Holding Beijing responsible for its role in the fentanyl crisis
Nearly 14,000 Americans have died from fentanyl since the Select Committee published their report on the CCP’s culpability
Friends,
Lots of news stories this week and I’ve included plenty of commentary. Things are escalating in the West Philippine Sea and the U.S. military appears stretched thin.
But the issue that concerns me most is the lack of attention on Beijing’s role in fueling the fentanyl crisis in the United States, a scourge that has cost the lives of 500,000 Americans over the last decade and is the leading cause of death for Americans under the age of 44 (something the CDC euphemistically calls “unintentional injury deaths” and its largest subset, “poisoning”).
Here are two disturbing charts from the CDC website on leading causes of deaths for Americans under 44 years old, the first is interactive if your go to the website.
Those “poisoning” deaths are almost entirely caused by fentanyl overdoses or just simply contact with fentanyl, examine each of these for a sampling of how catastrophic this is:
“US child dies from fentanyl kept under nursery nap mat,” September 20, 2023
“Fentanyl’s littlest victims: Dozens of babies, toddlers die in Missouri and Kansas,” October 17, 2023
“3 Everett babies overdose on fentanyl in 4 days; 1 dead,” April 25, 2024
“Couple Sentenced in Connection to Child’s Death from Fentanyl,” May 28, 2024
“Chester Co. child dies after being exposed to fentanyl, parents charged,” June 4, 2024
How have these “poisoning” deaths tripled over the past decade?
Over that same decade, the Chinese Communist Party has provided tax rebates and other subsidies to companies that manufacture and export the precursors to create fentanyl. This has encouraged several thousand Chinese companies to get into the business of manufacturing and exporting chemicals that the same PRC Government bans domestically and imposes harsh criminal sentences, up to and including death, if they sell inside China.
No other country besides the PRC has the pharmaceutical or chemical industrial base to produce these precursors… so if Beijing prevented these exports, the raw materials to make fentanyl would dry up. The Chinese Communist Party has pursued the opposite approach and incentivized the production and export of these precursors.
What has been the effect of those decisions by Beijing? The deaths of over 500,000 Americans.
For those who think this is just an America problem, see this from the European Monitoring Centre for Drugs and Drug Addiction and this recent article in Foreign Policy (Europe Could Soon Be Hooked on Fentanyl).
I covered this topic in detail two months ago with an issue titled “Beijing’s Covert Fentanyl Campaign Against the United States” (feel free to go back and read that issue, we aren’t going anywhere). That commentary was prompted by the publication of the bipartisan report, “The CCP’s Role in the Fentanyl Crisis” by the House Select Committee and my own experience with the poor job that the Congressional Commission on Combating Synthetic Opioid Trafficking did back in early 2022.
The top three findings of the House Select Committee’s report were:
The Select Committee's investigation has established that the PRC government, under the control of the CCP:
Directly subsidizes the manufacturing and export of illicit fentanyl materials and other synthetic narcotics through tax rebates. Many of these substances are illegal under the PRC’s own laws and have no known legal use worldwide. Like its export tax rebates for legitimate goods, the CCP’s subsidies of illegal drugs incentivizes international synthetic drug sales from the PRC. The CCP never disclosed this program.
Gave monetary grants and awards to companies openly trafficking illicit fentanyl materials and other synthetic narcotics. There are even examples of some of these companies enjoying site visits from provincial PRC government officials who complimented them for their impact on the provincial economy.
Holds ownership interest in several PRC companies tied to drug trafficking. This includes a PRC government prison connected to human rights abuses owning a drug trafficking chemical company and a publicly traded PRC company hosting thousands of instances of open drug trafficking on its sites.
When the Congressional and Executive branch Commission investigated this topic two years before they found none of this evidence (or at least didn’t publish it) because they largely took Beijing at their word and assumed this was almost entirely a “demand problem” (rather than a demand problem being intentionally exacerbated by a hostile foreign state).
Perhaps naively, I had thought that evidence that Beijing was complicit the deaths of more than 70,000 Americans per year (approximately 200 per day) would rouse folks from their slumbers.
So far, that has not happened and I’m not sure why.
The Biden Administration has done very little investigate this or to hold the CCP responsible for it’s complicity in illicit drug trafficking and money laundering. Based on feedback I’ve gotten, and from others who have looked into this, I suspect the Administration is downplaying the significance because it doesn’t fit their worldview.
More on that below with the first article this week.
***
Tweet of the Week - Rahm Emmanuel, U.S. Ambassador to Japan:
“Ecuador suspends a visa agreement with China earlier this week and suffers a nationwide blackout the next day. Palau signs a 20-year economic and security deal with the U.S. and is immediately targeted with a major cyberattack. The UK charges two men with spying for China and its ministry of defense is hit by a massive hacking attack. Coincidences, happenstance, or something more sinister? Thoughts and opinions are more than welcome.”
Thanks for reading!
Matt
MUST READ
1. Despite fentanyl crackdown, Chinese sellers are open for business
Cate Cadell and Lily Kuo, Washington Post, June 20, 2024
A booming online marketplace in shipping small but potent packages of the chemicals used in the production of fentanyl from China to Mexico remains largely unhindered.
COMMENT – This story from the Washington Post completely misses the mark.
Instead of highlighting that Chinese companies are still advertising the sale of fentanyl precursors, what the reporters should have done is focus on the fact that the PRC Government provides tax rebates for the export of fentanyl precursors (that is why so many companies advertise the sale of these poisons because the PRC Government knowingly incentivizes the manufacture and export of them to countries like the United States).
This is what was revealed two months ago with the bipartisan Congressional report, The CCP’s Role in the Fentanyl Crisis.
Here is the first bullet and key point from the Executive Summary:
“The Select Committee’s investigation has established that the PRC government, under the control of the CCP:
1. Directly subsidizes the manufacturing and export of illicit fentanyl materials and other synthetic narcotics through tax rebates. Many of these substances are illegal under the PRC’s own laws and have no known legal use worldwide. Like its export tax rebates for legitimate goods, the CCP’s subsidizing of illegal drugs incentivizes international synthetic drug sales from the PRC. The CCP has never disclosed this program.”
Did the reporters who wrote this article mention the above main point (despite it being in the public for over two months)?
Nope.
Instead, they focused on the relatively minor point, that advertising for these precursors still takes place.
Well of course advertising still takes place because the Chinese Communist Party is intentionally subsidizing the export of these precursors with tax rebates, so these companies want to export more of their products and therefore want to find customers.
Just as I highlighted in the April 21 issue of this newsletter (Beijing’s Covert Fentanyl Campaign Against the United States), it is absolutely mind-boggling to me that this has not attracted more attention.
Instead of taking the PRC Government at its word and rationalizing its actions as routine mistakes of a big economy (as an unnamed senior U.S. official remarked for this story: “Many of these companies are small in size and are able to resume operations quickly under different names”), the Biden Administration should be holding the Chinese Communist Party publicly responsible for the deaths.
Just this week, the PRC Ambassador to the United States Xie Feng, claimed:
“The fentanyl problem is not China's problem, nor was it caused by China… But out of humanitarian considerations, China has been doing its utmost to help the U.S. side deal with the fentanyl issue."
He goes on to say, the PRC “has made great efforts and demonstrated its sincerity for cooperation” and "the U.S. side needs to move in the same direction with China, take China's concerns seriously and earnestly address them, so as to create a favorable atmosphere for cooperation."
I’m throwing the bullshit flag.
Will anyone in the Administration take this seriously? (IMO, pawning this off on Rahul Gupta, the Director of the Office of National Drug Control Policy, is NOT a signal that the Administration is taking this issue seriously… no offense, Dr. Gupta, but this is far too important for you to handle)
I’ve spoken to the staff for the Select Committee since their report came out, they have been offering for two months to give briefings on this problem to the Administration and all they have gotten is crickets.
I fear that the Administration is too committed to “managing” the relationship and doesn’t want to jeopardize it by holding the Chinese Communist Party publicly accountable. They prefer to delude themselves into thinking that just a little more behind the scenes negotiation and engagement will persuade the Chinese Communist Party to take this issue seriously. Accepting the fact that Beijing is purposefully exporting these poisons to undermine the United States would call into question their entire strategic approach to the PRC. They would prefer to sweep these inconvenient truths under the carpet rather than rethink their approach and admit it hasn’t worked.
Phelim Kine and Stuart Lau alluded to this dynamic in their April 18 issue of the Politico “China Watcher” newsletter:
“The report’s findings are awkward for the Biden administration, which has pointed to the launch of a bilateral Counter Narcotics Working Group in January as key to curbing the flow of precursor chemicals from China to Mexico. The group has produced “concrete specific actions” by Chinese authorities against firms linked to such shipments, Homeland Security Secretary Alejandro Mayorkas said in February.”
It does beg some questions:
How many more Americans must die before they take it seriously?
When will they conclude that half-measures are insufficient?
Another 70 days?
[NOTE: Since the publication of the bipartisan report on April 15, 2024, an estimated 14,000 Americans have died from the fentanyl, and its precursors, that the PRC intentionally exports (70 days x 200 deaths per day)… that is more than double the number of American service members killed in both Iraq and Afghanistan over the past quarter century]
2. Philippines says sailor sustained serious injury in South China Sea collision
Mikhail Flores and Karen Lema, Reuters, June 18, 2024
A Philippine navy sailor suffered "serious injury" after what the country's military called on Tuesday "intentional-high speed ramming" by the Chinese coast guard during a resupply mission in the South China Sea.
The Philippine military said in a statement the Chinese coast guard's "continued aggressive behavior and unprofessional conduct towards a legitimate humanitarian mission is unacceptable."
3. Philippines accuses China of 'piracy' in South China Sea
Ramon Royandoyan, Nikkei Asia, June 19, 2024
Chinese with 'bolo, spear, knives' boarded Manila ship and seized weapons, equipment.
4. VIDEO – Chinese and Filipino forces clash in tense confrontation in South China Sea
CNN, June 20, 2024
The Philippines has accused China’s Coast Guard of launching a “brutal assault” with bladed weapons during a clash in the South China Sea earlier this week, a major escalation in a festering dispute that threatens to drag the United States into another global conflict.
The incident is the latest in a series of increasingly fraught confrontations in the resource-rich and strategically important waterway.
5. Philippines secretly reinforces ship at centre of South China Sea dispute
Demetri Sevastopulo, Financial Times, June 21, 2024
The Philippines has secretly reinforced a dilapidated warship marooned on a South China Sea reef that is central to an increasingly dangerous dispute with Beijing, according to six people familiar with the operation.
In recent months, the Philippine military has conducted missions to reinforce the Sierra Madre, which is lodged on the disputed Second Thomas Shoal in the Spratly Islands, the people said. It did so due to rising concern that the rusting ship was in danger of breaking apart.
The Philippines ran the Sierra Madre aground in 1999 to help reinforce its claim to the reef, over which China also asserts sovereignty as part of an expansive claim — opposed by its neighbours — over most of the South China Sea.
An international tribunal in 2016 rejected Beijing’s claims to the region and said it had no legal rights to the Second Thomas Shoal, which lies inside the Philippine exclusive economic zone.
The Sierra Madre has become the most dangerous flashpoint in the Indo-Pacific. In recent months, China’s coast guard has used increasingly violent tactics — firing water cannons, ramming boats and wielding weapons — to block Manila from resupplying Marines who are stationed on the ship.
Manila accused Beijing of conducting a “brutal assault” on Monday that was the most aggressive action at the Second Thomas Shoal since China started interrupting supply missions a year ago. Washington responded by warning Beijing that the US-Philippines mutual defence treaty applied to the Sierra Madre.
The Philippines insists its missions are sending humanitarian supplies to the site. But China accuses Manila of bringing construction materials to reinforce the ship and prevent it from breaking apart and coming off the reef — which Manila denies.
In an interview, Jose Manuel Romualdez, the Philippine ambassador to the US, said Manila was not “strengthening” the ship. “This is a shipwreck, a world war two ship that’s been there since the 1990s, so it needs repair. We’re just doing a humanitarian act of giving these people a decent place to be in because they’re stationed there.”
However, the people familiar with the situation said Manila had secretly reinforced the ship in ways that would extend its life.
“Beijing is probably aware and infuriated that the Philippines has successfully delivered construction materials . . . China has waited 25 years for the ship to disintegrate and slide off the reef and continued escalation against the Philippines suggests that they will not back down and admit defeat,” said Bonnie Glaser, a China expert at the German Marshall Fund.
“The potential for an armed conflict over this tiny, submerged feature is increasing.”
Underscoring the increasingly tense situation around the reef, President Ferdinand Marcos Jr last month warned that he would consider any Chinese action that killed a Filipino as being “very close to . . . an act of war”.
Zack Cooper, an Asia security expert at the American Enterprise Institute think-tank, said the US and Philippines were “inching closer” to invoking Article V of their mutual defence treaty, which would require them to “meet the common danger”.
From the Financial Times
COMMENT – If this is true, and I have no reason to doubt Demetri’s reporting, then I agree with Bonnie Glaser, Beijing will be furious that Manila has successfully reinforced their position on Second Thomas Shoal.
No doubt Beijing suspects that Washington aided Manila and likely has proof. It may choose to release that information (just as it likely played a role in releasing the details of the information campaign the U.S. waged during COVID that sought to undermine the PRC in the Philippines). I’m sure Beijing hoped that the release of that story a week ago and its reporting in Western media outlets, like Reuters, would create a wedge between the United States and the Philippines.
The ball is now in Beijing’s court. Does it accept Manila’s “victory” and admit defeat? Or does it escalate and use force to “push” the Philippines off?
I think everyone should keep this map in their mind and remember that international law has already weighed in on this issue. In July 2016, the Permanent Court of Arbitration ruled overwhelming in favor of the Philippines in their dispute with the PRC and specifically ruled that Second Thomas Shoal is a part of the exclusive economic zone and continental shelf of the Philippines.
Quote from page 41 of the South China Sea Arbitration Award, July 12, 2016:
“(5) Mischief Reef, Second Thomas Shoal and Subi Reef are low-tide elevations that do not generate entitlement to a territorial sea, exclusive economic zone or continental shelf, and are not features that are capable of appropriation by occupation or otherwise;
(6) Mischief Reef and Second Thomas Shoal are part of the exclusive economic zone and continental shelf of the Philippines;”
So as a matter of international law (the United Nations Convention on the Law of the Sea, UNCLOS), the maritime claims that Beijing makes under the so-called “Nine-Dash Line” have been formally rejected and the Philippines exclusive economic zone (EEZ) has been upheld. Both Beijing and Manila are signatories to UNCLOS and the decisions by the Permanent Court of Arbitration are binding on signatories to the Law of the Sea treaty.
At every opportunity, this point should be made to PRC officials, Chinese citizens, and the rest of the world. Beijing is acting unlawfully with its use of force to steal territory from the Philippines and prevent the Philippines from exercising control over their own EEZ.
6. European companies step up efforts to decouple from China
Financial Times, June 8, 2024
European buyers are seeking to reduce their dependence on China, sourcing executives say, as Brussels increases its scrutiny of goods from the world’s largest export economy.
COMMENT – This is a major problem for the PRC.
As Desmond Shum points out in an insightful post this morning, the entire PRC economy is built on an assumption that the rest of the world can and will continue to absorb ever more PRC exports:
Can Chinese find market for its manufacturing?
I recently talked to some friends in China and did some research on the subject of Chinese manufacturing
1. Over the past three decades, China has built tremendous manufacturing capacity and capability. Its strength includes innovative and hungry entrepreneurs, hardworking and trained workers, sophisticated ecosystem and supply chains, and ability to find and to develop markets, etc… It’s truly a manufacturing powerhouse. According to world bank, China makes more than 30% of global products in the world today.
2. China is running into the limit of global economies’ willingness and capability to absorb its products
3. Chinese govt continues to see China’s future in manufacturing. This has been CCP’s perspective since 1949. Mao once stood on top of Tiananmen and said his dream was to see chimneys all across Beijing city. CCP has designed and built its entire bureaucracy and governing system based on growing the manufacturing sector. I really don’t know how they can snap out of this.
4. I think trade wars with US and Europe are inevitable going forward. Geopolitical tensions is also making trade expansion even harder for China.
Chinese economy really has no way forward, other than changing its growth model. I think one of Xi’s biggest blunders, which he has had many, is not to change China’s growth model from production to consumption when China can afford to, which was a decade ago. Now China is being bogged down by so many macro level problems, and every one of those seems urgent. I don’t think he can even if he realizes the he has to, which is a big question of itself
This approach to trade and exports could only work when the international environment was benign (hence few national security concerns), the PRC share of global manufacturing was relatively small, and the impacts of PRC exports were constrained. But as the geopolitical situation became more tense and the impacts of PRC exports disrupted more societies, then a backlash became somewhat inevitable.
There is reason to believe that Chinese economists and some policymakers understood these dynamics over a decade ago, but that meant boosting Chinese domestic consumption. To boost Chinese domestic consumption, Chinese workers needed to be paid more (making the PRC less attractive as a manufacturing hub) and Chinese consumers needed to exercise greater control over what the economy produced (reducing the Chinese Communist Party’s control over the economic levers of society). Between 2013 and 2015, the PRC started to implement these changes but each time policymakers did that, it caused domestic instability and Xi Jinping pulled back.
The PRC’s rise was bound to cause social, political, and economic changes, domestically and internationally. Rather than deal with those impacts domestically, Beijing decided to overwhelming “export” the negative effects to other countries. But in doing so, they have created the conditions in which other countries protect themselves from Beijing’s ‘beggar thy neighbor’ decisions. That is making the PRC’s export driven economic model unsustainable as the world’s largest markets (US and EU) close their doors.
Beijing says it will pivot to other markets, namely Southeast Asia, Africa, the Middle East, and Latin America.
But that won’t work because those markets aren’t wealthy enough to take the place of American and European consumers. They simply cannot buy enough excess Chinese capacity and Beijing cannot afford to subsidize them as they did during the peak of the Belt and Road Initiative.
Instead, those regions (along with India) will gladly take China’s place as the low-cost manufacturers for the American and European markets. This will further isolate Beijing and make its economic problems intractable. Xi’s successors will have many fewer options than what Xi had when he entered the top job in late 2012.
All that may sound like a good outcome, but Beijing (along with Moscow, Tehran, and Pyongyang) are unlikely to just let this happen to them. Leaders in Beijing may conclude that the use of military force is a viable method of getting out of this dilemma, which is why we should be mobilizing now to persuade Xi and others that isn’t a viable option.
Randy Schriver, Dan Blumenthal, and Josh Young, Foreign Policy, June 17, 2024
The United States is in a cold war with the People’s Republic of China, and it urgently needs a strategy led and directed by the president himself if it is going to win. Absent such leadership, Washington’s approach to China will remain fragmented, contradictory, and unfocused. The absence of leadership is in stark contrast to Chinese Communist Party (CCP) Secretary-General Xi Jinping and the approach that he laid out in the country’s 20th National Congress in 2022, which directs all instruments of China’s power to wage a “protracted struggle”—in other words, a cold war—against the United States.
The United States has been especially timid in responding to China’s economic assault. For decades, China has been building geo-economic leverage through its “military-civil fusion” and “dual circulation” strategies—efforts by the CCP to build the country’s technological and industrial capacity both for domestic economic growth and military modernization. Beijing’s dominant position in global supply chains is also a deliberate result of policies that seek to hold nations hostage by placing China at the center of the production of key economic elements such as critical minerals, semiconductors, and now next-generation energy technology.
COMMENT – Randy, Dan, and Josh hit the nail on the head: the United States is in a cold war with the PRC and the President must both acknowledge that fact and lead the country and a collection of allies to ensure a coherent strategy.
8. The United States, China and Taiwan and the Role of Deterrence in Scenarios Short of War
Ambassador Kevin Rudd, Australian Embassy to the United States, June 6, 2024
Speech delivered at the Daniel K. Inouye Asia-Pacific Center for Security Studies in Honolulu.
9. Ray Dalio’s stock tip: diversify portfolios to avoid getting caught in US-China rivalry
Jiaxing Li, South China Morning Post, June 18, 2024
Billionaire investor Ray Dalio, founder of the world’s largest hedge fund Bridgewater Associates, has warned that the US and China will continue to “press up against the other’s red lines” as the US election nears, and smart money should prepare for heightened volatility by diversifying investments.
The two great powers are “on the brink of a much worse economic or military war” but neither wants to cross that line, as a major deterioration from current conditions could be disastrous, Dalio said in exclusive comments made to the Post. This strained but contained rivalry is set to pose major risks for global investors, he added.
COMMENT – Interesting about-face for Dalio.
As late as April 2024 he was encouraging investors that the PRC’s problems don’t outweigh the benefits of investing there (Quartz, “Ray Dalio says China’s problems don't outweigh the benefits of investing there,” April 4, 2024):
“Dalio said he worries about China’s problems just as he worries about the problems facing the U.S., Europe, and any countries he invests in, however different they may be.
While he has considered the risks — that it’s “too controversial because China is considered an enemy, that it’s a communist dictatorship which we should be morally against, that such systems have a clear track-record of failing, that if there is a U.S.–China war it would be disastrous especially if one is an American investor there, etc.” — none of them outweigh the reasons for investing in China, he said.”
Authoritarianism
Jessica Batke, China File, June 17, 2024
In a video posted to a Chinese social media platform, young women in crop tops, Hello Kitty t-shirts, and jeans pose together in the middle of an empty, tree-lined road. Electronic dance music plays in the background, the singer crooning in English, “Tonight I wanna drown in an ocean of you.” Then, as the beat drops, the volunteers suddenly appear in crisp black uniforms, complete with caps, boots, and epaulets. They march confidently, determinedly, towards the camera, their feet hitting the pavement in time with the song.
These women are members of the “Shangrao Vigilantes,” an all-volunteer group that advertises itself as supporting and supplementing the local police. The Shangrao Vigilantes, named after the city in Jiangxi province in which they are based, also posted a similar video featuring male volunteers.
11. WAY BACK MACHINE – The Rise of Xenophobia and Nationalism in China Since the COVID Pandemic: Insights from Discourse Analysis
Lai Ha Chan and Pak K. Lee, East Asia, August 4, 2023
Since the successful containment of COVID-19 in Wuhan in late March 2020, China had implemented a nationwide highly stringent and restrictive zero-COVID policy to manage the pandemic until the sudden swift away from it in early December 2022.
How did the Chinese Communist Party discursively construct it as a ‘normal’ and legitimate policy?
Using interpretivism and poststructuralist political theory, this paper examines how Chinese political elites constructed a discourse of danger for the COVID pandemic, with the dominant discursive narratives full of xenophobic and nationalist languages.
The discourse framed ‘foreigners’ as ‘threats’ to Chinese people’s health, advocated that China should rely on home-made vaccines and medicines and, more importantly, argued that the Chinese Communist rule demonstrates ‘institutional superiority’ over Western governance.
This xenophobic and nationalist discourse has lingered on after the dismantling of the zero-COVID policy. There are grounds for us to concern whether China is seeking self-reliance rather than integrating itself with the world. A Chinese decoupling from the world—a nationalist self-reliance policy similar with that in the Mao era—is not unthinkable.
COMMENT – A piece worth considering as some push for increased people-to-people ties.
The authors trace the trend to the imposition of restrictive policies in the wake of the pandemic (which certainly is true, see this piece from The Guardian in March 2020), but the Chinese Communist Party sought to use xenophobic and nationalist discourse across all of Chinese society starting years (if not decades) before and it permeated everywhere.
For example, this campaign by the Chinese Communist Party in early 2016, well before COVID and even the Trump Administration, which warns Chinese citizens that foreigners are likely spies.
12. China’s reunification is ‘unstoppable’, says Beijing’s top man on Taiwan affairs
Yuanyue Dang and Hayley Wong, Southy China Morning Post, June 15, 2024
Beijing has “firm determination, sufficient confidence and strong capability” to destroy any efforts by Taiwanese separatists, mainland China’s top political adviser and No. 4 official told a forum aimed at boosting exchanges with the island’s mainland-friendly camps.
“No matter how the situation in the Taiwan Strait changes, the fact that both sides belong to one China cannot be denied,” Wang Huning said in his opening speech at the annual Straits Forum on Saturday, held in the southeastern port city of Xiamen in Fujian province.
COMMENT – Wang Huning doth protest too much, methinks.
13. Inside China’s ‘soft siege’ of Taiwan
Rana Mitter, The Spectator, June 16, 2024
“There is only one China in the world,” Wang Wenbin, the spokesman for China’s foreign ministry, declared at a press conference late last month. “Taiwan is an inalienable part of China’s territory.” The previous day, on May 23, Beijing carried out major military exercises around the island under the title “Joint-Sword 2024A.” The Chinese Communist Party said it wanted to practice how to “seize power” in Taiwan, and to “punish” its new leader, Lai Ching-te, and his supporters in the US.
J-16 aircraft and Type 052D destroyers — some of China’s best military assets — led the exercises, surrounding Taiwan and practicing bombing runs. In recent months, as China’s deployment of fighter jets around Taiwan has become more frequent, there’s been a growing sense that Beijing is seriously preparing for conflict.
The CCP has long said the island will eventually be unified with the mainland. The military maneuvers around Taiwan “looked like a rehearsal” for an invasion, said Admiral Samuel Paparo, the commander of the US Indo-Pacific Fleet. “We watched them. We took note. We learned from them. And they helped us prepare for the future.”
A week later, at the Shangri-La Dialogue in Singapore, China’s defense minister, Dong Jun, himself a former naval commander, emphasized the repercussions for the US of getting involved: “Anyone who dares to separate Taiwan from China will only end up in self-destruction.”
Still, many military analysts think that a full-blown invasion of Taiwan by China remains unlikely.
“Every year for three years, a new Chinese defense minister has come to Shangri-La,” one senior US official said after Dong’s speech. “And every year, they’ve given a speech at complete odds with the reality of the PLA’s [People’s Liberation Army’s] coercive activity across the region. This year was no different.”
14. Google AI Gemini parrots China’s propaganda
Wenhao Ma, Voice of America, June 13, 2024
VOA’s Mandarin Service recently took Google’s artificial intelligence assistant Gemini for a test drive by asking it dozens of questions in Mandarin, but when it was asked about topics including China’s human rights abuses in Xinjiang or street protests against the country’s controversial COVID policies, the chatbot went silent.
Gemini’s responses to questions about problems in the United States and Taiwan, on the other hand, parroted Beijing’s official positions.
Gemini, Google’s large-language model launched late last year, is blocked in China. The California-based tech firm had quit the Chinese market in 2010 in a dispute over censorship demands.
Congressional lawmakers and experts tell VOA that they are concerned about Gemini’s pro-Beijing responses and are urging Google and other Western companies to be more transparent about their AI training data.
Parroting Chinese propaganda
When asked to describe China’s top leader Xi Jinping and the Chinese Communist Party, Gemini gave answers that were indistinguishable from Beijing’s official propaganda.
Gemini called Xi “an excellent leader” who “will lead the Chinese people continuously toward the great rejuvenation of the Chinese nation.”
Gemini said that the Chinese Communist Party “represents the fundamental interest of the Chinese people,” a claim the CCP itself maintains.
On Taiwan, Gemini also mirrored Beijing’s talking points, saying the United States has recognized China’s claim to sovereignty over the self-governed island democracy.
The U.S. only acknowledges Beijing’s position but does not recognize it.
Silent on sensitive topics
During VOA’s testing, Gemini had no problem criticizing the United States. But when similar questions were asked about China, Gemini refused to answer.
When asked about human rights concerns in the U.S., Gemini listed a plethora of issues, including gun violence, government surveillance, police brutality and socioeconomic inequalities. Gemini cited a report released by the Chinese government.
But when asked to explain the criticisms of Beijing’s Xinjiang policies, Gemini said it did not understand the question.
According to estimates from rights groups, more than 1 million Uyghurs in Xinjiang have been placed in internment camps as part of campaign by Beijing to counter terrorism and extremism. Beijing calls the facilities where Uyghurs and other ethnic minorities are being held vocational training centers.
When asked if COVID lockdowns in the U.S. had led to public protests, Gemini gave an affirmative response as well as two examples. But when asked if similar demonstrations took place in China, Gemini said it could not help with the question.
COMMENT – Come on Google, be better!
15. G7 plans to warn small Chinese banks over Russia ties, sources say
Trevor Hunnicutt and Lananh Nguyen, Reuters, June 9, 2024
16. Australia's Albanese tells China's Li journalist incident 'unacceptable'
Kirsty Needham, Reuters, November 18, 2024
Australia's Prime Minister Anthony Albanese said he had told China's Premier Li Qiang that an incident at parliament house, where Chinese officials tried to obstruct a journalist previously jailed in Beijing, was "unacceptable".
Li's visit to Australia from June 15-18 was the first by a Chinese premier in seven years and marks a stabilisation in ties between the U.S. ally and the world's second-largest economy.
Australian journalist Cheng Lei, who was jailed for three years in Beijing on national security charges until her release in October, was among media covering Li's visit to Canberra on Monday, when Chinese officials stood in front of her to prevent her appearing on camera.
Cheng has said it was likely the Chinese officials did not want her to appear on domestic Chinese news coverage. The incident dominated Australian media coverage of Li's Canberra meeting, and became a focus of political debate on Tuesday.
Albanese said in a radio interview on Tuesday that he had expressed his concern over the incident directly to Li, and it was an example of the differences between China and Australia.
"I raised the incident with Cheng Lei directly with the Premier and told him that, in our view, that was clearly unacceptable, that officials tried to block the camera view," he said.
"We have different political systems, different values, but we need to work those things through," he told radio station 6PR.
17. In China, regional security officials have been told to make regime stability a priority
William Zheng, South China Morning Post, June 10, 2024
18. China Warns U.S. Lawmakers Over Meeting with Dalai Lama in India
Shan Li, Wall Street Journal, June 19, 2024
19. China says US tip led to suspect in ‘prime example’ of cooperation amid fentanyl crisis
Cyril Ip and Yuanyue Dang, South China Morning Post, June 19, 2024
20. Top BofA auto analyst says Detroit automakers need to exit China as soon as possible
Michael Wayland, CNBC, June 18, 2024
Environmental Harms
21. VIDEO – China’s slave fishermen and the companies allegedly exploiting Uyghur labour
Al Jazeera, June 20, 2024
22. Illegal Chinese fishing off East Africa hurts local communities: report
Mai Xiaotian, Radio Free Asia, June 15, 2024
A multibillion dollar global fishing industry backed by the Chinese government is driving a surge in Chinese vessels engaged in illegal activities and exploiting fishing grounds off East Africa, spoiling them for local people, according to a London-based environmental group.
"Before the Chinese fishing boats came here, we could expect a good catch when we cast our nets, even if we only cast the nets three times," one Mozambican fisher told the U.K.-based Environmental Justice Foundation. "Now we have to stay out at sea for a whole day to catch enough fish."
"This is heartbreaking, because these fish are not only for us, but also for our children,” he said. “They have destroyed our future livelihoods."
23. China responsible for 95% of new coal power construction in 2023, report says
Molly Lempriere, Carbon Brief, April 11, 2024
Foreign Interference and Coercion
Office of the Director of national Intelligence, June 5, 2024
25. Chinese firm sought to use UK university links to access AI for possible military use
Hannah Devlin, The Guardian, June 16, 2024
A Chinese state-owned company sought to use a partnership with a leading British university in order to access AI technology for potential use in “smart military bases”, the Guardian has learned.
Emails show that China’s Jiangsu Automation Research Institute (Jari) discussed deploying software developed by scientists at Imperial College London for military use.
The company, which is the leading designer of China’s drone warships, shared this objective with two Imperial employees before signing a £3m deal with the university in 2019.
Ministers have spent the past year stepping up warnings about the potential security risk posed by academic collaborations with China, with MI5 telling vice-chancellors in April that hostile states are targeting sensitive research that can “deliver their authoritarian, military and commercial priorities”.
26. Silicon Valley steps up staff screening over Chinese espionage threat
Financial Times, June 19, 2024
27. As the Hill sets its focus on China, DC trade groups are the latest in the line of fire
Caitlin Oprysko, Politico, June 18, 2024
More than half a dozen lobbying firms dumped Chinese clients earlier this year after POLITICO reported that congressional offices were threatening to blacklist them for working for companies linked to the Chinese military.
And as distrust of the Chinese government reaches a fever pitch in Washington on both sides of the aisle, companies with roots in the country — or suspected links to the Chinese Communist Party — are rapidly finding themselves without allies to make their case to lawmakers.
The pressure campaign is now turning to Washington’s trade associations, with several major industry groups buckling under demands to boot China-linked members when faced with congressional inquiries.
In an industry where relationships and access to those in power are currency, threats alone can be enough to spook advocates, especially if being associated with one client could compromise a lobbying firm or trade group’s ability to advocate on behalf of the rest of its clients.
“Many people say, you know, ‘All we have is our reputation,’” said Tom Spulak, a partner at King & Spalding who advises clients on lobbying compliance. “If one’s reputation is marred on the Hill, that could be existential to your ability to stay in business.”
The dynamics in Washington are a marked change from even a few years ago, when the Chinese telecom giant ZTE was able to hire major names like former Sens. Norm Coleman and Joe Lieberman to defend it in Washington as it fought against being barred from doing business with American companies.
The value of membership in a trade group isn’t only in the ability to mobilize the lobbying and financial muscle of the collective against threats to an industry. Trade groups also give their members a veneer of credibility and can serve as a crucial defender of individual members.
Take NetChoice, the center-right tech group that in May dropped TikTok from its membership rolls after pressure from House Majority Leader Steve Scalise’s office. NetChoice stuck with the social media giant through lawmakers’ initial efforts to ban it from the U.S. and defended the app in court — including that same week.
A trade group representing the biopharmaceutical industry, the Biotechnology Innovation Organization, cut ties with one of its member companies, the Chinese biotech firm WuXi, in March after lawmakers questioned whether BIO should be required to register as a foreign agent for lobbying against legislation that would hurt WuXi.
Not only did BIO oust WuXi, the group’s new chief executive announced that BIO would flip its support in favor of the bill, which would block WuXi and other Chinese biotechs from doing business in the U.S.
Meanwhile, one of the retail industry’s marquee trade associations, the National Retail Federation, has reportedly rebuffed efforts by the e-commerce giant Shein to join its ranks. The fast fashion site, which previously was based in China and still faces questions about its ties there, has embarked on a hiring spree amid the Washington inquisition, staffing up its D.C. office with veteran retail lobbyists and retaining five new outside lobbying firms — many with ties to Republicans critical of the company — since February.
Even the Chinese government itself has lost all its U.S. lobbyists.
Squire Patton Boggs, the last lobbying firm registered to work for a formal arm of the Chinese government, no longer represents China’s U.S. Embassy as of the end of 2023, according to documents filed with the Justice Department earlier this year. The firm had worked for the embassy for nearly two decades, bringing in more than $9.2 million for its advocacy from 2005 through 2023, DOJ filings show.
Meanwhile, scrutiny on trade groups over their members’ ties to China doesn’t appear to be letting up.
In May, Rep. Elise Stefanik (R-N.Y.) and Rep. John Moolenaar (R-Mich.), the new chair of the House China Committee, called on the Justice Department to investigate whether a drone advocacy coalition sponsored by the Chinese drone maker DJI should be forced to register as a foreign agent.
“Obviously, these companies are coming under much closer scrutiny than” even a few years ago, said one Senate GOP staffer, who was granted anonymity to speak candidly about internal discussions.
The U.S. Chamber of Commerce provides a cautionary tale of how even the most powerful organizations aren’t immune from the blowback of crossing Republicans, the aide offered.
Congressional Republicans traditionally counted the behemoth business lobby one of their closest allies. But amid a wider break-up between populist Republicans and corporate America — and the Chamber’s critique of partisan grandstanding and embrace of some business-friendly Democrats — the business lobby has found itself at the center of previously unfathomable Republican ire on the Hill.
“If you think back five years ago, six years ago, it’d be kind of hard to imagine Republicans in outright revolt against the Chamber,” said the aide. The episode demonstrates trade associations “can no longer take for granted that relationship that they’ve had with Republicans over the years. And that means they have to pay extra close attention to the types of decisions they make [or] what their members are saying and doing, because they can get bogged down in all of it.”
Craig Singleton, director of the China Program at the Foundation for Defense of Democracies, expects the trend to ripple across a number of tech-adjacent sectors — especially industries China is looking to dominate such as telecom, electric and autonomous vehicles, batteries and drones.
If anything, Congress’ surprise success in pushing a TikTok divest-or-ban bill across the finish line in April may act as a galvanizing force for lawmakers to target Chinese companies with exponentially less risk for political blowback. And if members opt to try to replicate the TikTok model — keeping their efforts a secret until there is too little time and too much momentum for lobbyists to overcome — that will require trade groups to be especially discerning.
“There’s a lot of things that industry groups aren’t even aware of, and there’s a lot of movement afoot that the companies that could be implicated are not aware of,” Singleton argued.
“Every single tech industry group, every single industry group that has Chinese company membership and participation is … in a state of analyzing” its potential risk exposure, said Singleton.
COMMENT – This is excellent news.
28. Calls to ban WeChat grow after Canberra clashes
Gus McCubbing, Australian Financial Review, June 18, 2024
WeChat has censored posts mentioning clashes between Chinese Australians over Chinese Premier Li Qiang’s visit to Australia, heightening calls from cybersecurity experts for the social media platform to be banned.
The calls come a day after a bizarre incident in which Chinese officials blocked cameras from getting a shot of Australian journalist Cheng Lei – who was detained in China for three years – in the press pack while Mr Li was speaking.
WeChat Australia on Tuesday censored a Mandarin-language post by a relatively unknown account called CBRLife which mentioned clashes in Canberra, according to Dr Fan Yang, a Melbourne Law School research fellow.
The post was titled “Australian and Chinese leaders hold talks in Canberra; Chinese Australians who support Li Qiang clash with protesters; will Australia still have pandas in the future?”
Footage posted by other users on X, formerly known as Twitter, showed pro-China supporters clutching both Australian and Chinese flags while chanting “long live in China”. Other protesters held up a large Chinese flag in front of English-Chinese banner that read: “Heaven destroys CCP”.
Dr Yang said that while WeChat had automatically censored the Canberra protests for “violating relevant laws, regulations and policies”, no such action was ever taken against articles mentioning Australian protests aimed at Israel’s invasion of Gaza or Russia’s invasion of Ukraine.
“Pro-Palestine protests can go on WeChat. It’s all about anti-China protests. So it’s not about protests generally, it’s the angle,” she said. “But WeChat had problems with freedom of speech, information and publication long before Li Qiang’s visit. If any articles mention things like [religious movement] Falun Gong, they are censored automatically.”
A report released by the Lowy Institute last year, called “Being Chinese in Australia”, said while usage had declined since 2021, nearly 50 per cent of Chinese Australians use WeChat daily, making it the third-most-popular social media platform after YouTube and Facebook.
Hesitant approach
Three-quarters of Chinese Australians said it was a central source in their news diet, the report said, but just shy of half doubted the fairness and accuracy of the news and information it provided.
More than 60 per cent of Australians polled by UTS last year said both WeChat and TikTok should be banned, up from 47 per cent in 2022.
Robert Potter, co-chief executive of Australian cybersecurity firm Internet 2.0, says WeChat’s presence in democratic countries is “unsustainable”.
“WeChat is so difficult because it’s fully controlled by Beijing. You can’t post about human rights, COVID, Tiananmen Square – anything that would remotely tick them off is automatically censored,” he said.
“I expect there will be a hard exit of Chinese-language social media platforms from the West, but obviously Australia doesn’t want to go first, because we did that on COVID origins and got pummelled.”
Prime Minister Anthony Albanese on Tuesday said the government had expressed its concern after two junior Chinese embassy staffers jostled with Australian officials and tried to block TV cameras from filming Ms Cheng while she was covering Mr Li’s visit for Sky News.
“There should be no impediments to Australian journalists going about their job. And we’ve made that clear to the Chinese embassy,” he said.
Opposition Leader Peter Dutton said he was pleased the government had spoken to the embassy about Ms Cheng but attacked Mr Albanese’s initial hesitance to criticise the Chinese officials.
“Please, grow a backbone and stand up for our country,” he said. “The job of the prime minister is to make tough decisions and to call out bad behaviour and to make sure that you do the right thing by Australians – and that’s what our prime minister should do.”
COMMENT – WeChat is how the Chinese Communist Party maintains control and influence extraterritorially over individuals of Chinese heritage. Just as Western social media platforms are banned in the PRC, we should prohibit WeChat from operating in our countries. Reciprocity should be our guiding principle.
Human Rights and Religious Persecution
29. Nancy Pelosi Meets with Dalai Lama, Despite China’s Criticism
Mujib Mashal and Hari Kumar, New York Times, June 18, 2024
The former House speaker joined a congressional delegation that met with the Tibetan spiritual leader at his home in India. China calls him a separatist.
A high-level U.S. congressional delegation, including the former House speaker Nancy Pelosi, met with the Dalai Lama at his Indian home on Wednesday, a visit that was condemned in advance by China’s government, which considers the exiled Tibetan spiritual leader a separatist.
The delegation, led by Michael McCaul, the Republican chairman of the House Committee on Foreign Affairs, arrived on Tuesday in the Himalayan town of Dharamsala, where the Dalai Lama has lived since the 1960s. The delegation visited the offices of the Tibetan government in exile, which is pushing for autonomy for Tibet within China.
The trip comes days after Congress passed a bill with bipartisan support that urged China to start dialogue with Tibetan leaders to find a solution to the longstanding conflict.
China’s criticism of the visit was immediate and unsurprising. Its leaders consider the government in exile illegal and regard any support for the cause of autonomy for Tibet, which they call Xizang, as interference in internal Chinese matters.
“We urge the U.S. side to fully recognize the anti-China separatist nature of the Dalai group, honor the commitments the U.S. has made to China on issues related to Xizang, stop sending the wrong signal to the world,” the Chinese Embassy in New Delhi said in a statement on Tuesday night.
30. China has renamed hundreds of Uyghur villages and towns, say human rights groups
Helen Davidson, The Guardian, June 19, 2024
Hundreds of Uyghur villages and towns have been renamed by Chinese authorities to remove religious or cultural references, with many replaced by names reflecting Communist party ideology, a report has found.
Research published on Wednesday by Human Rights Watch and the Norway-based organisation Uyghur Hjelp documents about 630 communities that have been renamed in this way by the government, mostly during the height of a crackdown on Uyghurs that several governments and human rights bodies have called a genocide.
The new names removing religious, historical or cultural references are among thousands of otherwise benign name changes between 2009 and 2023. According to the two organisations that conducted the research, the apparently political changes, which mostly occurred in 2017-19, targeted three broad categories. Any mentions of religion or Uyghur cultural practices were removed, including terms such as hoja, a title for a Sufi religious teacher, which was removed from at least 25 village names; haniqa, a type of Sufi religious building taken from 10 village names; and mazar, meaning shrine, which was removed from at least 41 village names.
31. UN Should Act on Crimes Against Humanity
Human Rights Watch, June 20, 2024
The United Nations High Commissioner for Human Rights, Volker Türk, should provide a public update of measures taken by the Chinese government and by his office to address the human rights situation in Xinjiang, Human Rights Watch, Amnesty International, the International Service for Human Rights, and the World Uyghur Congress said today, releasing a series of translations of the report by his office on Xinjiang published in 2022.
The Office of the High Commissioner’s 2022 report concluded that violations in the region “may constitute international crimes, in particular crimes against humanity.” The ongoing absence of public reporting by the high commissioner to follow-up the atrocity crimes documented by his own office, risks undermining the trust placed in his office by victims and survivors. At the same time, UN member states need to take more determined action to fight against impunity.
“The publication of the UN human rights office’s report was a landmark moment for highlighting the gravity of human rights violations in Xinjiang,” said Elaine Pearson, Asia director at Human Rights Watch. “Now it’s up to the UN high commissioner to make full use of that report to improve the situation for Uyghurs and other Turkic Muslims in Xinjiang.”
32. US lawmakers in India to meet Dalai Lama, discuss Tibet-China dispute bill
Charlotte Greenfield, Reuters, June 18, 2024
33. China warns US over lawmakers’ India trip to meet Dalai Lama, including Nancy Pelosi
Khushboo Razdan, South China Morning Post, June 19, 2024
34. A cartoon cat has been vexing China’s censors – now he says they are on his tail
Tessa Wong, BBC, June 10, 2024
Mr Li has since become a vital chronicler of information deemed politically sensitive by Beijing. His X account is a window into Xi Jinping’s China where authorities’ vice-like grip on information keeps tightening. From major protests to small acts of dissent, corruption to crime, it is zealously scrubbed off the Chinese internet, only to turn up on Mr Li’s account.
He says this has earned him the wrath of the authorities and, in an interview with the BBC, he painted a clear picture of how Beijing pressures dissidents overseas. He alleged the Chinese government is not only harassing him but also his friends, family and X followers in a coordinated campaign of intimidation.
35. Australian writer's sentence upheld ahead of China Premier's visit, say supporters
Kirsty Needham, Reuters, June 16, 2024
Australian writer Yang Hengjun's suspended death sentence has been upheld by Beijing's High People's Court, with the decision relayed to Australian officials two weeks before China's Premier Li Qiang arrived in Australia, his supporters said on Sunday.
Australia's Prime Minister Anthony Albanese will meet Li, who is making the first visit to Australia in seven years by a Chinese premier, in Canberra on Monday. Albanese said last week he would raise Yang's case with China's second-highest ranked official.
36. China dismisses EU comments on human rights crackdown
Marine Strauss, Reuters, June 18, 2024
37. How Members of the Chinese Diaspora Found Their Voices
Han Zhang, The New Yorker, June 11, 2024
Industrial Policies and Economic Espionage
38. China EV Makers Have Room to Absorb EU Tariffs, Find New Markets
Bloomberg, June 13, 2024
Chinese electric carmakers may be crying foul over the European Union’s imposition of additional tariffs, but they have several options to keep growing, including shifting production to the continent and using fat profit margins to absorb some of the hit.
Companies could also turn their attention to new markets in the Middle East, Latin America and Southeast Asia, where EVs comprise a small but growing segment of the passenger car market.
COMMENT – I hope Brussels didn’t undershoot the mark, but I fear they did.
They imposed tariffs that will cost them in terms of Beijing’s retaliation, but they weren’t high enough to provide sufficient protection for European automakers. Hopefully they can calibrate quickly.
39. US as many as 15 years behind China on nuclear power, report says
Timothy Gardner, Reuters, June 17, 2024
40. China Is Testing More Driverless Cars Than Any Other Country
Keith Bradsher, New York Times, June 13, 2024
Assisted driving systems and robot taxis are becoming more popular with government help, as cities designate large areas for testing on public roads.
The world’s largest experiment in driverless cars is underway on the busy streets of Wuhan, a city in central China with 11 million people, 4.5 million cars, eight-lane expressways and towering bridges over the muddy waters of the Yangtze River.
A fleet of 500 taxis navigated by computers, often with no safety drivers in them for backup, buzz around. The company that operates them, the tech giant Baidu, said last month that it would add a further 1,000 of the so-called robot taxis in Wuhan.
Across China, 16 or more cities have allowed companies to test driverless vehicles on public roads, and at least 19 Chinese automakers and their suppliers are competing to establish global leadership in the field. No other country is moving as aggressively.
The government is providing the companies significant help. In addition to cities designating on-road testing areas for robot taxis, censors are limiting online discussion of safety incidents and crashes to restrain public fears about the nascent technology.
Surveys by J.D. Power, an automotive consulting firm, found that Chinese drivers are more willing than Americans to trust computers to guide their cars.
“I think there’s no need to worry too much about safety — it must have passed safety approval,” said Zhang Ming, the owner of a small grocery store near Wuhan’s Qingchuan Pavilion, where many Baidu robot taxis stop.
Another reason for China’s lead in the development of driverless cars is its strict and ever-tightening control of data. Chinese companies set up crucial research facilities in the United States and Europe and sent the results back home. But any research in China is not allowed to leave the country. As a result, it’s difficult for foreign carmakers to use what they learn in China for cars they sell in other countries.
Then there are the safety issues. As China charges ahead, companies and regulators elsewhere have become more cautious.
The Cruise robot taxi service of General Motors halted service in the United States last fall after one of its cars in San Francisco hit and dragged a pedestrian who had been knocked into its path by a human driver. California regulators later suspended the company’s state license. Cruise has resumed limited testing in Phoenix.
Waymo, formerly Google’s self-driving car division, is testing more than 200 self-driving cars in the Phoenix suburbs and in San Francisco, as well as nearly 50 in Los Angeles and in Austin, Texas. Waymo was notified twice by federal regulators last month that they were reviewing its safety.
Ford and Volkswagen shut down their robot taxi joint venture, Argo AI, two years ago, but both companies are still developing advanced assisted driving systems.
Last fall, Japan suspended its test of driverless golf carts that travel seven miles per hour after one of them hit the pedal of a parked bicycle. No one was injured. The testing resumed in March.
…
Baidu believes it has a three- to five-year lead over Tesla in Chinese cities like Wuhan, according to Wang Yunpeng, president of Baidu’s intelligent driving business group. By operating fully driverless cars in these places, Baidu has learned how the traffic works, block by block, he said in a speech last month.
From steamy coastal ports in southeastern China like Shenzhen and Fuzhou to metropolises in the mountains of western China, like Chongqing and Chengdu, cities across China are encouraging broad experimentation.
COMMENT – Whichever country masters this technology will have a significant economic and military advantage. We were unwise to let our entrepreneurs and researchers collaborate with the PRC on this and make it difficult to experiment with this technology in the United States and Europe.
41. China's factory output disappoints, property sector stuck in doldrums
Kevin Yao, Albee Zhang and Ellen Zhang, Reuters, June 17, 2024
China's May industrial output lagged expectations and a slowdown in the property sector showed no signs of easing despite policy support, adding pressure on Beijing to shore up growth.
Apart from retail sales that beat forecasts due to a holiday boost, the flurry of data on Monday was largely downbeat, underscoring a bumpy recovery for the world's second-largest economy.
42. China is distorting its stock market by trying to prop it up
The Economist, June 10, 2024
Investors in China’s stock market have been doing handsomely this year. The Shanghai composite index has risen by 12% from a multi-year low in February, notwithstanding a recent drop. Equity analysts and state media alike are cheering. For Xi Jinping, China’s leader, the rally was a relief, since retail investors own at least 80% of the market. A previous rout hurt them badly, adding to anxieties about the country’s future. To many, the recovery reflected good governance and fortune.
Part of the rally came from the purchase of tens of billions of dollars’ worth of shares by the “national team”, a group of state-owned institutions that ride to the rescue when China’s markets wobble. For Mr Xi, the bill may appear worth it. But the state has also tinkered with the market in other, more destructive ways. In an effort to boost share prices, it has put an end to a bonanza in initial public offerings (IPOs). With fewer exit opportunities for private investors, state capital has become more dominant. The danger is that these distortions will crimp the growth of China’s most innovative firms.
43. China's property investment slump worsens in January-May
Reuters, June 17, 2024
Property investment in China fell 10.1% in the first five months of 2024 from a year earlier, after dropping 9.8% in January-April, even as policymakers doubled down on efforts to support the ailing sector and shore up consumer confidence.
44. Turkey to Impose Additional 40% Tariff on All China Vehicles
Asli Kandemir, Bloomberg, June 8, 2024
45. Volvo to shift EV production to Europe to escape China tariffs
Oliver Gill, Sunday Times, June 8, 2024
The carmaker has started to divert manufacturing to Belgium ahead of an expected European Union crackdown on Beijing-subsidised imports
Volvo has started to divert production of Chinese-made electric vehicles to Belgium in the expectation that the European Union will drive ahead with a crackdown on Beijing-subsidised imports.
The Swedish-headquartered company is seen as the most exposed among western carmakers to the controversial plans to impose tariffs on a flood of cheap EVs that are heading to Europe from Chinese factories.
Company insiders said that Volvo, itself owned by the Chinese carmaker Geely, was considering plans to halt sales of Chinese-built EVs bound for Europe if tariffs were introduced. Diverting production of Volvo’s EX30 model from China to Belgium is expected to negate the need for the company to do so. The manufacturing of certain Volvo models bound for the UK could also be moved
46. India Beats China in Stock Performance
Jackie Wong, Wall Street Journal, June 19, 2024
Cyber and Information Technology
47. Senator says US needs to 'up our game' on tracking Chinese tech efforts
David Shepardson, Reuters, June 18, 2024
The chair of the Senate Intelligence Committee said on Tuesday that U.S. intelligence agencies need to do a better job in tracking Chinese advanced technology and other efforts across a variety of fields.
"Our intel community is so used to traditionally spying - you spy on the military, you spy on the government. You don't necessarily follow all of the tech companies," Senator Mark Warner told reporters at a breakfast sponsored by the Christian Science Monitor. "You don't follow where China is getting extraction of rare earth minerals. We just need to kind of continue to up our game in following what China is doing, not just in this chip space but frankly in a lot of these other domains."
48. TikTok child privacy complaint referred to US justice department
Financial Times, June 19, 2024
49. US Seeks Allies’ Help in Curbing China’s AI Chip Progress
Mackenzie Hawkins, Cagan Koc, and Yuki Furukawa, Bloomberg, June 18, 2024
50. Intel Foundry pitches 3nm services to Chinese clients: can they use non-US fabs?
Amanda Liang, DigiTimes Asia, June 19, 2024
COMMENT - I’m pretty sure this is the same Intel that spent years lobbying the U.S. Government to pass the CHIPS Act because the threat from the PRC to their business was so great.
Military and Security Threats
51. China's 3-pronged maritime threat rattles Japan, Philippines and Taiwan
Andrew Sharp, Nikkei Asia, June 11, 2024
52. War Machine: The Networks Supplying & Sustaining the Russian Precision Machine Tool Arsenal
Al Maggard, C4ADS, June 18, 2024
In the face of global sanctions and other trade restrictions, Russia continues to import technology from countries that publicly support Kyiv — specifically, computer numeric control (CNC) machine tools that automate the manufacturing of defense equipment critical to Moscow’s ability to wage war on Ukraine.
COMMENT – Newsflash! Beijing plays a key role in enabling this.
53. Future Scenarios for Sino-Russian Military Cooperation: Possibilities, Limitations, and Consequences
Mark Cozad, Cortez A. Cooper III, Alexis A. Blanc, David Woodworth, Anthony Atler, Kotryna Jukneviciute, Mark Hvizda, Sale Lilly, RAND, June 18, 2024
In this report, the authors explore possible future cooperation scenarios in which the Russian Armed Forces and the People's Liberation Army could operate together as coalition partners. The authors examine historical patterns of Russian and Chinese alliance behavior as well as current military-to-military engagements between these two militaries that include exercises, training events, such operational activities as joint maritime and air patrols, and high-level exchanges. Given these military engagement trends, three scenarios that illustrate how Russian and Chinese forces might operate together under different strategic and operational circumstances are then examined. These scenarios are then used to identify the prospects and pitfalls for future Russian and Chinese military cooperation in conflict and to explore implications for U.S. policymakers, commanders, and planners.
Key Findings
From Moscow's perspective, partnership with China is a strategic imperative for Russia to maintain its claim to great-power status. China's support has helped Russia withstand some of the most negative consequences of Western sanctions, particularly through China's purchase of record amounts of energy from Russia.
The Russia-China partnership is also critical for Beijing. With no alliances of its own, Beijing views Moscow's mutual support as its most important strategic relationship and an effective counterweight to U.S. power. As the de facto senior partner in the relationship, Beijing simultaneously sees a significant opportunity to exploit Russia's weakness, which Beijing has leveraged to gain access to inexpensive energy, advanced military technology, and strategic resources.
Strategic cooperation and coordination in the overall military-to-military relationship suggests that expanded cooperation might eventually include some form of combined military operation, but this possibility remains uncertain at best. However, cooperation is not the same as interoperability.
The likely costs of direct military confrontation with the United States make the willingness of either country to enter into such an operation — either independently or as a coalition — unlikely, especially from Beijing's perspective.
Short of a mutual defense treaty, other forms of military cooperation should be expected to intensify.
Deeper integration would likely result in more-complex and more-frequent training and exercises between Russian and Chinese forces — interactions that likely engender expanded technology and skills transfers. Similarly, increased integration could potentially lead both militaries to consider operating in new geographic areas or domains, perhaps with new operational concepts they develop jointly.
Recommendations
Efforts to break apart the Sino-Russian relationship are unlikely to succeed and may end up motivating both Russia and China to strengthen their ties. This strategic partnership is vital to Putin and Xi, but its importance preceded them and will extend beyond their tenures.
The United States' most effective means for countering the Russia-China strategic partnership is ensuring the health of its own alliances and pursuing ever greater cooperation among its most important allies and partners. This U.S. network of alliances is a significant advantage.
Although the possibilities for cooperation in a combined operation appear to be limited now, U.S. planners and policymakers need to consider the circumstances under which Russia and China might pursue cooperation and factor those considerations into planning efforts.
Policymakers and planners should avoid overestimating the state of military cooperation and operational integration that exists between Russia and China.
Deterrence issues in the context of the Russia-China relationship will become increasingly complicated because of Moscow's and Beijing's differing risk calculations and perspectives on the role of nuclear weapons. The United States should consider such areas of friction as an opportunity to inject doubt into the minds of senior leaders in Russia and China about the costs and risks associated with a conflict involving the United States and its allies.
COMMENT – This is a disappointing report from RAND.
They play down the significance of the Sino-Russian entente and their recommendations fall far short of addressing the problem.
A scenarios they paint were largely unimagined a decade ago (Beijing and Moscow in an alliance with Tehran and Pyongyang as junior partners). We have open conflicts, which could escalate rapidly at any time, in two separate theaters and a third that is growing closer to open conflict (that doesn’t count a North Korean nuclear capability which is now full functional). Yet the authors essentially recommend doing the same thing we have been doing since the end of the First Cold War.
I find their specific recommendation to NOT overestimate Sino-Russian military cooperation, baffling… this is literally the worst-case scenario for military planners in the United States, Europe and Asia and these researchers suggest we shouldn’t get worked up about it because Beijing and Moscow don’t fully trust one another (as if trusting one another completely is the prerequisite for them to act in concert and for us to take it seriously).
¯\_(ツ)_/¯
We need to do much, much more than simply “ensuring the health of [our] own alliances and pursuing ever greater cooperation” with allies and partners. These bromides to alliances and cooperation and that they can solve every problem are becoming tired mantras which lull us into further complacency.
Deterring a wider global conflict requires a degree of mobilization and military build-up that cannot be accomplished with the “business-as-usual” approach these RAND researchers recommend.
The time for half-measures is behind us.
54. China views Taiwan's 'elimination' as national cause, Taiwan president says
Ben Blanchard and Ann Wang, Reuters, June 16, 2024
55. PLA study suggests China’s Fire Dragon missiles could sink US warships
Stephen Chen, South China Morning Post, June 20, 2024
A simulation indicates that the missiles, which have been exported to the UAE, could destroy Ticonderoga-class cruisers.
A Chinese tactical ballistic missile known as the Fire Dragon 480 that has been exported to the Middle East would be capable of sinking a US cruiser patrolling the Red Sea, according to a computer simulation run by the People’s Liberation Army.
With close coordination of a swarm of drones and the adoption of new tactics, an average of six of these long-range guided rockets would be needed to destroy a large US warship, according to a peer-reviewed paper published in the academic journal Command Control & Simulation on May 15.
56. Philippines says ‘intentional’ ship ramming by China left sailor badly hurt
Financial Times, June 19, 2024
57. Xi Jinping Signals More Military Purges in Call for Corruption Crackdown
Chun Hun Wong, Wall Street Journal, June 19, 2024
58. US says Mexico's Sinaloa Cartel used group tied to Chinese underground banking
Kanishka Singh, Reuters, June 18, 2024
59. Why did a Chinese nuclear-powered submarine suddenly surface in the Taiwan Strait?
Lawrence Chung, South China Morning Post, June 19, 2024
COMMENT - Kind of embarrassing for the PLAN.
60. Taiwan keeping watch after Chinese submarine surfaces in Taiwan Strait
Ben Blanchard and Yimou Lee, Reuters, June 18, 2024
Taiwan's defence minister said on Tuesday that they have a "grasp" of the situation after pictures appeared online of a Chinese nuclear submarine surfacing in the sensitive Taiwan Strait near Taiwanese fishermen.
The narrow strait that separates Taiwan from China is a frequent source of tension. Taiwan reports Chinese warplanes and warships operating there on a daily basis, as Beijing seeks to assert its sovereignty claims against the democratically governed island.
Taiwanese media published the pictures of the surfaced craft, which appears to be a nuclear-armed Jin class ballistic missile submarine, taken by a Taiwanese fishing boat in the strait as dawn broke on Tuesday, about 200 km (125 miles) from Taiwan's western coast.
Asked about the submarine, Taiwan Defence Minister Wellington Koo said they have a "grasp" of the intelligence situation, but declined to say how they were monitoring it or give details.
China's defence ministry did not immediately respond to a request for comment.
Nuclear-powered submarines can operate underwater for months at a time, and ballistic-missile boats' secretive mission means they rarely surface.
A security source familiar with the situation told Reuters that the submarine was most likely returning to its home port in Qingdao from the South China Sea. The source said Tuesday's incident might have been because it experienced a malfunction and was forced to surface.
61. VIDEO – Roger Wicker Sounds the Alarm on Fading U.S. Defenses
Wall Street Journal, June 17, 2024
One Belt, One Road Strategy
62. Ecuador reinstates visa requirement for Chinese travelers
Alexandra Valencia and Natalia Siniawski, Reuters, June 18, 2024
63. Thailand's rail network to link to Laos-China high-speed train
Apornrath Phoonphongphiphat, Nikkei Asia, June 11, 2024
Opinion Pieces
64. Only Justin Trudeau can clear the air in Ottawa
The Globe and Mail, June 20, 2024
From the start, Prime Minister Justin Trudeau has displayed an alarming lack of urgency about revelations that foreign states meddled in the 2019 and 2021 federal elections.
His government kept credible evidence of the meddling from the public, only commenting on it after The Globe and Mail reported on its existence in early 2023. He tried to calm the waters by launching an investigation that was compromised from the start, and only buckled to calls for a proper public inquiry after that fell apart.
And it wasn’t until last month, just weeks before the House rises for the summer, that the Liberals introduced legislation to criminalize and counter election interference – even though the Canadian Security Intelligence Service first warned them of the problem in 2019.
Given all that foot-dragging, it would be absurd for Mr. Trudeau to now try to claim the high ground in the fight against foreign interference.
And yet that is what he is doing in the wake of this month’s release of a heavily redacted report from the National Security and Intelligence Committee of Parliamentarians that says there are parliamentarians who are co-operating with foreign governments.
This week and last, Mr. Trudeau has been boasting that his government created NSICOP in 2017 over the objections of the Conservative opposition, suggesting that the Liberals care more about this stuff.
But the Conservatives objected to NSICOP because it is a parliamentary committee that answers only to the Prime Minister’s Office, with members and a chair chosen by Mr. Trudeau, and whose reports are vetted and redacted by the PMO prior to their release.
And while Mr. Trudeau boasts of creating the committee, NSICOP itself says in its latest annual report that his government has repeatedly ignored its recommendations on ways to prevent foreign meddling, and regularly withholds relevant information from it.
Those concerns take on a new dimension now that NSICOP’s unredacted report – first delivered to Mr. Trudeau in March – has identified parliamentarians that it says are collaborating with foreign actors.
Worse yet, Mr. Trudeau is now questioning the committee’s competence in assessing intelligence, even though he asked for the report, and said at the time that the committee was “well placed” to look into foreign election meddling.
The smoke screens don’t stop there. After NDP Leader Jagmeet Singh read the unredacted report and said it confirms “criminal activity” by some parliamentarians, but added he was relieved there were no members of his caucus to worry about, Mr. Trudeau responded that, “I would be wary of any party leader drawing any sort of conclusion like that.”
Mr. Trudeau has also criticized Pierre Poilievre for not reading the unredacted version of the report, suggesting that the Conservative leader would rather just not know.
But Mr. Poilievre says he won’t read the unredacted report because the conditions of the top-secret security clearance required to do so would handcuff what he as leader of the official opposition could say. Thomas Mulcair, the leader of the NDP when it was the official opposition from 2012 to 2015, said last week he would have taken the same position.
Mr. Poilievre is furthermore correct when he says that, if the government thinks someone in his caucus is a threat to Canada, CSIS agents are perfectly able to brief him on it.
Why is Mr. Trudeau suddenly attacking NSICOP? And why, too, does he feel it necessary to make sure that MPs in every party remain under a cloud of suspicion?
On Monday, Mr. Trudeau said he is glad that the foreign interference inquiry led by Justice Marie-Josée Hogue has now agreed to examine the allegations in the report. But that, too, is a dodge. The inquiry has no power to name names or make any classified information public on its own, or to come to a conclusion about criminal liability.
Only one person can legally reveal the names involved, and that is the Prime Minister. He has the power to make classified information public: he did it last year when he told Parliament that there was credible evidence that India was behind the assassination of Canadian citizen in Canada.
We’ll say it again: the government should blow away its smoke screens, name names in Parliament, let those facing allegations defend themselves there, and clear the air for Canadians.
COMMENT – I recommend re-reading that opinion piece from the editorial board of The Globe and Mail, Canada’s paper-of-record.
65. The Pivot That Wasn’t: Did America Wait Too Long to Counter China?
Oriana Skylar Mastro, Foreign Affairs, June 18, 2024
Walter Russell Mead, Wall Street Journal, June 17, 2024
Giorgia Meloni was the winner of last week’s Group of Seven meeting. Whether giving French President Emmanuel Macron the stink eye or stitching up a deal to increase Italy’s clout in the European Union, the Italian prime minister had a good summit. Once stigmatized as a neofascist from the fringes of Europe’s hard right, Ms. Meloni has firmly entrenched herself at the center of European politics. She has become a role model for figures like Marine Le Pen in France, and the European Union seems to be moving in Ms. Meloni’s direction on issues like migration and climate change.
Joe Biden, by contrast, is struggling. While administration supporters denounced what they called a cropped and misleading video of a befuddled-looking president wandering across the lawn, the image aptly depicted the state of an American foreign policy that has largely lost its way.
The problem isn’t lack of activity. If frequent-flyer miles could be redeemed for Nobel Peace Prizes, Team Biden would have a fistful of medals. But that isn’t where we are. In the Middle East, Europe and the Far East, the U.S. and its friends are less secure than they were in January 2021. Great-power conflict is closer today than at any time in decades.
The heart of the problem is conceptual. Team Biden was slow to grasp the connections between the challenges it faces, and slower still to draw the appropriate conclusions. For too long they ignored the steadily growing elements of common strategy and purpose among major revisionist powers like China, Russia and Iran and lesser powers like North Korea and Venezuela.
The merits of the American-led world system were so obvious to Team Biden that they assumed other countries mostly agreed with us about how the world should work. “Stability,” they believed, is an interest almost everybody shares. When a crisis erupts—in the shoals off the Philippines, in the Red Sea, on Israel’s northern border, on the ground in Ukraine—the Biden hands instinctively rushed to “stabilize the situation,” offering “off-ramps,” “de-escalating,” and generally trying to smooth things over.
Unfortunately, this approach is badly out of date. China, Russia and Iran don’t have a common set of positive goals or values, but they have a common interest in undermining the U.S.-led world system. Rather than seeing crises as common problems demanding common action to restore stability, they see crises as opportunities to weaken American power.
COMMENT – Quote of the week: “The problem isn’t lack of activity. If frequent-flyer miles could be redeemed for Nobel Peace Prizes, Team Biden would have a fistful of medals.”
67. The South China Sea Dog That Hasn’t Barked … Yet
Zack Cooper and Gregory Poling, War on the Rocks, June 18, 2024
68. The Committee that Ended the Age of Engagement?
Charles Hutzler, China File, June 10, 2024
The U.S. Congress’ special China committee has a packed agenda for the few months left this term. But its most consequential work may be done: a more confrontational U.S. policy towards China.
Set up at the start of last year in the House of Representatives, the Select Committee on the Strategic Competition between the United States and the Chinese Communist Party has racked up notable successes in its brief existence. Its scrutiny put Wall Street and Silicon Valley on notice to police their investments into China. Its investigations showed that Chinese tax programs support the export of ingredients for fentanyl, and got the Department of Homeland Security to step up inspections of small packages, tightening a loophole potentially used to import goods made with forced labor in Xinjiang.
On the legislative front, the panel’s leading members helped craft the law that will force TikTok’s Chinese owner to sell or shut down the platform in the U.S. if the company is not successful in challenging it.
The Select Committee accomplished much of this via a parade of livestreamed hearings, published reports, and publicized letters requesting information from big-name American companies like Apple and BlackRock. The Committee managed this with a bipartisanship that is rare in Washington. The panel’s founding chairman, Republican Mike Gallagher, and leading Democrat, Raja Krishnamoorthi, often appeared to act and speak in lockstep. And that gave the Committee greater credibility in Washington.
The Biden White House and State Department often crafted China policies—from investment restrictions to diplomatic initiatives—with an eye on the Committee. American companies have particularly dreaded the panel’s focus on how their China businesses might be compromising U.S. national security. One business representative likened the committee’s inquiries to falling under the “eye of Sauron.”
In sum, the Committee, with its bipartisanship and use of the public spotlight, has helped shift Washington’s political consensus on Beijing. China, with its large economy and military and technological ambitions, is now more firmly rooted as a global rival that requires an aggressive U.S. response, whether it’s more arms for Taiwan or more restrictions on technology exports.
Policies that long held broad political support and that underpinned U.S.-China ties—like the normal, low-tariff trade treatment Washington grants China and most other countries—are now up for debate; the Committee has recommended revoking the trade status, getting Democrats to join with Republican trade skeptics. Members of Congress are questioning the efficacy of diplomatic engagement with Beijing.
James Mann, the author of several books on U.S. policy toward China, says that prior to the Committee’s existence, members of Congress largely took part either in partisan critiques of administration policy toward Beijing or in efforts to defend “the rapidly fading era of engagement.”
“The significance of the Select Committee was that with it, Congress began to break out of these patterns,” says Mann, who is a senior fellow at Johns Hopkins School of Advanced International Studies. “The Committee was able to achieve some bipartisan consensus—not always, but frequently enough. And it was able to focus on policy and strategy amid the rhetoric.”
69. China Is Waging a Proxy War on Israel
Pesach Wolicki, Newsweek, June 17, 2024
70. India Could Help the U.S. to Tech Victory Over China
Sadanand Dhume, Wall Street Journal, June 19, 2024
Can India help the U.S. win its race against China for technological dominance? The Biden administration seems to think so. Following national security adviser Jake Sullivan’s visit to New Delhi, the White House on Monday released an ambitious fact sheet listing current and proposed areas of U.S.-India cooperation on “critical and emerging” technologies, including semiconductors, fighter jet engines, space flight, telecommunications, biotechnology and artificial intelligence.
The statement doesn’t mention China. But shared concerns about Beijing’s ambitions underpin the effort, the initiative on Critical and Emerging Technology, which was launched last January. “To put it bluntly and boldly, it’s first and foremost about derisking and diversification from China,” Rudra Chaudhuri, the director of Carnegie India, says in a phone interview.
Those concerns are well-founded. Over the past four decades, China has transformed itself into a science and technology powerhouse. According to the Australian Strategic Policy Institute, China leads the U.S. in research in 53 out of 64 critical and emerging technologies, including advanced aircraft engines, electric batteries, machine learning and synthetic biology.
In the Leiden global university science rankings, Chinese universities occupy 10 of the top 20 spots, while only five U.S. universities make the top 20. China in 2020 graduated 1.4 million engineers, seven times as many as graduated from U.S. institutions the same year.
71. The EU has a chicken feet problem with China
Andy Bounds, Financial Times, June 18, 2024