By Jim McShane, Export Solutions

Passed on June 27, 2017, Article 7 of China’s National Intelligence Law defines that it is the responsibility that “All organizations and citizens shall support, assist, and cooperate with national intelligence efforts in accordance with law, and shall protect national intelligence work secrets they are aware of.” Article 10 affirms that, “As necessary for their work, national intelligence work institutions are to use the necessary means, tactics, and channels to carry out intelligence efforts, domestically and abroad.” Appealing to more than just “minds and hearts”, Article 9 advises that “The State gives commendations and awards to individuals and organizations that make major contributions to national intelligence efforts.” Article 14 sums it up stating that, “National intelligence work institutions lawfully carrying out intelligence efforts may request that relevant organs, organizations, and citizens provide necessary support, assistance, and cooperation.”

Defending U.S. Technology

So you’ve never directly heard of, or read, China’s National Intelligence Law? Think Huawei, which has long been accused by a number of nations of intentionally or by negligence having security "backdoors" in their telecommunications equipment allowing access to information by the Chinese government. Huawei is only one example of actions being taken to protect U.S. assets and defend our technology.

An alert recently issued by the US Department of Homeland Security warns of Chinese-made unmanned aircraft systems capable of collecting and transferring operational data, as well as information on the individuals and entities operating them, to China. Unequivocally the warning stated, “The United States government has strong concerns about any technology product that takes American data into the territory of an authoritarian state that permits its intelligence services to have unfettered access to that data or otherwise abuses that access.”  Recent analysis identifies that Chinese drone manufacturer, DJI, holds up to 80% of the drone market share in North America. The threat was first recognized in 2017, when the US Army issued a ban of DJI drones based upon allegations that they shared “critical infrastructure and law-enforcement data with the Chinese government.”

Measures Being Taken

The Director of National Intelligence, the FBI and the National Counterintelligence and Security Center have begun providing classified briefings to large technology companies, venture capitalists and educational institutions who conduct business with China or have relationships with China (Confucius Institutes were the subject of a recent blog by Export Solutions Inc. – “Protect Our Universities Act of 2019” on 4/23/2019).  The briefings focused upon the trade risks with China and the potential threats of cyber-attacks, as well as controlled technology and intellectual property theft.

Just this week, Kevin Patrick Mallory (Mallory was the subject of a recent blog by Export Solutions Inc. – “LinkedIn, national security and Chinese spies” 9/18/2019), a former U.S. Intelligence Agent, was sentenced to 20 years imprisonment for violation of the Espionage Act in that he conspired to send national defense information to a Chinese intelligence operative. Mallory, who was recruited through social media to be a consultant on foreign policy for a Chinese think tank, was actually recruited by Chinese intelligence.

Currently under consideration for additional bans from acquiring U.S. technology are two Chinese video-surveillance giants.  Hangzhou Hikvision Digital Technology Co. and Zhejiang Dahua Technology Co. control one-third of the global market for video surveillance. In August of 2018, the President signed a ban against the use of Dahua and Hikvision, as well as their OEMs, for the US government, for US government-funded contracts and possibly for 'critical infrastructure' and 'national security' usage. The effective day for the ban is August 13, 2019. The ban also included the removal of existing equipment from such facilities. Additionally, equipment from OEMs, which are included under the 'produced' for 'affiliates' clause, will also have to be removed. Did I mention that Dahua and Hikvision are used extensively on U.S. military installations?

In the area of artificial intelligence, bans are being considered against China’s Xiamen Meiya Pico Information Co., Beijing Megvii Co., and Iflytek Co., that would bar them from buying U.S. components or software.

In 2011, China Mobile USA filed an application with the FCC to provide international communications services. This month’s unanimous 5-0 vote from the FCC's commissioners was the result of what the FCC concluded – that there was “a significant risk that the Chinese government would use China Mobile to conduct activities that would seriously jeopardize the national security, law enforcement, and economic interests of the United States." Previously the FCC had granted authorization to operate in the U.S. to two other Chinese firms (China Telecom and China Unicom). These authorizations are now under review.

Moving Forward

Activities and initiatives continue to increase with respect to China and unfortunately it is all too easy to identify these as part of a “Trade War”.  Actions being taken are in response to threats against U.S. National Security through spying, recruitment, and illegal acquisition. The Export Control Reform Act of 2018 provided, in part, some of the tools necessary to protect U.S. technological lead, but now it is time to go back and determine how much harm has already been done.

From the perspective of China, Article 7 of the National Intelligence Law does not merely call upon Chinese organizations and citizens to support intelligence efforts, it requires it.

For more information on U.S. export compliance and how it relates to China, please contact Export Solutions for a free consultation.

 

Jim McShane is a Sr. Consultant, Trade Compliance for Export Solutions -- a full-service consulting firm specializing in ITAR and EAR regulations.