Category Archives: China

China’s Best Method of Industrial Espionage

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Obscure Chinese Firm Dives Into $22 Trillion U.S. Market

Bloomberg: When Cromwell Coulson heard that an obscure Chinese real estate firm had agreed to buy the Chicago Stock Exchange, he was shocked.

“My first reaction was, ‘Wow, that’s who they’re selling to?”’ said Coulson, the chief executive officer of OTC Markets Group Inc. in New York. “These new buyers have no connection to Chicago’s existing business. They’re completely disconnected from the current business of supporting the Chicago trading community. So wow, that’s out of left field.”

While the world has gotten used to seeing Chinese companies snap up overseas businesses, the purchase of a 134-year-old U.S. stock market by Chongqing Casin Enterprise Group — a little-known property and investment firm from southwestern China — raises a whole host of questions. For starters, why does a provincial Chinese business with no apparent ties to the securities industry have any interest in buying one of America’s smallest equity exchanges? And will U.S. regulators sign off?

So far, Casin Group’s intentions are unclear, with calls to the company’s Chongqing headquarters going unanswered on Friday. If the deal does pass muster with American regulators, it would mark the first-ever Chinese purchase of a U.S. equity exchange, giving Casin Group a foothold in a $22 trillion market where even the smallest bourses have room to grow if they can provide the best price for a stock at any given moment.

The Chicago Stock Exchange — a subsidiary of CHX Holdings Inc. — is minority-owned by a group including E*Trade Financial Corp., Bank of America Corp., Goldman Sachs Group Inc. and JPMorgan Chase & Co., according to the company. The minority shareholders are also selling their stake, Chicago Stock Exchange Chief Executive Officer John Kerin said in a phone interview.

The deal values the exchange at less than $100 million, according to a person familiar with the matter, who asked to not be identified because the terms weren’t disclosed publicly. Mark O’Connor, a spokesman for the exchange, declined to comment on the size of the transaction.

Overseas Shopping

Casin Group’s offer, announced on Friday in a statement from the Chicago exchange, comes amid an unprecedented overseas shopping spree by Chinese companies. Businesses from Asia’s largest economy have announced $70 billion of cross-border acquisitions and investments this year, on track to break last year’s record of $123 billion, according to data compiled by Bloomberg.

While many of those deals had obvious business rationales, the reasons for Casin Group’s bid are less clear. The company, founded in the 1990s through a privatization of state-owned assets, initially focused on developing real estate projects in Chongqing, before expanding into the environmental and financial industries. While the firm owns stakes in banks and insurers, it has no previous experience owning an exchange.

Chinese Growth

Lu Shengju, the majority owner and chairman of Casin Group, wants to help bring Chinese companies to U.S. markets, according to the statement from Chicago’s bourse.

“We have reviewed CHX’s plans to improve market share through new growth initiatives and fully support them,” Lu, a torch bearer during the Beijing Olympic games in 2008, said in the statement, which didn’t disclose terms of the deal. “Together, we have a unique opportunity to help develop financial markets in China over the longer term and to bring exciting Chinese growth companies to U.S. investors.”

The Chicago Stock Exchange could serve as a venue for Chinese companies to list, said Dale Rosenthal, a clinical assistant professor of finance at the University of Illinois at Chicago.

“Because they’re an exchange, they can list stock,” Rosenthal said. “It has the potential to raise Chicago’s profile in China.”

Casin Group is no stranger to investing in outside businesses, including overseas targets. Three years ago, the firm increased its stake in Shenzhen-listed Guoxing Property to 30 percent, becoming the biggest shareholder. Guoxing, now 60 percent owned by Casin Group, has soared 170 percent in the past two months, versus a 19 percent drop in the CSI 300 Index, data compiled by Bloomberg show. Casin Group bought a 25 percent stake in Singapore-based Great Eastern Life Assurance in 2013.

“It’s interesting to see the Chinese increase their footprint in the U.S.,” said Ramon Camacho, a principal at RSM US LLP, an audit, tax and consulting company based in Chicago. “These investors are looking for a platform to showcase and bring to market Chinese companies.”

The company’s bid for the Chicago bourse could face political opposition, with American regulators and politicians taking a skeptical approach toward foreign investments in industries deemed important to national interests. When Germany’s Deutsche Boerse AG wanted to buy the owner of the New York Stock Exchange in 2011, U.S. Senator Charles Schumer, a Democrat from New York, raised obstacles. The deal was finally scrapped on monopoly concerns.

Heavy Scrutiny

Some Chinese companies have come under heavy scrutiny as they tried to enter U.S. markets. Huawei Technologies Co., China’s largest phone-network equipment maker, was barred by the U.S. in 2011 from participating in building a nationwide emergency network.

The U.S. Securities and Exchange Commission would have to approve the deal, because the exchange is a self-regulatory organization. The new owners will have to show they intend to follow all of the regulations imposed on stock exchanges, whose listing and trading rules also must be approved by the SEC.

Additionally, the takeover would probably be reviewed by the Committee on Foreign Investment in the U.S., said Anne Salladin, a lawyer at Stroock & Stroock & Lavan LLP in Washington. CFIUS, a panel of government officials led by the Treasury Department that examines purchases of American businesses by foreign investors, can recommend the president block transactions it believes compromise national security. It can also impose changes to address any concerns.

“It’s a Chinese investment, and it’s in a potentially sensitive sector: financial infrastructure,” Salladin said.

CFIUS has been closely scrutinizing purchases of American businesses by Chinese buyers. Last month, Royal Philips NV abandoned its plan to sell its lighting-components unit to a Chinese-led investment group following opposition from CFIUS.

“If you have a U.S. stock exchange that’s primarily satisfying Chinese companies, the regulators are gonna look very closely at it,” Coulson said. “If your core business is listing Chinese companies in the U.S., that’s going to pick up a lot of regulatory scrutiny and caution.”

China Industrial Espionage:

This new book is the first full account, inside or outside government, of China’s efforts to acquire foreign technology.

Based on primary sources and meticulously researched, the book lays bare China’s efforts to prosper technologically through others’ achievements. For decades, China has operated an elaborate system to spot foreign technologies, acquire them by all conceivable means, and convert them into weapons and competitive goods—without compensating the owners. The director of the US National Security Agency recently called it “the greatest transfer of wealth in history.”

Written by two of America’s leading government analysts and an expert on Chinese cyber networks, this book describes these transfer processes comprehensively and in detail, providing the breadth and depth missing in other works. Drawing upon previously unexploited Chinese language sources, the authors begin by placing the new research within historical context, before examining the People’s Republic of China’s policy support for economic espionage, clandestine technology transfers, theft through cyberspace and its impact on the future of the US.

This book will be of much interest to students of Chinese politics, Asian security studies, US defence, US foreign policy and IR in general.

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China’s long history of spying on business

CNN: The United States indicted five members of China’s People’s Liberation Army Monday, accusing them of hacking into American companies and pilfering closely-guarded trade secrets.  The charges — rejected by Beijing as “purely ungrounded and with ulterior purpose” — are a dramatic escalation in a squabble between the two countries over spying. But they will surprise few Americans working in sensitive industries.

While many countries engage in industrial espionage, China has long been among the most aggressive collectors of economic secrets — both online and off, experts say.

“I can tell you they [China] are the most pervasive,” Kevin Mandia, founder of cybersecurity firm Mandiant, told CNN. “The indictment is about taking intellectual property … it’s the theft of trade secrets, it’s economic espionage.” Full article here.

Epic Chinese Hacking is Forecasted

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In 2015: Washington (CNN) A highly trained group of Chinese hackers is targeting defense, commercial and political organizations worldwide, pulling off sophisticated heists of sensitive information, according to new research out Wednesday.

Though Chinese cyberespionage has been well-documented, researchers from Dell SecureWorks Counter Threat Unit — a division of Dell tech company — say this group, nicknamed Emissary Panda by another research firm, has pulled off cyberattacks at a level of sophistication and specialization rarely seen before among Chinese hackers. More here.

Security Firm Warns of
New Chinese Cyber Attacks

CrowdStrike: Russia, North Korea also engaged in cyber theft

FreeBeacon: China’s cyber attacks against U.S. government and private sector databases are part of a major intelligence-gathering operation and are likely to continue, according to a new report by a cyber security firm.

Chinese hackers stole health care data pertaining to some 80 million Americans last year, and the Office of Personnel Management cyber attacks netted sensitive records on 22 million federal workers, according to an annual threat report made public Wednesday by CrowdStrike, a cyber security and intelligence company. The company is widely consulted by both government and private sector organizations.

The gathering of personal data by the Chinese represents a new trend in Beijing’s aggressive cyber attacks.

“This targeting underscores that intrusion operations associated with nation-states pose a significant risk to all data, no matter how uninteresting it may seem,” the report said.

The 49-page “2015 Global Threat Report” also states that the U.S.-China agreement not to conduct commercial cyber theft has had little impact on Beijing’s cyber operations.

“Beneath the surface, however, China has not appeared to change its intentions where cyber is concerned,” the report said.

Any reduction in Chinese cyber attacks this year likely will be temporary, and an apparent reduction may result from the use of more clandestine methods for conducting attacks following a major military reorganization.

The military changes “will likely increase [China’s] reliance on its civilian intelligence agencies and associated contractors, all of which generally employ better tradecraft,” the report said.

“If observed campaigns in late 2015 were any indication, it is unlikely China will completely cease its cyber operations, and 2016 will show the new direction it is headed,” the report said.

More cyber attacks seeking personal data could take place in the future, and organizations that hold such data “should remain alert to the possibility of similar activity going into 2016,” the report said.

China’s cyber spies usually use cyber intrusions to steal strategic information, such as intellectual property, business operations data, and sensitive government documents.

Stolen personal data, on the other hand, “is typically used to facilitate identity theft or other types of financially motivated crimes,” the report said.

However, the compromised personal information from health insurance companies Anthem, Premera, and CareFirst last year could be used by the government or state-run companies.

The large data theft also appears to be part of Chinese efforts to “build out profiles on individuals to support future operations.”

The federal government data breaches were more damaging and included sensitive background investigation information on federal employees, the report said.

“Without doubt, access to this degree of [personally identifiable information] for both successful and unsuccessful applicants represents a treasure trove of information that may be exploited for counterintelligence purposes,” the report said.

The Chinese can now exploit millions of stolen records for intelligence operations.

“Knowledge acquired during these operations could be used to create more individualized, and therefore more effective, spear phishing campaigns, or also in more traditional, real-world espionage activity,” the report said, noting that the background investigation data “would be particularly useful to traditional [human intelligence] operations as it contains details of a very personal nature about current and former government employees, as well as private sector employees working on government contracts.”

The Chinese government, through the Ministry of Public Security, has launched a major domestic campaign to crack down on online dissent. The Ministry is conducting cyber operations against people and websites that post information opposed by communist authorities, including use of an offensive cyber security force called the “Great Cannon,” a supplement to the Great Firewall designed to block online users from accessing unapproved content.

In Russia, hackers linked to the government used malicious software for intelligence-gathering and for political coercion, such as against Ukraine. Moscow hackers also have conducted cyber reconnaissance—preparation of the cyber battlefield—in Europe and elsewhere.

“In February, widespread spear phishing … was detected and analyzed,” the report said. “These attacks targeted numerous entities in government, defense, and non-governmental organizations (NGOs) in the U.S., Europe, Asia, and South America.”

Russian hackers used stolen emails from a hack against the U.S. strategic consulting firm Stratfor, the report said, a tactic not typical of Russian hacking in the past.

International pressure on Moscow over its military activities, such as the annexation of Ukraine’s Crimea “portend increased intelligence collection by Russia-based adversaries particularly against regional targets and global energy companies,” the report said.

A Russian cyber intelligence operation, dubbed Berserk Bear, targeted oil and gas companies in the Middle East. Another operation, called Fancy Bear, targeted Chinese defense firms.

One Russian hacker group called CyberBerkut operating in Ukraine appears linked to Russian intelligence services.

North Korean cyber activities last year principally involved intelligence-gathering operations directed against South Korea.

Pressure from China could prompt Pyongyang to take a more aggressive cyber posture. And North Korean cyber activities also could expand into criminal activities to raise money for the regime, the report said.

Iran is expected to step up cyber attacks against Saudi Arabia. Regional tensions “increase the likelihood that Iran would use its proven cyber capabilities in 2016, targeting Saudi Arabia and regional governments that are becoming involved in the two countries’ dispute by choosing to align with Saudi Arabia.”

The report names more than 70 cyber adversaries and divides them into three types of attackers: Target intruders, such as nation states, cyber criminals, and “hacktivists.”

For cyber crime, attacks on banks and the use of ransom schemes increased during 2015.

“Phishing emails continued to dominate crimeware distribution throughout the year as the primary mechanism used for the aforementioned banking Trojans and ransomware threats,” the report said.

So-called hacktivist activities including politically motivated cyber attacks by groups like the Syrian Electronic Army and pro-ISIS hackers.

Several pro-Iranian hacker groups also were active last year, including Parastoo, Remember EMAD, and SOBH Cyber Jihad.

The group Remember EMAD—named after the Hezbollah terrorist Imad Mughniyah who was killed in a Damascus car bomb in 2009—claimed to have penetrated Pentagon networks and then threatened to release stolen data. No data was ever released.

ISIS hacking was very active last year and included campaigns of web defacement, the release of personal data—known as “doxing”—and the hijacking of social media accounts.

United Way was a Great Charity, Right?

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Yes, but everything is subject to power and money. When it comes to your child, take extreme caution, ask questions, research and don’t trust anyone. That includes Bill Gates and Common Core. You are the real watchdog for your children, regardless of age, take comfort however, there are people doing great work on your behalf. Use these tools.

   <<— Big and scary

Parents: Don’t Listen to the United Way. Don’t Sign Away Your Child’s Data and Give Up a Constitutional Right to Privacy.

The Family Education Rights Privacy Act (FERPA) has been a stumbling block in accessing data in education reformer plans for many years.  According to the ed reform talking points, it is imperative that personally identifiable information be available so that all federal agencies, state educational agencies and third party researchers have access to this information ostensibly to ‘help your child’.   The request for information and the need for this information has been requested repeatedly by education reformers needing that data for company/agency existence.  The Departments of Education and Health and Human Services need that information as well in order to ‘help your child and your family’ reach the goals the government (not the parents) has indicated is success.

From a previous 2013 article on escholar, a company wanting to use data to track students:

 

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Common Core and the revision of FERPA by the US Department of Education allows intensive data mining and sharing of student information to various federal agencies and private firms selected the the USDOEd.  The company eScholar is one education reform company eager and ready to data mine information on students.  From wsj.com and Education Data Companies Chosen, 08.13.2012:

 

New York state education officials Monday said they selected four companies to build a broad education database that will host students’ test scores, curriculum materials and education apps, paid for by up to $50 million in federal Race to the Top funds.

The state Education Department said that by fall 2013, school districts will be able to use one of the data systems created by either ConnectEDU, eScholar or Pearson PLC and its subsidiary Schoolnet.
The systems are supposed to store student test scores, student demographic information, curriculum materials, lesson plans and other items that teachers or parents can access. Companies will get paid, in part, based on how many school districts select their data system.

It’s financially lucrative for data mining companies to compile student data and advantageous for them to have start up funding provided by taxpayer money. eScholar has produced a video about “Bobby”, a hypothetical student the company is tracking.  From the eScholar website:

 

“Have you met Bobby yet?”

(access video here)

Meet Bobby, the newest member of the eScholar myTrack team. We think that educators have a lot of students like Bobby, students who have things that they want to do, but aren’t always sure how to get there. Check out the video to see how Bobby and his team of supporters use myTrack to help him reach his goals. What do you think? Do you have any students like Bobby?  

eScholar is a company that received federal stimulus dollars to track your child without your knowledge or permission.  Could such behavior and practice be considered not just data mining but stalking?

Should the tracking of student academic and non-academic information and sharing it with federal agencies and private organizations without parental/student knowledge/permission be allowed?  How is the difference in the dissemination of personal information about “Bobby” to others and monitoring “Bobby’s” computer usage via the relaxation of FERPA any different than the definition of how stalkers operate?

Here’s an example of what eScholar will gather on “Bobby” and why:

Enabling P-20 Data Warehousing

Today, a consensus has emerged amongst educators at all levels that there is a need to create an LDS that provides a comprehensive view of education from early childhood through postsecondary and beyond (P-20). This capability is essential to maximizing the effectiveness of our efforts to encourage every student to achieve his or her greatest potential. A key element of this LDS is a comprehensive data warehouse that supports the data requirements of the P-20 world. With the introduction of CDW-PS, which integrates with our eScholar Uniq-ID® products supporting unique identification and ID management of individuals from early childhood through postsecondary, eScholar now has a complete solution for a P-20 data warehouse. Thedata model for the CDW-PS product is specifically designed to integrate with the eScholar Complete Data Warehouse® for PK-12 product to create a comprehensive LDS of over 3,000 data elements encompassing student and teacher academic history from pre-K through higher education. This powerful combination enables SEAs to answer key P-20 questions through one software product solution. 

Should the tracking of student academic and non-academic information and sharing it with federal agencies and private organizations without parental/student knowledge/permission be allowed?  How is the difference in the dissemination of personal information about “Bobby” to others and monitoring “Bobby’s” computer usage via the relaxation of FERPA any different than the definition of how stalkers operate?

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The United Way Salt Lake City (a private NGO) is making a pitch to parents to sign away their children’s right to privacy by agreeing to waive their FERPA protections so that the organization can ‘help’ their child and agencies can then determine the ‘right’ services for their children.  Apparently the Salt Lake City United Way just can’t do its job without parents giving their human capital information to federal agencies, NGOs like The United Way and third party researchers.   Unlike escholar, United Way is making a pitch directly to parents to give away a right that has been constitutionally provided.  The United Way is asking parents to provide active permission to data mine students.  It doesn’t give information on exactly where that information is directed and other than promises that it will make United Way’s partners jobs easier, there is no indication on who has access to this data.

From Emily Talmage in United Way to Parents: Give Us Your Gold:

To get around this law, United Way of Salt Lake City, which has recently partnered with an organization called “StriveTogether” – a subsidiary of KnowledgeWorks Foundation that has received millions from the Gates Foundation – is now encouraging parents to sign a form waiving their FERPA rights.

They’ve even put together a video to convince parents just how important it is that they give up their children’s personal information to just about any organization in the city that wants it – including the Salt Lake City Chamber of Commerce.

 

Here is The United Way’s video cajoling parents into giving their child’s data away.  It’s the same argument made by escholar, it’s because we want the best for your child.  Don’t fall for it.  It’s to have access to the dossier on your human capital.  Do a search on ‘United Way and FERPA’. The United Way is supportive of this administration’s educational reforms and ESSA and many United Way agencies are requesting parents give away their child’s constitutional right to privacy.

New Sanctions Confirm Iran/China/North Korea Missile Partners

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The State Department knew it, the White House knew it, the National Security Council knew it, the CIA knew it and yet, Barack Obama approved the Iran deal even while China, North Korea and Iran collaborated on missile construction, materials, tests and scientists.

Going back to 2007, even Condoleeza Rice earnestly challenged China on the matter.

The Keys to Iran’s Missiles are in China and North Korea

The latest revelations about Iran’s ballistic missile program make it clear that sanctions on Tehran are pointless unless they’re imposed on China and the DPRK, too.
On Monday, Tehran condemned sanctions imposed by the U.S. Treasury Department over the weekend. “The U.S. sanctions against Iran’s ballistic missile program,” said Iranian Foreign Ministry spokesman Hossein Jaber Ansari, “have no legal or moral legitimacy.”

Gordon Chang, DailyBeast:

Earlier, Iranian President Hassan Rouhani issued a threat: “Any action will be met by a reaction.”

In fact, action and reaction—sequencing, in diplomatic speak—was always part of the picture.

The Obama administration undoubtedly knew of Iranian violations before signing the landmark nuclear arrangement with Tehran in July.

Treasury’s measures follow by more than three months Iran’s Oct. 10 launch of a nuclear-capable ballistic missile in violation of Security Council Resolution 1929.

On Sunday, a prisoner “swap” was announced by Tehran, then confirmed by Washington, in which four Iranian-Americans including Washington Post correspondent Jason Rezaian were let out of Iran’s prisons. Hours later, Treasury imposed its measures on 11 designated entities and individuals “involved in procurement on behalf of Iran’s ballistic missile program.”

The sanctions, delayed from the end of December to facilitate the prisoner swap, prohibit Americans and others from engaging in business dealings with the named entities and individuals, and orders U.S. banks to freeze their assets.

The U.S. prohibitions target two Iranian procurement networks, one based in China and the United Arab Emirates and the other involving Pyongyang’s notorious Korea Mining Development Trading Corp, better known as KOMID.

The dealings between Iran and North Korea, as The Daily Beast has noted, have been extensive and spanned three decades.

Several Iranian officials vowed on Friday to expand Tehran’s missile capabilities, a direct challenge to the United States which has threatened to impose new sanctions even as the vast bulk of its measures against Iran are due to be lifted under a nuclear deal. “As long as the United States supports Israel we will expand our missile capabilities,” Brigadier General Hossein Salami,second-in-command of the Revolutionary Guards, was quoted as saying by the Fars news agency. “We don’t have enough space to store our missiles. All our depots and underground facilities are full,” he added.
Several Iranian officials vowed on Friday to expand Tehran’s missile capabilities, a direct challenge to the United States which has threatened to impose new sanctions even as the vast bulk of its measures against Iran are due to be lifted under a nuclear deal. “As long as the United States supports Israel we will expand our missile capabilities,” Brigadier General Hossein Salami,second-in-command of the Revolutionary Guards, was quoted as saying by the Fars news agency. “We don’t have enough space to store our missiles. All our depots and underground facilities are full,” he added.
Several Iranian officials vowed on Friday to expand Tehran’s missile capabilities, a direct challenge to the United States which has threatened to impose new sanctions even as the vast bulk of its measures against Iran are due to be lifted under a nuclear deal. “As long as the United States supports Israel we will expand our missile capabilities,” Brigadier General Hossein Salami,second-in-command of the Revolutionary Guards, was quoted as saying by the Fars news agency. “We don’t have enough space to store our missiles. All our depots and underground facilities are full,” he added.

Some analysts believe that during this time there have been significant contributions of Iranian technology, but Bruce Bechtol, author of North Korea and Regional Security in the Kim Jong-un Era, disagrees. “The North Koreans are providing the expertise, the components, and the on-site development,” he told The Daily Beast over the weekend. “The Iranians are providing the money.”

Treasury’s explanatory comments tend to confirm the view that the transfer of technology has been one-way, noting that technicians from Iran’s Shahid Hemmat Industrial Group “traveled to North Korea to work on an 80-ton rocket booster being developed by the North Korean government.”

As Bechtol predicts, “The Iranians, of course, will insist that this is an ‘Iranian developed system,’” but it is not. The booster, he notes, looks like it is for the Taepodong series, the North’s longest-range launchers, or more ominously, a new family of missiles. The Taepodong missile, repainted, is the Unha-3 rocket.

This launcher “could allow Iran to achieve accurate global targeting of U.S. and Western military facilities in addition to large cities.”

Rick Fisher of the International Assessment and Strategy Center told The Daily Beast that this launcher “could allow Iran to achieve accurate global targeting of U.S. and Western military facilities in addition to large cities.” Bechtol thinks it won’t be long before the “rocket booster”—actually the first stage of an intercontinental missile—will be produced both in North Korea and Iran.

That missile, in short, will pose a grave threat to the American homeland.

Treasury’s sanctions might slow North Korea-Iran missile cooperation, but as former Pentagon analyst Robert Collins, who is based in South Korea, suggests, Pyongyang has already figured out ways around obstacles like this. “The North Koreans have become experts at planning alternative routes for moving monies, moving equipment, and moving contacts,” he told The Daily Beast after the Treasury imposed the measures. They employ “a ‘dumping Peter to use Paul’ system designed to circumvent anticipated sanctions.” Pyongyang has become “very adept at counter-sanction planning.”

Henry Sokolski of the Nonproliferation Policy Education Center believes Sunday’s measures will not be the last, as he noted in an email to The Daily Beast.

What is surprising is that Treasury essentially admitted that it was aware of proscribed Iranian activities before both the signing, on July 14, of the Joint Comprehensive Plan of Action, better known as the Iranian nuclear deal, and its Oct. 18 “Adoption Day.” The 80-ton booster, after all, is designed for a missile useful only for carrying a nuclear warhead.

“The newest sanctions from the Treasury Department prove—without a doubt—that the State Department and the Treasury Department knew, as the agreement with Iran was in negotiation, that the North Koreans and Iranians were cooperating on new, advanced ballistic missile technology,” Bechtol writes.

In fact, work on the 80-ton booster has been publicly known for more than two years.

Treasury’s statement declares that “Iranian missile technicians” had gone to North Korea “within the past several years” in connection with the big booster.

The sanctions, therefore, look like an afterthought, and Washington appears unserious. If the U.S. really wants to end the missile threat, it will have to impose much more severe measures not just on Iran and North Korea but also on parties helping them.

Who is helping the two rogue states? WikiLeaks released an American cable showing that Chinese officials, despite pleas from then-Secretary of State Condoleezza Rice, refused to stop shipments of North Korean missile parts passing through the Beijing Capital International Airport on their way to Iran.

That was 2007. Fisher, in his message to The Daily Beast on Monday, points out that Chinese entities are still involved in this deadly trade.

And so, it appears, is the Chinese central government. In all probability, the Iranian technicians in the last two years reached Pyongyang using the same route Tehran’s nuclear staff have routinely taken on their way to North Korea, through the airport in Beijing.

GATES: Don’t expect the nuclear agreement to lead to a more moderate Iran

Former US defense secretary Robert Gates isn’t optimistic that the landmark July 2015 nuclear deal with Iran will lead the country to halt any of its disruptive policies in the Middle East or its support for terrorist groups.
In an interview with Business Insider, Gates, who spent nearly 27 years in the CIA and was the only cabinet secretary to have served under Barack Obama and George W. Bush, said that he didn’t believe the nuclear deal would have a moderating impact on Iranian behavior or lead Tehran to become a more responsible international actor.
“The notion that betting that this regime is going to temper its behavior in the region because of this nuclear deal I think is mistaken,” Gates told Business Insider. “I think that will not happen.”

In the six months since the nuclear deal was reached, Iran has tested two nuclear-capable ballistic missiles in violation of UN Security Council resolutions, fired live missiles within 1,500 yards of a US aircraft carrier, and continued its support for the Assad regime in Syria and for Shiite militia groups in Iraq, Syria, and Lebanon. Full story here.

China: Needy and More Provocative

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Now China Wants Okinawa, Site of U.S. Bases in Japan

DailyBeast: Beijing is pushing out in all directions, from the South China Sea to several Japanese islands, with an eye on the eastern Pacific that laps American shores.

On the day after Christmas, three Chinese boats, one modified to carry four cannons, entered Japan’s territorial waters surrounding the Senkaku Islands in the southern portion of the East China Sea. The move, a dangerous escalation, is the first time the People’s Republic of China sent an armed vessel into an area that Tokyo claims as its own.

The sending of the three Chinese vessels on Dec. 26 appears to signal a new phase of incursions to grab not just the Senkaku Islands but the nearby—and far more important—Ryukyu Islands. Those include Okinawa, which hosts more than half of the 54,000 American military personnel in Japan, including those at Kadena Air Force Base, the Army’s Fort Buckner and Torii Station, eight Marine Corps camps, as well as Air Station Futenma and Yontan Airfield, and the Navy’s Fleet Activities Okinawa.

Geopolitically, Okinawa is key to the American-Japanese alliance and the heart of America’s military presence in Japan. But if Beijing gets its way, U.S. military bases will be off Okinawa soon. And Japan will be out of Okinawa, too.

Chinese authorities in the spring of 2013 brazenly challenged Japan’s sovereignty of the islands with a concerted campaign that included an article in a magazine associated with the Ministry of Foreign Affairs; a widely publicized commentary in People’s Daily, the Communist Party’s flagship newspaper and therefore China’s most authoritative publication; two pieces in the Global Times, the tabloid controlled by People’s Daily; an interview of Maj. Gen. Luo Yuan in the state-run China News Service; and a seminar held at prestigious Renmin University in Beijing. Much more here.

South China Sea tensions surge as China lands plane on artificial island

Reuters: China’s first landing of a plane on one of its new island runways in the South China Sea shows Beijing’s facilities in the disputed region are being completed on schedule and military flights will inevitably follow, foreign officials and analysts said.

China’s increasing military presence in the disputed sea could effectively lead to a Beijing-controlled air defense zone, they said, ratcheting up tensions with other claimants and with the United States in one of the world’s most volatile areas.

Chinese foreign ministry officials confirmed on Saturday that a test flight by a civilian plane landed on an artificial island built in the Spratlys, the first time Beijing has used a runway in the area.

Vietnam launched a formal diplomatic protest while Philippines Foreign Ministry spokesman Charles Jose said Manila was planning to do the same. Both have claims to the area that overlap with China.

“That’s the fear, that China will be able take control of the South China Sea and it will affect the freedom of navigation and freedom of overflight,” Jose told reporters.

China has been building runways on the artificial islands for over a year, and the plane’s landing was not a surprise, although it will almost certainly increase tensions.

The runway at the Fiery Cross Reef is 3,000 meters (10,000 feet) long and is one of three China was constructing on artificial islands built up from seven reefs and atolls in the Spratlys archipelago.

The runways would be long enough to handle long-range bombers and transport craft as well as China’s best jet fighters, giving them a presence deep into the maritime heart of Southeast Asia that they have lacked until now.

Work is well underway to complete a range of port, storage and personnel facilities on the new islands, U.S. and regional officials have said.

Fiery Cross is also expected to house advanced early warning radars and military communications facilities, they said.

Chinese officials have repeatedly stressed that the new islands would be mostly for civilian use, such as coast guard activity and fishing research.

Foreign ministry spokeswoman Hua Chunying said at the weekend that the test flight was intended to check whether the runway met civilian aviation standards and fell “completely within China’s sovereignty”.

Leszek Buszynski, a visiting fellow at the Australian National University’s Strategic and Defence Studies Centre, said he believed military landings on the islands were now “inevitable”.

An air defense zone, while unlikely soon, was feasible and possible in future once China’s built up its air strength.

“The next step will be, once they’ve tested it with several flights, they will bring down some of their fighter air power – SU-27s and SU-33’s – and they will station them there permanently. That’s what they’re likely to do.”

DE FACTO DEFENCE ZONE

Ian Storey, a South China Sea expert at Singapore’s ISEAS Yusof Ishak Institute, said he expected tensions to worsen as China used its new facilities to project power deeper into the South China Sea.

Even if China stopped short of formally declaring an Air Defence Identification Zone, known as an ADIZ, Beijing’s need to protect its new airstrips and other facilities could see it effectively operating one.

“As these facilities become operational, Chinese warnings to both military and civilian aircraft will become routine,” Storey said.

“These events are a precursor to an ADIZ, or an undeclared but de facto ADIZ, and one has to expect tensions to rise.”

Hua, the Chinese foreign ministry spokeswoman, said on Monday that there were no immediate plans for an ADIZ in the South China Sea.

“As for whether China will establish an ADIZ, the decision will be based on our judgment of the situation and our needs,” she aid, adding that Beijing respected other nations’ rights to international freedoms of navigation and overflight.

China claims most of the South China Sea, through which more than $5 trillion of world trade ships every year. Vietnam, Malaysia, Brunei, the Philippines and Taiwan have rival claims.

The United States has no claim in the South China Sea, but has been highly critical of China’s assertiveness and says it will protect freedom of navigation.

China sparked condemnation from the United States and Japan in late 2013 when it declared an ADIZ over the East China Sea, covering uninhabited islands disputed with Tokyo.

Chinese officials have reserved their right to do the same in the South China Sea but have said the conditions do not warrant one yet.

However, regional military officials say they are logging increased warnings to aircraft from Chinese radio operators, including some from ground stations on Fiery Cross reef.