Xi Jinping: A Princeling’s Princeling

How is Washington sizing up the man who looks set to be China’s next president, Xi Jinping? Reuters news agency has reviewed a large number of U.S. State Department cables sent to WikiLeaks but unpublished to date. From the snippets of information and analysis in these gained over several years by American diplomats from their sources, Reuters constructs a biography that paints a picture of the 57-year-old Xi as:

…untainted by corruption–he is referred to as ‘Mr Clean’–and disdainful of China’s nouveau riche and consumer culture. He is also depicted as an elitist who believes that the offspring of Maoist revolutionaries [the princelings] are the rightful rulers of China. His father was a major Communist leader who fought alongside Mao Zedong and helped implement Deng Xiaoping’s economic reforms.

Xi emerges as competent, conservative and cautious. Somewhat taciturn, he is a man whose ability to keep his own council and no clear record of imposing his own agenda make him a leader acceptable to the competing factions among the princelings. They see him as one of their own and a safe pair of hands. His smooth ascendancy of the Party ranks suggests no political naivety, however. His wife, Peng Liyuan, is a well known (and wealthy) singer with the People’s Liberation Army, giving him good links to a crucial domestic political constituency often underestimated by outside commentators.

What sort of president will Xi make? Even allowing for the fact China’s president is more a convener of the Politburo rather than a leader in the Western sense, it is impossible to say on the evidence of the cables. If anything the profile raises more questions than it answers. If Xi is a chip off the old block, he will be more a Dengist reformer than a Hu Jintao equalizer. His father, Xi Zhongxun, when Party boss in Guangdong from 1978 to 1980, set up the first special economic zone in Shenzhen, now regarded as ground zero of China’s explosive economic growth of the past three decades. The younger Xi has made his political career in provinces known for economic openness, trade and rapid wealth creation.

Xi senior is also believed to have opposed using troops to clear Tiananmen Square in 1989, prompting some sources to suggest that the younger Xi might have similar liberal leanings. Despite some tinkering with low-level political transparency in Zhejiang and Shanghai, we see little evidence to support that. Rather we see a man who will act pragmatically to secure the long-term interests of his fellow princelings as the guarantors of the Party’s primacy. If so, that will translate into a continuing but slowing pace of reform.

If he is driven by anything, the cables suggest, it is by a sense of a loss of the Party’s traditional moral values of honesty, dignity and self-respect. He is unusual among his Cultural Revolution disrupted generation to have embraced the Party at an early age in preference to hedonism and moneymaking. Some sources suggest Xi is repulsed by China’s corruption and its all-encompassing commercialization. He is said to be dismissive of the ‘shopkeepers’, the nouveau riche elite who cannot trace their wealth or political lineage to revolutionary roots. If Egypt and the rest of the Middle East is any harbinger, he may need to be more worried by the shoppers than the shopkeepers.

China And Its Double-Edged Cyber-Sword

The following is a guest post by Sean Noonan of the U.S. intelligence-analysis firm, STRATFOR. It is republished with permission.

A recent batch of WikiLeaks cables led Der Spiegel and The New York Times to print front-page stories on China’s cyber-espionage capabilities Dec. 4 and 5. While China’s offensive capabilities on the Internet are widely recognized, the country is discovering the other edge of the sword.

China is no doubt facing a paradox as it tries to manipulate and confront the growing capabilities of Internet users. Recent arrests of Chinese hackers and People’s Liberation Army (PLA) pronouncements suggest that China fears that its own computer experts, nationalist hackers and social media could turn against the government. While the exact cause of Beijing’s new focus on network security is unclear, it comes at a time when other countries are developing their own defenses against cyber attacks and hot topics like Stuxnet and WikiLeaks are generating new concerns about Internet security.

One of the U.S. State Department cables released by WikiLeaks focuses on the Chinese-based cyber attack on Google’s servers that became public in January 2010. According to a State Department source mentioned in one of the cables, Li Changchun, the fifth highest-ranking member of the Communist Party of China (CPC) and head of the Party’s Propaganda Department, was concerned about the information he could find on himself through Google’s search engine. He also reportedly ordered the attack on Google. This is single-source information, and since the cables WikiLeaks released do not include the U.S. intelligence community’s actual analysis of the source, we cannot vouch for its accuracy. What it does appear to verify, however, is that Beijing is regularly debating the opportunities and threats presented by the Internet.

A Shift from Offensive Capabilities

On Nov. 2, the People’s Liberation Army Daily, the official paper for the PLA and the primary medium for announcing top-down policy, recommended the PLA better prepare itself for cyber threats, calling for new strategies to reduce Internet threats that are developing “at an unprecedented rate.” While the report did not detail any strategies, it quoted a PLA order issued for computer experts to focus on the issue.

The Nov. 2 PLA announcement is part of a long trend of growing network-security concerns in China. In 2009, Minister of Public Security Meng Jianzhu emphasized that the development of the Internet in China created “unprecedented challenges” in “social control and stability maintenance.” In June 2010, the State Council Information Office published a white paper on the growing threat of cyber crime and how to combat it. Clearly, these challenges have been addressed this year. The Ministry of Public Security (MPS) announced Nov. 30 that it had arrested 460 suspected hackers thought to have been involved in 180 cases so far in 2010. This is part of the MPS’ usual end-of-year announcement of statistics to promote its success. But the MPS announcement also said that cyber crime had increased 80 percent this year and seemed to blame the attacks only on hackers inside China.

These were cases mainly of producing and selling “Trojan” programs (malware that looks legitimate), organizing botnets, assisting others in carrying out denial-of-service attacks and invading government websites. The MPS also closed more than 100 websites that provided hackers with attack programs and taught them various tactics.

The PLA already has two notoriously large and capable network security units: the Seventh Bureau of the Military Intelligence Department (MID) and the Third Department of the PLA. In simple terms, the MID’s Seventh Bureau is an offensive unit, responsible for managing research institutes that develop new hacking methods, train hackers and produce new hardware and software. The PLA Third Department, defensive in nature, is the third largest signals intelligence-monitoring organization in the world. STRATFOR sources with expertise in network security believe that China’s government-sponsored hacking capabilities are the best in the world. But this perception is based in part on the fact that China demonstrates these capabilities quite often. The United States, on the other hand, is much more restrained in exercising its offensive cyber capabilities and is not inclined to do so until there is a dire and immediate need, such as war.

Piracy Vulnerability

The details of China’s escalating effort to improve network security are still murky, but one recently announced campaign against software piracy is notable. On Nov. 30, Deputy Commerce Minister Jiang Zengwei announced a new six-month crackdown on illegally copied products in China. He said the focus was on pirated software, counterfeit pharmaceuticals and mislabeled agricultural products. The Chinese public has pushed for more regulation of pharmaceuticals and food due to a rising number of cases in which people have become sick or even died because of falsely labeled or tainted products, such as melamine-contaminated milk. But Beijing seems to be even more concerned about the vulnerabilities created by running unlicensed and non-updated software, and publicizing the crackdown is clearly an attempt by Beijing to appease Western governments and businesses that are placing growing pressure on China.

Indeed, China has a sizable counterfeit economy, much to the ire of Western businesses. While Beijing may placate Westerners by announcing crackdowns for the benefit of international audiences, it takes more forceful measures when it sees a larger threat to itself, and the security emphasis now seems to be on the threat of running insecure software on government computers. The problem with unlicensed software is that it does not receive automatic updates from the manufacturer, which usually are sent out to fix vulnerabilities to malware. Unlicensed software is thus left open to viral infiltration. It is also cheap and easy to get, which makes it pervasive throughout both government and private computer networks.

One of the measures Beijing has started to implement is requiring licensed software to be installed on new computers before they are sold, which also gives the government an opportunity to install censorship measures like Green Dam. One persistent problem is that much of the pre-installed software still consists of pirated copies. While China has released statistics showing that the use of legitimate software in China has increased dramatically, the Business Software Alliance, an international software industry group, estimates that 79 percent of the software sold in China in 2009 was illegally copied, creating a loss to the industry of $7.6 billion in revenue. Even more important to Beijing, these statistics mean the vast majority of Chinese computer systems — government and private alike — remain vulnerable to malware.

At the same Nov. 30 news conference at which Jiang announced the new anti-piracy initiative, Yan Xiaohong, deputy head of the General Administration of Press and Publication and vice director of the National Copyright Administration, announced a nationwide inspection of local and central government computers to make sure they were running licensed software. While this suggests Beijing’s major concern is the security of government computers, it also emphasizes how widespread the unlicensed software problem is.

This new focus on using legitimate software, however, will not be a complete solution to China’s Internet vulnerabilities. There has been little effort to stop the selling of copied software, and it is still very easy to download other programs, licensed and unlicensed, and malware along with them (such as QQ). Moreover, the new security measures are dealing only with the symptoms, not the underlying problem, of a counterfeit-heavy economy. A six-month crackdown will not undermine or eliminate software piracy in China; to do so would require an immense and sustained investment of time, money and manpower. Indeed, China has been a hub for pirating software, films and other copyrighted material for so long that the enormous domestic economic base that has grown up around it would be virtually impossible to dismantle. In any case, vulnerabilities still exist in legitimate software, even if it is better protected against novice hackers. New vulnerabilities are constantly being found and exploited until software companies come up with the appropriate patches.

From Nationalist Hackers to Dissident Threats

China’s highly developed hacking capabilities, more offensive than defensive, include Internet censorship measures like the infamous Great Firewall, and the official police force run by the MPS specifically to monitor Chinese Internet traffic and censor websites is 40,000 strong. China also has developed two unofficial methods of censorship. First, operators of private websites and forums must follow certain government regulations to prevent statements critical of the government from being disseminated, which encourages private operators to be their own censors. Second, there is a veritable army of nationalistic computer users in China that include “hacktivist” groups such as the Red Hacker Alliance, China Union Eagle and the Honker Union, with thousands of members each. They became famous after the 1999 “accidental” bombing of the Chinese embassy in Belgrade, which prompted China-based hackers to attack and deface U.S. government websites. The Chinese government, state-owned enterprises and private companies also engage public relations firms to hire, deploy and manage what have become colloquially known as “Party of Five Maoists.” These are individuals who get paid half a yuan (5 mao) for every positive Internet post they write regarding government policy, product reviews and other issues.

But as China’s Internet-using population nears 400 million, with nearly 160 million using social networking, Beijing recognizes the risk of all this spiraling out of control. Censors have not been able to keep up on the social-networking front. Even with limited or banned access to sites like Twitter and Facebook, their Chinese versions, Weibo and Kaixin, for example, are expanding exponentially. While the government may exercise more control over the Chinese-based sites, it cannot keep up with the huge number of posts on topics the CPC considers disharmonious. The recent announcement of Liu Xiaobo’s Nobel Peace Prize is an example of news that was not reported at first in Chinese media but through social networking sites, spreading like wildfire. And the censorship is not exclusive; even non-dissidents can be censored, such as Prime Minister Wen Jiabao when he recently called for limited political reform.

China’s large Internet population will not all be nationalists. And if those who learn skills from informal hackers turn into dissidents, Beijing would consider them a serious threat. The Internet presents exactly the type of tool that could pose a major threat to the CPC because it spans regions, classes and ethnicities. Most social grievances are local and economic or ethnic-based. The potential for one opposition group to be united nationwide over the Internet is one of Beijing’s gravest concerns. It has realized that a weapon it once wielded so deftly against foreign powers and business entities can now be used against Beijing.

Outside Issues

At the same time Beijing reached this realization, WikiLeaks demonstrated the possibility for sensitive government information to be spread globally through the Internet. Beijing saw that if the United States, with its expertise in signals intelligence and security, could be vulnerable to such a threat, so could China. Stuxnet demonstrated the vulnerability of important infrastructure to cyber attack, one reason for China’s new emphasis on licensed software (Iran is known to run unlicensed Siemens software). China’s recent emphasis on network security is likely linked to all of these factors, or it may be due to a threat seen but as yet unpublicized, such as a cyber attack or leak inside China that the government has been able to keep quiet.

Other countries have also been implementing new network security measures, most notably the United States. On Oct. 31, the Maryland-based U.S. Cyber Command became fully operational, and its commander is also the head of the National Security Agency, the premier U.S. government entity for signals intelligence. (Thus, China’s giving Internet security responsibility to the PLA should come as no surprise to the United States.) And as China realizes the difficulties of defending against attacks in cyberspace, which tends to favor the offense, the United States is wrestling with the same problems and complexities as it tries to shield government, civilian and commercial computer systems, all of which require different degrees of control and operate under different laws. As cyber espionage and cyber sabotage become even greater concerns, China will be forced to face the far more difficult task of not only pecking away at the Pentagon’s firewalls but also providing for its own internal system security.

These new efforts all contradict China’s long-standing policy of cultivating a population of nationalistic computer users. This effort has been useful to Beijing when it sees a need to cause disruption, whether by attacking U.S. sites after perceived affronts like the Chinese embassy bombing in Belgrade or preventing access from powerful foreign entities like Google. But China has also recognized that developing these public capabilities can be dangerous. Nationalist Chinese hackers, if motivated by the right cause and united through the pervasive Internet, can always turn on the government. And the situation seems to have more and more governments on edge, where simple mistakes can raise suspicions. China’s redirection of a large amount of Internet traffic in April caused an outcry from the United States and other countries, though it may well have been an accident.

It is hard to tell what Beijing sees, specifically, as a first-tier cyber threat, but its decision to develop an effective response to all manner of threats is evident.

China and its Double-edged Cyber-sword is republished with permission of STRATFOR.

We Are Shocked, Shocked To Find Dodgy Data Here

More from the latest bunch of leaked U.S. diplomatic cables published by WikiLeaks telling us what we already knew but which get piquancy from the detail. In this case, it is a suggestion that provincial GDP data is inflated. Well, hold the phone. The spice comes from the comment being made by Li Keqiang, who at the time, 2007, was Party secretary in Liaoning. He is now a vice-premier in line to succeed Wen Jiabao as prime minister and thus become the man in charge of economic policy.

Like the fictional town of Lake Woebegon created by the American satirist Garrison Keillor where all the children are above average, it has long been a curious fact that no province has let its reported GDP fall below the national average. Local officials’ promotions depend on measures of local economic development. It is no surprise that they add up the numbers in a way that reflects the best possible light on themselves. Nor is that a uniquely Chinese trait.

China’s national GDP figures are more solid, though no economist would pretend they are perfect in either their accuracy or consistency despite efforts to improve them in recent years, many led by Li as it happens. You just can’t manage an economy the size of China’s without accurate data. Nor can China play the bigger role it seeks in multilateral organizations to which it has to report standardized data.

Li, who made his reported comments to the U.S. ambassador at a dinner in Beijing, was talking specifically about his own province but said he got a better sense of its pace of economic growth from monitoring economic activity that could be metered free of a political filter, such as electricity consumption, rail freight volumes and loan disbursements.

 

China Gives First Reaction To Leaked U.S. Diplomatic Cables

Beijing’s first public comment on the leaked U.S. State Department cables published by the online whistleblower WikiLeaks has been a short, sharp no comment from the foreign ministry. These are already choppy waters for the U.S. not much worth China stirring up further at this point.

Foreign ministry spokesman Hong Lei did add that “We hope the U.S. side will properly handle relevant issues”, the issues being taken to be the leaking rather than the substance of the leaks. We hear of some smug tut-tuting among some officials at what is seen as another sign of American government weakness and incompetence.

Among the censoring classes, we understand, there is a more sobering view that the leaks only reinforce the value of their work and a need to redouble efforts. We wonder, though, if nagging at the back of some minds is the thought that there but for the grace of God…, and even a tiny concern that it is a case of when not if a whistleblower leaps the Great Firewall with 250,000 state documents.

Cablegate: Grim South Korean Take On China’s Leverage Over North Korea

A leaked U.S. State Department cable from February this year, newly made public by WikiLeaks, reports a grim view of China’s leverage over North Korea held by South Korea’s Vice Foreign Minister, Chun Yung-woo. Chun reportedly told American officials that China would be unable to prevent North Korea’s collapse within two to three years of the death of Kim Jong Il, and that it had “far less influence on North Korea ‘than most people believe’.” Chun also said that “Beijing had ‘no will’ to use its economic leverage to force a change in Pyongyang’s policies and the [North Korean] leadership ‘knows it’.”

Without China being prepared to push North Korea to the brink of collapse, Chun thought, Kim’s regime would continue not to take any meaningful steps on denuclearization. Chun also denigrated the abilities of Wu Dawei, head of China’s delegation to the six-party talks on the denuclearization of the peninsula, whom he characterized as a bombastic hardline nationalist blowhard and whom he said was “the most incompetent official in China”.

Wu stood in contrast, Chun said, to the younger generation of China’s Korea policymakers who saw little value to China in North Korea acting as a buffer state between it and South Korea, and who would also tolerate a Seoul-controlled unification government on the peninsula in the event of North Korea’s collapse, provided it was not hostile to Beijing. They would “not welcome” U.S. troops north of the DMZ, however, Chun ventured, but would be reassured by trade and investment opportunities for Chinese companies. Chun also noted that Toyko’s preference was to keep the peninsular divided.

Still Awaiting China Surprises From Leaked U.S. Cables

The leaked U.S. State Department cables published by WikiLeaks so far, at least those concerning China that we have seen coming from the U.S. embassy in Beijing, are mostly the diplomatic equivalent of sales-call reports: Mr X said A; Mr Y said Mr Z told him B and so on. As such many are mundane reportage of officials, advisors and academics who know they are talking to American officials, even if they may have thought at the time they were speaking in private.

Much of it is on the same level of observation that we read in the serious broadsheets attributed to unnamed government officials, except the diplomats name their sources, which provides some prurient interest. That is one reason that there are no great surprises to date. Another is that it takes a sharp pen to break out of the standard format cables follow, though these cables are refreshingly free of the polysyllabic obscurantism that wrings any meaning from most public statements by diplomats. English is, it happily turns out, the first language of U.S. senior officials after all.

Such communications are the string — hundreds of thousands of pieces of it — from which foreign ministries and security advisors form their analyses and create their policies. We have only a few pieces of that string so far that relate to Sino-American relations, all of it a year or more old, and most of it about Iran and North Korea. They do underline how much common cause Beijing and Washington have in keeping two volatile areas of the world from getting “out of control” through the acquisition of nuclear weapons, how much Beijing wants Washington to take the lead in bilateral talks with both Pyongyang and Teheran to bring them into international six-party talks to stop nuclear proliferation, how much more patient Beijing is than Washington with the diplomatic process and how much less faith Beijing has in the effectiveness of sanctions and how much more it has in the benefits of rewarding Teheran and Pyongyang for good behavior.

As we noted yesterday, our eye was caught by some assertions that Beijing’s support for Teheran wasn’t unconditional, and that it had told the Iranians that progress on the nuclear anti-proliferation talks would make continuing Chinese investment in Iran’s energy sector more likely. We wonder if future leaked cables, if published (there are more than 3,000 on China to come), will reveal the same attitude towards Pyongyang, as we believe has been happening. Most of all we are waiting to read cable traffic on the issues that get to the heart of Sino-American relations — regional defense and security and the handling of the global financial crisis and the associated macroeconomic imbalances, trade and currency issues.

Leaked Cables Show U.S. Frustration At China’s Role In North Korea-Iran Trade

The leaks of U.S. State Dept. cables by the online whistleblower WikiLeaks as far as we can tell so far don’t reveal any great new secrets about Sino-American relations. We’ve turned up only a few China-related cables in the batches published by some newspapers, which are not the full set shown to them, so it is thin pickings at this point, though there will be thousands more to come. (WikiLeaks’ leaked cables from the U.S. Beijing embassy here.) Yet one of the few that has been made public initially underlines the depth of frustration felt in Washington about its inability to stop China playing the middleman in North Korea’s weapons trade with Iran.

A 2007 document signed by then U.S. Secretary of State Condoleezza Rice (via Guardian) mentions “about 10” occasions between December 2006 and August 2007 on which the Americans said North Korean shipments of jet vanes for ballistic missiles passed through Beijing. The vanes were trans-shipped to commercial passenger flights out of Beijing Airport, with the Chinese authorities ignoring American requests to intervene to stop them, despite the Bush administration raising the issue several times at the highest levels.

The leaked cable also says Iran was trying to buy tungsten-copper alloy plates from Dalian Sunny Industries to make the vanes itself should its North Korean supply dry up. Separate cables also have the Americans accusing Chinese firms last year of supplying Iran with materials and assistance for making chemical weapons and saying that Iran was trying to buy gyroscopes and carbon fiber for its ballistic missiles from Chinese companies.

If the jet vanes were missile related, as the U.S. claims, their trans-shipment would have been in contravention of a U.N. Security Council resolution preventing their international trade and China has publicly said that it won’t help any country develop ballistic missiles that can be used to deliver nuclear weapons. But there is plenty of wiggle room within those constraints for anyone who didn’t want to look too closely.

At the same time, a cable from the U.S. embassy in Beijing dated March 2009 says that senior Foreign Ministry officials were telling the Americans that China’s good political and economic relations with Iran weren’t unconditional, that China didn’t want a nuclear-armed Iran (and was not 100% certain Iran was developing nuclear weapons, as opposed to “nuclear capability”, which would give it some regional clout). The officials also said China was supporting international talks on the issue but that the U.S. should take the lead with direct negotiations. They also said that they had told the Iranians “not to take China’s economic interests in Iran for granted” and that progress on the nuclear issue would “create a foundation” for further Chinese investment in the energy sector.

Improved ties with Saudi Arabia makes Beijing less reliant on Iran for oil and gas. Another cable, on the occasion of Foreign Minister Yang Jiechi’s visit to Saudi Arabia in January this year, notes some prodding from the kingdom for China to get in line with international efforts to limit Iran’s nuclear ambitions, and non-specific promises that Saudi Arabia would assure what is now the largest customer for its oil of adequate supplies should its purchases from Iran be interrupted.

Without providing the supporting cable in its database of the leaks , The Guardian also reports that

the hacker attacks which forced Google to quit China in January were orchestrated by a senior member of the Politburo who typed his own name into the global version of the search engine and found articles criticising him personally.

The New York Times, another recipient of the leaked cables, adds that

The Google hacking was part of a coordinated campaign of computer sabotage carried out by government operatives, private security experts and Internet outlaws recruited by the Chinese government. They have broken into American government computers and those of Western allies, the Dalai Lama and American businesses since 2002, cables said.

The New York Times also reports that “American and South Korean officials have discussed the prospects for a unified Korea, should the North’s economic troubles and political transition lead the state to implode. The South Koreans even considered commercial inducements to China, according to the American ambassador to Seoul. She told Washington in February that South Korean officials believe that the right business deals would ‘help salve’ China’s ‘concerns about living with a reunified Korea’ that is in a ‘benign alliance’ with the United States.”

A cable from May 2009 also reveals that China felt that the “lever of economic development” had not been used effectively on North Korea in the six-party talks, and that the further sanctions being pushed by the West wouldn’t work. As with Iran, Chinese officials have been telling the Americans that they need to take the lead through a bilateral dialogue with Pyongyang to get the international talks going again. A cable from December 2009, summarizing China’s advice to the U.S. on what reassurances it should give North Korea about its intentions, gives a good sense of why Kim Jong Il’s regime feels its back is against the wall.

It also contains the best piece of diplomatic understatement in all the leaked cables we’ve seen. Wang Jiarui, who heads the Party’s department dealing with other Communist Parties, told the Americans that “it was impossible to predict North Korean behavior through ‘normal’ means of reading public indicators”.