Thread: Trump, China, ZTE and the art of the deal

Trump, China, ZTE and the art of the deal

Analysis by Stephen Collinson, CNN
Updated 1:23 AM ET, Tue May 15, 2018

(CNN)For President Donald Trump, foreign policy is all about the deals that are ripe to be done and the powerful men who make them.

So while it seems illogical that someone who won power accusing China of stealing American jobs now wants to save US-sanctioned technology firm ZTE to rescue Chinese jobs, the move is perfectly compatible with his character.

ZTE's fate is evolving into a multi-layered drama that encapsulates tense trade posturing between two economic superpowers that are also locked in high-stakes geopolitical maneuvering over the future of a nuclear North Korea.

It offers fresh insight into Trump's way of doing business, his willingness to flout the norms of presidential governance and his own impulsive behavior -- all of which proved so attractive to voters soured on establishment politics in 2016.

But to Trump's critics, the tussle over ZTE offers yet more evidence that he's prone to placing his personal political gain over the national interest, takes profound decisions without regard for the risks and is guilty of hypocrisy.

It's also raising questions about whether Trump's hard line on trade is softening ahead of talks with Chinese negotiators in Washington this week.

"This is quite unprecedented," Michael Hirson, a former US Treasury trade representative to Beijing, told CNN's Richard Quest on Monday, arguing that the President's gambit could mean he is on a different page from his most hawkish advisers on the China trade dispute.

The Trump administration last month banned ZTE, which makes smartphones running Google's Android operating system, from using US technology after accusing it of violating a deal in which it agreed to pay $1.2 billion for evading US sanctions on North Korea and Iran.

Yet on Sunday, out of nowhere, Trump tweeted that "President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!"

Trump posted a follow-up tweet on Monday that was just as staggering, possibly influenced by hours of news coverage about motivation in offering to do the deal:

"ZTE, the large Chinese phone company, buys a big percentage of individual parts from U.S. companies. This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi."
Trump has repeatedly stressed the warmth of his friendship with Xi since he welcomed the Chinese leader to his Mar-a-Lago resort last year and was honored with lavish hospitality during his return visit to Beijing.

The trip reflected how Trump -- who lacks a firm grounding in international relations and policy experience -- roots his foreign policy in forging friendships with leaders like Xi, France's Emmanuel Macron or Russia's Vladimir Putin, often drowning them in compliments and basking in flattery in return.

Why save ZTE?

The case for saving ZTE is that doing so could yield significant concessions in return -- and the United States should use every bargaining chip it has to secure a win in the deepening trade confrontation with Beijing.

Trump also needs China's cooperation, and continued pressure, on North Korea as he prepares for his summit with the isolated state's leader, Kim Jong Un, in Singapore on June 12.

There is also the argument that ZTE is emblematic of the entwined US-China economic relationship, given that thousands of jobs in both countries depend on its survival farther down the high-tech supply chain.

But Trump's intervention on ZTE surprised trade experts because it rejected the principle that trade enforcement decisions should not be used and potentially waived for political reasons -- a bridge other presidents have hesitated to cross.

Avoiding that linkage spares presidents from requests from every foreign leader they meet to intervene in niggling trade disputes.

Politicizing enforcement action also weakens US arguments to foreign governments that the rule of law and good governance are crucial to healthy political systems and regulated interaction between governments.

Further, Trump's hint of concessions on ZTE played into critics' concerns that the President cedes leverage before securing substantial concessions in return -- despite his claim to be the world's best deal-maker.

Characteristically, the President's order seemed to take his own government by surprise. Commerce Secretary Wilbur Ross, who last month accused ZTE of "egregious" violations, was singing a different tune Monday.

"The question is: Are there additional remedies to the one we had originally put forward?" he said at the National Press Club. "That's the area we will be exploring very, very promptly."

Ross also said he wouldn't be surprised if the issue came up in talks with Chinese Vice Premier Lui He in Washington this week.

Looming trade war

The Trump administration is locked in a confrontation with China over alleged intellectual property theft, market access and the size of the Chinese trade surplus with the US, which prompted Trump to threaten $150 billion in import duties on Chinese goods.

But his critics worry that his positioning on ZTE is a first sign of a broader shift.

"He is backing off, and his policy is now designed to achieve one goal: Make China great again," said Senate Democratic leader Chuck Schumer, of New York. "The toughest thing we could do, the thing that will move China the most, is taking tough action against actors like ZTE."

Trump's tweets also exposed him to accusations of inconsistency, since the administration on Sunday warned of possible sanctions against European firms that do business with Tehran after pulling out of the Iran nuclear deal last week.

"The hypocrisy here is staggering," former State Department spokesman John Kirby told CNN's Wolf Blitzer on Monday.
"He has got his new ambassador to Germany out there last week saying German companies that do business with Iran -- we are going to slam ya -- and now we are going to go ahead and just forget the billion dollars of fines that we assigned to that company for selling that technology to both Iran and North Korea."

The ZTE situation could also expose Trump politically ahead of midterm elections in November.

CNN's Cristina Alesci reported on Monday that the administration was seeking concessions from the Chinese government in exchange for easing restrictions on ZTE. A deal could see China remove proposed agricultural tariffs, a Commerce Department official familiar with the discussions said.

Those tariffs, apparently targeted direct at Trump country in Midwestern states, were threatened in response to the President's vow to tax China's imports to narrow the US trade deficit with Beijing.If agricultural penalties are waived in quid pro quo with ZTE, the White House could face accusations of prioritizing Trump's political fortunes over national security. Already, some Republicans are accusing the White House of ignoring the concerns of US intelligence agencies that ZTE could be used by Chinese spy agencies to conduct cyber-espionage in the United States.

"Problem with ZTE isn't jobs & trade, it's national security & espionage," tweeted Sen. Marco Rubio, a Florida Republican. "We are crazy to allow them to operate in U.S. without tighter restrictions."

https://www.cnn.com/2018/05/15/polit...ics/index.html

Already, some Republicans are accusing the White House of ignoring the concerns of US intelligence agencies that ZTE could be used by Chinese spy agencies to conduct cyber-espionage in the United States.

"Problem with ZTE isn't jobs & trade, it's national security & espionage," tweeted Sen. Marco Rubio, a Florida Republican. "We are crazy to allow them to operate in U.S. without tighter restrictions."

Can someone explain to me how someone's private personal cell phone could be used to threaten US national security and conduct cyber-espionage in the United States? Wouldn't the person who owns the cell phone have to be a spy to use it that way? And couldn't they use any cell phone to do such things? So shouldn't the restrictions which I'm all for apply to all cell phone makers, foreign and domestic?

Okay, this article explains "concerns" of what could be if Chinese telecommunications companies are allowed to purchase US high-technology companies. It's not about selling their cell phones, it's about acquiring US companies. That's completely different than trade issues, that's an SEC and government-controlled operation for the very purpose of preventing monopoly and protecting national security.

These are reviews that are conducted with each and every acquisition of a US company whether oil or cell phones or technology or anything else. Of course foreign acquisition by any country (and don't forget the Brits who MEDDLED in the 2016 US Presidential Election) of high technology or oil or any other strategic business related to our independence and national security should be prohibited in most cases. I think the "intel" community is a little late in the game since our technologies are revealed as part of our US companies doing business in China.

They don't have to buy our companies here to get the technology, they get it when our companies decide to branch into the Chinese market with their own operations in China. That's the intellectual property theft issue that Trump has been harping on for years that he wants to solve in these trade negotiations with China. Anyway, this article sheds light on what they're actually talking about:

US intelligence officials all say they wouldn't use a Chinese-made Huawei or ZTE phone for fear of spying

Doina Chiacu and Patricia Zengerle, Reuters
Feb. 14, 2018, 4:21 AM

US senators warned that China is trying to gain access to sensitive U.S. technologies and intellectual properties through telecommunications companies, academia and joint business ventures.

Chinese firms have come under greater scrutiny in the United States in recent years over fears they may be conduits for spying, something they have consistently denied.

Under questioning from Republican Senator Tom Cotton, none of the Intelligence officials said they would use Chinese made Huawei or ZTE phone or device.

WASHINGTON (Reuters) - China is trying to gain access to sensitive U.S. technologies and intellectual properties through telecommunications companies, academia and joint business ventures, U.S. senators and spy chiefs warned on Tuesday at a Senate hearing.

Republican Senator Richard Burr, chairman of the Senate Intelligence Committee, said he worried about the spread in the United States of what he called "counterintelligence and information security risks that come prepackaged with the goods and services of certain overseas vendors."

"The focus of my concern today is China, and specifically Chinese telecoms (companies) like Huawei (Technologies Co Ltd [HWT.UL]) and ZTE Corp, that are widely understood to have extraordinary ties to the Chinese government," Burr said.

Chinese firms have come under greater scrutiny in the United States in recent years over fears they may be conduits for spying, something they have consistently denied.

A Huawei spokesman said the company is aware of "U.S. government activities seemingly aimed at inhibiting Huawei's business in the U.S. market." He also said the firm is trusted by governments and customers in 170 countries and poses no greater cyber security risk than other vendors.

ZTE officials did not immediately respond to a request for comment.

Burr said he worried that foreign commercial investment and acquisitions might jeopardize sensitive technologies and that U.S. academic research and laboratories may be at risk of infiltration by China's spies.

Several of the U.S. spy agency chiefs who testified at the committee's annual worldwide threats hearing cited concerns raised by what they called China's "all of society" approach toward gaining access to technology and intellectual property.

"The reality is that the Chinese have turned more and more to more creative avenues using non-traditional collectors," said FBI Director Christopher Wray in response to a question about student spies.

Senator Mark Warner, the committee's Democratic vice chairman, said he worried about commercialization of surveillance technologies as well as the close relationship between the Chinese government and companies.

"Some of these Chinese tech companies may not even have to acquire an American company before they become pervasive in our markets," Warner said.

Wray said the United States needed a more "strategic perspective on China's efforts to use acquisitions and other types of business ventures."

Under questioning from Republican Senator Tom Cotton, none of the Intelligence officials said they would use a Huawei or ZTE product.

Last week, Cotton and Republican Senator Marco Rubio introduced legislation that would block the government from buying or leasing telecoms equipment from Huawei or ZTE, citing concern the companies would use their access to spy on U.S. officials.

In 2012, Huawei and ZTE were the subject of a U.S. investigation into whether their equipment provided an opportunity for foreign espionage and threatened critical U.S. infrastructure - something they have consistently denied.

"Chinese cyber espionage and cyber attack capabilities will continue to support China's national security and economic priorities," said Dan Coats, the director of national intelligence.

Speaking in Beijing, Chinese Foreign Ministry spokesman Geng Shuang said the United States was the world's most powerful country.

"If even the United States thinks it is surrounded by threats, what should other countries do?" Geng told reporters.

"I don't know where the United States' sense of insecurity comes from. But I want to emphasize that in this world there is no such thing as absolute security. One country's security can't be put before another country's security."

http://www.businessinsider.com/us-in...-secure-2018-2

The director of the FBI says the whole of Chinese society is a threat to the US — and that Americans must step up to defend themselves

Michal Kranz
Feb. 13, 2018, 9:00 PM

FBI Director Christopher Wray issued a dire warning about China's growing influence during a Senate Intelligence Committee hearing on Tuesday.

He said there were a variety of ways China was implementing a plan to replace the US as the foremost global power, including by infiltrating academia.

Recent reports have suggested that while China's Confucius Institutes are ostensibly language-learning centers, they often serve as vehicles for Chinese propaganda at universities around the world, including the US.

Intelligence experts have also cited Chinese cybersecurity threats as a major concern in 2018.

FBI Director Christopher Wray on Tuesday reiterated a commonly held view among US intelligence officials that China is seeking to become a global superpower through unconventional means — but he framed it as both a governmental and a societal threat to the US.

Speaking before the Senate Intelligence Committee alongside the heads of other US intelligence agencies, Wray said that to undermine the US's military, economic, cultural, and informational power across the globe, China was using methods relying on more than just its state institutions.

"One of the things we're trying to do is view the China threat as not just a whole-of-government threat, but a whole-of-society threat on their end," Wray said. "And I think it's going to take a whole-of-society response by us."

In response to a question from Sen. Marco Rubio about whether China was planning to overtake the US as the world's most dominant power, Dan Coats, the director of national intelligence, echoed Wray.

"There is no question that what you have just articulated is what's happening with China," Coats said. "They're doing it in a very smart way. They're doing it in a very effective way. They are looking beyond their own region."

Coats said multiple agencies were conducting "intensive studies" to understand the ways China is looking to carry out its global agenda.
The double-edged sword of open academics

Wray pointed to China's use of unconventional intelligence sources as an example of its reach.

He said "collectors" — what the intelligence community calls people who collect intelligence on behalf of agencies or governments — had infiltrated US universities.

"I think in this setting, I would just say that the use of nontraditional collectors — especially in the academic setting, whether it's professors, scientists, students — we see in almost every field office that the FBI has around the country," Wray said.

"They're exploiting the very open research-and-development environment that we have, which we all revere, but they're taking advantage of it," Wray said, adding that there was a "naiveté" among academics about the risks posed by foreign nationals at US universities.

china confucius institute Xi's immediate predecessor, Hu Jintao, in 2011. REUTERS/Chris Walker/Pool

The Institute of International Education found that US universities admitted more than 1 million international students in the 2015-16 school year, nearly 329,000 of which were Chinese students.

While there is no evidence that a large number of Chinese students or academics at US universities poses a threat to US interests, the Chinese government uses several education efforts as vehicles for soft power.

One is the Confucius Institutes, which Rubio alluded to during the Senate hearing.

These institutes mirror many other foreign-language-education entities that countries fund around the world, but with a couple of caveats. Rather than existing as standalone bodies, they are inserted into universities in the US and elsewhere. And Foreign Policy reported last year that though their mission is to promote cultural diplomacy, they disseminate Chinese propaganda and restrict what professors.

In response to the perceived danger to open expression posed by these institutes, the University of Chicago and Pennsylvania State University closed the Confucius Institutes on their campuses in 2014. Other global universities have followed suit.

Confucius Institutes also have a presence in Africa, where China is growing its economic and political power.

Quartz reported in November that people in countries like Zambia and Zimbabwe were encouraged to view China as a positive economic force and a source of progress and opportunity as part of the "Look East" policy many African countries have implemented.

As a result of this push, the number of African students in China has skyrocketed over the past 10 or so years, the Quartz report says.
Chinese cybersecurity threats

During Tuesday's Senate hearing, the top US intel chiefs drew attention to Chinese cybersecurity strategies.

"Frankly, the United States is under attack by entities that are using cyber to penetrate virtually every major action that takes place" within the US, Coats said.

Federal Bureau of Investigation (FBI) Director Christopher Wray; Central Intelligence Agency (CIA) Director Mike Pompeo; Director of National Intelligence (DNI) Dan Coats; Defense Intelligence Agency Director Robert Ashley; National Security Agency (NSA) Director Michael Rogers; and National Geospatial Intelligence Agency Director Robert Cardillo testify before a Senate Intelligence Committee hearing on US security chiefs testifying at the Senate Intelligence Committee's hearing on worldwide threats. Thomson Reuters

The Worldwide Threat Assessment of the US Intelligence Community, also released Tuesday, outlines China's cyber capabilities.

"China will continue to use cyber espionage and bolster cyber attack capabilities to support national security priorities," the report says, adding that while China's cyber activity is at much lower levels than it was before September 2015, it is still threatening.

It continues: "Most detected Chinese cyber operations against US private industry are focused on cleared defense contractors or IT and communications firms whose products and services support government and private sector networks worldwide."

Pointing to the findings, several intelligence heads reaffirmed the need to beef up US counterintelligence efforts in cyber. Many identified it as one of the top priorities for the intelligence community in the coming year.

Wray said that with so many facets of American society under threat, it would take a lot more than just intelligence agencies to combat China.

"It's not just the intelligence community," he said, "but it's raising awareness within our academic sector, within our private sector, as part of the defense."

http://uk.businessinsider.com/china-...18-2?r=US&IR=T