Matt Turpin's China Articles - November 27, 2022
Friends,
For those of you who observe Thanksgiving, I hope you got the chance to spend time with family and friends. I spent the week in California with family and really enjoyed seeing everyone.
This week’s issue highlights the changing landscape across the world on how the PRC is viewed, its place in the global economy, and what the expanding rivalry between the Chinese Communist Party and the world’s democracies will result in.
On the one hand, we see individuals like Mike Bloomberg apologizing that a speaker at his New Economy Forum criticized the Chinese Communist Party for being a brutal dictatorship and Josep Borrell, the EU’s foreign policy chief, arguing with European Parliamentarians about not coordinating with the United States on a technology competition with Beijing.
And on the other hand, we see investors like Tim Draper pulling out of the PRC due to its authoritarianism and Chancellor Scholz expressing “surprise” that German companies are overly dependent on the PRC.
I’m not sure where all this goes, but I’m fairly certain it won’t be a return to the heady days of optimism over Chinese ‘reform and opening.’ As companies and countries adjust to an international environment defined by rivalry, those who seek to straddle will find it increasingly difficult.
Thanks for reading!
Matt
MUST READ
1. Tim Draper Touts Decision to Pull Out of China
Joyu Wang, Wall Street Journal, November 18, 2022
Silicon Valley investor is looking toward Taiwan, while dismissing China’s Xi Jinping as a ‘weak leader’ for tightening controls on business.
In an interview in Taiwan, where he is pursuing new investments, Mr. Draper slammed China’s Xi Jinping, whom he called a “weak leader,” saying the country is going backward after more than four decades of former leader Deng Xiaoping’s “reform and opening up” policy.
“It’s not a place where you invest money to get a return,” he said. “I see China as a place where the government is trying to control everybody.”
2. EU will not follow US’ China policy, top diplomat says in fiery debate with lawmakers
Finbarr Bermingham, South China Morning Post, November 22, 2022
Josep Borrell distanced bloc from Washington’s broad push to ban export of high-end chips seen as attempt to cripple Beijing’s hi-tech sector.
But some lawmakers voiced disappointment in the EU’s perceived softening approach, with one noting ‘low ebb’ in bilateral relations.
3. If China Invaded Taiwan, What Would Europe Do?
Hal Brands, Bloomberg, November 16, 2022
The UK and other allies would have valuable supporting roles in a Pacific crisis, first by taking responsibility for their own security.
While European nations deal with the economic fallout from a war in Ukraine, Washington is warning them to brace for the economic catastrophe that could result from a war over Taiwan. US diplomats are reportedly telling their transatlantic counterparts that the global economy would suffer a hit of $2.5 trillion per year from a Chinese blockade of the island, while a full-on invasion would cause immensely more commercial carnage.
4. Inside the Trilateral Commission: Power elites grapple with China's rise
Ken Moriyasu, Mariko Kodaki, and Shigesaburo Okumura, Nikkei Asia, November 23, 2022
Enigmatic group linking Asia, the U.S. and Europe opens up on eve of 50th anniversary.
5. How Washington chased Huawei out of Europe
Laurens Cerulus and Sarah Wheaton, Politico, November 23, 2022
The Chinese tech giant is scaling back in Brussels, Paris and London and pivoting to its domestic market.
COMMENT – An interesting retelling of the last five years. The reporters got a few facts wrong – the sanctions against Huawei were imposed a year before the pandemic, not May 2020 – and they left out the role that Europeans played in chasing Huawei out of Europe, like the Czechs in hosting the ‘Prague Proposals’ for telecom infrastructure security in May 2019 before U.S. sanctions.
Overall their piece is fairly accurate: Huawei’s position is significantly weaker today than it was five years ago. Just goes to show that there is nothing inevitable about the success of PRC companies or Beijing’s rise to dominance.
AUTHORITARIANISM
6. ‘We’ve totally confused residents’: China’s Covid policy flip-flop stokes frustration
Ryan McMorrow, Financial Times, November 22, 2022
City of Shijiazhuang has shut down, opened up and closed again in 9 days as country battles near record outbreak.
Days after the northern Chinese city of Shijiazhuang reopened from a Covid-19 lockdown, barista Lu Mengyuan donned her apron, applied her eye glitter and was again whipping up coffee and hot Chinese crepes for the trickle of residents venturing slowly from their homes.
Like many others, Lu believed the city’s abrupt reopening in the middle of a Covid wave and its vow to do away with mass testing marked a turning point. “We’re the first in China, an experiment,” she said last Wednesday. “We will not lock back up.”
This week, however, Lu was again isolated and her silver Airstream coffee truck closed, as authorities reacted to a near record number of new Covid cases spreading across the country by locking down again. “I really have egg on my face,” she said.
7. Angry protests at giant iPhone factory in Zhengzhou
BBC, November 23, 2022
8. Tim Draper turns attention from China to Taiwan
Ben Blanchard, Taipei Times, November 16, 2022
China is no longer a place to invest and has left “the free market” under Chinese President Xi Jinping, said US venture capitalist Tim Draper, an early investor in Tesla Inc and Space Exploration Technologies Corp (SpaceX).
Draper was also an early and prominent investor in Chinese search engine Baidu Inc, but he is now turning his attention to Taiwan, home to companies such as Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker.
“I used to be an investor in China,” he said late on Monday after arriving in Taipei.
9. The contradictions holding Germany back
Helmut K. Anheier, ASPI The Strategist, November 23, 2022
Just days after Russia’s invasion of Ukraine, German Chancellor Olaf Scholz declared that Germany’s approach to defence and foreign policy would undergo a Zeitenwende (epochal change). And in various commentaries and speeches since then, he has reiterated his commitment to deeper European security integration and economic coordination. Then, in September, German Foreign Minister Annalena Baerbock announced that the country would adopt a more values-based feminist foreign policy to defend the liberal order against autocracy.
The intended message is that Germany will abandon a foreign policy that many others have criticised as being too passive, intransigent and ambiguous. For many decades, Germany was all too willing to do business with autocrats, despite its professed commitment to a foreign policy based on European liberal values. It was a free-rider in matters of hard power and it frequently failed to consult its allies or pay due attention to their legitimate concerns. It clung to this ambiguous position because there were massive economic benefits in doing so.
From Helmut Kohl in the 1990s to Scholz today, German chancellors have consistently believed that trade policy and dialogue would improve ties with actual and potential adversaries. Defying key allies such as the United States and France, Germany fostered economic dependencies that ultimately could be used against it. By the time Russia invaded Ukraine, Vladimir Putin had an iron grip on Germany’s natural-gas supply, and by the time Xi Jinping succeeded in turning China into a de facto dictatorship, Germany’s massive export sector had become critically dependent on China.
Is the current German government serious about adopting a more assertive and less ambiguous foreign policy? Unfortunately, the early evidence suggests otherwise. The same old gap between Germany’s stated aspirations and its actions remains. After announcing support for Ukraine, the government has been slow in granting military and logistical aid, and its promised strengthening of the Bundeswehr (armed forces) is already far behind schedule.
And by moving unilaterally to soften the blow from higher energy prices, Germany is increasingly isolated within the European Union. This lack of consultation has increased Franco-German tensions to a worrying degree.
As for the values-based feminist foreign policy, Baerbock’s office already failed its first test by being too slow to respond to the women-led protests in Iran. And Scholz added to the ambiguity of Germany’s position with his visit to China this month. He said his goal was to convince China to pressure Russia not to use nuclear weapons. But if that was really the point of the visit, why did he also bring a host of German corporate executives with him?
More broadly, why has Germany constantly managed to alienate its closest allies while going soft on adversarial powers like Russia and China? I see four interrelated reasons. First, there is Germany’s lack of long-term strategic thinking in foreign policy, which blinded it to a fundamental rule of geopolitics: conditions can—and often do—change radically.
Until Putin’s attack on Ukraine earlier this year, Germany had no ‘plan B’. It had scarcely even considered the possibility that there might be some alternative to the post-Cold War dispensation of endless economic globalisation driving the spread of liberal values and democracy. The German foreign ministry remained beholden to groupthink through the rise of Trumpism, illiberal democracy, Russian bellicosity and a thoroughly autocratic China.
10. Germany's Scholz 'surprised' by companies' China dependence
Andreas Rinke, Reuters, November 25, 2022
German Chancellor Olaf Scholz said the number of German companies that have ignored the risks of depending too heavily on the Chinese market was remarkable and stressed the need for diversification, in an interview with Focus magazine on Friday.
"The importance of the Chinese market needs no explanation," he said, but the goal is not to be dependent on any one market.
"I am therefore surprised at how dependent some companies have made themselves on individual markets and have completely ignored the risks," Scholz told the magazine.
COMMENT – Given the enormous pressure that German companies like Volkswagen and BASF have exerted on German politicians over the past decades, how can someone like Chancellor Scholz be “surprised” by any of this?
For nearly two decades, Germany’s two main parties (the center-right CDU and the center-left SPD) have pursued policies that enabled German companies to become dependent on the China market through the ill-conceived concept of Wandel durch Handel (change through trade).
Opposition parties like the Greens and FPD have been warning about this dangerous dependency for years and Scholz as Vice Chancellor for Merkel ignored it.
Academics, journalists, and policy analysts have been warning Berlin about this for years:
Stephen Szabo, Berlin Policy Journal, August 6, 2020
Germany’s “Change Through Trade” Fallacy with China
David Hutt, The Geopolitics, July 25, 2020
Chinese Expansion Has Germany on the Defensive
Der Spiegel, May 24, 2018
Quote: “The German economy has grown dependent on China in a development that is now coming back to haunt it. With a global trade war brewing, it will be impossible for the government in Berlin to please both Beijing and Washington. It's time for a new strategy.”
All of this suggests a kind of naivety that is unbecoming of a leader of his stature and a government as important as Germany’s.
11. Police beat protesting iPhone workers as Covid cases hit record high in China
The Guardian, November 23, 2022
12. Beijing grinds to a near halt as China's capital city battles Covid with more lockdowns
Jade Gao, CNBC, November 25, 2022
More and more apartment compounds in Beijing on Friday forbade residents from leaving for at least a few days.
“You constantly hear of someone going into lockdown and you have this constant feeling that you’re going to be next,” Joerg Wuttke, president of the EU Chamber of Commerce in China, said Friday.
It was not clear how many people were affected at a city level, and to what degree stay-in-place measures were being enforced.
ENVIRONMENTAL HARMS
13. How China, the world’s top climate polluter, avoids paying for the damage
Maxine Joselow, Washington Post, November 23, 2022
The U.N. still considers China, now the world’s second-largest economy and biggest annual polluter, a developing country.
14. Environmental reporters face disinformation, threats in China's restrictive political climate
Isabella Genovese, International Journalists’ Network, November 18, 2022
For reporters in China, the world’s largest greenhouse gas emitter, covering environmental issues is essential. Exposing the country’s destructive practices can influence the government to adopt renewable energy alternatives and carbon mitigation strategies, among other climate change solutions. Without China on board, it will be difficult for the world to reach the global climate goals laid out in the Paris Agreement.
Yet, China’s restrictive political climate threatens the sustainability of environmental journalism. In recent years, Chinese government officials have shut down reporting efforts; meanwhile, trust among the public in journalists’ coverage has been upended, leading to skepticism of reporters’ intentions.
I spoke with three reporters from mainland China and Hong Kong to better understand how censorship and threats to their physical safety impact their reporting on the climate crisis and other environmental issues.
15. China to Bangladesh, river-sharing pacts can be new CBMs, resolve other contentious issues
Shyam Divan and Armin Rosencranz, The Print, November 20, 2022
Environmental resources often do not fit within man- made borders. They spill across the borders of nations. The sharing and common use of these resources constitute transboundary environmental issues. Simply put, these are issues relating to the international management of environmental resources and its impact. In this chapter, we consider transboundary water and air pollution from the Indian perspective.
Consider the Ganges River and its role in the relations between India and Bangladesh. The river passes through several states of India before flowing into Bangladesh, playing a major role in sustaining the Bangladeshi agricultural system. What would happen to Bangladesh’s largely agriculture- fuelled economy if India were to construct a dam on the Ganges? Obviously, the flow of water to Bangladesh would diminish, negatively affecting its crop yields, in turn harming its economy. The Farakka Barrage to the north of Kolkata already diverts a substantial amount of the Ganges River water that would otherwise flow into Bangladesh.
Further east, the Brahmaputra or the Yarlung Tsangpo, as it is referred to in Tibet, is one of the widest rivers in the world. It enters India after originating in China and finally meets the Bay of Bengal after passing through Bangladesh. The river accounts for 44% of India’s hydropower potential. The Chinese plans for dams and other diversion projects have been another point of tension between the two sparring nations. A similar issue arises between India, China and Pakistan with the Indus River and its tributaries.
Often these resources are vital to the cultures, societies and economies of many nations. For example, the Ganges is of tremendous religious significance in both India and Bangladesh, in addition to its economic and agricultural importance. Thus, the issue fails to remain simply environmental. Religious, political and social overtones further complicate matters.
FOREIGN INTERFERENCE AND COERCION
16. Mike Bloomberg forced to apologise after Boris Johnson speech criticising China
Pippa Crerar, The Guardian, November 18, 2022
Ex-PM said to have described China as ‘coercive autocracy’ in speech to Asian businesspeople and diplomats.
The billionaire financier Mike Bloomberg was forced to apologise to hundreds of guests at a major Asian business event in Singapore this week after complaints about a speech by Boris Johnson that robustly criticised China.
The former UK prime minister, the after-dinner speaker at the flagship Bloomberg New Economy Forum in Singapore on Tuesday, was said to have described China as a “coercive autocracy” to about 500 Asian businesspeople, investors and diplomats.
While his comments would not be regarded as controversial in the UK, where there is concern over Beijing’s human rights record, approach to Taiwan and closeness to Russia, the majority of Asian countries are much more favourably inclined towards China and share strong economic and diplomatic ties.
COMMENT – Pretty shameful display by Mike Bloomberg… acknowledging that the Chinese Communist Party is a brutal, authoritarian regime that threatens its neighbors with military aggression and is responsible for some of history’s worst human rights abuses is NOT something a former U.S. Presidential candidate should apologize for.
As someone who has attended Bloomberg’s New Economy Forum, I can tell you that this is an event designed to paper-over Beijing’s worst abuses and legitimize the malign influences of the Chinese Communist Party throughout Asia and the rest of the world.
Of course, none of this should be surprising from Mike Bloomberg:
In Appeal to Hard Left, Bloomberg Praises Chinese Communism
Eric Levitz, New York Magazine, December 2, 2019
Michael Bloomberg’s China record shows why he can’t be president
Josh Rogin, Washington Post, November 13, 2019
When Bloomberg News’s Reporting on China Was Challenged, Bloomberg Tried to Ruin Me for Speaking Out
Leta Hong Fincher, The Intercept, February 18, 2020.
17. China Regional Snapshot: Exposing the CCP’s Global Malign Influence
U.S. House Foreign Affairs Republicans, November 2022
For far too long, the Chinese Communist Party’s (CCP) global campaign for influence and quest for dominance has gone largely unchecked on the world stage. In an effort to better understand the full scale of the CCP’s growing influence around the world, House Foreign Affairs Committee Lead Republican Michael McCaul (TX-10) led an in-depth assessment to detail their activities and investments, particularly through their Belt and Road Initiative.
The research found a number of disturbing trends negatively affecting the world in sectors that include trade, investments, security and arms sales, technology, and soft power initiatives to advance the CCP’s foreign policy interests.
18. Germany Debates Naming Businesses with Large China Exposure
Bojan Pancevski, Wall Street Journal, November 21, 2022
Berlin nationalized part of the German energy sector after Russia first throttled and then stopped natural-gas deliveries to the country. Moscow’s move threatened to bankrupt some of Germany’s largest utilities that were reliant on imported Russian fuel.
Companies with large stakes in China that are of systemic relevance to the German economy could be made to disclose details of their involvement and potentially undergo stress tests for risks related to their activities there, according to a draft government paper setting out a new strategy for dealing with China.
19. China Reportedly Paid Taiwan Officer to Surrender If War Started
Sarah Zheng, Bloomberg, November 22, 2022
Infantry colonel was given nearly $1,300 a month, reports say Taiwan has long faced espionage threat from bigger neighbor.
20. China playing ‘long game’ as it co-opts UK assets, warns MI5 chief
William Wallis, Financial Times, November 16, 2022
The Chinese are playing a “long game” seeking to co-opt and influence not just MPs but also people much earlier in their careers in public life, in what the head of Britain’s domestic security agency said was part of a “game-changing strategic challenge”.
Delivering his annual threat assessment on Wednesday, Ken McCallum said MI5 was making “the biggest shifts in a generation” as it faced state adversaries in China, Russia and Iran, who were not “squeamish about the tactics they deploy”. UK security, values and democratic institutions were at stake, he added.
The breadth of tactics Beijing used to redesign the international system and apply pressure to those challenging the regime’s perceived core interests presented a “different order of challenge” to the immediate one posed by Moscow.
Using a football analogy, he said China was “trying to rewrite the rule book, to buy the league, to recruit our coaching staff to work for them”.
Beijing uses all means at its disposal to monitor and intimidate the Chinese diaspora, he added, noting an incident last month in which a pro-democracy protester was assaulted outside the Chinese consulate in Manchester.
As part of efforts to manipulate opinion in its favour, Chinese authorities were also “cultivating assets” in academia, business and in parliament. In an indication of the scope of ambition and scale of threat posed, they were building “early stage” relationships with potential future politicians, including at local government level by “gradually building a debt of obligation”.
21. Hostile states are targeting you, Speaker warns MPs
Damian Grammaticas, November 17, 2022
22. China Turns to Back-Channel Diplomacy to Shore Up U.S. Ties
Lingling Wei and Charles Hutzler, Wall Street Journal, November 19, 2022
A few days before Mr. Xi’s summit last week with President Biden, according to people with knowledge of the matter, Beijing dispatched a delegation of senior policy advisers and business executives to New York to meet with a U.S. counterpart group set up by insurance executive Maurice “Hank” Greenberg, one of the most successful American businessmen in China.
Wall Street executives have long held a special place in Beijing’s corridors of power. Beijing has viewed Mr. Greenberg, 97 years old, as what Chinese leaders call an “old friend of China.” Mr. Greenberg, a decorated World War II veteran and a major Republican donor, is the chief executive of insurance and investment firm C.V. Starr & Co. and former CEO of insurance giant American International Group Inc.
23. What fate for China’s Confucius Institutes under new PM?
Yojana Sharma, University World News, November 20, 2022
24. Carmakers try to frustrate US push to cut China from EV supply chain
Claire Bushey and Aime Williams, Financial Times, November 21, 2022
Motor companies fret about loss of tax incentives as they depend on Chinese battery components.
25. Can Lawmakers Withstand Semiconductor Lobby Onslaught Against National Security?
Roslyn Layton, Forbes, November 22, 2022
It’s that time of the year again – the congressional haggling over the annual National Defense Authorization Act (NDAA) is in full swing. Usually, lawmakers are preoccupied with allocating funding for big-ticket items like ships, planes, and other conventional military tools. But this year a crucial provision is on the table for defending America’s defense infrastructure against Chinese tech threats. Lawmakers seeking to strike a blow against both Chinese malign cyber activity and its weaponization of economic power would be wise to expand Section 889 of the NDAA.
First enacted in 2019, Section 889 currently prevents the federal government from buying gear made by Chinese telecom companies such as Huawei, ZTE, and Hikvision, and with good reason. Under the 2017 National Intelligence Law, all Chinese companies are obligated to act on behalf of the Chinese state, should the Chinese Communist Party demand it. If able to burrow into Department of Defense systems, Huawei and ZTE could access critical national security systems and information. These companies have already proven to be arms of the Chinese surveillance state around the world (ZTE, for example, ran Venezuela’s social credit system pilot program). Section 889 wisely keeps Huawei and ZTE from setting up shop inside the Pentagon.
Now Senate Majority Leader and Senator John Cornyn want to expand Section 889 by including Chinese semiconductor companies YMTC, CXMT, and SMIC in the same category as Huawei and ZTE, banning products using their chips from federal government systems. This bipartisan effort reflects both common sense and these companies’ symbiotic relationship with the Chinese state. YMTC and SMIC’s ties to the Chinese military are well-documented (see here and here), and “there is high confidence that CXMT is fully integrated into the Chinese military and surveillance apparatus,” Rear Admiral (Ret.) Mark Montgomery, now a cyber expert at the Foundation for the Defense of Democracies and formerly the executive director of the Cyberspace Solarium Commission, told me in an interview. Moreover, said Montgomery, “We are reasonably certain Chinese chips can be altered to contain malware.”
HUMAN RIGHTS AND RELIGIOUS PERSECUTION
26. Why was this Mongolian school teacher branded an enemy of China?
The Economist, November 22, 2022
Even after fleeing to Thailand the Chinese state chased him down.
My Mongolian name is Adiya, though the name on my passport is Wu Guoxing. I’m 34 and was born in the eastern part of Inner Mongolia, a region in northern China. When I was little all my lessons were in Mongolian and I used Mongolian in my daily life. That changed as I grew up.
The Chinese government sent tens of thousands of Han Chinese, who make up more than 92% of China’s population, as migrants to Mongolian areas. Many people in Inner Mongolia married Han Chinese and their children went to schools that taught in Mandarin. Gradually, it seemed as though there were fewer and fewer Mongolians. As a child I just thought, oh, there are more Chinese people, so we need Chinese to communicate. Only later, when I was in my 30s, did I realise that the shift was permanent.
Wall Street Journal, November 22, 2022
The long-awaited trial of Apple Daily founder Jimmy Lai on national security charges is supposed to begin Dec. 1 in Hong Kong. The latest news is that the government objects to Mr. Lai’s choice of a British lawyer to represent him, King’s Counsel Timothy Owen. The objection underscores how the government tries to stack the deck against anyone it dislikes.
One of Hong Kong’s attractions as a financial center has been that foreign lawyers and judges from common-law jurisdictions are welcome. The same Department of Justice now fighting Mr. Lai’s bid to hire a British barrister to defend him itself hired another one, David Perry, to prosecute Mr. Lai along with eight other pro-democracy advocates.
A department spokesperson cited “growing pressure and criticism” in the U.K. against Mr Perry for taking the case: “Mr. Perry expressed concerns about such pressures and the exemption of quarantine, and indicated that the trial should proceed without him.”
The Hong Kong government and democracy supporters recognized that hiring a British barrister would give credibility to the Hong Kong legal system. But then came Mr. Lai’s request. When High Court Judge Jeremy Poon ruled that Mr. Lai could hire Mr. Owen to defend him, the government suddenly saw it as a threat.
28. Shein’s Cotton Tied to Chinese Region Accused of Forced Labor
Sheridan Prasso, Bloomberg, November 20, 2022
Tests link retailer’s apparel to Xinjiang, where US officials say China abuses Uyghurs.
29. MSCI investors at risk of exposure to Xinjiang allegations, report says
Edward White and Hudson Lockett, Financial Times, November 20, 2022
China has come under renewed international pressure over its treatment of Uyghur Muslims
The world’s biggest asset management, state pension and sovereign wealth funds are passively invested in companies which have allegedly been involved in the repression of Uyghur Muslims in north-west China’s Xinjiang region, a new report says.
According to Hong Kong Watch, a UK-based research group, and the Helena Kennedy Centre for International Justice at Sheffield Hallam University, three major stock indices provided by index publisher MSCI include at least 13 companies which have allegedly used forced labour or have profited from China’s construction of internment camps in Xinjiang and its surveillance apparatus in recent years.
The report, which will be published on Monday, shows how leading asset managers, including BlackRock, HSBC, UBS and Deutsche Bank, are exposed to index funds that include companies accused of being complicit in rights violations.
Pension funds from Canada, the US and UK — including the Church of England’s fund — as well as Japan’s Government Pension Investment Fund and the New Zealand Superannuation Fund are also exposed.
“Major institutional investors are funding companies known to be involved and benefiting from the crisis in the Uyghur region,” the report said. “It is vital that firms take action and actually live up to the ethical commitments that they have made under ESG frameworks and through signing international human rights compacts.”
China has come under renewed international pressure over its treatment of Xinjiang’s Uyghur population, which numbers about 12mn in a region of 25mn. In a landmark report in September, the UN’s top human rights body said China’s actions could constitute “crimes against humanity”. Beijing has denied the allegations as a “fabricated lie”.
30. Covenant Home Church Banned in Shanxi
Tao Niu, Bitter Winter, November 21, 2022
After the detention of four leaders, the authorities decided to liquidate the popular house church.
On November 16, 2022, the Civil Affairs Bureau of Yaodu District, Linfen City published an official notice banning Covenant Home Church and its school, citing unauthorized religious and educational activities.
Bitter Winter reported last August that on August 19, some 70 members of the Covenant Home Church were attending a parent-children camp that was raided by armed police. Some 170 police officers participated in the raid. Pastor Li Jie, his wife Li Shanshan, and Elder Han Xiaodong were detained and later placed under residential surveillance. Bibles, Christian books, and church documents were confiscated.
In October, we reported that on September 30, 2022, Pastor Li Jie and Elder Han Xiaodong had been formally arrested. Subsequently, Elder Wan Qiang was criminally detained on November 9. Sister Wu Tingting had been placed under residential surveillance on November 3; reportedly, she has now also been criminally detained although her family has not received an official confirmation.
INDUSTRIAL POLICIES AND ECONOMIC ESPIONAGE
Robert Atkinson, ITIF, November 21, 2022
Section 337 of the 1930 Tariff Act allows the U.S. International Trade Commission (USITC) to bar imports when domestic industries suffer harm due to unfair competition. Congress should expand the law to better address the unfair trade practices China uses to capture market share in advanced industries at America’s expense.
KEY TAKEAWAYS
Existing strategies to counter China’s industrial predation—including trying to make it change its policies, boosting U.S. competitiveness, or limiting China’s access to U.S. resources—are not viable or likely to be effective enough on their own.
Reforming Section 337 can change the game by making unfair trade practices less profitable: When China violates global rules or norms to benefit particular firms, they would be denied access to U.S. and (ideally) allied markets.
Over the last several decades, Section 337 has been largely used to adjudicate patent disputes, often among U.S. multinationals—but it can and should be used to address other trade practices from non-market, non-rule-of-law nations.
Congress should reform Section 337 to, among other things, make it easier to impose exclusion orders against imports from companies systematically supported by unfair trade practices in non-market, non-rule-of-law economies such as China.
Congress should allow the Commerce Department to bring cases before USITC and provide more resources to thoroughly document and adjudicate Chinese unfair practices, and the administration should work with allies to establish similar programs.
This will not only send a clear message of support for free trade, but also enable allied-nation firms to compete more effectively with Chinese government-backed champions.
32. A Memo for the President on U.S. Technology Competitiveness
PJ Maykish, Abigail Kukura, and Will Moreland, SCSP, November 22, 2022
The following analysis is an attempt to emulate the style of a Presidential Daily Brief but drawn from open-source information. This type of two-sided analysis is difficult based on legal and organizational constraints. Comparing tech sectors between the United States and China is a classic example of this dilemma. Tech-specific comparisons are particularly difficult for the U.S. Government because so much of the progress takes place in the private sector far from the focus of traditional intelligence analysis. Yet that same non-government focus means there is usually vast, albeit scattered, data available ranging from academic papers to corporate reports and economic statistics.
The results below are a snapshot in time as the two-largest economies in the world compete in rapidly evolving strategic technology sectors. The broader point is that to build a long-term competitive strategy, the United States needs two-sided technology analysis which begins with solving the traditional barriers to performing that comparative analysis. Our leaders need to know where we are in the competition in order to guide strategy and move resources.
These assessments were derived using the methodology described in Appendix A of SCSP’s Platforms Panel Interim Panel Report, Harnessing the New Geometry of Innovation. For more detailed analysis of each technology see Appendix B of the same report. This analysis is also an example of the type of technoeconomic analysis that can be generated using open sources. For more information, see SCSP’s Intelligence Panel Interim Panel Report, Intelligence in An Age of Data-Driven Competition.
COMMENT – If you haven’t subscribed to SCSP’s Substack, you should. The group is doing important work to characterize and provide substantive recommendations on how to succeed in the long-term rivalry with the PRC.
33. Germany plans to tighten rules for firms highly dependent on China – document
Andreas Rinke, Reuters, November 21, 2022
Germany's foreign ministry plans to tighten the rules for companies deeply exposed to China, making them disclose more information and possibly conduct stress tests for geopolitical risks, a confidential draft document seen by Reuters said.
The proposed measures are part of a new business strategy towards China being drawn up by Chancellor Olaf Scholz's government as it seeks to reduce its dependency on Asia's economic superpower.
34. Dutch Resist US Call to Ban More Chip Equipment Sales to China
Diederik Baazil, Bloomberg, November 22, 2022
35. Credit Suisse lays off one-third of China-based investment bankers – sources
Summer Zhen, Reuters, November 22, 2022
36. China thought to be stockpiling gold to cut greenback dependence
Munemasa Horio, Nikkei Asia, November 22, 2022
CYBER AND INFORMATION TECHNOLOGY
37. How Xi Jinping leveled-up China's hacking teams
Dakota Cary, Cyberscoop, November 21, 2022
From the early 2000s to 2015, China’s hacking teams caused havoc for private companies and U.S. and allied governments. In a series of high-profile breaches, they poached government databases, weapon system designs and corporate IP. From the breach of the Office of Personnel Management, to Marriott, to Equifax, to many, many others, the People’s Republic of China’s digital warriors demonstrated the full potential digitally mediated espionage.
But if Chinese President Xi Jinping has his way, this litany of breaches represents only the beginning of China’s digital prowess.
A year after coming to power in 2013, Xi began to prioritize cybersecurity as a matter of government policy, focusing the bureaucracy, universities and the security services on purposefully cultivating talent and funding cybersecurity research. During his time in office, the Chinese state has systematized cybersecurity education, improved students’ access to hands-on practice, promoted hacking competitions, and collected vulnerabilities to be used in network operations against China’s adversaries.
These investments are now coming to fruition, and, as a result, China’s hacking teams are poised to reap the benefits of a nearly decade-long cultivation of cyber talent and capabilities. These better resourced and trained teams put companies at risk of further compromise and create an additional imperative for U.S. and allied nations to improve defenses of government networks.
38. China is rapidly rolling out its new digital currency
Don Weinland, The Economist, November 18, 2022
The buzz around the e-CNY, China’s central-bank digital currency, has been loud. The country’s policymakers have been credited with leading a revolution in state-backed digital money starting in 2019. Many other central banks have followed China’s lead. But the development has all been local. The People’s Bank of China (PBOC), the central bank, has said next to nothing about using the digital currency abroad. In fact PBOC officials have emphasised that the current focus of e-CNY use is within China.
This has not stopped the speculation about it spreading abroad. Cryptocurrency and decentralised-finance specialists say it is only a matter of time before China expands trials into markets where the country does lots of trade. They also suggest that sanctions on Russia could speed up the process.
39. UK orders sale of Newport microchip plant by China’s Nexperia on security grounds
Cristina Gallardo, Politico, November 16, 2022
Security review cites risk of know-how falling into Chinese hands — but company plans to appeal.
MILITARY AND SECURITY THREATS
40. “Reunification” with Taiwan through Force Would Be a Pyrrhic Victory for China
Jude Blanchette and Gerard DiPippo, CSIS, November 22, 2022
Many commentators and officials speculate about Beijing’s plans to compel “reunification” with Taiwan. Much of the existing commentary focuses on how or when a Chinese attack on Taiwan could occur, but there is little discussion of the nonmilitary consequences of such a scenario for China and the world. This brief explores the implications of a Chinese attack on Taiwan based on reasonable, albeit speculative, assumptions.
When considered more holistically, the implications of an attack on Taiwan would be grim for Beijing, even if Chinese forces “successfully” capture the island. China would probably be diplomatically and economically isolated from key advanced economies, and Chinese leader Xi Jinping would have to tread a narrow path to avoid dire consequences for China and the Chinese Communist Party (CCP) as a whole. This analysis helps clarify what could be at stake for the world and reaffirms the importance of deterring Beijing from contemplating such an attack on Taiwan.
41. The Exoskeleton Force: The Royal Navy in the Indo-Pacific Tilt
Sidharth Kaushal, John Louth and Andrew Young, RUSI, November 2022
42. Ban These Chinese Chipmakers from Pentagon Purchases
Maseh Zarif and Mark Montgomery, Defense One, November 17, 2022
Congress should pass a proposed expansion of the law that keeps the federal government from buying certain companies’ products.
American chipmaking companies and government focus are finally putting the United States back on the offensive in the semiconductor field. This is a welcome development, but it must be paired with a good defense, which starts with ensuring that federal government networks are free of Chinese-made chips that pose a national-security risk to the United States.
Congress could, and should, do just that as it negotiates a final defense authorization bill in the coming weeks. A provision in the Senate’s version of the annual defense-policy bill would expand the Section 889 government procurement ban to cover chips made by high-risk Chinese companies.
Section 889, a provision in the 2019 National Defense Authorization Act, or NDAA, prohibits the federal government from obtaining telecommunications and surveillance equipment or services from certain entities, including those the Defense Department has identified as Chinese military companies, like Huawei and Hikvision. The law also prohibits the federal government from contracting with companies that make significant use of the equipment and services of these Chinese entities.
The Section 889 expansion that focuses on semiconductors, which was proposed by Senators Chuck Schumer and John Cornyn, is in Section 5871 in the Fiscal Year 2023 NDAA substitute amendment filed in the Senate on October 11. Like the existing ban it seeks to amend, the proposed prohibition would have two elements, both of which are critical to its effectiveness.
The first element will prevent the federal government from purchasing and using goods that contain Chinese chips made by Semiconductor Manufacturing International Corporation, or SMIC; ChangXin Memory Technologies; or Yangtze Memory Technologies Corp., or YMTC. Given the evolving nature of China’s semiconductor industry and its proclivity to “re-imagine” named entities and provide them with new names, the provision also includes “any subsidiary, affiliate, or successor” of these companies.
The language also gives the defense secretary, in consultation with the director of national intelligence, the discretion to extend the ban to other Chinese chip companies of concern. This underscores that risk mitigation related to Chinese semiconductors must account not just for today’s environment, but for Beijing’s long-term strategy and future industrial ambitions.
The second element of the new provision will encourage federal contractors to eliminate the use of Chinese chips made by the listed companies in any “substantial or essential” parts of their systems. This should be a simple choice for companies: you can do business with the federal government or you can have a significant dependence on Chinese chips, but you cannot do both. Companies that choose the latter path, placing U.S. security at risk, will be ineligible for government contracts.
In a show of considerable—perhaps excessive—flexibility, the prohibition would only kick in three years after the language becomes law.
The prospects for passing the language remain unclear as the Senate and House negotiate over a final version of the NDAA.
There are also hurdles beyond procedural ones. The federal contractor community will again put up resistance on several fronts. Some contractors are attempting to persuade lawmakers to extend the implementation period beyond three years. Additionally, some could attempt to have Congress carve out loopholes for existing Chinese chips and retain the flexibility to use Chinese semiconductors in their businesses. Such dramatic changes would undercut the impact of the proposed policy. The existing chips are the risk; in reality, U.S. weapons are generally manufactured with these larger chips, not the smaller, cutting-edge chips produced by Taiwan Semiconductor Manufacturing Company.
There is no credible national security case for keeping the door open to Chinese semiconductors in federal procurement networks. This is especially true given the nature of the entities being targeted. SMIC is a Defense Department-designated Chinese military company. YMTC, the Chinese government’s “national champion” memory-chip producer, has ties to China’s military-civil fusion strategy and has reportedly helped Huawei evade export-control restrictions.
Beyond this rap sheet, the reality is that the entire semiconductor ecosystem in a Chinese Communist Party-led China threatens U.S. national and economic security interests.
Ensuring that the federal government’s systems and the supporting systems of its trusted suppliers are not corrupted with high-risk Chinese semiconductors is a bare minimum measure to protect U.S. national-security interests.
COMMENT – Watch this space, I suspect the U.S. will continue to sharpen these tools of economic statecraft to disadvantage the PRC and those countries and companies that continue to try to assist the Chinese Communist Party in achieving their technology development goals.
43. China, Cambodia look to upgrade military ties along with expanded naval base
Jack Lau, South China Morning Post, November 21, 2022
Cambodia’s prime minister thanks PLA for support, hopes to advance military cooperation. Upgrades to Cambodian facility add to concerns over China’s military ambitions in South China Sea.
Cambodian Prime Minister Hun Sen on Sunday thanked China’s People’s Liberation Army for helping to develop its own armed forces, adding that he hoped both militaries will strengthen cooperation.
During a meeting in Phnom Penh with General Wei Fenghe, the Chinese defence minister, Hun Sen also said Cambodia hoped to maintain peace with China in the South China Sea, according to China’s official Xinhua news agency.
Earlier this month, Hun Sen met with US President Joe Biden, who repeated Washington’s concerns about the Ream Naval Base, which China has helped to expand. Biden said it was important for Chinese military activities to be fully transparent at Cambodia’s largest naval base.
44. Wassenaar Can’t ‘Adapt’ to Modern Export Control Concerns, Former NSC Official Says
Ian Cohen, Export Compliance Daily, November 22, 2022
The U.S. needs to abandon the current model of multilateral export control regimes and move toward control agreements with smaller groups of allies in specific technology areas, said Liza Tobin, the National Security Council’s former China director.
Tobin, speaking during an Emerging Technology Technical Advisory Committee meeting last week, also said the U.S. should look to impose technology-specific controls on items destined to China rather than end-use- and end-user-based controls, which are proving increasingly ineffective.
45. American Allies Want U.S. Leadership on Taiwan if China Invades
Jason McMann, Scott Moskowitz, and Samantha Elbouez, Morning Consult, November 16, 2022
A coordinated, multilateral response would benefit multinationals and markets, but prevailing public opinion suggests a piecemeal response is more realistic.
Public attitudes among American allies in Europe and Asia favor U.S.-led retaliation over their own countries taking action if China invades Taiwan.
The finding suggests that major U.S. partners and allies whose populations are inclined to dither — most notably Germany, Japan, South Korea and the United Kingdom — could hesitate to join U.S.-led retaliation efforts.
The average premium on American leadership is larger for military options than for economic ones. Among the latter, public opinion is most amenable to a coordinated response that entails banning China-bound investment and Chinese imports, as well as sanctioning Chinese government officials and companies.
Trends within the countries surveyed largely mirror these patterns.
Given these findings, companies and financial market actors with holdings in China should plan for restrictions on trade and capital flows if Taiwan is invaded.
A comprehensive, multilateral effort covering a wider range of economic and military actions would provide certainty in the rules of the game for global trade and capital flows. But a piecemeal approach is the more likely outcome.
46. Anti-Access Bubbles: How to Stop China From Militarily Dominating Asia?
James Holmes, 1945, November 12, 2022
47. U.S. kept quiet on warship transit of Taiwan Strait before Biden met Xi
Ryo Nakamura, Nikkei Asia, November 20, 2022
A U.S. Navy warship sailed through the Taiwan Strait on Nov. 5, a Pacific Fleet spokesperson told Nikkei on Saturday, but the transit was not disclosed at that time in a likely attempt to avoid provoking China ahead of a bilateral summit.
At the same time, by going ahead with the transit, Washington signaled its opposition to a unilateral change in the status quo in the Taiwan Strait.
ONE BELT, ONE ROAD STRATEGY
Andrew Polk, CSIS, November 15, 2022
This “CCP Inc.” case study explores how an ecosystem of Chinese party-state actors enabled a range of state-owned and private Chinese companies to embed themselves in Portugal’s financial system, creating a foothold to widen China’s financial presence within the country and beyond. The report specifically focuses on Fosun International Limited, a subsidiary of the Chinese conglomerate Fosun Group, which became a key source of foreign direct investment in Portugal through strategic acquisitions that opened market access for Chinese firms.
Fosun’s investments in Portugal provide insight into the Chinese Communist Party’s activism in shaping the business environment for private sector players, as the company’s international strategy faced the challenge of balancing alignment with state goals against a regulatory crackdown on private sector outbound spending.
49. America Ignores the Pacific Islands At Its Peril
Kyle Sajoyan, 1945, November 22, 2022
50. ‘More smoke than fire’: China’s Pacific aid falls short of pledges
Nic Fildes, Financial Times, November 20, 2022
Beijing’s development spending has fallen despite efforts to build influence in the region.
In 2017, Papua New Guinea’s government announced a long-awaited A$4.1bn ($2.6bn) upgrade of the nation’s potholed highway network that would be funded by development loans from China.
Five years on, the project, which was to be undertaken by the state-owned China Railway Group, has stalled, with none of the planned 1,600km of roads improved or replaced.
The project’s fortunes reflect a fall in Chinese development aid to the Pacific region over the past six years, a decline that contrasts with Beijing’s efforts to increase its influence in the area.
Alexandre Dayant, a project director with the Lowy Institute who charts aid across the Pacific region, said China’s spending over the past decade had not always lived up to its promises.
“China committed to massive infrastructure projects worth hundreds of millions of dollars. But there was a very big difference in what China committed to what it spent on the ground,” Dayant said. “There’s more smoke than fire.”
According to Lowy’s research, Chinese development aid spent in the Pacific region — made up of grants and concessional loans to fund construction, infrastructure and other projects — fell to $188mn in 2020 from a peak of $334mn in 2016.
Beijing has been assertively pursuing security and development deals in the Pacific this year. But Dayant said the Lowy data suggested Chinese aid had continued to fall in 2021 and argued that there was “less appetite” in the country than before to fund overseas development.
The 2020 total was the lowest annual figure recorded for China since Lowy started tracking aid in the region in 2008. China does not publish its own data on aid.
China’s foreign ministry declined to comment on the data showing decreasing aid spending in the region. A ministry spokesperson said the country was “continuously dedicated” to providing assistance to Pacific island nations to enhance their “self-driven development” and to jointly build a closer “China-Pacific community”.
The Papua New Guinea government and China Railway Group did not respond to requests for comment on the stalled road project.
51. China Is Investing Billions in Pakistan. Its Workers There Are Under Attack.
Saeed Shah and Chun Han Wong, Wall Street Journal, November 23, 2022
Beijing’s Belt and Road investment strategy meets resistance in the developing world it seeks to influence.
In April, a Pakistani mother of two blew herself up outside the gate of Karachi University’s Chinese language and culture institute, incinerating a minibus and killing three Chinese teachers and a Pakistani driver.
China is the largest lender to the developing world, mainly through Chinese leader Xi Jinping’s Belt and Road infrastructure program. The country has worked to portray itself as a benevolent partner to the countries where it is spending money, in an attempt to draw a distinction with Western powers.
Still, as its global reach expands, China is increasingly grappling with the consequences of projecting power around the world, including corruption, local resentment, political instability and violence. For developing countries, China offers perhaps the best chance of quickly building major infrastructure.
52. Kazakhstan seen tilting to China after president's landslide win
Nikkei Asia, November 22, 2022
Kazakhstan is expected to bolster ties with China and Western powers after President Kassym-Jomart Tokayev won Sunday's snap election in a landslide, as Russia's invasion of Ukraine erodes Moscow's clout over former Soviet states in Central Asia.
Tokayev beat five other candidates as he received 81.3% of the votes, according to preliminary results announced Monday by the country's election commission. He is now set to remain in office until 2029.
OPINION PIECES
53. The U.S. And China Are Now in An Economic War
Doug Bandow, 1945, November 21, 2022
The US is at economic war with China. No formal congressional declaration was necessary. However, the Biden administration has imposed draconian restrictions on Chinese access to semiconductor chips, while Congress has approved significant subsidies for the chip industry.
Unfortunately, this sort of “industrial policy,” a favorite of ambitious politicians worldwide, is unlikely to turn out well. Government-directed “investment” failed to spur Japan past the US decades ago. So far government-backed enterprises have not delivered chip superiority to China. Expanding US outlays for the industry is unlikely to achieve better results.
A half century ago the People’s Republic of China was isolated and impoverished, a threat to few people other than its own. Today the PRC has dramatically imposed itself on the world. Beijing’s geopolitical ambitions have expanded accordingly.
China poses a unique challenge to America, unlike that from Japan or other aspirants to global influence. The Chinese Communist Party (CCP) is Leninist if not Marxist, determined to rule everyone and everything in the PRC. An increasingly totalitarian state sits atop a large economy, able to conscript nominally private enterprises and wealth for aggressive purposes.
54. America Can’t Depend on China for Its Electric Vehicles
William P. Barr, Wall Street Journal, November 21, 2022
The U.S. has been the world’s technological leader since the end of the 19th century. This has made the country prosperous and secure. When the U.S. leads the way in a new technology—as it did with the internet—Americans benefit economically. But U.S. technological leadership is under assault, and the stakes couldn’t be higher.
In 2015, the Chinese Communist Party launched Made in China 2025—an aggressive and highly orchestrated industrial campaign to supplant the U.S. as the world’s pre-eminent economic power. The goal is to dominate the development and production of next-generation technologies, including electric and autonomous vehicles, information-technology and telecom equipment, advanced robotics and artificial intelligence. Using massive subsidies and an array of predatory and unlawful tactics—including industrial espionage, dumping, tariffs and quotas—Beijing has muscled aside American companies in critical industries. The failure of the Biden administration’s piecemeal approach in countering China’s ambitions has been alarming.
55. Chips and China
Ben Thompson, Stratechery, October 25, 2022
56. Macron outburst over submarine ambitions plays into China’s hands
Peter Jennings, The Australian, November 23, 2022
57. How China Spies
Anthony Holmes, 1945, November 21, 2022
My experiences prompted me to read Chinese Espionage: Operations and Tactics by the pioneering Nicholas Eftimiades. The author does yeoman’s work and offers the free world an important service by painstakingly combing through publicly available information on how the PRC operates its vast foreign intelligence apparatus.
He creates a monograph that every U.S. business professional and member of Congress should read – as should any person concerned about free markets and fair competition. I read it in one evening. It is only 56 pages, but that is more than enough. Eftimiades is trying to sound an alarm, not win a Man Booker Prize.
Analyzing 595 cases over a 10-year period, and using disparate data including U.S. Department of Justice filings, asset control briefs, import/export applications, and foreign government information, Eftimiades presents a compelling narrative of just how pervasive PRC intelligence is, what are its global goals, and how it has already co-opted private industry to advance its agenda.
58. The 20th Party Congress: What it means for the CCP and the world
Charles Parton, Council on Geostrategy, November 22, 2022
This Explainer follows on from an earlier one entitled ‘The CCP’s 20th Party Congress: What to look out for?’. It revisits the outcomes of the four main strands of a Party Congress: renewing the CCP’s leadership; fortifying ideology; strengthening the party’s role and discipline; and guiding the overall direction of policy. It then considers what they imply for the PRC’s future of domestic and foreign policy.
59. Britain needs a new strategy to counter Xi’s ‘Chinese Dream’
Steve Tsang, The Telegraph, November 16, 2022
Increasingly a dictator unfazed by human costs, Xi cannot be deterred militarily.
60. Ukraine shows how space is now central to warfare
Anders Fogh Rasmussen, Financial Times, November 21, 2022
Russia’s brutal invasion of Ukraine has made clear how vital space is to our security. In January, GPS images of Russian troops massing at Ukraine’s borders signalled an imminent invasion. Throughout the war, satellite links have kept frontline troops connected with their commanders. Meanwhile, GPS-guided Himar rocket launchers have helped shift the balance of the war in Ukraine’s favour, allowing them to pinpoint and destroy Russian ammunition dumps and artillery well behind enemy lines. This is the first major conflict where both sides have been heavily reliant on space-based capabilities. It will not be the last.
The importance of space during the war in Ukraine reflects how central activity in Earth’s orbits has become to all our lives. In recent years, the US, Russia, China, and India, have significantly strengthened their space capabilities. In a time of heightened geopolitical tension, Europe must not be left behind.
This week European ministers meet in Paris to discuss the future of Europe’s space programme. One conclusion is already clear — our continent’s security and prosperity will increasingly rely on our ability to act in space. For this we need secure infrastructure, open and safe access, and sustainable human activity.
In Ukraine, Russia is increasingly targeting critical civilian infrastructure. Moscow has launched repeated missile attacks against the country’s power plants and electricity grid. The aim is clear: to make life as hard as possible for civilians this winter. Russia has even targeted infrastructure outside Ukraine, allegedly sabotaging underwater pipelines carrying gas to Europe.
Moscow is making clear that it perceives critical infrastructure as a legitimate target in any future conflict. This includes assets in space. In the early days of the war, Russia launched cyber attacks on Ukraine’s satellite communication systems. Last year it carried out anti-satellite tests in low-earth orbit, proving it has the capacity to conduct physical strikes in space if it chooses to do so. This threat was made explicit last month, when a senior Russian official told the UN that commercial satellites from the US and its allies could be “legitimate targets for retaliatory strikes”.
Europe must be able to act autonomously in space. Last month, SpaceX owner Elon Musk tweeted a “peace plan” for Ukraine, and has also threatened to cut access to the company’s Starlink satellites. This plan could have been taken straight from a Kremlin disinformation unit. It called for Kyiv to cede swaths of territory to Russia and commit to military neutrality. Musk’s foray into geopolitics highlighted the dangers of space monopolies. Europe cannot allow its critical infrastructure to be subject to the whims or tweets of billionaires.
The best way to avoid this is for European leaders to push for a more open and competitive market in space. Our companies must be able to compete on a level playing field, while ensuring we maintain essential capabilities within the continent. This is important because space exploration drives innovation. It expands our technological horizons, creates new industries and drives understanding about our place in the universe. However, it can only bring these benefits if our activity there is safe and sustainable. Right now, it is not clear that is the case.
In particular, low-Earth orbit risks becoming dangerously congested with larger and larger objects. This is due to the launch of mega-constellations of satellites by companies such as SpaceX and Amazon. In 2018, there were just 2,000 satellites in orbit. By the end of this decade this could be 100,000: a 50-fold increase. Both the European Space Agency and Nasa have raised the alarm on the growing threat of overcrowding, collisions and the generation of debris.
Just like air, land and water resources, near-Earth space is fragile. New rules are badly needed to govern human activity there. Unfortunately, global consensus is impossible in the current climate. It is time for Europe to step up. We have been at the forefront of addressing environmental concerns on Earth, we must do the same in space.
We must understand and address the risks before it is too late. Our academics and companies must work with allies to understand what activity Earth’s orbits can sustain, as we did for sea lanes and civilian airspace. Regulators should then set clear conditions when granting market access to satellite companies, which lower the risk of collisions.
Europe must be bold. If we fail to address security concerns, we will be weaker. If we fail to deliver a level playing field, we will be poorer. And if we fail to make our space activity safe and sustainable, then future generations will pay the price.
61. In Taiwan, a Shaky Status Quo Prevails
Walter Russell Mead, Wall Street Journal, November 21, 2022
The people here have little desire either to yield to Beijing or to provoke a war.
As I discovered on a visit here last week, the most immediate problem confronting most students at Taiwan’s National Sun Yat-sen University is the macaque monkeys who occasionally descend from the forests to snatch sandwiches and snacks from careless humans loitering near the beach.
But that peaceful beach front is among the most likely landing zones for a People’s Liberation Army invasion force, and a debate over reintroducing the draft keeps students’ minds focused on the risks ahead. Those students are not alone. The extinction of liberty in Hong Kong, Xi Jinping’s rise to absolute power on the mainland, and the horrors of Vladimir Putin’s war in Ukraine have combined to create a new and complex mood on the island.
On the one hand, Taiwan has never been this alienated from the mainland. The descendants of the mainland Chinese who fled the advancing communist armies across the Taiwan Strait with Chiang Kai-shek increasingly think of themselves as Taiwanese rather than as exiles from China. As for the rest of the population, 50 years of Japanese colonial rule and 73 years of de facto independence have created a robust Taiwanese identity. The Taiwanese are a people, and they vastly prefer their open, democratic system to the deepening repression of life under communist rule.
Yet support for a formal declaration of independence remains low. The Taiwanese don’t want to unify with Beijing, but they also don’t want to provoke a war.
62. China’s Zero-Covid Reckoning
Wall Street Journal, November 24, 2022
Record infections and new lockdowns lead to rising public frustration and slower economic growth.
Remember when China’s handling of Covid-19 was supposed to be a global model? Western public-health sages looked fondly on Beijing’s zero-Covid policy as an alternative to America’s messy democratic decision to live with the virus after the disastrous initial lockdowns. Well, so much for that.
As the third anniversary of the Covid outbreak nears, China is reporting record infections. The daily highs are surpassing April’s surge in Shanghai, which shut down for two months. Outbreaks are occurring across China, and cities are again imposing lockdowns. Nomura, the Japanese brokerage, estimates that more than a fifth of the country is under restricted movement.
The latest breakout was inevitable in a large continental nation given the increasing transmissibility of the virus as it mutates. China’s particular problem is that its draconian zero-Covid policy has left its people less protected with either vaccine or natural immunity. For nationalist reasons, the Communist Party refused to accept Western vaccines that are more effective than China’s homegrown shots. Long lockdowns mean fewer people have been exposed to the virus and developed natural immunity as they have in the rest of the world.
China’s aging population is especially vulnerable, since the country lacks the hospital capacity and ICU beds to deal with widespread serious illness. By one estimate a full reopening could lead to 5.8 million intensive-care admissions in a country with fewer than four ICU beds per 100,000 people. The designs of China’s rulers are opaque, but this may explain the Party’s dogged insistence in sticking with zero-Covid despite the global evidence that lockdowns merely delay the spread of disease while doing great economic and social harm.
President Xi Jinping’s other problem is political. An authoritarian regime can always do what it does best—surveil, coerce, lock down. But it lacks a mechanism to gain public support for the pain that could accompany the abandonment of zero-Covid. Democracies, for all their cacophony, have more flexibility to change policies and adapt when the public sees that the facts require it.
Meanwhile, signs are growing that the latest Covid breakout and lockdowns are meeting more public frustration and resistance. The protest this week at the Foxconn facility that makes Apple’s iPhones in the central city of Zhengzhou is one example that has made it to the international press. There are surely many others in such a large country with no avenue to register public complaints.
The new lockdowns will slow China’s economy, with growth estimates falling for the fourth quarter and the year below 3%. That’s assuming Chinese officials aren’t gilding the books. China’s official GDP target for this year had been 5.5%.