China Articles - July 24, 2022
Friends,
We are about a week out from what should be the start of the annual retreat at Beidaihe. The elite of the Chinese Communist Party gather at this coastal resort and relax. However, this year, there is likely little to relax about.
Photo of Mao Zedong relaxing at Beidaihe in 1960 during the middle of the ‘Great Leap Forward,’ which directly caused the deaths of 25 to 55 million Chinese citizens, a fact that the Chinese Communist Party still covers up to this day.
The 20th Party Congress is just weeks away (perhaps as early as October if the leaked invitation to European leaders in November is to be believed) and the Party faces numerous challenges just as Xi Jinping is trying to consolidate his position for an unprecedented 3rd term. Beidaihe is likely to be where the final deals are cut and the direction of the PRC is determined (though since the Party refuses to provide any transparency, we will be forced to look ‘through the glass, darkly’).
A serious economic slowdown that is exasperated by continued COVID lockdowns, the spectacular failures of the Belt and Road Initiative in Sri Lanka and Pakistan, an international environment that seems to be coalescing against the Chinese Communist Party, and Taiwan’s increasing international profile. Here are just a few examples of how Taiwan is pushing back against its aggressive neighbor:
Taiwan’s Vice President attended former Japanese Prime Minister Abe’s funeral;
The former U.S. Secretary of Defense visited Taiwan and called for the end of ‘strategic ambiguity’;
Taiwan’s Legislative Speaker visited Prague, the “Mecca of democracy movements,” just as the Czechs take over the EU Presidency;
One of the European Parliament’s Vice Presidents visited Taiwan and called for closer relations between the EU and Taiwan; and
The U.S. Speaker of the House appears to be poised to visit Taiwan in the coming weeks.
I’d love to be a fly on wall at Beidaihe…
Thanks for reading!
Matt
MUST READ
1. So viel weiß TikTok über Ihr Handy [This is how much TikTok knows about your phone]
Janne Knoedler and Frederik Obermaier, Der Spiegel, July 17, 2022 – ORIGINAL IN GERMAN
[GOOGLE TRANSLATE] Analysts from the American-Australian IT security company Internet2.0 have taken a closer look at one of the most popular apps on smartphones, especially among younger people. It's about the Android and iOS versions of the video app TikTok, which ranks sixth among the most used applications worldwide. It is operated by ByteDance, a Chinese company. Ten years after its inception, it is one of the most valuable unlisted tech startups in the world with a current valuation of around $300 billion. Even in the crisis, business seems to be going well: according to forecasts, it will bring in around twelve billion dollars in advertising sales in the current year.
The results of the Internet 2.0 investigation, which SPIEGEL has received, should not only be of interest to users, but also to politicians. Accordingly, at least the TikTok app for the iPhone operating system iOS sometimes establishes a connection to a server in China. Exactly why is unclear to the analysts. According to Internet2.0 research, the connection always leads back to the cyber security company Guizhou Baishan Cloud Technology from the city of Baishan, which, according to the information, operates a joint data laboratory with the local university.
COMMENT: To get the report from Internet 2.0, you will need to sign up here for the download.
2. Rich Chinese Worth $48 Billion Want to Leave – But Will Xi Let Them?
Bloomberg, July 18, 2022
Some 10,000 wealthy Chinese are looking to leave in the wake of punishing lockdowns and an economic slowdown. The question is whether they’ll be able to.
3. New Hawley Bill to Crack Down on McKinsey, Management Consultants’ China Contracts
Senator Josh Hawley, July 18, 2022
Today U.S. Senator Josh Hawley (R-Mo.) introduced the Time to Choose Act which would prohibit the Department of Defense (DOD) and other federal agencies from contracting with consulting firms like McKinsey & Company who are simultaneously providing services to the Chinese government or its affiliates. The bill would force these government contractors to choose whether to stand with the United States in its efforts to protect Americans against China's imperial ambitions, or forfeit U.S. government contracts.
"The fact that these consultants are awarded huge contracts by our Defense Department and other federal agencies, while they are simultaneously working to advance China's efforts to coerce the United States is appalling and completely unacceptable," said Senator Hawley. "It is well past time that we hold these companies accountable and prohibit this kind of conflict of interest in government contracting."
Recent reporting has revealed that McKinsey & Co., which regularly receives multi-million dollar contracts from federal agencies like DOD, has also contracted with Chinese state-owned entities that have been blacklisted by the U.S. for actively undermining American national security.
COMMENT: McKinsey is not alone… here is the press release by Deloitte in 2017 that it was investing $200 million “dedicated to enhancing its advisory services, advancing digital and technology transformation for the firm and Chinese enterprises, supporting the Belt & Road Initiative, as well as assisting Chinese enterprises in going global.”
Deloitte announces US$200 million strategic investment in China
Deloitte China, Globe Newswire, September 25, 2017
4. Intel, others seek weaker China rules in chips bill
Gavin Bade, Politico, July 18, 2022
The fate of an outbound investment review provision — another of target of corporate ire — is in doubt after a key lawmaker said last week the issue should be addressed in “another vehicle,” and not the chips bill.
COMMENT: The CHIPS Act, which is premised on maintaining U.S. leadership in semiconductor manufacturing and undermining the PRC’s quest for semiconductor dominance faces some important hurdles. Intel and other U.S. chip companies that desire significant subsidies from the U.S. taxpayer are lobbying hard against any restrictions on how they might invest that money in the PRC.
5. China seeks to stop UN rights chief from releasing Xinjiang report - document
Emma Farge, Reuters, July 20, 2022
China is asking the United Nations human rights chief to bury a highly-anticipated report on human rights violations in Xinjiang, according to a Chinese letter seen by Reuters and confirmed by diplomats from three countries who received it.
United Nations High Commissioner Michelle Bachelet has faced severe criticism from civil society for being too soft on China during a May visit and has since said she will refrain from seeking a second term for personal reasons.
Authoritarianism
6. A North Dakota City Attracted a Corn Mill. Then Came Questions About Its Chinese Owners. Mitch Smith, New York Times, July 17, 2022
7. ‘My Worldview Has Been Destroyed’: Chinese Banking Scandal Tests Faith in the System
Vivian Wang and Zixu Wang, New York Times, July 19, 2022
The disappearance of ordinary savers’ money, and the government’s seemingly indifferent response, could pose a major test for the Communist Party’s legitimacy.
8. Outbreaks in China prompt lockdowns and fears of more economic woes.
Amy Chang Chien, New York Times, July 19, 2022
9. Anger in China after officials break into homes in hunt for Covid contacts
The Guardian, July 19, 2022
10. Mortgage strikes threaten China’s economic and political stability
Vincent Ni, The Guardian, July 19, 2022
11. Jackie Chan-produced action movie films in devastated Syrian city
Andrew Pulver, The Guardian, July 19, 2022
12. China’s Surveillance State Hits Rare Resistance from Its Own Subjects
Amy Qin, John Liu and Amy Chang Chien, New York Times, July 14, 2022
13. China has an unemployment problem. Why nearly 20 percent of young job-seekers can’t land a job.
Lili Pike, Grid News, July 18, 2022
Environmental Harms
14. Uruguay Navy Chases and Captures Chinese Fishing Vessel
Chris Dalby, Insight Crime, July 6, 2022
The capture of a Chinese fishing vessel and detaining of its crew in Uruguay, on suspicion of illegal fishing, is a rare instance in which a Latin American country is fighting back against encroaching fleets.
On July 5, Uruguayan authorities revealed that at least 11 tons of squid had been found inside the Chinese fishing vessel, Lu Rong Yuan Yu 606, after it was detained a day earlier 150 nautical miles off the city of Punta del Este. The haul was only found during a secondary, more thorough search after an initial inspection failed to detect anything.
15. Biden aims at China in new illegal fishing policy framework
Barry Hatton and Joshua Goodman, Associated Press, June 27, 2022
The Biden administration is stepping up efforts to combat illegal fishing by China, ordering federal agencies to better coordinate among themselves as well as with foreign partners in a bid to promote sustainable exploitation of the world’s oceans.
16. Actions proposed to combat illegal fishing, forced labor in seafood supply chain
U.S. National Oceanic and Atmospheric Administration, June 27, 2022
17. The Adaptation Advantage
Eyck Freymann, The Wire China, July 17, 2022
18. China is Sending More Space Junk Hurtling Down to Earth
Maggie Harrison, Futurism, July 22, 2022
Heads up, literally. This weekend, China plans to launch a powerful Long March 5B rocket called the Wentian from the Wenchang Space Launch Site in Hainan — and taking into account the history of the country's Long March 5B spacecraft, it's pretty likely parts of the rocket will crash land back onto Earth.
As Gizmodo reports, the 174-foot-tall rocket launching this Sunday from Hainan is the third of its kind, all of which have thus far made chaotic, haphazard re-entries that resulted in unpredictable crashes around the world.
Following a launch back in 2020, uncontrollable Long March 5B debris crashed into Africa's west coast, thankfully hurting no one but damaging some structures. Then, just last spring, the Chinese government confirmed that debris from the same model had hurtled into the Indian Ocean after widespread speculation about where it would land.
NASA condemned the 2021 crash at the time, with agency chief Bill Nelson declaring in a statement that it was "clear that China is failing to meet responsible standards regarding their space debris."
19. Mining Lithium and Money
Eliot Chen, The Wire China, July 17, 2022
Foreign Interference and Coercion
20. China Warns U.S. Against Nancy Pelosi Visit to Taiwan
James T. Areddy, Wall Street Journal, July 19, 2022
21. Biden: Military say a Pelosi Taiwan trip ‘not a good idea’
Seung Min Kim, Washington Post, July 20, 2022
22. India escalates crackdown on Chinese phonemakers
John Reed, Financial Times, July 16, 2022
23. China Slams Czechs Over Taiwan Visit as Ties Continue to Unravel
Lenka Ponikelska, Bloomberg, July 20, 2022
24. China asks European leaders to meet Xi in November. But will they accept?
Finbarr Bermingham, South China Morning Post, July 18, 2022
25. Janet Yellen Calls for Trade Overhaul to Diversify From China
Andrew Duehren, Wall Street Journal, July 19, 2022
Human Rights and Religious Persecution
26. Morocco: Uyghur Activist at Risk of Extradition
Human Rights Watch, July 19, 2022
27. Allies seek to follow U.S. lead on Xinjiang forced labor ban -U.S. official
Michael Martin and David Brunnstrom, Reuters, July 18, 2022
28. U.S. aid chief criticizes China’s ‘absence’ in a food crisis stoked by Russia’s invasion.
Lara Jakes, New York Times, July 18, 2022
29. China’s Tsinghua University Punishes Students for LGBTQ Flags
Bloomberg, July 19, 2022
30. Background Press Call on President Biden’s New Executive Order to Bolster Efforts to Bring Home American Hostages and Wrongful Detainees
White House Statements and Releases, July 18, 2022
Industrial Policies and Economic Espionage
31. Jeep Owner Stellantis to End China Joint Venture
Nick Kostov and Selina Cheng, Wall Street Journal, July 18, 2022
32. Another Chip Investment Bigwig Faces Corruption Probe
Zhang Erchi, Ding Yi, and Flynn Murphy, Caixin Global, July 19, 2022
33. China’s Comac reliant on ‘captive domestic market’ for sales
Arjun Neil Alimm, Financial Times, July 20, 2022
34. Neil Shen’s Sequoia China seeks ‘politically correct’ investment strategy
Tabby Kinder and Ryan McMorrow, Financial Times, July 20, 2022
35. China is Pariah for Global Investors as Xi’s Policies Backfire
Sofia Horta e Costa, Bloomberg, July 17, 2022
36. Tech Bill Aims to Block U.S. Aid for Companies That Build Advanced Chips in China
John D. McKinnon and Natalie Andrews, Wall Street Journal, July 18, 2022
Cyber & Information Technology
37. Huawei carries on with HarmonyOS as China seeks tech self-sufficiency
Che Pan and Iris Deng, South China Morning Post, July 18, 2022
38. TikTok’s ‘alarming’, ‘excessive’ data collection revealed
Max Mason, Australian Financial Review, July 17, 2022
Viral video-app TikTok collects “excessive” amounts of data, according to new analysis of its source code, raising alarm about the volume of information and its security following an admission that staff in China can access the data of millions of Australian users.
TikTok checks device location at least once an hour, continuously requests access to contacts even if the user originally denies, maps a device’s running apps and all installed apps, and more, according to a white paper by Canberra-based cybersecurity and intelligence firm Internet 2.0.
39. It’s Their Word Against Their Source Code – TikTok Report
Thomas Perkins, Internet 2.0, July 2022
Thomas Perkins has revealed the excessive data collection of TikTok and that the app connects to mainland China based infrastructure. (We note that we put all of our research to TikTok for comment and verification. They refused to go on the record about the details of their China based infrastructure.)
40. Alibaba Executives Called In by China Authorities as It Investigates Historic Data Heist
Karen Hao, Wall Street Journal, July 14, 2022
41. TechScape: suspicious of TikTok? You’re not alone
Alex Hern, The Guardian, July 20, 2022
42. China’s Roadblocks to Becoming A Science Superpower
Ma Xiu and Peter W. Singer, Defense One, July 17, 2022
43. China’s Model of Science: Rationale, Players, Issues
Alex Stone, Blue Path Labs, February 7, 2022
Military and Security Threats
44. Kiribati’s Liaison with China Threatens Sushi and U.S. Security
Jill Goldenziel, Forbes, July 22, 2022
Kiribati stunned its neighbors—and the world—by abruptly pulling out of the Pacific Island Forum on July 10. Speculation is rampant that China lies behind the move. Kiribati has been cozying up to China since 2019, when it aborted its diplomatic recognition of Taiwan—and accepted a $66 million grant from China shortly thereafter.
Elsewhere in the Pacific, the Solomon Islands recently made headlines when it inked a security agreement with China, raising fears that China would establish a naval base there. China’s potential meddling in Kiribati is even more concerning because of its security implications and drastic environmental consequences. The U.S. must act to stop Kiribati from destroying a UNESCO World Heritage Site, threatening a critical tuna spawning ground, and allowing China to develop an airstrip dangerously close to U.S. territory.
The Republic of Kiribati is a nation of 113,000 people and thirty-three small islands in the Central Pacific, roughly between Australia and Hawaii. Its waters span 1.4 million square miles, an area roughly the size of India. They are home to an archipelago of eight breathtakingly beautiful, isolated atolls known as the Phoenix Islands. Only one, Kanton, is inhabited by about 20-50 people and an administrative unit. Kanton also hosts an abandoned airstrip built by the U.S. during World War II. Two members of the Phoenix group, Howard and Baker, lie north of Kiribati, in U.S. territory.
The islands have tremendous ecological value. They are one of the few remaining places on earth where marine dynamics are largely undisturbed by humans. The area contains hundreds of species, including rare fish and corals. It is also a fertile tuna spawning ground. More tuna is caught in Kiribati’s waters than in any other country in the world. The regional fisheries commission to which it belongs covers 55% of the global tuna catch. Fishing licenses comprise more than 70% of Kiribati’s revenue.
In the mid-2000s, the New England Aquarium, Conservation International, and the Government of Kiribati formed the Phoenix Islands Protected Area (PIPA) and a related PIPA Trust to protect the area under the laws of Kiribati that is governed by a board of directors appointed by all three partners. Under the Trust, PIPA remains closed to commercial fishing, and the Trust compensates Kiribati for the lost revenue from fishing licenses. PIPA became the world’s largest and deepest UNESCO World Heritage Site, a model for world-class Marine Protected Areas, and a sustainable fishing mechanism—raising Kiribati’s global profile.
In November 2021, Kiribati announced that the Trust was no longer cost-effective and that it would re-open PIPA to commercial fishing. The government claimed that demand for fishing in Kiribati’s EEZ has declined by 8% since PIPA closed to commercial fishing, and the PIPA endowment fund had not raised enough to compensate it. The cabinet estimated that, by opening PIPA, the government would receive $200 million in annual fishing license fees. Kiribati announced a plan to replace the Trust with Marine Spatial Planning—which will cause it to lose its UNESCO World Heritage designation.
Many believe China is behind the decision to open PIPA, which Kiribati’s government has vigorously denied. However, the decision comes at a time of rising Chinese influence in Kiribati, including the recent signing of ten trade deals with China. China gave Kiribati more than $4.2 million in aid for “livelihood projects” in the weeks preceding its 2021 presidential election, in which diplomatic recognition of Taiwan was again an issue.
China appears to have two main goals: preferred access to Kiribati’s tuna, and proximity to U.S. waters. China is drastically overfishing the world’s tuna, as the world’s top perpetrator of Illegal, Unregulated, and Unreported Fishing.
China has also stated publicly that, at Kiribati’s request, it has entered into discussions about developing the airstrip on Kanton Island. The airstrip lies approximately 1,600 nautical miles southwest of Hawaii, on the sea lanes that connect Hawaii with Australia and New Zealand. At least one report states that China has already provided funding to develop Kanton and upgrade the airstrip. Kiribati’s president has denied that the airstrip will be used for military purposes. Yet China has a history of building “non-military” airstrips in the Pacific and militarizing them. On Kanton, it could install military and surveillance equipment perilously close to U.S. territory.
The U.S. must move fast to counter Chinese influence in Kiribati and elsewhere in the Pacific, to save the one of the world’s natural treasures, and protect world’s tuna supply. Fortunately, the law is on the U.S.’s side. Development of the Kanton airstrip by China is prohibited by the 1979 Treaty of Friendship and Territorial Sovereignty between Kiribati and the U.S., which prohibits U.S.-built facilities such as the Kanton airfield from being made available to third parties for military purposes without U.S. consent. Even if China claims that it will not be developing the airstrip for military purposes, its ability to quickly militarize the airstrip would be a treaty violation in-the-making. The U.S. would be wise to remind Kiribati of China’s history of breaking promises not to militarize airstrips elsewhere, and clarifying what actions by China would constitute a treaty violation.
PIPA too, might be an area ripe for litigation. The PIPA Conservation Trust Act limits the ability of Kiribati’s parliament to unilaterally repeal or amend the Act. The U.S. should engage with Trust board members, and pressure Kiribati’s government through political channels and in court. Agreements with Kiribati to protect PIPA and fight illegal fishing can also help counter Chinese influence while protecting the planet. The U.S. might work with Japan and South Korea, whose fishing vessels are also among the largest harvesters of Western and Central Pacific tuna, to develop fishing and conservation agreements with Kiribati and its Pacific neighbors.
Opening PIPA and allowing development of the Kanton airstrip would harm the global fish supply. It would destroy a world heritage site, and endanger international security. The U.S. must work with Kiribati to counter China’s insatiable hunger for fish and power. The world’s sandwiches, sushi and security are at stake.
45. Chinese scientists plan ‘disposable’ reactor for long-range torpedo
Stephen Chen, South China Morning Post, July 20, 2022
46. China demands U.S. cancel potential arms sale to Taiwan
Nikkei Asia, July 19, 2022
47. ‘He’s a loyal friend’: Taiwan welcomes visit by ex-US defence chief
Lawrence Chung, South China Morning Post, July 18, 2022
48. Taiwan's ex-defense chief calls for sweeping military reforms
Thompson Chau, Nikkei Asia, July 20, 2022
49. Sen. Marco Rubio: Expose Secret Chinese Communist Party Cells
Marco Rubio, Wall Street Journal, July 17, 2022
50. Why did MI5 name Christine Lee as an 'agent of influence'?
Gordon Corera, BBC, July 19, 2022
51. ‘Abusing China’s restraint’: Beijing accuses Australia of provocation at sea
Tory Shepherd, The Guardian, July 18, 2022
52. Experts see challenges, opportunities for restricting Chinese military access to AI chips
Jon Harper, Fedscoop, July 18, 2022
53. Striking Asymmetries: Nuclear Transitions in Southern Asia
Ashley J. Tellis, Carnegie Endowment for International Peace, July 18, 2022
54. VIDEO – Are China’s Military Logistics Better Than the Russian Military’s?
Center for Strategic & International Studies, July 19, 2022
One Belt, One Road Strategy
55. Pakistan’s Belt and Road revival at risk as Gwadar protest brews
Adnan Aamir, Nikkei Asia, July 19, 2022
56. ‘Hidden cost’ of China’s Belt and Road is forced labor: U.S. report
Nikkei Asia, July 20, 2022
The U.S. State Department highlighted the use of forced labor in China's Belt and Road infrastructure initiative in its annual human trafficking report released Tuesday, while maintaining its assessment that Japan's efforts to eliminate trafficking are not yet sufficient.
Calling forced labor the "hidden cost" of China's Belt and Road Initiative, the department said in the Trafficking in Persons Report, "All countries should be able to pursue development opportunities without sacrificing their respect for human rights."
"If a BRI project employs local workers, the host government must scrutinize recruitment channels and contracts to ensure its citizens are not lured under false pretenses and exploited," it added.
The move comes as the U.S. is working with other Group of Seven industrialized nations to provide an alternative to the BRI for low- and middle-income nations, advocating "high-standards and quality investments" in infrastructure.
Implemented since 2013, the BRI is a scheme critics say was designed to draw countries deeper into Beijing's economic orbit. It has faced criticism for its record of saddling developing countries with debt and for poor environmental and labor standards.
The report alleges some BRI projects in African, European, Middle Eastern and Asian countries and elsewhere have seen cases of deceptive recruitment into debt bondage, confiscation of travel documentation, forced overtime, physical violence, restricted freedom of movement and retaliation for reported abuses, among other issues.
In the report's rating system for the human trafficking situation in various countries, China remained in Tier 3, the worst level.
57. Xinjiang’s emerging digital economy includes ‘smart oil fields’
Barry van Wyk, Sup China, July 20, 2022
Opinion Pieces
58. Biden’s China Tariff Cuts Would Hurt the U.S.
Robert Lighthizer, Wall Street Journal, July 18, 2022
President Biden may rescind some Trump administration tariffs on Chinese products, a move that would hurt U. S. workers and businesses, increase our already crippling trade deficit with China, and squander Washington’s negotiation leverage with Beijing over intellectual-property theft, threatening American security interests.
59. Fighting Back: How Democracies Can Check Authoritarian Aggression
Daniel Twining and Patrick W. Quirk, The National Interest, July 11, 2022
It is past time the United States starts playing offense to shape a balance of power that continues to favor freedom.
60. An Operation Paperclip for Taiwan
Ben Noon, American Enterprise Institute, July 18, 2022
61. Rivals Within Reason?
Kevin Rudd, Foreign Affairs, July 20, 2022
62. Corporate jitters over Taiwan and China on the rise
Kathrin Hille, Financial Times, July 19, 2022
63. China’s Cyber Isolationism Has Severe Security Implications
Tim Culpan, Bloomberg, July 18, 2022
64. No longer the most populous, but still China wants to be world number one
Rana Mitter, The Guardian, July 17, 2022
Last week, the UN’s global population project announced a major shift in the way the world looks. Next year, India, not China, will be the world’s most populous country. Right now, China has 1.43 billion people to India’s 1.41 billion, but by mid-century there will be more than 1.6 billion Indians to around 1.3 billion Chinese.
At one level, this development ought to delight Beijing, which compelled its population into a “one child” policy for some 40 years. Yet there may be a few disconsolate faces in Beijing. The idea of China being the most populous society in the world has long been linked to the country’s rise. Officially, China dismisses any idea that being at the top of global rankings matters: in January this year, vice foreign minister Le Yucheng declared that China had no interest in becoming the world’s biggest economy or superpower and would instead work on improving its people’s lives at home.
Yet for years, Chinese social media has overflowed with confrontational voices demanding that the country should be “No 1”. The drop to No 2 in global population is likely to bring soul-searching about that quest for the other global top spot.
65. Why Washington Must Abandon Strategic Ambiguity
John Pietro, The Hamiltonian, July 15, 2022