German Federal Elections today

The End of the Long ‘Super-Year’ of Elections

Friends,

Three years ago this Monday, President Putin launched a war of aggression to dismember and annex Ukraine.

Over the past three years, a Sino-Russian entente has solidified as both Xi and Putin view themselves as allies in an existential struggle against the “Global West” (see my August 18, 2024 issue, The Blocs are Back in Town).

I hope the Trump Administration’s long-shot gambit to end the war in Ukraine works. I hope it results in protection for both Ukraine and Europe, but I fear that this will be very difficult to do and I think it is unlikely to be completed quickly, as the President seems to hope will happen.

I also fear that the negotiations will result in giving Putin what he couldn’t win on the battlefield, as well as enabling him to restart his war of aggression at the time and place of his choosing since we appear unwilling to embark on the kinds of collective security arrangements (AND significant defense build-ups) that would actually deter future aggression.

Unfortunately, what I’ve seen so far from the Trump Administration does not give me much confidence.

In an ideal world, the nearly 450 million citizens of Europe would have their own military strength and geopolitical power to deter Moscow (with its 145 million citizens) from invading its neighbors… but for a variety of reasons, as we’ve covered in this newsletter, Europe lacks both the military strength and geopolitical power to do that. Despite having decades to prepare and constant American demands that Europeans do more.

It isn’t that Europe lacks the capability or the resources or the manpower… they have all of those things in abundance. They lack political leadership and a strategic understanding of the threats that face them.

This problem manifests itself most acutely in the European heartland of Germany which will hold snap federal elections today.

German voters will elect new members of the Bundestag, the country’s federal legislature which, based on how the parties do, will determine which parties can form a government. The outcome will replace the so-called “traffic light” coalition (Red, Yellow, Green) that collapsed in November after just three years governing under the leadership of Chancellor Olaf Scholz.

Scholz’s biggest test was the Ukraine War and I think it is safe to say that he failed that test as a leader.

It wasn’t all his fault.

Scholz’s predecessors, Chancellors Angela Merkel and Gerhard Schröder (a true puppet of Vladimir Putin), pursued policies that set Scholz up for failure. But Putin’s invasion gave him (and the European Union as a whole) a unique opportunity to implement a Zeitenwende (a historic turning point) and he squandered it.

This leadership failure led to Germany’s fourth snap election of the post-WWII period when Scholz’s coalition collapsed in November 2024 after spending months on death’s door.

Sunday’s Election

Unless one party wins an overall majority (which is highly unlikely), we won’t know the composition of the new German Government for quite some time. A new coalition of parties will need to negotiate an agreement for how they will govern and who gets what position in the cabinet. In the fall of 2021, it took two months for the SPD (Red), FDP (Yellow), and the Greens (Green) to form their so-called “traffic light” coalition. That may seem long, but following the September 2017 German Federal election, it took almost six months for the parties to hammer out a coalition (that time it was a CDU/CSU and SPD “grand coalition”).

Up until today, the Bundestag has had 733 members (technically 735, but that isn’t important).

However, due recent changes in German electoral law, that number will drop to 630 members following this election. A party, or a coalition of parties, needs a simple majority to form a government which can remain in place as long as it can maintain a Bundestag majority.

With this change in the number of Bundestag members, the new magic number to form a government is: 316.

Going into the election on Sunday, the center-right union of the CDU/CSU is in the lead, but with just under a third of the vote in nearly all polling across the last few months. So, if the polling holds, the CDU/CSU will win about 190 seats (126 seats short of a majority). Therefore, the CDU leader, Friedrich Merz, will need to negotiate with another party (or parties) to form a coalition government.

If everything were normal and there weren’t any controversies, the CDU/CSU would just turn to the party that is polling second with consistently 20% of the vote, meaning they will likely win about 126 seats. (190 + 126 = 316… not a strong coalition, but a slim majority and just having one coalition partner is the easiest way to form a government)

But the party that is polling second with 20% of the vote just happens to be the AfD… the Voldemort of German politics.

All major German parties have agreed to a “firewall” to keep the AfD out of Government, which was relatively easy when they didn’t have seats in the Bundestag, but now that is becoming increasingly difficult as one fifth of German voters want the AfD to represent them.

I could be wrong, but I suspect that Mr. Merz and his CDU/CSU union will want to maintain that “firewall” (despite Vice President Vance’s public criticism at the Munich Security Conference last weekend).

[NOTE: I could be wrong on this… if the CDU/CSU wins less than expected and the AfD wins more than expected, then it is anyone’s guess what Mr. Merz would be forced to do. The math I show below is based on the projections of the polling we’ve seen so far, but if that turns out to be wrong, then the “firewall” could collapse.]

Assuming the “firewall” holds, this likely means that Mr. Merz and his CDU/CSU union will need to turn to the third leading party which is its center-left rival, the SPD… but the SPD is only polling at 15% or about 95 seats meaning a CDU/CSU-SPD coalition doesn’t get a majority. (190 + 95 = 285… try again)

So, if Merz can’t form a viable coalition with just one party, that means he will need to find two (perhaps even three) partners to get past the 316-seat threshold.

• The Greens, in fourth, have about 13% of the vote (82 seats)

• The Left (Linke), in fifth have about 7% of the vote (44 seats)

• The FDP and BSW (Sahre Wagenknecht Alliance), tied for sixth, are polling at less than 5% each (30 seats each)

The most obvious option is a CDU/CSU-SPD-Greens coalition, aka the “Kenya” coalition (Black, Red, Green).

CDU/CSU (190) + SPD (95) + Greens (82) = 367

This “Kenya” coalition offers two attractive features for Merz: a solid majority, while maintaining the “firewall” against the AfD.

The problem with the “Kenya” coalition is that it doesn’t offer much change from the coalition government that just collapsed a few months ago. It isn’t clear to me that Merz will have much of a mandate (with less than a third of the vote) and he will be stuck in a coalition with the two main parties from the coalition that held power for the last three years when he was in opposition.

So, what other options does Mr. Merz have?

Here are the other coalition options (assuming the “firewall”)… none seem politically feasible to me, even if they result in more than 316:

• CDU/CSU (190) + SPD (95) + Linke (44) = 329

• CDU/CSU (190) + Greens (82) + FDP (30) + BSW (30) = 332

• CDU/CSU (190) + Greens (82) + Linke (44) = 316

• CDU/CSU (190) + SPD (95) + FDP (30) = 315

• CDU/CSU (190) + Greens (82) + FDP (30) = 302

• CDU/CSU (190) + Linke (44) + FDP (30) + BSW (30) = 294

For fun, what would a coalition without the CDU/CSU or the AfD look like?

• SPD (95) + Greens (82) + Linke (44) + FDP (30) + BSW (30) = 281

So, what’s the bottom line for this election?

This looks like just more deadlock for Berlin… which ultimately means more deadlock for the European Union.

To say that this is NOT the time for Germany to have these kinds of leadership problems is a massive understatement.

The Germans need a government with a clear and strong mandate. The rest of Europe needs this too. I’m deeply concerned that the German Federal election won’t provide that kind of mandate and Germany’s leaders will continue to squabble and fail to take the kinds of bold actions that could reverse their decline.

It pains me to say this (because I think the United States also needs a Germany that can act boldly and occupy its natural leadership role in Europe), but I think it is more likely than not that we will have an equally divided coalition government in Berlin that is incapable of doing what Germans, Europeans, and the Transatlantic alliance needs them to do. [NOTE: I take no pleasure in pointing this out… I am NOT rooting against Germany and Europe, I just see little chance they can fix their problems]

I suspect that the Trump Administration has already concluded this to be the case and has decided to press ahead with its own plans without waiting for Berlin to fix itself (again it could be months before we get a German coalition government in place). Decades of disappointment by leaders in Washington with their counterparts in Berlin has accumulated to the point that there is very little confidence in the German political system. This was on display at the Munich Security Conference with the split screen of dueling speeches by Vice President Vance and German Defense Minister Pistorius (SPD).

I think it is worthwhile watching both of their speeches in full (as well as an excellent analysis by DW’s Richard Walker at the end of Vance’s speech).

• Vice President Vance Speech at the Munich Security Conference

• Defense Minister Pistorius Speech at the Munich Security Conference

I hope the election on Sunday proves me wrong… but I don’t think it will.

***

A few weeks ago, I observed that I thought the America First Trade Policy (AFTP) was the most consequential announcement of the new Trump Administration. Well on Friday, the Administration released the America First Investment Policy (AFIP), and it may just surpass the significance of that January 20 Presidential Memorandum.

Perhaps unsurprisingly, the AFIP (along with the AFTP) have not elicited the kinds of media attention that firings of federal employees, DOGE, and speeches at Munich have gotten. I think that is a mistake as it seems pretty clear to me that the Trump Administration is strongly telegraphing its main policy focus: incentivize global trade and investment flows to advantage the United States while simultaneously disadvantaging the PRC. The Trump Administration isn’t waiting for some grand negotiation with Xi, it is moving ahead with significant executive action to reshape the American (and global) economy to create structural impediments to Beijing.

The Trump Administration will likely be open to negotiating with Xi and his cadres, but only within this ever-tightening arrangement.

Third countries have a choice: accept this new construct or suffer the kinds of structural impediments that Washington is imposing on Beijing.

As we’ve seen with other negotiations so far, if third countries are willing to accept this new paradigm, they can achieve an agreement with Washington at a relatively low cost (Panama, Mexico, and Canada). If third countries throw their lot in with the PRC, then Washington won’t negotiate (side-eye at South Africa… “South Africa says silence from US on bid for talks, China pledges support”).

This is also the backdrop of the negotiations with Moscow: if Russia ends its war, then it can rejoin a Western system as long as it turns its back on Beijing.

As I wrote at the beginning, what I’ve seen so far of the negotiations with Moscow hasn’t inspired confidence. But I’m withholding judgement for now.

***

Thoughts and prayers for Pope Francis who is in critical condition. The latest reports, as of Saturday evening, are that he is alert, but that he suffered a severe respiratory crisis due to a complex lung infection.

Thanks for reading!

Matt

P.S. If you find this newsletter valuable, please consider contributing with a subscription, I would really appreciate it!

---

MUST READ

1. Xi Is Making the World Pay for China’s Mistakes
   Brad Setser, New York Times, February 18, 2025

President Trump’s readiness to use coercive tariffs presents a profound threat to the postwar economic and political order, introducing an unpredictability to global commerce that makes it difficult for trade partners to know how to react — and next to impossible for businesses to plan.

But he is not the only danger the world economy faces and may not even be the biggest. That may be President Xi Jinping of China, whose more strategic and calibrated industrial and economic policies are fundamentally distorting and harming global trade.

Trade usually refers to the combination of imports and exports. But Mr. Xi has upended that idea, radically changing China’s trade interaction with the rest of the world, at least when it comes to manufactured goods. Over the past six years, China’s imports of such goods increased by an average of only $15 billion a year, essentially no change at all when inflation is taken into account. Its manufactured exports, on the other hand, have grown more than 10 times as fast, by over $150 billion a year. When it comes to manufactured goods, trade with China is virtually a one-way street.

China now dominates global manufacturing, and its trade surplus dwarfs the biggest run by Germany and Japan during their eras of postwar export supremacy. Countries around the world get cheap Chinese products, but they can’t sell nearly as many of their own to China. Their export sectors are hurting — see Germany — and not hiring.

Why is Mr. Xi doing this?

To make up for the Chinese government’s mismanagement of its domestic economy.

The roots of the problem go back to the global financial crisis of 2008. The crisis caused Chinese exports to fall. The government could have offset this by strengthening the ability of Chinese consumers to buy the country’s products through policies that support household incomes and by reducing the hefty taxes on low-wage workers and domestic consumption that finance China’s state. This would have helped China transition to a more sustainable economic model that is balanced among industry, trade, investment and consumer spending.

Chinese leaders opted instead to funnel the country’s huge household savings into an immense investment boom. New bridges, roads and, above all, apartments were built, and all of that construction and related economic activity allowed China to rely a bit less on exports for growth. But this created a real estate bubble, and when Mr. Xi responded by cracking down on the housing sector in 2020, he triggered a deep property slump that has persisted.

Mr. Xi’s response to the Covid pandemic also played a role. To cushion the pandemic’s economic shock, advanced economies around the world opened up their government checkbooks to support consumer spending. The one major economy that didn’t take significant steps to stimulate its economy and support households was the country where the virus first took hold: China. He is ideologically opposed to cutting government checks or anything else that smacks of welfarism, believing that consumer stimulus — unlike investment — generates no lasting value. So while consumers in the United States and elsewhere began spending again, including on Chinese imports, China was able to recover on the back of other countries’ stimulus checks while throwing everything into building out its manufacturing sector to replace the growth that property wasn’t providing.

COMMENT – An excellent essay by Brad Setser… Xi and his cadres have implemented beggar thy neighbor policies for years.

2. It is all about trade
   Matthew Turpin, United States Studies Center, February 13, 2025

After returning to the White House in January, President Donald Trump issued a flurry of executive orders, presidential memorandums, and policies. His lieutenants descended upon federal government departments and began an aggressive set of bureaucratic changes. To outside observers, and even Washington insiders, it is difficult to keep these actions straight and comprehend the potential significance of these efforts in isolation, let alone the implications of them collectively. The president’s most important strategic goal appears to be a combination of refashioning the US economy and re-engineering how global trade works.

While there is no guarantee that Trump and his administration will achieve the goal he has in mind, it is important to understand the president’s perspective, what he wants his administration to achieve, and how he intends to do it. If carried out successfully, these efforts could have enormous impacts on the global trade and economic system.

Individuals, businesses, and even countries, should weigh the potential risks to their own economic and business models. But also, and perhaps more importantly, they should consider the potential opportunities that a transformed US economy and global trading system might bring.

To start, it is worth briefly describing Trump’s worldview. Contrary to nearly all his predecessors, Trump believes that US interests, and in particular American workers and companies, are disadvantaged by the liberal international economic system that emerged after the collapse of the Soviet Union. He believes that the United States embraced an ideology of ‘free trade’ as an unqualified virtue and unwisely disarmed itself by removing protections against the free flow of labour, capital, technology, and goods.

According to Trump, these decisions, which both Republican and Democratic politicians championed, led to the hollowing out of the US economy and industrial strength, while transferring jobs and wealth to the citizens of other nations. While in theory he may accept the arguments of David Ricardo’s comparative advantage, in practice he believes that this theoretical ideal rarely emerges as nations game the system to their own advantage. When these abuses became too blatant to ignore, he faults his predecessors as being too wedded to their ideological biases and too naïve to understand that appeals to legalistic norms shrink in the face of sovereign power. For Trump, the persistent and deepening trade deficit that the United States carries with the rest of the world (though not with Australia), is evidence of the failure of these theories. He is deeply critical of politicians and experts who put their faith in an ideal, which, in his opinion, does not exist in reality.

Closely linked to this suspicion about ‘free trade’ is his deep scepticism of multilateral organisations and international institutions which supposedly safeguard this liberal international economic system. Again, he may accept the theory of a rules-based order maintained by objective international organisations, but in practice he believes these entities cannot enforce the rules and that nations must protect the interests of their own citizens, instead of outsourcing it to others.

Lastly, Trump views the United States as well positioned to change the global trade and economic system. As the world’s largest and wealthiest consumer market with the deepest and richest capital markets, he believes the United States has enormous leverage in renegotiating the terms of trade with its partners individually.

The themes of this worldview are not new, and Trump campaigned on them in 2016, 2020, and 2024. In each subsequent campaign and during the Biden administration, Trump’s political opponents tacked closer to his views on these issues, giving him confidence that American voters share his concerns and have provided him a political mandate to change the global trade and economic system.

Renegotiating the terms of trade

Based on these themes, Trump looks to renegotiate much of the globalisation orthodoxy. Under that system, manufacturing and other industrial activities moved from the United States to other countries with either lower labour costs or to those who could negotiate trade agreements that both benefited their citizens and provided low barrier market access to the United States. Under this version of globalisation, the United States provided two public goods: security, which brought down the cost of commerce, and a market of last resort, that countries could sell into with few barriers which enable those countries to power their own economic development and prosperity.

Trump views this as an unsustainable arrangement, that places heavy burdens on the United States, which lets allies freeride on public goods, and allows rivals to build economic, industrial, military, and technological strength at the expense of the United States.

Rather than viewing the provision of security and market access to the United States as something Americans owe to the world, Trump seeks to share the cost of security with those that share values with the United States and to make access to the US market a privilege. To the degree that companies and countries want to assist in furthering US prosperity and to share in the profits, their investment and manufacturing in the United States will be welcome. The availability of abundant energy, a well-educated workforce, and most importantly, wealthy consumers who will consume large quantities of products and goods, is likely to be attractive to those who want to manufacture in the United States, for the United States. For those who can provide commodities and raw materials for this industrial and manufacturing renaissance that the United States cannot provide itself, those imports to the United States will be welcome at low or no tariff rates.

The responsibility for implementing these changes will fall primarily on five individuals, known colloquially as, the ‘trade team.’ Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, nominee for US Trade Representative Jamieson Greer, Director of the National Economic Council Kevin Hassett, and Senior Counselor for Trade and Manufacturing Peter Navarro.

An America First Trade Policy

The most far-reaching document that Trump signed on his first day in office was a presidential memorandum titled, America First Trade Policy. Addressed to his key cabinet officials, but available for the world to read, Trump’s trade policy lays out a roadmap for overhauling the way the United States conducts commerce with the world.

The policy directs the ‘trade team’ to undertake at least 21 investigations (with five specifically focused on the People’s Republic of China) into existing trade relationships, compliance with trade agreements, and any harms inflicted on the United States. These investigations, some of which include periods for public comment, unlock statutory authorities granted to the president or specific cabinet members. For example, if after an investigation by the Office of the US Trade Representative, it is determined that a foreign country is violating a trade agreement or placing unjustifiable burdens on US commerce, US Code 19, Section 2411, grants the trade representative broad authority to suspend the benefits of a trade agreement, impose duties, or restrict imports.

The administration appears to be constructing a deliberate set of tools that it can rapidly employ to either achieve a specific policy goal, as demonstrated below, or to change the fundamental commercial calculus for businesses to manufacture products in the United States.

Under the section for economic security matters, the Trump administration has already implemented one portion of this policy. It directed the Secretary of Commerce and Secretary of Homeland Security to assess unlawful migration and fentanyl flows from Canada, Mexico, and the People’s Republic of China and recommend appropriate trade and national security measures. On 1 February, Trump signed three separate executive orders directing the imposition of tariffs on those three countries due to unlawful migration and fentanyl flows. Within 72 hours, the leaders of Canada and Mexico agreed to implement measures to address those two issues. Meanwhile China’s leader apparently refused to communicate with Trump and he ordered the imposition of an additional 10% tariff on all Chinese imports to the United States, as well as a suspension of duty-free de minimis treatment for Chinese imports under US$800.

While this trade policy offers a roadmap for where the Trump administration is going and preview of the tools it will use to get there, this process will inevitably unfold over months and years. For those who want to understand the logic of what the United States is seeking to achieve during the second Trump administration, understanding Trump’s worldview, watching the actions of his ‘trade team,’ and following the roadmap of the America First Trade Policy will answer many questions.

COMMENT – My piece published by the United States Studies Center at the University of Sydney on the likely contours of U.S. trade policy during the second Trump Administration. I wrote this before the “America First Investment Policy” was released (next piece), so I probably need to do some updating.

3. America First Investment Policy – Presidential Memorandum

Executive Office of the President, February 21, 2025

Section 1. Principles and Objectives. America’s investment policy is critical to our national and economic security. Welcoming foreign investment and strengthening the United States’ world-leading private and public capital markets will be a key part of America’s Golden Age. The United States has the world’s most attractive assets, in technology and across our economy, and we will make it easier for our overseas allies to support United States jobs, United States innovators, and United States economic growth with their capital.

Investment by United States allies and partners can create hundreds of thousands of jobs and significant wealth for the United States. Our Nation is committed to maintaining the strong, open investment environment that benefits our economy and our people, while enhancing our ability to protect the United States from new and evolving threats that can accompany foreign investment.

Investment at all costs is not always in the national interest, however. Certain foreign adversaries, including the People’s Republic of China (PRC), systematically direct and facilitate investment in United States companies and assets to obtain cutting-edge technologies, intellectual property, and leverage in strategic industries. The PRC pursues these strategies in diverse ways, both visible and concealed, and often through partner companies or investment funds in third countries.

Economic security is national security. The PRC does not allow United States companies to take over their critical infrastructure, and the United States should not allow the PRC to take over United States critical infrastructure. PRC-affiliated investors are targeting the crown jewels of United States technology, food supplies, farmland, minerals, natural resources, ports, and shipping terminals.

The PRC is also increasingly exploiting United States capital to develop and modernize its military, intelligence, and other security apparatuses, which poses significant risk to the United States homeland and Armed Forces of the United States around the world. Related actions include the development and deployment of dual-use technologies, weapons of mass destruction, advanced conventional weapons, and malicious cyber‑enabled actions against the United States and its people. Through its national Military-Civil Fusion strategy, the PRC increases the size of its military-industrial complex by compelling civilian Chinese companies and research institutions to support its military and intelligence activities.

Those Chinese companies also raise capital by: selling to American investors securities that trade on American and foreign public exchanges; lobbying United States index providers and funds to include these securities in market offerings; and engaging in other acts to ensure access to United States capital and accompanying intangible benefits. In this way, the PRC exploits United States investors to finance and advance the development and modernization of its military.

COMMENT – When read alongside the January 20, America First Trade Policy, it appears obvious to me that the Trump Administration has little faith that some sort of ‘grand bargain’ can be reached with Beijing. These two overarching policy documents lay out a road map for a permanent disadvantage to the People’s Republic of China.

In essence, while the Administration views other countries as potentially causing harm to the United States, the PRC is the only country specifically named for broad restrictions. Additionally, third countries are essentially incentivized to receive fast-track access to the United States so long as they renounce their connections to the PRC.

All of this seems to be designed to isolate and disadvantage the PRC over time.

Foreign investors have a choice, if they want access to investment opportunities in the world’s largest and wealthiest market with the world’s leading technology, they must turn away from partnerships with Beijing.

American investors don’t have that choice, they are essentially being told: withdraw your investments in the PRC’s cutting edge technology or face severe executive action that will see your investment cut off.

Quote from Section 2 (k):

To further reduce incentives for United States persons to invest in our foreign adversaries, we will review whether to suspend or terminate the 1984 United States-The People’s Republic of China Income Tax Convention. That tax treaty, along with the PRC’s admission to the World Trade Organization and the related undertaking by the United States to accord unconditional Most Favored Nation treatment to goods and services of the PRC, led to the deindustrialization of the United States and the technological modernization of the PRC military. We will seek to reverse both those trends. United States investors will invest in the future of America, not the future of the PRC.

If we carry these policies to their logical ends, Washington is presenting the world’s businesses and investors with a stark choice: you can help the United States succeed and share in its prosperity OR you can help the PRC… not both.

4. How Dirty Money from Fentanyl Sales Is Flowing Through China
   Patricia Kowsmann, Dylan Tokar and Brian Spegele, Wall Street Journal, February 18, 2025

Chinese money brokers are teaming up with Mexican cartels, greasing the wheels of the fentanyl trade, U.S. officials say.

On an October morning in 2022, an alleged drug trafficker drove a white pickup truck into the parking lot of a Global Fresh Market in San Gabriel, Calif., and stopped alongside a blue Maserati.

After a quick discussion with a woman in the Maserati, the man placed a large black bag in the sportscar’s back seat. Members of a U.S. government task force, who were watching, say it contained some $300,000 in cash.

The drop was part of what U.S. officials say is a new front in America’s war on drugs: an emerging partnership that has made China a crucial pit stop for dirty money flowing from the U.S.’s fentanyl crisis, according to law-enforcement officials and court documents.

Chinese money brokers, part of an underground banking system that has long served the country’s immigrant diaspora, have become go-to partners for fentanyl traffickers and other criminal groups needing to launder illicit drug profits, officials say.

Long operating in the shadows, the Chinese brokers use intermediaries, such as the woman in the Maserati, to collect drug profits from fentanyl dealers. Then, through a series of transactions, they sell those dollars to Chinese customers who want cash in the U.S. for purposes such as buying real estate or other investments, but can’t legally send money directly from China because of capital controls there.

The drug dealers end up with clean money in the process, law-enforcement officials say.

In the case involving the Maserati, dubbed “Operation Fortune Runner,” members of the Drug Enforcement Administration task force spent years investigating one such network, including thousands of hours of street-level surveillance. Traffic stops of suspects turned up cash stowed in a Fruity Pebbles cereal box and a gift bag with “Happy Birthday” printed on the side.

The investigation eventually led to indictments of 24 individuals last year, involving more than $50 million in drug proceeds prosecutors say Chinese brokers were laundering for associates of Mexico’s Sinaloa drug cartel.

Evidence of a deepening relationship between drug cartels and Chinese money brokers presents a challenge for President Trump, who has vowed to end the fentanyl crisis that causes the death of tens of thousands of Americans every year.

So far, his focus has been on cutting off the flow of fentanyl and the precursor ingredients that are used to make it into the U.S., imposing tariffs against producing countries, including a new 10% tariff on Chinese imports to the U.S. earlier this month.

COMMENT – The Chinese Communist Party has the power and authority to stop this activity IF it desired to do so… the fact that it is still going on, contributing to the deaths of hundreds of thousands of Americans, means the CCP is culpable.

5. China as the Keystone of a Global Network of Autocracies

Christopher Walker, Testimony to the U.S.-China Economic and Security Review Commission, February 20, 2025

Co-Chairs Friedberg and Stivers, distinguished Commissioners and staff, thank you for the opportunity to testify on China’s pivotal role in shaping the international environment and how deepening cooperation among a group of repressive powers is supercharging authoritarian influence globally. This hearing is especially timely and critical, given China’s increasingly essential role in leading and enabling the efforts by a diverse set of ambitious authoritarian regimes to undermine democratic rivals, pioneer new techniques of social control, and carry out acts of aggression that threaten global security and stability.

China’s leadership over the last generation has invested heavily in projecting power internationally. This has been especially evident since the time of Xi Jinping’s rise to a position of paramount power in 2012. Less obvious has been the extent to which China has used a web of relationships with other autocracies to enhance its leverage, where possible to achieve multiplier effects, and more generally guide the global rules of the road in a direction more friendly to the Chinese Communist Party’s (CCP) interests, values, and preferences.

And as Beijing deepens its strategic cooperation and coordination with countries that include but are not limited to Russia, Iran, and North Korea, China functions as the “keystone” that makes the authoritarian whole stronger than any single one of its parts. This development represents a comprehensive and even systemic threat to the United States and other free systems.

Moreover, as China and other ambitious authoritarian regimes have worked more intentionally in common cause, their ability to exert influence has grown. Over the years, democracies have consistently underestimated the scope and durability of the challenge from this networked authoritarian grouping. Assumptions that authoritarian relationships are temporary or superficial “marriages of convenience,” for instance, have led analysts to understate the true risk we face. We need to look at the coordinated actions of these regimes, as well as the structures they are building, in order to understand the depth and scope of their ambitions.

COMMENT – The team at the National Endowment of Democracy (NED) has been doing excellent work at illuminating the PRC’s malign activities for years. Unfortunately, the ham-fisted cuts by DOGE have all but eliminated their work which provides the CCP an open field to push their propaganda unchallenged.

I’m sure Xi Jinping will be sending Elon Musk a bouquet of flowers as a thank you!

6. See How Xi and Putin Are Ramping Up Joint Military Drills

Austin Ramzy, Wall Street Journal, February 22, 2025

China and Russia expand cooperation from Alaska to Taiwan in a challenge to the U.S. and its partners.

The militaries of China and Russia, America’s top two global adversaries, are working together as never before in their long partnership, probing the defenses of the U.S. and its allies.

The message to America from the growing partnership is that, if drawn into a military conflict, U.S. forces could find themselves confronting both countries.

Chinese-Russian joint patrols and military exercises have become more frequent and increasingly assertive, a review of recent activity shows—and the U.S. and its allies have been forced to respond more frequently as well, scrambling jet fighters and other assets to safeguard territory.

Beijing and Moscow have been displaying close cooperation near Japan, South Korea and the Philippines, nations that the U.S. has pledged to defend, and Taiwan, to which the U.S. sells weapons and provides training. Washington has maintained a policy of ambiguity as to whether it would defend Taiwan from a Chinese invasion.

Alongside growing military ties between Russia and U.S. foe North Korea, the prospect of battling multiple enemies compounds the challenge for the U.S. as it prepares and develops strategy for a potential conflict in Asia.

7. Thoughts on the political demise of Miao Hua
   Jonathan A. Czin, Brookings, February 18, 2025

What was once improbable in Chinese politics has now become yet another symptom of a new normal.

What was once improbable—even imponderable—in Chinese politics has now become yet another symptom of a new normal. On November 28, 2024, the People’s Republic of China (PRC) Ministry of National Defense announced that Admiral Miao Hua, until then the director of the Political Work Department, had been suspended from his position and was under investigation. Thirteen years into Xi Jinping’s tenure at the top, it can be hard to recall that prior to Xi’s rule, toppling members of the Central Military Commission (CMC) was unheard of in the post-Mao era. Xi, however, has now made the removal of CMC members a regular feature of China’s politics—toppling no fewer than seven serving and former members of the CMC since becoming chairman of the CMC in 2012. These terminations have been dramatic affairs—with one former vice chairman dying of cancer after being purged following more than 40 years of military service, and one of Miao’s predecessors committing suicide.

The ouster of yet another sitting CMC member only further reinforces what have become the three verities of Xi’s anti-corruption campaign in the military:

• Corruption is an endemic problem in the People’s Liberation Army (PLA).

• Xi is serious about rooting out corruption.

• The persistence of corruption undermines Xi’s confidence in the PLA.

The last point is the crucial one for Xi—and why he has even been willing to remove from the high command officers whom he has personally elevated. After all, Miao is just the most recent CMC member Xi has ousted in his third term, after purging the previous two ministers of national defense in 2024, both of whom had been deeply involved in core aspects of the PLA’s weapons modernization before taking on the largely ceremonial role of defense minister. Xi’s sangfroid toward those in his own orbit reflects the gravity of his concern that actions by Taiwan, the United States, or other factors could force him to turn to the PLA—and that he needs real options. Xi’s concern is not new, but it is as stubborn and persistent as the corruption he seeks to eliminate. This is no parlor game for Xi, and at this point in his tenure, these purges are about both politics and proficiency. Xi is quite serious when he says that he wants the PLA to prepare to “fight and win battles”—a turn of phrase that itself implies that the PLA is not ready. The fact that these corruption investigations have had little discernible negative impact on the PLA’s capabilities or operations—at least from afar—probably only reinforces Xi’s belief in the salutary effects of these kinds of purges.

Prologue on the Political Work Department

We do not know the exact reasons for Miao’s sudden downfall, but situating it in the full arc of Xi’s anti-corruption crusade in the PLA does help illuminate the ruthless logic that has shaped the cadence of these roving purges. In many ways, Xi’s toppling of Miao returns the story to its point of origin: the political commissariat of the People’s Liberation Army. Political commissars are a peculiar feature of the Chinese military—and are part of the PLA’s inheritance from the Soviet Union. During the Russian Civil War, Leon Trotsky instituted the practice of installing political commissars alongside military commanders as dubious “white” units defected to the Red Army to ensure that their expedient enthusiasm for the Red Army would not wane—and to ensure that the Red Army would not be double-crossed on the battlefield. In the PLA, the political commissar system dates back to the Gutian Conference in 1929, where Mao Zedong imposed the institution on the high command over the objections of more professionally oriented officers. Notably, Xi convened a significant conference of his own high command in Gutian in 2014—as a not-so-subtle reminder to the PLA of the Chinese Communist Party’s supremacy over military affairs. In 2015, Xi abolished the old General Political Department (GPD) as part of a massive reorganization of the PLA and reincarnated the institution as the Political Work Department (PWD).

Within the PLA, the PWD still plays a crucial role in ensuring the party’s control over the military—and ironically, it is therefore a natural focal point for ambitious military officers to build up their own factions and political power. This is especially true since the PWD and its predecessor organization oversaw personnel—affording the department’s chief huge leverage over the officer corps, since he and his political allies would have enormous leeway to decide who would be put forward for promotion. The GPD was actually even more powerful since it could decide whose corrupt activities could be protected, and who could be targeted for investigation—which is probably why Xi wrested these powers from the PWD and bestowed them on other elements of the reorganized high command.

COMMENT – I continue to wonder just what Xi Jinping thinks about the PLA. Does he view them as an effective tool that could achieve the Party’s most important objectives if called upon to do so? Or does he view them with suspicion and contempt?

I think Jon Czin does a fine job with this piece and it helps reinforce something we all know: things are often more complex than we first suppose.

8. US drops website wording on not supporting Taiwan independence
   Reuters, February 16, 2025

The U.S. State Department has removed a statement on its website that it does not support Taiwan independence, among changes that the island's government praised on Sunday as supporting Taiwan.

The fact sheet, opens new tab on Taiwan retains Washington's opposition to unilateral change from either Taiwan or from China, which claims the democratically governed island as its own.

But as well as dropping the phrase "we do not support Taiwan independence", the page has added a reference to Taiwan's cooperation with a Pentagon technology and semiconductor development project and says the U.S. will support Taiwan's membership in international organisations "where applicable".

The United States, like most countries, has no formal diplomatic ties with Taiwan but is its strongest international backer, bound by law to provide the island with the means to defend itself.

"We oppose any unilateral changes to the status quo from either side," the State Department website reads in the update posted on Thursday. "We expect cross-Strait differences to be resolved by peaceful means, free from coercion, in a manner acceptable to the people on both sides of the (Taiwan) Strait."

Taiwan Foreign Minister Lin Chia-lung "welcomed the support and positive stance on U.S.-Taiwan relations demonstrated in the relevant content" of the website, his ministry said in a statement on Sunday.

The State Department and China's foreign ministry did not immediately respond to requests for comment outside office hours.

The changes in language were first reported by Taiwan's official Central News Agency on Sunday. The wording on Taiwan independence was also removed in 2022, before being restored a month later.

Taiwan's government rejects Beijing's sovereignty claims, saying only the island's people can decide their future. Taiwan says it is already an independent country called the Republic of China, its official name.

Beijing describes Taiwan as its "core of core interests", regularly denouncing any shows of support for Taipei from Washington.

While U.S. President Donald Trump has unnerved Taiwan since taking office last month with criticism of Taiwan's dominance in making semiconductors, his administration has otherwise offered strong words of support for Taiwan.

Last week, the first U.S. Navy ships sailed through the sensitive Taiwan Strait since Trump's inauguration.

Taiwan's foreign ministry said in a separate statement that a Canadian warship, the Ottawa, had sailed through the strait on Sunday.

Canada's Department of National Defence did not respond to a request for comment.

Taiwan has faced stepped-up military pressure from Beijing, including almost daily forays by Chinese warplanes and warships into the waters and skies around the island.

Taiwan's defence ministry said that on Sunday it had detected 24 Chinese military aircraft carrying out a "joint combat readiness patrol" along with Chinese warships around Taiwan.

China's defence ministry did not answer calls seeking comment on the State Department website, the Canadian warship or the renewed military activity.

COMMENT – I think it is incredibly important to remind Beijing that their Orwellian demands won’t be respected.

9. Wall Street’s China Plans in Tatters After Years of Setbacks
   Cathy Chan, Bloomberg, February 16, 2025

Major banks are scaling back investments and cutting jobs as they rethink growth strategies.

It was mid-December, and representatives for Wall Street’s biggest banks were meeting with US Treasury officials to better understand how their clients can comply with new rules for investing in Chinese companies that pose potential national security risks.

Bankers from Goldman Sachs, Morgan Stanley and others left the meeting confused, with more questions than answers about which deals qualify and what reporting is required to stay within the complex guidelines, according to people familiar with the talks, who spoke on condition they not be identified.

COMMENT – I think it should be remembered that U.S. banks wanted into the Chinese market because they perceived that a huge new group of middle class Chinese lacked the indigenous financial services firms to do business with and that they might become a new group of clients (in the tens of millions or even hundreds of millions).

By holding out the opportunity to provide financial services to these new Chinese clients, the PRC Government won over an influential partner to lobby the U.S. Government on their behalf.

But of course, that was all a mirage because as Wall Street Banks were slow-rolled by the PRC Government, so as to maximize their lobbying on Washington, domestic Chinese banks filled the void and now those Wall Street Banks are left with few opportunities and they are closing up shop.

I think it is what the Chinese Communist Party calls a “win-win” outcome.

10. The New Plan for Western Companies Is ABC: ‘Anything But China’
    Liza Lin, Wall Street Journal, February 16, 2025

For a growing number of Western tech companies, “Anything But China” is the order of the day.

In recent years, many multinationals decided they had become overreliant on suppliers in China, prompting them to pursue a so-called “China Plus 1” strategy of augmenting China-based suppliers with those in other countries.

Now, with U.S.-China tensions soaring again, many tech businesses are accelerating moves to shift production out of China and look for suppliers elsewhere, signifying a global tech world that is increasingly bifurcated between the two powers.

“Everybody is trying to look for an alternative to China,” said Wong Siew Hai, the head of the Semiconductor Industry Association in Malaysia, a destination for many tech companies leaving China. “Companies are redesigning their business. There’s no more ‘just-in-time’ strategy. Some people call this new strategy ‘just in case.’”

The trend is throwing up opportunities for countries in Asia and Latin America to move up the value chain. It is also pushing Chinese suppliers to expand overseas at a faster clip, as many set up plants beyond their borders at the request of Western customers.

COMMENT – This is the disentanglement that we should expect to see as the rivalry between the U.S. and the PRC continues to harden.

---

Authoritarianism

11. China aids Russian drone production with smuggled Western parts, says Estonia
    Andrius Sytas, Reuters, February 12, 2025

China is helping Russia's military drone production by becoming a hub for the smuggling of critical Western components for Moscow's armed forces, Estonia's foreign intelligence said in its annual national security report published on Wednesday.

Some 80% of such components reaching Russia now come from China, it said. Previous Ukrainian reports have suggested that roughly 60% of foreign parts found in Russian weapons on the battlefield in Ukraine have come via China.

China is Russia's "primary hub" for importing high-tech and dual-use goods, evading Western sanctions, according to the report.

"Chinese interests here lie in preventing Russia from losing the war in Ukraine as such an outcome would represent a victory for the United States, which is the main rival for China," Kaupo Rosin, director general of the service, told reporters in a video call.

NATO member Estonia closely tracks Russian military capabilities as it regards Moscow as the major threat to its security, especially since Russia's invasion of Ukraine in February 2022.

Estonia, like its Baltic neighbours Latvia and Lithuania, was forcibly annexed by Moscow during World War Two, regaining its independence only in 1991 as the Soviet Union fell apart.

Russia does not have domestic alternatives for drone parts, so these are largely sourced from the West, said the Estonian report.

"The Chinese government ... facilitates bilateral cooperation and covert transfers of dual-use components through private companies," it said.

"This approach will likely decrease Russia's dependency on Western components and, in the long term, could undermine the West's ability to leverage influence in this domain," it said.

COMMENT – Three years of failed efforts to stop this flow because Washington and Brussels have refused to take sufficient action against Beijing.

12. Revealed: Google facilitated Russia and China’s censorship requests

Sian Boyle, The Guardian, February 15, 2025

An investigation has exposed the tech firm’s cooperation with autocratic regimes to remove unfavourable content.

Google has cooperated with autocratic regimes around the world, including the Kremlin in Russia and the Chinese Communist party, to facilitate censorship requests, an Observer investigation can reveal.

The technology company has engaged with the administrations of about 150 countries since 2011 that want information scrubbed from their public domains.

As well as democratic governments, it has interacted with dictatorships, sanctioned regimes and governments accused of human rights abuses, including the police in Taliban-controlled Afghanistan.

After requests from the governments of Russia and China, Google has removed content such as YouTube videos of anti-state protesters or content that criticises and alleges corruption among their politicians.

13. A Chinese Artist Takes on Beijing, Carefully
    Lingling Wei, Wall Street Journal, February 14, 2025

Xu Weixin has posted a new drawing about Ukraine every day on social media to protest China’s support of Russia’s war. He’s navigating a ‘tough balance,’ he says.

Since Russia’s invasion of Ukraine in 2022, Xu Weixin has made one drawing every day. In his modest studio in New York, on visits to his mother in China, or just about anywhere he travels, he has sketched desolate Ukrainian cities, wounded Ukrainian soldiers and ordinary citizens trying to make it through the conflict.

Xu uses an iPad application and posts his drawings on both American and Chinese social media. He’s now made more than 1,000 of them. His cause is one that few other Chinese artists have been willing to embrace: defying Beijing’s support for Russia’s war.

The Chinese government has frequently imprisoned or harassed artists, writers and activists for challenging the authorities. The best known cases are artist Ai Weiwei, who has spent time in detention and now lives in exile, and Nobel laureate Liu Xiaobo, who died in 2017 under police surveillance and after long years of imprisonment.

Xu’s Ukraine-themed work has already run afoul of Chinese censors twice, and the 67-year-old artist is well aware that he is walking a tightrope by taking on a project of political sensitivity in China.

“What I do is a tough balance,” said Xu, a former dean of the school of arts at Renmin University in Beijing, as he sat in his studio in front of a large oil painting he made of Ukrainian President Volodymyr Zelensky. A U.S. green card holder since 2017, he now makes his home with his wife and daughter in New York City. But he remains a Chinese citizen and goes back to visit his mother at least a couple of times a year.

Xu’s studio, converted from a warehouse, sits in a diverse neighborhood of Queens where single-family homes mix with small factories. Earlier artworks arrayed along the walls showcase his daring approach, dating to when he lived in China full-time.

14. Cuts to U.S.-Backed Rights Groups Seen as a Win for China
    David Pierson and Berry Wang, New York Times, February 14, 2025

15. OpenAI Uncovers Evidence of A.I.-Powered Chinese Surveillance Tool

Cade Metz, New York Times, February 21, 2025

The company said a Chinese operation had built the tool to identify anti-Chinese posts on social media services in Western countries.

OpenAI said on Friday that it had uncovered evidence that a Chinese security operation had built an artificial intelligence-powered surveillance tool to gather real-time reports about anti-Chinese posts on social media services in Western countries.

The company’s researchers said they had identified this new campaign, which they called Peer Review, because someone working on the tool used OpenAI’s technologies to debug some of the computer code that underpins it.

Ben Nimmo, a principal investigator for OpenAI, said this was the first time the company had uncovered an A.I.-powered surveillance tool of this kind.

“Threat actors sometimes give us a glimpse of what they are doing in other parts of the internet because of the way they use our A.I. models,” Mr. Nimmo said.

16. China’s unspoken question: who will succeed Xi Jinping?
    Edward White and Joe Leahy, Financial Times, February 16, 2025

17. Alternative Chinese terminals emerge to take in sanctioned tankers, sources say
    Chen Aizhu, Reuters, February 13, 2025

18. Xi Voices Support for Jack Ma, China Private Sector Chiefs
    Bloomberg, February 16, 2025

18. Chinese media echoes Xi’s speech on private sector with flurry of editorials

Alice Li, South China Morning Post, February 19, 2025

Soon after the Chinese president openly backed the country’s private firms, state news outlets followed suit with numerous commentaries.

Several of China’s most influential state media outlets have published editorials expressing support for the private sector, a unanimous reinforcement of the rhetoric delivered on Monday by President Xi Jinping at a high-profile symposium for the country’s leading entrepreneurs.

“Practice has proven that the private economy is a vital force in advancing Chinese-style modernisation and serves as an important foundation for high-quality development,” read an editorial from the People’s Daily, the official news organ of the Communist Party.

It referenced Xi’s speech extensively, emphasising that the government’s core principles and policies for the private economy – unwavering support, equal competition and legal protection – are integral to China’s socialist system and represent a long-term commitment that will remain unchanged.

“At present, during the critical period of China’s modernisation drive, the private economy is embracing even broader prospects for development,” said the editorial.

On the same day, a commentary was published in the newspaper under the pen name “He Yin” – which translates to “voice for peace” – stating companies with executives at the meeting exemplify the “innovative spirit” of China’s private enterprises and are leaving a “remarkable impression” on the world.

“As China steps into a stage of high-quality development, private enterprises are poised to play a more significant role in areas such as technological innovation, sustainable development, and the digital economy,” wrote the pseudonymous author.

COMMENT – Nothing like having a completely supine media to amplify everything a dictator wants said.

19. Tesla braces for delay to China licence as Trump trade tensions mount
    Zijing Wu and Stephen Morris, Financial Times, February 18, 2025

20. China’s Private Berths Emerge as Hotspots for Russia, Iran Oil
    Weilun Soon, Bloomberg, February 17, 2025

21. Xi's new frontline corporate guard showcases his priorities, control
    Eduardo Baptista and Brenda Goh, Reuters, February 18, 2025

22. China’s homegrown tech boosts global surveillance, social controls: report

Lin Yueyang, RFA, February 20, 2025

The ruling Chinese Communist Party is using AI and big data to monitor citizens at home and abroad, and is exporting its technology for use overseas.

Homegrown AI and other cutting-edge technology is boosting internal surveillance by the ruling Chinese Communist Party and expanding its overseas influence and infiltration operations, and is already in use far beyond its borders, according to a recent report.

China’s recent advances in AI and big data, including its recently launched DeepSeek AI model, will boost the government’s surveillance capabilities, including overseas, according to Feb. 11 report from the Washington-based National Endowment for Democracy.

“The People’s Republic of China stands out for its quest to collect and leverage unprecedented types and volumes of data, from public and private sources and from within and beyond its borders, for social control,” according to the report.

China’s increasingly powerful AI surveillance systems use facial recognition and combine data streams to create sophisticated “city brains” that can track events in real time, wrote report author Valentin Weber.

“These tools create a pervasive surveillance dragnet and may be used by state authorities to quell protests before they start,” it said.

---

Environmental Harms

23. China keeps building mega coal projects
    CNN, February 13, 2025

China’s power industry began construction on nearly 100 gigawatts of new coal plant capacity last year, the most in nearly a decade, a report from two clean-energy groups said Thursday.

The development raises concerns about the ability of the world’s largest carbon dioxide emitter to meet its climate goals and threatens to undercut China’s massive expansion in solar and wind power, which has far outpaced that in the United States and Europe, the report said.

“Instead of replacing coal, clean energy is being layered on top of an entrenched reliance on fossil fuels,” it said.

The report is part of a review of China’s coal projects done every six months by the Europe-based Centre for Research on Energy and Clean Air and the US-based Global Energy Monitor.

Construction began on 94.5 gigawatts of coal power plant capacity in 2024, more than in any year since 2015, according to a worldwide database of coal plants maintained by Global Energy Monitor.

Work also resumed on 3.3 gigawatts of suspended projects, the report said.

“A substantial number of new plants will come online in the next 2-3 years, further solidifying coal’s role in the power system,” it said.

The concern is that coal power will displace solar and wind capacity. The report said that in the last three months of 2024, electricity generation from fossil fuels remained high, while solar and wind utilization dropped sharply.

The new construction was expected following a surge in government approvals for coal-fired plants in 2022 and 2023, said Qi Qin, a China analyst for the Centre for Research on Energy and Clean Air.

COMMENT - News Flash!!! The PRC will not measurably reduce its CO2 emissions anytime in the foreseeable future, but will continue building coal-fired power plants no matter what some NGOs say.

This will completely negate all the cuts and sacrifices the Europeans are making as overall global CO2 emissions will continue to rise.

24. China’s construction of coal-fired power plants reaches highest in a decade
    Joe Leahy, Wenjie Ding, and Attracta Mooney, Financial Times, February 13, 2025

25. China digs deep on mineral security as battle for resources with US intensifies
    Alice Li, South China Morning Post, February 17, 2025

26. China, Cook Islands seabed research pact sparks environmental concerns
    Shaun Turton, Nikkei Asia, February 17, 2025

27. Electricity demand surges for the world’s two biggest polluters
    Justine Calma, The Verge, February 18, 2025

---

Foreign Interference and Coercion

28. Questions raised over Lord Mandelson’s work with Chinese ‘influence operation’

Tom Bergis, Eleni Courea, and Rob Evans, The Guardian, February 12, 2025

New ambassador to US and his consultancy firm under spotlight over links to agency said to have aim of co-opting western businesspeople.

Peter Mandelson’s face appeared at the top of the screen. Below him was Li Keqiang, then the Chinese premier. Ringed around them in the online “Europe-China business dialogue” meeting were top executives from some of the biggest European multinationals.

Covid was still rife so the February 2021 gathering took place online, with the British Labour peer in the chair. When a copy of the minutes was leaked, they contained fawning opening remarks from Mandelson about China’s rulers and their ability to “prove [their critics] wrong”.

But as Mandelson’s new post as UK ambassador in Washington draws scrutiny of his relationships in Beijing, the most striking aspect of that 2021 meeting has been overlooked.

The China Council for the Promotion of International Trade (CCPIT), the agency that arranged it alongside Mandelson’s Global Counsel consultancy, is believed by experts to be a longstanding Chinese Communist party influence operation with a covert mission to co-opt western businesspeople. The meeting was attended by 20 senior European bosses from Airbus, AstraZeneca, Maersk, Nokia, Prudential and Suez and other major corporations.

COMMENT – It is a real head-scratcher why the UK Labour Party would appoint Peter Mandelson as its Ambassador to the United States. Mandelson is the poster child for a bygone era and represents a worldview that seems completely out of step with what the UK is trying to achieve in the United States.

This new Labour Party Government has not shown itself to be very skilled.

29. North Dakota was a leader in limiting China land purchases and sees no reason to stop
    Jack Dura, Associated Press, February 13, 2025

30. Apple, Google Restore TikTok App After Assurances from Trump
    Mark Gurman, Bloomberg, February 13, 2025

31. China denies Swiss allegations of surveillance on Uyghur, Tibetan diaspora

Alan Lu and Habibulla Izchi, RFA, February 14, 2025

A recent study suggests Tibetans, Uyghurs in Switzerland face surveillance and cyberattacks initiated by Beijing.

China dismissed a report alleging that it pressures Tibetans and Uyghurs in Switzerland to spy on their communities, calling it “misleading information.”

The Swiss government released a report on Wednesday suggesting that China is pressuring Tibetans and Uyghurs in the European country to spy on each other while systematically monitoring politically active people.

“Transnational repression against people of Tibetan and Uyghur ethnicity is taking place in Switzerland,” the report published in German says. “They are allegedly being put under pressure by actors from the People’s Republic of China and are in some cases being prevented from exercising their fundamental rights.”

China rejected the report, which was based on a study conducted by the University of Basel, saying that Tibet and Xinjiang affairs were “purely China’s internal matters.”

“Political manipulation on issues related to Xizang [Tibet] and Xinjiang and vilification and smears against China that are inconsistent with facts violate the fundamental principle of mutual respect in China-Switzerland relations, and contravene the robust development of bilateral ties,” he said.

The report, based on a study sponsored by Switzerland’s Federal Office of Justice and the State Secretariat for Migration, found that Tibetan and Uyghur dissidents in Switzerland are often subjected to cyberattacks and surveillance of communications. Individuals were often followed, photographed and filmed by fellow members of their communities, the researchers said in the report.

“Such activities may also potentially affect Swiss citizens who are politically engaged in this area,” they added.

Gene Bunin, founder of the Xinjiang Victims Database, told Radio Free Asia that there have been documented cases of Uyghurs working with Chinese security officials in exchange for favors or the safety of their relatives.

“Distrust in the Uyghur diaspora is very common,” he said.

32. The Rower Turned Engineer Who Helped Make Nvidia a $3 Trillion Company
    Stu Woo and Raffaele Huang, Wall Street Journal, February 16, 2025

33. Vietnam to take Chinese loans for $8.3bn railway linking nations
    Nikkei Asia, February 13, 2025

34. Prato Gets Wenzhou Media Liaison Office

David Bandurski, China Media Project, February 14, 2025

China’s network of ICCs — local centers meant to revolutionize its state-led global communication — is growing both at home and overseas.

The Tuscan textile city of Prato, home to thousands of fashion shops and warehouses and one of the most concentrated Chinese populations in Europe, can now boast formal links to China’s growing national network of local centers that are meant to revolutionize its state-led global communication.

In a ceremony held this week, Prato’s “Green Dragon Club,” a local Chinese community center and dragon boat club, was presented with a pair of plaques designating it as both the “overseas communication base” and the “liaison office” of the Wenzhou International Communication Center.

This international communication center, or ICC, is one of a growing number of local hubs in provinces and cities across China meant to harness the strength of local media groups — in coordination with local propaganda offices — to supercharge the efforts of the Chinese Communist Party to “tell China’s story well,” and strengthen its “discourse power” globally. As CMP has previously reported, Zhejiang province has led the charge in forming local ICCs. By our latest count, it now hosts 16 local centers — five times the national average.

35. Chinese Investments Evoke Concern of State AGs
    Ted Godbout, ASPPA, February 12, 2025

36. China extends reach in South Pacific with Cook Islands deal
    Michael E. Miller, Washington Post, February 14, 2025

37. China's BYD holds mining rights in Brazil's Lithium Valley, documents show
    Fabio Teixeira, Reuters, February 14, 2025

38. South Korea’s likely next leader wants warmer ties with China, North Korea
    Michelle Ye Hee Lee, Washington Post, February 13, 2025

39. Philippines suffers Chinese tourism setback with spying allegations
    Yuki Fujita, Nikkei Asia, February 16, 2025

40. Nepal Took a Risk on a $500 Million U.S. Grant. It May Now Regret It.
    Bhadra Sharma, Mujib Mashal, and Edward Wong, New York Times, February 19, 2025

41. China promises Latin America 'trustworthy' ties as Trump lays out demands
    Joe Cash, Reuters, February 18, 2025

42. Trump wants Greenland and Gaza. That might embolden China on Taiwan.
    Katrina Northrop and Vic Chiang, Washington Post, February 18, 2025

COMMENT - Beijing is already emboldened to take Taiwan, Xi Jinping has been talking about it for over a decade as the CCP’s leader.

---

Human Rights and Religious Persecution

43. UN report: China expands forced labor in Xinjiang, Tibet

Kasim Kashgar, Voice of America, February 13, 2025

A newly released report from the United Nations’ International Labor Organization states that authorities in China are not only using "vocational skills training and education centers" for forced labor in Xinjiang and Tibet, but also the large-scale transfer of "surplus" rural workers to state-led labor programs across the country.

China called the report “baseless” and “false.”

Released Monday, the ILO report details how Chinese authorities have intensified efforts to investigate and monitor poverty levels, setting higher targets for cross-provincial labor transfers while pressuring ethnic smallholder farmers to cede their land to large state-led cooperatives.

Framed as "liberating" rural workers, the report said, this process has forced tens of thousands of Uyghurs, Tibetans and other ethnic minorities in Xinjiang and Tibet into industries such as solar panel production, battery manufacturing, seasonal agriculture and seafood processing under coercive conditions.

The Xinjiang Uyghur Autonomous Region and the Tibet Autonomous Region are two of China’s five provincial-level autonomous regions. Both are located in the country's western regions.

44. Why death of Dalai Lama’s brother Gyalo Thondup is the ‘end of an era’ for Tibetan exiles
    Xinlu Liang, South China Morning Post, February 14, 2025

45. China rights monitors suspend work, lay off staff after U.S. aid freeze
    Laurie Chen, Reuters, February 13, 2025

46. The A-level student who became an enemy of the Chinese state

Frances Mao, BBC, February 16, 2025

Just over a year ago, Chloe Cheung was sitting her A-levels. Now she's on a Chinese government list of wanted dissidents.

The choir girl-turned-democracy activist woke up to news in December that police in Hong Kong had issued a $HK1 million ($100,000; £105,000) reward for information leading to her capture abroad.

"I actually just wanted to take a gap year after school," Chloe, 19, who lives in London, told the BBC. "But I've ended up with a bounty!"

Chloe is the youngest of 19 activists accused of breaching a national security law introduced by Beijing in response to huge pro-democracy protests in the former British colony five years ago.

In 2021, she and her family moved to the UK under a special visa scheme for Hong Kongers. She can probably never return to her home city and says she has to be careful about where she travels.

Her protest work has made her a fugitive of the Chinese state, a detail not lost on me as we meet one icy morning in the café in the crypt of Westminster Abbey. In medieval England, churches provided sanctuary from arrest.

47. Western Brands Cash in On Xinjiang’s Tourism Boom
    Noah Berman, The Wire China, February 16, 2025

48. Right to Leave Country Further Restricted
    Human Rights Watch, February 17, 2025

49. Sinicization Campaigns Target Hui Communities and Mosques

Arthur Kaufman, China Digital Times, February 12, 2025

Steadily growing over the past few years, the Chinese government’s Sinicization campaigns have targeted a number of Muslim minority groups. These campaigns are perhaps most visible through the transformation of mosques, which have been the site of confrontation between police and local protesters. Several recent media pieces shine light on this dynamic in Hui communities and describe how their Muslim identities have changed over time.

This week, Hannah Theaker and David Stroup published a 91-page report titled “Making Islam Chinese: Religious Policy and Mosque Sinicisation in the Xi Era.” The report details how Sinicization policies have suppressed the religious activity and identity of Hui communities since 2017, including mosques with Arabic features.

50. Making Islam Chinese: Religious Policy and Mosque Sinicisation in the Xi Era

Hannah Theaker and David Stroup, International Network for Critical China Studies, February 2025

This report lays out a comprehensive survey of the impacts of the Sinicisation of Islam programme on Hui communities from 2017 to the present. As detailed in the report, this slate of policies makes the ruling party-state the sole arbiter for correct observation of religion and allows it to exert near total authority on matters of religious belief, practice and expression.

Further, because of the broad powers they give to the party-state to suppress religious activity falling outside its own narrowly construed parameters, the measures identified in this report present a profound threat to Muslim identity and practice within the People’s Republic of China (PRC). The concealed nature of much of the policies in question means that, to date, the impacts of these policies have been systematically under-estimated by observers.

COMMENT – It is absolutely amazing how the entire Muslim world turns a blind-eye to what the Chinese Communist Party is doing to millions of Muslims inside China.

51. Divorce Is Being Politicized in China—and Trapping Women in Abusive Marriages
    Liyan Qi, Wall Street Journal, February 16, 2025

52. Kazakhstan man comes back from China beaten, in altered mental state

Qian Lang, RFA, February 14, 2025

Zhengis Zhanat’s family called for compensation after he claims he was poisoned and beaten by police in Xinjiang.

A Kazakhstan man who went to China to support his mother in a land dispute has suffered abuse from police, leaving him in an altered mental state after he said he had been poisoned and beaten, according to a Kazakhstan-based rights group and the man’s family.

Zhengis Zhanat, 34, emigrated from China’s northwestern region of Xinjiang to neighboring Kazakhstan as a child, and became a citizen of that country, where he now has a wife and two children.

But his mother, who stayed in Xinjiang’s Ili Kazakh Autonomous Prefecture where Zhanat was raised, was in a long-running dispute with local authorities over the appropriation of the family’s land.

Zhanat had traveled back to his birthplace in Ili’s Kaba county to support her and to help her get much-needed medical attention after getting beaten by police.

“This gentleman’s name is Zhanat. He called his wife ... from Kaba county, Xinjiang, saying that the county authorities were trying to poison him and kill him,” Serikzhan Bilash, founder of the Kazakh-based rights group Atajurt told RFA Mandarin in a recent interview, citing a video call with Zhanat’s family in Kazakhstan.

---

Industrial Policies and Economic Espionage

53. DeepSeek, Tariff Relief Fuel Rally in Chinese Tech Stocks
    Kimberley Kao, Wall Street Journal, February 14, 2025

The Hang Seng Tech Index has gained 24% this year.

A benchmark for Chinese technology stocks rose for a fifth straight week, hitting a three-year high as China’s largest companies in the sector continued to be buoyed by bullish sentiment thanks to homegrown AI upstart DeepSeek and relief over delayed U.S. tariffs.

The Hang Seng Tech Index, which tracks the 30 largest technology companies listed in Hong Kong, advanced 5.6% on Friday, bringing its gains this year to 24%. The index topped an October high that came after Beijing raised hopes for more government support and fiscal stimulus measures to boost the economy.

The sudden emergence of Chinese AI company DeepSeek hit U.S. technology stocks two weeks ago and has fueled investors’ optimism in China’s tech shares.

COMMENT – I’m no stock-picker, but I suspect that this is just another ‘pump n’ dump’ scheme by those who have learned to game the PRC’s stock market.

54. Trump Directs CFIUS to Restrict Chinese Investments in US

Akayla Gardner and Jennifer Dlouhy, Bloomberg, February 21, 2025

55. Japan’s $1.5bn bet on ultra-thin solar cells in challenge to China
    Harry Dempsey, Financial Times, February 15, 2025

56. With DeepSeek, China’s economic growth suddenly seems tied to AI
    Alice Li, South China Morning Post, February 13, 2025

57. Where China’s Exports Begin: Inside the Vast Markets of Guangzhou
    Keith Bradsher, New York Times, February 14, 2025

58. ‘They’re hiring less’: China’s ‘iPhone City’ falls quiet as market rivalry intensifies
    Alice Li, South China Morning Post, February 13, 2025

59. DeepSeek reignites investor interest in China tech stocks
    Echo Wong and Wataru Suzuki, Nikkei Asia, February 13, 2025

60. China’s Bond Rally Hits Roadblock as Popular Trade Hands Losses
    Iris Ouyang and Shulun Huang, Bloomberg, February 12, 2025

61. BlackRock Fund Gives Up China Towers After Missing Loan
    Bloomberg, February 12, 2025

62. Apple’s Stock-Market Performance Is Increasingly Made in China
    Ryan Vlastelica, Bloomberg, February 13, 2025

63. China’s Central Bank Signals Policy Adjustments Amid Rising Global Risks
    Wall Street Journal, February 13, 2025

64. Chinese Companies Work Around Trump to Keep Selling to Americans
    Shen Lu, Raffaele Huang and Esther Fung, Wall Street Journal, February 13, 2025

65. Calvin Klein blacklisting sends chill through US business in China
    Ryan McMorrow, Tina Hu, and Thomas Hale, Financial Times, February 13, 2025

66. Shein IPO plans hit by Trump’s low-cost parcels crackdown
    Laura Onita, Zijing Wu and James Fontanella-Khan, Financial Times, February 13, 2025

67. Storm clouds gather for Chinese shipping lines as Trump threatens more tariffs
    Mia Nulimaimaiti, South China Morning Post, February 14, 2025

68. China Has Record Foreign Investment Outflow as $168 Billion Exit
    Bloomberg, February 14, 2025

69. Chinese exporters brace for 'rat race' in shift away from US
    Reuters, February 13, 2025

70. China tightens grip on tech, minerals and engineers as trade war spirals
    Ryan McMorrow, Financial Times, February 15, 2025

71. The US must play to its strengths to compete with China in Latin America
    Robert Mosbacher Jr, Financial Times, February 16, 2025

72. US-China trade war + Energy sector + Tech regulations
    Mercator Institute for China Studies, February 13, 2025

73. Shein IPO plans hit by Trump’s low-cost parcels crackdown
    Laura Onita, et al., Financial Times, February 13, 2025

74. China tightens grip on tech, minerals and engineers as trade war spirals
    Ryan McMorrow, et al., Financial Times, February 15, 2025

75. Business school teaching case study: how does Temu respond to tariff threats?
    Carlos Cordon and Simon J. Evenett, Financial Times, February 14, 2025

76. China’s Leader Embraces Business, Even Jack Ma. But Will It Be Enough?
    Alexandra Stevenson, New York Times, February 17, 2025

77. Xi Jinping seizes DeepSeek moment to restore China tech chiefs to spotlight
    Joe Leahy, Ryan McMorrow, and Nian Liu, Financial Times, February 17, 2025

78. Europe risks becoming ‘assembly plant’ for Chinese battery makers
    Ian Johnston and Kana Inagaki, Financial Times, February 17, 2025

79. Tesla braces for delay to China licence as Trump trade tensions mount
    Zijing Wu and Stephen Morris, Financial Times, February 17, 2025

80. US and European energy groups at risk from uranium supply crunch
    Camilla Hodgson and Ian Johnston, Financial Times, February 16, 2025

81. China follows up fast on Xi’s pledge for private sector support
    Alice Li, South China Morning Post, February 18, 2025

82. Why China Investors Finally Believe Xi’s Tech Crackdown Is Over
    Bloomberg, February 17, 2025

83. It’s not just AI. China’s medicines are surprising the world, too
    The Economist, February 16, 2025

84. Xi’s rehabilitation of Jack Ma may be the most lucrative ever
    The Economist, February 17, 2025

85. China Home Prices Show Slight Improvement but Remain in Decline
    Wall Street Journal, February 18, 2025

86. China’s holdings of US Treasuries fall to lowest level since 2009
    Arjun Neil Alim, Cheng Leng, and Harriet Clarfelt, Financial Times, February 18, 2025

87. Chinese lithium company halts tech exports as trade tensions build
    Ernest Scheyder and Lewis Jackson, Reuters, February 18, 2025

---

Cyber and Information Technology

88. China’s Salt Typhoon Spies Are Still Hacking Telecoms—Now by Exploiting Cisco Routers
    Andy Greenberg, Wired, February 13, 2025

89. Beyond the Headlines on DeepSeek’s Sputnik Moment
    Jimmy Goodrich, University of California Institute on Global Conflict and Cooperation, February 12, 2025

90. DeepSeek reveals loophole in Japan's personal data safeguards
    Kohei Sakai, Nikkei Asia, February 14, 2025

91. China to develop gene-edit tools, new crop varieties in biotech drive
    Nikkei Asia, February 14, 2025

92. China’s EV giants are betting big on humanoid robots
    Caiwei Chen, MIT Technology Review, February 14, 2025

93. The Quantum Panic
    Rachel Cheung, The Wire China, February 16, 2025

94. Tired of spotty internet, Bolivians are smuggling in Starlink
    William Wroblewski, Rest of World, February 13, 2025

95. China's Baidu to make latest Ernie AI model open-source as competition heats up
    Reuters, February 13, 2025

96. A Policymaker’s Guide to China’s Technology Security Strategy
    Emily Jin, Information Technology & Innovation Foundation, February 18, 2025

97. South Korea Bans Downloads of DeepSeek, the Chinese A.I. App
    Meaghan Tobin and Jin Yu Young, New York Times, February 18, 2025

98. China Sends Message to Its Tech Leaders: We Need You
    Raffaele Huang, Wall Street Journal, February 17, 2025

99. China's tech rally rests on 'hot money'
    Summer Zhen and Jiaxing Li, Reuters, February 17, 2025

100. Inside China’s electric-vehicle-to-humanoid-robot pivot
     James O'Donnell, MIT Technology Review, February 18, 2025

101. China holds dominant position in humanoid robot ecosystem: analysts
     Ralph Jennings, South China Morning Post, February 19, 2025

---

Military and Security Threats

102. Flights between Australia, New Zealand diverted because of Chinese drills

RFA, February 21, 2025

A Chinese navy task group has been operating off the Australian coast since last week.

Several commercial flights between Australia and New Zealand had to divert on Friday because of a live-fire exercise conducted by Chinese warships, according to media reports.

The Associated Press quoted Australian Foreign Minister Penny Wong as saying that Canberra had warned international airlines flying between the two countries to beware of the Chinese live-fire exercise in the Tasman Sea. Commercial pilots had been informed of potential hazards in the airspace.

Several international flights had been diverted as a result, the Australian Broadcasting Corporation reported without giving details.

It was not clear if the exercise had finished. The Chinese military has not commented on it.

103. China military exercises near Taiwan could be used to conceal attack, US says
     Demetri Sevastopulo, Financial Times, February 13, 2025

104. MI5 investigates use of Chinese green technology in UK
     Jim Pickard, Financial Times, February 15, 2025

105. China, Taiwan, and the PLA’s 2027 milestones
     John Culver, Lowy Institute, February 12, 2025

106. Ex-N.Y. Official Accused of Working for China Faces Bribery Allegation
     Santul Nerkar, New York Times, February 12, 2025

107. China Says U.S. Should Lead Trump’s Proposed Arms Control Effort
     David Pierson, New York Times, February 14, 2025

108. Canadian Citizen Charged with Aerial Photography Of Defense Installation
     U.S. Attorney's Office, Middle District of Florida, February 13, 2025

109. Chinese warships sail within 150 nautical miles of Sydney
     Demetri Sevastopulo and Nic Fildes, Financial Times, February 17, 2025

110. Philippines ‘deeply disturbed’ by incident over shoal disputed by China
     Charles Clover and Kathrin Hille, Financial Times, February 18, 2025

111. China Exploiting Russian Weakness in Arctic–and Moscow Has Reason to Worry
     Paul Goble, Jamestown Foundation, February 18, 2025

---

One Belt, One Road Strategy

112. South Africa says silence from US on bid for talks, China pledges support
     Nellie Peyton and Tim Cocks, Reuters, February 17, 2025

113. PRC Assessments of China-Latin America Relations
     R. Evan Ellis, Parsifal D’Sola Alvarado and Juliana González Jáuregui, CSIS, February 14, 2025

114. The Growing Pains of Asia’s Newest Country
     Sui-Lee Wee, New York Times, February 18, 2025

115. Pakistan rides China's donkey demand to rev up economy
     Adnan Aamir, Nikkei Asia, February 18, 2025

---

Opinion

116. A Better Tool to Counter China’s Unfair Trade Practices
     Alex Raskolnikov and Benn Steil, Foreign Affairs, February 19, 2025

117. Trade isn’t all about Trump
     Rana Foroohar, Financial Times, February 15, 2025

118. China Doesn’t Want to Lead an Axis
     Sergey Radchenko, Foreign Affairs, February 18, 2025

119. The US must play to its strengths to compete with China in Latin America
     Robert Mosbacher Jr, Financial Times, February 16, 2025

120. China’s Rehearsals for a Blockade of Taiwan
     Wall Street Journal, February 14, 2025

121. What America Can Gain if Trump Goes to China
     By Bonnie S. Glaser, Financial Times, February 16, 2025

122. Trump must avoid an 'ugly deal' with China
     Hiroyuki Akita, Nikkei Asia, February 15, 2025

123. China can counter Trump using his own trade playbook
     Hanscom Smith, Nikkei Asia, February 17, 2025

124. It’s Time for Europe to Do the Unthinkable
     Kishore Mahbubani, Foreign Policy, February 18, 2025

Brussels has slavishly followed Washington for too long—and forgotten how to advance its own geopolitical interests.

Desperate times call for desperate measures. And as my geopolitical gurus taught me, one must always think the unthinkable, as Europe must do now.

It’s too early to tell who the real winners and losers from the second Trump administration will be. Things could change. Yet, there’s no doubt that Europe’s geopolitical standing has diminished considerably. U.S. President Donald Trump’s decision to not even consult with or forewarn European leaders before speaking to Russian President Vladimir Putin shows how irrelevant Europe has become, even when its geopolitical interests are at stake. The only way to restore Europe’s geopolitical standing is to consider three unthinkable options.

COMMENT - Kishore Mahbubani is one of Beijing’s best friends in Singapore, I hope Europeans have learned not to take his advice.

The obvious option, that Kishore of course ignores, is that Europe could finally take its alliance with the United States seriously AND not allow itself to be divided and conquered by either Moscow or Beijing.

125. Xi Jinping’s graft crackdown is fight without end
     Hudson Lockett, Reuters, February 19, 2025