### CYBER

 THREAT

 ANALYSIS By Insikt Group®

**CHINA**

July 27, 2021

# China’s Digital Colonialism: Espionage and Repression 


-----

2. China’s export of intrusive artificial intelligence

(AI)-enabled technologies and ideologies to
illiberal regimes around the world enables
authoritarianism and systemic oppression and
degrades democratic values.

3. Chinese digital dominance poses both a critical

cybersecurity threat to the world and a growing
threat to competitors’ markets through the
assertion of new Chinese-style standards of
internet governance.

Digital dominance benefits the Chinese government

_This report profiles the growth of China’s global digital presence and_ in several ways. By building out and controlling access
_influence through state-sponsored development of digital infrastructure_ to data infrastructure in foreign countries, China is
_in foreign countries, cyber espionage enablement, and the export of_
_Chinese surveillance technology. This examination weighs the privacy_ establishing new footholds for the flows of information
_and security risks associated with Beijing’s growing global influence_ from new markets. And by hosting foreign companies
_through programs such as the Digital Silk Road Initiative. Data sources_
_include the Recorded Future Platform, academic papers, government_ and government information in data centers, the Chinese
_reports, and common open-source tools. The report will be of most_ government has access to valuable intelligence and
_interest to democratic governments, strategic decision-makers in_

intellectual property (IP) if unchecked by the host

_developing regions such as Latin America, Africa, and South Asia, cyber_
_defense groups, and corporations hosting data in developing regions._ country. Additionally, China is actively [developing](https://www.uscc.gov/research/chinas-internet-things)
_Analysis cut-off date: June 22, 2021._ [exploits for the global internet of things (IoT), giving](https://www.uscc.gov/research/chinas-internet-things)

them an additional layer of access to individual and

#### Executive Summary societal behavior data.

Through the [Digital Silk Road Initiative (DSR),](https://www.cfr.org/china-digital-silk-road/) As China builds new global internet infrastructure
announced in 2015, the People’s Republic of China (PRC) through the Digital Silk Road, it will co-opt billions of
is building an expansive global data infrastructure and new IoT devices, servers, and foreign resources to
exporting surveillance technologies to dictators and its cyber arsenal. We posit that Beijing will conduct
illiberal regimes throughout the developing world, in some extensive influence operations in conjunction with the
cases trading technology for access to sensitive user development of Chinese-style internet governance in
data and facial recognition intelligence. Domestically, [participating Belt and Road Initiative (BRI) countries. If](https://app.recordedfuture.com/live/sc/1xJTq7rD9Pul)
China uses this type of technology to assert authority left unchecked by both the rest of the world, China will
over its citizens, censor the media, quell protests, and reshape internet governance by replacing democratic
systematically oppress religious minorities. Now, [over](https://www.brookings.edu/wp-content/uploads/2020/04/FP_20200428_china_surveillance_greitens_v3.pdf) values and standards with authoritarian principles.
[80 countries are enabled to do the same with Chinese](https://www.brookings.edu/wp-content/uploads/2020/04/FP_20200428_china_surveillance_greitens_v3.pdf)
surveillance technology.

#### Key Judgments

Many developing countries are vulnerable to the

China’s digital colonialism is a growing threat to

exploitation of their data by corporations and powerful

democratic values, human rights, and national autonomy,

governments due to a lack of direct experience in cyber

especially in developing regions of the world such as

defense and an eagerness to catch up with competitors

Latin America and Africa.

through rapid digitalization. The 8 case studies in this
report serve as examples from Africa, Latin America, and The export of Chinese digital surveillance technology
Southwest Asia. This report explores 3 primary concerns to developing and security-vulnerable countries poses
related to China’s digital colonialism: a critical privacy risk to citizens and businesses alike.

1. China’s DSR projects in the least developed China’s development of internet infrastructure in

regions of the world create a power imbalance foreign countries opens avenues for Chinese intelligence
between China and the recipient nations, services abroad and poses a growing risk for cyber
resulting in a high risk for privacy and espionage intrusion campaigns.
cybersecurity in those regions.


-----

China’s growing presence and influence in the developing
world will pose challenges for democratic institutions and markets
as it co-opts new alliances through coercion and manipulation.

China’s intelligence services have unprecedented access to
foreign user data and vulnerability research through its fused
civil-military research ecosystem. China’s dominance in the IoT
market ensures continued access to this data, which can be
exploited and developed for multiple purposes.

The CCP will increase influence operations and espionage
operations globally as the 2022 Winter Olympics in Beijing nears.
Its focus will be on modeling the benefits of a surveillance
state, crushing pro-democracy movements, and managing the
messaging around its minority human rights violations in Xinjiang,
Hong Kong, and Tibet.

#### Background

China’s global digital dominance is developing through a
program called the Digital Silk Road Initiative (DSR), part of the
more widely known Belt and Road Initiative (BRI). Launched in
2015, the DSR is a [private-sector agenda that aims to extend](https://www.cfr.org/china-digital-silk-road/)
China’s digital presence abroad, enhancing its commercial and
political influence. The DSR receives heavy support from the
state. In its initial stages, Chinese companies have answered
demands for digital infrastructure and connectivity in Asia,
Africa, and Latin America. Data centers, underwater and
underground fiber-optic cable, telecommunications networks,
smart education, cloud storage, and online surveillance have
been constructed, creating a backbone for the flow of data to
and from developing regions.

Mirroring its own internal internet controls, China is
promoting strict global internet regulation by reinventing the
internet, enabling nation-states to take control, and replacing
the free, open, and decentralized internet infrastructure that
has contributed to shaping the digital experience. In September
[2019, Huawei engineers proposed the “New IP [internet protocol]](https://www.huawei.com/us/industry-insights/innovation/new-ip)
Plan” to delegates from over 40 countries. Suggesting the current
internet as outdated and limited, the engineers presented the
new plan: a [top-down design, enabling nation-states to more](https://www.ft.com/content/ba94c2bc-6e27-11ea-9bca-bf503995cd6f)
efficiently police their digital property and populations.

[The CCP advocates for “cyber sovereignty” (网络主权), the](https://www.cfr.org/blog/how-much-cyber-sovereignty-too-much-cyber-sovereignty)
supreme right to govern its own internet, and maintains rigid
control over the operation and use of its online infrastructure,
its internet-connected devices, and the online behavior of its
citizens. President Xi Jinping is attempting to [revolutionize](http://newamerica.org/cybersecurity-initiative/blog/chinas-strategic-thinking-building-power-cyberspace/)
[international norms and institutions to accommodate the Chinese](http://newamerica.org/cybersecurity-initiative/blog/chinas-strategic-thinking-building-power-cyberspace/)
model of authoritarian governance while insulating itself from
global accountability.


Beijing divides the world into [friends and enemies. Inside](https://securingdemocracy.gmfus.org/friends-and-enemies-a-framework-for-understanding-chinese-political-interference-in-democratic-countries/)
China, friends[1] are those who “uphold the leadership of the

[Communist Party] and the socialist cause” through support for its
[policy agenda. Outside China, the party’s friends are “foreigners](https://www.jstor.org/stable/23732104?seq=1)
of influence and/or power who assist China’s interests”. Those
who publicly question how it chooses to exercise power are
labeled enemies, whether they are inside China or abroad. The
party has developed[2] a sophisticated set of tools and a body of
doctrine to maintain unchallenged power by “uniting friends” and
“isolating enemies”.

This divide-and-conquer strategy not only rewards friends
for their support but coerces the party’s enemies. Within China,
[coercive tactics include extralegal detention, limits on public](https://securingdemocracy.gmfus.org/friends-and-enemies-a-framework-for-understanding-chinese-political-interference-in-democratic-countries/)
speech, tight control of media messaging and key sectors of the
economy, and manipulation of elites by “establishing personal
and professional costs for opposing the party”. Outside of China,
[Beijing uses state-sponsored actors to interfere in its enemies’](https://time.com/5334262/chinese-hackers-cambodia-elections-report/)
foreign elections, [recruit foreign agents for espionage, and](https://www.nytimes.com/2019/08/27/world/asia/china-linkedin-spies.html)
[disseminate disinformation to isolate its competition.](https://www.atlanticcouncil.org/wp-content/uploads/2020/12/CHINA-ASI-Report-FINAL-1.pdf)

[Publicly, Chinese companies like Huawei claim it would never](https://www.cnbc.com/2019/03/05/huawei-would-have-to-give-data-to-china-government-if-asked-experts.html)
[turn over user data to Beijing. However, the Cybersecurity Law](https://thediplomat.com/2017/06/chinas-cybersecurity-law-what-you-need-to-know/)
[of the People’s Republic of China, enacted in 2016, dictates](https://thediplomat.com/2017/06/chinas-cybersecurity-law-what-you-need-to-know/)
that local data be stored and provided to the state on demand.
When Beijing identifies intelligence gaps that they cannot fill with
data mined domestically, they covertly fill these gaps through
[cyber espionage operations. Although espionage is a common](https://breakingdefense.com/2020/10/the-5-faces-of-chinese-espionage-the-worlds-first-digital-authoritarian-state/)
nation-state tactic to inform military and policy decisions, Beijing
[feeds stolen corporate data and intellectual property to Chinese](https://www.belfercenter.org/publication/confronting-chinas-efforts-steal-defense-information#toc-2-0-0)
companies as well. Its national “Made in China 2025[3]” (MiC2025)
plan, which aims to transform China from a producer of lowcost goods into a high-tech powerhouse, likely feeds collection
requirements into its intelligence community. Financial damages
from Chinese IP theft are [estimated to be as high as $540](https://www.belfercenter.org/publication/confronting-chinas-efforts-steal-defense-information#footnote-099)
billion per year. The US Director of National Intelligence (ODNI)
[calculated that the US alone is losing approximately $400 billion](https://www.whitehouse.gov/wp-content/uploads/2018/03/The-Cost-of-Malicious-Cyber-Activity-to-the-U.S.-Economy.pdf)
[annually to cyber theft, of which approximately 73% is attributed](https://www.reuters.com/article/usa-china-espionage/top-u-s-officials-to-spotlight-chinese-spy-operations-pursuit-of-american-secrets-idUSL1N28S1B3)
to Chinese-linked espionage.

Technological development plays a [leading role in](https://www.researchgate.net/publication/321251274_The_Analysis_of_Role_and_Place_of_Science_and_Technology_in_National_Power)
determining power in our world today. According to the
[International Telecommunication Union (ITU), globally, only 55%](https://www.itu.int/en/ITU-D/Statistics/Documents/facts/FactsFigures2019.pdf)
of households have an internet connection. In the developed
world, 87% of households are connected, compared with 47%
in developing nations and just 19% in the least developed
countries. These least developed and developing nations are at a
[significant technological disadvantage and vulnerability to digital](https://longreads.tni.org/digital-colonialism-the-evolution-of-us-empire)
[colonialism, defined as “the use of digital technology for political,](https://longreads.tni.org/digital-colonialism-the-evolution-of-us-empire)
economic, and social domination of another nation or territory”.

1 http://www.cppcc.gov.cn/zxww/2018/12/27/ARTI1545876942660350.shtml

2 http://cpc.people.com.cn/GB/64162/64171/65717/65720/4461190.html


-----

_[Figure 1: DSR IT infrastructure projects as of December 2018 (Source: International Institute for Strategic Studies)](https://www.iiss.org/blogs/analysis/2019/01/china-digital-silk-road)_


It encompasses the digitizing of indigenous data without fully
informed consent, the theft or exploitation of data, and the use
of digital tools for influence and power over a subject.

Many transnational technology organizations are expanding
internet access to the least developed countries, which
provides opportunities for economic growth as well as access
to healthcare, education, and jobs. However, if done in a way that
provides unparalleled benefits and power to the offering party,
the process begins to mimic colonialistic behavior of centuries
[past, creating a digital welfare state. In these circumstances, the](https://www.ohchr.org/EN/Issues/Poverty/Pages/DigitalTechnology.aspx#:~:text=The%20digital%20welfare%20state%20is,%2C%20detect%2C%20target%20and%20punish.)
colonizer incentivizes poor or indigenous populations with goods
and services while imposing their values, ideologies, and norms
of behavior, as well as extracting and exploiting their personal
[data. China is fast becoming a “digital dictator”, exploiting foreign](https://www.foreignaffairs.com/articles/china/2020-02-06/digital-dictators)
data for profit and corporate gain.

##### China’s Rise to Global Power

China currently boasts the second largest economy in the
world in terms of gross domestic product (GDP), with a GDP of
over [$13.4 trillion, trailing only behind the US’s GDP of $20.49](https://worldpopulationreview.com/en/countries/countries-by-gdp)
trillion. When applying purchasing power parity, factoring in the
[cost of living and inflation differences, China ranks number one,](https://blogs.worldbank.org/opendata/tracking-gdp-ppp-terms-shows-rapid-rise-china-and-india)
a far cry from where it was just 50 years ago. Its military power
[ranks third behind the US and Russia by one measure of wartime](https://defsec.net.nz/2020/03/14/how-powerful-china/)
capabilities and receives a generous [2021 budget of $209.16](https://www.google.com/url?q=https://www.csis.org/analysis/understanding-chinas-2021-defense-budget&sa=D&source=editors&ust=1624293248239000&usg=AOvVaw283eF3AQgnfn7Ok77mj7qs)
billion. With the world’s [largest population at over 1.4 billion](https://www.google.com/url?q=http://www.xinhuanet.com/english/2021-05/12/c_139939402.htm&sa=D&source=editors&ust=1624292570614000&usg=AOvVaw0pMEB_ufRG1O_nBkWqTVp2)
people, China has significant human capital through which to
pursue its government’s objectives.


Since opening to foreign trade and investment in 1979, China
has been one of the fastest growing economies, a pace that the
[World Bank acknowledged as “the fastest sustained expansion](https://www.everycrsreport.com/reports/RL33534.html#:~:text=the%20global%20economy.-,Since%20opening%20up%20to%20foreign%20trade%20and%20investment%20and%20implementing,sustained%20expansion%20by%20a%20major)
by a major economy in history”. The CCP enjoys political
singularity and direction, aiming all of its resources at continued
growth, sovereignty, and influence. Furthermore, Beijing invests
[significant resources into overt and covert influence operations,](https://www.atlanticcouncil.org/wp-content/uploads/2020/12/CHINA-ASI-Report-FINAL-1.pdf)
both domestically and abroad to protect its reputation and build
support for single-party authoritarianism.

China creates its own rules and pursues its objectives
with little regard for democratic values, global standards, or
[accountability. Its pursuit of national rejuvenation has created](https://www.culawreview.org/journal/could-china-be-charged-for-the-xinjiang-conflict-exploring-the-applicability-of-international-genocide-law)
fast success through forced [technology transfer,](https://www.wsj.com/articles/forced-tech-transfers-are-on-the-rise-in-china-european-firms-say-11558344240) [stealing](https://www.fbi.gov/news/speeches/the-threat-posed-by-the-chinese-government-and-the-chinese-communist-party-to-the-economic-and-national-security-of-the-united-states)
[proprietary information through cyber espionage, limiting](https://www.fbi.gov/news/speeches/the-threat-posed-by-the-chinese-government-and-the-chinese-communist-party-to-the-economic-and-national-security-of-the-united-states)
access to its domestic market, and providing state support to
its homegrown private sector “champions”.

##### The Digital Silk Road Initiative

China’s DSR [project, which falls under Beijing’s broader](https://www.cfr.org/china-digital-silk-road/)
BRI, aims to create next-generation digital connectivity across
the globe, including through terrestrial and underwater data
cables, 5G cellular networks, data storage centers, surveillance
networks, and the launch of global satellite navigation systems.


-----

DSR-branded infrastructure projects are an avenue for
Beijing to increase its influence in emerging economies and
developing countries as well as an opportunity for domestic
technology companies such as Huawei, Alibaba, and Tencent
to [expand their global business. Through the DSR, China also](https://www.eurasiagroup.net/live-post/digital-silk-road-expanding-china-digital-footprint)
[provides economic aid, political support, and other welfare to](https://www.cfr.org/china-digital-silk-road/)
recipient states.

Since the DSR’s rollout in 2015, China-based companies
that initially globalized for purposes of profit have slowly been
[incorporated into DSR projects. Beijing invests billions of dollars](https://www.forbes.com/sites/wadeshepard/2020/02/28/how-beijing-is-losing-support-for-its-belt-and-road-initiative/)
of resources to help its domestic [tech champions achieve](https://www.scmp.com/economy/global-economy/article/3094247/xi-jinping-rallies-chinas-tech-champions-rivalry-us)
[commercial success overseas and is increasingly supporting the](https://merics.org/en/tracker/networking-belt-and-road-future-digital)
buildout of digital infrastructures such as fiber-optic cable, 5G
infrastructure, satellite data, device production, and applicationlayer software.

By strengthening other countries’ reliance on Chinese
infrastructure and tools, Beijing gains a valuable mechanism for
local political influence. Although this method of exploitation
is [not exclusive to China, Beijing’s disregard for international](https://longreads.tni.org/digital-colonialism-the-evolution-of-us-empire)
[norms, its increasingly aggressive foreign policy, and its lack of](https://www.reuters.com/world/china/chinas-wolf-warrior-diplomacy-is-justified-defence-envoy-says-2021-06-17/)
transparency raises concerns for the future of global freedom.

##### Technology Empowering Authoritarian Regimes

Social media-fueled protests have become the most
significant challenge for 21st-century authoritarian regimes.
[Coups unseated around 9% of the dictatorships that fell between](https://polisci.msu.edu/news-events/news/franz-foreignaffairs.html)
2001 and 2017. Mass movements led to the collapse of twice as
many governments. In addition to movements like the Arab Spring,
[social media-fueled protests led to the end of dictatorships in](https://www.usip.org/publications/2020/04/amid-coronavirus-online-activism-confronts-digital-authoritarianism)
Burkina Faso, Georgia, and Kyrgyzstan. The CCP also faces
domestic challenges such as [pro-democracy movements and](https://www.bbc.com/news/world-asia-china-55555299)
criticism from human rights defenders. To counter these threats
to its authority, Beijing uses [surveillance technology to track](https://time.com/5735411/china-surveillance-privacy-issues/)
the movements and behavior of its citizens, has implemented a
[social credit system to encourage citizens to conform to laws,](https://merics.org/en/report/chinas-social-credit-system-2021-fragmentation-towards-integration)
and uses surveillance data to identify and apprehend dissenters,
journalists, and protesters.

Armed with both experience and tools to counter antigovernment activists, China demonstrates to the world how new
technology can be harnessed to control populations, manipulate
outcomes, and shift power. Government access to vast networks
of surveillance cameras, mobile and IoT devices, and private
servers is a critical threat to privacy. China has stepped in to offer
inexpensive, comprehensive technology packages to nations
and regimes that otherwise would not be able to afford them.
[Furthermore, China teaches governments how to censor, surveil,](https://www.usnews.com/news/best-countries/articles/2018-11-01/china-expands-its-surveillance-model-by-training-other-governments)
and manage the data that is collected. In 2020, only 43% of
[the least developed countries had established data and privacy](https://unctad.org/news/data-and-privacy-unprotected-one-third-countries-despite-progress)


protection legislation. The security knowledge gap between
the seller (China) and the buyer (recipient government) creates
a dynamic that unknowingly leaves the buyer in a vulnerable
security posture. Selling this type of technology creates a winwin for China: they get access to private data overseas and
enable like-minded governments with powerful technical tools,
thereby developing important alliances.

##### Foreign Footholds for Cyber Espionage

China is employing both its private and public sectors to
facilitate its vision for a new internet and a world more friendly
to its preferences and policies. Cyber espionage operations
have been attributed to Chinese state-sponsored threat actors
as far back as 2006 and have increased in volume and severity
since. These groups have been [discovered in hundreds of](https://securityboulevard.com/2020/12/china-cyber-attacks-the-current-threat-landscape/)
foreign networks, stealing diverse intellectual properties such
as diplomatic plans, medical data, and military technology.
We have uncovered several Chinese state-sponsored threat
activity groups, including [RedDelta,](https://www.recordedfuture.com/reddelta-targets-catholic-organizations/) [RedEcho, and](https://www.recordedfuture.com/redecho-targeting-indian-power-sector/) [RedFoxtrot,](https://www.recordedfuture.com/redfoxtrot-china-pla-targets-bordering-asian-countries/)
conducting targeted intrusions against foreign governments and
religious organizations.

According to [Chinese officials, over 6,000 Chinese](https://carnegieendowment.org/2020/05/08/will-china-control-global-internet-via-its-digital-silk-road-pub-81857)
enterprises and over 10,000 Chinese technology products
have penetrated overseas markets. As China builds new global
internet infrastructure through the DSR, it will co-opt billions
of new IoT devices, servers, and foreign resources to its cyber
arsenal, increasing its global stature, market domination, and
cyber-military superiority. This growth will create new avenues
and opportunities for cyber intrusions and espionage campaigns.

##### Digital Infrastructure Projects in Undeveloped Countries

Chinese companies such as China Telecom, China Unicom,
China Mobile, GDS, and 21Vianet dominate the [data center](https://www.datacenterknowledge.com/archives/2017/01/20/here-are-the-10-largest-data-center-providers-in-the-world)
[market, together making up 15.4% of the global market share.](https://www.datacenterknowledge.com/archives/2017/01/20/here-are-the-10-largest-data-center-providers-in-the-world)
The Chinese data center industry is enjoying dramatic growth
as a result of a few key factors, including state support through
the BRI, DSR, and Made in China 2025 plans; foreign demand for
inexpensive goods; a strategic focus on undeveloped regions;
and oftentimes coercion to adopt China’s technology. These
factors have fueled China’s own economic and military growth.

China’s greatest tech champion, Huawei, is the leading seller
of 5G technology and smartphones despite the US decision to ban
Huawei technology due to security concerns. Huawei signed a
[$175 million “smart city” contract with Kenya, a cloud data center](https://link.springer.com/article/10.1007/s11036-020-01524-4)
contract with [Pakistan, and a 4G high-speed wireless internet](https://www.techjuice.pk/huawei-to-establish-its-first-cloud-center-in-pakistan-ceo-meets-pm-khan/)
contract with [Canada. In February 2020,](https://www.reuters.com/article/telecoms-5g-ericsson/ericsson-shares-boosted-after-5g-contract-win-in-canada-beating-huawei-idUSL4N2DG2GE) [Thailand launched](https://www.reuters.com/article/huawei-thailand/thailand-launches-huawei-5g-test-bed-even-as-us-urges-allies-to-bar-chinese-gear-idUSL3N1ZV47W)
Huawei’s first 5G testbed in Southeast Asia. In April 2019, Huawei


-----

[launched its Cloud and AI Innovation Lab in Singapore, intended](https://www.huawei.com/en/news/2019/4/huawei-cloud--ai-innovation-lab-singapore)
[to align with its “Smart Nation” Initiative.](https://www.smartnation.gov.sg/docs/default-source/default-document-library/smart-nation-strategy_nov2018.pdf?sfvrsn=3f5c2af8_2)

In 2012, the US House Intelligence Committee labeled
Huawei a [national security threat and warned that it had](http://www.nytimes.com/2012/10/09/us/us-panel-calls-huawei-and-zte-national-security-threat.html)
stolen intellectual property through backdoors that allowed
unauthorized access to sensitive data. [US concerns center](https://www.cfr.org/backgrounder/huawei-chinas-controversial-tech-giant)
[around the Chinese Cybersecurity Law that the government can](https://thediplomat.com/2017/06/chinas-cybersecurity-law-what-you-need-to-know/)
use to subpoena sensitive or proprietary customer data from
Chinese corporations. Other concerns include the fear of hidden
backdoors in Huawei technology, which could subsequently
be used to attack US internet infrastructure. In 2019, the US
[Department of Commerce added Huawei to its “Entity List”,](https://www.reuters.com/article/us-usa-china-huaweitech/chinas-huawei-70-affiliates-placed-on-us-trade-blacklist-idUSKCN1SL2W4)
restricting it from conducting business with US partners.

Recently, nations such as Australia, Great Britain, and Japan
[have heeded cybersecurity and espionage warnings from the US,](https://www.wsj.com/articles/at-gathering-of-spy-chiefs-u-s-allies-agreed-to-contain-huawei-11544825652?mod=article_inline)
banning Huawei from building their 5G networks. However, many
developing countries have opted into expansive DSR contracts
with Chinese technology companies in trade for inexpensive
internet and trade deals. The following case studies outline
security threats developing countries have faced due to DSR
deals with China and how Chinese surveillance technology is
further enabling pervasive privacy concerns.

##### Case Study 1: African Union

In January 2017, computer scientists at the African
Union (AU) headquarters’ IT center in Addis Ababa, Ethiopia,
[discovered massive amounts of local data being transferred to](https://www.voanews.com/africa/after-allegations-spying-african-union-renews-huawei-alliance)
unfamiliar servers in Shanghai, China every day between 12 AM
and 2 AM local time. The AU headquarters building and data
center was donated as “China’s gift to the friends of Africa” in
2012. The computer systems were delivered turnkey, but with
[2 digital backdoors, created by design to allow the free flow of](https://www.momoafrica.com/le-monde-report-african-union-spied-china-five-years-china-denies-act/)
AU’s proprietary communications and production data directly
to China. This event created a breach of trust between the 2
parties. Although it was quietly resolved at the highest levels of
the AU, it also represented a turning point for IT security in the
African Union. After the Chinese engineers were dismissed from
their roles with the AU, the AU acquired its own new servers and
declined China’s offer to configure them.


_Figure 2: The African Union Conference Center and Office Complex (AUCC), the headquarters of the_
_African Union, in Addis Ababa, Ethiopia_

The AU’s data traffic was routed through [Ethio Telecom,](https://www.zte.com.cn/global/about/magazine/zte-technologies/2015/6/en_669/446034.html)
the sole public operator in Ethiopia at that time. Ethio Telecom,
a state-owned Ethiopian firm, is also notorious for its cyber
surveillance and electronic espionage technology, provided
by the Chinese company ZTE. Ethio [monitors and controls](https://www.hrw.org/news/2014/04/07/ethiopias-borderless-cyberespionage)
communications, providing intelligence to the government
to silence dissenters, conduct interrogations, target foreign
diplomats, and spy on domestic phone calls without warrants.

In July 2017, during the AU’s 29th Summit, security inspectors
also discovered the conference rooms bugged with microphones,
suspected to be Chinese devices, under desks and in the walls.
[When confronted with this information, AU authorities remarked](https://www.lemonde.fr/afrique/article/2018/01/26/a-addis-abeba-le-siege-de-l-union-africaine-espionne-par-les-chinois_5247521_3212.html)
that this was the cost of being “supported [in] the independence
struggle on the continent and [being] helped economically”.

##### Case Study 2: Papua New Guinea

In 2018, Huawei built a data center for the government of
Papua New Guinea that was later discovered to be critically
[vulnerable to cyber espionage by design. A report prepared by](https://www.afr.com/companies/telecommunications/huawei-data-centre-built-to-spy-on-png-20200810-p55k7w)
Australia’s Department of Foreign Affairs on behalf of Papua
New Guinea’s National Cyber Security Centre detailed multiple
security failures, including outdated encryption software and
firewalls and insufficient firewall coverage on core switches,
meaning remote access by hackers would be undetected. The
[$53 million data center, sponsored by the Chinese government,](https://www.datacenterdynamics.com/en/news/australia-huaweis-papua-new-guinea-data-center-security-openly-broken-making-potential-spying-easy/)
was meant to host all of Papua New Guinea’s government data,
but most departments did not shift to the new center due to a
lack of funding for maintenance.


-----

To resolve these issues, Papua New Guinea turned
to Australia for financial assistance. When the Australian
government investigated the architecture of the data center and
commissioned the report, it concluded that a full rebuild would
be required to comply with industry standards and requirements,
[something Huawei adamantly denied. The report also stated that](https://www.wsws.org/en/articles/2020/08/27/pnga-a27.html)
it was a “deliberate effort by Huawei to deploy lax cybersecurity”.
Australia spent $200 million and took actions to block Huawei
from accessing submarine data cables they laid between Papua
New Guinea and the Solomon Islands as well as Australia. Huawei
[has since sold its majority stake in those cables to China-based](https://www.datacenterdynamics.com/en/news/amid-sanctions-huawei-plans-sell-its-submarine-cable-business-hengtong/)
Hengtong Group, Inc.

With limited cybersecurity training and no counterespionage
capabilities, entities like the African Union and Papua New Guinea
are at critical risk of compromise, accepting “digital welfare”
from China but lacking the ability to sufficiently detect security
vulnerabilities designed into its hardware and software.

##### Telecommunications Projects in Undeveloped Countries

Chinese officials [view the construction of next-generation](https://www.foreign.senate.gov/imo/media/doc/2020%20SFRC%20Minority%20Staff%20Report%20-%20The%20New%20Big%20Brother%20-%20China%20and%20Digital%20Authoritarianism.pdf)
telecommunications infrastructure as critical to gaining a role in
internet governance discussion on the global stage. The greater
the role that Chinese companies play in the development of
fiber optic systems and mobile communications, the greater the
role they will have in setting standards for the world. China has
also promoted its concept of internet sovereignty among BRI
participants by teaching strict data governance, restrictive laws,
and oppressive control.

Huawei has a presence in over 170 countries. The majority
of current cellular infrastructure in Africa was also built by
Huawei. Starting in the 1990s, when 2G and 3G networks
were built, Huawei [laid the foundation for future technology](https://www.eurasiagroup.net/files/upload/Digital-Silk-Road-Expanding-China-Digital-Footprint-1.pdf)
at steeply discounted prices. Backed by Chinese government
loans, Huawei subsidized IT infrastructure throughout Africa,
answering demands for more affordable and more available
telecommunications infrastructure.

Beijing has positioned itself to dominate technology in all
emerging markets, including Latin America, Africa, and the IndoPacific. Latin America is an important battleground in which
Chinese companies are building infrastructure and setting
technological standards. China initially focused on [extractive](https://www.cfr.org/report/chinas-belt-and-road-implications-for-the-united-states/findings)
[sectors and non-digital infrastructure projects, including the](https://www.cfr.org/report/chinas-belt-and-road-implications-for-the-united-states/findings)
Belt and Road Initiative, which Beijing extended to Latin America
in [2017. However, Chinese technology companies such as ZTE](https://dialogochino.net/en/infrastructure/36699-coronavirus-reshapes-belt-and-road-in-latin-america/)
and Huawei also made important breakthroughs in the region.
[Huawei saw a 21.3% increase in revenue from its Latin America](https://www.huawei.com/-/media/corporate/pdf/annual-report/annual_report2018_en_v2.pdf)
operations in its initial year operating in the region. Much of


that growth can be attributed to the company’s development
of telecommunication infrastructure in countries like Mexico,
Venezuela, and Brazil. From 2002 to 2018, 62% of China’s
[commercial engagement was through mergers and acquisitions,](https://dialogochino.net/wp/wp-content/uploads/2019/04/Monitor-OFDI-2019english-2.pdf)
obtaining energy, telecommunications, and infrastructure.

As of 2019, Huawei was operating in 20 Latin American
countries and dominates as the third top cell phone provider in
Mexico, Colombia, Peru, and Central America. Earlier this year,
chief of US Southern Command Admiral Craig Faller [warned](https://www.mcclatchydc.com/news/nation-world/national/national-security/article249986534.html)
Congress that China was conducting “medical diplomacy” to
leverage its vaccine supply to negotiate the entry of Huawei 5G
and IT infrastructure into Latin American markets.

##### Case Study 3: Brazil

In January 2021, Brazilian president Jair Bolsonaro [agreed](https://www.reuters.com/article/us-brazil-huawei-tech/brazils-bolsonaro-to-allow-chinas-huawei-in-5g-auctions-newspaper-idUSKBN29L0JM)
to allow Huawei to bid on building out a 5G network in the
country after initially opposing it just months prior. Previously,
US president Donald Trump [pressured President Bolsonaro to](https://www.reuters.com/article/us-huawei-tech-brazil-5g/brazil-may-face-consequences-if-it-gives-huawei-5g-access-says-u-s-ambassador-idUSKCN24U20X)
oppose the adoption of Huawei’s 5G technology in Brazil, but
Bolsonaro faced resistance from both industry and his own
government, which may have influenced his decision to allow
[Huawei to make a bid. Of note, China is currently Brazil’s largest](https://www.worldstopexports.com/brazils-top-import-partners/)
[trading partner, giving China significant influence in decisions](https://www.worldstopexports.com/brazils-top-import-partners/)
related to industry partnerships in the country. Huawei has been
[present in Brazil for 22 years and has already conducted 5G tests](https://www.reuters.com/article/us-huawei-tech-brazil-5g/huawei-says-u-s-pressure-on-brazil-threatens-long-delays-in-5g-rollout-idUSKBN2482WS)
with all the wireless companies in Brazil.

Huawei has been expanding its digital influence in Brazil,
opening an internet-of-things lab in the state of São Paulo in
partnership with the Institute of Technology, a research entity
founded in 2003 and accredited by the Ministry of Science,
Technology, Innovation, and Communication. Huawei also
supports an internet-of-things center with Telefónica and a
separate partnership with the Pontifical Catholic University of
Rio Grande do Sul on a smart public lighting system.

##### Case Study 4: Uruguay

In August 2019, the Uruguayan government signed a
[memorandum of understanding with Huawei to deepen](http://www.xinhuanet.com/english/2019-08/27/c_138342414.htm)
cooperation on emerging technologies, such as 5G networks,
artificial intelligence, the internet of things, and cloud computing.
The bilateral agreement also expands cooperation in agriculture,
clean energy, communications, mining, manufacturing, and
finance through the Belt and Road Initiative. Former Uruguayan
president Tabaré Vázquez developed a strong political alliance
with Chinese President Xi Jinping while he was in office and
had, since 2016, offered [explicit support to the One-China](https://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1407320.shtml)
policy and backed China’s reunification with Taiwan. President
[Vázquez also stressed that Uruguay was ready to play a leading](https://agdconsult.com/uruguays-controversial-trade-dealings-with-china/)


-----

role in advancing Latin America-China relations and “enhance
coordination on international and regional issues”. Uruguay will
likely play an important role in influencing other Latin American
governments toward cooperation with China.

##### Access to the Global Internet of Things

China poses a grave threat to global privacy and security
as its state-sponsored surveillance apparatuses are accessing
internet-of-things (IoT) data well in excess of accepted
international norms. According to a [study by global market](https://www.business-standard.com/international)
research firm International Data Corporation (IDC), the Chinese
IoT market will reach $300 billion by 2024, putting it ahead
of all competition. No other government in the world has this
level of IoT market domination and access to the IoT data of
foreign consumers. The collection and exploitation of IoT data
is [regarded by the CCP as an economic and technological](http://www.miit.gov.cn/n1146295/n1146562/n1146650/c3074283/content.html.)
[“strategic high ground”. The data is fed into a fused civil-military](https://www.uscc.gov/sites/default/files/Research/SOSi_China's%20Internet%20of%20Things.pdf)
[research ecosystem involving PRC intelligence and military](https://www.uscc.gov/sites/default/files/Research/SOSi_China%27s%20Internet%20of%20Things.pdf)
actors who will have access to breakthroughs in IoT vulnerability
research. Additionally, China’s increased effort to influence and
set international IoT standards is a critical part of its ambitious
state-directed plan to achieve dominance in the IoT industry.

Chinese companies can access IoT data in 5 main ways:

1. At the user level, Chinese companies can access

user data simply from sales and use of their IoT
[products, including abusive terms of service and usage](https://www.caixinglobal.com/2021-05-11/internet-security-apps-called-out-for-personal-data-abuse-101709810.html)
agreements.

2. Device-level access through device manufacturing

[and design vulnerabilities and backdoors open up](https://www.uscc.gov/sites/default/files/Research/SOSi_China%27s%20Internet%20of%20Things.pdf)
opportunities for outside entities to collect information
at scale.

3. At the corporate level, Chinese companies can

[acquire foreign IoT companies and the data they have](https://www.uscc.gov/files/000783)
accumulated through their products, or buy foreign data
through a third-party vendor.

4. The Chinese government can subpoena private data

at will from foreign businesses (in China) through its
[Cybersecurity Law.](https://web.archive.org/web/20161029174914/http://www.npc.gov.cn/npc/xinwen/lfgz/flca/2015-07/06/content_1940614.htm)

5. Collection of user data, human behavior, and device

information from Chinese-made applications used
worldwide, including social media, games, IoT firmware,
and business software.


Unauthorized access to IoT devices has already resulted
in [physical consequences, including attacks on industrial](https://www.mdpi.com/2076-3417/10/12/4102/pdf)
machinery and power grids around the world. The widespread
use of Chinese IoT devices and components suggests that the
aggregate negative consequences of unauthorized access to
Chinese devices may be proportionally larger than for devices
[from other countries. For example, the 2016 Mirai botnet attack](https://www.theguardian.com/technology/2016/oct/26/ddos-attack-dyn-mirai-botnet)
[was largely enabled by vulnerable devices produced by Chinese](https://www.computerworld.com/article/3134097/chinese-firm-admits-its-hacked-products-were-behind-fridays-ddos-attack.html)
manufacturer Hangzhou Xiongmai Technology. The company
acknowledged that its DVR and internet-connected cameras were
created with weak default passwords and security vulnerabilities.

#### Digital Repression and the Export of Surveillance Technologies

The world is facing a deepening [recession in democratic](https://freedomhouse.org/report/freedom-world/2021/democracy-under-siege)
[freedom for the 15th consecutive year. In 2020, the COVID-19](https://freedomhouse.org/report/freedom-world/2021/democracy-under-siege)
pandemic, economic and physical insecurity, and violent conflict
shifted the international balance away from democratic values
and in favor of tyranny. Last year, nearly [75% of the world’s](https://freedomhouse.org/report/freedom-world/2021/democracy-under-siege)
population resided in a country that faced deterioration of
freedom. China and [Russia both strengthened anti-democratic](https://www.rferl.org/a/u-s-capitol-chaos-russia-reaction-kremlin-trump-biden/31038013.html)
[narratives and used the COVID pandemic to criticize the handling](https://abcnews.go.com/Politics/chinas-ambassador-us-slams-trump-covid-19-blame/story?id=72187153)
of the disease by democratic nations. Beijing countered criticism
[of its handling of the COVID-19 outbreak with an intense global](https://www.recordedfuture.com/covid-19-chinese-media-influence/)
[disinformation campaign and domestic censorship. Authoritarian](https://www.recordedfuture.com/covid-19-chinese-media-influence/)
regimes around the world are evolving to embrace the internet,
social media, and AI to counter their greatest threat — mass antigovernment protests. At least 18 countries are [currently using](https://freedomhouse.org/report/freedom-net/2018/rise-digital-authoritarianism)
Chinese surveillance and censorship technology, and more than
36 governments have held Chinese-led training on “new media”
or “information management”.

China is [exporting digital authoritarianism en masse to](https://www.foreign.senate.gov/imo/media/doc/2020%20SFRC%20Minority%20Staff%20Report%20-%20The%20New%20Big%20Brother%20-%20China%20and%20Digital%20Authoritarianism.pdf)
reinforce and enhance political repression under the guise of
building “safe cities” projects that use tracking devices, video
cameras, and other surveillance technology to enhance law
enforcement and military capabilities. This activity shows up
predominantly in the Southern hemisphere, where adoption
of [authoritarian-style surveillance technologies in the name of](https://freedomhouse.org/report/freedom-net/2018/rise-digital-authoritarianism)
public safety will create both repression of human rights and
privacy in those countries, and vulnerability of personal data
to Chinese interception and exploitation. In Africa, for example,
China is implementing facial recognition technology and [using](https://qz.com/africa/1287675/china-is-exporting-facial-recognition-to-africa-ensuring-ai-dominance-through-diversity/)
[the data to advance its capabilities on dark-skinned individuals.](https://qz.com/africa/1287675/china-is-exporting-facial-recognition-to-africa-ensuring-ai-dominance-through-diversity/)


-----

While this advancement may serve to improve recognition
of individual faces of all different colors and shapes, [human](https://www.hrw.org/report/2021/04/19/break-their-lineage-break-their-roots/chinas-crimes-against-humanity-targeting)
[rights groups point out that Chinese surveillance companies](https://www.hrw.org/report/2021/04/19/break-their-lineage-break-their-roots/chinas-crimes-against-humanity-targeting)
are programming the technology to recognize and categorize
groups of minorities for purposes of monitoring, detaining, and
[repression. These groups, called “sensitive peoples” by Chinese](https://www.nytimes.com/2019/04/14/technology/china-surveillance-artificial-intelligence-racial-profiling.html)
technology company [CloudWalk, include the Uyghur Muslim](https://www.wsj.com/articles/twelve-days-in-xinjiang-how-chinas-surveillance-state-overwhelms-daily-life-1513700355)
population of Xinjiang, of which the CCP is conducting systematic
and widespread human rights violations.

This confluence of factors, including the availability of this
technology to repressive regimes, the established use of this
surveillance technology for repression of minority groups, and
the advancements in grouping individuals by appearance, has
serious implications for minorities and repressed peoples around
the world.

##### Africa

Chinese companies are aggressively targeting African
markets with facial recognition surveillance technology under the
guise of promoting “safe cities”. However, the push into African
societies is concerning because China [aims to advance facial](https://www.nytimes.com/2019/04/14/technology/china-surveillance-artificial-intelligence-racial-profiling.html)
recognition capabilities on dark-skinned individuals. According to
Human Rights Commissioner Edward Santow, facial recognition
technology is [less accurate when used on people with darker](https://www.abc.net.au/news/2020-02-04/fact-check-facial-recognition-darker-skin/11781192?nw=0)
skin and presents challenges in diverse societies as dark-skinned
individuals could be excessively targeted or excluded from
surveillance activities. More accurate differentiation between
dark-skinned faces has led to increased political targeting of
individuals within African countries and could lead to increased
racist persecution around the world. The Chinese technology
influence in Africa involves several companies:

[• Chinese telecom giant ZTE provides the infrastructure](https://www.hrw.org/report/2014/03/25/they-know-everything-we-do/telecom-and-internet-surveillance-ethiopia)

for the Ethiopian government to monitor its citizens’
communications.

  - Huawei employees embedded in Zambian cybersecurity

[teams intercepted encrypted communications and used](https://www.wsj.com/articles/huawei-technicians-helped-african-governments-spy-on-political-opponents-11565793017)
cell data to track political opponents.

[• In 2015, Hikvision opened an office in Johannesburg.](https://www.switchcom.co.za/collections/hikvision)

[Hikvision, a leading provider of surveillance cameras, is](https://www.nytimes.com/2019/04/14/technology/china-surveillance-artificial-intelligence-racial-profiling.html)
based in Hangzhou, Xinjiang, the heart of the persecuted
Uyghur population. Hikvision technology is notorious for
[being vulnerable to cyberattacks.](https://www.csis.org/blogs/technology-policy-blog/hikvision-corporate-governance-and-risks-chinese-technology)

As of January 2021, [41 African countries have signed](https://green-bri.org/countries-of-the-belt-and-road-initiative-bri/)
memorandums of understanding to join China’s Belt and Road
Initiative. Of those, 13 have acquired advanced surveillance
capabilities, and 9 of those — Botswana, Côte d’Ivoire, Ghana,
Kenya, Mauritius, Morocco, South Africa, Uganda, and Zambia —
are implementing “safe city” systems, all produced by Huawei.


_[Figure 3: Huawei projects in Africa, 2019 (Source: Wall Street Journal)](https://www.wsj.com/articles/huawei-technicians-helped-african-governments-spy-on-political-opponents-11565793017)_

[In Africa, 5 countries are direct beneficiaries of Digital Silk](https://www.bloomberg.com/news/articles/2021-01-21/cdc-group-targets-1-billion-of-african-investments-in-2021)
Road investments totaling $8.43 billion: Angola, Ethiopia, Nigeria,
Zambia, and Zimbabwe. The following case studies serve as
examples of how Chinese surveillance technology is enabling
authoritarianism, human rights violations, and diminishing
democratic values throughout the developing world.

##### Case Study 5: Uganda

In 2018, Uganda’s President Yoweri Museveni ordered his
cyber-surveillance intelligence unit to intercept encrypted online
communications and cell phone calls of a “popstar turned political
opponent” named Bobi Wine. According to an investigation by
the [Wall Street Journal, when the regime’s intelligence agents](https://www.wsj.com/articles/huawei-technicians-helped-african-governments-spy-on-political-opponents-11565793017)
tried for days to hack Wine’s WhatsApp and Skype accounts and
failed, they requested assistance from Huawei, the top digital
supplier in Uganda. Within 2 days, the Huawei engineers were
allegedly able to successfully breach Wine’s WhatsApp account
using spyware. Museveni’s regime then used the access to
sabotage the opponent’s political rallies and [arrest Wine and](https://apnews.com/article/yoweri-museveni-kampala-elections-bobi-wine-arrests-f8349719f285adbf2660e22fcb72b5e5)
[hundreds of his supporters.](https://apnews.com/article/yoweri-museveni-kampala-elections-bobi-wine-arrests-f8349719f285adbf2660e22fcb72b5e5)


-----

Beijing has been conducting the same activity domestically
[to monitor, censor, and control its own population for decades](https://cs.stanford.edu/people/eroberts/cs181/projects/2010-11/FreeExpressionVsSocialCohesion/china_policy.html)
[through its “Great Firewall” and state-sponsored “law](https://www.eff.org/deeplinks/2019/10/chinas-global-reach-surveillance-and-censorship-beyond-great-firewall)
[enforcement” programs. According to the investigation, Huawei](https://www.eff.org/deeplinks/2019/10/chinas-global-reach-surveillance-and-censorship-beyond-great-firewall)
employees not only played a direct role in government efforts
to intercept the private communications of opponents, but they
[also encouraged Ugandan security officials to travel to Algeria so](https://www.wsj.com/articles/huawei-technicians-helped-african-governments-spy-on-political-opponents-11565793017)
they could study Huawei’s “intelligent video surveillance system”
[operating in the capital city of Algiers. Uganda later agreed to](https://www.huawei.com/en/news/2016/7/huawei-wins-algeria-houari-boumediene-airport-bid)
spend [$126 million on a similar facial recognition surveillance](https://www.reuters.com/article/us-uganda-crime/ugandas-cash-strapped-cops-spend-126-million-on-cctv-from-huawei-idUSKCN1V50RF)
system from Huawei.

##### Case Study 6: Zimbabwe

In March 2018, the government of Zimbabwe agreed to
a [strategic partnership with Guangzhou-based CloudWalk](http://www.globaltimes.cn/content/1097747.shtml)
Technology to develop facial recognition programs in the
country. As part of the deal, Zimbabwe agreed to share all facial
recognition data from its local databases to CloudWalk for further
analysis. Yao Zhiqiang, strategic director of CloudWalk’s research
and development center, [expressed that “in order to make a](https://www.globaltimes.cn/content/1102797.shtml)
breakthrough with [facial recognition] technology, deep learning
needs to be exploited”, referring to the AI gaps in analyzing darkskinned faces.

Surveillance tools such as CCTV, AI projects, and facial
recognition are also transforming Zimbabwe’s ability to track
citizens, political opponents, monitor dissent, counter-protests,
and consolidate political control. However, Zimbabwe’s
government remains under [targeted sanctions from the US,](https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-country-information/zimbabwe-related-sanctions)
meaning there are reputational and legal risks for western
companies attempting to sell sensitive digital equipment to its
[government. CloudWalk has stepped in to fill that void, directly](https://foreignpolicy.com/2018/07/24/beijings-big-brother-tech-needs-african-faces/)
[supporting an oppressive government that willingly and violently](https://foreignpolicy.com/2018/07/24/beijings-big-brother-tech-needs-african-faces/)
subdues its population. The deal is built on a long relationship
between former President Robert Mugabe’s regime, considered
[an ideological ally by Beijing. In 2016, Mugabe publicly expressed](http://www.sundaymail.co.zw/social-media-regulation-is-nigh/)
his desire to emulate Chinese-style social media censorship. The
current president, Emmerson Mnangagwa, took office after a
2017 military coup ousted Mugabe after 37 years of repressive
[rule, but activists are skeptical of any significant progress being](https://carnegieeurope.eu/2019/10/24/civic-activism-in-post-mugabe-era-pub-80146)
made on the human rights front.

##### Latin America

 Case Study 7: Venezuela

In 2008, Venezuelan president Hugo Chávez sent a Justice
Department [envoy to Shenzhen, China to explore the Chinese](https://www.reuters.com/article/us-venezuela-zte-specialreport/special-report-how-zte-helps-venezuela-create-china-style-social-control-idUSKCN1NJ1TT)
social credit system and its national ID card system. During their
visit, they were taken to the headquarters of Chinese telecom


giant ZTE Corp., where they learned how China was developing a
system to track social, political, and economic behavior through a
national ID card. President Chávez expressed immediate interest
in the idea but [opted to use a Cuban firm to make millions of](https://www.acton.org/pub/commentary/2020/01/08/china-exports-its-social-credit-system-venezuela)
ID cards for $172 million. When the Venezuelan delegation’s
technical advisor, Anthony Daquin, later [expressed concerns](https://www.reuters.com/investigates/special-report/venezuela-zte/)
over privacy overreach to the Venezuelan government, he was
detained, beaten, and extorted by Venezuelan intelligence
agents, prompting him to flee the country.

In 2017, with the Maduro regime in power, Venezuela
[contracted with ZTE on a $70 million government effort to build](https://www.acton.org/pub/commentary/2020/01/08/china-exports-its-social-credit-system-venezuela)
a national ID card, payment system, and “fatherland database” to
track individuals’ transactions, personal information, and social
[media accounts. Now, a team of ZTE employees is embedded in](https://www.reuters.com/article/us-venezuela-zte-specialreport/special-report-how-zte-helps-venezuela-create-china-style-social-control-idUSKCN1NJ1TT)
a special unit at Cantv, the Venezuelan state telecommunications
company that manages the database, which is housed on ZTE
servers. Information retained on Venezuelan citizens through the
system includes PII such as dates of birth, family information,
employment and income, property owned, medical history, state
welfare benefits received, presence on social media, membership
of a political party, and voter history.

_[Figure 5: Venezuelan president Nicolas Maduro holding a fatherland ID card (Source: ABC News)](https://www.abc.net.au/news/2018-11-16/nicolas-maduro-shows-off-venezuelan-fatherland-card-1/10504086?nw=0)_

Since the project was initiated, President Maduro has
upgraded to a larger version of the system, aiming to add 30,000
cameras and payment applications. Su Qingfeng, the head of
ZTE’s Venezuela unit, confirmed that it has sold the Venezuelan
government servers to host the system’s data and to host new
Chinese mobile payment applications.


-----

Despite protests from concerned citizens and human rights
activists, the program is being mandated across the country.
The government requires citizens to enroll in order to receive
public benefits including health care and pension payments,
leaving the poorest populations vulnerable to data collection
and exploitation.

In 2016, the US Department of Justice determined that ZTE
[violated its sanctions on Iran by selling American “controlled](https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-05104.pdf)
items” to the country as part of a surveillance technology package
[used to monitor its citizens. As a result, a settlement was made](https://www.nytimes.com/2018/07/13/business/zte-ban-trump.html)
between the Chinese corporation and the US government: pay
a $1 billion penalty, put $400 million in escrow with an American
bank, overhaul its leadership, and allow a team of compliance
monitors to be installed inside the company for 10 years.

On November 30, 2020, the US Department of the Treasury
[added the Chinese surveillance company China National](https://home.treasury.gov/news/press-releases/sm1194)
Electronics Import and Export Corporation (CEIEC) to its list of
Specially Designated Nationals and Blocked Persons for its role
in supporting the “illegitimate Maduro regime” and “undermining
democracy in Venezuela”. The US Treasury stated that CEIEC
provided “software, training, and technical expertise to
Venezuela[n] government entities, which was then used against
the people of Venezuela”. The press release detailed that CEIEC
has enabled Maduro through technology and training to repress
political dissent, conduct malicious cyber efforts since 2017,
censor independent media, and manipulate votes by censoring
social media.

##### Case Study 8: Ecuador’s ECU-911

In February 2011, Ecuador signed a deal with Chinese tech
giants CEIEC and Huawei to install an extensive surveillance
system financed by Chinese loans. Inspired by the 2008 Beijing
[Olympics, Ecuador purchased over 4,300 surveillance cameras](https://www.nytimes.com/2019/04/24/technology/ecuador-surveillance-cameras-police-government.html)
to collect footage of citizens and transmit it to intelligence
services, calling the project [ECU-911. The](https://www.ecu911.gob.ec/) [surveillance project](https://www.foreign.senate.gov/imo/media/doc/2020%20SFRC%20Minority%20Staff%20Report%20-%20The%20New%20Big%20Brother%20-%20China%20and%20Digital%20Authoritarianism.pdf)
includes capabilities to monitor emails and phone calls, as well
as to bug vehicles with hidden microphones. In order to help
facilitate the rollout of ECU-911, Beijing sent [military attachés](https://sv.usembassy.gov/made-in-china-exported-to-the-world/)
from the embassy in Quito to assist in the installation and setup
of the equipment.

In exchange for ECU-911, Ecuador agreed to provide one of
its main exports, oil, to China. However, the deal quickly became
a point of concern for the Ecuadorian government. In exchange
for the technology that totaled more than $19 billion, Ecuador
signed away large portions of its oil reserves, leaving the country
in debt to China and in a vulnerable position economically.
Following this deal, Chinese infrastructure projects in the country
increased, including the construction of a hydroelectric dam and

oil refineries to maximize outputs demanded by China.


-----

#### Outlook

China is playing a direct role in the expansion of authoritarian
rule around the world. With global democracy in decline for the
15th consecutive year, it will become increasingly important for
the free world to counter China’s influence in the developing
world. Illiberal and hybrid regimes throughout Asia, the Middle
East, Africa, and Latin America will invest in the next generation
of Chinese-style autocratic technologies to enable population
control, surveillance, and censorship. The authoritarian tools that
Beijing is selling will continue to spread around the globe if liberal
democracies do not cooperate better with developing nations
and present a cost-effective alternative.

Beijing will continue to dominate the construction and
management of telecommunications, data, finance, and IoT.
Furthermore, they will continue to push new technical standards
for the next generation of the internet and will leverage their
political and economic influence over “friends” to gain this power.
Established political alliances between China and BRI partner
countries such as Uruguay, Zimbabwe, and Venezuela will likely
play a part in strengthening partnerships between respective
neighboring countries and China.

As the world’s democratic leaders and the G7 step up to
this challenge with plans such as the Build Back Better World
(B3W) initiative, we expect Beijing to increase their efforts
proportionally, using the entire autocratic toolkit to influence,
coerce, and sponsor the adoption of Chinese technology and
ideology throughout the world. As Beijing gains access to
new markets and human-driven AI data, it will also improve its
capabilities for influence operations in those societies, drawing
them closer to China and encouraging a push away from the
US and its allies. China is set to host the 2022 Winter Olympics
in Beijing and will likely use the event as a platform to display
the effectiveness of its domestic surveillance and policing.
Leading up to the Olympics, China will likely crack down on prodemocracy protests and will ramp up its control of the Muslim
minority population — and the way the media portrays it.


-----

#### Recorded Future Threat Activity Group and Malware Taxonomy

Recorded Future’s research group, Insikt, tracks threat
actors and their activity, focusing on state actors from China,
Iran, Russia, and North Korea, as well as cybercriminals —
individuals and groups — from Russia, CIS states, China,
Iran, and Brazil. We emphasize tracking activity groups and
where possible, attributing them to nation state government,
organizations, or affiliate institutions.

Our coverage includes:


**ADVERSARY**



   - Government organizations and intelligence
agencies, their associated laboratories, partners,
industry collaborators, proxy entities, and
individual threat actors

   - Recorded Future-identified, suspected nationstate activity groups, such as RedAlpha,
RedBravo, Red Delta, and BlueAlpha and many
other industry established groups

   - Cybercriminal individuals and groups established
and named by Recorded Future

   - Newly emerging malware, as well as prolific,
persistent commodity malware

Insikt Group publicly names a new threat activity group
or campaign, such as RedFoxtrot, when analysts typically
have data corresponding to at least three points on the
Diamond Model of Intrusion Analysis with at least medium
confidence. We will occasionally report on significant activity
using a temporary activity clustering name such as TAG-21
where the activity is new and significant but doesn't map
to existing groupings and hasn't yet graduated or merged
into an established activity group. We tie this to a threat
actor only when we can point to a handle, persona, person,
or organization responsible. We will write about the activity
as a campaign in the absence of this level of adversary
data. We use the most widely used or recognized name for a
particular group when the public body of empirical evidence
is clear the activity corresponds to a known group.

Insikt Group uses a simple color and phonetic alphabet
naming convention for new nation-state threat actor groups
or campaigns. The color generally corresponds to that
nation’s flag colors, with more color/nation pairings to be
added as we identify and attribute new threat actor groups
associated with new nations.

For newly identified cybercriminal groups, Insikt
Group uses a naming convention corresponding to the
Greek alphabet. Where we have identified a criminal entity
connected to a particular country, we will use the appropriate
country color, and where that group may be tied to a specific
government organization, tie it to that entity specifically.

Insikt Group uses mathematical terms when naming
newly identified malware.


**INFRASTRUCTURE** **CAPABILITY**

**VICTIM**


-----

About Recorded Future

Recorded Future is the world’s largest provider of intelligence for enterprise

security. By combining persistent and pervasive automated data collection and analytics

with human analysis, Recorded Future delivers intelligence that is timely, accurate,

and actionable. In a world of ever-increasing chaos and uncertainty, Recorded Future

empowers organizations with the visibility they need to identify and detect threats

faster; take proactive action to disrupt adversaries; and protect their people, systems,

and assets, so business can be conducted with confidence. Recorded Future is trusted

by more than 1,000 businesses and government organizations around the world.

Learn more at recordedfuture.com and follow us on Twitter at @RecordedFuture.


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