Sep 15, 2020

Axios China

By Bethany Allen-Ebrahimian
Bethany Allen-Ebrahimian

Welcome back to Axios China. Today's newsletter focuses on Chinese tech. We've got a proposal for a democratic "tech alliance," a new Tencent lobbyist, Chinese hackers and lots more.

  • Check out the top stories from our latest episode of "Axios on HBO." Our show airs every other Monday night at 11pm ET/PT on all HBO platforms.

This newsletter is 1,513 words, a 6-minute read.

1 big thing: How democracies can push back on China's growing tech dominance

Illustration: Eniola Odetunde/Axios

A group of researchers from Europe, the U.S. and Japan are proposing a "tech alliance" of democratic countries in response to the Chinese government's use of technology standards and its tech sector as instruments of state power abroad, according to a version of the proposal viewed by Axios.

Why it matters: Technological rivalry may dominate the 21st century world. But so far, democratic nations have not yet acted in concert to shape standards and secure their infrastructure in the face of a strong authoritarian challenge.

What's happening: Analysts from the Center for a New American Security, the Mercator Institute for China Studies in Germany, and the Asia Pacific Initiative in Japan have come up with a blueprint to establish digital privacy guidelines, secure supply chains and conduct joint research development.

  • The proposal, called "Common Code: An Alliance Framework for Democratic Technology Policy" to be published next month, recommends that founding members of the new tech alliance include Australia, Canada, France, Germany, Italy, Japan, South Korea, Netherlands, United Kingdom and the U.S., as well as the European Union.
  • It includes 14 specific recommendations, intended to serve as a "shovel-ready" how-to guide for setting up the new body.

What they're saying: "The status quo of uncoordinated and reactive technology policymaking for the major democratic technology powers in Asia, Europe and North America means growing risk of ceding their technological leadership," the authors write.

  • "Having China’s government dictate the terms of the global economy is in no one’s interest but Beijing’s. It would erode the economic and national security of most countries."

Driving the news: In August, President Trump cited national security concerns when he issued executive orders banning transactions with popular Chinese apps TikTok and WeChat, to take effect 45 days later.

  • But numerous experts have argued that ad hoc measures such as bans don't address the larger structural issues arising from rapid technological innovation, such as the need for a data privacy law to protect Americans from many different kinds of intrusive or abusive uses of their data.

The problem, according to the report: China's industrial policy, such as massive subsidies and preferential loans for Chinese tech companies combined with extensive economic espionage, has created an unfair advantage for Chinese national champions in global markets.

  • This, combined with China's growing emphasis on mass data collection and surveillance, threatens not just the health of tech industries in democratic nations but also privacy and national security.
  • But the lack of a coordinated response from democratic countries has left policymakers with few immediate options.

The solution: To lay the groundwork for "proactive and innovative solutions so that you can proactively outcompete, rather than focusing so much energy on blocking and putting down your competitors," Martijn Rasser of the Center for a New American Security, the lead author of the report, told Axios.

The specifics: The report hashes out specific details that a new international body would entail, such as membership, structure and decision-making processes.

  • It also includes several major goals, including securing and diversifying supply chains, protecting critical technologies, preserving research integrity, proactively shaping standards in ways that align with democratic values, and beefing up tech investment.

What to watch: In May, British Prime Minister Boris Johnson urged the U.S. and other countries to join Britain in a "Democracy 10" summit aimed at shutting out Huawei.

  • But for this or any other proposal to be effective, it will need input and buy-in from the tech industries it aims to govern.
Bonus chart: Americans support multilateralism
Data: Eurasia Group Foundation; Note: "Don't know" answers were not included; Chart: Axios Visuals

Given the Trump administration's opposition to multilateralism, it seems unlikely that the current administration would spearhead the establishment of a new tech-focused international body.

But, but, but: Data from the Eurasia Group Foundation shows that a majority of Americans would support the U.S. rejoining organizations from which the U.S. under Trump has withdrawn, including the Paris Agreement and World Health Organization.

Why it matters: This suggests that a U.S. re-engagement with international organizations would be well-received among Americans.

2. Ed Royce, once an outspoken critic of Vietnam's Communist Party, is now lobbying for Tencent

Photo: Bill Clark/CQ Roll Call/Getty Images

Former House Foreign Affairs Committee chair Ed Royce, a Republican from California, has registered as a lobbyist for Chinese tech giant Tencent, which helps implement the Chinese Communist Party's censorship and surveillance regime.

  • While in office, Royce was an outspoken critic of the Vietnamese Communist Party's human rights abuses and backed several bills targeting China.

The big picture: Royce is only the latest in a line of former elected officials to lobby on behalf of Chinese companies accused of being complicit in human rights abuses.

Driving the news: Tencent has retained several lobbying firms to help plead its cause in Washington amid the looming ban on WeChat, including Brownstein Hyatt Farber Schreck LLP, where Royce works.

Background: Inside China, Tencent's WeChat is a "super-app" that most Chinese people use not just for messaging but also for banking, hailing cabs, paying bills and running their businesses.

  • Chinese residents know that if they post politically sensitive content on WeChat, Chinese public security officials could show up at their doors within hours. Tencent readily hands over user data to the Chinese government and allows public security officials ongoing access to messages, facilitating the CCP's authoritarian crackdown on any kind of dissent.
  • The Xinjiang public security bureau has used WeChat to identify, surveil and threaten Uighurs abroad, as China has engaged in a sweeping campaign of repression aimed at forcibly assimilating the ethnic minority.

Royce has a long history of criticizing a different Communist party's human rights record:

  • Royce threw his support behind a 2007 bill that would withdraw non-humanitarian support from Vietnam unless the government made progress in human rights, such as the release of political prisoners.
  • He explicitly discouraged the idea that warming ties with Vietnam meant the U.S. could overlook human rights abuses there.
  • "The United States has a growing relationship with Vietnam, particularly in the security and trade arenas. However, human rights remain a core value to us and we cannot segregate them from our on-going engagement with the Vietnamese government," said Royce in a June 2017 statement.

Royce did not respond to a request for comment.

The bottom line: Money talks.

3. Catch up quick

1. U.S. Customs and Border Protection barred some imports of cotton, apparel, hair products, computer parts and other goods from China's Xinjiang region. Go deeper.

2. The U.S. ambassador to China, Terry Branstad, will leave his post in early October. Go deeper.

3. China enacted new restrictions on U.S. diplomats working in mainland China and Hong Kong, stating the move was in retaliation for U.S. restrictions on Chinese diplomats in the U.S. Go deeper.

4. The U.S. has revoked more than 1,000 visas of Chinese students under an executive order aimed at student researchers suspected of ties to China's military. Go deeper.

4. Chinese hacking group moves on from targeting COVID intelligence

Illustration: Annelise Capossela/Axios

A Chinese government-associated hacking group that shifted its focus this spring toward collecting intelligence involving the European coronavirus response has again reoriented its work, this time to target Tibetan dissidents, according to security firm Proofpoint, writes Zach Dorfman of the Aspen Institute.

Between the lines: China’s intelligence services may now feel that, with the initial COVID-19 crisis in China now receding, they can return to older, core priorities.

Details: Proofpoint connected the most recent hacking activity to the same Chinese group behind the coronavirus campaign because of shared email accounts employed during phishing campaigns, use of the same "new malware family" and the group’s historical targeting patterns.

  • This Chinese hacking group has a well-documented history of targeting Tibetan dissident and exile organizations. Chinese intelligence places great emphasis on tracking human rights figures and dissidents abroad — and Tibetan groups are among its top targets.
  • Until now, the group of late had been targeting “European diplomatic and legislative bodies, non-profit policy research organizations, and global organizations dealing with economic affairs” in response to the pandemic, Proofpoint says.

Context: The push for Tibetan autonomy is one of what the Chinese Communist Party calls the “Five Poisons” that it believes threaten national unity and its power.

  • The others are the assertion of Taiwanese independence, the call for Uighur rights, pro-democracy movements and Falun Gong, a spiritual practice banned in China.
  • Keeping a close eye on these is a core feature of Beijing’s internal and external counterintelligence strategies, including its cyber espionage efforts.
5. What I'm reading

OSINT: Chinese firm harvests social media posts, data of prominent Americans and military (Washington Post)

  • "The database, combined with Zhenhua’s digital trail — marketing materials, patents and employees’ résumés — provides a small window into the firm’s ambitions, if not actual capabilities, to glean insights by aggregating and analyzing publicly available, or open-source, data."

Techno-dystopia: China’s system of oppression in Xinjiang: How it developed and how to curb it (Brookings)

  • "Today, more than 1,400 Chinese companies are providing facial, voice, and gait recognition capabilities as well as additional tracking tools to the Xinjiang public security and surveillance industry."

What happens on WeChat: A violinist lost his seat and his job. He blames China (New York Times)

  • The Tianjin Juilliard School in China fired a Chinese American violinist (and well-known CCP critic) after a comment he posted to WeChat went viral in Chinese media.
  • My thought bubble: China's own "cancel culture" is amplified by social media just like in the U.S. But it is also shaped by a regime of censorship and propaganda, and it's another powerful deterrent for those who wish to criticize Beijing.
6. 1 piano thing

A worker moves a new piano at the Klaviry Petrof company in Hradec Kralove, Czech Republic, February 2009. Photo: Milan Jaros/AFP via Getty Images

Back in February, I wrote about how the classic Czech piano company Klaviry Petrof, founded in 1864, could face losses after China threatened retaliation on Czech companies after a Czech politician planned to visit Taiwan, which the Chinese government views as part of its territory.

  • After a second Czech official visited Taiwan in August, China made good on that threat — a Chinese company suspended a $23.8 million order of the Czech-made pianos.
  • But Karel Komárek, a Czech entrepreneur and billionaire, stepped in and bought the 11 pianos originally intended for China.

What he's saying: "My wife and I agreed that our foundation would immediately dedicate them to Czech schools. We would like the 11 instruments to become a symbol of Czech pride and cohesion," said Komárek.

Bethany Allen-Ebrahimian