Coming April 23!
With Special Guest
The Honorable John C. Demers
Assistant Attorney General
"Spy vs. You:
Evan Anderson, CEO, INVNT/IP
Reception, Talks & Dinner Starting at 5:30pm
Lotte New York Palace Hotel
I. Introduction: Latent Parameters and New Metrics
by Mark Anderson
This week, we're going to look at the COVID-19 virus story not from the perspective of what we know, but rather - and more important - what we do not know.
Yesterday a (non-technical) friend in the hospitality business asked me what I thought about the virus and its impacts. I told him the virus is like a mirror, with the epidemic(s) showing us things about our countries and ourselves that are both good and bad.
Clearly, a lack of good data would be at the top of the latter list.
While China's global propaganda machine has ramped into full steam ahead, praising Xi for his leadership, the rest of the world stands back in wonder at the lies, delays, firings, deaths, and overall inconsistency between Chinese states with regard to data reportage. I don't think our members will find anyone, inside or outside China, who believes the government's numbers. This lack of data integrity has been the largest impediment to global success in preventing and treating the disease.
A review of what is known quickly shows holes that remain to be filled. Were we running all known parameters in an advanced machine learning system, it might be able to tell us that there are what are called "latent parameters" - in other words, the things that Donald Rumsfeld famously called "the unknown unknowns."
Let's look at them more closely:
The result of these data problems is that we do not have some of the most basic parameters regarding the virus. (See "SNS: "It Isn't Just the Virus: Financial Impacts of R0," 2/3/20.)
Amid rumors of reinfection, for example, the CDC has offered its opinion that reinfection is unlikely. But it is clear that some patients - one of whose tests twice showed the patient to be virus-free - later tested positive and needed to be again hospitalized. There is no explanation for this to date.
Some patients testing positive show symptoms, while others do not.
The incubation period appears to be in the five- to eight-day range, but as a sign of how little we (or the CDC) know, its website uses SARS figures, almost certainly different.
The virus can exist on flat surfaces for wildly varying times measured thus far: a few hours on stainless steel, longer on surfaces such as plastic or cardboard. One German study has it at almost 24 days.
Finally, there is a lack of useful metrics by which to gauge the transition of each state's state: on the way up, nearing the peak, getting better. We need this for states, the country, and the world. Next week, we'll hope to have these in place for our members.
Let's hope that the mirror of this virus is not broken, as the Chinese Communist Party's version is, but rather that the world can soon consolidate reliable data sets that will allow us to better understand, and then control, the spread of COVID-19. Ultimately, it is not the spread of the virus that threatens the world, but the spread of fear.
Following is our current review of the US situation.
II. The US Status: Bracing for Impact
by Evan Anderson
This section is in part informed by conversations with Dr. Megan Coffee, an infectious-disease specialist working on the outbreak now, to whom we owe a large debt of gratitude for her expertise. A number of other health professionals working in the field have offered anonymous quotes, and we offer our most sincere thanks for their honesty.
In the past few days, much has come to light regarding the ongoing COVID-19 outbreak and its arrival in the United States. While it is now obvious that community spread is occurring actively in three states, further spread is not yet being reported elsewhere. There are two key reasons to believe that the US caseload is far higher than reported, and that we are at a point where a lack of data is doing serious harm to our ability to address these issues.
"The US doesn't have a lot of cases, because we were not allowed to check." - Anonymous
Below, we describe the factors involved that have seriously hampered the US response to date, before providing a set of policy suggestions and personal action items. We hope that this alert serves to inform the public and to provide quality guidance to those members who can affect policy at the government level.
Reasons to Believe the US Outbreak Is Far Worse Than Reported
"Not identifying cases can provide a false sense of security - even to doctors, who need to be extremely suspicious and identify potential patients." - Dr. Megan Coffee
1. Testing issues.
"California up until yesterday had only 200 tests available. That is a testing capacity below that of Myanmar, which had 450." - Anonymous
The United States has encountered serious issues with testing in the early stages of the arrival of COVID-19. This much is clear: after a public health emergency was declared, the CDC required that all tests be CDC-approved, but then often failed to provide tests. Those it did provide had faulty reagents and were often useless.
This has placed the entire US medical ecosystem in a dangerous Catch-22, wherein testing wasn't allowed unless it was CDC approved, and available CDC tests were extremely faulty. Further, this lack of testing has exponential ripple effects, because general silencing of the real caseload leads to complacency in both the population and in diagnostic staffers.
In addition to Dr. Coffee's comment above about the dangers of a false sense of security, in the words of Michael Mina, who teaches Epidemiology and Immunology & Infectious Diseases at Harvard School of Public Health: "The declaration of a public health emergency... limited the diagnostic capacity of this country. It's insane."
2. Lack of supplies.
Unsurprisingly, fears regarding the virus have led to a run on medical supplies in US stores, a mirror of what has occurred worldwide. While health officials have issued a number of declarations that these supplies aren't necessary or helpful for civilians, there is a much more important (and more accurate) point to be made. Medical professionals will need to source these supplies heavily in the event of a larger outbreak, and without them, nosocomial spread (that which originates inside of hospitals) could become one of the biggest issues. It is therefore critical that citizens not hoard these supplies so that front-line responders have access to them until better supply chains are established (covered in the next section).
From a strategic standpoint, the current level of preparedness in the United States is far from acceptable. There are, however, some simple things that can and should be done immediately to begin to assuage the situation.
Dr. Coffee's suggestions regarding immediate known concerns are as follows:
These preparations and action items, if begun today, would go a long way toward easing and addressing the inevitable arrival of case surges in the United States.
To weather a regional outbreak with minimal or no discomfort:
We trust that this special SNS issue serves three key purposes:
As with all great challenges, the key is not so much to be alarmed as to be alert. Today, we hope that we have shown what might be done with this alertness.
Stay prepared, stay alert, and stay productive. And don't forget the chocolate bars.
Your comments are always welcome.
Mark R. and Evan R. Anderson
Copyright © 2020 Strategic News Service. Redistribution prohibited without written permission.
To arrange for a speech or consultation by Mark Anderson on subjects in technology and economics, or to schedule a strategic review of your company, email email@example.com.
"Chinese theft by hacking has been prominent. Those actions by China are continuing, and you should expect more indictments and prosecutions in the future." - US Attorney General William Barr, in a speech at the Center for Strategic and International Studies in Washington, DC, last week; quoted on Cyberscoop.com.
It is unclear when prosecutors will issue the next indictment related to Chinese activity. Asked when that would happen, he would only say "soon."
"I think you'll see more cyber-related indictments and you'll see more of the insider indictments that, more recently, have actually ... dominated the number of indictments we've brought." - John Demers, assistant attorney general for National Security, referring reporters to cases in which an employee of a US company is coopted into stealing sensitive data. Ibid.
[Note: John Demers will be our keynote interview at the SNS FiReSide NYC dinner on April 23. You can register here while seats are available for this intimate event.]
"Rick Fisher, a senior fellow at the International Assessment and Strategy Center and an Epoch Times contributor, said in an interview that U.S. assessments in the government and intelligence communities hold that 'China has been developing these weapons all along'.... They are still disasters - breakdowns - in the process of these laboratories that allowed for these very harmful viruses to leak out into the public and cause extensive, but clearly unnecessary, death....'" - The Epoch Times, in an interview with Fisher stating that US assessments in the government and intelligence communities hold that the P4 lab in Wuhan has connections to the Chinese military, the People's Liberation Army.
"... When the US-based company Gilead Sciences recently sent a new antiviral drug (remdesivir) to China that could possibly treat the novel coronavirus, the Wuhan Institute of Virology quickly moved to apply for a patent.
"In a Feb. 4 statement published on the institute's website about the patent, the institute notes it conducted research alongside the National Academy of Military Medical Research Institute of Emergency Medicine for Prevention and Control of Drugs. It also notes ties to the Prevention Engineering Technology Research Center of Military Medical Research Institute, and to the National Institute of Emergency Medicine Control and Engineering Research Center for Military Medical Research.... Meanwhile, Chinese military doctrine has identified biological warfare as a key part of the regime's military strategies - particularly in any war scenarios with the United States. Among the key programs is its Assassin's Mace ('Sha Shou Jian') strategy.
"Michael Pillsbury, a Pentagon consultant, warned of the strategy in his 2016 book 'The Hundred-Year Marathon,' in which he noted the only time China won in a simulated war game with the United States, the China team used the Assassin's Mace strategy. He wrote, 'whenever the China team used conventional tactics and strategies, America won - decisively. However, in every case where China employed Assassin's Mace methods, China was the victor.'" - Ibid.
"'Reputable scientists are beginning to coalesce around the idea that at a minimum, the coronavirus that we're facing today is the product of a laboratory [and] not the product of some kind of naturally occurring process,' Fisher said.... '[T]he developing consensus that this coronavirus is a man-made virus naturally links this to China's biowarfare capabilities and programs. The world should take this as a very serious possibility, and it should affect our policy and relationships with the People's Republic of China.'" - Ibid.
"Fisher noted that it was suspected that biological warfare programs in China were connected to leakages of the SARS virus, following its outbreak in 2002 and 2003, and to a viral outbreak in the late 1980s in Xinjiang." - Ibid.
The FBI on China
The following speech was delivered last month by FBI director Christopher Wray and is available for public viewing on the FBI website. We're reprinting it here in its entirety because it is perhaps the most comprehensive review of what we at INVNT/IP are now calling "The Real China":
February 6, 2020
Responding Effectively to the Chinese Economic Espionage Threat
Remarks prepared for delivery.
I want to join John Demers in thanking CSIS for hosting this event, and for all you do to educate policymakers and the public. Having been FBI Director for over two years now, I can attest that our nation faces a wider than ever array of challenging threats. But one of them stands out as the greatest long-term threat to our nation's information and intellectual property, and to our economic vitality - and that's the counterintelligence and economic espionage threat from China.
You just heard a pretty sobering presentation from Bill about some of the costs, the impact of that threat. It's a threat to our economic security - and by extension, it's a threat to our national security.
To respond to the China threat more effectively, I believe we need to better understand several key aspects of it. So this morning I want to help further set the table for today's presentations.
A Diverse and Multi-Layered Threat
The first thing we need to understand about the threat from China is how diverse and multi-layered it is - in techniques, in actors, and in targets. China is using a wide range of methods and techniques - everything from cyber intrusions to corrupting trusted insiders. They've even engaged in physical theft. And they've pioneered an expansive approach to stealing innovation through a wide range of actors - including not just Chinese intelligence services but state-owned enterprises, ostensibly private companies, certain kinds of graduate students and researchers, and a variety of other actors all working on their behalf.
It's also a diverse threat when it comes to the sectors and sizes of China's targets here in the U.S. - from Fortune 100 companies to Silicon Valley start-ups, and from government and academia to high tech and agriculture. Even as we speak, the FBI has about 1,000 investigations involving China's attempted theft of U.S.-based technology, in all 56 of our field offices, spanning almost every industry and sector.
They're not just targeting defense sector companies. The Chinese have targeted companies producing everything from proprietary rice and corn seeds to software for wind turbines to high-end medical devices. And they're not just targeting innovation and R&D. They're going after cost and pricing information, internal strategy documents, bulk PII - anything that can give them a competitive advantage.
They're also targeting cutting-edge research at our universities. Just last week, for example, we announced charges against the chairman of Harvard's chemistry department for false statements related to a Chinese talent plan, and a PLA officer at Boston University for concealing her military ties. In December we arrested a Chinese researcher for smuggling vials of stolen biological research. And those are all cases investigated by just one of our 56 field offices - Boston - and charged in a little over a month. You'll hear more about some of these cases later this morning.
But to summarize, the Chinese government is taking an all-tools and all-sectors approach - and that demands our own all-tools and all-sectors approach in response.
The Scope of China's Ambitions
The second thing we need to understand about this threat is the scope of China's ambitions, which are no secret. To be clear: This threat is not about the Chinese people as a whole, and certainly not about Chinese-Americans as a group. But it is about the Chinese government and the Chinese Communist Party.
The Chinese government is fighting a generational fight to surpass our country in economic and technological leadership. But not through legitimate innovation, not through fair and lawful competition, and not by giving their citizens the freedom of thought and speech and creativity we treasure here in the United States. Instead, they've shown that they're willing to steal their way up the economic ladder at our expense.
In recent decades, China has grown its economy rapidly by combining low-cost Chinese labor with Western capital and technology. But China's leaders know they can't rely on that model forever - to surpass America, they need to make leaps in cutting-edge technologies. Last March, at a Communist Party gathering, Chinese Premier Li made that understanding pretty clear. He said: "Our capacity for innovation is not strong, and our weakness in terms of core technologies for key fields remains a salient problem."
To accomplish the breakthroughs they seek, China is acquiring American intellectual property and innovation, by any means necessary. We see Chinese companies stealing American intellectual property to avoid the hard slog of innovation, and then using it to compete against the very American companies they victimized - in effect, cheating twice over.
Part of what makes this threat so challenging is that the Chinese are using an expanding set of non-traditional methods - both lawful and unlawful - blending things like foreign investments and corporate acquisitions with things like cyber intrusions and espionage by corporate insiders. Their intelligence services also increasingly hire hacking contractors, who do the government's bidding, to try to obfuscate the connection between the Chinese government and the theft of our data. The Chinese government is clearly taking the long view here - and that's an understatement. They've made the long view an art form. They're calculating. They're persistent. They're patient.
Exploiting Our Openness
The third thing we need to remember about this threat is that China has a fundamentally different system than ours - and they're doing all they can to exploit our openness. Many of the distinctions that mean a lot here are blurred, if they exist at all, in China: distinctions between the Chinese government and the Chinese Communist Party, distinctions between civilian and military sectors or uses, and distinctions between the state and their business sector.
For one thing, many large Chinese businesses are state-owned enterprises - literally owned by the government, and thus the party. And even where not formally owned, they are legally and practically beholden to the government in a very tangible way. You don't have to take my word for it you - can take theirs. China has national security laws that compel Chinese companies to provide the government with information and access at their government's request. And virtually all Chinese companies of any size are required to have Communist Party "cells" inside them, to make sure the companies stay in line with the party's principles and policies. It's hard to even imagine something like that happening in our system.
Unfortunately, it's a similar story in the academic sphere - the Chinese government doesn't play by the same rules of academic integrity and freedom that the U.S. does. We know they use some Chinese students in the U.S. as non-traditional collectors of our intellectual property. We know that through their "Thousand Talents Plan" and similar programs, they try to entice scientists at our universities to bring their knowledge to China - even if that means stealing proprietary information or violating export controls or conflict-of-interest policies to do so.
We know they support the establishment of institutes on our campuses that are more concerned with promoting Communist Party ideology than independent scholarship. We know they pressure Chinese students to self-censor their views while studying here, and that they use campus proxies to monitor both U.S. and foreign students and staff. And we know they use financial donations as leverage, to discourage American universities from hosting speakers with views the Chinese government doesn't like.
So, whether we're talking about the business world or the academic world, it's crucial that we acknowledge these differences between our two systems - because the Chinese government is doing everything they can to turn those differences to their advantage. Obviously, they're exploiting our open academic environment for research and development. They're exploiting American companies' openness to foreign investment and partnerships. And they're acquiring U.S. firms to gain ownership of what those firms have created.
Meanwhile, they take advantage of their own system being closed. They often require our businesses to put their trade secrets and their customers' personal data at risk as the cost of gaining access to China's huge market. And they make American joint ventures operating in China establish Communist Party "cells" within their companies. This government control over our joint ventures has become so common that American companies don't always stop to think about it. But if these companies want to protect their information, they sure better think about it.
They should also think about what it means to operate in an environment where a major IT provider like Huawei, with broad access into so much that U.S. companies do in China, has been charged with fraud, obstruction of justice, and theft of trade secrets. There's no reason for any U.S. company working in China to think it's safely off-limits.
Responding Effectively to the Threat
Understanding the Chinese counterintelligence threat better will help us respond to it more effectively. China is taking a multi-faceted approach, so we've got to have a multi-faceted response. Our folks at the FBI and at DOJ are working their tails off every day to protect our nation's companies, our universities, our computer networks, and our ideas and innovation. To do that, we're using a broad set of techniques - from our traditional law enforcement authorities to our intelligence capabilities.
You'll hear more about that in the panels later this morning, but I'll briefly note that we're having real success, real impact. With the help of our many foreign partners, we've arrested targets all over the globe. Our investigations and prosecutions have exposed the tradecraft and techniques the Chinese use, raising awareness of the threat and our industries' defenses.
They also show our resolve and our ability to attribute these crimes to those responsible. And we've seen how our criminal indictments have rallied other nations to our cause, which is crucial to persuading the Chinese government to change its behavior. We're also working more closely than ever with partner agencies here in the U.S., and our partners abroad.
We've got a host of tools we can use, from criminal charges and civil injunctions to things like economic sanctions, entity listings, and visa revocations. We're also working with CFIUS - the Committee on Foreign Investment in the United States - in its review of foreign investments in American companies that produce critical technologies or collect sensitive personal data of U.S. citizens.
But we can't do it on our own; we need a whole-of-society response, with government and the private sector working together. That's why we in the intelligence and law enforcement communities are working harder to give companies and universities the information they need to make informed decisions and protect their most valuable assets.
Through our Office of Private Sector, the FBI has stepped up our national outreach to spread awareness of this threat. For example, we're holding conferences for members of our Domestic Security Alliance Council, where we share information with Fortune 1000 companies about China's continued efforts to steal intellectual property. We also have private sector coordinators in each of our 56 field offices, who lead our engagement with local businesses and universities.
We're meeting with these partners frequently, providing threat awareness briefings, and helping them connect to the right people in the FBI, on any concern. Our Office of Private Sector also engages with a variety of academic associations on the China threat, including the American Council on Education, the Association of American Universities, and the Association of Public and Land-Grant Universities.
Last October at FBI Headquarters, we hosted an Academia Summit where more than 100 attendees discussed how the academic community can continue to work with the FBI and other federal agencies to tackle national security threats on our campuses. All of this outreach is geared toward helping our partners take the long view and preventing our openness from being exploited.
In this country, we value our open, free-market system - including the way it attracts international investment and talent to our country. And we value academic freedom - including international collaboration and the benefits we gain from having talented students from abroad, including China, come here to study. We're not going to change who we are. But at the same time, we've got to be clear-eyed and thoughtful about the threat from China and do everything possible to ensure a level playing field between our two countries. So the FBI is encouraging our business and academic partners to keep the long view in mind when engaging with China.
We're asking executives and boards of directors to carefully consider who they choose to do business with and who they make part of their supply chains. A decision to enter into a joint venture or contract with a particular vendor might look good to them in the near term. It might make a lot of money today; it might sound great on the next earnings call. But it might not look so great a few years down the road, when they find themselves bleeding intellectual property or hemorrhaging their most sensitive data.
We're also encouraging universities to take steps to protect their students from intimidation or control by foreign governments and to give them ways to report such incidents. We're urging them to seek transparency and reciprocity in their agreements with foreign institutions. And to do their due diligence on the foreign nationals they allow to work and study on their campuses.
Finally, we're asking our private sector and academic partners to reach out to us if they see something that concerns them. We're going to keep working to build trusted relationships with them, so that they know - with confidence - that we're here to help.
Let me close by making one thing clear: Confronting this threat effectively does not mean we shouldn't do business with the Chinese. It does not mean we shouldn't host Chinese visitors. It does not mean we shouldn't welcome Chinese students or co-exist with China as a country on the world stage. What it does mean is that when China violates our criminal laws and international norms, we're not going to tolerate it, let alone enable it. The Department of Justice and the FBI are going to hold people accountable for that and protect our nation's innovation and ideas.
Thanks for having me here today.
(Inventing Nations vs. Nation-sponsored Theft of Intellectual Property)
This section highlights current stories regarding IP theft - or,
For more on the SNS INVNT/IP division, and how your company can get privileged access to our information, go to: http://www.invntip.com/.
Feds are lining up more indictments related to Chinese cyber-activity, officials say
Harvard Professor Arrest Highlights Intellectual Property Espionage
US Prosecutors Eye Uptick In Chinese Economic Espionage Cases
Chinese scientists ask for patent on US drug to fight virus
Malaysia warns of Chinese hacking campaign targeting government projects
Huawei sues Verizon for $1 bn intellectual property theft
The dangers of doing business with the Chinese dragon
FBI is investigating more than 1,000 cases of Chinese theft of US technology
The China Initiative: Combating Economic Espionage and Trade Secret Exfiltration
FBI Warns Automakers That China Is Placing A Priority On Stealing Electric Car Tech
Texas Man Sentenced to 16 Months in Prison for Stealing US Technology to Benefit China
China's Military Behind 2017 Equifax Breach: DoJ
US charges Huawei with racketeering, adding pressure on China
Lawsuits Against Hytera
The Scientist and the Spy: Chinese industrial espionage and the atmosphere of fear in the West
Europe Becomes a Battleground Over Huawei and 5G
Huawei, 5G and the UK: What is the real risk for enterprises?
Western governments should have been ready for Huawei
Huawei ban: Complete timeline since, according to reports, EE find that the Chinese company has access to mobile networks worldwide
White House Official Says Huawei Has Secret Back Door to Extract Data
Huawei accuses U.S. officials of 'lies' in fiery statement denying backdoor
Commentary: Why China signed an unequal trade deal with the US
Trump's 'two steps forward, one step backward' strategy with China
Huawei takes Verizon to court for alleged patent infringement
Re: "SNS: Surveillance, Cities, and Facial Recognition"
"SNS Special Alert: Why the Wuhan Coronavirus Could Easily Be Manmade"
Subj: I thought you might get a kick out of this
China and the Coronavirus: Western Business Gets Itself Over A Chinese Barrel
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We look forward to returning to
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on the beautiful California coast, October 6-9, 2020.
* On April 23, Mark will be hosting the newly minted annual FiReSide NYC, again at the magnificent Lotte New York Palace Hotel. (See details at the top of this issue.) * On October 6-9, 2020, he will be hosting the 18th annual Future in Review conference, at The Lodge at Torrey Pines in La Jolla, California. Register now for the year's best rate: www.futureinreview.com.
In between times, he will be getting the tow-cart ready for spring. Specifically, he will be trying to move forward with 5/8" wheels in a world made only of 3/4" axles. What is this world coming to?
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