Nine Chinese companies, mainly in the semiconductor and aviation industries, are on the latest list of sanctions listed by the U.S. Department of Defense on Jan. 14, and cell phone maker Xiaomi Group is also on the list. Xiaomi denies that it has any ties to the Chinese Communist Party‘s military, but the business chain and connections of Xiaomi’s founder Lei Jun reveal that Xiaomi has a military background and connections behind the group.
Companies listed on the U.S. Department of Defense’s Communist Chinese Military Companies list are prohibited from American investment.
Xiaomi’s shares plummeted after the news broke, with the price of its shares trading in Hong Kong falling 13.6 percent at one point.
Xiaomi Group said in an announcement on Jan. 15 that the company is not owned, controlled or affiliated with the Chinese Communist Party’s military, nor is it a Chinese Communist Party military company as defined under the U.S. National Defense Authorization Act (NDAA) law.
Founded in Beijing in 2010, Xiaomi Group is a large mobile Internet company engaged in the research and development of smart hardware and electronic products, as well as the construction of a smart Home ecology. It is the fourth cell phone company after Apple, Samsung and huawei to have its own cell phone chip development capability, and has built the world’s largest consumer IoT platform, connecting more than 252 million smart devices.
Xiaomi’s attempts to develop its own chips have not been successful. Xiaomi’s globalization is growing rapidly, with major markets in India, Southeast Asia and Europe.
Xiaomi’s relationship with the military
The relationship between Xiaomi Group and the Chinese Communist Party’s military cannot be seen only in terms of the company’s business or shareholding structure. The most critical factor is that Xiaomi’s connections with the military cannot be cut.
Lei Jun, the founder of Xiaomi Technology, is still closely associated with Jinshan, a company with a strong military background. Photo shows Lei Jun attending Xiaomi’s official listing on the main board in Hong Kong on July 9, 2018. (Song Bilong / Epoch Times)
Lei Jun, founder of Xiaomi Technology, is also a senior executive and shareholder of Kingsoft. Lei officially joined the company in January 1992 and became the general manager of Kingsoft at the age of 25 (1994) and led the company to go public in Hong Kong in 2007.
Beijing Kingsoft’s predecessor is “Hong Kong Kingsoft”, the founder is called Zhang Gaqing, Zhang Gaqing’s son Zhang Xuanlong, is also another founder of Kingsoft. According to Baidu, Zhang Xuanlong is currently the chairman of the supervisory board of Peking University Education Foundation, known as the “Godfather of Zhongguancun”, and is also one of the founders of Founder.
On May 30, 2019, Tencent column “100,000 brand stories” published an article “Microsoft siege failed to destroy the Jinshan, its products WPS than imagined to be excellent”. In the article, it is said that in 1973, Zhang Gaqing, who was passionate about radio knowledge, founded Jinshan Company in Hong Kong, mainly engaged in the assembly and sales of IBM PC compatible machines.
Born in Mauritius, Zhang Gaqing returned to China in 1935, and after graduating from Tongji University in Shanghai, he joined the Communist army’s South China Service Corps in Fujian, and later married Zhao Shaoru, who came from a Family of professors at Xiamen University. During the special period, because Zhao Shaoru’s father was a Kuomintang tax officer, Zhang Gaqing was put in a cowshed.
In 1972, Zhang Gaqing went to Hong Kong and started a chip business after he failed to inherit the inheritance, and when Western countries restricted the import of Chinese technology under the Paris Agreement, Zhang Gaqing shipped many chips from abroad to China through his personal connections. The National Defense Science and Technology Commission of the Communist Party of China (NDSC) told Zhang Gaqing, “Why don’t you set up a company and we will buy from you.”
The Commission asked him to help bring chips from the U.S. to the mainland through his personal connections for use in submarines, satellites, and other areas.
The CDSIC is subordinate to the Central Military Commission, and its work is under the dual leadership of the State Council and the Central Military Commission. It is not only the leading organ of the Central Military Commission for unified management of the national defense science and technology work of the whole army, but also the comprehensive department of the State Council for managing the national defense scientific research, military products production and foreign trade of military products in all relevant industrial departments.
When the institutional reform in March 1998, the former National Defense Science and Technology Commission was reorganized as the General Equipment Department, and another National Defense Science and Technology Commission belonging to a government department was established.
In 1978, the new Jinshan Company was established along the way. In 1981, Zhang Gaqing’s son, Zhang Xuanlong, quit his job as a tour guide and took over his father’s company and began to help run Jinshan Company, specializing in the chip business, and later took over the reins of Jinshan. Zhang Xuanlong also traveled abroad with Jiang’s APEC (Asia-Pacific Economic Cooperation) entrepreneurial group during the reign of Chinese Communist Party leader Jiang Zemin.
In 1984, Zhang Xuanlong moved to Zhongguancun, Beijing, and partnered with Beijing Sitong (the company that later invested in Sina.com), which served as the sole agent for Kingsoft in Hong Kong. 1988 saw the departure of Bojun Qiu from Beijing Sitong to join Kingsoft. 1992 saw Zhang Xuanlong merge Kingsoft Hong Kong into Founder, moving Kingsoft from Hong Kong to the mainland. In 1993, Zhang Xuanlong provided Mr. Qu to the company. In 1994, Mr. Zhang established Beijing Kingsoft, and Hong Kong Kingsoft became history. And Zhang Xuanlong’s family is still a shareholder of Kingsoft to this day.
In addition to the father and son, Kingsoft also has a known as the “soul” of Bojun Qiu, a graduate of the PLA National University of Defense Technology, in 2001, won the second prize for national scientific and technological progress, received by Jiang Zemin personally. When he retired in 2011, he transferred his shares of Kingsoft to Tencent Holdings, and Lei Jun, vice chairman of Kingsoft, took over the post.
According to the website of Beijing Jinshan Office Software Co., Ltd: Lei Jun has worked at Kingsoft since 1992, served as CEO of Kingsoft since 1998, and resigned in 2007, was transferred from executive director to non-executive director in August 2008; and became chairman of Kingsoft in July 2011. Lei Jun has also served as a director of certain subsidiaries of Kingsoft, and has been the Chairman and Chief Executive Officer of Xiaomi since 2010, and an executive director of Kingsoft Office Limited since its establishment in 2011.
As the founder of Xiaomi Technology, Lei Jun is still closely associated with Jinshan, a company with a strong military background. This tied relationship shows that Xiaomi has deep human connections with the Chinese Communist Party military.
The Chinese Communist Party’s official media praised Lei Jun as a challenge to Musk
“The company profile on the official website of Galaxy Aerospace lists three people, from top to bottom: Xu Ming, the chairman and founder of Galaxy Aerospace; Lei Jun, the founder of Xiaomi and Sunway Capital; and Deng Zongquan, an academician at the Chinese Academy of Engineering.
Lei Jun is an investor in Galaxy Space, while Deng Zongquan is the chairman of the company’s technical committee. In the introduction of Deng Zongquan, there are several titles: director of the National Defense Key Subject Laboratory of Space Mechanism and Control Technology of China Aerospace, chief scientist of the National Defense 973 Project, and head of the National “111” Intellectual Citation Program.
What does this 973 project mean? According to the description of Baidu, the full name of “National Defense 973 Project” is “National Security Major Basic Research Program”, also known as “Military 973”, which is a project of the Ministry of General Armaments of the Communist Party of China. It is a national key basic research project selected by the Ministry of General Armaments of the Communist Party of China, taking into account the future development trend of equipment technology, and is conducted by the first-class scientific research units in related fields in China. Most of these projects are classified and not publicly announced. The predecessor of the General Equipment Department of the Communist Party of China is the National Defense Science and Technology Commission, which found the Jinshan company in the first place.
The information above shows that Lei Jun, the owner of Xiaomi, not only has close ties with the Chinese Communist Party’s military, but this Galaxy Aerospace has an even more mysterious background.
According to Galaxy Space’s official website, this company was established in 2018 and is dedicated to the large-scale development of low-cost, high-performance small satellites, with the goal of establishing a global coverage of the converged communication network between heaven and earth.
Galaxy Space, in just over a year, has developed China’s first low-orbit broadband communication satellite with a communication capacity of 10 Gbps. The satellite was launched on Jan. 16, 2020, from the Jiuquan Satellite Launch Center aboard a fast-boat-1A launch vehicle developed by a company owned by China Aerospace Science and Industry Corporation (CASIC), and successfully entered its scheduled orbit, and completed its communication capability test a month later on Feb. 16.
Galaxy Space declared that its mission is “to connect every corner of the Earth with 5G satellites. tesla and SpaceX founder Musk’s Starlink project has been attracting attention from the Chinese Communist Party, and official media reports on the mainland have explicitly mentioned that Galaxy’s main target is SpaceX’s Starlink. The official media reports on the mainland also explicitly mention that the main target rival of Galaxy Space is SpaceX’s “Starlink”.
On December 31, 2020, a report by the China Galaxy Securities Research Institute mentioned that in February, Xu Ming, CEO of Galaxy Space, said that after the launch of the first satellite, Galaxy had compared its technical indicators with those of the U.S. “Starlink” in public tests and came to two conclusions: First, it is possible to make satellite Internet through low-orbit satellites and provide 4G and 5G-like network connections; second, Chinese satellite Internet companies can fully compete with the U.S. “Starlink” in terms of technology.
On November 18, 2020, GlobeNewswire published an article titled “Galaxy Space Takes New Funding CEO Xu Ming: Building China’s Internet Satellite”. According to the article, the second broadband communication satellite independently developed by Galaxy Space is now in the final assembly stage. Xu Ming is quoted as saying that next, Galaxy Space will focus on building a super factory in Nantong to move toward an annual production capacity of 300 to 500 satellites. When completed, the factory will be the first intelligent production line in China’s commercial space industry that is on par with the Starlink program, and is expected to shorten the gap between China’s next-generation satellite production capacity and that of the United States to within two years.
From the introduction of Galaxy Space official website, we can learn that Xu Ming is the co-founder and president of Cheetah Mobile, and was the technical director of 360. And according to Wikipedia, Cheetah Mobile (Cheetah Mobile) was founded in October 2010, is a merger of Kingsoft Security and KeNiu image, formerly known as Kingsoft Network. It can be seen that Xu Ming is also associated with Kingsoft, which has a deep military background.
In addition, in April 2020, the Development and Reform Commission of the CPC Central Committee also included satellite Internet in the category of “new infrastructure”. At present, the national teams represented by the Communist Party of China (CPC) Space Science and Technology and Aerospace Science and Industry Group have proposed the “Hong Yun Project” and the “Hong Yan Constellation” respectively, while private companies represented by Galaxy Space are participating in the CPC’s satellite Internet industry. industry.
The U.S. Starlink program, first proposed by SpaceX CEO Musk in January 2015, provides high-speed Internet access through a constellation of near-Earth orbiting satellites with global coverage. The company plans to launch about 12,000 satellites into near-Earth orbit between 2019 and 2024, building a giant three-tier satellite network that will eventually link all satellites into a giant “constellation” to provide global coverage of all-weather, high-rate, low-cost satellite Internet services.
With more than 700 satellites currently launched and deployed, Starlink plans to provide near-global service by the end of 2021, with consideration for expansion to 42,000 satellites later.
On November 19, 2020, U.S. Indo-Pacific Command released a schematic of the satellite chain program. (U.S. Indo-Pacific Command)
In November of last year, U.S. Indo-Pacific Command revealed the U.S. Air Force’s Starlink program, stating that the U.S. Air Force has partnered with SpaceX and is deploying a massive space satellite cyberlink, adding military satellites to the Starlink program.
The Chinese Communist Party (CCP) media has repeatedly and publicly declared that the CCP’s development of satellite Internet is in the context of the CCP’s national defense, targeting the U.S. “Starlink” program and challenging the core strategic interests of the United States.
Xiaomi’s Role in the CCP’s Satellite Internet Program
As a delegate to the National People’s Congress, Lei Jun has made proposals at the Communist Party’s two sessions for two consecutive years. At the 2019 National People’s Congress, Lei Jun put forward a proposal on improving innovation and vigorously developing the commercial space industry. At the two sessions in 2020, Lei Jun again put forward “Proposal on Promoting the Development of the Satellite Internet Industry”.
Lei Jun also used his “Shunwei Capital” to invest directly in several aerospace companies.
After Galaxy Space successfully launched its first satellite, Lei Jun said on Weibo, “We at Sunway Capital are very fortunate to have invested in Galaxy Space early and become a major investor in Galaxy Space.”
Lei Jun said that from 2018 to 2019, Shunwei Capital has been seen in Galaxy Space’s financing.
Shunwei Capital, founded by Lei Jun and another person in 2011, manages a $2.96 billion U.S. dollar fund and a $2 billion yuan fund, according to public information.
According to the mainland’s Daily Economic News, Sunway Capital focused on the commercial space sector in 2015 and 2016, and has invested in four commercial space companies since 2017: in the rocket sector, it invested in two companies, Star Pride and Deep Blue Space; in the satellite sector, it invested in two companies, Thousand Multiplier Exploration and Galaxy Space.
The day before Xiaomi was blacklisted, the official website of Beijing Securities Regulatory Bureau just announced on January 13 that Beijing Star Glory Space Technology Co.
Public information shows that Star Glory was founded in October 2016, and is the first private company in China to complete the launch of a launch vehicle into orbit. The company’s self-developed small solid launch vehicle was successfully launched on July 25, 2019, from China’s Jiuquan Satellite Launch Center.
U.S. investments absorbed by Xiaomi
The U.S. government is currently using two different sanctions blacklists to target Chinese companies with ties to the Communist regime: one list of entities, compiled by the Department of Commerce, and another blacklist of Chinese Communist military companies, put together by the Department of Defense. Each type of targeted company is subject to different sanctions. Xiaomi and Huawei are both on the Pentagon’s list, while Huawei is also on the Commerce Department’s entity list, and thus have different punitive tools.
Companies on the U.S. Department of Commerce’s Entity List are prohibited from doing business with U.S. companies without obtaining permission from the U.S. government. Companies listed on the Department of Defense’s Communist Chinese Military Companies list are prohibited from investing in U.S. companies.
And under President Trump‘s latest executive order, issued Jan. 13, U.S. investors are required to divest their securities in nine Chinese entities, including Xiaomi, by Nov. 11, 2021, EST.
The Trump Administration argues that U.S. investment in supporting Chinese companies that help the Communist Party’s military grow would support the expansion of the Communist Party’s military, which has been pursuing a strategy of integrated civil-military development, a strategy that supports the Communist Party’s military modernization goals by ensuring that the military has access to Chinese companies, universities and research programs that appear to be civilian entities to acquire and develop advanced technology and expertise. In 2015, Xi Jinping also proposed for the first Time to elevate “integrated military-civilian development” to a national strategy of the CCP.
According to the Hong Kong CCASS website on January 14, foreign U.S. brokerage firms hold a relatively large share of Xiaomi shareholders. Among them, JP Morgan’s shareholding is 2.53 billion shares, accounting for 10.04 percent of the issued share capital; Citibank holds 2.093 billion shares, accounting for 8.31 percent; Goldman Sachs holds 667 million shares, accounting for 3.04 percent; Morgan Stanley holds 480 million shares, accounting for 1.9 percent, and the four together hold 23.39 percent of the shares.
A senior U.S. government official told Reuters that the Jan. 13 executive order is a key tool to ensure that U.S. investors do not fund the Communist Party’s military modernization.
The executive order, signed by President Trump before he left office, was modified by the incoming Biden administration to delay the effective date of the investment ban to late May from the previous Jan. 11.
On Jan. 27, the U.S. Treasury Department website posted a statement issued by the Treasury Department’s Office of Foreign Assets Control that said the Biden Administration said most investment projects by U.S. investors in companies with similar, but not identical, names of listed Chinese Communist Party military companies would be approved until May 27.
Recent Comments