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Trump Claims Illegal Ballots Cost Him Popular Vote; Trump Withdraws U.S. from Trans-Pacific Partnership; Syria's Warring Sides Refuse to Negotiate Directly; China Makes It Harder to Evade Its Great Firewall; Russia's Top Diplomat Praises Trump on Foreign Policy; China Requires Approval of Virtual Private Networks. Aired 12-1a ET

Aired January 24, 2017 - 00:00   ET



[000012] JOHN VAUSE, CNN ANCHOR: This is CNN NEWSROOM live from Los Angeles.

Ahead this hour --

ISHA SESAY, CNN ANCHOR: Without any evidence to support it President Donald Trump continues to insist that millions of illegally cast ballots cost him the popular vote.

VAUSE: Low expectations as rebel fighters meet for the first time with the Syrian government for peace talks.

SESAY: And China is hiding its great firewall cracking down on the tools used to get around its web sources.

VAUSE: Hello everybody. Great to have you with us. I'm John Vause.

SESAY: And I'm Isha Sesay.

VAUSE: Is that right? Nice to see you.

SESAY: It really is me.

NEWSROOM L.A. starts right now.

Well, with the pressing business of the U.S. presidency before him Donald Trump can't seem to move beyond the past sources say Mr. Trump told congressional leaders Monday if not for three to five million illegal ballots, he would have won the popular vote.

We should point out there is no evidence to support this claim he keeps bringing up.

VAUSE: Mr. Trump also welcomed union and business leaders to the White House and he kept his word on a key campaign promise pulling the U.S. out of the TPP, the Trans-Pacific Trade Partnership.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We just officially terminated TPP. And I just signed a document, very powerful document. And we can have trade but we're going to have one on one.

And if somebody misbehaves we're going to send them a letter of termination, 30 days and then we have to straighten it out or we're gone.


SESAY: Well joining us now: Democratic strategist Dave Jacobson and Republican consultant John Thomas.

VAUSE: Also with us CNN Money Asia-Pacific editor Andrew Stevens in Hong Kong and CNN correspondent David McKenzie standing by in Beijing.

SESAY: Andrew -- first to you. President Trump following through on one of his key campaign promises of withdrawing the U.S. from the TPP. He expressed on Monday the U.S. would sign trade deal only with individual allies.

So let me ask you this. What are expectations for the U.S. renegotiating bilateral trade deals with the 11 other countries that make up the TPP?

ANDREW STEVENS, CNN MONEY ASIA-PACIFIC EDITOR: Well, Donald Trump made it pretty clear there, didn't he, that he's going to do one on one and if people don't comply within 30 days, if they breached the rules of that one on one they're going to be out of this.

So he's making it very clear that this is going to be the way forward for him in the wake of the TPP which was, of course, a 12-member multi-country partnership.

The interesting thing in here is when he talks about a one on one deal, what does he actually mean -- Isha? Because if you look at what he's been saying, he's talking about putting America first, buying American goods first. So what he's saying is basically it sounds like we will negotiate on very much our terms.

Now, there used to be a term called mercantilism which was really a zero-sum game. We win, you lose. That's obviously what Donald Trump's hinting at. Interestingly also that the Japanese Prime Minister came out after Mr. Trump made that statement saying that they think the way forward on trade deals is to use the architecture, if you like, of the TPP.

And Shinzo Abe is talking about making sure there's proper protection for labor, for environmental stance, for intellectual property, et cetera, et cetera. Whether Donald Trump picks that up we don't know at the moment.

But what he signaled it is going to be a whole new ball game now for U.S. and globe in trade.

VAUSE: Ok. Now to David McKenzie standing by in Beijing. So David -- it seems that the door is now wide open for China to move ahead with its own trade deals and essentially cash in on this decision by the U.S. president. DAVID MCKENZIE, CNN CORRESPONDENT: Well, that's right. The big economy on the block, of course, is China. It was not included in those 12 nations that Andrew described. And China now will be seen to taking advantage most likely of the U.S. pulling back from its economic commitment in the region.

But this is not just about trade, it's also about politics. And certainly some of the allies of the U.S. including Japan in the region will be thinking potentially that they're being let down by the U.S. who made a big push to get this TPP partisanship in the region to try and counteract China's influence in the Asia-Pacific.

Now they might try to cobble together TPP without the U.S. but it certainly won't as strong of an option and it certainly is an opening door for China -- John.


SESAY: Yes, David. And Andrew, stand by for us. Let's bring it back to the studio here. And guys -- let me put this to you.

[00:05:00] I mean the TPP was effectively dead -- it hadn't been ratified by Congress anyway. So why make this such a big deal in your first full day of office. I mean what's the message here. What's really going on? Is it more about optics than anything else?

JOHN THOMAS, REPUBLICAN CONSULTANT: It's 100 percent about optics. I mean this is a big reason Donald Trump got through the primary. He was running on a populist agenda to repeal TPP.

I mean what's interesting today, this was a moment when Bernie Sanders congratulated Donald Trump. It's about what Donald Trump said in his inauguration speech about putting Americans first, killing bad trade deals, killing things that American workers and this is, for Donald Trump, it's on message. And it's better talking about this than crowd size.

VAUSE: It's been -- this is one of the surreal things happened in the last -- Bernie Sanders praising Donald Trump was the least of them.

What I don't understand though, I get, you know, ripping out the TPP. It was a campaign promise. But why withdraw from the TPP and hand this huge win to China -- for the day (ph) while at the same times, he says he's going to renegotiate NAFTA, the trade deal between the United States, Canada and Mexico. Surely, you know, if you're going to renegotiate NAFTA, you recognize the benefits of free trade.

DAVID JACOBSON, DEMOCRATIC STRATEGIST: Potentially, yes. Look, I think this was one of the things that Donald Trump said he was going to do on his first day in office when he had that speech he gave for Pennsylvania. He said look, I'm going to rip apart the TPP.

It's a widely recognized bipartisan. Bernie Sanders campaign on it. Obviously Donald Trump did. So I think this is one of the few things he said he was going to do on day one that he actually accomplished. But the reality is, there are several things that he also said that he was going to do on day one that he hasn't done, right? He said that he was going to put a term limit, a ban -- amendment forward in Congress.

He also said he was going to put a limit on folks who serve in Congress or in the White House that they can't lobby for five years.

These are things that he hasn't delivered on that I think is going to raise real questions about whether or not he's going to follow through on all these promises.

THOMAS: Here's what's fascinating to me about NAFTA is, Trump wrote "The Art of the Deal". He claimed he's a smart businessman and that America's been cutting bad deals. And that everything needs to be renegotiated.

So he's talking not about repealing NAFTA but renegotiating. What does that look like?


THOMAS: And I think American's are going to be watching very closely. Can he strike a better deal.

SESAY: Yes. And let me ask you this. I mean with withdrawing the U.S. from the TP, you know, there are going to be American workers thinking that things are going to change -- right? I mean what happens when they realize, actually no, it's not going to change? Those jobs aren't going to come flooding back.

I mean what does "America first" look like in reality for people looking for jobs.

JACOBSON: Well, at the same time, he's putting in a hiring freeze at the federal level.


JACOBSON: There's 2.1 million federal employees. He's not going to allow any new employees to come into the federal system and that raises real questions about whether or not he's going to really stand up for the little guy, for the average worker.

THOMAS: Well, he is, just not the government worker. He's going to stand up for the private sector.

JACOBSON: So he's going to contract out the services though?

THOMAS: Probably, I guess.


THOMAS: He's still going to get the job done.

(CROSSTALK) VAUSE: Reagan did exactly the same thing Isha was saying --

THOMAS: Right.

VAUSE: -- back in the 1980s. I mean it's sort of sad --



VAUSE: -- of a Republican president.

Ok -- let's look at the positive from the first, you know, week day of the Trump presidency.


VAUSE: A lot of meetings with business leaders, also with union bosses. We also had the meeting with congressional leaders as well. And this has basically been seen as a positive because Dave, one of the big criticisms of President Obama is that he didn't really reach out to many of these groups, you know.

He asked many of these CEOs who were in the Oval Office, to say how many of you have been in this office before. I think two or three --



VAUSE: You know, if this continues, it's a positive -- right?

JACOBSON: I think generally, the fact that he's opening the doors of the White House and being -- trying to at least be inclusive and bring labor folks and business folks into the White House, is a good thing that any president should do.

The fact that he flat out lied to congressional leaders and basically said well there was widespread voter fraud. I would have won the popular vote by three to five million votes had these votes not been put forward, these fraudulent votes. I think that was something that was widely debunked. And I think it really undermines the President's credibility on the heels of several sort of back to back lies that the White House has put forward.

SESAY: But John -- again bringing that issue of three to five million illegally-cast I think gets back to this issue of his concern about seen as being illegitimate or not having the mandate.


SESAY: I mean that's what this is all about -- right?

THOMAS: 100 percent. And personally it's an ego thing. He can't ever accept the fact that in some measurement, one that really doesn't matter in our system, but some measurement that he didn't come out on top. He just can't, whether it's ratings or attendance, he just can't stomach it.

The other good news we did see today I think was the press secretary. I think the press conference went fine -- well, better than it did on Saturday.

VAUSE: Well, he could have been watching his words. I mean


THOMAS: Well, he could have doubled down but he didn't really.

VAUSE: Sorry -- about the news briefing on Monday -- look, certainly there was a softer tone. He opened with a joke which fell really flat, I should say. And while the tone was softer, the substance hasn't changed. He's still repeating the fact that the inauguration was the most watched period. He did double that and then told then another lie (ph). I mean -- so you know, yes the tone is different but the substance hasn't changed.

[00:10:00] THOMAS: Well, I think that softened it with saying look, we all can initially make mistakes. He goes what I meant is I made a mistake perhaps on the visual but in fact, looking at the Nielsen ratings, looking at the online views, I still think this was the most watched --

SESAY: I mean when you heard that, what went through your mind? When he started talking about (inaudible) and YouTube and all the rest of it; I mean --

THOMAS: Well, I thought that was the argument that if they went down that rat hole, that he should have made at the outset rather than definitively saying something that could be fact-checked.

It's just the truth. There were more people with Barack Obama than there were at Trump. Why did they have to go down that rat hole? I can tell you why. It's because the boss tells the spokesperson to go out and fight that fight.

JACOBSON: Yes. But here's the challenge -- like he's lost all credibility. What he should have done today is gone out on the podium and said, folks, American folks, people -- I'm sorry. I lied. I apologize.

THOMAS: Let's move --

SESAY: And I'm moving out. I'm back in my boat --


VAUSE: But another alternatives fact stated by the President over the weekend was at the CIA headquarters. Mr. Trump said the media (inaudible) is a risk between him and the intelligence community. He was at CIA, he got this huge round of applause when he attacked the media. Listen to this.

(BEGIN VIDEO CLIP) TRUMP: As you know, I have a running war with the media. They are among the most dishonest human beings on earth.


VAUSE: Ok. So on Saturday, the White House spokesperson Sean Spicer said that there was a raucous standing ovation by the audience that were there and that they were overwhelming enthusiastic about having Donald Trump as their Commander-in-Chief.

But we have this report now from CBS News that the Trump folks actually took about 40 of their own supporters. They essentially stacked it. They were the ones who were doing all the cheering and all the clapping. Many within the intelligence community which are supposed to steer clear of the politics were very, you know, concerned about what the Trump people were doing.

So, you know, again we've got this continued deception about the popularity of the President. And it goes to the very core of this administration. Why do they have to continue on with this narrative?

JACOBSON: It's pathetic. And I think it really fans the flames of the sort of the growing rift between the President and the intelligence community. I mean the reality -- community, pardon me -- the reality is that it was just a week ago that he compared the intelligence community to Nazi, Germany and the fact that they were having a quote, "witch hunt" for him.

I mean this thing really undermines the credibility of the presidency of the office and the fact of the matter is Donald Trump needs the intelligence community to have a good relationship with him because he needs their intelligence in order to keep us safe.

SESAY: Let's play some sound from Sean Spicer, the White House spokesperson as he handed answers to questions about, you know, the administration's intention of deceiving the public about the popularity of the new president --

VAUSE: Packing the audience.

SESAY: -- in packing the audience, yes.


UNIDENTIFIED MALE: The people in the crowd that were seen on camera -- those were CIA employees.

SEAN SPICER, WHITE HOUSE PRESS SECRETARY: Honestly, I don't have a seating chart. I think we had a very small footprint going over there. I don't know exactly who went over. But I don't know -- maybe 10 people at most. Sarah, was it --


SPICER: -- 10 were in the travel, going over.


VAUSE: Hands up who believes him?

SESAY: Again, he's caught again in something that can be checked. Something that's (inaudible) -- why do it?

THOMAS: Well that -- yes, that's the great question. I mean they should -- if you're going to fudge the truth, do it on things that are more nebulous that with your perception versus mine. Not things with photographs, not things that can potentially media could go back and perhaps get a seating chart -- right.

Those are things that are distractions from press conferences like on the TPP when jobs are saved or created here. Trump understands and you saw it in his inauguration speech. He wants to be the "America first" jobs president. That's what he wants to be. And all of these are side shows.

It's this confliction between Trump can't help himself with he understands where he wants to be on message. And he's got to get his act together because it will undermine him. There's a lot more of you guys than him.

VAUSE: And Dave, can we establish here now that it's not the media which is creating the sideshows? It is coming directly from Donald Trump and those around him.

JACOBSON: Right. For example, the Nazi comment about the intelligence community last week. Like the video is just throwing back at Donald Trump the words that he's already spewed out whether during the transition or as president or as a candidate.

The media is objective. Their goal is to identify the truth, ask the tough questions and get folks to go on the record so that they can convey to the American people or to the world what the facts are.

SESAY: Thank you -- Dave.

VAUSE: Thank you. We'll have you back. You're in trouble.

SESAY: Thank you.


VAUSE: You -- maybe not so much.

SESAY: You'll be back.

(inaudible) It's really good to be back.

JACOBSON: Just doing my job.

VAUSE: Thanks guys.

THOMAS: Thank you.

VAUSE: Ok. We'll take a short break.

When we come back, Russia's foreign minister gives the new U.S. president kudos as Donald Trump plans for a call with Vladimir Putin. That story just ahead.

SESAY: Plus Syria's warring sides at peace talks right now in Kazakhstan but they're not talking to each other. The details -- next.


VAUSE: Welcome back everybody.

Syrian peace talks are happening right now in Kazakhstan's capital. They'll continue for about an hour and a half but they're already off to a tense and divisive start.

SESAY: That's right. Rebel groups announced they would not talk directly with representatives of the Syrian regime. In turn the chief Syrian delegate called some of the rebels terrorists.

More now from our own CNN's Jomana Karadsheh.


JOMANA KARADSHEH, CNN CORRESPONDENT: There's no expectation of anything ground breaking to come out of these talks in Astana. The main focus here is the ceasefire, that shaky ceasefire that went into effect on December 30th that was brokered by Russia and --

[00:19:30] (NO VIDEO)

[00:20:58] KARADSHEH: -- talks in Kazakhstan are not aimed to compete with the talks in Geneva. They're supposed to complement those talks, pave the way for these political talks next month.

The battlefield in Syria is a very complex one. It's a very complicated conflict there with so many different parties, countries involved and so many different agendas and interests. And coming to these talks, these different groups bring with them these competing interests.

So we're going to have to wait and see if these talks are going to be any different to previous Syria talks.

Jomana Karadsheh, CNN -- Amman.


VAUSE: Gayle Tzemach-Lemmon joins us now. She's a senior fellow with the Council on Foreign Relations. Gayle -- always good to have you with us.


VAUSE: Ok. When it comes to Syria, you always find the positive because there's never a lot of positives. There's usually not a lot of positive because (inaudible) the Syrian government, at least yesterday in the same room as the rebel fighters. The first time that has happened. And also we now have Russia playing this role of sort of diplomat and mediate that as opposed to spoiler.

LEMMON: Look, it's Russia's rules. They've been the one to shape the facts on the ground. And where are they meeting? Not in Geneva, not in a European capital, not within an American participating, with an American as an observer and with the U.N. basically RSVP'ing at the very last minute in a former Soviet republic.

VAUSE: Including --

LEMMON: -- right exactly with Russia shaping the rules on the ground today are really trying to, I think, use the capital they've built through air power and through shaping the facts on the ground to at least bring ceasefire in (inaudible). But whether they'll be successful is absolutely an open question.

SESAY: I mean I get why Russia is pushing for these talks, why they've arranged these talks. But what's Turkey's deal in all this? You know, Russia's supporting Assad; Turkey's sponsoring these opposition groups, these rebel groups. Now on the same page, pushing for talks now -- why?

LEMMON: Look, Russia's hand has been strengthened by the fact that they have been all-in versus the U.S. and, you know, many others who have been kind of dipping their toe in the water for years.

And so right now what you see is Turkey seeing something to be gained by being closer to Russia. It's not sure how it feels about the Americans. And it certainly is unhappy about the fact that Syrian Kurds are part of the American alliance. So I think it's just about your best interest and what makes the most sense if you're Turkey right now -- for them.

VAUSE: Ok. Well, the goal here is pretty limited. It's potentially to extend this ceasefire. There's no talk of a wider political settlement which I think they'll do next month in Geneva. Is there a feeling though that Russia is essentially trying to sideline those Geneva talks and actually move the entire political process into its own sphere?

LEMMON: I think the whole time, Russia has wanted to shape the facts that we live with in the war in Syria. And it has been incredibly successful since it started the air campaign well over a year ago.

And so now, what you see, is they say listen, we're not trying to sideline Geneva. We're trying to reinforce it. But look at where we are. We're (inaudible), we are in a place where the Americans are relegated to the observer role. And if they can bring things a little bit closer and say listen, we saved some lives today then so much the better for Russia going into Geneva talks which are scheduled in February.

SESAY: Gayle -- the opposition is being represented at these talks by a delegation comprised of rebel commanders as opposed to the political leaders in exile, the political position in exile. What message does that send? What does that say to you?

LEMMON: I think all along a lot of people have said we should have the people who are actually doing the fighting [00:24:29] (AUDIO GAP) -- so many diplomatic talks which are simply talks.

And so I think that, you know, look, we started at the beginning by talking about there have been a lot of false starts along the way to an end to this war. And I think there's some sense that at least you can get the folks with guns in the room, maybe you can have a conversation about what comes next.

But I mean the fact that insults were traded very quickly --


LEMMON: -- you're right -- isn't the terrorist and --

SESAY: Yes, exactly.

LEMMON: -- you know, trying to, you know, basically a government of death but, you know, all of these were traded within hours.

[00:25:04] VAUSE: Ok. At the first official White House briefing, spokesman Sean Spicer said the U.S. is willing to work with Russia to defeat ISIS in Syria. Listen to this.


SPICER: I think if there's a way that we can combat ISIS with any country whether it's Russia or anyone else and we had a shared national interest in that, sure we'll take it.


VAUSE: That would be a big change from the Obama administration's position -- right?

LEMMON: Yes and now, right. The stated Obama position was the time has come for Assad to step aside. The reality was there was nothing on the ground that was really leading to that. And there had been a lot of folks inside the Obama administration who had worried about the fact that American influence wasn't there and Russia and Iran were having an increasingly large role.

So I think in some ways it's recognizing a reality that was long left not said from the podium. And also Spicer went on to say, you know, but don't go too far here because, you know, look, it would be hard to imagine how it's getting General Mattis, you know, the Secretary of Defense, getting much closer without a wholesale change of policy in Syria.

SESAY: And last question, (inaudible) higher or lower, do these talks raise or lower the expectations for the talks in Geneva next month? Do they go higher or do they go lower? LEMMON: I think the talks in Geneva have always faced an incredibly higher hurdle. And I don't think it's gotten much lower today.


VAUSE: Ok. Well, thank you very much.

LEMMON: Thank you.

VAUSE: Good to see you.

Short break.

When we come back, Russian President Vladimir Putin will get in touch with the U.S. President Donald Trump this week. We'll tell you what Russia's foreign minister says these two men have in common.

SESAY: Plus, the great firewall of China is getting reinforced. Why it will now be harder for users in China to bypass strict censorship online.


[00:30:07] VAUSE: Welcome back everybody. You're watching CNN NEWSROOM, live from Los Angeles. I'm John Vause.

SESAY: And I'm Isha Sesay.

The headlines this hour --

Donald Trump is pulling out of the Transpacific Partnership. He has signed an executive action, Monday, withdrawing from the 12 country trade deal. Congress never actually ratifies the TPP so the move is largely symbolic.

VAUSE: That wasn't his only executive action on Monday. Mr. Trump also bans international groups from providing abortion services from receiving U.S. aide. He also issued a hiring freeze on all non- military federal workers.

SESAY: President Trump brought up two past grievances in his meeting with congressional leaders, Monday. Sources say he mentioned the size of the crowd at his inauguration and renewed his unverified claim that 3 to 5 million ballots were illegally cast against him in the election costing him the popular vote.

VAUSE: In Kazakhstan, Syria's warring sides are talking but not to each other. Peace talks saying that cementing a ceasefire is said to continue about another hour and a half. The talks backed by Russia and Turkey were for rocky start as both sides accused each other of violating the ceasefire and the chief delegate for Syria's government called the rebels terrorist.

SESAY: Donald Trump received some praise from Russia on his first working day in office. It came from Russia's top diplomat in regards to the U.S. president's foreign policy. CNN's Clarissa Ward has all the details.


CLARISSA WARD, CNN SENIOR INTERNATIONAL CORRESPONDENT (on-camera): Another day has passed here in Moscow and still that hotly anticipated phone call between President Vladimir Putin and President Donald Trump has not yet taken place. We have heard from a spokesperson for the Kremlin that it is still being negotiated, but we did hear today from Russia's foreign minister Sergey Lavrov. He essentially said that there are several key foreign policy areas where the interest of President Trump do overlap with the interest of President Putin.

Now before we have heard President Trump talk about the possibility of further cooperation with Russia specifically on the issue of combating terrorism and the fight against ISIS. President Putin has also indicated that that is a priority for him but it's important to note that if you look at the fight against ISIS that Russia claims to be waging in Syria. So far that fight really has primarily targeted the opposition that is fighting President Bashar al-Assad. The Russians have had relatively little success in fighting ISIS inside Syria.

Now beyond that, of course, there are several, really thorny issues that President Trump and President Putin will have to negotiate before there can be any talk of a real detente between Russia and the U.S.

I'm thinking here specifically of Russian aggression in Syria. I'm thinking also of the annexation of Crimea, which President Trump has indicated possibly he would simply sort of allow to casts, but certainly he will face some resistance in Europe and within his own Congress.

There is also, of course, the issue of sanctions. Russia feels deep- seated resentment against the U.S. about those sanctions, against Russia. They have certainly hobbled the economy here. We heard Russia's prime minister warn that he doesn't think those sanctions are likely to be repealed anytime soon.

So while there are some notes of optimism, there's definitely also a sense that Russian leaders are just quietly trying to throw some cold water on the deal, that there's going to be any rapprochement in the near future.

As far as the Kremlin is concerned, President Trump is still an unknown commodity.

Clarissa Ward, CNN, Moscow.


VAUSE: Minnesota Governor Mark Dayton fainted while delivering his state of the state address Monday night. He's at 40 minutes into the speech when he began to slump.




VAUSE: The governor was helped out of the chamber. His chief-of- staff says he quickly recovered. He is now at home with his family.

SESAY: Frightening.

VAUSE: Yes, it was.


VAUSE: We still don't know exactly what happened, though.

SESAY: Yes. Time for a quick break.

A new crackdown on Internet users in China, next. The latest target of the government's online censorship.


[00:36:43] SESAY: The great firewall of China is getting reinforcement. They will now be even harder for the world's largest population of Internet users to bypass strict censorship online.

VAUSE: The Chinese government now says companies offering a virtual private network will need official approval.

Internet security analyst Hemu Nigam joins us now. He's also the founder of the online safety firm SSP, but also CNN's David McKenzie standing by, live, also in Beijing. So David, first to you, explain why Beijing has done this and how will this crackdown actually be enforced.

DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: Well, John, as you know, it's all about control here in China. There's the Internet as we know it around the world and then there's the Chinese Internet which is behind the so called great firewall.

The authorities of the communist party have for years try to control what people can see and access on the Internet, well-known sites like Facebook, Gmail, Google, Twitter as well as many of the ways we interact with the Internet are not accessible unless people use VPN or virtual private network to draw underneath that wall and access the rest of the Web.

Normally, people spend, you know, a few dollars a month to access that ordinary Chinese particularly like this service so they can access the world. And now the authorities are saying that in the next 18 months or so, they plan on clamping down on those services themselves saying that you have to have the license or negotiate a license before you operate in China and it might be legal if you are caught using the VPN servers.

It's vague, I think, on purpose to allow the authorities to clamp down where they see fit. And some people saying that there's more about ordinary Chinese trying to access forbidden things than necessary taking on corporate entities which use VPN regularly here in China.


VAUSE: The timing, though, seems especially relevant from a domestic, political point of view in China.

MCKENZIE: Well, that's right. You've got the big party, five-year conference coming up soon, though. Somewhat ironic, given that Xi Jinping just last week in Davos said that, quote, "They need to re- double their efforts to develop global connectivity." Well, clearly, not when it comes to the Chinese Internet.



VAUSE: OK, David, thank you. David McKenzie, live, in Beijing.

SESAY: Thanks, David.

Hemu, to bring you in now.

David, just you know, use the expression or use the imagery that VPNs helped people borrow under the great firewall of China. But break it down for us even further how they actually work.

HEMU NIGAM, INTERNET SECURITY ANALYST: Yes. In the simplest form, Isha, all it really is doing is that it's encrypting communication to a server that's been specifically set up to not really collect IP addresses and not really identify where you are visiting so it has this access to really the rest of the world.

And what China is saying is, look, if you are within my boundaries, the Internet for the rest of us recognizes no jurisdiction or boundaries, no physical boundaries. In China, it is inside the physical boundaries. It is part of their physical world and they are saying, hey, if I don't -- if I do allow you, now this is the secret thing that nobody is really talking about.

[00:40:00] If I do allow you, I can actually watch what you're doing and that's the clever part of this. It's a definite shift in policy which is, you know, why I go after this VPN somewhere else pay for, do what you want, I'm not going to pay attention. And I think what China realized in the government side is they went dark.

Their own citizens were allowed to do something that resulted in them being dark so they are flipping it and saying, guess what, come on in, but secretly nobody can watch it.

VAUSE: So this is how this new law will essentially work. It will be the VPN companies have to get a license and then they have to report back to the government. It will be self enforcing.

NIGAM: Well, they have to get a license from the government, which means there will be certain rules that no one has talked about yet. Many times, Chinese that are forced into getting regulations or complying with regulations with the Chinese government have to do things like block access, monitor first time communications, they away certain words from being even reaching their citizens. So I think what you're going to see is VPN is going to become part of the Chinese great firewall but in a different way, where the appearances, hey, they are actually allowing access, but the reality is they are watching what the access is.

SESAY: So can smart people out there find a work around.

NIGAM: Well, I think where I see the world going here is the satellite communications that Facebook has often talked about, that we've talked about here, the more they institute satellite communications, the harder it's going to be for the Chinese government to deal with that issue. And I think this is going to be that cat and mouse game that goes on constantly.

For some reason, they were just kind of keeping their eye over here knowing their citizens are doing this but there's a definite shift including what they said in Davos. That was very interesting. Globalization is key but not for their citizens.

VAUSE: Exactly.

But also, we're talking about, you know, the impact of this on citizens. But, you know, a lot of companies in China use a VPN. The multinational companies, they use a secure line to send sensitive information mainly from Beijing to the headquarters in New York.

How will this now impact on them?

NIGAM: Well, supposedly, it won't impact on them because they already have been doing it legitimately. The fact that they are allowing companies towards citizen access means that their focus is on actually controlling citizens from learning too much, exploring too much, getting to be more powerful in organizing and creating dissident activity, which is very different than the corporate side.

There's a requirement in the corporate side to follow Chinese regulations. So when you set up an entity and I've been inside companies where we had to create what we call local entities in order for our global globalization to occur from the U.S. outside.

SESAY: Can you drop those servers? From folks like the multinationals as a way to get around this. I mean --

NIGAM: Well, they can but now they are dealing with very big issue because on the one hand, they want to have business. Like Apple, for example, or Google.

They can easily just get ban and now they have a very revenue impact that's direct and serious.

VAUSE: If you want access, you got to play by the rules.

SESAY: Indeed.

NIGAM: Exactly.

VAUSE: Thanks, Hemu.

SESAY: Thank you, Hemu.

Thank you for watching CNN NEWSROOM live from Los Angeles, I'm Isha Sesay.

VAUSE: Oh that's your name. I see you.

I'm John Vause. "World Sport" with Kate Riley is up next and we'll be back with another hour of news when we get back to. You're watching CNN.