May 3, 2019

Axios China

By Bethany Allen-Ebrahimian
Bethany Allen-Ebrahimian

Happy Friday! China has been on holiday since Wednesday in celebration of International Worker's Day. Everyone will be back to work by Monday.

Thanks for reading.

1 big thing: Harnessing the May 4th anniversary

An audience watches a short film about the May 4th Movement at The Great Hall Of The People on April 30 in Beijing. Photo: Andrea Verdelli/Getty Images

Tomorrow is the 100th anniversary of the May 4th Movement, which sparked the rise of many radical Chinese political and social leaders, and is one of the sensitive events this year that has the PRC government locking things down even more tightly than normal.

Why it matters: At the same time, the Party, which controls the official history of the movement, is again trying to harness the legacy of May 4 for its own goals.

On Tuesday, the Party convened a gathering at the anniversary at which Xi Jinping urged patriotism among youth, striving for brighter China (Xinhua):

The essence of patriotism is having unified love for the country, the Party and socialism, Xi added, urging young Chinese to follow the instructions and guidance of the Party, and remain dedicated to the country and the people.
Young people are also urged to establish belief in Marxism, faith in socialism with Chinese characteristics, as well as confidence in the Chinese Dream of national rejuvenation...
In the new era, the theme and direction of Chinese youth movement and the mission of Chinese young people, Xi said, are to uphold the leadership of the CPC, and work along with the people to realize the two centenary goals and the Chinese Dream of national rejuvenation.

My thought bubble: Be wary of underestimating how many believe in the patriotic and increasingly jingoistic propaganda and Xi's repeated claims that China is closer than it has ever been to national rejuvenation, or of how many sycophants and opportunists there are in a country as large as China who see safety and opportunity in embracing the Party line. 

  • There is also no question that China is closer to national rejuvenation than it has been at any time since the Opium Wars. Omnipresent propaganda based in kernels of truth married to efficient and ruthless security services can be very effective.

Go deeper: Xi Praises a Student Protest in China. From 100 Years Ago. - The New York Times and Why Does a Student Protest Held a Century Ago Still Matter in China? - The New York Times

2. The latest on the U.S.-China trade talks

Speculation is again building that the U.S. and China are on the verge of a trade deal. USTR head Robert Lighthizer and Treasury Secretary were in Beijing earlier this week, and Liu He is leading a large delegation to Washington next week.

Between the lines: There is so much noise about the talks, it does seem the two sides are closer to a deal, but it is by no means done.

What we're hearing: The PRC side, at least, is starting to plan for a possible mid-June state visit by Xi to the U.S. to seal a deal.

One thing to watch: Frontline's "The inside story of President Trump’s gamble to confront China over trade," airing on May 7, with a cameo by yours truly.

Go deeper: If the U.S. and China Make a Trade Deal, Then What? | ChinaFile Conversation

3. The Pentagon's "China Military Power" report

The Pentagon is required by Congress to issue a report on China's military power annually. The 2019 version came out Thursday. The excutive summary states China's strategy as:

Over the coming decades, they are focused on realizing a powerful and prosperous China that is equipped with a “world-class” military, securing China’s status as a great power with the aim of emerging as the preeminent power in the Indo-Pacific region.

This year's report included sections on influence operations and China in the Arctic. From the summary of the influence operations section:

A cornerstone of China’s strategy includes appealing to overseas Chinese citizens or ethnic Chinese citizens of other countries to advance CCP objectives through soft power or, sometimes, coercion and blackmail. Furthermore, China harnesses academia and educational institutions, think tanks, and state-run media to advance China’s security interests.
China’s foreign influence activities are [predominantly] focused on establishing and maintaining power brokers within a foreign government to promote policies that China believes will facilitate China’s rise.

Why it matters: The trade negotiations are one of the easier aspects of U.S.-China relations, and this report is another reminder that even if there is a trade deal, the broader relationship will only feature intensifying strategic competition.

4. Silicon Valley's "sudden paranoia"

From Mike Allen's must-read Axios AM (sign up here):

Toughened Treasury Department (CFIUS) reviews are "becoming a geopolitical minefield for venture capitalists and startups," Vox's Teddy Schleifer reports:

  • "Even foreign investors who have no China connections suddenly have to jump through hoops that they didn’t have to six months ago."

Why it matters: "Silicon Valley is awash in Chinese and Saudi cash."

  • "[I]f you trace the money that comes into startups through their venture capital firms ... one can see the makings of a great gold rush, financed by overseas investors eager to overstuff money into hungry young companies."
5. The curious case of Bloomberg's Huawei scoop

From Joe Uchill's excellent Axios Codebook newsletter (sign up here):

Bloomberg reported Tuesday that Vodafone's Italian division had discovered "backdoors" in its Huawei-brand telecommunications equipment in 2011 and 2012.

But, but, but: The story did not play well in the security community, where the evidence is seen as insufficient of the central claims. It didn't make a strong case that the "backdoor" was anything more than a minor, unintentional problem. Vodafone's official stance was it wasn't.

Here's what actually happened: The story was based on internal memos leaked to Bloomberg.

  • The "backdoors" were a number of security flaws that Vodafone found in security testing. All hardware and software have security vulnerabilities, so that doesn't seem particularly malicious.
  • One "backdoor" was Telnet, an extremely common communications protocol that many hardware manufacturers use for configuration. While Huawei used the industry standard way to make Telnet inaccessible via the wider internet, Vodafone has a policy of not allowing Telnet.
  • When Huawei fixed the equipment, it claimed it resolved the Telnet issue, but Telnet was still accessible.
  • According to the memos, Huawei said that Telnet couldn't be entirely removed from the router.

To be clear: This chain of events is common for manufacturers. It's hard to make the leap to claiming this was a backdoor based on the story.

  • This is where the story stopped.

However: Bloomberg may not have given the full account of the technical reasoning that the Telnet issue was intentional.

  • Bloomberg did not release the memos, so it's hard to verify any technical details.
  • Still, according to Stefano Zanero, an expert quoted in the story who did see the memos, the memos make Huawei seem sketchier than the story suggested.

According to Zanero, the following was left out of the story:

  • The Telnet service wasn't in guides explaining how the hardware worked.
  • The passwords to the Telnet service couldn't be changed, meaning that the manufacturer would always know how to hack the hardware.
  • It accepted connections in a nonstandard way, which made it seem hidden.
  • The Telnet was successfully removed once but reintroduced later.

The bottom line: It still isn't a smoking gun. Even with Zanero's elaborations, to most of the security community, this has read like Vodafone employees attributing malice to incompetence.

Go deeper: How to stop the next "Huawei moment" - Axios and Huawei says will fight U.S. prosecutors' motion to disqualify its lawyer - Reuters

6. Xinjiang's mass surveillance app

Human Rights Watch reverse engineered an app by police and officials in Xinjiang, and on Thursday released a report and video on what they found:

This report provides a detailed description and analysis of a mobile app that police and other officials use to communicate with the Integrated Joint Operations Platform (IJOP, 一体化联合作战平台), one of the main systems Chinese authorities use for mass surveillance in Xinjiang ...
Authorities are collecting massive amounts of personal information — from the color of a person’s car to their height down to the precise centimeter — and feeding it into the IJOP central system, linking that data to the person’s national identification card number...
Xinjiang authorities consider many forms of lawful, everyday, non-violent behavior—such as “not socializing with neighbors, often avoiding using the front door” — as suspicious.
The app also labels the use of 51 network tools as suspicious, including many Virtual Private Networks (VPNs) and encrypted communication tools, such as WhatsApp and Viber.

Read the report and watch the video here.

7. Worthy of your time

The New York Times - Admissions Scandal: When ‘Hard Work’ (Plus $6.5 Million) Helps Get You Into Stanford

Reuters - U.S. seeks to challenge China's electric-vehicle supply chain dominance

South China Morning Post - Why China dropped its opposition to UN blacklisting of Pakistan-based terror chief Masood Azhar

The Guardian - 'Stand together': support surges in China for student accusing JD.com tycoon of rape

PingWest - Pinduoduo, the Fast-Growing Ecommerce Firm, Unobtrusively Encourages Simulated Trading: An Investigation

Variety - ‘Avengers: Endgame’ Crowned Top Foreign Title of All Time in China

WIRED UK - Airbnb listings in China are littered with racist discrimination

MacroPolo - Mao Redux: The Enduring Relevance of Self-Reliance in China

China Channel - Searching for Bodies

USA Today - Jawbone of prehistoric human 'cousin' Denisovan discovered in Tibet

What's on Weibo - "Be as Good as Your Word": The Chinese Social Credit Song is Here

This week's issues of my Sinocism China Newsletter

Bethany Allen-Ebrahimian