Chindia Alert: You’ll be Living in their World Very Soon
aims to alert you to the threats and opportunities that China and India present. China and India require serious attention; case of ‘hidden dragon and crouching tiger’.
Without this attention, governments, businesses and, indeed, individuals may find themselves at a great disadvantage sooner rather than later.
The POSTs (front webpages) are mainly 'cuttings' from reliable sources, updated continuously.
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Angela Merkel says Europe is still keen to participate in infrastructure scheme despite concerns about spread of Chinese influence
EU Commission chief Jean-Claude Juncker seeks to reassure Chinese leader Xi Jinping that view of China as ‘strategic rival’ is a compliment
Xi Jinping and Angela Merkel and the Paris meeting. Photo: EPA-EFE
European leaders sought to reassure China over trade and cooperation on Tuesday by suggesting they were still open to joining China’s Belt and Road Initiative.
French President Emmanuel Macron, who is hosting his Chinese counterpart Xi Jinping on the final leg of his European tour, had invited German Chancellor Angela Merkel and European Commission President Jean-Claude Juncker to the meeting in Paris, where the four stressed their support for multilateralism and the pursuit of cooperation between major powers.
The visit took place amid growing European scepticism about China’s influence and follows a decision by Brussels to brand China a “systemic rival” in a policy paper earlier this month.
“We understand that China does not like the expression ‘rivals’, but it is a compliment describing our shared ambitions,” Juncker told a press conference.
However, the EU and China also share concerns about the growing US trend towards protectionism – as manifested in the ongoing trade war between Washington and Beijing.
For his part, Xi stressed that China was determined to protect the world’s multilateral system, and was ready to continue with “opening up”.
He also invited European countries to join the belt and road scheme – which Washington has characterised as a Chinese “vanity project”.
The scheme has caused increased concern in the West about the extent to which it will help spread Chinese influence, especially since Italy became the first G7 economy to join the project over the weekend.
But Merkel stressed it was an important project that Europeans still wanted to participate in.
She continued: “We, as Europeans, want to play an active part and that must lead to a certain reciprocity and we are still wrangling over that a bit.
“We are seeing the project as a good visualisation of interaction, interrelation and interdependence.”
Xi also said China’s process of opening up its economy to the world had allowed the country to achieve in the space of 40 years what the Europeans had managed over the course of the industrial revolution.
“We will continue to open up,” he said, “and to make the world a better open economy.”
“The Belt and Road Initiative has enriched the world’s multilateral system, we welcome all countries, including France, to join,” Xi said.
The US has also put increasing pressure on European countries to block the Chinese tech giant Huawei, which it sees as a security threat, from playing a role in European communications networks.
Despite her support for Xi’s stance on multilateralism, Merkel was still keen to express support for America’s role in upholding global order.
“The triangle between EU, China and US is very important. Without the US, we will not be able to have multilateralism. Our relations from the European side are obviously very important,” Merkel said.
However, she also noted that the trade war between the US and CHina was “hitting our German economy” and disturbing the balance.
Image copyrightGETTY IMAGESImage captionChina has bought up a majority stake in the Greek port of Piraeus – and Italy might be next
China’s president lands in Rome on Thursday, where he is expected to sign a landmark infrastructure deal that has raised eyebrows and suspicions among Italy’s Western allies.
Xi Jinping’s project is a New Silk Road which, just like the ancient trade route, aims to link China to Europe.
The upside for Italy is a potential flood of investment and greater access to Chinese markets and raw materials.
But amid China’s growing influence and questions over its intentions, Italy’s Western allies in the European Union and United States have concerns.
By land and by sea
The New Silk Road has another name – the Belt and Road Initiative (BRI) – and it involves a wave of Chinese funding for major infrastructure projects around the world, in a bid to speed Chinese goods to markets further afield.
It has already funded trains, roads, and ports, with Chinese construction firms given lucrative contracts to connect ports and cities – funded by loans from Chinese banks.
The levels of debt owed by African nations to China have raised concerns in the West – but roads and railways have been built that would not exist otherwise:
In Uganda, Chinese millions built a 50km (30 mile) road to the international airport
The country slipped into recession at the end of 2018, and its national debt levels are among the highest in the eurozone. Italy’s populist government came to power in June 2018 with high-spending plans but had to peg them back after a stand-off with the EU.
It is in this context that China’s deal is being offered – funding that could rejuvenate Italy’s grand old port cities along the Maritime Silk Road.
Italian Prime Minister Giuseppe Conte has mentioned the cities of Trieste and Genoa as likely candidates.
“The way we see it, it is an opportunity for our companies to take the opportunity of China’s growing importance in the world,” said Italy’s undersecretary of state for trade and investment, Michele Geraci.
“We feel that amongst our European partners, Italy has been left out. We have wasted a little bit of time,” he told the BBC.
Italy’s move is “largely symbolic”, according to Peter Frankopan, professor of Global History at Oxford University and a writer on The Silk Roads.
But even Rome admitting the BRI is worth exploring “has a value for Beijing”, he said.
“It adds gloss to the existing scheme and also shows that China has an important global role.”
Image copyrightGETTY IMAGESImage captionPresident Xi Jinping has made the BRI a flagship policy
“The seemingly innocuous move comes at a sensitive time for Europe and the European Union, where there is suddenly a great deal of trepidation not only about China, but about working out how Europe or the EU should adapt and react to a changing world,” Prof Frankopan told the BBC.
“But there is more at stake here too,” he added. “If investment does not come from China to build ports, refineries, railway lines and so on, then where will it come from?”
Ahead of his arrival, President Xi declared that the friendship between the two nations was “rooted in a rich historical legacy”.
“Made in Italy has become synonymous with high quality products. Italian fashion and furnishings fully meet the taste of Chinese consumers; pizza and tiramisu are liked by young Chinese people,” he wrote in an article published by Corriere della Sera.
Image copyrightOXFORD SCIENCE ARCHIVE/GETTY IMAGImage captionExplorer Marco Polo’s travels along the Silk Road were immortalised in the “Book of Marvels”
That “made in Italy” label carries a reputation for quality worldwide, and is legally protected for products items processed “mainly” in Italy.
Better connections for cheap raw materials from China – and the return of finished products from Italy – could exaggerate that practice.
“Predatory” investment
The non-binding deal being signed by the two countries on Thursday comes amid questions over whether Chinese firm Huawei should be permitted to build essential communications networks – after the United States expressed concern they could help Beijing spy on the West.
That is not part of the current negotiations in Italy.
As President Xi tours Rome, EU leaders in Brussels will be considering 10 points for relations with China.
While they include deepening engagement, they also involve plans to “address the distortive effects of foreign state ownership” as well as “security risks posed by foreign investment in critical assets, technologies and infrastructure”.
In March, US National Security Council spokesman Garrett Marquis pointed out that Italy was a major economy and did not need to “lend legitimacy to China’s vanity infrastructure project”.
Members of Italy’s ruling right-wing League party have their owns concerns about national security
Interior Minister Matteo Salvini warned that he did not want to see foreign businesses “colonising” Italy.
“Before allowing someone to invest in the ports of Trieste or Genoa, I would think about it not once but a hundred times,” Salvini warned.
Setting the scene
Italian officials are keen to point out that the deal being signed is not an international treaty, and is non-binding.
“There are no specific projects,” Mr Geraci said. “It is more of an accord that sets the scene.”
Other European nations already accept Chinese investment through something called the Asian Infrastructure Investment Bank, he said – something the UK was the first to sign up to.
Chinese President Xi Jinping, also general secretary of the Communist Party of China (CPC) Central Committee and chairman of the Central Military Commission, joins deliberation with deputies from Gansu Province at the second session of the 13th National People’s Congress in Beijing, capital of China, March 7, 2019. (Xinhua/Ju Peng)
BEIJING, March 7 (Xinhua) — Chinese President Xi Jinping on Thursday called for perseverance in the fight against poverty as there are only two years left for the country to meet its goal of eradicating extreme poverty by 2020.
“There should be no retreat until a complete victory is won,” said Xi, also general secretary of the Communist Party of China (CPC) Central Committee and chairman of the Central Military Commission.
He made the remarks when deliberating with deputies from Gansu Province at the second session of the 13th National People’s Congress (NPC), China’s national legislature.
Decisive progress has been achieved in the country’s tough fight against poverty over the past years, marking a new chapter in the poverty reduction history of mankind, said Xi, stressing that the goal to eradicate extreme poverty must be achieved on time.
He warned that the tasks ahead remain arduous and hard as those still in poverty are the worst stricken.
Explaining the criteria of lifting people out of poverty, Xi said they should no longer need to worry about food and clothing while enjoying access to compulsory education, basic medical care and safe housing.
The practices of formalities for formalities’ sake and bureaucratism hamper the effective advancement of poverty reduction, he said, stressing a firm hand in rectifying malpractices in poverty relief.
Xi asked Party committees and governments at all levels to shoulder their responsibilities in the critical battle against poverty.
He ordered efforts to redress undesirable conduct of officials in a timely manner, as well as special campaigns to target corruption and bad conduct in poverty reduction.
Li Keqiang, Li Zhanshu, Wang Yang, Wang Huning, Zhao Leji and Han Zheng — members of the Standing Committee of the Political Bureau of the CPC Central Committee — on Thursday also separately joined deliberation with NPC deputies.
Premier Li Keqiang spoke of the need to replace old growth drivers with new ones and improve people’s wellbeing to advance high-quality development.
NPC Standing Committee Chairman Li Zhanshu called for efforts to adhere to green, high-quality development and link poverty alleviation with rural vitalization strategy.
Wang Yang, chairman of the National Committee of the Chinese People’s Political Consultative Conference, urged high-quality poverty alleviation work to make sure that nobody is left behind in the course of building a moderately prosperous society in all respects.
Wang Huning, a member of the Secretariat of the CPC Central Committee, said he expects Shanghai to continue to lead the reform and opening-up and to elevate the coordinated development of the Yangtze River Delta to a higher level.
Zhao Leji, secretary of the CPC Central Commission for Discipline Inspection, spoke of the need for Tianjin to take advantage of the period of strategic opportunity, enhance the capacity of innovation, and focus on developing real economy.
Vice Premier Han Zheng stressed the full implementation of the national strategy of the coordinated development of the Yangtze River Delta.
Chinese Premier Li Keqiang, also a member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee, joins panel discussions by deputies from Guangxi Zhuang Autonomous Region at the second session of the 13th National People’s Congress in Beijing, capital of China, March 6, 2019. (Xinhua/Ding Lin)
BEIJING, March 6 (Xinhua) — Senior Chinese leaders on Wednesday urged for more efforts to advance high-quality development.
Li Keqiang, Wang Yang and Han Zheng — members of the Standing Committee of the Political Bureau of the Communist Party of China Central Committee — made the remarks at the annual “two sessions” of the country’s top legislative and political advisory bodies.
Joining panel discussions by deputies to the 13th National People’s Congress (NPC) from southwest China’s Guangxi Zhuang Autonomous Region, Premier Li Keqiang stressed following the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as China’s development faces more and graver risks and challenges in 2019.
He called for efforts to keep the economic growth within an appropriate range and promote high-quality development, and urged solid implementation of the planned tax and fee cuts to reduce burden on the real economy.
At the joint panel discussions of political advisors from economy and agriculture sectors, Wang Yang, chairman of the Chinese People’s Political Consultative Conference National Committee, told them to focus on major and difficult tasks, such as high-quality development and supply-side structural reform, and to deepen their investigations and researches. Wang also urged the advisors to guide the people in correctly interpreting the changes in economy and boost their confidence in development.
Vice Premier Han Zheng joined the panel discussions by lawmakers from Hong Kong. He expressed the support to Hong Kong’s bid to build itself into an international innovation and technology hub, and encouraged the people of Hong Kong, especially the youth, to start up businesses and work in the Guangdong-Hong Kong-Macao Greater Bay Area.
Han also joined panel discussions by lawmakers from Macao. He said that Macao will be supported in its efforts to expand new development space, and to develop its tourism and exhibition industries.
BEIJING (Reuters) – China’s ruling Communist Party is ramping up calls for political loyalty in a year of sensitive anniversaries, warning against “erroneous thoughts” as officials fall over themselves to pledge allegiance to President Xi Jinping and his philosophy.
This year is marked by some delicate milestones: 30 years since the bloody crackdown on pro-democracy demonstrators in and around Tiananmen Square; 60 years since the Dalai Lama fled from Tibet into exile; and finally, on Oct. 1, 70 years since the founding of Communist China.
Born of turmoil and revolution, the Communist Party came to power in 1949 on the back of decades of civil war in which millions died, and has always been on high alert for “luan”, or “chaos”, and valued stability above all else.
“This year is the 70th anniversary of the founding of new China,” Xi told legislators from Inner Mongolia on Tuesday, the opening day of the annual meeting of parliament. “Maintaining sustained, healthy economic development and social stability is a mission that is extremely arduous.”
Xi has tightened the party’s grip on almost every facet of government and life since assuming power in late 2012.
Last year parliament amended the country’s constitution to remove term limits and allow him to stay in office for the rest of his life, should he so wish, though it is unclear if that will happen and Xi has not mentioned it in public.
Later in the year the party will likely hold a plenum of its top leadership focused on what China calls “party building”, diplomats and sources with ties to China’s leadership say, a concept that refers to furthering party control and ensuring its instructions are followed to the letter.
In late January the party again stressed loyalty in new rules on “strengthening party political building”, telling members they should not fake loyalty or be “low-level red”, in a lengthy document carried by state media.
“Be on high alert to all kinds of erroneous thoughts, vague understandings, and bad phenomena in ideological areas,” it warned. “Keep your eyes open, see things early and move on them fast.”
LOYALTY FIRST
On March 1, Xi spoke at the Central Party School, which trains rising officials, mentioning the word “loyalty” at least seven times, according to official accounts in state media.
Xi noted that whether an official is loyal to the party is a key gauge of whether they have ideals and convictions. “Loyalty always comes first,” he said.
Duncan Innes-Ker, regional director for Asia at the Economist Intelligence Unit, said China was concerned about resistance at lower levels to following party orders, the slowing economy and also about demands for political reforms as people get steadily richer.
“The desire for control is not something particular to any time period,” he said. “It is a fundamental tenet of autocratic governments that they are constantly paranoid about being overthrown.”
Xi looms large over this year’s session of China’s largely rubber stamp parliament, known as the National People’s Congress, which has always been stacked with people chosen for their absolute fealty to the party.
Government ministers who spoke to reporters on the sidelines of parliament’s opening session on Tuesday peppered their comments with references to Xi – 16 times in all.
Customs minister Ni Yuefeng said that Xi himself “pays great attention to not allowing foreign garbage into the country”, a reference to China’s ban on solid waste imports, part of the country’s war on pollution.
“Ideology comes first this year,” said one Western diplomat who is attending the parliamentary sessions as an observer. “It’s all about the 70th anniversary.”
ROOTING OUT DISLOYALTY
The party has increasingly been making rooting out disloyalty and wavering from the party line a disciplinary offence to be enforced by its anti-corruption watchdog, whose role had ostensibly been to go after criminal acts such as bribery and lesser bureaucratic transgressions.
The graft buster said last month it would “uncover political deviation” in its political inspections this year of provincial governments and ministries.
Top graft buster Zhao Leji, in a January speech to the corruption watchdog, a full transcript of which the party released late February, used the word “loyalty” eight times.
“Set an example with your loyalty to the party,” Zhao said.
China has persistently denied its war on corruption is about political manoeuvring or Xi taking down his enemies. Xi told an audience in Seattle in 2015 that the anti-graft fight was no “House of Cards”-style power play, in a reference to the Netflix U.S. political drama.
The deeper fear for the party is some sort of unrest or a domestic or even international event fomenting a crisis that could end its rule.
Xi told officials in January they need to be on high alert for “black swan” events..
That same month the top law-enforcement official said China’s police must focus on withstanding “colour revolutions”, or popular uprisings, and treat the defence of China’s political system as central to their work.
The party has meanwhile shown no interest in political reform, and has been doubling down on the merits of the Communist Party, including this month rolling out English-language propaganda videos on state media-run Twitter accounts to laud “Chinese democracy”. Twitter remains blocked in China.
The official state news agency Xinhua said in an English-language commentary on Sunday that China was determined to stick to its political model and rejected Western-style democracy.
“The country began to learn about democracy a century ago, but soon found Western politics did not work here. Decades of turmoil and civil war followed,” it said.
The African Union headquarters in Addis Ababa is a shiny spaceship-like structure that glistens in the afternoon sun.
With its accompanying skyscraper, it stands out in the Ethiopian capital.
Greetings in Mandarin welcome visitors as they enter the lifts, and the plastic palm trees bear the logos of the China Development Bank.
African Union HQ, Addis Ababa
Everywhere, there are small indications that the building was made possible through Chinese financial aid.
In 2006, Beijing pledged $200m to build the headquarters. Completed in 2012, everything was custom-built by the Chinese – including a state-of-the-art computer system.
For several years, the building stood as a proud testament to ever-closer ties between China and Africa. Trade has rocketed over the past two decades, growing by about 20% a year, according to international consultancy McKinsey. China is Africa’s largest economic partner.
But in January 2018, French newspaper Le Monde Afrique dropped a bombshell.
It reported that the AU’s computer system had been compromised.
The newspaper, citing multiple sources, said that for five years, between the hours of midnight and 0200, data from the AU’s servers was transferred more than 8,000km away – to servers in Shanghai.
This had allegedly continued for 1,825 days in a row.
Le Monde Afrique reported that it had come to light in 2017, when a conscientious scientist working for the AU recorded an unusually high amount of computer activity on its servers during hours when the offices would have been deserted.
It was also reported that microphones and listening devices had been discovered in the walls and desks of the building, following a sweep for bugs.
The reaction was swift.
Both AU and Chinese officials publicly condemned the report as false and sensationalist – an attempt by the Western media to damage relations between a more assertive China and an increasingly independent Africa.
But Le Monde Afrique said that AU officials had privately expressed concerns about just how dependent they were on Chinese aid – and what the consequences of that could be.
In the midst of all of this, one fact remained largely unreported.
The main supplier of information and communication technology systems to the AU headquarters was China’s best-known telecoms equipment company – Huawei.
The company says it had “nothing” to do with any alleged breach.
Huawei “served as the key ICT provider inside the AU’s headquarters”, said Danielle Cave of the Australian Strategic Policy Institute, in a review of the alleged incident.
Huawei headquarters in Shenzhen, China
“This doesn’t mean the company was complicit in any theft of data. But… it’s hard to see how – given Huawei’s role in providing equipment and key ICT services to the AU building and specifically to the AU’s data centre – the company could have remained completely unaware of the apparent theft of large amounts of data, every day, for five years.”
There is no evidence to indicate that Huawei’s telecoms network equipment was ever used by the Chinese government – or anyone else – to gain access to the data of their customers.
Indeed, no-one has ever gone on record to confirm that the AU system was compromised in the first place.
But these reports played into years of suspicions about Huawei – that a large Chinese company might find itself unduly influenced by the Chinese government.
Ren and the rise of Huawei
“When I first started out 30 years ago… we didn’t really have any telephones. The only phones we had were those hand-cranked phones that you see in old World War II films. We were pretty undeveloped then.”
Huawei’s founder and chairman Ren Zhengfei is reminiscing to the BBC about the origins of the world’s second-biggest smartphone firm, while sitting in the Huawei headquarters in Shenzhen – a symbol of the success that he’s worked his whole lifetime for.
A long marbled staircase, covered in plush red carpet, greets you as you first walk in.
At the top of the stairs, a giant painting depicts a traditional Chinese New Year scene.
Inside Huawei’s Shenzhen HQ
A few kilometres away in Dongguan, Huawei’s latest campus is even more eye-catching.
The site – designed to accommodate the company’s 25,000 R&D staff – comprises 12 “villages”, each of which recreates the architecture of a different European city, among them Paris, Bologna and Granada.
It’s as if Silicon Valley had been re-imagined by Walt Disney. Long corridors of Roman pillars and picturesque French cafes adorn the campus, with a train connecting the different areas, running through manicured gardens and past an artificial lake.
It’s a world away from the environment that Mr Ren found himself in when he first started the company in 1987. “I founded Huawei when China began to implement its reform and opening up policy,” he says. “At that time, China was shifting from a planned economy to a market economy. Not only people like myself, but even the most senior government officials, did not have the vaguest idea of what a market economy was. It seemed it was hard to survive.”
Ren was born in 1944 in Southern China – a tumultuous, chaotic place, one of the poorest regions in an already destitute country.
For a long time, hardship was all he ever knew.
He was from a family of seven children. “They were very poor,” says David De Cremer, who has co-written a book on Ren and Huawei.
“I think hardship is something that you can see throughout his life, and which he keeps emphasising himself.”
To escape that life of poverty and drudgery, Ren did what many young Chinese men of that era did. He joined the army.
Soldiers from the People’s Liberation Army, 1972
“I was a very low-ranking officer in the People’s Liberation Army,” he says. “I served in an ordinary construction project, not a field unit. At the time, I was a technician of a company in the military, and then I became an engineer.”
He left the military in 1983 when China began to downsize its forces, and went into the electronics business.
By his own admission, he wasn’t a great businessman at first.
“I was someone who had been in the military all my life at the time, used to doing what I was told,” he says. “Suddenly, I began to work in a market economy. I was at a total loss. So I too suffered losses, I too was deceived, and I was cheated.”
But he was quick to learn, and was a keen student of Western business practices and European history.
“I did research on what exactly a market economy was all about,” he says. “I read books on laws, including those about European and US laws. At that time, there were very few books on Chinese laws, and I had to read those on European and US laws.”
Five years later, he founded Huawei – the name can be translated as “splendid achievement” or “China is able” – to sell simple telecoms equipment to the rural Chinese market. Within a few years, Huawei was developing and producing the equipment itself.
Sometime in the early 90s, Huawei won a government contract to provide telecoms equipment for the People’s Liberation Army.
By 1995, the company was generating sales of around US$220,000, mainly from selling to the rural market.
The following year Huawei was given the status of a Chinese “national champion”. In practice, this meant the government closed the market to foreign competition.
At a time when China’s economy was growing by an average of 10% per year, this was no small advantage. But it was only when Huawei started to expand overseas in 2000, that it really saw its sales soar.
In 2002, Huawei made US$552m from its international market sales. By 2005 its international market contracts exceeded its domestic business for the first time.
Ren’s early days in business instilled in him a desire to protect his company from the whims and fancies of the stock market. Huawei is privately held and employee-owned. This gave Ren the power to plough more money back into research and development. Each year, Huawei spends US$20bn on R&D – one of the biggest such budgets in the world.
“Publicly listed companies have to pay a lot of attention to their balance sheets,” he says. “They can’t invest too much, otherwise profits will drop and so will their share prices. At Huawei, we fight for our ideals. We know that if we fertilise our ‘soil’ it will become more bountiful. That’s how we’ve managed to pull ahead and succeed.”
One story from the early days of the company tells how Ren was cooking for his staff (he loves to cook, or so the story goes). Suddenly he rushed out of the kitchen and announced to the room: “Huawei will be a top three player in the global communications market 20 years from now!”
And that’s exactly what happened. In fact, those ambitions were surpassed.
Today, Huawei is the world’s biggest seller of network telecommunications equipment.
From aspiring to be a company like Apple, it now sells more smartphones than Apple.
But shadows have continued to loom over Huawei’s international success.
Ren and Huawei’s links to the Chinese Communist Party have raised suspicions that the company owes its meteoric rise to its powerful political connections in China. The US has accused Huawei of being a tool of the Chinese government.
It’s an accusation which Ren denies. “Please don’t think that Huawei has become what it is today because we have special connections,” he says. “Even 100% state-owned companies have failed. Do good connections mean you will succeed then? Huawei’s success is still very much due to our hard work.”
The case against
It was 1 December 2018. US President Donald Trump and China’s President Xi Jinping were dining on grilled sirloin followed by caramel rolled pancakes at the G20 summit in Buenos Aires.
They had a lot to discuss. The US and China were in the middle of a trade war – imposing tariffs on each other’s goods – and growth forecasts for both countries had recently been cut as a result. This was adding to the fear of a slowing global economy.
In the event, the two leaders agreed a truce in the trade war, with Donald Trump tweeting that “Relations with China have taken a BIG leap forward!”
Xi Jinping and Donald Trump at dinner, December 2018
But thousands of kilometres north in Canada, an arrest was taking place that would throw doubt on this rapprochement.
Meng Wanzhou, Huawei’s chief financial officer and Ren Zhengfei’s eldest daughter, had been detained by Canadian officials while transferring between flights at Vancouver airport.
The arrest had come at the request of the US, who accused her of breaking sanctions against Iran.
“When she was detained, as her father, my heart broke,” says Ren, visibly emotional. “How could I watch my child suffer like this? But what happened, has happened. We can only depend on the law to solve this problem.”
Meng Wanzhou being driven to court in Canada
Huawei’s problems were just beginning. Nearly two months later, the US Department of Justice filed two indictments against Huawei and Ms Meng.
Under the first indictment, Huawei and Ms Meng were charged with misleading banks and the US government about their business in Iran.
The second indictment – against Huawei – involved criminal charges including obstruction of justice and the attempted theft of trade secrets.
Both Huawei and Ms Meng deny the charges.
January 2019: Acting US attorney general Matthew Whittaker announces charges against Huawei and Meng Wanzhou
The charge of stealing trade secrets centres on a robotic tool – developed by T-Mobile – known as Tappy.
According to legal documents, Huawei had tried to buy Tappy, a device which mimicked human fingers by tapping mobile phone screens rapidly to test responsiveness.
T-Mobile was in partnership with Huawei at the time, but it rebuffed the Chinese firm’s offers, fearing it would use the technology to make phones for T-Mobile’s competitors.
It’s alleged that one of Huawei’s US employees then smuggled Tappy’s robotic arm into his satchel so that he could send its details to colleagues in China.
After the alleged theft was discovered, the Huawei employee claimed that the arm had mistakenly fallen into his bag.
Huawei claimed that the employee had been acting alone, and the case was settled out of court in 2014. But the latest case is built on email trails between managers in China and the company’s US employees, linking Huawei management to the alleged theft.
The indictment also details evidence of a bonus scheme from 2013, offering Huawei employees financial rewards for stealing confidential information from competitors.
Huawei has denied any such scheme exists.
Meng Wanzhou, photographed in 2014
This is not the first time that Huawei has been accused of stealing trade secrets. Over the years companies like Cisco, Nortel and Motorola have all pointed the finger at the Chinese firm.
But US fears about Huawei are about much more than industrial espionage. For more than a decade, the US government has seen the company as little more than an arm of the Chinese Communist Party.
These concerns have been brought to the fore with the advent of “fifth generation” or 5G mobile internet, which promises download speeds 10 or 20 times faster than at present, and much greater connectivity between devices.
As the world’s biggest telecoms infrastructure provider, Huawei is one of the companies best placed to build new 5G networks. But the US has warned its intelligence partners that awarding contracts to Huawei would be tantamount to allowing the Chinese spy on them.
US Secretary of State Mike Pompeo recently cautioned against Huawei, saying, “If a country adopts this and puts it in some of their critical information systems, we won’t be able to share information with them.”
US Secretary of State Mike Pompeo
The UK, Germany and Canada are reviewing whether Huawei’s products pose a security threat.
Australia went a step further last year, and banned equipment suppliers “likely to be subject to extrajudicial directions from a foreign government”.
Huawei was not mentioned by name, but Danielle Cave of the Australian Strategic Policy Institute says the company posed a national security risk because of its government links.
She cites an article in Chinese law that makes it impossible for any company to refuse to help the Chinese Communist Party in intelligence gathering.
“Admittedly, what is missing from this debate is the smoking gun,” she says.
“For the average person who has a Huawei smartphone it’s not a big deal. But if you’re a Western government that has key national security to protect – why would you allow this access to a company that is in the political system that China is in?”
For his part, Ren says that Huawei’s resources have never and would never be used to spy for the Chinese government.
“The Chinese government has clearly said that it won’t ask companies to install backdoors,” he says. A “backdoor” is a term used to describe a secret entry point in software or a computer system that gives access to the person or entity who installed it to the inner workings of the system.
“Huawei will not do it either,” he continues. “Our sales revenues are now hundreds of billions of dollars. 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.”
Xi’s China
Zhou Daiqi is Huawei’s chief ethics and compliance officer.
He’s been with the company for nearly 25 years, in a number of different positions – chief engineer, director of the hardware department, head of the research centre in Xi’an, according to his biography on the company’s website. He is also understood to combine his high-ranking executive duties with another role – party secretary of Huawei’s Communist Party committee.
All companies in China are required by law to have a Communist Party committee.
Zhou Daiqi’s profile on Huawei’s website
The official line is that they exist to ensure that employees uphold the country’s moral and social values. Representatives of the committee are also often tasked with helping workers with financial problems.
But critics of China’s one-party system argue that they allow the state to exert control on corporate China. And they say the level of this control has increased in recent years.
“[President] Xi Jinping is exerting greater control over the business community in China,” says Elliott Zaagman, who regularly advises Chinese companies on their PR strategy. “As these companies gain power and influence overseas, the party doesn’t want to lose control over them.”
Ren, however, argues that the role of Huawei’s Communist Party committee is far less important than many in the West believe.
“[It] serves only to educate its employees,” he says. “It is not involved in any business decisions.”
In China, most chief executives are Communist Party members.
Every year, they dutifully turn up to the National People’s Congress along with local and national party chiefs, officials and chief executives.
It’s where the big economic decisions are voted on – although no proposal is put forward which hasn’t already been agreed upon.
Still, big CEOs come to show their commitment to the party, and to contribute to working papers that are meant to help the government understand the concerns of the business community.
Being a member of the party is very much a networking opportunity – in the way one would join a business association.
Elliott Zaagman argues that this is a system that demands loyalty.
“There is no separation from the party and the state,” he says.
“The system in China encourages the lack of transparency in companies like Huawei.”
The worry is that these close links mean that if the Communist Party asked a company to do something, they would have no choice but to comply.
And if that company is one that is involved in sensitive global telecoms infrastructure projects, it’s easy to see why Western observers would be worried.
There is no evidence to indicate that Huawei is in any way under the orders of the Chinese government, or that Beijing has any plans to dictate business plans and strategy at Huawei – particularly when it comes to spying.
But the way in which the Chinese Communist Party has robustly defended Huawei has raised questions about how independent the company is of its influence.
For example, Beijing stated that Ms Meng’s detention was a rights abuse .
And while her extradition case to the US was moving forward, China detained two Canadian citizens and accused them of stealing state secrets. Critics say the detentions are linked to Ms Meng’s arrest.
December 2018: Chinese police patrol outside Canada’s embassy in Beijing
While not commenting on the arrest of the Canadians, Ren says China’s defence of Huawei is understandable.
“It is the Chinese government’s duty to protect its people,” he says. “If the US attempts to gain competitive edge by undermining China’s most outstanding hi-tech talent, then it is understandable if the Chinese government, in turn, protects its hi-tech companies.”
Over the past few years, there have been signs of a bigger push by the government to get private companies, and in particular tech firms, to cooperate with party rules – even when they are firmly resistant.
A Didi Chuxing logo adorns a building in Hangzhou, China
China’s ride-hailing giant Didi Chuxing’s troubles are an example of the struggles Chinese firms face when they try to uphold their independence in the face of government pressure.
Chinese attitudes to data collection and data privacy are different to those in the West – many people don’t care if businesses have access to their data, arguing that it adds to the convenience of life and work.
Government access to data in China is not the free-for-all that many outside of China assume it to be
Samm Sacks, CSIS
So it wasn’t unusual when, after the murders of two of its passengers by Didi drivers, regulators used the scandal to force Didi to share more corporate data with the government. But Didi resisted – citing customer privacy. Under Chinese law, it had no choice but to comply.
When it did, it handed over “three boxes of data printed on paper, including 95 hard copies for authorities to review”.
According to Samm Sacks of the Center for Strategic and International Studies (CSIS), the case demonstrates that “government access to data in China is not the free-for-all that many outside China assume it to be”.
She says this indicates that there appears to be “a kind of tug of war between the government and companies over data”.
How this plays out will determine how Chinese companies are viewed by foreign governments when they do business overseas.
Companies like Huawei have grown up in a system where to survive and thrive they needed strong links to the Chinese government – there was and is no other choice. But these links could harm their reputation abroad.
“It’s two different systems,” says Zaagman. “Think of it like an electrical outlet. China’s plug doesn’t fit in to the outlets we have in the West.”
What’s at stake
“Basically you want to connect to everything that can be connected.”
Zhu Peiying, head of Huawei’s 5G wireless labs, is showing off devices that can connect to the new technology. From a smart toothbrush that collects data about how well you brush your teeth, to a smart cup that reminds you when you should drink some water, this is a world where everything you can think of is being measured and analysed.
At its most sophisticated, everything in entire cities would be connected – driverless cars, the temperature of buildings, the speed of public transport – the list is endless.
Huawei is thought to be a year ahead of its competitors in terms of its technological expertise and what it can offer customers, according to industry sources.
It’s also thought that the company can offer prices that are about 10% cheaper than its competitors, although critics claim this is because of state support.
Ren dismisses this, saying that Huawei doesn’t receive government subsidies.
He says the real reason behind the US resistance to Huawei is its superior technology.
“There’s no way the US can crush us,” he says. “The world needs Huawei because we are more advanced. Even if they persuade more countries not to use us temporarily we could just scale things down a bit.”
Many analysts say that Huawei’s exclusion from US networks could actually cause the US to fall behind in its 5G capabilities.
“It would mean we wouldn’t be able to participate in any blended network [using Huawei] in Europe or Asia,” says Samm Sacks of CSIS. “That would put us at a significant disadvantage.”
What this would mean in reality is a world of two internets – or what analysts are calling a “digital iron curtain” – dividing the world into parts that do business with Chinese companies like Huawei, and those that don’t.
Because of US pressure on its allies, Huawei has been on an aggressive public relations campaign to win over customers and government stakeholders.
In recent days, Vodafone’s boss Nick Read called on the US to share any evidence it has about Huawei, while Andrus Ansip, the European Commission’s vice president for the digital single market, said in a tweet that he had met with Huawei’s rotating CEO to discuss the importance of being open and transparent, as they explored ways of working together.
But suspicions about Huawei remain.
One security firm reports a sharp rise in inquiries by Asian government clients about Huawei.
“Some have asked us how much they should worry about whether Huawei is really a liability,” says an analyst who consults to Asian governments, on condition of anonymity.
Ren is sanguine about such concerns.
“For countries who believe in them [suspicions about Huawei] we will hold off,” he says. “For countries who feel Huawei is trustworthy, we may move a little faster. The world is so big. We can’t walk across every corner of it.”
But this is about more than just one company or one CEO and his family.
Increasingly, this is perceived as a battle between two world orders, and which one is the future.
In the early days of China opening up, US presidents like George HW Bush espoused the merits of engagement.
“No nation on Earth has discovered a way to import the world’s goods and services while stopping foreign ideas at the border,” he said in a 1991 speech. “Just as the democratic idea has transformed nations on every continent, so, too, change will inevitably come to China.”
1989: George HW Bush in Beijing – he encouraged economic engagement with China
Previous US administrations believed that economic engagement in China would lead to China following a freer, more “liberal” path.
There’s no denying China has made remarkable strides in the past 40 years. The economy grew by an annual average of 10% for three decades, helping to lift 800 million people out of poverty. It is now the second-largest economy in the world, only surpassed by the US.
Some estimates put China’s economy ahead of America’s by 2030.
It achieved this while maintaining one-party rule and the supremacy of the Communist Party.
But its success has raised concerns that it is only possible with a huge amount of government control over the country’s companies. The fear is that control could be used to achieve the Communist Party’s goals – which are at this point unclear.
“It’s a double-edged sword for China,” says Danielle Cave. “[Because of its laws] the Chinese Communist Party has made it virtually impossible for Chinese companies to expand without attracting understandable and legitimate suspicion.”
Added to this, China has become more authoritarian under Xi Jinping’s rule.
President Xi Jinping
“Xi is systematically undermining virtually every feature that made China so distinct and helped it work so well in the past,” writes Jonathan Tepperman, editor in chief of Foreign Policy.
“His efforts may boost his own power and prestige in the short term and reduce some forms of corruption. On balance, however, Xi’s campaign will have disastrous long-term consequences for his country and the world.”
But Ren dismisses this, insisting that China is more open than ever before.
“If this meeting took place 30 years ago,” he says of our interview, “it would have been very dangerous for me. Today, I can be straightforward when answering difficult questions. This shows that China has a more open political environment.”
Still, Ren is hopeful of the direction China will take in the future.
“China has more or less tried to close itself off from the outside world for 5,000 years,” he says. “Yet we had found ourselves poor, lagging behind other nations. It was only in the past 30 years since Deng Xiaoping opened China’s doors to the world that China has become more prosperous. Therefore, China must continue to move forward on the path of reform and opening-up.”
In one of Huawei’s vast campus sites across Shenzen, lies a man-made lake. Swimming in these serene waters are two black swans.
There is a story that Ren put the birds here to remind employees of “black swan” events – unpredictable and catastrophic financial eventualities that are impossible to prepare for. He dismisses this as an urban myth, but it’s hard not to read something into it.
For Huawei, and Ren, these are highly uncertain times with no way of telling what lies ahead.
Different social systems should not be ‘a barrier to unification or an excuse for separation’, according to mainland’s cross-strait affairs office
After Quemoy began importing water from Fujian in August, preliminary research has been done to supply water to Matsu chain and electricity to both
News
Beijing says it can ease power and water shortages on Taiwan’s islands
27 Feb 2019
Taiwan-controlled Quemoy Island – which is just 2km from Xiamen – began importing water from the mainland in August. Photo: Weibo
Beijing says it is prepared to supply electricity and water to islands controlled by Taipei in the Taiwan Strait despite escalating tensions between the two sides.
An Fengshan, spokesman for the Taiwan Affairs Office in Beijing, also said their different social systems should not be “an excuse” to separate the country, and any deal between the mainland and Taipei should be struck in the interests of a “peaceful unification” agenda.
Speaking at a monthly press briefing on Wednesday, An said the mainland could supply power and water to meet the needs of residents on Quemoy, also known as Kinmen, and the Matsu island group. Controlled by Taipei, the islands are located off the mainland’s southeastern Fujian coast – Quemoy is just 2km from Xiamen – and have been on the front line of cross-strait tensions since 1949.
Taiwan’s cold war island begins to thaw
“The people of the Quemoy and Matsu islands have long hoped that the mainland could help to resolve the difficulties they face with power and water shortages, and they have made numerous appeals for gas and bridge connections [with the mainland],” An said.
“Our attitude is very clear – that in regards to these demands, the mainland will make every effort to provide opportunities and conditions to help them achieve bigger and better development.”
An said Fujian province authorities had completed preliminary research and planning to supply electricity to the Quemoy and Matsu islands, as well as water to the Matsu chain. Plans to supply gas and build bridges were expected in the future, he said, without elaborating.
Water is released into the Tianbu Reservoir on Quemoy island in August when the mainland supply began. Photo: EPA-EFE
Quemoy began importing water from Fujian to ease its water shortage in August, three years after it signed a 30-year agreement with the mainland province to supply water via an undersea pipeline.
But Taiwan’s Mainland Affairs Council, which handles cross-strait ties, asked the Quemoy county government to downplay a ceremony marking the start of the supply
because of moves by Beijing to suppress Taipei.
Beijing sees Taiwan as a breakaway province subject to eventual reunification, by force if necessary. Relations across the strait soured after Tsai Ing-wen, of the independence-leaning Democratic Progressive Party, became president in 2016 and refused to accept the one-China principles.
Since then, mainland China has stepped up pressure on Taiwan, suspending official communications with the Tsai government, poaching its diplomatic allies and staging war games near the self-ruled island, which is edging closer to Washington.
In an interview with CNN last week, Tsai said she would seek re-election next year and there would be no peace deal with the mainland unless Beijing ruled out using force against Taiwan.
On Wednesday, An said the different social systems across the strait should not be a barrier to unification, which President Xi Jinping sees as part of his Chinese dream of national rejuvenation but has been rejected by Tsai.
“Peaceful unification and ‘one country, two systems’ are the basic policies for us to resolve the Taiwan issues, and the best way to realise the motherland’s unification,” An said.
He was referring to a speech by Xi in January calling for Beijing and Taipei to start talks on “one country, two systems” in Taiwan – first proposed by late paramount leader Deng Xiaoping in the 1980s – as the path to bring the island back into the China fold.
“The differences in the systems should not be a barrier to unification or an excuse for separation,” An said.
China protests against US ‘provocation’ after two American warships pass through Taiwan Straits.
Asked about Beijing-friendly Kuomintang chairman Wu Den-yih’s recent remarks that Taipei would sign a peace deal with the mainland if his party won the election in 2020, An said the two sides could explore a deal “as long as it benefits and safeguards the peace of the Taiwan Strait, increases the peaceful development of relations and pushes the peaceful unification process of the motherland”.
President Donald Trump has said that the US and China are “very very close” to signing a trade agreement, potentially ending the long-running feud between the two countries.
Mr Trump told US governors on Monday that both nations “are going to have a signing summit”.
“Hopefully, we can get that completed. But we’re getting very, very close,” he said.
It follows a decision to delay imposing further trade tariffs on Chinese goods.
Mr Trump’s decision to delay tariff increases on $200bn (£153bn) worth of Chinese goods was seen as a sign that the two sides were moving ahead in settling their damaging trade war.
Last week, Mr Trump noted progress in the latest round of negotiations in Washington, including an agreement on currency manipulation, though no details were disclosed.
Sources told CNBC on Friday that China had committed to buying up to $1.2 trillion in US goods, but there had been no progress on the intellectual property issues.
Image copyrightAFPImage captionPresident Trump met China’s Vice Premier Liu He on Friday
Gregory Daco, chief US economist at Oxford Economics, said: “We had anticipated such a delay and believe a handshake agreement in which China will promise to import more agricultural products, work towards a stable currency and reinforce intellectual property rights protection will be achieved in the coming weeks.
“However, we don’t foresee a significant rollback of existing tariffs, and see underlying tensions regarding China’s strategic ambitions, its industrial policy, technological transfers and ‘verification and enforcement’ mechanisms remaining in place.”
What has happened in the trade war so far?
Mr Trump initiated the trade war over complaints of unfair Chinese trading practices.
That included accusing China of stealing intellectual property from American firms, forcing them to transfer technology to China.
The US has imposed tariffs on $250bn worth of Chinese goods, and China has retaliated by imposing duties on $110bn of US products.
Mr Trump has also threatened further tariffs on an additional $267bn worth of Chinese products – which would see virtually all of Chinese imports into the US become subject to duties.
WASHINGTON (Reuters) – President Donald Trump said on Friday there was “a very good chance” the United States would strike a deal with China to end their trade war and that he was inclined to extend his March 1 tariff deadline and meet soon with Chinese President Xi Jinping.
U.S. and Chinese negotiators had made progress and will extend this week’s round of negotiations by two days through Sunday, Trump told reporters at the White House as he met with his top negotiators and their counterpart, Chinese Vice Premier Liu He.
“I think that we both feel there’s a very good chance a deal will happen,” Trump said.
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Liu agreed there had been “great progress”.
“From China, we believe that (it) is very likely that it will happen and we hope that ultimately we’ll have a deal. And the Chinese side is ready to make our utmost effort,” he said at the White House.
The Republican president said he probably would meet with Xi in March in Florida to decide on the most important terms of a trade deal.
Extending the deadline would put on hold Trump’s threatened tariff increase to 25 percent from 10 percent on $200 billion of Chinese imports into the United States. That would prevent a further escalation in a trade war that already has disrupted commerce in goods worth hundreds of billions of dollars, slowed global economic growth and roiled markets.
Optimism that the two sides will find a way to end the trade war lifted stocks, especially technology shares. The S&P 500 stock index reached its highest closing level since Nov. 8. Oil prices rose to their highest since mid-November, with Brent crude reaching a high of $67.73 a barrel. [.N] [O/R]
CURRENCY AGREEMENT
Trump and Treasury Secretary Steven Mnuchin said the two sides had reached an agreement on currency. Trump declined to provide details, but U.S. officials long have expressed concerns that China’s yuan is undervalued, giving China a trade advantage and partly offsetting U.S. tariffs.
Announcement of a pact aimed at limiting yuan depreciation was putting “the currency cart before the trade horse,” but would likely be positive for Asian emerging market currencies, said Alan Ruskin, global head of currency strategy at Deutsche Bank in New York.
“How can you agree to avoid excessive Chinese yuan depreciation or volatility if you have not made an agreement on trade that could have huge FX implications?” Ruskin asked in a note to clients.
In a letter to Trump read aloud by an aide to Liu at the White House, Xi called on negotiators to work hard to strike a deal that benefits both country.
Trump said a deal with China may extend beyond trade to encompass Chinese telecommunications companies Huawei Technologies and ZTE Corp.
The Justice Department has accused Huawei of conspiring to violate U.S. sanctions on Iran and of stealing robotic technology from T-Mobile US Inc.
Chinese peer ZTE was last year prevented from buying essential components from U.S. firms after pleading guilty to similar charges, crippling its operations.
MEMORANDUMS NO MORE
Trump appeared at odds with his top negotiator, U.S. Trade Representative Robert Lighthizer, on the preliminary terms that his team is outlining in memorandums of understanding for a deal with China. Trump said he did not like MOUs because they are short term, and he wanted a long-term deal.
“I don’t like MOUs because they don’t mean anything,” Trump said. “Either you are going to make a deal or you’re not.”
Lighthizer responded testily that MOUs were binding, but that he would never use the term again.
Reuters reported exclusively on Wednesday that the two sides were drafting the language for six MOUs covering the most difficult issues in the trade talks that would require structural economic change in China.
Negotiators have struggled this week to agree on specific language within those memorandums to address tough U.S. demands, according to sources familiar with the talks. The six memorandums include cyber theft, intellectual property rights, services, agriculture and non-tariff barriers to trade, including subsidies.
An industry source briefed on the talks said both sides have narrowed differences on intellectual property rights, market access and narrowing a nearly $400 billion U.S. trade deficit with China. But bigger differences remain on changes to China’s treatment of state-owned enterprises, subsidies, forced technology transfers and cyber theft of U.S. trade secrets.
Lighthizer pushed back when questioned on forced technology transfers, saying the two sides made “a lot of progress” on the issue, but did not elaborate.
The United States has said foreign firms in China are often coerced to transfer their technology to Chinese firms if they want to operate there. China denies this.
The U.S. Chamber of Commerce on Friday urged the U.S. government to ensure the deal was comprehensive and addressed core issues, rather than one based on more Chinese short-term purchases of goods.
China has pledged to increase purchases of agricultural produce, energy, semiconductors and industrial goods to reduce its trade surplus with the United States.
China committed to buying an additional 10 million tonnes of U.S. soybeans on Friday, U.S. Agriculture Secretary Sonny Perdue said on Twitter. China bought about 32 million tonnes of U.S. soybeans in 2017. The commitments are a “show of good faith by the Chinese” and “indications of more good news to come,” Perdue wrote.
China was the top buyer of U.S. soybeans before the trade war, but Beijing’s retaliatory tariffs on U.S. soybeans slashed business that had been worth $12 billion annually.
BEIJING, Feb. 20 (Xinhua) — Chinese President Xi Jinping has sent a congratulatory letter to the opening ceremony of 2019 China-ASEAN Year of Media Exchanges, which was held here Wednesday.
The letter was read by Huang Kunming, a member of the Political Bureau of the CPC Central Committee, at the opening ceremony.
China and ASEAN countries, as close neighbors linked by cultural bonds and with a long history of friendly exchanges, have deepened strategic communication in recent years, Xi said.
The two sides have made joint efforts in constructing the Belt and Road, advancing people-to-people exchanges, properly handling differences and safeguarding regional stability, he noted.
Saying China-ASEAN relations have entered a new phase of all-around development, Xi stressed the launch of the China-ASEAN Year of Media Exchanges represents an important move toward intensifying their strategic partnership.
“Acting as a bridge in promoting communication, cooperation and people-to-people contacts, media can play an even greater role in the development of China-ASEAN ties,” said the Chinese president.
He expressed hope that media from both sides could serve as messengers of friendly exchanges, facilitators of pragmatic cooperation, guardians of harmonious coexistence and good story-tellers on peace and development, making a greater contribution to the building of a closer China-ASEAN community with a shared future.
Huang, also head of the Publicity Department of the CPC Central Committee, met with some distinguished guests from ASEAN prior to the opening ceremony.
China’s neighborhood diplomacy of amity, sincerity, mutual benefit and inclusiveness proposed by Xi has pointed out the direction of the country’s relations with ASEAN, Huang said.
Saying China-ASEAN Year of Media Exchanges aims to push forward bilateral ties and people-to-people exchanges, Huang called on media organizations to expand and tap potential in cooperation in the spirit of friendly negotiation, equality and mutual benefit.
The ASEAN guests spoke highly of the two sides’ media cooperation and voiced their hope to further boost communication and friendship.
CHINDIA ALERT: You'll be living in their world, very soon 