Huawei’s dirty tricks department in Africa

Access Archive
Jeremy Goldkorn

Dear Access member,

A couple of things:

If you’re going to the Edinburgh Fringe festival, check out Before the Wall, an Anglo-Chinese production of a play set during the Second Opium War (1856–1860), which ended in the sacking of the old Summer Palace — an event for which China may never forgive Britain. There are interviews with the playwright and cast on YouTube. 

The Center for Strategic and International Studies is holding an executive education course on China’s Belt and Road Initiative on September 11–13. You can get details on the event and buy tickets here. 

Our words of the day are the names of two countries where the Wall Street Journal has found evidence of nefarious activities by Huawei technicians: Uganda (乌干达 wūgāndá) and Zambia (赞比亚 zànbǐyà). 

—Jeremy Goldkorn, Editor-in-Chief

1. Huawei helps African governments spy on opponents

The Wall Street Journal has published an investigation in text and video (paywall) by Josh Chin, Joe Parkinson, and Nicholas Bariyo on Huawei’s activities in Africa, focusing on Uganda and Zambia, where the company has helped governments spy on opponents. 

The investigation is based on multiple sources, but some of the evidence is in plain view: Zambia’s ruling Patriotic Front posted on its Facebook page in April that police officers working with “Chinese experts at Huawei have managed to track” and arrest four anti-government bloggers.

The investigation did not find evidence of spying on behalf of Beijing in Africa, nor did it find that Huawei executives in China approved of, or planned, the behavior described in the report. This is what the investigation did find:

  • In Uganda in 2018, government intelligence officers worked with Huawei technicians to access the WhatsApp group of Bobi Wine, a pop star and opposition leader. Ugandan security forces then disrupted Wines’ plans for street rallies, and arrested him and dozens of his supporters. (My favorite Bobi Wine songs are Carolina and Mwesotinge; there’s a long Youtube mix of his music here.)

  • In Zambia, “Huawei technicians helped the government access the phones and Facebook pages of a team of opposition bloggers running a pro-opposition news site, which had repeatedly criticized President Edgar Lungu.” 

  • Two Huawei experts were, or are, “based in a cyber-surveillance unit in the offices of Zambia’s telecom regulator.” They “pinpointed the bloggers’ locations and were in constant contact with police units deployed to arrest them,” apparently using Huawei’s  “safe cities” surveillance systems.

  • “Huawei rejects completely these unfounded and inaccurate allegations against our business operations” was the company’s response when questioned by the WSJ. 

In other Huawei news, every Chinese patriot’s favorite phone maker is in trouble online for listing Taiwan as a country “in the time zone settings on Huawei phones when the user interface is in traditional Chinese language, commonly used in Taiwan and Hong Kong,” according to TechNode. 

2. Economic slowdown and GDP omertà

New economic data about China’s second quarter is out. Here are the key numbers drawn mostly from official sources, abridged from this Reuters article:

  • Economic growth cooled to a near 30-year low of 6.2 percent in the second quarter.

  • Industrial output growth slowed markedly to 4.8 percent in July from a year earlier. Infrastructure investment, which Beijing has been counting on to stabilize the economy, also dropped back.

  • Crude steel output fell for a second straight month, while production of motor vehicles continued to fall by double digits. Hi-tech manufacturing output rose by a slower 6.6 percent, and the country’s power output edged up just 0.6 percent.

  • Property investment slowed to its weakest this year. It rose 8.5 percent in July on-year, from June’s 10.1 percent. 

  • Retail sales were weaker than the most pessimistic forecast, rising 7.6 percent in July, “well off consensus of 8.6 percent.” 

  • Unemployment edged up to 5.3 percent from 5.1 percent in June, based on surveys, “though market watchers believe it could be much higher.”

As you digest these numbers, you might want to read a new note from Logan Wright and Daniel H. Rosen of Rhodium Group: China’s GDP: The costs of omertà: 

China’s GDP data have been far too smooth to be realistic over the past four years, and the available benign explanations for the data are unpersuasive. This note explains the reasons for the awkward code of silence within official policy debates in discussing problems with the most common measure of China’s economy, and the costs of this silence both for China and the rest of the world.

3. Xi Jinping ‘unlikely’ to send troops to Hong Kong

Will China send in the troops? 

Anna Fifield of the Washington Post says China is threatening to use force in Hong Kong but hoping threats will suffice. Scholar Minxin Pei says a Tiananmen-style crackdown would be catastrophic for China.  

Scholar and respected commentator on elite Chinese politics Willy Wo-Lap Lam (林和立 Lín Hélì) argues on the Jamestown Foundation China Brief that “it is unlikely” that Xí Jìnpíng 习近平 “will give the go-ahead for the Hong Kong Garrison to quash the ‘turmoil’” in Hong Kong. Lam provides two key reasons:

  • Loss of face: Chinese troops in Hong Kong “would demonstrate that, after 22 years of rule, the CCP has failed to win hearts and minds among Hong Kong’s 7.5 million residents.”

  • “Even more devastating would be the economic fallout in both Hong Kong and the mainland. Despite the rise of Shanghai as a regional financial center, the Chinese economy is still dependent on Hong Kong to raise money for its ambitious modernization programs.”

So what will Beijing do? Lam says “Beijing has a better option: much of the same impact as deploying the PLA’s Hong Kong Garrison can be achieved through surreptitiously stationing in the Special Administrative Region (SAR) Chinese police officers from neighboring Guangdong Province, who have started working seamlessly with indigenous police in Hong Kong.”

  • Mainland police officers are already working in Hong Kong and there will likely be more of them in the coming months. 

  • Beijing intends “to wait for public opinion to turn,” hoping that violence from protesters alienates “large swathes of Hong Kong’s silent majority,” and that declining economic numbers “will pit members of the Hong Kong business community—many of whom are diehard opponents of the Extradition Bill — against the protestors.” 

  • “More power will be given to the Central Liaison Office (CLO), Beijing’s representative in Hong Kong “which is grooming a cadre of Cantonese-speaking loyalists — including underground Communist Party members — for senior slots in the SAR administration.” Lam says “the wily and ambitious head of the CLO, Wáng Zhìmín 王志民, who is a member of the CCP’s ruling Central Committee, could become the de facto principal policymaker of the SAR.”

  • In the long term, Beijing will encourage migration. “Since the change of sovereignty in 1997, some 1.5 million mainlanders have been given permanent residence and voting rights in the SAR. Opinion polls on the political inclinations of these new immigrants have shown they are more sympathetic toward Beijing’s harsh line of taming Hong Kong’s democratic aspirations.”

Lap does not discuss other methods at Beijing’s disposal such as sanctioning companies and their employees for political participation and plausibly deniable harassment of activists by thugs working with Chinese security agents and police. Nor does he mention the possible role of agents provocateurs — the Global Times “journalist” carrying an “I ♥︎ police” T-shirt who got abused by protesters yesterday may well have been one. 

In other news from Hong Kong:

Beijing continues to promote the absurd conspiracy theory that American government “black hands” are behind the protests. See for example this Xinhua News Agency editorial (in English, Chinese).  

“Hong Kong protesters have apologised to the public for the chaos caused at the city’s airport, one of the world’s busiest transport hubs, after demonstrations brought flights to a halt for two consecutive days and stranded thousands of visitors,” reports the Guardian. 

Cathay Pacific Airways has fired two pilots it had previously suspended, the company announced on Wednesday,” reports the South China Morning Post. “Hong Kong’s flag carrier said it had sacked a pilot who was arrested and charged over clashes between police and anti-government protesters in Sheung Wan on July 28.”

“The attacks on two mainland Chinese men at Hong Kong airport on Tuesday evening by anti-government protesters have set off a firestorm of criticism on the mainland,” reports the South China Morning Post. (See yesterday’s newsletter for details on the incidents.)

“The vast majority of Hong Kong’s pro-democracy protesters are university-educated, almost half are in their twenties and nearly everyone loathes the police, according to an academic survey that sheds new light on the movement,” reports Agence France-Presse. 

4. China’s top diplomat meets U.S. counterpart

“China’s top diplomat Yáng Jiéchí 杨洁篪 has made an unexpected trip to New York for talks with his U.S. counterpart Mike Pompeo, in an apparent attempt to close the growing distance between the two nations, including over protests in Hong Kong,” reports the South China Morning Post. One observer commented, “This meeting will not be very useful, but shows that both sides can still manage to talk.”

The meeting also comes after “Beijing hailed the decision by US President Donald Trump to delay or remove some planned tariffs against Chinese products as a ‘positive signal,’” per the SCMP. However U.S. Commerce Secretary Wilbur Ross told CNBC that Donald Trump’s “decision to delay upcoming tariffs on certain items was to help consumers during the Christmas shopping season… not a ‘quid pro quo’ trade concession with Beijing.”

Other news from the U.S.-China techno-trade war, day 405 by our count:

“The U.S. will add China General Nuclear Power Group, the country’s biggest state-owned nuclear company, to its “entity list,” the Department of Commerce said Tuesday, according to Asian Nikkei Review (porous paywall). 

Australia is feeling the effects of the trade war: “Wool prices in the world’s dominant exporter, Australia, are plunging after Chinese mills closed their order books, with buyers citing an escalation in the U.S.-Sino trade war,” reports Reuters. 

—Jeremy Goldkorn 

BUSINESS AND TECHNOLOGY:

Tencent Holdings Ltd.’s comeback is taking a little longer than expected.

China’s leading social media and gaming company posted disappointing revenue growth after rivals like ByteDance Inc. and a broader economic slowdown sapped advertising. Online ad revenue grew a worse-than-expected 16 percent as the internet wunderkind undercut Tencent’s efforts to load more ads into its WeChat super-app.

  • Tencent’s underperforming gaming division is also a major factor.  CNBC explains:

[T]he Chinese government halted game approvals last year. Video games need to be approved by regulators in order to be released and monetized in China. That hurt Tencent’s business, which relies on a large portion — nearly 41% in the first quarter — of revenue from online gaming.

In July 2017, the government issued an ambitious master plan to lead the world in AI research and deployment by 2030. The road map outlined the steps by which AI will be deployed in areas such as military readiness and city planning, and the government announced that AI courses would be included in all primary and secondary schools. In response, the Chinese Ministry of Education has drafted its own “AI Innovation Action Plan for Colleges and Universities,” calling for 50 world-class AI textbooks, 50 national-level online AI courses, and 50 AI research centers to be established by 2020.

But it’s a long way from buzzwords to reality. 

Laocaibao, a peer-to-peer (P2P) lending platform ultimately owned by private conglomerate Zendai Group, is the latest casualty of the troubles that have engulfed the scandal-hit industry over the past three years.

China’s troubled Anbang Insurance Group has put its $2.4 billion property portfolio in Japan up for sale and previous owner Blackstone Group is bidding, two people familiar with the company’s plans said. 

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

Would you send your child to a school named after a cigarette brand? What if it was one of only two schools in your area and boasting far better infrastructure? What if the school also had an inspirational slogan such as “genius is from hard work, tobacco helps you excel” on a sign or its walls, and a tobacco company’s logo on its building? Would you care if the school was built by a tobacco company?

  • Can China meet Paris climate goals?
    China govt think-tank presses for 2025 carbon dioxide cap to fight climate change / Reuters via Straits Times
    As part of its commitment to the Paris Climate Agreement, China has pledged to bring its total emissions to a peak by “around 2030”. But an influential government think tank, the National Centre for Climate Change Strategy and International Cooperation, warns that to meet the goal, China needs to set “absolute limits on carbon emissions” in its 2021-2025 five-year plan.

POLITICS AND CURRENT AFFAIRS:

“It is deeply disturbing that the FBI is now asking for universities to monitor ethnic Chinese academics across the board. This goes against our American values — it is racist and morally wrong to blanket profile any race or ethnicity,” said Rita Pin Ahrens, OCA National Executive Director. 

An ambitious project to build the longest undersea rail tunnel in the world between Helsinki and Tallinn is being held up by the Estonian government over worries about the plan and where the money is coming from.  It should let the life-changing link go ahead, even if its Chinese funding looks suspicious.

SOCIETY AND CULTURE:

Frank Tsao Wen-king (Cáo Wénjǐn 曹文锦), the Shanghai-born entrepreneur who fled to Hong Kong amid the turmoil of the Chinese civil war and went on to build one of Asia’s biggest shipping empires, has died aged 94.

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For high-school graduates across China, two days in June mark some of the most life-changing moments in their lives. That’s when the gaokao, China’s university entrance exam, takes place.

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Jeremy Goldkorn worked in China for 20 years as an editor and entrepreneur. He is editor-in-chief of The China Project, and co-founder of the Sinica Podcast. Read more

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