White House Considers Restricting Chinese Researchers Over Espionage Fears

The Trump administration is considering measures to block Chinese from performing sensitive research at American universities and research institutes

By ANA SWANSON and KEITH BRADSHER

The Trump administration is considering restrictions on students and researchers from China over concerns that they could be sharing American technology and trade secrets with the Chinese. 

WASHINGTON — It sounds like something out of a science fiction movie: In April, China is said to have tested an invisibility cloak that would allow ordinary fighter jets to suddenly vanish from radar screens.
This advancement, which could prove to be a critical intelligence breakthrough, is one that American officials fear China may have gained from a Chinese researcher who roused suspicions while working on a similar technology at a Duke University laboratory in 2008. 

The researcher, who was investigated by the F.B.I., ultimately returned to China, became a billionaire and opened a thriving research institute that worked on projects related to those he studied at Duke.
The Trump administration is considering strict measures to block Chinese from performing sensitive research at American universities and research institutes over fears they may be acquiring intellectual secrets, according to people familiar with the deliberations.
The White House is discussing whether to limit the access of Chinese to the United States, including restricting certain types of visas available to them and greatly expanding rules pertaining to Chinese researchers who work on projects with military or intelligence value at American companies and universities. 

The exact types of projects that would be subject to restrictions are unclear, but the measures could clamp down on collaboration in advanced materials, software and other technologies at the heart of Beijing’s plan to dominate cutting-edge technologies like advanced microchips, artificial intelligence and electric cars, known as Made in China 2025.
The potential curbs are part of a broad set of measures necessary to combat a growing national security threat from China, which is pressuring or coercing American companies into handing over valuable trade secrets. 

But blocking Chinese’s access to American laboratories over fears of spying would be a significant escalation in the Cold War with the Chinese over which nation will claim technological dominance.
The details are still under discussion and it is not known how many people could be affected, but restrictions would probably fall most heavily on graduate students, postdoctoral researchers and employees of technology companies in the United States on temporary visas. 

More than one million foreign students study in the United States each year, with roughly one-third coming from China.
The restrictions would cover Chinese nationals, but with two exceptions: those with green cards, which give them the right to permanent residency in the United States, and those who have been granted asylum because of persecution in their home country. 

Also exempt would be former Chinese nationals who renounce their citizenship and become naturalized Americans.

The student-spies: Chinese graduates in New York in 2016. 

This week, a delegation of administration officials, including the Treasury secretary, Steven Mnuchin, will head to China for discussions to help avoid a brewing trade war. 

But additional curbs on Chinese could make those tough discussions even harder.
President Trump has threatened tariffs on roughly $150 billion of Chinese goods in retaliation for unfair trade practices — a proposal that sparked tariff threats of China’s own. 

The administration is expected to detail new plans for restrictions on Chinese investment in the United States by the end of May. 

Congress is also considering giving the United States broader authority to restrict Chinese investments.
These measures could prompt more retaliation from China, which has already promised to place tariffs on at least $50 billion of American products. 

They also appear to be fueling anti-American sentiment within Chinese borders. 

China has tightened measures against possible spying, even posting public service announcements in subway trains warning citizens to watch foreigners for signs of espionage.
In America, research institutes look particularly vulnerable to espionage. 

According to Defense Department statistics, nearly a quarter of all foreign efforts to obtain sensitive or classified information in 2014 were routed through academic institutions. 

At a congressional hearing in April, Michelle Van Cleave, a former national counterintelligence executive, said the freedom and openness of the United States made the country a “spy’s paradise.” 

Chinese and Russian agents both come to the United States with “detailed shopping lists,” she added.

Trump administration officials fear technologies with military applications could make their way to China.

Administration officials have been debating restricting visas offered to Chinese for months as part of the broad package of measures targeting China economically. 

But the new plan under discussion by the White House would be a much more targeted measure, and one with potentially big consequences for American industry. 

While the Obama administration also proposed barring foreign students from company-sponsored research at American universities with national security implications, the Trump administration’s measures could apply more broadly to private research facilities as well as new products and technologies.
The United States already restricts who can work on sensitive technology. 

Researchers on projects deemed classified are carefully vetted and must obtain security clearances. The next level down are research projects that are subject to so-called export controls — including many with potential military applications, such as computer programs and hardware that might be used to model nuclear explosions. 

Universities and companies working on this material need to obtain a special license from the government to employ foreign researchers.
These products do not need to leave the United States to fall under export rules. 

All it takes to trigger export controls is for citizens from certain countries — including China, Russia and many former Soviet republics — to be involved in almost any way. 

That ranges from physical possession of the product to written descriptions and even verbal discussions of it. 

The administration is considering broadening the range of goods and services traded with China that would be subject to these so-called deemed export rules.
If the proposal is approved by the Commerce Department, and ultimately by Mr. Trump, American companies and universities would be required to obtain special licenses for Chinese who have any contact whatsoever with a much wider range of goods — making it harder for Chinese to work on a range of scientific research and product development programs.
Fueling the push are instances like the one involving Ruopeng Liu, a Chinese student at Duke who was helping to develop a cloak that shields objects from a broad spectrum of wave frequencies. 

The professor leading the Pentagon-funded lab, David R. Smith, became suspicious of Liu, who seemed intent on collaborating with old colleagues in China, and even invited them to tour the lab and photograph Duke’s equipment.
It became clear that Liu was trying to share the cutting-edge technology he was studying in the United States with colleagues in China. 

The institute he founded on his return to China eventually received millions of dollars of investment, registered thousands of patents and even played host to Xi Jinping.
Liu did not respond to interview requests, but in past interviews, he has maintained that he did nothing wrong, beyond taking advantage of an open and collaborative university atmosphere. 

Like many projects in the United States, most of Mr. Smith’s work at Duke was early-stage research that was not classified or categorized as a deemed export.
Daniel Golden, who tells Liu’s story in his book, “Spy Schools,” said Liu exploited a gray area that allows a large amount of sensitive, taxpayer-funded technology to flow to foreign governments. 

“Globalization has transformed American universities into a front line for espionage,” Mr. Golden said.

China's Electric Cars Are Actually Pretty Dirty

The technology is only as clean as its sources of power.
By Mark Buchanan

Where you get the power matters. 

Could China, the world's largest automobile market, help address the threat of global warming if it went completely electric? 

The answer isn’t as obvious as it seems.
China has been making great strides toward electrification. 

Electric vehicle sales are booming: Consumers bought more than 300,000 last year, and more than 5 million are expected to be on the road by 2020. 

The government just announced bold plans for a wave of big new battery factories.
Encouraging as that may be, though, the move away from conventional cars and trucks won’t immediately reduce the country’s carbon emissions. 

On the contrary, the production and exploitation of electric vehicles in China actually produces more greenhouse gases and consumes more overall energy. 

In the short run, China’s moves could make greenhouse emissions go up, not down.
Electric vehicles seem environmentally benign. 

They’re lightweight, energy-efficient, and potentially greener than their conventional counterparts. But the reality is more complex. 

Their manufacture entails energy-intensive mining of rare elements, such as the lithium required for their batteries. 

Their fuel efficiency can make up for that in the course of use, but only if the electricity is produced in a relatively clean way.
Developed nations get the best results, because they tend to generate electricity using cleaner sources. By one estimate, the average electric car in the U.S. has just half the greenhouse gas impact of a conventional car over its life cycle. 

It’s even less in the western, southern and northeastern parts of the country, where power plants draw more renewable power. 

A comprehensive energy model being developed by Argonne National Laboratory produces a similar estimate.
Europe does well, too. 

Looking at all the processes involved in the manufacture, use, and ultimate disposal of a range of both electrical and conventional vehicles, Norwegian researchers found that electric vehicles offer at least a 10 percent reduction in greenhouse gas emissions (assuming they were driven about 150,000 kilometers). 

To be sure, electric-vehicle batteries impose a host of other environmental costs linked to the mining of rare metals. 

But on carbon emissions, electric vehicles win out.
The real challenge to reducing greenhouse gas emissions will be in developing nations -- especially China, which is likely to dominate the global auto market for decades to come. 

Unfortunately, the structure of China’s industrial economy will make it difficult. 

One recent study by Chinese engineers estimated that electric vehicles generate about a 50 percent increase in both greenhouse gas emissions and total energy consumption over their life cycle. 

The manufacture of the lithium-ion battery alone accounts for 13 percent of the energy consumption and 20 percent of the emissions.
The most promising ways to make electric vehicles better have little to do with the vehicles themselves. 

Energy infrastructure matters more. 

In China, electricity production still relies quite heavily on high-carbon sources including coal. 

Hence, both the manufacturing of the batteries and the operation of the vehicle produce more pollution than they would elsewhere. 

The recycling industry in China is also underdeveloped. 

U.S. steel is about 70 percent recycled, compared with just 11 percent in China.
Electric vehicles can help China reduce greenhouse emissions only in the context of a deeper shift toward renewable sources of energy and greater efficiency. 

No one technology alone can create a green revolution.

China Just Handed Trump A Really Good Reason To Retaliate

By Gordon G. Chang

Saturday, Miao Wei, the head of the powerful Ministry of Industry and Information Technology, tried to reassure the international community that Beijing’s Made in China 2025 plan will not discriminate against foreign companies. 

Minister Miao was responding to sharp criticisms contained in a report issued Tuesday by the European Union Chamber of Commerce in China.
Last month, Beijing issued implementing guidelines for the plan. 

The guidelines were the product of more than 20 State Council units led by Miao’s ministry.
Every nation tries to help its domestic businesses, but China’s plan, introduced in March 2015 by Li Keqiang, steps over the line in aiding Chinese companies.
The plan, sometimes abbreviated to CM2025, is a $300 billion initiative to make China nearly self-sufficient in 10 industries, including aircraft, robots, electric cars, and computer chips. 

Beijing has set out specific targets for market shares by industry.
The plan aims for near self-sufficiency in components by 2020 and materials five years later.
In short, Beijing wants Chinese industries to possess 80% of China’s home market in the targeted sectors.
To get there, CM2025 calls for jumbo-sized, low-interest loans from state investment funds and development banks, aid for the purchase of foreign competitors, and research subsidies.
As the European Union Chamber of Commerce in China noted in its report, “the 2025 project is in fact a large-scale import substitution plan aimed at nationalizing key industries, or at least severely curtailing the position of foreign business in them, both as suppliers of key components and finished goods.”
A German think tank, the Mercator Institute for China Studies, put it this way: Beijing is planning to build a “small vanguard” of “front-runners” that “are likely to dominate their sectors on the Chinese market and become fierce competitors in international markets.”
The U.S. Chamber of Commerce is expected to issue a report along the same lines shortly.
It is in this context that Miao mounted Beijing’s defense. 

He made many points Saturday but stumbled when trying to defend the plan’s targets for market share of Chinese brands. 

They were only forecasts, the minister maintained. 

As he said, “When we were drawing up the plan, we did not deliberately pursue these targets.”
Miao’s comment was not credible. 

The plan is a compilation of tactics Beijing has used in the past to disadvantage foreign companies. 

It comes in the midst of a concerted effort to cripple foreign competitors in China. 

And does he really think Beijing is going to spend tens of billions of dollars over the course of years to aid foreigners?
Beijing has had great success with its various industrial policies, but this plan is unlikely to succeed, and not only because its targets are “lofty,” as Sara Hsu of the State University of New York at New Paltz described them on this site.
First, CM2025 is afflicted by the same flaw that undermines all politically directed efforts. Governments are not good at picking winners and losers in broad-based, multi-year initiatives.
Yes, Beijing has had success with a few enterprises, the most notable being the nominally private Huawei Technologies. 

To replicate that favorable result across ten industries, however, is extremely unlikely, beyond the capabilities of any government.
China’s officials in 2025 may be able to point to some dominate Chinese companies in the ten sectors, but they will have no good answer to this question, posed by Professor Hsu: “Is this program better than allowing foreign companies to compete, forcing Chinese companies to innovate?”
A state-dominated system almost always opts for state-led solutions. 

Chinese leaders may say they are in favor of globalization, as Xi Jinping famously did at Davos this year, but they implement localist solutions whenever possible.
This is not to say localism cannot work, especially in the short run. 

Mao Zedong, after all, had a booming economy in the first years of his rule.
Yet those types of solutions do not produce good results over time. 

The Chinese economy under Mao collapsed less than a decade after he assumed power. 

The economy today may be on the same course. 

China, after the relative openness of the “reform and opening up” period started by Deng Xiaoping, appears to be regressing fast, moving toward more state control and turning inward under Mao-admiring Xi Jinping. 

Mao admirers, among other things, make poor economic planners.
Second, Xi’s predatory policies, theoretically, would make sense in the long run if foreigners cooperated by not protesting trade violations, easily surrendering technology, continually pouring in money for no return.
But they are no longer doing that. 

Last year, foreign direct investment into China fell in dollar terms. 

And it will continue to fall as China’s growth slows, as Beijing imposes stricter controls on outbound transfers, as Xi continues to target foreign companies in China.
China’s economy needs infusions of cash and technology, and his CM2025 plan will restrict the flow as foreign companies decide to invest elsewhere. 

As the European Union Chamber of Commerce in China report notes, the discrimination inherent in Made in China 2025 limits the ability of foreign business “to contribute to the country’s innovation ecosystem.”
Third, countries will protect themselves from China’s new industrial plan. 

Whatever one may think of CM2025, this is a particularly bad time to have to defend it.
As the Financial Times reports, Peter Navarro, the head of the newly created National Trade Council, and senior adviser Steve Bannon are beginning to win “a civil war” in the White House over trade policy.
If they can keep President Trump’s ear, the U.S. will act decisively against Beijing’s increasingly brazen protectionism. 

After all, Navarro, in his address before the National Association for Business Economics this month, said trade deficits are a matter of national security and identified China as responsible for about half of America’s.
Navarro has a point. 

Among the American companies that are thought to be at special risk because of CM2025 are Boeing, General Electric, and Intel.
Trump was elected to protect Boeing, General Electric, and Intel—and their American-based workers—from Chinese trade practices. 

Minister Miao has just handed him a reason to hit China hard.

Rogue Nation

China tech plan threat to foreign firms
By JOE MCDONALD

China is violating its free-trade pledges by pressing foreign makers of electric cars and other goods to share technology under an industry development plan that is likely to shrink access to its markets, a business group said Tuesday.
The report by the European Union Chamber of Commerce adds to mounting complaints Beijing improperly shields its fledgling developers of robotics, software and other technology from competition.
Technology is a growing flashpoint in trade tensions with Washington and Europe, which worry their competitive edge is eroding as Beijing buys or develops skills in semiconductors, renewable energy and other fields.
European companies express frustration Chinese enterprises have been permitted to acquire technology leaders such as German robot maker Kuka while most of China's assets are off-limits to foreign buyers. 

In December, Germany blocked the Chinese purchase of a chipmaker, Aixtron, after Washington objected on security grounds.
The European chamber warned tactics Beijing is using to carry out its "China Manufacturing 2025" initiative might inflame sentiments in Europe and the United States in favor of trade controls.
The plan calls for China to be able to supply its own high-tech components by 2020 and materials by 2025 in 10 industries from information technology and aerospace to pharmaceuticals. 

A broad outline was issued in 2015 and officials have been gradually releasing details.
Suppliers of electric cars and other goods are under pressure to hand over technology in violation of Beijing's World Trade Organization commitments, the European chamber said. 

It said that also contradicts the ruling Communist Party's repeated promises of equal treatment and to give market forces a bigger role in the state-dominated economy.
That strategy "is in fact a large-scale import substitution plan aimed at nationalizing key industries, or at least severely curtailing the position of foreign business in them," the chamber said.
In a possible response to such criticism, China's top economic official, Li Keqiang, promised in a speech Sunday foreign companies would receive "equal treatment" under the manufacturing plan. 

He gave no details.
Foreign suppliers of technology from X-ray scanners to wind turbines to bank security software complain they face growing official obstacles to making sales in China. 

Those range from controls based on national security concerns foreign suppliers say might be exaggerated to procurement rules that encourage hospitals and other customers to favor Chinese suppliers.
Beijing has clashed repeatedly with Washington and Europe since the 1990s over its efforts to induce foreign companies to hand over encryption and other technology.
In November, Chinese legislators approved a cybersecurity law business groups warned would hamper access to technology markets. 

They said a provision requiring security technology to be "secure and controllable" might require providers to disclose how products work, raising the risk trade secrets might be leaked.
In electric cars, where Beijing sees major opportunities, the manufacturing plan says two of the top 10 global brands by 2025 should be Chinese, the European chamber said. 

It said that rules out joint ventures created by foreign companies with Chinese partners.
The chamber appealed to Chinese leaders to discard quotas and other controls and focus instead on encouraging basic research and improving their manufacturing base.
"Perfecting the market would do far more to ensure that China reaches its full potential for economic development and innovation than more old-school, expensive industrial planning ever could," the chamber said.