US Secretary of State Mike Pompeo asks Silicon Valley to be smart when dealing with China and to not let American technology power a truly Orwellian surveillance state.

“We need to make sure American technology doesn’t power a truly Orwellian surveillance state. We need to make sure American principles aren’t sacrificed for prosperity,” Pompeo told the Silicon Valley Leadership Group at the Commonwealth Club in San Francisco on Monday, where he remained optimistic about US-China business relations.

“I am convinced that we can cooperate with China […] but we also have to honestly confront tough questions about the national security consequences of doing business in a country controlled by the Chinese Communist Party,” he remarked.

“That especially goes for companies that develop some of our most sensitive technology as many do here in this region [Silicon Valley].”

“Our government agencies are cooperating in new ways to stop the Chinese military from using our own innovation against us”

Addressing the elephant in the room, the Secretary of State acknowledged that China’s intellectual property theft was still a huge problem, but what was even more troubling was how China used stolen technology to power its Orwellian system of surveillance.

“China’s rampant theft of intellectual property is real, and it’s not just a problem for the particular company affected because that capacity to invest and create and protect those property rights underpins the entire innovation economy that we have here in the United States,” Pompeo said.

“As we stand here today, there are about a thousand open intellectual property cases with the FBI — nearly all of them somehow connected to China.

“But, as you know, it’s the application of that property that is just as troubling.”

“Under Chinese law Chinese companies and researchers MUST, I repeat — MUST — under penalty of law share technology with the Chinese military”

Under Chinese law the Communist government can access data from any company operating in China. This goes for both foreign and domestic companies.

“There’s a reason why so many hackers and thieves like the APT 10 Group are connected to the Chinese Ministry of State Security,” Pompeo continued.

“Under Xi Jingping, the CCP has prioritized something called ‘Military-Civil Fusion.’ It’s a technical term but a very simple idea. Under Chinese law Chinese companies and researchers must, I repeat — MUST — under penalty of law share technology with the Chinese military.

“The goal is to ensure that the People’s Liberation Army has military dominance. And the PLA’s core mission is to sustain the Chinese Communist Party’s grip on power.

“That same Chinese Communist Party that has led China in an increasingly authoritarian direction — and one that is increasingly oppressive as well. It runs completely at odds with the tolerant views that are held here in this area and all across America.”

“We now see China for what it is — not for what we wish it would be”

The Secretary of State warned the Silicon Valley crowd about the risks involved in doing business with China. He said that US companies can work with China, but they have to be smart and keep American values at heart.

“Even if the Chinese Communist Party gives assurances about your technology being confined to peaceful uses, you should know there is enormous risk — risk to America’s national security as well,” Pompeo warned.

“Look, the commercial decisions are yours to make. You’ve got shareholders which hold you accountable; boards of directors to which you have fiduciary obligations. And I know your job is to make money for your shareholders. The Trump administration is all for it.

“Invent new things. Change the world. I get that. But I also want to remind each of you as Americans, as citizens of a free nation — that it is increasingly at risk from Chinese actions that may undermine the very freedom that you have to build your business and create.

“This is not to be alarmist. This is not to be threatening. It is for all of us to be aware of.

“We now see China for what it is — not for what we wish it would be. It’s happened on both sides of the political aisle, and American companies have also rallied to patriotic causes. There’s a long history of that here in the United States.”

“We need to make sure that our companies don’t do deals that strengthen a competitor’s military or tighten the regime’s grip of repression”

“I’m not here to demand that you get out of China. In fact, just the opposite. We want American companies to get rich doing business there. We want you to grow jobs here in America and build your companies successfully. We want to create conditions that you may do so on a level playing field.

“At the same time we need to make sure that our companies don’t do deals that strengthen a competitor’s military or tighten the regime’s grip of repression in parts of that country.”

“President Trump has taken action to confront China’s theft and predatory economic practices. He’s demanding respect and reciprocity. It’s happening this very week when we sign the first part of a trade deal.”

Secretary Pompeo added, “Our government agencies are cooperating in new ways to stop the Chinese military from using our own innovation against us.

“And we’re putting our allies and partners on notice about the massive security and privacy risks connecting to letting Huawei construct their 5G networks inside of their countries.

“Protecting America’s innovating capacity is at the center of what we’re trying to do in these talks.”