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China Times: Chinese Investments in Silicon Valley Dropped Sharply in 2018

Major Taiwanese newspaper China Times recently reported that, as the China-U.S. trade war intensifies, Chinese capital that used to flow continuously into U.S. high-tech companies, in 2018 started to see a dramatic decline. According to Forbes, last year China invested a total of around US$2 billion in the U.S. high-tech field. That was an 80 percent drop from 2017. More and more U.S. start-up companies are avoiding Chinese investments since many U.S. investors are concerned about the additional risks that these Chinese partners may bring to the venture. The Canadian detention of Huawei CFO Meng Wanzhou could further cool down the willingness of Chinese investors. According to several experts monitoring the trade war, in the long run, the conflicts in trade will not have a major impact on business activities between China and the Silicon Valley. However, all experts agreed that the era of close cooperation between China and the United States is over.

Source: China Times, February 2, 2019
https://www.chinatimes.com/cn/realtimenews/20190202001605-260409

Briefings | | |   Information/Technology US-China Relations

FBI Detained Chinese Engineer for Stealing Apple Intellectual Property

Well-known Chinese news site Tencent News recently reported that the FBI detained a second Chinese engineer (Chen Jizhong), who worked at Apple, for stealing classified information on Apple’s self-driving car technology. A further search found more unauthorized photos in Chen’s hard disk. Chen admitted that he planned to return to China and work for Xiaopeng Automobiles, a Chinese smart car manufacturer. Xiaopeng later commented on the story and said the company had never interviewed this individual. Last July the FBI arrested another Apple Chinese engineer (Zhang Xiaolang) for stealing self-driving car information. Zhang did join Xiaopeng Automobiles. Xiaopeng later refused to acknowledge that they had any awareness of Zhang’s illegal activities. According to the FBI, Apple confirmed that the materials Chen stole would have been “extremely damaging” if handed to competitors. Apple’s self-driving car team suffered quite a few setbacks in the past and Apple has laid off many people.

Source: Tencent News, January 31, 2019
https://new.qq.com/omn/20190131/20190131A0BZJV.html

Briefings | | |   Information/Technology US-China Relations

EU May Ban Huawei Equipment to Please the U.S.

Well-known Chinese news site Sohu recently reported that, according to four European Union officials, the European Commission is considering amending the 2016 network security law in order to stop EU companies from using Huawei’s next generation mobile network equipment. Anonymous sources said this plan is still in an early stage but good enough to demonstrate a “change in the EU position.” Apparently, this will please the United States. However, the new policy will face difficulties in real life even if it gets established, as some of the countries, such as Germany, have already issued their 5G permits. At the moment, most of the EU countries, except Britain, Germany, France, and Poland, do not have a ban on Huawei products. Interestingly, Huawei, Ericsson and Nokia hold the vast majority of the global 5G market. The United States doesn’t even have a presence there.

Source: Sohu, January 31, 2019
http://www.sohu.com/a/292577089_334198?scm=1002.0.0.0

Briefings | | |   Geo-Strategic Trend Information/Technology US-China Relations

Why Huawei and Beijing Are Singing Different Tunes

Epoch Times reported that Huawei has taken a low-key approach because of the restrictions the Western countries have placed on its products due to their fear that Huawei is spying for the Chinese Communist Party (CCP). Founder Ren Zhengfei said, “If they don’t want Huawei to stay in certain markets, we can reduce our scale.” Huawei Chairman Liang Hua said at the Davos Economic Forum that, if the restrictions continue, Huawei might have to exit from Western countries.

However, Beijing has taken a strong stance against Canada. After Canada arrested Huawei CFO Meng Wanzhou, It arrested at least 10 Canadian citizens  and modified one Canadian’s sentence to the death penalty. China’s Ambassador Lu Shaye threatened Canada saying that there will be severe consequences if Canada restricts Huawei from supplying 5G network equipment to its market.

Epoch Times collected opinions from several newspapers and commentators on why Huawei and Beijing are taking different stances.

Hong Kong Economic Times thinks that Huawei is taking a soft approach in order to try to resolve its crisis or minimize its impact. Having a strong position would create more conflict between Huawei and the Western countries. Also a strong position will not help Ren Zhengfei save his daughter since the judicial systems of the U.S. and Canada are independent and will not yield to Huawei.

Hu Ping, Honorary Chief Editor of Beijing Spring suggested that Beijing is worried about Huawei being targeted. Huawei is related to the CCP’s future economy and high-tech development plans, so Beijing is taking a tough stance to protect its interests.

Source: Epoch Times, January 23, 2019
http://www.epochtimes.com/gb/19/1/23/n10996914.htm

Briefings | | |   Economy/Resources US-China Relations

Huawei Warns to “Prepare for Bitter Days”

Recently, Ren Zhifei, the founder of Huawei, issued two letters to Huawei employees. He warned not to be too optimistic about the prospects for Huawei and that people should prepare for bitter days.

Ren stated that, if they make an assessment that certain business units are not providing much value, they should be cut or the work reduced so as to focus on (more valuable portions). He also said that Huawei should give up some mediocre employees so as to reduce the cost of human resources.

“In the next few years, the whole environment (for Huawei) will not be as promising as we imagined. We should prepare for bitter days.”

He said that, unlike the 4G business that flourished for Huawei, the 5G business may just bloom in some spots, but not on a widespread scale. However, Huawei has 180,000 employees and it pays over US$30 billion in salaries and stock distributions each year. “If we can’t produce as much, how can we get the money to share?”

Source: Sina, January 21, 2019
https://news.sina.com.cn/o/2019-01-21/doc-ihqfskcn9133229.shtml

Briefings | | |   Economy/Resources US-China Relations

CNA: The U.S. House Unanimously Supported Taiwan’s Return to WHO

The primary Taiwanese news agency CNA (The Central News Agency) recently reported that the U.S. House of Representatives just passed a resolution unanimously supporting Taiwan’s return to the World Health Organization (WHO). The resolution is still pending in the Senate. The resolution asked the Secretary of State to assist Taiwan to regain its observer status with the WHO. Since 2017, Taiwan has not been invited to the World Health Assembly (WHA) as an observer. The resolution required the Secretary of State to explain the reason if Taiwan is not invited. The U.S. Department of State has been sticking to the principle of supporting Taiwan’s effort to participate in international organizations. Last year when the U.S Secretary of Health and Human Services, Alex Azar, attended the WHA, he pointed out that Taiwan should not be excluded from WHO and he also expressed his disappointment.

Source: CNA, January 23, 2019
https://www.cna.com.tw/news/firstnews/201901230015.aspx

Briefings | | |   Geo-Strategic Trend US-China Relations

Former Chinese Official Reveals Predecessor of Thousand Talents Program

At the end of last year, after a famous American Chinese physicist, Zhang Shoucheng, “accidentally passed away,” the Chinese government began to play down the “Thousand Talents Program” in which he had been involved.

Cheng Ganyuan, a former Chinese Communist Party official now living in the United States, said that, as early as 1978, when Zhang was admitted to the Physics Department of Fudan University in Shanghai at the age of 15, he became part of China’s strategy to steal Western technology.

Cheng said that in the late 1970s and early 1980s, Deng Xiaoping started the reform and opening up policy in order to save the autocratic regime and prevent the regime from collapsing. At that time, the regime established a plan to send a group of capable technical talents to study in the West.

He said, “Now we know about the ‘Thousand Talents Program.’ At that time it had no clear name. It was said that we needed to train a group of capable technical personnel and send them to the West to steal technological intelligence.”

Cheng graduated from the Law Department of Fudan University in the 1950s. At that time, Fudan University had a Second Physics Department, which appeared to the outside as a university academic program and was also known as the Nuclear Physics Department. He learned through the school’s internal channels that the intelligence division of the Ministry of Public Security actually headed this department.

At that time, the Second Physics Department enrolled those students who had the highest scores. It was also an honor to study in that department. The Second Physics Department selected from the applicants those who had no problems in their family backgrounds. Many of them were princelings.

Jiang Mianheng, the eldest son of former head of the Chinese Communist Party Jiang Zemin, graduated from the Second Physics Department of Fudan University in 1977. After that, he went to the United States to obtain a doctoral degree. After returning to China, he became the vice president of the Chinese Academy of Sciences. One year later, in 1978, 15-year-old junior high school graduate Zhang Shoucheng was admitted to the Second Physics Department. The school selected him to study in Germany. Zhang later became a tenured professor of physics at Stanford University. Tsinghua University’s Institute of Advanced Studies employed him a few years ago. Every year he spent a long time in China to conduct research and to teach students.

Cheng added that most of the people who came to study in the United States in the 1980s later received a Ph.D. in physics. Most of them have been connected with Chinese science and technology units and universities. They gradually brought Western technology to China and China also provided them with many benefits.

Cheng said that, for many years, stealing Western technology has been a clear goal of the Communist Party. It is only in recent years that the government has opened it up as the “Thousand Talents Program” and believes that it can be publicized in a high profile.

Source: Voice of America, January 22, 2019
https://www.voachinese.com/a/thousand-talents-program-goes-way-back-20190122/4754883.html

Briefings | | |   US-China Relations