Chinese Espionage

FCC Blocks China Mobile's Bid For International Phone Services In The U.S.

By SASHA INGBER

Federal Communications Commission Chairman Ajit Pai said Thursday that the commission has rejected China Mobile USA's application to provide phone services between the United States and other countries because of national security risks.

The Federal Communications Commission has blocked a Chinese company from providing international phone services in the United States, citing national security concerns as tensions persist between Washington and Beijing.
China Mobile USA, though a Delaware corporation, is ultimately owned and controlled by the Chinese government. 

The company filed an application in 2011 to provide international communications services.
"There is a significant risk that the Chinese government would use China Mobile to conduct activities that would seriously jeopardize the national security, law enforcement, and economic interests of the United States," FCC Chairman Ajit Pai said.

"Among other things, if this application were granted, the Chinese government could use China Mobile to exploit our telephone network to increase intelligence collection against U.S. government agencies and other sensitive targets that depend on this network."
China Mobile USA does not provide domestic services in the United States, an FCC spokesperson says.
If the application had been granted, the company would have been able to connect to the U.S. network, receiving greater access to telephone lines, cellular networks, fiber-optic cables and communication satellites — heightening the risk of communications being monitored, degraded and disrupted.
In 2018, the U.S. Department of Commerce communicated with the company and the U.S. intelligence community before recommending the application be denied. 

Last month, the FCC indicated that it intended to follow through with that recommendation in a draft order.
Thursday's announcement came after a unanimous 5-0 vote from the FCC's Republican and Democratic commissioners.
After the vote, Mr Pai said the agency was also examining authorizations that had been previously granted to two other Chinese firms, China Telecom and China Unicom.
China Mobile USA is a subsidiary of China Mobile Limited, which did not immediately respond to NPR's request for comment.
Lawyers representing China Mobile USA said the drafted order to reject the company's application was guided "more by tensions in the bilateral U.S.-China relationship than an absence of effective mitigation options."
The denied application is the latest indication of a growing rift between the United States and China. Amid a trade war, the Trump administration has insisted that Chinese telecom company Huawei has ties to the government and that its equipment could be used to spy on people or commit economic espionage.

Congress has banned government agencies and contractors from buying Huawei equipment.
Reuters reported that for more than a year, President Trump has also been considering an executive order that would block American companies from using equipment manufactured by Huawei and its competitor, ZTE.
In March, U.S. authorities warned allies in Europe to ban Huawei from their 5G communication networks or face the possibility of receiving less intelligence from U.S. agencies. 

Germany declined to exclude the company.
A FCC spokesperson told NPR that ownership of China Mobile USA traces to the China Mobile Communications Corporation, which is "subject to the supervision of the State-Owned Assets Supervision and Administration Commission," a part of the Chinese government managed under the State Council.

Ajit Pai proposes blocking China-owned telecom from US phone market

China Mobile could be used by Chinese government to attack phone network.
By JON BRODKIN

Federal Communications Commission Chairman Ajit Pai has proposed denying China Mobile USA's application to offer telecom services in the US, saying the Chinese government-owned company poses a security risk.
The FCC is scheduled to vote on an order to deny the application at its open meeting on May 9, and Pai yesterday announced his opposition to China Mobile entering the US market.
"After reviewing the evidence in this proceeding, including the input provided by other federal agencies, it is clear that China Mobile's application to provide telecommunications services in our country raises substantial and serious national security and law enforcement risks," Pai said. 

"Therefore, I do not believe that approving it would be in the public interest. I hope that my colleagues will join me in voting to reject China Mobile's application."
We contacted China Mobile and one of its attorneys today about Pai's proposal and will update this story if we get a response.
China Mobile filed its application in 2011, and has repeatedly complained about the government's lengthy review process. 

According to Pai's announcement, China Mobile's application sought authority "to provide international facilities-based and resale telecommunications services between the US and foreign destinations."
In simpler terms, the company was seeking "a license to connect calls between the United States and other nations" and "was not seeking to provide domestic cell service and compete in the country with businesses like AT&T and Verizon," The New York Times wrote yesterday. 

An FCC official told reporters that such calls "could be intercepted for surveillance and make the domestic network vulnerable to hacking and other risks," the Times wrote.

Chinese state-owned firm “subject to exploitation”
The executive branch—which includes the Departments of Justice, Homeland Security, Defense, State, Commerce, and other federal bodies—recommended denial of the application in July 2018.
"[B]ecause China Mobile is subject to exploitation, influence, and control by the Chinese government, granting China Mobile's international Section 214 application, in the current national security environment, would pose substantial and unacceptable national security and law enforcement risks," the National Telecommunications and Information Administration (NTIA), which represents the executive branch in telecom issues, told the FCC.
The filing said that US officials believe that "China Mobile would comply with requests by the Chinese government for information, access to its network, and any other assistance, including activities involving cyber intrusions and attacks."
In another filing, the executive branch noted that granting China Mobile's application "would afford it the ability to interconnect and have greater access to telephone lines, fiber-optic cables, cellular networks, and communication satellites throughout the United States' telecommunications network." Allowing this would not be in the public interest, the executive branch concluded, saying it reached the decision after "a thorough review of the concerns raised by the application, and China Mobile's proposals to mitigate them."
While China Mobile is incorporated in Delaware, "its majority owner is China Mobile Hong Kong (BVI) Limited, which is wholly owned by China Mobile Communications Corporation, which in turn is wholly owned by a foreign state, the People's Republic of China, and is subject to the supervision of the State-Owned Assets Supervision and Administration Commission (SASAC) of the State Council of the People's Republic of China," the executive branch said.
China Mobile acknowledged in filings that "the Chinese government indirectly holds a majority ownership interest in China Mobile USA," but argued that the executive branch "inappropriately conflates" the company with the Chinese government. 

Under FCC rules, the burden of proof is on China Mobile to prove that granting its application is in the public interest, the executive branch noted. 

The executive branch said it is concerned about the Chinese government's ownership of China Mobile because of ample evidence that the Chinese government "has engaged in extensive intelligence collection activity against the United States for national security and economic espionage purposes."
Pai agreed with the executive branch's concerns. 

The FCC said that Pai's draft order to deny the application "would find that, based on the public record, China Mobile had not demonstrated that its application for international Section 214 authority is in the public interest" and that "China Mobile is vulnerable to exploitation, influence, and control by the Chinese government."

China's Digital Silk Road Benefits Chinese Espionage

Cross-border communications networks and e-commerce links built by Chinese tech companies are used for Beijing's intelligence operations
By Nyshka Chandran

A major element of China's continent-spanning Belt and Road Initiative has nothing to do with roads, ports or power plants. 

Rather, the "Digital Silk Road" aims to construct communications networks across the developing world.
Many fear Beijing could use those tools for electronic surveillance.
The world's second-largest economy wants to build fiber optic cables, international trunk passageways, mobile structures and e-commerce links in countries tied to its investment initiative. These technologies are designed to supplement the Belt and Road's physical infrastructure while introducing common technical standards in participating nations, most of which are emerging economies and lack rudimentary internet facilities.
Boosting connectivity can enable information exchanges, bringing about "mutual benefit and win-win cooperation," according to a 2015 white paper jointly released by various Chinese government bodies. 

But there are geopolitical implications if foreign governments allow Chinese technology companies — believed to carry close ties with the state — to install complex data communications systems.
A big fear is that Chinese players insert "backdoor mechanisms that increase [Beijing's] intelligence and propaganda operations in BRI partner countries," researchers at the Council on Foreign Relations said in a note last week.
State-owned China Mobile, the world's biggest telecom carrier by subscriber count, is currently building optical fiber cable projects linking Beijing to Myanmar, Nepal and Kyrgyzstan. 

Meanwhile, "private" player Huawei signed a deal last year to build a cable system linking Pakistan to Kenya via Djibouti. 

Talks are also underway for state-owned China Telecom to help build fiber-optic links in the Arctic Circle.
Cables, which transfer massive amounts of personal, government and financial data, are controlled by telecommunications firms. 

So, when it comes to enforcing security, regulatory grey areas emerge.
That infrastructure can be used to help Beijing gain information, according to the Council on Foreign Relations. 

For example, technicians can bend or clamp the fibers to allow data to leak out or bypass encryption, the note explained: "Prior actions taken by the Chinese government, such as installing backdoors in encryption technology, suggest that it will take similar actions when laying down fiber optic cables in other countries."
China Mobile, Huawei and China Telecom didn't respond to CNBC's requests for comment.
While these projects may benefit developing economies, "they have raised concerns that Beijing uses these networks to exert pressure on other states or engage in electronic surveillance," The Economist Intelligence Unit said in a recent report. 

"BRI countries will need to enhance regulatory frameworks and oversight of projects to mitigate financial risks and political dependence," it added.
Heavyweights such as Huawei are also involved in deploying 5G mobile technology — a central component of China's digital economy — worldwide under the Digital Silk Road. 

But there are worries those firms could use their influence to promote Beijing's preferred standards.
"In 5G, China’s commercial and geopolitical objectives are closely aligned," said Elsa Kania, a Fulbright specialist at the Australian Strategic Policy Institute. 

Beijing "views the nascent and emerging technical standards in new technologies as a 'golden opportunity’ that Chinese national champions are poised to take advantage of," she said.
At the heart of the matter is deep-rooted suspicion about the data-sharing practices of Chinese firms.
Corporates could be legally required or co-opted to support and participate in Chinese intelligence, according to Kania. 

"That raises concerns about the implications for China’s future espionage capabilities, while also creating leverage that could be exercised for coercive purposes," she explained.
In 2012, U.S. intelligence chiefs deemed Huawei and ZTE products a risk to national security, claiming the companies collaborate with China's government to spy, steal trade secrets and cast cyberattacks.

US moves to keep China Mobile out

The Trump administration has moved to block a state-owned Chinese wireless carrier from linking up with the US market, citing national security concerns.

By Sherisse Pham

China Mobile wanted to provide cell phone and other communication services between the United States and other countries. 

It submitted an application for a license to US regulators back in 2011.
On Monday, the National Telecommunications and Information Administration, a branch of the US Commerce Department, recommended that the Federal Communications Commission deny the request.
The move against a high-profile Chinese company could add to the bitter dispute between Washington and Beijing over trade and technology.
"Because China Mobile is subject to exploitation, influence, and control by the Chinese government, the Executive Branch believes that granting China Mobile's application ... would produce substantial and unacceptable national security and law enforcement risks," the telecommunications agency said in a filing to the FCC.
Giving China Mobile access to the US telecommunications market could lead to a spike in Chinese spying, it said. 

Phone calls or other communications from US government agencies to international destinations could pass through China Mobile's network, even if the agencies are not customers of the operator, according to the filing.
China Mobile, which has more than 900 million mobile customers, did not immediately respond to a request for comment Tuesday. 

The company wasn't seeking to offer mobile services directly to US customers, according to the US filing.
The FCC wasn't immediately available for comment outside of regular office hours.
A US rejection is expected to have little impact on the company's income. 

The international calling business accounts for only a tiny portion of China Mobile's revenue, according to Ramakrishna Maruvada, an analyst with Daiwa Capital Markets.

Heightened tensions
The recommendation against China Mobile comes at a time of heightened trade and national security tensions between the United States and China.
The Trump administration is trying to counter China's ambitions to become a global tech leader, accusing China of pressuring companies and stealing intellectual property to get ahead. 

A series of tech and telecommunications companies have run into difficulties over potential security concerns.
The Trump administration in March blocked chipmaker Broadcom's $117 billion bid for rival Qualcomm. 

One concern it cited was the deal could cause the United States to fall behind on the development of 5G technology and allow China to take the lead.
Chinese smartphone and telecommunications company ZTE has been in crisis since April when the US Commerce Department banned American companies from selling it vital components.
The Commerce Department said it imposed the ban on ZTE because the company breached a 2017 deal in which it agreed to pay a fine for violating sanctions on Iran and North Korea.
The Trump administration struck a new deal with the company earlier this month to end the ban in exchange for an additional fine and a drastic management overhaul. 

But ZTE still faces an uncertain future, and some members of Congress are seeking to keep the ban in place.
The US government has long been wary of Chinese companies having access to American telecommunications networks. 

A 2012 congressional report found ZTE and its larger Chinese rival Huawei posed significant national security threats and could not be trusted to be free of Chinese state influence.
The Chinese companies strongly disputed the report's findings. 

But ZTE and Huawei remain largely locked out of the market for providing telecommunications network gear to American carriers.

Chinese Espionage

US lawmakers urge AT&T to cut commercial ties with Huawei

Reuters

U.S. lawmakers are urging AT&T, the No. 2 wireless carrier, to cut all commercial ties to Chinese phone maker Huawei Technologies and oppose plans by telecom operator China Mobile to enter the U.S. market because of national security concerns, said two congressional aides.
The warning comes after the administration of President Donald Trump took a harder line on policies initiated by his predecessor Barack Obama on issues ranging from Beijing's role in restraining North Korea to Chinese efforts to acquire U.S. strategic industries.
Earlier this month, AT&T was forced to scrap a plan to offer its customers Huawei handsets after members of Congress lobbied against the idea with federal regulators, sources told
Reuters.
The U.S. government has also blocked a string of Chinese acquisitions over national security concerns, including Ant Financial's proposed purchase of U.S. money transfer company MoneyGram International Inc.
The lawmakers are also advising U.S. companies that if they have ties to Huawei or China Mobile, it could hamper their ability to do business with the U.S. government.
One of the commercial ties senators and House members want AT&T to cut is its collaboration with Huawei over standards for the high-speed next generation 5G network, the aides said.
Another is the use of Huawei handsets by AT&T's discount subsidiary Cricket, the aides said.
China Mobile, the world's biggest mobile phone operator, did not respond to requests for comment.
AT&T declined to comment but said that it had made no decisions on 5G suppliers. 

U.S. lawmakers who have in the past expressed concerns about the prospect of the deal between AT&T and Huawei either declined to comment or were not immediately available.
Huawei declined to comment.
National security experts fear that any data from a Huawei device, for example about the location of the phone's user, would be available to Chinese government intelligence services.
In 2012, Huawei and ZTE were the subject of a U.S. investigation into whether their equipment provided an opportunity for foreign espionage and threatened critical U.S. infrastructure.
"The next wave of wireless communication has enormous economic and national security implications. China's participation in setting the standards and selling the equipment raises many national security issues that demand strict and prompt attention," said Michael Wessel, a member of the U.S.-China Economic and Security Review Commission, which was set up by Congress.
U.S. lawmakers do not want China Mobile to be given a license to do business in the United States.

China Mobile applied for the license in 2011, and the application is pending before the Federal Communications Commission.
Huawei and Chinese telecom firms have long struggled to gain a toehold in the U.S. market, partly because of U.S. government pressure on potential U.S. partners.
Two Republican lawmakers, Representatives Michael Conaway and Liz Cheney, introduced a bill this week that bars the U.S. government from using or contracting with Huawei or ZTE, a Chinese telecommunications and equipment and systems company.

Kowtowing to China’s Despots

Joining Apple, Amazon’s China Cloud Service Bows to Censors
By PAUL MOZUR

An internet cafe in Beijing in May. Weeks after China enacted a tough cybersecurity law, a local company that manages Amazon’s cloud computing services in China told customers not to offer ways for Chinese users to bypass the country’s internet censorship measures.

SHANGHAI — Days after Apple yanked anti-censorship tools off its app store in China, another major American technology company is moving to implement the country’s tough restrictions on online content.
A Chinese company that operates Amazon’s cloud-computing and online services business there said on Tuesday that it told local customers to cease using any software that would allow Chinese to circumvent the country’s extensive system of internet blocks. 

The company, called Beijing Sinnet Technology and operator of the American company’s Amazon Web Services operations in China, sent one round of emails to customers on Friday and another on Monday.
“If users don’t comply with the guidance, the offered services and their websites can be shut down,” said a woman surnamed Wang who answered a Sinnet service hotline. 

“We the operators also check routinely if any of our users use these softwares or store illegal content.”
Ms. Wang said the letter was sent according to recent guidance from China’s Ministry of Public Security and the country’s telecom regulator. 

Amazon did not respond to emails and phone calls requesting comment.
The emails are the latest sign of a widening push by China’s government to block access to software that gets over the Great Firewall — the nickname for the sophisticated internet filters that China uses to stop its people from gaining access to Facebook, Google and Twitter, as well as foreign news media outlets.

The move came at roughly the same time that Apple said it took down a number of apps from its China app store that help users vault the Great Firewall. 

Those apps helped users connect to the rest of the internet world using technology called virtual private networks, or VPNs.
Taken together, the recent moves by Apple and Amazon show how Beijing is increasingly forcing America’s biggest tech companies to play by Chinese rules if they want to maintain access to the market. 

The push comes even as the number of foreign American tech companies able to operate and compete in China has dwindled.
Beijing has become increasingly emboldened in pushing America’s internet giants to follow its local internet laws, which forbid unregistered censorship-evasion software. 

Analysts say the government has been more aggressive in pressuring companies to make concessions following the passage of a new cybersecurity law, which went into effect June 1, and ahead of a sensitive Communist Party conclave set for late autumn.
The government has been intent on tightening controls domestically as well. 

It recently shut down a number of Chinese-run VPNs. 

New rules posted to government websites in recent days said Communist Party members can be punished for viewing illegal sites and that they must register all foreign or local social media accounts.
Also in response to the new law, Apple said it planned to open a new data center in China and store user data there.
Ms. Wang, who said that Sinnet handles Amazon Web Services operations across China, said that the company has sent letters warning users about such services in the past but that the government had been more focused on other issues.
Amazon Web Services allows companies small and large to lease computing power instead of running their websites or other online services through their own hardware and software. 

Because Amazon’s cloud services allow customers to lease servers in China, it could be used to give Chinese internet users access to various types of software that would help them get around the Great Firewall.
Keeping in line with censorship rules is only a part of it. 

In cloud computing, China requires foreign companies have a local partner and restricts them from owning a controlling stake in any cloud company. 

New proposed laws, which have drawn complaints of protectionism from American politicians, further restrict the companies from using their own brand and call for them to terminate and report any behavior that violates China’s laws.
While Microsoft and Amazon both run cloud services in China, similar ones run by local Chinese internet rivals dwarf them in scale. 

In particular Chinese e-commerce giant Alibaba runs its own cloud services, which have grown rapidly in China. 

In order to operate in the country, China’s biggest internet companies must stay in close contact with the government and carry out Beijing’s various demands, whether they be a request for user data or to censor various topics.
While China is not a major market for Amazon, the company has been in the country for a long time and has been pushing its cloud computing services there. 

Also recently the company announced a partnership with the state-run telecom China Mobile to create a Kindle, the company’s e-reader device, aimed at the local Chinese market.