Tag: max baucus
U.S. Envoy Max Baucus To China: More Business Ties, Less Cyber-Theft

U.S. Envoy Max Baucus To China: More Business Ties, Less Cyber-Theft

By Julie Makinen, Los Angeles Times

BEIJING — In his first public address on the U.S.-China relationship since taking up the post of U.S. ambassador, Max Baucus said Wednesday that “the U.S. welcomes China’s rise” and that his priorities include pushing for a bilateral investment treaty and increasing cooperation on environmental issues.

But the former Montana senator briefly rapped Beijing on the knuckles over concerns including human rights, cyber-theft of U.S. companies’ trade secrets, and the blocking of American tech firms from the Chinese market.

“Trade and investment have come to be the foundation, the ballast, of the U.S.-China relationship, providing great stability,” said Baucus, speaking to a luncheon hosted by the American Chamber of Commerce and other business groups in Beijing. Developing trust on issues like business and the environment, he said, would serve as a basis for addressing other matters where the two nations disagree.

Baucus, 72, took over the ambassador’s post from Gary Locke this spring and has spent the last several months settling into the job and traveling to a number of Chinese cities. Already, though, he’s found the U.S.-China relationship encountering rocky shoals.

Baucus has kept a low profile as a number of issues between Beijing and U.S. allies in the region have flared up, including World War II-era grievances and territorial disputes in the South China Sea. Beijing has also reacted strongly to the U.S. indictment of five Chinese army officers in May on charges of hacking into American companies and stealing commercial secrets.

Baucus is stepping off the sidelines as Treasury Secretary Jacob J. Lew and Secretary of State John Kerry prepare to travel to Beijing in July for the sixth round of the U.S.-China Strategic and Economic Dialogue with their Chinese counterparts.

The new ambassador encouraged China to push forward with economic reforms and asserted that a bilateral investment treaty could have as many benefits for China today as the nation’s accession to the World Trade Organization did in 2001.

Though WTO membership opened China to a significant degree, Beijing continues to restrict foreign investment in numerous sectors of the economy, barring foreign entities from owning more than 50 percent of ventures in areas including automobiles and agriculture. A bilateral investment treaty that reduces such barriers is a high priority for many U.S. companies — particularly service providers — doing business in China, though American labor groups and others have concerns.

Advocates say such a treaty would also improve U.S. firms’ ability to protect their technology in China because they would not be forced to share as much with Chinese partners.

The United States already has such investment treaties with about 40 other smaller countries, but any such deal between the world’s top two economies would have a significantly larger impact.

Baucus devoted a notable portion of his remarks Wednesday to environmental concerns, including pollution and climate change. He recounted that when first lady Michelle Obama visited China this spring, she encountered a young boy — named Max, coincidentally — who told her he liked living in Beijing except for one thing: the dirty air.

“You obviously don’t have to look very far … to see that Max has a point,” Baucus said. He urged Chinese leaders to follow President Obama’s recent pledge to cut emissions from U.S. power plants and said Americans could help China learn from the U.S. experience cleaning up its pollution problems several decades ago.

Baucus briefly brought up some recent points of tension in the bilateral relationship, noting that China has recently arrested a number of “moderate voices” who have been advocating for issues such as ethnic minorities’ rights and good governance.

“We strongly believe that individual advocates play an important role in developing a civil society,” Baucus said. Playing to a top concern of Chinese leaders — the fear of unrest — he added that “protecting basic rights such as freedom of expression enhances social stability.”

He reiterated U.S. concerns over cyber-theft of trade secrets by “state actors” in China. “We wouldn’t sit idly by while a crime is committed in the real world, so why should we do it when it happens in cyberspace?” he said. “We will continue to use diplomatic and legal means to make clear that this type of behavior must stop.”

And he briefly alluded to China’s continued blockages of companies such as Facebook and Twitter, and its recent enhanced restrictions on Google access within the mainland. Locking such companies out of China’s market will hurt both of us, he said.

“Despite our differences, we have no choice but to keep talking, to work our way through these tough challenges,” Baucus said. “It’s at moments like these that more, not less, dialogue is needed.”

©afp.com / Saul Loeb

Hacking Charges Came Even As U.S. Wooed Chinese Investment

Hacking Charges Came Even As U.S. Wooed Chinese Investment

By Stuart Leavenworth, McClatchy Foreign Staff

BEIJING — Max Baucus, the U.S. ambassador to China, started his workweek Monday by urging China’s state-owned enterprises to invest in American infrastructure projects. “There is a huge opportunity,” he told a forum at the U.S. Embassy in Beijing that scores of Chinese and U.S. executives attended.

While Baucus was looking for Chinese investment, U.S. Attorney General Eric Holder was preparing to announce an indictment against five Chinese military officers. Holder would accuse them of hacking into U.S. companies’ computer systems on behalf of unnamed Chinese state-owned enterprises — including possibly some that the United States is courting for investment.

To many analysts, the juxtaposition of the two events Monday reveals how bifurcated U.S. policy toward China has become. On any given day, it can swing between indictments and ceremonial toasts.

Here in Beijing, Baucus’ efforts to court Chinese investment were quickly overshadowed by what China called “fabricated” accusations against its military officers. By Tuesday, China’s official news agency, Xinhua, was reporting that Baucus had been summoned to the Foreign Ministry to explain the U.S. position and make amends.

Adam Segal, a cyber-security expert at the Council on Foreign Relations, said he was surprised that the Obama administration decided to issue the indictments, the first U.S. prosecution against a foreign country’s military for economic espionage. “The public ‘naming and shaming’ has been a big part of the picture since a year ago,” he said, but it’s unclear how effective it’s been.

Unlike in the United States, China’s economy is dominated by more than 100 major state-owned enterprises. These include companies involved in steel manufacturing, nuclear power and solar power — the sectors named in the indictment as targets for China’s U.S. hacking.

It’s long been known that China’s military has close ties to the enterprises. It’s been suspected for almost as long that the military uses its cyber-warfare capabilities to give those industries a competitive advantage. That was backed up last year by a detailed investigation by Mandiant, a private American cyber-security company. Mandiant revealed that a Shanghai-based espionage unit of the People’s Liberation Army had engaged in years of cyber-attacks on U.S. companies and defense installations.

“This issue poses a serious threat to the stability of U.S.-Chinese codependency,” Stephen Roach, a senior fellow at Yale University’s Jackson Institute for Global Affairs, wrote in his new book, “Unbalanced.” Unlike issues such as unfair trade practices, he wrote, hacking doesn’t lend itself to a process of negotiation and adjudication.

Indeed, it now appears that the only avenue for negotiation has been suspended, if not permanently shut down. In response to Monday’s indictments, China said it would no longer attend a working group made up of senior officials from both countries to resolve complaints about cross-border hacking.

Baucus met with Zheng Zeguang, China’s assistant foreign minister, on Monday shortly after the indictments were announced, according to a statement posted on the ministry’s website Tuesday.

Zheng reportedly told Baucus that depending on the development of the situation, China “will take further action on the so-called charges by the United States.”

“The Chinese government and military and its associated personnel have never conducted or participated in the theft of trade secrets over the Internet,” the Foreign Ministry quoted Zheng as telling Baucus.

In its indictment, the Justice Department detailed how the army officers allegedly used malicious software, called malware, as well as techniques such as “spear phishing” to steal corporate secrets from Alcoa, U.S. Steel, Westinghouse Electric and other companies.

The indictment says the five named officers allegedly used online aliases — “KandyGoo,” “Jack Sun” and “UglyGorilla” — to do their spying. It’s silent on any higher-level officials who may have directed them in the hacking, but it makes clear — on page 3 — that certain unnamed state-owned enterprises were involved.

For example, one state-owned enterprise “involved in trade litigation against some of the American victims mentioned herein hired the unit, and one of the co-conspirators charged herein, to build a ‘secret’ database to hold ‘corporate’ intelligence,” the indictment alleges.

It also notes that one officer charged, Huang Zhenyu, is alleged to have done programming work for what is identified as “state-owned enterprise 2” from 2006 to 2009.

U.S. business interests have long complained in private about Chinese state-owned enterprises being involved in various forms of espionage, including deploying police to steal laptops from visiting corporate executives. But American groups rarely speak out in public, worried about hurting their economic prospects. When they do complain, they do so only in the most careful of terms.

On Tuesday, the American Chamber of Commerce in China — known as Amcham China — issued a statement on the indictments.

“While we cannot comment on the specifics of any particular case, AmCham China believes there is a fundamental difference between intelligence gathering for legitimate national security purposes and intelligence gathering for stealing trade secrets, and that the definition of national security ought not include economic interests,” said the group’s chairman in Beijing, Gregory Gilligan. “We urge both governments to reach agreement on the rules of the road regarding cyber security incorporating this distinction.”

It’s still unclear what steps China might take in response to the indictments, beyond statements from the Foreign Ministry labeling the charges “ungrounded and absurd” and boycotting the talks on cyber-security.

Segal doubts that Beijing would indict U.S. National Security Agency officials, but it might take actions detrimental to U.S. relations with China, such as curtailing talks among top military leaders on avoiding accidental conflicts at sea.

It also remains to be seen whether the U.S. will attempt to crack down on other hacking operations in China, some affiliated with the military, that the NSA is known to be monitoring. Even if it did, there’s no way the United States could arrest and prosecute the military officials involved, unless they were to visit a country that has a extradition treaty with the U.S.

Some observers doubt the indictments will do anything but send a symbolic message to China, and even that isn’t likely to budge Beijing. As reflected in China’s state media, Chinese officials view the United States as a hypocrite on cyber-spying in the wake of Edward Snowden’s NSA-spying revelations.

Writing on the Asia Society’s ChinaFile blog Monday, Robert Daly said “naming and shaming” military officers was a tactic of last resort, and that it might backfire if China’s leaders thought they needed to “save face.”

“China cares more about face than we do and will fight harder to save it,” wrote Daly, the director of the Kissinger Institute on China and the United States. “Bilateral and multilateral consultation will yield better results over an arduous, imperfect long run.”

Photo: akasped via Flickr

Democrat John Walsh Appointed To Finish Max Baucus’ Term In Senate

John WalshMontana governor Steve Bullock (D) has appointed Lieutenant Governor John Walsh to serve the remainder of Senator Max Baucus’ (D-MT) term, potentially giving the Democrat a leg up in the state’s crucial November Senate election.

“I wanted to appoint someone who I believed would represent the values Montanans hold important,” Bullock said at the Friday press conference in Helena.

Walsh, who served as Adjutant General of the Montana National Guard before joining Bullock’s gubernatorial ticket in 2012, was already considered the frontrunner for the Democratic nomination in the race to replace the retiring Baucus. When President Obama selected Baucus as the new U.S. ambassador to China, it presented an opportunity for Walsh to head to Washington earlier than he had hoped.

Walsh’s appointment should allow him to lock up the Democratic nomination — one of his opponents, former lieutenant governor John Bohlinger, has suggested that he would drop out were Walsh appointed to the seat — and could theoretically give him a boost in November. Incumbents tend to have a major advantage in Senate elections; over 75 percent have been re-elected in every election cycle since 1980 (and in 8 of those 17 cycles, over 90 percent of incumbents won another term).

There is some reason to question how much the appointment will help Walsh, however. The new senator will only spend about eight months in office before Election Day, and given Congress’ historic unpopularity, it may not be the best time to run a campaign from Washington.

Perhaps luckily for Walsh, he is not the only congressman pursuing Baucus’ seat. The Republican nominee will most likely be U.S. Representative Steve Daines, who has represented Montana’s at-large congressional district since 2013. History suggests that the deeply unpopular Republican House majority could drag Daines down in the general election; in 2012, just one of the seven GOP representatives seeking Senate seats successfully won a spot in the upper chamber.

Republicans are counting on Montana being one of the net six seats they must gain to win a Senate majority in 2014, and early polling of the race suggests that Daines will begin as a heavy favorite in the state that President Obama lost by 14 percent in 2012. Democrats do tend to fare better in Senate elections in Montana, however; just two Republicans have represented the state in the Senate during the past century.

Senate Democrats are apparently happy to have Walsh join their ranks. Almost immediately after Governor Bullock announced the appointment, Senator Michael Bennet (D-CO) — the chairman of the Democratic Senatorial Campaign Committee — issued a statement applauding the decision, saying “John will demonstrate the leadership and courage to fight every day for Montana’s best interests, and will make a great senator for his state.”

Photo via Wikimedia Commons

Senate Confirms Max Baucus As New China Ambassador

Senate Confirms Max Baucus As New China Ambassador

WASHINGTON — The Senate easily confirmed one of its own Thursday, endorsing the nomination of longtime Montana Senator Max Baucus as the new U.S. ambassador to China.

The vote was unanimous, 96-0. Baucus voted “present.”

The Democratic senator stood at his desk accepting congratulations from his colleagues in both parties as the clerk called the roll. After the final tally was announced, Baucus was set to deliver his farewell speech to the body in which he’s served since 1978.

Approval of the six-term senator’s nomination — coming just a month after President Barack Obama’s surprise announcement that Baucus would leave Congress to take the key post — sets in motion a process to replace him that may help Democrats hold on to his seat in the 2014 election.

Baucus, chairman of the powerful Finance Committee, had announced he would not seek re-election in 2014.

Montana Lt. Gov. John Walsh, who emerged as Democrats’ leading candidate ahead of the November vote, is seen as the obvious choice to win a temporary appointment to succeed Baucus.

Gov. Steve Bullock, a Democrat, is likely to announce his choice to fill the vacancy Friday.

Winning the seat would give Walsh a needed boost in the race, which Republicans have identified as a key pickup opportunity in their quest to regain control of the Senate this fall.

The GOP needs a net gain of six seats to do so; the state’s lone congressman, Steve Daines, is the likely Republican nominee.

Baucus, 72, will succeed Gary Locke, a former Washington governor and U.S. commerce secretary, in Beijing. The Obama administration, which has tried to shift its diplomatic attention to Asia, has carefully cultivated a relationship with China and particularly the nation’s new president, Xi Jinping.

AFP Photo/Mandel Ngan