Chinese troops training on the Polish border
As if NATO needed more proof of Beijing's hostility
Friends,
We are a day away from the start of the Central Committee’s Third Plenum. This once a decade conference focuses on long-term, structural economic issues. This is perhaps the most important meeting you haven’t heard about because it sets the course for where the Party will go and since the Party again controls everything in the PRC, it means the decisions made this week will have a huge impact on the global economy and the geopolitical environment.
This decade’s Third Plenum is perhaps as important as the one in 1978 which Deng Xiaoping used to put the turbulence of the Mao era behind them. Now the Party faces an equally critical time. The economic model that Deng put in place in 1978 has run its course and the Party is mulling over the question: what does the next stage of the country’s economy look like?
Many believed we had an answer to this question more than a decade ago during the last Third Plenum (November 2013). The Party’s technocratic leaders and economists had conducted years of analysis and concluded that to avoid the middle-income trap the PRC must aggressively embrace further economic liberalization. China’s brand-new leader, Xi Jinping seemed to accept these recommendations and appeared to start implementing these impressive reforms.
Unfortunately for the Chinese economy (and for the rest of us given the second and third order effects), when these reforms caused instability, Xi blinked and pulled back. This happened most spectacularly in the summer of 2015 when Chinese capital markets crashed, and Xi responded by implementing stringent capital controls that still have not lifted. I’m sure plenty of folks will spill a lot of ink determining whether Xi ever believed in these reforms and changed his mind, or whether he never really supported them and blamed the failures on his Premier Li Keqiang. Regardless, the effect was the same: the reforms that Chinese economists rightly recommended were abandoned over the last decade.
In 2013, the structural economic problems facing the PRC were bad, but likely manageable.
In 2024, those problems are much worse and probably aren’t manageable.
Supply chains are shifting away from the PRC, their demographic challenge is much worse, their citizens have lost confidence in their economy, and the international environment is increasingly hostile to Beijing.
Our friends over at Trivium China did a great pre-Plenum analysis that is available for free. I recommend you read it (they will want you to subscribe to their daily note and that’s a good idea).
They lay out the seven big questions facing the Party at the Plenum.
#1 – Can officials restore faith in the economy?
#2 – How will officials look to forge China into a tech superpower?
#3 – Do foreign companies have a future in China?
#4 – How will China address growing geo-economic risks?
#5 – Can officials fix the government’s broken revenue model?
#6 – How will the Party respond to China’s demographic decline?
#7 – How will China try to manage the green transition?
I’ll let you go to their site to get the answers, but this is a topic worth following. I know it is tough given all the headlines in the rest of the world, but IMO this is a do-or-die moment for the Party. If they cannot restore confidence in their economic competence, then things will get much worse for the Party.
My assessment: There is a very low probability that what the Party and Xi will announce coming out of the Third Plenum will turn things around for the Chinese economy. Beijing’s boosters will come out with glowing reports and that Beijing is on the cusp of solving their problems, but I think we can confidently discount those cheerleaders.
The Chinese economy has serious structural problems that the Party correctly identified more than a decade ago and under Xi Jinping’s leadership they failed to address those structural problems. Now things are much worse, and we still have Xi Jinping in charge. Had Xi given up power in 2022, as the norms established by Deng required, the PRC’s new leaders could be turning things around. I suspect Xi can’t make those kinds of changes.
Some will point to Xi’s reversal on Zero-COVID in late 2022 as proof that he can make bold changes, but IMO that is a bad example. Under no conceivable scenario could the PRC have maintained Zero-COVID indefinitely (was the Party supposed to cut the PRC off from the world forever?!?). At some point Zero-COVID had to end.
The fact that Zero-COVID went on so long and only lifted when the Party was forced to concede that it had lost control of the virus suggests that Xi is incredibly stubborn and resistant to evidence (these are common pathologies of a dictator). The experience of Zero-COVID (and the complete lack of accountability and introspection about the Party’s decision-making with that policy) has done more to destroy faith in the Party’s competence than anything else.
Rather than hold Zero-COVID up as an example of the Party’s adaptability, I think it shows the opposite.
In about a week, we should have some sense of what Xi and his cadres have proposed… I’m skeptical it will be enough.
Tokyo and Manila enter into a defense agreement
In other news that is indicative of Xi and the Party’s unwillingness to adapt to the situation, Japan and the Philippines signed a defense agreement on Monday. The Reciprocal Access Agreement (RAA) allows for the training of soldiers in each other’s countries and sets up a series of combined exercises.
The PRC’s actions are driving its neighbors closer together and encouraging them to form closer economic and collective security ties. Beijing complains that this is all being orchestrated by the United States to further its hegemonic fantasies, but this is the entirely predictable response of countries who are routinely threatened by a revisionist China. Beijing’s own policies are creating the containment that they so fear.
Thanks for reading!
Matt
MUST READ
1. Australia accuses China-backed hackers of breaching government networks
Nic Fildes and Demetri Sevastopulo, Financial Times, July 9, 2024
Australia and its allies, including the US, UK, and Japan, have accused the Chinese state-backed hacking group APT40 of targeting Australian government and private sector networks. The group's activities are allegedly linked to China's Ministry of State Security and have involved exploiting software vulnerabilities rather than using phishing techniques.
2. How the investment world is trying to navigate geopolitics
Nicholas Megaw, Madison Darbyshire, and James Fontanella-Khan, Financial Times, July 4, 2024
An industry that has been hoovering up mathematicians to devise new trading strategies is now leaning on political scientists for guidance.
Attended by prominent figures such as tech billionaire Michael Dell, Blackstone chief Stephen Schwarzman and Yasir Al-Rumayyan, the head of Saudi Arabia’s $925bn Public Investment Fund, the FII Priority conference in Miami in February was one of the most high-profile business events in the US this year.
The first morning audience listened to former US secretary of state Mike Pompeo who warned the investors that it had become “impossible to separate geopolitical risk from capital allocation”.
A week later, at another event down the street in Miami, former Trump White House chief of staff Reince Priebus was the keynote speaker at JPMorgan’s flagship event for high-yield bond dealmakers. When the futures and derivatives industry convened up the coast in Boca Raton the following month, a prominent historian was brought in to lecture attendees on the “era of rising political turbulence”.
At the Milken Institute conference in Beverly Hills in May, one of the world’s largest gatherings of top money managers and their clients, there were speakers from the US state department, the White House National Security Council, West Point and Nato, a former major general and multiple current and former world leaders.
Investors, it seems, cannot stop talking about politics.
On the surface, it is not hard to see why given the flurry of elections taking place around the world — from the drama of the Biden-Trump debate, to the prospect of a far-right government in France to the votes in Mexico and India. Investors have nervously watched conflict in the Middle East, nuclear sabre-rattling from Russian President Vladimir Putin and escalating tensions in the South China Sea.
For some in the industry, this is more than just a deluge of alarming headlines. Increasingly, many senior executives believe the world is going through not just a temporary bout of political volatility, but a structural shift that will have a long-term impact on the investment world.
“Over the past 20 or 30 years, [geopolitics] has been deflationary, created lower risk and made it easier to invest,” says Ali Dibadj, chief executive of Janus Henderson, the British-American investment group that manages about $353bn in assets. “Going forward it is the complete opposite: it is probably inflationary; it is probably going to create more risk; and it is going to make it harder to invest.”
An industry that over the past two decades has been hoovering up mathematicians to devise new trading strategies is now leaning on political scientists for guidance. Most investors are used to dealing with pockets of instability and conflict, but many say the sheer number of recent shocks — even in traditionally stable democracies — and the long-term nature of conflicts represent a sea change.
Last year BlackRock, the world’s largest asset manager, added “geopolitical fragmentation” to its list of the most important trends impacting on global growth and markets, putting it on a par with new technology, global demographic shifts and climate change. When Optiver, the market making firm, kicked off 2024 with a list of “top tail risks” for financial markets, more than half were focused on politics, from a contested US presidential election result to escalation in the war between Russia and Ukraine.
COMMENT – I’ve said it before and I will say it again:
“Geopolitics drive business models, not the other way around.”
(I know I’m quoting myself and that seems kind of lame, but hey, this is my newsletter, so get over it)
In the quarter century after the first cold war, many investors, business leaders, economists, and politicians believed that the creation of global supply chains, cross-border investments strategies, and multi-national business models would not only result in greater efficiencies and profits but would also prevent the return of great power rivalry and war.
I think it is clear now that many of them confused cause and effect.
Because there was relative peace in the 1990s and the 2000s, setting up multinational business models with complex and vulnerable supply chains made sense. Since no one imagined Moscow or Beijing could become our adversaries again, establishing dependencies didn’t seem like a big deal.
Europe could get its energy from Russia, and everything would be awesome!
America could get its manufactured goods from the PRC, and everything would be awesome!
But when our vacation from history ended and the second cold war emerged, those business models, which were the product of (not the cause of) a Post-Cold War era of relative peace, became uniquely ill-suited to the new geopolitical reality.
Should we have anticipated this? Sure
But I don’t think it does us much good to wring our hands, we need to start adapting now and that begins with accepting that the old status quo isn’t coming back. The heady days of the 1990s and the 2000s, when the World Trade Organization held such promise and the peace dividend seemed so sweet, are over and they aren’t coming back.
The challenge before us is adapting those business models to our new reality. This is not something CEOs can do alone… the desire to pine for the old status quo is just too strong. This will only happen when Governments and investors demand that companies adapt. Some will succeed, many will not. But for those that fail to adapt, there will be new companies, unencumbered by the past.
3. Chinese troops hold military exercises with Belarus on Polish border
The Guardian, July 8, 2024
Chinese military personnel are to begin joint “anti-terrorist training” with their counterparts in Belarus on Monday, close to the border with Poland. The “Eagle Assault” exercises by the two Russian allies amid the war in Ukraine will be held over 11 days in the border city of Brest, Belarus, and will involve tasks such as hostage rescue and anti-terrorism operations, China’s Ministry of National Defence said.
It comes days after Belarus officially joined the Shanghai Cooperation Organization led by China and Russia, deepening their coordination on military, economic and political matters.
COMMENT – If this isn’t a flashing red siren that we are in a second cold war, I don’t know what one would look like.
4. The Pentagon Can’t Wait to Innovate
Leon E. Panetta and Mike Gallagher, Wall Street Journal, July 9, 2024
The U.S. faces grave national-security threats around the globe. Conflicts in the Middle East and Europe, combined with a shifting balance of power in the Indo-Pacific, embolden America’s adversaries and threaten the free world. If the U.S. doesn’t act swiftly to ensure our technological edge, we’ll risk further deterrence failures and the erosion of international freedom.
China and Russia are expanding their global influence through conventional military power and advances in manufacturing and critical technology. The U.S. is unlikely to adopt industrial policy or match our enemies in sheer production volume. That’s OK; our path forward instead lies in America’s capacity to innovate.
Our enemies prioritize personal power and ambition over their citizens’ interests. Such authoritarians are also willing to steal to overcome a dearth of homegrown innovation. The well-documented theft of intellectual property and cyberattacks conducted by state-sponsored actors in China, Russia, Iran and North Korea reveals that our enemies have contempt for the rules-based international order. Yet we needn’t stoop to their level to compete. By embracing American innovation and ingenuity as cornerstones of our national-defense strategy, we can uphold and strengthen our fundamental values.
The Defense Department must make the rapid adoption of new technologies a priority, particularly in the commercial sector. This will require Pentagon bureaucrats to overcome the aversion to risk that permeates their agency and to leverage the expertise of academia and the private sector. The goal will be to build a defense innovation ecosystem in which the brightest minds in technology, strategy and defense can collaborate without constraint.
5. High-Tech American Weapons Work Against Russia—Until They Don’t
Yaroslav Trofimov, Wall Street Journal, July 10, 2024
Moscow is learning how to defeat Western precision munitions in Ukraine.
The Excalibur artillery round performed wonders when it was introduced into the Ukrainian battlefield in the summer of 2022. Guided by GPS, the shells hit Russian tanks and artillery with surgical precision, as drones overhead filmed the resulting fireballs.
That didn’t last.
Within weeks, the Russian army started to adapt, using its formidable electronic warfare capabilities. It managed to interfere with the GPS guidance and fuzes, so that the shells would either go astray, fail to detonate, or both. By the middle of last year, the M982 Excalibur munitions, developed by RTX and BAE Systems, became essentially useless and are no longer employed, Ukrainian commanders say.
Several other weapons that showcased the West’s technological superiority have encountered a similar fate. Russian electronic countermeasures have significantly reduced the precision of GPS-guided missiles fired by Himars systems, the weapon credited for reversing the momentum of the war in Ukraine’s favor in the summer of 2022, Ukrainian military officials say.
A brand-new system, the Ground-Launched Small Diameter Bomb munition, manufactured by Boeing and Sweden’s Saab, has failed altogether after its introduction in recent months, in part because of Russian electronic warfare, Ukrainian and Western officials say. It is no longer in use in Ukraine pending an overhaul.
The Pentagon declined to discuss the performance of specific U.S. weapons systems, citing operational security.
Some of the other Western precision weapons, provided more recently, continue to strike high-value Russian targets. U.S.-made ATACMS ballistic missiles and the Storm Shadow cruise missiles manufactured by Franco-British-Italian defense company MBDA have devastated several airfields, command centers and communications facilities in Russian-occupied Crimea and other parts of the country this year. A number of Russia’s vaunted S-400 air defense batteries were among the successful hits.
For these weapons, too, it’s only a matter of time before Russia learns how to reduce the effectiveness and improve interception rates, Ukrainian military officials and Western defense experts say.
COMMENT – I think we can be absolutely certain that these lessons are being shared with the People’s Liberation Army… is the United States military learning these lessons and sharing them effectively with forces in the Western Pacific and its allies?
6. Taiwan monitors Chinese military surge, calls China a threat to stability
Ben Blanchard, Reuters, July 11, 2024
Taiwan said on Thursday that it was closely watching the Chinese military, which it said posed a rising threat to the region, after a flurry of warplanes passed near the island to join drills with China's Shandong aircraft carrier in the Pacific.
The Chinese military exercises coincide with a NATO summit in Washington, where a draft communique says China has become a decisive enabler of Russia's war effort in Ukraine and Beijing continues to pose systemic challenges to Europe and to security.
The Shandong passed close to the Philippines on its way to the Pacific exercises, Taiwan's defence minister said on Wednesday.
In its daily update on Chinese military activity over the past 24 hours, released on Thursday morning, Taiwan's defence ministry said it had detected 66 Chinese military aircraft around the island.
Of those, 39 passed to the south and southeast of Taiwan, the ministry said. On Wednesday the ministry said it had detected 36 aircraft heading to the Western Pacific to carry out drills with the Shandong.
7. Next Steps to Defend the Transatlantic Alliance from Chinese Aggression
Senate Committee on Foreign Relations Minority Report, July 9, 2024
Since the 2022 invasion of Ukraine, the North Atlantic Treaty Organization (NATO) alliance understandably has focused on the re-emerging threats from Russia. NATO was founded to address these challenges and it should remain a priority. However, China’s support for Russia’s war, its increasing nuclear capabilities, anti-NATO propaganda, growing presence in the Arctic, and offensive cyber capabilities, to name a few actions, have put the alliance on alert. In 2022, NATO released a new Strategic Concept that for the first time identified the People’s Republic of China (PRC) as a serious concern and potential threat. These twin threats of Russia and China and their deepening strategic alliance require serious focus from the alliance.
However, the alliance and its individual members still have a long way to go to make themselves more resistant and responsive to the dangers that China poses. First, NATO’s contingency planning for scenarios involving Chinese state interference in the NATO region remains underdeveloped. While China is unlikely to become a direct combatant in a war between Russia and NATO, its control of key infrastructure nodes – in particular ports and their supporting logistics networks – could play a decisive role in the outcome of a conflict in Europe. NATO must also be better prepared for a situation in which the United States must remove some of its military power from Europe in order to respond to Chinese actions in East Asia.
Finally, the United States and Europe, especially European NATO members, must unite to prevent Chinese involvement in any diplomacy over Ukraine and its reconstruction. Currently, both sides of the Atlantic are at best lackadaisical about the risks of PRC involvement. The legitimization of China’s peace plan in Ukraine and permitting a role for China in ending the war are deeply naïve and troubling.
To better prepare to counter the strategic threat from China, NATO should:
Improve institutional knowledge of China, the Chinese Communist Party (CCP), its strategic culture, and the operational capacity of the People’s Liberation Army.
Using the 2022 Strategic Concept as a starting point, develop contingency planning for Chinese state interference and its potential involvement in a war in Europe.
Require member nations to set standards for research security, strategic investments, and procurement in defense-relevant sectors including infrastructure to ensure NATO can defend itself.
Develop specific guidelines that make clear to Ukraine what kinds of Chinese investments would make its eventual NATO membership difficult to approve.
8. Washington Summit Declaration
NATO, July 10, 2024
#4 – Strategic competition, pervasive instability, and recurrent shocks define our broader security environment. Conflict, fragility and instability in Africa and the Middle East directly affect our security and the security of our partners. Where present, these trends, among others, contribute to forced displacement, fuelling human trafficking and irregular migration. Iran’s destabilising actions are affecting Euro-Atlantic security. The People’s Republic of China’s (PRC) stated ambitions and coercive policies continue to challenge our interests, security and values. The deepening strategic partnership between Russia and the PRC and their mutually reinforcing attempts to undercut and reshape the rules-based international order, are a cause for profound concern. We are confronted by hybrid, cyber, space, and other threats and malicious activities from state and non-state actors.
…
#26 – The PRC has become a decisive enabler of Russia’s war against Ukraine through its so-called “no limits” partnership and its large-scale support for Russia’s defence industrial base. This increases the threat Russia poses to its neighbours and to Euro-Atlantic security. We call on the PRC, as a permanent member of the United Nations Security Council with a particular responsibility to uphold the purposes and principles of the UN Charter, to cease all material and political support to Russia’s war effort. This includes the transfer of dual-use materials, such as weapons components, equipment, and raw materials that serve as inputs for Russia’s defence sector. The PRC cannot enable the largest war in Europe in recent history without this negatively impacting its interests and reputation.
#27 – The PRC continues to pose systemic challenges to Euro-Atlantic security. We have seen sustained malicious cyber and hybrid activities, including disinformation, stemming from the PRC. We call on the PRC to uphold its commitment to act responsibly in cyberspace. We are concerned by developments in the PRC’s space capabilities and activities. We call on the PRC to support international efforts to promote responsible space behaviour. The PRC continues to rapidly expand and diversify its nuclear arsenal with more warheads and a larger number of sophisticated delivery systems. We urge the PRC to engage in strategic risk reduction discussions and promote stability through transparency. We remain open to constructive engagement with the PRC, including to build reciprocal transparency with the view of safeguarding the Alliance’s security interests. At the same time, we are boosting our shared awareness, enhancing our resilience and preparedness, and protecting against the PRC’s coercive tactics and efforts to divide the Alliance.
COMMENT - I’ve watched NATO’s evolution on China for years, it is really quite remarkable how far the Alliance has come on the threat posed by Beijing.
Authoritarianism
9. U.S. law firms hasten retreat from mainland China
Pak Yiu and Echo Wong, Nikkei Asia, July 8, 2024
10. Xi’s China Proves a Hard Sell at Overseas Investment Roadshows
Josh Xiao, Bloomberg, July 3, 2024
11. Xi’s Outreach to Young Americans Stumbles with Scripted Moments
Bloomberg, July 8, 2024
12. U.S., Allies Issue Rare Warning on Chinese Hacking Group
Mike Cherney, Wall Street Journal, July 9, 2024
13. 15 years after Xinjiang unrest, China fends off criticism of hardline rule
Kenji Kawase, Nikkei Asia, July 5, 2024
14. U.S. Creates High-Tech Global Supply Chains to Blunt Risks Tied to China
Edward Wong and Ana Swanson, New York Times, July 8, 2024
15. Chinese Scholars See Little Room to Improve US Relationship
Bloomberg, July 7, 2024
16. Holding China Accountable for Its Role in the Most Catastrophic Pandemic of Our Time: COVID-19
John Ratcliffe, The Heritage Foundation, July 8, 2024
17. Is Xenophobia on Chinese Social Media Teaching Real-World Hate?
Li Yuan, New York Times, July 4, 2024
18. How China Could Retaliate Against the EU’s Looming EV Tariffs
Lili Pike, Foreign Policy, July 3, 2024
19. Watching China in Europe—July 2024
Noah Barkin, GMF, July 4, 2024
20. Only China Can End the War in Ukraine, Finland’s President Says
Yaroslav Trofimov, Wall Street Journal, July 5, 2024
21. Johnson plans push for new China legislation
Doug Palmer, Politico, July 8, 2024
22. China Reopened to Foreign Students. Americans Are Staying Away.
Jazper Lu, Wall Street Journal, July 4, 2024
U.S. students numbered 11,000 prepandemic; now there may be fewer than 1,000.
In the decade-plus that Wu Xinbo has taught a class on China’s foreign policy at Shanghai’s Fudan University, Americans have typically made up a third of his class.
Then came Covid-19, which essentially locked out most international students. But even as Fudan classes returned to normal last year, none of the 30 or so foreign students in Wu’s class were from the U.S.
“I miss them,” said Wu, who said his American students lobbed lively questions at him—and provided insight into how Americans were looking at China.
Across China, American students have been slow to return since Beijing ended its strict Covid restrictions in late 2022. That is despite pledges by both Beijing and Washington to rebuild exchanges between ordinary Chinese and Americans, including Chinese leader Xi Jinping expressing hope at a November summit with President Biden of attracting 50,000 American students to China over the next five years.
In the last full academic year before the pandemic, over 11,000 Americans were studying in China, making it the most popular non-European destination for U.S. students abroad and the seventh overall, according to data from the Institute of International Education. As of June 2023, the IIE said, China wasn’t even among the top 20.
While there is no official tally of Americans currently studying in China, Nicholas Burns, the U.S. ambassador to Beijing, put the number at about 800 in a speech last month. A State Department spokesperson clarified that this figure only represents those studying in university-credit programs.
Henry Huiyao Wang, president of Beijing think tank Center for China and Globalization, estimates the number is closer to 3,000, though he includes visiting nondegree students in his estimate. Liu Pengyu, a spokesman for the Chinese Embassy in Washington, said that there are currently “thousands” of American students in China, according to what he termed “incomplete statistics.” Meanwhile, around 290,000 Chinese students were in the U.S. during the 2022-23 academic year, according to the most recent IIE data.
The fact that China ended Covid restrictions later than other countries is only part of the explanation, said David Moser, associate professor at Beijing Capital Normal University. He said the number of Americans studying in China has been declining for over a decade amid rising U.S.-China tensions and the tightening of controls on expression under Xi.
“What’s happening now is that after Covid and even after China opened up, the students didn’t come back,” he said.
Academics like Moser and Wu say they see the decline as detrimental to the broader U.S.-China relationship.
“We really need to have people at all levels of government, business, academia who are China-savvy,” Moser said. “I feel like we’ve already lost a generation of those people.”
A State Department spokesperson said the department was “focused on expanding people-to-people ties,” but said the Chinese government “does not consistently meet us halfway in our efforts to build bridges between the people of our two countries.”
The spokesperson added that since the November summit more groups of young Americans have visited China on short, Beijing-sponsored programs and that the U.S. hopes more will follow. “We need more U.S. students going to [China] to learn Mandarin, study Chinese culture, and become our next generation of China experts,” the spokesperson said.
Before the pandemic, the number of U.S. students in China had already dropped by more than one-fifth since the peak in 2012, with many students interested in China studies or Mandarin going to Taiwan instead.
COMMENT – The spell has been broken, American students are not going back, and that is okay.
23. VIDEO – U.S.-China Economic Relations with Jay Shambaugh
Council on Foreign Relations, July 10, 2024
24. What Is the New Path for "China's Hong Kong"?
Silva Shih, Commonwealth, July 9, 2024
25. ‘One Country, Two Systems’ No More
Amber Lin, Commonwealth, July 7, 2024
Environmental Harms
26. 26 million tons of clothing end up in China's landfills each year, propelled by fast fashion
Tian Macleod Ji, Associated Press, July 10, 2024
27. China state media slams Sinograin over alleged use of fuel tankers to transport cooking oil
Reuters, July 8, 2024
28. China cooking oil scandal sparks a scramble to reassure consumers
Cissy Zhou, Nikkei Asia, July 10, 2024
Foreign Interference and Coercion
29. NTUC to be designated as politically significant person under foreign interference law
Chin Soo Fang, The Straits Times, July 11, 2024
The National Trades Union Congress (NTUC) will be designated a politically significant person under the Foreign Interference (Countermeasures) Act (Fica), a law that empowers the authorities to deal with foreign interference in domestic politics.
The notice was served to NTUC on July 11, according to a statement from the Ministry of Home Affairs (MHA).
The statement said: “The Registrar (of Foreign and Political Disclosures) has assessed that given NTUC’s close nexus and symbiotic relationship with the People’s Action Party, it is in the public interest for countermeasures under Fica to be applied to NTUC.”
The pre-emptive measure is intended to mitigate NTUC’s risk of being a target of foreign interference in the future.
“It is not because NTUC has been compromised by a foreign actor, or has committed any wrongdoing nor anything of concern,” MHA said in response to queries.
Politically significant persons can include political parties, political office-holders, MPs, and election candidates and their election agents.
Other persons or groups may also be designated politically significant if the authorities assess that their activities are directed towards a political end, and that it is in the public interest that countermeasures against foreign interference be applied.
As a designated politically significant person, NTUC would have to make yearly disclosures to the authorities of political donations of $10,000 or more that it receives and accepts, as well as foreign affiliations.
NTUC’s designation is at the federation level and will not include affiliated unions and associations, nor its social enterprises, which are separate legal entities. It will also not include NTUC’s personnel such as its central committee members and employees, said MHA. However, several of NTUC’s central committee members may already be politically significant persons, given their roles as political office-holders or sitting MPs.
They include Senior Minister of State for Defence Heng Chee How and Senior Minister of State in the Prime Minister’s Office Desmond Tan.
On why NTUC is being designated a politically significant person only now, more than six months after Fica provisions against interference via local proxies came into force in December 2023, MHA said it needed time to consider and assess many issues.
COMMENT – Hmmm… 🤔… I wonder which country Singapore is concerned about when it comes to foreign interference. The Straits Times is awfully silent on the matter.
It couldn’t possibly be China… everyone knows China never, ever interferes in the internal affairs of other countries. It was just a few weeks ago at the daily press conference for the Foreign Ministry that Spokesperson Mao Ning stated unequivocally:
“China follows the principle of non-interference in other countries’ internal affairs. We will not and have no interest in interfering in other countries’ internal affairs.”
I guess this is just another mystery that will never be solved.
30. China making it ‘very difficult’ for EU to deepen ties: ambassador Jorge Toledo
Dewey Sim, South China Morning Post, July 7, 2024
31. EU must not be 'naive' in China EV talks, Spain economy minister says
Alice French, Nikkei Asia, July 5, 2024
32. India races to build power plants in region claimed by China
Sarita Chaganti Singh, Reuters, July 9, 2024
33. WADA Clears Itself in Chinese Doping Case, but Report Raises New Questions
Michael S. Schmidt and Tariq Panja, New York Times, July 9, 2024
Human Rights and Religious Persecution
34. Quote of the Day: Courtroom Altercation "Reflects the State of the Justice System as a Whole"
Samuel Wade, China Digital Times, July 5, 2024
35. AUDIO – 5 years ago they protested for freedom in Hong Kong. They want us to remember them
John Ruwitch, NPR, July 9, 2024
36. Hong Kong activist Joshua Wong asks for a lesser sentence in landmark security case
Kanis Leung, Associated Press, July 4, 2024
37. A Conversation with Koala, a Survivor of the 2015 “709 Crackdown”
Human Rights in China, Substack, July 10, 2024
38. Scammed by the fake Chinese police
Elaine Chong and Ed Main, BBC, July 7, 2024
Chinese people worldwide are being targeted by scammers posing as Chinese police. These criminals, often impersonating officers via video calls, convince victims they are under investigation for crimes in China, extracting large sums of money as "bail." The FBI and Chinese embassies have issued warnings; some scams occur in the US.
Industrial Policies and Economic Espionage
39. China dials up scrutiny of Big Four audit firms
Julie Zhu and Xie Yu, Reuters, July 10, 2024
40. How China’s Overcapacity Holds Back Emerging Economies
Camille Boullenois and Charles Austin Jordan, Rhodium Group, June 18, 2024
41. Lay-offs by China’s top firms in key industries show unemployment biting through economic turmoil
Alice Li, South China Morning Post, July 9, 2024
42. Gridlock in China: spending on network surges to support green energy transition
Edward White and Wenjie Ding, Financial Times, July 8, 2024
43. Why Chinese banks are now vanishing
The Economist, July 4, 2024
44. Germany vetoes sale of sensitive turbine unit to Chinese group
Sam Jones, Financial Times, July 3, 2024
45. Europe Tells China’s Carmakers: Get Ready to Pay Tariffs
Keith Bradsher, New York Times, July 4, 2024
46. China steps up pressure with EU brandy probe hearing as EV tariffs begin
Joe Cash, Reuters, July 5, 2024
47. Foreign Carmakers Fight to Survive in China as Market Share Dwindles
Yoko Kubota and Clarence Leong, Wall Street Journal, July 8, 2024
48. China's central bank tweaks liquidity operations
Reuters, July 7, 2024
49. Sequoia Capital’s former China unit raises new $2.5bn start-up fund
Tabby Kinder and Eleanor Olcott, Financial Times, July 8, 2024
50. Nornickel in talks with China Copper to move smelting plant to China, sources say
Julian Luk and Siyi Liu, Reuters, July 9, 2024
51. China's exports seen rising more quickly in June amid fresh tariff fears: Reuters poll
Joe Cash, Reuters, July 9, 2024
52. China Outspends the U.S. on Fusion in the Race for Energy’s Holy Grail
Jennifer Hiller and Sha Hua, Wall Street Journal, July 8, 2024
Cyber & Information Technology
53. China AI leader iFlytek dips into red under 'ultimate' U.S. pressure
Kenji Kawase, Nikkei Asia, July 8, 2024
54. Microsoft Orders China Staff to Use iPhones for Work and Drop Android
Bloomberg, July 8, 2024
55. Chinese self-driving cars have quietly traveled 1.8 million miles on U.S. roads, collecting detailed data with cameras and lasers
Rachyl Jones, Fortune, July 8, 2024
56. The Chinese government is going all-in on autonomous vehicles
Zeyi Yang, MIT Technology Review, July 10, 2024
57. Tesla’s Full Self-Driving Rivals Are in China
Stephen Wilmot, Wall Street Journal, July 10, 2024
Military and Security Threats
58. When America and China Collided
Jane Perlez, Foreign Affairs, July 5, 2024
59. Chinese warships spotted off Alaska coast, US Coast Guard says
Maya Yang, The Guardian, July 11, 2024
Multiple Chinese military warships were spotted off the coast of Alaska over the weekend, the US Coast Guard announced.
In a statement released on Wednesday, the US Coast Guard said that it detected three vessels approximately 124 miles (200km) north of the Amchitka Pass in the Aleutian Islands, as well as another vessel approximately 84 miles (135km) north of the Amukta Pass, a strait between the Bering Sea and the north Pacific Ocean.
All four Chinese vessels were “transiting in international waters but still inside the US exclusive economic zone, which extends 200 nautical miles from the US shoreline”, according to the US Coast Guard.
“The Chinese naval presence operated in accordance with international rules and norms,” R Adm Megan Dean of the US Coast Guard said, adding: “We met presence with presence to ensure there were no disruptions to US interests in the maritime environment around Alaska.”
Responding to US Coast Guard radio communication, the Chinese vessels said their purpose was “freedom of navigation operations”.
COMMENT – I guess this means Beijing will stop complaining about American naval vessels conducting “freedom of navigation operations” in the South China Sea and the Taiwan Strait.
60. China constructs secret Tajikistan military base amid fears of Taliban
Sophia Yan, The Telegraph, July 10, 2024
61. North Korea’s shifting satellite allegiance signals China’s waning influence
Seong Hyeon Choi, South China Morning Post, July 9, 2024
62. Chinese student pleads guilty to violating U.S. espionage act
Marrian Zhou, Nikkei Asia, July 9, 2024
63. China develops new stealth aircraft likely to be deployed on carriers
Yukio Tajima, Nikkei Asia, July 8, 2024
64. Unmasked China-backed hacker group an 'ongoing threat'
Dominic Giannini, Canberra Times, July 8, 2024
65. APT40 Advisory: PRC MSS tradecraft in action
Australian Cyber Security Centre, July 9, 2024
66. Israel–China Dialogue Is Required to Prevent Further Deterioration of Relations
Tuvia Gering, INSS, July 9, 2024
67. China’s Support for Russia’s War in Ukraine Puts Beijing on NATO’s Threat List
Daniel Michaels, Wall Street Journal, July 7, 2024
68. Japan and Philippines deepen defence ties in response to China threat
Kana Inagaki and Kathrin Hille, Financial Times, July 8, 2024
One Belt, One Road Strategy
69. Central Asian railway to offer new link between China, Europe
Nikkei staff writers, Nikkei Asia, July 10, 2024
70. As Violence Surges, Can Pakistan Protect Its Chinese Projects?
Zia ur-Rehman and Christina Goldbaum, New York Times, July 10, 2024
71. Unpacking the Drivers of Southeast Asia’s Policy towards China
Selina Ho and Chin-Hao Huang, ChinaPower, July 8, 2024
72. China’s Arm Sales and Military Diplomacy in Africa
Antonio Graceffo, Geopolitical Monitor, July 8, 2024
Opinion Pieces
73. How China is using Silicon Valley
Jacob Dreyer, UnHerd, July 4, 2024
74. Avoiding War in the South China Sea
Ryan Hass, Foreign Affairs, July 9, 2024
75. China’s Self-Imposed Isolation
Michael Schuman, Atlantic, July 10, 2024
76. Is the China-Russia friendship facade set to crumble?
Hiroyuki Akita, Nikkei Asia, July 7, 2024
Despite declarations of an unbounded friendship, genuine trust between China and Russia remains tenuous due to historical conflicts and current geopolitical tensions. China recently prohibited its senior officials from taking work smartphones to Russia, indicating concerns over espionage. Additionally, Russia's military pact with North Korea has displeased China, which fears losing control over Pyongyang and potential conflict in its region. The partnership between China and Russia faces further strain from mutual dissatisfaction over issues like the Ukraine invasion and potential shifts in U.S. foreign policy under a new administration.
77. China Thrashes U.S. In Global AI Patent Race—Here’s Why That Doesn’t Mean It’s Winning the AI War
Robert Hart, Forbes, July 4, 2024
78. Why China is pushing so hard for international cooperation on AI
Gerui Wang, South China Morning Post, July 9, 2024
79. US Drones Will Create a ‘Hellscape’ in the Taiwan Strait
Andreas Kluth, Bloomberg, July 7, 2024
80. Milk Tea Craze Is Bringing Out All China’s Wrongs
Shuli Ren, Bloomberg, July 8, 2024
81. Keir Starmer Should Rethink Britain’s China Policy
James Crabtree, Foreign Policy, July 8, 2024
82. Asia’s New ‘Game of Thrones’
Walter Russell Mead, Wall Street Journal, July 8, 2024
83. NATO’s Biggest Threat Isn’t Trump
The Editorial Board, Wall Street Journal, July 8, 2024
84. China’s plenum must offer action not rote slogans
Eswar Prasad, Financial Times, July 8, 2024