Posts Tagged ‘spying’

Huawei chief warns of job losses amid 5G security concerns

January 21, 2019

Huawei founder Ren Zhengfei admits, “Things went too smoothly for us in the last 30 years.”

Ren Zhengfei  [Vincent Yu/AP Photo]

Ren Zhengfei [Vincent Yu/AP Photo]

Says tech group must prepare for ‘times of hardship’ Ren Zhengfei: ‘In order to achieve overall victory, we need to conduct some organisational streamlining’

By Kathrin Hille in Taipei

Ren Zhengfei, founder and chief executive of Huawei, has publicly warned of job losses as several more governments bar the embattled Chinese technology group from supplying equipment for 5G networks. “In the coming years, the overall situation will probably not be as bright as imagined, we have to prepare for times of hardship,” Mr Ren said in an email to staff. He added that goals found to be unrealistic needed to be revised. “We also need to give up some mediocre employees and lower labour expenses.”

The warning comes as security concerns over Huawei are snowballing across the western world. The detention of Meng Wanzhou, Huawei’s chief financial officer and Mr Ren’s daughter, in Canada on a US extradition request in December and the arrest of a Huawei executive in Poland on allegations of spying for Chinese intelligence earlier this month have fuelled western suspicions of the group.

A man lights a cigarette outside a Huawei retail shop in Beijing

Germany last week became the latest country to indicate that it would not allow Huawei equipment to be used in its 5G rollout. In the US a bipartisan group of lawmakers proposed legislation that would ban the sale of American semiconductors and other electronics components to Huawei and ZTE, in what would be a re-introduction and expansion of earlier sanctions against the Huawei rival.

Mr Ren, a former People’s Liberation Army officer, issued his warning about a rocky road ahead at an internal cadre management seminar in November. But the CEO’s office sent it out to all staff and published it on Huawei’s online community on Friday, as the company stepped up its efforts to manage the growing crisis.

Guangzhou Messe Qualcomm 5G (picture-alliance/dpa/L. Zhihao)

China invested heavily in the standardization of 5G because it realized that with 3G/4G it had lost the battle over standards and was thus dependent on foreign, mainly US, companies

“5G cannot possibly become as easy as 4G,” said Mr Ren in a speech peppered with military jargon and war metaphors.

“Maybe a mine will go off here and there,” he said. “And even if there won’t be a big explosion all over the place, we will still need to feed 180,000 staff. Wages, salaries and dividends amount to over US$30bn a year.”

Recommended Huawei Technologies Co Ltd Huawei founder Ren Zhengfei in his own words

Huawei (picture-alliance/dpa/M. Schiefelbein)

Huawei’s revenues are expected to have grown to $100bn last year from less than $1bn 20 years ago. Mr Ren suggested in his message that the days of uncontrolled growth were over.  “Things went too smoothly for us in the last 30 years,” he said.

“We were in a phase of strategic expansion, our organisation expanded in a destructive way. We have to review carefully if all geographical subsidiaries are efficient. […] In order to achieve overall victory, we need to conduct some organisational streamlining.”

In a message to human resources executives delivered last October, also sent out on Friday, the Huawei chief called for a “revolution” at the entire company. The tough messages come only days after Mr Ren, who normally shuns media attention, swung into action to rebut the US’s allegations against his company in a rare interview with a group of international journalists.

https://www.ft.com/content/2b0c6a22-1cbc-11e9-b126-46fc3ad87c65

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U.S. Weaponizes Its Criminal Courts in Fight Against China and Huawei

January 18, 2019

Pursuit of theft charges against Huawei is the second recent case where prosecutors have built criminal allegations on civil litigation

Why China's Huawei Matters

Why China’s Huawei Matters
Chinese telecom giant Huawei has long caused tension between Washington and Beijing. WSJ’s Shelby Holliday explains what the company does and why it’s significant. (Photo: Aly Song/Reuters)
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The federal pursuit of theft charges adds pressure on Chinese tech giant Huawei Technologies Co. by further involving the criminal-justice system in the fight against China’s alleged encroachment on intellectual property.

It is the second case in four months where federal prosecutors have built criminal allegations on civil litigation, risking uncertain outcomes as a verdict isn’t guaranteed.

The Trump administration wants to use indictments, along with export controls and other policy tools, as part of an arsenal to counter Chinese theft of trade and technology secrets, which U.S. officials increasingly view as part of national security, The Wall Street Journal has reported. That has meant a more aggressive effort to convert corporate squabbles into criminal charges.

The federal investigation, first reported by The Wall Street Journal, into whether Huawei stole trade secrets from U.S. business partners arose from civil lawsuits, including one in which the Shenzhen-based company was accused of misappropriating robotic technology from wireless-network operator T-Mobile US Inc.

In November, the U.S. said it indicted two companies in China and Taiwan on charges of stealing semiconductor-design secrets from Idaho-based chip maker Micron TechnologyInc., based almost entirely on litigation that Micron had filed in California courts a year earlier.

In both cases, the entry of federal prosecutors ratcheted up global attention and the stakes in what had until then been less noticed civil filings.

China said Thursday that it was concerned that a closed civil case was being reopened. “We have serious suspicions about the true motives behind it,” a Foreign Ministry spokeswoman said. “If they are politicizing this case, this does not comport with the rules on fair and free competition and breaches the spirit of the rule of law.”

In the Huawei case, the jury didn’t award T-Mobile any damages in a claim of misappropriation of trade secrets and didn’t find Huawei’s alleged actions in that claim “willful or malicious”—an outcome that raises the risk that a criminal case on broadly similar terms may not deliver the verdict prosecutors want, attorneys say.

“In a civil case, you need to prevail on a preponderance of the evidence, whereas a criminal case you need beyond a reasonable doubt, a much stricter burden of proof,” said Christopher Neumeyer, an attorney specializing in intellectual property for Taiwan-based Duane Morris & Selvam. “If you can’t prevail in a civil case, how are you going to win a criminal case?”

Huawei declined to comment. The Chinese and Taiwanese companies in Micron’s case say they plan to fight the charges. Fujian Jinhua Integrated Circuit Co. said in a statement that it isn’t guilty. The Taiwanese firm, United Microelectronics Corp. , said it has 15 years of experience in making the kind of chips whose technology it has been accused of helping Jinhua to steal.

Chinese telecom giant Huawei has long caused tension between Washington and Beijing. WSJ’s Shelby Holliday explains what the company does and why it’s significant. (Photo: Aly Song/Reuters)

Prosecutors pursuing the pair of tech-related cases may be taking cues from a playbook set a year earlier, when a Wisconsin jury found Chinese wind-turbine maker Sinovel Wind Group Co. guilty of stealing technology from its former U.S. supplier, American Superconductor Corp.

Attorneys say the Sinovel ruling was a landmark in using federal courts to go after Chinese companies for tech theft. Like Micron and T-Mobile, Massachusetts-based American Superconductor had tried first to take the Chinese company to court on its own—in that case, by filing suit in Beijing in 2011. That litigation went nowhere. The U.S. court ruled Sinovel must pay $59 million in fines and restitution to the American firm.

High-profile prosecutions are part of a range of weapons the U.S. can call on to shape global perceptions of China’s state-corporate behavior, as well as China’s perception of how its options might be dwindling, attorneys and analysts say. Other tools include sanctioning exports and redefining “emerging technologies” as a national security concern.

“The U.S. will pursue critical Chinese companies in any form possible,” said Alicia Garcia Herrero, chief economist at investment bank Natixis . “The U.S. is aiming at creating a kind of sinking feeling for China. That is, no matter what China does, there will still be new angles for the U.S. to contain it.”

On its part, Beijing has sought to allay concerns in a series of pronouncements and other policies, even before the recent escalation of litigation. President Xi Jinping in July 2017 at a financial work conference said that intellectual property infringers would “pay a heavy price,” a remark analysts describe as unusual for the occasion. And last month, dozens of government agencies vowed in a coordinated announcement tougher punishments against such wrongdoers.

“If you can’t prevail in a civil case, how are you going to win a criminal case?”

—Christopher Neumeyer, attorney specializing in intellectual property

The U.S. may have more tech companies it could pursue. In December, the Justice Department indicted two Chinese nationals on charges of hacking and stealing technology and other business secrets from more than 45 companies in at least a dozen U.S. states and from government agencies. The U.S. hasn’t charged any companies involved in the allegations.

In a speech accompanying the December indictments, Deputy Attorney General Rod Rosenstein said one advantage of using the justice system is that it makes it difficult for China to feign ignorance when faced with a barrage of detailed allegations and corroboration.

“Exposing these actions through the criminal-justice system is a valuable tool,” he said.

But should prosecutions go awry, China may find itself with a trump card—and justification for retaliation. For some analysts, a central question remains.

“Is there really a reasonable determination that this is an appropriate case, or is it just a political thing?” Mr. Neumeyer said. “I don’t know how much of it is careful legal strategy and how much of it is tit for tat.”

Write to Chuin-Wei Yap at chuin-wei.yap@wsj.com

Appeared in the January 18, 2019, print edition as ‘U.S. Steps Up Legal Pressure On Firm.’

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China slams Huawei ‘hysteria’ — But if Huawei is “Clean,” why China’s ugly reaction?

January 17, 2019

Beijing has condemned US legislation that would stop businesses from selling American-made chips to Huawei and ZTE. US lawmakers described Huawei as an “intelligence-gathering arms of the Chinese Communist Party.”

    
Huawei logo

The Chinese Foreign Ministry on Thursday described US legislation targeting technology giant Huawei and other Chinese telecommunications companies as “hysteria.”

From the US to Poland, the embattled Chinese company and some of its employees have been targeted by authorities as Western countries seek to limit its scope of operations domestically due to security fears and allegations of intellectual property theft.

Signage is displayed atop a ZTE Corp. building in Beijing.

Read more: Berlin’s dilemma: My way or the Huawei?

Huawei targeted around the world:

  • US lawmakers put forward a bipartisan bill on Wednesday to block the sale of US chips to Chinese telecommunications companies. Huawei and ZTE were cited in the draft law.
  • Several top Huawei officials have been arrested across the globe. Poland detained Huawei executive Wang Weijing last Friday on espionage-related charges. In Canada, CFO Meng Wanzhou is on house arrest pending a US extradition request.
  • The German government has actively sought ways to prevent Huawei from building the country’s 5G network, according to business newspaper Handelsblatt. Other countries, including the US, have already enacted bans.

Image result for Huawei, 5G, photos

More to follow…

Read more: Huawei ‘could give Chinese spies our secrets,’ EU fears

ls/rt (AFP, AP, Reuters)

China Is a Dangerous Rival, and America Should Treat It Like One

January 15, 2019

Enough with the endless talks and handshakes. We need to untie the American economy from China.

By Derek Scissors and Daniel Blumenthal

Mr. Scissors and Mr. Blumenthal are experts on China at the American Enterprise Institute.

The Trump administration has been clear about its view of China. A 2017 national security strategy document called China a “revisionist” power attempting to reorder international politics to suit its interests. It’s difficult to think otherwise given Beijing’s military buildup, its attempts to undermine American influence and power, its retaliations against American allies such as Canada, and its economic actions.

How to respond is more controversial. After years of unsuccessful talks and handshake deals with Beijing, the United States should change course and begin cutting some of its economic ties with China. Such a separation would stop intellectual property theft, cut off an important source of support to the People’s Liberation Army and hold companies that are involved in Chinese human rights abuses accountable.

Image result for Xi Jinping, at G20 dinner with Donald trump, pictures

This will be no easy task. Some industries will have problems finding new suppliers or buyers, and there are entrenched constituencies that support doing business with China. They argue that any pullback could threaten economic growth. But even if American exports to China fell by half, it would be the equivalent of less than one-half of 1 percent of gross domestic product. The cost of reducing Chinese imports is harder to assess, but there are multiple countries that can substitute for China-based production, none of them strategic rivals and trade predators.

The United States economy and its national security have been harmed by China’s rampant theft of intellectual property and the requirement that American companies that want to do business in the country hand over their technology. These actions threaten America’s comparative advantage in innovation and its military edge.

Even uncoerced foreign investment in technology can strengthen the Chinese military-industrial complex, especially since the Communist Party has moved, since President Xi Jinping took office in 2012, to a defense industrial policy that translates in English to “civil-military fusion.” In practice, many Chinese and foreign “civilian” companies serve as de facto suppliers for the Chinese Army and its technological-industrial base. Residents and visitors are subject to constant visual surveillance, and a nascent “social credit program” in which disobedience to party dictates is reflected in credit scores, which could affect everything from home purchases to job opportunities. These forms of social control often use technology developed by Western companies.

The United States should make major adjustments to its economic relationship with China. Comprehensive tariffs, which harm American consumers and workers unnecessarily, are not the right reaction. But neither are admonishments to “just let the market work.”

The scale of China’s industrial-policy distortions, technology thievery and efforts to modernize its army are too significant for such superficial responses. The American government must intervene in the market when it comes to China, although that intervention should be limited to areas that are genuinely vital to national security, prosperity and democratic values.

For example, the United States government should impose sanctions on the Chinese beneficiaries of intellectual property theft and coercion, in cooperation with our allies. This was the legitimate target of the United States trade representative’s original inquiry in August 2017 under Section 301 of the Trade Act of 1974, but the policy steps chosen — tariffs — focus on the trade deficit instead of loss of intellectual property.

Rather than across-the-board tariffs, Chinese companies receiving stolen or coerced intellectual property should not be allowed to do business with firms in America or, with our allies’ cooperation, in Europe and Japan. The United States should also intervene to halt foreign investment in any technology that assists the Chinese Army or contributes to internal repression and limit the access to global markets of any Chinese company that is tied to human rights abuses and army modernization.

Taking these actions would require an enormous amount of intelligence collection by American security agencies as well as crucial information from American companies. The latter is difficult to obtain: Out of fear of Chinese retribution, the foreign business community will cooperate only if there is a clear, bipartisan and long-term commitment by the American government.

While the United States must act unilaterally if necessary, the cooperation of allies such as Japan, Germany and Britain would make these steps more effective. Such countries have their own interests in China. Imposing sanctions in the name of national security on the European Union and China, as the Trump administration has threatened, would unwisely give them common cause.

Previous efforts to assert America’s influence against China, such as the discarded Trans-Pacific Partnership, did not push back effectively on Chinese economic aggression. Working with allies to directly address China’s malfeasance would.

All this means putting China at the top of American international economic priorities and keeping it there for years, without overstating or overreacting to trade disputes with our allies.

The administration has demonstrated some good instincts on China, but it must not be distracted by the next round of Beijing’s false economic promises. Protecting innovation from Chinese attack makes the United States stronger. Hindering the Chinese security apparatus makes external aggression and internal repression more costly for Beijing.

China is our only major trade partner that is also a strategic rival, and we should treat it differently from friendly countries with whom we have disputes. If Washington wants the global free market to work, it must intervene to blunt Beijing’s belligerence.

Derek Scissors (@DerekScissors1) is a resident scholar at the American Enterprise Institute, where Daniel Blumenthal (@DAlexBlumenthal) is the director of Asian studies.

Follow The New York Times Opinion section on FacebookTwitter (@NYTopinion) and Instagram.

A version of this article appears in print on , on Page A23 of the New York edition with the headline: Treat China Like the Danger It Is.

Germany detains Bundeswehr employee for spying for Iran

January 15, 2019

German prosecutors say an army employee has been detained on suspicion of spying for Iranian intelligence. The German-Afghan citizen worked as a translator for the German military.

    
German troops Afghanistan (picture-alliance/dpa)

German federal prosecutors on Tuesday said an employee of the German army had been held on suspicion of spying for the Iranian intelligence service.

The prosecutor’s office said in a statement that a 50-year-old German-Afghan citizen, whose name was given as Abdul Hamid S., was a language expert and cultural adviser for the German armed forces.

“Abdul Hamid S. is strongly suspected of having worked for a foreign intelligence agency,” the intelligence officer said.

The German news magazine Der Spiegel reported that the suspect had access to sensitive information, including possible details of troop deployments in Afghanistan. It said he had worked for Iranian secret services for several years.

Germany’s military the Bundeswehr often uses native interpreters to accompany troops on patrol in Afghanistan. The man was reportedly arrested in Germany’s Rhineland region.

Read more: Denmark foils ‘Iranian intelligence agency’ attack

Intelligence officials in Germany and Europe have raised fears about what they see as increasing espionage by Iran. Germany’s domestic intelligence agency in July reported that Iran had upped its cyber warfare capabilities and posed a danger for German companies.

German has past examples of uncovering spies working for foreign agencies that made for big headlines.

In 2016, former German intelligence officer Markus Reichel was convicted of spying for both the CIA and Russian intelligence.

In 2013, Germany jailed a married couple who it found had spied for the Russian secret services for more than 20 years. The pair had been planted in the former West Germany from 1988 by the Soviet Union’s KGB and later its successor, the SVR.

rc/jil (dpa, Reuters, AP)

https://www.dw.com/en/germany-detains-bundeswehr-employee-for-spying-for-iran/a-47090621

Huawei CEO Says Company Doesn’t Spy for China, Praises Trump in Charm Offensive

January 15, 2019

Image result for Xi Jinping and Huawei founder Ren Zhengfei, photos

Photo: Xi Jinping and Huawei founder Ren Zhengfei

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Ren Zhengfei, founder of the Chinese tech giant, says no law forces companies in China to install ‘mandatory back doors’

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Huawei founder and CEO Ren Zhengfei in Shenzhen, China, on Tuesday.
Huawei founder and CEO Ren Zhengfei in Shenzhen, China, on Tuesday. PHOTO: THEODORE KAYE FOR THE WALL STREET JOURNAL
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SHENZHEN, China—The founder and CEO of Huawei Technologies Co. said his company has never spied for the Chinese government—and never would—as he made a rare public appearance following the arrest of his daughter in Canada.

“No law requires any company in China to install mandatory back doors,” Ren Zhengfei said Tuesday. “I personally would never harm the interest of my customers and me and my company would not answer to such requests.”

Mr. Ren’s public comments at Huawei’s campus are his first in years and come as the telecom giant faces challenges on multiple fronts. His daughter, Huawei CFO Meng Wanzhou, is fighting extradition to the U.S., where prosecutors accuse her of lying about the company’s business with Iran, Huawei has been blocked from several key markets and last week one of its employees was arrested in Poland and charged with espionage.

Mr. Ren didn’t say what specifically he would do to resist requests from the Chinese government. All companies doing business in China are required by law to hand over customer data to the government in cases that touch on national security. In China, national-security threats are broadly defined and can include speech critical of the Communist Party.

Mr. Ren said he missed his daughter, but was optimistic justice would prevail. Ms. Meng was arrested on Dec. 1 in Vancouver at the request of U.S. authorities. She denies the charges.

Huawei’s reclusive 74-year-old founder, a former army engineer, also praised President Trump as a “great president” and maintained Huawei is owned by its employees. The U.S. has raised concerns about Huawei’s ties to the Chinese state and that its telecom equipment could be used by Beijing to spy.

Mr. Ren’s public appearance comes days after the arrest of a Huawei employee in Poland who was charged with spying on the state on behalf of China. Huawei has fired the employee, Wang Weijing, and said his alleged actions have nothing to do with the company.

The events have rocked China, set back efforts toward a Beijing-Washington trade detente and dealt a direct blow to one of the country’s most successful global corporations. A Chinese court on Monday ordered the death penalty for a Canadian national convicted of drug smuggling, the latest example of how Canada has become caught up in the battle between the U.S. and China following the detention of Ms. Meng.

With 180,000 employees, Huawei is the world’s largest maker of telecommunications equipment, where it competes with Sweden’s Ericsson AB and Finland’s Nokia Corp. in making gear like routers, switches and base stations. It overtook Apple Inc. to become the world’s No. 2 global smartphone vendor, behind Samsung Electronics Co. , through the third quarter of last year.

Ren’s Rise

Huawei founder Ren Zhengfei rose from an army engineer to lead one of China’s tech champions.

1944 — Mr. Ren is born in a rural village in China’s Guizhou Province.
1963 — He attends the Chongqing Institute of Civil Engineering and Architecture.
1974 — Mr. Ren joins the People’s Liberation Army’s engineering corps. He is sent to Liaoyang near the North Korean border to help build a synthetic fiber factory.
1982 — Mr. Ren attends the 12th National Congress of the Chinese Communist Party as a reward for his contributions in the army.
1983 — He retires from the military after the engineering corps is disbanded and later joins a Shenzhen state-owned oil corporation.
1087 — Mr. Ren establishes Huawei in Shenzhen with 21,000 yuan (about $5,600 at the time).
2001 — Huawei establishes its U.S. subsidiary Futurewei in Plano, Texas.
Huawei discloses Mr. Ren’s daughter Meng Wanzhou had been appointed as CFO and to the board of directors.
2012 — The U.S. House Permanent Select Committee on Intelligence releases a report that says Huawei is a national security threat and recommends U.S. companies not use its equipment.
Mr. Ren attends the World Economic Forum at Davos and rebuts charges Huawei is a national security threat.
2018 — AT&T backs out of a deal to sell Huawei smartphones in the U.S. The American campaign against Huawei escalates.
2018 — Ms. Meng is arrested in Canada on U.S. charges that she lied to banks about Huawei’s business dealings in Iran.

Source: staff reports

In addition to hitting back against claims that Huawei is national-security threat, Mr. Ren reiterated that Huawei is purely owned by its employees, with its shareholders numbering nearly 97,000, and said no outside entity holds any stake in the company.

“There is no external institution that owns our shares—even 1 cent,” Mr. Ren said.

Speaking with reporters under a green and gold chandelier in an opulent meeting room on Huawei’s Shenzhen campus, Mr. Ren also praised President Trump’s tax-cutting agenda, but said a trade war between the U.S. and China would harm the world.

“In the information society, interdependence between one another is very significant,” he said. “That interdependence is what’s driving human progress forward more rapidly.”

Huawei has been dogged for years by allegations that is a security threat. It has been effectively locked out of the U.S. telecom market since a 2012 Congressional report raised concerns that its gear could be used by Beijing to spy on Americans, which Huawei has forcefully denied.

Spy chiefs from Australia to the U.K. have signaled concern that China could use Huawei for espionage, though no evidence of back doors or hacks related to the company has been produced. The U.S. has been pressing allies to shun Huawei gear in advance of an expected rollout of next-generation 5G networks, expected to allow faster connection speeds and a fuel a boom in connected devices, from autonomous vehicles to remote-controlled medical equipment.

Australia and New Zealand, key U.S. allies, have banned Huawei from their 5G network upgrades. Japan has excluded it from government purchasing while the U.K. and Canada have said they are reviewing their telecom supply chains.

Mr. Ren spoke with reporters under a green and gold chandelier in an opulent meeting room on Huawei’s Shenzhen campus.
Mr. Ren spoke with reporters under a green and gold chandelier in an opulent meeting room on Huawei’s Shenzhen campus. PHOTO: QILAI SHEN/BLOOMBERG NEWS
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Despite the barriers, Huawei said last month it expected to report that 2018 revenue rose 21% to $108.5 billion. Mr. Ren said the company has already signed 30 5G commercial contracts and shipped 25,000 5G base stations out of China.

“We’re not a public company. We don’t care so much about beautiful balance sheets,” said Mr. Ren, who alternated between reading from prepared remarks and casually holding forth on the company’s history and vision. “As long as we can keep our employees fed I believe there will be a future for Huawei.”

Much of the suspicion around Huawei has centered on Mr. Ren himself—in particular his years spent in the Chinese military before founding the telecom giant. In their 2012 report, Congressional investigators said Huawei refused to describe Mr. Ren’s full military background, and that they “struggled to get answers” about whether his military ties played any role in the company’s development.

Mr. Ren maintains a tight grip on the company, but avoids the spotlight—rarely giving interviews and delegating public appearances to deputies. One of his last major public addresses was in 2015 at the World Economic Forum in Davos, where he discussed his military days and Huawei’s origins and rebutted spying charges.

On Tuesday Mr. Ren returned to the subject of his military experience, explaining that as an engineer he helped establish a synthetic-textile factory in the northeastern city of Liaoyang. Mr. Ren left the military in 1983, four years before founding Huawei.

He also addressed another sticking point in his background: his attendance at a 1982 National Congress of the Chinese Communist Party. He said he was invited as a reward for a widely publicized device he invented while in the military.

“Today, I still love my country,” Mr. Ren said. “I support the Communist Party of China, but I will never do anything to harm any other nation.”

Write to Dan Strumpf at daniel.strumpf@wsj.com and Josh Chin at josh.chin@wsj.com

https://www.wsj.com/articles/huawei-ceo-hits-back-at-claims-company-spies-for-china-11547542616

Huawei founder breaks silence to dismiss claims of spying by company

January 15, 2019

Ren Zhengfei speaks out after arrest of his daughter in Canada Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Save Save to myFT

By Yuan Yang in Shenzhen

Huawei founder Ren Zhengfei hit back at claims that his company is used by the Chinese government for spying, using a rare meeting with the media following the arrest of his daughter from jail in Canada.

Image result for Xi Jinping and Huawei founder Ren Zhengfei, photos

Photo: Xi Jinping and Huawei founder Ren Zhengfei

Mr Ren was speaking to journalists in Shenzhen on Tuesday after Meng Wanzhou, his daughter and Huawei’s chief financial officer, was arrested in Vancouver in December. Ms Meng faces extradition to the US on allegations that Huawei sold US-made equipment to Iran.

The Huawei Case Just Got (More) Political

Meng Wanzhou

The reclusive former Chinese army officer said Huawei had “never received any request from any government to provide improper information” and missed his daughter “very much”. “I still love my country, I support the Communist party, but I will never do anything to harm any country in the world,” he said, echoing earlier dismissals of allegations that Huawei was involved in espionage.

Image result for Huawei, 5G, photos

Ms Meng’s detention came against a backdrop of heightened international concern over Huawei’s alleged links to the Chinese government, and amid broader US angst over China’s rising technology capabilities. Several countries, including the UK, Australia and the US, have tightened oversight of the company and in some cases blocked its involvement in building the 5G next generation telecoms networks.

Last week, a Huawei executive was arrested in Poland on allegations of spying for China’s secret service. Huawei subsequently fired the employee. In an overture to Donald Trump, who has said he would be willing to intervene in Ms Meng’s case to secure a trade deal with China, Mr Ren described the US president as “great”, and noted that his tax cuts had been good for American industry.

“The message to the US I want to communicate is: collaboration and shared success. In our world of high tech, it’s increasingly impossible for any single company or country to sustain or to support the world’s needs,” Mr Ren said.

Recommended Huawei under fire In response to fears over the security of Huawei’s equipment

Mr Ren said “no law in China requires any company to install mandatory backdoors”. He added that the company has had “no serious security incident”. Mr Ren also downplayed the risk Huawei faced from being blocked from the rollout of 5G by some countries.

“It’s always been the case, you can’t work with everyone . . . we’ll shift our focus to better serve countries that welcome Huawei,” he said, adding that the company had 30 contracts globally to build 5G networks. Seeking to shed some light on Huawei’s opaque ownership, Mr Ren said he owned 1.14 per cent of the company’s shares.

Ms Meng’s arrest also sparked a sharp backlash from Beijing. Chinese officials have since detained at least two Canadian citizens and just this week a Canadian man convicted of drug smuggling was sentenced to death by a Chinese court, overturning a previous 15-year sentence. Mr Ren maintained that the alleged Chinese hacking of the African Union headquarters, revealed last year, had “nothing to do with Huawei”.

https://www.ft.com/content/d37edb56-1882-11e9-9e64-d150b3105d21

Related:

Image result for CIA, seal, floor, pictures

But Huawei, which has been specially designated as a “national champion,” has an even more important assignment from the Communist Party than simply listening in on phone conversations, critics say.

China's J-20 stealth fighter is only the world’s second operational stealth fighter, giving Beijing a distinct edge in the Asian arms race. Picture: People's Daily

China’s J-20 stealth fighter Picture: People’s Daily

Why Trump’s America is rethinking engagement with China

January 15, 2019

The more aggressive US approach is part of a strategic shift that goes well beyond the trade war

Image result for china, map, flag

By Demetri Sevastopulo in Washington

When Donald Trump sat down to dinner with Xi Jinping last month at the G20 summit in Buenos Aires, the US president did not know about the diplomatic bomb that was about to explode. At about the same time, police in Canada arrested a Chinese telecoms executive after an extradition request from Washington.

The detention of Meng Wanzhou, chief financial officer of Huawei, was extraordinary because the US justice department had not told the White House about the warrant to arrest the daughter of the founder of the telecoms group, one of China’s most successful and influential companies.

Donald Trump and Xi Jinping at a dinner meeting on Dec. 1 Photographer: Pablo Martinez Monsivais/AP

But the importance of the arrest went well beyond the immediate circumstances. It is the most striking symbol yet of the dramatic deterioration in relations between China and a US that is increasingly suspicious of Beijing’s motives and actions. Reinforcing the rupture, the US several weeks later charged two Chinese nationals with conducting a global hacking campaign to assist the Chinese intelligence services.

While the trade war has received the most attention, the economic tussle is part of a much more profound shift in the US that has seen Washington reverse important elements of the strategy of engaging with its Asian rival that was first introduced more than 40 years ago by Richard Nixon.

East meets West.  Photographer: Bloomberg/Bloomberg

Support for this change in approach has a broad base in the US. Officials across the US government have become significantly more hawkish towards China— over everything from human rights, politics and business to national security. At the same time, US companies and academics who once acted as a buffer against the harshest views are now far less sanguine.

“China has for some time underestimated the extent to which the mood in the US has shifted,” says Hank Paulson, the former US Treasury secretary. “

The attitude that they would implement reforms at a timetable that made sense to them missed the fact that this was no longer sustainable if they wanted the US to keep its markets open to them. And the US business community now supports a harder line.”

Hank Paulson at the Bloomberg New Economy Forum in Singapore on Nov. 7.
Photographer: Justin Chin/Bloomberg

 

While Mr Trump likes to describe China’s president Mr Xi as his friend, his White House signalled a major shift away from China when it labelled the nation a “revisionist power” in its December 2017 National Security Strategy.

In October, Mike Pence, vice-president, hammered home that message in a speech at the Hudson Institute that charged China with a litany of offences — from political repression at home to coercive diplomacy abroad. The rhetoric has been matched with action.

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U.S. Vice President Mike Pence at the Hudson Institute,  October 4, 2018

In the South China Sea, the US Navy is now conducting frequent freedom of navigation operations to push back against Chinese sovereignty claims over disputed reefs and islands. Meanwhile, the justice department created a “China initiative” task force to crack down on espionage.

While Ms Meng was arrested for allegedly helping her telecoms company violate US sanctions on Iran, US officials have long worried that Huawei could help China spy on rivals.

Those concerns escalated last year, culminating in the US convincing its Five Eyes intelligence-sharing partners — Canada, Australia, New Zealand and Britain — that they needed to take a much tougher line on Huawei, according to one person familiar with the situation.

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While concerns about China have risen in parallel with its emergence as a rival to the US, Washington has concluded that it has underestimated the speed at which it has caught up with the US in terms of technology — particularly technology with military applications.

Dennis Wilder, former head of China analysis at the CIA, says that as the US war on terror has receded in urgency, intelligence and national security officials have now woken up to the fact that China was using a “whole-of-society” approach to collecting intelligence, and that the openness of the west to Chinese scientists, students and business people had become an “Achilles heel”.

“The Chinese intelligence operations were astoundingly successful in providing the military and other state-owned enterprises with the secrets to enable technological leaps that could only be possible with the theft of advanced critical technology from the US, Japan and Europe,” Mr Wilder says.

Mr Trump and his trade war have done a lot to change the mood but many experts say China would have faced a harsher climate regardless of whether he had won the 2016 election. One of the few areas where Democrats and Republicans are united is over the need to adopt a tougher stance towards Beijing.

Lindsey Ford, a former Pentagon official under Barack Obama, says US military officials started to become much more concerned about China in the second half of his administration, when it appeared that Mr Xi was abandoning the “hide and bide” low-profile approach espoused by former leader Deng Xiaoping.

This was most striking in the rapid land reclamation in the South China Sea, where it installed weapons systems on some islands despite Mr Xi having pledged to Mr Obama in 2015 that China had “no intention to militarise” them.

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U.S. President Donald Trump with his guest Xi Jinping at Mar-a-Lago, April 2017

Ms Ford says the South China Sea activity was “the clearest signal that the game seemed to have shifted and that China’s own calculations about how much risk it was willing to accept . . . was no longer the same”.

At the same time that its navy has become more assertive, China has developed weapons-related technologies at a much faster pace than many US analysts once thought likely. Underscoring how the gap between the US and China has shrunk, General Paul Selva, vice-chairman of the joint chiefs of staff, warned in June that “if we sit back and don’t react, we will lose our technological superiority in 2020”.

The Pentagon is also concerned about the vulnerability of its military supply chains because of components made in China. Washington is raising red flags about activities aimed at stealing US technology — whether via Chinese nationals working in American university labs or cyber espionage.

One person familiar with the situation says US officials realised how much more vigilant they needed to become when they discovered just how much similarity there was between the Chinese J-20 stealth fighter jet and the American F-35. To tackle the threat, the US has significantly stepped up the vetting of Chinese nationals who apply to study sensitive subjects in America.

Christopher Wray, FBI director, last year warned Congress that US universities were naive about the potential for Chinese nationals to collect intelligence on their campuses.

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John Demers, assistant attorney-general for national security at the justice department, says 90% of economic espionage cases against the US in the past seven years have involved China © Bloomberg

John Demers, head of the justice department’s China Initiative, recently told the Senate judiciary committee that 90 per cent of economic espionage cases over the past seven years involved China. When the US charged the hackers in December, it said Beijing had breached a 2015 deal that neither nation would steal intellectual property for commercial advantages.

The US is also concerned about China trying to recruit American spies. In his testimony, Mr Demers said the justice department had an “unprecedented” three cases against former US intelligence officers accused of spying for China. In May, the US charged a former CIA operative named Jerry Lee with illegally possessing secret information.

The CIA believes he provided Beijing with details about its spying operation in China. One person familiar with the situation says his actions dealt a catastrophic blow to the CIA’s network — as many spies were arrested or executed.

Mike Pence, US vice-president, has hammered home the American message that China is a ‘revisionist power’ © AP The US also believes that two suspected Chinese cyber attacks — one in 2015 on the Office of Personnel Management which maintains government employee records, and another later on the Marriott hotel group — were part of an operation designed to help China identify covert US intelligence operatives in the country.

As the US strikes a tougher tone, China is losing constituencies that once helped balance the more hawkish views in security circles. US academics who were seen as friendly to China are becoming warier as Beijing cracks down on human rights — such as the mass detention of Uighurs in Xinjiang, failures to follow through on economic pledges, pressures on US scholars to toe the party line and moves backwards in terms of political reform.

“People I’ve known for decades have given up on China,” says Susan Shirk, chair of the 21st century China Center at the University of California San Diego.

“There’s a widespread view in the academic community that the overreaching China has done both domestically and internationally is hard-baked into the system and that there’s no hope of getting them to adjust their behaviour to our interests and values.”

A turning point that alarmed Washington came in late 2017 when Mr Xi did not name a successor at the Communist party’s 19th congress. He also pledged that China would become a fully modern economy by 2035 — picking a date that some saw as another sign that he intended to remain in power following his second five-year term. In a further sign of centralising power, the National People’s Congress approved last March a change in the constitution to remove the two-term limit on the presidency.

More recently, Mr Xi reignited concerns that he was moving backwards on promised reforms when he used a speech commemorating China’s economic opening 40 years ago to stress the primacy of the party. “No one is in a position to dictate to the Chinese people what should or should not be done,” he said in December. One senior US administration official says China has misread the change of mood in the US, adding that “even more disturbingly, they just don’t care”.

The official says the fact that Mr Xi’s speech had focused on “the growing role of the Communist party in every aspect of economic, political and personal life in China” suggested that Beijing was not taking the US concerns seriously.

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F-35B stealth fighter

“I don’t see signs of a course shift by the top leadership,” says the official. “I never thought China would aspire to be a Jeffersonian democracy or espouse the western liberal order,” says Mr Paulson.

“I always thought the Communist party would be paramount, but I didn’t see the clock being turned back.” Ms Shirk says a major reason for the growing US backlash is that the business community has “really soured on China”. “Right now, it is totally out of balance because the national security concerns are completely dominating the process and the business community isn’t resisting,” she says.

Ryan Hass, a former White House official now at the Brookings Institution, says many US companies had “promise fatigue”. While many did not agree with the approach Mr Trump was taking on trade, they wanted him to be tough on China on market access and were “trying to use Trump’s instincts for disruption [to] their advantage”.

“The Chinese leadership has promised for years that reform was around the bend and then you see things like President Xi’s speech where he emphasised the central role of the party,” says Mr Hass. “Members of the business community see the Trump administration as an opportunity for the US to rattle the cage in Beijing.”

Related image

Former state department official Susan Thornton says the wider relationship with China is being ignored inside the administration © Bloomberg

Susan Thornton, the top Asia official at the state department until last summer, says many of the grievances had existed for years but Mr Trump was giving them impetus because there was no one inside his administration who was weighing those concerns against the broader China relationship.

“There is no one imposing discipline right now. Everybody has now got a hunting licence. It is open season on China,” says Ms Thornton. One reason the Chinese may have been blindsided by the changing US approach is that Mr Trump rarely raises security issues.

“Trump never brings up any of that stuff in meetings with the Chinese,” she says. “He won’t bring up Taiwan or the South China Sea, or nuclear missiles or arms control, or espionage.”

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The new era of US-China decoupling Just before New Year,

Mr Trump tweeted that he had spoken to his Chinese counterpart and that there had been “big progress” on trade.

But the landscape has changed so dramatically that most China experts believe the relationship will become much more rocky even if there is an agreement on trade. “I am cautiously optimistic that President Trump will be able to declare a trade victory and end the tariff war,” says Mr Paulson.

“But there will still be so many intractable economic and security issues that this will continue to be a very fraught relationship.”

https://www.ft.com/content/f882b7c2-1339-11e9-a581-4ff78404524e

Huawei Spy Case Sets Up a New Warsaw Pact

January 14, 2019

With many developed markets effectively closed, and China already in the bag, the company is looking elsewhere.

East meets West.  Photographer: Bloomberg/Bloomberg

Poland just handed the U.S. a gift in its case against Chinese telecom-equipment giant Huawei Technologies Co.

Yet this development won’t halt Huawei’s global advance. Rather it will deepen the global split between those who trust the company and those who don’t.

On Friday, Polish authorities said they arrested a Huawei employee and a former Polish security agent, accusing both of spying for China. Authorities also pointed out that the case was against two individuals, not the company itself.

Huawei promptly fired the staff member and has been consistent in its denial of espionage allegations.

U.S. lawmakers are among those making the point that even if Huawei doesn’t want to engage in espionage, it operates at the behest of the Chinese government. Huawei gets 51 percent of its revenue from China, where telcos are government-controlled.

The deepening cleavage between Huawei proponents and detractors means the company will likely strengthen its focus on the business at hand – selling smartphones and communications equipment.

With many developed markets effectively closed to Huawei, and China already in the bag, the company is looking elsewhere. Developing Europe, Africa and Asia are lush pastures.

The Middle East and Africa, for example, are home to 1.3 billion mobile connections – almost equal to the population of China. Latin America and Eastern Europe combined provide the same amount, according to data compiled by Bloomberg Intelligence.

The Chinese company’s smartphones have surpassed 15 percent share in Saudi Arabia, the United Arab Emirates, Mexico, Colombia and South Africa, Huawei said in its 2017 annual report. Ethiopia, Nigeria, Kenya and Namibia are among nations on its client list for telecommunications equipment, while Middle East markets account for five of at least 22 commercial 5G contracts Huawei has signed to date.

Some of these are places that could benefit from Chinese foreign aid, or at the very least might be unable to resist it. Markets, that if not for Beijing’s generosity, might not have been able to afford miles of new highways, big expensive shipping ports, or high-speed communications networks.

With Huawei determined to push forward alongside Beijing’s broader globalization effort, it’s likely this Polish case will further split the world into Chinese and U.S. hemispheres. This could leave some in the middle left to decide on which side they want to live.

And it makes Warsaw once again the unwilling center of a global divide.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

https://www.bloomberg.com/opinion/articles/2019-01-14/rift-from-poland-arrest-supports-huawei-s-emerging-markets-push

Amid Growing Global Scrutiny of Huawei, Poland Makes An Arrest

January 11, 2019

“Poland is Huawei’s base camp in the region.”

Detention follows a U.S. push to dissuade allies around the world from using Huawei gear

The Huawei logo
Officers of Poland’s counterintelligence agency this week searched the local Huawei office. Above, a Huawei ad in Warsaw. PHOTO: JAAP ARRIENS/NURPHOTO/ZUMA PRESS
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Polish authorities detained and charged a local sales director of Huawei Technologies Co., a Chinese national, with conducting high-level espionage on behalf of China, amid widening global scrutiny by Washington and its allies of the technology giant.

The arrest is another bombshell for Huawei, following the early December detention of the company’s chief financial officer in Canada, at the U.S.’s request, on charges related to Iranian sanctions. Unlike those allegations, the nature of the charges in Poland speak directly to suspicions by Washington and other Western governments that Huawei could be used by Beijing as a global spying tool.

For years, Washington has labeled Huawei a national security threat, saying it could be forced by China to use its knowledge of the telecommunications equipment it sells around the world to tap into, or disable, foreign communications networks. Huawei has denied that forcefully through the years. Part of its defense has been that it hadn’t been implicated in overseas spying allegations.

Officers of Poland’s counterintelligence agency this week searched the local Huawei office, leaving with documents and electronic data, as well as the home of the Chinese national, said Stanislaw Zaryn, a spokesman for Poland’s security coordination office. The Chinese individual wasn’t named, but was identified by Polish state television as a graduate of one of China’s top intelligence schools, as well as a former employee of the Chinese consulate in the port city of Gdansk.

People familiar with the matter identified him as Weijing Wang. He is known in Poland as Stanislaw Wang, according to these people and a public LinkedIn page that matches his biographical details.

A person who knew Mr. Wang described him as a well-known figure in local business circles, often spotted at events sponsored by Huawei in Poland. “He spoke great Polish,” this person said. “He was a really well-known Chinese guy in Poland and was always around.”

Before taking over as a Huawei sales director in the country, Mr. Wang was Huawei’s public-relations director in the country, according to this person and the LinkedIn page.

Why China's Huawei Matters

Why China’s Huawei Matters
Chinese telecom giant Huawei has long caused tension between Washington and Beijing. WSJ’s Shelby Holliday explains what the company does and why it’s significant. (Photo: Aly Song/Reuters)

In Poland, Mr. Wang worked in Huawei’s enterprise division, handling sales of information-technology and communications equipment to government customers, according to people familiar with the matter. That business area sometimes involves a higher level of scrutiny than others, given that the buyers are in the government, one of these people said.

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As part of the same investigation, Poland’s Internal Security Agency also detained one of its own former officials, a Polish citizen who was deputy head of the agency’s IT security department. That person, who wasn’t publicly identified, had knowledge of the inner workings of the Polish government’s encrypted communications network, which is used by its top officeholders, the state broadcaster said.

Both men have been charged with espionage, according to Mr. Zaryn. The crime carries up to 10 years’ imprisonment. They have pleaded not guilty.

“Huawei is aware of the situation, and we are looking into it,” a spokesman for the company said. Huawei said it complies with laws and regulations in the countries where it operates, and requires employees to do the same. A Chinese Foreign Ministry statement said Beijing “is highly concerned about it. We require relevant countries to handle relevant cases fairly and in accordance with law,” the statement said.

Polish counterintelligence officers also searched the offices of French telecommunications carrier Orange SA, said Mr. Zaryn.

Orange said it was aware of the search of its offices in Poland. In a statement, the company’s local unit said it had handed over belongings of one of its employees. “We have no knowledge if there is any relation of these actions to his professional duties,” it said. Orange said it was cooperating with the probe.

The Polish national who was arrested had previously worked for Orange, according to state-owned television. Mr. Zaryn declined to discuss the personal details of the Polish citizen, but said he was a veteran of the country’s intelligence and law-enforcement agencies who had held director-level positions in several.

 

“He was in many different institutions,” he said. That included the police and Poland’s secret services. The individuals were detained on suspicion of espionage earlier this week. A judge has ordered them detained for three months, Mr. Zaryn said.

Mr. Zaryn said Poland acted alone in the probe. “I do not think there was any international cooperation in this investigation.”

Last month, Canadian authorities, at the behest of U.S. officials, arrested Huawei CFO Meng Wanzhou on charges she lied to banks about the company’s business in Iran. Ms. Meng denies the charges.

In 2012, a U.S. congressional report labeled Huawei a national security threat, a finding the company said was politically motivated. Huawei has long denied that it is a spying threat, saying that it is owned by its employees and operates independently of Beijing.

The congressional report all but shut the telecom-gear and smartphone maker out of the U.S. market. Still, it flourished overseas, quickly eclipsing Western rivals like Nokia Corp.and Ericsson AB as the world’s biggest seller of telecom gear—equipment like cell towers and switches that enable mobile networks.

For much of last year, American officials redoubled efforts to limit sales of Huawei gear in the U.S. Some small American carriers, particularly rural ones, use the gear, partly because it is cheap.

Washington also started more recently to press allies aggressively to avoid using Huawei gear. Australia has also been out front raising public concern about Huawei equipment. A number of countries, including Australia, the U.K., Germany, New Zealand and Japan have agreed to review their telecom-gear supply chain, or have specifically restricted the sale of Chinese equipment, in the wake of the new scrutiny.

The push from Washington comes as many carriers around the world are starting to roll out 5G, the latest generation of mobile-telecom technology that promises faster connections and is envisioned to help enable internet connections for everything from factories to toothbrushes.

Last month, Germany’s Deutsche Telekom AG announced the launch of the country’s first fully functional 5G network using equipment from Huawei.

Poland has been Huawei’s top market in Central and Eastern Europe, and its ambitions to roll out 5G equipment in the region have gone farther in Poland than most places outside China. Last year, the government named the company an official partner of its 5G strategy. In September, Huawei and Orange’s local unit began installing the first test antennas of a 5G network the two companies hoped to launch together. In November, the prime minister’s office said Huawei would build a science-and-technology center in the capital. It already runs a research-and-development center there.

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“Poland is Huawei’s base camp in the region,” said Mo Jia, an analyst at Canalys. “And this market is very critical to Huawei’s smartphone business.”

Counterintelligence agencies elsewhere in the region, however, have issued unusually public warnings against Huawei for years, part of broader international scrutiny on cyber vulnerabilities in what is the North Atlantic Treaty Organization’s eastern flank, a front line for cyberattacks against U.S. allies. As far back as 2013, the Czech Security Information Service, a domestic security agency, suggested excluding Huawei from public tenders and said the company might be installing backdoors on its equipment to allow outsiders to log into government computers from elsewhere.

Besides telecom equipment, Huawei is also the world’s No. 2 smartphone maker, behind South Korea’s Samsung Electronics Co. , and has been a top player in Poland’s market for the devices. Until as recently as the first quarter of 2018, it was the top seller of smartphones there, though has more recently been edged out by Samsung, according to research firm IDC.

Hope for the best and prepare for the worst.   Photographer: JUNG YEON-JE/AFP

Write to Drew Hinshaw at drew.hinshaw@wsj.com and Dan Strumpf at daniel.strumpf@wsj.com