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State Owned Banking Regulatory Agencies Summoned 13 Top Online Financing Companies

Xinhua reported that, on April 29, four financial regulatory agencies including the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the Administration of Foreign Exchange summoned 13 top online financing companies including Tencent and Meituan Finance.

Chinese economists and scholars told Radio Free Asia that these online financial companies bypassed China’s banking system to serve small to mid-size customers and self-employed individuals and have become a threat to traditional banking financing channels. The meeting was meant to warn these companies that Beijing has formed a plan to take over these private online financing companies. Other internet companies like Taobao, We Chat and QQ are not only a trading platform but they also draw large numbers of users. Therefore they would be the next target. One commentator told RFA, “Beijing will be very nervous and vigilant about such a platform and force that can connect with or and even unite the people. So, it needs to have a more a comprehensive and thorough control.”  These take-overs will not only benefit the state-owned banks but also control public opinion and limit the development of the private economy.

According to official statistics, WeChat users now exceed 1.2 billion, Taobao has over 800 million, and QQ has close to 600 million. After Beijing issued an antitrust fine of more than 18 billion (US$2.78 billion) against Alibaba not long ago, it immediately demanded that, within a specified time limit, 34 online companies including Tencent, JD.com, ByteDance, Baidu, and Meituan conduct an internal restructuring.

Source: Radio Free Asia, April 30, 2021
https://www.rfa.org/mandarin/yataibaodao/jingmao/ql1-04302021044205.html

Chinese Phone Makers and House Builders Leap into Electric Vehicle Market

Baidu, Xiaomi, Huawei, OPPO, Evergrande and other Chinese companies have recently announced their commitment to doing electric vehicle research and development. These companies are not car makers: Xiaomi, Huawei and OPPO are phone makers; Baidu, which has already invested in driverless vehicles, is in Internet-related services; and Evergrande started out as a real estate developer.

At the Shanghai Auto Show in April, while Tesla was under the spotlight because of a consumer dispute, the electric cars that local automakers presented and also the aforementioned companies attracted a lot of attention.

As Chinese financial media and Radio Free Asia reported, Evergrande launched nine new electric car models at the Shanghai Auto Show using the brand name “Hengchi.” Evergrande boasted that they were developed in cooperation with car manufacturers such as Swedish supercar producer Koenigsegg. The nine models that Evergrand launched were later found to be “model cars” which had only a shell and no brakes or suspension system. For this reason, Evergrande sent an army of security personnel to guard the stage and wouldn’t allow the audience to  take pictures of the chassis of the display cars.

It was widely believed that China’s manufacturing sector still has great difficult in achieving self-sufficiency in the area of critical parts and components, as well as in the core technologies such as auto chips. Making a car is a much more complex business than making a smartphone. The “great-leap-forward” model of investing in electric vehicles cannot last long.

Some argue that China’s domestic demand has not yet recovered, and that it is a question whether most people can afford an electric vehicle. One cannot rule out the possibility that some companies and local governments are making the initial investment in order to solicit financial subsidies from the central government.

Source: Central News Agency, May 2, 2021
https://www.cna.com.tw/news/acn/202105020185.aspx

China’s Newly Amended Maritime Traffic Safety Law Raises Concerns

On Thursday April 29, China passed a newly amended Maritime Traffic Safety Law, over which a Taiwanese scholar expressed the concerns that Beijing is using the law to expand the gray zone of potential conflicts.

The National People’s Congress (NPC), China’s rubberstamp parliament, announced that the law will come into force on September 1.

Under Article 53 and Article 54, foreign vessels are required to report to the maritime authorities if they are submersible, nuclear powered, carry radioactive or poisonous materials or may in any other way endanger safety in navigation.

Article 92 stipulates that if a foreign ship may threaten the safety of China’s internal waters and territorial waters, the maritime authorities have the right to order it to leave. If a foreign ship violates Chinese laws and regulations on maritime traffic safety or prevention of pollution, the maritime authority may exercise the “right of hot pursuit.” The “right of hot pursuit” refers to the right of the authority of the coastal state to chase a foreign ship to the high seas, arrest those on board and bring the ship back to its port so they can face a trial. It can do this if it has sufficient reason to believe that the foreign ship has violated the laws and regulations of the state.

In addition, in the amended maritime law, China has changed the wording from the phrase “coastal waters” to “jurisdictional waters.

Su Tzu-yun, senior security analyst with Taiwan’s Institute for National Defense and Security Research, considers that both the Maritime Traffic Safety Law and the Maritime Police Law, a new law passed in January, are tools of the Chinese Communist Party (CCP) to claim and protect its national sovereignty and interests. The CCP is using the law to expand the gray area of conflict, and has raised concerns that this could become a loose cannon for maritime conflicts.

Su said that the Chinese government’s “jurisdictional waters” refers to “the internal waters, the territorial sea, the contiguous zone, the exclusive economic zone, the continental shelf, and other waters under the jurisdiction of the People’s Republic of China,” which it defines more broadly than “coastal waters.” However, the CCP has built many artificial islands in the South China Sea and claims that the 12 nautical miles surrounding each of them are all territorial waters, which gives the CCP an excuse to enforce the law when other countries simply carry out free navigation missions.

Source: Central News Agency, April 30, 2021
https://www.cna.com.tw/news/acn/202104300257.aspx

Africa’s Stadiums and China’s Sports Diplomacy

The French newspaper Le Monde recently published two articles that describe how Beijing is actively engaging in sports diplomacy in Switzerland, the headquarters of many international sports organizations. It also describes how the Chinese government is building sports facilities in Africa, especially sports stadiums, to gain control over African heads of government, win local sports markets, and secure access to important sports events in the continent.

The Chinese government is making arrangements in the sports industry to serve its goal of becoming a geopolitical power. One article in Le Monde quotes Carole Gomez, a researcher at the French Institute for International and Strategic Affairs, who commented that, until the 1950s, sports were marginally important for the Chinese government, except for fitness or training soldiers. Learning from the Cold War, the Chinese began to realize that the Olympic Games were not just a sporting event, and that it should not only participate in international sports competitions; China should also produce outstanding results to promote national pride.

Jean-Loup Chappelet, a professor at the University of Lausanne, Switzerland, outlined the strategic pattern of China’s participation in international sports bodies. It started with the participation of athletes. China followed by actively winning competitions. Then the Chinese government started organizing events. Finally, China gained a seat on the international organizing committee of the sport. Beijing began with table tennis and gymnastics and gradually advanced to a few new sports such as climbing and rugby sevens. Beijing used its huge domestic market and the construction of sports facilities as bait to gain a seat in international sports organizations. . . .  Sources familiar with the International Olympic Committee told Le Monde that international sports are in fact a mirror of today’s international community. What’s going on in the IOC is similar to what goes on at the United Nations and at the World Trade Organization. Beijing is actively pursuing control of these international sports organizations just as it is in other international arenas. While Europe and the United States are leaders in most of the international sports organizations, China is closely following in their footsteps.

Another Le Monde article mentioned that in mid-March, Alassane Ouattara, President of the African country Ivory Coast, personally inaugurated a 60,000-seat stadium, a gift from China, in the northern part of the capital Abidjan. The finale of the 2023 African Cup of Nations, the main international men’s soccer competition in the continent, will be held in Ivory Coast, where China will build two more stadiums elsewhere in the country, in addition to the one in Abidjan. The total cost is expected to be more than 200 million euros. Le Monde commented that China has built and renovated nearly 100 stadiums on the continent in recent decades, apparently to strengthen diplomatic relations with African countries, to open access to local markets, and to secure support from African countries in international organizations such as the United Nations.

In recent years, with the number of countries participating in the tournament increasing from 16 to 24, the Africa Cup of Nations could not have been held without China-built stadiums. The organizers lamented that the countries hosting the tournament could not afford to build their own stadiums and had to rely on China. In January, the rights to broadcast the games were sold to a Chinese company, Star Times. According to internal U.S. diplomatic documents, over the last two decades, Star Times, which gathers intelligence for Beijing in Africa, has become a major player in digital media on the continent. In other words, the African Cup of Nations are often played in China-built stadiums and Chinese media broadcast them.

Source: Radio France International, April 29, 2021
https://rfi.my/7Lth.T

Netizen Exposes Data Collection Function of Smart TVs Made in China

Recently, a Chinese netizen discovered that his home TV, equipped with the Android system, was secretly carrying out surveillance capabilities. In an article posted on the V2EX website, a discussion platform for designers and developers, he mentioned that a data service on his TV scans all network devices every 10 minutes, even including his neighbors’ information.

As he felt the transmission of the TV signal was slow, he decided to look at the background services that were running. He found something called ‘Gozen Data Service,’ about which he had absolutely no idea.

“I found that this thing scans my household’s network devices every 10 minutes, sending back the information including hostname, MAC (Media Access Control), IP addresses, and even the network latency time. It also detects the surrounding WiFi SSID (Service Set Identifier) names, and MAC addresses packaged and sent to the domain name gz-data .com.”

“In other words, with the information such as whatever smart devices or cell phones are physically at home, anyone who is connected to the WiFi, and the name of the neighbors’ WiFi networks, were collected and uploaded all the time. Are we sure this is not a spy service?”

Gozen Data is a Chinese company specializing in big data service in large smart TV’s, reaching over 100 million smart TV terminals made in China and accounting for 55 percent of the market. As of April 2019, Gozen Data entered into a long-term partnership with a long list of Chinese and Western companies including Sanyo, Toshiba, and Philips, by the implanting of an SDK (Software development kit) in the TV’s operating system so as to collect smart TV data.

Xing Jian, a citizen journalist who is familiar with the Internet technology, told Radio Free Asia that the Chinese government had modified the open-source Android system and used it for the “Xueliang Project (雪亮工程),” an IT network to surveil people living in the rural area.

The “Android system repurposed for this ‘Xueliang Project’ was able to achieve the networking of public security surveillance videos. The application usually intrudes into cell phones, TVs and other Android devices in the form of ‘spyware,’ automatically scanning and collecting the information such as device model, usage, and social media and transferring the data to the government databases.”

Source: Radio Free Asia, April 27, 2021
http://https://www.rfa.org/mandarin/yataibaodao/meiti/ql1-04272021042034.html

China Adopts Anti-espionage Regulation Targeting “Hostile Forces”

On April 26, 2021, China’s Ministry of State Security released a new anti-espionage regulation, which was to be effective immediately. The regulation allows the national security authority to draw up lists of companies and organizations susceptible to foreign infiltration, treating a broad range of entities, including potentially universities and private businesses, as if they are sensitive government agencies.

The regulation specifies that agencies, social groups, enterprises, public institutions, and other social organizations are primarily responsible for the unit’s anti-espionage security work.

On April 26, 2021, officials from the Ministry of State Security explained to the press, “Overseas espionage and intelligence agencies and hostile forces have intensified their infiltration into China, with more diverse methods and in broader fields, which pose a serious threat to China’s national security and interests.”

At the same time, “the core and vital areas still have issues such as which organizations bear the primary responsibilities for anti-espionage security and prevention measures that are not institutionalized.”  Officials from the Ministry of State security said that the regulation clarifies “what, who and how” to guard against foreign espionage.

According to the regulation, the Ministry of State Security will provide companies and organizations susceptible to foreign infiltration with work manuals, guides, and other publicity and education materials. The authorities will also issue written guidance, organize trainings, hold work meetings, and supervise anti-espionage work using different methods such as reminders and advice.

Under the regulation, the companies, organizations, or social groups have the responsibility of rolling out detailed measures against foreign espionage. The measures identified in the regulation include arranging their working staff to sign letters of commitment before taking up posts, reporting their activities related to national security, briefing personnel ahead of their trips overseas, and interviewing them after their return to China.

Sources:
1. People’s Daily, April 26, 2021
http://legal.people.com.cn/n1/2021/0426/c205462-32088423.html

2. Xinhua, April 26, 2021
http://www.xinhuanet.com/2021-04/26/c_1127376250.htm

TikTok Accused in London of Collecting Children’s Private Information Illegally

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that a class action lawsuit was filed in London against TikTok because it was illegally collecting private information from millions of children. TikTok may face a damages of billions of U.S dollars. According to Anne Longfield, leader of this current suit and the former Children’s Commissioner for England, every child can receive thousands of dollars in compensation if they win the case. According to Longfield, since May 25, 2018, every child who used TikTok suffered TikTok’s illegal information collection. The information was provided to unknown third parties for consumption regardless of what privacy settings the children had on the app. The information includes phone numbers, physical location and videos. TikTok claimed these accusations are baseless. In 2019, TikTok was fined by the U.S. FTC for a total of US$5.7 million for illegal information collection from underaged users. The company is still seeking settlement of a privacy related suit in the United States. The class lawsuite indicated that TikTok collected information without transparency and without the guardian’s consent, violating British and European Union data protection laws. There are 3.5 million children impacted in Britain alone.

Source: NetEase, April 21, 2021
https://www.163.com/tech/article/G84A0OMB00097U7R.html