Category Archives: China

How Chinese Officials Hijacked My Company – WSJ

Why we want to do “joint business” with China is beyond my comprehension.  mrossol.

WSJ 8/1/2020 by Steve Saleen

President Trump said last month that talks for a phase 2 trade agreement with China were on the back burner. If they resume, it is more important than ever that any deal protect American companies and their intellectual property from theft by China. My experience doing business in China shows the lengths to which the Chinese government will go to steal American intellectual property.

My story began in 2016, when I entered a joint venture with the government of Rugao, a city in Jiangsu province with a population of 1.4 million. Rugao needed expertise to start an automotive manufacturing company that would create jobs.

I would bring experience, design, engineering and related technologies developed over my 40-year career in the automotive industry building race cars and high-performance street cars. My contributions to the deal were valued at $800 million, and I would maintain a majority stake in the new company along with my American partners. Rugao would bring $500 million in capital and $600 million in subsidized loans over three years to fund manufacturing sites and operations, and receive a minority stake.

The deal was a sham. It was a trap designed to secure my intellectual property, then use intimidation tactics and lies to nullify the agreement and seize control.

The first few years of the venture, named Jiangsu Saleen Automotive Technologies, were relatively smooth. I contributed three well-designed, well-engineered vehicles, hired staff, set up supply chains and launched marketing. The Rugao government contributed some of the promised capital, but nowhere near the amount needed to get operations up and running at scale.

I would later find out that while I was busy fulfilling my end of the bargain, the joint venture applied for 510 Chinese patents for my designs, technologies, trade secrets and engineering developments. Most of the patent filings didn’t even list me as the inventor. With many of these Chinese patents approved, Rugao was ready to take over the joint venture and steal the intellectual property.

Rugao is now claiming the initial valuation of my contributions was based on false information. But the city government itself requested, verified and accepted the valuation, picking at the outset three separate firms to conduct independent appraisals. The government never contested any of what these reviews found. In the past three months, Rugao has demanded the valuation companies say their findings were based on false information.

You could ask Grace Yin Xu about this—if you could find her. Grace is a Chinese national who serves as the director of corporate affairs for Jiangsu Saleen. In the early stages of the deal Grace was a liaison between the joint venture and the valuation firms. Chinese law enforcement recently instructed Grace to say that my business partner provided false information and embezzled money. She refused to lie. She entered a government building in Rugao on the morning of June 22 and hasn’t been heard from since.

Rugao law enforcement also detained Frank Sterzer, our vice president of manufacturing, for intimidation on June 29. Frank, a German citizen, was released after six hours with no explanation for the detention after he managed to contact the German Embassy using a cellphone the police forgot to confiscate.

Though my colleagues refused to lie, the government has convinced one of the three evaluation firms to do so. The Shanghai Wanlong Asset Appraisal Co. issued a public statement denying it performed a valuation report at all, and the government used that statement to declare the reports were fabricated. The government has also levied bogus embezzlement charges against my partners and me over money used to fund vehicle development—payments the government knew about and approved before they were made.

China’s aggressive theft of intellectual property is well documented. In a 2019 survey of the CNBC Global CFO Council, 1 in 5 North American corporations said China had stolen their intellectual property within the past year. By one estimate this stealing costs the American economy $600 billion annually.

China can no longer go unchecked. The U.S.-China trade deal must include protections for American companies and consumers, who ultimately will pay the price for Beijing’s theft. The Trump administration should have the power to deny access to U.S. consumer and capital markets to foreign entities found to be directly benefiting from the theft of American intellectual property.

The U.S. should also deny thieves access to banking systems and require the Securities and Exchange Commission to judge whether a company’s use of stolen intellectual property is a material condition that should be publicly reported. In addition to blocking such goods from the U.S. market, Congress should pass legislation to block banks, investment companies and other financial institutions and stock exchanges from using asset valuation reports prepared by any Chinese asset valuation firms. These reports are easily manipulated by the Chinese government.

Such measures may not be enough to protect my 40 years of work and the brand I have built. But it isn’t too late for other American entrepreneurs whose livelihoods are at stake. Congress, and the Trump administration should send a clear message to China: If you want to be in the race, play by the rules.

Mr. Saleen is a retired race car driver and founder of Saleen Inc.

https://www.wsj.com/articles/how-chinese-officials-hijacked-my-company-11596233617?mod=hp_opin_pos_2

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Australia Begins ‘Unprecedented’ Pushback Against Beijing

I hope the Aussies don’t back down. mrossol

The Australian government is boldly pushing back against the Chinese Communist Party (CCP)—a newborn strategic position held by a government facing an increasingly hostile and antagonistic Beijing.

Recent aggressions by the CCP that in the past often failed to be directly addressed—are now being met with counterblows by the Morrison government, and it’s not just simply stronger rhetoric.

Australia was one of the first countries to call for an investigation into Beijing’s handling of the COVID-19 pandemic and has suspended its extradition treaty with Hong Kong over concerns around the new national security law. The country also is standing its ground against an escalating number of economic threats and intimidation from China.

Australian senators told The Epoch Times the resistance from the current government is in response to China’s growing contempt for international law, coupled with the gross mistreatment of its own people, and a seeping threat to the core values held by “Down Under.”

“China is starting to realise that not everyone will simply kowtow to their threats, be it geopolitical aggression, foreign interference or economic pressure,” Eric Abetz, a Liberal senator, told The Epoch Times.

“In all the circumstances, it is appropriate, indeed necessary, for freedom-loving countries to take a stand,” he continued.

Abetz said the “pushback” against the regime has been spurred by a number of pressing concerns, including “its ever-growing belligerence and bullying of its own people–Christians, Uyghurs, Falun Gong.”

China’s blatant disregard for international law through its South China Sea militarization is another concern, said Abetz, who pointed to Beijing’s intentional targeting of nations such as Australia that dare to seek accountability from China.

It started to take shape months ago, when Canberra called for an independent probe into Beijing’s handling of the pandemic. Meanwhile, Australia was one of the first countries that called for a travel ban from China.

Foreign Affairs Minister Marise Payne, who was first to signal the need for a transparent investigation, was soon backed by Australia’s Prime Minister Scott Morrison. In May, Morrison  told Alan Jones on 2GB Radio: “What the world over needs to know—and there’s a lot of support for this—is how did it start and what are the lessons to be learned?”

Australia’s inquiry has since drawn the support of the European Union and a coalition of more than 100 nations. The move sparked anger from the CCP, which has since imposed an 80 percent tariff on Australian barley and a ban on four red meat processing plants.

One Nation Senator Malcolm Roberts said that although he’s pleased with the Australian government for making noise in response to the CCP, he will hold his assessment until after the media headlines subside. He said he was “doubtful the government’s actions will follow its words.”

“The [CCP] threat is enormous and affects every aspect of Australian life and lifestyles,” he told The Epoch Times.

“National security, economic independence, ownership of land and essential infrastructure assets, control of services, control over Labor and Liberal/National Party members of parliament and backroom powerbrokers to name just a few,” he said.

Roberts noted that the “world is awakening to the threat from the totalitarian CCP that has no regard for human life and freedom.” (India, one of the latest countries to crack down on Beijing, recently banned 59 mostly Chinese-owned apps over their border crisis, and plans to more heavily scrutinize foreign direct investments).

Meanwhile, Beijing also threatened to stop sending tourists and its students if Australia sticks to its call for a probe.

“We reject any suggestion that economic coercion is an appropriate response to a call for such an assessment, when what we need is global cooperation,” Payne said in a statement to The Australian.

She refuses to shy away when addressing China. In June, she criticized the CCP for creating “disinformation” amid the pandemic, adding that it “contributes to a climate of fear and division when what we need is cooperation and understanding.”

It’s been documented that the Chinese regime deliberately masked the total number of CCP virus cases in China in a bid to safeguard its image, both nationally and internationally. It has also been widely reported that China continues seeking to shift the blame away from its botched handling of the virus by launching a global disinformation campaign to manipulate narratives.

Andrew Phelan, an Australian-based medical technology entrepreneur who has spent most of his career in Asia, much of it representing U.S.-based medical technology companies (two of which have successfully prosecuted PRC nationals for IP theft), said he has never witnessed Australia respond to the CCP threat in the way it has today.

“I’m almost 54 and I’ve been following China since my first visit as a 21-year-old in 1988,” Phelan told The Epoch Times. “The current [pushback] situation is unprecedented … That courage has come with a cost and has put Australia in Chinese leader Xi Jinping’s crosshairs.”

“The significance of the pushback is that it is happening so fast, it’s involving so many countries and they are coalescing and forming alliances,” he added.

The recent pushback stems from a process of Australia waking up to Beijing’s plans and ambitions, according to Phelan. He noted that Australia is in a unique position, as no other country globally has benefited as much from the rise of China.

Neither the prime minister’s office nor the Department of Foreign Affairs and Trade immediately responded to a request by The Epoch Times for comment.

Beijing’s Influence Operations

More countries across the world are beginning to stand up to Beijing as it ramps up its global aspirations through avenues that include United Front operations, the Belt and Road Initiative, and Confucius Institutes.

The United Front unit coordinates with thousands of groups to carry out foreign political influence operations, suppress dissident movements, gather intelligence, and facilitate the transfer of other countries’ technology to China, according to a June report by the Australian Strategic Policy Institute.

Groups and individuals linked to that unit have attracted an unprecedented level of scrutiny for their links to political interference, economic espionage, and influence on university campuses, the report stated. In Australia, businessmen who were members of organizations with close ties to the United Front Work Department “have been accused of interfering in Australian politics.”

The case of Huang Xiangmo was highlighted by the report’s authors as “one of the most informative cases of United Front-linked influence efforts.” Huang arrived in Australia “in near-total obscurity,” until “big spending and relentless networking behind closed doors has seen him swiftly ingratiate himself with Australia’s most powerful politicians,” the report stated, citing an article.

Huang was philanthropic and donated generously to universities, starting centers at two Australian universities. He also sought to mentor young Chinese Australians with political goals, organizing the Australia Young Leadership Forum for Chinese university students. His ACRI institute hosted a United Front official in 2016 and “also organized trips to China, supported by the Propaganda Department, for Australian journalists,” according to the report.

In one case, Huang reportedly withdrew a promised $400,000 donation to the Labor Party after its defense spokesman criticized China’s militarization of the South China Sea. Tim Xu, a former assistant to Huang, testified in 2019 that one of the councils Huang ran was a front for the CCP.

The Australia Security Intelligence Organisation (ASIO) later concluded that Huang was “amenable to conducting acts of foreign interference.” Huang’s citizenship application was denied and his residency rescinded. However, Huang’s networks and—United Front networks in general—are still active in Australia, the report stated.

Through the Belt and Road Initiative, the CCP has begun more than 2,900 projects valued at $3.87 trillion. The BRI has been called a “debt trap” because Beijing’s predatory lending practices reportedly have left countries vulnerable to China’s aggressive influence campaigns.

In October 2019, Victoria formally signed onto the initiative under Premier Daniel Andrews and Chinese ambassador to Australia Cheng Jingye; Victoria is the only state in Australia to have joined the initiative.

Former Victorian Premier Jeff Kennett told Sky News in a July 13 interview that the move would be the “undoing of this government,” labeling it as “an expansionist policy.”

Meanwhile, the Confucius Institutes located across Australia’s educational institutions have also attracted controversy. Late last year, the New South Wales Department of Education banned the program from being taught at the state’s public schools.

The institutes, overseen with heavy involvement from the United Front Work Department, have “generated controversy for more than a decade for their effects on academic freedom and influence on universities,” according to the Strategic Policy Institute report. China has claimed that the aim of the CIs is purely to strengthen Chinese language learning and culture.

The institutes aim to push a foreign policy goal of making the regime not only an economic superpower, but also a cultural one.

Abetz said unless the regime is brought to account early on, “they will continue their unacceptable practices until their domination becomes too reprehensible that conflict ensues.”

Australia’s pushback is “most certainly warranted,” says Casey Fleming, chairman and CEO of intelligence and security strategy firm BlackOps Partners.

“It is the canary in the mine for the rest of the free world and democracy,” he told The Epoch Times. “The CCP poses an extreme and ongoing threat to Australia’s values and national security. The CCP works under stealth cover, leverages intense espionage, and maximizes infiltration and subversion to destroy democracy.”Follow Bowen on Twitter: @BowenXiao_

https://www.theepochtimes.com/australia-starts-unprecedented-pushback-against-beijing_3422527.html?ref=brief_News&__sta=vhg.hhksexuhqqhbbv|TJY&__stm_medium=email&__stm_source=smartech

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Worried About Big Brother?

Oh, yes, we should be really, really worried!
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WSJ 11/5/2018
By Andy Kessler

Hardly a week goes by that I don’t run into people who, when I ask how they are doing, tell me they’re worried about authoritarianism. Living in California, my impulse is to ask if they’re worried about the state’s one-party rule. But before I can get that out, the complaints begin: Trump, Facebook, Google, police state. Uh boy. Pot-dispensary paranoia?

This fascist-behind-every-tree thinking isn’t helped by the tech industry. Apple CEO Tim Cook told privacy commissioners in Brussels last month that personal information “is being weaponized against us with military efficiency. Today, that trade has exploded into a data-industrial complex.” Mr. Cook was poking at Facebook and Google and calling for more regulation.

In high Silicon Valley style, former Facebook security executive Alex Stamos took to Twitter to criticize Mr. Cook’s hypocrisy: “Apple uses hardware- rooted [digital rights management] to deny Chinese users the ability to install” virtual private networks. That means iPhone users in China can’t avoid their government’s censorship and surveillance. Fear mongers in the U.S. worry about authoritarianism, but in China it’s real. Anyone caught resisting there gets a mark on his not-so-proverbial permanent record.

In 2014 China began rolling out a Social Credit System, aiming for nationwide implementation by 2020. Like the FICO financial-credit system in the U.S., scores come from hundreds of data sources, but in this case those sources include more than 200 million cameras that monitor citizens’ behavior. Debtors end up on blacklists, unable to take trains or stay in luxury hotels. Some who have refused to join the military have been locked out of universities.

There are also “red lists” of good citizens, who are entitled to perks like skipping lines at ferries and not paying a deposit to rent bikes. Every man, woman and child must adapt to the government’s social pressure—or else. As the Dead Kennedys sang in 1979: “It’s the Suede-Denim secret police / They have come for your uncool niece.”

Is authoritarianism a rational fear in the U.S.? We have all the piece parts. FICO tracks financial credit, though not very well. Loyalty systems from airlines to supermarkets track purchases. Environmentalists often deploy social persuasion, from the LEED energy- efficiency standards to the virtue signaling that surrounds hybrid cars and overpriced organic food.

But these are all private actors. The government has no-fly blacklists and TSA Pre-Check as a travel red list. But as far as anyone can prove, that data is siloed. The Internal Revenue Service isn’t supposed to share data with Immigration and Customs Enforcement. And your phone records? To catch the recent pipe-bomber, the FBI identified his fingerprints but had to get a subpoena before it could triangulate his location from phone records.

Our checks have balances. Facebook, Google and Apple have fixed procedures for handling government data requests. Under the 1986 Stored Communications Act, gaining access to data usually requires a subpoena, court order or search warrant; less than 10% of requests qualify as emergencies under the companies’ criteria. Investigators similarly need subpoenas to access footage from city traffic cameras.

California passed a privacy bill in June patterned on Europe’s General Data Protection Regulation. The cost of compliance will benefit the biggest tech companies by squeezing out competitors, while the new privacy rules will do little to prevent data breaches. Instead, the law will bring government and technology platforms even closer.

How to prevent a social-credit system from coming to the U.S.? First, keep regulators out of the business of setting privacy rules, as they will be tempted to offer rewards to incumbents in exchange for backdoors to users’ information. Second, stop data from mingling among different government agencies.

Finally, in the digital age, data privacy should be understood as a property right. The concept of property rights formed the basis for the runaway success of American capitalism. You, not the state, own your land and your ideas. Congress should pass a law deeming individuals full owners of their digital information, though they would still be free to sell it in slices to Facebook or United Airlines or Safeway.

By contrast, China’s political system—a mongrel of autocratic capitalism and democratic socialism—is not compatible with progress and growth in the long run. Given the choice, ever fewer Chinese entrepreneurs will opt to realize their dreams at home. China’s authoritarian disregard for property rights and privacy is a fuse already lit. Ideas, like capital, flow to where they’re treated well.

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Google: No to USA; Yes to China.

A wonderful (?) example of politically correct non-think.  [And when only the money matters.]

WSJ – 8/4/2018

Intent on abiding by its founding motto, “Don’t Be Evil,” Google announced in June that it would not participate in a U.S. military program seeking to apply artificial intelligence to drone technology. This week it has been reported that Google is attempting to reintroduce its flagship search engine into China, albeit with censoring and surveillance filters demanded by the Chinese government. This does not compute.

Eight years ago, Google co-founder Sergey Brin pulled the company out of China, telling The Wall Street Journal that “in some aspects of their policy, particularly with respect to censorship, with respect to surveillance of dissidents, I see some earmarks of totalitarianism.” That was true then and is more so now. China is famously using advanced technology to erect an Orwellian surveillance state.

But like other companies, Google has concluded it cannot sacrifice access to China’s market, which is now dominated by the Chinese search-engine company Baidu. That means conforming itself to China’s rules on social control of the internet. Google hasn’t decided whether to proceed with this search-engine initiative, but clearly no license will be granted unless the company agrees to give Chinese censors access to the site’s vast internal information.

That Google would seek re-entry to a country whose efforts at totalitarian control are increasing while the company ostentatiously separates itself from a U.S. defense program is more than a contradiction. It is naive. What kind of world does Google think we live in?

The June decision to withdraw from the Pentagon’s AI program was accompanied by an 8,000-word statement

of Google’s ethical principles on the use of artificial intelligence. Well, yes, the intersection between AI and human autonomy is complicated. But no one paying attention to China’s ambitions doubts that it is developing artificial intelligence for domestic political control and sophisticated military applications. Its Communist Party leaders are doing so to gain a decisive advantage over China’s military competitors, primarily the United States and its citizens.

A recent Journal article detailing China’s high-tech military programs quoted former People’s Liberation Army Maj. Gen. Xu Guangyu: “China will not ignore or let slip by any dual-use technology, or any technology at all, that might improve the ability of our military to fight, our awareness, or our ability to attack.” In other words, the U.S. finds itself in an intense military competition with China. If American tech companies deny their own country access to advanced knowledge, the U.S. will fall behind.

The good news is that most U.S. technology companies, including in Silicon Valley, understand these realities and are contributing to the U.S. effort to defend itself. Google and its hyper-political employees stand out for seeming to spend a remarkable amount of time navel-gazing and composing codes of conduct.

Sergey Brin had it right in 2010: China’s success at lifting its people out of poverty is remarkable. Its determination to deploy American knowledge to control the Chinese people remains abhorrent. 

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