Day: April 11, 2019

Lin Feng contributed to this report

WASHINGTON — A senior official in the U.S. Department of State said Wednesday the security concerns the government has raised related to Chinese telecommunications firms Huawei and ZTE extend to all companies headquartered in China, saying they are effectively “under direction” of the Chinese Communist Party.

“It’s very important to distinguish how Western democracies operate relative to their private sector companies and vendors, and how the Chinese government operates with its companies,” Ambassador Robert L. Strayer, deputy assistant secretary for Cyber and International Communications and Information Policy, said during a conference call with reporters. 

Chinese companies don’t have the ability to mount a legal challenge to directives from the government, he said. 

“They don’t have the ability to go to court,” he said. “They’re basically under direction — what we call extra-judicial command — of the Communist Party of China … to take actions, when requested by the government. There’s not the same rule of law that we consider a part of our daily lives and all of our business dealings in Western democracies.”

Strayer has been the point person in the Trump administration’s effort to block Chinese firms, and Huawei in particular, from participating in the global rollout of 5G mobile communications technology, insisting that Chinese law requires the companies to cooperate with Beijing’s intelligence services. 

Strayer and other officials have warned that Chinese telecommunications firms could give Beijing intelligence services secret “back-door” access to sensitive communications networks, or that in a crisis, they could disrupt communications on command.

His comments were among the administration’s most comprehensive justification for trying to block Huawei’s entry into the U.S. and European 5G markets.

The push has included warnings that the United States may restrict the kind of intelligence it shares, even with close allies, if Washington is not satisfied that communications networks are secure.

To this point, the U.S. has failed to produce hard evidence of Huawei or ZTE engaging in espionage for the Chinese government. However, both firms have been charged with theft of intellectual property from rival companies, and Huawei has been charged with conspiracy to violate U.S. sanctions against Iran.

Huawei and ZTE have consistently denied they ever have or will act as an arm of Chinese intelligence services. 

Ren Zhengfei, Huawei’s 74-year-old founder and president, recently told the BBC that to do so would be economic suicide.

“Our sales revenues are now hundreds of billions of dollars,” he said. “We are not going to risk the disgust of our country and our customers all over the world because of something like that. We will lose all our business. I’m not going to take that risk.”

Samm Sacks, cybersecurity policy and China digital economy fellow at the New America Foundation, said, “The reality is the Communist Party of China uses the law selectively as an instrument as it sees fit.”

“What does worry me is this hypothetical situation of what Huawei would be employed to do by the Chinese government,” she told VOA. “I think we have to look at what Huawei as a commercial company needing to succeed in global markets have in its interest. And I’d say right now, it’s not in its interests to use those vulnerabilities. But that could change in another scenario.”

The U.S. effort so far has achieved only limited success in its efforts to get allies to impose blanket restrictions on the use of equipment made by Huawei and ZTE in cutting edge, high-speed, next-generation infrastructure. However, Strayer said that as countries around the world begin looking closely at the risks, he believes an eventual ban on the two firms’ products is inevitable.

He cited a recent analysis of Huawei equipment by government investigators in the United Kingdom, which found myriad security flaws and engineering deficiencies in devices meant to support the rollout of 5G in that country. In Germany, he said, a set of strict security standards under consideration would amount to a de facto ban on Chinese-made 5G equipment.

The proposed German standards would require that telecommunications systems “be sourced from trustworthy suppliers whose compliance with national security regulations and provisions for the secrecy of telecommunications and for data protection is assured.”

Given the legal requirement that Chinese companies assist the intelligence services —and keep that assistance secret — “It’s hard to see how Chinese technology would meet that standard for protection of data,” he said.

Strayer said the U.S. is encouraging all countries to consider similar regulations.

“We have encouraged countries to adopt risk-based security frameworks,” Strayer said. “And we think that a rigorous application of those frameworks, if they include supply chain security risk and the consideration of the relationship between a 5G vendor and their government, will lead, inevitably, to the banning of Huawei and  ZTE.”

In his remarks Wednesday, Strayer focused on the issue of 5G infrastructure, but at times broadened his critique of Chinese government policies to encompass all firms based in China that deal with sensitive technology.

“We think it’s very important that countries deploying 5G networks consider the relationship between a foreign government, where a vendor is headquartered, and the companies themselves and that country,” he said. “When we look at the Chinese laws, relative to intelligence and national security, those allow the Chinese government to direct the actions of companies for their national interest of China, as well as require that companies to maintain secrecy, about the actions they’ve taken at the direction of the Chinese Communist Party.”

He also echoed a common complaint from Western countries that Chinese government policies provide advantages to domestic firms that give them an unfair competitive advantage when they move into international markets. 

“The Chinese government, through state-owned banks and other sources, has provided in some cases zero percent interest, 20-year loan offers, which are not commercially reasonable,” he said. “That kind of unfair playing field is not one that Western technology should have to compete with. It should be a level playing field for technology vendors.”

In addition, he said, government-supported “cross subsidization” allows Chinese firms another avenue by which they can undercut the prices of Western firms. 

“They can get large profits on what they sell into the Chinese market, which they largely have under their control through the government, and then use those subsidies to then offer lower prices in our markets in the West.”

 
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The arched stone-built hall in Jerusalem venerated by Christians as the site of Jesus’ Last Supper has been digitally recreated by archaeologists using laser scanners and advanced photography.

The Cenacle, a popular site for pilgrims near Jerusalem’s walled Old City, has ancient, worn surfaces and poor illumination, hampering a study of its history.

So researchers from Israel’s Antiquities Authority and European research institutions used laser technology and advanced photographic techniques to create richly detailed three-dimensional models of the hall built in the Crusader era.

The project helped highlight obscure artwork and decipher some theological aspects of the second-floor room, built above what Jewish tradition says is the burial site of King David.

“We managed, in one of the… holiest places in Jerusalem, to use this technology and this is a breakthrough,” Amit Re’em, Jerusalem district archaeologist at the Israel Antiquities Authority, told Reuters of the project, which began in 2016.

Re’em pointed to reliefs of what he described as the symbols of the “Agnus Dei,” a lamb that is an emblem of Christ, and the “Lion of Judah” on keystones in the hall’s vaulted ceiling.

“It tells the story of this room,” Re’em said. “It delivers the message of the Last [Supper] Room, Christ as a Messiah, as victorious, as a victim — and the lion, the lion is a symbol of the Davidic dynasty. They combine together in this room.”

Some archaeologists have questioned whether the room is the actual venue of the Last Supper, the final meal which the New Testament says Jesus shared with disciples before his crucifixion.

Ilya Berkovich, a historian at the INZ research institute of the Austrian Academy of Sciences who worked on the project, said the endeavor opens “incredibly new horizons” with enormous potential.

 
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Dutch ASML said on Thursday it had been the victim of corporate espionage in 2015 involving employees from countries including China but said it had not been the target of any “national conspiracy.”

ASML said the perpetrators took “large files” on memory sticks from its Silicon Valley software subsidiary that develops software for machine optimization. It said it had since taken action to make such theft much more difficult.

Following publication of a story in Dutch daily newspaper Financieele Dagblad (FD) that said ASML had been struck by Chinese espionage, the company took issue with that label. “The suggestion that we were somehow victim of a national conspiracy is wrong,” CEO Peter Wennink said in a statement.

“We resent any suggestion that this event should have any implication for ASML conducting business in China. Some of the individuals (involved) happened to be Chinese nationals,” he added.

The Dutch company welcomed a Sino-European agreement earlier this week, which promised that Beijing would no longer force foreign companies to share sensitive know-how when operating in China.

“Can we prudently do business in China? Yes of course. This was a rotten apple,” ASML said in an earlier statement.

ASML is the dominant maker of lithography systems, used to trace out the circuitry of semiconductor chips.

Its sales to China more than doubled to 1.8 billion euros ($2 billion) in 2018 as Beijing drives growth of its domestic semiconductor industry, now accounting for about a sixth of ASML’s total sales.

California case

The FD story was based in part on ASML sources and in part on documents from the Santa Clara, California Superior Court that showed six former ASML employees, all with Chinese names, breached their employment contract by sharing information on ASML software processes with a company called XTAL Inc.

The FD reported that XTAL, which makes electrical design automation for semiconductor systems, is a subsidiary of a China-based company called Dongfang Jingyuan, which it said in turn has ties to the Chinese Ministry of Science and Technology.

In its reaction, ASML said XTAL’s funding came from “South Korea and China.” It said the aim of the theft was to create a competing product and sell it to an existing ASML customer in South Korea.

The company confirmed the FD’s report that the court had awarded ASML $223 million in damages.

“It is unclear to what extent these damages can be collected from the now bankrupt company XTAL,” ASML said.

ASML shares slipped 1.5 percent by 1210 GMT to the bottom of a flat European technology index.

ASML’s major customers include Samsung of South Korea, TSMC of Taiwan and Intel of the United States.

The Dutch intelligence agency has included warnings in its annual threat assessments for the past several years, saying that China is targeting tech companies in the Netherlands, as it does in other countries, for intellectual property theft.

In a reaction, the intelligence agency AIVD said it could not comment on individual cases.

“In a broader sense, the greatest threat of economic espionage comes from China,” it said in an email to Reuters. “The Netherlands is an attractive target, other countries are interested in our information in science and technical expertise.”
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Amazon challenged its retail rivals to raise their wages and improve benefits, saying the competition will help everyone.

CEO and founder Jeff Bezos said in a letter to shareholders Thursday that as Amazon grows, so does the size of its “failed experiments.”

He said Amazon is willing to continue to take risks and learn from its failures, while simultaneously supporting successful areas of its business like its third-party sellers and retail locations.

Bezos named the Fire phone as a failure, but Echo and Alexa as successes.

He also touted third-party sales of $160 billion and Amazon Go stores, saying Amazon is “excited about the future.”
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The world will need new breakthroughs to tackle the growing threat of climate change. Whoever comes up with them stands to make a lot of money. And the places where those entrepreneurs do business will reap the benefits. Greentown Labs outside Boston, Massachusetts, wants to play a major role in spawning new clean technology. VOA’s Steve Baragona went to have a look.
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