The Catch Behind Illegal Fishing

More than 3 billion people depend on fisheries for their food security and jobs according to USAID, with U.S. consumers spending more money on seafood than any other nation. To date, the U.S. is the largest single-country market for fish and fish products, the fifth largest exporter, and the third largest wild seafood producer. Needless to say, the United States is vested.

As a result, the U.S. leads and partners with nations who have a shared interest to regulate global waters. This becomes challenging when dealing with nations who do not adhere to international maritime regulatory programs or practices in place. Nations who challenge regulations tend to practice Illegal, Unreported, and Unregulated fishing also known as IUU. It is estimated that one-third of today’s global seafood harvest comes from fishing operations engaged in IUU fishing practices. In 1992, the U.S. enacted the High Seas Driftnet Fishing Moratorium Protection Act, requiring the U.S. to provide nationals to Congress who practiced IUU fishing. The 2021 report identified 31 nations, including repeat offenders like China, The Russian Federation, and Mexico. In the 2019 report to Congress, there is a section calling out the concerns of China’s illegal fishing practices.

In this week’s Overwatch, analysts investigate the ongoing IUU practices, the ongoing struggle for regulation of global waters, the correlation IUU has to human trafficking and the counter narrative from China. This is all contributing to a larger impact threatening sustainability, the resiliency of the fishing community, economies, and the oceanic ecosystem.

Illegal Fishing Invites Human Trafficking

Illegal fishing is a prosperous business that depletes near-shore fisheries, perpetuating forced labor through human trafficking in seafood sectors because the vessels need to travel out further and stay at sea longer to catch enough fish – all raising operational costs. The unattractive conditions also make it difficult to recruit and keep costs down, further enticing forced labor tactics.

Last May, the Illegal Fishing and Forced Labor Prevention Act was enacted to not only remedy IUU, but also human trafficking, as more stories are released about the inhumane conditions on the vessels and the disinformation campaigns used to recruit workers. Many incidents target individuals vulnerable to making money quickly, only to discover long 18-hour workdays, poor living conditions left to eat fish bait with unclean water and being isolated at sea with monthly salaries turning into annual salaries.

A Mongabay article shares a personal account of vessel Long Xing 629, where deckhand Sepri never made it to the end of the catch. This story of Sepri was published by the Society of Publishers in Asia (SOPA) this year and won an Excellence Award. Like most deckhand stories, Sepri responded to a Facebook ad recruiting deckhands. The position was attractive to Sepri, who only had a middle school education. The ad boasted a compensation of $350 per month, twice the minimum wage in South Sumatra province, where Sepri lived. The dream was short lived though, with hard labor 18 hours a day, as he was forced to eat the same bait fish hooked onto fishing gear, along with desalinated seawater. Sepri fell ill, leading to his death. Sepri’s sister, Rika, shares, “He wanted to make a lot of money. He wanted to make his cousins and me proud. That was his wish. Even though I always said the important thing was finding a job.” Unfortunately, the fate of Sepri on Long Xing 629 (owned and operated by the Dalian Ocean Fishing Company) is not uncommon.

Facebook photos posted at Lakemba Perkasa Bahari show, clockwise from top left, men training with fishing lines; a sign outside Lakemba’s office in Bekasi, a satellite city of Jakarta; Lakemba recruits; and coffee and cigarettes. Mongabay.com

The Dalian Ocean Fishing Company has many aliases and also goes by its formal Chinese name Dalian Yuan Yang Tuna Yu Ye Co., or by “China Tuna,” or Liaoning Dalian Ocean Fishery Group Corp. 辽渔集团有限公司, ‘State-Owned Assets Supervision and Administration Commission of Liaoning Provincial People’s Government.’  A Customs and Border Patrol Customs and Border Patrol (CBP) investigation led to a Withhold Release Order (WRO) after finding evidence of forced labor aboard 32 of Dalian’s vessels.

Based on the current bill of lading shown below, the Dalian Group is still active with a ship currently heading to the Port of Long Beach.

Polarizing Narratives

With the U.S. spending more money on imported seafood than any other nation, consumer campaigns were created to raise awareness about illegal fishing and the threat it plays on sustainability and the oceanic ecosystem. An example is through the Food and Agriculture Organization of the United Nations’ consumer campaign last June to educate the public about the impact of IUU. Without traceable resources to understand where your fish is coming from, the campaign encourages consumers to ask a simple question, “Where is this fish from,” whether fish was being purchased from a local market or ordered at a restaurant.

Outside of protecting food security and the ocean ecosystem, the U.S. is a global leader in protecting human rights issues. Much like the Uyghur Forced Labor Prevention Act earlier this year, the U.S. takes a stand for peace, security, and human dignity. The definition of human dignity continues to be subjective, with the Chinese narrative, guaranteeing human rights sentiment of the Chinese people to have notable increases in their sense of fulfillment, happiness, and security. The portrayal from China is that the U.S. has a track record of being the biggest human rights abusers in the world, citing examples such as the death toll in the U.S. for COVID-19, the Forced Labour Convention, and rising numbers of gun violence.

Our Assessment

With the global demand for seafood continuing to grow alongside illegal fishing, regulation combined with consumer awareness is the answer. However, compliance proves to be an ongoing challenge as narratives and definitions continue to be a debate. As the debate continues, the coastal environments and forced laborers are at risk of the greatest vulnerability.

Overwatch analysts anticipate the U.S. will continue to make strong ground domestically through matching consumer campaigns that extend awareness and tracing products from sea to table. According to David Schorr, the Senior Manager for Transparent Seas, Oceans, WWF:

On a global front, the U.S. will continue to build alliances with nations who have common values in protecting the lives of both humans and marine life, impacting IUU. As recently as October 7, 2022, State Secretary Antony Blinken launched a new project, the Por la Pesca (for fishing) Project. The effort is to support sustainable fishing like Peru and Ecuador through artisanal fishing.

As alliances on land and sea attempt to regulate the sea, tools such as the Global Fishing Watch’s map will help the U.S. Coast Guard and analysts discover hot spots where IUU vessels are, identify vessels and owners that are suspect, and monitor their movement and transponder activity to make strides in our effort for greater sustainability.

Overwatch Series: Information Operations Campaigns – Their Influence and Longevity

In last week’s issue of Overwatch, “Information Operation campaigns In Plain Sight,” we highlighted our combined efforts with Pangea Group to uncover information operations (IO) surrounding tensions between China and Taiwan. In a combined effort with local analysts, we uncovered a three-pronged approach to China’s IO campaign that frames the problem set at the local level. 

For this week’s Overwatch, we broaden our scope to see how these IO campaigns are surviving the distance and how effective, or ineffective, they are with Americans across several landscapes – the U.S. government, news media outlets, and citizens. As of recent, analysts are seeing an increase in Taiwan mentions across mainstream western/U.S. media, even though tensions between the Democratic Republic of China (DRC/Taiwan) and Mainland China have been on the rise since the elections of the Democratic Progressive Party presidential candidate Tsai Ing-wen in 2016 and 2020. 

This bipartisan support of helping Taiwan bolster its defenses to counter China has allowed legislation at the Congressional level, and action at the Executive level, to go forward since early August. This bipartisan consensus may be targeted in the future by Chinese information operations to erode the ability of the U.S. government to support Taiwan.  

As with all politics, the U.S. will need to tread lightly as they deal with opposing sovereign nations.  Overwatch and Pangea analysts highlighted in last week’s Overwatch that the good intentions of the U.S. Government can be the fuel that China needs to push their agenda. This specific IO campaign aligns with China’s message that paints the U.S. as the sole party responsible for changing the status quo in the Taiwan Strait and supports the IO message that the U.S. has repeatedly breached its commitments to Beijing with respect to Taiwan.

U.S. News Coverage 

The effects of this bipartisan support to bolster Taiwan’s national defense can be seen in the media’s coverage of the $1.1 billion arms sale to Taiwan, as well as articles about the current state of Taiwan’s military. Articles across media sources such as CNN, Foreign Policy, Insider, and the Financial Times focus on the relative unpreparedness of Taiwan’s military for a conflict with China and the need for further arming Taiwan through the purchase of arms from the United States.  

Perhaps more interesting, though, have been comparisons between increased military spending in Taiwan and the crisis in Ukraine. A Foreign Policy article published on September 8, 2022 notes that “The U.S.-led response to Russia’s war of aggression in Ukraine has been impressive but it is not a model for a similar intervention in Taiwan.” The article goes on to mention the need to arm Taiwan preemptively as geography, and the risk of U.S.-Chinese confrontations, would make arming the island after the fact nearly impossible without risking expanding the war.  

From the articles mentioned above, we can see that the U.S. media’s framing of the increasing tension and potential conflict with China projects bipartisan support for the arming of Taiwan’s military, which is seen as currently lacking the equipment to counter the Chinese. The narratives presented above also paint a picture that the United States will be responsible for arming the country and that this must be carried out for the same reasons the U.S. is currently sending military aid to Ukraine.  

What U.S. Citizens are Saying 

A quick look at Twitter helps lay out some potential avenues through which bipartisan support could begin to be eroded. Starting as early as August 30, 2022, accounts across the platform began tweeting their dissatisfaction with the U.S. spending money on the defense of Ukraine and Taiwan when the city of Jackson, Mississippi was unable to provide clean drinking water for its citizens. 

Tweets about this issue began taking on a similar format and were discovered in English and Spanish. 

 

 

 

 

 

 

 

 

 

 

 

 

 

While it may be tempting to think that these sentiments are being driven by the Chinese agenda, rather they are opportunities for China to exploit the difference in opinions between the U.S. government and the support of their constituents. It is targeted fractures like this on the digital landscape that create accessible entry points from which disinformation campaigns can be launched to erode the U.S. resolve reflected in western media. These would be avenues to monitor for China’s third line of effort in an IO campaign; seize the opportunity to highlight discord in others to serve their own self-interest.  

While the narrative of the bipartisan push to arm and support Taiwan in the face of Chinese aggression has been the dominant conversation surrounding the ongoing tension, other topics have been essential to open-source intelligence analysts. These include the specific economic ramifications of increased tension or war over Taiwan, the logistics of a Chinese Invasion of the island, the perspective of mainland Chinese citizens, and the views of those in Taiwan.  

While doing research for this brief over the last month, analysts found an article from a tech magazine published on September 12, 2022 that went into detail about the need to diversify semiconductor chips due to the increased risk of conflict, as well as an article from a local Fox affiliate website published on September 5, 2022. Additionally, an article published in Newsweek discussed a report on the 3,500 targets China would likely focus on in Taiwan during a conflict. Analysts found no mention of the reaction of China’s domestic population to increasing tensions with Taiwan in western media sources. Finally, most articles that feature the perspective of individuals in Taiwan focus solely on their view on the incursion of Chinese ships and planes over the median line of the Taiwan Strait.

In summary, the content found in U.S. news media tends to focus only on the U.S.’s role in the current tensions between Taiwan and China, while content specific to Taiwan generally focuses only on the potential flashpoints that could cause the conflict to erupt. The perspective and responses of the Chinese and Taiwanese to these crises are missing from these narratives and can only be fully understood through the analysis of regional media created outside the United States. 

Our Assessment 

Social media platforms like Twitter and Facebook have recently been in the news regarding their campaigns to remove politically motivated bot-accounts from their platforms. Overwatch analysts assess that this will have a great effect on IO campaigns across social media but will not have a great impact on news and political agendas. As such, Overwatch and Pangea analysts will be monitoring the trends in media over the next 30 days to see just how much of an effect the removal of these accounts will have on IO campaigns in plain sight.  

 

 

 

Information Operation Campaigns In Plain Sight

The invasion of Ukraine by Russian forces was perhaps a global eye-opener to the fact that sovereign nations still go to war with each other. As unpleasant as the concept of war is, it will not be the last time we see events like this unfold. However, what is different now is that any action, big or small, can draw the observation and criticism of not just governments, but citizens of the world who are all connected through the internet. How will those nations fight back? In this first installment of an Overwatch series, analysts look at how sovereign nations use the internet to prepare the global stage for their actions. Enter: Information Operations or IO. 

Understanding information operations is crucial to understanding what is happening around us. Every message from a media agency or government delivers a well-designed purpose to a target audience. To see the full spectrum of an IO campaign, you must put yourself in the shoes of both the deliverer and receiver of the message. To do this, Overwatch analysts partnered with Pangea Group to provide ground-level research and intelligence. Comparing this native-level insight into cultural and linguistic nuances enables a research team to see things that conventional artificial intelligence and machine learning tools overlook.  

Three Sides of the Coin 

While it may be common knowledge that countries such as Russia or China fully employ IO campaigns, it’s not always clear how complex they can be. With the help of analysts in the local area, we can now see that China has three very distinct functions of its IO campaign with Taiwan:  

Overwatch analysts will highlight the different IO campaigns and how they support China’s mission to prepare the stage for future actions as we move forward.  

The View from Taiwan 

Since the invasion of Ukraine by Russian forces, common themes and messages coming from Taiwanese locals, and the media outlets they follow, have slightly changed from a distant possibility of a Chinese invasion to the full likelihood of it. According to the Formosa survey conducted on March 23-24, 2022, as stated in an article in Newsweek, local Taiwanese concern of invasion had increased by 10%. To the outside observer, this increase may seem low; however, in an environment that – “For more than 70 years, people have ‘waited’ for a war that is yet to come.” – this shows a shift in local sentiment significant enough to pay close attention to.  

Taiwan’s information environment has seen sentiment from pro and anti-reunification messaging for over 70 years. This has led to several Taiwanese generations anticipating that, someday, the Chinese Communist Party (CCP) can and will be in control of Taiwan by any means. This is a narrative preferable to the CCP as they speak of trying to create a peaceful solution while simultaneously creating deterrent messages towards foreign influence like a flash invasion, lightning assault, and firmly cracking down on Taiwan’s independence separatist acts. 

According to the white paper released by Xinhua on August 10, 2022, “people on both sides…have set out on a path of peaceful development,“ a message the CCP would have the mainland and the Wai Mei 外媒, or foreign media, believe. This messaging is amplified through CCP Western social media campaigns with messages stating:  

  • You have me, and I have you – relating to the electronic semiconductor industry where influencers attempt to create a sense of panic around the issue of a world shortage in the event tensions rise in the Taiwan Strait to open conflict.  
  • I waited for a long time, motherland; you finally came to pick me up -, using famous Hong Kong singer Andy Lau’s song “Today” to provide the assumption that Taiwan would see the CCP’s invasion as a liberation.  

  • Taiwan reunification – mentioned several hundred thousand times a day with common messages stating surrender, comply, re-education, and untenable. 
  • Taiwanese are Chinese… Actions speak louder than words – Singer Li Jianfu wrote the song “Descendants of the Dragon” in 1978 in response to America’s decision to break off diplomatic relations with Taiwan to pursue relations with the CCP. Using historical significance and pop culture, this song has been replicated and shared with millions of re-tweets, shares, and likes. 

  • Taiwanese should strive for national rejuvenation– suggestive language in response to Ambassador Qin Gang’s statement that “One Country and Two Systems” is democracy.                     

Much of the internal messaging by the CCP on the topic of Taiwan is lighthearted and suggestive of a long-lost relative as opposed to an oppressive foreign invader. In line with their Internal IO campaign, these types of messages are meant to normalize the idea that reunification is the best option for the Taiwanese people. While media outlets and social media outside of mainland China are painting one picture, locals see something very different inside mainland China. 

China’s Public Face

In its first public message on Pelosi’s visit to Taiwan on August 2nd, 2022, China has primarily tried to portray the United States as the instigator of the current tensions and reassure China’s domestic population that the CCP is defending the country’s sovereignty. Beijing issued a rare and highly authoritative Foreign Ministry Statement that stated China “will never accept” Speaker Pelosi’s visit and “will never agree to it” and that the visit is tantamount to “playing with fire.” An equally rare Taiwan Affairs Office (TAO) Statement mirrors these statements. At the same time, the People’s Liberation Army (PLA) Eastern Theater Command announced a series of multi-day military operations in various locations around Taiwan, one of which was to entail “conventional firepower demonstrations” east of the island.  

These messages set the ground for an IO campaign that prepared observers for the uncertainty and strife that would occur if outside entities interfered with Chinese internal governance. China made a bold attempt to push these IO campaigns further by making multiple public claims on state-sponsored media sites that focused on an internal audience that it was sending SU-35 fighter jets over the Taiwan Strait less than 20 minutes before the Speaker’s arrival in Taipei. This message was likely meant to bolster patriotism and the belief that China would defend its sovereignty. However, the Ministry of National Defense for Taiwan quickly debunked these claims.  

China continued its IO public messaging surrounding the mid-August and late-August US congressional delegation, the first and the second since the US Speaker of the House visited Taiwan in early August. These public statements continued to paint the United States as the sole party responsible for changing the status quo in the Taiwan Strait and accused the US side of having repeatedly breached its commitments to Beijing concerning Taiwan. These key themes are consistent with those observed in response to the Speaker’s visit and in line with China‘s third aspect of IO: preparatory. Beijing is now attempting to signal that it has no choice but to respond forcefully to these provocations on issues pertaining to its sovereignty and that the international community is aligned with Beijing on this issue.  

Taiwan Independence, a toxic cup of wine: Image created by Global Times, a Chinese State-run media company, in response to the visit by the U.S. Speaker of the House. The image was created by CGTN, an English–language media company based in Beijing. This cartoon has made it into every corner of the internet, from U.S. – based credible news sources to Chinese and U.S. social media platforms.  

Separate from the messages directed against U.S. interference with China, we also see counter–messaging themes denying human rights violations.

This cartoon was recently broadcast on Weibo, Twitter, Facebook, and Telegram in response to a United Nations report generated by the Office of the High Commissioner for Human Rights (OHCHR). The report details investigations of China’s Xingjian Uighur Autonomous Region (XUAR) in response to “2017… increasing allegations by various civil society groups that members of the Uyghur and other predominantly Muslim ethnic minority communities were missing or had disappeared”.  

In a recent Public Broadcasting System article, the Chinese Foreign Ministry Spokesperson replied, “The assessment is a patchwork of false information that serves as political tools for the U.S. and other Western countries to use Xinjiang to contain China strategically,” Foreign Ministry spokesperson Wang Wenbin said. “It again shows that the U.N. Human Rights Office has been reduced to an enforcer and accomplice of the U.S. and other Western countries.” This continues the narrative that the U.S. and the U.N. deliberately spread falsehoods to undermine China’s security and internal peace.  

The Global View  

In next week’s Overwatch brief, analysts will uncover what everyone else on the internet sees when they take a cursory look into the affairs of China and Taiwan. In the following brief, Overwatch and Pangea Group analysts will look deeper into how these Information Operations campaigns can affect global economies, governments, and private citizens in Jackson, Mississippi. 

Despite Legislation, Do U.S. Consumers Know Where and How Their Products are Made?

On June 21, 2022[i], the Uyghur Forced Labor Prevention Act (UFLPA) took effect in the United States. The Act was enacted in response to the 2014 investigations concerning the Uyghur population of Xinjiang, China, that determined the People’s Republic of China (PRC) committed numerous human rights violations that are still occurring today.[ii] The UFLPA now requires U.S. imports produced “wholly or in part in the Xinjiang Uyghur Autonomous Region” to have “clear and convincing evidence” to be free of forced labor.[iii] In addition to the enactment, monitoring resources have been implemented, and most American consumers are familiar with UFLPA, having little to no impact on purchasing behavior.

[iv]|[v]|[vi]

On the other hand, Chinese officials have countered U.S. allegations of forced labor in Xinjiang with accusations of lies and undercutting the international supply chain. Wang Wenbin, the Chinese Foreign Ministry spokesperson, stated that Xinjiang forced labor allegations are “a big lie made by anti-China forces.”[vii] Hua Chunying, Assistant Minister of Foreign Affairs, posted that the UFLPA “essentially deprives millions… of their right to work”. [viii] U.S. Secretary of State, Anthony Blinken, responded by stating, “we are rallying our allies and partners to make global supply chains free from the use of forced labor, to speak out against atrocities in Xinjiang, and to join us in calling on the government of the PRC to immediately end atrocities and human rights abuses, including forced labor.” [ix] | [x]

In this Overwatch brief, Echo Analytics Group and Valens Global analysts focused on challenges U.S consumers face when trying to understand the supply chain. Our research identified that forced labor products from the Xinjiang Uyghur Autonomous Region (XUAR) continue to make their way into the hands of American consumers. This brief is based on shipments already accepted into the U.S. from export companies known to utilize cotton from the XUAR and future shipments from the same companies operating under an alias.

Overwatch_60_Disclaimer
Overwatch

Unraveling the Origins of Consumer Goods

When a finished product arrives in the U.S., it is difficult to confirm or deny its origins within the Xinjiang Uyghur Autonomous Region (XUAR) with “clear and convincing evidence.” For this case, analysts looked at a shipment that landed in the port of Long Beach, CA, on June 29, 2022. The shipper’s name is Nanhai Textiles Import and Export carrying containers of women’s clothing. The COSCO Shipping Rose vessel came from the Yantian port in China. Before arriving in Long Beach, CA, we backtracked its movements using Vessel Finder and the International Maritime Organization (IMO) number to reveal stops in Hongqiao, Jiangyin, Xiamen, Yantian, and El Paso, Texas. However, Panjiva’s report dated June 29, 2022, and Bill of Lading #PSEAYTNLAX50787 were no longer available on the site. Look at the sample Bill of Lading and note the Shipper, Consignee, and Marks Description.

According to the UFPLA, we must show that Nanhai Textiles did not use cotton produced by forced labor in Xinjiang to show “clear and convincing evidence” for the items in container OOLU8868244.

After performing a series of searches in the Securities and Exchange Commission (SEC) and finding no record of Nanhai Textiles, analysts pivoted their search to find aliases for the company through Google Dorks, social media, Panjiva, Office of Foreign Asset Collection (OFAC), Market Watch, and human rights watchdogs (Politico, Voice of America, Human Rights Watch, Helena Kennedy Center, etc.). The following are all alias listings for Nanhai Textiles:

  • Nanhai Textile Import & Export Co LTD of Guangdong (link)
  • Foshan City Nanhai Deyao Textile Industrial Co., Ltd. (link)
  • Foshan Nanhai Weilong Textile Co., Ltd. (Facebook) (link)
  • FOSHAN NANHAI HONGXINGHONG TEXTILE CO., LTD. (link)
  • FoShan NanHai HuaChun Fashion Co., Ltd. “Supplier to PVH Corp”
  • Foshan Chicley Textiles Co. Ltd. (link)

None of the above listings have direct ties to or show up on the Department of Homeland Security’s UFPLA list, a list of entities known to utilize forced labor. As a result, this shipment passed muster without issue and, luckily, just days after the UFPLA went into effect.

However, as listed above, Foshan NanHai HuaChun Fashion Co., Ltd. is a direct supplier to PVH Corporation (Corp.). PVH Corp manages significant apparel brands and denotes receiving products produced by Esquel Enterprises, also known as Changji Esquel Textile Co. Ltd (currently on the UFPLA entity list). Additionally, PVH Corp.’s current senior leadership formerly oversaw importing operations for Urban Outfitters, the same receivers of our case study shipment from Nanhai Textiles and retailers of PVH products.

These correlations do not necessarily connect our entities directly to materials sourced from the XUAR. Instead, our example shows the complex supply chain and how far removed the consumer is from the cultivation of raw materials to the finished product. How can a supplier provide “clear and convincing evidence” that their products meet the requirements in the UFPLA?

The difficulty in proving where raw materials came from is “at the ginning stage [when fibers are separated from their seeds], cotton from disparate locations is mixed together, making it impossible to trace the provenance,” according to Liv Simpliciano of Fashion Revolution in an interview for The Guardian. She quotes leaders in supply chain technology as saying the only way to prove the absence of Xinjiang cotton is a “complete digital chain of custody.”

According to an article published in the Taipei Times, Tech companies such as TrusTrace, Supply Shift, and TextileGenesis, plan to use “blockchain and artificial intelligence to trace supply chains for fashion labels.” These companies aim to provide transparency to the industry by providing traceability throughout the supply chain. However, as stated by TrusTrace, “Only the brand is informed,” meaning that TrusTrace is “not alerted when Xinjiang cotton is found in a brand’s supply chain.” This places the ownness back on the importer to report when they receive alerts, leaving the system vulnerable to market manipulation.

To the Informed Supplier

For an additional case study, we referenced “Laundering Cotton: How Xinjiang Cotton is Obscured in International Supply Chains.” Laura T. Murphy and her team covered the Texhong Textile Group, currently under scrutiny for sourcing from the Xinjiang Tianmian Foundation Textile Co. (not on the UFPLA entity list).

The case study shows direct correlations between the Xinjiang Source, Intermediary Manufacturer Supply Chain, and specific shipments.

According to Laundering Cotton, Texhong’s subsidiary Winnitex supplies manufacturer Andalan Mandiri Busana (AMB). On a shipping report from Panjiva, J.Crew received a large shipment of men’s pants labeled AR886-3 from AMB on 03/31/2021. The same product number was recorded on J.Crew’s website as available for purchase.[xi]

The Laundering Cotton report illuminates several other case studies from major American and international apparel retailers. They also caveat at the end of the report by stating that each entity named throughout the study has had the opportunity to reply. Their responses are recorded here in Annex D of the report.

Our Assessment

We assess that U.S. Importer inventories of XUAR-sourced products will continue to make their way into the hands of unwitting consumers. However, as the UFPLA expands its list of banned entities, future shipments of ethically sourced goods promise to deny forced labor products into the supply chain. As noted with the ginning stage of cotton and the complexity of supply chains, there may never be a single solution to help legislation against forced labor reach its full potential.

Overwatch assesses that it will take a combined effort on the UFPLA to expand their banned entities along with consumer awareness that anything from these designated regions could be in support of forced labor. Launching a consumer campaign to raise awareness about where and how products and services are sourced has proven highly effective, especially within the agriculture industry. We will likely not see any significant decrease in forced labor until consumers and legislation become more aligned.

Ultimately, the ones who will have the most significant impact are the producers of these products. When they have a healthy understanding of what their consumers demand and are concerned with their brand reputation, they will work to enforce a higher standard of “clear and convincing evidence” to their market base.

OSINT Workflow for Supply Chain Due Diligence

https://panjiva.com/ (shipments)

https://www.vesselfinder.com/ (vessels)

https://home.treasury.gov/policy-issues/office-of-foreign-assets-control-sanctions-programs-and-information (Sanction Lists)

https://www.sec.gov/edgar/search/ (Business by name lookup)

UFLPA Entity List | Homeland Security (dhs.gov) (Xinjiang Banned Entity List)

(List is not exhaustive or a complete list; this is the bare minimum.)

Sources

[i] U.S. Customs and Border Protection: Uyghur Forced Labor Prevention Act

[ii] Aljazeera: China’s Uighurs claim cultural ‘genocide’; China’s Uighurs claim cultural ‘genocide’ | Opinions | Al Jazeera

[iii] Ibid. page 1

[iv] WRC Case Brief: Lacoste Linked to Factory in China that Reportedly Uses Forced Labor; https://www.workersrights.org/wp-content/uploads/2020/03/WRC-Case-Brief-Yili-Zhuo-Wan-Lacoste.pdf

[v] Congressional-Executive Commission on China: Global Supply Chains, Forced Labor, and the Xinjiang Uyghur Autonomous Region; CECC Staff Report March 2020 – Global Supply Chains, Forced Labor, and the Xinjiang Uyghur Autonomous Region.pdf

[vi] Australian Strategic Policy Institute: Uyghurs for sale; https://www.aspi.org.au/report/uyghurs-sale

[vii] Politico: U.S. importers brace for chaos as Uyghur Act looms; https://www.politico.com/newsletters/politico-china-watcher/2022/06/16/u-s-importers-brace-for-chaos-as-uyghur-act-looms-00040072

[viii] Reuters: Tracking China’s Muslim Gulag; https://www.reuters.com/investigates/special-report/muslims-camps-china/

[ix] U.S. Dept of State, Dept of Treasury, Dept of Commerce, Dept of Homeland Security, Office of Trade Representative, and Dept of Labor: Xinjiang Supply Chain Business Advisory; 20210713_xinjiang_advisory_0.pdf (treasury.gov)

[x] United Nations Human Rights Council: UN human rights experts urge China to allow them ‘full access’- UN human rights experts urge China to allow them ‘full access’

[xi] Laura T. Murphy, et al. (2021). “Laundering Cotton: How Xinjiang Cotton is Obscured in International Supply Chains.” Sheffield, United Kingdom: Sheffield Hallam University Helena Kennedy Centre; https://www.shu.ac.uk/helena-kennedy-centre-international-justice/research-and-projects/all-projects/laundered-cotton

 

The Chinese Communist Party is the Most Significant Threat to America

While the global focus remains on the Russia-Ukraine War, the Chinese Communist Party (CCP) undermines regional security in the Indo-Pacific. On March 25, 2022, the Solomon Islands, which are northeast of Australia, confirmed drafting a security agreement with the People’s Republic of China (PRC). According to leaked documents, the deal gives the PRC the right to deploy forces on the island to protect its workers and projects. Australia said it has “great concerns” over the agreement between the Solomon Islands and the Chinese State.

However, the Solomon Islands and the PRC’s agreement is only one of many concerns about China’s goals for absolute power on the global stage. Overwatch analyzed the CCP’s capability to threaten the United States for this brief. We determined that the Chinese Communist Party is the most significant national security threat to the U.S. because of its data theft, espionage activities, targeting of dissidents, advances in the global tech race, and its majority control of the rare earths market.

Massive Cyber Theft

In a March 2022 speech to the Detroit Economic Club, FBI Director Christopher Wray said that China has stolen more data from the United States than all other countries combined. Wray said, “To pick just one example, a year ago, hackers with China’s Ministry of State Security targeted a vulnerability in the Microsoft Exchange Server software widely used in corporate e-mail systems. They compromised tens of thousands of computers worldwide and left back doors so they could return whenever they wanted. And to give you a sense of how common that kind of theft is, just using cyber means, Chinese government hackers have stolen more of our personal and corporate data than all other countries combined.”

According to William Evanina, the former Director of the U.S. Counterintelligence and Security Center, the PRC has the Personally Identifiable Information (PII) of 80% of Americans. PII can include a person’s first and last name, phone number, address, Social Security Number, medical records, financial records, criminal history, or driver’s license number.

In 2015, a state-sponsored hacking group working for the Chinese government breached 20 million U.S. government records from the Office of Personnel and Budget Management. These records also included information from peoples’ SF-86 form, which is required to get a security clearance. SF-86 forms have a significant amount of highly personal information about the person applying for a clearance.

Per cybersecurity firm Mandiant, in the last six months, the Chinese-state-sponsored hacking group, APT41 (Advanced Persistent Threat) compromised “at least six U.S. state government networks” through the exploitation of livestock app USAHerds.

China is also developing more sophisticated malware that can be used against “hardened targets.” CyberScoop reports, “A backdoor in use as recently as November 2021 is the ‘most advanced piece of malware’ ever seen from China-linked spies, according to researchers at Symantec.”

Espionage

In February 2022, Wray explained that the FBI pours most of its resources and time into the Chinese threat. Wray said, “When we tally up what we see in our investigations—over 2,000 of which are focused on the Chinese government trying to steal our information or technology—there is just no country that presents a broader threat to our ideas, our innovation, and our economic security than China.”

Convictions in espionage cases in the United States show that China has successfully recruited former Central Intelligence Agency (CIA) Case Officers and former Defense Intelligence Agency (DIA) Case Officers.

In May 2019, Jerry Chun Shing Lee, a former CIA Case Officer plead guilty to “conspiring to communicate, deliver and transmit national defense information to the People’s Republic of China.” Lee, who was recruited in Hong Kong, provided his handlers with classified information, including the identities of CIA operatives and sensitive CIA locations.

In September 2019, Ron Rockwell Hansen, a former DIA Case Officer, was sentenced to ten years in federal prison. According to a Department of Justice press release, Hansen provided national security information to Chinese agents about U.S. military readiness in a particular region — “information closely held by the federal government.”

Targeting Chinese Dissidents

In March 2022, the Department of Justice (DOJ) charged five individuals with spying on U.S. residents on behalf of the PRC’s Ministry of State Security. The DOJ press release, reads, in part, “Two complaints were unsealed, and one amended complaint was authorized today in federal court charging five defendants with various crimes related to efforts by the secret police of the People’s Republic of China (PRC) to stalk, harass, and spy on Chinese nationals residing in Queens, New York, and elsewhere in the United States.” The U.S. residents included a Chinese national and military veteran, who is openly critical of China’s government.

Overwatch spoke to an anti-CCP activist about how China harasses and threatens dissidents in the states. The activist spoke to us on a condition of anonymity. The activist said, “They do target high-profile people. Most Chinese speakers in the U.S. have WeChat on their phones. So, they use that to try and harass or exploit them. They usually use phrases like ‘be careful.’ They will use your family WeChat to deliver the message. Sometimes they will detain your family and talk to you in front of them.”

The activist continued, “In extreme cases, they will freeze your family members’ credit card. Or they might try and trick you that someone is sick at home, and you must go back and see them. We’ve seen this work before.”

The Global Tech Race and Rare Earths

The Chinese state aims to be the global leader in artificial intelligence by 2030. Currently, China produces more scholarly AI research than the United States.

A December 2021 report from the Belfer Center for Science and International Affairs says that China “displaced the U.S. as the world’s top high-tech manufacturer, producing 250 million computers, 25 million automobiles, and 1.5 billion smartphones in 2020.”

However, the Chinese government has been cracking down on the tech sector in the country. As a result, there are reports of significant layoffs in the industry inside of China. The South China Morning Post reports, “The destruction of tech-related jobs from content creation to private tutoring is translating into fears of a jobless wave that could rival the time when millions of rural migrant workers were turfed out of jobs amid the 2008 global financial crisis or when millions of state sector positions were lost amid the reforms of the late 1990s.”

One area where China has the upper hand over the United States in the global tech race is the rare earths market. Rare earths are essential in developing smartphones, flatscreen TVs, electric vehicle batteries, catalytic converters, for some industrial applications, defense systems, lasers, and even used for screening some genetic diseases. The PRC is currently responsible for 60-70% of rare earth production globally. Apple and defense contractors Raytheon and Lockheed Martin rely on rare earth minerals to develop their products.

OUR ASSESSMENT

We assess that China aims to surpass the United States economically, technologically, and militarily, willing to use any resources, tactics, or manpower to meet its objective of becoming the primary global superpower. The PRC will continue to target U.S. government and private sector systems, stealing sensitive data that will likely be used for further offensive cyber operations against the United States. With 80% of Americans’ PII collected, China has the capability to launch social engineering attacks on over two hundred million Americans. No country other than China can launch such a massive attack from its data theft.

The Chinese State will continue to recruit former intelligence community members, compromising classified information and state secrets. Further, as anti-CCP sentiment grows in the United States, the Ministry of State Security could potentially increase its efforts to harass, threaten, and intimidate Chinese government dissidents in the U.S.

As tensions continue to escalate between the U.S. and China, the CCP could use its majority control over rare earth production to further impact U.S. supply chains from companies that rely on rare earth materials for their products. Such a move would likely lead to a significant increase in the price of these products on the U.S. market. Additionally, if China can surpass the U.S. in the field of artificial intelligence, it would displace the U.S. as the global leader in the field and require many more U.S. government and private sector resources to compete with the Chinese state.

Quantum Technology, the People’s Republic of China and Tsinghua University

Quantum technology, which was once seen as something more science-fiction than feasible, is a significant area of interest for Google, IBM, Honeywell, and Amazon, all of whom are all developing quantum computers. Currently, Google’s quantum computer can process data a hundred and fifty-eight million times the speed of the world’s fastest supercomputer. China claims that its quantum computer, Zuchongzhi 2.1, is a million times faster than Google’s quantum computer. And there is a concern that as the technology advances, a nation-state actor like the People’s Republic of China could use the technology to break the most secure encryptions for U.S. military-grade systems and develop superior AI-enabled technology.

While quantum technology is still in its beginning stages of development, the Office of the Director of National Intelligence considers quantum one of the most significant national security threats to the U.S.

Several different institutions in China focus on the development of quantum technology. Overwatch analysts focused on Tsinghua University’s Quantum Center for Information for this brief.

With the Chinese government still spreading its influence across the U.S., and 34 of its Confucius Institutes continuing to operate on U.S. campuses, our focus on Tsinghua is part of a much larger picture regarding the Chinese state’s influence in America. Tsinghua University, the equivalent of an Ivy League School in China, also has a partnership with UC-Berkeley in California. The two schools built the Tsinghua UC-Berkeley Shenzen Institute in China, which focuses researching environment science and new energy technology, information data technology and data science, and precision medicine and healthcare.

This report illuminates ties between Tsinghua’s Quantum Center, the United Front Work Department, China’s People’s Liberation Army (PLA), and Quantumctek which was recently added to the U.S. Department of Commerce’s Bureau of Industry and Security’s Entity List.

UNITED FRONT WORK DEPARTMENT

The Quantum Center for Information, led by Professor Andrew Chi-Chih Yao, a Harvard and University of Illinois alumni, is influenced by the United Front Work Department. The United Front Work Department is an arm to the Chinese State, with a focus on building support for the Chinese Communist Party (CCP) and foreign influence operations. Chinese President Xi Jinping has referred to the United Front as a “magic weapon.” Regarding foreign influence, the U.S. – China Economic Security Review Commission says of the United Front, “UFWD directs overseas Chinese work, which seeks to co-opt ethnic Chinese individuals and communities living outside China, while a number of other key affiliated organizations guided by China’s broader United Front strategy conduct influence operations targeting foreign actors and states.”

In 2017, Xu Kuangdi, then Vice-Chairman of the 10th National Committee of the Chinese People’s Political Consultative Conference, visited Tsinghua’s Quantum Center for Information. The Chinese People’s Political Consultative Conference is a critical piece of the United Front and targets non-CCP members to promote and advance the goals of the Chinese Communist Party. According to the report from Tsinghua, Xu provided insights into the “achievements, teaching, and research” at the university. While analysts did not identify any other visits from the United Front to the Quantum Center for Information through open-source research, the United Front does have its own office at Tsinghua, indicating a certain level of importance to the Chinese State.

Our research also discovered that most professors working in the Quantum Center with Professor Yao studied in U.S. schools, including Yale University, University of Michigan, University of Texas, and University of Maryland. Professor Yao himself is a member of the Communist Party and met with former Chinese President Hu Jintao in 2011 for the 100th anniversary of Tsinghua University.

PLA INFLUENCE

Since 2011, the PLA and Tsinghua University have worked on education initiatives for students to join the military subsequently. That influence has not waned, and in 2020, the PLA Academy of Military Science and Tsinghua announced a joint program for the training of Ph.D. students in computer science and technology.

Further, in September 2021, the Center for International Security and Strategy of Tsinghua University held its 20th Security and Strategy Seminar. The seminar’s main topic was the Australia, U.K., and U.S. (AUKUS) — security agreement. This agreement sparked controversy between President Biden and President Macron of France as Australia ended its 2016 contract with France to purchase U.S. nuclear-propelled submarine technology. Students weren’t the only ones in attendance. The event included experts from Peking University, PLA National Defense University (China’s West Point), Party School of the Central Committee of the CPC, PLA Academy of Military Science, and the Ministry of Foreign Affairs.

Additionally, Tsinghua has worked on COVID-19 research with the Academy of Military Medical Sciences, recently added to the Department of Commerce’s Bureau of Industry and Security Entity List for its involvement in developing biometrics and “brain control” technology to oppress the Uyghur Muslim population in Xianjing. In 2021, Tsignhua co-hosted a symposium on mechanical engineering and biotechnology manufacturing with the Academy of Military Medical Sciences.

QUANTUMCTEK

On November 24, 2021, the Department of Commerce’s U.S. Bureau of Industry and Security placed Quantumctek Co. Ltd. on its Entity List, for supporting the PLA with its quantum technology.

Overwatch research into Quantumctek found a few connections with Tsinghua’s Center for Quantum Information.

Jiajun Mu, a Ph.D. student, was a researcher at the Quantum Information Center from 2012 – 2017 and currently works for Quantumctek as a researcher. Bing Bai, who served in the PLA as an engineer from 2001 – 2018, works as an engineer for Quantumctek. Both Tsinghua Quantum Information Center professors, Yu Lan San and Xiongfeng Ma, are part of the ITU Workshop on Quantum Information, along with Quantumctek’s CEO, Yong Zhao.

Additionally, we identified a Ph.D. student at the University of Berkeley that studied at the Quantum Center for Information. That student, Yunchao Liu, studied under Professor Yao and works on quantum research with members of IBM’s Quantum Research Team, suggesting Tsinghua’s significant influence on U.S. companies developing quantum technology and the university’s reach goes beyond China’s borders.

ASSESSMENT

Overwatch research suggests that Tsinghua University’s Quantum Center for Information is influenced by the United Front Work Department, as evidenced by the 2017 visit of Xu Kuangdi, Vice Chairman of the 10th National Committee of the Chinese People’s Political Consultative Conference.

Tsinghua and the PLA’s Academy of Military Science’s joint program for training doctoral students in computer science and work on strategic issues with PLA National Defense University indicates a significant partnership between the university and the Chinese state’s military-industrial complex.

Jiajun Mu and Bing Bai’s links to Quantumctek also pose the question: What other computer science companies working with the PLA employ students from Tsinghua’s Quantum Center for Information? Further, are students from Tsinghua’s Quantum Center for Information coming to the United States to further their education, or are they working on behalf of the interests of the Chinese State?

With the FBI opening a new counterintelligence investigation into China every twelve hours, the U.S. should consider the impact that Tsinghua students could have and their access to sensitive information as researchers at U.S. universities. That information could be collected for the benefit of the Chinese State and have ramifications, which could at some level compromise U.S. efforts to develop quantum technology and give China a military and technological edge.

Suppose the PRC achieves quantum supremacy before the United States. Such a breakthrough would likely impact the lives of everyday Americans as most computers have basic encryptions, which quantum technology could easily break.

China’s potential ability to crack the encryption on electronic banking, credit cards, cellular communications, our critical infrastructure, hybrid vehicles, autonomous systems, and medical record encryption would require a significantly larger investment in budgetary allocations and manpower to continue to be on the defense for every little potential impact. These impacts would regularly inconvenience Americans to the point where many would demand the government solve the problem, influencing elections and politicians, affording the PRC at some level, the ability to shape U.S. government policy. Further, China could target Taiwan’s semiconductor production through weaponizing quantum technology, disrupting the global supply chain, and forcing countries to rely heavier on the Chinese State for the chips that power their computers and smart devices.