ExclusiveChinese Stocks in Decline After Losing $3.5 Trillion | China in Focus

Welcome to China In Focus. I'm Tiffany Meyer. Our top story, Chinese stocks are barreling down even further to the bottom, according to Morgan Stanley. This comes after China's stock market lost $3.5 trillion in value. Now it's official, the Pentagon has dismantled 80 organizations linked to Confucius Institutes on American soil. These Chinese government-backed propaganda cultural programs had infiltrated our nation's universities in almost every state. American money flowing into Chinese biotech, the U.S. government seeking to restrict those investments by legally classifying biotech as a sensitive technology. And imagine losing all your corporate sponsors overnight just for watching a political event. Why a single campaign stop cost a beloved iconic Taiwanese host his career in mainland China. Nick and Stanley reports that Chinese stocks are barreling down even further to the bottom. This comes as Bloomberg reported that China's equities market had already lost $3.5 trillion in value from a peak in May. A Sunday note said that Chinese company shares listed outside of mainland China may fall another 10 to 15 percent. Stocks traded in mainland China are also falling. Analysts expect their prices to drop to about 10 to 11 times what the companies are expected to earn next year. Making matters worse is China's recent crackdown on wealthy Chinese elites. China enacted a 20% income tax on offshore trusts and separate taxes on any money those trusts make, even if that money is never distributed to the owners. This has spooked Chinese elites into fleeing with their wealth. Chinese companies, meanwhile, are underperforming across a variety of industries, including banking, EVs, and AI, thanks to China's weak consumer economy and its cutthroat race to the bottom competition. Global events, including conflicts in the Middle East that affect fuel prices, are also weighing on Chinese stocks. Chinese financial regulators are seeking to stabilize the stock market by encouraging companies and state funds to buy stocks and discouraging panic selling. Now, its official War Secretary Hagel says the Pentagon has dismantled 80 organizations linked to Confucius Institutes across 30 U.S. universities. He alleges these China-linked groups operated under different names with the goal of stealing American intellectual property and influencing American students against their own country. These Chinese government-backed propaganda cultural programs had infiltrated our nation's universities in almost every state. Now, thankfully, Congress banned them a few years ago, these Confucius Institutes. But they came back disguised in new forms just like DEI does just call it a different name he said U.S. universities need to stay vigilant about the threat he said after Congress banned Confucius Institutes 80 new propaganda cells across 30 universities popped up using different names and charters but held the same anti-American mission according to the National Association of Scholars the Chinese Communist regime has sponsored Confucius Institutes at schools around the world the regime provides teachers textbooks and funds. The National Association of Scholars found that Confucius Institutes undermine academic integrity and import censorship. The U.S. government seeks to restrict American investments from going into Chinese biotech. To do that, it required investors last week to notify the government whenever they make certain transactions that involve biotech with foreign companies. This would be done by legally classifying biotech as a sensitive technology, putting it on par with semiconductor technology, AI, quantum technology, supercomputing, and hypersonic weapons. This comes as U.S. companies are increasingly reliant on Chinese biotech supply chains while pouring billions into China's biotech industry. Biotech covers a wide range of different sectors, including medicine, agriculture, and genetics. China puts biotech as a core strategic priority alongside AI, quantum technology, nuclear fusion, and brain computer interface. Should China further develop its biotech with the help of American investors, China could gain even more leverage around the world and threaten U.S. national security. Some American investors are pushing back against the proposal to restrict American dollars from going into Chinese biotech, arguing that this could hurt American companies and public health. On Monday, the Chinese Communist Party's Central Committee started its fifth plenum. As the name implies it is the fifth out of seven plenums, a series of meetings that happen every five years between major party congresses. What are we looking out for? The fifth plenum normally introduces China's next five-year plan to set economic and social development priorities. Experts believe the meeting this year will also focus on tightening ideological control. This comes as the CCP leader Xi Jinping continues to tighten his grip on the party through anti-corruption campaigns aimed at rooting out internal threats. Throughout his reign, millions of officials, including a vast majority of the Chinese Central Military Commission, have been purged. This, in turn, has even affected the current plenum meeting. The Asia Society Policy Institute estimates the actual participation rate this year may be around 80 percent. A number of Central Committee members and alternative members were placed under investigation or ousted during this year's Plenum, more are expected to be officially confirmed to have been removed. It's kind of laying the ground for the National Party Congress next year, which is the major meeting and the one to look out for to see if Xi will continue. The plenum will last until Thursday. AI-powered hacking at high speed. Microsoft says a hacking group aligned with the Chinese regime used an artificial intelligence tool to speed up cyber attacks on organizations around the world. Microsoft says the group, known as Storm-0940, obtained credentials tied to the ConnectWise cloud backup service. Customers had already authorized those applications to access their Microsoft 365 systems. The hackers attempted to sign in to more than 2,200 customer cloud environments using a Chinese-developed AI tool called Artex. Microsoft says they targeted government agencies, defense contractors, and banks. At multiple organizations, they gained privileged access, sometimes in under three hours. But Microsoft says that doesn't necessarily mean data was stolen. ConnectWise says its backup archives show no sign of compromise. The company says partners can begin restoring data from existing backups starting today. DeepSeek, you may have already heard about the Chinese AI startup, but do you really know it? DeepSeek was founded in 2023 in China. It made global headlines in January last year when it came out with its reasoning AI chatbot, DeepSeek R1. DeepSeek claimed that it was equivalent to AI models like OpenAI's ChatGPT. It caused Western tech stocks, including NVIDIA's, to plummet, with many in the U.S. tech industry saying it matched or even surpassed cutting-edge U.S. models. At one point, DeepSeek's AI model ranked as the top downloaded free app on Apple's App Store. But given that this is a Chinese app, it makes sense that it would have Chinese characteristics. DeepSeek censors in real time everything that the Chinese Communist Party deems too sensitive, including the Tiananmen Square massacre, the Cultural Revolution, and Xi Jinping, among others. DeepSeek also raises surveillance concerns. It collects not just proof of identity, but even collects data about the user device models, operating system, keystroke patterns or rhythms, IP address, and system language. The U.S. military had already warned service members not to use DeepSeek, though some in the military have used DeepSeek through an authorized software program called AskSage. The Trump administration recently mandated that all civilian U.S. government agencies ban DeepSeek. The Department of Homeland Security warns that DeepSeek could not only access sensitive U.S. government data, but possibly even contain malware or other security vulnerabilities. It's not just the U.S. that has raised the alarm about DeepSeek. European countries, Australia, India, Taiwan, and others have also scrutinized DeepSeek over security concerns, especially given that DeepSeek reportedly provides China's military support beyond open source AI access. One of Trump's tech advisors called it AI's Sputnik moment, a wake-up call that forces the U.S. to catch up. What if going to a campaign event could destroy your career overnight? That's what a well known Chinese language host is facing. After sitting in the audience of a local political rally, he found himself targeted by Beijing. Here's how a routine work habit turned into a geopolitical battleground. On October 4th, Kevin Tsai, a prominent Chinese language host, dropped by a campaign launch for Huma Shen, a Taiwanese lawmaker and Democratic Progressive Party candidate for Taipei mayor, the appearance quickly made headlines in Taiwan and trended on China's Weibo platform. Tsai said he was just there to prepare for a possible interview, but in mainland China, the backlash was instant. Several brands announced they were ending business partnerships with him. Beijing's Taiwan Affairs Office also criticized people who make money in China while associating with what it calls pro-independence forces. Bu Maishan is a prominent critic of Beijing's influence operations and an advocate for civil defense in Taiwan. China officially lists him as a separatist and imposed sanctions on Shen. After three weeks of silence, Tsai posted on Chinese social media on Sunday saying, quote, I have never supported Taiwan independence. The statement did not end the debate. Some mainland Chinese media questioned why he did not directly address whether Taiwan belongs to China. Taiwan, meanwhile, is a self-governing democracy. Beijing claims the island as part of its territory and says unification must eventually happen. On Monday, the host attended a rally for Shen's rival, the incumbent Taipei mayor, and a member of the opposition, Kuomintang. Shen Zetai appeared to have faced outside pressure. It's a familiar dilemma for Taiwanese stars. As another famous host, Matilda Tao, once said, quote, no matter what you say or don't say, you get attacked. Volvo, the Swedish luxury car manufacturer owned by Chinese company Geely is facing a financial crisis. Despite initial forecasts of sale and cash growth, Volvo's business is plummeting, especially in China, thanks to extreme cutthroat competition demanding lower prices, faster development, as well as rising costs caused by conflicts in the Middle East. Record low profit losses have forced Volvo to cut 2,500 jobs, or 6% of its workforce. Coming up, from America's most sensitive security files to Coca-Cola's secret formula and Tesla's technology, no sector is off-limits. Former Defense Intelligence Agency Chief David Shedd explains why he calls China's campaign to steal American secrets the Great Heist. More on that after the break here on China In Focus. Welcome back to China In Focus. Tiffany Meyer, China's ambitions in high-tech keep growing. It's betting big on brain-computer interfaces, or BCIs, the same technology that, like Elon Musk's Neuralink, can potentially help the paralyzed to move, help the mute to speak, and help the blind to see. China elevated BCIs in its most recent five-year plan as a core strategic industry because it could see the technology being as critical to the world as other technologies, like drones, batteries, and EVs. Dominating BCIs could give China even more influence, not to mention a potential edge in the military sphere. That's why it enlists the help of BCI experts like former Harvard professor Charles Lieber in this field. China is already pushing to make Chinese BCI treatments more widespread, and it's seeking to dictate the international rules for BCIs. It now chairs a subcommittee overseen by the International Organization for Standardization and the International Electrotechnical Commission. though a man named Yu Yuntao, he's the former department head of the China Electronic Standardization Institute. This institution works under the Chinese regime agency that helps implement China's civil military defense industry. Under Yu's leadership, the subcommittee that's overseeing BCIs is already publishing standards about terminology and implementation. From U.S. security files to Coca-Cola's secret formula to Tesla's technology, the Chinese Communist Party's theft campaign spans nearly every sector. American Thought Leader's host, Yanni Kellek, spoke with former Defense Intelligence Agency Chief David Shedd on how China steals America's secrets, the national security risks, and how Americans can protect themselves. He's also the co-author of The Great Heist, China's epic campaign to steal America's secrets. Take a look. The Great Heist. Tell me, what is The Great Heist? The Great Heist refers to the greatest transfer of illicit wealth in human history by China and from China from the United States. In other words, it is taking our intellectual property, our know-how, our capabilities associated with technology all the way through to, yes, believe it or not, seeds and everything in between in terms of a target by the Chinese that Chris Wray, the former director of FBI, estimated somewhere in terms of the knowledge that the FBI had three years ago, somewhere between $400 and $600 billion per year in IP theft alone, which is the intellectual property on U.S. technology, all the way again to all the research and development. And that is really the great heist. And does that include like the willing transfer, for example, American companies going to China, setting up shop and having to give their IP as part of the deal? Does that include that? No, if it's been willingly done, obviously it's not part of the heist. This would be the unwitting aspects on the part of the U.S. companies, whether in China or here in the United States, that are targeted then by the Ministry of State Security and other elements of the Chinese security apparatus to go after that IP. So this is really the portion that is not willingly given up or certainly wittingly given up by U.S. enterprises operating in China or in the United States. But obviously, I think it applies more to being onshore in the People's Republic of China. Right. And because that it's fascinating because absolutely you're right. It is this it is the greatest heist. But that's on top of another great heist, which is convincing American companies to willingly give it at a scale, which is also probably almost certainly the greatest in history. It absolutely is. And I think one of the things that we need to keep in mind is that this is paired up with the stealing of our data. That's often forgotten. And I am, and in fact, the product of someone who was incentivized to write this book, The Great Heist, China's Epic Campaign to Steal America's Secrets, was incentivized to do that because I was part of 22.5 million security dossiers from the Office of Personnel and Management that were stolen by the Chinese in May of 2015, so 11 years ago. Imagine that treasure trove of data. Since then, of course, Equifax has been hit, Anthem Health and others. So it's really this pairing of the stolen technology and know-how alongside of the data that they're acquiring illicitly. I don't think I fully grasped the scale of it back then even. And I was someone who, you know, was ready to accept that such a thing happened, even though a lot fewer people were then than they are today. No. And when you think of it, I think of my CIA career of nearly 33 years. I would set up its own directorate to exploit that kind of data. Because think of it. If you can find one to five percent of individuals that are vulnerable to blackmailing or to some other coercion form that you could do in terms of even finding their ideological leanings that might fit. favor China for whatever reason within that security dossier. What a target-rich environment that produces for the targeteers, that being the Ministry of State Security. Absolutely astonishing. Let's jump to the heist, okay? Give me what is the most prominent example, the thing that you would like to kind of lead with that's the most astonishing, that's the most extreme. You have amazing cases in here. I mean, some of them I didn't even know about until I was looking in your book. But what would you say is like the biggest? Let's start. Well, we'll do a few, but let's start with the biggest one. Well, there's something that in the book I've entitled The Billion Dollar Heist. And it's a thumb drive. And it happens to Elon Musk as it pertains to Tesla. In a very hot summer day in Shanghai in the summer of 2018, he reaches an agreement with very high party officials of the Chinese Communist Party in Shanghai to build a gigafactory for the production of Teslas in Shanghai, a factory of Tesla. That ribbon cutting occurs in January of 2019 so it's a few months later and and it's going to produce several million Tesla cars all the while Mr. Cao in California at Tesla headquarters at Tesla's operating plant is downloading the autopilot aspects of that that are now currently found in Build Your Dreams car the BYD, among many others, X Motors and others, because surprise, surprise, the Chinese enterprises shared that stolen technology and at great expense to Elon Musk and Tesla. So that's a billion dollar heist. At another sort of end of the spectrum, I have the example of Ms. Shannon Yu. Shannon worked at coca-cola and you have to scratch your head why would china be interested in coca-cola and and we all know they have the secret formula no the chinese weren't interested in the secret formula they were interested in getting the chemistry behind the inside of the cans of Coca-Cola and you ask yourself why it's because those cans have a formulation to prevent oxidation while those cans sit on the grocery shelf or in your home for the Coca-Cola acidity not to eat through the can. All sounds very reasonable. Why would the Chinese want that? It's the lining now that is inside their ballistic missile fuel containers in order to protect, again, that oxidation associated with it. And she was subsequently convicted for this. But she volunteered that. And so I give you two examples. They're kind of opposite ends of the spectrum from the Elon Musk Tesla one all the way to the lining of a Coca-Cola can. You know, perhaps the most astonishing part that a lot of people don't know is how acidic Coca-Cola actually is that they need such a lining in the first place. Uh, that's something I'd rather not get into since I don't, I'm, I'm not a doctor, but you're absolutely correct. To watch the full interview, visit ntd.com slash NTD plus and check out American thought leaders with Yania Kellick. That's all for today's China in focus. I'm Tiffany Meyer. If you have any feedback on the show or have something you'd like to see us cover, send us an email at China in focus at ntd.com. We'd love to hear from you round the clock, original news coverage visit us at ntd.com or download our NTD app thanks for watching see you tomorrow