U.S.'s 5,025,817 Chinese Spies

FBI points to China as biggest U.S. law-enforcement threat

Top U.S. officials to spotlight Chinese spy operations, pursuit of American secrets

By Mark Hosenball

U.S. Attorney General William Barr arrives for U.S. President Donald Trump's State of the Union address to a joint session of the U.S. Congress in the House Chamber of the U.S. Capitol in Washington, U.S. February 4, 2020. 

WASHINGTON -- An aggressive campaign by American authorities to root out Chinese espionage operations in the United States has snared a growing group of Chinese government officials, business people, and academics pursuing American secrets.
In 2019 alone, public records show U.S. authorities arrested and expelled two Chinese diplomats who drove onto a military base in Virginia. 

They also caught and jailed former CIA and Defense Intelligence Agency officials on espionage charges linked to China.
On Thursday, U.S. Attorney General William Barr, FBI director Christopher Wray and U.S. counterintelligence chief William Evanina will address a Washington conference on U.S. efforts to counter Chinese economic malfeasance involving espionage and the theft of U.S. technological and scientific secrets.
China’s efforts to steal unclassified American technology, ranging from military secrets to medical research, have long been extensive and aggressive, but U.S. officials only launched a broad effort to stop Chinese espionage in the United States in 2018.
“The theft of American trade secrets by China costs our nation anywhere from $300 to $600 billion in a year,” Evanina, director of the National Counterintelligence and Security Center, said in advance of Thursday’s conference.

Of 137 publicly reported instances of Chinese-linked espionage against the United States since 2000, 73% took place in the last decade, according to the Washington-based Center for Strategic and International Studies (CSIS).
The think-tank’s data, which excludes cases of intellectual property litigation and attempts to smuggle munitions or controlled technologies, shows that military and commercial technologies are the most common targets for theft.
In the area of medical research, of 180 investigations into misuse of National Institutes of Health funds, diversion of research intellectual property and inappropriate sharing of confidential information, more than 90% of the cases have links to China, according to an NIH spokeswoman.
One main reason Chinese espionage, including extensive hacking in cyberspace, has expanded is that “China depends on Western technology and as licit avenues are closed, they turn to espionage to get access,” said James Lewis, a CSIS expert.

The Harvard Connection
In late January alone, federal prosecutors in Boston announced three new criminal cases involving industrial spying or stealing, including charges against a Harvard professor.
Prosecutors said Harvard’s Charles Lieber lied to the Pentagon and NIH about his involvement in the Thousand Talents Plan -- a Chinese government scheme that offers mainly Chinese scientists working overseas lavish financial incentives to bring their expertise and knowledge back to China. 

Lieber also lied about his affiliation with China’s Wuhan University of Technology.
During at least part of the time he was signed up with the Chinese university, Lieber was also a “principal investigator” working on at least six research projects funded by U.S. Defense Department agencies, court documents show.
A lawyer for Lieber did not respond to a request for comment.

Nation of Thieves

The Huawei indictment tells a story of deceit and corporate espionage
The Washington Post

Huawei chief financial officer Meng Wanzhou in Vancouver, British Columbia, on Dec. 12. 

HUAWEI, THE Chinese telecom giant, has insisted in recent years that it operates within the bounds of local and international laws and norms. 

When a former employee filed a legal claim alleging that he was directed by Huawei to steal rivals’ trade secrets, the firm declared, “Every employee is expected to adhere to applicable laws, regulations and business ethics in the countries where we operate.” 

But a new U.S. federal indictment issued this week alleges this was far from true.
Huawei, which makes smartphones as well as gear for connectivity, including the forthcoming super-fast 5G networks, has been largely barred from business in the United States for some time, partly over suspicions that it could build “back doors” into its equipment for spying or network mischief. Chinese companies are closely intertwined with, and required to be subservient to, the state. 

Concerns voiced in recent years about Huawei’s behavior now look prescient. 

Huawei’s approach resembles that of the Chinese state: It is unbound by a rules-based, law-governed international order, and it is determined to succeed by using theft and duplicity.
In one case described in the indictment unveiled Monday by the Justice Department, Huawei headquarters in China instructed its employees in the United States to steal the design of a mobile-phone-testing robot developed by T-Mobile. 

This was a valuable piece of intellectual property that Huawei wanted for its own robot. 

Huawei engineers were repeatedly encouraged to carry out theft, and on May 29, 2013, a Huawei engineer visiting T-Mobile slipped a robot arm into his bag and walked out of the laboratory. 

Overnight, he photographed the device and took critical measurements before returning it the next day, apologizing that it was taken by “mistake.” 

Later, Huawei responded to T-Mobile about the incident with gross deception, saying the thefts were “a moment of indiscretion” and did not reflect company policy when, in fact, the data had been sent to headquarters. 

Huawei even created a bonus program for workers who stole information from competitors.
This corporate deception is also behind the separate indictment of Huawei and its chief financial officer, Meng Wanzhou, the founder’s daughter, for bank and wire fraud. 

The indictment charges that Huawei misled the U.S. government and banks about business that violated Western sanctions against Iran. 

The legal proceedings against Meng, who is being held under house arrest in Canada pending an extradition request by the United States, should not be politicized in the current Sino-American trade dispute. 

It is clear Huawei intentionally snubbed its nose at international norms and laws, which in turn means it could pose a potentially large national security risk to the West.
Doubts about Huawei are now being heard elsewhere, including in Australia, Poland, Britain and Germany. 

The next generation of connectivity — 5G networks — is far too important to put in the hands of a company that may work by lies and coverups.

Criminal Company

US unveils criminal charges against Huawei and Meng Wanzhou 
By Kiran Stacey in Washington and Tom Mitchell in Beijing

Acting US Attorney General Matthew Whitaker reiterated the Justice Department’s desire to have Huawei CFO Meng Wanzhou extradited to the United States.

The US has accused China’s Huawei and its chief financial officer of stealing American technology and breaking US sanctions against Iran, in a criminal indictment that sharply escalates the two countries’ technological rivalry.
 The move will overshadow trade talks this week aimed at averting an all-out trade war between the world’s two largest economies.
 Matthew Whitaker, acting attorney-general, announced the action against the world’s biggest telecoms equipment maker on Monday as China’s trade negotiators, led by Vice-Premier Liu He, arrived in Washington for talks scheduled to open on Wednesday.
 Depending on the penalties sought by the justice department, the Trump administration’s salvo could disrupt the global operations of a Chinese corporate champion and land its chief financial officer, Meng Wanzhou, in prison.
 Meng is the daughter of Huawei’s founder, Ren Zhengfei, and is currently in Vancouver as she fights a US extradition request in Canadian courts.
Canada’s justice department late Monday said it had received a formal extradition request from the US, the Canadian Broadcasting Corporation reported.
 Mr Whitaker told a press conference: “These are very serious actions by a company that appears to be using corporate espionage and sanctions violations not only to enhance their bottom line, but also to compete in the world economy. This is something the United States will not stand for.”
 He added: “This goes back 10 years and goes all the way to the top of the company.” 
 Huawei said it was “disappointed to learn of the charges brought against the company today”, adding that it had sought discussions with the US justice department after Meng’s arrest but “the request was rejected”.
 US officials said the investigations into Huawei had been going on for years.
But they began to come to a head in December, when Canadian officials arrested Meng in Vancouver on US charges, a move that triggered protests from China, which has since detained at least two Canadian citizens.
 Mr Whitaker said the US would formally lodge an extradition request with Canada in the coming days. 
 Meng’s arrest is a particularly sensitive political issue given Huawei’s status as a Chinese national champion.
 Eswar Prasad, a professor of trade policy at Cornell University, predicted the charges would make an eventual trade deal less likely.
 It is also likely to give the US further leverage when urging allies to do more to shut the Chinese company out of their markets. 
 Mark Warner, the Democratic vice-chairman of the Senate intelligence committee, said: “This is a reminder that we need to take seriously the risks of doing business with companies like Huawei and allowing them access to our markets. I will continue to strongly urge our ally Canada to reconsider Huawei’s inclusion in any aspect of its 5G infrastructure.” 
 US officials including Wilbur Ross, the commerce secretary, outlined on Monday the charges being brought against both Meng and the company.
 The charges of corporate espionage, they said, related to Huawei’s attempts to steal the technology used by T-Mobile, one of its US business partners, in a robot called Tappy, which was used to test mobile telephones.
 Annette Hayes, first assistant US attorney for the western district of Washington state, said US officials had internal emails from Huawei showing this was a “determined and unrelenting effort”, and not a rogue operation by some within the company.
“This was Huawei’s modus operandi,” she said.
 T-Mobile declined to comment.
The sanctions-busting charges relate to Huawei’s ownership of a company called Skycom, which was reported to have offered to sell embargoed Hewlett-Packard equipment to Iran’s Mobile Telecommunication Co in 2013.
The indictment filed in the eastern district of New York alleges that Skycom illegally employed a US citizen in Iran, and that Huawei lied to US banks about its financial interest in Skycom.
As a result, the indictment says, US funds were illegally funnelled to Iran. 
 US officials said they had evidence that Meng was personally involved in these criminal actions. 
 The legal action might have additional consequences for the company as a whole.
 One lawyer involved in action against Huawei in the US said: “The fact that Wilbur Ross was at the press conference indicates the US might end up putting Huawei on the export control list.”
 Banning US companies from exporting to Huawei is seen in Washington as the “nuclear option” against the Chinese company, given its reliance on US software and microchips.
 Stocks in China turned sharply lower following the filing of the charges and declines on Wall Street on Monday.
The Shenzhen Composite fell as much as 2.6 per cent by mid-morning, but later erased some of that decline to trade down 1 per cent in the late afternoon.

Senate Bill Targets Chinese Economic Espionage

New measure would give U.S. prosecutors power to indict hackers working abroad.
BY ELIAS GROLL

Sen. Dianne Feinstein (D-Calif.) walks with Sens. Kamala Harris (D-Calif.) and Mark Warner (D-Va.) to a Senate Select Committee on Intelligence closed-door meeting at the U.S. Capitol in Washington on April 27, 2017. 

A new Senate bill would expand the ability of American prosecutors to go after hackers abroad who attempt to steal trade secrets from U.S. firms, in the latest effort in Washington to crack down on Chinese economic espionage.
Under current law, the U.S. Justice Department is limited in its ability to bring charges of economic espionage against offenders abroad, and may only do so if the suspects are American citizens or permanent residents—or if an act to further the theft was committed in the United States.
A bill authored by Sen. Kamala Harris, a California Democrat, and set to be introduced Wednesday would loosen those requirements by amending the Economic Espionage Act. 

Harris’s bill would allow American prosecutors to bring charges of economic espionage against individuals operating abroad if the act of theft has a “substantial economic effect” in the United States.
That reform would expand the jurisdiction of American prosecutors to bring economic espionage charges against hackers and operatives who operate with scant respect for national borders.
“It is absolutely vital that our approach to combating economic espionage is grounded in a modern-day understanding of the tactics employed by foreign actors and that our laws provide a strong deterrent to committing these acts in the first place,” Harris said in a statement to Foreign Policy.
The bill would also increase the damages companies are able to seek from individuals or groups that break into their computer systems to carry out economic espionage. 

And it would extend the statute of limitations for such crimes and allow victims to bring civil suit against operatives working abroad.
Peter Harrell, a former State Department official and a fellow at the Center for a New American Security think tank, described the measure as a “useful step” in responding to Chinese economic espionage against the United States.
Deterring such espionage usually falls to the government, “but the U.S. also needs to make it easier for individual American companies that are victims of Chinese economic espionage to fight back,” Harrell said. 

“The threat of expanded damages could make the act more of a deterrent to Chinese hacking.”
American prosecutors have brought a series of indictments in recent months against Chinese operatives and intelligence officials alleged to have stolen U.S. intellectual property. 

But in those cases, authorities have typically relied on anti-hacking laws—as opposed to economic espionage statutes—to bring charges.
The bill comes amid escalating tensions between the United States and China over a wide-ranging campaign by Beijing’s operatives to steal U.S. trade secrets.
Speaking at an event in New York on Tuesday, Rob Joyce, a senior National Security Agency official, said Chinese hacking operations have grown more audacious in recent years. 

Xi Jinping's empty promises

In 2015, Barack Obama and Chinese dictator Xi Jinping pledged to halt hacking operations in support of economic espionage, but Beijing reneged on that agreement during the first two years of Donald Trump’s presidency.

U.S. prosecutors are expected to unveil a wide-ranging indictment this week targeting a well-known Chinese hacking group said to have targeted U.S. firms. 

American officials are also expected to levy sanctions against Chinese operatives involved in the scheme.
Multiple media outlets reported this week that Chinese intelligence was responsible for a breach of hotel giant Marriott International that affected some 500 million guests.
While American officials describe China as the most prolific user of economic espionage, other U.S. adversaries, including Russia and Iran, are thought to employ the tactic as well. 

“China is a player, but it’s not the only player in the game,” said a Senate aide familiar with the matter.
The bill could also have political benefits for Harris as Democratic politicians begin to position themselves for the 2020 presidential election. 

A former California attorney general, Harris is likely to seek her party’s nomination but would enter the race with relatively little foreign-policy experience.
By positioning herself as a champion of U.S. companies contending with Chinese economic espionage, Harris joins Sen. Elizabeth Warren, a Massachusetts Democrat, in signaling a hawkish approach toward Beijing. 

Warren, in a speech last month, argued that China is “using its economic might to bludgeon its way onto the world stage and offering a model in which economic gains legitimize oppression.”

China's theft of US intellectual property

Beyond Huawei, Venture Capitalist's Death Hurts China's Technology Quest

The loss of Zhang Shoucheng highlights tensions over Chinese venture capital investments in U.S. technology startups.

By Shuli Ren

China has a wall of venture capital money, including from chipmaker Semiconductor Manufacturing International Corp.

The death of a Chinese scientist in the U.S. has passed unnoticed beside the blizzard of global headlines devoted to the Huawei arrest, yet the tragedy bears upon another important aspect of Beijing's quest for technological leadership.
Zhang Shoucheng, a Chinese venture capitalist, died on Dec. 1, the same day that Meng Wanzhou, the chief financial officer of Huawei Technologies Co., was arrested in Vancouver. 

There was speculation on Chinese social media that Zhang’s death was connected to an U.S. government investigation into his venture capital fund.

Zhang Shoucheng founded a $400 million fund that invests in Silicon Valley startups and was active in "helping" U.S.-trained Chinese researchers to return home.
His death highlights a deep pool of Beijing-backed money that has been passing under the public radar.
Consider the fund Zhang founded. 

Danhua Capital was cited in a report last month by the Office of the United States Trade Representative after an investigation into China’s technology policies and practices.
Through Zhang's Danhua Capital, China is infiltrating Silicon Valley. 

Between 2015 and 2017, 10 percent to 16 percent of venture capital deals counted Chinese as participants.

Infiltrators
The report singled out Zhang’s firm as an example of the new tactics China is using to steal U.S. technology. 

The fund lists 113 U.S. companies in its portfolio, most falling within emerging sectors that the Chinese government has identified as strategic priorities.

At least one has decided to reduce operations in Silicon Valley and open operations in China.
For years, China relied on government subsidies to encourage development of key industries. 

But starting in 2014, subsidies gave way to so-called “guidance funds”, or state-backed funds of funds that act like venture capital and private equity firms. 

As of the first half, various levels of the government had established 1,171 guidance funds, aiming to raise and deploy a staggering 5.9 trillion yuan ($858 billion).
Danhua Capital, also known as Digital Horizon Capital, is a major beneficiary of China’s shift into guidance funds. 

It counts Zhongguancun Development Group, a state-backed investment fund with more than 10 billion yuan in assets, as a major investor. 

The firm invests in artificial intelligence, big data, blockchain and other disruptive technology sectors.

One can see why these Chinese state-backed funds make the U.S. government nervous.
The scale is unprecedented. 

For instance, the $21 billion China Integrated Circuit Industry Investment Fund, established in September 2014 and nicknamed the “Big Fund,” is raising another $47 billion this year. 

In addition, there’s already evidence that shows China is abandoning fund-of-funds best practices.
In a 2014 interview, Zhongguancun, set up in the early 2000s long before the recent explosion of guidance funds, said that it would contribute to no more than 30 percent of the total capital of venture capital funds in which it invested, and that it would not interfere with fund managers' decisions. 

In other words, it would act only as a passive investor.
But the new kids on the block aren’t abiding by the old rules. 

For instance, this May, China's largest chip foundry company, Semiconductor Manufacturing International Corp., partnered with the Big Fund to establish a new 1.8 billion yuan venture capital vehicle. 

The fund is clearly in the driver’s seat: It contributed 49.5 percent of the capital and owns 15 percent of SMIC.
In August, the U.S. government signed an update to legislation for the Committee on Foreign Investment in the U.S., broadening governmental scrutiny to vetting VC-backed, and especially Chinese state-funded, investments in U.S. tech startups.
With Zhang's death, China has lost a valuable connection to the newest technology in Silicon Valley. But my bet is that Beijing won’t ease back on its aggressive theft tactics. 

The wall of money is too big and the strategic imperative to upgrade China's technology is too great.

National Security Threat

Huawei exec's arrest opens a new front in the US-China trade war

By Jethro Mullen

Hong Kong -- The conflict between the United States and China over trade and technology is expanding.
The arrest of a top executive at Chinese tech giant Huawei at the request of the US government has raised new doubts about the fragile truce that the leaders of the world's top two economies reached just days ago.
"You have to see this as a significant escalation in the trade war," said Christopher Balding, a China expert at the Fulbright University Vietnam in Saigon.
Viewed by the US as a national security threat, Huawei sells more smartphones than Apple and builds telecommunications networks in countries around the world.
Huawei CFO Meng Wanzhou arrested in Canada, faces extradition to United States

Canadian authorities said late Wednesday that Huawei's chief financial officer, Meng Wanzhou, had been arrested in Vancouver and that the United States is seeking her extradition.
The US and Canadian governments haven't specified what charges Meng faces, but her arrest follows reports this year that the US Justice Department was investigating whether Huawei violated American sanctions on Iran.
"Under the Obama administration, the US indicted Chinese personnel on similar charges, but was reluctant to take more drastic action such as arresting the individuals in third countries, over fear that Beijing would retaliate against US interests in China or in other countries," Eurasia Group political risk analysts wrote in a note.
Meng's arrest "suggests that the gloves are now fully off in this arena," the analysts said.
What happens next to Meng, the daughter of Huawei's reclusive founder, could have huge repercussions for Huawei's business.

What does it mean for the trade war?
The arrest comes as the US and Chinese governments are discussing ways to tackle problems that led to their trade conflict, which has resulted in new tariffs on hundreds of billions of dollars of goods.
"This type of action will affect the atmosphere around the negotiations," the Eurasia Group analysts said.

China's Commerce Ministry said Thursday it was confident a trade agreement with the United States could still be reached in time to hit a 90-day deadline set by President Donald Trump.
But the Chinese government is clearly angry about Meng's arrest. 

The big question is what Beijing and Washington do now. 

Analysts suggest China could retaliate, and the Trump administration may be preparing other moves against Chinese interests.
The stakes are extremely high.
"This case is like a sharp tug on a loose thread that could be part of an unraveling of the relationship," said Scott Kennedy, an expert on the Chinese economy at the Center for Strategic & International Studies in Washington. 

Technology is at the heart of the trade war. 

The Trump administration says the huge waves of tariffs it has slapped on Chinese goods are part of an effort to stop China from getting its hands on American technology unfairly through practices like cybertheft and forcing companies to hand over trade secrets.
The return to the negotiating table follows a ceasefire reached at a dinner between President Trump and Xi Jinping on Saturday.
Balding pointed out that the deal was reached the same day that Meng was arrested in Canada.
"That is very politically embarrassing to Xi," he said. 

"It has to be considered an escalation."

What does it mean for Huawei?
The arrest is one of the strongest moves yet against Huawei by US authorities.
The company is largely shut out of supplying telecommunications equipment to US carriers. American officials have repeatedly said that the Chinese government uses Huawei products for espionage.
Huawei's no good, very bad year just got even worse

Meng's case "could be a prelude to further action against the firm and its senior officials," Eurasia Group analysts said.
Huawei's smaller rival, ZTE, provides an example of how the US government could go further. 

The Chinese company was crippled for months after the US Commerce Department blocked it from buying vital parts from American companies.
The ban threatened to put ZTE out of business and highlighted China's continued reliance on American technology, a vulnerability Beijing is eager to reduce. 

ZTE eventually got a reprieve after Xi personally asked Trump for help. 

But the crisis caused disruption for telecommunications carriers ZTE supplies around the world.
A similar ban on Huawei would have a bigger impact because its equipment is more widely used.

A Huawei stand at an artificial intelligence conference in Shanghai.

The next moves in Meng's case are key.
"There is a lot of legal and diplomatic wrangling ahead," Balding said. 

"The US and Canada would not have taken this move lightly and it puts everything in a brand new light."

Xi Jinping's Empty Promises

China always promises to stop cheating on trade, but never does
President Trump’s tariffs are beginning to make Beijing uneasy
By DAN DIMICCO

President Donald Trump announces tariffs on steel and aluminum imports during a meeting with leaders of the steel industry at the White House in March 2018.

China’s Vice President Wang Qishan recently announced that Beijing is ready to have discussions with the United States and “work for a solution” on trade challenges. 

It sounds impressive, especially since Xi Jinping just made a similar pledge that China is ready to “advance an open world economy.”
Unfortunately, we’ve heard this from Beijing literally hundreds of times before. 

And nothing ever changes.
Here’s the bottom line: China remains the most protectionist nation on earth. 

For years, Beijing has undervalued its currency, the yuan, to lower the price of its exports. 

It dumps steel and other goods on the world market at below the cost of production in order to put U.S. manufacturers out of business. 

It funnels billions and billions of dollars in shadowy subsidies and “loans” to its many state-owned enterprises. 

And, it repeatedly hacks U.S. companies to steal their intellectual property.
China has benefited beyond its wildest dreams from the world’s openness. 

And it has grotesquely abused the privileges that come with membership in the World Trade Organization (WTO).
Of course, Xi and Wang are now making encouraging statements about open markets and global trade. 

They want us to believe that things are going to be “different” this time. 

Finally, their authoritarian regime wants to dedicate itself to “supporting the multilateral trading system and promoting free trade.”
But we’ve been down this road many times before, and Beijing has never actually changed course.
In 2005, when the U.S. Senate moved forward on a bill targeting currency manipulation, Beijing suddenly “untethered” the yuan from its longstanding dollar peg. 

Ahead of a contentious G20 summit in 2010, Beijing quickly adjusted the yuan’s exchange rate. 

And shortly before Vice President Joe Biden’s visit to Beijing in 2011, China suddenly tweaked the value of the yuan.
History repeats itself again.
Undoubtedly, President Donald Trump has brought a newfound vigilance and assertiveness regarding China. 

And his steady stream of tariff actions has finally caught Beijing’s attention. 

But the U.S. is still a long way from coercing Beijing to stop its endless cheating and conniving.
What would the U.S. need to see, if China were to honestly and finally change course? 

Beijing would need to fundamentally alter its approach on trade: Immediately fulfill its WTO commitments — particularly on currency, dumping, and subsidies; stop it’s state-owned economic, cyber, and military aggression; and halt all of its intellectual-property theft and forced technology transfer.
In short, Beijing needs to dismantle its entire “China 2025” focus on predatory trade and global dominance, particularly in the world’s high-tech sectors.
The good news is that President Trump’s tariffs are starting to take a bite out of China’s economy. 

A key manufacturing indicator for China, the country’s purchasing managers’ index, reported slower manufacturing growth in October for the second straight month. 

In fact, the October level was the lowest for China since July 2016, and new export orders contracted for the fifth straight month.
This kind of sustained economic pressure can give the U.S. important leverage.
Ronald Reagan famously said, “Trust, but verify.” 

If China really wants to prove that it can be an open, reliable partner, it’s time for Beijing to make a major shift. 

But President Trump should keep the pressure on — for many years, if need be — to make sure that America doesn’t get conned again. 

There’s simply no excuse to give Beijing room to keep taking advantage of the United States and other countries that maintain free and open markets.

Taiwan's Double Loyalty

Theft of Micron Chip Secrets Is an Embarrassment for Taiwan
A loss of trust in the technology hub’s ability to protect intellectual property could threaten its economic survival.

By Tim Culpan
An article of faith. 

A U.S. indictment of United Microelectronics Corp. and three executives is a slap in the face for Taiwan.
As a critical partner in the nexus between U.S. clients and the Chinese supply chain, the last thing Taiwan needs right now is to become known as a place that can’t be trusted.
This isn’t the first time its credibility has come into focus.
Weak enforcement is endemic in Taiwan, from insider trading rules to know-your-customer requirements, and that includes many more cases of intellectual property theft.
According to the U.S. Justice Department, UMC executives were the front for a Chinese plan to steal semiconductor secrets from Boise, Idaho-based Micron Technology Inc. 

Even before jumping into bed with state-owned Fujian Jinhua Integrated Circuit Co., UMC had a history of questionable deals in China.
More than a decade ago, the Hsinchu-based company was charged with illegally investing in He Jian Technology (Suzhou) Co. and handed a paltry $150,000 fine. 

Years later, a court overturned an initial guilty verdict. 

That this case even dragged through the courts is a reflection of Taiwan’s weak legal structure and poorly worded regulations. 

In 2009, UMC publicly bought a stake in He Jian in the ultimate show of disdain for Taiwan’s attempts to hold onto locally developed technology.
There’s every indication that UMC takes the Jinhua case just as seriously as it did He Jian (i.e., not very). 

The company said it would halt R&D work for the Chinese client only this week, despite knowing of the case for over a year.
IP isn’t the only area of regulatory weakness. 

Mega Financial Holding Co. was handed a $180 million fine by New York State’s department of financial services in 2016 for money laundering after the regulator found that the bank's compliance program was a “hollow shell.” 

At least six current and former Taiwanese cabinet members were subsequently investigated locally for their lax supervision of Taipei-based Mega.
Cybersecurity is another area of concern, one with global implications. 

The problem was highlighted when an old piece of malware caught out Taiwan Semiconductor Manufacturing Co., UMC’s bigger rival. 

Ongoing attacks by China on local companies show there’s no room for complacency. 

For years, Taiwanese authorities were ill-equipped and largely uninterested in combating the threat, with interference ahead of local elections finally giving the issue some overdue attention.
And let’s not forget insider trading. 

Taiwan is a known hub of industry gossip, tips and non-compliance. 

Eight years ago, I spent months digging up details of its inside information ecosystem, with sources boasting to me about how much they knew and how easy it was to get away with trafficking in company secrets. 

To the best of my knowledge, none of those people have been investigated by Taiwanese regulators.
So when a Taiwanese company gets charged with leaking U.S. secrets to a Chinese government-backed entity, the sad truth is that we’re not surprised – even though we should be.
Taiwan, and its government, has spent four decades and billions of dollars building its technological know-how. 

That’s translated into trust on the part of Western companies that Taiwanese partners will keep their secrets.
With intellectual property at the heart of President Donald Trump’s trade war with China, Taiwan needs to show this hard-earned faith is still warranted. 

In the past few months, numerous companies have indicated a willingness to move production out of China – and in some cases back to Taiwan – in response not only to U.S. security concerns, but also to rising costs and new tariffs.
If Taiwan, and its companies, can’t be trusted to safeguard confidential information then there’s little reason for global clients to keep giving them orders. 

Chinese companies are eager to take over, and its government is ready and willing to spend money to make that happen.
That makes Taiwan’s protection of intellectual property not just a political and security issue, but one of economic survival.

US won't talk to China on trade until it gets specific plan to halt tech theft

• The U.S. demands a specific plan from China to halt technology theft.
• The impasse threatens a meeting in late-November between President Donald Trump and China's Xi Jinping

By Jeff Cox 

Trade tensions between have taken another negative turn, with the U.S. demanding that China come up with a specific plan to stop stealing technology.
Until Beijing does so, the U.S. will not resume trade negotiations, according to a report Thursday in the Wall Street Journal.
The latest impasse jeopardizes a meeting between President Donald Trump and China's Xi Jinping scheduled for the end of November at the G20 meeting.
There had been some hope that Trump and the Chinese president could make progress on the myriad trade issues between the two sides, a major focus being forced technology transfers.
China has sought to resume talks but the U.S. has refused until Beijing addresses the tech issue.
"If China wants [the G-20 session] to be a meaningful meeting, we need to do the groundwork," a senior White House official told the Journal.
"And if they don't give us any information, it's just hard to see how that becomes fruitful."
The U.S. has slapped tariffs on $200 billion worth of Chinese goods, charging the country with unfair trade practices that have ballooned the deficit between the two.
President Trump has threatened to put duties on all imported goods from China.
A week ago, Larry Kudlow, the National Economic Council director, said the U.S. has let its demands be known but has not seen a satisfactory response.
"They are unfair traders. They are illegal traders. They have stolen our intellectual property," Kudlow said in Detroit.
"China has not responded positively to any of our asks."
The Journal reports that there are risks for China to tip its hand on its negotiation strategy.
In 1999, the Clinton administration made public an offer from China when it entered the World Trade Organization, sparking a crisis at home that nearly killed China's entrance into the group.

China's theft of US intellectual property

Lawmakers press for answers about China's supply chain hack
By Derek Hawkins

Sen. Marco Rubio (R-Fla.) on Capitol Hill in Washington on Aug. 2. 

Lawmakers are prying into a controversial report that Chinese spies installed surveillance microchips in servers used by Apple, Amazon and other American companies.
On Wednesday, Sens. Marco Rubio (R-Fla.) and Richard Blumenthal (D-Conn.) wrote to Supermicro, the firm that manufactured the compromised hardware, asking whether it had detected any such tampering in its products. 

The senators said “the nature of the claims raised alarms that must be comprehensively addressed.”
“We are alarmed by the dangers posed by back doors, and take any claimed threat to the nation’s networks and supply chain seriously,” they said. 

“These new allegations require thorough and urgent investigation for customers, law enforcement and Congress.”
Other lawmakers on the Hill have fired off similar missives. 

Sen. John Thune (R-S.D.) wrote to Apple, Amazon and Supermicro requesting staff briefings about the Bloomberg article by Friday. 

And House Oversight Committee Chairman Trey Gowdy (R-S.C.) and Intelligence Committee Chairman Devin Nunes (R-Calif.) called on the heads of the FBI, Department of Homeland Security and the Office of the Director of National Intelligence to provide a classified briefing on the matter by Oct. 22. (Amazon.com founder and chief executive Jeffrey P. Bezos owns The Washington Post.)
The flurry of requests underscores long-standing concerns in Congress about the potential for China to conduct cyber espionage by infiltrating the supply chain. 

So lawmakers aren’t taking any chances with the allegations raised in it.
“If this news report is accurate, the potential infiltration of Chinese back doors could provide a foothold for adversaries and competitors to engage in commercial espionage and launch destructive cyber attacks,” Rubio and Blumenthal wrote.

The explosive Bloomberg report said that operatives from a unit of the People’s Liberation Army secretly installed the surveillance chips in Supermicro motherboards during the assembly process in China, creating a “stealth doorway” into networks that used the machines. 

Citing unnamed government and corporate officials, the report described it as the “most significant supply chain attack known to have been carried out against American companies.”

Sen. Ron Johnson (R-Wis.), chairman of the Homeland Security Committee, said in a hearing Wednesday morning that he found the story credible. 

He asked FBI Director Christopher A. Wray and Homeland Security Secretary Kirstjen Nielsen, who testified in the hearing, whether they were aware of “implantation of chips in the supply chain.”
Wray deflected. 

“Be careful what you read in this context,” he said, adding that he was barred from commenting on whether the FBI was investigating the matter. 

Nielsen said that supply chain hacks are "a very real and emerging threat that we are very concerned about." 

Indeed, the article seemed to channel some of Washington’s worst anxieties about supply chain security.
Lawmakers and federal officials have long fretted over whether a foreign adversary could carry out such an infiltration, and over the past year they’ve taken steps to try to prevent it. 

Last fall, DHS directed federal agencies to stop using software made by the Russian cybersecurity contractor Kaspersky over concerns that Moscow’s intelligence services could use the company to conduct cyber espionage. 

Shortly after, Congress banned federal agencies from using Kaspersky’s products as part of the defense spending bill. 

Lawmakers and military officials have raised similar fears that Chinese telecom giants ZTE and Huawei could be used as conduits for Beijing to spy on U.S. citizens, companies and government offices. 

This year, lawmakers abandoned an effort to prohibit federal agencies and contractors from doing business with ZTE at the request of the White House.

China a bigger security threat than Russia, says FBI Director Wray

Nielsen also warned senators that China “absolutely” is “exerting unprecedented effort to influence American opinion" in her appearance before the Senate Homeland Security and Governmental Affairs Committee on Wednesday. 

Nielsen testified alongside Wray and Russell Travers, the acting director of the National Counterterrorism Center at the Office of the Director of National Intelligence.
Asked by Sen. Jon Kyl (R-Ariz.) to assess the risk that Beijing's cyber activities and disinformation efforts represent in comparison to Russia, Wray replied that he was “reluctant to try to rank threats” but added that “China in many ways represents the broadest, most complicated, most long-term counterintelligence threat we face.” 

Wray told Kyl that China will remain a threat to the United States in the long run. 

“Russia is in many ways fighting to stay relevant after the fall of the Soviet Union. They're fighting today's fight,” Wray said. 

“China is fighting tomorrow's fight, and the day after tomorrow, and the day after that. And it affects every sector of our economy, every state in the country and just about every aspect of what we hold dear.”

How China Systematically Pries Technology From U.S. Companies

Beijing leans on an array of levers to extract intellectual property coercively

By Lingling Wei in Beijing and Bob Davis in Washington

When China set out to build the C919 jet, it made clear it would buy components only from joint ventures whose foreign partners would share technology. 

DuPont Co. suspected its onetime partner in China was getting hold of its prized chemical technology, and spent more than a year fighting in arbitration trying to make it stop.
Then, 20 investigators from China’s antitrust authority showed up.
For four days this past December, they fanned out through DuPont’s Shanghai offices, demanding passwords to the company’s world-wide research network, say people briefed on the raid. Investigators printed documents, seized computers and intimidated employees, accompanying some to the bathroom.
Beijing leans on an array of levers to pry technology from American companies—sometimes coercively so, say businesses and the U.S. government.
Interviews with dozens of corporate and government officials on both sides of the Pacific, and a review of regulatory and other documents, reveal how systemic and methodical Beijing’s extraction of technology has become—and how unfair Chinese officials consider the complaints.
China’s tactics, these interviews and documents show, include pressuring U.S. partners in joint ventures to relinquish technology, using local courts to invalidate American firms’ patents and licensing arrangements, dispatching antitrust and other investigators, and filling regulatory panels with experts who may pass trade secrets to Chinese competitors.
In DuPont’s case, the dispute concerned a process to produce supple textile fibers from corn, a $400 million business for the company in 2017. 

The antitrust investigators, say the people briefed on the raid, told DuPont to drop the case against its former Chinese partner.
U.S. companies have long complained that Beijing pressures them to hand over intellectual property. More recently, their concerns have escalated as China turns into an advanced rival in industries ranging from chemicals to computer chips to electric vehicles.
Coerced technology transfer is now a central part of the spiraling U.S.-China trade fight, a standoff that appears to be only more entrenched. 

The White House estimates China inflicts $50 billion yearly in damages on U.S. companies. 

That transfer weakens American businesses’ competitiveness and undermines the incentive to innovate.

Coerced technology transfer is part of the spiraling U.S.-China trade war.

Chinese authorities referred questions to a paper issued on Monday by the State Council, China’s cabinet, that says: “Foreign companies are allowed to access China’s markets but they would need to contribute something in return: their technology.”

U.S. companies have gone into China with eyes wide open, for the most part, and many are wary of going public with complaints. 

American companies initially brought the idea of joint ventures to China as a way to get access to a market of 1.4 billion people and tap a low-cost workforce. 

The bargain included helping Chinese firms become more technologically advanced.
At a January U.S. Chamber of Commerce dinner in Washington, executives pressed U.S. Ambassador to China Terry Branstad not to hit Beijing too hard on technology issues, according to dinner attendees. 

China has many ways to get even, warned Christopher Padilla, a vice president of International Business Machines Corp., which licenses technology to Chinese firms.
“If someone gets knifed in a dark alley, you don’t know who did it until the next morning,” Mr. Padilla said at the dinner. 

“But there has been a murder.”
DuPont briefed U.S. officials on its problems but didn’t want its case raised in trade talks, say some of the people familiar with the case. 

Its former Chinese partner, Zhangjiagang Glory Chemical Industry Co., continues to sell chemicals used to make fibers that DuPont believes are knockoffs of its technology. 

DuPont and Glory declined to make executives available for comment.
China’s antitrust regulator said “the investigation is still ongoing,” declining to elaborate.

‘Notable pressure’
About one in five members of the American Chamber of Commerce in Shanghai say they have been pressured to transfer technology, according to a survey conducted in the spring. 

Of those companies, 44% in aerospace and 41% in chemicals report “notable pressure.” 

China considers both industries strategically important.
Trading market access for technology dates to Chinese leader Deng Xiaoping’s effort to launch the pro-market policies that propelled China’s rise. 

General Motors Co. executives on an exploratory 1978 visit proposed a joint venture with a local company to boost a then-antiquated Chinese industry, say Chinese government advisers, historians and auto-industry executives.
The idea fit with Deng’s desire to obtain Western technology but limit Western influence. 

China “needs to give up portions of the domestic market in exchange for advanced technologies we need,” he pronounced in 1984. 

The policy was a success, according to a March 2018 paper by economists at the universities of Colorado, Hong Kong and Nottingham, who found that foreign technology “diffuses beyond the confines of the joint venture” and boosts competitors’ technology.
Foreigners bring cash, technology, management know-how and other intellectual property while the Chinese partner usually contributes some land-use rights, financing, political connections and market know-how. 

As the practice increased, one U.S. administration after another, with only modest success, pressed Beijing to ease requirements that U.S. companies fork over technology. 

The Trump administration says it wants to “change the paradigm” by hitting Beijing with tariffs.
China mandates that foreign companies wanting to open or expand in 35 sectors do it through joint ventures, though it announced a plan in April to phase out rules requiring foreign auto makers to share factory ownership and profits with Chinese companies by 2022.
The arrangement has worked for some. 

When China set out to build its first large commercial passenger jet in 2008, state-owned Commercial Aircraft Corp. of China made clear it would buy components only from joint ventures whose foreign partners would share technology. 

General Electric Co. agreed.
GE’s venture with state-owned Aviation Industry Corp. of China now is a main supplier of avionics for the domestic C919 aircraft. 

The joint venture helped GE avoid writing down a struggling avionics unit, according to former and current GE employees.
GE says “there was never a write down at our avionics business, nor was there risk of one.” 

It says, referring to intellectual property, that GE is “highly sensitive to the protection of our IP whether in our wholly-owned operations or in our” joint ventures.
Advanced Micro Devices Inc., a Silicon Valley chip company, entered a joint venture in 2016 with Chinese private and state-owned entities, including the government’s Chinese Academy of Sciences. AMD licenses microprocessor technology to the venture and is developing new computer chips with it.
AMD has received about $140 million in licensing through 2017, enough to help boost it into the black last year for the first time since 2011. 

“We created a joint venture that was very much a win-win,” AMD Chief Executive Lisa Su said at a 2016 conference. 

An AMD spokesman says the joint venture is “part of our strategy to create a complementary product offering.”
Chinese leaders see innovative technologies as forces to propel its industries up the value chain into more sophisticated sectors and the country into rich-nation ranks. 

To ensure foreigners bring their best, phalanxes of regulatory panels scrutinize foreign investments to make sure they meet government goals.
Huntsman Corp. has singled out these review panels as a conduit for siphoning trade secrets. 

The Woodlands, Texas, chemicals maker is thriving in China, which accounted for about 14% of its 2017 revenues.
Still, “our competition isn’t going to be standing on the sidelines cheering a song,” CEO Peter Huntsman told analysts in June. 

They could be “trying to either steal the technology or develop the technology themselves.” 

Mr. Huntsman declined to be interviewed.
Regulatory panels, packed with industry experts, must approve many chemicals before they can be produced in China and require detailed information on formulas and production processes, say U.S. trade groups and chemical firms. 

“Enough information to duplicate the product,” is how the American Chemical Council trade group put it in a filing to the U.S. government.
For Huntsman, these panels have drilled down on specialized knowledge, such as how it makes plastics with high transparency and elasticity—the kind of material often used for making sports shoes—people close to Huntsman say. 

Soon after those experts conducted their evaluations, local competitors used the same kind of technology in their own products, they say.
Huntsman is battling over a crown jewel of its business, a black dye used in textiles that is less polluting to make. 

It filed a lawsuit in Shanghai against a Chinese company for infringing a patent on the dye in 2007. Huntsman then found a court-appointed review panel stacked against it, it said in a 2011 complaint it filed with the U.S. Commerce Department.
The three-panel members included an engineer from the company Huntsman was suing, another from a local dye-research group and a third who once worked at a local dye firm, according to the complaint and people with knowledge of the matter. 

The experts’ work “effectively turned them into allies and ‘spokespersons’ ” for the Chinese competitor, the complaint said.
Litigation of the patent-infringement case has dragged on. 

Huntsman has asked the Trump administration to consider blocking Chinese firms if they set up operations in the U.S. using disputed Huntsman technology.
For foreign auto makers, the review panels have become a battleground over electric-vehicle technology. 

New vehicles must get government approval before mass production, undergoing a mandatory technology audit that usually lasts several days, foreign makers say.

An electric-vehicle manufacturing line in China. 

An audit this year convinced an employee at one foreign auto maker there was “clear evidence of collusion” between the audit team and Chinese auto makers. 

When the audit began, the person says, inspectors asked for only the blueprints of the electric-vehicle components the foreign company was striving to protect from its Chinese joint-venture partner.
“Somehow they knew exactly the areas to look at,” the person says. 

“There wasn’t a single question about any of the other very complex systems on the vehicle.”

The DuPont raid
DuPont also shared information with its Chinese partner, Zhangjiagang Glory, when it licensed the Chinese firm in 2006 to produce and distribute Sorona, the textile polymers made from corn. 

Within DuPont, the Glory deal was called a “tolling” partnership—a relationship that serves as a kind of toll to enter the market. 

DuPont trained Glory to set up a factory to produce Sorona polymers and to spin them into fibers.
Around 2013, say the people familiar with the case, DuPont didn’t renew Glory’s license amid suspicions the Chinese firm was ripping off its intellectual property to sell products similar to Sorona, which has grown to a $70 million business in China. 

DuPont filed two arbitration cases in China, alleging patent infringement, with hearings stretching through 2017.
Around that time, officials with the National Development and Reform Commission’s antitrust division in Beijing took an interest in the matter and started holding meetings with DuPont. 

The commission showed little interest in DuPont’s planned merger with Dow Chemical Co., completed late last year, even though it launched an antitrust investigation into the combined entity in December.
Rather, investigators focused on the DuPont-Glory standoff, say the people briefed on the case. During three days of meetings in December, DuPont became worried about a raid on its office. 

It planned an employee-training session on how to deal with one, but the investigators showed up first.
An investigator told DuPont officials they were looking at antitrust behavior, specifically their unwillingness to license technology to Chinese firms and their pursuit of the Glory case, say these people. 

DuPont officials, they say, now fear that even dropping the case won’t be sufficient to satisfy Beijing, which may want a hostage in the trade fight with Washington.
Trump administration officials see cases like this as evidence of China’s economic aggression. 

“The combination of naiveté and hubris on the part of U.S. companies seeking to enter the Chinese market, coupled with a sophisticated Chinese effort to extract technology has been a lethal combination,” says White House trade adviser Peter Navarro.

Micron Technology chips. 

During August trade talks, U.S. negotiators pressed Beijing about coerced technology transfer. 

They cited memory-chip maker Micron Technology Inc., which filed a lawsuit in U.S. District Court in California in December alleging technology theft by Fujian Jinhua Integrated Circuit Co. 

Jinhua sued Micron in January in a court in Fujian province—whose government partly controls Jinhua—and won a temporary order blocking some Micron subsidiaries from selling products in China that each company claims patents to.
Jinhua declined to comment. 

In a July statement, it said Micron has “recklessly” infringed on its patents. 

Micron says it intends “to vigorously protect our intellectual property and business interests through all available means.”

Sina Delenda Est

At the UN President Trump should call for a total economic boycott of China
By Steve Hilton 

On Monday President Trump will address the United Nations General Assembly. 

It will be another opportunity for the president to set out his "America First" agenda and to explain that it's better, and more democratic, for sovereign nations to work together to solve problems than to hand over power to remote and unaccountable international bureaucracies.
His approach is a stark contrast to the globalist ideology that has held sway for far too long -- the idea that individual countries should subordinate their own national interest to some vague notion of the "global interest."
This was the thinking that led to the biggest foreign policy mistake of the last two decades: the globalists' insistence on engagement with China. 

Mesmerized by their own fantasy of an economically borderless world -- convenient for global corporations but disastrous for American workers -- the elitists have helped bring China’s brutal, authoritarian Communist regime to the brink of achieving its long planned-for attempt at world domination.
We often hear about how we’ve been losing out to China economically -- and that’s true. 

But the case against China is a moral one too.
UN and U.S. officials have estimated that China has literally imprisoned one million Muslims in internment camps. 

Reports include brainwashing to force Muslims to worship dictator Xi Jinping instead of Allah.
China’s vile "social credit" system is using the world’s most sophisticated technology in an Orwellian effort to monitor, track and control every Chinese citizen and punish those who step out of line.
And the dictators of Beijing are now spreading their poison internationally, colonizing countries around the world with an imperialist aggression far worse than anything in history.
President Trump should now reject in its entirety the failed China strategy of his globalist predecessors. 

This means not just continuing, through tariffs, to pressurize the Chinese regime on issues like the theft of vital technology from American companies.
He needs to go bigger, and bolder. 

At the UN and beyond, he should rally the whole world behind a simple but audacious goal: to topple Xi Jinping's regime by turning China into a pariah state.
It must start with economics. 

For a long time, our economic interaction with China was minimal. 

That all changed when, with U.S. backing, China joined the World Trade Organization in 2000.
The elitists argued that by integrating China into the world economy, we would benefit financially through increased, mutually beneficial trade and investment; and that we would benefit strategically by moving China away from communism towards openness and maybe even democracy.
Of course the exact opposite happened, on both fronts. 

Over the next few years, manufacturing jobs in America were destroyed on a massive scale as China used its newfound access to “dump” its state-subsidized exports into the American and world markets.
And instead of moving towards democracy, China has become ever more authoritarian and aggressive. 

The only difference is that now, it is incomparably richer and more empowered to assert its hegemonic mania -- thanks to the elitists’ catastrophic misjudgment.
Both George W. Bush and Barack Obama pathetically failed to stand up to China’s economic imperialism and global expansionism. 

Neither had the backs of working Americans; instead, they just wanted to look like good global players to their big business donors and foreign policy experts -- all of whom are now utterly humiliated as the true scale of the establishment’s China debacle becomes apparent.
The greedy, foolish elites were mesmerized by the prospect of untold riches from China’s untapped consumer markets -- little realizing that China would never be as stupid as we were, and allow foreign competitors to get the edge. 

The gullible and naive ‘Asia experts’ labored under the impression that if we gave China the Olympics, if we engaged on China’s terms, if we got China into the trading system, then China would become more democratic, human rights would improve, and we would all be a lot richer.
Well the Chinese got richer. 

And the elites in America got richer. 

But is China any more democratic? 

No; it has regressed, if that is possible, from communist oligarchy to an increasingly totalitarian state. Is China playing by the rules? 

No; it is quite literally taking islands from its neighbors, ignoring intentional rulings, and flouting agreed maritime boundaries. 

Instead of playing by the established rules of the international community it is actively setting its own, creating a network of quiescent countries -- including in Europe -- through its One Belt, One Road infrastructure initiative. 

Its aggressive cyber-warfare against America has included not only industrial espionage but the theft of Americans’ personal data on a massive scale.
Meanwhile, Chinese industry continues to undercut American manufacturing, totally disproportionate tariffs are levied on foreign imports to China and currency manipulation has further put our exporters at an unfair disadvantage. 

Even when China does allow American corporations to compete in its markets, it’s entirely on the regime’s terms: American companies cannot own their own Chinese businesses, they can only operate through joint ventures. 

And for technology companies, a condition of operation is to hand over commercial secrets in vital areas like AI and quantum computing. 

The Chinese have turned intellectual property theft into a weapon of war.
I hate to say I told you so -- but I told you so.
Against the grain of the elite’s embarrassing China swoon, I argued all along that no good would come of this. 

While I was working in Downing Street I typically stayed away from foreign policy but I did have one early victory as I persuaded David Cameron, in the teeth of frantic protests from the Foreign Office and Treasury, that his first major international visit as Prime Minister should be to India not China. 

Of course the corrupt apparatchiks of Beijing, by now accustomed to over a decade of craven kowtowing by the supine West, were infuriated.
And sure enough, the China-skeptic posture I advocated was reversed in an instant, culminating in the abject humiliation of a lavish state visit to Britain for the brutal dictator Xi Jinping, paraded through the streets of London in a gold carriage while goons from the Chinese Embassy beat up pro-democracy protesters just a few feet away.
Well now we know. 

We can’t pretend that China wants anything less than world domination -- economically, technologically, politically, militarily. 

We can't waste time hoping it will play by our rules. 

It won't. 

The sooner we realize that, the sooner we can take the aggressive stance we need to isolate this rising giant of a rival. 

We put all our might into fighting and winning the Cold War against the Soviets; the Chinese regime is an infinitely bigger threat because unlike the Soviet Union it is an economic powerhouse. 

Military conflict between China and America isn't inevitable, and I'm not advocating that we go down that path. 

But for our long term prosperity, and for a world run according to the values of openness and democracy, we must take aggressive action now, even at the cost of short-term pain.
Yes we have to get tough on our trade imbalances with China, as President Trump has been doing. But we can and should go further than that. 

When I was at Oxford, I proudly joined protests against apartheid South Africa. 

They were rightly an international pariah for their despicable treatment of the majority of their people.
It’s time for a complete economic boycott of China. 

We can start by imposing exactly the same conditions on Chinese companies in America as the ones imposed on American companies in China: no independent operations, compulsory joint ventures and the forced handover of intellectual property. 

How long do you think Chinese companies would stay here on that basis? 

Next: no American company or investor should be permitted to support China's various schemes for world domination like One Belt One Road. 

All U.S. companies in China should pull out, and no new investments should be made.
Yes this seems drastic but in the long run it is our only hope of putting sufficient pressure on the vile Beijing regime that it might collapse from within. 

China is our enemy, not our “partner,” and we need to start acting like it.

China’s “Thousand Talented Spies” program

U.S. Faces Unprecedented Threat From China on Tech Takeover

• U.S. intelligence sees it as ‘flagship’ for U.S. tech access
• National intelligence director outlines threat to lawmakers

By Anthony Capaccio

China's student-spies

China’s “Thousand Talents” program to tap into its citizens educated or employed in the U.S. is a key part of multi-pronged efforts to transfer, replicate and eventually overtake U.S. military and commercial technology, according to American intelligence officials.
The program, begun in 2008, is far from secret. 

But its unadvertised goal is to facilitate the legal and illicit transfer of U.S. technology, intellectual property and know-how to China, according to an unclassified analysis by the National Intelligence Council, the branch of U.S. intelligence that assesses long-term trends.
The program was highlighted Thursday to House Armed Services Committee members as Pentagon and intelligence officials outlined what they said was an aggressive, 10-part Chinese “toolkit for foreign technology acquisition.”
The National Intelligence Council’s analysis described the Thousand Talents Plan as “China’s flagship "talent" program and probably the largest in terms of funding.” 

The program also was cited in a combative White House report posted Tuesday titled “How China’s Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World.”

Breakdown of Recruits
The assessment discussed Thursday numbered the current of pool Thousand Talents recruits at 2,629 -- 44 percent of whom specialize in medicine, life or health sciences, 22 percent in applied industrial technologies, 8 percent in computer sciences and 6 percent each in aviation/aerospace and astronomy. Smaller percentages possessed U.S.-garnered expertise in economics, finance and mathematics.
American military and intelligence officials have long warned that China threatens the nation’s security as well as its economy. 

The warnings have escalated under President Donald Trump, whose moves to impose tariffs on China and Beijing’s counter-moves have heightened fears of a trade war.

‘Unprecedented Threat’
The Pentagon “is facing an unprecedented threat to its technological and industrial base,” as the U.S.’s “open society” has “offered China full access to the same technology and information that is crucial to the success of our future war-fighting capabilities,” Michael Griffin, under secretary for research and engineering, testified at Thursday’s hearing.
“We have seen the Chinese target top talent in American universities and research labs
of the private sector, including defense contractors and the U.S. government,” he said. 

The solution must include strengthening American counterintelligence capabilities and elevating the private sector’s focus on security, he added.
Tony Schinella, the national intelligence officer for military issues, testified that in addition to using the Thousand Talents program, “Beijing also has employed Western-trained returnees to implement important changes in its science, engineering, and math curricula that foster greater creativity and applied skills at China’s top-tier universities.”
Another tool to gain access to U.S. technology is “joint ventures, mergers, and acquisitions,” he said. 

“Tech transfer to China is occurring in part through increased levels in investment and acquisitions of U.S. companies, which hit a record level in 2016 before dropping somewhat in 2017 and again in the first half of 2018.”
China’s aggregate investment in American technology over the past decade, from 2007 to 2017, totaled approximately $40 billion and was about $5.3 billion last year, he said.

Trade War Punctures China’s Pride in Its Technology

There is a big gap between the science and technology of China and those of the United States
By Yoko Kubota

China’s tech businesses have been on tenterhooks in recent months. Here, a Foxconn factory in Guizhou province. 

BEIJING—To the list of casualties in the trade battle between the U.S. and China add another: Chinese chest-thumping about the country’s prowess in innovation.
More sober assessments of China’s technological capabilities have emerged from China’s tech community in recent weeks, as the U.S. has ratcheted up pressure, threatening tariffs and export restrictions to punish Beijing for what it says are theft of technology and unfair trade practices.
“There is a big gap between the science and technology of China and those of the United States, as well as other Western developed countries. This is common sense, not a problem,” said Liu Yadong, the editor in chief of the government-run Science and Technology Daily, in a speech last week that set off debate on the internet.
China’s tech businesses have been on tenterhooks in recent months. 

Threats by the Trump administration to impose tariffs on as much as $450 billion in Chinese products and to restrict Chinese investment in the U.S. and American technology exports to China potentially stand to disrupt supply chains crucial to China’s telecommunications-gear makers, its microchip industry and aircraft manufacturing.
While President Donald Trump backed away from those investment and export restrictions on Wednesday, he said those issues would be addressed through existing institutions.
Some Chinese officials greeted the move with wary relief. 

A Commerce Ministry spokesman said Thursday that Beijing is watching developments in the U.S. and warned that investment restrictions would likely affect global perceptions about the U.S.’s business environment.
Still, disruptions loom. 

U.S. tariffs on $34 billion in Chinese goods kick in July 6, and China has vowed to retaliate dollar for dollar. 

The biggest casualty thus far in the trade fight is Chinese telecom-equipment maker ZTE Corp., which nearly stopped operating after the U.S. Commerce Department prohibited its access to American components because of sanctions violations.
Liu, the Science and Technology Daily editor, sought to address the foreign foundations of many Chinese industries at a seminar on China’s reliance on critical technologies.
“The house is built on other people’s foundation, but some insist that we have complete and permanent property rights,” Liu said, according to a transcript on the website of the newspaper, which belongs to the Ministry of Science and Technology. 

“What’s troublesome is that people with those kind of opinions have fooled leaders, the public and even themselves.”
His was a striking admission considering that state media and senior officials have played up China’s advances in innovation for much of the past year to meet Xi Jinping’s objective of making the country a global technology power. 

The government news agency Xinhua last year praised China’s “four great new innovations” in modern times: dockless shared bikes, high-speed rail, online payments and e-commerce. 

All were invented elsewhere, and China’s high-speed rail uses technology from Germany’s Siemens AG , Japan’s Kawasaki Heavy Industries Ltd. and other foreign companies.
In March, a government-produced documentary “Amazing China” lauded China’s advanced technologies in ports, bridges, cars and the internet.

ZTE nearly stopped operating after the U.S. Commerce Department prohibited its access to American components because of sanctions violations. 

“Our Amazing China also has areas that are not amazing,” Beijing Daily, the Communist Party’s official newspaper in the capital, said this week. 

It said that while China has made strides in development, “our shortcomings are more noticeable. 

Just one microchip is enough to put China in a corner, let alone other items.”
A core U.S. concern is what the Trump administration says are attempts by China to steal U.S. technology and use subsidies to build up national champions to conquer world markets. 

Particular criticism has been directed at Beijing’s “Made in China 2025” plan to dominate 10 cutting-edge areas including information technology and aerospace.
Given the glare, senior Chinese officials have recently started playing down “Made in China 2025” in meetings with the U.S. business community and European diplomats, people familiar with the matter said. 

Authorities have also ordered media to tone down coverage of the policy.
China’s State Council Information Office didn’t respond to a request for comment.
The shift in tone is more tactical and doesn’t mean China is scrapping its global technology ambitions. 

“The wrestling between the U.S. and China on technology issues is inescapable, and we for sure shouldn’t chicken out at this moment,” said Fang Xingdong, who runs ChinaLabs, a technology think tank. 

But, he said, China has said too much about the importance of Made in China 2025.
The U.S. is mistakenly targeting Made in China 2025, he said, because the real strength in China’s technology sector comes from market-oriented companies.
The Finance Ministry offered tax relief Thursday for companies in high-end manufacturing and technology sectors, particularly those in fields covered by “Made In China 2025.” 

In a notice, the ministry said it would refund to companies overpayment of value-added taxes, instead of applying the excess amount to next year’s tax bill, as in the past.
As part of the new messaging, Xi, senior officials and state media have said the trade fight should spur China to reduce its U.S. dependence, not curb its technological ambition.
“If the U.S. keeps providing us with core technology, it might hinder China’s technology development,” Liu, of the Science and Technology Daily, said in an interview. 

“If the U.S. does not provide, China will devote our own efforts to technology development, and the process to catch up might be shortened.”