Global Thief

From university funding to computer hacking: How China steals Western innovation
By James Cook

China is seeking to "steal its way up the economic ladder" at the expense of Western innovation

China is seeking to "steal its way up the economic ladder" at the expense of Western innovation.
Those were the damning words of FBI Director Christopher Wray who last week said that China poses a "multi-layered" threat to US interests.
His comments were made as Washington's campaign to ban Chinese telecoms firm Huawei intensified.
"China has pioneered a societal approach to stealing innovation in any way it can from a wide array of businesses, universities and organisations," he said.
"They're doing it through Chinese intelligence services, through state-owned enterprises, through ostensibly private companies, through graduate students and researchers, through a variety of actors all working on behalf of China."
It's something known only too well by businesses desperate to crack China's lucrative market of 1.3bn people.
Among them is Apple, who saw Chinese electronics business Xiaomi spend years replicating its iPhone designs.
Its chief executive even modelled himself on Apple founder Steve Jobs, wearing similar clothing and copying his presentations.
For Apple design chief Jony Ive, the constant replication was a source of frustration.
“You spend seven or eight years working on something, and then it’s copied. I have to be honest, the first thing I can think, all those weekends that I could have at home with my family but didn’t. I think it’s theft, and it’s lazy,” he said in 2014.
While Xiaomi was a brazen example of a Chinese business copying Western designs, there are far more advanced ways which Chinese businesses have used to copy Western innovation.
Huawei has been at the centre of a political row over concerns that its closeness to the Chinese government could introduce espionage risks if its hardware is used in the development of 5G networks around the world. 
Many countries, including the US, have taken a firm stance against Huawei’s involvement in the new networks, but other nations including the UK have taken a softer approach.
The political row around Huawei often overlooks the company’s historic practice of stealing Western innovation, however.
Over 15 years ago, Huawei took part in a costly legal battle with US technology firm Cisco over allegations that Huawei copied Cisco’s software for its routers.
Huawei eventually admitted that it had cloned the software and pledged to remove it from its products.
Huawei had been systematically reverse-engineering Cisco’s routers, a practice which would have allowed the Chinese telecoms company to peer into the inner workings of Cisco’s software and cherry pick sections to use in its own products.
Cisco sued Huawei for patent infringement in 2003, only settling the case after Huawei admitted to using Cisco’s source code.
The US government has also accused Huawei employees of attempting to copy “Tappy,” a smartphone-testing robot built by US network T-Mobile.
Huawei employees with access to the robot took photographs of Tappy and one employee has been accused of removing one of its arms. 
Concern around Chinese replication of technology doesn't end with reverse-engineering.
As businesses like Huawei have become more successful and expanded around the world, they have begun investing in academic research.
Huawei has spent millions of pounds in the UK alone funding research into technologies such as mobile phone networks. 
But experts have warned that these donations risk handing British innovations to China.
“China is using broad research relationships with universities and other entities to try and fill in any technological gaps,” said Michael Wessel, a commissioner on the US-China Economic and Security Review Commission.
Companies are trying to “advance Chinese standards so that Huawei and other Chinese-produced equipment will be the equipment of choice as networks get built out,” he said.
The issue of Huawei funding university research has been particularly sensitive in Canada, which has seen a political debate over the hundreds of patents Huawei has been granted thanks to Canadian research it has funded.
A similar debate has not yet taken place in the UK, although Oxford University suspended all research grants and donations from Huawei following a Telegraph report into the financial backing published last year.
Apart from the continued practice of university funding, other Chinese businesses have for years been systematically cloning Western software and hardware for sale in the Chinese market.
Earlier this month, it was reported that a cloned version of popular Nintendo smartphone game Fire Emblem Heroes had been approved by the government and was available for download on iPhones and Android phones.
The app had been reverse-engineered, with the only substantive change being the translation of the game’s text into Simplified Chinese.
Chinese businesses have also grown adept at copying hardware manufactured in Chinese factories.
These factories are given the blueprints for technology hardware, as well as prototype devices that can help to create cloned devices.
Quartz reported in 2016 that an entrepreneur who invented a smartphone case that folds out into a selfie stick was shocked to find a copy of his product on sale through Chinese websites at a cheaper price.
It’s an extremely common issue seen in Chinese factories, which are used to produce counterfeit products that have been designed to be as similar as possible to the original products. 
Often, the cloned products are sold online for a cheaper price.
The nature of China’s laws around foreign businesses are key to helping transfer technology from Western companies to China.
A report to the US Congress by the Department of Justice published in 2018 said that “China uses foreign ownership restrictions, such as joint venture requirements and foreign equity limitations, and various administrative review and licensing processes, to require or pressure technology transfer from US companies.”
Forcing the creation of joint ventures has meant that businesses wishing to operate in China have to transfer information to Chinese businesses, raising concerns that the products may be copied.
The report to Congress also described widespread hacking of computer networks in order to gain access to confidential information that would be extremely useful to Chinese businesses.
In 2014, the US government indicted five members of the Chinese military over charges that they hacked into the networks of large US power and steel companies in order to steal trade secrets.
These hacking attacks are a far cry from the more prosaic copying of devices like crowdfunded selfie sticks, but the ongoing hacks show a continued effort to promote Chinese businesses by handing them closely guarded trade secrets.
The promise of a new law that could grant businesses “fair treatment” inside China is seen as a step in the right direction, but Western businesses don’t anticipate an immediate end to the copying, cloning and hacking which has gone on for years.

Lawmakers Take Aim at Chinese Tech Firms

Bipartisan groups introduce amendment to scuttle Trump’s deal with ZTE, scrutinize Huawei’s ties to Google
By Siobhan Hughes, Kate O’Keeffe and John D. McKinnon

The deal that the Trump administration announced Thursday with China’s ZTE Corp. was immediately opposed by a bipartisan group of U.S. lawmakers as a threat to national security. 

WASHINGTON—Lawmakers in Congress lost a battle over ZTE Corp. when the Trump administration announced a deal Thursday to resuscitate the Chinese telecommunications giant, but they made it clear their war against Chinese technology companies is far from over.
Hours after the Commerce Department announced a deal that would prevent ZTE’s collapse by allowing it to resume buying components from U.S. suppliers, a bipartisan group of lawmakers introduced an amendment to a must-pass bill in an effort to undo the deal.
Members of Congress have also begun scrutinizing Google’s relationship with China’s Huawei Technologies Co. 

A group of lawmakers that includes some of the biggest critics of Huawei—Sens. Tom Cotton (R., Ark.) and Marco Rubio (R., Fla.) and Reps. Mike Conaway (R., Texas) and Robert Pittenger (R., N.C.)—is looking at Google’s operating-system partnership with Huawei.
Sen. Mark Warner (D.,Va.) issued his own open letter early Thursday to Google parent Alphabet Inc. and Twitter Inc., asking for information about any data-sharing agreements between the two companies and Chinese vendors. 

He also asked for information from Alphabet about separate partnerships with Chinese phone maker Xiaomi Corp. and Chinese tech giant Tencent Holdings Ltd.
The effort to reverse the ZTE deal marks the second time this week that the Republican-led Senate has threatened direct confrontation with Donald Trump over a signature policy issue.
A group of senators is also seeking to undo tariffs that Trump recently imposed on aluminum and steel imports from Canada, the European and Mexico. 

They have taken a dispute that was a war of words into the more serious realm of legislation that could handcuff the president.
Trump has made trade, and particularly fixing what he views as an unfair global trading system, a centerpiece of his agenda. 

That has entailed confronting both China and close allies, and threatening tariffs on a range of goods. When Trump last month said he was planning to reverse the penalties on ZTE, as the administration was pushing Beijing to commit to buy more U.S. exports, lawmakers from both parties accused him of conflating trade and national-security issues. 

The administration denies that.
While some Republicans have shied away from confronting Trump over his trade agenda, they appeared more prepared on Thursday to challenge the deal with ZTE, where national- security issues are more clear-cut. 

U.S. officials have warned for years that the telecom firm’s equipment, along with equipment made by rival Huawei, could be used to spy on Americans.
In mid-April, the U.S. banned exports to ZTE as punishment for the Chinese company breaking the terms of a settlement to resolve its sanctions-busting sales to North Korea and Iran. 

The penalty, which the Commerce Department said Thursday it would now lift as part of a new deal, amounted to a death knell for ZTE.
Backers of the ZTE amendment introduced Thursday, led by Mr. Cotton along with Senate Minority Leader Chuck Schumer (D., N.Y.) and Sen. Chris Van Hollen (D., Md.), are hoping to attach it to the National Defense Authorization Act, which could get a vote as soon as next week. 

Senate Majority Leader Mitch McConnell (R., Ky.) hasn’t said whether he expects the amendment to go to a vote, or whether it could make it into the package by other means.
Sen. Lindsey Graham (R., S.C.), who urged his colleagues to back off their effort to void Trump’s aluminum and steel tariffs after meeting with the president this week, said he wasn’t yet comfortable with the ZTE deal.
“I don’t know,” Mr. Graham said. 

“I want to give the president as much latitude as we can to negotiate with China and get a good deal with North Korea. Our intelligence community is very concerned. I want to know from them: do these changes alleviate their concerns?” he said.
The Commerce Department agreement announced Thursday requires ZTE to pay a $1 billion fine and allow U.S. enforcement officers inside the Chinese company to monitor its actions. 

In exchange, it allows ZTE to resume buying components from U.S. suppliers that it needs to make smartphones and build telecoms networks.
“I’m not comfortable yet,” said Sen. Roy Blunt (R., Mo.), a member of the Senate Intelligence Committee who has declined to back an effort to subject Trump’s metals tariffs to congressional approval. 

“I want to know more about the U.S. presence inside the company and why we should believe that that creates a level of assurance that we need to have about their capacity to do things that we wouldn’t want to have them do.”
The amendment introduced by lawmakers on Thursday would also prohibit U.S. government agencies from purchasing or leasing telecom equipment or services from ZTE or Huawei, and ban the U.S. from subsidizing those firms with grants or loans.
A ZTE spokeswoman didn’t immediately respond to a request for comment.
The fight over ZTE between Trump administration officials and China hawks in Congress began last month. 

Just weeks after the Commerce Department had banned U.S. companies from selling to ZTE, Trump suggested he was considering reversing the penalty. 

He tweeted May 13 that he and Chinese dictator Xi Jinping were “working together to give massive Chinese phone company, ZTE, a way to get back into business, fast.” 

He added: “Too many jobs in China lost. Commerce Department has been instructed to get it done!”

The tweet incensed many members of Congress, as well as intelligence and military officials, who moved swiftly to denounce any prospect of a reprieve through a series of legislative actions and an aggressive publicity campaign.
The debate over ZTE in Congress likely will have ramifications for the fall elections, as well as for trade policy. 

Polling has suggested that voters remain wary of China, a fear that Trump is tapping with his get-tough rhetoric.
The Wall Street Journal/NBC poll in April found that most U.S. voters view China as an adversary rather than an ally. 

Fear of China is especially intense among Trump supporters. 

But it is also substantial among older voters, whites and Republicans in general.
In private meetings with GOP senators this week, Trump argued in favor of reaching a deal with ZTE, which his administration struck after the president personally negotiated with Xi. 

The White House has also argued that if ZTE goes out of business, it will simply be absorbed by Huawei, lawmakers said, leaving the U.S. without protections included in the deal, such as the installation of Chinese-speaking American enforcement officers inside the company to monitor its actions.
That carried little weight with Mr. Rubio, who co-sponsored Thursday’s amendment and who has been among the most vocal members of Congress on the issue. 

“If Huawei is an even bigger problem than ZTE, we shouldn’t be selling them semiconductors either,” he said.
Lawmakers said the administration’s handling of the ZTE issue was evidence of dysfunctional trade policies. 

In a speech on the Senate floor Thursday, Mr. Schumer said: “Trump has directed far too much of the administration’s energies on trade toward punishing our allies, like Canada and Europe, instead of focusing on the real menace, the No. 1 menace: China.” 

Mr. Schumer was referencing Trump’s decision last week to impose tariffs on America’s closest allies.
While the ZTE drama unfolded Thursday, lawmakers’ ramped-up scrutiny of Google’s deal with Huawei represented another front in the offensive against Chinese tech companies: data sharing. 

Trump administration officials and lawmakers had earlier largely limited their actions to trying to reduce ZTE’s and Huawei’s U.S. footprints. 

Now, members of Congress appear more willing to examine partnerships between U.S. firms and the two companies that have nothing to do with U.S. sales.
A representative for Huawei wasn’t immediately available to comment.
A Google spokesman said in a statement the company looks forward to answering lawmakers’ questions, adding: “We do not provide special access to Google user data as part of these agreements, and our agreements include privacy and security protections for user data.”
Derek Scissors, a China scholar at American Enterprise Institute, said the ZTE deal makes little sense if U.S. policy goals are to both keep Chinese firms out of the U.S. telecom network and keep them from getting access to Americans’ personal data.
“If we don’t trust Chinese telecommunications firms, why are we helping them become more capable?” he said.

No Surprise: Backdoors and Spyware on Smartphones is the Norm in China

All the three biggest Chinese smartphone manufacturers, Xiaomi, Huawei and Lenovo had preinstalled spyware in their smartphones
By Oiwan Lam

Kryptowire, a security firm, recently identified several models of Android mobile devices that have preinstalled permanent software, known as firmware, that serve as backdoor that collects sensitive personal data, including text messages, geolocations, contact lists, call logs and transmits them to a third-party server in Shanghai, China.
Without users’ consent, the code can bypass Android's permission model. 

This could allow anyone interested in a mobile user's data — from government officials to malicious hackers — to execute remote commands with system privileges and even reprogram the devices.
The firmware was developed by Chinese company Shanghai ADUPS Technology Company. 

ADUPS confirmed the report with a statement explaining that the software was a “solution” to a Chinese phone manufacturer’s demand to “flag junk texts and calls” in response to user demand. 

It said the collected messages would be analyzed to “identify junk texts” and “improve mobile phone experience.”
Kryptowire's research reveals that the collected information was protected with multiple layers of encryption and then transmitted over secure web protocols to a server located in Shanghai. 

The data transmission occurred every 72 hours for text messages and call log information, and every 24 hours for other personally identifiable information.
ADUPS explained that the “accustomed” firmware was "accidentally" built into 120,000 mobile products of one American phone manufacturer, BLU Products. 

After BLU raised the issue, ADUPS explained that the software was not designed for American phones and deactivated the program on Blu phones.
The news has been widely reported in foreign media as ADUPS is among the largest FOTA (firmware over the air) providers in the world. 

The company provides a cloud platform for mobile device management to over 700 million active users in 200 countries, which is equivalent to 70% of the global market share as it works closely with the world largest cheap mobile phone manufacturers ZTE and Huawei, both of which are based in China. 

In 2015 alone, Huawei sold more than 100 million smartphones.
Chinese netizens have not been surprised by the news. 

Reports about spyware preinstalled in Chinese mobile brands have circulated for many years among mainland and overseas Chinese speaking-communities. 

In 2014, Hong Kong Android Magazine reported that Xiaomi’s smartphones designed for overseas markets were automatically connecting to an IP in Beijing and that all documents, SMS and phone logs, and video files downloaded were being transmitted to a Beijing server.
In 2015, Germany-based security company G-Data also found out that at least 26 Android mobile brands had preinstalled spyware in their smartphones.
The three biggest Chinese smartphone manufacturers, Xiaomi, Huawei and Lenovo were all listed.

China's newly passed Cybersecurity Law has provided legal ground for the smartphone’s backdoor operation. 

The law requires “critical information infrastructure operators” to store users’ “personal information and other important business data” in China.
Other laws, such as the Child Protection Bill (still in draft), also requires hardware companies to pre-install surveillance software on communication devices and legalize specific approaches to treating internet addiction.
In addition to the surveillance of private data as required by law, Chinese Android phone users regularly download Android apps from unofficial third party app markets since Google left China in 2010. 

These Android markets are flooded with apps containing malware that can steal and manipulate personal data.
On November 16, the New York Times reported that American authorities say it is not clear whether this represents secretive data mining for advertising purposes or a Chinese government effort to collect intelligence.
In response to the news, many Chinese netizens are pointing out the abusive use of personal data and government surveillance has become the norm.
信息泄露人们早就见惯了，即使是被Gov监视人们也不会在意。we are nobody.
We are so used to the leaking of personal data. We don’t care about government surveillance anymore. We are nobody.