Shane Leary joins Miles Yu to discuss a massive document leak from Chinese cybersecurity firm I-Soon, which sheds light on the Chinese Communist Party’s global surveillance and hacking regime and destroys the illusion of safety around Chinese private sector companies. They then turn to a little-covered spat between the Taiwan Coast Guard and a Chinese fishing vessel that resulted in the drowning of the two Chinese nationals near the island of Quemoy. Finally, they discuss Wang Yi’s absence at the G20 ministerial meeting and its implications for broader trends in the People’s Republic of China’s foreign policy.
China Insider is a weekly podcast project from Hudson Institute's China Center, hosted by Miles Yu, who provides weekly news that mainstream American outlets often miss, as well as in-depth commentary and analysis on the China challenge and the free world’s future.
Episode Transcript
This transcription is automatically generated and edited lightly for accuracy. Please excuse any errors.
Miles Yu:
Welcome to China Insider, a podcast from Hudson Institute's China Center.
It's Tuesday, February 27th, and we have three topics this week. The first is Miles’ reflection on the recent I-Soon document leak, which sheds light on the CCPs global hacking and surveillance regime. Second, we discussed Wang Yi’s absence at the ministerial meeting of the G20 and what this tells us about China's approach to foreign policy. Finally, we discuss a recent confrontation between the Taiwan Coast Guard and Chinese fishermen, which resulted in the drowning of two fishermen and the potential for further escalation in the Taiwan Strait.
Shane Leary:
Miles, how are you?
Miles Yu:
Very good, Shane.
Shane Leary:
Wonderful. So, for our first topic, a massive document leak from Chinese company I-Soon, a cybersecurity firm that hacks on behalf of the Chinese Communist Party offers a rare window into the CCPs global surveillance and hacking regime. Among the documents leaked are internal documents like contracts, marketing presentations, and client and employee list, but more significantly, documents revealing the methods used to surveil dissidents, hack foreign nations, and manipulates social media abroad. The leak shows evidence of the firm hacking the governments of China's neighbors, including Vietnam and Taiwan among others, as well as evidence of email inboxes and social media accounts in the west. No evidence of successful cyber-attacks against NATO or the US have been discovered thus far. We know the CCP has been doing things like this, but here we have a smoking gun. What are your initial thoughts on this leak?
Miles Yu:
We have discovered so many smoking guns in the past, but this is the first time there is a massive amount of evidence connecting the Chinese intelligence and security agencies with what the obviously is a view by the West as a private company. So that's why this is a very, very sensitive topic because there has been lingering illusion that somehow we could still engage with the company in China that's a private company and therefore the only thing remaining is de-risking. This is a very devastating blow to that illusion because first of all, there is no such thing as a Chinese private company. Full stop. If you are doing business with the entity owned or controlled by the Chinese government, you're doing business with the CCP. Not only do the Chinese national security laws spread this out very clearly, but so does common sense. Secondly, this is the case because there's no such thing as property rights in China.
You can make some money, but you don't really have the total ownership of government can come over and take it over anytime they want. So, it's bad enough that Chinese companies are controlled by the CCP, but to have American companies controlled by China, that's just outright dangerous. That's a fact. That's because all Chinese companies and all foreign companies working inside China must comply with Chinese security laws. Basically, there are three intelligence and security laws in China. Number one is the national intelligence law. Number two is the Chinese national security law, and number three is the Chinese counter-espionage laws that has just been updated last year, which caused quite a big stir, which is also one of the major reasons that trigger the massive exodus of foreign companies, particularly American companies, because every foreign company will be treated by default as suspicious of being a foreign agent.
According to all this Chinese security and intelligence laws, all companies, including US companies, must cooperate with Chinese intelligence and security services. It might be that they don't enforce them every day, but any firm connected to China is vulnerable. So, you can see the nature of the engagement with China is really about a clash of completely different political and economic systems. We have to really understand China's basic framework as it's not a market economy. It is a communist country and does want to dominate the globe economically, technologically, and sooner or later, politically, militarily as well, according to their own statements. It's not that we don't understand this. I think we know this in the West for a long, long time, but there has not been, there have not been sufficiently incorporated into this understanding into our China policy using words like ‘competition’ or ‘coexistence’ to define the bilateral relationship between Western countries and China.
From this point of view, I think what this case illustrated is that de-risking is just a dream because de-risking assumes we can continue to do business with China, but then the matter is just for us to just get rid of the risk. It's a naïve dream. Decoupling is probably the only way to go forward. Unless China changes its non-market and command economic nature and its intelligence, security, and espionage laws, do not do business with China, not even compete with them because there are no rules for them to abide by in a fair and transparent contest. And I think the West will lose if we continue to fantasize China as a part of the global free market system based on limited government, popular sovereignty, and a constitutional protection of private property. From this point of view, also, my view is that the policy of de-risking it's a risk itself.
Shane Leary:
That's well said. I want to ask just a follow up. In the CCPs official response, they accused the United States of having long work to compromise China's critical infrastructure and demanded that the US stop using cybersecurity issues to smear other countries. Now obviously any prudent nation has cybersecurity capabilities in today's conflict environment. In light of specifically how they're targeting dissidents and things like that abroad, what would you say makes the US' approach different to that of the CCP’s approach, in light of this document leak?
Miles Yu:
If you look at the American intelligence organizations, particularly since the 1970s, there have been a dramatic increase of the policy guidance. In other words, intelligence agencies were subject to civilian control, subject to elected officials’ supervision. So, Congress and the Executive branch, you have different layers of enforcement of those laws, and so except for its operational security, and you can basically find out a lot of information about the intelligence operations, particularly the policy. So, this were guided by law is not without any guidance at all. The Chinese system however, is very different. All organizations inside China must satisfy the insatiable appetite for the Chinese central government to control, to spy. The Chinese government has the most sophisticated, most comprehensive, most advanced technologically surveillance system over its own people. One [inaudible] poor Chinese, nobody can escape from that. You can see there's a massive amount of digital control of every citizen's behavior and that's basically a very, very dangerous thing. I think we have to realize the danger and the pervasiveness of the Chinese government operation in this area, particularly.
Shane Leary:
A confrontation over a Chinese illegal fishing operation In Taiwan's territorial waters between the Taiwan Coast Guard and Chinese fishermen ended in the deaths of two Chinese nationals. The Taiwan coast Guard pursued the boat, which capsized during the chase throwing its crew of four into the water with two of them drowning. The PRC condemned Taiwan's behavior, stating it severely harm the feelings of compatriots on both sides of the Taiwan strait. Miles, we've talked about events like this in the past as potential flashpoints which could escalate tensions. What are your reflections on this and its potential for escalation?
Miles Yu:
Okay, so this is a very small incident in a larger scheme of things. However, I'm actually surprised Western media have not picked it up because this tiny incident involves something that's very, very serious. Two aspects mostly. Mostly one. It offers a window to China's massive IUU violations. IUU means illegal, unrestricted, and unregulated fishing. China is the world's number one offender globally, it ignores national, other people's, other nation's laws and regulations. When confronted, China's standard response is that China condemned this rude law enforcement. Or, the most obvious one is Chinese fishermen’s traditional fishing areas are there, so therefore they use traditional fishing practice in history as the excuse, explicitly denying the legality of local government's laws and regulations and environmental protection measures. This is China's illegal fishing. It's a far beyond the Pacific, it's in the Atlantic, it's also in Indian ocean, so it's become a global issue. But far more importantly, this tiny incident about drowning of two Chinese alleged fishermen, many speculate they are actually Chinese soldiers in disguise, [inaudible] this tiny island of Quemoy.
This is a very important picture. Quemoy has been the most sensitive island in Asia. It's most likely that the first shot of World War III will be fired at Quemoy due to its unique geographic location and its illustrious history in the Cold War. Two of the four Taiwan Strait Crises, 1954, 1958, involves Quemoy and the invasion of Taiwan by the CCP must start with the invasion of Quemoy. Let me explain why. Quemoy occupies a crucial role in the US-China relationship, for that matter, global geostrategy. If you understand Chinese history and American history, you'll know that in 1960 there was a famous presidential debate series, three of them, between Richard Nixon and John Kennedy––the first televised TV debates that captivated the nation's attention. The number one foreign policy issue in the last debate was about the Quemoy Matsu crisis.
Miles Yu:
China started bombing the Quemoy Island on August 23rd, 1958, and that bombing didn't stop in the 1960 presidential election and also did not stop for the next 21 years. So, this is a really important case. Due to its extreme proximity to China, which is about six miles away, the other side of Quemoy is Taiwan Island, about 95 miles away. The United States policy, however, has consistently held that Quemoy and other offshore islands held by Taiwan, but much closer to PRC coastlines, are not defensible. Therefore, those islands have never been within America's defense parameter, not even covered by the 1954, 1955 Mutual Defense Treaty between US and Taiwan, not even covered by the Taiwan Relations Act of 1979, which is a cornerstone of America's defense pledge for Taiwan, today. Because of these long held views, the US government tried to persuade the ROC government, the Taiwan government, to basically be realistic. Those islands offshore were indefensible, but we have failed to persuade the ROC government under Chiang Kai-shek to abandon those islands to focus on the defense of Taiwan and the Penghu Islands themselves.
But the ROC government has consistently insisted that the defense of Quemoy and other offshore islands are an integral part of the homeland defense. They are inseparable from Taiwan Island itself. So, you, see there is a policy ambiguity right there. For the CCP, however, it's a dilemma. In Chinese, it's a way to describe the dilemma called [inaudible] 食之无味，弃之可惜. The translation into English is like “Quemoy Island is like a chicken rib: two bland, insipid, and tasteless to eat, yet it will be a pity to throw it away.” On one hand, it is an enemy's territory so close to China, so easy to take for the CCP, but precisely because there are so close to the PRC, they serve as an indispensable tie to China. So, the last seven decades, the CCP always took advantage of America's exclusion of this offshore island from American's, Taiwan defense perimeter, constantly creating crisis over these islands like the 1954, 1958 crises, but never actually attempted to invade and take over those islands for fear of losing those last ties of Taiwan with China.
And this fear is real because if you look at today's Taiwan, people in Taiwan are less and less identifying themselves as Chinese, quote on quote, but instead overwhelmingly identifying themselves as Taiwanese. Last week, as a matter of fact, February 22nd, to be exact, the most authoritative appealing poll in Taiwan conducted by the National Chengchi University published a new poll based upon interviews with 16,000 adult 20 years and older. According to this poll, 61.7%, close to two thirds of people, identify themselves as pure Taiwanese. 32% of them identify themselves both as Chinese and Taiwanese, or you might say Chinese Taiwanese, in the same way Dwight Eisenhower would identify himself as German American, but only 2.4% of this poll would identify themselves as pure Chinese. You can see the national identity is very different. So, the [inaudible] is really remote right now. So, if Quemoy and other offshore islands were taken by China, the hundred miles strait would permanently and completely drive Taiwan away from any cultural or political identification with China, which is one of the reasons why China’s response to this particular drowning incident is very peculiar and relatively careful this time over the fishermen’s drowning incident. It’s a loud and visceral protest from foreign ministry. There's some kind of veiled threat as well, but as Time Magazine puts it, China isn't blowing up over the deaths of fishermen that Taiwanese forces chased away. That's precisely because China's ambivalence about this Quemoy Island, number one, I mean it is not owned by China, they want to take it. Number two, if you take it and then you lose the tie with mainland China. So, that's basically something that China doesn't quite know how to deal with.
Shane Leary:
For our last topic, last episode we discussed the PRC Foreign Minister Wang Yi’s inflammatory remarks at the 2024 Munich Security Conference, but this past week we have another Wang Yi story, his absence at the G20 Foreign Ministers meeting in Brazil. When asked about his absence, a PRC foreign ministry spokesperson simply stated, China attaches great importance to the role of the G20 and will send a delegation miles. What does this tell us about China's foreign policy that they would send a delegation in instead?
Miles Yu:
Wang Yi is excuse for not attending the first administerial meeting, which is foreign minister's meeting in Brazil is just not convincing. G20 is not what China wants. What China wants is a CCP dominated group. Wang Yi after [the] Munich conference, he went to Spain and Portugal and then we went back to China. He sent a very unimportant deputy who's not in real power position to Brazil to mark China's attendance. Blinken, Lavrov, and UK Foreign Minister Cameron, everybody showed up except China in the major countries’ representation in there. China is uncomfortable with the G20 because countries, particularly countries within the BRICS, like South Africa, like India and Brazil now, they are actually playing a very leading role in G20. In 2022, the host country was South Africa. Xi Jinping didn't feel very comfortable because his buddy Vladimir Putin was not invited. Putin was by that time has been wanted by the International Criminal Court.
India last year hosted a G20, Xi didn't bother to go, so he was a no-show. Brazil this year hosting this, and the Chinese government basically had the same kind of attitude. China's not happy that it is gangster buddy, Putin, as I said, wanted by ICC, was not invited to G20 South Africa and India last year. It's hard to see that G20 Brazil will see Putin there too this year as a result, and Putin and Xi Jinping probably will take a uniform step and to skip G20 just like he skipped G20 last year in India. So, it's very hard for Wang Yi to go there to explain all this. By the way, when talking about the Russia and China, China is the only country willing to provide diplomatic immunity and the political stage for Putin to shine. Give you one example. In May of last year, China hosted this thing called the China Central Asia Summit, which is a copycat of the US 2015 C5+1 Summit in Washington DC.
Putin was allowed to go to China and he used that stage provided by China to meet many countries’ leaders in safe heaven in Xi’an China, provided by China, because Putin has very few countries that he could go to without being arrested by the International Criminal Court. Speaking of this, why do you think that Xi Jinping is so gung-ho about Putin's presence in all the international multilateral conferences? I think one reason really is because this ICC warrant is a great deterrence to China's Xi Jinping. Imagine this: Putin is wanted for war crime in Ukraine. If Xi Jinping invades Taiwan, Xi could banned from international forums such as G20 as well. He could be served an arrest warrant just like Putin. So that's why he's very, very keen on protecting Putin as well. Now, I think there's also another reason for one is no-show in Brazil. That's because Russia's foreign minister Lavrov showed up and he was wrongly criticized for Russia's war in Ukraine, and China has said openly, repeatedly that China is on Russia's side in the Ukrainian war. One. He wanted to avoid being humiliated as Russia's ally instead, the best way to skip the meeting and to visit Spain and Portugal.
Shane Leary:
Well, Miles, I think that's all the time we have for this week. Thanks so much for taking the time and I look forward to doing this again next week.
Miles Yu:
Week. Okay, see you next week.
Thanks for listening to this week's episode of China Insider. If you enjoy the show, please share with your friends and colleagues, and for our Chinese language audience, be sure to come back and check out our monthly Chinese language episodes, which are released on the same channel as well as the Hudson Institute YouTube channel. For more research and analysis from the China Center, be sure to find miles on X and then head on over to hudson.org, where you can read and watch more on these and other pressing issues around the globe. Finally, please review and subscribe wherever you are listening from to help grow the show. From all of us at China Insider, we will see you next week.