Chinese spying fear drives Barack Obama from famous Waldorf Astoria hotel

Date

September 29, 2015

Washington: The threat of Chinese espionage is changing how the US acts – in ways big and small. For the first time in decades, the American President isn't staying at the Waldorf Astoria, the luxury hotel on Park Avenue, during his annual trip to New York for a meeting of the United Nations.

Every September, leaders and bureaucrats from around the world descend on New York for the UN General Assembly. The President and his entourage typically rent out at least three floors of the Waldorf Towers. The administration reportedly favour the Waldorf for its long tradition – the iconic hotel is home to the US ambassador to the UN and has hosted every US president since Herbert Hoover – as well as its internal elevators and secure design, which allows Secret Service agents to be posted throughout the hotel. But this year, the American delegation is staying a block over, at the Lotte New York Palace Hotel, which is South Korean-owned.

The Waldorf Astoria, which has been the site of notable moments in American history including the invention of Eggs Benedict and the death of Herbert Hoover, passed into Chinese ownership last year. A previously little-known Chinese insurance company called Anbang Insurance Group acquired the hotel for $US1.95 billion in a deal that closed in February.

The famed Waldorf-Astoria was ruled out before Barack Obama's visit to New York for the UN General Assembly. Photo: Supplied

Mark Toner, the deputy State Department spokesman, said in an emailed response that the US delegation considered several factors in its decision to relocate, including space, cost and potential security concerns. "We constantly re-evaluate venues to take into account changing circumstances," Mr Toner said.

However, security experts said the Obama administration would be right to be cautious about espionage risks from staying in the newly acquired hotel. Anbang Insurance is a relatively minor player in China's insurance market, but it has weighty connections to what Chinese call "second-generation reds", rich and powerful descendants of China's former leaders.

Anbang's chairman, Wu Xiaohui, has married the granddaughter of Deng Xiaoping, China's paramount leader from 1978 to 1992, and has business ties to Wen Yunsong, the son of former prime minister Wen Jiabao. The company's board also includes Chen Xiaolu, a former army officer whose father was a prominent figure in China's Communist revolution and a comrade of Mao Zedong.

Spying is real: President Barack Obama is briefed inside a secure tent setup near his hotel suite in Rio de Janeiro in 2011 - one of many counter-snooping measures US officials have embraced in recent years. Photo: New York Times

It's unclear whether Waldorf's high-level guest list, which includes US as well as foreign dignitaries, had anything to do with Anbang's acquisition.

Chinese insurance companies have been taking steps in recent years to diversify their holdings overseas, and many Chinese investors are drawn to trophy properties like the Waldorf. The hotel also figures prominently in the Chinese psyche: Every Chinese leader since Deng has stayed there.

But given mounting accusations of cyber attacks between the US and China, neither side is taking any chances.

The US has accused China of stealing billions of dollars of trade secrets and intellectual property from American companies, as well as orchestrating the hack of the Office of Personnel Management in June, in which information on more than 22 million US federal employees was stolen.

China denies both charges. It has also criticised the US for its surveillance of dozens of foreign leaders and its hacking of millions of private Chinese text messages, actions disclosed by former National Security Agency contractor Edward Snowden.

The US and China took a first step toward addressing this major source of conflict last Friday, when presidents Obama and Xi pledged that neither government would conduct or knowingly support economic espionage in cyberspace.

Yet both sides remain cautious of surveillance. In 2002, the Chinese reportedly discovered dozens of surveillance devices hidden in a Boeing 767 that the US had shipped to then-Chinese leader Jiang Zemin. And when Mr Xi travelled to the US for an informal meeting with Mr Obama at the expansive Sunnylands estate in California in 2013, the Chinese delegation chose to stay at a nearby hotel instead.

When travelling overseas, the Obama administration has been known to confine sensitive conversations to a security tent, an opaque enclosure equipped with noise-making devices that can be set up in a nearby hotel room.

The State Department advises diplomats and business travellers that any devices taken with them to China can be monitored or searched. Security experts tell executives and diplomats travelling to China to leave any trade secrets, sensitive information and personal electronic devices at home, and assume that their Chinese hotel suites are bugged.

It's not just listening devices or cameras that high-level travellers must be concerned about. Researchers at MIT, Microsoft and Adobe succeeded in developing an algorithm last year that reconstructed conversations by analysing the minute vibrations that the sound caused in other objects in the room. The researchers recovered speech and other useful audio signals by analysing the vibrations that speech created on a potato-chip bag, aluminum foil, the surface of a glass of water, and a potted plant.

Anbang's decision to carry out a major renovation to the Waldorf Astoria has also raised eyebrows among the security community, since a top-down renovation would be an opportune moment to install sophisticated espionage equipment.

However, Hilton Worldwide, which has agreed to manage the hotel for the next 100 years, countered that the renovation was aimed at the property's "elegance and grandeur" and would be fully compliant with US law. "This agreement is typical of many other hotels with foreign owners in New York and throughout the US," a spokesperson said in an email.