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China’s Cyber Regulation Bans Information Endangering National Security

The Cyberspace Administration of China (CAC) recently issued the “Regulations on the Ecological Governance of Cyber Information Content,” which states that online content producers must not produce, copy, or publish contents that “endanger national security, leak state secrets, subvert state power, or disrupt national unity.” The regulation is to be implemented starting March 1, 2020.

The regulation encourages Internet content producers to generate, copy, and publish information that “promotes Xi Jinping thoughts, accurately and vividly interpret socialist roads, theories, systems, and culture with Chinese characteristics, and positive contents that “promote socialist core values, excellent moral culture and the spirit of the times, and fully display the Chinese nation’s upward spirit.”

In addition, the regulation states that online content producers must not produce, copy, or publish illegal information that contains contents that “endanger national security, leak state secrets, subvert state power, and disrupt national unity” and information that “damages national honor and interests.” They should take measures to prevent and resist the production, copying, and release of bad messages containing content that “uses exaggerated titles, is seriously inconsistent with the title” and contains information that “hypes scandals, love affairs, and misdeeds.”

Source: Central News Agency, December 20, 2019

China’s Domestic Software Push Is Hard to Implement

Taiwanese online news site Storm recently reported that China’s central government established a three-year plan to replace all foreign hardware and software in the entire government system. Although the Chinese government did not confirm the existence of such a plan, the news was verified via multiple channels. It is relatively easy for the Chinese government to switch entirely to Chinese vendors like Lenovo, which is a preferred supplier today anyway. However, nearly all software in use today in the government system was designed to run on either Microsoft Windows or Apple MacOS. It is expected to be very challenging to replace U.S. made operating systems and the day-to-day software packages that run on top of them. Chinese domestic operating systems attempted this in the past decade or two and failed multiple times. There are hardly any software developers who are willing to develop for the domestic operating systems. Analysts expressed the belief that the new policy will have a major impact on the Chinese IT industry. However, the private sector may not go along with the government to replace IT environments. Even in the hardware space, with strong domestic vendors’ support, it is very hard to overcome the fact that critical components like CPU and memory are almost all made outside of China.

Source: Storm, December 9, 2019

China to Ban Live Webcasts; Three Minutes Minimum Delay Required

The Chinese authorities issued a directive in August last year requiring real name registration for live webcasts. Recently, the Ministry of Culture and Tourism announced a series of regulations including a ban on live web broadcasts and other restrictions upon online video programs. The Notice said, “live Internet broadcasts should take the form of delayed broadcasts, with a minimum delay of three minutes. Performance organizers and online broadcast companies should formulate live broadcast management procedures and emergency contingency plans, and arrange special personnel to conduct real time review of the contents and of Internet users’ comments. Any problem should be dealt with in a timely manner and the video materials should to be kept for at least 60 days for inspection.”

Chinese authorities’ surveillance of online video programs has become increasingly harsh. It is believed that the new media has mostly exposed the major and small incidents that the authorities have attempted to cover up.

The consultation period for the aforementioned Notice will end on December 22. In August last year, six national level agencies in China, including the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of Culture and Tourism, and the State Administration of Radio and Television, issued a “Notice on Strengthening the Management of Webcasting Services.” The notice requires the implementation of the real-name registration system, stringent management of online program anchors, the establishment of a blacklist for anchors, and improvement of the monitoring, review, and disposal of illegal and harmful contents. The notice also requires the online live broadcasters to cooperate with the authorities and provide the necessary documents, materials, and data.

Source: Radio Free Asia, December 11, 2019

Facial Recognition: Anxiety among Chinese People

Starting in December, whenever the Chinese people had to register their new mobile phone numbers, they also had to undergo facial scanning. However, a survey showed that Chinese respondents were very concerned about the security of facial recognition. During October and November of this year, a research center affiliated with the Guangzhou based Southern Metropolis Daily conducted a survey on facial recognition. The center released an online questionnaire to investigate the problems and concerns of the public when using facial recognition. Among the respondents, 57 percent were worried that their personal whereabouts were recorded while nearly 50 percent were worried that criminals may use fake information to perform fraud or theft. Nearly 84 percent of the respondents want operators of the facial recognition system to provide them with a channel to view or delete facial data. 74 percent of respondents want to choose whether to use facial recognition or traditional methods. However, the survey also showed that about 60 percent to 70 percent of respondents believe that facial recognition makes public places safer.

An IT website, Comparitech, once conducted a study on the scope and depth of the use of biometrics and surveillance systems. China, the worst among the 50 surveyed countries, lacks public attention to the privacy of people’s biometric data. The study showed that China has no laws to protect the biometrics of citizens and emphasized “the lack of protection for employees in the workplace.”

According to Chinese media, the metro system in Zhengzhou city of Henan province started “riding with face” (using facial recognition in the metro system) in early December. China Daily reported that riders can use facial recognition to authorize payment automatically instead of scanning the QR code on their mobile phones. Currently, passengers can voluntarily choose whether to use facial recognition.

Source: BBC Chinese, December 6, 2019

Huawei’s “Wolf Culture” in Canada

Chinese people recently have been using the term “wolf culture” to describe a company or a person who behaves like a wolf, who is willing to take any measure to win, and who ignores human nature and morality.

Epoch Times interviewed some former employees of Huawei’s subsidiary in Toronto who took the opportunity to expose Huawei’s “wolf culture” in Canada.

1. Taking down Nortel: Huawei offered prices 40 percent below market so it could quickly grab the global telecom market. It was able to do so because of the Chinese government’s subsidies and the People’s Liberation Army’s “gift contracts.” In addition, from 2004 to 2009, the Chinese Communist Party’s (CCP’s) hackers had been consistently hacking into Nortel’s system to steal its secrets. Nortel filed for bankruptcy in 2009. Huawei was able to hire all of Nortel’s top five 5G experts and make them work for Huawei.

2. Operations in Canada: Huawei maintains a tight central control over its financial operations. It is the Chinese Headquarters in Shenzhen that makes the calls on major financial decisions for its overseas branches. The Shenzhen Headquarters must review all overseas branches’ pricing of equipment proposals and solutions. The Shenzhen headquarters has over 10,000 staff member managing its financial operations globally.

3. Discrimination on “Chinese Faces”: A former Huawei employee said that Huawei Canada has been discriminating against employees because of their race and age. This was the company’s culture in China.

Huawei’s CFO Meng Wanzhou visited Huawei Canada in Toronto in 2016. She was reported to be unhappy when she saw so many “Chinese faces” in the office there.

A former employee said, “(Huawei) prefers non-Chinese people for non-technical positions, such as the public relations positions,” so that the company can appear more “Westernized.”

A former Huawei employee recalled that a high-ranking executive did not like the high labor cost and said that he expected the salary of employees of Chinese origin to be much lower.

4. Discrimination on age: A high-ranking executive sent from China to Huawei Canada in 2016 launched a policy to “make employees younger.” Meng Wanzhou further strengthened this policy.

Chinese media have widely reported Huawei’s “age of 35” policy: If an employee reaches the age of 35 and has not become a manager, Huawei puts that person in a human resource database at the Headquarters in China; if no department wants the person, Huawei will let that person go.

“We often heard that so and so was fired for age,” a former employee said, “Though there is no written evidence, people have been discussing it.”

Another employee who was diagnosed with cancer and took sick leave was let go due to her age. Another employee, in her 50s, was let go too, despite the fact that she maintained a high performance rating. She complained to Huawei management that their action was age discrimination. Huawei denied discrimination but increased her severance pay. She protested again. Huawei increased severance pay again, but still didn’t offer to bring her back. She is considering taking legal action.

5. Communist Study: About 10 percent of the people at Huawei Canada’s Headquarters are from the Shenzhen Headquarters. They must participate in the CCP study every Saturday morning.

6. “Wolf Culture”: All employees, including those hired in Canada or sent from China, must follow the “wolf culture” that Huawei’s Founder Ren Zhenfei has promoted: employees must have the hungry wolf’s nature of being fearless and blood-loving, and must keep fighting in a tough team environment. “There are instructions (about ‘wolf culture’) on Huawei’s internal site for everyone to read and follow. Their idea is that, no matter what, you must fight for success, even if it means to step on your fellow coworkers. They asked us to read the ‘wolf culture’ articles and write learning reports to send to China’s Headquarters.”

“Employees work an average of 10 hours a day. It is normal for people to resume work after dinner. There is no overtime pay. Occasionally you hear a story that someone complained about it and was then fired. The company didn’t give a reason for the firing, but everyone knew why.”

If Huawei wants to fire someone, it creates a tough situation at work for that person, for example, increasing his workload and giving him a low rating, to force that person to leave.

Source: Epoch Times, December 7, 2019

DW Chinese: Deutsche Telekom Workers’ Group Stood against Using Huawei Equipment

Deutsche Welle Chinese Edition recently reported that Josef Bednarski, Member of the Supervisory Board and Employee Representative of Deutsche Telekom, spoke up for the first time after the hot topic of using Huawei equipment was brought to the public. Bednarski, as the Chairman of the Group Works Council, told the press that Deutsche Telekom must give up using Huawei equipment in the mid-and-long term in order to prevent economic and political data loss. He expressed the belief that the Chinese government has too much power over Huawei to the point that, at any time, Huawei has to surrender any of its data. He also added that, not just Huawei, but any other Chinese technology company, may be ordered to deploy government-mandated back-doors. However, Bednarski also aired his concern that an immediate stop to using Huawei equipment may affect the construction schedule of the German 5G network. He called for the European Union to take the lead in encouraging the growth of the EU’s own telecommunications industry and providing necessary support to European manufacturers.

Source: DW Chinese, November 24, 2019

DW Chinese: Deutsche Telekom Will Discontinue Using Huawei Equipment

Deutsche Welle Chinese Edition recently reported that Deutsche Telekom’s management decided to discontinue the use of Huawei products. The Huawei parts used in its current core networks will all be replaced. In fact, the company came up with a two-year plan to reduce the use of all Asian parts to zero. Meanwhile, some parts made in the United States will be replaced too. Deutsche Telekom claims that this is part of a normal three to five years refresh cycle. Also, as a response to the U.S. ban on Huawei products, Deutsche Telekom dramatically adjusted its procurement policies. For example, the company will directly purchase U.S. database supplier Oracle’s products and stop buying Huawei’s total solution. The company emphasized that the policy changes were not designed to bypass the U.S. ban because the parts will not be re-sold to Huawei. The company explained that, since U.S. companies can no longer sell products to Huawei to be bundled in Huawei’s total solution, Deutsche Telekom will purchase directly from these U.S. vendors. The company hopes these adjustments will ensure the supply channels remain smooth.

Source: DW Chinese, November 20, 2019

China Times: Teardown Analysis on Huawei’s Latest Smartphone

Major Taiwanese news network China Times recently reported that Chinese leading communications equipment company Huawei, which is currently under U.S. sanction, recently released its flagship smartphone Huawei Mate 30 Pro 5G. Huawei founder Ren Zhengfei has bragged on multiple occasions that Huawei can comfortably survive without using any supply of U.S. parts. International tech firm TechInsights recently published its tear-down analysis of the newly released Huawei flagship handset and found that, out of a total of 36 chips used in the phone, Huawei made half of them. The rest depended on foreign supplies, among which key components still rely on U.S. vendors. Critical parts are from U.S. suppliers like Texas Instruments, Qualcomm, and Cirrus Logic. TechInsights did notice that Huawei replaced U.S. DRAM supplier Micron with South Korean supplier SK-Hynix. However, the U.S. ban may also apply to SK-Hynix due to the amount of U.S. technology used in SK-Hynix products. Analysts expressed the belief that Huawei is currently sustaining itself based on its stock of U.S. parts. It is nearly impossible for Huawei to produce a smartphone without any U.S. technology.

Source: China Times, November 11, 2019

Freedom House Report: China’s Internet Freedom Worst in the World

Radio Free Asia (RFA) Chinese Edition recently reported that Freedom House just released its 2019 annual Internet freedom Report, which shows China ranked last on the list as the worst country in violating cyber freedom. This is the fourth consecutive year for China to rank at the bottom. This year is the thirtieth anniversary of the Tiananmen Massacre and there are massive protests currently going on in Hong Kong. The Chinese government has further intensified its Internet control. The Freedom House ranking is mainly based on Internet connection barriers, restrictions on contents, and the protections of netizens’ rights. China scored zero on protection of netizens’ rights. The Report indicated that China utilizes cutting-edge data analytics technology to monitor people online. Many netizens have been arrested as a result of speaking up online. The Freedom House report also shows that, for the past nine consecutive years, cyber freedom has been on the decline around the globe. Even the United States suffered a decline. More and more countries are monitoring and even manipulating social media.

Source: RFA Chinese, November 5, 2019

Media: Why Did the CCP Politburo Study Blockchain

Recently, at the Fourth Plenary Session of the 19th Chinese Communist Party (CCP) Central Committee, Xi Jinping stressed that there should be a focus on blockchain technology. The CCP Politburo also held a group study on blockchain’s status and trends related to blockchain. Some media interviewed China experts on why the CCP is eying blockchain.

Deutsche Welle interviewed a senior IT practitioner in China who stated, “In fact, China has long been talking about digital finance. In 2014, People’s Bank (China’s Central Bank) created a group to research the feasibility of issuing digital currency. In January 2017, it officially established the Digital Currency Institute. Maybe it is to help People’s Bank launch the Digital Currency Electronic Payment (DCEP).

Blockchain relies on 5G technology to provide fast transportation speed.

VOA interviewed an economics observer, “This policy is more for the political agenda. There are three reasons for the CCP to promote blockchain.”

First, the CCP wants to participate in this “de-centralization” technology early so that it can participate in and control the standard settings and data control areas.

Second, the CCP has the financial ambition to promote a national digital currency. It has been trying to promote China’s national digital currency via the Belt and Road Initiative so as to further compete with the U.S. for financial control.

Third, blockchain can be extended to finance, to supplying China, to manufacturing, and to military areas. Having a first mover advantage or having greater power in controlling and implementing these technologies will help the CCP to reach its ambition of world domination.

1. Deutsche Welle, October 28, 2019专访中共中央政治局为什么学区块链/a-51022583
2. VOA, October 29, 2019