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)

Hong Kong’s Apple Daily vows to fight on after owner arrested

By Yoyo Chow

HONG KONG (Reuters) – Hong Kong’s Apple Daily tabloid responded with defiance on Tuesday to the arrest of owner Jimmy Lai under a new national security law imposed by Beijing, promising to fight on in a front-page headline over an image of Lai in handcuffs.

Readers queued from the early hours to get copies of the pro-democracy tabloid a day after police raided its offices and took Lai into detention, the highest-profile arrest under the national law.

“Apple Daily must fight on,” the front-page headline read, amid fears the new law is eroding media freedoms guaranteed when the former British colony returned to Chinese rule in 1997.

“The prayers and encouragement of many readers and writers make us believe that as long as there are readers, there will be writers, and that Apple Daily shall certainly fight on.”

More than 500,000 copies were printed, compared with the usual 100,000, the paper said on its website.

Mainland-born Lai, who was smuggled into Hong Kong on a fishing boat when he was a penniless 12-year-old, is one of the most prominent democracy activists in the city and an ardent critic of Communist Party rule in Beijing.

His arrest comes amid a crackdown on the pro-democracy opposition in Hong Kong that has drawn international criticism and raised fears for freedoms promised by Beijing under a “one country, two systems” formula.

The sweeping security law imposed on June 30 punishes anything China considers secession, subversion, terrorism or collusion with foreign forces with up to life in prison.

The city’s Beijing-backed government and Chinese authorities say the law is necessary to restore order after months of at times violent anti-government protests last year, sparked by fears China was slowly eroding those freedoms.

Hong Kong has since become another source of contention between the United States and China, whose relations were already at their most strained in years over issues including trade, the coronavirus, China’s treatment of its Uighur Muslim minority and its claims in the South China Sea.

U.S. Secretary of State Mike Pompeo on Monday called Lai a “patriot”, saying Beijing had “eviscerated” Hong Kong’s freedoms.

Britain said Lai’s arrest was further evidence the security law was a “pretext to silence opposition”, to which China’s embassy replied by urging London to stop “using freedom of the press as an excuse to discredit” the law.

‘DANCING WITH THE ENEMY’

Police detained Lai for suspected collusion with foreign forces after about 200 officers searched the newspaper’s offices, collecting 25 boxes of evidence.

Handcuffed and apparently wearing the same clothes after spending the night in jail, he was driven by police on Tuesday to his yacht which police searched, according to media footage.

Beijing has labelled Lai a “traitor” in the past and issued a statement supporting his arrest.

The Beijing-backed China Daily newspaper said in an editorial Lai’s arrest showed “the cost of dancing with the enemy.” The paper added that “justice delayed didn’t mean the absence of justice”.

Police arrested 10 people in all on Monday, including other Apple Daily executives and 23-year-old Agnes Chow, one of the former leaders of young activist Joshua Wong’s Demosisto pro-democracy group, which disbanded before the new law came into force.

Chow was released on bail late on Tuesday, calling the arrest of herself and other activists “political persecution.”

“It’s very obvious that the regime is using the national security law to suppress political dissidents,” she said.

Hong Kong’s pro-democracy movement has managed to sustain broad support across the community.

Shares in Next Digital, which publishes Apple Daily, surged for a second day, gaining more than 2,078% from Friday’s close, after online pro-democracy forums called on investors to show support.

Its market value rose as high as HK$5.17 billion ($666.7 million) from some HK$200 million.

In the working-class neighborhood of Mong Kok, dozens of people queued from as early as 2:00 a.m. (1800 GMT) to buy Lai’s paper.

“What the police did yesterday interfered with press freedom brutally,” said 45-year-old Kim Yau as she bought a copy.

“All Hong Kong people with a conscience have to support Hong Kong today, support Apple Daily.”

In another show of support, long queues formed at lunch time at the Cafe Seasons restaurant owned by Lai’s son, Ian, who was also arrested on Monday.

The United States last week imposed sanctions on several top officials over what it said was their role in curtailing political freedoms in Hong Kong. China responded with sanctions on top U.S. legislators and others.

($1 = 7.7501 Hong Kong dollars)

(Additional reporting by Jessie Pang, Carol Mang, Donny Kwok and Clare Jim; Writing by Marius Zaharia; Editing by Stephen Coates, Robert Birsel and Nick Macfie)

Hong Kong police raid on newspaper filmed in real time as China flexes muscles

By James Pomfret

HONG KONG (Reuters) – Six weeks after China imposed sweeping national security laws on Hong Kong, police moved in on media tycoon Jimmy Lai, one of the most outspoken critics of Beijing in the city.

Lai, 71, was whisked away from his home early on Monday morning by national security police, part of a citywide operation that also saw eight other men arrested, including several of his senior executives.

Then, just before 10 a.m., hundreds of police descended on Lai’s corporate Next Digital headquarters, where his flagship Apple Daily is produced and published.

Staffers said they asked police what legal grounds they had for entering. But these questions were largely ignored as more than 200 police streamed in, according to a live feed of the unfolding drama.

Apple Daily’s Editor-in-Chief Ryan Law, who was helping film and comment on the Facebook live feed, could be seen rushing about the building as he tried to report on events breaking in his own newsroom.

“This is, I believe, the first time in Hong Kong that police have initiated a mass search on a media outlet like this,” he said, panting, as he scaled a back staircase with a colleague to get around the mass of police officers.

As news of the raid spread, more than 10,000 people tuned in, watching as Law defied police warnings to stop filming.

The newsroom was lightly staffed at the time.

But the few employees there, some clad in shorts and sneakers, were told to produce identity documents and register with the police. Some demanded to first see a search warrant.

Some desks were festooned with poster art in support of pro-democracy protests last year, and the Umbrella movement of 2014. One read: “Who’s afraid of the truth!”

More police began arriving, and fanned across the newsroom, following by Law as they meandered through the unmanned cubicles in scattershot fashion, lifting a paper here, plucking a folder from a cabinet there.

“What is the scope of your search area?” one voice was heard shouting off camera. A male officer replied that such inquiries should be put to his supervisors.

Several executive offices, including Lai’s, were sealed off with a red cordon and guarded by police.

PREPARED FOR RAID

Two months before, in an interview with Reuters in one of those sealed rooms, Lai said he was bracing for just such a day: shifting assets abroad and making preparations with lawyers.

“Everything will be piled on us,” he had said.

At around 11 a.m., police led the crew-cut Lai into his office in handcuffs. When he went to the toilet, an entourage of around 20 officers followed. Several other senior executives were also shown being taken into the building.

The police said in a statement that they had a court-issued warrant for their search, and that the nine men had all been arrested for suspected national security law violations, including collusion with foreign powers.

The police did not reveal the names or any specific charges for any of those arrested.

The raid, though expected, rattled some staffers.

Months before the law took effect, the newspaper had shredded documents, uploaded digitized files to overseas servers and safeguarded sources, two senior reporters told Reuters, speaking anonymously because of the sensitivity of the situation.

“I had prepared myself mentally for this,” one said. “But emotionally I feel a little conflicted. It’s happened so quickly. The government is finally taking this drastic step to destroy the city’s media freedoms.”

Police carted 25 boxes of evidence from the building and blocked reporters from other outlets from entering.

Senior police on the scene tried at one point to prevent Apple Daily reporters working at their desks, but relented upon fierce objections from staff present.

Law, Apple Daily’s chief editor, said the paper would continue to be published no matter what.

“Business as usual,” he said in a text message to Reuters.

(Additional reporting by Greg Torode and Jessie Pang; Editing by Gerry Doyle and Raju Gopalakrishnan)

U.S. imposes sanctions on Hong Kong’s Lam, other officials over crackdown

By David Brunnstrom and Daphne Psaledakis

WASHINGTON (Reuters) – The United States on Friday imposed sanctions on Hong Kong Chief Executive Carrie Lam, the territory’s current and former police chiefs and eight other officials for their role in curtailing political freedoms in the territory.

The sanctions were imposed under an executive order U.S. President Donald Trump signed last month to punish China for its moves against dissent in Hong Kong and are the latest action by his administration against Beijing in the run-up to his November re-election bid.

As well as Lam, the sanctions target Hong Kong Police commissioner Chris Tang and his predecessor Stephen Lo; John Lee Ka-chiu, Hong Kong’s secretary of security, and Teresa Cheng, the justice secretary, the U.S. Treasury Department said in a statement.

It said Beijing’s imposition of draconian national security legislation had undermined Hong Kong’s autonomy and allowed mainland security services to operate with impunity, “setting the groundwork for censorship of any individuals or outlets that are deemed unfriendly to China.””Carrie Lam is the chief executive directly responsible for implementing Beijing’s policies of suppression of freedom and democratic processes,” it said.

“The United States stands with the people of Hong Kong and we will use our tools and authorities to target those undermining their autonomy,” Secretary of the Treasury Steven Mnuchin said in the statement.

The sanctions freeze any U.S. asset of the officials and generally bar Americans from doing business with them.

Tensions between the United States and China have been increasing daily. China’s foreign ministry said on Friday it firmly opposes executive orders that Trump announced this week to ban U.S. transactions with the Chinese owners of the WeChat and TikTok apps.

Last month, Carrie Lam postponed a Sept. 6 election to Hong Kong’s legislature by a year because of a rise in coronavirus cases, dealing a blow to the pro-democracy opposition that had hoped to make huge gains.

The United States condemned the action, saying it was the latest example of Beijing undermining democracy in the Chinese-ruled territory.

A source familiar with the matter said U.S. deliberations on the sanctions intensified after the election postponement.

(Reporting by Lisa Lambert, Susan Heavey, David Brunnstrom, Daphne Psaledakis and Matt Spetalnick; Editing by Chris Reese and Frances Kerry)