Ni Guangnan: China should suspend purchases and use of Windows 10 China Government Edition pending security review (translation)

(Chinese original follows / 中文在后)

See also related items: 核心安全审查专家回应Windows10政府版被建议禁用:现阶段强行切换系统并非最佳选择,  倪光南炮轰Win10政府版没过审查 微软合作方回应

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The Government Should Suspend Purchase and Use of Windows 10 Government Edition

By Ni Guangnan

Southern Metropolis Daily, June 8, 2017, Page: AA15

A few days ago, Microsoft Greater China CEO Alain Crozier said the China Government Edition of Windows 10, produced according to the “secure and controllable” principle, had already undergone user testing at three major enterprises, proving that it is reliably secure and thus ready for wide deployment. Reports followed saying “Windows 10 Government Edition Has Completed Domestic Security Testing.” People should ask: Why are they making a big deal out of Windows 10 passing “user testing” and “security testing”?

As everyone knows, China’s Cybersecurity Law has officially gone into effect. It requires: “Critical information infrastructure operators purchasing network products and services that might impact national security shall undergo a national security review organized by the State cybersecurity and Informatization departments and relevant departments of the State Council.” In contrast to this regulation, it’s not difficult to see that claiming Windows 10 passed “user testing” or “security testing” is probably designed to give create the false impression that Windows 10 Government Edition has already passed “national security review,” in order to open the door to government procurement.

According to the Security Review Measures for Network Products and Services issued by the Cyberspace Administration of China, cybersecurity review has strict procedures, for instance requiring third-party evaluation by a nationally recognized cybersecurity review organization.

In 2015, before the establishment of the joint venture between China Electronics Technology Group Corporation (CETC) and Microsoft, Microsoft issued Windows 10 Government Edition. At that point, the Security Review Measures for Network Products and Services were being drafted, and on related aspects Windows 10 Government Edition underwent a round of cybersecurity review and did not pass. Since then, Windows 10 Government Edition has never again undergone this kind of review. No matter what kind of “user testing” or “security testing” it later went through, therefore, it still has not passed cybersecurity review.

Experts specifically point out that Windows 10 has subjectively and objectively not passed cybersecurity review, because:

(1) Although China does not lack operating system experts, because Windows is closed-source, proprietary software, no expert outside Microsoft can be fully familiar with it. It is not realistic, then, to rely on a few experts not fully familiar with Windows to accurately estimate the security and controllability of Windows 10 Government Edition with only a short period in which to examine 100 million lines of source code.

(2) Undertaking security review of software at minimum requires access to the software’s refactorable (可重构的) and complete source code, but Microsoft has never provided China with Windows’ complete source code, let alone allowed it to refactor. If a piece of software has millions of lines of non-open source code, it is like a black box, and there is fundamentally no way to accurately estimate its security and controllability.

Today, no substantive change has resulted from experts making the above points. Even if Windows 10 Government Edition again undergoes cybersecurity review, the degree of difficulty will not decrease. Furthermore, because the structure of Windows 10 incorporates trustworthy computing, reviewing it requires verifying that it complies with the Electric Signature Law (电子签名法) and the Provisions on the Administration of the Use of Commercial Encryption Products (商用密码管理条例). Additionally, it requires surveying how domestic and international information security firms integrate trustworthy computing and antivirus software with Windows 10 and deal with the issue of unfair competition. Clearly Windows 10 Government Edition must again undergo cybersecurity review in what will be a protracted process.

In 2005 and 2014, because Windows Vista and Windows 8 were not controllable, the government ordered a halt of purchases. In 2015, Microsoft quickly updated editions and released Windows 10. Several authoritative Chinese security evaluation organizations concluded that, “the Windows 8.1 and Windows 10 kernel are basically the same, there were not more substantial changes, and to a great extent the upgrade was for the sake of commercial publicity.” (This evaluation only determined whether the two editions were the same and did not touch upon security and controllability estimation, and so it was relatively easy to complete.)

In conclusion, seeing that Windows 10, Windows 8, and Windows 10 Government Edition have not passed cybersecurity review, relevant issues will hopefully be given attention, and government procurement and use of Windows 10 (including Windows 10 Government edition) should be prohibited according to law.

Ni Guangnan, a member of the first class of academicians of the Chinese Academy of Engineering, is devoted to indigenous and controllable core information technologies and industries, and has received lifetime achievement awards from the Chinese Information Processing Society of China and the China Computer Federation. 

Translated by Graham Webster.

建议政府停止采购和使用“Win10政府版”

来源:南方都市报 2017年06月08日 版次:AA15 作者:倪光南

开放专栏

日前,微软大中华区CEO柯睿杰表示:基于“安全可控”原则打造的中国政府版W in10正处于上市销售前的准备当中,该版本Win10已经通过3家大型企业的用户测试,证明该版本系统拥有可靠的安全性,接下来将进行大规模的部署。接着有报道呼应说,“Win10政府版已经在国内完成安全测试”。人们要问:他们为什么要大肆宣传Win10通过“用户测试”、“安全测试”呢?

众所周知,我国《网络安全法》已正式施行,它要求“我国关键信息基础设施的运营者采购网络产品和服务,可能影响国家安全的,应当通过国家网信部门会同国务院有关部门组织的国家安全审查”。对照这个法规,人们不难理解,宣传Win10通过“用户测试”、“安全测试”,可能是想造成“Win10政府版”已通过国家安全审查的假象,从而为它进入政府采购敞开大门。

按照网信办发布的《网络产品和服务安全审查办法》,网络安全审查有严格的程序,并需由国家统一认定网络安全审查第三方机构,承担网络安全审查中的第三方评价工作。

2015年,早在CETC与微软的合资公司成立前,微软就做出了“Win10政府版”。那时,《网络产品和服务安全审查办法》正在制订中,有关方面对“Win10政府版”进行了一次网络安全审查,结果没有通过。此后,对“Win10政府版”并没有再做此类审查。因此,不管后来它做了什么“用户测试”、“安全测试”,它至今仍是一个没有通过网络安全审查的产品。

那时专家们还特别指出,当前不具备对Win10进行网络安全审查的主客观条件,因为:

一、中国虽然不缺少操作系统专家,不过因为Windows是不开放源代码的专有软件,微软以外的专家谁也无法精通W indow s.现在想指望一些不精通Windows的人,在短时间里对亿行源代码规模的“Win10政府版”的安全性、可控性作出准确评估,显然是不现实的。

二、要对一个软件进行安全审查至少应获得该软件的可重构的全部源代码,但微软从未对中方提供过W indow s的全部源代码,更谈不上可重构了。而如果一个软件有数以百万计的源代码不开放,这就像一个黑盒子,根本无法对其安全性、可控性作出准确评估。

今天,专家陈述的上述情况并没有发生实质变化,即使对“Win10政府版”再作网络安全审查,其难度也没有减少。而且由于Win10的架构集成了可信计算,审查需验证它与我国《电子签名法》和《商用密码管理条例》的合法、合规性。此外,还需调查国内外信息安全厂商对Win10捆绑可信计算和杀毒软件、实施不正当竞争的投诉问题。可见,“Win10政府版”要想再作网络安全审查,也将是旷日持久的事。

在2005年和2014年,我国政府因Vista和Win8不可控,都明令禁止采购。后来到2015年,微软快速更新版本号,推出了Win10.对此,我国几家权威安全测评机构进行测评后认为,“Win8 .1与Win10内核基本一致,并不存在较大幅度的变化,而版本号的大幅度升级更多是为了商业宣传的需要”。(按:这里的测评只需判断两者是否一致,不涉及安全性、可控性的评估,因而较易实施。)

综上所述,鉴于Win10等同于Win8以及“Win10政府版”并未通过网络安全审查,希望有关方面予以关注,应依法继续禁止政府采购和使用Win10(包括“Win10政府版”在内)。

倪光南(中国工程院首批院士,一直致力于自主可控的信息核心技术和产业,曾获得中国中文信息学会与中国计算机学会终身成就奖)

U.S.–China Week: A ‘FON’ op. or not? Cybersecurity Law in effect, Mattis at Shangri-La: ‘Bear with us.’ (2017.06.05)

Welcome to Issue 101 of U.S.–China Week. This edition covers three weeks of news, so it is far from thorough, but significant South China Sea and cyberspace policy developments deserve attention. We’re back to a broader agenda next Monday.

As always: Please encourage friends and colleagues to subscribe to U.S.–China Week. Here is the web version of this issue, ideal for sharing on social media, and you can follow me on Twitter at @gwbstr. Please send your comments, quibbles, and suggestions to [email protected].

SOUTH CHINA SEA
U.S. destroyer in possible ‘FON’ op. at Mischief Reef; PLA jet in close intercept of U.S. spy plane; ‘Code of Conduct’ moves

A U.S. Navy guided missile destroyer, USS Dewey, reportedly navigated within 6 nautical miles (nm) of the Chinese outpost constructed atop Mischief Reef in the South China Sea’s Spratly Islands on May 25 local time. USNI News had the most detail, saying the Dewey spent 90 minutes within 12nm of Mischief, where it zig-zagged and conducted a man overboard drill. A Pentagon statement sent to journalists but not published would not confirm details of the operation, but said “We are continuing regular FONOPS [Freedom of Navigation (FON) operations], as we have routinely done in the past and will continue to do in the future. Summaries of these operations will be released publicly in the annual FONOPS report, and not sooner.”

Most reporters and analysts said the Dewey maneuver was a FON operation, but it’s not clear it was officially so. As I argued last year at Lawfare, a U.S. military sail-by at Mischief Reef does not easily fit into existing patterns in the FON program, because China has carefully avoided making formal claims of maritime rights or jurisdiction surrounding its installation there and FON operations are designed to challenge “excessive maritime claims.” Official Chinese responses to the Dewey’s activities continued to avoid assertions about legally significant terms such as “territorial sea,” but a Foreign Ministry spokesperson did note that the U.S. ship did not have permission to be in the area.

Meanwhile: U.S. sources told media a Chinese fighter jet performed an unsafe intercept of a U.S. spy plane over the South China Sea; it wasn’t clear in reports whether this followed or preceded the Dewey voyage. / Chinese officials said they were “strongly dissatisfied” with mention of the East and South China Seas in a G7 statement. / China and ASEAN governments reportedly had a “framework” brewing for South China Sea Code of Conduct negotiations, with a Singaporean official saying a “draft” framework would be submitted to the China-ASEAN foreign ministers’ meeting in August.

ANALYSIS: Though China’s government has not formally claimed a territorial sea surrounding Mischief, the Dewey’s action appeared designed to express the U.S. view that, under the UN Convention on the Law of the Sea (UNCLOS) and according to the tribunal in the Philippines v. China arbitration, there could be no territorial sea surrounding an outpost constructed atop the low-tide elevation at Mischief. In the annual FON reports since 1991, there is no example of the U.S. government using the FON program for this purpose. On the other hand, Vice President Mike Pence told graduating cadets at the Naval Academy “just yesterday one of our mighty ships conducted freedom of navigation operations.” Whether a formal FON operation or not, it is likely that news of the operation, preceding the Shangri-La Dialogue in Singapore, did not emerge entirely by accident.

CYBERSPACE + TECH
China’s Cybersecurity Law goes into effect amid uncertainty and with implementation partially delayed

Before the Cybersecurity Law was to go into effect June 1, the Cyberspace Administration of China (CAC) held a meeting with “around 100” participants including from the international technology industry. At the meeting, CAC presented a revised draft of regulations on transferring “personal information and important data” out of China that has not been formally published but has circulated among analysts and reporters. Most significantly, the revised measures said adherence to the rules starting December 31, 2018, rather than this month, giving businesses time and giving regulators room to adjust the rules. Also in the lead-up to June 1, the Chinese standards-setting body Technical Committee 260 (TC260) issued draft guidelines for cross-border data flows that add significant detail to what Chinese regulators are likely to treat as “important data” (重要数据), a crucial term in defining what data are subject to limits on cross-border transfers in the Cybersecurity Law. Detailed definitions of “critical information infrastructure” (关键信息基础设施), however, are still in question. TC260 has also released numerous sector-specific draft standards, some of which might be made binding through reference in further regulations that will implement the law.

ANALYSIS: As I told AFP, the law is part of an evolving regulatory regime for cyberspace and the digital economy that does not switch on like a light with the June 1 implementation date. That regime will continue to develop through a network of related regulations, evidence about implementation, and interaction with the changing regulatory environment in other jurisdictions. At Lawfare, Samm Sacks has a the best single explanation of the significance and role of the Cybersecurity Law to date.

U.S.–CHINA TECH ROUNDUP

  • Microsoft issues Windows 10 edition customized for Chinese government. Microsoft release | WSJ story
  • Google’s AlphaGo AI beats top Chinese human go player, as event streaming blocked in China. FT story
  • U.S. Director of National Intelligence Dan Coats: private sector says “cyber activity from China…significantly lower than before the bilateral Chinese-U.S. cyber commitments of September 2015.”
  • “Big data, Chinese surveillance, and Donald Trump could keep China’s biggest payments company from entering the US” Quartz story on Ant Financial’s effort to buy MoneyGram
  • Kunlun Tech, a Beijing-based game company, buys remainder of dating app Grindr after purchasing controlling stake in January. Caixin story
  • China’s government is increasing funding for AI projects while the United States and Europe stagnate or reduce support, NYT reported.
  • Elsa Kania on “China’s Employment of Unmanned Systems: Across the Spectrum from Peacetime to Wartime” at Lawfare
  • Flashpoint: “Linguistic Analysis of WannaCry Ransomware Messages Suggests Chinese-Speaking Authors
  • “Chinese state media says U.S. should take some blame for cyber attack” Reuters story
  • “Symantec Says ‘Highly Likely’ North Korean Hacking Group Behind Ransomware Attack” Reuters story
  • Overseas users of Sina Weibo blocked from posting pictures or video on June 4 Tiananmen anniversary. SCMP story

SUMMIT CIRCUIT
China skips big speech at Shangri-La, cancels Xiangshan; Mattis pushes ‘rules-based order,’ says ‘bear with us’

At the annual Shangri-La Dialogue defense gathering in Singapore, China “sent a lower-ranking delegation … and, in a stark contrast to previous events, none of its members” was to give a keynote speech, SCMP reported. After Shangri-La, SCMPreported China’s government would also cancel its similar meeting, the Xiangshan Forum, at least for this year.

Secretary of Defense James Mattis did give a keynote speech at Shangri-La, one that included a lengthy section on U.S.–China ties amidst an emphasis on the “rules-based order.” Chinese officials reacted negatively to Mattis’ comments on the East and South China Sea. His comments on the topic were fairly direct:

“The 2016 ruling by the Permanent Court of Arbitration on the case brought by the Philippines on the South China Sea is binding. We call on all claimants to use this as a starting point to peacefully manage their disputes in the South China Sea. Artificial island construction and indisputable militarization of facilities on features in international waters undermine regional stability. The scope and effect of China’s construction activities in the South China Sea differ from those in other countries in several key ways. This includes the nature of its militarization, China’s disregard for international law, its contempt for other nations’ interests, and its efforts to dismiss non-adversarial resolution of issues. We oppose countries militarizing artificial islands and enforcing excessive maritime claims unsupported by international law. We cannot and will not accept unilateral coercive changes to the status quo.”

Mattis also spoke of providing arms to Taiwan but emphasized the One China policy in Q&A. Also in Q&A, Mattis left the impression he’s not entirely satisfied with the administration’s efforts to date: “To quote a British observer of us from some years ago, ‘Bear with us. Once we’ve exhausted all possible alternatives, the Americans will do the right thing.'”

#USChinaWeek1967
‘U.S. Warns China on Vietnam War: Official Asserts Washington Would Meet Intervention With Everything It Has’

“WASHINGTON, May 23[, 1967]—A State Department official declared today that if Communist China were to intervene with massive forces in Vietnam, the United States would have to take action against mainland China with everything it has. Although officials acknowledged that the warning was slightly ambiguous, the State Department said it was intended to refer only to the use of conventional American weapons rather than nuclear weapons. State Department officials added, however, that they considered a major Chinese intervention in Vietnam very unlikely. They said there were no signs in Peking’s recent propaganda or other activity pointing toward a major Chinese intervention. The question came up during a briefing at the State Department for newspaper editors and broadcasters. Under the rules of the briefing, the official who made the statement could not be identified…”

(Source: The New York TimesThis entry is part of an ongoing feature of U.S.–China Week that follows U.S.–China relations as they developed in another era of change and uncertainty, 50 years ago.)

ABOUT U.S.–CHINA WEEK

U.S.–China Week is a weekly news and analysis brief that covers important developments in U.S.–China relations and features especially insightful or influential new policy analysis.

Graham Webster is a senior research scholar, lecturer, and senior fellow of the Paul Tsai China Center at Yale Law School, where he specializes in U.S.–China diplomatic, security, and economic relations through research and Track II dialogues. He is also a fellow for China and East Asia with the EastWest Institute. His website is gwbstr.com.

Disclaimer: Opinions expressed here are my own (and I reserve the right to change my mind).

Free Subscription to U.S.–China Week by clicking here or e-mailing me is open to all, and an archive of past editions appears at my long-running website on East Asia and the United States, Transpacifica.

Contact: Follow me on Twitter at @gwbstr. Send e-mail to [email protected].

U.S.–China Week Issue 100 (2017.05.15)

Welcome to Issue 100 of U.S.–China Week. This week’s big show is the Belt and Road Forum in Beijing—President Xi Jinping’s intensely promoted conference on his government’s signature Belt and Road Initiative. U.S. involvement was minimal, with the late-announced participation of National Security Council Senior Director for Asia Matt Pottinger, who is quoted advocating for openness to U.S. companies in procurement for Belt and Road projects and saying “U.S. firms have a long and successful track record in global infrastructure development, and are ready to participate in ‘Belt and Road’ projects.” Bill Bishop wrote that Pottinger was an upgrade over the previously planned delegation leader “Eric Branstad, a Department of Commerce political appointee and the son of the incoming Ambassador to Beijing Terry Branstad.” I find the many op-eds arguing over whether China is displacing U.S. leadership a bit premature, but Xi’s speech and a leaders’ communique (not including the United States) are worth reviewing. / Another big show: South Korea has a new president, Moon Jae-in, whom North Korea greeted with the test of a new intermediate-range ballistic missile. Moon’s position on the THAAD missile defense system is something to watch.

Programming note: Thanks to everyone who’s been reading along for all or part of the first 100 issues of U.S.–China Week. I’ll be taking some time away from work next week and traveling the following week, so unless I just can’t stop myself, I’ll take a two-week hundredth-issue breather and see you all on June 5. I have several exciting potential plans for the newsletter as I move my home base to California’s Bay Area this summer.

As always: Please encourage friends and colleagues to subscribe to U.S.–China Week. Here is the web version of this issue, ideal for sharing on social media. You can also find U.S.–China Week on Medium and Facebook, and you can follow me on Twitter at @gwbstr. Please send your comments, quibbles, and suggestions to [email protected].

TRADE + INVESTMENT
Some initial trade results emerge under ‘100-day’ plan, but the stop-the-presses U.S. roll-out was out of proportion

The U.S. and Chinese governments released a joint statement of agreements reached under the “100-day plan” rubric suggested by China and agreed as an initial approach to economic negotiations when Xi visited Florida last month. (English and Chinese releases, Chinese press conference.) According to the release: China will allow imports of U.S. beef by July 16, following through on a September first step to lift the ban; the United States will allow imports of Chinese cooked poultry; “Wholly foreign-owned financial services firms in China [will be allowed] to provide credit rating services”; and U.S. payment card issuers may get some access to the Chinese market following a WTO ruling many said China had not been complying with. Media and commentator reaction centered around the idea that the U.S. side got little from China. Dan DiMicco, who had advised the Trump transition, told FT “This is disappointing on many levels. … We are rewarding China before stopping their massive trade cheating.” U.S. tech industry think tank ITIF’s president, Robert D. Atkinson, said in a statement, “rather than secure real concessions on the critical issues facing the U.S. economy—especially the rampant practice of ‘innovation mercantilism’ that wrests away U.S. market share in advanced industries … —the [100-day] plan instead opens up Chinese markets for some commodity-based and finance industries in return for giving China free rein to use its massive foreign reserves to buy up American companies in advanced industries.” Commerce Secretary Wilbur Ross told reporters, “This is more than has been done in the whole history of U.S.-China relations on trade.”

ANALYSIS: Ross’ self-congratulatory hyperbole makes one wonder how much he really knows about the “history of U.S.–China relations on trade.” Though I haven’t had a chance to listen, the new Sinica podcast with former U.S. Trade Representative Charlene Barshefsky promises some good stories about negotiations she conducted on China’s accession to the World Trade Organization, which was a pretty darn big deal. This week’s “early harvest” announcements were mostly holdovers from negotiations under way before Trump took office, according to several media reports. Left un-addressed were the IT industry concerns referenced by Atkinson above and discussed again in the fourth item below. While the administration’s blaring publicity was out of proportion with these initial announcements, the 100-day approach was explicitly designed to produce some early positive publicity. It’s too early to say whether the Trump team is on track to effectively advocate for U.S. interests in the longer term. While U.S.–China Week is (thankfully) not concerned with moment-by-moment political developments in the United States, I do wonder how constant public turmoil affects the administration’s leverage in striking deals with tough, organized counterparts like those in China’s government.

KOREAN PENINSULA
North Korean officials and U.S. experts meet in Oslo

North Korean officials reportedly met with a delegation of U.S. experts in Oslo in their first meeting “in half a year,” according to Korea Herald. “The North Korean delegation is reportedly led by Choe Son-hui, director-general of the North America bureau chief of the communist nation’s foreign ministry. Her counterpart is Suzanne DiMaggio, director and senior fellow at New America, a think tank based in Washington DC, according to another source,” the Herald reported. An earlier scheduled meeting in the United States with the same North Korean delegation head was canceled in February after the State Department did not issue visas for the North Korean visitors. / Meanwhile, Chinese Ambassador to the United States Cui Tiankai published an opinion piece in USA Today arguing for direct U.S.–North Korea talks.

SOUTH CHINA SEA
Senators urge Trump to ‘routinely exercise freedom of navigation and overflight’ in South China Sea

A bipartisan group of senators including the chair and ranking member of the Foreign Relations Committee wrote to Trump to “express concern that the United States has not conducted regular and routine Freedom of Navigation Operations in the South China Sea since October 2016.” They said they were “encouraged by the statement made by Admiral Harry Harris, Commander of U.S. Pacific Command, during his testimony before the Senate Armed Services Committee on April 26, that he expects new FONOPS to take place soon.” In conclusion, they urge the Trump “administration to take necessary steps to routinely exercise freedom of navigation and overflight in the South China Sea.” / Meanwhile, Defense News reports on satellite imagery it “obtained” that China’s military has deployed new “airborne early warning and control” planes to Hainan—though not to an outpost built on any disputed feature. / And CSIS released a new in-depth report on “Countering Coercion in Maritime Asia: The Theory and Practice of Gray Zone Deterrence.”

ANALYSIS: There’s a crucial distinction that the senators’ letter about freedom of navigation seems to blur. Their stated concern is that the U.S. military has reportedly not engaged in Freedom of Navigation (FON) Program operations in the South China Sea since last year. Their request, however, is that the U.S. “exercise freedom of navigation and overflight.” It’s possible to fulfill this request without engaging in FON operations: If for instance the U.S. Navy sends a ship into waters where it is entitled to go under international law but where other countries have not made formal excessive claims of maritime rights or jurisdiction, then this is an exercise of freedom of navigation but not a FON op. What the senators seem to be asking for is that some maneuvers be undertaken in a way that makes a public point. It would be nice if we could return to the day when only a small group of maritime law nerds talked about FON ops, and the U.S. government’s efforts to maintain “state practice” consistent with its views of international law weren’t tied to bullhorn diplomacy.

CYBERSPACE + TECH
Foreign business groups want Cybersecurity Law delayed; Debate over China’s cloud computing regime

At a time when U.S. and Chinese shared vulnerability to cybersecurity threats is underlined by the latest ransomware attack, the bilateral “cyber” news instead is about regulatory and market concerns. The Business Software Alliance (BSA) and the EU Chamber of Commerce in China urged the Cyberspace Administration of China to suspend the scheduled June 1 implementation of China’s Cybersecurity Law, Reuters reported. “It doesn’t look to us like there’s going to be the regulatory clarity necessary for the cybersecurity law to be fully enforced on June 1,” a BSA representative told Reuters. A second letter from 54 foreign organizations, also urging delay, said in part: “We are deeply concerned that current and pending security-related rules will effectively erect trade barriers. … China’s current course risks compromising its legitimate security objectives (and may even weaken security) while burdening industry and undermining the foundation of China’s relations with its commercial partners.”

Separately, 10 senators asked the Commerce Department and the Office of the U.S. Trade Representative (whose boss Robert Lighthizer has just been sworn in and is to attend an APEC meeting this month) to take up the cause of market access for U.S. cloud computing services. “Specifically, we request that you secure a commitment from the Chinese government during the 100 day period that it will apply the ‘national treatment’ principle to foreign [cloud service providers] operating in the Chinese market, thereby ensuring that China will not use its laws and regulations to discriminate against foreign [cloud service providers],” the letter said according to Politico Pro. WSJ reported that, in responding to cloud regulation concerns, “the industry and information technology ministry said in a statement Friday that it was a ‘misreading of the situation’ to say the rules would require U.S. companies to transfer control to a local partner.”

#USChinaWeek1967
‘Assessing a Year of China’s Cultural Revolution’

By Harry Schwartz, a member of the editorial board of The Times: “A traveler who recently returned from Hong Kong reports that among the graffiti he saw there was the assertion: ‘Mao Tse-tung is a Hippie.’ The suspicion must be strong that the author was a frustrated China-watcher expressing his conviction that only a user of LSD or marijuana could have been responsible for this past year’s convulsions in China. In retrospect new, it is evident that the ‘great proletarian cultural revolution’ went into high gear just twelve months ago. In May of 1966 a Chinese nuclear explosion employed some thermonuclear material, Mao Tse-tung appeared in public view after a prolonged absence, and Peng Chen, Peking Communist party boss, was secretly purged. And the large-character poster put up at Peking University became the precursor of a propaganda instrument employed innumerable times since then all over China. …”

(Source: The New York TimesThis entry is part of an ongoing feature of U.S.–China Week that follows U.S.–China relations as they developed in another era of change and uncertainty, 50 years ago.)

ABOUT U.S.–CHINA WEEK

U.S.–China Week is a weekly news and analysis brief that covers important developments in U.S.–China relations and features especially insightful or influential new policy analysis.

Graham Webster is a senior research scholar, lecturer, and senior fellow of the Paul Tsai China Center at Yale Law School, where he specializes in U.S.–China diplomatic, security, and economic relations through research and Track II dialogues. He is also a fellow for China and East Asia with the EastWest Institute. His website is gwbstr.com.

Disclaimer: Opinions expressed here are my own (and I reserve the right to change my mind).

Free Subscription to U.S.–China Week by clicking here or e-mailing me is open to all, and an archive of past editions appears at my long-running website on East Asia and the United States, Transpacifica.

Contact: Follow me on Twitter at @gwbstr. Send e-mail to [email protected].

U.S.–China Week: Kushner EB-5 scheme, PACOM denied, U.S. helps rights lawyer’s family, tech national security reviews (2017.05.08)

Welcome to Issue 99 of U.S.–China Week. In a speech at the State Department, Secretary of State Rex Tillerson revealed a few details about the bilateral diplomatic approach. The first meeting of the “Diplomatic and Security Dialogue” is set for June in Washington, he said, with himself and Defense Secretary Jim Mattis chairing on the U.S. side. The economic and trade meetings are to be chaired by Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross. In general, he said, “we’ve asked them to bring people who report directly to the decision-maker, which is President Xi. So for the first time, we are seeking and we – so far it appears we will get people at the politburo level and at much higher levels of the government within China to participate in these dialogues.” In the now-dead Strategic and Economic Dialogue, of course, the economic track was led by a Politburo member (Vice Premier Wang Yang), as was the adjacent people-to-people meeting (Vice Premier Liu Yandong). Law enforcement and cybersecurity issues had been dealt with outside the S&ED framework by another Politburo member (Meng Jianzhu). That leaves the “Diplomatic and Security” side for elevation. Anyone want to place bets on who will show up in June?

As always: Please encourage friends and colleagues to subscribe to U.S.–China Week. Here is the web version of this issue, ideal for sharing on social media. You can also find U.S.–China Week on Medium and Facebook, and you can follow me on Twitter at @gwbstr. Please send your comments, quibbles, and suggestions to [email protected].

THE PRESIDENT’S MEN
Branstad confirmation hearing goes smoothly; Kushner family conflicts of interest in full bloom over EB-5 scheme

Though timing for a confirmation vote is not yet announced, Iowa Governor Terry Branstad appears likely to soon be U.S. ambassador to China following a broadly friendly confirmation hearing during which he came off as well-prepared and said, regarding President Xi Jinping, “as an old friend, I tell him where I think they’re falling short and the kind of things that need to be addressed; including these human rights, intellectual property rights and other things.” On the South China Sea, he said, “China cannot be allowed to use its artificial islands to coerce its neighbors or limit freedom of navigation or overflight.” On cybersecurity, he limited his comments to the well-worn issue of internet-enabled theft of intellectual property.

Closer to President Donald Trump, the politics were less smooth as reporters documented efforts by White House adviser and Trump son-in-law Jared Kushner’s sister to attract Chinese investment for the family real estate business. Investors would put in a minimum of $500,000 each in exchange for a path to U.S. permanent residency and citizenship through the EB-5 visa program. NYT and WaPo reporters attended part of a Beijing event pitching the deal before being thrown out. The EB-5 program has been under scrutiny in recent years over issues including whether invested funds are legally obtained, and WaPo reported that rumors had circulated about potential changes to the program under Trump. One slide in the Beijing presentation cast Trump as a key decision-maker on the EB-5 program. Jared Kushner “has divested his stakes in dozens of entities used to hold family company investments, although he remains the beneficiary of trusts that hold stakes in hundreds of others,” NYT reported, adding that a lawyer said he had divested interests in the project being pitched in China “by selling them to a family trust of which he is not a beneficiary,” in NYT‘s words.

ANALYSIS: Branstad’s performance in an admittedly friendly hearing room suggests he will soon be ambassador. From that moment on, there will be one more official to watch regarding influence on Trump administration China policy. An “old friend” of Xi by his own account (and an “old friend of the Chinese people” per the Foreign Ministry) appears to have less risk of a perceived conflict of interest than the president’s son-in-law. Kushner, who has reportedly played a central role in U.S.–China official contacts under his father-in-law, cannot be said to be clean of potential conflicts merely because he is not a named beneficiary of family entities that hold wealth for projects that bear his name. Trump too cannot be said to be clear of conflicts in deciding the administration’s position on the EB-5 program, since it’s reasonable that a person would be concerned for the success of a child’s spouse’s family business. The fact of the conflict was already there before this week, but the presentations in China clearly sought to profit from ties with Trump. I’ll leave it to the lawyers whether Kushner can still be legally in the clear; no special qualifications are needed to identify an integrity problem—one that could significantly complicate U.S.–China relations on a variety of issues if Kushner’s role is as central as reported.

SOUTH CHINA SEA
Pentagon denies PACOM bid to sail warship by Scarborough; Duterte says Xi call was at Trump’s urging

NYT reported that a U.S. Pacific Command (PACOM) request for permission to sail a U.S. warship within 12 nautical miles (nm) of Scarborough Shoal in the Spratly Islands was denied, as were two similar requests, by the Pentagon “before it even made it to President Trump’s desk.” “Defense Department officials” told NYT that no U.S. Navy ship had traveled within 12 nm of a disputed island in the South China Sea since Trump took office. Following a U.S.–ASEAN meeting in Washington, Deputy Assistant Secretary of State Patrick Murphy said Secretary of State Rex Tillerson had told ASEAN counterparts “the United States will continue to assert its rights in the South China Sea through freedom of operation— freedom of navigation operations and through our diplomacy, through our dialogue with all of our partners in the countries in the region.” / Reuters reported: “Philippine President Rodrigo Duterte said on Thursday his telephone conversation this week with [Xi] to discuss the Korean peninsula crisis was at the behest of [Trump]. ‘So, I called President Xi Jinping, “I am calling you at the behest of the president of the United States”,’ he said in a speech in his hometown in Davao City, ‘”We have all agreed in the ASEAN, and even President Trump, that you can do something. Actually, the biggest contribution of all other is your intervention”,’ he said.” / Meanwhile, a Kyodo source reportedly said Chinese Ambassador Cui Tiankai asked the U.S. government to remove PACOM Commander Adm. Harry Harris, but Kyodo did not say it had checked the information nor did it describe the source in any way.

ANALYSIS: The NYT reporting on PACOM’s requests leaves several questions open. Many analysts have taken the report to be saying that the United States has conducted no Freedom of Navigation (FON) operations targeting China since Trump took office; but the report only said there had been no transits within 12 nm of disputed South China Sea features, and FON ops. can be undertaken without such a transit (for instance by traveling within the straight baselines China has drawn around the Paracels that the U.S. government rightly argues are inconsistent with international law). Nearly everyone assumed that a request to send a ship within 12 nm of Scarborough would have been a FON op.; but it would not classically qualify as one because FON ops. challenge “excessive maritime claims” and China has avoided making explicit maritime claims there, meaning there is no claim to challenge. (See my related argument here.)

Given that the NYT story provides insufficient detail to think through the highly law-entangled subtleties of the FON program, it’s probably best to think more holistically. What would the United States gain by sending a Navy ship specifically within 12 nm of Scarborough Shoal—a location where Chinese ships reportedly exercise some amount of control over fishing but lately have reportedly allowed Philippine fishing boats access to the internal lagoon, and where, in accordance with unconfirmed but widely reported U.S. pressure, China has not undertaken island construction activities? Arguments that the lack of such a voyage weakens the U.S. position on UNCLOS or acknowledges Chinese sovereignty over the rocks there are decoys. Proponents are advocating for a military demonstration more pointed than the already active U.S. Navy presence in the region. The debate over a show of force or intimidation should be had on those terms and not disingenuously wrapped in ill-fitting UNCLOS technicalities.

THE LONG ARM
AP: U.S. authorities whisk Chinese lawyer’s family from Thai jail, leading to airport confrontation with Chinese officials

In a remarkable story, AP reported that Chen Guiqiu and her two children—family of the Chinese rights lawyer Xie Yang, whose subversion trial took place very quickly today in Changsha after Xie’s own lawyer was detained—were led by U.S. Embassy officials out the back door of a Bangkok jail where they faced deportation just as “more than a dozen Chinese security agents were waiting” in front. After some further efforts, the trio made it to the United States on March 17, but details of their flight emerged today. Chen had reportedly fled with the children after escalating threats from Chinese officials as Xie, detained since July 2015, refused to confess. Texas-based Christian activist Bob Fu reportedly played a role in enabling Chen and children’s flight and activating U.S. government assistance when Chinese authorities appeared to have tracked them down in Thailand. The U.S. exfiltration led to “an hours-long standoff at the airport, [a source said, where] the confrontation between the Chinese, American and Thai officials nearly boiled over into a physical clash.” Chinese authorities had reportedly pressured other family members to travel to Thailand in an effort to bring back Chen and her children. Those relatives have had their passports taken away, “have been repeatedly interrogated, and their jobs have been threatened,” Chen reportedly said.

ANALYSIS: It’s unclear at what level U.S. officials decided to undertake efforts on this family’s behalf, but it seems likely U.S.-side lobbying by Fu and/or others had a significant effect. For now, without knowing who decided what, I would not draw any conclusions about future Trump administration behavior on Chinese human rights issues. One macro question remains: Is the Trump administration subordinating human rights and other issues to the hope of effective Chinese cooperation on the Korean Peninsula? This story played out before the Trump-Xi meeting in Florida in April, so the linkage dynamic suggested by numerous Trump statements since then was not necessarily in play.

CYBERSPACE + TECH
Revised national security review measures for tech products released, to go into effect June 1

The Cyberspace Administration of China (CAC) released revised measures for national security review of “network products and services” that will go into effect alongside the Cybersecurity Law on June 1 (original/English). The measures included modest but significant changes since the draft for comment released earlier this year. Broad language saying the reviews were designed to serve “the public interest” was removed, though the goal of “national security” is still broad and vague. Examples of “critical information infrastructure” sectors are now given and include “public communication and information services, energy, transportation, water conservancy, finance, public services, and e-government.” And language barring government and Party procurement of products that had not passed review was removed. Peking University’s Hong Yanqing wrote on the measures and, among other things, interpreted the meaning of “secure and controllable” as meaning that products and service providers (1) must not illegally collect user information or violate users’ rights to control over their information; (2) must not be able to illegally control user systems or devices or stop users from controlling them; and (3) must not exploit the fact of their use for unfair competition or to seek unfair advantage. The reviews, Hong writes, are not designed to measure performance but to determine whether devices or service providers that influence or might influence national security might be vulnerable to tampering, interference, or interruption. / Meanwhile, FT reports that Tencent will open an artificial intelligence lab in Seattle. And the Electronic Frontier Foundation published a post on the new “12426 Copyright Monitoring Center,” which it said is “dedicated to scanning the Chinese Internet for evidence of copyright infringement” and lists big Hollywood studios as partners.

ANALYSIS: As always, the proof will be in implementation as to whether the national security review regime, which is called for in both the Cybersecurity Law and the National Security Law, will be used narrowly and for legitimate interests or more broadly and in such a way as to erect a significant new barrier to U.S. companies’ competition in the Chinese market. Taken as a whole, regardless of the intention, the Chinese government’s emphasis on “secure and controllable” network and information technology products is widely seen as amounting to a barrier. If the reviews are carefully, openly, and narrowly implemented, CAC could allay some international concerns. If not, fears will be realized and officials can expect increased international pressure over high-tech market access and unfair competition.

#USChinaWeek1967
‘Peking Urges Forces’ Vigilance Against the U.S.’

“HONG KONG, May 3[, 1967]—Communist China called on its armed forces today to maintain ‘high vigilance’ against ‘military provocations’ by the United States following an alleged bombing attack by American aircraft on Chinese territory. Chiehfang Chun Pao, the armed forces publication, declared in an editorial that was broadcast by Peking: ‘Never relax your fighting will and remain always ready to meet and crush and surprise attack by United States imperialism and its accomplices.’ A statement by the Ministry of National Defense said that four American F-105 fighter planes intruded over the southern area of Ningming County in the Kwangsi Chuang Autonomous Region and dropped several bombs, causing damage to property and threatening loves. … The United States Defense Department said yesterday in Washington: ‘Although the Department of Defense does not normally comment on Chinese Communist propaganda broadcasts, reports failed to show any evidence that these propaganda allegations are true.'”

(Source: The New York TimesThis entry is part of an ongoing feature of U.S.–China Week that follows U.S.–China relations as they developed in another era of change and uncertainty, 50 years ago.)

ABOUT U.S.–CHINA WEEK

U.S.–China Week is a weekly news and analysis brief that covers important developments in U.S.–China relations and features especially insightful or influential new policy analysis.

Graham Webster is a senior research scholar, lecturer, and senior fellow of the Paul Tsai China Center at Yale Law School, where he specializes in U.S.–China diplomatic, security, and economic relations through research and Track II dialogues. He is also a fellow for China and East Asia with the EastWest Institute. His website is gwbstr.com.

Disclaimer: Opinions expressed here are my own (and I reserve the right to change my mind).

Free Subscription to U.S.–China Week by clicking here or e-mailing me is open to all, and an archive of past editions appears at my long-running website on East Asia and the United States, Transpacifica.

Contact: Follow me on Twitter at @gwbstr. Send e-mail to [email protected].

U.S.–China Week: Cui speech, THAAD deployed, CFIUS trajectories, 100 days (2017.05.01)

Welcome to Issue 98 of U.S.–China Week. Chinese Ambassador to the United States Cui Tiankai gave a speech last week in New York that, while characteristically careful, revealed a few important details about U.S.–China relations during the Trump administration’s first 100 days. In the speech, Cui discussed China’s priorities for bilateral ties primarily in the economic area, mentioning the otherwise ever-present Korean nuclear issue only in passing. He described the new replacement for the Strategic and Economic Dialogue (S&ED) that was agreed when President Donald Trump and President Xi Jinping met in Florida. In doing so, he did not use the U.S. framing of a “U.S.–China Comprehensive Dialogue” with four pillars under it, but instead framed each pillar as an independent track.

  1. In the “Diplomatic and Security” area, he emphasized “respect of each other’s core interest[s] and major concerns” (an import from the now mostly defunct “new model” rhetoric) but mentioned no specific security issues.
  2. In the economic area, he reaffirmed that the present “100-day plan” for U.S.–China trade and economic talks was China’s proposal (as the acting top U.S. Asia diplomat had also said), emphasizing an “early harvest” of relatively easy deals and advocating for delaying tougher issues until later. He gave vague and familiar promises of a “level playing field” for investment in China while also expressing the hope that the United States would roll back high-tech export restrictions, eliminate “excessive security reviews” for Chinese investments in the United States, and conclude a bilateral investment treaty.
  3. In the combined “Law Enforcement and Cyber Security” area, Cui listed several types of potential law enforcement cooperation but framed cybersecurity as almost an afterthought.
  4. The “Social and People-to-People” element sounds nice but is framed basically as a joint effort to convince people on both sides that the bilateral relationship is and should be positive. (Recently, the “people-to-people” meeting alongside S&ED has been led on the Chinese side by Vice Premier Liu Yandong, who among other things sits atop the bureaucracy that runs the Hanban and the Confucius Institutes, which have come in for renewed controversy following a conservative nonprofit’s report and a thoughtful discussion in the New York Review of Books by Richard Bernstein.)

Trump has explicitly said China may get a “better deal” on economic issues if it plays along on the Korean Peninsula. Cui’s speech provides insight into what China’s desired “better deal” might look like, and it suggests the high degree to which the formal, public agenda for bilateral ties is being mapped out by China’s diplomats—though not necessarily in the high-pressure and rapidly changing area of the Korean Peninsula. The U.S. side could perhaps seek to reset the table that seems to have been set during a period of disarray in the U.S. government, but with Trump explicitly linking China’s cooperation on Korea to other matters, Chinese officials are invited to explicitly hold Korea cooperation hostage to a long menu of what Trump has indicated are lesser priorities.In other regional diplomatic news, Trump seemingly surprised to his foreign policy staff when he invited Philippine President Rodrigo Duterte to visit the White House despite Duterte’s no-apologies campaign of extrajudicial killings and violence in the name of a war on drugs. At about the same time, the chairman’s statement from a Philippine-hosted ASEAN meeting went easy on China (as documented by Lyle Morris) regarding South China Sea issues. Trump is to attend regional meetings in the Philippines in November.

As always: Please encourage friends and colleagues to subscribe to U.S.–China Week. Here is the web version of this issue, ideal for sharing on social media. You can also find U.S.–China Week on Medium and Facebook, and you can follow me on Twitter at @gwbstr. Please send your comments, quibbles, and suggestions to [email protected].

KOREAN PENINSULA
Trump projects optimism about Xi’s cooperation on Korean nuclear issue; THAAD deployed after Trump questions the bill

In a Sunday TV interview that followed another North Korean missile launch, Trump expressed respect for Xi and cautious optimism that Xi will be “able to effect change” regarding the North Korean weapons program. (In the same interview, Trump inaccurately claimed that China’s government stopped manipulating its currency after he was elected.) Trump also made the most explicit comments yet confirming that his present strategy is to link trade negotiations with efforts to seek Chinese pressure on North Korea. “I think that, frankly, North Korea is maybe more important than trade,” Trump said. As part of a series of incomplete sentences, Trump further suggested thinking in terms of leverage: “if I can use trade as a method to get China…” Also this week Trump summoned all 100 U.S. Senators to a White House meeting on North Korea, after which he received mixed reviews. U.S. Pacific Command chief Adm. Harry Harris, speaking to Congress, was cautiously optimistic about a change in China’s level of effort on Korean Peninsula matters: “From a month ago forward we’re seeing some positive behavior from China, and I’m encouraged by that, so I think we should let this thing play out a little bit.” / Complicating the Korean Peninsula picture, Trump said the U.S.–South Korea free trade deal was “horrible” and threatened to kill or renegotiate it, meanwhile saying he “informed South Korea it would be appropriate if they paid” for THAAD missile defense deployment. Only a few days before a South Korean election on May 9, THAAD is already a campaign topic. National Security Adviser H.R. McMaster apparently sought to reassure South Korea’s government that a prior agreement by which the United States would pay for THAAD deployment was still on, but reportedly left open the possibility of renegotiation of that deal. Ankit Panda reports that THAAD is now operational, beating the possibility that it would be stopped after a win by the anti-THAAD frontrunner in next week’s election. / Separately, Taiwanese President Tsai Ing-wen told journalists “we don’t exclude the opportunity to call [on the phone] President Trump himself.” Trump then raised North Korea cooperation as a reason why he “would certainly want to speak to [Xi] first” before speaking directly with Tsai. / In big-think, Brookings has an in-depth discussion among several experts on “averting catastrophe” and a new paper by National People’s Congress Foreign Affairs Committee Chair Fu Ying, both on the North Korean nuclear issue.

ANALYSIS: I am starting to get used to the sensation of never having a solid idea of what the Trump administration will say or do next, nor of what recent statements amount to. It is possible that other governments’ have stronger assurances from parts of the U.S. government they find to be dependable. Allies and others have the choice of either discounting adverse signals while waiting for concrete action or actively hedging based on the idea that official U.S. statements are no longer good predictors of future behavior. If I were working in Zhongnanhai, I would advise my colleagues to be cautious about Trump’s signals about a better deal for China but exploit his apparent willingness to delay the tough economic conversations the U.S. political and economic communities have been clamoring for.

TECHNOLOGY + TRADE
Visions of CFIUS future as Washington tech policy group identifies holes in investment reviews

In a hearing before a House panel, Robert Atkinson, president of the D.C.-based Information Technology & Innovation Foundation (ITIF), framed potential changes to the Committee on Foreign Investment in the United States (CFIUS) inbound investment review process both as part of a more holistic view of technology in national security and as a way to achieve fairness and reciprocity in international competition. “We tend to look at [technology] as either military or it’s not military,” Atkinson said. “And so a lot of things get through the cracks in CFIUS that are, quote, not military. And yet when you connect the dots and you put the capabilities together, it ends up enabling their military capabilities.” Here, Atkinson is arguing that CFIUS does not currently capture actual national security concerns (which are its current purpose) because of an insufficiently holistic view of technology uses. Next, he said, “CFIUS needs much, much stronger abilities to just simply deny Chinese technology acquisitions, particularly ones that are backed by the Chinese government.” In his example, a government-supported Chinese company’s acquisition of the printer company Lexmark “shouldn’t have been approved because it wasn’t a market-based capitalist transaction; it was a government strategy to take that technology.” Here, Atkinson is arguing for a broader purpose for CFIUS—stopping transactions when government backing and industrial policy is involved, not strictly on the basis of national security. ITIF recently released a major report on “Stopping China’s Mercantilism” that in part details proposed changes to CFIUS. This week, ITIF also released a report comparing cross-border data regulations in a broad array of countries, including significant attention to China.

Meanwhile:

  • Huawei is the subject of a U.S. investigation concerning potential violations of U.S. trade controls with Cuba, Iran, Sudan, and Syria.
  • Rhodium Group released an updated version of its report on Chinese investment in the United States by Congressional district, finding the number of Americans employed by Chinese-affiliated companies to have risen 46% over the previous year to 140,000.
  • FireEye believes a Chinese hacker group that had targeted U.S. defense companies “has shifted its focus to critical infrastructure across Asia following a U.S.–China deal on electronic espionage,” FT reported.
  • The U.S. Trade Representative‘s office released its annual intellectual property reports, again placing China on the “Priority Watch List.”
  • And the U.S. Chamber released a “Win-Win Strategy for 100 Days” proposal, leading with China spending the implementation of its Cybersecurity Law, currently scheduled for June 1. The “win-win” proposal does not include any asks for the U.S. side.
  • Netflix reached a licensing deal with Chinese service iQiyi.com.

#USChinaWeek1967
‘U.S. Plane Down, China Says’

“TOKYO, April 30[, 1967]—Communist China said today that its air force shot down a pilotless American reconnaissance plane yesterday over the Kwangsi Chuang Autonomous Region in southern China. Hsinhua, the official press agency, said the plane was the third United States military aircraft shot down over the region.”

(Source: The New York TimesThis entry is part of an ongoing feature of U.S.–China Week that follows U.S.–China relations as they developed in another era of change and uncertainty, 50 years ago.)

ABOUT U.S.–CHINA WEEK

U.S.–China Week is a weekly news and analysis brief that covers important developments in U.S.–China relations and features especially insightful or influential new policy analysis.

Graham Webster is a senior research scholar, lecturer, and senior fellow of the Paul Tsai China Center at Yale Law School, where he specializes in U.S.–China diplomatic, security, and economic relations through research and Track II dialogues. He is also a fellow for China and East Asia with the EastWest Institute. His website is gwbstr.com.

Disclaimer: Opinions expressed here are my own (and I reserve the right to change my mind).

Free Subscription to U.S.–China Week by clicking here or e-mailing me is open to all, and an archive of past editions appears at my long-running website on East Asia and the United States, Transpacifica.

Contact: Follow me on Twitter at @gwbstr. Send e-mail to [email protected].