China Articles - May 1, 2022
Friends,
Three interrelated policy decisions by the Chinese Communist Party are impacting the trajectory of the PRC and will continue to shape the geoeconomic and geopolitical landscape.
The first is the Party’s decision made as far back as 2017 during the 19th Party Congress to shift to the left in its economic policies, constraining the ability of markets and entrepreneurs within the PRC to provide the kind of growth that the Party says that it wants.
The second is the Party’s continuation of a zero-COVID strategy which proved effective two years ago, but as the virus mutated and the PRC refused to protect its citizens with more efficacious mRNA vaccines, the nation faces rolling lockdowns that will wreak havoc on the global economy given the PRC’s role as the world’s factory.
The third is Xi’s ‘no limits’ friendship with Putin’s Russia as it conducts a brutal war of aggression against Ukraine.
One might expect that these decisions, made at the very top of the Party’s leadership structure, would spawn serious political debate and the opportunity for adjustment. However, given the pathologies of the Chinese Communist Party, I don’t think we should expect that to happen. As the international environment becomes less permissive for the PRC, Xi has stamped out opportunities for reappraisal because debate fosters factionalism and factionalism is the one thing that Leninist Party’s cannot abide.
I fear we are in for increasingly troubled waters.
This week, I’ve highlighted a series of think tank reports that you should be aware of.
The first is an update on the PRC’s foreign direct investments (FDI) into Europe by the advisory firm Rhodium Group and the Berlin-based think tank MERICS. They find that the downward trend in Chinese FDI to Europe continues. Then we have a report from the Center for New American Security on preventing the isolation of Taiwan, an interview with Georgetown University Assistant Professor Lizhi Lui on the way that the CCP pursues its geopolitical objectives through the digital domain, and an article on how an intelligence sharing agreement between New Zealand and Japan could lead to broader intelligence cooperation across the Five-Eye countries and Japan.
Lastly, there is the report from Jon Bateman at Carnegie on a ‘decoupling’ strategy with regards to the PRC. Given the three policy decisions above and the trends that they portend, I suspect we will continue down the path of selective decoupling whether boardrooms, investors or political leaders want to or not.
Thanks for reading!
Matt
Must Read
1. Chinese FDI in Europe: 2021 Update
Agatha Kratz, Max Zenglein, Gregor Sebastian, and Mark Witzke, Rhodium Group, April 27, 2022
The Berlin-based think tank MERICS and Rhodium Group have teamed up to provide the latest update on the PRC’s foreign direct investment flows into the European Union and the United Kingdom in 2021. While the PRC’s investments in Europe grew somewhat during 2021 compared to 2020, the downward trajectory of PRC investments in Europe continued with a shift away from mergers and acquisitions to ‘greenfield’ investments.
2. Sustaining Taiwan’s International Participation Amid Mounting Pressure from China
Jacob Stokes, Alexander Sullivan and Zachary Durkee, CNAS, April 19, 2022
The Chinese Communist Party is accelerating its efforts to isolate Taiwan from the rest of the international community. This CNAS report provides insight into Beijing’s campaign as well as potential responses to ensure that Taiwan can provide benefits to its citizens that any normal country would be guaranteed.
3. AUDIO – The Rise of Data Politics
Lizhi Liu, Pekingology, April 26, 2022
Jude Blanchette at the Center for Strategic and International Studies interviews Georgetown University Assistant Professor Lizhi Liu on how the Chinese Communist Party views the digital domain and the politics surrounding issues like data privacy and digital sovereignty.
4. New Zealand Deal May Put Japan Closer to ‘Five Eyes’ Intelligence Alliance
Pete McKenzie, New York Times, April 22, 2022
As China moves to expand its influence, Japan and New Zealand have opened talks on an agreement for “seamless” sharing of classified information, a step that could strengthen Tokyo’s case to eventually join the “Five Eyes” intelligence partnership among English-speaking powers.
5. U.S.-China Technological “Decoupling”: A Strategy and Policy Framework
Jon Bateman, Carnegie Endowment, April 25, 2022
Jon Bateman examines the ongoing trend of partial decoupling that is taking place between the PRC and the United States (a trend that is also happening between the PRC and other powers). Bateman asserts that without a well-reasoned strategy and specific policies in place, the impacts will be quite negative on the United States.
Authoritarianism
6. China’s Biggest Covid Failure Is Not Deploying an mRNA Vaccine
Bloomberg, April 26, 2022
7. Hong Kong’s M+ art museum reopens with new works and attractions; Tiananmen satire replaced
Tom Grundy, Hong Kong Free Press, April 21, 2022
8. The Rise of Data Politics: Digital China and the World
Lizhi Liu, Studies in Comparative International Development, March 19, 2021
This paper explores various aspects of data politics through the lens of China's digital rise and the country's global engagement, starting with the theoretical premise that data differs from traditional strategic assets in that it is nonrival and partially excludable. These characteristics have generated externality, commitment, and valuation problems, triggering fundamental changes in China's external economic relations.
9. Czech foreign minister eyes closer ties with ‘bullied’ Taiwan
Stuart Lau, Politico, April 13, 2022
10. Shanghai Lockdown Bolsters a Fringe Independence Movement
James T. Areddy, Wall Street Journal, April 23, 2022
11. Chinese web users told to report ‘historical nihilism’ against party line
Josephine Ma, South China Morning Post, April 27, 2022
ByteDance platforms Toutiao and Douyin announce five focuses for clean-up drive months ahead of 20th party congress. Criticism of Marx, Mao and Deng or China’s economic policies, and glorification of Western culture among online content targeted.
12. Chinese Markets Tank as Investors Worry About Covid-19 Lockdowns
Rebecca Feng and Dave Sebastian, Wall Street Journal, April 25, 2022
13. Beijing Orders Citywide Covid-19 Testing as Fears of Lockdown Spark Panic-Buying
Joyu Wang and Jonathan Cheng, Wall Street Journal, April 25, 2022
14. Wall Street’s Shanghai problem
Tabby Kinder, Financial Times, April 25, 2022
15. Most Chinese stocks fall as lockdowns hurt economy amid calls for stimulus
Zhang Shidong, South China Morning Post, April 27, 2022
16. ‘A betrayal of China’? Debate over TCM Covid-19 remedy turns political
Echo Xie. South China Morning Post, April 22, 2022
17. Zero-Covid could ‘wipe out international schools’ in China, BritCham warns
Amanda Lee, South China Morning Post, April 22, 2022
18. University of Hong Kong seeks to punish students who bring it into ‘disrepute’
William Yiu, South China Morning Post, April 26, 2022
19. EU approves funds for Lithuanian companies hit by China embargo
Finbarr Bermingham, South China Morning Post, April 27, 2022
20. VIDEO – Shanghai lockdown: This is the video Chinese censors don't want you to see or share
CNN, April 26, 2022
21. Political cartoonist Ah To announces departure from Hong Kong citing ‘great mental stress’
Kelly Ho, Hong Kong Free Press, April 26, 2022
22. WTA not returning to China in 2022, wants resolution to Peng case
Reuters, April 25, 2022
23. Henan court jails dissident for nearly three years after Jiang Tianyong visit
Radio Free Asia, April 26, 2022
24. Pro-China newspaper denounces Hong Kong journalists
Radio Free Asia, April 25, 2022
25. Covid Lockdowns Revive the Ghosts of a Planned Economy
Li Yuan, New York Times, April 25, 2022
China is meddling with free enterprise as it hadn’t in decades. The results are familiar to those old enough to remember: scarcity, and the rise of black markets.
Yang Wenhui should be a proud example of China’s rise from economic rubble to global powerhouse.
Growing up poor, he ate so much cabbage that he didn’t touch it again for many years. He worked as a farmer and a construction worker before joining the country’s nascent logistics industry. In 2003, he started his own freight logistics company, striking gold as online shopping took off in the 2010s and products moved swiftly between provinces.
Then the Omicron variant of the coronavirus started spreading in China. In the government’s zealous pursuit of its “zero Covid” policy, dozens of cities along the 1,300 miles of highway between the capital, Beijing, and the southern province of Guangdong, his main freight route, imposed travel restrictions and lockdowns. Many truckers were grounded. Cargo prices rose by 20 percent in a matter of weeks.
“I’ve been in the logistics business for 28 years,” Mr. Yang, 47, said in an interview. “But I’ve never seen a mess like this. There were numerous emergencies to deal with.” He estimates that he lost tens of thousands of dollars in March.
China’s economy is a giant, sophisticated machine that requires numerous parts to work together. Behind its 1.4 billion consumers are 150 million registered businesses that provide jobs, food and everything that keeps the machine humming.
26. Covid Outbreak in Beijing Prompts Order for Nearly Citywide Testing
Keith Bradsher and Chris Buckley, New York Times, April 25, 2022
27. The prospect of lockdowns in Beijing fuels more concerns about supply chain disruptions.
Ana Swanson, New York Times, April 25, 2022
28. ‘Pearl lost its shine’: Shanghai expats eye exit over COVID rules
Liam Gibson, Al Jazeera, April 25, 2022
29. How China’s Response to COVID-19 Set the Stage for a Worldwide Wave of Censorship
Joel Simon and Robert Mahoney, New Yorker, April 25, 2022
Environmental Harms
30. China Inc has little to celebrate on Earth Day
Robyn Mak, Reuters, April 22, 2022
Foreign Interference and Coercion
Scott Pelley, CBS News, April 24, 2022
32. Does Elon Musk’s Twitter Deal Give China Influence Over The Site?
Alan Ohnsman, Forbes, April 25, 2022
33. China's discourse power operations in the Global South
Atlantic Council, April 20, 2022
34. Be wary of foreign interference, China warns Central Asia
Teddy Ng, South China Morning Post, April 26, 2022
35. How Far Does China’s Influence at U.S. Universities Go? One Student Tried to Find Out.
Will Ford, Politico, April 04, 2022
36. Chinese political interference has Western spooks worried
The Economist, April 21, 2022
China Media Project, April 25, 2022
Human Rights and Religious Persecution
38. British surveillance camera monitor asks officials to clarify Hikvision position
Chad Bray, South China Morning Post, April 26, 2022
39. Hong Kong Foreign Journalists Club Suspends Human Rights Awards
Bloomberg, Paul Geitner, April 25, 2022
40. China is hunting down Uyghurs with help from some surprising countries
Anna Schecter, NBC, April 25, 2022
41. Kenneth Roth, ‘Godfather’ of Human Rights Work, to Step Down
Aina J. Khan, New York Times, April 26, 2022
42. Britain seeks law change to ban medical supplies from China's Xinjiang
Reuters, April 22, 2022
43. Li & Fung CEO threads the needle on Xinjiang labor controversy
Kenji Kawase, Nikkei Asia, April 22, 2022
44. Tibet’s leader seeks U.S. action to end China’s 'cultural eradication'
Phelim Kine, Politico, April 25, 2022
45. UN team in China ahead of rights chief visit to Xinjiang
Associated Press, April 26, 2022
Industrial Policies and Economic Espionage
46. We Should Not Allow China to Weaponize Antitrust for Theft of American Intellectual Property
Julie Carlson, Information Technology and Innovation Foundation, April 18, 2022
47. BMW and Audi suspend shipments by train to China
Jens Kastner, Nikkei Asia, April 26, 2022
48. Treasury floats alternative to proposed regulation on U.S. investment in China
Gavin Bade, Politico, April 26, 2022
49. China Stretches Another AI Framework to Exascale
Jeffrey Burt, TheNextPlatform, April 26, 2022
50. China’s most chaotic social network survived Beijing’s censors — until now
Viola Zhou, RestOfWorld, April 21, 2022
51. 17 firms, including Li Auto, added to SEC list for possible delisting
Phate Zhang, CnEVPost, April 22, 2022
52. Women in China’s Leadership
Sierra Janik, Daniel Blaugher, Jonathan Ray, U.S.-China Economic and Security Review Commission, March 30, 2022
53. Is it time to break up HSBC?
Jill Treanor, Sunday Times, April 23, 2022
54. HSBC’s Quarterly Profit Drops 28%
Quentin Webb and Julie Steinberg, Wall Street Journal, April 26, 2022
55. China’s Xi Pushing to Beat the U.S. in GDP Growth Despite Covid Lockdowns
Jason Douglas, Wall Street Journal, April 26, 2022
56. Investors in the dark on China industrial transport as data curbs bite
Gavin Maguire, Muyu Xu, Xie Yu, Reuters, April 25, 2022
57. India suspends tourist visas for Chinese nationals in tit-for-tat move: Report
Hindustan Times, April 24, 2022
58. Elon Musk buys Tesla a pounding Chinese headache
Pete Sweeney, Reuters, April 26, 2022
59. China's Zhihu tumbles 24% in Hong Kong 'homecoming'
Cissy Zhou, Nikkei Asia, April 22, 2022
60. Measuring and Mis-measuring China’s Scientific Rise
Richard Yarrow, The Wire China, April 24, 2022
61. Analysis: Foreign investors are ditching China. Russia's war is the latest trigger
Laura He, CNN, April 25, 2022
62. State and local governments need to stop subsidizing Chinese companies
The Hill, April 21, 2022
63. Xi Calls for ‘All Out’ Infrastructure Push to Boost Economy
Bloomberg, April 26, 2022
64. China policymakers clash over how to counter property slump
Sun Yu, Financial Times, April 26, 2022
65. Tech Reconsiders Dependence on China, But Costs to Move Are High
Bloomberg, April 24, 2022
66. The Chinese Way of Innovation
Matt Sheehan, Foreign Affairs, April 26, 2022
67. Can China Conquer Crypto?
Darrell Duffie, Foreign Affairs, April 26, 2022
68. Expat Bankers Fleeing Hong Kong See No Easy Escape to Singapore
Ambereen Choudhury, David Ramli and Faris Mokhtar, Bloomberg, April 21, 2022
69. Former Goldman Sachs Partner’s Hedge Fund Pivots Away From China
Bei Hu, Bloomberg, April 25, 2022
70. Economic Security Through Trusted Connectivity for a Free and Open Indo-Pacific
Krach Institute for Tech Diplomacy, Kaush Arha, April 26, 2022
Cyber & Information Technology
71. Teardown of China budget smartphone Honor reveals rise in U.S. parts
Norio Matsumoto, Nikkei Asia, April 25, 2022
72. “What Is in Our Interest”: India and the Ukraine War
Ashley J. Tellis, Carnegie Endowment for International Peace, April 27, 2022
Military and Security Threats
73. Taiwan is part of China, Beijing tells U.S.
Reuters, April 20, 2022
74. Ukraine war shows America could be outgunned without investing in energetics
Nadia Schadlow, Brady Helwig, Breaking Defense, April 20, 2022
75. WeChat wants people to use its video platform. So they did, for digital protests
Zeyi Yang, MIT Technology Review, April 24, 2022
76. Taiwan Doesn’t Need a Formal U.S. Security Guarantee
Ivan Kanapathy, Foreign Policy, April 27, 2022
77. Why the War in Ukraine Won’t Go Nuclear
Gideon Rose, Foreign Affairs, April 26, 2022
78. China condemns latest U.S. sailing through Taiwan Strait
Reuters, April 27, 2022
79. Blinken to detail U.S. national strategy for China in coming weeks
Patricia Zengerle, Michael Martina, Reuters, April 27, 2022
80. China reports first human case of H3N8 bird flu
Dominique Patton, Reuters, April 27, 2022
81. Defense Panel Within Japan’s Ruling Party Urges Tokyo to Acquire ‘Counterattack Capability’
Kosuke Takahashi, The Diplomat, April 22, 2022
82. US won’t rule out military action if China establishes base in Solomon Islands
Kate Lyons, The Guardian, April 26, 2022
83. Ukraine cannot blind us to China’s mischief
Edward Lucas, Sunday Times, April 24, 2022
84. ‘Reality of our time’: Dutton warns Australians to prepare for war
Angus Thompson, Sydney Morning Herald, April 25, 2022
85. Ukraine Sounds Alarm on Chinese Drones, Opening Skies to U.S. Startups
Heather Somerville, Wall Street Journal, April 22, 2022
One Belt, One Road Strategy
86. China’s Growing Influence in Africa Seen in Arms Trade and Infrastructure Investment
Gordon Lubold, Wall Street Journal, April 21, 2022
87. Balochistan Liberation Army claims Karachi attack and '1st woman suicide bomber'
Aniruddha Dhar, Hindustan Times, April 26, 2022
88. India’s role significant as US seeks to reverse PRC takeover of Solomon Islands
Cleo Paskal, Sunday Guardian Live, April 23, 2022
Opinion Pieces
89. China’s South Pacific Power Play
The Editorial Board, Wall Street Journal, April 26, 2022
90. It is in India's interest to align with allies against the Moscow-Beijing nexus
Kaush Arha, Hindustan Times, April 25, 2022
91. Sorry, China. Most Americans Support Higher Prices On Your Imports.
Kenneth Rapoza, Forbes, April 24, 2022
92. Why America Only Pretends to Compete With China
Jeremy Stern, Tablet Magazine, April 25, 2022