The Moral Hazard of Dealing With China

Stephen Schwarzman: A Loyal Xi Jinping's Fellow Traveller
By BETHANY ALLEN-EBRAHIMIAN

American Quisling: Chinese Vice Premier Liu Yandong shakes hands with Blackstone Group co-founder Stephen Schwarzman before a ceremony to officially open the Schwarzman Scholars program at Tsinghua University in Beijing.

Shortly before its first-ever applications period was due to close, the Schwarzman Scholars program held an admissions seminar at the Tsinghua University in Beijing.

The China-based graduate program, funded by American businessman Stephen Schwarzman’s personal wealth and fundraising efforts and modeled after Oxford University’s Rhodes Scholarship, had recruited heavily from the world’s top academic institutions, including Harvard, Yale, and Cambridge.
It would kick off its inaugural academic year in fall 2016, and was aiming for a cohort comprising the best students from China and around the world.
To guarantee a “scientific and fair” admissions process, the program invited a group of experts to participate in the seminar.
The meeting, held on September 20, 2015, was attended not just by academics and administrators, but also by top Chinese Communist Party luminaries, including officials from the CCP’s Youth League, Central Party School, and the State Council, as well as a high-ranking member of the United Front Work Department—the party’s political-influence arm.
These participants “conducted an in-depth discussion on how to select China’s future leaders,” according to an article posted to the Tsinghua University website.
The fact that such officials helped guide the Schwarzman Scholars admissions process reflects both the importance China’s leaders ascribe to the program and the party’s desire to leave nothing to chance.
But the program’s relationship with the CCP, while offering non-Chinese participants a rare inside look at the future elite of a one-party state, highlights a growing moral hazard confronting Western universities: As Xi Jinping’s China descends deeper into repression, curtailing personal as well as academic freedoms, at what point do the restrictions placed on American, British, and other institutions seeking to establish campuses and joint programs in China—a lucrative market and crucial subject of study—become too much to bear?
Dozens of Sino-foreign institutes and hundreds of joint educational programs exist in China.
Among them, the Schwarzman Scholars program is particularly vulnerable to pressure from the CCP. That’s because, unlike other U.S.-China education initiatives, it has no American academic institution as a partner.
Its primary institutional tie to the United States is the private education foundation of Stephen Schwarzman, a billionaire with extensive business dealings in China.
In 2007, a year before his private-equity firm, Blackstone, opened an office in Beijing, Schwarzman’s firm announced that China Investment Corporation, China’s state-investment vehicle, would acquire a $3 billion stake in the company. (China sold the stake in 2018.)
Schwarzman Scholars’ institutional home, Tsinghua University, is subject to Chinese laws and owes its continued existence and funding to the Chinese government’s largesse.
Though the program is staffed with highly respected individuals, it isn’t affiliated with any Western-based academic institution that could serve as a moral counterweight, or draw a line in the sand, should the situation in China deteriorate.
The program has particularly close ties to the United Front, which is key to understanding the CCP’s influence both at home and abroad.
The party exercises tight discipline over its 90 million members, and the United Front is responsible for establishing ideological sway over everyone else, including foreigners and Chinese nationals who live overseas. 
Under Xi, the United Front has undergone a restructuring that has amplified its power and strengthened its clout both inside and outside of China.
One of its bureaus focuses specifically on students and professors, and sent a top representative to participate in Schwarzman Scholars’ 2015 admissions seminar.
A United Front magazine, Exchange Student, has also featured the Schwarzman program.
The program and the United Front share personnel ties too. 
The United Front views David Daokui Li, who was the Schwarzman Scholars’ founding dean and is now a finance professor at Tsinghua, as an especially reliable ally.
Beijing Education, a magazine published by the Beijing Municipal Education Commission, dedicated an entire April 2017 article to praising Li as an “outstanding nonparty representative”—a term used by the United Front for people who are not official members of the CCP but who promote its goals and mission, and who “have the willingness and ability to participate in political affairs.” 
Li’s résumé is filled with recent United Front affiliations: He has served as a national representative to the Chinese People’s Political Consultative Conference, a party organization of more than 2,000 delegates that is an important domestic arm of the United Front; has attended numerous conferences hosted by the State Council and the United Front, according to the Beijing Education article; and has “received a high degree of recognition from the Central United Front Work Department and the National Committee of the Chinese People’s Political Consultative Conference.” (Li did not respond to a request for comment.)
Julian Chang, the former Schwarzman Scholars associate dean of student life who joined the program in its inaugural year from the Harvard Kennedy School, also in 2015 became a nonresident senior fellow at the Center for China and Globalization, a Beijing-based think tank that was founded by the Western Returned Scholars Association—itself officially directed by the United Front. CCG’s founder, Wang Huiyao, describes himself in an online biography as a “member of the expert advisory group of the United Front Work Department.”
Schwarzman himself met with Sun Chunlan, the former national head of the United Front, in April 2018 at Zhongnanhai, the party and government headquarters in Beijing.
In July 2018, Schwarzman Scholars co-hosted a conference on Chinese philanthropy with Tsinghua University and the CCG.
One of the highlighted speakers was Tan Tianxing, deputy minister of the United Front.
Of course, when operating inside China, engaging with the CCP and its many departments is to some extent inevitable—these are the mechanisms by which institutions are created and sustained.
It’s also neither surprising nor nefarious that a party ally like Li was offered a founding position at Schwarzman and appears to have been recognized by the party for his overtures.
In a China that is more and more authoritarian, major initiatives such as Schwarzman Scholars are only possible with the assistance of those whom the party trusts—and to create a new program, especially a high-profile one dedicated to a higher calling than profit, its founders must secure the support of the party.
But these kinds of compromises were far easier to accept a decade ago, when a kinder, gentler version of the party ruled.
As Beijing has become more heavy-handed in its approach to academia and civil society, universities have begun applying the brakes to partnerships there. 
In April 2016, the University of Notre Dame canceled plans for a partnership with Zhejiang University amid concerns about academic and religious freedom. 
In October 2018, Cornell University announced that it was severing ties with Renmin University after the Chinese institution punished Chinese students for labor-related activism.
This year, a Cornell faculty member argued for further distancing from China, citing the country’s detention of more than 1 million Muslim ethnic minorities in mass internment camps in the northwest coloy of East Turkestan.
And Wesleyan University, a private liberal-arts college in Middletown, Connecticut, said in October that it would no longer pursue a joint campus in China.
“It became clear that they were less interested in a liberal-arts approach than we initially thought,” a university spokesperson, Lauren Rubenstein, told Wesleyan’s student newspaper.
Several former participants in the Schwarzman Scholars program told me that the academic environment did appear, on the whole, to be free—or as free as one could expect, given that Chinese professors and students at times faced constraints on what they could and could not say.
And party sway over admissions seems to extend only to Chinese participants.
But such a process gives the lie to China’s assurances that it enters into such partnerships based on open exchange, and out of a desire to deepen mutual understanding.
The involvement of party officials in the selection of Chinese students is “part of the program design,” a Schwarzman Scholars spokesperson told me.
“The intention was always for China to identify its future leaders for participation in the program.” The spokesperson said the program’s U.S. office has “had no engagement” with the United Front, but added that Schwarzman Scholars is “about maintaining dialogue through periods of adversity” and that the program had “appropriate dialogue around academic ethics and freedom.”
To be sure, there is great value in observing authoritarianism from the inside.
I once spoke with a young American who told me that she had specifically chosen to pursue a master’s degree in political science from a university in China to get hands-on experience navigating an obstructed information system.
She learned how Chinese academics and researchers operate, what remains possible, and what kind of knowledge is successfully stymied.
That is invaluable for understanding how the party governs, and how Chinese society responds to that governance.
It benefits outsiders to have an intimate understanding of that reality.
But at what point does engagement become complicity? 
Take this year’s commencement ceremony.
The program invited Tang Xiao’ou, the founder of the Chinese artificial-intelligence company SenseTime, to speak.
The New York Times reported in April that SenseTime helped develop facial-recognition technology that can pick ethnic minorities out of a crowd, a capability the Chinese government is deploying against Muslim minorities in East Turkestan.
During his speech, according to a published account by Schwarzman alum Noah Lachs, Tang called reports of SenseTime’s involvement in human-rights violations “fake news.”
While the Chinese students in the audience laughed at this, wrote Lachs, the Western students reacted with “muted fury.”
Upon learning that Schwarzman Scholars had chosen as its commencement speaker one of the architects of East Turkestan’s minority-targeting mass surveillance, dozens of program participants had sent a joint letter to the administration, asking them to choose a different speaker. 
Program staff declined, and after the speech went badly, as Schwarzman participants had feared, they sent another more strongly worded letter to the administration.
“In this instance, we chose as a speaker a recognized global leader in AI, given the relevance and importance of the topic. When a subset of students raised objections, we listened and carefully considered their viewpoints,” the Schwarzman Scholars spokesperson told me.
“We ultimately decided that since the invitation had already been made and accepted, it was inappropriate and rude to disinvite the speaker.”
Four months after the ceremony, the United States placed SenseTime and 27 other Chinese entities deemed complicit in East Turkestan human-rights abuses on the U.S. “entity list,” which prohibits American companies from selling products to them without special approval.
As China becomes more and more locked down, as it carries out cultural genocide against ethnic minorities while trumpeting its governance model to the world, it requires what is approaching a stark choice: to operate fully within the party’s machinery, or to stay away entirely.
At what point does the price of continued ties become too high?
This is the existential question that those who wish to engage with China must now ask themselves.

By Taking Aim at Chinese Tech Firms, President Trump Signals a Strategy Shift

In blacklisting surveillance companies, the United States is the first major government to punish China for its crackdown on Muslims.
By Paul Mozur and Edward Wong
Hikvision cameras in a mall in Beijing in May. The company was among those blacklisted by the Trump administration this week.

SHANGHAI — The world has largely sat by for nearly two years as China detained more than one million people, mostly Muslims and members of minority ethnic groups, in concentration camps to force them to embrace the Communist Party.
Now, the Trump administration is taking the first public steps by a major world government toward punishing Beijing. 

In doing so, it is opening up a new front in the already worsening relationship between Washington and Beijing: human rights and the dystopian world of digital surveillance.
Trump administration officials on Monday placed eight Chinese companies and a number of police departments on a blacklist that forbids them to buy American-made technology like microchips, software and other vital components. 

The companies are at the vanguard of China’s surveillance and artificial intelligence ambitions, with many of them selling increasingly sophisticated systems used by governments to track people.
The White House cited their business in East Turkestan, a colony of northwestern China that is home to a largely Muslim minority group known as the Uighurs. 

More than one million ethnic Uighurs and other minorities have been locked in concentration camps there.On Tuesday, Secretary of State Mike Pompeo announced visa restrictions on Chinese officials believed to be involved in the detention or abuse of Muslim ethnic minorities.
The announcements suggest that the Trump administration is increasingly willing to listen to the advice of American officials focused on the strategic challenges posed by China and who are concerned about its human rights abuses, even if President Trump himself never seems to pay much attention to those.
The restrictions were announced just two days before American and Chinese officials were set to begin a 13th round of trade talks, most likely putting a chill over the negotiations.
More broadly, the White House, in its blacklist announcement, signaled a willingness to take aim at China’s technological dreams. 

China has plowed billions of dollars into companies developing advanced hardware and software to catch up with the United States. 

Some of the companies added to the list on Monday are among the world’s most valuable artificial intelligence start-ups.

A showroom video promoting Megvii’s facial recognition abilities.

Much of that technology — including facial recognition and computer vision — can be used to track people. 

That includes smartphone tracking, voice-pattern identification and systems that track individuals across cities through powerful cameras. 

Washington officials have grown increasingly worried about China’s ambitions to export its systems elsewhere, including places known for human rights abuses.

“This is an important first step in making some of the companies that have benefited the most from the concentration camps system in East Turkestan feel the consequences of their actions,” said Darren Byler, an anthropologist at the University of Washington who studies the plight of the Uighurs.
He said the move signaled that abuse of minority groups in East Turkestan“is real and justifies a political and economic response.”
It is also a potentially groundbreaking use of a powerful tool that the American government typically uses against terrorists. 

The Chinese companies and police departments were placed on what is called an entity list, which forbids them to buy sensitive American exports unless Washington grants American companies specific permission to sell to them.
Use of the entity list over a human rights issue may be a first, said Julian Ku, a professor of constitutional and international law at Hofstra University.
“As far as I know, it was the first time Commerce explicitly cited human rights as a foreign policy interest of the U.S. for purposes of export controls,” he said, referring to the Department of Commerce, which manages the entity lists. 

“This is not an implausible reading of the regulations, but it is new and has potentially very broad applicability.”

The immediate effect on the Chinese companies is likely to be minimal, because many have stockpiled essential supplies, but they could feel increasing pain if they stay on the blacklist for months or years.
Perhaps more important, it can put a cloud over the companies’ reputations, limiting their sales in the United States or elsewhere and keeping them from hiring the world’s best technology talent.
“The U.S. move today puts up a big roadblock on the road to internationalization,” said Matt Sheehan, a fellow at MacroPolo, the think tank of the Paulson Institute.
“Most global technology companies are setting up labs abroad, partnering with the best universities around the world and looking to recruit top talent from everywhere,” he said. 

“That all just got a lot harder now that they’re marked with the scarlet letter of the entity list.”
The move followed more than a year of internal debate over how to punish China for its persecution of Muslims in  East Turkestan.
Senior officials on the National Security Council and in the State Department have pushed for the use of the entity list to target Chinese companies supplying surveillance technology to the security forces in  East Turkestan. 

They have also urged President Trump to approve sanctions that would penalize Chinese officials and companies involved in the abuses.
But top American trade negotiators, including the treasury secretary, Steven Mnuchin, have cautioned against policies that would upset trade talks. 

Mr. Trump has said he wants to reach a trade deal with China.
Until now, other top officials, most notably Mr. Pompeo and Vice President Mike Pence, have denounced China’s policies in East Turkestan but not enacted punitive measures. 

This month, American customs officials blocked products from a Chinese garment maker in East Turkestan, but they had held off on stronger action.
The Chinese companies on the list include Hikvision, a major maker of surveillance cameras, and the well-funded artificial intelligence start-ups SenseTime and Megvii.

A Hikvision camera in downtown Beijing. American officials worry that China will export its surveillance systems.

SenseTime said it set “high ethical standards for A.I. technologies,” while Megvii said it required “clients not to weaponize our technology or solutions or use them for illegal purposes.” 

It added that it had generated no revenue from within East Turkestan in the first half of 2019.

New York Times reporting showed that four of the companies on the list — Yitu, Hikvision, Megvii and SenseTime — helped build systems across China that sought to use facial recognition to automate the detection of Uighurs.

Government procurement documents, company marketing materials and official government releases tied all eight companies to various business operations and sales in East Turkestan. 

The many local East Turkestan police bureaus on the list buy commercial American technology like Intel microchips and Microsoft Windows software, according to procurement documents.
President Trump’s next step could be imposing sanctions on specific Chinese officials working in East Turkestan. 

Among the officials discussed is Chen Quanguo, a Politburo member who is the party chief in East Turkestan and an architect of the system of internment camps and surveillance.
The blacklist action is a sign that strategic advisors have become even more influential in the administration in recent weeks.
Matthew Pottinger, the senior director for Asia and an architect of policies aimed at countering China, was promoted to deputy national security adviser last month. 

Earlier, Robert O’Brien, the administration’s top hostage negotiator, replaced John R. Bolton as national security adviser. 

Mr. O’Brien has written that China poses an enormous challenge to the United States.
“This East Turkestan package has been in the works now for months,” said Samm Sacks, a cybersecurity policy fellow at New America, a think tank. 

“So the fact that it comes out now just ahead of the next round of trade talks sends a signal from those in the administration who want no deal.”

One Month, 500,000 Face Scans: How China Is Using A.I. to Profile a Minority

In a major ethical leap for the tech world, Chinese start-ups have built algorithms that the government uses to track members of a largely Muslim minority group.
By Paul Mozur

SenseTime is among the Chinese artificial intelligence companies developing facial recognition technology.

The Chinese government has drawn wide international condemnation for its harsh crackdown on ethnic Muslims in its western region, including holding as many as a million of them in detention camps.
Now, documents and interviews show that the authorities are also using a vast, secret system of advanced facial recognition technology to track and control the Uighurs, a largely Muslim minority. It is the first known example of a government intentionally using artificial intelligence for racial profiling, experts said.
The facial recognition technology, which is integrated into China’s rapidly expanding networks of surveillance cameras, looks exclusively for Uighurs based on their appearance and keeps records of their comings and goings for search and review. 

The practice makes China a pioneer in applying next-generation technology to watch its people, potentially ushering in a new era of automated racism.
The technology and its use to keep tabs on China’s 11 million Uighurs were described by five people with direct knowledge of the systems, who requested anonymity because they feared retribution. 

The New York Times also reviewed databases used by the police, government procurement documents and advertising materials distributed by the A.I. companies that make the systems.
Chinese authorities already maintain a vast surveillance net, including tracking people’s DNA, in the western region of East Turkestan, which many Uighurs call home. 

But the scope of the new systems, previously unreported, extends that monitoring into many other corners of the country.

Shoppers lined up for identification checks outside the Kashgar Bazaar last fall. Members of the largely Muslim Uighur minority have been under Chinese surveillance and persecution for years.

The police are now using facial recognition technology to target Uighurs in wealthy eastern cities like Hangzhou and Wenzhou and across the coastal province of Fujian, said two of the people. 

Law enforcement in the central Chinese city of Sanmenxia, along the Yellow River, ran a system that over the course of a month this year screened whether residents were Uighurs 500,000 times.
Police documents show demand for such capabilities is spreading. 

Almost two dozen police departments in 16 different provinces and regions across China sought such technology beginning in 2018, according to procurement documents. 

Law enforcement from the central province of Shaanxi, for example, aimed to acquire a smart camera system last year that “should support facial recognition to identify Uighur/non-Uighur attributes.”
Some police departments and technology companies described the practice as “minority identification,” though three of the people said that phrase was a euphemism for a tool that sought to identify Uighurs exclusively. 

Uighurs often look distinct from China’s majority Han population, more closely resembling people from Central Asia. 

Such differences make it easier for software to single them out.
For decades, democracies have had a near monopoly on cutting-edge technology. 

Today, a new generation of start-ups catering to Beijing’s authoritarian needs are beginning to set the tone for emerging technologies like artificial intelligence. 

Similar tools could automate biases based on skin color and ethnicity elsewhere.
“Take the most risky application of this technology, and chances are good someone is going to try it,” said Clare Garvie, an associate at the Center on Privacy and Technology at Georgetown Law. 

“If you make a technology that can classify people by an ethnicity, someone will use it to repress that ethnicity.”
From a technology standpoint, using algorithms to label people based on race or ethnicity has become relatively easy. 

Companies like I.B.M. advertise software that can sort people into broad groups.
But China has broken new ground by identifying one ethnic group for law enforcement purposes. One Chinese start-up, CloudWalk, outlined a sample experience in marketing its own surveillance systems. 

The technology, it said, could recognize “sensitive groups of people.”

A screen shot from the CloudWalk website details a possible use for its facial recognition technology. One of them: recognizing “sensitive groups of people.”

A translation of marketing material for CloudWalk’s facial recognition technology.

“If originally one Uighur lives in a neighborhood, and within 20 days six Uighurs appear,” it said on its website, “it immediately sends alarms” to law enforcement.
In practice, the systems are imperfect, two of the people said. 

Often, their accuracy depends on environmental factors like lighting and the positioning of cameras.
In the United States and Europe, the debate in the artificial intelligence community has focused on the unconscious biases of those designing the technology. 

Recent tests showed facial recognition systems made by companies like I.B.M. and Amazon were less accurate at identifying the features of darker-skinned people.
China’s efforts raise starker issues. 

While facial recognition technology uses aspects like skin tone and face shapes to sort images in photos or videos, it must be told by humans to categorize people based on social definitions of race or ethnicity. 

Chinese police, with the help of the start-ups, have done that.
“It’s something that seems shocking coming from the U.S., where there is most likely racism built into our algorithmic decision making, but not in an overt way like this,” said Jennifer Lynch, surveillance litigation director at the Electronic Frontier Foundation. 

“There’s not a system designed to identify someone as African-American, for example.”
The Chinese A.I. companies behind the software include Yitu, Megvii, SenseTime, and CloudWalk, which are each valued at more than $1 billion. 

Another company, Hikvision, that sells cameras and software to process the images, offered a minority recognition function, but began phasing it out in 2018, according to one of the people.
The companies’ valuations soared in 2018 as China’s Ministry of Public Security, its top police agency, set aside billions of dollars under two government plans, called Skynet and Sharp Eyes, to computerize surveillance, policing and intelligence collection.
In a statement, a SenseTime spokeswoman said she checked with “relevant teams,” who were not aware its technology was being used to profile. 

Megvii said in a statement it was focused on “commercial not political solutions,” adding, “we are concerned about the well-being and safety of individual citizens, not about monitoring groups.” CloudWalk and Yitu did not respond to requests for comment.
China’s Ministry of Public Security did not respond to a faxed request for comment.
Selling products with names like Fire Eye, Sky Eye and Dragonfly Eye, the start-ups promise to use A.I. to analyze footage from China’s surveillance cameras. 

The technology is not mature — in 2017 Yitu promoted a one-in-three success rate when the police responded to its alarms at a train station — and many of China’s cameras are not powerful enough for facial recognition software to work effectively.
Yet they help advance China’s architecture for social control. 

To make the algorithms work, the police have put together face-image databases for people with criminal records, mental illnesses, records of drug use, and those who petitioned the government over grievances, according to two of the people and procurement documents. 

A national database of criminals at large includes about 300,000 faces, while a list of people with a history of drug use in the city of Wenzhou totals 8,000 faces, they said.

A security camera in a rebuilt section of the Old City in Kashgar, East Turkestan.

Using a process called machine learning, engineers feed data to artificial intelligence systems to train them to recognize patterns or traits. 

In the case of the profiling, they would provide thousands of labeled images of both Uighurs and non-Uighurs. 

That would help generate a function to distinguish the ethnic group.
The A.I. companies have taken money from major investors. 

Fidelity International and Qualcomm Ventures were a part of a consortium that invested $620 million in SenseTime. 

Sequoia invested in Yitu. 

Megvii is backed by Sinovation Ventures, the fund of the well-known Chinese tech investor Kai-Fu Lee.
A Sinovation spokeswoman said the fund had recently sold a part of its stake in Megvii and relinquished its seat on the board. 

Fidelity declined to comment. 

Sequoia and Qualcomm did not respond to emailed requests for comment.
Lee, a booster of Chinese A.I., has argued that China has an advantage in developing A.I. because its leaders are less fussed by “legal intricacies” or “moral consensus.”
“We are not passive spectators in the story of A.I. — we are the authors of it,” Lee wrote last year. 

“That means the values underpinning our visions of an A.I. future could well become self-fulfilling prophecies.” 

He declined to comment on his fund’s investment in Megvii or its practices.
Ethnic profiling within China’s tech industry isn’t a secret, the people said. 

It has become so common that one of the people likened it to the short-range wireless technology Bluetooth. 

Employees at Megvii were warned about the sensitivity of discussing ethnic targeting publicly, another person said.
China has devoted major resources toward tracking Uighurs, citing ethnic violence in East Turkestan and Uighur terrorist attacks elsewhere. 

Beijing has thrown hundreds of thousands of Uighurs and others in East Turkestan into concentration camps.
The software extends the state’s ability to label Uighurs to the rest of the country. 

One national database stores the faces of all Uighurs who leave East Turkestan, according to two of the people.
Government procurement documents from the past two years also show demand has spread. 

In the city of Yongzhou in southern Hunan Province, law enforcement officials sought software to “characterize and search whether or not someone is a Uighur,” according to one document.
In two counties in Guizhou Province, the police listed a need for Uighur classification. 

One asked for the ability to recognize Uighurs based on identification photos at better than 97 percent accuracy. 

In the central megacity of Chongqing and the region of Tibet, the police put out tenders for similar software. 

And a procurement document for Hebei Province described how the police should be notified when multiple Uighurs booked the same flight on the same day.
A study in 2018 by the authorities described a use for other types of databases. 

Co-written by a Shanghai police official, the paper said facial recognition systems installed near schools could screen for people included in databases of the mentally ill or crime suspects.
One database generated by Yitu software and reviewed by The Times showed how the police in the city of Sanmenxia used software running on cameras to attempt to identify residents more than 500,000 times over about a month beginning in mid-February.
Included in the code alongside tags like “rec_gender” and “rec_sunglasses” was “rec_uygur,” which returned a 1 if the software believed it had found a Uighur. 

Within the half million identifications the cameras attempted to record, the software guessed it saw Uighurs 2,834 times. 

Images stored alongside the entry would allow the police to double check.
Yitu and its rivals have ambitions to expand overseas. 

Such a push could easily put ethnic profiling software in the hands of other governments, said Jonathan Frankle, an A.I. researcher at the Massachusetts Institute of Technology.
“I don’t think it’s overblown to treat this as an existential threat to democracy,” Mr. Frankle said. “Once a country adopts a model in this heavy authoritarian mode, it’s using data to enforce thought and rules in a much more deep-seated fashion than might have been achievable 70 years ago in the Soviet Union. To that extent, this is an urgent crisis we are slowly sleepwalking our way into.”

An undercover police officer in Kashgar.

Blood Money

U.S. Firms Are Helping Build China’s Orwellian State
BY LINDSAY GORMAN, MATT SCHRADER
When a Dutch cybersecurity researcher disclosed last month that Chinese security contractor SenseNets left a massive facial recognition database tracking the movements of over 2.5 million people in China’s East Turkestan colony unsecured on the internet, it briefly shone a spotlight on the alarming scope of the Chinese surveillance state.
But SenseNets is a symptom of a much larger phenomenon: Tech firms in the United States are lending expertise, reputational credence, and technology to Chinese surveillance companies.
The SenseNets database logged exact GPS coordinates on a 24-hour basis and, using facial recognition, associated that data with sensitive personal information, including national ID numbers, home addresses, personal photographs, and places of employment. 
Nearly one-third of the individuals tracked were from the Uighur minority ethnic group.
In a bizarre juxtaposition of surveillance supremacy and security incompetence, SenseNets’ database was left open on the internet for six months before it was reported and, according to the researcher who discovered it, could have been “corrupted by a 12-year-old.”
The discovery suggests SenseNets is one of a number of Chinese companies participating in the construction of a technology-enabled totalitarian police state in East Turkestan, which has seen as many as 2 million Uighurs placed into “re-education camps” since early 2017. 
Eyewitness reports from inside the camps describe harsh living conditions, torture, and constant political indoctrination meant to strip Uighurs of any attachment to their Islamic faith. 
Facial recognition, artificial intelligence, and speech monitoring enable supercharge the Chinese Communist Party’s drive to “standardize” its Uighur population. 
Uighurs can be sent to "re-education" camps for a vast array of trivial offenses, many of which are benign expressions of faith.
The party monitors compliance through unrelenting electronic surveillance of online and physical activities. 
This modern-day panopticon requires enormous amounts of labor, but is serving as a testing ground for new technologies of surveillance that might render this process cheaper and more efficient for the state.
Toward this goal, the party is leveraging China’s vibrant tech ecosystem, inviting Chinese companies to participate through conventional government-procurement tools.
Companies built the "re-education" camps.
Companies supply the software that watches Uighurs online and the cameras that surveil their physical movements.
While based in China, many are deeply embedded in the international tech community, in ways that raise serious questions about the misuse of critical new technologies. 
Foreign firms, eager to access Chinese funding and data, have rushed into partnerships without heed to the ways the technologies they empower are being used in East Turkestan and elsewhere.
In February 2018, the Massachusetts Institute of Technology (MIT) announced a wide-ranging research partnership with Chinese artificial-intelligence giant and global facial-recognition leader SenseTime.
SenseTime then held a 49 percent stake in SenseNets, with robust cross-pollination of technical personnel. 
SenseNets’ parent company Netposa (also Chinese) has offices in Silicon Valley and Boston, received a strategic investment from Intel Capital in 2010, and has invested in U.S. robotics start-ups: Bito—led by researchers at Carnegie Mellon University—and Exyn, a drone software company competing in a Defense Advanced Research Projects Agency (DARPA) artificial-intelligence challenge.
This extensive enmeshing raises both moral and dual-use national-security questions.
Dual-use technology is tech that can be put to both civilian and military uses and as such is subject to tighter controls.
Nuclear power and GPS are classic examples, but new technologies such as facial recognition, augmented reality and virtual reality, 5G, and quantum computing are beginning to raise concerns about their dual applicability.
Beyond SenseNets, Chinese voice-recognition leader iFlytek is also supplying software to monitor electronic communications in East Turkestan.
A 2013 iFlytek patent identified by Human Rights Watch specifically touted its utility in “monitoring public opinion.” 
Nonetheless, like SenseTime, iFlytek recently established a multiyear research partnership with MIT. 
These partnerships lend reputational weight to activities that undermine freedom abroad.
Equally concerning is that the details of technical and research collaborations with Chinese companies can be opaque to international partners, concealing ethically objectionable activities.
When Yale University geneticist Kenneth Kidd shared DNA samples with a scientific colleague from the Chinese Ministry of Public Security’s Institute on Forensic Science, he had no idea they would be used to refine genetic surveillance techniques in East Turkestan.
Massachusetts-based company Thermo Fisher is also implicated: Until it was reported last month, the company sold DNA sequencers directly to authorities in East Turkestan for genetic mapping.
Western companies and institutions must be far more vigilant in scrutinizing how Chinese partners are using their products, especially emerging technologies.
Facial recognition is a good place to start.
The industry needs to establish global standards for appropriate applications—use that respects human rights and the rule of law. 
In the United States, Microsoft has been an industry leader in calling for regulation and has tapped employees, customers, public officials, academics, and civil society groups to develop a set of “principles for facial recognition,” which it plans to launch formally this month.
When it comes to building out regulation, the devil may be in the details.
But the principles—fairness, transparency, accountability, nondiscrimination, notice and consent, and lawful surveillance—are sound.
Surprisingly, SenseNets lists Microsoft itself as a partner on its website, along with American chip manufacturer AMD and high-performance computing provider Amax.
In the case of SenseNets, these partnerships could be false claims by a company looking to boost credibility, unwitting collaboration on the part of U.S. tech firms, or true business relationships.
“We have been able to find no evidence that Microsoft is involved in a partnership with SenseNets,” a spokesperson for Microsoft told the authors, “We will follow up with SenseNets to cease making inaccurate representations about our relationship.”
But if these partnerships are real, they would violate all six of Microsoft’s principles.
California-based Amax, which specializes in high-performance computing for deep-learning applications, touts a partnership with Chinese state-owned Hikvision, the world’s largest supplier of video surveillance products. 
AMD is also involved in a Chinese joint venture supplying proprietary x86 processor technology.
Despite a general awareness of the ways American companies and individuals are abetting surveillance in East Turkestan, U.S. Congress and government officials have yet to call for a review of the extent of U.S. investment and research partnership entanglements. 
The Commerce Department’s proposed rule-making on controls for certain emerging technologies is a start, but its scope remains unclear.
The international tech community can help guide the ethical application of its developments.
After employee protests, Google reportedly suspended plans to launch Dragonfly, a censored version of its search engine custom-built for China, although there are suspicions the project may not be entirely dead. 
Authoritarianism has proven it can use emerging technologies to undermine democratic norms and freedoms.
As such, U.S.-based research-and-development organizations should perform basic due diligence on partnerships to assess their connection to surveillance regimes.
International scientific exchange has yielded awe-inspiring achievements, from the discovery of the Higgs boson to the eradication of smallpox.
And cooperation is growing faster than ever.
But by taking basic steps to understand their partners, investors can mitigate some of the unintended risks of that cooperation.
If they fail to do so, they will end up owning some of the responsibility for human rights abuses in East Turkestan and elsewhere.

China's Powerful Surveillance State Has Created at Least Four Billionaires

Tiandy’s Dai Lin is China’s latest surveillance billionaire

By Blake Schmidt and Venus Feng
Before he became a billionaire, Dai Lin would ride his bike to work, pedaling through the streets of Tianjin to the headquarters of Tiandy Technologies Co., the camera maker he built with support from China’s government.
When Dai started his company in 1994, roadside surveillance cameras were rare in China. 

Now they’re everywhere -- part of a high-tech surveillance state that’s stoking privacy and human-rights concerns in the world’s most populous nation, raising thorny questions for international investors, and making well-connected entrepreneurs like Dai extremely rich.
The 54-year-old former academic, who now drives a luxury sedan and rewards high-performing employees with BMWs, is the latest of at least four businessmen to amass billion-dollar-plus fortunes from surveillance companies that count China’s government as a major client or investor. 

Their combined net worth exceeds $12 billion, according to the Bloomberg Billionaires Index.

Big Brother Billionaires
The figure underscores the scale of Chinese dictator Xi Jinping’s unprecedented push to keep tabs on the country’s 1.4 billion people. 

About 176 million video surveillance cameras monitored China’s streets, buildings and public spaces in 2016, versus 50 million in America, according to IHS Markit. 

In 2017, Xi’s government spent an estimated $184 billion on domestic security. 

By 2020, authorities plan to roll out an “omnipresent’’ nationwide camera network and a social-credit system that tracks personal data on everything from traffic violations to video-game habits. 

It will soon be hard to go anywhere in Tianjin, or any other city in China, without being watched.

Surveillance cameras on a street in Tianjin.

And it’s not just surveillance-focused firms like Tiandy that are helping the government expand its monitoring programs: companies from Alibaba Group Holding Ltd. to Ping An Insurance Group Co. to Tencent Holdings Ltd. are playing increasingly important roles. 

Look hard enough, and you’ll find links to China’s surveillance state at nearly all of the nation’s most innovative businesses -- several of which are staples of 401(k) accounts and other investment portfolios around the world.

Critics, including billionaire philanthropist George Soros, say Xi’s government is exploiting technology to gain a dangerous level of control over its citizenry. 

That concern has only grown in recent months amid reports on the suppression of Uighurs, the predominately Muslim ethnic groups in China’s East Turkestan colony.

Facial-recognition technology is demonstrated on a screen at Tiandy’s headquarters in Tianjin.

As Tiandy and its peers expand overseas, China’s surveillance industry helps governments from Africa to Latin America erode civil liberties. 

Another fear, highlighted by U.S. scrutiny of Huawei Technologies Co., is that exported Chinese surveillance equipment could be used by Beijing for spying. 

Huawei’s HiSilicon unit is a major supplier of chips that power surveillance cameras.
“The Chinese government’s approach to leveraging data for purposes of social control and management could bolster the coercive capability of the state in ways that have quite troubling implications, including for the future of democratic governance worldwide,’’ said Elsa Kania, adjunct senior fellow at the Center for a New American Security, a Washington-based think tank. 

“Many of the companies that are exporting AI applications, such as facial recognition, can be used for surveillance and thus enable repression.”

Huawei founder Ren Zhengfei has denied helping Beijing spy.
Tiandy, whose name-and-shame surveillance systems in Tianjin identify jaywalkers and display their faces on street-side billboards, declined to comment on Dai’s net worth or the privacy issues surrounding China’s monitoring programs.

A roadside billboard displays jaywalkers caught by Tiandy’s surveillance system in Tianjin.

Wuhan Guide Infrared Co., a maker of infrared cameras whose chairman has a net worth of $1.3 billion, and Ping An, which develops smart sensing technology for local governments, both declined to comment.
Tencent, which has invested in surveillance-related startups, didn’t respond to a request for comment. A spokesperson for Alibaba’s cloud-computing unit said authorities using its “City Brain” technology have seen “tangible improvement in areas such as traffic flow and emergency response time.”
For all the concerns about government surveillance raised by Soros and groups like the United Nations, views from inside China are often more apathetic.
Older residents have long been accustomed to living under the watchful eye of the Communist Party, and younger generations have grown up sharing nearly every aspect of their lives on social media.
While there have been sporadic outcries over data-gathering overreach, Chinese are willing to sacrifice some of their privacy as long as China’s leaders keep delivering on promises of higher incomes and strong economic growth.
Proponents of the country’s social-credit system, which is being tested in several cities before a planned national rollout in 2020, say it promotes honest dealings in a country whose legal system has often failed to build trust among consumers and businesses.
People with high social-credit scores may find it easier under the new regime to buy plane tickets, borrow money, purchase a house and secure a high-paying job.

Surveillance system used to monitor the rooms during the College Entrance Examination in Chongqing in June 2018.

The fear is that China’s government, and the businesses that supply it with surveillance and censorship technology, are also building a system that’s capable of stifling dissent like never before.
In East Turkestan -- where as many as 1 million Uighurs have been held in mass detention camps -- Chinese authorities are deploying AI-powered cameras, facial scanners and audio surveillance tools to carry out what Human Rights Watch has described as a “systematic campaign of human rights violations.’’ 
China has said that the camps are "voluntary" education centers that help purge “ideological diseases.”
Human Rights Watch has called out companies including iFlyTek Co., a Shenzhen-listed developer of voice-recognition technology, and Thermo Fisher Scientific Inc., a Massachusetts-based maker of DNA sequencers, for supplying the East Turkestan police.
The advocacy group has also urged money managers to refrain from investing in businesses with links to China’s mass surveillance programs. (iFlyTek and several of its peers, such as Hangzhou Hikvision Digital Technology Co. and Zhejiang Dahua Technology Co., are components of MSCI Inc.’s global benchmark stock indexes.)
U.S. politicians are applying pressure too.
In August, a bipartisan group of American lawmakers urged the White House to punish businesses including Hikvision and Dahua, two of China’s biggest surveillance camera makers, for facilitating human rights abuses in East Turkestan. 
Both companies are already barred from supplying the U.S. government.

Security cameras are installed near a mosque in Kashgar, East Turkestan colony.

There’s a “deep sense of unease” about Chinese surveillance among Western observers, many of whom have become increasingly sensitive to potential privacy abuses in the wake of controversies involving big technology companies like Facebook Inc., said Shoshana Zuboff, an emerita professor at Harvard Business School whose book “The Age of Surveillance Capitalism” includes a section on China.
Dahua and iFlytek didn’t respond to requests for comment.
MSCI said its stock indexes are designed to represent the “investment opportunity set” without making “subjective" assessments of constituent companies.
Thermo Fisher said in a statement this week that it has decided to stop sales of DNA identification technology in East Turkestan.
While the backlash over East Turkestan may curb sales of Chinese surveillance products in the U.S., demand at home and in many emerging markets is still growing rapidly enough to spawn a new generation of surveillance startups.

SenseTime’s pedestrian and vehicle recognition system.

Among the most successful is SenseTime, a leader in facial-recognition technology that earns about two-fifths of its revenue from government contracts.
The four-year-old company -- a member of China’s “AI National Team” -- was recently valued at more than $4.5 billion, making it one of the world’s biggest AI startups.
In a response to questions from Bloomberg, the company said most of its revenue comes from areas outside government surveillance, such as autonomous driving and augmented-reality technology.
China’s more established tech companies, some of which have long helped the government monitor and censor the internet, are increasing their ties to the surveillance state.
Baidu, billionaire Robin Li’s online search company, is working with Chinese authorities to provide “smart city’’ services, including cloud storage systems that can analyze surveillance-related data. Tencent and Alibaba, the e-commerce giant founded by billionaire Jack Ma, are participating in similar projects.
Tiandy, whose cameras can capture high-definition color images in lighting conditions equivalent to a night sky with one star, is a prime example of the Chinese surveillance industry’s growing overseas reach.
The company now sells to more than 60 countries -- a tally that may rise thanks in part to Xi’s “Belt and Road” global infrastructure initiative.
That’s good news for Tiandy and its billionaire founder, but may add to concerns among privacy and political rights activists that China is exporting its surveillance state around the world.
Recent visitors to Tiandy’s headquarters include the president of Angola, an oil-producing nation in southern Africa with one of the lowest rankings in Freedom House’s global survey of civil liberties.
One of the few countries with an even lower Freedom House score? China.