An employee works in the chip manufacturing process at a clean room of the Barcelona Institute for Microelectronics (IMB-CNM) in Bellaterra, near Barcelona, on March 3, 2022. (Josep Lago/AFP via Getty Images)
UK and US warn both direct and middleman CCP purchases are threats to national security
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The United Kingdom has blocked, on grounds of national security, the acquisition of British software design company Pulsic by a Hong Kong company “Super Orange HK Holding Limited” (SOHK), which has been registered for just one year. Several media reports indicated that SOHK has a strong mainland background.
This is not the first case. The UK had earlier banned a mainland company from acquiring a British company on similar grounds. Last month, senior British and American intelligence officials gave an unprecedented joint speech, pointing out the threats of CCP to national security and commercial technology of the two countries and their allies.
The UK Department of Business, Energy, and Industrial Strategy announced on July 17, that Business Secretary Kwasi Kwarteng blocked, in accordance with the National Security and Investment Act 2021, the acquisition of British software design company Pulsic by “Super Orange,” which has been registered in Hong Kong for only one year. Software designed by Pulsic can be used to make electronic design automation (EDA) products for designing dual-use (military and commercial) wafers.
When talking about this block on his Twitter, Kwarteng referred to “Hong Kong Super Orange” as a “Chinese company.”
Several media sources have collected evidence that, via an intricate network, they can always trace the certain direct or indirect influences of the CCP behind it. This SOHK case is one good example. The parent company of “Hong Kong Super Orange” is “Nanjing Puxing Software Co., Ltd.” Nanjing Puxing is in turn a wholly owned subsidiary of “Shanghai Univista Industrial Software Group Co. Ltd.”
The main director of “Nanjing Puxing,” one of the co-presidents of “Shanghai Univista,” and the director of “Hong Kong Super Orange” are all under the name “Xu Yun.”
If we are to continue along this relationship path, a few more links can be established as follows. The second largest shareholder of “Shanghai Univista,” which owns “Hong Kong Super Orange,” is “National Integrated Circuit Industry Investment Fund Phase II Co. Ltd.” The fund, known as the “Big Fund” within the industry, was established under the guidance of the Ministry of Industry and Information Technology and the Ministry of Finance.
The fifth-largest shareholder of “Shanghai Univista” is the “China Internet Investment Fund” established by the State Internet Information Office, the Office of the Central Cyber Security and Informatisation Committee, and the Ministry of Finance, all CCP-directed departments or agencies.
In other words, the CCP administration, through a number of mutually interlaced companies, is in effect managing the acquisition of British companies involved in chip technology.
Commentator: The Mainland is Destroying Hong Kong
Martin Oei, a political commentator, said during an online programme, on how and why the status of Hong Kong as an international financial centre is getting worse and worse.
He pointed out that as soon as the Hong Kong administration tightened company searches in 2021 by barring public access to the HKID card numbers and residential addresses of company directors, it paved the way for Hong Kong to function as the “White Gloves (middleman)” for the mainland authority by setting up companies in Hong Kong to act on their behalf.
He questions the logic behind being a financial centre against working for the CCP. “Can Hong Kong still be a financial centre? How can Hong Kong be a financial centre when it is being destroyed by the mainland to such a state?”
The “Daily Telegraph,” an English tabloid, came as far as analyzing what could be the cause and implication of Kwarteng’s latest ruling. It shows that stimulated by the deterioration of relations between the UK and China on human rights, defence, and security issues, the British authorities become increasingly intolerant of China’s involvement in its economy.
In the 2021 edition of “Global Britain in a Competitive Edge: the Integrated Review of Security, Defence, Development and Foreign Policy,” China was named “the country of highest threat to the UK’s economic security.”
UK Identifies China as a Threat to Its Economic Security
The UK’s National Security and Investment Act, passed in January 2022, allows UK ministers to retroactively block, impose conditions, or even cancel certain deals where national security concerns become apparent. The British government decided at the end of May 2022 to initiate a national security review on the intended acquisition of the largest local semiconductor company, Newport Wafer Fab, by a company led by the CCP.
In July, the British government cited the same law to prohibit “Beijing Infinite Vision Technology Co., Ltd.” from acquiring the visual sensing technologies firms, SCAMP-5, and SCAMP-7, of the University of Manchester. The same reason was quoted, that it has implications for British national security.
These two cases of banned Chinese acquisitions can be seen as a continuation of a series of policies of the British government. The most notable precedents had to be the blocking of Huawei Technologies from participating in the UK’s 5G network in 2020, and the attempt to exclude China General Nuclear Power Group from participating in UK nuclear power projects.
Frank Xie Tian, a tenured professor at the University of South Carolina’s Aiken School of Business, commented in May on UK’s attempt to remove China General Nuclear Power Corporation. He said that “all the CCP overseas investments are manipulated by the Party’s ruling clique and serve the CCP’s greater ambition to dominate the world.” He also added, “the CCP’s practice of wolf warrior diplomacy is an attempt to try aggressively to push the CCP’s communist ideology to eventually control the world. But it has attracted more and more attention and caused backlash from the world.”
Unprecedented Joint Warning by Senior British and American Intelligence Officials
On the other hand, British MI5 Director General Ken McCallum and FBI Director Christopher Wray gave a rare joint speech in July, warning about the all-around CCP threat against the United Kingdom and the United States, as well as their allies. They emphasized in particular the areas of national security, business, and technology. McCallum said at the time that the prime intention of their joint appearance was to send “the clearest signal” they can on a “massive shared challenge: China.”
At that time, McCallum also quoted one case to support his claim. He revealed that the British precision engineering company Smith’s Harlow (SH) started a cooperation project with a Chinese company called Futures Aerospace (FA) in 2017.
In that agreement, SH was to transfer three technologies, and FA agreed to pay 3 million pounds (about US$3.55 million) for quality supervision and training. But after Smith’s Harlow transferred the said technology, the Chinese company withdrew from the partnership, causing Smith’s Harlow to enter bankruptcy proceedings.
He said that the CCP wants to serve its interests by distorting the economy, society, and attitudes of the Western world. However, he also emphasized that all these remarks are aimed at the CCP, not the Chinese people.