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Using thine enemy’s sword against him: Right Wing Think-tank warns Washington of potential new China threat
During a written deposition to the US-China Economic and Security Review Commission Alan Wong, a former official with the US Department of State, laid the claim that Beijing has been engaged in a concerted effort to attract high technology firms to China for non economic purposes.
In his deposition Wong stated his belief that Chinese authorities were using the promise of priority support for their infrastructure needs as a ‘sweetener’ to convince certain technology companies of the merits of doing business through China.
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"In an effort to assure Western companies that power sources and road
access to a given site will be plentiful and well-maintained, Chinese
promoters sometimes let slip that infrastructure in the area will
receive consistent support and priority” |
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Wong’s deposition went on to say that that Beijing’s ‘sweetener’ policy might not simply directed towards attracting investment and foreign expertise to China, but that Beijing appeared to be purposefully targeting such ‘sweeteners’ at companies whose technology could be harvested for military applications.
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“the [Chinese] government wants to attract certain technologies that can be used in the Chinese defense and military industries" |
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Wong also expresses concern over the security of US intellectual property, particularly that concerning items of high technology, being electronically transmitted into or out of China. His deposition cited Beijing’s.
Under national law, companies operating in China must make the key, or mathematical code used to read encrypted data, available to the state. This allows Beijing to decrypt and read corporate data being transmitted between China and the outside world, some of which might be highly confidential or have potential economic and military benefits for China.
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"My assumption is anything you put in there [China], the government can have" |
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Chinese stance on encryption keys has long been of concern to foreign companies that operate in China. In a statement that is unrelated to unrelated the current case, Washington legal expert companies David Addis an Attorney with the Washington based legal firm Covington & Burling earlier warned that the Chinese government can demand information about corporate encryption technology, and force foreign companies operating in China to appoint an ‘encryption contact’ who is legally required to provide Beijing with the mathematical key required to ‘unlock’ encrypted data.
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"If you encrypt data in China, you have to provide the Chinese government the ability to access the keys (unlocking codes). |
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The Dilemma
Wong’s deposition represents one of the key dilemmas facing the US over its relationship with China.
On one had, US consumers are increasingly demanding technology, and other, products at costs below that which can be provided in the US, where industrial, commercial and labor laws have pushed up the price of manufacturing, yet on the other side manufacturing goods in China leaves the US open to intellectual property risks and the economic implications of industries relocating to areas where profits are being ploughed back into the local economy rather than the US economy in the form of investments, wages, taxes and the purchase of raw materials.
Currently, America’s sluggish economy is being buoyed up by consumer spending, much of which is centered on imported goods. Where Chinese products to become less attractive, or less available, it would impact on the profit margins of domestic retailers which, in turn, would impact on US stock and job markets.
If America intervenes to protect domestic interest or clamps down on Sino-US investment because of potential national security concerns, it will hurt its consumer sector, but if it does not intervene it not only faces the prospect of its manufacturing and design sectors relocating to China, but also of China eclipsing the it using, both legally and illegally, the very technology that allowed the US to rise to become a both an economic and military superpower.
Bias?
The US-China Economic and Security Review Commission was founded in 2000, and was originally mandated with observing China’s adherence to its WTO obligations. However, in the years since its founding, the US-CERC has evolved into a general purpose think-tank with a broad mandate to advice congress on China’s rise, how it threatens US interests, and how it can be countered.
The US-CERC is widely seen as being anti-Chinese, and the advice that it gives often presents elements of China’s peaceful economic and diplomatic rise as being a hostile gesture designed to unseat the US from its position in the Asia Pacific region.
Advice given by the US-CERC now stretches well beyond its original mandate and the committee frequently advices Washington to take tough action to prevent Chinese expansion even when China is growing through legitimate and peaceful means.
Alan Wong now works for computer chip manufacturer NVIDIA and stated, during his deposition, that he was not acting on behalf of his employer when providing testimony for the committee.
Let's not forget that China also requires certain amounts of technology
transfers from those wishing to invest or engage in "joint ventures" with
the PRC.
Several companies in the US have been censured for providing "sensitive" technology to the Chinese in return for their being able to profit on China's growing market.
Without those tech transfers much of China's current technological capabilities would either be non-existent or at least further behind than what they are.
Wasn't it Boeing that was recently accused of providing "sensitive" technology to China that contributed to its space program? I believe they were also fined by the US government for that.
Here's an interesting article.
http://bernie.house .gov/documents/articles/20030102180551.asp
I linked a similar article to my name that I have posted on my blog.
Visit me @ http://thehorsesmouth.blog-city.com/read/1218625.htm
Oh yes, need I mention that there are no such things as "private" ventures
when it involves such technology in China?
They may be private companies doing business with China, but the companies in China are still controlled by the CCP. Such companies in China have two chains of management. For each civilian position there is also an equal, but higher "party" position. This is to give the appearance of having a "private" corporation rather than one that is ran by the State
Here is a list of top US defense contractors. If you do some googling, you will find that quite a few of them have ties to China and if you ask me, that's scary than hell.
http://www.cdi.org/issues/usmi/complex/top15FY99.html
The US is sacrificing its national security for the almighty dollar.
The recent IBM sale comes to mind....
Visit me @ http://thehorsesmouth.blog-city.com
I'd be interested in your thoughts/info on whether dollar-rich Chinese
firms, including govt-owned firms, may be acquiring US high tech firms to
gain access to technology.
David
That's exactly what I was inferring.
Visit me @ http://thehorsesmouth.blog-city.com
Chinese firms would be stupid if they didn't.
This kind of thing goes on all the time in the US domestic market, particularly with patents. Patents are often the prized item when a firm is broken up and sold for bankruptsy and many larger companies often aquire smaller firms that specialize in a niche technology.
I think what the US is worried about is that firms are being lured in with the promise of good services, but are being targeted deliberately so that China can leach off of them.
ACB
You may find this interesting. It was printed in the Boston Metro
(circulation 260,000) in early April.
Beijing Makes A Move
By J.
Edward Conway
Metro, Boston Edition, April 2005
Recently the legislative branch of China’s government, the National People’s Congress, approved an anti-secession law that gives the military direct authority to act against Taiwan—China’s rogue province—if they declare independence, a move that comes head-to-head with a previous promise from President Bush to defend Taiwan in the event of an attack by China.
However, with our military stretched incredibly thin in the Middle East, paired with the fact that China holds close to $200 billion in U.S. debt over our heads, Bush’s threat is essentially empty. And internationally, China’s growing economy and cheap workforce have allowed it to refuse doing business with any country that recognizes Taiwanese independence, while China has also used its veto power to block any official acknowledgment of the island’s independence by the United Nations.
Though it pains me to say it, it is time for Taiwan to give up on the possibility of independence.
Rather, Taiwan should begin to work with China and bring the communist state into the 21st century. Taiwan, after all, was victim to an authoritative government for several years of its own history, though over time the island evolved into a free, democratic society with a solid economy. Actually, relations between China and Taiwan seemed to be heading in a positive direction until the People’s Congress passed the military authority provision. Plans for more frequent direct airplane flights between the countries, as well as leniency on trade restrictions, were already in place. China had also backed away from its strong “One China” rhetoric that the Taiwanese found so insulting and totalitarian.
Unfortunately, there seems to be evidence that China’s sudden “about-face” is more of a muscle flex toward the United States than a statement about Chinese-Taiwanese relations. Our country has been hoping to sell Taiwan billions of dollars in arms—submarines, submarine-hunting aircraft, and Patriot missiles, and understandably, China (just 125 miles from the island) is not terribly excited. To complicate the issue, the European Union was planning on lifting an arms embargo on China but in light of recent events, Great Britain has sided with the U.S. and is voicing concerns, further alienating Bush and Blair from the majority of the E.U.
The United States needs to back away from Taiwan for the moment and let the country grow on its own. China has been tolerant of Taiwan’s democracy for years and China needs Taiwan much more than Taiwan needs China—the island serves as one of the biggest seaports in the world—giving China every incentive for cooperation and coexistence.
We should be more concerned with out president’s empty threats—we simply don’t have the muscle right now to back up Taiwan, nor should we be burning bridges with allies in Europe that may be able to help alleviate the burden of Middle East reconstruction. If China were to call our bluff, or the E.U. to turn a cold shoulder—or both—the United States would find itself very lonely.
ACB's only counterpoint to this think tank's argument is that China is
expanding through "legitimate and peaceful means." Well that's dandy.
Would we expect them to declare war immediately if they planned to grow to
rule the world? That's just a foolish, academic, and idealistic
defense.
The fact is, allowing all of the intellectual property and expertise that make the US the dominant power it is today to transfer to a closed, totalitarian state is an epic blunder. I am here participating in that transfer because because there is nothing I can do to stop it. However there is absolutely no arguing with the fact that strategically, China is gutting the west, and the west is burrying its head in a mound of cash.
The US should not participate in unrestricted commerce with such regimes, but it has chosen to do so, the tracks are laid, and there is no stopping this train. China will be very careful not to show its hand until it's good and ready.