Matt Turpin's China Articles - May 28, 2023
Friends,
The PRC Commerce Minister, Wang Wentao, made his first visit to Washington this week and met with U.S. Commerce Secretary Gina Raimondo and Trade Representative Katherine Tai.
I have a sinking feeling that the long-expected White House move to screen and restrict outbound investments to the PRC in the most sensitive emerging technology areas has been traded away for an economic ‘reset’ with Beijing… even as the Chinese Communist Party cracks down on U.S. companies like Micron and restricts access to commercial information.
I hope I’m wrong, but there are disturbing signals that seem to confirm this (See Danielle Pletka’s analysis, #6).
Early last week, Newsweek revealed that the Federal Government’s retirement investment program (Thrift Savings Plan) has failed to restrict investment into sanctioned PRC companies (See #41). This means that the retirement savings of federal employees are still being funneled into the coffers of companies that build fighter jets and missiles, as well as companies that commit gross human rights violations. Apparently, the Biden Administration has made very little progress in harmonizing its efforts across the bureaucracy.
For some insight into the CCP’s interference campaign against Canada, I recommend reading #67, a post this week by the former leader of Canada’s Conservative Party… the party targeted by the CCP in its Canadian interference campaign. Peter O’Toole reveals that Ottawa still has a lot of work to do to get a handle on this insidious problem that undermines the faith of Canadian citizens in their own elections and government functions.
For my American readers, I hope everyone gets a chance to spend time with family and friends this Memorial Day weekend.
Remember those who have sacrificed themselves for our nation, then celebrate them with a BBQ and a few beers… oh and watch the Indianapolis 500 at 12:45 ET today!
Thanks for reading!
Matt
MUST READ
1. When You're in a Cold War, Play for Time
Niall Ferguson, Bloomberg, May 20, 2023
Detente in Sino-American relations is on the horizon. Despite the previously optimistic predictions, the Chinese economy is not going to overtake the American GDP in the next two decades. Torn by various struggles, Beijing faces a long period of constrained capability.
2. ‘In a lot of the world, the clock has hit midnight’: China is calling in loans to dozens of countries from Pakistan to Kenya
Bernard Condon, Fortune, May 18, 2023
The PRC’s reluctance to forgive debt and its secrecy about loan terms have caused economic instability and collapse in a dozen countries. The Party’s pursuit of narrow self-interest forces the indebted governments to cut spending on healthcare, social services, and subsidies.
COMMENT – Now is the time to highlight to the world the disastrous impacts of Xi’s Belt and Road Initiative and the negative consequences of debt trap diplomacy. It is a vulnerability that the Chinese Communist Party is extremely sensitive to (hence why they spend so much effort getting ‘friends of China’ to defend them… side-eye at Deborah Brautigam and here).
We should be exploiting that vulnerability to the fullest by advertising to the world the Party’s failures.
3. Exclusive: Chinese hackers attacked Kenyan government as debt strains grew
Aaron Ross, James Pearson, and Christopher Bing, Reuters, May 24, 2023
For the past three years, Chinese hackers have targeted Kenya's government in an effort to learn more about the amount of debt that the East African country owed to Beijing. The hackers have launched a number of attacks on Kenya's intelligence agency. Chinese officials denied having anything to do with the cyberattacks.
4. Taiwan excluded from WHO annual assembly following Chinese opposition
Reuters, May 22, 2023
Taiwan failed to gain an invitation to the World Health Organization's annual assembly, with China and Pakistan urging WHO members to deny Taiwanese a spot. Taiwan condemned the decision whereas Beijing welcomed the move, urging other states not to politicize the health issue or interfere in “China's internal affairs.”
COMMENT – Yet more evidence that our international institutions are toothless in upholding the values and principles they were designed to protect.
5. What Washington Gets Wrong About Deterrence
Raphael S. Cohen, War on the Rocks, May 22, 2023
Despite the perceived "trade-off" between deterring China and fighting Russia, the Ukraine War and America's response to the threat have improved the perception of America and its deterrence capabilities. War in Ukraine has changed the strategic narrative of American defense and capability, demonstrating that the West is not as weak or fragmented as many had assumed.
COMMENT – Yet another good antidote to the wrong-headed arguments by some that we can neatly divide our world in two: concentrating on Asia while ignoring the war on Ukraine and leaving it to the Europeans.
Our real problem is not explaining to the American people that we face an expanding and aggressive Sino-Russian alliance that requires substantial defense investments to deter a wider conflict that engulfs more of the Eurasian land mass.
The next article suggests that we aren’t going to do that either.
6. Is the Biden Administration Going Soft on China?
Danielle Pletka, Foreign Policy, May 25, 2023
A policy shift toward economic engagement with Beijing seems to be underway in the White House.
The need to counter China has been a welcome area of bipartisan consensus in a Washington riven over everything from nuclear modernization to chicken nuggets. But the bipartisan concordat on China is ending, foundering over politics, ideology, and economic expediency. And the biggest beneficiary? The People’s Republic of China.
The break has been coming for some months, a product of myriad, disparate fears among Democrats—a progressive backlash to the alleged “drumbeat to war”; claims that standing up to China is fostering anti-Asian sentiment in the public at large; a desire to draw a contrast with increasing Republican bellicosity; and an appeal to younger generations more skeptical of the need to confront rising powers. And if that’s not enough, don’t forget the possible recession headed America’s way—not the ideal moment for economic conflict—as well as ever-present business lobbying insisting that national security not interfere with corporate profits.
Then there’s the fretting of the liberal commentariat: Jon Bateman argued in a December Politico piece that “The Fevered Anti-China Attitude in Washington Is Going to Backfire.” The New York Times’s Tom Friedman warned, “If it is not the goal of U.S. foreign policy to topple the Communist regime in China, the United States needs to make that crystal clear.” In the pages of the Washington Post, Fareed Zakaria cautioned that “Washington has succumbed to dangerous groupthink on China.” And éminence grise Graham Allison has returned repeatedly to his Thucydides trap warning of 2015, reupping it in 2022 to liken then-U.S. House Speaker Nancy Pelosi’s trip to Taiwan to Archduke Franz Ferdinand’s visit to Sarajevo (a visit that nominally sparked World War I).
Needless to say, the musings of Washington’s chattering classes are not always dispositive indicators of a policy shift. But I have been told by several insiders that the White House is keenly attuned to these criticisms from Biden stalwarts in the press. And thus, a shift.
COMMENT – I see some countercurrents to what Pletka observes, but she may be right that the Biden Administration is under a combination of pressures which to pursue a “reset” with Beijing. Something that I think would be a spectacular mistake at this point.
Authoritarianism
7. Why China fears Starlink
Economist, May 18, 2023
8. Chinese App Trains Government Workers How to Keep State Secrets
Bloomberg, May 23, 2023
9. Hong Kong student arrested over comments made on social media while in Japan
Karin Kaneko, Japan Times, April 21, 2023
10. G7 issues strongest condemnation of China as it intensifies response to Beijing
Henry Foy, Kana Inagaki, Demetri Sevastopulo, Jim Pickard, and Christopher Miller, Financial Times, May 20, 2023
The G7 has strongly denounced China and urged Beijing to pressure Moscow to pull its troops out of Ukraine and find a "peaceful solution" to the tensions in the Taiwan Strait. The US and Japan have issued warnings of "heightened uncertainty about the global economic outlook" as a result of the G7 nations' tougher stance on China.
11. Xi Jinping’s Succession Problem—and China’s
Chun Han Wong, Wall Street Journal, May 19, 2023
12. China Puts Spymaster in Charge of U.S. Corporate Crackdown
Lingling Wei, Wall Street Journal, May 18, 2023
13. China is an increasingly hostile place for foreign consultancies
Joe Leahy, Financial Times, May 23, 2023
Environmental Harms
14. Australia Tries to Break Its Dependence on China for Lithium Mining
Natasha Frost, New York Times, May 23, 2023
15. China’s fishing fleet embroiled in rising tensions with US
Edward White, Financial Times, May 22, 2023
Foreign Interference and Coercion
16. China’s Ambassador Warns Trudeau Off ‘Provocation’ as Diplomatic Ties Fray
Laura Dhillon Kane and Stephen Wicary, Bloomberg, May 19, 2023
17. Hungary is becoming more important to China
The Economist, May 24, 2023
18. The China-Mexico fentanyl pipeline: increasingly sophisticated and deadly
Jennifer Doherty, The Guardian, May 18, 2023
19. Party Ties: Vietnam, Cuba and China’s Relations with Other Marxist-Leninist States - Jamestown
John S. Van Oudenaren, Jamestown Foundation, May 19, 2023
20. Russia PM visits China with U.S.-sanctioned delegation
Ck Tan, Nikkei Asia, May 23, 2023
21. Deputy Minister Wojciech Gerwel met the Special Envoy of the Chinese Government for Eurasian Affairs
Łukasz Jasina, Ministry of Foreign Affairs Republic of Poland, May 19, 2023
At the request of the Chinese side, Deputy Minister Wojciech Gerwel met Special Envoy of the Chinese Government for Eurasian Affairs, Ambassador Li Hui. The main goal of the visit of the Chinese diplomat was to consult the main partners in the European Union with regard to the Chinese position on the Russia’s aggression against Ukraine.
Deputy Minister W. Gerwel referred positively to Beijing’s recent dialogue with Kyiv, in particular the telephone conversation between the leaders of China and Ukraine and the current visit of the Chinese Special Envoy to Europe. He stressed that Russia's aggression against Ukraine poses a key challenge for regional and global stability and security. In this war, positions are not evenly distributed. Any attempts to equalize the status of Russia - the aggressor in this conflict, and Ukraine - the victim, are not acceptable.
The end of the conflict and the restoration of peace must be based on the principles of international law, including the United Nations Charter. We support President Zelensky's peace plan as the basis for resolving the conflict. The withdrawal of Russian troops and the return of unlawfully seized territories by Russia are the only acceptable solution to achieve a just peace – said Deputy Minister Gerwel.
Poland notes with concern Beijing's declarations concerning its persistent will to strengthen its bilateral relations with Russia, the aggressor state. Deputy Minister Gerwel expressed the hope that China would never recognize the annexation of illegally seized Ukrainian territories by Russia, just as it has not recognized the annexation of Crimea from 2014. He underlined, that any military aid, including the potential supply of weapons from China to Russia, may result in a grave consequences for the bilateral relationship between Europe and China.
Ukraine's right to self-defense arises from Art. 51 of the United Nations Charter. Support for the victim of an armed attack is not only a right but an obligation of all members of the international community. In this context, Deputy Minister Gerwel recognized China's responsibility as a Permanent Member of the UN Security Council, and expressed the hope that China – a promoter of the Five Principles of Peaceful Coexistence – will condemn Russia’s aggression, and exert pressure on Russia to return to compliance with the principles of international law.
Deputy Minister Gerwel condemned Russia's threats of use of nuclear weapons. This fact sets a dangerous precedent and may have a negative implications for the other parts of the world. Poland counts on concrete actions by China towards Russia – the aggressor state blackmailing the world with the use of these weapons. Deputy Minister underlined the need for the support of the International Atomic Energy Agency by the international community, including China; in particular the safe functioning of the nuclear power plant in Zaporizhzhia must be ensured.
Chinese diplomat emphasized that the situation in Ukraine is not in anyone's interest. In the opinion of the Chinese side, there is no easy solution to the war in Ukraine. Li Hui pointed to the need for a ceasefire and a return to peace talks. In this context, he underlined the 12-point " China’s Position on the Political Settlement of the Ukraine Crisis ". Ambassador Li declared opposition of China towards the use of nuclear weapons, underlining the importance that his country attaches to nuclear security and security, and maintaining the mandate of international organizations.
COMMENT – The Polish people and citizens of the EU can take pride in the strength Warsaw demonstrated with this visit.
Li Hui could not have been happy with this statement which included lines like:
“Poland notes with concern Beijing's declarations concerning its persistent will to strengthen its bilateral relations with Russia, the aggressor state.”
And this:
“Ukraine's right to self-defense arises from Art. 51 of the United Nations Charter. Support for the victim of an armed attack is not only a right but an obligation of all members of the international community. In this context, Deputy Minister Gerwel recognized China's responsibility as a Permanent Member of the UN Security Council and expressed the hope that China – a promoter of the Five Principles of Peaceful Coexistence – will condemn Russia’s aggression, and exert pressure on Russia to return to compliance with the principles of international law.”
It is also fitting that Poland only granted Li Hui a meeting at the “Deputy Minister”-level.
If only other European leaders could deliver similarly tough and clear messages to Beijing. But given the mixed messages from “large” EU members, we shouldn’t be surprised that the Party still believes that it can assist Moscow by dividing European support for Ukraine and splitting the transatlantic alliance.
22. Support for Taiwan’s meaningful engagement with the WHO
British Office Taipei, May 18, 2023
We, the British Office Taipei, the American Institute in Taiwan, the Australian Office, Taipei, the Canadian Trade Office in Taipei, the Czech Economic and Cultural Office, the German Institute Taipei, the Japan-Taiwan Exchange Association, and the Lithuanian Trade Representative Office wish to reaffirm our support for Taiwan’s meaningful participation in the work of the World Health Organization and Taiwan’s participation as an observer in the World Health Assembly.
COMMENT – It is really disappointing that the World Health Organization caved to the pressure and coercion of the PRC… again.
23. WHA press passes for Taiwan reporters abruptly canceled
Judy Tseng, Tien Hsi-ju, and Matthew Mazzetta, Focus Taiwan, May 22, 2023
24. The Middle East’s Shifting Political Landscape
Mohamed ELDoh, Geopolitical Monitor, May 22, 2023
25. New Chinese Ambassador Departs for the U.S. Under a Cloud of Uncertainty
Keith Zai, Wall Street Journal, May 23, 2023
COMMENT – Based on what I’ve heard from folks who have worked with Ambassador Xie Feng in his prior assignments, he is a stuffed shirt with little influence in Beijing. He has been sent to Washington to “deliver talking points”… engaging with him will be of little use.
Beijing has made up its mind about the United States, but will be more than happy to complicate policy decision-making in Washington by holding out the hope that negotiation can resolve the problems between the two countries even as Beijing pursues its own cold war strategy.
26. Flaring tensions over G7 and Micron show limits to US-China reset
Demetri Sevastopulo, Eleanor Olcott, and Joe Leahy, Financial Times, May 22, 2023
27. China’s Ambassador Warns Trudeau Off ‘Provocation’ as Diplomatic Ties Fray
Laura Dhillon Kane and Stephen Wicary, Bloomberg, May 19, 2023
China’s ambassador is urging Prime Minister Justin Trudeau to avoid further “provocation” as Canada weighs whether to launch a public inquiry into claims the Chinese government meddled in its elections.
Ambassador Cong Peiwu said Friday that Canada should consider returning to a more independent foreign policy rather than following the lead of the US, its neighbor and biggest trading partner.
COMMENT – Beijing has made it almost impossible for Trudeau’s government to treat the PRC the way Ambassador Cong Peiwu demands. His remarks suggest that the PRC Foreign Ministry either cannot, or will not, comprehend the damage their own policies and actions do to the interests of the PRC.
This is the same Ambassador that Ottawa summoned three weeks ago to express its deep objections to his personnel interfering with Canadian domestic politics and threatening the family of a Member of Parliament.
Human Rights and Religious Persecution
28. China Is Turning a Crushed Xinjiang Into a Tourist Trap
Eva Xiao, Foreign Policy, May 24, 2023
29. Hong Kong activist warns Vatican against 'faithwashing' China
Christopher White, National Catholic Reporter, May 22, 2023
30. Uyghurs face long wait to become U.S. citizens
Ruth Ingram, The China Project, May 18, 2023
Industrial Policies and Economic Espionage
31. China’s Port Power
Isaac Kardon and Wendy Leutert, Foreign Affairs, May 22, 2023
32. Rishi Sunak open to following US lead over curbs on Chinese investment
Jim Pickard, Financial Times, May 17, 2023
33. Testimony on Standing United Against the PRC’s Economic Aggression and Predatory Practices
Derek Scissors, American Enterprise Institute, May 18, 2023
34. Despite risks, EU continues to fund research with Chinese military-linked universities
David Matthews and Richard L. Hudson, Science Business, May 16, 2023
35. Venture Capitalists Face Pressure to Divest From China
Kate Clark, The Information, May 24, 2023
36. English universities warned not to over-rely on fees of students from China
Sally Weale and Ben Quinn, The Guardian, May 17, 2023
37. US China hawks to press UK minister for tougher line on Beijing
Dan Sabbagh, The Guardian, May 18, 2023
38. How to “Friendshore”
Elisabeth Braw, American Enterprise Institute, May 16, 2023
39. U.S., Taiwan finish first phase of trade initiative
Steven Overly, Politico, May 18, 2023
40. The power of control: How the EU can shape the new era of strategic export restrictions
Tobias Gehrke and Julian Ringhof, European Council on Foreign Relations, May 17, 2023
41. Chinese Firms That Threaten U.S. Security Can Get Investment from Federal Employees
Valerie Bauman and Didi Kirsten Tatlow, Newsweek, May 22, 2023
Millions of federal employees can invest in Chinese companies sanctioned by the U.S. government via its flagship retirement plan, even though these companies have been branded a danger to national security or are accused of profiting from forced labor or other human rights abuses, Newsweek has learned.
COMMENT – This is frustrating… the first company on Newsweek’s list is AECC (Aero-Engine Corporation of China). This is a state-owned defense company focused on building jet engines for the Chinese military.
42. DOE won’t award $200M to battery company criticized by GOP over China links
James Bikales and Kelsey Tamborrino, Politico, May 22, 2023
43. 1 in 5 Young Chinese Is Jobless, and Millions More Are About to Graduate
Claire Fu, New York Times, May 19, 2023
44. Global investment banks’ profits drop in China
Kaye Wiggins, Cheng Leng, and Thomas Hale, Financial Times, May 21, 2023
45. Big drop in German exports to China raises fears over EU’s economic powerhouse
Martin Arnold and Patricia Nilsson, Financial Times, May 23, 2023
46. Siemens chief vows to ‘defend and expand’ market share in China
Patricia Nilsson, Financial Times, May 23, 2023
47. Your Next Electric Vehicle Could Be Made in China
Jacky Wong, Wall Street Journal, May 24, 2023
Cyber & Information Technology
48. China Bars Micron Chips in Escalation of US Tech Clash
Bloomberg, May 21, 2023
49. US sanctions orgs behind North Korea’s ‘illicit’ IT worker army
Sergiu Gatlan, Bleeping Computer, May 23, 2023
While located in China and Russia, they're funneling the generated revenue to funds earned through these endeavors to fuel the Pyongyang regime's weapons programs.
COMMENT – Of course if Beijing and Moscow were interested in preventing these activities, they would have no problem doing it. It is similar to Beijing’s failure to take action against fentanyl exports.
For Beijing and Moscow, these activities harm the United States and other democracies so turning a blind-eye serves their interests.
50. US supers maintain grip on Top500 list as China seemingly hides its powers
Tobias Mann, The Register, May 22, 2023
51. China’s New Chip Ban on Micron Puts South Korea in a Delicate Spot
Jiyoung Sohn and Yang Jie, Wall Street Journal, May 22, 2023
52. Driver’s Licenses, Addresses, Photos: Inside How TikTok Shares User Data
Sapna Maheshwari and Ryan Mac, New York Times, May 24, 2023
53. South Korea signals its chipmakers can fill gap after China’s ban on Micron
Ryan McMorrow, Song Jung-a, Tim Bradshaw, and Qianer Liu, Financial Times, May 22, 2023
54. China fears Japan’s chipmaking curbs go further than US restrictions
Qianer Liu, Kana Inagaki, and Anna Gross, Financial Times, May 22, 2023
55. Chinese Data Restrictions Undermine US-China Stability
Paul Scharre, Center for a New American Security, May 16, 2023
56. Chinese Data Restrictions Undermine US-China Stability
Paul Scharre, Center for a New American Security, May 16, 2023
Military and Security Threats
57. KMT frames 2024 election as a choice between war and peace
Bethany Allen-Ebrahimian, Axios, May 23, 2023
The Beijing-friendly Kuomintang (KMT) is casting the election in stark terms: A vote for the KMT is a vote for peace, while a vote for the ruling Democratic Progressive Party (DPP) could lead to war with China.
The KMT views warm relations with Beijing as the best guarantee of Taiwan's security, while the DPP believes pursuing close ties with the U.S. and other democracies is the best way to protect Taiwan from China.
The Chinese government has cut off communications with the DPP, while the KMT is still able to engage in dialogue with leaders in China.
58. WAY BACK MACHINE – Sino-Russian Relations Embark on a New Journey
Li Hui, Foreign Affairs, Jan 31, 2020
The improved ties between China and Russia are marked under the banner of a "comprehensive strategic partnership." Li predicts that the two nations will continue to strengthen their economic ties, coordinate their diplomatic outreach to developing nations, and work together to advance multilateral institutions' governance reform in the years to come.
59. Microsoft warns that China hackers attacked U.S. infrastructure
Rohan Goswami, CNBC, May 24, 2023
60. Chinese Warships Circle Japan Ahead of G-7 Summit
Dzirhan Mahadzir, USNI News, May 15, 2023
61. China fears threaten to shatter G7 unity
Stuart Lau, Eli Stokols, and Phelim Kine, Politico, May 18, 2023
62. VIDEO - The real Top Gun: US military in heated stand-off with China
60 Minutes Australia, May 21, 2023
63. The China Hawk in Washington Rattling Corporate Boardrooms
James T. Areddy, Wall Street Journal, May 20, 2023
One Belt, One Road Strategy
64. As the U.S. Attends the G7, China Hosts a Summit of Its Own
Nicole Hong, New York Times, May 18, 2023
65. Xi Jinping courts Central Asia as Russian influence weakens
Joe Leahy, Financial Times, May 17, 2023
66. Xi Jinping pushes Central Asian defence co-operation plan
Joe Leahy, Financial Times, May 19, 2023
Opinion Pieces
67. I Met with David Johnston for his Report – here’s what happened
Erin O’Toole, Blue Skies, May 22, 2023
And why we can no longer accept the Prime Minister grading his own homework.
Let me get one thing out of the way: I was the Leader of the Conservative Party in the 2021 election and let me say very clearly that Justin Trudeau and the Liberal Party won that election. Political interference from the Chinese Communist Party was NOT the reason the Conservatives lost the election. I take responsibility for the loss.
But I have also served our country most of my adult life and had a secret clearance in the military and as a Minister of the Crown. I take national defence and security matters seriously and I am disappointed that in the last few years our government has not. While my time in elected office will come to an end soon, I feel that I have a duty to speak out on the issue of foreign interference in our elections. I have watched this issue get progressively worse during my decade in politics. I have also been stunned by the level of indifference from the Trudeau government in their response to this rising threat.
The 2021 election saw a considerable amount of foreign interference targeted towards the Conservative Party, several candidates and me personally. So it was baffling that the man commissioned to report on foreign interference in the 2021 election, Morris Rosenberg, conducted his analysis of the campaign without speaking to a single Conservative. The Rosenberg Report suggests that he worked with all parties, but this is simply false and it calls the entire report into question. Yet it is this report that the Liberals have used to justify their inaction on foreign interference. More on that below.
But first, my meeting with the Right Honourable David Johnston.
To set the scene, Mr. Johnston did not reach out to the Conservative Party, my office, or Pierre Poilievre’s office until the final week of his initial assignment. He waited until the very end to meet with the current and former leaders of the Party that had been the central target of the foreign interference he was charged with investigating. If I am to believe media reports, Johnston interviewed the Bloc Quebecois leader about events alleged to have taken place in British Columbia and Ontario – where Mr. Blanchet ran no candidates – before he finally got around to me or the present Conservative Leader. This makes no sense.
I was still waiting to receive a CSIS briefing on foreign interference that had been promised the week before when my office was called by the Johnston team and told we only had two days to make the meeting work. I asked to meet with him following my meeting with CSIS (which I am still waiting to receive) but was told that this was not possible. I confirmed with Pierre that his office received a request to meet on the same day that I was. He declined the meeting and somehow that information was leaked to the media within hours.
Since I only had a couple of days to prepare, I asked several key 2021 Conservative campaign officials for their input and gathered a considerable amount of social media and polling information. I was proud that my team was able to assemble a solid dossier with predictive modelling analysis as well as evidence from the ground and from WeChat. Given the pressed timeline, we were literally putting the binders together as Mr. Johnston arrived at my office with his counsel. With this in mind, you might understand how disappointed I was to learn halfway through my meeting that Johnston’s report was already undergoing French translation. I was flabbergasted and realized that nothing I was going to provide to the Special Rapporteur was going to impact his work.
I was left with the clear impression that my meeting was nothing more than a box checking exercise. I shared with them detailed examples of my concerns and how I believed that intelligence leaks on interference were the result of many years of inaction by the Prime Minister and senior officials and a steady erosion of trust with our security agencies charged with doing important work in our national interest. I was not really asked any questions or given any insights. It was a very strange meeting. When they made a comparison of nomination level interference by China to nomination campaigns by specific groups in Canada, I realized that sharing my on the ground experiences leading the team that had been targeted by China was a waste of time.
David Johnston is someone I have great admiration for. I consider him to be a great Canadian, which is why I am disappointed that he lent his incredible goodwill to a flawed exercise. I am also disappointed to say that this examination into election interference has been an unserious exercise. He was appointed to be the “Independent Special Rapporteur on Foreign Interference” but a quick review of his mandate shows that his examination of election interference largely consists of talking to the same political leaders and senior officials who have presided over the ineffective and trust eroding decisions that led to the leaks in the first place.
But as disappointing as this box-checking exercise was, even this was an improvement over the Rosenberg Report.
Have you spoken to Morris Rosenberg?
“Did you speak with Morris Rosenberg as part of his independent report on the 2021 election?” I began asking this question to all of my national campaign team officials following the earthshattering February 17th Globe and Mail front page and the Prime Minister’s reliance on the Rosenberg Report in the fallout from these headlines and the building foreign interference scandal. I had heard the name of Morris Rosenberg previously, but only in association with the Trudeau Foundation as I had been raising the issue of inappropriate donations to the Foundation since 2017.
My phone calls following the release of the Report confirmed that no senior Conservative Party officials were interviewed by Rosenberg about the 2021 election. He did not speak to me or my appointed delegate for the Security and Intelligence Threats to Election Task Force (SITE), nor did he speak to my national campaign manager, my Chief of Staff, or the Executive Director of the Conservative Party. I am not sure if Mr. Rosenberg spoke to anyone from the political party that was the principal target of foreign influence in the 2021 election. This alone makes the report one of questionable value.
The content of the report itself is even more concerning because Mr. Rosenberg suggests that he did speak to the Conservative Party. I use the word “suggests” because the report states that “[t]here was an opportunity to meet with representatives of major political parties” (emphasis mine) without stating who he spoke with from each party. Beyond this curious wording, the Rosenberg Report leaves the distinct impression that he spoke to everyone because he makes several all-party references throughout the report. There are multiple references to “interviews with party representatives” in both the summary findings and recommendations. In a few instances, the report actually draws conclusions from these “interviews” stating that “party representatives were pleased with the thoroughness of briefings…” But this is simply false when it comes to the Conservative Party.
None of the central actors from the 2021 Conservative campaign were interviewed for the Rosenberg Report. And the Report was defensively released by the government in the immediate aftermath of damning news reports. This suggests that the Report was used by the Trudeau government as a way to discount or discredit the reports in the Globe and Mail and Global News. Add to that the perceived conflict of interest related to Mr. Rosenberg’s leadership of the Trudeau Foundation, and the Rosenberg Report should not be viewed as credible in any way.
Security and Intelligence Threats to Election Task Force (SITE)
Had Mr. Rosenberg taken the time to consult with the political party targeted by Beijing in the 2021 election, he would have learned that the Conservative Party did have considerable concerns with the SITE process. Reports in recent months lead me to believe that the SITE could not do its job effectively because it was not briefed in the way it should have been ahead of the 2021 election.
If the Prime Minister and the National Security Advisor were not briefed on specific intelligence reports about the flow of money from China to candidates or interactions between Liberal MPs and Chinese diplomatic officials, it is reasonable to infer that the SITE was not briefed on these things either. This gap explains why the SITE was unconcerned about interference by Beijing at the start of the election. They simply were not briefed.
The Critical Election Incident Public Protocol and SITE process was created in 2019 to engage our state agencies and political parties in the mission of strengthening our electoral system. The SITE Panel consists of five senior civil servants leading a panel with the political parties and it makes determinations in accordance with the Protocol with respect to informing the public about interference as it is happening. It is charged with communicating “freely, transparently, and impartially with Canadians during an election in the event of an incident or incidents that threaten the integrity of a federal election”. These civil servants decide whether the public should be informed about a single incident of mischief, misinformation or interference, or a pattern of such conduct.
During the 2021 election, the Conservative Party informed the SITE Panel about the extremely intense foreign influence activities in Richmond, British Columbia and national misinformation campaign on the WeChat platform targeting Chinese Canadians. They did not issue any warning with respect to the veracity of WeChat campaigns or on the ground interference in certain ridings. In my view, this was a critical error. One million Canadians get the majority of their news from WeChat, a platform controlled in Beijing. It is my view that the SITE Panel did not believe any of these instances met the ‘threshold’ for public warning or communication because they had not received a complete picture of the intelligence regarding foreign interference ahead of the election. The SITE Panel had received a curated, partial view of the intelligence and, in my opinion, this is why they were skeptical of reports from the Conservative Party during and after the 2021 election.
I believe that the senior civil servants on the SITE Panel were honourable in their conduct, but they were failed by the system and were not fully briefed. This is similar to reports that have shown the Prime Minister and National Security Advisor were similarly not briefed. The Conservatives tried to be diligent participants in the SITE process. I took the Protocol very seriously and appointed one of my most accomplished and trusted advisors to be the Conservative Party delegate to the process and had my Chief of Staff provide a watching brief to keep me informed. As they informed the Procedure and House Affairs Committee last week, they were not satisfied with the performance of the Critical Election Incident Public Protocol and the SITE process during and following the 2021 election.
Mr. Rosenberg did not interview any of these Conservative Party campaign officials for his Report, nor has Mr. Johnston for his. It was clear by the limited timing for my interview that Mr. Johnston’s views have largely been formed by speaking to the very people that created the Critical Election Incident Public Protocol after the 2019 election and operated it during the 2021 election.
The same system that I believe failed to adequately brief and prepare the SITE Panel is now facilitating the review by David Johnston. Given the avalanche of intelligence leaks stemmed from a lack of confidence in the present system, it shows that the Terms of Reference for David Johnston were flawed and he conducted his review backward. He had his views reinforced before hearing perspectives that would allow him to challenge the status quo. In my view, Johnston was set up to fail because his review was facilitated by the system needing scrutiny. I say this not knowing whether he will recommend a national inquiry tomorrow or not. Politically, he cannot ignore the need for a national inquiry given the nature of the leaks and unanimity of the opposition parties, but practically, his terms of reference led him to conclude that everything is fine because the people running the system told him it is.
Conclusion
Canada needs to get serious when it comes to the issue of foreign interference. Canada needs an independent public inquiry on foreign interference in Canadian politics regardless of whether it is recommended by the Special Rapporteur or not. We must also do more than just a retrospective exercise. We must charge the inquiry with recommending how best to modernize and strengthen the resiliency of our democracy. Opposition parties and diaspora groups must be meaningfully engaged in the selection of the inquiry lead and in setting its terms of reference.
The Globe and Mail intelligence whistleblower who dropped the foreign interference bombshells months ago wrote a powerful essay on his/her motivations for breaking the law. It is worth reflecting upon those words as we start a national conversation on how to safeguard our democracy:
“Months passed, and then years. The threat grew in urgency; serious action remained unforthcoming. I endeavored, alone and with others, to raise concerns about this threat directly to those in a position to hold our top officials to account. Regrettably, those individuals were unable to do so.
In the time that passed, another federal election had come and gone, the threat of interference had grown, and it had become increasingly clear that no serious action was being considered. Worse still, evidence of senior public officials ignoring interference was beginning to mount.”
The Trudeau government cannot be allowed to continue to grade their own homework on this issue any further. The cavalcade of intelligence leaks shows that some of Canada’s leading intelligence officials have lost confidence in the Trudeau government and their response to the 2021 election has my confidence eroding as well. Now is the time to restore confidence in our democracy and its institutions. Now is the time to show Canadians and our allies that Canada is a serious country and that we will valiantly defend our democracy from the attacks upon it.
COMMENT – An absolutely fascinating piece by the former Conservative Party Leader, Erin O’Toole, on the controversy that continues to engulf the Trudeau administration in Canada and the role of the Chinese Communist Party in manipulating domestic politics inside Canada.
68. As G-7 Host, Japan Schools the World
Walter Russell Mead, Wall Street Journal, May 22, 2023
69. China is preparing for war – and the West is preparing to surrender
Con Coughlin, Telegraph, May 18, 2023
70. Why the WHO needs Taiwan
Joel Keep, The Interpreter, May 18, 2023
71. ‘Boomy’ talk about the Chinese economy is a charade
Ruchir Sharma, Financial Times, May 21, 2023
Wall Street forecasts are now even more optimistic than Beijing’s unreachable growth target.
Something is rotten in the Chinese economy, but don’t expect Wall Street analysts to tell you about it.
There has never been a bigger disconnect, in my experience, between some of the rosier investment bank views on China and the dim reality on the ground. Perhaps reluctant to back off their calls for a reopening boom this year, sellside economists keep sticking to their forecasts for growth in gross domestic product in 2023, and now expect it to come in well above 5 per cent. That’s even more optimistic than the official target, and wildly out of line with dismal news from Chinese companies.
Hopes for a reopening boom were based on the premise that, once released from lockdown, Chinese consumers would go on a spending spree, but company reports show no sign of one. If China’s economy were growing at 5 per cent, then based on historical trends corporate revenues should be growing faster than 8 per cent. Instead, revenues grew at 1.5 per cent in the first quarter.
Corporate revenues are now growing slower than officially stated GDP in 20 of China’s 28 sectors, including consumer favourites from autos to home appliances. Weak revenues are in turn depressing earnings for consumer goods companies, which normally track GDP growth quite closely, but shrank in the first quarter. Instead of a reopening rush, the MSCI China stock index has fallen 15 per cent from the January peak and consumer discretionary stocks are down 25 per cent since then.
If the analysts were right, and consumer demand was picking up in what one described as a “boomy” economy, imports would be strong. Imports fell 8 per cent in April. When retail sales and industrial output came in way below analysts’ estimates last week, one attributed this miss to “seasonal adjustment”, as if spring had come unexpectedly this year.
China’s credit growth is weakening too, up by just Rmb720bn ($103bn) in April, half as fast as forecasters expected. The debt service burden of Chinese consumers has doubled in the past decade to 30 per cent of disposable income — a level three times higher than in the US. Many Chinese youth need a job before they can join a spending spree: urban youth unemployment is rising and last month topped 20 per cent.
These facts point to the source of the rot. Since 2008, China’s economic model has been based on government stimulus and rising debt, much of it pouring into the property markets, which became the main driver of growth. With debts so high, the government was much more restrained in its stimulus spending during the pandemic.
By the start of this year, the Chinese had accumulated excess savings during the pandemic equal to 3 per cent of GDP. The comparable figure in the US was 10 per cent of GDP. While the US got a big reopening boost from stimulus, China did not get one this time.
A growth model dependent on stimulus and debt was always going to be unsustainable, and now it has run out of steam. Much of the stimulus over the past decade had flowed through local governments in China, which used their own “financing vehicles” to borrow and buy real estate, propping up the property markets. Those vehicles are fast running out of cash to finance their debts, which is curbing their investment in the property market and industry as well. Industrial sectors are slowing faster than the consumer-related businesses at the centre of the reopening story.
Though Beijing still aims for growth of 5 per cent, its potential has fallen to half that. Potential for GDP growth is a function of population and productivity growth: China’s negative population growth means fewer workers are entering the labour force, and heavy debts are slowing output per worker.
China’s government has long been suspected of massaging its GDP numbers to hit its growth targets. But cheerleading from Wall Street seems to be reaching a crescendo now, as analysts who called for a reopening boom find it more opportune to stay the course — even if this requires highly selective use of official data — than to reverse themselves.
While analysts may have little to lose from rosy forecasts, the rest of us do. “Boomy” chatter has contributed to investors’ loss of hundreds of billions of dollars in China in just the past four months. Further, global growth may prove weaker than expected in 2023, since the hope is that a US downturn will be countered by the China reopening boom, which may never come. It is time to expose this charade before the fallout gets worse.
72. 4 Ways U.S. Support for Ukraine Helps Defend Taiwan
Gabriel Scheinmann, Foreign Policy, May 24, 2023
73. Not your grandfather’s cold war
Rabah Arezki, Al-Jazeera, May 23, 2023
74. To invest or cut loose: western carmakers’ China conundrum
Peter Campbell, Financial Times, May 18, 2023
When a market turns against you, how should businesses respond? This is the question being pondered with some urgency across the automotive boardrooms of the world.
The market is China, the world’s largest auto market. It was once the breadbasket of the industry, flush with a hugely profitable pool of newly-wealthy consumers, many of whom were eager to flaunt their status with a shiny Mercedes-Benz or Buick. The entry price for overseas carmakers — a technology-sharing joint venture with a local manufacturer — seemed worth every yuan.
But the tide has turned. The build quality of the Chinese brands have caught up with global nameplates, no doubt aided by the experience of running joint factories. And inside the vehicles, the technology — the key to unlocking the hearts of Chinese consumers — is now superior.
Whether the touch screen systems, the connectivity, or the batteries themselves, many of the Chinese-made models are now considered comparable, if not better.
Already, the difference is being felt at the showroom. While Volkswagen once accounted for almost one in five engine vehicles sold in China, its market share in electric vehicles is less than 5 per cent.
Others, from Nissan to General Motors, have faced similar drop-off rates. Nissan’s chief executive Makoto Uchida admitted last week that local brands were moving “much faster than we expected before”.
The question is how to respond. VW, a company so wedded to China it has a board member dedicated to the market, is doubling down. The group flew a host of executives out to the Shanghai auto show last month, where it unveiled a pledge to invest €15bn by 2024.
Ford this week laid out a different road. Chief executive Jim Farley told the Financial Times it would pursue a “lower investment, more focused” approach, paring back to commercial vehicles and keeping some other operations as a “listening post” on battery developments and consumer trends. The winners in electric vehicles are not, Farley warned, the western (or Japanese) carmakers, but new, local brands.
The move is a strategic one, made in the knowledge that carmakers have limited resources and a growing number of investment mouths to feed, from engines and batteries to software. Pouring money into a market that has decided it does not want your vehicles is imprudent.
75. Principles and Policies for Competition
Michael Mazza, American Enterprise Institute, May 18, 2023