Chinese Espionage: The Risks Within U.S. Companies

FORBES
Eric Savitz, Forbes Staff
Guest post by Peter J. Toren
April 24, 2012

 

 


 

Peter J. Toren is a partner with Weisbrod, Matteis & Copley in Washington, D.C. Formerly a federal prosecutor with the Computer Crime & Intellectual Property Section of the Justice Department, he is also the author of Intellectual Property & Computer Crimes.

 

 

Over the past several months, Congress has heard from a slew of witnesses who have testified about the threat posed by foreign computer hackers, particularly from China, who penetrate U.S. companies’ computers and steal valuable data and intellectual property. FBI Director Robert Mueller testified that hacking could soon replace terrorism as the FBI’s primary concern. Gen. Keith Alexander, head of the military’s Cyber Command, characterized the losses caused by cybertheft as “the greatest transfer of wealth in history.”

Less attention, however, has been given to an equally insidious threat from employees or other insiders, who steal trade secrets from their corporate employers and depart with the stolen information and provide the information to foreign governments or foreign companies, most often in China. Until recently, there has been no reliable public studies about the extent of foreign economic espionage, especially with a link to China. But the results of a detailed analysis of the prosecutions under the Economic Espionage Act establishes that economic espionage with a China connection also creates a great risk to the financial well-being of U.S. companies, and, in turn to the U.S. economy.

The government has brought about 115 prosecutions under the EEA alleging theft of trade secrets. Nine have involved claims that the defendant acted with the intent to benefit a foreign government, while the remaining 106 concern allegations that the defendant intended to economically benefit a third party.  Although the government does not have to prove foreign government sponsorship to obtain a conviction in the 106 cases, an analysis of both categories of prosecutions finds a disproportionate share with a link to China.

In particular, almost 80% of the prosecutions that concern foreign government sponsorship involve allegations of direct Chinese government sponsorship. All of the thefts also involve sophisticated technology. Most recently, the government unsealed an indictment charging that a Chinese company, the Panang Group, with ties to the Chinese government, stole trade secrets from DuPont relating to the obscure but valuable technology on how to produce titanium dioxide, a white pigment used in paints and other products. Pangang allegedly paid over $12 million to U.S. individuals for access to DuPont’s trade secret secrets.

In another egregious example, Dongfan Chung was found guilty on July 16, 2009, of stealing trade secrets from Boeing. Chung worked at Boeing, with a few breaks, from 1964 until September 11, 2006, when federal agents searched his home and discovered a trove of Boeing technical documents stored beneath his house relating to the space shuttle, Delta IV Rocket, F-15 Fighter, B-52 Bomber and Chinook Helicopter. The court found that Chung’s theft of Boeing trade secrets was intended to benefit a number of Chinese government agencies and sentenced him to 188 months imprisonment.

The government alleged in 21% of the prosecutions that did not involve state sponsorship that the purpose of the theft was to benefit a company in China. Again, nearly all of the thefts involved sophisticated and valuable technology. For example, on January 19, 2012, Yuan Li, a former Sanofi Aventis research chemist pleaded guilty to stealing the company’s trade secrets and selling them to a U.S. sales and distribution unit of a Chinese chemical company. In another significant case, Wen Chyu Liou was convicted of stealing trade secrets from Dow Chemical and offering to sell them to companies in China. Liou worked for Dow for 27 years and after he retired in 1992 he conspired with at least four current and former Dow employees to misappropriate the corporation’s trade secrets. He was sentenced last year to 60 months imprisonment.

Further, 86% of the cases that were adjudicated in 2010 under the EEA involved a link to China. This emerging trend confirms a government understanding that, as part of the development process, China’s intelligence services as well as private companies and other entities, frequently seek to exploit Chinese citizens or persons with family ties to China who can use their insider access to U.S. corporations to steal trade secrets.

What can and should be done to stem this transfer of wealth before it is too late?

First, Congress must put aside its partisan bickering and enact a comprehensive cybersecurity law that addresses the risks posed by Chinese hackers. The current version of the bill, which has been stalled in committee, does little to address Chinese cyberespionage. Congress should also amend the EEA to increase the penalties and to address questions created by a recent court decision. In addition, Congress should finally enact a civil trade secrets law with a broad extraterritorial effect that would permit companies that have been victims of economic espionage to sue in federal court. State laws do not entirely fill the holes left by the lack of a federal law especially since state laws do not have the extraterritorial reach, which may be critical where the theft involved a foreign entity. It is past time that trade secrets be accorded the same status as patent, copyrights and trademarks.

While waiting for Congress to act, there are a number of steps that the executive branch can and should do.

 

  • First, President Obama, even without authority from Congress, can issue a finding that would authorize agencies to monitor the Internet outside the United States and to block the exportation of files containing information stolen from the United States.
  • Second, the government should increase the number of prosecutors and agents charged with investigating and prosecuting thefts of trade secrets.
  • Third, the Justice Department should consider what it can do to improve how it investigates and prosecutes EEA cases. Currently, the authority to investigate EEA cases is divided depending on whether or not the cases are state sponsored. If they are, they are handled by counter-intelligence FBI agents and prosecutors from the Internal Security Section of the Justice Department, whereas non-state sponsored prosecutions are the responsibility of FBI agents skilled in investigating financial crimes and are prosecuted by special IP units in U.S. Attorney’s Offices and by the Computer Crime & Intellectual Property Section. Whether agents and prosecutors, who normally handle investigations and prosecutions involving spying against the United States, should be assigned matters where the victim is a U.S. corporation is open to debate.

 

While the government has stepped up investigating theft of trade secrets cases, companies should not rely on the government for protection.  Corporations should carefully examine whether they are doing enough to protect their intellectual property. Tangible assets can be replaced, but intangible assets if lost, are lost for good. Even companies that have sophisticated and elaborate trade secret protection programs should consistently reevaluate their programs and learn from the mistakes of other corporations that have been the victim of trade secret thefts. Legal experts should be included in this process to ensure that the company is not running afould of any laws. In many of the EEA prosecutions the theft was only discovered through luck, such as where the defendant was stopped by Customs agents, while boarding a flight to China, who only found the stolen confidential documents she was carrying, after searching her because they did not find her answers to routine questions truthful. The corporation may have discovered what she was doing earlier if they had spotted a number of red flags earlier.

Companies should also reevaluate whether or not to report thefts of trade secrets to the government. Many companies are reluctant to report trade secret thefts to the government for fear of the damage to their reputations. However, while current management may save face, non-reporting is probably not in the best long-term interests of the company. A corporate policy of always reporting thefts to the government may be the best deterrent against future thefts.

Protection of intellectual property is critical to the economic well-being of the United States. When it is not protected, we lose not only jobs, productions and profits today, but also our ability to undertake the research and the investment that lead to further technological progress tomorrow.  This hurts not only today’s workers and investors, but also future generations of U.S. citizens.

 

 

Direct Link:   http://www.forbes.com/sites/ciocentral/2012/04/24/chinese-espionage-the-risks-within-u-s-companies/

 

 

Censoring of Tweets Sets Off #Outrage

The New York Times
By SOMINI SENGUPTA
January 27, 2012

SAN FRANCISCO —

It started five years ago after a young engineer in San Francisco sketched out a quirky little Web tool for telling your friends what you were up to. It became a bullhorn for millions of people worldwide, especially vital in nations that tend to muzzle their own people.

Peter Macdiarmid/Getty Images

 

Checking Twitter on Friday in Cairo. Twitter helped protesters organize in Egypt, but a new policy could alter that dynamic.

But this week, in a sort of coming-of-age moment, Twitter announced that upon request, it would block certain messages in countries where they were deemed illegal. The move immediately prompted outcry, argument and even calls for a boycott from some users.

Twitter in turn sought to explain that this was the best way to comply with the laws of different countries. And the whole episode, swiftly amplified worldwide through Twitter itself, offered a telling glimpse into what happens when a scrappy Internet start-up tries to become a multinational business.

“Thank you for the #censorship, #twitter, with love from the governments of #Syria, #Bahrain, #Iran, #Turkey, #China, #Saudi and friends,” wrote Björn Nilsson, a user in Sweden.

Bianca Jagger asked, almost existentially, “How are we going to boycott #TWITTER?”

Zeynep Tufekci, an assistant professor at the University of North Carolina at Chapel Hill, took the other side. “I’m defending Twitter’s policy because it is the one I hope others adopt: transparent, minimally compliant w/ law, user-empowering,” she wrote.

Twitter, like other Internet companies, has always had to remove content that is illegal in one country or another, whether it is a copyright violation, child pornography or something else. What is different about Twitter’s announcement is that it plans to redact messages only in those countries where they are illegal, and only if the authorities there make a valid request.

So if someone posts a message that insults the monarchy of Thailand, which is punishable by a jail term, it will be blocked and unavailable to Twitter users in that country, but still visible elsewhere. What is more, Twitter users in Thailand will be put on notice that something was removed: A gray box will show up in its place, with a clear note: “Tweet withheld,” it will read. “This tweet from @username has been withheld in: Thailand.”

Think of it as the digital equivalent of a newspaper responding to old-fashioned government censorship with a blank front page.

“We have always had the obligation to remove illegal content. This is a way to keep it up in places where we can,” said Alex Macgillivray, general counsel at Twitter. “We have been working on this awhile. We needed to figure out how to deal with this as a company.”

The majority of Twitter’s 100 million users are overseas and it has several offices abroad working to expand its business and drum up local advertising. Twitter’s president, Jack Dorsey, said this week that it would open an office in Germany, which prohibits Nazi material online and offline.

The announcement signals the choice that a service like Twitter has to make about its own existence: Should it be more of a free-speech tool that can be used in defiance of governments, as happened during the Arab Spring protests, or a commercial venture that necessarily must obey the laws of the lands where it seeks to attract customers and eventually make money?

Tim Wu, a professor at Columbia Law School and author of “The Master Switch,” said the changes could undermine the usefulness of Twitter in authoritarian countries.

“I don’t fault them for wanting to run a normal business,” he said. “It does suggest someone or something else needs to take Twitter’s place as a political tool.”

Professor Wu urged the company to use discretion: “Twitter needs to be careful not to be in a position where it’s no longer helpful to a rebellion against oppressive governments. It needs to remain its old self in some circumstances.”

Twitter’s policy of allowing its users to adopt pseudonyms made it particularly useful to many protest organizers in the Arab world, and its chief executive went so far as to call it “the free-speech wing of the free-speech party.”

But Professor Wu wondered aloud if the new policy would have allowed Egyptians to organize protests using the service.

Twitter insists its new system is a way to promote greater transparency, not less. The company says it will not filter content before it is posted. It will not remove material that may be offensive, only that which it thinks is illegal. And it said it would also try to notify users whose posts had been withheld by sending them an e-mail with an explanation.

The company identifies the locations of its users by looking at the Internet Protocol addresses of their computers or phones. But it also allows users to manually set their location or choose “worldwide.” Essentially that is a way to circumvent the blocking system entirely. A user in Syria can simply change her location setting to “worldwide” and see everything.

Jillian C. York, director for international freedom of expression at the Electronic Frontier Foundation, a civil liberties group, successfully tried this herself after Twitter announced its new approach. “Unfortunately it is a necessary evil when offering a service in certain countries,” Ms. York said of the new system.

Critics on Twitter surmised that the company had been pressed to adopt country-specific censorship after a major investment by a Saudi prince, a theory that Mr. Macgillivray quickly dismissed.

Facebook also handles requests to remove content that is illegal in certain countries, though it does not explain what it removes and for what reason. In its search results, Google signals what it is required to redact under a certain country’s law — and in the case of YouTube, a Google product, it can block content country by country.

Twitter has followed in Google’s footsteps in another respect. It has opted to post some of the removal requests it receives on Chilling Effects, a site jointly run by the Electronic Frontier Foundation and several American universities. Mr. Macgillivray was previously on the legal team at Google and, as a student at Harvard, he worked on Chilling Effects.

“We have always tried to let people talk and tweet. That has not been good for despots,” Mr. Macgillivray said in response to the criticism. “There is no change in policy. What this does is it strengthens, when we are legally required to, our ability to withhold something and to let people know it has been withheld.”

Still, not long after the announcement, there were calls for a silent protest on Saturday — and naturally, a hashtag to go with it.

“I’m joining the #TwitterBlackout & won’t tweet tomorrow,” wrote a user identified as Omar Johani. “Time to go back to getting news 12 hours after it happened.”

 

Direct Link:  http://www.nytimes.com/2012/01/28/technology/when-twitter-blocks-tweets-its-outrage.html?nl=todaysheadlines&emc=tha26

 

In China, Google Earth reveals unidentified structures
Washington Post
By Melissa Bell
11/14/2011

Few roadways cross the wide expanse of the Gobi desert, but thanks to Google Earth satellite technology a few structures have been spotted dotting the arid landscape. Against a background of brown, the glowing blue squares and criss-crossed lines have spurred heavy Internet speculation as to what China has built out in the emptiness of Mongolia.


(Screengrab Google Earth)

Malcolm Moore at the Telegraph writes, “All of the sites are on the borders of Gansu province and Xinjiang, some less than 100 miles from Jiuquan, the headquarters of China’s space programme and the location of its launch pads.”

Speculation as to what the buildings are ran from water purification plants to weapons testing sites to training facilities. In one Google Earth closeup there is debris scattered in a systematic way, possibly suggesting a weapons training facility. In another closeup, there appear to be large manmade bodies of water.

Scanning Google Earth and Google Street View has become a popular and obsessive pastime for some Internet denizens, who enjoy discovering crop circles, Chinese pyramids, and smiling faces on top of water towers, previously only known to the random pilot passing by.

Direct Link: http://www.washingtonpost.com/blogs/blogpost/post/in-china-google-earth-reveals-unidentified-structures/2011/11/14/gIQAhuW8KN_blog.html?wprss=blogpost

 

China: Google Earth spots huge, unidentified structures in Gobi desert
THE TELEGRAPH
By Malcolm Moore, Shanghai and Thomas Harding, Defence correspondent
14 Nov 2011

 

 


China: Google Earth spots huge, unidentified structures in Gobi desert

Vast, unidentified, structures have been spotted by satellites in the barren Gobi desert, raising questions about what China might be building in a region it uses for its military, space and nuclear programmes.

In two images, available on Google Earth, reflective rectangles up to a mile long can be seen, a tangle of bright white intersecting lines that are clearly visible from space.

Other pictures show enormous concentric circles radiating on the ground, with three jets parked at their centre.

In one picture from 2007, a mass of orange blocks have been carefully arranged in a circle. In a more recent image, however, the blocks, each one the size of a shipping container, appear to have been scattered as far as three miles from the original site.

Another image shows an array of metallic squares littered with what appears to be the debris of exploded vehicles while another shows an intricate grid that is some 18 miles long.

All of the sites are on the borders of Gansu province and Xinjiang, some less than 100 miles from Jiuquan, the headquarters of China’s space programme and the location of its launch pads.

The two reflective rectangles lie 70 miles from the nearest main road and there is no sign of any surrounding activity. However, Ding Xin military airbase, where China carries out its secret aircraft testing programme, is relatively nearby, at a distance of some 400 miles.

400 miles in the other direction is Lop Nur, the salt lakes where China tested 45 nuclear bombs between 1967 and 1995.

The purpose of the structures is unknown, but some experts suggested that they might be optical test ranges for Chinese missiles, to simulate the street grids of cities.

Tim Ripley, a defence expert from Jane’s Defence Weekly, compared the structures to similar grids in Area 51, the secret United States military test base in Nevada. “The picture of the circle looks very like a missile test range, with target and instrumentation set out to record weapon effects. The Americans have lots of these in Nevada – Area 51!” he said.

Conspiracy theorists believe that Area 51 is home to the remains of an alien spacecraft found at Roswell, and there was no shortage on Monday of similar hypotheses about the Chinese sites.

“It looks like our own Area 51,” said one commenter on Baidu, a Chinese website. “Can it be an alien base,” asked another. “It looks like solar energy facilities, with a walkway along the side,” said a third.

Direct Link: http://www.telegraph.co.uk/news/worldnews/asia/china/8888909/China-Google-Earth-spots-huge-unidentified-structures-in-Gobi-desert.html

 

 

THE PYRAMIDS OF CHINA
credit: Walter Hain

Interesting You Tube Video

These pyramids are located in China, but up until a few decades ago, China has denied the existence of them. Chinese scientists claim that the pyramids are burial mounds, but since these pyramids have never been (officially) excavated, it is pure speculation that these pyramids are part of the tombs mentioned in written records. Most of what you read about these pyramids is based on speculation and anecdotal evidence, they could be much older than China reports them to be.

Maoling Mausoleum 1: size 222 x 217 m, 34°20’17″N 108°34’11″E

Pyramid 6: size 153 x 158 m, 34°21’47.16″N 108°37’49.80″E

Pyramid 7: size 149 x 155 m, 34°21’42.48″N 108°38’24.36″E

Pyramid 11: size 155 x 154 m, 34°22’29.64″N 108°41’51.36″E

Pyramid 15: size 219 x 230 m, 34°23’52″N 108°42’43″E

Pyramid 31: size 126 x 149 m, 34°14’09.00″N 109°07’05.00″E

Pyramids 33,34,35: bigest 160 x 167 m, 34°10’45.00″N 109°01’41.00″E

Huang-ti Mausoleum 37: size 354 x 357 m, 34°22’52″N 109°15’12″E

Link: http://web.utanet.at/mahain/Pyramids_in_China.htm

 

Congress Fears Chinese Telecom Gear May Phone Home
WIRED
By Adam Rawnsley
November 17, 2011

Photo: Wikimedia

Are telecommuniations deals with China good business — or a trojan horse for espionage? Some of Congress’ top intelligence officials are worried it’s the latter. And they’re launching an investigation to find out.

Rep. Mike Rogers (R-Mich.), chairman of the House Permanent Select Committee on Intelligence (HPSCI), and the committee’s top Democrat, Rep. Dutch Ruppersberger, announced on Thursday that their committee will look into the potential for Chinese telecommunications equipment — like commercial servers, routers and switches — to help China spy on the United States.

“The investigation is to determine the extent to which these companies provide the Chinese government an opportunity for greater foreign espionage, threaten our critical infrastructure, and further the opportunity for Chinese economic espionage,” Rogers tells Danger Room. “Through this investigation we will come to a better understanding of the threat so we are better prepared to mitigate.”

The concern is that Chinese companies could tamper with equipment for use in civilian communications infrastructure, allowing China to insert Trojan horses that eavesdrop on targets in the United States. Chinese companies already make a number of telecommunications products sold in the U.S., but several have bowed out of deals to acquire large stakes in American telecom companies after facing U.S. government pressure.

Rogers says the investigation is an outgrowth of a review he commissioned shortly after becoming chairman of the committee in January.

“The findings in that preliminary review indicate that a full investigation was warranted,” he explains. “I have serious national-security concerns about Huawei, ZTE and other infrastructure companies, and will use all of the committee’s resources to determine the extent of the threat and what the government is doing about it.”

Both Huawei and ZTE have been involved in a bids to gain a great foothold in the U.S. market — only to be turned down over espionage fears.

In the past few years, Huawei was rebuffed in its attempts to purchase network infrastructure manufacturer 3Com and backed out of a deal for server company 3Leaf, after Congress and the executive branch’s Committee on Foreign Investment in the United States raised red flags. Pentagon officials claim the company has close connections to China’s People’s Liberation Army. And in November of last year, Sprint dropped ZTE from a major U.S. telecommunications infrastructure contract, under pressure from the administration and Congress.

In a joint statement released with Ruppersberger, Rogers says the investigation won’t just focus on Chinese espionage capabilities, but also on whether America’s own spooks can find and thwart any spy gear.

The House committee inquiry comes on the heels of a similar initiative from the Obama administration, first reported by the Wall Street Journal’s Siobhan Gorman, to examine the espionage risk of Chinese telecommunications companies building American telcom infrasturcture.  There, too, the administration’s concerns reportedly center on Huawei.

But telecommunications companies aren’t the only source of China-related supply chain headaches the U.S. government has these days.

Iarpa, the intelligence community’s advanced research shop, recently dropped $49 million on a program designed to keep China and other potential adversaries from tampering with microprocessors intended for use in American weapons systems or computers accessing classified information. Iarpa’s Trusted Integrated Chip project focuses on finding ways to securely build chips abroad at foreign foundries that are often cheaper than their counterparts in the United States. Darpa, Iarpa’s cousin at the Pentagon, has a similar program designed to spot already-hacked chips.

Separately, the Senate Armed Services Committee has been looking into counterfeit electronics parts, often sourced from China, making their way into U.S. military equipment.

Rogers says the spy agencies he’s spoken with “clearly appreciate the importance of the issue,” but he’s hoping the Intelligence Committee’s investigation “will contribute to a greater understanding of that threat and help encourage a more rapid response to this emerging national security concern. We cannot wait any longer.”

Direct Link: http://www.wired.com/dangerroom/2011/11/china-trojan-horse-congress/

 

A U.S. Marine Base for Australia Irritates China
Charles Dharapak/Associated Press
By JACKIE CALMES
November 16, 2011

CANBERRA, Australia — President Obama announced Wednesday that the United States planned to deploy 2,500 Marines in Australia to shore up alliances in Asia, but the move prompted a sharp response from Beijing, which accused Mr. Obama of escalating military tensions in the region.

The agreement with Australia amounts to the first long-term expansion of the American military’s presence in the Pacific since the end of the Vietnam War. It comes despite budget cuts facing the Pentagon and an increasingly worried reaction from Chinese leaders, who have argued that the United States is seeking to encircle China militarily and economically.

“It may not be quite appropriate to intensify and expand military alliances and may not be in the interest of countries within this region,” Liu Weimin, a Foreign Ministry spokesman, said in response to the announcement by Mr. Obama and Prime Minister Julia Gillard of Australia.

In an address to the Australian Parliament on Thursday morning, Mr. Obama said he had “made a deliberate and strategic decision — as a Pacific nation, the United States will play a larger and long-term role in shaping this region and its future.”

The president said the moves were not intended to isolate China, but they were an unmistakable sign that the United States had grown warier of its intentions.

China has invested heavily in military modernization and has begun to deploy long-range aircraft and a more able deep-sea naval force, and it has asserted territorial claims to disputed islands that would give it broad sway over oil and gas rights in the East and South China Seas.

While the new military commitment is relatively modest, Mr. Obama has promoted it as the cornerstone of a strategy to confront more directly the challenge posed by China’s rapid advance as an economic and military power. He has also made some progress in creating a new Pacific free-trade zone that would give America’s free-market allies in the region some trading privileges that do not immediately extend to China.

Mr. Obama described the deployment as responding to the wishes of democratic allies in the region, from Japan to India. Some allies have expressed concerns that the United States, facing war fatigue and a slackened economy, will cede its leadership role to China.

The president said budget-cutting in Washington — and the inevitable squeeze on military spending — would not inhibit his ability to follow through. Defense cuts “will not — I repeat, will not — come at the expense of the Asia-Pacific,” he said.

Some analysts in China and elsewhere say they fear that the moves could backfire, risking a cold war-style standoff with China.

“I don’t think they’re going to be very happy,” said Mark Valencia, a Hawaii-based senior researcher at the National Bureau of Asian Research, who said the new policy was months in the making. “I’m not optimistic in the long run as to how this is going to wind up.”

The president is to fly north across the continent to Darwin, a frontier port and military outpost across the Timor Sea from Indonesia, which will be the center of operations for the coming deployment. The first 200 to 250 Marines will arrive next year, with forces rotating in and out and eventually building up to 2,500, the two leaders said.

The United States will not build new bases on the continent, but will use Australian facilities instead. Mr. Obama said that Marines would rotate through for joint training and exercises with Australians, and the American Air Force would have increased access to airfields in the nation’s Northern Territory.

“We’re going to be in a position to more effectively strengthen the security of both of our nations and this region,” he said.

The United States has had military bases and large forces in Japan and South Korea, in the north Pacific, since the end of World War II, but its presence in Southeast Asia was greatly diminished in the early 1990s with the closing of major bases in the Philippines, at Clark Field and Subic Bay. The new arrangement with Australia will restore a substantial American footprint near the South China Sea, a major commercial route — including for American exports — that has been roiled by China’s disputed claims of control.

The United States and other Pacific Rim nations are also negotiating to create a free-trade bloc, the Trans-Pacific Partnership, that would not initially include China, the world’s largest exporter and producer of manufactured goods.

The tentative trade agreement was a topic over the weekend in Honolulu, where Mr. Obama hosted the annual Asia-Pacific Economic Cooperation forum, and it will be discussed again later this week when he becomes the first American president to participate in the East Asia Summit meeting, on the Indonesian island of Bali.

For China, the week’s developments could suggest both an economic and a military encirclement. Top leaders did not immediately comment on Mr. Obama’s speech, but Mr. Liu, the Foreign Ministry spokesman, emphasized that it was the United States, not China, seeking to use military power to influence events in Asia.

The Global Times, a state-run news organization known for its nationalist and bellicose commentaries, issued a stronger reaction in an editorial, saying that Australia should be cautious about allowing the United States to use bases there to “harm China” and that it risked getting “caught in the cross-fire.”

Analysts say that Chinese leaders have been caught off guard by what they view as an American campaign to stir up discontent in the region. China may have miscalculated in recent years by restating longstanding territorial claims that would give it broad sway over development rights in the South China Sea, they say. But they argue that Beijing has not sought to project military power far beyond its shores, and has repeatedly proposed to resolve territorial disputes through negotiations.

The United States portrays itself as responding to a new Chinese assertiveness in the region that has alarmed core American allies. Secretary of State Hillary Rodham Clinton wrote a recent article in Foreign Policy laying out an expansive case for American involvement in Asia, and Defense Secretary Leon E. Panetta characterized China’s military development as lacking transparency and criticized its assertiveness in the regional waters.

Mr. Obama reached out to China even as he announced the new troop deployment. “The notion that we fear China is mistaken; the notion that we are looking to exclude China is mistaken,” he said.

The president said that China would be welcomed into the new trade pact if Beijing was willing to meet the free-trade standards for membership. But such standards would require China to let its currency rise in value, to better protect foreign producers’ intellectual property rights and to limit or end subsidies to state-owned companies, all of which would require a major overhaul of China’s economic development strategy.

Mr. Obama canceled two previous planned trips to Australia because of domestic demands; he recalled Wednesday at a state dinner that he had visited the country twice as a boy, when his mother was working in Indonesia on development programs.

This time, as president, Mr. Obama arrived at Parliament House to a 21-gun salute and, once inside, to the enthusiastic greeting of Australians crowding the galleries of the vast marble entrance hall.

The two countries have been allies for decades, and cooperated closely in World War II, when there were several dozen American air and naval bases and army camps in the country and Australian combat troops served under American command.

Another purpose of Mr. Obama’s visit is to celebrate those ties. “The United States has no stronger ally,” Mr. Obama said.

Australians fought alongside Americans in every war of the 20th century, and more recently have served in Iraq and Afghanistan.

The war in Afghanistan has become increasingly unpopular here, though, and most Australians want their troops to come home immediately.

Michael Wines contributed reporting from Beijing.

Direct Link: http://www.nytimes.com/2011/11/17/world/asia/obama-and-gillard-expand-us-australia-military-ties.html?pagewanted=all

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