ChinAI #118: A Tale of Two Investigative Reports

One on China's reckless chip investments, the other on China Twitter's reckless ties with alt-right disinformation campaigns

Greetings from a world where…

we need responsible gatekeepers

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Feature Translation: “China chips” triggers a tide of unfinished projects -- The collapse of six chip projects (each tens of billions of RMB)

Context: An investigative report by 瞭望 (Outlook Magazine), a state-run publication written for Communist Party bureaucrats and policy makers. Outlook has done exposé in the past, including on a secret network of detention centers as well as on surging mass incidents and protests. Think of them as investigative but not independent, as they are still beholden to the party.

Key Takeaways:

  • In the past year, six large-scale (tens of billions RMB) semiconductor projects in five provinces been shut down in succession: Nanjing Dekema in Jiangsu, Dehuai Semiconductor in Jiangsu, GF (Chengdu) Integrated Circuit Manufacturing in Sichuan, Wuhan Hongxin in Hubei, Huaxintong in Guizhou, and Shaanxi Kuntong in Shaanxi.

  • Let’s zoom in on Nanjing Dekema, a “star company” once known as “Nanjing’s TSMC.” Once the darling of Nanjing’s Economic and Technological Development Zone, it planned investments of US$billion, but now the factory area is overgrown with weeds. The company’s legal representative, Li Ruiwei, cannot be tracked down and has repeatedly ignored court summons. According to a Nanjing court, the company is facing 54 labor dispute case, in addition to two other cases regarding other services, that involve a total amount of more than 35 million RMB.

  • These reckless investments hurt the chip industry. Semiconductor companies take advantage of local governments who lack industry knowledge, and basically get governments to give them free land, factories, and massive subsidies. Per interviews with company managers who had employees poached by these six failed projects, talented employees wasted two or three years and now can’t keep up with the technology on their original teams.

  • The broader context of this is China’s chip-making fever. According to Qichacha data, the number of chip-related companies in China has grown rapidly in the first half of this year. In the second quarter of this year alone, there were 4,600 newly registered companies, a year-on-year increase of 207%.

  • Consider the specific example of compound semiconductors, chips made up of two or more elements (e.g. gallium arsenide). According to Zhu Jing, deputy secretary-general of the Beijing Semiconductor Industry Association: “In the first half of 2020 alone, nearly 20 places in China signed or started construction on compound semiconductor projects, with a total planned investment of more than 60 billion RMB. Moreover, 80% of these projects have landed in second- and third-tier or even fourth-tier cities in China, generally in areas where the semiconductor industry has a weak foundation and no relevant project construction experience. The sustainability of these projects has once again aroused industry concerns.”

The broader lesson here is to take big technology fund numbers with a grain of salt. I co-wrote an article in Foreign Affairs that makes this point with regards to China’s much ballyhooed $150 billion semiconductor fund, which had invested only $12 billion since its establishment in 2014.

FULL TRANSLATION: “China chips” triggers a tide of unfinished projects -- The collapse of six chip projects (each tens of billions of RMB)

Gatekeeping the Gatekeepers: China Twitter’s Amplification of Christopher Balding

This week’s second exposé is on the involvement of a prominent “China-watcher,” Christopher Balding, in spreading “an elaborate conspiracy theory involving former Vice President Joe Biden's son and business in China.” This week’s welcome message links to a story about how the Wall Street Journal responsibly decided to not further amplify this conspiracy theory despite the efforts of right-wing groups.

Some background on the case:

  • Balding, a former professor of Fulbright University Vietnam, and Mark Simon of Apple Daily, created a fake “intelligence report” about Hunter Biden’s connections to the Chinese government, which also included a fabricated report author named Martin Aspen, whose profile picture was created with an AI face generator (See, I told you this newsletter is about AI!).

  • Balding claimed he authored small parts of the report.

  • The document was amplified by Balding’s blog and conservative and conspiracy communities, received 70,000 public interactions, per the social media analysis tool BuzzSumo. As NBC news reports, “The document was also posted on the extremist forum 8kun by Q, the anonymous account behind the QAnon conspiracy theory movement.”

The NBC exposé has made quite an impact. Mark Simon has resigned from Apple Daily. As Wei Ting writes, “Every China Watcher is now tripping over themselves to disavow association with the names involved, or casting shade on their background and motives.”

In May, my year-in-review post emphasized the dangers of discursive bandwagoning in China-watching circles. How do we prevent this? One important aspect is to be very careful about which voices to amplify. There are a lot of people like Christopher Balding out there, but not many of them have 51.6k followers on Twitter and regularly get quoted in the Financial Times.

With that in mind, I think it’s important to review how the gatekeepers amplified Balding’s platform in the past. As Gabriel Wildau recounts, “I remember the day the FT quoted Balding twice in 24 hours -- on hilariously disparate topics. First story was about fintech IPOs and the second was about academic publishers facing censorship pressure. He's an expert on everything!” See his full thread below:

Wang Feng, editor-in-chief of FT Chinese, writes:

As Wang Feng notes, some people did cast doubts on Balding’s reports on Chinese companies Huawei and Zhenhua, which often involved questionable research practices and unreliable sourcing. For instance, Mike Gow has consistently criticized Balding’s work:

I was curious about how Bill Bishop, who writes Sinocism (“the presidential daily brief for China hands”), covered the Balding’s Huawei report. I’ve covered Bill’s missteps as a gatekeeper in past issues: ChinAI #54, ChinAI #90. Here’s the section from the July 8, 2019 issue of Sinocism. Balding’s paper is presented as sixth most essential (out of eight) topics of the day:

6. Huawei

Professor Christopher Balding has released a paper claiming to document links between Huawei employees and the PLA and PRC security services. The work is drawing both praise and condemnation.

Huawei Technologies’ Links to Chinese State Security Services by Christopher Balding :: SSRN

Using a unique dataset of CVs, this paper analyzes the relationship between key Huawei personnel and the Chinese state security services. Based upon an analysis of this dataset, I find there is strong evidence that Huawei personnel act at the direction of Chinese state intelligence, and that there exists a deep and lasting relationship between Huawei, its employees, and the Chinese state. This should raise questions within Western governments worried about Chinese access to domestic information.

Huawei CVs show close links with military, study says | Financial Times $$

The research was conducted by Christopher Balding, a professor at Fulbright University Vietnam, and researchers at the Henry Jackson Society, a UK think-tank. Trawling through a database of leaked Chinese CVs, they found Huawei employees who appeared to be simultaneously employed by institutions affiliated with the Chinese military, others who previously worked in areas related to hacking or telecom monitoring, and still more who described their work at Huawei as linked to the Ministry of State Security (MSS), an entity involved in cyber warfare and network penetration.

Responses to Comments on Huawei CV Paper - Balding's World

The paper is not an academic paper. No, and I never said it was. It was never intended or designed as a journal article type paper for many reasons. The purpose of the paper was to provide information into the public domain that did not exist before in a concise and readable form for everyone from politicians in different countries to citizens hearing about the issue. The focus was on describing the data the specific profiles. That is it. It is not a good academic paper because it was never intended to be one.

‘Smoking gun’: Huawei staff employment records link them to Chinese military agencies | National Post

The CVs of up to 25,000 Huawei employees were uncovered by Christopher Balding, an associate professor at the Fulbright University Vietnam, while investigating Huawei’s ownership structure. The CVs were uploaded on Chinese recruitment platforms in the past year and began to appear online and on publicly accessible sites. Prof. Balding, in conjunction with the Henry Jackson Society, a London-based think-tank, concluded that about 100 Huawei staff had connections with the Chinese military or intelligence agencies and their “backgrounds indicated experience in matters of national security”.

To Bill’s credit, he does acknowledge the report has drawn criticism. But while he doesn’t link directly to the criticism, he does make sure to link directly to Balding’s blog — the same blog that at the center of spreading the alt-right disinformation campaign exposed earlier this week. Bill’s newsletter goes to 85,000 email inboxes, a number that already exceeds the social interactions on Balding’s original post of the fake intelligence report. If that’s not amplification, I’m not sure what is.

Again, this is not about nit-picking every past newsletter issue or Tweet. If you search ChinAI archives, you won’t find a single reference to Balding other than this issue, but I’m sure I’ve made my fair share of mistakes regarding amplification, and I encourage people to call me out on this front. The hope is that this is a moment for people in gatekeeping positions to be more careful about which voices they amplify.

Thank you for reading and engaging.

Speaking of being more careful about amplification, I ran out of time to read the stuff I was considering recommending, so no ChinAI Four to Forward this week.

These are Jeff Ding's (sometimes) weekly translations of Chinese-language musings on AI and related topics. Jeff is a PhD candidate in International Relations at the University of Oxford and a researcher at the Center for the Governance of AI at Oxford’s Future of Humanity Institute.

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