[Rushtalk] Fwd: On the Chinese Communist Party’s Tactics for Stealing Western Military Technologies

Steven Laib slaib at att.net
Tue May 8 19:20:33 MDT 2018


> 
> On the Chinese Communist Party’s Tactics for Stealing Western Military Technologies: Part 1 of 2
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> By Zhang Ting
> March 10, 2018 2:32 pm Last Updated: March 18, 2018 10:51 am
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> China's Falcon L-15 jet performs a demo flight at the 7th China International Aviation and Aerospace Exhibition in Zhuhai of Guangdong Province, China, on November 6, 2008. (China Photos/Getty Images)
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> Since the Chinese Communist Party (CCP) took over the country in 1949, the Chinese regime has consistently been stealing military technology from other countries. In recent years, theft seems to have become a national strategy for growing its military, and it has become an increasingly worrisome problem.
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> This January, multiple news sources reported that in an official promotion video released by China’s state-run Hongdu Aviation Industry Group, an L-15 jet that conducted a test-flight at the China Flight Test Establishment carried a brand-new, domestic-made guided bomb underneath its prototype wing. The model name “TL-20/CK-G” was written on the bomb. Observers outside China immediately noted the striking similarities between TL-20 and GBU-53/B, the latest deployed second-generation Small Diameter Bomb of the U.S. Air Force.
> 
> Back in March 2017, the People’s Liberation Army Air Force’s J-20 fighter jet officially entered service. A few years ago, China and the United States engaged in a “war of words” on whether J-20 was a knockoff of the American F-35, because the two models shared many similarities. In 2014, a Chinese national pleaded guilty to conspiring with Chinese sources to steal design information and manufacturing technologies for the F-35 and other American fighter jets.
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> 
> Chinese J-20 stealth fighter jets fly in formation during a military parade at the Zhurihe training base in China’s northern Inner Mongolia region on July 30, 2017. (STR/AFP/Getty Images)
> Outside observers noticed that as soon as U.S. unmanned aerial vehicles (UAV), more commonly known as drones, entered combat service, the Chinese navy immediately released its own UAV model to the world at an airshow in 2006, with no intention of hiding the fact that its model highly resembled a U.S. drone. Over the years, the West has grown increasingly vigilant over CCP’s theft of sensitive technologies to grow its military.
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> 
> Official Document Highlights Plan for Stealing Tech
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> High-tech industries such as artificial intelligence play a vital role in military development. Technologies capable of sifting through intelligence data, and developing UAV and unmanned ground vehicles could substantially boost the combat capabilities of military personnel. Over the years, the CCP has gone on the offensive on a massive scale to get its hands on these technologies.
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> Last July, China’s State Council released a notice titled “the Plan on Developing a New Generation of Artificial Intelligence.” The notice clearly stated that AI is becoming a new focal point of international competition. Developing AI should be treated at “the height of national strategy” and China should “take initiative” to “draft plans systematically,” according to the notice.
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> 
> The Chinese actively search for those U.S. companies that pioneer the technologies that China lacks. They then carefully target those companies in order to acquire their expertise.
> — Wilbur Ross, U.S. commerce secretary, in a 2017 Financial Times editorial
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> The CCP also admitted that it was lagging behind developed nations, lacking in key “original achievements” in areas like core algorithms, key equipment, high-end chips, and software. The country also has a serious shortage of talent in top-tier AI, it said.
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> Ground crew members prepare an F-35 fighter jet for a training mission at Hill Air Force Base in Ogden, Utah, on March 15, 2017. (GEORGE FREY/GETTY IMAGES)
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> In consideration of this reality, the CCP outlined strategies for “acquiring” sensitive technologies from abroad: 1) encourage China’s domestic AI businesses to “leave home” and acquire foreign companies, invest in foreign equities and venture capital, and establish overseas R & D centers; 2) attract foreign AI companies and science research institutes to set up R & D centers in China; 3) put in place special policies for attracting high-end AI talent, such as the “Thousand Talents Plan” to recruit top-notch foreign and Chinese professionals from abroad; 4) provide support for China’s AI firms to partner with foreign top universities, science research institutes, and labs working in AI.
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> Western countries have found that these four strategies have provided opportunities for China to steal technologies from them. This article and its next installment shall discuss each strategy in more detail.
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> Strategy 1: The Chinese regime supports domestic businesses in purchasing on a massive scale foreign high-tech firms
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> The CCP first tasted victory after it bought a British high-tech company in 2008. The deal later helped the CCP to make a key breakthrough in its aircraft carrier development.
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> For many years, research into manufacturing a new generation of electromagnetic aircraft launch systems (EMALS) has been a focus for both the United States and China. The United States was the first to succeed, put into use on the USS Gerald R. Ford, the lead ship of the U.S. Navy’s supercarriers.
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> U.S. Navy sailors aboard the U.S. aircraft carrier Gerald R. Ford (CVN 78) in Newport News, Va., on April 8, 2017. (Chief Mass Communication Specialist Christopher Delano/U.S. Navy via Getty Images)
> According to Chinese state media, last year, the country’s main carrier-based aircraft, J-15, began test flights for a catapult launch using EMALS technology. One of the key components for making EMALS is a semiconductor chip called the “Insulated Gate Bipolar Transistor” (IGBT).
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> The South China Morning Post reported on Nov. 19, 2017, that the CCP was able to make a key breakthrough after purchasing the British company Dynex Semiconductor, which provided the technology to make IGBT chips.
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> Chinese J-15 fighter jets on the deck of the aircraft carrier Liaoning during military drills in the South China Sea, on Jan. 2, 2017. (STR/AFP/Getty Images)
> In 2008, the Chinese state-owned enterprise Zhuzhou CRRC Times Electric Co. Ltd. purchased 75 percent of shares from Dynex Semiconductor. This took place in the middle of a global economic crisis. A source from inside the current British government, who wished to remain anonymous, told The Epoch Times that then-Prime Minister Gordon Brown did not prevent the sale because his administration did not see the transaction as a threat to national security at the time.
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> But the following year, the UK government listed IGBT chips on its Strategic Export Control List, which are goods that require a special license in order to be exported.
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> Multiple sources from Chinese media reported that the CCP has already built a large-scale IGBT manufacturing facility in Zhuzhou City, Hunan Province.
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> At a Congressional hearing with the Committee on Foreign Investment held on Jan. 9, 2018, Dennis Blair, co-chair of the U.S. Commission on the Theft of American Intellectual Property, an independent organization, spoke about China’s current threats to U.S. military technology. Instead of targeting secondary technologies as it did in the past, the Chinese regime has now shifted its attention to the most advanced top-tier technologies. Their primary channel for stealing U.S. military technologies is through investment in the United States or through American allies.
> 
> In an editorial published on Aug. 15, 2017, in the Financial Times, U.S. Commerce Secretary Wilbur Ross wrote that “the Chinese actively search for those U.S. companies that pioneer the technologies that China lacks. They then carefully target those companies in order to acquire their expertise.” Ross also added that the regime also targets American startups with “scientific breakthroughs” to make significant investments, not for the “rate of return, but the capture of new technologies, which the Chinese then use for other purposes.”
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> 
> U.S. Commerce Secretary Wilbur Ross speaks to department employees in Washington, D.C. on March 1, 2017. (Aaron P. Bernstein/Getty Images)
> A report released in December 2016 by Mercator Institute for China Studies, a German-based think tank, noted that almost all large-scale American semiconductor firms have received investment offers from parties representing the Chinese regime.
> 
> There is a long list of examples where China’s state-owned enterprises purchased foreign firms to further the regime’s own purposes. Here we list but a few:
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> Over the past six years, the state-owned Aviation Industry Corporation of China (AVIC), the parent company of Chengdu Aircraft Industry Group, which is the R & D firm that designed and manufactured J-20, acquired many U.S. companies that manufacture aircraft and its parts and components. In 2011, AVIC purchased American manufacturer Cirrus Aircraft through a subsidiary company, giving it the opportunity to engage in R & D at the renowned Oak Ridge National Laboratories in Tennessee, operated by the U.S. Department of Energy.
> 
> In early November of 2016, Canyon Bridge Capital Partners LLC, a Chinese-backed firm, announced its intentions to purchase the U.S. semiconductor company Lattice Semiconductor Corp with 1.3 billion dollars. However, Canyon Bridge’s sole investor, China Venture Capital Fund Corporation, has ties with the Chinese regime. President Donald Trump blocked the takeover in September 2017, following U.S. defense officials’ advice that the deal may be a national security threat.
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> Soon after the failed deal, Canyon Bridge announced it would purchase Imagination Technologies, a British tech firm specializing in chip design. The deal was approved by a UK court in November.
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> Strategy 2: Attract high-tech firms to invest in China
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> In the same FT editorial, Ross lambasted Beijing authorities for pressuring American firms operating in China to turn over proprietary technology in exchange for access to the Chinese market. U.S. companies are often forced to form joint ventures with domestic firms; limited to ownership of 50 percent or less; and required to transfer their technology “as part of product sale contracts,” Ross wrote.
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> Many of those firms are tech-related. In February 2017, California-based chipmaker GlobalFoundries announced a $10 billion project to build a chip plant in Chengdu, Sichuan Province.
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> The New York Times reported in August 2017 that the Guizhou Province authorities would provide land and financing to a joint venture that it formed with American chipmaker Qualcomm, called Huaxintong Semiconductor. In turn, Qualcomm would provide the technology, $140 million in initial funding, and agree to shift more of its high-end manufacturing to its Chinese counterpart.
> 
> 
> Qualcomm CEO Steve Mollenkopf attends a press conference in Beijing, China on July 24, 2014.
> (ChinaFotoPress via Getty Images)
> The Chinese regime had announced plans to spend about $100 billion to bring chip factories and research facilities to China, according to the Times.
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> By handing over proprietary technology, American firms risk losing their competitive edge and handing over critical advances that the United States could apply to the military.
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> Intellectual property (IP) theft—of which China is the biggest infringer—has resulted in major financial losses for the U.S. economy. Theft of trade secrets cost the United States between $180 billion and $540 billion annually, according to the IP Commission, an independent group of experts who investigate the theft of American IP.
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> The U.S. has recently begun to take action. Trump has signed a memorandum to allow trade representatives to investigate China’s IP theft, while the United States, EU, and Japan plan to file a complaint with the WTO (World Trade Organization) over China’s forced technology transfers and other policies they deemed unfair to foreign businesses, according to a report by Japanese newspaper Yomiuri Shimbun.
> 
> 
> 
> On the Chinese Communist Party’s Tactics for Stealing Western Military Technologies: Part 2 of 2
> 
> By Zhang Ting
> March 10, 2018 2:43 pm Last Updated: March 15, 2018 2:32 pm
> 
> About 7,000 freshmen wearing fatigues gather at the Wuhan University of Technology during a military training in Wuhan City, Hubei Province on Sept. 14, 2015. (VCG via Getty Images)
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> Strategy 3: Influencing Overseas High-Tech Talent Through the United Front
> 
> According to the Chinese Communist Party’s (CCP) mouthpiece newspaper People’s Daily, the United Front Work Department—a Party organ that engages in subversion, forming alliances and isolating enemies—held a meeting in May 2015 where they made clear that overseas Chinese students will be the United Front’s new focus and primary target for the CCP’s outreach, stating that it needed to train and “use” them.
> 
> One of the means whereby the United Front efforts targets overseas scholars is through the “Thousand Talents Program,” a recruitment campaign to attract those working in the science and technology fields. The CCP has poached talent from top universities, research institutes, and renowned firms, including Zhu Huilong from IBM’s Semiconductor Research and Development Center (SRDC); Chen Dongmin, former chief strategic officer of the U.S.-based semiconductor firm, MEMSIC; and Shen Jian, who was a researcher of magnetic nanomaterials at Oak Ridge National Laboratories—operated by the U.S. Department of Energy—and a professor at University of Tennessee, Knoxville.
> More than 7,000 top-level Chinese and non-Chinese professionals, experts, and entrepreneurs have been recruited to China under the program, according to the Thousand Talents website in November 2017.
> 
> 
> Graduating students attend the Columbia University 2016 Commencement ceremony in New York on May 18, 2016. (Timothy A. Clary/AFP/Getty Images)
> The CCP lures them with lucrative promises, including a one-time package of one million yuan ($151,140); guaranteed employment in a leadership or professional position at a university, research institute, or state-owned enterprise; research subsidies; guaranteed employment for their spouses, and more.
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> In recent years, the FBI has grown concerned about the scholars recruited by the Thousand Talents Program.
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> In September 2017, Yiheng Percival Zhang, a Chinese professor teaching biological systems engineering at Virginia Tech, was arrested by the FBI and charged with conspiring to defraud the federal government.
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> Zhang was employed by Virginia Tech since 2005. His research projects covered areas that had to do with the U.S. Department of Energy, the U.S. Army Research Office, Air Force Office of Scientific Research at the Air Force Research Laboratory, and the instrument research project at the National Defense University. Zhang was also a researcher at the Tianjin Institute of Industrial Biotechnology, part of the state-run Chinese Academy of Sciences. According to the Institute’s website, Zhang was recruited by the Thousand Talents program.
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> Another example is the arrest of Tianjin University professor Hao Zhang when he returned to the United States from China in May 2015.
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> According to the U.S. Department of Justice, while studying for a doctorate in electrical engineering at a university in Southern California, Hao Zhang and another Tianjin University professor Pang Wei conducted research on thin-film bulk acoustic resonator (FBAR) technology using funding from the U.S. Department of Defense. After graduation, Pang was employed by Avago Technologies in Colorado, and Zhang worked for Skyworks Solutions in Massachusetts. Both men worked as FBAR engineers.
> 
> FBAR is a vital technology used in mobile devices such cellular phones, tablets, and GPS devices. It is used in consumer devices, in addition to having a wide range of applications for military and national defense communications. Avago Technologies is a firm that designs, develops, and supplies FBAR technology. Pang was on the list of recruited personnel under the Thousand Talents program in 2013.
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> 
> Smartphones hang on a wall at the Mobile World Congress (MWC), the world’s biggest mobile fair, in Barcelona, Spain, on February 28, 2018. (Pau Barrena/AFP/Getty Images)
> In 2008, officials from Tianjin University traveled to San Jose, California to meet with Pang, Zhang and other co-conspirators, according to the Justice Department press release about the case. Shortly after their meeting, Tianjin University agreed to finance them in setting up a FBAR production base in China. Both Pang and Zhang stayed at their companies while maintaining close cooperation with Tianjin University. In 2009, Pang and Zhang quit their jobs in the United States and accepted offers of full professorship at Tianjin University.
> 
> The Justice Department stated that Pang, Zhang, and their co-conspirators stole formulas, source code, technical specifications, design kits, and other documents marked as classified or proprietary from their American employers. Then, they shared the stolen trade secrets with Tianjin University, allowing it to build a “state-of-the-art FBAR fabrication facility.” Later, Pang, Zhang, and others opened a joint venture with the university, called ROFS Microsystems, which would mass-produce FBARs for commercial and military clients.
> 
> Pang, Zhang, and others were charged with economic espionage and theft of trade secrets.
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> Other than the Thousand Talents recruit program, the CCP has introduced a number of other similar programs including the Hundred Talents Program, Changjiang Scholars Program, Ten Thousand Talents Program, and Thousand Foreign Experts Program.
> 
> Qian Yingyi, dean of the School of Economic Management at Tsinghua University, said introducing foreign human resources has become a key “strategic mission” for both central and local authorities in China.
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> The CCP’s aggressive tactics to recruit overseas Chinese talent has made American law enforcement vigilant about activities within the Chinese-American community.
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> Multiple media reported in October 2017 that a message had been circulating within the Chinese scientist community in Washington D.C.: at a workshop on cases of ethnic Chinese scientists being wrongfully accused of espionage, attorneys warned the audience that anyone who joins the Thousand Talents program is automatically on the FBI’s watch list. Members of the Chinese Association for Science and Technology, a group for China-born scientists living in America, were also being closely watched.
> 
> A number of U.S.-based scholars, even if they do not join the Thousand Talents programs, are still used by the CCP to steal sensitive technologies.
> 
> On January 23, 2018, the U.S. Justice Department announced that Yi-Chi Shih and Kiet Ahn Mai were arrested on federal charges of scheming to steal military technology from an American company, to sell to a Chinese company, Chengdu GaStone Technology Co.
> 
> Among the clients of this American company are the U.S. Air Force, Navy, and the Defense Advanced Research Projects Agency. The firm produces MMIC (monolithic microwave integrated circuits) chips, which are used in electronic warfare and radar systems.
> 
> 
> U.S. soldiers stand alongside an A-10 Thunderbolt II at Kandahar Air base in Afghanistan on January 23, 2018. (Shah Marai/AFP/Getty Images)
> On January 18, 2018, the U.S. Justice Department announced that Xu Jiaqiang, a former IBM software developer in China, was sentenced to five years in prison for stealing, duplicating, and obtaining proprietary source code from IBM.
> 
> On December 6, 2017, four former executives of a key U.S. chipmaker, Applied Materials, were charged by the federal court with stealing chip designs from the company and attempting to use them to set up a Chinese startup. They downloaded data, including more than 16,000 drawings, from the company’s internal engineering database.
> 
> 
> (Dragon Images/Shutterstock)
> In 2012, Jin Hanjuan, a Chinese-born software engineer who had become a naturalized U.S. citizen, was sentenced to four years in prison for stealing trade secrets from Motorola and attempting to sell them to a Chinese telecoms company that develops products for the Chinese military.
> 
> Again in 2012, a Chinese national, Liu Sixing, who worked at L-3 Communications, a major defense contractor in the U.S., was sentenced to five years imprisonment for stealing the company’s technology involving guidance systems for missiles, rockets, and drones. According to the Justice Department, he had stolen the files in preparation for future employment in China, having delivered presentations about the technology at several Chinese universities, the state-run Chinese Academy of Sciences, and conferences held by the Chinese regime.
> 
> Strategy 4: Encouraging Cooperation With Foreign Companies
> 
> Another channel through which the CCP is able to acquire sensitive technologies is allowing Chinese and foreign businesses to work in partnership. According to The New York Times, two U.S. companies, Advanced Micro Devices and Hewlett Packard Enterprise, have formed partnerships with Chinese companies in the R&D of server chips, giving them access to their technology. Intel is partnered with a Chinese semiconductor firm to make high-end mobile phone chips. IBM has agreed to transfer some of its mainframe banking computer technology to its Chinese counterparts.
> 
> Last year, the Chinese internet giant Tencent Holdings formed a strategic partnership with the world’s leading science journal publisher Springer Nature. According to Cheng Wu, vice-president of Tencent, he wants to help foster young scientists.
> 
> Tencent hosts the annual WE conference, where Chinese and foreign professionals in the science and technology fields share their ideas.
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> The 2017 Tencent WE conference website states that over the past four years, 45 top scientists from around the world appeared on the stage of WE. Their expertise spanned from space exploration, life sciences, to artificial intelligence.
> 
> 
> A logo of Chinese Internet giant Tencent, at the announcement of the company’s fourth-quarter results in Hong Kong on March 18, 2015. (Philippe Lopez/AFP/Getty Images)
> New York-based political commentator Ming Zhu noted that the Chinese regime welcomes various international conferences to be held in China, for its own ulterior motives. These conferences are a platform whereby the CCP is able to collect relevant information and ideas from the speeches given by foreign top-notch scientists. Such conferences also allow the Chinese regime to detect tech companies that can serve a purpose for its agenda, then give Chinese firms time to prepare an offensive.
> 
> For example, In 2015, Satellogic, an Argentine satellite company, participated in the WE conference. Tencent later invested in Satellogic in June 2017. That month, Satellogic launched its sixth micro-satellite in Jiuquan City, China, transported with China’s Long March-4B (Chang Zheng-4B) carrier rocket.
> 
> In 2014, Robert Richards, co-founder of Silicon Valley think-tank Singularity University, joined the WE conference and introduced his new company, Moon Express, a space transportation firm. Tencent also later invested in it.
> 
> Chinese Companies Must Serve Party Strategy
> 
> The CCP supports Chinese businesses in making investments abroad. However, its support is limited to only high-tech investments that are useful to the CCP’s strategic purposes. As for Chinese companies that attempt to invest in other industries abroad, they are under strict regulation by the Chinese authorities.
> 
> Last year, the CCP stepped up its regulation of Chinese companies’ overseas investments. In a notice issued by the State Council on August 18, Beijing encouraged Chinese businesses to invest in high-tech and advanced manufacturing businesses, as well as setting up R&D centers abroad.
> 
> The same notice also told firms to limit their overseas investments in real estate, hotels, and the entertainment industry. Last year, China’s Wanda Group, which had invested extensively in those industries—including by acquiring American movie theater chain AMC—was severely disciplined by Beijing. The company then sought to sell many of its real estate acquisitions in Los Angeles, Chicago, UK, and Australia.
> 
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> A car passes a Wanda Group banner on a construction site at 9900 Wilshire Boulevard in Beverly Hills, California, on May 17, 2016. (Frederic J. Brown/AFP/Getty Images)
> Amid the company’s troubles, Wanda’s chairman Wang Jianlin had to declare openly that he will have his company focus on domestic investments from now on, in a July 2017 interview with Caixin, a Chinese business magazine.
> 
> Ming Zhu commented that under the Chinese Communist regime, private businesses are not truly private and cannot make their own decisions. Beijing regulates the private sector’s assets by setting forth rules for them.
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