified
Sawiris, who has vast telecommunications holdings, also weighed in on the drama around Chinese equipment maker Huawei.
Since 2012, Huawei, the world's largest maker of networking equipment, has been barred from selling those products in the U.S. on the explanation of security concerns by the U.S. government.

Naguib Sawiris, chairman and chief executive officer of Orascom Telecom Media and Technology Holding.

"I think there is genuine concern, and I think it's justified," the Egyptian billionaire told CNBC on Tuesday. 

"It's actually taking the West very long to — I mean, you know, telecom was my domain — to get worried. I think they should be worried."
Now, several other countries have taken Washington's lead and moved toward banning Huawei products from being used in their own development of 5G tech — the next generation of ultra-high speed internet.
Sawiris warned that such concerns, although justified, may eventually lead to technological silos between countries.
"I don't know how we'll remedy that because that will apply then to everyone: If I'm Chinese, I might not any take equipment from Motorola, for example," Sawiris said.

Nation of thieves: Chinese contractor for Australia’s AMP pleads guilty to stealing data

• The Chinese man was arrested as he tried to board a flight to China
• Financial planning company had noticed suspicious activity on its network

Reuters

A Chinese contractor for Australian financial planner AMP has been charged with stealing the confidential data of 20 of its customers, police and the company said on Thursday.
The man, named by authorities as Yi Zheng, 28, pleaded guilty to the offence in a Sydney court on Thursday, the Australian Associated Press reported.
New South Wales state police said they began investigating the breach after AMP’s cybersecurity staff noticed suspicious activity on the company network in December.
The investigation led them to Yi, who had downloaded 23 identity-related documents belonging to 20 customers and sent them to his personal email account, police said.
Yi was arrested as he tried to board a flight to China on January 17, police said, adding that they seized mobile phones, SIM cards, a laptop and other electronic storage devices from his luggage.
He was charged “with possessing identity info to commit an indictable offence”, police said, without saying what the man planned to do with the customer information.
“Identity information is an extremely valuable commodity on the black market and dark web, and anyone – whether an individual or business – who stores this data needs to ensure it is protected,” New South Wales’ cybercrime unit commander, Detective Superintendent Matt Craft, said in a statement.
An AMP spokeswoman said the data breach involved a small amount of customer information and there was no evidence the data was further compromised.
The company had contacted all affected customers, put extra security controls in place for them and notified the relevant regulators.
Yi’s lawyer did not immediately respond to a request for comment.

China's global theft of commercial secrets

China hacked Norway's Visma to steal client secrets

By Jack Stubbs

LONDON -- Hackers working on behalf of Chinese intelligence breached the network of Norwegian software firm Visma to steal secrets from its clients, cybersecurity researchers said, in what a company executive described as a potentially catastrophic attack.
The attack was part of what Western countries said in December is a global hacking campaign by China's Ministry of State Security to steal intellectual property and corporate secrets, according to investigators at cybersecurity firm Recorded Future.
China's Ministry of State Security has no publicly available contacts. 

The foreign ministry did not respond to a request for comment.
Visma took the decision to talk publicly about the breach to raise industry awareness about the hacking campaign, which is known as Cloudhopper and targets technology service and software providers in order reach their clients.
Cybersecurity firms and Western governments have warned about Cloudhopper several times since 2017 but have not disclosed the identities of the companies affected.
Reuters reported in December that Hewlett Packard Enterprise Co and IBM were two of the campaign's victims, and Western officials caution in private that there are many more.
At the time IBM said it had no evidence sensitive corporate data had been compromised, and Hewlett Packard Enterprise said it could not comment on the Cloudhopper campaign.
Visma, which reported global revenues of $1.3 billion last year, provides business software products to more than 900,000 companies across Scandinavia and parts of Europe.
The company's operations and security manager, Espen Johansen, said the attack was detected shortly after the hackers accessed Visma's systems and he was confident no client networks were accessed.

"PARANOIA HAT"
"But if I put on my paranoia hat, this could have been catastrophic," he said. 

"If you are a big intelligence agency somewhere in the world and you want to harvest as much information as possible, you of course go for the convergence points, it's a given fact."
"I'm aware that we do have clients which are very interesting for nation states," he said, declining to name any specific customers.
Paul Chichester, director for operations at Britain's National Cyber Security Centre, said the Visma case highlighted the dangers organisations increasingly face from cyber attacks on their supply chains.
"Because organisations are focused on improving their own cyber security, we are seeing an increase in activity targeting supply chains as actors try to find other ways in," he said.
In a report https://www.recordedfuture.com/apt10-cyberespionage-campaign with investigators at cybersecurity firm Rapid7, Recorded Future said the attackers first accessed Visma's network by using a stolen set of login credentials and were operating as part of a hacking group known as APT 10, which Western officials say is behind the Cloudhopper campaign.
The U.S. Department of Justice in December charged two members of APT 10 with hacking U.S. government agencies and dozens of businesses around the world on behalf of China's Ministry of State Security.
Priscilla Moriuchi, director of strategic threat development at Recorded Future and a former intelligence officer at the U.S. National Security Agency, said the hackers' activity inside Visma's network suggested they intended to infiltrate client systems in search of commercially-sensitive information.
"We believe that APT 10 in this case exploited Visma networks to enable secondary operations against Visma's customers, not necessarily to steal Visma's own intellectual property," she said. "Because they caught it so early they were able to discourage and prevent those secondary attacks."