China Articles - July 18, 2021

Jul 18, 2021

Friends,

I’m pleased to bring you this week’s edition of articles and reports on the malign activities of the Chinese Communist Party.

First in the “Must Read” section is the updated Business Advisory that multiple Departments of the Biden administration issued this week. It warns business leaders of the risks and potential legal violations that may result from doing business with PRC entities in Xinjiang, the site of an ongoing genocide and forced labor by the Chinese Communist Party.

I’d also encourage readers to listen to last week’s episode of Michael Morell’s “Intelligence Matters” podcast (#50 below). Michael interviews me on the trends in U.S. policy towards the People’s Republic of China and how it has changed over the past several years.

Thanks for reading!

Matt

MUST READ

1. Xinjiang Supply Chain Business Advisory: Risks and Considerations for Businesses and Individuals with Exposure to Entities Engaged in Forced Labor and other Human Rights Abuses linked to Xinjiang, China

United States Government, July 13, 2021

The People’s Republic of China (PRC) government continues to carry out genocide and crimes against humanity against Uyghurs and members of other ethnic and religious minority groups in the Xinjiang Uyghur Autonomous Region (Xinjiang), China. The PRC’s crimes against humanity include imprisonment, torture, rape, forced sterilization, and persecution, including through forced labor and the imposition of draconian restrictions on freedom of religion or belief, freedom of expression, and freedom of movement.
Businesses, individuals, and other persons, including but not limited to investors, consultants, labor brokers, academic institutions, and research service providers (hereafter “businesses and individuals”) with potential exposure to or connection with operations, supply chains, or laborers from the Xinjiang-region, should be aware of the significant reputational, economic, and legal risks of involvement with entities or individuals in or linked to Xinjiang that engage in human rights abuses, including but not limited to forced labor and intrusive surveillance.
Given the severity and extent of these abuses, including widespread, state-sponsored forced labor and intrusive surveillance taking place amid ongoing genocide and crimes against humanity in Xinjiang, businesses and individuals that do not exit supply chains, ventures, and/or investments connected to Xinjiang could run a high risk of violating U.S. law. Potential legal risks include: violation of statutes criminalizing forced labor including knowingly benefitting from participation in a venture, while knowing or in reckless disregard of the fact that the venture has engaged in forced labor; sanctions violations if dealing with designated persons; export control violations; and violation of the prohibition of importations of goods produced in whole or in part with forced labor or convict labor.

2. One by One, My Friends Were Sent to the Camps

Tahir Hamut Izgil, The Atlantic, July 14, 2021

After college, Tahir worked in Beijing before taking a position teaching Mandarin in Urumqi, Xinjiang’s capital. All the while, he continued writing poetry. In 1996, he left Urumqi with the hope of studying abroad in Turkey but was arrested while attempting to leave China. Following a confession elicited under torture, he was imprisoned for three years, first in a facility near Urumqi and then in a forced-labor camp outside Kashgar, on charges of intent to expose state secrets. Conditions were harsh, and his weight fell below 100 pounds.
After his release, Tahir had to begin his life again, only now with a black mark against his name. The next year, he began working in film production, and by the early 2000s he had established himself as a significant and highly original director.
Perhaps because of his experiences, Tahir saw what was coming earlier than most. One night in late 2016, we had dinner with several other friends. Afterward, Tahir offered to drive me home. Instead of setting off, though, we sat in his car in the empty parking lot and continued talking. In a city where the walls have ears, this was a good place for a private conversation.
We discussed the worsening political situation in Xinjiang, and he asked in some detail about life in the U.S. I sensed it was time to talk about something we had never discussed before. “Are you thinking about moving to America?”
He looked me straight in the eyes. “Yes.”
The following year, reports of mass arrests and internment camps began trickling out of Xinjiang. Although I had left by then, I could see for myself that something serious was happening. One by one, my closest friends began deleting me from their phone contacts, as communication with individuals abroad became a pretext for arrest.
Tahir stayed in touch longer than most. In late June, he sent me a voice message. “In May the weather here got really bad,” he told me, using the typical Uyghur circumlocution for political repression. We exchanged a few messages.
And then, silence. Those were the last messages I ever received from any of my friends in the Uyghur region.

3. Rock in China

Stacey Anderson, Rolling Stone, June 24, 2021

If a club is on the ropes financially, the presence of plainclothes officers can accelerate its demise. A concert promoter in Shanghai tells me that he and his friends often play “spot the cop” at shows, looking for the man in his thirties or forties dressed in some exaggeratedly trendy outfit, an untouched beer bottle warming in his fist. Plainclothes cops can, on a whim, demand urine tests from audience members and throw them in jail for any trace of drugs in their system. They have also been known to take stock of attendees and performers during shows, identify them using the government’s comprehensive surveillance technology that incorporates phone and facial-recognition scanners, and appear later at their homes to collect hair samples, which have longer-term traces of substances in them. When the Shanghai promoter anticipates such a visit, he says, he shaves his head. A Beijing-based artist tells me that although raids are currently less active there than in Shanghai, he and his peers still sometimes bleach their hair after long nights out, in order to fry any traces of drugs.
This uptick in police presence isn’t limited to concerts; the consistent possibility of arrest has also created deep, McCarthyist suspicion among its community. One Beijing-based singer fronted an up-and-coming rock band before his bandmate was arrested for drug use — sold out, he believes, by a friend. Soon after, the group broke up. He’s wary of who he speaks to now, both at concerts and on WeChat — a popular social media app, a sort of instant messenger, Twitter, Facebook, email, and digital wallet hybrid (and well-documented to be monitored by the government).
“The authorities are very good at calling on people to fight against people,” says the singer. “If they arrest you and they take you into the police station, they terrify you and threaten you. They say that if you report 10 other names who do drugs, they will reduce your sentence. So people are reporting each other all the time.”
Winston’s introductory stint in prison, after such an alleged peer report, lasted less than a week. Today, he recalls the harsh blankness of his cell. “The walls, the floor — everything was white. And the light never turned off. It was winter, but the heat was not on.” His voice is grim and clipped, even through the international static of our call. “They have cameras in there, so they can see what you’re doing. At one point we were doing push-ups, and a voice came through the speaker in our room telling us to stop.”

4. A Revealing ‘Gaffe’ Roils Asia

Wall Street Journal, July 9, 2021

Japan’s government played clean-up this week after Deputy Prime Minister Taro Aso indicated the country would intervene to repel a Chinese invasion of Taiwan. Such Chinese military expansion, he said Monday, could threaten Japan’s “survival,” and “if that is the case, Japan and the U.S. must defend Taiwan together.”
Japan officially embraces a “one-China” policy and favors a diplomatic resolution between Beijing and Taipei. China’s state media on Wednesday published a piece in response warning that if Japan is involved in a conflict over Taiwan, it “will become the target of China’s military strike. This will endanger Japan’s survival.”
While others in Tokyo said Mr. Aso’s comments were his personal view, in consensus-oriented Japan this is almost never true. Mr. Aso, who was also Prime Minister for a year in the late 2000s, is reflecting a growing chunk of Japanese opinion on the political center-right.
His gaffe is that he blurted out (at a political fundraiser) the truth that a Chinese takeover of Taiwan would blow up the half-century-old security order in Asia and pose a direct military threat to Japan, whose southernmost islands are adjacent to Taiwan. “Okinawa could be the next,” he added, according to press reports.
The subjugation of Taiwan, despite U.S. support and military aid, would undermine if not end the credibility of the U.S. security pact with Japan, which helps maintain the country’s independence. In the balance of power between the world’s two largest economies, the U.S. and China, the world’s third-largest economy, Japan, is critical.

5. Dear progressives: You can’t fight climate change by going soft on China

Isaac Stone Fish, Washington Post, July 10, 2021

On Thursday, more than 40 progressive groups sent a letter to lawmakers and President Biden, urging them to stop the “demonization” of China and to start cooperating with it. The letter argues that the United States must end “the new Cold War” with China to address our current climate emergency.
The United States, they write, has long “scapegoated China as an excuse to avoid global climate commitments.” The letter absolves China of its human rights abuses and the national security threat it poses to the United States, and instead claims that the two countries can partner to “support international best practice” human rights standards — a breathtaking statement, given China’s brutal repression of the Uyghurs, Hong Kong and Tibet (among other things). In short, the progressive groups who signed this letter imply that while the United States got us into this crisis, we can encourage China to save us.
The letter begins with the true statement: “Climate change is a global crisis.” But it’s followed by a false one: “Confronting it requires global cooperation.” In fact, countering China is a far more effective and more realistic strategy for fighting climate change.

6. Former Vice President Mike Pence Lays Out China Policy Roadmap for Biden White House

Mike Pence, Heritage Foundation, July 14, 2021

Former Vice President Mike Pence addressed The Heritage Foundation today on the threat posed by the Chinese Communist Party (CCP), the U.S.-China relationship under the Biden administration, and critical policy steps the Biden administration must take in the coming months to confront the China challenge.
Of the threat posed by the CCP, Pence said, “The Chinese Communist Party aspires not merely to join the community of economically developed nations, but to sit atop a new global order, created in its own image. A world in which freedom is constrained, but Beijing’s power is not.”
Pence, also a Heritage distinguished visiting fellow, highlighted the Trump administration’s track record in standing up to the challenge presented by the CCP, while calling on the Biden administration to do more to combat the threat. He declared, “The Biden-Harris administration is already rolling over to China. … China senses weakness in this new administration.”
He warned that the CCP represents an even greater threat to American interests than the Soviet Union, not only because China is America’s largest trading partner, but because many American institutions—including Hollywood, corporate America, and academia—sing the CCP’s praises while condemning American values and institutions. Indeed, Pence said, “Millions of Americans are looking at corporate America and asking, ‘Are you on our side, or theirs?’”

Authoritarianism

7. China is keeping its borders closed, and turning inward

The Economist, July 17, 2021

The Chinese Communist Party is breeding a powerful wave of isolationism and fear of the outside world to protect their legitimacy.
…
China wants foreign know-how and respect, not foreigners.
Chinese history has seen many cycles of opening and turning inward. Anecdote by anecdote, evidence is mounting that foreigners, whether suspected of bearing dangerous germs or ideas, are becoming less welcome. On a recent domestic flight, Chaguan’s neighbour pointedly asked to move seats. It is growing more common to face demands from members of the public to agree that China is strong and the West failing. Nationalism and impatience with foreign criticism were on the rise before covid-19. The pandemic has sped up those trends—as it has inspired at times nasty anti-Chinese racism abroad. Mutual distrust will be hard to overcome until China re-opens. That may take a while.

8. How nationalism is making life harder for gay people in China

The Economist, July 17, 2021

The Chinese Communist Party increasingly portrays its LGBT citizens as agents of foreign influence.

9. WeChat deletes dozens of university LGBT accounts in China

Nectar Gan and Yong Xiong, CNN, July 7, 2021

WeChat has deleted more than a dozen LGBT accounts run by university students, sparking fears that safe spaces for China's sexual and gender minorities are going to shrink even further.

10. Hong Kong’s Exodus Is Real and Painful

Clara Ferreira Marques, Bloomberg, July 13, 2021

Casual conversations in Hong Kong these days turn quickly to departures: Where to go, how to find work or school places. Subway station advertisements tout developments in London commuter towns. Thousands of the territory’s 7.5 million people, faced with the reality of Beijing’s rapidly tightening grip, have already left for new lives elsewhere. Many thousands more will likely follow as pandemic restrictions lift — not just a handful of young activists, but average families, galvanized by child arrests and the advent of a pro-China school curriculum.
Their flight and absence will leave the city changed.
It’s hard to measure the scale of the exodus. There aren’t enough timely statistics and Covid-19 travel barriers remain in place, affecting migration decisions. But surveys, anecdotal evidence and proxy measures suggest there is already a steady flow. As I completed my own bureaucratic departure formalities last month, I found knots of young Hong Kongers, often couples, filling in the same forms.
At the Covid-haunted airport the morning I left, there was a sharp contrast between row upon row of echoing, empty check-in lanes and the scramble of families around the Air Canada counters. At other times, by all accounts, it’s the London check-ins that throng with trolleys piled high with suitcases as more people take advantage of the British National (Overseas) immigration program that attempts to right historical wrongs by offering sanctuary and a path to citizenship for more than 5 million of the former colony’s residents.

11. Martial arts star Jackie Chan wants to join the Chinese Communist Party, but China doesn’t want him

Phoebe Zhang, South China Morning Post, July 13, 2021

Environmental Harms

12. China’s Extreme Weather Warnings Avoid Talk of Climate Change

Bloomberg, July 12, 2021

[Chinese Communist Party] officials and media often frame climate change as a global problem that China can lead in solving, not as a crisis that affects its citizens’ daily lives. In fact, the world’s second-biggest economy stands to suffer greatly from unchecked global warming.
The gap in China’s climate discourse means the public generally agrees with the government's official position, but few grasp the urgency of the crisis or what it means for their individual futures. In a recent survey of 5,400 Chinese aged 18 to 24 by nonprofit China Youth Climate Action Network, over 40% of them called climate change the biggest threat to the world. Yet almost 60% of them failed a simple knowledge test about the issue. They agreed that climate change is caused by a hole in the Earth’s atmosphere, confusing the impact of greenhouse gas emissions with depletion of the ozone layer.

13. Chinese cities among 25 big producers of greenhouse gases, study finds

Holly Chik, South China Morning Post, July 12, 2021

Foreign Interference and Coercion

14. The Challenge of Fentanyl: The China-Mexico Connection

Mark Brnovich, James W. Carroll Jr. and Uttam Dhillon, Heritage Foundation, July 15, 2021

With the United States still in the grips of an opioid crisis, the number of overdose fatalities has increasingly been driven by a narcotic even more potent than heroin: the synthetic opioid fentanyl. Fentanyl and its analogues are 50-100 times more powerful than morphine; even minute amounts can lead to death. Fentanyl is often added to heroin or cocaine because it is less expensive to produce. China exports the drug (or its precursor chemicals) to Mexico, and the cartels smuggle it into the United States. Law enforcement has struggled to halt that flow, and the recent crisis at the southern border has only exacerbated this issue.

15. Viktor Orbán wants a Chinese university in Hungary. Opponents see a chance to turn his nationalist rhetoric against him

Sheena McKenzie, CNN, July 11, 2021

A derelict plot on the banks of the Danube River in Budapest, Hungary, might seem like an unusual epicenter for a political earthquake.
But that was before Prime Minister Viktor Orbán's populist government announced a controversial plan for a prestigious Shanghai university to open its first overseas campus there in 2024 -- which Hungarians would apparently pay for.
Now protests over the future of this nondescript site have galvanized Hungary's opposition, and united them in an attempt to topple Orbán's ruling party at next year's general election.

16. U.S. set to add more Chinese companies to blacklist over Xinjiang

David Shepardson and Humeyra Pamuk, Reuters, July 9, 2021

17. Empty threats? Policymaking amidst Chinese pressure

Charles Parton, Council on Geostrategy, July 6, 2021

At a time when the divergence of political, economic and values systems between the Chinese Communist Party (CCP) and free and open countries is growing, Her Majesty’s (HM) Government has a difficult balance to strike: how, in an increasingly globalised world, to maximise good relations with the People’s Republic of China (PRC), while prioritising the United Kingdom’s (UK) own security, values and prosperity. PRC foreign policy is increasingly built upon economic sticks and carrots.
The implicit threat/inducement is that, unless the UK acquiesces to CCP aims, it will miss out in six areas: exports, investment in the UK, financial and associated services, Chinese students at British universities, tourism, and cooperation over climate change. The threat has been exaggerated. The contention of this Report is that the CCP’s sticks and carrots are neither as threatening nor as juicy, respectively, as generally portrayed.

18. Two decades after 9/11, British spies turn focus back to Russia and China

Reuters, July 13, 2021

Human Rights and Religious Persecution

19. WHO Panel Issues Gene-Editing Standards Aimed at Averting DNA Dystopia

Amy Dockser Marcus, Wall Street Journal, July 12, 2021

20. Media Freedom Coalition Statement on Hong Kong’s Apple Daily

U.S. Department of State, July 10, 2021

The undersigned members of the Media Freedom Coalition express their strong concerns about the forced closure of the Apple Daily newspaper, and the arrest of its staff by the Hong Kong authorities.
The use of the National Security Law to suppress journalism is a serious and negative step which undermines Hong Kong’s high degree of autonomy and the rights and freedoms of people in Hong Kong, as provided for in the Hong Kong Basic Law and the Sino-British Joint Declaration.
The action against Apple Daily comes against a backdrop of increased media censorship in Hong Kong, including pressure on the independence of the public broadcaster and recent legal action by the Hong Kong authorities against journalists.
We are highly concerned by the possible introduction of new legislation that is intended or could risk being used to eliminate scrutiny and criticism by the media of the government’s policies and actions.
Freedom of the press has been central to Hong Kong’s success and international reputation over many years. Hong Kong and mainland Chinese authorities should fully respect and uphold this important right, in line with China’s international legal obligations.
Signed by the Governments of Australia, Austria, Canada, Czech Republic, Denmark, Estonia, Finland, France, Germany, Iceland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, New Zealand, Slovakia, Switzerland, United Kingdom, United States of America.

21. German lab Eluthia says suspends use of BGI prenatal tests for privacy probe

Reuters, July 12, 2021

German laboratory operator Eluthia GmbH said on Monday it would suspend the use of Chinese gene company BGI Group's prenatal blood test for pregnant women while it looks into potential measures to protect its customers' data privacy.
"Eluthia will suspend the mediation of tests to the BGI laboratory on a preliminary basis to clarify published claims and to consider potential further measures for patient protection," the company said in a statement.
A Reuters review of scientific papers and company statements, published last week, found that BGI developed prenatal tests in collaboration with the Chinese military and is using them to collect genetic data from millions of women for sweeping research on the traits of populations.

22. Agencies warn U.S. firms that Xinjiang links could violate federal law

Gavin Bade, Politico, June 13, 2021

Widespread abuses: The document, issued by the departments of State, Treasury, Homeland Security, Labor and Commerce along with the Office of the U.S. Trade Representative, says the Chinese government’s abuses against Uyghur Muslims and other ethnic minorities in the region include “imprisonment, torture, rape, forced sterilization and persecution,” including forced labor and restrictions on movement and expression.
Legal risks: Any company that does not end its ventures and investments in Xinjiang “could run a high risk of violating U.S. law,” including statutes criminalizing use of forced labor in producing goods for American consumption, the document warns.
The advisory lists four areas where U.S. firms may be working with entities engaged in human rights violations. They include assisting in the development of surveillance tools for the Chinese government, sourcing labor or goods from Xinjiang or regions that use its products, supplying American technology to Xinjiang-based entities, and aiding the government in construction and operation of detention centers in the region.
What’s next: The advisory is “explanatory only,” and does not have the force of law itself. But it warns that the six agencies will continue developing regulations to bar U.S. firms from doing business with Xinjiang entities. That could include further financial regulations from Treasury, sanctions against Xinjiang officials from State, and further import bans on solar energy components and other products from the region.

Industrial Policies and Economic Espionage

23. China’s Monetary Policy Slips a Gear Into Neutral

Nathaniel Taplin, Wall Street Journal, July 12, 2021

24. Biden to warn U.S. companies of risks of operating in Hong Kong

Reuters, July 13, 2021

25. Global investors’ exposure to Chinese assets surges to $800bn

Hudson Lockett, Financial Times, July 13, 2021

26. China's Didi crackdown is a 'big F-U' to America, Kyle Bass says

Matt Egan, CNN, July 7, 2021

27. China widens clampdown on overseas listings with pre-IPO review of firms with large user data

Reuters, July 10, 2021

28. One of the largest ‘Made in China, sold on Amazon’ companies had 340 stores closed, US$20 million in funds frozen amid crackdown

Iris Deng, South Morning China Post, July 8, 2021

29. China’s Easing Forces Traders to Rethink How They Label Markets

Sydney Maki, Bloomberg, July 10, 2021

30. Chinese fitness app pulls New York IPO plan after Didi debacle

Financial Times, July 8, 2021

31. Senators call on US securities regulator to investigate Didi IPO

Kiran Stacey, James Politi, Financial Times, July 8, 2021

32. Chinese antitrust regulator blocks Tencent's $5.3 bln video games merger

Reuters, July 10, 2021

33. FTSE Russell to remove more China stocks from indexes over U.S. ban

Reuters, July 7, 2021

Cyber and Information Technology

34. FCC votes to finalize program to replace Huawei equipment in U.S networks

Reuters, July 13, 2021

35. Facebook Staff Uneasy at China Ads Denying Xinjiang Abuse: Report

Isobel Asher Hamilton, Business Insider, April 6, 2021

Facebook employees are uneasy about ads the Chinese government is running on the platform about life in Xinjiang, The Wall Street Journal reported.
The region of Xinjiang is home to most of China's Uyghur Muslim ethnic minority. In February, the UN's human-rights chief said there was a need for an "independent and comprehensive assessment" of human rights in Xinjiang following reports of mass detention centers, sexual violence, and forced labor. The Biden administration has accused Beijing of "genocide" against Uyghurs.
The ads show people saying that their lives in Xinjiang are improving and that Western countries are trying to destabilize China, The Journal reported. Facebook is banned in mainland China, but the Chinese government can take out ads.
The Journal said Facebook employees first raised complaints about the ads in an internal forum for Muslim staffers.

36. China Orders Stores to Remove More Apps Operated by Didi

Yoko Kubota, Wall Street Journal, July 9, 2021

37. VIDEO – Trusted Connectivity: Securing digital infrastructure in an era of strategic competition with China

H.E. Kaja Kallas, Atlantic Council, July 14, 2021

38. DIDI Crackdown: Big Data Is the Latest U.S.-China Battleground

Bloomberg, July 8, 2021

39. Chinese social media giant WeChat shuts LGBT accounts

Associated Press, July 7, 2021

Military and Security Threats

40. The Philippines’ secret weapon against Chinese incursions

The Economist, July 10, 2021

41. Biden backs Trump rejection of China's South China Sea claim