Friday News Analysis — November 2, 2018: Indictments Related to Chinese Espionage & China’s Economic Strategy; the Push for a Ceasefire in Yemen; and Stories You May Have Missed…

Happy Friday! We would like to (re)welcome you to the CSPC Friday News Analysis. For the past several Fridays, the policy team has been working on ways to give you more access to the analysis and thought-provoking insights of the staff, fellows, and advisors at CSPC. We have settled on this format that provides a deep-dive on critical issues that are shaping the world of the moment, cuts through the partisan rancor to focus on analysis and facts, and highlights some stories that slip through the cracks during the week’s turbulent news cycle.

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Before we get to this week’s analysis, we also want to remind people to get out and vote in next Tuesday’s elections. While the political environment is heated and rancorous, there is nothing more important than the American people exercising their fundamental democratic rights, making their voice heard through the ballot box, and the peaceful transition of political power. If you need to learn more about where to vote or what is on your ballot, this U.S. government website has useful information and links to follow.

Indictments Demonstrate the Ties between China’s Espionage and Economic Strategy

Dan Mahaffee

CSPC Photo

In a Thursday press conference, Attorney General Jeff Sessions announced a significant, broad-based push by the Justice Department and other government entities to combat Chinese espionage against the United States. The specific indictment announced at the press conference names three Chinese individuals, Taiwan-based United Microelectronics Corporations, and Chinese state-owned Fujian Jinhua in industrial espionage related to dynamic random-access memory (DRAM) semiconductors manufactured by the U.S. firm Micron Technology. This comes after Tuesday’s unsealing of an indictment against ten Chinese intelligence officers accused of spying on U.S., French, and other western turbine and aircraft engine manufacturers, as well as the October 10 announcement of the indictment and extradition of a Chinese intelligence officer who was seeking trade secrets from GE Aviation and subsequently arrested in Belgium in April.

From these indictments, we see the clear, ongoing pattern of China’s push to utilize a range of espionage methods to steal key technologies from the United States and western partners. Fitting with the Chinese government’s goals laid out in the “Made in China 2025” strategy, China seeks to surpass the west and establish Chinese leadership in a range of industries — including information technology and aerospace. As laid out by Assistant Attorney General John Demers during Thursday’s press conference, “China wants the fruits of America’s brainpower to harvest the seeds of its planned economic dominance.”

While much of the assembly and basic components of digital hardware takes place in China, the United States and other partner nations have continued to lead the way in many advanced information technologies. While direct espionage has been one approach by the Chinese, the push by China to gain advanced technologies through venture capital investment cannot be ignored, as an analysis from Reuters highlights 20 Silicon Valley venture capital firms that are related to a Chinese government fund or state-owned company.

Similarly, aviation has long been an area where China has sought to close the gap with the west. China has long lagged behind the United States, Europe, and Russia when it comes to avionics and engine technology. Even though the Chinese were able to develop their own fifth-generation stealth fighters and military heavy-lift aircraft through the theft of information related to the U.S. C-17, F-22, and F-35 aircraft, the lack of advanced engine technology has been the Achilles Heel of China’s aviation efforts. It is no less true on the civil aviation front, where China has long sought to develop an alternative to the Euro-American Airbus-Boeing duopoly. As yet, China has not built the necessary precision crafting industries necessary to produce advanced airplane engines, ensuring continued reliance on Airbus and Boeing, as well as suppliers such as General Electric, Honeywell, United Technologies, Safran, and Rolls Royce. While these firms are aware of China’s efforts to steal their technology and disrupt the global aviation market to their detriment, they continue to seek their piece of China’s aviation market — estimated to be the world’s largest by 2024.

While most observers focus on the rising tensions between Beijing and Washington, the scope of China’s intellectual property theft and corporate espionage go beyond the Sino-American relationship. China’s intellectual property theft and corporate espionage are a challenge to multinationals headquartered around the world. As Lorand Laksai of the Council on Foreign Relations points out, “China’s intention through ‘Made in China 2025’ is not so much to join the ranks of hi-tech economies like Germany, the United States, South Korea, and Japan, as much as replace them altogether.”

Who will feel the pressure from “Made in China 2025” via the Mercator Institute for China Studies

While governments will have to continue to monitor and disrupt Chinese intelligence efforts, corporate leaders need also ask themselves an important question: barring any change in China’s economic and industrial policies, is the near-term benefit of access to the Chinese market worth the loss of their long-term competitiveness?

Trump Administration’s Rhetoric Shifts on Yemen, the “World’s Worst Humanitarian Crisis”

Michael Stecher

Secretary of Defense Mattis visits Riyadh (Department of Defense Photo)

This week, the Trump administration signaled what could be the opening diplomatic salvo in an effort to end what the United Nations has called the world’s worst humanitarian crisis. On Tuesday, Secretary of Defense James Mattis and Secretary of State Mike Pompeo both made statements calling for a ceasefire in Yemen. Speaking at the U.S. Institute for Peace, Secretary Mattis said that all parties needed to pull back from the conflict lines and “ceas[e] dropping bombs,” which would allow the UN Special Envoy for Yemen Martin Griffiths to begin to facilitate peace negotiations. Secretary Pompeo echoed Mattis’s comments, but with slightly different emphasis. Specifically, Pompeo’s version includes specific sequencing: first, a ceasefire, including an end to air and missile attacks into Saudi Arabia and the United Arab Emirates; “Subsequently, Coalition air strikes must cease in all populated areas in Yemen.”

I want to give a brief background on the war in Yemen, but for a deeper view — including a stunning photo-essay by Lynsey Addario — please read this outstanding New York Times Magazine article by Robert Worth. The current conflict in Yemen began three years ago when the Saudis and Emiratis (who are collectively referred to as the coalition), with reluctant US backing, undertook a campaign to overthrow the Houthi forces that had taken control of large parts of Yemen. The Houthis practice a form of Shi’a Islam that is related to — but clearly distinct from — the state religion in Iran, and had spent decades opposing Saudi influence. The Saudis and Emiratis see the war in Yemen as another front in the ongoing conflict with Iran, but, while the Houthis are unquestionably receiving support from the Islamic Republic, they are not pure proxies like Lebanese Hezbollah. The coalition lacks the ground forces necessary to overthrow the Houthis, although the Emiratis have used mercenaries from Latin America and (in a story that deserves greater attention) ex-US Special Forces troops as an undercover assassination squad. As a result, the conflict has ground to a bloody stalemate and a rapidly deteriorating humanitarian situation.

Many members of Congress have expressed growing concern about the political cover and tangible military support being given to the coalition’s war effort. Senator Chris Murphy (D-CT) has long been the ringleader of the opposition to the Yemen war, and he was joined by Mike Lee (R-UT) and 42 other senators in a failed effort to pass a resolution calling for an end to the conflict in March. The Senate pushed for a provision in this year’s National Defense Authorization Act that requires the Secretary of State to certify to Congress that the coalition is working to end the conflict and alleviate the humanitarian catastrophe in Yemen. Without that certification, US Air Force tankers would be prohibited from refueling coalition aircraft for missions against Houthi targets. Democrats in Congress were unsatisfied with the certification that Secretary Pompeo provided in September, and the Charles Koch Institute, the public policy foundation established by the influential conservative fundraiser, has recently backed an effort led by Democratic Representative Ro Khanna (CA-17) to demand an end to American participation in the conflict.

In his remarks on Tuesday, Secretary Mattis stated that the call for a ceasefire is “separate” from the political backlash against Saudi Arabia and Crown Prince Muhammad bin Salman (MbS) over the assassination of regime critic and Washington Post columnist Jamal Khashoggi at the Saudi Consulate in Istanbul on October 2. This may be true in a narrow sense within Trump administration’s policymaking process, but the two are inextricable on the macro level. MbS is widely believed to have been at least the instigator — in the Henry II-“will no one rid me of this turbulent priest”-sense—of Khashoggi’s assassination and, in his prior role as Defense Minister, was the primary advocate of a forceful Saudi response to the Houthis in Yemen. In the United States, the Crown Prince’s prestige has taken a massive hit, as public intellectuals who had previously praised him and Congressional Republicans close to the White House have upbraided MbS since the assassination. It is impossible to imagine that the Trump administration would be willing to take this rhetorical step without the political pressure that was triggered by the Khashoggi assassination.

The Turkish government, who are also political rivals of Saudi Arabia, is exacerbating the damage to MbS’s reputation by releasing horrifying details of Khashoggi’s assassination over the span of days, ensuring that it remains in the news around the world. The war in Yemen is a battle for influence with Iran on what the Saudis consider to be home turf, and the stalemate it has become underscores Saudi Arabia’s limited hard power in this contest of wills. And now there is a growing risk of a rupture in Saudi Arabia’s relationship with its principal great power patron. MbS launched a purge against powerful members of the royal family to isolate himself from internal political rivals, but this confluence of threats to his prestige could pose a severe threat to his domestic power base.

However, facing a war that cannot be won on the battlefield, Saudi Arabia might be willing to move towards a diplomatic solution. If the talks succeed, the Saudi royal family could count on their ability to shape Yemen’s political situation in the future more with diplomacy and economics than with arms. If they fail, MbS could point to Houthi intransigence as the cause of the breakdown, as happened during the last round of ceasefire negotiations.

At this point, though, Secretary Mattis and Pompeo’s calls for a ceasefire should be seen as a trial balloon. Secretary Pompeo’s vision of the ceasefire, in which the Houthis stop their attacks and then the coalition does the same, implies that the Houthis need to work harder to build confidence than do the Saudis. Neither man gave any concrete examples of what steps the United States would take if a ceasefire was not in effect within 30 days — would the US suspend arms sales to Saudi Arabia if the Saudis walk away from negotiations? Would we participate more directly in the conflict if the Houthis continue to launch missile attacks against Riyadh? This could be nothing more than an attempt by the administration to take the pressure off of MbS by kicking the can down the road for 30 days. On the other hand, if the administration can harness the outrage against Saudi Arabia to end this terrible conflict, it will count as the most positive diplomatic move of the Trump presidency to date.

News You Might Have Missed

Right-Wing Trolls Try to Undermine Mueller

In a truly bizarre story, this week the spokesman for Special Counsel Robert Mueller disclosed that women had been offered money to promote false claims that Mueller had been involved in sexual misconduct. The entire episode appears to have been cooked up by conspiracy theorists who are voluble supporters of President Trump who were trying to undermine the Russia probe. The details of this story are very strange, but the participation of one of the conspirators was revealed when the voicemail number of the “private intelligence” company that allegedly provided the information turned out to belong to his mother.

NASA Announces the Death of the Kepler Space Telescope

On Tuesday, NASA announced that the Kepler Space Telescope had run out of fuel and would not be able to continue its mission. Since 2009, Kepler has searched for planets in distant solar systems, discovering more than 2,600 since its mission began in 2009. NASA’s next planet-hunter, the Transiting Exoplanet Survey Satellite (TESS), launched in April.

Israeli PM Netanyahu Makes Surprise Trip to Oman, Hints about Normalization with Other Arab Countries

Sometimes you cannot improve on the best analysis you find by others—in this case, from The Economist:

No matter the purpose, the trip was important. It took months of secret negotiations, handled by the chief of Mossad, Israel’s spy agency. “Israel has historically maintained under-the-table ties with many nations,” says an Israeli diplomat. “The problem has always been how to bring these out in the open. With the visit to Oman, Netanyahu has broken a glass ceiling.”

Briefing reporters, Netanyahu suggested that similar trips were in the future.

Supreme Romance

In this roundup, we too often focus on the grim and depressing news of the world, but not everything is politics. NPR reported on Wednesday that a forthcoming biography of Supreme Court Justice Sandra Day O’Connor reveals that she and former Chief Justice William Rehnquist dated at Stanford Law School in 1949, culminating in Rehnquist proposing marriage to her in March 1950. She declined, but there were apparently no hard feelings, as Rehnquist was among those who recommended O’Conner to President Reagan for the Court.

Diseases Spread to Neighbors as Venezuelan Health Care System Collapses

While the tragic humanitarian crisis in Venezuela has grown due to the brutal mismanagement of the Maduro regime, diseases such as malaria, measles, and diphtheria — once vanquished by a robust public health system — have spread through the country and into the refugee populations that have sought refuge in Venezuela’s neighbors. With the spread of measles into the Brazilian state of Amazonias, over 10,000 measles infections have been reported, with a rate of 170 new cases a day. As regional leaders take an increasingly strident tone towards Caracas, it remains to be seen how the spread of disease affects policies towards the Venezuelan government and Venezuelans taking refuge in other Latin American countries.

The views expressed by contributors are their own, and not the view of the Center for the Study of the Presidency & Congress.



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