Country Reports on Terrorism 2010 - China

Overview: China held counterterrorism military exercises with Thailand in October, participated in regional counterterrorism exercises with Shanghai Cooperation Organization (SCO) member states in September, and provided equipment to Pakistan for counterterrorism training in May. China's domestic counterterrorism efforts remained primarily focused against the East Turkistan Islamic Party (ETIP), also known as the East Turkistan Islamic Movement (ETIM). In January 2010, ETIP released videos in Uighur, a Turkic language indigenous to China's western Xinjiang Uighur Autonomous Region (XUAR), to claim credit for alleged actions in revenge for the "July 5 incident" of 2009, when racially-motivated riots in the XUAR capital led to the reported deaths of both Uighurs and Han Chinese, and to call on Muslims in Xinjiang to carry out a "jihad" against China.

China does not always distinguish between legitimate political dissent and the advocacy of violence to overthrow the government, and has used counterterrorism as a pretext to suppress Uighurs, a predominantly Muslim ethnic group that makes up a large percentage of the population within the XUAR.

2010 Terrorist Incidents: On August 19, three people drove an explosive-laden vehicle into a crowd in the city of Aksu, XUAR, killing three civilians and three police officers, and wounding 15 other civilians and police officers. The Chinese government attributed this incident to "separatists, extremists, and terrorists."

Legislation and Law Enforcement: The U. S. Federal Bureau of Investigation (FBI) Legal Attaché's Office in Beijing held several meetings and briefings with the Chinese Ministry of Public Security (MPS) Terrorism Department on a number of terrorist-related issues. The Legal Attaché's Office has presented specific investigations that potentially could be worked jointly between the FBI and MPS; to date, the MPS has not responded to these requests.

China participated in the Megaports program. Through provision of training and donation of radiation detection equipment, the U.S. Department of Energy improved China's capacity to detect and interdict smuggled nuclear and radiological materials in preparation for the 2010 Shanghai World Expo and the 2010 Asia Games.

Countering Terrorist Finance: China has yet to develop a regime to freeze terrorist assets that meets international standards or that adequately implements UNSCRs 1267 and 1373. This was identified by China's central bank as a future priority in China's "2008-2012 National Anti-Money Laundering/Counterterrorist Financing (AML/CTF) Strategy" paper. There remained a need for better implementation and enhanced coordination between financial regulators and law enforcement authorities. U.S. agencies continued to seek expanded cooperation with Chinese counterparts on terrorist and other illicit finance matters and to strengthen both policy- and operational-level cooperation in this critical area.

Terrorist financing is a criminal offense in China. In 2010, China demonstrated progress in addressing certain deficiencies in AML/CTF. China increased the number of money-laundering investigations, prosecutions, and convictions. The central bank issued a new regulation clarifying the suspicious transaction reporting obligations of Chinese banks, as well as penalties for lack of compliance. In April, the U.S. Treasury Department and China's central bank established an AML/CTF working group under the auspices of the U.S.-China Strategic and Economic Dialogue to provide an important channel for addressing both policy and operational cooperation. China is an active, full member of the Financial Action Task Force (FATF), the Asia-Pacific Group (APG), and the Eurasian Group, but has not joined the Egmont Group.

Regional and International Cooperation: In November, Chinese Foreign Minister Yang Jiechi, with his Russian and Indian counterparts, emphasized the need for full international cooperation in counterterrorism efforts, particularly within the framework of the UN, to prevent terrorist attacks and to prosecute terrorists and their supporters. In September, China hosted a diplomatic conference under the auspices of the International Civil Aviation Organization that resulted in two new legal instruments related to civil aviation security. China signed both instruments at the conclusion of the diplomatic conference. China also ratified the International Convention for Suppression of Acts of Nuclear Terrorism.

In response to an October 2009 proposal by the United States, Chinese President Hu Jintao endorsed the joint development of a Nuclear Security Center of Excellence at the April 2010 Nuclear Security Summit. The center's functions will include training to bolster bilateral efforts to prevent terrorists, terrorist organizations, and proliferating states from accessing nuclear and radiological materials. In 2010, we had regular bilateral counterterrorism consultations with the Chinese, including at the Second Annual Strategic and Economic Dialogue, but cooperation remained limited.

Hong Kong

Hong Kong law enforcement agencies provided full support to and cooperation with their foreign counterparts in tracing financial transactions suspected of links to terrorist activities. They participated in U.S. government-sponsored training, including terrorism investigations and complex financial investigations. Hong Kong continued its effective partnership on the Container Security Initiative. The year-old Hong Kong Police Counterterrorist Readiness Unit continued to develop capability in its mission areas of deterrence, assisting police districts with counterterrorist strategy implementation, and providing support to Hong Kong's existing specialist units.

Terrorist financing is a criminal offense in Hong Kong. Hong Kong's financial regulatory authorities directed banks and other financial institutions to continuously search for terrorist financing networks and accounts using designations lists made by the U.S. under relevant authorities, as well as the UN 1267 Sanctions Committee's consolidated lists. All entities and persons are legally required to file suspicious transactions reports (STRs) irrespective of transaction amounts involved. However, Hong Kong does not have reporting requirements for cross-border currency movements.

Hong Kong is an active member of the FATF and the (APG, a FATF-style regional body. Responding to the latest FATF and APG mutual evaluation, Hong Kong authorities in October presented draft legislation that would increase supervision of money changers and remittance agents; create statutory requirements for customer due diligence and record-keeping in the banking, securities, and insurance sectors; and establish civil penalties for violations.

Macau

Macau's law enforcement and customs agencies participated in U.S. government-sponsored training, including bulk cash smuggling detection and investigations, terrorism investigations, and complex financial investigations. Macau's Police Tactical Intervention Unit is responsible for protecting important installations and dignitaries, and for conducting high-risk missions, including the deactivation of improvised explosive devices.

Terrorist financing is a criminal offense in Macau. Macau's financial regulatory authorities directed banks and other financial institutions to continuously search for terrorist financing networks and accounts using designations lists made by the U.S. under relevant authorities, as well as the UN 1267 Sanctions Committee's consolidated lists. All entities and persons are legally required to file suspicious transactions reports (STRs) irrespective of transaction amounts involved. However, Macau does not have reporting requirements for cross-border currency movements.

Macau is an active member of the APG, a FATF-style regional body. Through its Financial Intelligence Office (FIO), Macau is also an active member of the Egmont Group of Financial Intelligence Units.