Matt Turpin's China Articles - November 6, 2022
Friends,
The end of the 20th Party Congress has generated some excellent analysis as China watchers from around the globe interact with one another and share ideas.
One such China watcher is Drew Thompson, a long-time friend and colleague who is a Visiting Senior Research Fellow at the National University of Singapore’s Lee Kuan Yew School of Public Policy. Shortly after the end of the Party Congress, Drew posted a few points to LinkedIn that I think are worth highlighting.
First, we should understand what the CCP is trying to achieve and realistic about whether the Party believes they have any reason to compromise:
China’s diplomacy will be increasingly assertive, with officials focused on achieving CPC political objectives rather than compromises to improve relations or accommodate the interests of foreign partners. Unless Washington decides to capitulate and suborn US interests to China’s, the overall relationship will deteriorate further.
This has important implications for the private sector and investors:
It is clear from the outcome of the 20th Party Congress that national security and the Party’s political security will take precedence over economic growth. The private sector and foreign investors are a means to an end and no amount of pandering to the Communist Party will make foreign entities a trusted partner, free from suspicion and the fear that foreign forces seek to subvert the party.
Drew ends with some advice for defense leaders as they seek to engage with their counterparts in the PRC… this advice isn’t new, but it has been consistently ignored. As General Zhang Youxia becomes first Vice Chairman of the Central Military Commission, defense leaders must shift from engaging with the PRC Defense Minister (the next MinDef is potentially General Li Shangfu, who was sanctioned by the U.S. Government in September 2018 under CAATSA (Countering America’s Adversaries Through Sanctions Act)) and focus on the leadership of the Central Military Commission:
The PRC Defense Minister has no power, commands no troops, and is primarily a senior external affairs officer. US officials often focus on their counterpart, which is a flawed, egotistical approach, rather than crafting engagement strategies around the Party committees that hold decision-making power.
One last note, for those of you looking for more detail on the implications of the U.S. export controls on chips, listen to #37, the latest episode of the Red Line podcast.
Thanks for reading!
Matt
MUST READ
1. China’s Nuclear Modernization and Expansion: Ways Beijing Could Adapt its Nuclear Policy
Jennifer Bradley, National Institute for Public Policy, July 2022
For decades, the PRC has relyed on a nuclear strategy of minimum deterrence with a declaratory ‘No First Use’ and ‘Sole Purpose’ policy. Over the last few years, the PRC has embarked on an expansion of its nuclear force while refusing to engage in strategic stability or arms control negotiations. Jennifer Bradley writes on what these changes could mean for the PRC’s nuclear strategy as strategic rivalry with the United States intensifies.
2. What Xi Jinping’s rhetoric reveals about China’s global aims
Bruno Macaes, New Statesman, November 2, 2022
Beijing’s call for “fighters” in leadership roles signals a battle with the West for dominance in tech.
3. Restoring the Sources of Techno-Economic Advantage
Liza Tobin, David Lin, and Warren Wilson, SCSP, November 1, 2022
The SCSP Economy IPR argues that to remain competitive, the United States needs a techno-industrial strategy (TIS) – a public-private initiative to shore up systemic factors spanning key technology sectors. The TIS should aim to boost technology diffusion across the market – generating additional productivity growth and prosperity for all Americans – and fill key economic and national security gaps.
To strengthen democratic advantage, the SCSP’s Economy IPR recommends executing the TIS in concert with allies and partners and build upon the work of the current and recent administrations. The strategy should have five pillars:
Production: Secure access to critical technology inputs;
Pipes: Invest in America’s digital infrastructure;
People: Strengthen America’s workforce;
Project: Extend U.S. financial leadership into the digital age; and
Pushback: Counter Beijing’s techno-economic malpractice.
4. I spent 10 days in a secret Chinese Covid detention centre
Thomas Hale, Financial Times, November 2, 2022
What I learnt when I was ‘taken away’ to an island quarantine facility in the middle of the night.
The call came from a number I did not recognise.
“You need to quarantine,” a man on the other end of the line said in Mandarin. He was calling from the Shanghai Municipal Center for Disease Control and Prevention. “I’ll come and get you in about four or five hours.”
I dashed out of my hotel to stock up on crucial supplies. Based on advice from colleagues and my previous experience of quarantine in China, these included: tinned tuna, tea, biscuits, three types of vitamin, four varieties of Haribo sweets, Tupperware, a yoga mat, a towel, cleaning equipment, an extension cable, a large number of books, eye drops, a tray, a mug and a coaster with a painting of the countryside surrounding Bolton Abbey in North Yorkshire.
Four to five hours later, I received another phone call. This time it was a woman from the hotel’s staff. “You are a close contact,” she said. “You can’t go outside.”
“Am I the only close contact in the hotel?”
I was, she told me and added “the hotel is closed”, meaning locked down. I went to the door of my room and opened it. A member of staff was standing there. We both jumped.
“You can’t go outside,” she said, mid-jump.
“Will the staff be able to leave?” I asked apologetically.
“It’s OK. I’ve just started my shift,” she replied, smiling.
The men in hazmat suits arrived a little later. First, they administered a PCR test with the same rushed weariness of the man who had called me earlier. Then, one escorted me down the deserted hallway. We passed the lifts, which were blocked off and guarded, and took the staff elevator. Outside, the entrance was also cordoned off. A hotel with hundreds of rooms had been frozen for me alone. I was being “taken away”, as this process is commonly referred to in China these days.
5. VIDEO – Overreach: How China Derailed its Peaceful Rise
Susan Shirk, Kevin Rudd, Orville Schell, Asia Society, November 1, 2022
Susan Shirk, former U.S. deputy assistant secretary of state and founding chair of the 21st Century China Center at UC San Diego, and former Australian Prime Minister Kevin Rudd discuss the implications of the 20th Party Congress and the Chinese Communist Party’s turn away from liberalization with Orville Schell.
AUTHORITARIANISM
6. In Xi’s China, even internal reports fall prey to censorship
Associated Press, November 1, 2022
When the coronavirus was first detected in Wuhan in late 2019, reporter Liao Jun of China’s official Xinhua News Agency told conflicting stories to two very different audiences.
Liao’s news dispatches assured readers the disease didn’t spread from person to person. But in a separate confidential report to senior officials, Liao struck a different tone, alerting Beijing that a mysterious, dangerous disease had surfaced.
Her reports to officials were part of a powerful internal reporting system long used by the ruling Communist Party to learn about issues considered too sensitive for the public to know. Chinese journalists and researchers file secret bulletins to top officials, ensuring they get the information needed to govern, even when it’s censored.
7. China’s closed-loop crisis: ‘I’m human, not a machine’
Financial Times, November 2, 2022
China’s “closed-loop” system was designed to keep the world’s factory running during coronavirus outbreaks.
But the system, used at factories making Apple devices and Tesla cars, is fast becoming unsustainable as supply chains are choked and foreign companies risk reputational damage from human rights violations against marginalised workers.
8. CBC News to shut China office after unanswered visa request for journalists
Reuters, November 2, 2022
The Canadian Broadcasting Corporation said on Wednesday it was shutting its news bureau in Beijing after waiting two years in vain for a China work permit for its journalists.
The publicly owned news outlet had numerous exchanges with Chinese officials in Canada over the past two years about visas but without a resolution, CBC News Editor-in-Chief Brodie Fenlon said in a blog post.
9. Xi Jinping is suffering from 'bad emperor syndrome'
Sophia Yan, The Telegraph, November 1, 2022
Inside the rise of the Chinese president's cult of personality.
10. Landmark decision could herald end to Europe’s extraditions to China
Safeguard Defenders, November 3, 2022
Just a few weeks ago, on 6 October, the European Court of Human Rights (ECtHR) unanimously found that the extradition of a Taiwanese national to China, which Poland’s courts had cleared earlier, would place him at significant risk of ill-treatment and torture.
This momentous decision will most likely mean European countries will find it near impossible to extradite suspects to China again.
It is hard to overstate how influential this decision could be, and how it, in one swoop, has done more to protect basic rights from being undermined by China, as enshrined in the European Convention on Human Rights (ECHR), than most or all European government actions so far.
The ECHR is a legally binding international judicial instrument and goes further than similar international treatises. It ties 46 European countries to one legally-binding convention, and, notably, does only apply to EU states. The only European countries not bound by it are Belarus and Russia (the latter which was expelled in 2022 after refusing to follow a decision by the court).
11. Germany’s Baerbock warns Scholz ahead of his China trip
Paola Tamma, Politico, November 1, 2022
Olaf Scholz is traveling to China this week, under pressure to take a tougher line with Xi Jinping.
German Foreign Minister Annalena Baerbock is demanding a more assertive “new China strategy,” piling pressure on Chancellor Olaf Scholz ahead of his visit to Beijing this week.
“The federal chancellor has decided the time of his trip,” Baerbock, from the Greens, said today during a visit to Tashkent, Uzbekistan. “Now it is crucial to make clear in China the messages that we laid down together in the coalition agreement,” she said, according to Der Spiegel newspaper.
“As is well known, we clearly stated in the coalition agreement that China is our partner on global issues, that we cannot decouple in a globalized world, but that China is also a competitor and increasingly a systemic rival,” said Baerbock, adding: “And that we will base our China policy on this strategic understanding and also align our cooperation with other regions in the world.”
12. Financiers’ pronouncements on China do not match their actions
The Economist, November 3, 2022
The bulls are less bullish than they appear.
13. iPhone Factory Worker Walked 25 Miles to Escape Covid Lockdown in China
Linda Lew, Bloomberg, October 31, 2022
14. Shanghai Disney briefly locks in visitors for coronavirus testing
Hannah Sampson, Washington Post, October 31, 2022
ENVIRONMENTAL HARMS
15. China Is Burning More Coal, a Growing Climate Challenge
New York Times, November 3, 2022
16. China fishing fleet defied U.S. in standoff on the high seas
Joshua Goodman, Associated Press, November 1, 2022
FOREIGN INTERFERENCE AND COERCION
17. How China’s state security controls its narrative in the West
Lizzi C. Lee and Alex Joske, The China Project, October 31, 2022
Author Alex Joske talks about the great lengths to which the CCP’s long-reaching security arm manipulates the West’s attitudes about China.
18. Ottawa orders Chinese divestment in three Canadian critical minerals companies
Niall McGee, The Globe and Mail, November 3, 2022
Ottawa is ordering Chinese state-owned companies to immediately divest their interests in three Canadian critical minerals companies, after the federal government faced an avalanche of criticism earlier in the year for allowing too much investment from the Asian superpower into the domestic mining sector.
The government’s order marks the second time in a week it has taken a more aggressive stand against China, after allowing it to acquire a Canadian critical minerals company earlier this year amid little scrutiny.
Mining is one of the most capital-intensive industries on the planet, and historically it made sense for Canadian miners to turn to China as a source of funding, but in recent years China has emerged as a clear national security threat. In its announcement on Wednesday, the federal government said it made its decision after consulting the security and intelligence community.
19. Did Germany Learn from Its Russia Trouble? The Test May Come in China.
Katrin Bennhold and Erika Solomon, New York Times, October 30, 2022
Germany understood the trap of strategic vulnerability that it had laid for itself in relying so heavily on Russian gas only after Moscow invaded Ukraine and turned off the spigot. But whether that lesson has been fully absorbed may be tested elsewhere: China.
As Chancellor Olaf Scholz prepares for his first visit to Beijing on Thursday, a planeload of executives in tow, Germany’s intelligence chiefs and allies are warning him against pursuing business as usual with a China that is saber-rattling in the Taiwan Strait. Were tensions to escalate, Europe’s most powerful democracy could be exposed to economic coercion.
20. Chinese police stations in the Netherlands ordered to close immediately
NL Times, November 1, 2022
21. Hong Kong exiles in UK unnerved by ‘weak’ response to beating of protester
Geneva Abdul, The Guardian, November 3, 2022
Stephen Dziedzic and Bang Xiao, ABC News, November 2, 2022
23. New taskforce set up to tackle threats to UK democracy
David Hughes, The Independent, November 1, 2022
24. Tugendhat confirms UK will ban Chinese Confucius Institutes at universities
Stefan Boscia, City AM, November 1, 2022
25. How China continues to lose friends in Central and Eastern Europe
Nikkei Asia, November 2, 2022
HUMAN RIGHTS AND RELIGIOUS PERSECUTION
26. The Strange Death of the Uyghur Internet
Masha Borak, Wired, November 2, 2022
China’s Muslim minority used to have its own budding cluster of websites, forums, and social media. Now that’s been erased.
27. 50 countries condemn China’s action against Uyghurs
Deutsche Welle, November 1, 2022
The 50 countries expressed concern over the human rights situation in China’s Xinjiang region and urged Beijing to act on the recommendations of a UN report alleging human rights violations against Uyghurs.
28. Newcastle ends twinning with Chinese city amid torture claims
BBC, November 3, 2022
Newcastle is to cut ties with a Chinese city over claims the country's regime has abused Uyghur people.
City councillors have agreed to end a long-standing twinning arrangement with Taiyuan, capital of Shanxi Province.
China has been accused of detaining a million Uyghur Muslims in so-called "re-education" camps.
Lib Dem Wendy Taylor, who proposed the motion, said she felt Newcastle could not have a relationship with China amid the claims of "horrific abuses".
The motion to end the sister city agreement was passed unanimously on Wednesday.
It said China's Communist regime's actions "repeatedly demonstrate that it is not concerned with upholding the universal values we safeguard and adhering to international rules of conduct".
29. Uyghur doctor jailed for treating a ‘terrorist’ dies after release from prison
Shohret Hoshur, Radio Free Asia, November 3, 2022
A Uyghur doctor sentenced to eight years in prison in China’s northwestern Xinjiang region for removing a bullet from the foot of a suspected criminal, died shortly after being released from prison in September, local police and people with knowledge of the situation said.
Tudahun Nurehmet, also known by the surname Mahmud, was the former chief of the Achatagh Hospital in Uchturpan (in Chinese, Wushi) county, Aksu (Akesu) prefecture.
In 2013, he was sentenced for treating a person Chinese authorities identified as a terrorist who was wounded during a clash in Aksu's Aykol (Ayikule) township in August of that year.
On that day, a brawl between Muslim Uyghurs and police broke out during a security check of a mosque on the eve of the Eid al-Fitr Islamic festival marks the end of the month-long dawn-to-sunset fasting of Ramadan.
During the altercation, police fired at unarmed people, killing three Uyghurs and wounding 20 others, RFA reported. Those who were wounded either were taken to the hospital or left the area and sought treatment on their own, according to a policeman who was at the scene.
It was at one of these hospitals that Tudahun apparently treated one of the wounded, fulfilling his role as a doctor – which later got him arrested and sentenced to eight years in prison because the patient was identified as a terrorist.
30. Ukraine Turns on China at U.N. Over Human Rights Concerns in Xinjiang
John Feng, Newsweek, November 1, 2022
31. Forgotten Uyghurs locked up in Thailand face 'hell on earth'
France 24, October 28, 2022
INDUSTRIAL POLICIES AND ECONOMIC ESPIONAGE
32. CCP Influence over China’s Corporate Governance
Lauren Yu-Hsin Lin and Curtis J. Milhaupt, Stanford Center on China’s Economy and Institutions, November 1, 2022
33. U.S. pushes Japan and other allies to join China chip curbs
Rintaro Tobita, Nikkei Asia, November 1, 2022
34. DuPont-Rogers Merger Failure Puts Focus on Deals Needing China’s Approval
Yiqin Shen, Bloomberg, November 2, 2022
Tower Semiconductor, Silicon Motion in focus amid arb jitters Many traders had expected companies to extend deal deadline.
Takeover targets awaiting approval from Chinese regulators slumped after DuPont de Nemours Inc. scuttled its planned acquisition of Rogers Corp. due to a drawn-out antitrust review.
Tower Semiconductor Ltd. and Silicon Motion Technology Corp., both of which have agreed to be bought out, saw their deal spreads widen Wednesday as traders dropped the stocks. Shares of Israeli chipmaker Tower fell as much as 4.7%, the most since January, sinking 23% below Intel Corp.’s offer price. Silicon Motion, which agreed to be bought by MaxLinear Inc., slid as much as 4.2% before reversing amid earnings results.
35. China’s Venture Funding Tumbles Precipitously After Crackdown
Jane Zhang, Bloomberg, November 2, 2022
36. German Companies Ignore Major Risks in China
Simon Hage, Martin Hesse, Michael Sauga, Benedikt Müller-Arnold und Christoph Giesen, Der Spiegel, November 1, 2022
37. AUDIO – The Geopolitics of Microchips and Semiconductors
Tim Cross, Bob Guterma, Jordan Scheider, and Chris Miller, The Red Line Podcast, October 30, 2022
COMMENT: While I think the moderator does a good job, I think he overlooks an important aspect of the comparison he tried to make with the Reagan Administration’s export controls on advanced oil drilling equipment to the Soviet Union in 1982… it may be true that the USSR was able to eventually design around those controls, it is also true that the USSR collapsed within a decade.
CYBER AND INFORMATION TECHNOLOGY
38. TikTok tells European users its staff in China get access to their data
Dan Milmo, The Guardian, November 2, 2022
MILITARY AND SECURITY THREATS
39. U.S. says China resisting nuclear talks after Xi vow to boost deterrent
Reuters, November 1, 2022
40. Personnel of the People’s Liberation Army
U.S.-China Economic and Security Review Commission, November 3, 2022
Key Findings:
Xi Jinping has had continued doubts about personnel competence and loyalty since becoming the Chairman of the Central Military Commission in 2012, and thus has focused on both force modernization and Party loyalty. Despite this emphasis, many commanders are still judged as incapable of properly assessing situations, making operational decisions, deploying forces, or leading forces in a modern, joint, informationized war.
The PLA remains concerned about improving political officers’ operational knowledge, seeking to make political officers an asset rather than a liability in the command tent. Political officers and Party Committees within the PLA are emphasized as the key conduit for ensuring Party control and often play a key role in unit affairs, including in personnel issues and day-to-day training and operations. They often struggle to play a productive role in the latter, however.
The PLA has emphasized recruitment of college-educated and more technically proficient personnel at all levels since 2009. It has succeeded in recruiting more educated personnel, though it continues to face serious challenges with retention and proper utilization of talent.
The PLA has also worked to improve the professionalism of its non-commissioned officer (NCO) corps through a range of new initiatives, with the goal of increasing NCO responsibilities and allowing NCOs to take over billets previously held by junior officers.
Significant changes have been made to improve training and standardize bases and academic institutions, while basic training times have nearly doubled. Most significantly, in 2020 the PLA shifted from a single conscription cycle per year to two cycles per year, with the aim of eliminating uneven levels of unit combat-readiness at certain times of the year.
While progress has been uneven, the sum of these initiatives is likely to produce a PLA that is more educated, professionalized, and technically proficient in the coming years.
ONE BELT, ONE ROAD STRATEGY
41. China and Pakistan fast-track economic ties with more railways, ports, and yuan
Nadya Yeh, The China Project, November 2, 2022
The leaders of “iron brothers” met in Beijing and assured each of other of their mutual support, financial and moral.
42. What Xi’s Third Term Means for Latin America
Catherine Osborn, Foreign Policy, October 28, 2022
OPINION PIECES
43. ‘Spies and Lies’ Review: The Myth of the ‘Peaceful Rise’
Dan Blumenthal, Wall Street Journal, November 2, 2022
An unprecedented history and analysis of Beijing’s campaign to soften Western resistance to its rapid global ascendance.
Today Xi Jinping, the CCP general-secretary, is employing the same trio of magic weapons in his bid for geopolitical dominance. He has accelerated the modernization of the party’s armed wing, the People’s Liberation Army; strengthened the party’s role in China’s political and economic life; and reinvigorated the united-front system to manipulate friends and keep enemies close. This last pillar of Chinese strategy, political warfare, is by its nature covert, opaque and hard for outsiders to understand. In “Spies and Lies: How China’s Covert Operations Fooled the World,” the Australian China expert Alex Joske elucidates, more completely than ever before, the workings of the Ministry of State Security (MSS), China’s premier intelligence organization, which, since its founding in 1983, has combined traditional intelligence collection with political-influence campaigns. Mr. Joske’s incisive history and analysis provides a much-needed look inside Beijing’s complex, often ruthlessly effective efforts to shape and soften Western responses to its rapid global ascendance.
Washington is now facing a reckoning over its decades of complacency about China. How did Beijing manage to convince so many powerful American politicians, pundits and academics that its rise would be peaceful? In the late 20th century, the United States had legitimate reasons to view its China engagement strategy with optimism as Beijing experimented with private businesses and abandoned its Maoist excesses. But by the early aughts China was dramatically building up its military, pillaging U.S. technology, hollowing out America’s industrial base, forcefully expanding its maritime territory and cracking down on domestic dissenters. Yet Washington persisted in its argument that China would gradually liberalize and ultimately become a responsible geopolitical partner.
44. We don’t want to decouple from China, but can’t be overreliant
German Chancellor Olaf Scholz, Politico, November 3, 2022
45. Countries Wary of China Need Patriotic Investment Plans
Elisabeth Braw, Foreign Policy, November 1, 2022
The Chinese shipping giant COSCO’s stake in Hamburg’s port raises concerns.
His own government is against it, but German Chancellor Olaf Scholz has granted China’s state-owned shipping giant COSCO permission to buy a significant stake in the Port of Hamburg. The six government ministries involved in the consultation regarding the stake all registered their objections in internal government correspondence, and Vice Chancellor Robert Habeck and Foreign Minister Annalena Baerbock had both voiced their opposition to it in public, but the port argues that the Chinese investment is merely a business matter. That’s the dilemma. Just like other companies, the Port of Hamburg is not obliged to concern itself with national security. That doesn’t mean Western governments should wave through investments by hostile regimes—but it does mean that they should find alternative investors.
“It was the right decision,” Scholz—a former mayor of Hamburg—called his decision to let COSCO buy almost 25 percent of the Port of Hamburg’s container terminal Tollerort. Tollerort has the capacity for 2 million TEU (containers, in layman speak) per year. That’s about one-quarter of the total handled by the Port of Hamburg, Europe’s third-largest port, after the ports of Rotterdam in the Netherlands and Antwerp in Belgium. Tollerort can also process container ships carrying up to 23,000 TEU—some of the largest container vessels traversing the world’s oceans today. That’s an enormous competitive advantage for the Port of Hamburg in European ports’ constant tussle for more cargo traffic. COSCO had promised the Port of Hamburg to make Hamburg its “preferred hub”—a considerable boon given that the Chinese behemoth operates 11 percent of the world’s shipping fleet.
Indeed, the CEO of Port of Hamburg Marketing told Chinese state media outlet Xinhua in September that the COSCO investment “was a pure business decision, which is very usual not only in Germany but also in other European countries.” Speaking at a news conference, Scholz said that countries should avoid damaging influence on their infrastructure, but said at the end of October that COSCO’s stake is not an example of such influence, just before a high-profile trip to China that will, it is hoped, intensify German-Chinese business links. Despite the ministry opposition, Scholz pushed the deal through anyway, his only concession being that COSCO will now buy a 24.9 percent stake, not the 35 percent originally foreseen.
The deal will undoubtedly stand the chancellor in good stead when he leaves for China on Nov. 3, accompanied by a business delegation. Just before Scholz’s departure for China, it has also emerged that the German government plans to greenlight the acquisition of German chipmaker Elmos by Silex, a Swedish microchip firm fully owned by China. Silex itself was acquired, along with two other Swedish cutting-edge microchip firms, in 2015 by firms that subsequently turned out to be linked to China’s People’s Liberation Army. At the time, Sweden had virtually no foreign direct investment (FDI) screening, and the acquisitions meant the companies in reality were lost to Sweden.
Daniel Kochis, Real Clear Politics, November 2, 2022
On Nov. 3-4, German Chancellor Olaf Scholz will lead a delegation of German business leaders to Beijing, becoming the first G7 leader to visit China since the start of the pandemic. His timing is inopportune. The visit comes amid a firestorm of controversy ignited by the German Cabinet’s approval of Chinese state-owned COSCO’s purchase of a 24.9% stake in a terminal in Hamburg, Germany’s largest port.
The decision was pushed through by Scholz’s Social Democratic Party (SPD) over the objections of his coalition partners. The foreign ministry, led by the Greens Annalena Baerbock, is said to be apoplectic, as are the government ministries led by the Free Democratic Party (FDP). The Greens and FDP reportedly drafted a note saying the decision, "disproportionately expands China's strategic influence on German and European transport infrastructure as well as Germany's dependence on China."
47. A Chinese invasion of Taiwan is coming
Jason Morgan, The Spectator, October 30, 2022
The recent CCP congress and other signs show Xi is preparing for war.