TAIPEI (BLOOMBERG) - China sent two air force incursions close to Taiwan on Thursday (Sept 23), underscoring its displeasure at the government in Taipei's bid to join a regional trade deal.
Twenty-four People's Liberation Army aircraft flew into Taiwan's air defence identification zone, Taiwan's Defence Ministry said in two separate statements. That was the largest number of Chinese planes to enter the zone in a day since June, when China's air force sent 28 aircraft close to Taiwan in the biggest sortie this year.
The flights came a day after Taiwan announced it had requested to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), an 11-nation group that China also applied to join last week.
In the past, Beijing has used large-scale incursions to signal its anger at Taiwan for challenging China's claims to sovereignty over the island democracy.
The dispute was not limited to military manoeuvres, with Beijing and Taipei exchanging barbs over the latter's attempt to join the CPTPP.
"We firmly oppose any official ties between Taiwan and any countries, and firmly oppose Taiwan's accession into any treaties and organisations that are of official nature," Beijing's Foreign Ministry spokesman Zhao Lijian said at a regular briefing on Thursday.
The Foreign Ministry in Taipei responded by saying China has no right to comment on the Taiwan government's application to join the CPTPP and that the People's Republic of China does not represent the people of Taiwan on the international stage.
NSO has rejected the claims arising from the data leak, but said it would "continue to investigate all credible claims of misuse and take appropriate action".
The company insisted that Pegasus is only intended for use against criminals and terrorists, and that it only sells to military, law enforcement and intelligence agencies in 40 unnamed countries. These customers have been vetted for their human rights records, NSO said.
But it is not difficult for bad actors to create legitimate-looking shell companies and deceive sellers of such sensitive tools, said Mr Vitaly Kamluk, director of the global research and analysis team (APAC) at Kaspersky.
"It's possible to create someone who will just represent you and look like a legal entity that may be connected to the government," he told CNA on Wednesday (Sep 22).
"Some proofs can even be faked and I'm sure that if you really focus on this, you can find one way or another to become a legitimate customer of the NSO Group. And if you have enough money, you can buy these tools they offer."
NSO has attracted scrutiny since 2016, when the company's software was said to be used against a rights activist in the United Arab Emirates and a journalist in Mexico, the New York Times reported on Jul 18.
In 2018, an investigation conducted by University of Toronto research group Citizen Lab found that some of the phones suspected to be infected were in the UK, US and Singapore. Citizen Lab had also reviewed the work done by Amnesty researchers on the recent data leak.
The Singapore Government said on Sep 13 it is aware of these claims but cannot verify them as no reports have been filed.
"As our findings are based on country-level geolocation of DNS servers, factors such as VPNs and satellite Internet teleport locations can introduce inaccuracies," the Citizen Lab report said.
Because Singapore hosts a number of data centres and is a regional Internet communication hub, Mr Kamluk said, the findings could have pointed to Singapore's Internet infrastructure instead of actual victims living here.
Here's what we know about Pegasus so far:
HOW DOES PEGASUS INFECT A PHONE?
While earlier versions of the software used targeted spear-phishing attacks to gain access to a phone, it has since been made far more efficient, and is able to infect a device even if nothing is clicked on.
Mr Kamluk said Pegasus infects phones through "non-interaction" methods, which means malicious code is sent to a target and breaches the target's device "without any kind of user interactions required".
For instance, Pegasus first creates a fake WhatsApp account, then uses it to make video calls. When an unsuspecting user's phone rings, a malicious code is transmitted that installs the spyware on the phone. The software is installed even if the call is not answered.
Pegasus has apparently begun exploiting vulnerabilities in Apple's iMessage software as well, although Apple on Sep 13 released a fix to rectify this.
Still, Mr Kamluk said Pegasus will likely find new ways to continue exploiting iPhones through other backdoors.
"These vulnerabilities, they (Apple engineers) don't plant them on purpose, for sure, but it's in the fundamental code of our human nature to make mistakes," he said. "We will see new ones come and appear, and Apple will patch again the moment they find this."
When Pegasus is installed on a phone, it could gain administrative privileges on a device, allowing it to do even more things than the device owner.
"It's fully automatic," Mr Kamluk said. "They choose the target and at that moment the operator has full control of the device."
CAN PEGASUS BE IDENTIFIED AND REMOVED?
When Pegasus infects a phone, it hides itself but leaves some traces that can be spotted using specialised software, like the mobile verification toolkit published open source and free by Amnesty, Mr Kamluk said.
But to thoroughly check an iPhone, for instance, users would probably void their warranty as specialists would need to "jailbreak" the phone to check every single thing stored inside, Mr Kamluk continued.
"Of course, NSO Group will improve," he said. "So, everything that is detected right now – all these signs and traces that were picked up by Amnesty International and Citizen Lab – will be changed so that this tool will be blind to future versions of diagnosis (software)."
And because Pegasus burrows deep into parts of a device that require the highest privileges to access, Mr Kamluk said removing it will not be easy as uninstalling an app or stopping a service.
"If the phone is infected, that likely means that it will remain there for a long time. Depending on the exploits they have and the post-exploitation stages, it may actually get deeper and even survive the reboot or total reset of the (phone)," he added.
"Once the phone is breached, I would not recommend to use it to anyone who cares about privacy or security."
WHO ELSE HAS BEEN TARGETED?
Numbers on the leaked list include Mexican reporter Cecilio Pineda Birto, who was gunned down on the street, as well as journalists from CNN, the Associated Press, the Wall Street Journal, Bloomberg News and the New York Times.
Two of the targeted phones were owned by Mr Szabolcs Panyi and Mr Andras Szabo, investigative reporters in Hungary who regularly cover government corruption.
Indian investigative news website the Wire also reported that 300 mobile phone numbers used in India, including those of government ministers, opposition politicians, journalists, scientists and rights activists, were on the list.
WHAT ARE THE IMPLICATIONS?
The Pegasus leak is likely to spur debates over government surveillance in several countries suspected of using the technology.
The investigation suggests the Hungarian government of Viktor Orbán appears to have deployed NSO’s technology as part of his so-called war on the media, targeting investigative journalists in the country as well as the close circle of one of Hungary’s few independent media executives, the Guardian report said.
WASHINGTON: US Vice President Kamala Harris met India's Prime Minister Narendra Modi on Thursday (Sep 23) and stressed the importance of a free and open Indo-Pacific region at a time when the United States is trying to solidify its pivot toward Asia and strengthen ties with allies to take on China's growing influence in the region.
The meeting between the most prominent Indian American and the Indian Prime Minister, who has close ties with former President Donald Trump, assumed greater significance as the Biden administration takes steps to deepen its relationship with one its most important allies in Asia.
"The United States, like India, feels very strongly about the pride of being a member of the Indo Pacific, but also the fragility and importance ... of those relationships, including maintaining a free and open Indo Pacific," Harris told Modi during the meeting.
The meeting was also a celebratory moment for the 4 million strong Indian diaspora in the United States and Indians back home who take pride in Harris's Indian roots and her ascent.
Modi praised the vice president referring to her as an "inspiration," a leader who is like "family" and called her a "real friend" who has had India's back during the COVID-19 crisis.
"The oldest democracy and the largest democracy ... we are indeed natural partners, we have similar values," Modi said.
During the meeting, Harris also welcomed India's decision to resume exports of the COVID-19 vaccine and said both countries must work together to protect democracies around the world.
India, the world's biggest maker of COVID-19 vaccines, announced recently that it would resume vaccine exports later this year. India stopped exports in April to focus on inoculating its own population as infections exploded.
"When India experienced the surge of COVID-19 in the country, the United States was very proud to support India in its need and responsibility to vaccinate its people, and I welcome India's announcement that it will soon be able to resume vaccine exports," Harris said.
Harris and Modi were expected to discuss the COVID-19 pandemic, greater cooperation in technology, space and other sectors, and supply chain issues, sources with knowledge of the matter told Reuters.
Modi's three-day Washington trip will be capped by a meeting with President Joe Biden at the White House on Friday.
Modi on Thursday also met the chief executives of Qualcomm, Blackstone, Adobe, First Solar and General Atomics, the sources said.
Modi, former chief minister of Gujarat before his 2014 national election win, was banned from traveling to the United States for a nearly a decade, following the massacre of 1,000 people, mostly Muslims, in the state in 2002.
It brings the US, Japan, India and Australia together in an informal alliance of democracies with shared economic and security interests that span the Pacific and Indian Oceans.
Formed to coordinate tsunami relief efforts, it lay dormant for years afterward until 2017, when it was revived under then-US President Donald Trump as his administration sought to challenge China from every angle.
Trump’s successor, Joe Biden, organised the first-ever gathering of the Quad leaders in March, at which they pledged to accelerate production of COVID-19 vaccines and distribute them across Asia.
Although their statement does not mention China, the talks came amid a flurry of US diplomacy designed to build a common approach to dealing with Beijing.
WHAT IS FIVE EYES
It is a decades-old intelligence-sharing arrangement among the US, the UK, Canada, Australia and New Zealand.
It is so good at keeping secrets that its existence was not publicly revealed until the mid-2000s.
It is not clear how much intelligence is shared, but most of whistle-blower Edward Snowden’s vast 2013 dump of classified US National Security Agency data, for instance, was marked FVEY, meaning it was available to other Five Eyes members.
Advocates say the collaboration was used to positive effect in the Afghanistan war as well as in counter-terrorism operations in the Philippines and East Africa. Snowden attacked it as unanswerable to democratic oversight by national governments.
Cracks emerged this year over China, when New Zealand distanced itself from moves to broaden the group’s remit and take positions on issues such as Beijing’s human rights record.
WHY SO MUCH FOCUS ON CHINA
Its rise has steadily become one of the biggest foreign policy challenges not just for the US, but for almost every Chinese neighbour and democracies around the world.
China’s rapid military development is a particularly acute threat to neighboring countries such as India and the Philippines, which have active maritime or border disputes. But it also threatens the US military presence that has underpinned Asia’s security architecture for decades.
Researchers at the University of Sydney, for example, warned last year that China’s growing missile arsenal could wipe out America’s bases in Asia during the “opening hours” of any conflict.
China’s global economic reach has also greatly expanded as state-owned companies buy up strategic assets such as ports around the world that could be harnessed in times of war.
Its statecraft - spearheaded by “wolf warrior” diplomats - has also grown more aggressive, particularly throughout the COVID-19 pandemic.
BEIJING – The world’s most indebted developer Evergrande Group said it will prioritise its home buyers and retail investors as it faces payment on some of its offshore bonds on Thursday (Sept 23).
Investors and markets are watching closely to see how regulators in China will respond to the Chinese developer’s liquidity crisis.
Evergrande chairman and founder Hui Ka Yan stressed in an internal meeting late on Wednesday night the importance of resuming construction on its stalled projects, and to be responsible towards helping Chinese wealth investors redeem their products.
The comments by Mr Hui, also known in Mandarin as Mr Xu Jiayin, come as some US$83.5 million (S$113 million) in interest payments are due on Thursday for China’s No. 2 property developer on its March 2022 notes. A failure to pay will set off a 30-day clock before the bond defaults.
Evergrande has another US$47.5 million due next Wednesday for its March 2024 notes. Another 30-day countdown will start if Evergrande does not pay up as scheduled.
"With time having run out for Evergrande, an imminent default followed by a long, painful restructuring is the most likely way forward," Dr Zafar Momin, an MBA lecturer at the Nanyang Business School, told The Straits Times.
BlackRock, UBS Group, HSBC Holdings and Ashmore Group, a London-based money manager that specialises in buying emerging-market debt, are among Evergrande's biggest debtors, according to Bloomberg.
Evergrande also reportedly missed interest payments to two of its largest bank creditors on Monday, even as it said on Wednesday that it would make a coupon payment on its domestic bonds due the following day.
It did not, however, specify how much of the 232 million yuan interest would be paid, or when.
Its statement to Shenzhen stock exchange did not mention whether it will make payment on its offshore bonds.
The uncertainty surrounding Evergrande's payments has raised questions on whether and how Beijing will intervene if the conglomerate defaults on its bonds.
The People's Bank of China (PBOC) has been injecting liquidity into its banking system to avoid a squeeze on funding amid Evergrande's debt crisis and a seasonal demand increase for financing, but the government has yet to make public its plans for the beleaguered property firm.
Professor Mak Yuen Teen at the National University of Singapore Business School said that "PBOC is closely monitoring the situation and will make the necessary intervention to prevent contagion" by encouraging lenders to continue financing firms with the additional liquidity.
"It's unlikely that there will be bail-out," he added.
Investors are hoping that the government will step in to help the company restructure and plan its refinancing, analysts said.
But, even if Beijing does come up with a rescue plan for Evergrande, regulators are expected to orchestrate the restructuring as inconspicuously as they can.
"The government would not want to be seen as bailing out the firm or its corporate creditors" amid its campaign to reduce moral hazard, Dr Wu said, referring to how high-flying firms have been borrowing and splurging recklessly and counting on the government to bail them out if they default.
State media has been adamant that Evergrande's liquidity problems will not spread to other parts of the economy - a key consideration for Beijing on whether or not an Evergrande bail-out is on the cards.
Global Times editor Hu Xijin said on his social media account last week that Evergrande should not bet on a government bail-out.
Workers walk inside the construction site of a project developed by Evergrande Group in Beijing, on Sept 22, 2021. PHOTO: REUTERS
"Borrowing for large Chinese companies such as Evergrande had never been a problem in the past," said Professor Michael Pettis at Peking University's Guanghua School of Management.
"Local governments and regulators were expected always to step in at the last minute to restructure liabilities and recapitalise the borrower if necessary," he added in an article on Monday for US-based think-tank Carnegie Endowment for International Peace.
What Beijing does about Evergrande will be a test of its commitment to its campaign against moral hazard, analysts added.
What's next for Evergrande?
Evergrande's fate hangs in the balance, as regulators weigh options for the beleaguered corporate behemoth.
To stave off bankruptcy, Evergrande has been trying to sell its apartments at massively reduced prices and has promised high returns of up to 12 per cent on its wealth management products to raise funds.
The company said on Saturday it has begun repaying investors in its wealth management products with real estate, and investors interested in redeeming the products for physical assets should contact their investment consultants or visit local offices.
Analysts said that Evergrande faces political pressure to prioritise home buyers and retail investors in any restructuring, given Beijing’s intolerance for social unrest.
About 70 investors had gathered near the company's Shenzhen headquarters last Tuesday as staff handled their complaints in a cafeteria.
The wealth management products that these investors bought rode on Evergrande's reputation as one of China's "too big to fail" firms, and attracted more than 70,000 retail investors with promises of up to 12 per cent in annual yield rates.
Earlier this month, more than 100 disgruntled customers who had bought homes with Evergrande staged a protest in Guangzhou, after construction work on the projects stalled, and urged the local government to intervene.
A woman walking past a map showing Evergrande commercial hubs in China at Evergrande city plaza in Beijing, on Sept 22, 2021. PHOTO: EPA-EFE
"The Chinese government will be particularly sensitive about the impact of (an Evergrande restructuring) on ordinary citizens... and would probably look to protect the interests of the ordinary man in the street as a priority," said Prof Mak.
Local suppliers and contractors are likely to be next in line, followed by Chinese banks and other Chinese creditors, "with external currency creditors probably bringing up the rear", Prof Pettis said.
"A surge in lawsuits as these foreign creditors claim unfair discrimination can be expected," he added.
Dr Momin said: "Any restructuring that follows may include the government... having a seat at the table."
The government will not want "good real estate projects to be abandoned and people to be deprived of their future homes", he added.
The government having a say in Evergrande's restructuring will "provide oversight and support... while preventing frenzied fire sales," Dr Momin added.
TAIPEI: There is a "risk" to Taiwan's application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) if China joins first, Taiwan's government said on Thursday (Sep 23), flagging a potential political roadblock.
Taiwan is excluded from many international bodies because of China's insistence that it is part of "one-China" rather than a separate country.
Taiwan's chief trade negotiator John Deng told reporters that China always tries to obstruct Taiwan's participation internationally.
"So if China joins first, Taiwan's membership case should be quite risky. This is quite obvious," he said.
Underscoring the pressure Taiwan faces from China, the island's defence ministry reported 19 Chinese air force planes flew into Taiwan's air defence zone on Thursday, including two nuclear-capable H-4 bombers. Taiwan's air force scrambled to intercept and warn them away.
China's air force flies almost daily in Taiwan's air defence zone, angering Taipei.
TAIWAN DEMOCRACY
Taiwan has been keen to win greater support from other democracies, including in its trading relations.
Deng pointed to Taiwan having a different "system" from China, including Taiwan's democracy, rule of law, transparent laws and respect for personal property.
However, he said, there was no direct connection between Taiwan's decision to apply and China's.
"How mainland China comments on this is a matter for them," Deng said.
When asked about Taiwan's application to the trade pact, Chinese foreign ministry spokesman Zhao Lijian reiterated a long-standing position that Taiwan is part of China.
"We are firmly opposed to any country having official ties with Taiwan, and to Taiwan entering into any official treaty or organisation," Zhao said.
Deng said that Taiwan, a major semiconductor producer, has applied to join under the name it uses in the World Trade Organization (WTO) - the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu. Taiwan is a member of the WTO and Asia-Pacific Economic Cooperation (APEC) grouping.
"I stress that Taiwan is a sovereign, independent nation. It has its own name. But for trade deals the name we have used for years is the least controversial," Deng said.
The CPTPP application was made to New Zealand's government, which handles the paperwork.
Deng said he was not able to predict when Taiwan may be allowed to join the CPTPP, noting that Britain's application was proceeding the fastest at present.
Britain began negotiations in June.
The original 12-member agreement, known as the Trans-Pacific Partnership (TPP), was seen as an important economic counterweight to China's growing influence.
But the TPP was thrown into limbo in early 2017 when then-US President Donald Trump withdrew the United States.
The grouping, which was renamed the CPTPP, links Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
