Wednesday, May 15, 2019

inside China today

 
1)     Huawei chairman Liang Hua (shown) (stated in very shrewd worm-tongue mode):  ”Where we are operating globally we are committed to be compliant with the locally applicable laws and regulations in that country.  There are no Chinese laws requiring companies to collect intelligence from a foreign government or implant back doors for the government."   https://www.zerohedge.com/news/2019-05-14/huawei-offers-sign-no-spy-pacts-governments-uk-embarks-5g
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-Beijing’s Central Business District.  The Trump administration accuses China of forcing foreign companies to hand over technological secrets.    Thomas Peter/Reuters
2)   3-4-19    Approval is essentially automatic in the 2,975-member congress, which is tightly controlled by the Communist Party, although there is some room for last-minute amendments.  https://www.nytimes.com/2019/03/04/business/china-foreign-investment.html
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3)     FBI Director Christopher Wray clarified that while there was no alleged illegal conduct by the Chinese Communist Party, it is public record that, under China’s Cybersecurity Law, Huawei and other Chinese companies must furnish Chinese government access to its data, undermining U.S. national security.  This statement encapsulates a new broadly held view of U.S. policymakers:  all Chinese companies are controlled by the Party.
  Western governments should not automatically conclude that Chinese companies are acting as agents of the Party because such firms are ultimately still in charge of their own business decisions.  But the lines have been dangerously blurred. Chinese domestic laws and administrative guidelines, as well as unspoken regulations and internal party committees, make it quite difficult to distinguish between what is private and what is state-owned.  https://foreignpolicy.com/2019/02/07/we-cant-tell-if-chinese-firms-work-for-the-party/
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4)   "Tech entrepreneurs are seeking to burnish their Party credentials, gain brownie points," said Duncan Clark, the chairman of Beijing-based investment advisory firm BDA….But now the Party "is more directly controlling the fate of Chinese tech ventures.  Falling foul of the Party is costly.”…
  The difference in China, observers say, is that the Party has virtually unchecked power.  It can deliver heavy blows to big tech companies with little warning.  Tencent, the world's biggest gaming company, took a hit to its profits and lost billions in market value after Chinese regulators stopped approving licenses to make money from new online games.  Tencent attributed the problem to a bureaucratic reshuffle in Beijing, and government statements expressed concern that video games are causing addiction and bad eyesight among young people….
  Figuring out "how to integrate the Party into corporate management and let it actually play a leading role — these are major issues for non-public companies in their Party building," Ofo CEO Dai Wei told Xinhua.  The startup's big investors include e-commerce company Alibaba (BABA).  The committees also often hold monthly sessions for employees' Party education….
  "To the extent these companies are viewed as arms of the Chinese government, that does not play well internationally," Paul Triolo, head of global tech policy at Eurasia Group, said.    https://www.cnn.com/2018/11/02/tech/china-tech-communist-party/index.html
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5)   8-6-18  Unlike America and many other nations, where multiple and co-equal branches of government can be at odds with one another, all portions of China's government are ultimately subject and accountable to the Communist Party.  As a result there's often less transparency in China's rule-making process.  Companies can be caught off guard by regulations, and "there is no independent judiciary," as D. Firestein, founding executive director of the China Public Policy Center at the University of Texas, bluntly put it….
  Chinese regulations often require foreign companies to partner with a state-run Chinese firm if they're going to open shop there.  That's happened to GM, Volkswagen, Qualcomm, and Intel, for instance.  And that intrinsically involves sharing intellectual property and technology with the Chinese partner.  There's good old-fashioned copyright violations:  Chinese companies brazenly copy patents, brands, logos and such. (Nor, as mentioned above, can foreign companies always rely on Chinese courts to shutdown this behavior.)  Finally, there's outright commercial espionage:  Chinese actors physically breaking in or hacking into foreign companies — either on foreign soil or within China--and making off with trade secrets.  https://theweek.com/articles/788219/what-like-business-china
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6)   8-24-17   The presence of Party units has long been a fact of doing business in China where Party organizations exist in nearly 70 percent of some 1.86 million privately owned companies, the official China Daily reported last month.
Companies in China, including foreign firms, are required by law to establish a Party organization, a rule that had long been regarded by many executives as more symbolic than anything to worry about.
  One senior executive whose company was represented at the meeting told Reuters some companies were under “political pressure” to revise the terms of their joint ventures with state-owned partners to allow the Party final say over business operations and investment decisions.  He said the company’s joint venture partner was pushing to amend their agreement to include language mandating party personnel be “brought into the business management organization”, that “Party organization overhead expenses shall be included in the company budget”, and that posts of board chairman and Party secretary be held by the same person….
  Of the 13 executives, all from different foreign companies, Reuters interviewed for this story, 8 expressed concerns about increasing demands from the Party or noted increased activity from Party groups.  They all spoke on the condition that they and their companies not be identified given the sensitivity of discussing relations with the Party.  Just two of 20 major multinationals queried by Reuters - Samsung Electronics Co Ltd (005930.KS) and Nokia NOKA.HE - confirmed having Party units in their China operations.  Most did not respond to questions on the subject….While plans to expand Party organizations in foreign companies have been a quiet concern for several decades, only under Xi has “some real muscle” been put behind the goal, said
Jude Blanchette, who studies the CC Party at the Conference Board’s China Center for Economics and Business in Beijing.
https://www.reuters.com/article/us-china-congress-companies/exclusive-in-china-the-partys-push-for-influence-inside-foreign-firms-stirs-fears-idUSKCN1B40JU
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7)    4-7-2016    Mao Zedong frequently quoted Three Kingdoms in his speeches. In 1943 he encouraged his Communist comrades to come together to defeat the Kuomintang, saying “three cobblers with their wits combined equal Zhuge Liang the master mind.”  This common idiom alludes to the famous Three Kingdoms military strategist, Zhuge Liang.  Years later, Deng Xiaoping called Cao Cao--another Three Kingdoms character--a “first-class politician” who was able to “unify China” under one mission.

  Chinese President/CCP Chairman Xi Jinping has also alluded to Three Kingdoms Period (220-280 A.D.) in his professional career.  When Xi was sent to the countryside town of Liangjiahe during the Cultural Revolution in 1968, he often shared stories with his colleagues about classic Chinese novels like Three Kingdoms as they slept in a lice-infested cave.  In a November 2015 speech in Singapore, Xi said that the characters from classics such as Three Kingdoms and Water Margin demonstrate the core values of the Chinese people:  loyalty, humility and determination….
  The main villain of the Three Kingdoms is Cao Cao, a ruthless leader who used alliances to turn neighboring states into vassals and routinely broke those alliances as soon as he saw an opening to strike.  Cao Cao’s famous quote in the story is “I would rather betray the whole world then have the world betray me.”  Likewise China uses its economic influence to coerce weaker states into submission.  It builds infrastructure in Latin America and Africa but rarely ever teaches the local workers how to maintain it, creating a system of dependence.  In return China demands that these countries give up their natural resources to China for years or even decades.   
       -Leland Lazarus is an M.A. candidate at the Fletcher School, Tufts University



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