China's crimes against humanity

Will China’s Uighur Detentions Spur U.S. Sanctions? Pompeo Won’t Say

By Edward Wong

Secretary of State Mike Pompeo said he had raised the issue of human rights “in multiple conversations” with his Chinese counterpart.

WASHINGTON — Secretary of State Mike Pompeo avoided saying on Sunday whether the Trump administration would impose targeted sanctions on China over mass detentions of Muslims, in another sign of the administration’s paralysis on the issue.
Mr. Pompeo was asked on CBS News’s “Face the Nation” about whether the administration might punish Chinese officials for the detention of hundreds of thousands to millions of ethnic minority Muslims in camps in East Turkestan, a vast region in northwest China.
The New York Times reported on Saturday that after months of debate, American officials had shelved proposed targeted sanctions for fear of jeopardizing continuing trade talks, and are unwilling to raise the issue in the talks.
When pressed on CBS on the matter, Mr. Pompeo said he had raised the issue of human rights “in multiple conversations” with Wang Yi, the Chinese foreign minister, and other officials. 

But he did not answer a question about any potential move on sanctions.
Mr. Pompeo has criticized the camps and said last week on Fox News that their use was “reminiscent of the 1930s.” 

But the State Department has been unsuccessful in pushing through proposed sanctions. 

Last fall, American officials drew up a policy to impose sanctions on specific Chinese officials and companies over the camps, with a legal basis in the Global Magnitsky Act, but the policy failed to get through an interagency review process.
While the State Department and the White House National Security Council approved the action, the Treasury Department voiced concerns about the effect on trade talks, according to American officials. 

Treasury Secretary Steven Mnuchin has generally been a proponent of reinforcing strong business ties with China.
Trade negotiators for the two sides are meeting this week in Washington and could conclude the talks. On Sunday, President Trump threatened to ramp up tariffs, a move that appeared to be aimed at forcing China to agree quickly to a deal.
In defending the administration’s approach to China, Mr. Pompeo said on Sunday that Trump had pushed back against China’s “enormous trade abuses” and was working to end intellectual property theft and forced technology transfer by Chinese companies and the government.
However, as the trade talks continue, it has become clear that the end result will not address critical issues like China’s cybertheft, state subsidies and regulations on trade in data. 

Economists say the trade deficit, which Trump is focused on, is not nearly as important as those other issues.
On the issue of China’s detention of Muslims, who are mostly Turkic-speaking ethnic Uighurs, Democratic and Republican members of Congress have expressed frustration at the lack of sanctions from the Trump administration. 

They have been pushing since last year for economic penalties on senior officials, including Chen Quanguo, a Politburo member who is party chief of East Turkestan. 

On Friday, Senator Marco Rubio, Republican of Florida, told The Times that “words alone are not enough.”
The host of “Face the Nation,” Margaret Brennan, also pressed Mr. Pompeo on Sunday on why the State Department and the Pentagon had different estimates of the number of detainees and used different labels for the camps. 

Mr. Pompeo has said the detention centers are “re-education camps” that hold up to one million people. 

On Friday, Randall G. Schriver, an assistant secretary of defense, told reporters that he considered the centers to be “concentration camps” that held “at least a million but likely closer to three million citizens.”
It was by far the largest estimate from any official on the number of detainees. 

Human rights groups have generally said the number is hundreds of thousands to more than one million.
Despite the obvious difference in estimates, Mr. Pompeo said there was no gap between the State and Defense Departments on their assessments.
“Don’t play ticky-tack,” he said. 

“There’s no discrepancy.”

Justice Department Details Charges Against Chinese Huawei and Its CFO

By MICHAEL BALSAMO 

FBI Director Christopher Wray, standing with Commerce Secretary Wilbur Ross (left) and Acting Attorney General Matthew Whitaker, remarks on the charges against Huawei during a press conference today at the Department of Justice in Washington, D.C.

WASHINGTON — The Justice Department unsealed criminal charges Monday against Chinese tech giant Huawei, two of its subsidiaries and a top executive, who are accused of misleading banks about the company’s business and violating U.S. sanctions.
The company is also charged in a separate case with stealing trade secrets from T-Mobile, according to federal prosecutors.
Prosecutors are seeking to extradite the company’s chief financial officer, Meng Wanzhou, and allege she committed fraud by misleading banks about Huawei’s business dealings in Iran.

She was arrested on Dec. 1 in Canada.
The criminal charges in Brooklyn and Seattle come as trade talks between China and the U.S. are scheduled for this week.
“As I told high-level Chinese law enforcement officials in August we need more law enforcement cooperation with China,” acting Attorney General Matt Whitaker said at a news conference with other Cabinet officials, including Commerce Secretary Wilbur Ross and Homeland Security Secretary Kirstjen Nielsen. 

“China should be concerned about criminal activities by Chinese companies and China should take action.”
U.S. prosecutors charge that Huawei used a Hong Kong shell company to sell equipment in Iran in violation of U.S. sanctions. 

Huawei had done business in Iran through a Hong Kong company called Skycom and Meng misled U.S. banks into believing the two companies were separate, according to the Justice Department.
The announcement Monday includes a 10-count grand jury indictment in Seattle, and a separate 13-count case from prosecutors in the Eastern District of New York.
“As you can tell from the number and magnitude of the charges, Huawei and its senior executives repeatedly refused to respect U.S. law and standard international business practices,” said FBI Director Chris Wray.
A Huawei spokesman did not immediately return phone messages seeking comment.
Huawei is the world’s biggest supplier of network gear used by phone and internet companies and has long been a front for spying by the Chinese military and security services.
Prosecutors also allege that Huawei stole trade secrets, including the technology behind a robotic device that T-Mobile used to test smartphones, prosecutors said. 

A jury in Seattle ruled that Huawei had misappropriated the robotic technology from T-Mobile’s lab in Washington state.
Meng was arrested in Canada because the U.S. and China don’t have an extradition treaty. 

But new rules enacted in the past few years have made it easier for U.S. prosecutors to indict overseas corporate defendants without coordinating with foreign governments, said Ronald Cheng, a partner with the O’Melveny and Myers law office in Los Angeles and former U.S. judicial attache in Beijing.
Because it’s usually difficult to go after corporate officers, Chinese companies accused of IP theft need to worry more about asset forfeiture, which has in some cases been considerable. 

In July, the Chinese wind turbine maker Sinovel Wind Group LLC was ordered to pay more than $50 million in restitution after being convicted of stealing trade secrets from the U.S. company AMSC.
Cheng, who was reached in Hong Kong, said there’s considerable concern among Chinese business executives about stepped up enforcement in such cases, which began in earnest with the Obama administration, including a 2014 indictment alleging theft of solar power trade secrets.
“I think the government would say that this is part of a large pattern of conduct” by Chinese companies, Cheng said of Monday’s indictments.
The Huawei case has set off a diplomatic spat with the three nations, which has threatened to complicate ties between the U.S. and Canada. 

Donald Trump said he would get involved in the Huawei case if it would help produce a trade agreement with China and told Reuters in an interview in December that he would “intervene if I thought it was necessary.”
The arrest of Meng, the daughter of Huawei’s founder at Vancouver’s airport, has in particular led to the worst relations between Canada and China since the Tiananmen Square massacre in 1989. 

China detained two Canadians shortly after Meng’s arrest in an apparent attempt to pressure Canada to release her. 

A Chinese court also sentenced a third Canadian to death in a sudden retrial of a drug case, overturning a 15-year prison term handed down earlier.
David Martin, Meng’s lawyer in Canada, didn’t immediately respond to a message seeking comment. 

Meng is out on bail in Vancouver and is due back in court Feb. 6 as she awaits extradition proceedings to begin.
Canada arrested Meng at the request of the United States. 

The Chinese have been furious at Canada ever since and arrested Canadian ex-diplomat Michael Kovrig and businessman Michael Spavor on Dec. 10 on vague allegations of endangering national security.

Axis of Evil

U.S. sanctions China for buying Russian fighter jets, missiles

By Lesley Wroughton, Patricia Zengerle

WASHINGTON -- The Trump administration imposed sanctions on the Chinese military on Thursday for buying fighter jets and missile systems from Russia, in breach of a sweeping U.S. sanctions law punishing Moscow for meddling in the 2016 U.S. election.
In Beijing, the Chinese government expressed anger and demanded the sanctions be withdrawn.
The U.S. State Department said it would immediately impose sanctions on China’s Equipment Development Department (EDD), the military branch responsible for weapons and equipment, and its director, Li Shangfu, for engaging in “significant transactions” with Rosoboronexport, Russia’s main arms exporter.
The sanctions are related to China’s purchase of 10 SU-35 combat aircraft in 2017 and S-400 surface-to-air missile system-related equipment in 2018, the State Department said.
They block the Chinese agency, and Li, from applying for export licenses and participating in the U.S. financial system.
It also adds them to the Treasury Department’s list of specially designated individuals with whom Americans are barred from doing business.
The U.S. also blacklisted another 33 people and entities associated with the Russian military and intelligence, adding them to a list under the 2017 law, known as the Countering America’s Adversaries Through Sanctions Act, or CAATSA.
CAATSA also seeks to punish Russia for its aggression in Ukraine and involvement in Syria’s civil war.
Doing significant business with anyone on the U.S. blacklist can trigger sanctions like those imposed on China.
Some of those added to the list, which now contains 72 names, were indicted in connection with Russian interference in the 2016 U.S. election, a U.S. official said.
President Donald Trump on Thursday issued an executive order intended to facilitate implementation of the sanctions.
A federal special counsel is leading a criminal investigation of Russian interference in the U.S. election, and any possible cooperation with Trump’s presidential campaign.
Trump has insisted there was no collusion with Russia. 

Sukhoi Su-35 multi-role fighters of the Sokoly Rossii (Falcons of Russia) aerobatic team fly in formation during a demonstration flight at the MAKS 2017 air show in Zhukovsky, outside Moscow, Russia, July 21, 2017. 

One U.S. administration official said the sanctions imposed on the Chinese agency were aimed at Moscow, not Beijing or its military, despite an escalating trade war between the United States and China.
“The ultimate target of these sanctions is Russia. CAATSA sanctions in this context are not intended to undermine the defense capabilities of any particular country,” the official told reporters on a conference call.
“They are instead aimed at imposing costs upon Russia in response to its malign activities,” the official said.
In Moscow, Russian member of parliament Franz Klintsevich said the sanctions would not affect the S-400 and SU-35 deals.
“I am sure that these contracts will be executed in line with the schedule,” Klintsevich was quoted as saying by Russia’s Interfax news agency. 

“The possession of this military equipment is very important for China.”
Security analysts in Asia said the move was largely symbolic.
“The imposition of U.S. sanctions will have zero impact on Russian arms sales to China,” said Ian Storey, of Singapore’s ISEAS Yusof Ishak Institute, adding that Moscow needed Chinese money and Beijing wanted advanced military technology.
Collin Koh, a security analyst at Singapore’s S Rajaratnam School of International Studies, said the sanctions would do little to counter the evolving research and development relationship between China and Russia.
China relies less on large big-ticket purchases from Russia, but Chinese defense industries are seeking expertise from Russia and former-Soviet states to plug knowledge gaps, he said.
The Trump administration is pursuing strategies to clamp down on China and faces growing pressure to respond strongly to U.S. intelligence agency reports that Russia is continuing to meddle in U.S. politics.

Russian servicemen drive S-400 missile air defence systems during the Victory Day parade, marking the 73rd anniversary of the victory over Nazi Germany in World War Two, at Red Square in Moscow, Russia May 9, 2018.

Members of Congress, including many of Trump’s fellow Republicans, who passed the sanctions bill nearly unanimously, have repeatedly called on the administration to take a harder line against Moscow.
Administration officials said they hoped the action against EDD would send a message to others considering buying the S-400.
U.S. officials have been discussing the issue particularly with NATO ally Turkey, which wants to buy the Russian-made S-400 surface-to-air missile batteries.
Washington has expressed concern that Turkey’s planned deployment of the S-400s could pose a risk to the security of some U.S.-made weapons and other technology used by Turkey, including the F-35 fighter jet.
U.S. officials have warned that Turkey’s purchase of the system could contravene CAATSA.
“We hope that at least this step will send a signal of our seriousness and perhaps encourage others to think twice about their own engagement with the Russian defense and intelligence sectors,” another U.S. official said.

Keep ZTE Out of China Trade Talks

The company needs to be punished, not used as a bargaining chip.

Bloomberg

By The Editors
ZTE is a double offender. 

Donald Trump has indicated, via Twitter, that he’s prepared to make an enormous concession to smooth trade talks with China, offering upfront to ease sanctions on ZTE Corp., the country’s second-largest telecom equipment maker. 

But ZTE is being punished for deliberately violating U.S. sanctions — twice. 

The company’s punishment needs to be enforced, not used as a bargaining chip. 

If Trump goes ahead anyway, he stands to have a very hard time making sure the U.S. gets its money’s worth.
The American case against ZTE isn’t in dispute. 

The company was singled out in 2016 for doing business with Iran in violation of U.S. sanctions. 

A $1.2 billion settlement last year was supposed to include internal punishment for the ZTE officials involved. 

Instead, according to the U.S. Commerce Department, the firm paid those executives bonuses. 

The U.S. then banned ZTE from buying irreplaceable U.S. components for seven years, effectively killing its business.
It is possible to conceive of different punishments for ZTE that would cause the company material pain without destroying its ability to operate. 

Commerce Secretary Wilbur Ross is said to be exploring such options.
But if Trump were to soften the blow now, the cost to U.S. credibility would be substantial, weakening the effect of its sanctions on Iran, North Korea and others. 

That cost would hardly be reduced if the U.S. were able to improve its position in trade talks with China.
After all, the greatest threat the U.S. has to address in those talks is China’s use of unfair means to pursue technological superiority over the U.S. 

If anything, the ZTE case has made Chinese officials more determined to achieve self-sufficiency in key high-tech sectors. 

Lightening ZTE’s punishment would only encourage Chinese companies to continue cheating, and not only on sanctions.
Trump’s injudicious tweeting may have already diminished U.S. bargaining power. 

But it’s not too late to take ZTE off the table.

China's ZTE pleads guilty, settles U.S. sanctions case for nearly $900 million

"ZTE Corporation not only violated export controls that keep sensitive American technology out of the hands of hostile regimes like Iran's, they lied about their illegal acts." -- U.S. Attorney General Jeff Sessions
By Karen Freifeld and Sijia Jiang | NEW YORK/HONG KONG

Chinese telecom equipment maker ZTE Corp has agreed to plead guilty and pay nearly $900 million in a U.S. sanctions case, drawing a line under a damaging scandal that had threatened its cut off its supply chain.
While the fine was larger than expected, ZTE, also a major smartphone maker, reported robust underlying earnings for 2016 and was upbeat in estimates for the first quarter.
That and the resolution of the case helped its Hong Kong-listed shares surge 6 percent.
A five-year investigation found ZTE conspired to evade U.S. embargoes by buying U.S. components, incorporating them into ZTE equipment and illegally shipping them to Iran.
In addition, it was charged in connection with 283 shipments of telecommunications equipment to North Korea.
"ZTE Corporation not only violated export controls that keep sensitive American technology out of the hands of hostile regimes like Iran's, they lied ... about their illegal acts," U.S. Attorney General Jeff Sessions said in a statement.
ZTE relies on U.S. suppliers for 25 percent to 30 percent of its components, many of which are key to its goods.
It purchases about $2.6 billion worth of components a year from U.S. firms, according to a company spokesman.
Qualcomm, Microsoft and Intel are among its suppliers.
"ZTE acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change in the company," ZTE Chief Executive Zhao Xianming said in a statement.
The company agreed to a seven-year suspended denial of export privileges, which could be activated if there are further violations, as well as three years of probation, a compliance and ethics program, and a corporate monitor.
It also agreed to an additional penalty of $300 million that will be suspended during the seven-year term on the condition the company complies with requirements in the agreement.
When asked about the ZTE case, Chinese Foreign Minister Wang Yi said relevant departments of the government would continue to pay attention as to whether Chinese firms were receiving fair treatment.
Tim O'Toole, a Washington D.C.-based lawyer with Miller & Chevalier specializing in sanction cases, said U.S. court documents suggest ZTE's attempts to obstruct the investigation were the main reason for a penalty significantly higher than in similar cases.
"What seems really important to U.S. regulators is whether a company or individual after the investigation starts is seen to continue to evade the sanctions and also obstruct the investigation," he said.
The investigation, spearheaded by the U.S. Department of Commerce, followed reports by Reuters in 2012 that ZTE had signed contracts to ship millions of dollars worth of hardware and software from some of the best-known U.S. technology companies to Iran's largest telecoms carrier.
Last year, the Commerce Department released internal documents showing senior ZTE executives instructing the company to carry out a project for dodging export controls in Iran, North Korea, Syria, Sudan and Cuba.
ZTE has replaced executives allegedly involved, including naming a new president.
The company said on Wednesday it slid to a preliminary net loss of 2.36 billion yuan ($342 million) in 2016, its first loss in four years, due to the settlement.
But without the fine, it would have logged 3.8 billion yuan in profit, 18 percent higher than a year earlier.
That was better than expected, as was a preliminary estimate for the first-quarter net profit rising between 21 and 31 percent, said Cindy Lam, an analyst with UOB Kay Hian in Hong Kong.
The settlement includes a $661 million penalty to Commerce; $430 million in combined criminal fines and forfeiture; and $101 million paid to the Treasury's Office of Foreign Assets Control (OFAC). 
The action marks OFAC's largest-ever settlement with a non-financial entity.
The Commerce Department will recommend ZTE be removed from a list of entities that U.S. firms cannot supply without a license if it lives up to its deal and a court approves its agreement with the Justice Department.
First placed on the list in March 2016, it has continued to do business with U.S. suppliers under a temporary general license that has been extended several times, with the latest reprieve expiring March 29.
The company's guilty pleas, which must be approved by a judge, will take place in U.S. District Court in Texas.