Big Tech Connections to the PRC Government
An OSINT and CSINT analysis in response to the following question:
Using open source information, is it possible to show direct, observable connections between China’s big tech firms and the PRC government?
Using the 2430 Group model of aligning questions/projects with our most capable partner for the task at hand, 2430 Group selected Govini and their National Security Knowledge Graph (NSKG) to analyze Alibaba and determine if any direct lines to the PRC are observable in OSINT/CSINT sources.
2430 Group experts guided Govini’s analysts through a detailed review of Alibaba’s key management personnel (KMPs) and the mapping of Alibaba’s partnerships, subsidiaries, and joint ventures. This analysis uncovered numerous direct fiduciary and controlling ties between Alibaba and majority Chinese State Owned Enterprises (SOEs).
How China's Political System Discourages Innovation and
Encourages IP Theft
(And What To Do About It)
By Glenn Chafetz, Director of 2430 Group
American companies are too slowly coming to the realization that the government of the People’s Republic of China directs an intentional, comprehensive campaign to acquire American and other Western technology by any means necessary. These mechanisms include patent infringement, coerced joint ventures and licensing arrangements, predatory finance, hacking, supply chain corruption, and old fashioned human espionage. However, American companies continue to labor under the misconception that the U.S. government or the government of the PRC can adopt policies to eliminate or reduce this wide scale theft. They cannot. The reason is that intellectual property (IP) theft is not merely a policy, but a feature of the Chinese economy and Party-State. The Communist Party of China (CPC) stands above the law. PRC companies with connections (guanxi) and an umbrella (baohusan) in the CPC can and do safely ignore the law and steal whatever IP they can, both domestically and internationally. This system discourages innovation in favor of theft. This means that absent a fundamental reform of the PRC Party-State and introduction of real rule of law, theft will continue regardless of any policy changes. It also means that U.S. companies must protect themselves. This article explains the nature of the threat, the mechanisms of theft, and the steps American companies can take to safeguard their technology, IP, and other confidential business information.
From The Headlines
Examples of cases in the news of recent threats against American citizens, companies, universities, and other institutions by foreign state-sponsored actors.
U.S. Accuses Harvard Scientist of Concealing Chinese Funding
Prosecutors say Charles M. Lieber, the chair of Harvard’s chemistry department, lied about contacts with a Chinese state-run initiative that seeks to draw foreign-educated talent.
Harvard University Professor and Two Chinese Nationals Charged in Three Separate China Related Cases
The Department of Justice announced today that the Chair of Harvard University’s Chemistry and Chemical Biology Department and two Chinese nationals have been charged in connection with aiding the People’s Republic of China.
Chinese Army Unit Is Seen as Tied to Hacking Against U.S.
The United States finds itself in something of an asymmetrical digital war with China. “In the cold war, we were focused every day on the nuclear command centers around Moscow,” one senior defense official said recently. “Today, it’s fair to say that we worry as much about the computer servers in Shanghai.”
Chinese National Sentenced to Prison in $1 Billion Trade Secret Theft Case
A Chinese national was sentenced to two years in prison for allegedly stealing proprietary information worth about $1 billion from his Oklahoma employer, the U.S. Justice Department said Thursday.
Billion-Dollar Secrets Stolen.
Scientist Sentenced for Theft of Trade Secrets
FBI Oklahoma City Special Agent Quincy Barnett said that there are a number of things companies can do to protect their products, research, and innovations, and that the FBI is eager to develop relationships with firms.
U.S. Preparing Cases Linking North Korea to Theft at N.Y. Fed
Investigators build charges against Chinese middlemen for allegedly aiding 2016 cyberheist of $81 million from Bangladesh
North Korea Suspected of Plundering Crypto to Fund Weapons Programs
A $100 million heist from crypto project Harmony matches tactics from a string of hacks linked to Pyongyang, blockchain experts say
Three North Korean Military Hackers Indicted in Wide-Ranging Scheme to Commit Cyberattacks and Financial Crimes Across the Globe
Indictment Expands 2018 Case that Detailed Attack on Sony Pictures and Creation of WannaCry Ransomware by Adding Two New Defendants and Recent Global Schemes to Steal Money and Cryptocurrency from Banks and Businesses while Operating in North Korea, China
Security firm finds link between China and Anthem hack
A Northern Virginia cyber security firm says it has uncovered links between Chinese government-sponsored researchers and the hack of health insurance giant Anthem.
Member of sophisticated China-based hacking group indicted
For a series of computer intrusions, including 2015 data breach of health insurer Anthem Inc. affecting over 78 million people
Sentenced to the can for taking $120m Coca-Cola secrets to China
A Chinese-American engineer has been jailed for 14 years for stealing trade secrets from Coca-Cola that she then used to set up a multimillion-dollar business in China.
One American and One Chinese National Indicted in Tennessee for Conspiracy to Commit Theft of Trade Secrets and Wire Fraud
Xiaorong You is accused of an egregious, premediated theft and transfer of trade secrets worth more than $100 million for the purpose of setting up a Chinese company that would compete with the American companies from which the trade secrets were stolen.
NSA Chief: Cybercrime constitutes the “greatest transfer of wealth in history”
The loss of industrial information and intellectual property through cyber espionage constitutes the “greatest transfer of wealth in history,” the nation’s top cyber warrior Gen. Keith Alexander said Monday.
How China Steals Our Secrets
Many companies do not even know when they have been hacked. According to Congressional testimony last week, 94 percent of companies served by the computer-security firm Mandiant were unaware that they had been victimized.
China’s cyber espionage campaign described as "the greatest transfer of wealth in history"
Gen. Keith Alexander, director of the secretive National Security Agency and head of the Pentagon’s Cyber Command, said the illicit cyberspace activities essentially amounted to “the greatest transfer of wealth in history.” Alexander said U.S. companies lose $250 billion to intellectual property theft every year.
Iranian Nationals Charged with Conspiring to Evade U.S. Sanctions on Iran by Disguising $300 Million in Transactions Over Two Decades
A federal criminal complaint unsealed today charges 10 Iranian nationals with running a nearly 20-year-long scheme to evade U.S. sanctions on the Government of Iran by disguising more than $300 million worth of transaction
Huawei and Top Executive Face Criminal Charges in the U.S.
The Justice Department unveiled sweeping charges on Monday against the Chinese telecom firm Huawei and its chief financial officer, Meng Wanzhou, outlining a decade-long attempt by the company to steal trade secrets, obstruct a criminal investigation and evade economic sanctions on Iran.
U.S. Authorities Unveil Sweeping Set of Charges Against China’s Huawei
Authorities unseal a pair of indictments just days before U.S.-China trade talks are set to resume
Huawei CFO Wanzhou Meng Admits to Misleading Global Financial Institution
The Chief Financial Officer of Huawei Technologies appeared today in federal district court in Brooklyn, entered into a deferred prosecution agreement (DPA) and was arraigned on charges of conspiracy to commit bank fraud and conspiracy to commit wire fraud, bank fraud and wire fraud.
Justice Dept.: Ohio State researcher shared work with China
A medical researcher and professor who had been working most recently at Ohio State University is facing federal charges in what prosecutors say was a sophisticated scheme to transfer U.S.-backed research to China.
Researcher Charged with Illegally Using U.S. Grant Funds to Develop Scientific Expertise for China
A rheumatology professor and researcher with strong ties to China has been ordered held without bond to face a charge of grant fraud for not disclosing that he was engaged in a sophisticated scheme to use approximately $4.1 million in grants from the National Institutes of Health (NIH) to develop China’s expertise in the areas of rheumatology and immunology.
6 Chinese Men Indicted in Theft of Code From U.S. Tech Companies
The Obama administration on Tuesday announced the arrest of a Chinese professor and the indictment of five other Chinese citizens in what it contended was a decade-long scheme to steal microelectronics designs from American companies on behalf of the Chinese government.
Chinese Professors Among Six Defendants Charged with Economic Espionage and Theft of Trade Secrets for Benefit of People’s Republic of China
The 32-count indictment, which had previously been sealed, charges a total of six individuals with economic espionage and theft of trade secrets for their roles in a long-running effort to obtain U.S. trade secrets for the benefit of universities and companies controlled by the PRC government.
Foreign-Direct Product (FDP) Rules
"Foreign-produced items located outside the United States are subject to the EAR when they are a 'direct product' of specified 'technology' or 'software,' or are produced by a plant or ‘major component’ of a plant that itself is a 'direct product' of specified 'technology' or 'software.'"
The Internal Traffic in Arms Regulations (ITAR)
"The Department of State is responsible for the export and temporary import of defense articles and services governed by 22 U.S.C. 2778 of the Arms Export Control Act (AECA) and Executive Order 13637. That section of the AECA is implemented by the International Traffic in Arms Regulations (ITAR," 22 CFR parts 120-130)."
Commerce Control List (CCL)
"A key in determining whether an export license is needed from the Department of Commerce is knowing whether the item you intend to export has a specific Export Control Classification Number (ECCN)."