A Tale of Two Nazisms

European Companies Get Rich in China’s Final Solution

Volkswagen, Siemens and more are making money in East Turkestan, where minorities are being herded into concentration camps.
By Benjamin Haas


BERLIN — Many people around the world may just now be learning that around a million Uighur Muslims and other minorities have been locked up in concentration camps in the colony of East Turkestan, in western China. 

There is a reason for that: East Turkestan is remote and the Chinese government has expended considerable effort to keep the news hidden, from harassing foreign journalists to seizing family members of activists to censoring information within its own borders.
Herbert Diess, however, should have no excuse.
Diess is the chief executive of Volkswagen, which opened a plant in East Turkestan in 2013 that employs almost 700 local workers and can make up to 50,000 cars a year. 

In an interview with the BBC in April, Diess said he was not aware of the system of camps or the Muslim minorities subject to mass detention, even though his company’s factory is within a 90-minute drive from four such detention centers. (The company issued a new statement saying it did, in fact, know about the treatment of Uighurs in East Turkestan and was committed to human rights.)
What excuse do the other chief executives and board presidents use?
I have found that about half of the largest 150 European companies had some presence in East Turkestan, an area that Amnesty International has described as “an open-air prison.” 

Their investments merit far more scrutiny from both regulators and the public, and European governments need to form standards for companies dealing with East Turkestan.
At the top of the list of companies that deserve a thorough review is Siemens. 

This large German conglomerate collaborates on advanced technologies in automation, digitization and networking with China Electronics Technology Group Corporation, a state-owned military contractor that has developed a policing app used in East Turkestan that has led many people to be sent to the camps.
The Spanish telecommunications firm Telefónica has a joint venture with China Unicom that appears to use big data for tracking people. 

The company markets the software as a way to deliver location-based ads or monitor public transportation use, and while it says the data is anonymous, I reviewed an internal presentation that appears to have shown ID numbers unique to each cellphone user. 

It is easy to see how such software could be used by the authorities in East Turkestan to track minorities in real time, and it has already been deployed in the region, according to a presentation.
Other investments are less immediately tied to abuses of the Uighur population. 

KfW, a German state-owned bank, provided 100 million euros ($111 million) in funding for the construction of a subway line that opened in 2018 in the regional capital, Urumqi, built with components from ABB, a Swiss engineering firm, and Airbus Defense and Space, the European aircraft manufacturer. 

Unilever and Nestlé both buy tomato products from a state-owned company in East Turkestan that could end up in the ketchup in kitchens across Europe. 

Neither company responded to questions about how products from East Turkestan are used.
While this research did not uncover any direct relationship between European companies and the concentration camps, conversations with executives in Germany showed that most headquarters have little understanding of how their businesses operate in East Turkestan.
The Chinese government has long pushed to develop its far-flung western colonies, partly to shore up their links with the rest of the country and partly in the hopes that economic development will depress religious observance and quell the desire for basic freedoms. 

In some cases, European companies have been pressured to start operations in East Turkestan as conditions for expansion elsewhere in China. 

Carrefour, the French supermarket chain, is just one example. 

It opened stores in East Turkestan only after receiving “strong advice” from Chinese officials. 

Other European executives told me that they had received similar messages.
But China’s desire for investment gives foreign companies with ties in the region — and European governments — real power. 

Now they need to use it.
The European Union should enact laws that set standards for companies operating in East Turkestan and punish those that fail to live up to European ideals of human rights, with audits on whether camp labor was involved in any part of their supply chains, where profits end up in China and how products and technology are used.
If all European Union members fail to agree on regulations, the charge should be taken up by national parliaments, especially in countries like Germany with extensive business in East Turkestan. 

These standards should apply to any European company, not just the large multinationals, and would have powerful ramifications beyond just East Turkestan.
Companies found to be flouting these standards could be barred from bidding for government contracts as an initial measure, with fines and government-appointed monitors as additional punishments. 

The European Union also needs to immediately impose export bans on technology that could be used in the repression of dissidents and religious minorities.
Business leaders and politicians frequently bristle at the idea of directly confronting China on its human rights abuses, worried that a firm stance could jeopardize future deals. 

But while China may issue statements condemning such actions and threaten to stop buying products from critics, it’s unlikely that Beijing is ready for another economic fight amid a slowing economy and a trade war with the United States.
European exports could take a hit or Chinese regulators may begin investigations into European companies as a punitive measure. 

But such actions would only further isolate China, a country that knows it needs all the stable economic relationships it has. 

While plenty of diplomatic protests and bombastic editorials in state-run newspapers are sure to follow such a move, Xi Jinping cannot afford to further destabilize the economy over a political spat with the European Union, which is China’s largest trading partner.
This confluence of circumstances is exactly why the European Union must act now to stand up for its values and leverage its economic relationship with China to pressure it to end one of the most egregious human rights violations in the world today. 

Feigning ignorance is no longer an option.

Nation of Thieves

US charges 3 Chinese nationals with hacking, stealing intellectual property from companies
By Evan Perez

The Justice Department on Monday unsealed an indictment against three Chinese nationals in connection with cyberhacks and the theft of intellectual property of three companies, according to US officials briefed on the investigation.
But the Trump administration is stopping short of publicly confronting the Chinese government about its role in the breach. 

The hacks occurred during both the Obama and Trump administrations.
The charges being brought in Pittsburgh allege that the hackers stole intellectual property from several companies, including Trimble, a maker of navigation systems; Siemens, a German technology company with major operations in the US; and Moody's Analytics.
The three charged in the Pittsburgh case are presumed to live in China and are either employed or associated with Guangzhou Bo Yu Information Technology Co., known as Boyusec, court documents say. 

US intelligence and private cybersecurity experts say Boyusec works as a contractor for the Chinese ministry of state security, that nation's version of the National Security Agency. 

The court documents unsealed Monday don't mention the Chinese state links.
US investigators have concluded that the three charged by the US attorney in Pittsburgh were working for a Chinese intelligence contractor, the sources briefed on the investigation say. 

But missing from court documents filed in the case is any explicit mention that the thefts were state-sponsored.
A 2015 deal between then-President Barack Obama and Xi Jinping prohibits the US and China from stealing intellectual property for the purpose of giving advantage to domestic companies.
In recent months US intelligence agencies have concluded that China is breaking the agreement.

But there's debate among intelligence officials about whether there's sufficient evidence to publicly reveal the Chinese government's role in the infractions, these people say.
Obama administration officials had touted the Obama-Xi agreement, as well as 2014 Justice Department charges against members of the Chinese People's Liberation Army for commercial espionage, for "reducing" some of the Chinese cyberactivity against companies in the US.
But the 2015 Obama-Xi deal was met with skepticism inside the US agencies whose job it is to guard against Chinese cyberactivity targeting US companies. 

Some now say there was only a brief drop in the number of cyberspying incidents, if at all.
In the waning months of the Obama administration, intelligence officials briefed senior White House officials on information showing that the Chinese cyberattacks were back to levels previously seen, sources familiar with the matter told CNN. 

Early in the Trump administration, US intelligence officials briefed senior officials, including the President and vice president, as well as advisers Jared Kushner and Steve Bannon.

China Threat

Siemens and Alstom Form European Train Giant to Beat Chinese Competition

By JACK EWING and LIZ ALDERMAN

Siemens Alstom would make systems and equipment for two of Europe’s high-speed rail lines, Germany’s ICE and France’s TGV, which can zip between cities at about 185 m.p.h.

FRANKFURT — Once, the merger of two iconic European companies might well have been derailed by regional political rivalries. 

But in the case of a deal between Siemens and Alstom, those concerns have receded in the face of a larger threat: China.
The proposed merger of Europe’s two largest train makers, one German and one French, demonstrated on Wednesday that economic imperatives are pushing the Continent together even as populist politicians try to pull it apart.
Siemens, a German electronics and engineering giant, and France’s Alstom, a maker of the high-speed TGV, said late Tuesday that they will merge their units that make trains, streetcars and signaling systems. 

The deal is backed by the French government, and the two companies provided details of the deal the following day.
The new company, to be called Siemens Alstom, is a response to intensifying competition from China Railway Rolling Stock Corporation, the state-backed train maker that has been winning contracts in the United States and emerging markets where mass transit is a fast-growing business.
The company’s success is emblematic of China’s increasing economic power, which, combined with a more isolationist American foreign policy, is forcing European leaders to violate old taboos in order to improve the functioning of the European Union and its economy.

“The message of this merger is that the European spirit is alive,” Joe Kaeser, the chief executive of Siemens, said at a news conference in Paris on Wednesday. 

“That’s a powerful message in times that are marked by populism and nationalism and social and political divides.”
The announcement comes just days after a far right party won seats in the German Parliament for the first time since World War II. 

On Tuesday, Emmanuel Macron, the French president, called for “the rebuilding of a sovereign, united and democratic Europe” that would include stronger border controls but also a European budget large enough to help countries in economic trouble.
Competition from China has already been a factor in other big European mergers. 

Last week, the German steel giant ThyssenKrupp said it would merge its European steel operations into a joint venture with Tata Steel. 

And last year, Nokia of Finland acquired Alcatel-Lucent, a French maker of telecommunications equipment, in part to address intense competition from China’s Huawei.
Other sectors, like shipbuilding or semiconductors, could also be ripe for mergers.
Mr. Macron has made competition from China a central focus of his European policy drive. 

This year, he proposed Europe-wide scrutiny of any new major stakes by Chinese companies in European industrial jewels, but was met with resistance by small countries like Greece and Hungary, which are eager for new investment.
The French president and other European leaders have grown increasingly alarmed that the E.U. is ceding control of advanced technology to China. 

In a recent speech in Athens, Mr. Macron called for strengthening the bloc into a “power that can face the U.S. and China.”
Those concerns deepened after a state-owned Chinese chemical company, ChemChina, bought the Swiss pesticides and seeds group Syngenta this summer for $43 billion. 

The Chinese state-backed shipping conglomerate Cosco recently took a majority stake in Greece’s Piraeus port to anchor China’s New Silk Road through Europe. 

Germany itself has been no stranger to takeover bids by Chinese state-backed firms.
Just weeks ago, Chancellor Angela Merkel of Germany tightened rules to limit takeovers of German strategic assets, a move aimed at Beijing.
Chinese competition was a driving factor in Mr. Macron’s backing to seal a deal between Alstom and Siemens, despite outcries from political opponents in France that he was handing over a French icon to the Germans.
“The big story here is the French willingness to let this happen,” said Mikko Huotari, director of the international relations program at the Mercator Institute for China Studies in Berlin. 

“Alstom is one of the crown jewels of French industry.”
The Siemens-Alstom deal is in part a bid that being bigger may be a better way to counter China Railway Rolling Stock, known as CRRC, which has grown into the world’s largest and most competitive maker of railway equipment. 

The European company could yet grow further: Ahead of Tuesday’s announcement, there had been speculation that Siemens could link up with Bombardier of Canada. 

On Wednesday, Mr. Kaeser of Siemens did not rule out that Bombardier could later become part of the combined company.
Still, with sales of over $33 billion last year and 180,000 employees worldwide, CRRC is bigger than the train businesses of Siemens, Alstom and Bombardier combined.
Last year, the Chinese company secured contracts to build 64 subway cars for the city of São Paulo, and sold more than 800 railway cars to Chicago for $1.3 billion, winning the deal by submitting a cheap bid with good technology.
“Of course CRRC is extremely strong, and has changed a little bit the picture of the market,” Henri Poupart-Lafarge, the chief executive of Alstom, told reporters Wednesday.
Mr. Poupart-Lafarge will be chief executive of the new company, which will have its headquarters in Paris. 

The Mobility Solutions unit of Siemens Alstom, which provides systems to control rail traffic and is more profitable than the unit that makes trains and streetcars, will be based in Berlin.
The new company will have annual revenue of €15.3 billion, an order backlog valued at €61.2 billion and more than 62,000 employees worldwide.
Alstom in particular is a symbol of national technological might for the French, with high-speed TGV trains racing across the countryside, and Eurostar trains connecting Paris to London in just over two hours through the Eurotunnel.
While populist parties such as the National Front are hostile to closer political ties in the European Union, they are less likely to oppose corporate mergers that protect European companies from foreign competition.
Pro-European political leaders like Mr. Macron have themselves not been averse to government intervention to protect jobs at home.
Despite pledges to be less protectionist than his predecessors, Mr. Macron has shown a willingness to involve the state in industrial policy by getting involved in big deals. 

Last month, he temporarily nationalized one of France’s biggest shipyards, STX France, to prevent it from being taken over by an Italian competitor.
As France’s economy minister, he pushed through a government plan last year to order €630 million worth of new TGV trains — most of which were not calibrated to run on faster tracks — from an Alstom factory in the eastern town of Belfort to prevent hundreds of jobs there from moving to another plant.
The Alstom deal with Siemens also reflects, however, a willingness to be flexible to protect broader French interests.
On Tuesday, the country’s finance minister, Bruno Le Maire, said the French government welcomed the deal with Siemens, characterizing it as one that protected French jobs at Alstom.