Beijing is 'harvesting data' from popular Chinese apps in the US and Europe, Plus China-Russia trade goes 'underground' -- China Boss News 5.03.24

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What happened

Researchers at the Australian Strategic Policy Institute (ASPI) say that the Chinese Communist Party (CCP) is using its vast “propaganda system” to “harvest data” from Chinese tech companies that own popular apps in the United States and Europe.

ASPI researchers mapped “linkages” between state propaganda units, big data exchanges and Chinese tech firms showing how companies, like Temu, a widely downloaded e-commerce app in the U.S. and Europe, and Genshin, a popular gaming app in the U.S., are firmly connected to Beijing.

According to the researchers, People’s Data Management Co. Ltd (People’s Data), a behemoth state-owned firm, “is at the forefront of the party’s efforts to implement ‘the theory and practice’ (理论和实践) of [CCP]-controlled data.”

It partners with an extensive list of other Chinese state-owned or state-controlled firms, as well as several large private firms, like Temu’s parent company Pinduoduo (PDD) Holdings and Midea Group, a Chinese electrical appliance manufacturer with production bases in over a dozen countries.

People’s Data musters its extensive international reach, however, via a data sharing arrangement with one of China’s oldest data exchanges, Zhejiang Big Data Exchange Centre (“Zhejiang Big Data”), whose “operations are overseen by the Propaganda Department of the Zhejiang Provincial Party Committee, and whose “role is to support the storage, clearance, analysis, exploration and exchange of data in Zhejiang Province and across China.”

But Zhejiang Big Data also partners with numerous “well-known” local and foreign multinationals, including Huawei Technologies, China Telecom, and, even, Dun and Bradstreet Corporation (D&B) - an American commercial data service provider that “partners with other leading global business information providers through its Data Cloud product,” researchers said.

Why it matters

The ‘missing piece’ of the TikTok challenge

Washington Post national security reporter Cate Cadell said ASPI’s research “maps ties between over a thousand Chinese government organizations and Chinese companies” and “includes details of a cooperation agreement between the Chinese sister company of Temu — the breakout Chinese shopping app with over 100 million U.S. users — and a unit of the Communist Party-controlled media group People’s Daily, which shares commercial data with the Chinese government and police.”

In 2021, Cadell analyzed “hundreds of Chinese bidding documents, contracts and company filings” to discover that Beijing uses a “public opinion analysis software” to mine Western social media platforms and “equip its government agencies, military and police with information on foreign targets.”

“The documents, publicly accessible through domestic government bidding platforms, also show that agencies including state media, propaganda departments, police, military and cyber regulators are purchasing new or more sophisticated systems to gather data,” she said.

But the evidence compiled by ASPI's researchers may yet provide the “missing piece many members of the public have waited for” of the “kinds of risks to US TikTok users that lawmakers have seen in their classified briefings,” as The Verge noted last week in its overview of “the legal challenges that lie ahead” for the company and lawmakers.

Gautam Hans, associate director of the First Amendment Clinic at Cornell Law School, told The Verge that, although “courts are very reluctant to end up micromanaging or second guessing the decisions of the political branches” on national security, the public is “unaware or uneducated on what exactly the national security implications are.”

Samantha Hoffman, the ASPI researcher who directed the study, told Cadell last week that “[w]hile links between Chinese propaganda units and the country’s tech products are becoming increasingly visible, there is little direct insight into how data harvested and shared is used.”

“It’s hard to tell that story in so many ways because there’s never going to be that sort of smoking gun … and yet you can see that the propaganda system in China is investing heavily into these efforts, so it must matter,” she noted.

Chaos theory

But author of The Gate to China: A New History of the People's Republic and Hong Kong and long time foreign correspondent Michael Sheridan may have an answer.

In a LinkedIn post which shared his latest analysis on Xi Jinping’s upcoming trip to Europe, Sheridan said the Chinese leader “knows that Ukraine is a brilliant wedge issue for Chinese foreign policy and he'll be using it to divide the western alliance and boost populist politicians ahead of elections.”

“Chaos theory is a good enough operating system for the autocrats,” Sheridan added.

Although normally used to describe an interdisciplinary area of science and mathematics, in essence, chaos theory is about managing unpredictable and non-linear surprises.

China’s rise as the world’s data superpower, however, is clearly premeditated.

According to Gregory C. Allen a the Center for a New American Security, “China’s leadership – including President Xi Jinping – believes that being at the forefront in AI technology is critical to the future of global military and economic power competition.”

“In October 2018, Xi Jinping led a Politburo study session on AI. … In his speech during the study session, Xi said that China must ‘ensure that our country marches in the front ranks where it comes to theoretical research in this important area of AI, and occupies the high ground in critical and AI core technologies.’”

As Chinese algorithm technology has developed into multi-billion dollar businesses, like TikTok’s, Beijing - long trained on preempting narratives that rival its own - easily sees the need to manage public opinion by censoring “search results.”

But social media algorithms - the kind that keep users glued to their screens longer than competitors - require infinite quantities of uploaded data and even that is not enough to forever secure hearts and minds.

And data harvesting to feed Xi Jinping’s “national rejuvenation” drive has a more dismal application.

Coordinated with a cyberattack on crucial American and European infrastructure, malign information control can be styled to create panic and upend society. China, together with Russia and Iran, looks to be scrimmaging for that vile game now with new “online campaigns” that “amplify the social and political conflicts over Gaza flaring at universities,” as New York Times reported yesterday.

As such, winning the upper hand in data collection could make all the difference between a surge of near-by sorties and landings in Taiwan.

This Week’s China News

The Big Story in China Business

BANK PULL BACK FROM RUSSIA FINANCING FORCES CHINESE FIRMS ‘UNDERGROUND’: Reports, here and here, that the US is considering sanctions that would cut off some Chinese banks “aiding Russia’s war effort” from the global financial system are having an effect on wider parts of China’s trade with Moscow.

According to Reuters, China’s larger banks “are pull[ing] back from financing Russia related transactions,” which is forcing “some Chinese companies” to “go ‘underground’” for trade.

‘Non-military trade’ feelin’ the punch: Reuters spoke to seven “trading and banking sources” who told them that “even non-military trade from China to Russia” is feeling the impact.

One Guangdong-based appliance maker told Reuters that no one could “‘do business