February 07, 2019
We Can’t Tell if Chinese Firms Work for the Party
On Jan. 28, the U.S. Justice Department announced two indictments against China’s largest telecommunications company, Huawei, alleging that the company tried to steal information from T-Mobile and committed fraud to evade U.S. sanctions against Iran. During the announcement of the indictment, FBI Director Christopher Wray clarified that while there was no alleged illegal conduct by the Chinese Communist Party, it is public record that, under China’s Cybersecurity Law, Huawei and other Chinese companies must furnish Chinese government access to its data, undermining U.S. national security. This statement encapsulates a new broadly held view of U.S. policymakers: All Chinese companies are controlled by the party.
Western governments should not automatically conclude that Chinese companies are acting as agents of the party because such firms are ultimately still in charge of their own business decisions. But the lines have been dangerously blurred. Chinese domestic laws and administrative guidelines, as well as unspoken regulations and internal party committees, make it quite difficult to distinguish between what is private and what is state-owned.
Foreign companies and governments began paying closer attention to China’s domestic regulations on the relationship between the company and the state in 2015, when China’s National Security Law came into effect, and the next year, when a Cybersecurity Law was enacted. The National Security Law requires all parties, including citizens, state authorities, public institutions, social organizations, and enterprises, “to maintain national security.” More specifically, and worryingly for the telecommunications industry, Article 28 of the Cybersecurity Law states that network operators, which include telecommunications companies such as Huawei, have to provide “technical support and assistance” to government offices involved in protecting national security. U.S. government officials, including at the FBI, interpreted this vague language to mean that all Chinese companies, including Huawei, are subject to the direct orders of the Chinese government.
Read the full article in Foreign Policy.
More from CNAS
-
Jones Act Relief Extended, Iran War Presses On
President Trump extended a waiver Monday for foreign ships transporting oil around the US as the war in Iran continues to disrupt supply chains. Bloomberg News' Mike McKee & B...
By Chris Kennedy
-
The Blind Spot in U.S.-China AI Competition with Paul Haenle and Terah Lyons
Paul Haenle and Terah Lyons of JPMorganChase join Emily and Geoff to talk about their recent report on U.S.-China AI competition and what policymakers miss when they only look...
By Emily Kilcrease & Geoffrey Gertz
-
Weapons Stockpiles Become the Next Constraint
Rachel Ziemba, adjunct senior fellow at the Center for a New American Security, joins Bloomberg Surveillance to discuss U.S. weapons stockpiles and their impact on future nego...
By Rachel Ziemba
-
Defense / Energy, Economics & Security
Defense Stocks Strain as Conflict WidensBecca Wasser and Chris Kennedy, adjunct senior fellows at the Center for a New American Security, join Bloomberg This Weekend to discuss the Iran War and the its impact on U.S...
By Becca Wasser & Chris Kennedy
