How China’s Telecoms Steal America’s Most Sensitive Information and What Needs to Be Done About It?

Simone Gao:
On July 25, CNN published an exclusive report that revealed a dramatic escalation of Chinese espionage on US soil over the past decade. The Report says Since at least 2017, federal officials have investigated Chinese land purchases near critical infrastructure, shut down a high-profile regional consulate, that is, the Chinese Consulate in Huston. The US government believed it to be a hot bed of Chinese spies and stonewalled what they saw as clear efforts to plant listening devices near sensitive military and government facilities.

The report also highlighted Huawei, China’s biggest telecommunications company that was once poised to take over the world 5G deployment until the America-led coalition stopped it. The report says the FBI uncovered Huawei  equipment atop cell towers near US military bases in the  rural Midwest. According to multiple sources familiar with the matter, the FBI determined the equipment was capable of capturing and disrupting highly restricted Defense Department communications, including those used by US Strategic Command, which oversees the country’s nuclear weapons.

It’s unclear if the intelligence community determined whether any data was actually intercepted and sent back to Beijing from these towers. Sources familiar with the issue say that from a technical standpoint, it’s incredibly difficult to prove a given package of data was stolen and sent overseas.

It is significant that this report came after Hua Wei’s 5G ambition had been shattered by the U.S. government two years ago. The defeat of Hua Wei in 5G was a great victory on the side of the free world. Many people think the threat posed by Huawei is gone. But is it really? To find out the answer, I spoke with Keith Krach, former under secretary of State for the Trump administration, who was behind the Hua Wei take down operation, about this matter and more.

Simone Gao:
Do you think Huawei still poses a significant national security threat to America right now and what should be done about it?

Keith Krach:
Absolutely, Simone, and I am sure our intelligence agencies and the Defense Department are monitoring this closely, but it should be shut down immediately. You know, Huawei is an arm of the Chinese government. They have some of the most sophisticated capabilities in the world to do all kinds of things that might not be detected. And obviously the information in that area is some of the most vital to our national security. We’re talking about the nuclear arsenal and it ranks absolutely near the top in terms of the kind of information the CCP wants, that information is priceless.

Simone Gao:
You are the person who executed the Huawei take-down operation and later expanded that approach to create the clean network. What are the essential facts you learnt about China’s technological aggression from that operation and what is your core strategic response to that aggression?

Keith Krach:
Well, Simone, here’s what I learned: that Huawei is the most important company to the CCP. It’s the backbone for their surveillance state. They’re the national champ in 5G. And you know, this tool is a tool that, you know, the worst of dictators could have only dreamed of, you know, they use this in Xinjiang, they use it literally everywhere. They test it out in Xinjiang, they monitor all the people in China. Now they’re exporting it like, dictator out of the box. And you know, it seemed two years ago was inevitable that the CCP’s master plan to control 5G was absolutely unstoppable. But as you pointed out, the Clean Network Alliance of Democracies ended up defeating this master plan. And, you know, the interesting thing is they’ve tried to use this everywhere and they will stop at nothing.

Keith Krach:
You know, the other big area, and Huawei has a subsidiary in this area is underwater cable, because there you can literally tap at anything. And I’ll tell you what we found out as we went around the world, building that Clean Network Alliance of Democracies, which has now formed the basis for president Biden’s internet declaration, is that nobody trusts the CCP and that’s their biggest weakness. And, you know, if you look at the information that 5G networks carry, you know, we’re not just talking about a smartphone, we’re talking about sanitation systems, utility grids, power systems, internet of things, manufacturing processes. This is vital. So, you know, we have to stay on top of this as democracies all around the world.

Simone Gao:
I understand recently you formed the Krach Institute for Tech Diplomacy and the Global Tech Security Commission. I believe they are the continuation of your response to China’s technological aggression. So can you tell us more of the thoughts behind these efforts?

Keith Krach:
Sure, Simone. You know, the key to securing freedom for this next generation is securing technology and tomorrow’s tech must be trusted tech and developed by a global trust network of like-minded countries, companies, and individuals who respect the rule of law, human rights, labor practices, the environment, respect for property of all kinds, and of course, respect for national sovereignty. And, you know, the objective is to develop the definitive global tech security strategy to safeguard freedom through the adoption of trusted technology, by designing a set of sector specific strategies, as well as taking an integrated approach that democracies can adopt to counter techno-authoritarianism. So three factors make up the commission’s scope uniquely, strategic in terms of countering those threats. First, the commission will focus on in-depth strategies in the 17 critical tech sectors that the White House name.

Keith Krach:
Basically the same ones that we used in the last administration just broken up a little bit differently. And the key is to integrate those into an overarching tech strategy. The second is, the scope is gonna be global and also private sector led, with commissioners from international companies and institutions. And we will represent more than a dozen countries as parts of democracies’ common efforts to compete in this emerging technology space. You know, the third thing is while previous commissions have primarily focused on analysis of the problems with recommendations limited to defensive policies, the global tech security commission will integrate offensive and defensive strategies and it will be beginning to build a global tech trust network, kind of carry on that Clean Network Alliance of Democracies, as well as defining overarching tech trust standards. And the objective is to accelerate the adoption of trusted technology,

Simone Gao:
Right. One of the strategies Global Tech Security Commission features is that the scope of the operation will be global and private sector led. Why is that? Why should the private sector instead of the government lead the effort?

Keith Krach:
So, first of all, Simone, the commission’s global tech security strategy is designed to complement recent multinational efforts that are led by governments to counter authoritarianism, such as the Indo-Pacific economic framework and the future of the internet declaration, as I talked about before. And by building a public- private coalition to promote democratic trust principles and digital trust standards and the widespread adoption trusted technology, you know, this is gonna have a really, really big impact. You know, one of the things that we’re seeing is, you know, some of the most prominent board members in the United States are demanding from their CEOs a China contingency plan, with the heightened risk of a conflict between China and Taiwan. There’s no doubt about it, that secretary Xi looks at China as, you know, it dispels his myth that he’s created that the Chinese culture cannot live in a democracy.

Keith Krach:
Nothing could be farther from the truth and Taiwan proves that. So he wants it destroyed. And so this has kind of heightened that risk, and for democracies Taiwan’s role model of freedom and a lynchpin in that area in terms of global economic security and national security. And obviously there’s semiconductor businesses the top in the world, which is the most important industry. So, you know, for corporations, if there’s a China-Taiwan conflict, then you know, this is gonna be devastating and absolutely catastrophic for the high tech industry. So, you know, these companies are putting together these contingency plans because they saw what happened when Putin invaded Ukraine. They had to pull all their operations out of Russia, cost hundreds of billions of dollars. And they were totally caught off guard and China is 10 to 20 times larger impact, more entangled.

Keith Krach:
So this is really important for boards to demand this from their CEOs because a board member’s fiduciary duty is to mitigate risk. And just like you have a plan for a cybersecurity breach, you need to have a contingency plan in case there’s that Taiwan-China conflict because if you don’t, and you don’t actually start on it right now, it’s gonna be too late by the time if it’s after the fact. And that’s why at the Krach Institute for Tech Diplomacy at Purdue, we’re getting requests in terms of what do these contingency plans look like? So those are some of the areas we’re helping out different corporations on.

Simone Gao:
Right. The commission will also integrate offensive and defensive strategies while previous commissions have primarily focused on defensive policies. Why is there such a change?

Keith Krach:
Well, the one thing I can tell you Simone, is that the best defense is a strong offense. So, you know, if you look back at the global economic security strategy that we put together a few years ago, there were three main pillars of that. The first one was to turbo charge our economic competitiveness and innovation. The second one was safeguard strategic assets that would be looked at as defensive that first one offensive. And the third one of course, was to build a network of trusted partners. So that is absolutely critical. You know, a great example of what we’re doing offensively is the Chips Act, the Chips plus Act

Simone Gao:
On August 9, President Joe Biden signed into law a multibillion dollar bill boosting domestic semiconductor and other high-tech manufacturing sectors that US leaders fear are being dominated by rival China.

Joe Biden:
The CHIPS and Science Act supercharges our efforts to make semiconductors here in America. This increased research and development funding is going to ensure the United States leads the world in the industries of the future. From Quantum computing to artificial intelligence to advanced biotechnology, the kinds of investment that will deliver vaccines for cancer cures, for HIV, invent the next big thing that hasn’t even been imagined yet.

Simone Gao:
The Chips and Science Act includes around $52 billion to promote production of microchips.

Keith Krach:
Because this is investing and securing the semiconductor supply chain, which all kind of began with that 5G trifecta, which was the opening salvo for the clean network, where we onshore TSMC in the largest onshore in history, 12 billion dollars.

Our strategy for that and our hope was that it would do three big things. One is TSMC would bring their ecosystem of suppliers, which is absolutely huge, that indeed happened. The second is that it would spur the other semiconductor manufacturers we’re trying to get on board to invest, especially Samsung and Intel. And indeed that happened as a matter of fact, Samsung recently announced 17 billion dollars additional investment in the United States and then Intel, you know, less than a year after we did that onshoring, they announced a 20 billion investment in Arizona, and now they’re doing a 20 billion plus investment in the state of Ohio where I’m from. So this is absolutely great. The other thing that we’re hoping for and we really, our strategy was designed for, is that we would get universities to develop curriculum in semiconductor engineering and also much more work in semiconductor, R and D.

Keith Krach:
And that is happening, you know, at Purdue, my old Alma mater, we just announcedthe United States’ first master’s degree in semiconductor engineering. So there’s a lot of investments. It really spur that on. So that’s an example of the areas where we can work together. And that’s one of the reasons why, you know, we designed a thing called the TD 12 or Techno Democracy 12, where we could not only work on things like defensive things like investment screening and export controls, those kind of things, but also in terms of collaborating in terms of R and D ’cause there’s a lot of economies of scale there.

Simone Gao:
China is weaponizing big data against the West, applications such as TikTok collect massive amount of user data, analyzing them, generate content that tailored to individual users’ interest, get people addicted, and then try to influence their political views once the app becomes indispensable to them. So what is the best way to eliminate such a danger?

Keith Krach:
Well, I can tell you one thing, Simone, that, you know, TikTok as well as U.S. tech platforms are used as a propaganda tool by China and, you know, and why do they do that? They want us so dissension because there’s nothing that general secretary Xi fears more than a united United States. So to try to work both ends of the political spectrum or so discontent, that’s been their aim for a long, long time. We have plenty of evidenc in open source on that. You know, the other thing is two big key areas is transparency and reciprocity. So if you look at that great, I call it the great one way China firewall, where all the data comes in for their own use, including their military artificial intelligence applications, as well as their social credit score.

Keith Krach:
I mean, you look at that and then, you know, but none flows out and then reciprocally all the propaganda goes out, but the truth does not come in. And what they’re doing is they’re extending their great one way firewall to, you know, to really, you know, export that all around the world to influence operations, influence different countries, influence different political systems. So this is something where this tech state craft model that we develop while we were building the Clean Network Alliance of Democracies that integrates Silicon valley strategies with foreign policy tools, all based on this trust doctrine. That’s where that this model works in all those different areas. So that’s the key thing that we’ve gotta do.

Simone Gao:
On one side, there is the alliance of democracies, on the other side, we start to see a China-Russia alliance taking shape quickly. In recent years, Russia and China have significantly deepened their bilateral ties, with Putin and Xi going so far as to proclaim that their countries’ “friendship has no limits.” China and Russia share economic and security interests, an authoritarian style of government, and a common enemy- The United States. Cooperation on high-tech has become an important element of this strategic partnership with areas of collaboration include, for example, artificial intelligence (AI), big data, robotics, and biotechnology. Furthermore, China has also become Russia’s largest supplier of semiconductors and consumer electronics over time.

Simone Gao:
My last question, are you concerned about a China-Russia technological alliance against the West and what should be done about it?

Keith Krach:
Well, the totalitarian twins, they signed their love letter back there, early February, right before the Olympics, this pact between Putin and Xi, and, you know, that’s where they both agreed. You know, that was, that was a green light for Putin to attack and this bloody war in Ukraine and commit all these war crimes and also, you know, Russia’s backing China on Taiwan so, you know, but the bloom has come off the roses for both these totalitarian states. I think the world has really woken up that these guys they’re up to no good. And they want to take, you know, countries’ freedoms away. They’re exporting that model. Now the good news is they don’t trust each other. And they never will, you know, but I could tell you who has the upper hand in that relationship, you could see it in that love letter, is China that’s for sure. And by the way, that’s more reason Simone, why an alliance of democracies based on this trust doctrine, which is something that they fear so much because they know if it’s a battle that involves values and ideals, we’ll win every time.

Simone Gao:
Thank you. The secretary Krach for joining Zooming In today again.

Keith Krach:
Thanks so much for having me Simone.

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