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Chinese telecom company Huawei has been charged with racketeering and stealing U.S. trade secrets But how serious is Huawei’s threat to America? Welcome back to China Uncensored I’m Chris Chappell Huawei The Chinese telecom company that brings us together Because both Trump and Obama agreed that it was a threat to the US The Justice Department has just charged Huawei with racketeering and stealing trade secrets But despite warnings from US intelligence agencies, some of America’s allies still want to make deals with Huawei Is the Huawei threat really that serious? I sat down to talk about Huawei with economic expert and Policy Director with America First Policies Curtis Ellis He was also a Senior Policy Advisor to Trump’s presidential campaign in 2016 Thank you for joining me today Yeah, it’s great to be here Thanks for having me Sure So I know you’ve called Huawei, essentially “the espionage arm of the Chinese Communist Party masquerading as a telecom company.” What are you basing that on? Well, they have back doors built into all of their equipment so that the Chinese government, the Chinese military, the Chinese Communist Party, can basically tap into all of the data and information that flows over Huawei networks So if you have an internet or a telecom network using Huawei equipment, you can be sure that the Chinese government can tap into it at will That’s espionage, that cyber espionage So it’s that simple and there is no other way to put it to look at it any other way is just delusional We know that the Chinese government has a law, the civil military fusion law that requires any Chinese company to cooperate with the Chinese military This is a communist dictatorship, they call it socialist if you want, socialists with Chinese characteristics, they want complete control over everything There is no such thing as an independent business entity in China No such thing Well, so I know the NSA has been accused of asking US telecom companies to build back doors How is what China is doing with Huawei different from that? Well, one big difference is the United States government is not the Chinese Communist Party The Chinese Communist Party has a far different agenda than the US government The US government still at its best, adheres to the ideals of Western values, individual liberty, privacy, freedom of speech, freedom of religion At its worst, the US government aspires to those ideals The Chinese Communist Party has no desire and no illusion about even recognizing those ideals So you’re looking in an organization, the Chinese Communist Party that is intent on staying in power, accruing, acquiring and holding on to as much power in its own hands as it can and it aspires to ideals of the collective above the individual No such thing as private property, no such thing as individual liberty or individual aspiration Those are the people who are going to be having access to all the information that flows over Huawei networks Is what Huawei is doing, is that typical for other Chinese companies? Well, as I said, the Chinese law says that all Chinese companies must accede to the demands of the Chinese government So if the Chinese government asks, let’s say a Chinese bank to turn over the financial records of its customers, it must do so It can’t say no I got to get out of that Chinese bank Yeah, there you go And let’s look at it further Every Chinese, we’re told that the Chinese government or its industrial espionage outfits are stealing hundreds of millions of dollars of American intellectual property every year So how many of these companies are essentially selling stolen goods? These Chinese companies are selling stolen goods And now the US justice department has just charged Huawei with racketeering and stealing trade secrets Practically speaking, what does that mean? Well, it means that if your Cisco and you’re building internet routers,

Huawei is stealing your designs, copying your designs, building its own routers using your research, using the fruits of your intellectual exploration, making copies of it and selling it probably for less money Because it didn’t have to go through all the expense, blood sweat, and toil of designing it and coming up with these designs on its own So, plus it’s receiving government subsidies so it can underbid legitimate companies like Cisco and it can sell that router for less and obtain contracts So will this charge affect US policy towards Huawei? Well, it certainly has already begun affecting US policy towards Huawei We are asking our allies not to use Huawei equipment as they build out their 5G networks We are looking at limiting sales of component parts to Huawei We don’t want to enable this company to carry out its malicious activities So while everybody’s focused on the trade deals and selling soybeans to China, there’s a vast spectrum of activities that the US government is looking at, a vast spectrum of interrelations with China that we’re re-examining A lot of the premises that underlie our current relationships with China are now really, I’d say called into question to put it euphemistically There is always this premise that the more we engage with China, the more they would become like us They would become more like us, they would respect liberty, they would respect private property, they would open up their system, they would become more peaceful What we’ve seen instead is they become more prosperous and acquire more Western technology They’re moving in the opposite direction, they’re becoming a techno totalitarian state, they’re militarizing, they’re stealing everything that they can’t buy or that we don’t give them So under the phase one deal, they’re supposed to address some of these intellectual property theft issues and they’re supposed to purchase more American goods and services, but there’s a whole lot of other stuff going on outside the realm of trade, which we’re looking at For example, Huawei, for example, the FBI says it has 1000 investigations open across the country of Chinese espionage Every field agency of the FBI in America has investigations into Chinese espionage activities So that’s not going to be covered by any trade agreement And the administration has made it very clear that they’re not linking the two We can do business with China, they can buy our soybeans, we can sell them certain goods of a non-military sensitive nature, but we’re not going to say, well, now we’re going to play nice and make believe that you’re not doing something wrong over here We did business with the Soviet Union throughout the Cold War They had nuclear missiles pointed at us, we knew they had spies trying to infiltrate and influence and plant moles and all kinds of things We still would sell them wheat and we’d still do all kinds of other business with them Occidental Petroleum, Armand Hammer, was a famous industrialist who famously did business with Russia The fact that we knew they were spying on us and wanted to, as Nikita Khrushchev said, we will bury you We knew they wanted to bury us, but we said, okay, well, we’ll still take their money So the US both the Trump administration and the Obama administration have warned about Huawei Do you think that’s been taken seriously? It’s being taken more seriously now than ever I really had questions about the Obama administration taking this stuff seriously Look, so many of the apparatchiks in Washington in both parties have been compromised one way or another- 100% By the Chinese influence operations I’m not saying that they signed up for the Chinese Communist Party, they don’t even know how they’d been compromised They’re buying off Americans on both sides of the aisle, Albright Associates, Madeline Albright, former secretary of state, her company’s made just tens of millions of dollars advising companies on how to move to China and how to do business in China Dianne Feinstein’s driver was a Chinese spy

Her husband has made money investing in China You just go down the line, Henry Kissinger, you’ve got all these Wall Street guys that have made fortunes investing in China, directing investment into China, and now it’s, you’ve heard the stories, it’s gone down the line of it’s infiltrated so far that now pension funds, the California state pension funds And so you think this has held back even though the Obama administration and the Trump administration have been pushing warnings about Huawei, that attitude has blocked There’s bureaucratic inertia Look, there’s basic human nature nobody wants to admit they’re wrong, right? Oh man, I was so wrong about that But the basic human nature of not wanting to admit they’re wrong, close their eyes, well, let’s keep doing things the way we were doing because I don’t want to admit that I believe the Chinese Communist Party They were lying to me for all these years and I was a fool to believe it, nobody wants to say that In addition, you have bureaucratic inertia There’s huge bureaucracies in the Pentagon and elsewhere, other agencies of the US government, that are still proceeding along those old premises that, as we get closer to China, as they develop and become more prosperous, they will become more American, they will become more Western Absolutely If we give money to a totalitarian communist regime, they’ll become a democracy Right I mean you hear the truncated version of this is, countries that trade with each other don’t go to war with each other Well, tell that to the Ukraines, Ukrainia, Ukraine and Russia were the two largest trading partners before World War 1 France and Germany were the two largest trading partners They went to war, and this is like this economic reductionism, this economism that human nature can be reduced to dollars and cents on a spreadsheet It’s a lot more complicated than that A lot of people say, we are trading, the US is trading with China But still many of their actions can only be described as a type of warfare Well, in the Chinese military strategy, warfare goes beyond the battlefield The doctrine is the best general defeats the enemy without taking the battlefield They see the economic crippling of America and acquiring the productive assets, the technology and the factories of America, acquiring them, moving them to China, that is a form of warfare And Huawei is a part of this? And Huawei is definitely a part of this Look, if a Chinese army invaded America, went to Silicon Valley and took all the factories, took all the research labs and took the people and moved them to Mongolia or moved them to Manchuria and set those factories up, we would recognize that as an act of war and the looting of America If you get, if Chinese capital and Chinese influence gets Wall Street to counsel Silicon Valley to move its research operations into China and to handover its innovation research and technology to Chinese partners The goal, the end result is the same And we just make some money off of it And Wall Streets’ made some money, they’d been bought off, China gets the capital and you’ve got Think Tanks like the Cato Institute saying, oh, this is wonderful, it’s free trade, it’s free market operations, so therefore it’s good Because you see, again, you have this ideology that says all that matters is the money, there are no such thing as nation States, there’s no such thing as culture, there’s no such thing as values, cultural values It just all comes down to how many widgets can we make? How many widgets can we consume? How many widgets can we acquire? And that’s all that matters And it’s a very reductionist way of looking at life, it’s devoid of humanity and the things that I would hold say, make living worthwhile So what does it mean for the US if its allies like the UK or other European countries use Huawei to build parts of its telecom or 5G networks? Well, unfortunately too many people in positions in government don’t understand how technology works And that if Huawei equipment is in any part of the network, it will have access to all parts of the network So if Huawei equipment, if our allies use Huawei equipment, they’re basically all of the information that flows

over those networks and in the 5G network, that’s basically everything will be, could be spied on, monitored, influenced by someone in Beijing Now look, 5G networks are going to link devices, power plants, electrical grids, ATM machines, not just telephones, everything So what if you shut down the power grid? What if, let’s say China moves in, the Beijing sends, decides to move on Taiwan, right? And simultaneously somebody gets a message in Washington, you can let this happen or you will lose power in East Los Angeles, North Philadelphia, Atlanta and Dade County And it’ll happen on the first of the month when the food stamp benefits are electronically delivered The SNAP, the supplemental nutrition, no longer stamps anymore, it’s an electronic card that automatically are replenished They won’t be replenished so there will be no power, there will be no food and what do you think is going to happen in your inner cities on that day? Right? Or there will be no power to hospitals, there’ll be no power to the emergency room, to the intensive care unit And so having the UK have parts of its system, 5G system, built by Huawei could have that effect on the US? Well, no, I’m saying if we were to have Huawei equipment inside the US that that ultimatum could be delivered But okay Germany’s looking at this like how vulnerable will we be if we have Huawei equipment here? They haven’t made the decision yet The British, maybe their health system is so bad already that they don’t care I suppose you would take it to the point of, well do you want to see this? The United States would be given this ultimatum, we’ll destabilize all of Europe, the British banking system, the City of London will go down and all of the finance flows that goes through the City of London will be effected and that will have a ripple effect through Wall Street and around the world Well, some people argue that the US is certainly not offering any 5G alternatives So for many people that feels like, well, it’s Huawei or the highway No, it’s Huawei or Nokia and Ericsson Nokia and Ericsson have 5G alternatives And it’s very interesting: why are the British not going for Nokia and Ericsson? Why are the Germans not going for the Swedes and the Danes, right? This is, and now the United States government is saying maybe we should invest some money into Nokia and Ericsson to develop the 5G alternative to Huawei You get the impression that the Swedes are sitting there and saying, hey, I’m here, look at me, what are you saying there’s no alternative? I’m sitting right here What’s going on with that? Some people make the argument that the only reason the US is going after Huawei is because it’s seen as a major rival to US tech in telecom companies What would you say to that argument? Well, we just said that the United States amazingly has no alternative for 5G There is no American company that can, producing 5G equipment So for anybody to say we’re going after Huawei because it’s a competitor to America that just is false right there The alternative to Huawei is Nokia and Ericsson The problem with Huawei is not that there’s an American competitor, the problem with Huawei is that it’s the espionage arm of the people’s liberation army They’re entirely compromised, we know they have back doors in their equipment that can funnel all the information that passes over its networks to Beijing And that they have been blatantly stealing intellectual property, buying off engineer’s from rival competitors, doubling, tripling their salary, come work for us,

and then violate the nondisclosure agreement that you signed with your previous employer, not to disclose their trade secrets That’s what’s the matter with Huawei And final question, do you think with the US putting so much pressure on Huawei, the Chinese communist party will try to retaliate The Chinese Communist Party takes nothing lying down They’ve threatened Germany, they’ve told German companies, well, they’ve told BMW well, that’s a nice factory you have outside of Shanghai hate to see something bad happen to it Maybe ought to have your government buy Huawei equipment So yes, they’re already flashing the dagger, threatening retaliation against anyone who doesn’t toe the line You have to wonder, they’ve got their equipment in place in various countries around the world in the developing world What kind of goods do they have on the leaders of some of these kleptocracies in Africa? What kind of goods do they have on a high officials or bankers, high government officials or high industry officials in places like Ethiopia, I’m just pulling this out of my head, I don’t know if they even have their equipment installed in Ethiopia This blackmail that could be going on that we don’t even know about And think about this, no American company ever voluntarily, unless it’s forced to even discloses when it’s hacked, very rare I mean we’ve heard about Experian, we heard about Marriott, heard about a couple other breaches, but virtually every American company that’s been reported, has been hacked, has been the victim of a cyber attack, they generally don’t release this information Because it materially affects their earnings, they could have a bad impact on their stock price, makes the executives look bad It’s like you didn’t have the systems in place to guard against this, what the hell are you doing? Right So they don’t reveal this all the time You have to wonder, what kind of goods does the Chinese Communist Party have on how many executives and how many companies? So retaliation? The retaliation could be going on already in the form of extortion or blackmail All right Thank you very much for joining me today and telling us about Huawei Thank you

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