Wednesday, May 29, 2019

Artificial intelligence has been weaponized in China. That should be a wake-up call for the world

Artificial intelligence has been weaponized in China. That should be a wake-up call for the world

The Chinese government is using AI-powered facial recognition systems to monitor and target members of the Uighurs, a persecuted Muslim minority in China. 
George Soros, founder and chairman of the Open Society Foundations, attends the annual meeting of the European Council On Foreign Relations, in Paris, France, May 29, 2018. (Francois Mori/AP)
At this year's World Economic Forum in Davos, the philanthropist George Soros caught everyone's attention when he warned that the Chinese government's use of artificial intelligence (AI) presents an "unprecedented danger" to its citizens and to all open societies.
His reading of the situation was prophetic. Last month, The New York Times confirmed Soros' fears when the newspaper revealed that the Chinese government is using AI-powered facial recognition systems to monitor and target members of the Uighurs, a persecuted Muslim minority in China. Human Rights Watch, in its recently released report titled "China's Algorithms of Oppression," provide additional evidence of Beijing's use of new technologies to curtail the rights and liberties of the Uighurs.
In the province of Xinjiang, where the majority of Turkic minorities reside, surveillance cameras equipped with face scans are omnipresent on street corners, mosques and schools. Commuters travelling between towns must go through security checkpoints where police, with the help of a mobile app, can access information ranging from their religious practices, political affiliation, use of social media platforms and even blood type. In this ecosystem of intense social monitoring, even legal routine behaviour, such as exiting through a backdoor, can be treated as suspect and serve as grounds for dubious arrests.
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China has already faced international condemnation for its large-scale arbitrary detention of the Uighurs. The Global Center for the Responsibility to Protect and the Asia-Pacific Center for the Responsibility to Protect, in their report titled The Persecution of the Uighurs and Potential Crimes Against Humanity in China, have signaled that approximately one million Uighurs and other Turkic Muslim minorities are placed against their will in "re-education" facilities.
The report cautions: "If urgent measures are not implemented to end the current state of systematic persecution, there is a clear and imminent danger of further crimes against humanity occurring."

Social credit system

China's willingness to use AI to control its wider population and stamp out disorder is already well reflected in its nascent social credit system. Developed in concert by private entities and the state, AI-powered algorithms collect data on an individual's financial and social behaviours to calculate their social score and determine if they pose a threat to the Communist Party of China.
Citizens with low creditworthiness are publicly shamed as their names and faces appear on billboard size displays. However, the use of AI-based facial recognition systems to target minorities pushes this systematic repression one-step further. This is the world's first case of a government using AI to carry out what many human rights experts consider mass atrocity crimes.
China's use of AI to persecute the Uighurs demonstrates the need to establish a global human rights framework for this emerging technology. 
Though The New York Times reported that only Chinese companies developed the facial recognition software, Western tech giants are also catering to Beijing's authoritarian needs.
In April, Microsoft was accused of being complicit in the design and research of AI facial recognition systems used by the Chinese government for state surveillance. Microsoft Research Asia and the Chinese military-run University of Defensive Technology co-authored three papers on AI and facial analysis last year.
The company defended its controversial partnership by stating that its employees' research "is guided by our principles, fully complies with US and local laws". Given the harmful potential of these technologies, Western companies should be more wary of such collaborations.
The truth is China's use of AI to persecute the Uighurs is a global wake-up call for the international community and demonstrates the need to establish a global human rights framework for this emerging technology.

Privacy rights

Beyond its use by repressive regimes, AI can directly interfere with human rights in democratic and open societies. The infinite collection of personal data by AI systems for micro-ad targeting limits the rights of privacy. AI-enabled online content monitoring impedes freedom of expression and opinion, as access to and the sharing of information by users is controlled in opaque and inscrutable ways.
Vast AI-powered disinformation campaigns — from troll bots to deepfakes (altered video clips) — threaten societies' access to accurate information, can disrupt elections and erode social cohesion.
An equally frightening scenario is the use of AI in conflict situations. Human Rights Watch has warned that AI could be used in the future to target certain populations in war zones through deploying lethal autonomous weapon systems, commonly known as killer robots.
Many important voices are beginning to wake up to AI's threat to human rights, particularly in the absence of regulation and oversight. In his report to the United Nations General Assembly on the Promotion and Protection of the Right to Freedom of Opinion and Expression, UN Special Rapporteur David Kaye stated that "a great global challenge confronts all those who promote human rights and the rule of law: how can States, companies and civil society ensure that artificial intelligence technologies reinforce and respect, rather than undermine and imperil, human rights?"
With China aggressively lobbying for Huawei to build the next generation cellular network in Western countries, definitely including Canada, policy makers should pause and reflect on a legitimate question. That is, how will China's use of AI powered surveillance technologies be applied to Huawei's 5G network?
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While states through history have used new technologies against civilians, AI has the power to augment the scale, scope and proliferation of monitoring, surveillance and repression. AI's ability to collect inestimable amounts of personal data per minute at relatively low costs gives state agencies the capacity to conduct levels of intrusive surveillance that pure manpower could never achieve.
What was once in the realm of Orwellian fiction is now being realized in China. As summarizedby MIT researcher Jonathan Frankle, "this is an urgent crisis we are slowly sleepwalking our way into."
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Clearly greater collaboration between states will be necessary to prevent AI-enabled human rights abuses and work to ensure authoritarian regimes do not export their technology and practices to other countries. The international community must set in place a human-rights framework that will protect citizens from AI's most dangerous and lethal applications.
While individual countries are free too act in their own jurisdictions, only global cooperation will establish the norms and rules that are needed to protect citizens the world over from the growing nefarious use of AI.

Tuesday, May 28, 2019

Is Australia Crazy! Head of Aerospace.Is...The Fox Is In The Henhouse


Picture of Dong Yang Wu
Dr Dong Yang Wu took up her appointment as Chief of Aerospace Division in July 2017.
In this role, she leads the work of over 300 scientists, engineers and technicians who undertake science and technology work to support the operation of Defence’s fixed-wing aircraft and helicopters.
Dr Wu has Ph.D and Masters degrees in physical chemistry from University of Haute Alsace (France), and a Bachelors degree in chemistry from Sun Yat-Sen University (China). She is an Adjunct Professor at the Royal Melbourne Institute of Technology (RMIT) in Australia, and Adjunct Professor at the Hong Kong Polytechnic University.
Prior to joining DST, Dr Wu worked for five years as the Managing Director of Boeing Research & Technology in China, and was Chairman of the Board of Governors of Aviation Services Research Center co-founded by Boeing and Hong Kong Polytechnic University.
From 2008 to 2012, Dr Wu was the Manager of the Melbourne Technology Centre and the Chief Scientist of Boeing Research and Technology – Australia.
Before joining Boeing, Dr Wu spent 17 years working at the Commonwealth Scientific and Industrial Research Organisation (CSIRO) of Australia as a leading scientist and leader of the Sustainable Polymeric Materials Group, where she was involved in the research and successful commercialisation of new technologies in Australia and globally.Image result for DR DONG YANG WU

Game of Loans: How China Bought Hambantota

Game of Loans: How China Bought Hambantota

CSIS Briefs
April 2, 2018

The Issue

  • Unable to repay its debt, Sri Lanka gave China a controlling equity stake and a 99-year lease for Hambantota port, which it handed over in December 2017.
  • The economic rationale for Hambantota is weak, given existing capacity and expansion plans at Colombo port, fueling concerns that it could become a Chinese naval facility.


  • Recipient countries should link infrastructure projects to broader development strategies that assess projects within larger networks and monitor overall debt levels.
  • The international community should expand alternatives to Chinese infrastructure financing but cannot and should not support all proposed projects.

The view from Hambantota’s Martello Tower says it all. Built by the British in the early 1800s as a lookout post, the small circular fort occupies a hill on Sri Lanka’s southern coast. Look west, along that coastline, and shipping cranes rise above a new port. Look south, out to the Indian Ocean, and hulking ships move cargo along one of the world’s busiest shipping lanes. These images could converge in the coming years, but on most days, they remain miles apart. Last year, only 175 cargo ships arrived at Hambantota’s port.
This gap explains how Hambantota became a cautionary tale in Asia’s infrastructure contest. The port was intended to transform a small fishing town into a major shipping hub. In pursuit of that dream, Sri Lanka relied on Chinese financing. But Sri Lanka could not repay those loans, and in 2017, it agreed to give China a controlling equity stake in the port and a 99-year lease for operating it. On the day of the handover, China’s official news agency tweeted triumphantly, “Another milestone along path of #BeltandRoad.”
The challenge, of course, is that political incentives are skewed toward starting big projects sooner without mitigating risks.
Not everyone is celebrating. Negotiations around the port sparked local protests and accusations that Sri Lanka was selling its sovereignty. Some observers worry that China’s infrastructure investments are creating economic dependencies, which are then exploited for strategic purposes. In 2014, a Chinese submarine docked at Colombo, Sri Lanka’s capital, setting off alarms about China’s expanding military footprint. Unlike Colombo, where Sri Lanka’s navy is headquartered, Hambantota is more isolated and could offer Chinese vessels greater independence.
Sri Lankan officials have tried to calm those fears. “Sri Lanka headed by President Maithripala Sirisena does not enter into military alliances with any country or make our bases available to foreign countries,” Sri Lankan Prime Minister Ranil Wickremesinghe said in August 2017. In February 2018, Sri Lanka’s highest-ranking military officer said, “There had been this widespread claim about the port being earmarked to be used as a military base. . . . No action, whatsoever will be taken in our harbor or in our waters that jeopardizes India’s security concerns.” Sri Lanka’s parliament approved the agreement, but the text has not been made public, allowing suspicions to fester.
Political Ambitions, Economic Realities
As speculation continues about Hambantota’s future, its past provides lessons for Asia’s broader infrastructure competition. For recipient countries, the case underscores the importance of assessing infrastructure projects as part of an overall development strategy. Infrastructure projects often look more attractive in isolation, but their long-term success hinges on being part of a wider network, whether transportation, energy, information, or other systems. A broader approach also draws attention to debt sustainability. The challenge, of course, is that political incentives are skewed toward starting big projects sooner without mitigating risks.
Hambantota’s port did not appear overnight, but resulted from a series of Sri Lankan government decisions. Many Chinese-funded projects in Sri Lanka have been unsolicited, but Hambantota’s port is not one of them. Constructing a port at Hambantota has been part of Sri Lanka’s official development plans since at least 2002. In 2003, SNC Lavalin, a French engineering firm, completed a feasibility study for the port. A Sri Lankan government-appointed task force reviewed and ultimately rejected the study, faulting it for ignoring the port’s potential impact on Colombo Port, which in recent years has handled roughly 95 percent of Sri Lanka’s international trade.
Hambantota’s main challenge came from within Sri Lanka itself.
In 2006, Ramboll, a Danish consulting firm, completed a second feasibility study. It took a relatively optimistic view of the port’s potential, basing traffic projections on Sri Lanka’s future growth and overflow from existing ports at Colombo, Galle, and Trincomalee. Dry and break bulk cargo (commodities and goods loaded individually rather than in standard containers) would provide the main source of traffic until 2030, when the balance would start shifting toward container traffic. By 2040, the port would handle nearly 20 million twenty-foot equivalent units (TEU), roughly as much as the world’s fifth busiest port in2015.
With that assessment in hand, Sri Lankan President Mahina Rajapaksa was even more eager to pursue the project. Elected in 2005, Rajapaksa had promised to develop Sri Lanka’s southern districts, especially his home district of Hambantota, which was among the areas devastated by the 2004 tsunami. During Rajapaksa’s tenure in office, Sri Lanka embarked on a series of ambitious projects. Many of these big-ticket projects—including an international airport, a cricket stadium, and the port—had three things in common: they used Chinese financing, Chinese contractors, and Rajapaksa’s name.
Mattala Rajapaksa International Airport, “world’s emptiest airport.” - Photo: Jonathan Hillman/CSIS
Chinese loans were often at high rates. The first phase of the Hambantota port project was a $307 million loan at 6.3 percent interest. Multilateral development banks typically offer loans at rates closer to 2 or 3 percent, and sometimes even closer to zero. One reason China is successful in locking in these higher rates is that better alternatives are often unavailable. Another reason is that Chinese loans, while often requiring the partner to use Chinese contracts, are not as stringent in their requirements for safeguards and reforms. There were no competing offers for Hambantota’s port, suggesting that other potential lenders did not see rewards commensurate with the project’s risks.
Putting political ambitions ahead of market demands, this approach failed to consider Hambantota port within a larger development strategy. Critically, the port at Colombo handled 5.7 million TEU in 2016, has not reached capacity, and will expand in the coming years. If Colombo port’s most ambitious plans are realized, its capacity could expand to 35 million TEU by 2040. Early plans for Hambantota focused on offering fuel services, but under Rajapaksa, it was scaled up to include other activities, many of them already carried out at Colombo. In sum, Hambantota’s main challenge came from within Sri Lanka itself.
The political environment changed in 2015, when Maithripala Sirisena unseated Rajapaksa, but the new government’s options were limited. It reexamined some deals and halted construction at Hambantota’s port. While well-intentioned, this also delayed any revenue the port could generate, effectively making it even more difficult to service the loans. By 2015, some 95 percent of Sri Lanka’s government revenue was going toward servicing its debt, and the government initiated debt renegotiations with China. Talks culminated in the 70 percent equity and 99-year lease deal.
The Path Forward
Highlighting the mistakes that led to Hambantota’s handover is easier than identifying a path forward. But Sri Lanka and its partners are not without options for limiting the damage and preventing similar outcomes in the future.
For its part, the Sri Lankan government could release the full text of the port agreement to help address concerns about the port’s future use. It could also improve government procurement and accounting processes. National debt remains a major concern. In February 2018, Sri Lanka’s auditor general admitted that he could not say with certainty how much public debt the country owed. Greater transparency would help across the board, from evaluating project proposals to contracting and payments.
Advancing a “free and open” Indo-Pacific will not come free.
The challenge for Sri Lanka’s partners is to avoid throwing good money after bad. India, for example, has expressed interest in taking over the international airport near Hambantota port. Officials have suggested it could be used as a flight school. The prospect of turning a failing project around is difficult to resist. But if that attempt is unsuccessful, India risks assuming the reputational damage that China would otherwise suffer. Likewise, Indian and Japanese interest in port facilities in Trincomalee, on Sri Lanka’s east coast, should be tempered by Sri Lanka’s debt levels and the existence of competing ports in the region.
Trincomalee, Sri Lanka - Photo: Jonathan Hillman/CSIS
India has another type of leverage, but may not be willing to use it. Its domestic shipping laws do not allow foreign vessels to carry domestic cargo between Indian ports. If those laws were loosened, allowing for greater international participation, India’s own ports would become more active and the need for transshipment services at Sri Lanka’s ports would decline. That would likely cut into a primary source of Hambantota’s future traffic, but also negatively impact Colombo port. Perhaps the biggest barrier to implementation are the interests within India that benefit from these laws and the status quo. But at some point, a stronger response to murky Chinese port investments could include greater openness of India’s own ports.
Clearly, advancing a “free and open” Indo-Pacific will not come free. As Sri Lanka’s experience illustrates, it is not enough to warn against embarking on risky projects. When leaders weigh the short-term incentives of starting projects against the long-term risks of debt and subpar performance, the former often wins out. Better financing alternatives could limit recipient countries’ exposure to high interest rates and project terms that create dangerous dependencies. Capacity-building measures could help train governments to evaluate projects and negotiate terms.
But none of this will solve the fundamental challenge of walking away from unviable projects. Better financing alternatives cannot and should not be made available for all proposed projects. Some projects simply should not be pursued. That responsibility falls to government officials, and in democracies, the citizens who elect them. Sri Lanka’s recent local elections suggest its political winds could change yet again, potentially bringing former President Rajapaksa back to power in 2020. When you climb down from Hambantota’s Martello Tower, there is a plaque and picture of him, smiling, at the bottom of the ladder.
Jonathan Hillman is a fellow with the Simon Chair in Political Economy and director of the Reconnecting Asia Project at CSIS.

What China Owns in Europe

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Chinese women join US Army to obtain green cards

Chinese Hacking Steals Billions; U.S. Businesses Turn A Blind Eye

Chinese Hacking Steals Billions; U.S. Businesses Turn A Blind Eye

APRIL 12, 2019 
This story is part of a joint investigation with NPR, which includes an upcoming documentary, Trump’s Trade War, scheduled to air May 7 on PBS.

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Technology theft and other unfair business practices originating from China are costing the American economy more than $57 billion a year, White House officials believe, and they expect that figure to grow.
Yet an investigation by NPR and FRONTLINE into why three successive administrations failed to stop cyberhacking from China found an unlikely obstacle for the government — the victims themselves.
In dozens of interviews with U.S. government and business representatives, officials involved in commerce with China said hacking and theft were an open secret for almost two decades, allowed to quietly continue because U.S. companies had too much money at stake to make waves.
Wendy Cutler, who was a veteran negotiator at the Office of the U.S. Trade Representative, says it wasn’t just that U.S. businesses were hesitant to come forward in specific cases. She says businesses didn’t want the trade office to take “any strong action.”
“We are not as effective if we don’t have the U.S. business community supporting us,” she says. “Looking back on it, in retrospect, I think we probably should have been more active and more responsive. We kind of lost the big picture of what was really happening.”
None of the dozens of companies or organizations that NPR reached out to that have been victims of theft or corporate espionage originating from China would go on the record.
And for its part, the Chinese government officially denied to NPR and FRONTLINE that it has been involved in such practices.
But that’s not what former U.S. Attorney David Hickton found. When he took over in the Western District of Pennsylvania in 2010, he says, he was inundated with calls from companies saying they suspected China might be inside their computer systems.
“I literally received an avalanche of concern and complaints from companies and organizations who said, ‘We are losing our technology — drip, drip, drip,’ ” he says.
Hickton opened an investigation and quickly set his sights on a special unit of the Chinese military — a secretive group known as Unit 61398. Investigators were able to watch as the unit’s officers, sitting in an office building in Shanghai, broke into the computer systems of American companies at night, stopped for an hour break at China’s lunchtime and then continued in the Chinese afternoon.
“They were really using a large rake — think of a rake [like] you rake leaves in the fall,” he says. “They were taking everything … personal information, strategic plans, organizational charts. Then they just figured out later how they were going to use it.”
But when Hickton went to the companies, eager for them to become plaintiffs, he ran into a problem. None of the companies wanted any part of it. Hickton says they had too much money on the line in China.
“What we were tone-deaf to is [that] we seemed to think we could just walk in and wave the flag of the USA,” Hickton says, “and it just didn’t work.”
David Hickton, former U.S. Attorney for the Western District of Pennsylvania, speaks during a 2014 announcement of indictments against Chinese military hackers, with former Attorney General Eric Holder and former Assistant Attorney General for National Security John Carlin.
David Hickton, former U.S. Attorney for the Western District of Pennsylvania, speaks during a 2014 announcement of indictments against Chinese military hackers, with former Attorney General Eric Holder and former Assistant Attorney General for National Security John Carlin. 
Even today, five years later, Hickton still won’t name most of the companies involved — and they have never come forward.
Eventually he was able to convince five largely local companies and the steelworkers union to come forward, mostly, he says, because he grew up in Pittsburgh and went to school with a lot of the managers.
“I knew these people,” Hickton says. “They trusted me. … We couldn’t ask them to be patriotic at the expense of engendering a shareholder case.”
But, he says, he could have included hundreds — or even thousands — more.
“We’ve made a terrible mistake by being so secretive about our cyberwork,” he says. “We have not fairly told the people we represent what the threats are.”
Government and business leaders interviewed by NPR and FRONTLINE said individual companies were making millions of dollars in China over the past decade and a half and didn’t want to hurt short-term profits by coming forward. They demanded secrecy, even in the face of outright theft.
But now the impact of that secrecy is coming to light, they say. Companies are facing hundreds of millions of dollars in future losses from the theft, and U.S. officials say they are years behind trying to tackle the problem.
Michael Wessel, commissioner on the U.S. government’s U.S.-China Economic and Security Review Commission, says it wasn’t supposed to be this way. U.S. officials had high hopes when China officially joined the World Trade Organization in 2001.
“There was a honeymoon period in the first six or seven years, a desire to try [to] make things work,” Wessel says.
But, he says, starting around 2006, businesses began coming to him saying that China had stolen their designs or ideas or had pressured them into partnerships and taken their technology.
Just like with Hickton, Wessel says, they wouldn’t come forward publicly.
“The business community wanted the administration to come in hard without anyone’s fingerprints being on the reasoning behind it,” he says. “They wanted the profits, but they also didn’t want the possible retribution.”
Wessel says that was never going to work. While nothing in the original trade agreements specifically mentions cybertheft, the U.S. could have brought criminal cases forward, enacted sanctions or opened investigations under rules set up by the World Trade Organization — if a company would let it.
Court cases and documents from recent years offer a clue into what experts believe has really been going on. The Chinese government has been accused of stealing everything from vacuum cleaner designs to solar panel technology to the blueprints of Boeing’s C-17 aircraft.
Hackers from China, often with ties to the government, have been accused of breaking into gas companies, steel companies and chemical companies. Not long ago, Chinese government companies were indicted for stealing the secret chemical makeup of the color white from DuPont. China developed its J-20 fighter plane, a plane similar to Lockheed Martin’s F-22 Raptor, shortly after a Chinese national was indicted for stealing technical data from Lockheed Martin, including the plans for the Raptor.
Chinese hacking made occasional headlines, but none really grabbed Americans’ attention. There was one exception.
The Chinese flag flies outside the Google Inc. office in Beijing, China, on Thursday, Jan. 14, 2010.
The Chinese flag flies outside the Google Inc. office in Beijing, China, on Jan. 14, 2010. The tech giant’s accusation that year that it had been hacked by China cast light on a problem few companies discuss: the pervasive threat from China-based cybertheft. 
In 2010, Google went public in announcing that it had been hacked by the Chinese government. Thirty-four other American companies that were also part of the hack stayed silent. Most have kept it a secret to this day.
NPR tracked down 11 of the total 35 companies. All of them either did not respond to NPR’s request or declined to comment.
A former top Google official who was closely involved in managing the hack told NPR that Google was “infuriated” that no other company would come forward, leaving Google to challenge China alone.
“[We] wanted to out all of the companies by name,” said the official, who spoke on the condition their name not be used because they did not have permission from Google to speak about the incident. “One of the companies we called, said ‘Oh, yeah, we’ve been tracking this for months.’ It was unbelievable. The legal department talked us out of it.”
“We felt like we stood up and did the right thing,” the former official said. “It felt like Helm’s Deep, the battle from The Lord of the Rings in which you’re impossibly surrounded and severely outnumbered.”
James McGregor, a former chairman of the American Chamber of Commerce in China, who was there at the time, says the companies kept even business organizations like his from speaking out.
“What they should have done is held a press conference and say, ‘We 35 businesses have been hacked,’ and you would have put it right back on China,” says McGregor. “Instead, they just all hid under a rock and pretended it didn’t happen.”
McGregor says their silence left little room for punishment, and worse, he says, it hid the extent of the problem.
Across the ocean, cybersleuth Dmitri Alperovitch was sitting at his desk at a security company in Atlanta when Google called looking for backup. He says when he took a look, he was stunned.
“I knew pretty much right away this is something very different,” says Alperovitch, who is co-founder of the cybersecurity firm CrowdStrike. “For the first time we were facing a nation-state and intelligence service that was breaking into companies — not governments, not militaries, but private sector organizations.”
But, he says, U.S. government officials were nowhere to be seen.
“They did not even publicly concur with the attributions that Google had made at the time,” he says.
Obama administration officials say they did not turn a blind eye to the Google hack or cybertheft from China.
The administration was struggling with other important priorities, such as North Korea, Iran, the economy and climate change, says Evan Medeiros, Obama’s top China specialist and then a staffer at the National Security Council.
“Direct confrontation with China does not usually result in lasting solutions,” Medeiros says, noting that President Obama secured an agreement with Chinese President Xi Jinping to halt the attacks and put together a regional trade agreement — the Trans-Pacific Partnership — to add pressure.
But neither measure lasted.
“Hindsight is always 20/20,” he says. “I wish that we had spent more time … finding creative ways to punish them for creating a nonlevel playing field.”
Without those punishments, the attacks continued.
In the year after the Google hack, Alperovitch uncovered two more serious intrusions that, he says, involved thousands of American companies.
In the fall of 2011, he went to the White House to warn officials about what he had found. He sat down in the Situation Room with a half-dozen top administration leaders.
“The most surprising thing to me was the lack of surprise,” Alperovitch says. “I got the distinct impression that none of this was news. When I pressed them on why they were not taking stronger action against China, their response was, ‘We have a multifaceted relationship with China.'”
Alperovitch says White House officials told him that some of the same companies that were being victimized by China also wanted to continue doing business in China.
“They didn’t want to take any action that would jeopardize that billions of dollars of trade we were doing at the time,” he says.
Ask McGregor, the American business representative, how companies can complain about China’s behavior to the U.S. government while simultaneously preventing the government from taking strong action, and his answer is blunt.
“Companies were afraid of China,” he says. “American business companies’ incentives are to make money.”
McGregor today advises dozens of American companies in China, and he says they are confronting a new reality. China is no longer an up-and-comer — it’s a true competitor and quickly closing in on America’s high-tech sector. McGregor says company leaders are beginning to ask whether years of theft and hacking have given China an edge that the United States will no longer be able to stay in front of.
And U.S. government officials are asking whether federal agencies will be able to catch up on enforcement.
Top government leaders told NPR that federal agencies are years behind where they could have been if the theft had been openly addressed.
Even at the Defense Department, as late as 2014, cybertheft from China was not one of the Pentagon’s top priorities.
“Our intelligence agencies were looking at the Middle East, at the Russians,” says Air Force Brig. Gen. Robert Spalding, a China expert who worked for the Joint Chiefs of Staff and the National Security Council.
He says he had never given the issue of Chinese cybertheft much thought. But then, in the fall of 2014, he loaded a confidential briefing into his computer. It was case after case in which the Chinese government had stolen the product designs from almost a dozen high-tech American companies, in a couple of cases almost putting them out of business.
“It immediately changed my conception, my view of the world,” he says. “I realized I did not know how the world worked.”
Spalding says he made it his mission to get the word out to other government agencies. But even in 2015, he says, he was met mostly with a shrug.
He says he went to the departments of Commerce and the Treasury, as well as the U.S. Trade Representative and the U.S. State Department.
“The two responses we got were, ‘Oh my gosh, this is really, really bad.’ And the second one is, ‘That’s not my job,'” Spalding says. “That was almost the universal answer we got every time we went to a senior leader. Bad problem but not my problem.”
Spalding, who retired from the Air Force last year, says in the final years under Obama and now under President Trump, agencies are finally starting to take some action. The Justice Department is bringing criminal cases, the trade representative’s office is investigating China’s dealings and both administrations have brought concerns to the Chinese directly.
But, Spalding says, it may have come 10 years too late.
“We all missed it,” he says. “We have to understand the problem and get to work on it.”