China's Fifth Column

President Trump's trade war shows how China has lost all its friends in Washington
By James Griffiths

Hong Kong -- Better relations with China used to be a bipartisan issue in Washington.
Beginning with Richard Nixon's history-making visit to Beijing in 1972, subsequent administrations -- both Democrat and Republican -- worked to improve relations with Beijing.
Democrat Jimmy Carter formally recognized the People's Republic of China over Taiwan, Republican George H.W. Bush maintained dialogue with Chinese leaders in the years following the Tiananmen Massacre, and Democrat Bill Clinton supported China's membership in the World Trade Organization (WTO).
That sense of steadiness and dependability has begun to unravel during President Donald Trump's time in office. 

This week, he ramped up a crackdown on Chinese telecoms giant Huawei, amid a worsening trade war with Beijing.
But while there are many topics where Trump is an iconoclast, out of step with some of his Republican colleagues, let alone the Democrats, this is not it. 

Bipartisan consensus has swung hard against Beijing in recent years, with some opposition lawmakers in Washington even calling on Trump to take a harder approach.
"There is a broad realism on China that straddles left, right, and center," said Patrick Lozada, China director at the Washington-based strategic advisory firm Albright Stonebridge Group (ASG). 

Trade war
When President Trump introduced new tariffs on Chinese products last year, there were complaints from top Democrats -- that he didn't go far enough.
"The United States must take strong, smart and strategic action against China's brazenly unfair trade policies," Congresswoman Nancy Pelosi said at the time. 

"Yet, today's announcement is merely a start, and the Trump Administration must do much more to fight for American workers and products."
Even today, as the expansion of those tariffs have started to bite both consumers and manufacturers at home, offering a tantalizing attack line for Democrats in 2020, criticisms from those in the party's leadership are of Trump's execution, not his target.
"We should not be having a multifront war on tariffs," Democrat Senator Chuck Schumer said this week. 

"I would focus everything on China. And get the Europeans, Canadians and Mexicans to be on our side and focus on China. Because they are the great danger."
On Trump's side of the aisle, voices critical of his deal have been outweighed by Republicans wanting to take an even harder line on China -- even as many sought to rein him in on expanding tariffs against European allies.
"The President is right to hold China's feet the fire on this," Senator John Barrasso told CNN on Wednesday. 

"They wouldn't be negotiating at all if it weren't for what the President has done ... The President has his own timeline. I support what he is doing."

US President Donald Trump (L) and Xi Jinping leave a business leaders event at the Great Hall of the People in Beijing on November 9, 2017.

Broad front
"I'm hard-pressed to think of another consensus in American foreign policy that's moved as far and as fast as the US consensus on China," Richard Hass, president of the Council on Foreign Relations, a New York-based think tank, said in February.
"People have grown weary of Chinese trade practices, of technology theft. But it's also a reflection of what's going inside China with the treatment of the Uyghurs, the abolition of (term) limits by the president. And it's also because of strategic concerns such as the South China Sea and what China has done there."
Lozada, the ASG analyst, said that "Beijing has failed to grasp the changing nature of US politics and the growing concerns about the slow pace of reform in China. When President Trump took office, they regarded him as a transactional businessman without taking serious his remarks about trade on the campaign trail and growing skepticism of China's role in the global economy at all levels."
Bipartisan China realism isn't only hurting Beijing on trade either.
Human rights, often an overlooked topic in relations with Beijing, have come back to the fore, along with calls for punitive sanctions that would further weaken China's economy in the middle of a trade war.
This week, leading Hong Kong democrats were on Capitol Hill to testify before the Congressional-Executive Commission on China (CECC), a bipartisan panel which issues an annual report on the state of human rights in China and has grown in influence under the Trump administration.
In his opening remarks, CECC chair James McGovern, a Democratic congressman, said he believed "it is time for the United States to consider new and innovative policies to support the people of Hong Kong."
McGovern and others have suggested Washington review the US-Hong Kong Policy Act of 1992, under which it treats the city as a separate customs territory to the rest of China, so long as Hong Kong remains "sufficiently autonomous." 

Suspending Hong Kong's special status could devastate the city's economy and also hit Beijing hard, given its reliance on Hong Kong's financial sector.
CECC members, including Republican Senator Marco Rubio, have called for China to be sanctioned under the Magnitsky Acts for its oppression of the Uyghur minority in East Turkestan, where hundreds of thousands if not millions of mostly Muslim people have been detained in concentration camps.
The Magnitsky Acts, which impose visa sanctions and asset freezes on human rights violators, were originally introduced to go after Russia and have since been expanded to target officials from Myanmar, Saudi Arabia, and other countries.
A bipartisan group of lawmakers, led by Rubio, have called for China to be added to the list. 

Doing so would strike a major blow against the finances and freedom to travel of top Chinese officials.

Dangers of further split
Despite widespread skepticism and hostility towards China in Washington today, better bilateral relations in the past paid off for both countries. 

China's economy exploded after it entered the WTO in 2000.
The chances of relations reaching a breaking point and turning into an open conflict are very real. 

US military leaders have expressed alarm over China's moves in the South China Sea and towards Taiwan, as Washington has ramped up its own military engagement in the region.
Taiwan has bought weapons from the US and lobbied for even greater support from Washington. 

The island's de facto independence from China has always been guaranteed to some extent by a belief that the US may come to its aid in a military conflict with Beijing.
While relations are unlikely to sour to the point of actual conflict there is a risk of a new Cold War developing, with other nations forced to choose sides.
That could create a bloc allied against Washington, something that it has not faced since the height of the original Cold War. 

As commentator Henry Luce wrote in December, better relations between Washington and Beijing under Nixon helped exacerbate the Sino-Soviet split, one factor which resulted in the USSR's eventual collapse.
"Mr Trump is triggering a 'reverse Nixon'," Luce wrote. 

"Decades of convergence is going into reverse. It is happening at a speed that is taking even Americans by surprise."
That was five months ago, and things have only sped up since then.

China Dream

A Tech Guru Captivated Canada. Then He Fled to China.

By Dan Levin

The offices of Istuary Innovation Group in Vancouver were emptied by an auction house late last year. A British Columbia provincial employment department has ordered the company to pay around $2.2 million in back wages to more than 150 employees.

VANCOUVER, British Columbia — Sun Yian was living the Canadian dream.
The Chinese immigrant found fortune harnessing Canadian talent to develop cutting-edge technology, everything from semiconductors to facial recognition, to take back to China. 

His company grew to more than 1,500 employees across China and North America, and was lauded by Canadian officials as a model for unlocking the Chinese market to create homegrown prosperity.
Then Sun stopped paying his Canadian workers and fled to China. 

Left behind are lawsuits from angry investors and Canadian employees who are wondering whether their work could be used to help China’s growing domestic surveillance state.
Canada has long benefited from close business ties to China, and lawmakers have courted the country as a new market for Canadian companies as well as a source of investment. 

Now, Sun’s story is fueling calls for heightened skepticism of Chinese money.
“Canadian officials have to some degree been blinded by China’s incredible economic growth and waves of capital spreading worldwide,” said Michael Byers, a professor of global politics and international law at the University of British Columbia in Vancouver. 

“They’re certainly naïve to China’s approach to acquiring high tech from other countries, and they haven’t pushed hard on getting answers before allowing deals to go through.”
In March 2017, the government of Prime Minister Justin Trudeau approved the sale of a Montreal laser company to a firm partly owned by the Chinese government, despite objections from security officials in the previous Canadian government. 

In June 2017, Canada waived a security review for a Chinese takeover of Norsat International, a Vancouver high-tech company that provided satellite technology to the United States military.
Sun’s company, Istuary Innovation Group, initially appeared to represent the positives of Chinese investment. 

His company brought jobs and high-tech business to Vancouver. 

But a review of the company’s finances and interviews with former employees reveal a murky web of financial and previously undisclosed ties to the Chinese government.
Sun, 45, who goes by the name Ethan, founded Istuary in 2013 in a Vancouver Starbucks, just as the Canadian government was welcoming greater Chinese investment. 

At its peak, the technology incubator and venture fund occupied two floors of a downtown Vancouver office building, where engineers toiled on semiconductors, robotics, big data analytics and facial recognition. 

By 2017, Istuary had 24 offices in places around the world, including Beijing, Shanghai, Los Angeles and Toronto.
Manivannan Gajendran and Eric Hsu are former Istuary employees. “Chinese clients had lots of ideas for ways they would use our applications. Some of those raised red flags,” Mr. Hsu said.

The company’s growth helped give Sun access to Canada’s political elite, relationships that were nurtured through political donations and corporate sponsorships. 

Photos he posted online show him smiling with Mr. Trudeau during a trade mission in China. Government officials in British Columbia praised Sun for creating Canadian jobs.
A Vancouver government agency signed a contract with Chinese industrial parks to expand Istuary’s operations. 

Istuary joined publicly funded Canadian organizations to do research. 

Canada’s immigration ministry approved the company for a federal start-up visa program that lets foreign entrepreneurs obtain permanent residency.
“The government gave us really good support,” Sun told a Canadian business conference in 2015, according to a video of his speech posted online.
Yet some of Istuary’s work provoked concern among employees.
Eric Hsu, 39, an American data scientist hired by Istuary’s Vancouver office in 2016, said he worked on artificial intelligence capable of recognizing a person’s face across multiple surveillance feeds or detecting specific human behavior, like fighting. 

“A lot of these security applications were both humanitarian and ethically troubling,” he said in an interview. 

“Chinese clients had lots of ideas for ways they would use our applications. Some of those raised red flags.”
An Istuary customer presentation reviewed by The New York Times highlighted the services its technology could offer in Chinese cities. 

They included the ability to recognize faces through security cameras and run them through databases, as well as track people’s personal relationships. 

It also highlighted other services, like tracking crowds and land records.
Mr. Hsu said he attended trade shows in China where Sun pitched Istuary’s artificial intelligence technology to potential customers interested in products designed to prevent prisoner suicides or for detecting criminal activity.
Chinese authorities have been zealously using big data collection, A.I. and facial-recognition technology to upgrade Beijing’s mass surveillance efforts.

Ethan Sun, the founder of Istuary Innovation Group, at the Canadian Association of Business Incubation Leadership Summit in 2015.

Sun enjoyed ties to the Chinese government that his Canadian workers and investors say he did not disclose.
Kuang’en Network Technologies, a cybersecurity company he founded in Beijing in 2014, specialized in industrial control systems for some of China’s biggest state-owned enterprises.
State Grid, China’s national power distributor, said it banned Kuang’en, among other companies, in 2016 from bidding on public contracts because of collusion, without offering details. 

But that year, Kuang’en formed a joint venture with another cybersecurity firm, BeijingVRV, whose powerful Chinese government clients include the National People’s Congress, the finance and foreign ministries, military contractors and public security agencies.
According to corporate documents and Sun’s employees in China, Istuary and Kuang’en shared funding, workers, technology, office space and shareholders, including Sun’s wife, Hu Yulan.
Former Istuary employees in Vancouver said the company’s collapse began last spring with a series of missed payrolls and final paychecks in May 2017. 

Many stayed at their jobs anyway.
“Sun kept giving us false hopes,” said Manivannan Gajendran, who led an Istuary quality testing team in Vancouver. 

He said he took out a $15,000 line of credit to cover his daily expenses while he waited for money that never came.
By then, Sun had gone back to China. 

In August, Istuary investors in British Columbia sued Sun and his wife, accusing the couple of illegally using funds to purchase two multimillion-dollar homes in Vancouver.

At one point, Istuary had 1,500 employees across China and North America.

Canada’s immigration ministry suspended Istuary from the start-up visa program after learning of the allegations. 

In an email, a ministry spokeswoman said it had gathered information on Istuary after the company was recommended by an industry association, and “found no reason to reject the designation recommendation at that time.”
Sun did not respond to interview requests made through his Vancouver lawyer. 

But he denied the allegations in a letter posted on Istuary’s now-defunct website in October. 

“We are NOT a Ponzi scheme,” he wrote.
A British Columbia provincial employment department has since ordered Istuary to pay around $2.2 million in unpaid wages to more than 150 employees and has begun collection proceedings in order to seize Sun’s residential properties, a spokeswoman from the province’s labor ministry said in an email.
The fallout, and Sun’s broken promises, soon reached the company’s operations in China. 

According to Laura Fan, an Istuary employee in Guangdong Province, Sun claimed the company’s cash crunch was because of poor management and Chinese regulatory changes. 

He also blamed Chinese investors and their “political mission” for pressuring him into striking deals with American chip companies, she said.
In December, Istuary and Kuang’en’s offices began closing across China, without employees being paid for months of work. 

“These people never got any of their salaries,” Ms. Fan said.
Just before Christmas, former employees said, two people from a Chinese technology firm that had invested in Kuang’en camped out in the Beijing office, hoping to catch Sun. 

A few weeks later, debt collectors locked the doors with a heavy chain. 

On a recent visit to the shuttered office, trash covered a rickety cot and chairs visible in the entryway.
Someone had scrawled a large handwritten message across the glass doors: “The fraudster network fakes bankruptcy, maliciously owes salaries and cons its employees.”
Underneath was an ultimatum: “Pay us the money and we’ll unlock the place.”

Europe's Seven Quislings: The European Politicians in Beijing’s Orbit

Fifth column: Former leaders from France, U.K., Germany, France boost Chinese interests

By Alan Crawford and Patricia Suzara

Xi Jinping and David Cameron.

David Cameron and Romano Prodi come from opposite ends of Europe’s political spectrum, but they have much in common. 

Both have left high office, boast an extensive network of connections, and now work in some capacity for China.
The former British and Italian prime ministers are far from alone: Across Europe, politicians past and present are taking positions on China’s growing global reach.
Some such as Anders Fogh Rasmussen, the former Danish premier and head of NATO, warn that Europe must gird itself against China’s rise. 

Far more are riding the wave and helping China’s onward march. 

It’s a dilemma likely to feature at an EU-China summit this month.
Following are a selection of Europe’s more prominent China advocates.

China’s Allure
European politicians turn to China after leaving office

David Cameron
Cameron, who was U.K. prime minister from 2010 until his resignation in 2016 after losing the Brexit referendum, made China a focus of his premiership. 

He announced a “golden era” of British-China relations aimed at boosting bilateral trade and investment, and approved a controversial deal allowing Chinese involvement in the Hinkley Point nuclear development. 

In October 2015, during a visit to the U.K., Xi Jinping posed for a selfie with Cameron at Manchester City soccer ground. 

Two years later and no longer in office, Cameron was made the head of a $1 billion China-U.K. fund supporting China’s massive Belt and Road Initiative infrastructure plan.

Dominique de Villepin
As France’s foreign minister, De Villepin came to global prominence in 2003 when he argued the case against the U.S.-led war in Iraq at the United Nations in New York. 

He went on to serve as France’s prime minister under President Jacques Chirac. 

He’s since become a regular commentator on Chinese affairs and advises Chinese companies on their international expansion plans through his consultancy Villepin International.

"Le traître français"

Jean-Pierre Raffarin
Another former French prime minister, Raffarin sits on the board of the Bo'ao Forum for Asia (BFA), an annual showcase for world leaders that is China’s answer to Davos. 

Xi Jinping chose this year’s Bo'ao Forum to deliver his message of a “new phase of opening up.” 

A prominent China advocate, Raffarin is also a member of the strategic committee of the France China Foundation, a body which brings together French and Chinese leaders and whose backers include Bank of China.

Romano Prodi
Prodi served two terms as Italy’s prime minister a decade apart, with a five-year stretch as president of the European Commission -- the European Union’s executive body -- in between. 

An economist and former Goldman Sachs adviser, Prodi sits on the board of the Bo'ao Forum. 

He was cited in the China Daily as welcoming Xi’s speech to the forum in April, praising the president’s “strong determination in safeguarding globalization, free trade and open economy.” 

Prodi is also a member of the board of the China Europe International Business School.

Danny Alexander

Alexander was Chief Secretary to the U.K. Treasury from 2010 to 2015, during David Cameron’s first-term coalition government with the Liberal Democrats. 

As such he was part of the administration that announced the golden era of ties with China. 

In an interview with China’s Xinhua news agency, Alexander later said that within government he had “advocated strongly that the U.K. should join the AIIB,” as the Asian Infrastructure Investment Bank is known. 

Knighted after losing his parliamentary seat at the 2015 election, Sir Danny was appointed vice president of the AIIB in February 2016.

Philipp Roesler
Roesler endured turbulent times during his spell as junior coalition partner in Chancellor Angela Merkel’s second-term coalition cabinet, first as minister for health and then German economy minister and vice chancellor. 

After losing his seat in the 2013 election along with all his Free Democratic Party lawmakers, Roesler retired from politics and joined the managing board of the World Economic Forum. 

In December, he was made CEO of HNA Group Co.’s New York-based charity, Hainan Cihang Charity Foundation Inc. 

The nonprofit holds 29.5 percent of HNA, which had about $180 billion in assets at the time of Roesler’s appointment.

Rudolf Scharping
Scharping was German defense minister from 1998 to 2002 under Social Democratic Chancellor Gerhard Schroeder. 

During his watch, the German army took part in the NATO-led attack on Yugoslavia, its first combat mission since World War II. 

His consultancy, Rudolf Scharping Strategie Beratung Kommunikation AG (RSBK), boasts of its “long years of contact with Chinese and German decision makers” and specializes in business development for companies and institutions in China. 

RSBK is involved in a German-Chinese Economic Conference, to be held in Frankfurt in November, focused on the Belt and Road Initiative.

China's Fifth Column

West Virginia GOP candidate says McConnell created jobs for ‘China people’
By Michael Scherer

Former Massey Energy CEO and U.S. Senate candidate Don Blankenship speaks during a town hall to kick off his campaign in Logan, W.Va., in January. 

Republican Senate candidate Don Blankenship stepped up his attacks on Senate Majority Leader Mitch McConnell on Thursday with a new ad that accuses him of creating “millions of jobs for China people.”
With a deadpan delivery and a defiant attitude that has become his trademark, the former coal baron focused his onslaught on the family of McConnell’s wife, Transportation Secretary Elaine Chao, which owns an international shipping business.
Blankenship also repeated his recent nickname for McConnell, “Cocaine Mitch,” an apparent reference to a seizure of drugs on one of Chao’s family’s ships.
“The war to drain the swamp and create jobs for West Virginia people has begun,” Blankenship says, in reference to McConnell (R-Ky.). 

“I will beat Joe Manchin III and ditch Cocaine Mitch for the sake of the kids.”
The ad comes as Blankenship’s two main rivals for the Republican nomination, Rep. Evan Jenkins (R-W.Va.) and state Attorney General Patrick Morrisey have focused their fire on each other with just days to go before the May 8 primary.
Blankenship, by contrast, has redirected his campaign to attack McConnell, whom he blames for a group called Mountain Families PAC, which has been running ads in the state against Blankenship.
The last public poll, by Fox News between April 18 and 22, found Jenkins and Morrisey pulling ahead of Blankenship, who is self-funding his campaign.
Allies of McConnell have expressed concerns for weeks that a primary win by Blankenship would jeopardize Republican hopes of beating incumbent Sen. Joe Manchin III (D-W.Va.) in the general election this fall.
The cocaine nickname for McConnell appears to be a reference to a 2014 seizure from a ship in Colombia bound for the Netherlands. 

Colombian officials seized 90 pounds of cocaine.
The ship came from the maritime company founded by Chao’s father, James Chao, who emigrated from Taiwan. 

The incident received some attention after the Nation reported it in 2014, about a week before McConnell faced reelection.
Blankenship’s own fiancee and a frequent companion on the campaign trail, Farrah Meiling Hobbs, was also born in China. 

Blankenship praises her on his campaign website, writing that he enjoys “spending time with my best friend, Meiling.”
From early in the campaign, Blankenship has boasted of his willingness to go negative. 

“I think the biggest reason you should have confidence that I would defeat Joe Manchin is because I will run hostile ads against him,” Blankenship said at a candidate forum in Martinsburg, W.Va., on April 3. 

“I will tell everyone what Joe Manchin has done.”

China's Fifth Column: The Manchurian Senator

How China got a U.S. senator to do its political bidding
By Josh Rogin

A congressional delegation led by Sen. Steve Daines (R-Mont.) presents frozen steaks to Li Keqiang on April 10 in Beijing. The gift was meant to underscore the importance of opening Chinese markets to U.S. beef imports.

In its effort to cultivate foreign influence, the Chinese Communist Party boldly mixes economic incentives with requests for political favors. 

Its dealings with Sen. Steve Daines (R-Mont.) this year offer a success story for Beijing.
Last month Daines announced a breakthrough in his long-standing effort to win access for Montana’s beef exports to China — a $200 million deal with a leading Chinese retailer.
Then, on Dec. 5, the regime of Xi Jinping got something at least as valuable from Daines. 

The senator hosted a delegation of Chinese Communist Party officials who oversee Tibet, at the request of the Chinese Embassy — thereby undercutting a simultaneous visit to Washington by the president of the Tibetan government in exile.
Lobsang Sangay, the Tibetan leader regarded as an enemy by Beijing, was in Washington to meet with lawmakers and members of the Tibetan community. 

The House Foreign Affairs Asia subcommittee held a hearing Dec. 6 on Chinese repression in Tibet.
The rival meeting hosted by Daines the day before included Sen. John Barrasso (R-Wyo.). 

After the meetings, the state-owned China Daily claimed the congressmen had praised Chinese officials in Tibet for doing “a good job in environmental protection and traditional cultural preservation.”
The episode illustrated China’s growing practice of enlisting Western politicians to blunt criticism of the regime — and also its determination to haunt its opponents wherever they travel. 

“Everywhere I go, I’m followed by a high-level Chinese delegation” denying human rights abuses in Tibet, Sangay told me, adding that Chinese officials pressure governments across the world not to meet with him.
Sangay was in town to push legislation calling for foreigners to have the same access to Tibet that Chinese officials who oversee Tibet have here. 

The Chinese Communist Party did allow one congressional delegation to visit Tibet in April — led by Daines — which met top Chinese officials.
Daines’s office couldn’t produce any record that he, either in China or Washington, publicly raised the fact that the Chinese government is perpetrating brutal, systematic repression in Tibet, including attempted cultural genocide, environmental destruction, mass surveillance, mass incarceration and severe denial of freedoms for Tibetans.
The senator had another agenda — selling Montana beef. 

He presented four frozen steaks to Li Keqiang in Beijing and hosted Chinese Ambassador Cui Tiankai at a Montana ranch. 

The $200 million contract was the first reward for his efforts.
Daines has done other favors for the Chinese government. 

Early this summer, he discussed with other senators his opposition to a bill that would rename the street in front of the Chinese Embassy in Washington after Liu Xiaobo, the Nobel Peace Prize laureate who later died in Chinese government custody, his office confirmed.
Spokeswoman Marcie Kinzel told me Daines has pushed to visit multiple Chinese regions where human rights are a concern. 

Daines’s approach to Chinese human rights is “not connected” to his push for beef exports, Kinzel said. 

Yet for the Chinese government, economics and politics are always linked. 

By helping the Communist Party squash political criticism in Washington, Daines’s actions constituted a victory for Chinese foreign influence operations, said Derek Mitchell, former U.S. ambassador to Burma.
“It confirms everything the Chinese believe about us, that anyone can be bought,” he said. 

“We’re only as strong as our weakest link, and that Daines would do this only encourages them to continue.”
There’s no evidence of a direct quid pro quo or any illegal behavior, just multiple favors between Daines and the Chinese government. 

But by using his power to protect China from accountability on human rights, Daines compromised American values and helped perpetuate the suffering of innocent people abroad.
In Australia last week, a senator resigned after it was revealed he took money from a Chinese donor and then parroted Chinese government lines on the South China Sea issue. 

It’s the same pattern: China dangles economic incentives and, soon enough, its friends begin helping China’s political aims.
Prime Minister Malcolm Turnbull is leading a national drive to excise Chinese foreign influence from Australian politics. 

“Foreign powers are making unprecedented and increasingly sophisticated attempts to influence the political process, both here and abroad,” Turnbull said.
In Washington, political and policy leaders are just waking up to the scope and scale of China’s efforts to interfere. 

But if the Chinese government can claim U.S. lawmakers as defenders of its repression in Tibet, it’s clear the problem is much worse than we realize.

Australia Seeks Foreign-Meddling Curbs After China Dust-Up

• New legislation will update espionage and treason definitions
• Political lobbyists obliged to register ties to foreign powers

By Jason Scott

Sam Dastyari in Invasion of the Body Snatchers and V (franchise)

Australian Prime Minister Malcolm Turnbull said he would introduce legislation to limit political meddling by foreign powers, citing reports of Chinese influence over a local lawmaker and Russia’s U.S. election interference.
People or organizations acting in the interests of foreign powers would be required to register and disclose their ties, Turnbull said, adding that foreign political donations would also be banned.
“Foreign powers are making unprecedented and increasingly sophisticated attempts to influence the political process,” Turnbull told reporters in Canberra on Tuesday. 

“We will not tolerate foreign-influence activities that are in any way covert, coercive or corrupt.”

Senator Sam Dastyari resigned from a senior position with the opposition Labor Party last week after he acknowledged warning a Chinese businessman linked to the Community Party that his phones were being tapped by Australian intelligence agencies. 

Dastyari, who remains in parliament, had previously said that a Chinese company with links to Beijing had paid a A$1,670 ($1,275) travel bill for him.
“We have recently seen disturbing reports about Chinese influence,” Turnbull said, adding the reforms were not targeted at any one country. 

Asked about Dastyari, Turnbull said: “Senator Dastyari’s solicited money from a Chinese national. It was as blatant an act of political interference you could imagine.”
Australians were familiar with the “very credible reports” that Russia sought to actively undermine and influence the U.S. election, Turnbull said.

Espionage, Treason
Under the legislation, which wasn’t expected to be voted on until next year, the definition of espionage and treason would be updated to make failing to report the receipt of information -- not just passing it on -- an offense.
“Foreign intelligence services are engaged in covert influence and interference on an unprecedented scale,” Turnbull said. 

“This activity is being directed against a range of Australian interests, from our political systems, to our commercial interests, to expatriate communities who have made Australia their home.”
Australia has long sought to balance its military alliance with the U.S., which bases as many as 2,500 Marines in the country, and China, which is its largest trading partner. 

China’s rising soft-power influence and militarization of the South China Sea have become an increasing concern in the Asia-Pacific region.

China's Fifth Column

The State Department Is Tilting Dangerously Toward China
BY ELY RATNER

Rex Tillerson makes China great again

The first time it happened was bewildering. 

Rex Tillerson, on his maiden voyage to Beijing as secretary of state, with Chinese Foreign Minister Wang Yi at his side, parroted a series of Communist Party slogans that are well-known shorthand for U.S. accommodation to China. 

Less than two months into the Trump administration, this could have been forgiven as a rookie mistake, rather than an intentional decision by the State Department to be submissive toward Beijing.
But then it happened again. 

And again. 

And again. 

Away from the limelight of North Korea and trade policy, the State Department has persisted throughout the summer with inexplicable deference to China.
On June 7, the department released its “Review of Key Developments in Hong Kong,” offering an obvious opportunity to raise concerns about Beijing’s ever-tightening authoritarian grip on the city. After praising the government for its economic management, the statement went on to note, “certain other actions by the Central Government appear to be inconsistent with its stated commitments to Hong Kong’s high degree of autonomy.” 

This is language you use — “appear to be inconsistent with” — when you’re either too afraid or just not that interested in speaking truth to power.
The following week, the department’s spokesperson was asked whether the United States had any concerns about China’s renewed diplomatic offensive to further isolate Taiwan, having just convinced Panama City to sever ties with Taipei. 

In response, spokesperson Heather Nauert reached into the vault of meaningless diplomacy speak and pulled out this: “We, the United States, urge all concerned parties to engage in productive dialogue and avoid escalatory and destabilizing moves.” 

Compare “urge all concerned parties” to a bipartisan letter that eight leading senators sent to President Donald Trump on June 23 expressing concerns that “China has intensified its economic coercion and military intimidation tactics” against Taiwan.
Not to be outdone by his spokesperson, Tillerson was back to aping Chinese talking points on June 21, in his official statement following the inaugural U.S.-China Diplomatic and Security Dialogue. After offering boilerplate remarks about U.S. policy in the South China Sea, Tillerson concluded by saying, without further comment or amendment: “With that said, China has committed to resolve their disputes peacefully and in accordance with recognized principles of international law, including the U.N. Convention on the Law of the Sea.” 

Of course, China isn’t resolving its disputes peacefully, and Beijing has explicitly rejected the landmark ruling of an arbitral tribunal under the convention in question. 

But why spoil the mood?
In early July, there were hopeful signs that the administration’s accommodation of China was coming to an end. 

Trump took to Twitter to declare his disappointment with Xi Jinping on North Korea: “So much for China working with us – but we had to give it a try!” 

This came after a busy week of actions aimed at bolstering U.S. policy in Asia, including the administration’s announcement of its first arms sales package to Taiwan, a new set of sanctions against Chinese entities illicitly doing business with North Korea, and a freedom of navigation operation in the South China Sea.
But despite this flurry of activity, the State Department has stuck to its pro-China tendencies. 

Case in point: On August 18, the department had exactly nothing to say at an official press briefing the day after 20-year old Joshua Wong and his pro-democracy colleagues were sentenced as political prisoners in Hong Kong. 

Astonishingly, a week has gone by and all the State Department has managed to muster is a tepid quote from a spokesperson for the U.S. consulate general in Hong Kong: “We are concerned by the decision of the Hong Kong authorities to seek a tougher sentence. We hope Hong Kong’s law enforcement continues to reflect Hong Kong’s high degree of autonomy and remains apolitical.” 

If I’m in Beijing, I read that as a free pass.
This pattern of capitulation is deeply troubling because things like statements by the secretary (or lack thereof) and official press guidance result from a clearance process in the State Department where all of the relevant offices should have the opportunity to offer edits and suggestions. 

What we have seen over the last several months is not just a series of random, off the cuff remarks, but instead a State Department deliberately unwilling to criticize China. 

This was the case with Nauert’s dreadful June 13 Taiwan statement. 

Despite urgings at the working-level to voice support for Taiwan and call out China’s destabilizing actions, a “blame Taiwan” view ultimately prevailed, which held instead that the real, underlying problem aggravating cross-Strait relations is that Taiwanese President Tsai Ing-wen has not sufficiently kowtowed to Beijing.
This has to stop. 

It has to stop because the State Department is giving Beijing a green light to bully Taiwan, further suppress Hong Kong, and push toward its goal of controlling the South China Sea. 

It has to stop because the State Department is generating serious concerns throughout the region about the credibility of America’s commitment to Asia and its willingness to push back on Chinese assertiveness.
Meanwhile, it isn’t totally clear where this accommodationist impulse is coming from. 

It appears to be some noxious combination of senior officials with no China expertise, Trump’s own transactionalism and willingness to trade U.S. interests for the right price, the romancing and capture of Jared Kushner, Trump’s son-in-law and senior advisor, by Chinese Ambassador Cui Tiankai, and risk-averse elements within the State Department that would rather see a stable, positive U.S.-China relationship regardless of whether a more competitive approach would better serve U.S. interests. (Notable exceptions can be found in the department’s various annual reports, for example those on trafficking in persons and religious freedom, which are prepared by subject-matter experts in functional bureaus.)
To reverse this damaging trend, other parts of the foreign policy establishment will have to step in. The State Department’s approach to China does not reflect majority views at the National Security Council or the Defense Department (Or the Treasury Department, Commerce Department, and Justice Department — or Congress, for that matter.) 

As a result, National Security Advisor H.R. McMaster and Secretary of Defense James Mattis will have to weigh in more actively on China issues. 

Congress also has a critical oversight role in demanding hearings and accountability for this torrent of feckless statements. 

To rule out more malicious motives, the Justice Department should ensure that investigations into Russian interference in U.S. politics also examine private business deals, consulting relationships, and secret channels that involve China and Trump administration officials.
Finally, the point should be made repeatedly that this is exactly the wrong way to achieve America’s goals on North Korea, trade, or whatever else the administration decides is the focus of the day in Asia. 

Bowing to China on issue after issue has only reinforced the impression in Beijing that the Trump administration — rather than being firm and principled in defending U.S. interests — can be bought or bent with little effort. 

And that’s a game China will win time and again against a president and cabinet with so little experience on Asia.

US completely infiltrated by Chinese spies

FBI Sino-American employee Kun Shan Chun gets two years in prison for acting as Chinese spy
By Nate Raymond

The quiet Sino-American FBI agent: Kun Shan Chun, alias Joey Chun

Sino-American officer Edward Lin was charged with espionage, falsifying records, and patronizing prostitutes.

Sino-American engineer Chi Mak passed unclassified technical documents to China

NEW YORK -- A former FBI employee in New York was sentenced to two years in prison on Friday after admitting that he illegally acted at the direction of a Chinese official to gather sensitive information.
Kun Shan Chun, also known as Joey Chun, was also ordered by U.S. District Judge Victor Marrero in Manhattan to pay $10,000 after pleading guilty in August to having illegally acted as an agent of a foreign government.
"I'm so sorry," a tearful Chun said in court. 

"I take full responsibility."
Chun, a U.S. citizen who was born in China, was arrested in March in connection with what prosecutors called a duplicitous betrayal of the FBI, which had employed him in its New York field office since 1997.
Prosecutors said that beginning in 2005, Chinese individuals claiming to be affiliated with a China-based printer products manufacturer called Zhuhai Kolion Technology Company Ltd solicited an investment from one of Chun's parents.
Chun, 47, first met purported Kolion associates during a 2005 trip, and met them abroad at several other times, eventually meeting a Chinese official who asked him about the FBI and surveillance practices and targets, prosecutors said.
In turn, Chun provided the official an FBI organizational chart and photographs related to surveillance technologies, prosecutors said.
In exchange, Chun's associates paid for him to go on international trips, and they sometimes also paid for prostitutes for him while he was abroad, prosecutors said.
By 2015, the FBI had sent an undercover agent to meet with Chun, who told the agent that "if you deal with China's government, you know what they want."
"They want what the American government is doing," he said, according to prosecutors.
During a later meeting, in which they discussed selling classified information the agent provided, Chun said his Chinese associates had asked him about surveillance targets and if he had information on "who they watching," prosecutors said.
The sale never happened, after Chun said he believed he was under investigation and one of his associates told the him not to trust the agent, who may be part of a "set up."
In court on Friday, Chun's lawyer, Jonathan Marvinny, argued his client deserved no prison time, saying he had acted only to protect his parents' investment and was "not out to harm the United States."
Marrero was unconvinced.
"Mr. Chun knew what he was doing, and he knew it was very wrong," he said.

China's Fifth Column: Szuhsiung "Allen" Ho has 'vital' intelligence on China

• Plea set for Chinese spy Szuhsiung "Allen" Ho
• Szuhsiung "Allen" Ho's cooperation seen as key to national security

By Jamie Satterfield

The Quiet Chinese

In the nation's first legal challenge of Chinese procurement of American nuclear know-how, the government has scored a victory in procuring the cooperation of an operative for China, federal court records show.
According to a docket entry, Szuhsiung "Allen" Ho is scheduled to plead guilty Friday in U.S. District Court in the nation's first case of nuclear espionage involving China. 

The plea deal itself has not yet been filed.
But a stack of documents already filed in the case suggest Ho's plea is considered key to gathering intelligence on the inner workings of China's nuclear program -- both the one used to power homes and the one to make war -- in a case in which the Chinese government refuses to even acknowledge the indictment of its own nuclear power company.
Ho is charged in U.S. District Court in Knoxville with plotting to develop special nuclear material illegally outside the United States.
Ho, his firm Energy Technology International, and Chinese nuclear power plant China General Nuclear Power were indicted in April in a plot to lure nuclear experts in the U.S. into providing information to allow China to develop and produce nuclear material based on American technology and below the radar of the U.S. government.
It is the first such case in the nation brought under a provision of law that regulates the sharing of U.S. nuclear technology with certain countries deemed too untrustworthy to see it. 

Those countries include China. 

Although the technology is used for nuclear-power generation, the by-product of that process can be used to produce nuclear weapons.
The investigation began at the behest of the Tennessee Valley Authority, which contacted the FBI with concerns about one of its senior executives, engineer Ching Huey, who later admitted he was paid by Ho and, by extension, the Chinese government, to supply information about nuclear power production and even traveled to China on the Chinese government's dime. 

Huey agreed to cooperate in the probe. 

He has since struck a plea deal.
Ho, a Taiwan native who became a naturalized U.S. citizen, brought to the defense table a stable of high-priced attorneys, including Washington attorney Peter Zeidenberg and Knoxville attorney Wade Davies. 

Assistant U.S. Attorney Charles Atchley Jr. has repeatedly insisted in court the Chinese government had paid Ho millions for his spy work. 

Ho worked for the Chinese government and lived in China most of the time.
Testimony from FBI Agent William Leckrone also emphasized Ho's key position in the eyes of those tasked with national security for the U.S. 

In a recent hearing, Leckrone said the FBI "believed Ho had information of value to the intelligence community." 

The FBI pushed him to cooperate the day of his arrest in April, but he refused, court records show.
A lawyer with the Justice Department's National Security Division is now attached to the local prosecution team of Atchley and Assistant U.S. Attorney Bart Slabbekorn Jr.
Under a standard plea deal, a suspect is required to debrief with the government. 

The extent of Ho's cooperation agreement is not yet known.

China's Fifth Column

Through reclusive Wa, China's reach extends into Suu Kyi's Myanmar

By Antoni Slodkowski and Yimou Lee | PANGSAN, MYANMAR

United Wa State Army (UWSA) soldiers march during a media display in Pansang, Wa territory in northeast Myanmar October 4, 2016. Picture taken on October 4, 2016.

Children leave school in Namtit, Wa territory in northeast Myanmar November 30, 2016. Picture taken on November 30, 

United Wa State Army (UWSA) soldiers march during a media display in Pansang, Wa territory in northeast Myanmar October 4, 2016. Picture taken on October 4, 2016. 

Ethnic Wa performer dressed as United Wa State Army (UWSA) soldiers perform a traditional dance in Mongmao, Wa territory in northeast Myanmar October 1, 2016. Picture taken on October 1, 2016. 

A teacher conducts a Chinese language lesson in a school in Namtit, Wa territory in northeast Myanmar November 30, 2016. Picture taken on November 30, 2016. 

China is extending its sway over an autonomous enclave run by Myanmar's most powerful ethnic armed group, sources in the region told Reuters, bolstering Beijing's role in the peace process that is the signature policy of Aung San Suu Kyi.

The "foreign policy" of the self-proclaimed Wa State is closely monitored by Beijing, senior officials in the administration run by the 30,000-strong United Wa State Army (UWSA) and its political wing said, with contact with Western governments, businesses or aid groups deemed particularly sensitive.
Official known to Myanmar as "Special Region 2", the remote territory is the size of Belgium and home to 600,000 people. 

Largely closed to Westerners for decades, it was visited by Reuters in October.
China's influence is quickly apparent, with street signs in Mandarin and Chinese businesses and banknotes ubiquitous in the self-proclaimed state's capital, Pangsan, and other Wa towns that straddle the rugged border.
"We share the same language and we marry each other," said the head of the Wa Foreign Affairs Office, Zhao Guo'an, when asked about the Chinese influence on Wa politics. 

"There's nothing we can do about it. We use Chinese currency, we speak Chinese and we wear and use products from China. Very little of that is from Myanmar."
Delve a little deeper, and it is apparent that China's reach extends much further than business and social ties.

EYES AND EARS
When Lo Yaku, the Wa agriculture minister, was asked about the drugs the statelet is accused of producing on an industrial scale, his secretary and a staffer from the official Wa News Bureau intervened to deflect the question. 

Both men are not Wa natives, but from China.
"This question was answered yesterday," said I Feng, a news bureau reporter originally from western China.
"After the drug eradication campaign, our government encouraged agencies, individuals and Chinese investors to participate in anti-drug activities," said the minister's secretary, Chen Chun, originally from Zhejiang province on China's faraway east coast.
A similar scene played out repeatedly during Reuters' visit -- the first by a major international news organization -- questions on topics ranging from military funding to methamphetamine were mostly fielded not by the Wa minister but by an accompanying Chinese minder.
These and other Chinese citizens Reuters found working in the administration in Pangsan said they were employees of the Wa government and "did not work" for the authorities in Beijing.
But their presence hints at just how closely entwined the Wa State and its leaders are with their giant neighbor.
"China has its ears and eyes everywhere, including in the government and business, and is wary of any deepening of ties with the West," said one minister from the Wa government, speaking on condition of anonymity due the sensitivity of the matter.
"We take this very seriously, and act so as not to anger China," he said, adding that all dealings with Washington and Brussels, as well as every foreigner or NGO entering Wa territory, were scrupulously reported to China.
China's Ministry of Foreign Affairs said in response to a question from Reuters that "as a friendly neighbor" it has "consistently respected Myanmar's sovereignty and territorial integrity, and not interfered with Myanmar's internal affairs".

OPENING UP
The Wa State was formed in 1989, when the Communist Party of Burma (CPB) disintegrated into ethnic armies, and has been run as an autonomous region by the UWSA beyond the authority of the central Myanmar government since.
The rare invitation to a small group of foreign journalists to visit -- made at Beijing's urging according to two ministers from the Wa government -- appears to be part of a charm offensive aimed at the new civilian government led by democracy champion Suu Kyi.
Reaching an accord with the Wa and other rebels is one of Suu Kyi's biggest challenges as she grapples with the interlocking issues of ending decades of ethnic conflict and tackling drug production in Myanmar's lawless border regions.
While it has not fought the Myanmar army in years, the USWA -- whose leaders deny allegations from the United States and others that it is a major producer of methamphetamine -- has so far declined to actively participate in Suu Kyi's peace process.
"It's a good timing for us to open up. There's a new political reality in Myanmar, so it's good to engage in the political dialogue and open up to the outside world," said Nyi Rang, a Wa government official.
China also has its own interests in play, according to analysts.
Beijing hopes Suu Kyi will restart a blocked, Chinese-financed mega-dam project, and wants to protect its extensive mineral interests in the country after the removal of U.S. sanctions has opened it up to Western competitors.
"China is playing a complex game in Myanmar aimed at safeguarding and extending its considerable economic, commercial and strategic interests while at the same time deterring any encroachment by Western or Japanese interests along its southwestern border," said Anthony Davis, a Bangkok-based analyst for security consulting firm IHS-Jane's.
"In this carrot-and-stick game the UWSA is unquestionably the biggest stick Beijing wields -- plausibly deniable diplomatically, hugely influential as a strategic rear-base for allied ethnic factions, and itself far too powerful to be taken down militarily."

WEAPONS SALES
The Wa mini-state relies heavily on China as a market for its exports of rubber and metals such as tin.
As well as occupying government posts, Chinese citizens, mainly from neighboring Yunnan province, dominate local markets and the Wa elite send their children to Chinese schools and elderly to its hospitals.
"We don't make anything here. The stuff we eat, we wear and we use is all from China," said Chu Chin Hung, district office chief in the Wa border town of Nan Tit. 

"Every Saturday morning there is a farmers' market, but almost all of the vendors are from China."
Experts such as IHS-Jane's Defence Weekly have previously reported that China has sold a variety of weapons to the Wa. 

For the first time, a Wa minister, who declined to be identified, confirmed some of those reports and described the process.
"The Wa State has bought military trucks directly from China and light weapons from China indirectly through Laos," said the minister. 

"Those weapons include rifles and cannons. They don't want to anger Myanmar by selling directly."
The Chinese Defence Ministry denied selling weapons to the Wa.
"China has consistently and strictly adhered to a military equipment export policy that benefits the recipient country's present defense needs, does not harm regional or world peace, security and stability, and that does not interfere in the internal affairs of the recipient country," it said in a statement to Reuters.

China's Fifth Column

Phone Maker Faces Lawsuit Over 'Backdoor' to China
by Jeff John Roberts 

Secret software sent texts to China.

A U.S. company is facing a class action lawsuit following reports it sold thousands of Android phones containing software that sent consumers’ private messages to China.
Miami-based Blu Products, which sells low cost phones through Amazon and BestBuy, came to attention last week when the New York Times identified it as among the phone makers whose products contained a so-called “backdoor.”
In this case, the backdoor served to send copies of users’ text messages and phone call data every 72 hours to a Chinese software firm called Shanghai AdUps Technologies. 

It also relayed other data, such as information about location and app usage, every 24 hours. 

Following the report of the secret backdoor, Blu Products told the Times that 120,000 of its devices had been affected and that it had pushed out a software update to stop them sending information to China. 

It also said it had not known about the backdoor.
But the incident also led Rosen Legal, a firm specializing in class action lawsuits, to post a “security alert” warning consumers about the backdoor, and inviting those who had bought certain Blu Products devices to be part of an investigation and participate in the lawsuit. 

The notice also explained how consumers could determine if their devices had been affected by what the firm calls “spyware”:
You can check to see if your Blu Products phone was affected by going to the Settings Menu in Android, selecting “Apps,” followed by “Show System” and then “Wireless Update.” 

If your version of Wireless Update is from 5.0.x to 5.3.x, or above, you phone was affected and you may be a member of the class action.
Blu Products, for its part, dismissed the law firm’s allegations.
“This is a non issue and there is no wrong doing from BLU to warrant any such claim,” said Carmen Gonzalez, senior marketing director for Blu Products, said in an email to Fortune.

The controversy comes at a time of growing concern over how phones, and many other Internet-connected devices, are susceptible to hacking or intrusive software that records or transmits private information. 

This week, a security firm reported the existence of another powerful backdoor in over 3 million Android devices that permits China to monitor the device owners’ communications.