U.S. announces new sanctions on six linked to Hong Kong mass arrests

By Humeyra Pamuk and David Brunnstrom

WASHINGTON (Reuters) – The United States announced sanctions on Friday against six Hong Kong or Chinese officials it blamed for implementing a new security law in Hong Kong, following the mass arrests of pro-democracy activists this month.

Hong Kong police arrested 53 people on Jan. 5 in dawn raids on democracy activists in the biggest crackdown since China last year imposed a security law which opponents say is aimed at quashing dissent in the former British colony.

The six people targeted for new sanctions include Frederic Choi, director of the national security division of the Hong Kong police, and Sun Qingye, a deputy to Zheng Yanxiong, who was appointed in July to head a new national security office in Hong Kong. Also named were pro-Beijing legislator Tam Yiu-chung and You Quan of China’s United Front Work Department.

U.S. Secretary of State Pompeo warned last week of fresh sanctions in response to the arrests of pro-democracy activists. That warning came a day after supporters of President Donald Trump stormed Congress in a bid to overturn his November election defeat, prompting China’s state media to accuse U.S. politicians of “double standards.”

It was the latest in a series of last minute steps taken by Pompeo on foreign policy, several targeting China in what analysts see as a bid driven by Pompeo to lock in a tough approach to Beijing.

Trump has pursued hardline policies toward China on issues ranging from trade to espionage and the coronavirus.

His administration has already imposed sanctions on Chinese officials for their actions involving the pro-democracy movement and other alleged rights abuses, and last July declared an end to the territory’s privileged economic status under U.S. law.

The Trump administration took another swipe at China and its biggest companies on Thursday, imposing sanctions on officials and companies for alleged misdeeds in the South China Sea and imposing an investment ban on nine more firms.

Last Saturday, Pompeo said he was lifting restrictions on contacts between U.S. officials and counterparts in Taiwan, a move that greatly angered Beijing, which considers the island a renegade province.

(Reporting by Humeyra Pamuk, Daphne Psaledakis and David Brunnstrom; editing by Jonathan Oatis)

Hong Kong bank account freezes rekindle asset safety fears

By Sumeet Chatterjee and Clare Jim

HONG KONG (Reuters) – Hong Kong police moves to freeze the accounts of several people linked to pro-democracy protests is prompting some residents to shift part of their savings overseas, bankers and lawyers said.

Banks were asked by police to freeze the accounts of veteran activist Ted Hui and his family last week, and on Monday a local church’s account was blocked, all on suspicion of money laundering.

The cases involved bank accounts held at HSBC, among others. Asked about the church’s account, HSBC said on Tuesday it did not comment on specific accounts. While limited, the police moves have triggered concerns that asset freezing could be used against Beijing opponents in Hong Kong to crack down on dissent, said the bankers and lawyers, who declined to be named because of the sensitivity of the matter.

Jimmy Chung, who works in retail planning, opened a bank account in Switzerland in June, around the time the government passed a national security in response to last year’s violent pro-democracy protests in Hong Kong.

The 40-year-old, who has no ties to political activists in Hong Kong, said he transferred thousands of dollars of his savings by July and is now considering moving more offshore.

“I never thought things would be evolving this fast, so I have to make more contingency plans,” said Chung, referring to the recent bank account freezes.

Chung’s reaction mirrors that of others worried by events in the financial hub, which attracts significant investment.

Two senior bankers said some of their clients, who opened offshore accounts last year, have started moving funds.

“The people who were sitting on the fence are starting to take action now,” one of them said. “They are worried that this (account freezing) could become more widespread and they have a lot to lose if all their savings are in Hong Kong.”

Another banker with a European wealth manager said some clients, who had no involvement in the protests, were converting assets denominated in local currency into U.S. dollars as they prepared to move them offshore.

‘RETALIATION’

Hong Kong has not seen large capital outflows despite the protests, instead benefiting from inflows tied to a large number of public offering of shares.

Responding to criticism that freezing the account of ex-lawmaker Hui, who fled to Britain after criminal charges related to the protests, would hurt Hong Kong’s image, its leader Carrie Lam said the financial and monetary systems remained robust.

The Hong Kong Monetary Authority said that the freezing of funds or property related to criminal investigations was by law enforcement agencies and banks were expected to cooperate.

“The main concern here is if this (power) is being used more loosely,” a lawyer who advises wealthy individuals said.

“People are now asking what would be the best alternative for them to safely park their assets.”

The Good Neighbor North District Church, whose volunteers gave “humanitarian aid” to protesters, said on Facebook that its HSBC account was frozen as an “act of political retaliation”.

The Hong Kong police said they asked a bank on Monday to freeze five accounts, involving a total of $3.2 million, related to suspicion of fraud and money laundering.

The police did not name the bank involved.

($1 = 7.7508 Hong Kong dollars)

(Reporting by Sumeet Chatterjee and Clare Jim; Editing by Ana Nicolaci da Costa and Alexander Smith)

‘Something close’ to genocide in China’s Xinjiang, says U.S. security adviser

By David Brunnstrom

WASHINGTON (Reuters) – The U.S. national security adviser said on Friday that China was perpetrating “something close to” a genocide with its treatment of Muslims in its Xinjiang region.

“If not a genocide, something close to it going on in Xinjiang,” Robert O’Brien told an online event hosted by the Aspen Institute, while highlighting other Chinese crackdowns including one on Hong Kong’s pro-democracy movement.

The United States has denounced China’s treatment of Uighur and other minority Muslims in Xinjiang and imposed sanctions on officials it blames for abuses. It has not, though, so far termed Beijing’s actions genocide, a designation that would have significant legal implications and require stronger action against China.

The United Nations estimates that more than a million Muslims have been detained in Xinjiang and activists say crimes against humanity and genocide are taking place there. China has denied any abuses and says its camps in the region provide vocational training and help fight extremism.

O’Brien referred to seizures by U.S. customs of “massive numbers” of hair products made with human hair from Xinjiang.

“The Chinese are literally shaving the heads of Uighur women and making hair products and sending them to the United States,” he said.

U.S. Customs and Border Protection said in June it had detained a shipment originating in Xinjiang of hair products and accessories suspected of being forced-labor products made with human hair.

In June, U.S. Secretary of State Mike Pompeo labeled as “shocking” and “disturbing” reports that China was using forced sterilization, forced abortion and coercive family planning against Muslims in Xinjiang.

He said last month Washington was considering the language it would use to describe what is happening in the region but added: “When the United States speaks about crimes against humanity or genocide … we’ve got to be very careful and very precise because it carries an enormous weight.”

(Reporting by David Brunnstrom and Jonathan Landay; Editing by Steve Orlofsky)

U.S. charges seven in wide-ranging Chinese hacking effort

WASHINGTON (Reuters) – The U.S. Justice Department said on Wednesday it has charged five Chinese residents and two Malaysian businessmen in a wide-ranging hacking effort that encompassed targets from video games to pro-democracy activists.

Federal prosecutors said the Chinese nationals had been charged with hacking more than 100 companies in the United States and abroad, including software development companies, computer manufacturers, telecommunications providers, social media companies, gaming firms, nonprofits, universities, think-tanks as well as foreign governments and politicians and civil society figures in Hong Kong.

U.S. officials stopped short of alleging the hackers were working on behalf of Beijing, but in a statement Deputy Attorney General Jeffrey Rosen expressed exasperation with Chinese authorities, saying they were – at the very least – turning a blind eye to cyber-espionage.

“We know the Chinese authorities to be at least as able as the law enforcement authorities here and in like minded states to enforce laws against computer intrusions,” Rosen said. “But they choose not to.”

He further alleged that one of the Chinese defendants had boasted to a colleague that he was “very close” to China’s Ministry of State Security and would be protected “unless something very big happens.”

“No responsible government knowingly shelters cyber criminals that target victims worldwide in acts of rank theft,” Rosen said.

The Chinese Embassy in Washington did not immediately return an email seeking comment. Beijing has repeatedly denied responsibility for hacking in the face of a mounting pile of indictments from U.S. authorities.

Along with the alleged hackers, U.S. prosecutors also indicted two Malaysian businessmen, Wong Ong Hua, 46, and Ling Yang Ching, 32, who were charged with conspiring with two of the digital spies to profit from computer intrusions targeting video game companies in the United States, France, Japan, Singapore and South Korea.

The Justice Department said the pair operated through a Malaysian firm called SEA Gamer Mall. Messages left with the company were not immediately returned. Messages sent to email addresses allegedly maintained by the hackers also received no immediate response.

U.S. Assistant Attorney General for National Security John Demers said on Wednesday that the Malaysian defendants were in custody but were likely to fight extradition.

The Justice Department said it has obtained search warrants this month resulting in the seizure of hundreds of accounts, servers, domain names and “dead drop” Web pages used by the alleged hackers to help siphon data from their victims.

The Department said Microsoft Corp. had developed measures to block the hackers and that the company’s actions “were a significant part” of the overall U.S. effort to neutralize them. Microsoft did not immediately return a message seeking comment.

(Reporting by David Shepardson, Susan Heavey, Raphael Satter and Mark Hosenball in Washington; Editing by Chizu Nomiyama and Matthew Lewis)

China imposes curbs on U.S. diplomats in response to U.S. move

BEIJING (Reuters) – China on Friday said it had imposed restrictions on staff at the U.S. Embassy and its consulates in mainland China and Hong Kong, responding to U.S. measures announced early this month.

China’s Foreign Ministry did not specify the measures, which it described as reciprocal.

Last week, Washington said it would require senior Chinese diplomats to get State Department approval before visiting university campuses or holding cultural events with more than 50 people outside mission grounds, which it had said were a response to China’s restrictions on American diplomats.

(Reporting by Lusha Zhang and Tony Munroe; Editing by Kevin Liffey)

U.S. says blocking visas of some Chinese graduate students and researchers

By David Brunnstrom and Ryan Woo

WASHINGTON/BEIJING (Reuters) – The United States is blocking visas for certain Chinese graduate students and researchers to prevent them from stealing sensitive research, the acting head of the U.S. Department of Homeland Security, said on Wednesday.

Chad Wolf repeated U.S. charges of unjust business practices and industrial espionage by China, including attempts to steal coronavirus research, and accused it of abusing student visas to exploit American academia.

“We are blocking visas for certain Chinese graduate students and researchers with ties to China’s military fusion strategy to prevent them from stealing and otherwise appropriating sensitive research,” he said in a speech in Washington.

Wolf said the United States was also “preventing goods produced from slave labor from entering our markets, demanding that China respect the inherent dignity of each human being,” an apparent reference to alleged abuses of Muslims in China’s Xinjiang region.

Wolf did not give details.

U.S. Customs and Border Protection officials have prepared orders to block imports of cotton and tomato products from Xinjiang over accusations of forced labor, though a formal announcement has been delayed.

Sino-U.S. relations have sunk to historic lows with the world’s two biggest economies clashing over issues ranging from trade and human rights to Hong Kong and the coronavirus.

Earlier, some Chinese students enrolled in U.S. universities said they received emailed notices from the U.S. embassy in Beijing or U.S. consulates in China on Wednesday informing them that their visas had been canceled.

Nearly 50 students holding F-1 academic visas including postgraduates and undergraduates said in a WeChat chatroom the notices stated they would have to apply for new visas if they wanted to travel to the United States.

Many in the chatroom said they were majoring in subjects such as science, technology, engineering and mathematics. Some said they were postgraduates who obtained bachelor’s degrees at Chinese universities with links to the People’s Liberation Army.

In late May, sources with knowledge of the matter told Reuters Washington was planning to cancel the visas of thousands of Chinese graduate students believed to have links to China’s military.

(Reporting by David Brunnstrom in Washington, Ryan Woo in Beijing; Editing by Richard Chang)

Pentagon concerned by China’s nuclear ambitions, expects warheads to double

By Idrees Ali and Phil Stewart

WASHINGTON (Reuters) – China is expected to at least double the number of its nuclear warheads over the next decade from the low 200’s now and is nearing the ability to launch nuclear strikes by land, air and sea, a capacity known as a triad, the Pentagon said on Tuesday.

The revelations came as tensions rise between China and the United States and as Washington seeks to have Beijing join a flagship nuclear arms treaty between the United States and Russia.

In its annual report to Congress on China’s military, the Pentagon said that China has nuclear warheads in the low 200’s, the first time the U.S. military has disclosed this number. The Federation of American Scientists has estimated that China has about 320 nuclear warheads.

The Pentagon said the growth projection was based on factors including Beijing having enough material to double its nuclear weapons stockpile without new fissile material production.

The Pentagon’s estimate is in line with an analysis by the Defense Intelligence Agency.

“We’re certainly concerned about the numbers … but also just the trajectory of China’s nuclear developments writ large,” Chad Sbragia, deputy assistant secretary of defense for China, told reporters.

Earlier this year, China’s Communist Party-backed newspaper Global Times said Beijing needs to expand the number of its nuclear warheads to 1,000 in a relatively short time.

Sbragia said China was also nearing completion of its nuclear triad capacity, suggesting China is further along than previously publicly known. China has only two of the three legs of triad operational but is developing a nuclear capable air-launched ballistic missile.

The report said that in October 2019, China publicly revealed the H-6N bomber as its first nuclear capable air-to-air refueling bomber.

Washington has repeatedly called for China to join in trilateral negotiations to extend New START, a U.S.-Russian nuclear arms treaty that is due to expire in February.

China has said it has no interest in joining the negotiation, given that the U.S. nuclear arsenal is about 20 times the size of China’s.

In July, a senior Chinese diplomat said Beijing would “be happy to” participate in trilateral arms control negotiations, but only if the United States were willing to reduce its nuclear arsenal to China’s level.

China’s growing nuclear arsenal should not be used as an excuse for the United States and Russia not to extend New START, Kingston Reif, director for disarmament and threat reduction policy at the Arms Control Association advocacy group, said.

It “further reinforces the importance of extending New START and the folly of conditioning extension on China and China’s participation in arms control,” Reif added.

China’s nuclear arsenal is a fraction of the United States’, which has 3,800 nuclear warheads stockpiled, and Russia’s, which has roughly 4,300, according to the Federation of American Scientists.

“PREVENT TAIWAN INDEPENDENCE”

Tensions have been simmering between China and the United States for months. Washington has taken issue with China’s handling of the novel coronavirus outbreak and moves to curb freedoms in Hong Kong. The increasingly aggressive posture comes as President Donald Trump bids for re-election in November.

Another source of tension has been Taiwan. China has stepped up its military activity around the democratic island Beijing claims as sovereign Chinese territory, sending fighter jets and warships on exercises close to Taiwan.

The Pentagon report, based on 2019 information, said China’s military continued to “enhance its readiness” to prevent Taiwan’s independence and carry out an invasion if needed.

(Reporting by Idrees Ali and Phil Stewart; Editing by Cynthia Osterman)

Italy says China a key strategic partner, despite U.S. concerns

By Angelo Amante

ROME (Reuters) – Italy and China need to forge closer ties, Italian Foreign Minister Luigi Di Maio said on Tuesday, potentially putting Rome at odds with Washington, which has raised alarm over Beijing’s economic ambitions.

Di Maio was speaking after talks with the Chinese government’s top diplomat State Councillor Wang Yi, who was beginning a visit to Europe that will also include the Netherlands, Norway, France and Germany.

Italy became the first major Western economy to join China’s international infrastructure project, the Belt and Road Initiative, when it signed a raft of accords in 2019. However, the move has yielded little for Italy so far.

“It was a very fruitful meeting,” Di Maio said, adding that he had discussed with Wang how to “relaunch (our) strategic partnership from the economic and industrial view point”.

Wang told reporters it was important for China and the European Union to strengthen relations and deepen cooperation to tackle the coronavirus.

U.S. President Donald Trump blames Beijing for the spread of the disease, which emerged in China last year. He also wants to restrict the global development of Chinese telecom giant Huawei Technologies Co., accusing it of acting as a Trojan Horse for Chinese cyber spies.

Italy has not joined the United States in imposing restrictions on Huawei and Di Maio made no reference to the company in his remarks. In an apparent reference to tensions with Washington, Wang said China did not want to see a Cold War.

“A Cold War would be a step backwards,” he said. “We will not let other countries do this for their own private interests, while damaging the interests of other countries.”

Di Maio said he had raised the issue of Hong Kong with Wang, saying its citizens’ rights and freedoms had to be respected.

China unveiled a national security law last month which Hong Kong pro-democracy protesters and the West say breaches the 1984 Sino-British treaty that guaranteed Hong Kong’s autonomy.

Hong Kong will suspend some legal cooperation with U.S., China says

BEIJING (Reuters) – Hong Kong will suspend an agreement on mutual legal assistance with the United States, China’s foreign ministry said on Thursday, in a tit-for-tat response to Washington ending some agreements with Hong Kong.

The U.S. State Department notified Hong Kong on Wednesday that Washington had suspended or terminated three bilateral agreements with the semi-autonomous city following China’s imposition of a sweeping national security law.

“China urges the U.S. to immediately correct its mistakes,” foreign ministry spokesman Zhao Lijian told a news briefing on Thursday as he announced the suspension of the agreement on legal assistance.

The agreement, signed in 1997 before Britain returned Hong Kong to China, specified that the United States and Hong Kong governments would help each other in criminal matters such as transferring people in custody or searching and confiscating proceeds of crime.

The U.S. State Department said earlier the three agreements the United States ended covered “the surrender of fugitive offenders, the transfer of sentenced persons, and reciprocal tax exemptions on income derived from the international operation of ships”.

The U.S. decision followed President Donald Trump’s order last month to end Hong Kong’s special status under U.S. law to punish China for what he called “oppressive actions” against the former British colony.

Trump signed an executive order that he said would end the preferential economic treatment for the city following the imposition of the draconian new security law.

The national security law punishes anything China considers secession, subversion, terrorism or collusion with foreign forces with up to life in prison and has drawn criticism from Western countries that worry the law will end the freedoms promised when the former British colony returned to Chinese rule.

Beijing and the Hong Kong government have defended the law as necessary to restore order and preserve prosperity after months of at times violent anti-government protests last year.

Hong Kong has become another contentious issue between China and the United States, whose relations were already strained by differences over trade, China’s claims in the South China Sea and its treatment of its Muslim Uighur minority.

(Reporting by Yew Lun Tian; Editing by Toby Chopra, Robert Birsel)

U.S. officially notifies Hong Kong it has ended three agreements: State Dept

WASHINGTON (Reuters) – The U.S. State Department said it notified Hong Kong on Wednesday that Washington has suspended or terminated three bilateral agreements with the semi-autonomous city following China’s imposition of a sweeping national security law.

The ending of the agreements follows U.S. President Donald Trump’s order last month to end Hong Kong’s special status under U.S. law to punish China for what he called “oppressive actions” against the former British colony.

The State Department said in a statement the agreements ended covered “the surrender of fugitive offenders, the transfer of sentenced persons, and reciprocal tax exemptions on income derived from the international operation of ships.”

“These steps underscore our deep concern regarding Beijing’s decision to impose the National Security Law, which has crushed the freedoms of the people of Hong Kong,” State Department Spokeswoman Morgan Ortagus said.

Trump signed an executive order last month that he said would end the preferential economic treatment for the city following the imposition of the draconian new national security law.

The legislation punishes anything China considers secession, subversion, terrorism or collusion with foreign forces with up to life in prison and has drawn criticism from Western countries that worry the law will end the freedoms promised when the former British colony returned to Chinese rule in 1997.

Analysts have said U.S.-China ties have deteriorated to their worst level in decades.

Washington this month imposed sanctions on Hong Kong leader Carrie Lam and other current and former Hong Kong and mainland officials whom Washington accuses of curtailing political freedom in the financial hub.

The U.S. government has also required goods made in the former British colony for export to the United States to be labelled as made in China after Sept. 25.

(Reporting by Daphne Psaledakis; Editing by Susan Heavey and Marguerita Choy)