Dec 22, 2020

Axios China

Welcome back to Axios China. Today's newsletter is a special deep dive into China's intelligence collection and cyber hacks.

  • This is the last edition of Axios China in 2020. I'll be back in your inboxes on Jan. 5. Happy holidays!

Today's newsletter is 1,622 words, a 6-minute read.

1 big thing: DOJ complaint highlights Zoom's China problem

Illustration: Aïda Amer/Axios

Last week, the U.S. Department of Justice charged a China-based Zoom executive with disrupting video meetings hosted by users outside China that commemorated the 1989 Tiananmen Square massacre.

  • The complaint reveals the now-terminated employee was sending the private data of some U.S.-based users directly to the Ministry of State Security (MSS), China's main civilian spy agency.

Why it matters: Researchers and U.S. government officials have warned that the Chinese government might require China-based employees of U.S. companies to hand over private company data to Beijing. The DOJ's charges indicate those fears are valid.

Details: Xinjiang Jin, also known as Julien Jin, officially served as Zoom's "primary liaison" with Chinese law enforcement and intelligence services, regularly responding to requests from Beijing "for information and to terminate video meetings" hosted on the company's video platform, according to the complaint.

  • Zoom abides by Chinese domestic law for users based in China, handing over information and suspending meetings deemed to be in violation of Chinese law, which can include meetings that discuss politically sensitive topics.
  • But Jin's communications with the MSS and other Chinese officials went beyond what Zoom had authorized, according to the DOJ. Jin allegedly provided the Chinese government with information including IP addresses, names and email addresses of users located outside of China.
  • While in close communication with MSS officials, Jin allegedly fabricated evidence to falsely accuse accounts that held Tiananmen memorials in May and June of this year of promoting terrorism and pornographic content and sent falsified images to Zoom executives, according to the complaint.

The big picture: This is precisely the scenario U.S. analysts and national security professionals have warned might happen to U.S. tech companies with operations in China. That's because China's laws mandate cooperation and coordination between Chinese firms and the Chinese government.

  • A 2015 national security law obligates individuals and companies to provide assistance to the government to "safeguard national security," and a 2017 law requires private-sector cooperation with China’s intelligence services.
  • This means Chinese law requires local employees to assist with government information and censorship — and to keep that assistance a secret upon request.

Put simply, if the MSS was sending these requests to Jin, a Chinese national on Chinese soil, he was required by law to comply and to keep his actions a secret.

Zoom executives have long known their China operations carry a degree of risk. Zoom has more than 700 employees in China, many of them part of its research and development team.

  • In its January 2020 filings to the U.S. Securities and Exchange Commission, the company stated its “high concentration of research and development personnel in China” could “expose us to market scrutiny regarding the integrity of our solution or data security features."
  • But despite this risk, Zoom’s official position as stated in its 2020 SEC filings was that its China operations presented a “strategic advantage” because it allowed the company to “invest more in increasing our product capabilities in an efficient manner.” Relocating its product development team outside of China would result in “higher operating expenses.”

What they're saying: "We support the U.S. Government’s commitment to protect American interests from foreign influence. As the DOJ notes, Zoom has been fully cooperating with them in this matter," a statement posted to Zoom's website read.

What to watch: While Zoom said earlier this year it would boost the number of U.S.-based members of its R&D team, Zoom has not indicated it will close its China-based R&D operations. Zoom declined to comment.

2. A CCP think tank staffer offered to pay me for my sources

Image source: LinkedIn.

A person on LinkedIn claiming to work for a think tank run by a high-ranking Chinese Communist Party department recently offered financial compensation for the names of my sources and for reports about the incoming Biden administration's views on China.

Why it matters: It was a surprisingly clumsy attempt to gain insider information about the U.S. government's China policy, suggesting that amid a chill in U.S.-China relations and a global pandemic, it's gotten harder for people in Beijing to know what's happening in Washington.

Details: A couple of weeks ago, someone named Aaron Shen (沈岳 in Chinese) sent me a request to connect on LinkedIn. I accepted after I saw he claimed to be the assistant director of international liaison at the China Center for Contemporary World Studies — the in-house think tank of the International Department of the Chinese Communist Party's Central Committee (IDCPC).

  • The IDCPC functions as the foreign affairs wing of the party.
  • The IDCPC's job is "to win support for China among foreign political parties," The Economist's Gady Epstein recently wrote. "As a party outfit it has considerable authority. It works closely with the foreign ministry and swaps personnel with it."

Shen and I started chatting. We had both been students at Peking University in 2008. I asked him where he was from (Hubei province). I told him I was from Texas ("Oh right! Cowboy is a very famous cultural symbol of Texas," he replied, referring to the hat-wearing cow-wrangler, not the football team).

But then something weird happened.

  • He asked how I was able to gather "first-hand information" during the pandemic.
  • He said he was "troubled by lacking channels and sources to gather the first-hand in-depth information we need for our research and consulting work."
  • He said they placed a lot of value on "information sources" with "authority" that could "reflect true situation and trends of the U.S.-China relations."

The pitch: "If the contributions can really reflect real situation and meet our demand well, the remuneration will be generously paid without doubt," Shen messaged me, after asking that we switch to the encrypted messaging app Signal and offering to pay me for my sources.

  • Shen told me he wanted to know "the policy standpoints and considerations on the issue of punishing and blocking certain entities and individuals of China by the means of imposing sanctions, enforcing long-arm jurisdiction, putting pressures on allies, and so on."
Image Source: LinkedIn.

A little bit of fun: After Shen offered to pay me for reports written with input from my sources, I told him I had an imminent meeting with a "former intelligence director" (an important-sounding but nonexistent position) named "Krustofsky" — the last name of Krusty the Clown, a character from the "Simpsons."

  • He didn't seem to catch on. His final message to me, before I sent him a formal media inquiry with questions for this article, was, "How about your meeting with Krustofsky, was there anything interesting?"

Go deeper: Read the full story.

3. Catch up quick

1. The U.S. passed into law a bill targeting Chinese companies on U.S. stock exchanges, the South China Morning Post reports.

2. The website for Alibaba's cloud-computing service showed customers how to use software that identifies Uighur faces, the New York Times reports.

3. The U.S. warned that Chinese investments in the Israeli tech industry could pose a security threat. Go deeper.

4. The FBI briefed House leaders Nancy Pelosi and Kevin McCarthy on Rep. Eric Swalwell's ties to an alleged Chinese spy, NPR reports.

4. Xi Jinping's anti-corruption drive had a counterintelligence motive

Illustration: Annelise Capossela/Axios

Widespread corruption in China made Chinese government officials especially vulnerable to CIA recruitment, and Chinese leader Xi Jinping sought to mitigate this threat by weeding out corruption, according to a new investigation by Foreign Policy magazine.

Why it matters: The anti-corruption campaign, combined with China's other counterintelligence efforts, may have reduced the CIA's visibility into what is happening on the ground in China.

Background: Shortly after he assumed office in late 2012, Xi launched a sweeping anti-corruption campaign that targeted the widespread practice of bribe-seeking and grift among party cadres and government officials.

  • The campaign has long been judged to have had two primary aims: redeeming the corrupt one-party system in the eyes of the Chinese populace and giving Xi a credible reason to go after his political foes.

Now we know of a third aim — countering CIA recruitment.

  • The Chinese government discovered the CIA was paying the “promotion fees” for some Chinese officials, Zach Dorfman reports for Foreign Policy.
  • This was a double vulnerability. Not only were these Chinese officials being paid by U.S. intelligence, but those very payments were allowing the officials to rise higher in the system, giving the U.S. even greater visibility into China’s halls of power.

What they're saying: “Paying their bribes was an example of long-term thinking that was extraordinary for us,” a former senior counterintelligence official told Foreign Policy. “Recruiting foreign military officers is nearly impossible. It was a way to exploit the corruption to our advantage.”

What happened: Top Chinese leaders recognized corruption was threatening the legitimacy of the party and even China's national security, Dorfman reports.

  • Xi's anti-corruption campaign, combined with a counterintelligence offensive that saw the arrest or execution of dozens of CIA assets in China, mitigated the threat and reduced the CIA's footprint on the ground there.
5. What I'm reading

Super-duper computer: Physicists in China challenge Google's "quantum advantage" (Nature)

  • A team of researchers in China used beams of light to complete a complex calculation in 200 seconds, achieving "within a few minutes what would take half the age of Earth on the best existing supercomputers."
  • This performance eclipsed a demonstration last year by Google.

Bringing allies: An allied strategy for China (Atlantic Council)

  • As Biden prepares to assume office, I'm seeing a growing number of proposals for multilateral approaches to deal with China's assault on liberal institutions.
  • This report by the Atlantic Council's Scowcroft Center is a particularly good one. It doesn't downplay China's chilling authoritarian reach, and it also sets out a realistic path for limited engagement on issues like climate change.

India and China: This is a great thread, from a professor at Shiv Nadar University in India, on the role of the CCP in China and how India is dealing with the CCP and with private Chinese companies.

Via Twitter

The influence environment: A survey of Chinese-language media in Australia (Australian Strategic Policy Institute)

  • ASPI's latest report finds WeChat is keeping Chinese-Australian communities in a haze of Chinese state propaganda.
6. 1 spy thing: The true story of M. Butterfly

Illustration: Greg Ruben/Axios

If you haven't read the book — or seen the play — or watched the movie, you can read this 1993 article from the New York Times about the French diplomat who fell in love with a Chinese man who he believed for years was a woman.

  • The early years of their relationship highlight how truly different the Mao era was from China today — it could be dangerous for a Chinese person to even be seen with a foreigner.

P.S. Thanks to those who sent me their favorite Simpsons' references last week. I was crowdsourcing ideas for my conversations with Aaron Shen. Real audience engagement!

  • I managed to fit in Kent Brockman, Troy McClure, Ned Flanders and, of course, Krusty the Clown.