He's a leader like no other,
commander of a formidable military,
president of a rising superpower.
This series tells the story of Chinese President Xi Jinping's
six-year rule.
He heads an economy that is now crucial to all of us.
Hundreds of millions of people have been lifted out of poverty.
China was clearly going to be the great source of growth
in the global economy, and we want a part of that.
For years, world leaders have sought to work with him to solve some
of the most pressing issues of our time.
When we work together, it's good for the United States,
it's good for China, and it is good for the world.
But in the West, there's growing anxiety about how President Xi's
China is extending its power.
Now, media reports have suggested that the Chinese Communist Party
has been working covertly to interfere with the decisions
of elected representatives.
So I think Australia is in many ways the canary in the coal mine.
The Chinese state stands accused of stealing the West's technology
and business secrets through hacking and industrial espionage.
You watch billions and billions of dollars,
trade secrets, trade negotiation strategies,
pour out of the United States.
It's been called the largest transfer of wealth in human history.
This includes stopping China's outrageous theft
of intellectual property.
There's now serious concern about allowing Chinese companies
to invest in sensitive parts of Britain's infrastructure.
Do you want companies from authoritarian one-party states
involved in your critical national infrastructure?
No, of course you don't.
If Huawei's branch in the UK does not do harm to the UK's interests,
then it will be counterproductive if you block Huawei.
Xi Jinping has transformed his country.
He could be president for the rest of his life.
So what does that mean for China and the rest of the world?
Xi Jinping is a very ambitious nationalist,
and he thinks that, with the rise of Chinese high technology,
it is possible for China to challenge the American position
as the sole superpower in the world.
We don't actually know how China's going to evolve in the next decade.
We could look back in ten years' time and say, you know,
we made the wrong call.
It's not every day the number two official from a foreign country gets
the full red carpet treatment.
But today, someone did.
And the reason here is he is next in line to be the leader of China.
This is a unique opportunity for Iowa.
And we're very hopeful that Vice President Xi will find it
to be friendly and accommodating and enjoyable.
I got a call saying, "He's coming.
"Can we come to your home?"
And I said, "Sure."
He was light-hearted,
always had a smile - a smile and a warm handshake.
Always curious.
In 2012, the Vice President of China made a special trip to a small town
in Iowa to see some friends he'd known for 27 years.
In 1985, Sarah Lande and a small group of others made quite
an impression on Xi, then a young Chinese official.
He spent three days in Muscatine, learning ways of agriculture
in the US.
We liked him right off the bat.
When we were bringing people to town, "Oh, yeah,
"you're bringing these communists to town!"
Well, once they met him, you know, it's sort of like
people around the world - they liked him.
Sarah Lande helped look after Xi Jingping
and other Chinese officials.
They'd come to learn how they could use US technology
to boost food production in China.
This region is called the corn belt of the United States.
In few places has agriculture been raised to so high a level.
Iowa has been famous for its cutting-edge agriculture
for more than 100 years.
Three factors make its great productivity possible.
The first of these is technology.
At that time, that was a real challenge to China -
how to feed their people better.
They needed food and they weren't very efficient, as we understand.
The people came to see about the processes
as well as how to grow crops better.
He was just real happy to be here.
As he said to us,
"This is my first time in America.
"You know, to me, you are America."
Now, Xi was one of the most powerful men in China.
During his visit, his country signed agricultural deals with the US
worth more than $4 billion.
Good evening, ladies and gentlemen,
and welcome to this evening's historic gala dinner.
Iowa's governor hosted a banquet in Xi's honour.
APPLAUSE
I am truly honoured to formally welcome Vice President Xi Jingping
from the People's Republic of China to Iowa.
Among those listening to Xi's speech that night was
a Chinese seed company executive.
Mo Hailong was a director for the Beijing Dabeinong Technology Group,
and he was under investigation by the FBI.
It's almost entirely agriculture-based out here.
As you can see, there's just an occasional farmhouse
and the rest is all farmland.
Nine months earlier, the FBI had got a tip-off
from a local seed company called Pioneer.
One of their Pioneer field managers was out near one of their fields
near a town called Tama, Iowa, and he saw two Asian individuals.
One Asian male was in the field, on his hands and knees, and appeared
to be digging something up.
And the field had just been planted a couple of days before.
The field had been planted with a newly-developed seed.
The manager from Pioneer confronted the man.
The Asian male kind of left quickly, at a quick rate, and got in a car
that was sitting along the side of the road
and with another Asian male in it.
And the two of them drove out of there very quickly.
Pioneer security folks tracked the licence plate and they found out
that it was rented by an individual named Mo Hailong.
I couldn't believe it.
I still can't believe it to this day, that a guy digging
in a remote field in Iowa - in Tama, Iowa -
he's a Chinese seed executive over in Beijing.
Agent Betten put him under surveillance.
Corn is big business in Iowa.
Companies like Pioneer invest millions of dollars,
developing new strains of seeds to deliver high yields.
If a foreign company can short-circuit that,
they can continue to use that in their breeding programme for years.
So that's why it's so valuable to them.
You're talking about technology worth hundreds of millions
of dollars in these fields.
On the day of the state banquet in honour of Xi,
agents had Mo under tight surveillance.
I was on the surveillance team that night.
So when he came down here and pulled up to the Capitol,
we were quite surprised.
He used a false name to try to get into the banquet.
Initially, he was denied entry.
And then he placed a call to someone that was already inside the event,
who came out and vouched for him, and he was able to get in the event.
There's no other plausible explanation that the person
that came and got him knew he was using an alias.
That really raised the eyebrows of and caused a significant amount
a concern of a lot of people in the US government,
particularly at our FBI headquarters and, again,
trying to establish what level of involvement did
the Chinese government have in assisting Mo Hailong?
Betten didn't have enough evidence to arrest him,
so he got permission to bug a car used by the gang.
And that listening device was blockbuster evidence.
It was the smoking gun. Ye Jian claimed to have studied the law
and knew US law well enough to know that what they were doing
was not only theft, trespassing, larceny.
It's no different than secrets by the military or Defense.
And if they caught us, they will consider us spies without doubt,
cos what we're doing, really, is spying.
NEWSREADER: A man faces prison time after pleading guilty
to stealing corn seeds from...
Mo Hailong. Authorities say he's one of six Chinese nationals who...
Pleaded guilty to conspiracy to steal trade secrets yesterday...
The seeds that we could identify that he had stolen,
we had the value at over $2 billion.
I don't think we ever came across any evidence Xi Jinping
or his close advisers had any direct contact with Mo Hailong.
I think any large Chinese company in China
operates with a certain level of...
..encouragement or direction by the Chinese government
to a certain extent.
We utilised some techniques that are unique to the intelligence world
that I really can't discuss, but...
..yeah, I do think that there was some level of
Chinese government involvement in the case.
There's evidence that China has been stealing the West's
business secrets and intellectual property for decades.
NEWSREADER: A bitter trade war breaks out between America and China
as Washington loses patience over industrial power.
We cannot stand by while the interests of our fastest-growing,
most competitive industries are sacrificed in China.
The United States and China are attempting to head off a damaging
trade war over the protection of intellectual property rights.
Initially, really, what we were talking about was low-level piracy.
Pirate CDs or whatever consumer goods that you were producing,
and all of a sudden, there'd be a Chinese knock-off.
As China modernised very rapidly...
..its ambitions grew proportionately.
Beijing government has a learning process in doing this.
At the very beginning, when China just opened up,
they did not even realise this kind of, you know...
..that violation of intellectual property rights is a crime.
They said, "Well, look, everybody's doing that."
So this is the model factory of SolarWorld.
It's still the most advanced solar manufacturing plant in Europe
and in the Western world. And the reason why it is not producing
is because the company, SolarWorld, went bankrupt.
When Milan Nitzschke joined SolarWorld, it was flourishing.
We had, at that time, a real boom for renewable energies.
People were using the technology.
It was normal to think about, "Whoa! I have a rooftop.
"Why not investing in solar?"
SolarWorld was one of the pioneers of the solar industry and,
at the end, it was the largest solar manufacturer in the Western world.
In the past, it was always about the oil. The oil...
It was the biggest producer of solar panels in the United States.
Too dirty. I quit it years ago.
But I'm still in the energy business.
There's always a better alternative.
Shine, baby, shine!
HE LAUGHS
But SolarWorld had a problem.
The Chinese government wanted China to lead the world
in solar technology,
so it poured billions of dollars into the industry
in what SolarWorld said were illegal subsidies.
So in only five years, they build up a capacity double as big
as the whole global demand, so they could have supplied
the whole global solar demand two times, only from China.
We understood that we would all vanish from the market...
..if we would not act against that unfair competition
and unfair trade, because what China did was illegal from the beginning.
NEWSREADER: American solar panel makers accuse the Chinese
of using billions of dollars in government subsidies
to gain control of the US market.
SolarWorld launched legal action against the Chinese government
in Europe and the United States.
The illegal subsidies that China's putting out into the solar industry
is no different than giving an athlete a bucketful of steroids.
But within months, SolarWorld had another problem.
Some officers of the LA Department of the FBI came to our offices
in Hillsboro in Oregon...
..told us that our company has been hacked.
So the hackers took all the information about the ongoing
anti-dumping case and they took all - simply all - information
about the company, especially...
..everything related to technology.
So who hacked SolarWorld?
Kevin Mandia runs a cyber security company that have been tracking
a group of Chinese hackers for more than seven years.
We were always seeing between 60 to 80 new companies compromised
every single month.
We saw most in the United States but, you know,
we responded to breaches in the Netherlands and Germany and the UK.
It was universities, pharmaceuticals,
military, non-military.
They knew the hackers were based in Shanghai,
and then they made a startling discovery.
You know, we found a document at a university in China.
And when we translated that document,
it was like a student that says, "I want to do network operations."
We translate that phrase into they want to do...
You know, they want to do network attack.
And they'd mentioned PLA Unit 61398 as one of the places
they used to work.
So we're like, "Oh, they did attack, network attack from this unit."
Kevin Mandia went public with his discovery
that a unit of the Chinese army was hacking Western businesses.
REPORTER: This is our crew being chased by Chinese security officers.
We got the building right.
We got the purpose of the building right.
We got that they are,
you know, military folks hacking the private sector.
It was this Chinese military unit that had hacked SolarWorld.
The Chinese government and the Chinese army is employing hackers
to steal IP of manufacturing companies.
This was completely new to us.
You know, if a foreign nation sent troops in to rob a bank,
the US military would respond in kind.
You know, we would actually defend the bank, and we don't expect banks
to withstand bank robbers that are parachuting out of helicopters.
I don't think we do. So why do we expect the private sector
to withstand cyber military attacks?
China says the US is short on delivering solid evidence
of Chinese stealing of IP,
and China has not achieved its technological development
through theft.
China says it is serious in respecting and protecting IP rights,
and its payment of licensing fees and royalties for the use
of foreign technology has increased fourfold over the last decade.
But FireEye's discovery was part of a growing alarm in the US
about Chinese hacking attacks on businesses.
Google says hackers accessed the e-mail accounts of
Chinese human rights activists...
..tampered with, and that the attacks originated in China.
Not only was Google itself targeted by the cyber spies,
but so were at least 20 other major corporations.
That signalled to us that we had a much bigger problem
than we had anticipated.
It was recognition that the Chinese were a lot better at hacking
and cyber-enabled activities than we had anticipated,
but also that there may be an economic dimension to this.
Barack Obama knew about Chinese cyber espionage all too well.
They hacked into the Obama campaign and compromised, I think,
you know, all of our e-mails
even before I walked in the door at the White House.
Well, that's a little disconcerting that the Chinese would do that.
I know how it feels to have privacy violated,
because it has happened to me and the people around me.
You begin to realise that it's not an isolated set of occurrences.
It's Chinese state policy to essentially
steal intellectual property and to spread it around...
..to Chinese companies that are direct competitors with US
and other Western businesses.
We had three years of constantly raising with the Chinese
and, to be frank, not making a lot of progress.
So, by 2013, we were getting very concerned
because they didn't seem to be...
..changing their practices that much, and frustration in the US
was growing pretty substantially.
America must also face the rapidly growing threat from cyber attacks.
Now, we know hackers steal people's identities
and infiltrate private e-mails.
We know foreign countries and companies
swipe our corporate secrets.
President Obama wanted to find a way to stop Chinese hacking.
REPORTER: In the heart of Chinese power, a new era...
..as a billion people waited to hear from their new leaders.
Xi Jinping took the stage.
China's new president spoke of his Chinese dream.
He thought the appointment of Xi Jinping presented
an ideal opportunity.
We wanted to signal at the beginning of a new Chinese leadership,
"OK, this is now... This is now front and centre for us.
"This is a core interest for the United States."
We didn't have any illusions that Xi Jinping was sort of
a secret democrat.
But we needed to get to know him,
and we needed to do it as quickly and early as possible.
So that was the idea behind Sunnylands.
It's a beautiful estate in Southern California -
very, very arid, relatively flat -
but it's all done in this striking mid-century modern architecture.
You couldn't imagine a more unexpected place for
an American democratic leader and the President of China
to be meeting.
But days before the meeting between Presidents Obama and Xi,
details of the US government's own computer hacking began to leak out.
A new bombshell that could be devastating
for the Obama administration has also surfaced this morning.
You guessed it right. Big Brother is keeping files.
The National Security Agency
is keeping track of the telephone records
of millions of Americans.
Britain's Guardian newspaper...
The absurdity of this whole situation is that...
..like, on the way to that summit,
the first disclosures come out from Edward Snowden.
It just fuelled this sort of sense by China that we were applying
a double standard, that we engage in behaviour against China
but now we're criticising China for engaging in that behaviour.
I think that was part of Xi's response,
was, "Whoa, we're just learning all these things
"that you guys have been doing."
And what we were trying to do was sensitise China to the distinction
between cyber activities for the purposes of economic espionage -
which the US does not do -
and cyber activities for the purposes of international espionage,
which most major cyber powers conduct.
We provided specific instances where Chinese actors
had stolen intellectual property,
confidential business information, from American companies,
and the damage that it had done to them.
It was not clear to us at that time that Xi Jinping
knew exactly what was going on within his own government.
Obama leaned in. He said, "Mr President, this is a serious issue.
"I need you to pay attention to it.
"I need you to look into what your government is doing,
"and it needs to stop."
But the US authorities say China's cyber espionage
against its companies did not stop.
They decided to take on the hackers directly.
For the first time,
we are exposing the faces and names behind the keyboards in Shanghai
used to steal from American businesses.
The United States is making an unprecedented charge
against another country - the Chinese.
In May 2014, the US indicted
five of the Chinese hackers
who'd targeted SolarWorld.
This is the second largest military in the world,
and their day job, when they put on their uniform and go to work,
was to hack private companies.
There's nothing that a private company can do
to keep out the second largest military in the world.
This has to be an issue where the government helps.
John Carlin had first seen the extent of Chinese cyber espionage
at the FBI seven years before.
A giant screen displaying cyber intrusions across the United States.
I watched in real time as Chinese state actors would hop into
places like universities, they'd go from the universities into business,
and then you'd watch billions and billions of dollars, trade secrets,
trade negotiation strategies, pour out of the United States.
It's what the former director of the National Security Agency
called "the largest transfer of wealth in human history".
The Chinese government says China itself
is a victim of hacking and cyber theft,
and that China, as a staunch defender of cyber security,
has always been firmly opposing
and cracking down on all kinds of hacking.
But for US officials, China's ability to hack any US target
was about to become very clear.
Officials say this could be the biggest cyber attack
in American history.
The culprit, they say - China.
As many as four million current and former government employees
have been told their personal information
could have been hacked from the Office of Personnel Management.
It was a big intelligence coup for China,
a huge loss for the United States.
Officials say that the hackers accessed a database
storing government forms used for security clearances.
I don't like it. I'm one of those people.
I don't feel great about the possibility that the Chinese
are sitting here with all my paperwork. But...
..to be fair, I mean,
that's kind of what states do.
You know, people were very upset
about their records being leaked, et cetera,
and that's when, really, I think...
..sort of the tolerance level went off the charts,
and they said, "We've got to do something about this."
President Xi was due to travel to the US three months later
for a state visit.
President Obama decided to seek an agreement from him
that the hacking would stop.
Susan Thornton was one of the top US diplomats for East Asia
and helped lead the team negotiating with China ahead of Xi's visit.
It became clear that cyber was going to be a make-or-break issue
for the summit.
We basically told them, if we don't have an outcome in this area,
it's not going to be a success.
In the weeks running up to the visit,
the negotiators made little progress.
Then there was a carefully timed leak.
The White House has threatened sanctions against China.
A little harsh?
Well, some say they've been a long time coming.
So they sent a very high-ranking level Politburo member over
to do this negotiation, and when they did that, we thought, "Aha!"
You know, they're not kidding around because it's unprecedented
that they would send someone at that level to do the negotiations.
Countries should not be using their intelligence services
to conduct economic espionage
or steal trade secrets for the benefit of their companies.
So I think that it had become clear to the Chinese government
that this issue had become a real irritant and a problem,
and they wanted very much the visit between President Xi
and President Obama to go well.
It was pretty clear that, in the Chinese system,
things were a bit in disarray on this front, as in,
the central government probably wasn't aware
of a lot of the entrepreneurial stuff that was going on
in various parts of the bureaucracy on hacking.
At the end of the summit, President Xi and President Obama
made a major announcement.
We've agreed that neither the US or the Chinese government
will conduct or knowingly support cyber-enabled theft
of intellectual property, including trade secrets or other confidential
business information for commercial advantage.
It was an extraordinary moment.
The two most powerful countries in the world
agreeing a ceasefire in cyberspace.
The question now is,
are words followed by actions?
While the US was confronting the threats posed by China,
the UK was taking a very different approach.
State visits are important. There's a lot of ceremony in them.
Pomp and circumstance, but they're also a moment
to cement a relationship with a country.
We made it more informal, with visits to football stadiums.
The selfie with Sergio Aguero, I think it was,
was pretty effective.
Visits to the pub.
China was clearly going to be the great source of growth
in the global economy.
It contributes around 30% of all global growth
in our economy, going forward.
And we want a part of that.
JOURNALIST: How were the fish and chips?
Very good, excellent.
The British government wanted to boost trade with China
and attract Chinese investment to the UK.
It included a deal to bring China into the heart of Britain's
civil nuclear programme.
The British government declared a golden decade
of Chinese-British relations.
It was so over the top.
There was nothing else left.
If you're trying to send a message to the Chinese
that we're going to bend over backwards and do anything you want,
then I think the message was sent very clearly.
The question is,
is that strategy most likely to result in
getting what you want from China in the way you want it?
CHEERING
George Osborne took President Xi
to the National Graphene Institute in Manchester.
Graphene is an incredible new substance
that has been discovered by two Russian scientists
working in Britain, who won the Nobel Prize.
I wanted to show Xi Jinping
what we were capable of in Britain, and, of course, make sure that
potentially the largest market in the world for graphene
was open to us, so that things discovered in Britain
could be made in Britain and then sold around the world.
Among those showing off the Institute's work to Xi Jinping
that day was this man - Huang Xianjun.
He'd come to Manchester to study graphene,
but he was no ordinary student.
He was sent by the Chinese military
to study at the University of Manchester as a PhD student,
where he made some breakthroughs on graphene technology.
And that's particularly concerning, I think,
because graphene technology has clear military applications.
When Huang returned to China,
he worked to apply the knowledge and skills
he'd gained overseas in the UK to Chinese military technology,
and that includes things like military intelligence.
Alex Joske has researched how the Chinese military
has sent thousands of students to study new technologies
at Western universities over ten years.
And it's a phenomenon that the Chinese military
has described as picking flowers in foreign lands
to make honey in China.
I think the UK is probably the primary destination
for Chinese military scientists studying abroad.
About 500 of them have been to the UK,
which I think really represents a significant contribution
to Chinese military technology.
The Graphene Institute refuses to say if Huang Xianjun
told them about his links to the Chinese military.
I think it's a concern because it raises some
pretty substantial questions. Was this a grey area
that this PLA representative was operating in?
We're not quite sure.
But what we do know is that this technology is now...
UK technology is now being developed in China
for military purposes.
There's nothing secret about graphene.
So you don't need to go to the Graphene Institute
to find out about that - you can look it up online.
What we needed to do was make sure that there's a market
for something that Britain had participated in the discovery of.
And one of those biggest markets,
one of the biggest parts of that market, was China.
I think that the approach in 2015,
to my mind, smacked of naivete.
The golden era of cooperation
appeared to be based on the presumption
that you could have an economic relationship with China
without having to worry about the politics.
And in a country... In respect of a country like China,
where everything is politicised to the nth degree,
that is simply not a realistic approach to adopt.
THERESA MAY: I have just been to Buckingham Palace,
where Her Majesty the Queen has asked me to form a new government
and I accepted.
When Theresa May became Prime Minister,
it looked like Britain would take a very different approach to China.
One of her first announcements cast doubt
over one of China's most significant investments in the UK -
the deal that let it into the heart of Britain's nuclear power industry.
NEWSREADER: The government has pulled back from a deal
to build Britain's first nuclear power station in a generation.
But now the government says
it wants to have a bit of a think about it for a few weeks.
So why the change in heart?
China has a stake in Hinkley,
and the promise of building its reactors in Britain in the future.
Did that raise fresh security concerns?
The deal to allow Chinese involvement
in Britain's nuclear industry
had been done when relations between China and the West were warm.
But the temperature was rapidly dropping.
I work counterintelligence and this was a major case.
As we started looking into it, we realised
that the nuclear industry was clearly defined as a target
by China, as the nation.
Three years earlier, FBI agent Bill Leckrone had begun to investigate
a group of US nuclear power experts working as consultants
for this man - Dr Allen Ho.
So Dr Ho clearly targeted
individuals newly retired or ready to retire from the nuclear field.
He had a sales pitch that sounded similar to, you know,
"Travel to China twice a year for a week at a time.
"Work from home the rest of the time and we can correspond via e-mail."
And this was really appealing to an individual who wants
to continue to utilise the expertise that he had.
Dr Ho was working for a Chinese state-owned company -
China General Nuclear, or CGN -
the same company that was involved in Hinkley Point.
We proceeded forward in our investigation
more into Dr Ho and his network,
what we would uncover as a network of subject matter experts
that were providing nuclear technology to China
without the proper authorisations.
Agent Leckrone discovered that Ho was helping CGN steal US secrets
that could enable it to build cutting-edge nuclear reactors.
We identified nearly 50 individuals or corporations
that Dr Ho had attempted to bring into his consulting firm.
In 2016, Agent Leckrone tracked down Dr Ho
as he travelled to a nuclear conference.
Dr Ho got off the elevator, at which point
I met him and asked him to come into the conference room
and explained that he was under arrest.
So in January 2017, Dr Ho pled guilty to a violation
of the Atomic Energy Act.
The company China General Nuclear Power has been charged in the US
with trying to steal nuclear technology. The company says...
CGN and Allen Ho were prosecuted
under a law passed in the Cold War era.
For some, that raised fears of a witch hunt.
There have been accusations that
the US government has succumbed to some form of McCarthyism
of the 1950s. Suddenly, the descriptions of a "red scare"...
..are not necessarily overdrawn or exaggerated.
But the rules of the game had changed.
For some in the US, China was now an adversary.
He's a naturalised US citizen.
But his heart is in the PRC.
And that's apparent.
We had evidence that his actions were state-directed.
We felt comfortable that we could prove that
and that, while he was employed with CGN, he was being directed
on behalf of the Chinese government as a whole - tasked, if you will.
The main story for The Times is that Britain's Chinese partner
in the Hinkley Point power station deal is facing nuclear espionage
charges in the United States.
Last month, Theresa May postponed a final decision on whether to
go ahead with Hinkley Point. While all aspects...
When the news of Allen Ho's prosecution broke, many in the UK
doubted that the nuclear deal with China would go ahead.
In September 2016, after Theresa May visited China and met Xi Jinping,
the Government announced its decision.
I can announce today that the government has decided to proceed
with the first new nuclear power station for a generation.
Theresa May has been very careful to make sure that
we protect national security.
Particularly when it comes to our critical national infrastructure,
we need to make sure that we do proper checks
about whether companies are appropriate to invest,
and that's what we do.
It seems to me that there's a track record in spying
for the Chinese state, so clearly we shouldn't be doing this.
Do you want companies...
..from authoritarian one-party states involved
in your critical national infrastructure?
No. Of course you don't.
So we shouldn't be doing it.
The UK administration has been seen, I think, correctly, as being too lax
and relaxed in its control of
operations of state-owned enterprises from China in the UK.
But this is perhaps due to London's anxiety to absorb Chinese...
..as much Chinese investment as possible.
China. China.
But remember I talk about China for a reason.
China. I've done a lot of business with China.
Well, China...
China doesn't even like us.
We can't continue to allow China to rape our country.
And that's what they're doing.
This includes stopping China's outrageous theft
of intellectual property.
Donald Trump's election campaign had turbo-charged anxiety
about the threat posed by China.
His victory paved the way for a trade war.
President Trump has adopted a much more aggressive policy
to make sure that the...
..American deficits in trade would shrink and also in stopping
intellectual property rights theft.
This President says,
"I don't believe the Chinese are treating us fairly.
"Why can they cheat and we have to abide by the rules and they win?
"We're going to call them out on fundamental unfair behaviour."
The first is the theft of intellectual property that's almost
entirely cyber-enabled theft of intellectual property.
The US authorities honed in on a particular target.
Officials had been secretly tracking the activities of these men -
Zhu Hua and Zhang Shilong -
who said they worked for a technology company in China.
Officials called them APT10.
If I start with this series of numbers and digits,
that's the digital fingerprint of a specific bit of malware
used by APT10 that they've probably used to compromise
or target an organisation.
In London, cyber security expert Kris McConkey
was also tracking the men.
He uncovered a huge network of servers and websites dedicated
to hacking into Western companies.
So those are actual systems on the internet,
and if the domain's pointing to that IP address,
it's likely that's an IP address under the control of APT10,
so a server physically sitting somewhere that they're using
to conduct these types of attacks.
If I take the IP address on the screen and I ask our system,
"What other domains have you seen associated with that?" we can see
pretty quickly we have this huge set of probably
a couple of hundred domains.
So we've now gone from one piece of malware,
to the domain that it connects to,
to the IP address that it points to,
back out to all of the other domains that point to that IP address.
And so we happen to know from our research, all of these domains
all belong to APT10.
APT10 had developed a new and sophisticated way of stealing
the West's business secrets.
It was targeting the firms that manage IT services
for other companies - known as managed service providers or MSPs.
If I'm staying in a hotel,
if you pickpocket me and get my room key,
you're going to just get into my room.
That's not going to get you into any other room
but if you get a copy of the master key, you have the ability to wander
round and access any room you want.
That's the equivalent to why APT10 are actively targeting MSPs,
because once you breach one of them, you in theory have an easy
route into all of their customers, which can number in the thousands.
The hackers reportedly targeted some of the world's biggest companies,
including IBM, Ericsson and Hewlett Packard.
Whether it's media and advertising, whether it's industrial machinery,
whether it's professional services firms, whether it's banks,
we are talking extremely large companies.
It's affecting the UK economy
every bit as much as it is other countries.
Cyber experts believed the men were working for the Chinese state.
Concerned about growing economic losses,
the authorities in the UK and US decided to take action.
The United States and the UK have accused China of carrying out
a global campaign of state-sponsored espionage.
The US indictment says Chinese hackers obtained unauthorised access
to computers of at least 45 entities,
including commercial and defence technology companies.
Despite China's long history of hacking, it was the first time
the UK government had publicly blamed the Chinese state.
We were very clearly able to attribute this espionage to APT10,
which is part of the Chinese state.
And so we thought the best way that we can do this, in a way
that we hope does not do enormous damage to bilateral relations,
is to publicly attribute it,
so the Chinese understand that we know what they're doing
and we hope the result of that will be they stop.
Today the Department of Justice is announcing a criminal indictment
of two hackers associated with the Chinese government.
The indictment alleges that the defendants worked for a group
known to cyber security experts as APT10.
What we did when we indicted the APT10 case was demonstrate
that the Chinese continue to engage in computer intrusions
for the purpose of commercial benefit of their companies.
What we're saying when we put something in an indictment is
we can prove this beyond a reasonable doubt in court
with admissible evidence.
We're not relying on classified information.
We're not asking you to trust us.
We're saying, I can go to court and prove these allegations to a jury.
Compared to his predecessors,
President Trump has been much more conscientious, if not aggressive,
in using the judiciary to penalise
Chinese companies for alleged offences in
intellectual property rights theft.
We are now making it clear to China...
..that after years of targeting our industries
and stealing our intellectual property,
the theft of American jobs and wealth...
..has come to an end.
Some fear the legal action in the US may be politically motivated.
Others say it's unclear if China was hacking to uncover business secrets
or for more traditional espionage.
We don't know which part is so-called intelligence,
which part is a violation of property rights.
Even if they're caught red-handed,
it's more complex than what people see or people imagine.
But senior US officials say that much of the hacking
targets technologies identified in a Chinese economic plan
drawn up under Xi Jinping, called Made in China 2025.
It's a ten-year plan to have significant domestic development
in ten areas of technology
that the Chinese believe will be
at the forefront of technological advance in this century.
There's nothing organic about economic espionage coming
out of China, whether it's sponsored by the government directly or not.
It follows very closely this plan and the objectives of this plan.
President Xi's focus on the technologies of the future
and China's long campaign of stealing business secrets
appear to be paying off.
China is now challenging
the technological superiority of the West.
They understand that the future of our economic growth is technology.
And they have dedicated their time and resources
to doing something we don't -
putting their centralised government money behind their front leaders.
No doubt about it, Xi Jinping is a very ambitious nationalist.
And he thinks that with the rise of the Chinese economy,
with the rise of Chinese high technology,
it is possible for China to challenge the American position
as the sole superpower in the world.
The mobile industry makes an evolutionary leap every ten years.
In 2020, the 5G era will be upon us...
And nowhere is this clearer than in the race to develop
the next generation of mobile phone technology, known as 5G.
Data and information is power,
and that is going to be even more true in the 21st century
than it has been in the past,
and so 5G is going to become part
of our critical national infrastructure.
The world leader in 5G is the Chinese company Huawei.
We serve 170 countries -
nearly one third of the world population...
President Trump has declared a national emergency...
..to protect US communication networks
from what he calls "foreign adversaries".
Washington has effectively blocked the company
doing business in the US.
President Trump has blacklisted Huawei over concerns
about national security.
So what is Huawei?
They're a company based in China subject to authoritarian rule.
They're still subject to the whim of a Chinese leader
who might come in at a later date and say, "I'd like you to turn over
"all the data that you've gleaned from all of your users."
That is terrifying.
So the question is about trust in the Chinese system,
not just in that company.
It is pretty obvious that if you are a Chinese company, you have to do
what the Chinese government tells you to do.
Like, it's not optional.
So if they tell you to undertake an activity,
they're going to have to do it, under Chinese law.
That is, they're required to do that.
Critics accuse the US of hypocrisy.
They say that US companies cooperate with the US government
when it comes to national security.
The grand jury in Seattle has returned an indictment that alleges
ten federal crimes by two affiliates of telecommunications corporation
Huawei Technologies.
US officials also accuse Huawei of stealing
a rival company's business secrets.
This was Huawei's MO.
During the time period of the alleged crimes,
Huawei announced a bonus programme for its employees worldwide -
that it would pay cash to employees
for stealing confidential information from competitors.
The US now alleges Huawei set out to secretly copy this robot,
known as Tappy, which is used by T-Mobile USA to test smartphones.
In the US, Huawei has pleaded not guilty to the charges.
Some think Trump is ramping up concerns about the company
to provide leverage in his trade war with China.
It's much simpler not to do any business with Huawei
so we're not doing business with Huawei.
That doesn't mean we won't agree to something if and when
we make a trade deal,
but we're not going to be doing business with Huawei.
Donald Trump wants Britain to ban the company from parts
of its 5G network.
But China warns there'll be serious consequences if it does.
It's become a high-stakes debate.
Are we comfortable that, if push comes to shove,
our basic infrastructure network 5G...
..can be controlled by the Chinese Communist Party?
If we are comfortable with that, there is no problem.
If the idea is that we should not allow our basic infrastructure
being controlled by a party that does not believe in our basic values
then we have a clear problem there.
This is a state that has invested a great amount of time and effort
in intellectual property theft.
It's a bit like saying, even if your safe is secure,
do you really want to give a known burglar the keys to your house
if the burglar says, "Don't worry,
"I'm not going to burgle you any more"?
Do we have any kind of findings that Huawei has deliberately
undermined the UK interests,
and, moreover, undermined UK interests
on behalf of Chinese government?
If you have that kind of evidence, that kind of finding,
absolutely, cut Huawei immediately.
But if that's not the case,
if Huawei's branch in the UK does not do harm to the UK's interests,
then it'll be counterproductive if you block Huawei.
Huawei was a purely private company
and it's been amazingly successful.
It has... There's almost no competitor when it comes to
some of the technologies it's able to provide.
If the UK thinks that it can control various aspects of it,
can have an open kind of discussion about the practices and standards
and rules, then why not?
I think it is...
..a difficult decision.
How do you make sure that
you're not putting in your communications infrastructure
a back door that, at some stage in the future, could allow
a foreign country access to critical data paths?
But there's also a strategic consideration,
which is how we make sure that we're not, as a country,
dependent on other countries
for critical parts of our national security infrastructure.
We don't actually know how China's going to evolve in the next decade.
It could be that it evolves in a way that is totally reassuring.
Or it could be different,
and we could look back in ten years' time and say, you know,
we made the wrong call.
The Chinese government says that Chinese laws and regulations
do not authorise any firm, including Huawei,
to build back doors to network systems.
And British government reports on Huawei's operations
show no evidence of any problem involving back doors.
It says banning Huawei would imperil the rules-based international order,
undermine business confidence, and take its toll on the global
investment environment, incurring heavy costs on all countries.
Xi Jingping has disappointed those
who hoped he'd make China more free and open.
Under his rule,
China has become a state where loyalty to the Communist Party
appears to be valued above everything else.
A state President Xi could rule for life.
He has a high level of popularity among the people and we can see
that President Xi has been an effective leader
because he has been standing by the Chinese people,
thinking about the Chinese people.
I don't know that there's a single adjective
to describe Xi Jinping's tenure
other than...brutal.
This is somebody who will do whatever it takes...
..to achieve whatever his particular policy outcome or goal is.
There is absolutely no shadow of a doubt
that he is a hardcore dictator.
He still craves more and more power.
I think Xi Jinping has taken China down a much more assertive route
than it's been on previously and that, of course,
is making the rest of the world wonder what's in store.
Xi Jinping's foreign policy is to make China great again.
And what Xi Jinping essentially would like is that China
would be modern, rich,
powerful and second to none.
We know that China's rising is quite different from the previous powers.
Xi Jinping wants China to play a positive role in global affairs.
China wants to maintain the international order.
China does not want to establish a new order.
The United States has to show a real presence
in order to compete with China.
If we aren't there to keep that restraint on China,
then, without question, the 21st century will be dominated by China.