Matt Turpin's China Articles - October 9, 2022
Friends,
Its another eclectic week of articles and reports on the malign activities of the Chinese Communist Party. Scholars, researchers, journalists, and their editors have cleared timed their publications to coincide with the start of the 20th Party Congress.
First up is an update by SCCEI (Stanford Center on China’s Economy and Institutions) on “the China Shock,” a concept coined by the labor economist David Autor, and his co-authors David Dorn and Gordon Hanson, with their January 2016 report by the same name from the National Bureau of Economic Research (#2 and their update #3).
While many economists (along with political and business leaders) had assumed that the PRC’s entry into the WTO in 2001 would lead to a virtuous cycle of Ricardian ‘comparative advantage’ and a ‘win-win’ outcome, Autor and his co-authors dispelled those myths. Import replacement destroyed U.S. manufacturing jobs, leading to long-term unemployment and net income losses concentrated in specific localities that were not offset by increased government support or by marginally cheaper imports. Unilaterally granting market access to a non-market economy caused significant harm to large swaths of Americans.
SCCEI revisits this important research and shows that the effect of Washington’s policy decision in the late-1990s and early 2000s to welcome Beijing into a globalized trading regime continues to have enduring, negative effects. Beyond the scope of the SCCEI report is the obvious correlation of the opioid and fentanyl crises that disproportionally harmed these same communities. Given the CCP’s role in aiding and abetting illicit fentanyl trafficking (and here and here and here and here), those harms can hardly be separated.
This week, the Chinese Communist Party continued its material support for Putin’s war on Ukraine by amplifying the propaganda that the United States sabotaged the Baltic Sea gas pipelines. I recommend everyone review the Global Engagement Center’s report from May 2022 (People’s Republic of China Efforts to Amplify the Kremlin’s Voice on Ukraine).
Also this week, the United States made some potentially significant changes to its economic statecraft tools. It remains to be seen how these changes in export controls will be operationalized, but investors in China, Inc. should pay close attention.
Lastly, Canada is expected to issue its ‘Indo-Pacific Strategy’ by the end of the year and Germany is expected to issue its first National Security Strategy and a new China strategy early next year. It will be interesting to see just how far Prime Minister Trudeau’s Liberal Party will go on joining its closest allies against the PRC or on how far Chancellor Scholz’s SPD will go on responding to the Sino-Russian entente.
My prediction is that both countries (and their center-left ruling parties) will shift considerably more towards rivalry with Beijing relative to their positions a decade ago, but that Canada and Germany will still lag behind their allies who have shifted even more, hoping that some sort of accommodation can be found with Beijing. I think that will be exceedingly difficult as an emboldened Xi starts his third term. Ottawa and Berlin will continue to be perceived as ‘shooting behind the duck’ and domestic political opposition in both countries will continue to gain ground by portraying those parties as geopolitically naïve.
Thanks for reading!
Matt
MUST READ
1. The China Shock and Its Enduring Effects
Stanford Center on China’s Economy and Institutions, October 1, 2022
INSIGHTS
The impact of the China shock accounted for 59.3% of all U.S. manufacturing job losses between 2001 and 2019, mostly in labor-intensive manufacturing where fewer workers had college degrees.
Laid-off workers converted nearly one for one into long-term unemployment, causing a corresponding rise in government transfer receipts per capita.
Adverse impacts of the China shock lasted two decades beyond the initial trade shock and one decade following its peak intensity in 2010.
Despite lower consumer prices of goods imported from China, 6.3% of the U.S. population still experienced net losses in real income due to the China shock.
2. WAY BACK MACHINE – The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade
David H. Autor, David Dorn, and Gordon Hanson, National Bureau of Economic Research, January 2016
China’s emergence as a great economic power has induced an epochal shift in patterns of world trade. Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks.
Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences. These impacts are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences.
Exposed workers experience greater job churning and reduced lifetime income. At the national level, employment has fallen in U.S. industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize. Better understanding when and where trade is costly, and how and why it may be beneficial, are key items on the research agenda for trade and labor economists.
3. WAY BACK MACHINE – On the Persistence of the China Shock
David H. Autor, David Dorn, and Gordon Hanson, National Bureau of Economic Research, October 2021
We evaluate the duration of the China trade shock and its impact on a wide range of outcomes over the period 2000 to 2019. The shock plateaued in 2010, enabling analysis of its effects for nearly a decade past its culmination.
Adverse impacts of import competition on manufacturing employment, overall employment-population ratios, and income per capita in more trade-exposed U.S. commuting zones are present out to 2019. Over the full study period, greater import competition implies a reduction in the manufacturing employment-population ratio of 1.54 percentage points, which is 55% of the observed change in the value, and the absorption of 86% of this net job loss via a corresponding decrease in the overall employment rate. Reductions in population headcounts, which indicate net out-migration, register only for foreign-born workers and the native-born 25-39 years old, implying that exit from work is a primary means of adjustment to trade-induced contractions in labor demand.
More negatively affected regions see modest increases in the uptake of government transfers, but these transfers primarily take the form of Social Security and Medicare benefits. Adverse outcomes are more acute in regions that initially had fewer college-educated workers and were more industrially specialized.
Impacts are qualitatively—but not quantitatively—similar to those caused by the decline of employment in coal production since the 1980s, indicating that the China trade shock holds lessons for other episodes of localized job loss. Import competition from China induced changes in income per capita across local labor markets that are much larger than the spatial heterogeneity of income effects predicted by standard quantitative trade models. Even using higher-end estimates of the consumer benefits of rising trade with China, a substantial fraction of commuting zones appears to have suffered absolute declines in average real incomes.
COMMENT: These three reports related to ‘The China Shock’ help explain the perception among some Americans, that decades of economic engagement with the PRC led to enormous benefits to the PRC and certain American elites, while poorer Americans suffered disproportionally high losses. As the SCCEI study points out: import penetration from the PRC accounts for 59.3% of all manufacturing job losses between 2000 and 2012 in the United States and alongside increasing joblessness, these localities suffered corresponding declines in personal income per capita. Relatively cheaper imports did little to offset these enormous losses and opened many of these communities to the scourge of opioids and fentanyl (which the PRC enabled as well: 'We Are Shipping To The U.S.': Inside China's Online Synthetic Drug Networks, Emily Feng, NPR, November 17, 2020).
It should be no surprise that for many, the ‘Chinese economic miracle,’ ‘globalization,’ and ‘free trade’ have become synonymous with ignoring the interests of American workers.
4. Beijing echoes Russian narrative that Washington is responsible for Nord Stream pipeline explosions
Joe Webster, The China Project (formerly SupChina), September 29, 2022
Moscow says Washington is to blame for the apparent sabotage of a Russian gas pipeline to Europe, and Chinese state media agree. But there are several reasons why Putin may have sent underwater saboteurs to the Baltic Sea.
VIDEO – Jeffrey Sachs: The World thinks the U.S. sabotaged Nord Stream, it does not show up in our media
Bloomberg TV, October 3, 2022
COMMENT: Jeffrey Sachs, the well-documented CCP apologist and propagandist (and here and here and here and here), parrots the Russian and PRC efforts to blame the United States for sabotaging the gas pipeline to Europe on Bloomberg.
Needless to say, CCP officials and proxies have used Sachs’ statements as even more circular evidence.
Of course, CCP apologists aren’t the only ones parroting this information warfare campaign:
Sam Tabahriti, Business Insider, October 9, 2022
5. Secretive Chip Startup May Help Huawei Circumvent US Sanctions
Debby Wu, Yuan Gao, Ian King, Jenny Leonard, and Eric Martin, Bloomberg, October 5, 2022
PXW, run by an ex-Huawei exec, is building a fab to make chips US tightens export rules as China tries to boost tech sector.
6. China’s chip industry set for deep pain from US export controls
Kathrin Hille, Qianer Liu, Eleanor Olcott, and Richard Waters, Financial Times, October 8, 2022
Experts predict ‘tsunami of change’ for semiconductor industry as Washington wields tools tested on Huawei.
Two years after the US hit Huawei with harsh sanctions, the Chinese technology group’s revenue has dropped, it has lost its leadership position in network equipment and smartphones, and its founder has told staff that the company’s survival is at stake.
Now, China’s entire chip industry is bracing for similar pain as Washington applies the tools tested on Huawei much more broadly.
Under new export controls announced on Friday, semiconductors made with US technology for use in AI, high performance computing and supercomputers can only be sold to China with an export licence — which will be very difficult to obtain.
Moreover, Washington is barring US citizens or entities from working with Chinese chip producers except with specific approval. The package also strictly limits the export to China of chip manufacturing tools and technology China could use to develop its own equipment.
“To put it mildly, [Chinese companies] are basically going back to the Stone Age,” said Szeho Ng, Managing Director at China Renaissance.
COMMENT: This article is worth reading in full… if executed these changes in U.S. economic statecraft could have enormous impacts on the PRC’s most advanced industries. However, as Bloomberg’s report (#5) above suggests, the enforcement and execution mechanisms within the U.S. Government are woefully ineffective and in need a serious improvement.
7. Xi Jinping’s third term is a tragic error
Martin Wolf, Financial Times, October 4, 2022
China’s macroeconomic, microeconomic and environmental difficulties remain largely unaddressed.
Xi Jinping will shortly be confirmed for a third term as general secretary of the Communist party and head of the military. So, is his achievement of such unchallengeable power good for China or for the world? No. It is dangerous for both. It would be dangerous even if he had proven himself a ruler of matchless competence. But he has not done so. As it is, the risks are those of ossification at home and increasing friction abroad.
Ten years is always enough. Even a first-rate leader decays after that long in office. One with unchallengeable power tends to decay more quickly. Surrounded by people he has chosen and protective of the legacy he has created, the despot will become increasingly isolated and defensive, even paranoid.
Reform halts. Decision-making slows. Foolish decisions go unchallenged and so remain unchanged. The zero-Covid policy is an example. If one wishes to look outside China, one can see the madness induced by prolonged power in Putin’s Russia. In Mao Zedong, China has its own example. Indeed, Mao was why Deng Xiaoping, a genius of common sense, introduced the system of term limits Xi is now overthrowing.
The advantage of democracies is not that they necessarily choose wise and well-intentioned leaders. Too often they choose the opposite. But these can be opposed without danger and dismissed without bloodshed. In personal despotisms, neither is possible. In institutionalised despotisms, dismissal is conceivable, as Khrushchev discovered. But it is dangerous and the more dominant the leader, the more dangerous it becomes. It is simply realistic to expect the next 10 years of Xi to be worse than the last.
How bad then was his first decade?
In a recent article in China Leadership Monitor, Minxin Pei of Claremont McKenna College judges that Xi has three main goals: personal dominance; revitalisation of the Leninist party-state; and expanding China’s global influence. He has been triumphant on the first; formally successful on the second; and had mixed success on the last. While China is today a recognised superpower, it has also mobilised a powerful coalition of anxious adversaries.
AUTHORITARIANISM
8. Xi’s First Decade Made China a Paradox of Confidence and Anxiety
Bloomberg, October 5, 2022
China Media Project, September 29, 2022
The state-run Global Times said in an English-language report this week that nearly 70 other countries had called on others to “stop interfering in China’s internal affairs on [the] Xinjiang, Hong Kong and Xizang regions.” This came amid efforts by the United States to encourage a debate on human rights in Xinjiang at an upcoming session of the UN Human Rights Council, following a report released last month by UN rights chief Michelle Bachelet.
But contained in this standard language about interference — hiding just in view — is an intriguing clue to how diplomats and state media are moving to reframe debates over sovereignty and human rights in another region, Tibet, and with the most basic of tools: the place name.
Speakers of Mandarin educated in the pinyin system, created by Zhou Youguang in the 1950s, shortly after the founding of the People’s Republic of China, will instantly recognize “Xizang” as the pinyin rendering of Tibet (西藏) — which in the local Tibetan language is called “Bod” (བོད་).
How long has “Xizang” featured in English-language coverage by the Party-state media? Only for a matter of months, it turns out.
10. “Xizang”: China’s Efforts to Change Tibet’s Name Continue
Lopsang Gurung, Bitter Winter, October 5, 2022
In 2021, Bitter Winter was among the first media outlets that denounced the Chinese campaign to change the name of “Tibet” into “Xizang.” This was the ultimate “Sinicization”: stealing from the oppressed Tibetans even the name of their country. Some called our article alarmist. After all, the English edition of the CCP-owned People’s Daily continued to use “Tibet” more often than “Xizang.”
11. China Business Risks Likely to Keep Rising After Party Congress, Scholar Says
Russell Flannery, Forbes, September 26, 2022
12. VIDEO – Divestment from China’s High-Tech Industry to Protect US National Interests
Nury Turkel and Keith Krach, Hudson Institute, October 4, 2022
China presents significant challenges to the world order, especially with its technology. One critical aspect of this has been China’s use of state-of-the-art artificial intelligence, surveillance, advanced biometrics, and mandatory DNA testing. China touts its facial recognition software that can distinguish an individual face in seconds, and the country is testing and utilizing software to identify ethnic groups and emotions.
13. Commerce Secretary Raimondo: Corporate America is increasingly considering pulling out of China
Nick Fouriezos, Atlantic Council, September 29, 2022
Jude Blanchette and Evan Medeiros, Survival, October 4, 2022
During his first ten years in power, Chinese leader Xi Jinping has overseen substantial shifts in China’s political system and domestic economy, while also adopting a more activist and forceful foreign policy.
With his likely third term beginning after the 20th Party Congress in October 2022, key questions remain about how his agenda will evolve. This article offers an assessment of Xi’s third term based on the key drivers and characteristics of Xi’s approach to domestic governance and foreign policy over the last two decades.
It also explores how growing tensions and trade-offs will force policy shifts or otherwise constrain China’s growth. China seems likely to become more insular and self-referential, more frustrated and indignant and, ultimately, more alienated from the international community.
15. New US report outlines ‘devastating effect’ of national security law on Hong Kong
Bochen Han, South China Morning Post, October 5, 2022
16. Hong Kong’s Civil Society: From an Open City to a City of Fear
Congressional-Executive Committee on China, October 3, 2022
17. How academies for cadres shape China’s ruling class
The Economist, October 4, 2022
Bold, innovative thinking was once encouraged. No more
18. Xi Jinping’s quest for total control of China is just getting started
Christian Shepherd and Eva Dou, Washington Post, October 5, 2022
19. VIDEO – How a Chinese Doctor Who Warned of Covid-19 Spent His Final Days
Muyi Xiao, Isabelle Qian, Tracy Wen Liu, and Chris Buckley, New York Times, October 6, 2022
ENVIRONMENTAL HARMS
20. Chinese Fishing Fleet Threatens Marine Biodiversity in Latin America and the Caribbean
Andrea Barretto, Dialogo Americas, October 4, 2022
“Illegal, unreported, and unregulated [IUU] fishing poses a potentially enduring threat to the security and well-being of the United States and its neighbors in Latin America and the Caribbean,” the August report IUU Fishing Crimes in Latin America and the Caribbean of the Center for Latin American & Latino Studies (CLALS) at American University in Washington, D,C., and investigative journalism organization InSight Crime, indicated.
According to the report, which analyzed the problem in nine countries of the region (Argentina, Chile, Costa Rica, Ecuador, Guyana, Jamaica, Panama, Suriname, and Uruguay), China is among the major IUU fishing violators in these countries, with fishing vessels present both within their territorial waters, as well as the outer limits and within their Exclusive Economic Zone (EEZ).
“China’s distant water fishing [DWF] is believed to significantly affect the environment and have a strong socio-economic impact on developing countries,” Miren Gutiérrez, a research associate at the Overseas Development Institute (ODI), an international think tank based in London, told Diálogo.
China, said Gutiérrez, has the world’s largest DWF fleet, with nearly 17,000 vessels, according to ODI’s 2020 survey, and added that this overcapacity implies a significant ecological export risk to developing countries’ territorial waters, despite increased regulations and restrictions worldwide. “While the fishing boom has benefited China, Chinese consumers, and Chinese companies, most of the social, environmental, and economic costs are borne by coastal developing states, which do not share equally in the benefits,” Gutiérrez said.
Hundreds of Chinese vessels operate in Latin America’s oceans year-round and have long been accused of plundering two main fishing grounds — the waters near Argentina in the South Atlantic and those near Chile, Peru, and Ecuador in the South Pacific, InSight Crime says. The number of Chinese vessels that plunder the waters off the coast of Latin America can be anywhere from 300 to more than 700, several international news media and organizations indicated.
21. Will the Mekong River Really Become the Next South China Sea?
Sebastian Strangio, The Diplomat, October 4, 2022
22. Will China Deplete the Oceans?
Robert Hunziker, City Watch, October 5, 2022
FOREIGN INTERFERENCE AND COERCION
23. China Has Lost India: How Beijing’s Aggression Pushed New Delhi to the West
Tanvi Madan, Foreign Affairs, October 4, 2022
24. Suppressing the truth and spreading lies
Blake Johnson, Miah Hammond-Errey, and Daria Impiombato, ASPI, October 5, 2022
The Chinese Communist Party (CCP) is attempting to influence public discourse in Solomon Islands through coordinated information operations that seek to spread false narratives and suppress information on a range of topics. Following the November 2021 Honiara riots and the March 2022 leaking of the China – Solomon Islands security agreement, the CCP has used its propaganda and disinformation capabilities to push false narratives in an effort to shape the Solomon Islands public’s perception of security issues and foreign partners. In alignment with the CCP’s regional security objectives, those messages have a strong focus on undermining Solomon Islands’ existing partnerships with Australia and the US.
Although some of the CCP’s messaging occurs through routine diplomatic engagement, there’s a coordinated effort to influence the population across a broad spectrum of information channels. That spectrum includes Chinese party-state media, CCP official-led statements and publications in local and social media, and the amplification of particular individual and pro-CCP content via targeted Facebook groups.
There’s now growing evidence to suggest that CCP officials are also seeking to suppress information that doesn’t align with the party-state’s narratives across the Pacific islands through the coercion of local journalists and media institutions.
25. China in the World Community Fund Report — 2022
China Research Team and Doublethink Lab, September 23, 2022
Advancing global research and collaborations on PRC influence
In 2021, the China in the World (CITW) network, under Doublethink Lab (DTL), launched the beta version of the China Index, the first initiative to objectively codify the influence of the People’s Republic of China (PRC) wields around the world.
The first edition of the China Index provides a comparative view of PRC influence across 36 independent states and territories in nine domains: media, foreign policy, academia, domestic politics, economy, technology, society, military, and law enforcement. Future editions, which will include additional countries, will serve as a tool to measure how the PRC’s global influence waxes and wanes over time.
Both CITW and the Index aim to enhance global understanding and awareness of PRC-related issues, particularly among academics, media, policymakers, and advocacy networks. With this goal in mind, CITW in 2021 launched its first Community Fund, inviting proposals that leverage results from the China Index to develop related projects or activities, while promoting collaboration between stakeholders.
26. Xi Jinping’s Quest for Order
Sheena Chestnut Greitens, Foreign Affairs, October 3, 2022
In April 2022, Chinese President Xi Jinping gave a speech on foreign policy at the Boao Forum for Asia, an annual conference of business executives and world leaders in Hainan Province. In it, he proposed what he called Quanqiu Anquan Changyi, or the Global Security Initiative (GSI), which he framed as “promoting the common security of the world.” Xi offered few details of how the initiative might be put into practice, however, and with Western governments intensely focused on Russia’s unfolding war in Ukraine, the speech did not receive much attention.
But the speech was hardly insignificant. As Chinese diplomats and analysts close to the government have made clear in the months since, the GSI marks a significant shift in Chinese foreign policy. It directly challenges the role of U.S. alliances and partnerships in global security and seeks to revise global security governance to make it more compatible with the regime security interests of the Chinese Communist Party.
During his first two terms, Xi transformed China’s approach to internal security in ways that caught the world off-guard—writing China’s first-ever national security strategy and a host of new security laws, restructuring the country’s domestic security apparatus, purging and jailing many of the security forces’ top leaders, building a massive surveillance state, and intensifying repression at a speed that few outside observers predicted. The guiding framework for those efforts was something that Xi called the “comprehensive national security concept,” which was really a regime security concept codified as grand strategy. Now, Xi is applying that framework to foreign policy, attempting to remake regional and global security order to guard against threats to China’s domestic stability and further consolidate the party’s grip on power.
27. China demands foreign diplomats provide floor plans of Hong Kong missions
Financial Times, October 3, 2022
28. In Global Slowdown, China Holds Sway Over Countries’ Fates
Keith Bradsher, New York Times, October 6, 2022
29. Hollywood says farewell to Chinese investment bonanza
Financial Times, October 5, 2022
HUMAN RIGHTS AND RELIGIOUS PERSECUTION
30. The UN Xinjiang Report, One Month Later: Where Do We Go from There?
Ruth Ingram, Bitter Winter, October 4, 2022
31. UN rights body rejects Western bid to debate Xinjiang abuses
Jamey Keaten, Associated Press, October 5, 2022
In a close diplomatic victory for China, the U.N.’s top human rights body on Thursday voted down a proposal from Britain, Turkey, the United States and other mostly Western countries to hold a debate on alleged rights abuses against Muslim Uyghurs and other ethnic minorities in China’s western Xinjiang region.
At the 47-member state Human Rights Council, 17 countries voted in favor, 19 were against, and 11 abstained in a vote to hold a debate on Xinjiang at its next session in March. The vote amounted to a test of political and diplomatic clout between the West and Beijing, and would have marked the first time that China’s record on human rights would merit a specific agenda item at the council.
The result, prompting a smattering of applause in the chamber, followed days of diplomatic arm-twisting in Geneva and in many national capitals as leading Western countries tried to build momentum on a report from former U.N. human rights chief Michelle Bachelet’s office, released Aug. 31, which found that possible “crimes against humanity” had occurred in Xinjiang.
A simple majority of voting countries was required.
China locked down “no” votes among its usual allies, plus many African countries and Persian Gulf states Qatar and the United Arab Emirates. Somalia was the only African country, and only member state of the Organization of Islamic Cooperation, to vote “yes.” Turkey is in the OIC, but doesn’t have a council seat right now. Argentina, Brazil, India, Malaysia, Mexico and Ukraine were among countries that abstained.
“This is a missed opportunity by council members to hold China to the same standard as other countries,” Dolkun Isa, president of the World Uyghur Congress, sai in a statement. “The international community cannot fail the victims of the Uyghur genocide.”
The U.N. rights office’s report stopped short of referring to abuses against Uyghurs as genocide, but some Western countries have.
The make-up of the council rotates among U.N. member states each year, and China — a powerful country with a permanent seat on the Security Council — has never been the subject of a country-specific resolution at the council since it was founded more than 16 years ago.
The proposal was for just to hold a debate, with no consistent monitoring of the rights situation, and amounted just about the least intrusive form of scrutiny that the council could seek.
The call stopped short of creating a team of investigators to look into possible crimes in Xinjiang, or appointing a special rapporteur — a tacit acknowledgement by the Western countries that going after increasingly influential China would be a tall order.
Before the vote, Chinese ambassador Chen Xu said Beijing “firmly opposes and categorically rejects” the proposal. He accused Western countries of seeking to turn a “blind eye” to their own issues on human rights and point a finger at others. He insisted that China never gave its support to Bachelet’s report, and warned of a bad precedent.
Michele Taylor, the U.S. ambassador, said the request for the debate aimed simply to “provide neutral forum for discussion.”
“No country represented here today has a perfect human rights record,” she said. “No country, no matter how powerful, should be excluded from council discussions. This includes my country — the United States — and it includes the People’s Republic of China.”
Human rights groups have accused China of sweeping a million or more people from the minority groups into detention camps where many have said they were tortured, sexually assaulted, and forced to abandon their language and religion. The camps were part of what the rights groups have called a ruthless campaign against extremism in Xinjiang that included draconian birth control policies and restrictions on people’s movement.
Some leading human rights advocacy groups expressed disappointment, but vowed to keep working for victims of abuses against Uyghurs and others in Xinjiang.
“Today’s vote protects the perpetrators of human rights violations rather than the victims — a dismaying result that puts the U.N.’s main human rights body in the farcical position of ignoring the findings of the U.N.’s own human rights office,” said Amnesty International Secretary-General Agnes Callamard.
“Thirty member states’ silence — or worse, blocking of debate — in the face of the atrocities committed by the Chinese government further sullies the reputation of the Human Rights Council,” she added.
32. House Church Pastor and Elder Arrested in Shanxi
Tao Niu, Bitter Winter, October 3, 2022
INDUSTRIAL POLICIES AND ECONOMIC ESPIONAGE
Michael Pettis, Foreign Affairs, October 5, 2022
As China emerges this month from the all-important 20th National Congress of the Chinese Communist Party (CCP), its leadership will have to confront the most difficult set of economic choices it has faced in decades.
It can shift out of an economic growth model that has generated a great deal of wealth, albeit at the cost of escalating inequality, surging debt, and an increasing amount of wasted investment over the last decade.
Or Beijing can choose to continue with its current economic model for a few more years until it is forced by these rising costs into an even more painful transition.
Paula Dobriansky and Representative Mike McCaul (R-TX), Atlantic Council, October 3, 2022
Mark Magnier, South China Morning Post, September 27, 2022
36. Pentagon’s China Warning Prompts Calls to Vet U.S. Funding of Startups
Kate O’Keeffe, Wall Street Journal, May 8, 2022
CYBER AND INFORMATION TECHNOLOGY
37. WAY BACK MACHINE – China Used Stolen Data to Expose CIA Operatives an Africa and Europe
Zach Dorfman, Foreign Policy, December 21, 2020
The discovery of U.S. spy networks in China fueled a decadelong global war over data between Beijing and Washington.
Around 2013, U.S. intelligence began noticing an alarming pattern: Undercover CIA personnel, flying into countries in Africa and Europe for sensitive work, were being rapidly and successfully identified by Chinese intelligence, according to three former U.S. officials. The surveillance by Chinese operatives began in some cases as soon as the CIA officers had cleared passport control. Sometimes, the surveillance was so overt that U.S. intelligence officials speculated that the Chinese wanted the U.S. side to know they had identified the CIA operatives, disrupting their missions; other times, however, it was much more subtle and only detected through U.S. spy agencies’ own sophisticated technical countersurveillance capabilities.
The CIA had been taking advantage of China’s own growing presence overseas to meet or recruit sources, according to one of these former officials. “We can’t get to them in Beijing, but can in Djibouti. Heat map Belt and Road”—China’s trillion-dollar infrastructure and influence initiative—“and you’d see our activity happening. It’s where the targets are.” The CIA recruits “Russians and Chinese hard in Africa,” said a former agency official. “And they know that.” China’s new aggressive moves to track U.S. operatives were likely a response to these U.S. efforts.
38. WAY BACK MACHINE – Beijing Ransacked Data as U.S. Sources Went Dark in China
Zach Dorfman, Foreign Policy, December 22, 2020
In early 2013, as Communist Party General Secretary Xi Jinping prepared to assume the Chinese presidency, very few people in the West had any idea what kind of leader he was. In January of that year, the New York Times’ Nick Kristof, an experienced China correspondent, wrote that Xi “will spearhead a resurgence of economic reform, and probably some political easing as well.”
This series, based on interviews with over three dozen current and former U.S. intelligence and national security officials, tells the story of China’s assault on U.S. personal data over the last decade—and its consequences.
It was a radically mistaken assessment. But even inside the U.S. government, knowledge of China—and its intensions—was at a low point. During the 2000s, U.S. intelligence had operated with relative confidence against Beijing. But during China’s biggest political transition in decades, American officials were looking through an increasingly opaque glass.
The twin disasters of the Office of Personnel Management (OPM) hack, which had helped the Chinese to identify undercover U.S. intelligence officials, and the obliteration of the CIA’s network of Chinese assets significantly “affected the quality of insight” into what the United States understood about events in that country, according to a former U.S. national security official. There was a noticeable decrease in high-quality intelligence reporting percolating up to senior policymakers, this source recalled. “Things weren’t the same.”
39. WAY BACK MACHINE – Tech Giants are Giving China a Vital Edge in Espionage
Zach Dorfman, Foreign Policy, December 23, 2020
By co-opting Chinese companies’ data-processing capabilities, U.S. officials say, Beijing’s spy agencies can rapidly sift through massive amounts of information to find key nuggets of intelligence value—for example, to help identify an undercover CIA operative by cross-checking real-time travel intelligence with other sources gathered by China’s Ministry of State Security (MSS). And by outsourcing these expensive data-processing functions to private companies, Chinese intelligence agencies can also exploit these commercial capabilities at a scale they don’t possess themselves or don’t want to build in-house, officials say. Alibaba and Baidu did not respond to multiple requests for comment.
The cooperation hasn’t always been frictionless. “The private companies are hostages to it,” a former counterintelligence executive said. “Arguments ensue.” Sometimes, U.S. intelligence officials would learn about “pissed-off employees” at Chinese companies upset about “doing extra work” on behalf of Chinese intelligence, the former executive said. But they were obligated to comply. “All the major Chinese firms have benefited from knowing, at various points, how to not be too big to fail the party,” the former senior CIA official said. The companies’ at-times begrudging cooperation with Beijing’s intelligence agencies is still, in the end, a subordination to them.
COMMENT: This trend of using PRC Tech Giants to aid CCP espionage of course includes ByteDance, the parent company of TikTok, which makes the unwillingness to exclude TikTok from the U.S. market all the more baffling… see next article.
40. TikTok Security-Deal Talks Pose Liability for Biden
John D. McKinnon, Alex Leary, and Raffaele Huang, Wall Street Journal, October 3, 2022
Plan to secure user data is nearing conclusion, sources say, but hurdles remain and Republicans warn against concessions to video app’s Chinese owner.
MILITARY AND SECURITY THREATS
U.S. Department of Defense, October 5, 2022
Today, the Department of Defense released the names of “Chinese military companies” operating directly or indirectly in the United States in accordance with the statutory requirement of Section 1260H of the National Defense Authorization Act for Fiscal Year 2021.
The Department is determined to highlight and counter the PRC Military-Civil Fusion strategy, which supports the modernization goals of the People’s Liberation Army (PLA) by ensuring its access to advanced technologies and expertise are acquired and developed by PRC companies, universities, and research programs that appear to be civilian entities. Section 1260H directs the Department to begin identifying, among other things, Military-Civil Fusion contributors operating directly or indirectly in the United States.
42. The Future of Conflict and the New Requirements of Defense
Special Competitive Studies Project, October 6, 2022
43. China's space footprint in South America fuels security concerns
Bethany Allen-Ebrahimian and Miriam Kramer, Axios, October 4, 2022
China has expanded its use of satellite ground stations in South America, leading multiple governments to express concern about Beijing's intentions, according to a new report.
Why it matters: China's space program has close but opaque ties to the country's military, fueling concerns that ostensibly civilian facilities could also be used for intelligence collection and surveillance, according to the report.
44. Eyes on the Skies: China's Growing Space Footprint in South America
Matthew P. Funaiole, Dana Kim, Brian Hart, and Joseph S. Bermudez Jr., CSIS, October 4, 2022
China has laid out a bold vision for its ambitions in space. President Xi Jinping has repeatedly called for China to transform into a leading “space power,” and a 2022 Chinese government white paper states plainly that China’s space industry “serves the overall national strategy.” While Beijing insists that it utilizes space for peaceful purposes and aspires to make scientific achievements in space, its emergence as a space power poses potential risks to other countries.
45. Taiwan Pledges to Keep Advanced Chips from Chinese Military
Debby Wu, Bloomberg, October 5, 2022
46. Corporates, academic partnerships weigh growing cross-strait risk
Nan Nielsen, EJ Insight, October 4, 2022
ONE BELT, ONE ROAD STRATEGY
47. [PRC Miner] MMG to invest $2 bln at its troubled Peruvian Las Bambas mine
Marcelo Rochabrun and Marco Acquino, Reuters, September 29, 2022
48. WAY BACK MACHINE – Why is Peru’s Las Bambas copper mine in constant conflict?
Martin Leon Espinosa, Dialogo Chino, April 22, 2022
Once again, Peru’s Las Bambas copper mine, one of the world’s largest copper mines, is in the news for the wrong reasons. As part of a protest, last week community members occupied company land at the site, operated by China Minmetals Corporation (China MMG), causing it to suspend operations again. Protestors allege that China MMG, which contributes an average of 1% to Peru’s GDP through the project, failed to comply with various agreements.
Las Bambas seems to live in constant conflict. In March, communities demanding better living conditions blocked the road along which the ore is transported. Blockades on the same road also forced the mine’s closure at the end of 2021.
49. Key Chinese Belt and Road builder faces rising risks, debt
Shin Watanabe, Nikkei Asia, October 5, 2022
50. Toward a Strategy for Responding to the PRC in Latin America
Evan Ellis, Global Americans, October 6, 2022
As the People’s Republic of China (PRC) expands its engagement in Latin America and the Caribbean, a common refrain in Washington is to lament the lack of an effective U.S. strategy in response, as well as the lack of U.S. government attention to the region in general. Having served on the Policy Planning Staff of the U.S. State Department (S/P), as well as engaging with U.S. government colleagues over the years, in an academic capacity, I can attest that many talented people in both republican and democratic administrations have given serious thought to the challenge. The problem is not the lack of strategies, but the adequacy of the concepts behind them, their resourcing and coordination, and ensuring that the chosen instruments and messages are sufficient for the challenge.
OPINION PIECES
51. Why trade couldn’t buy peace
John Plender, Financial Times, September 22, 2022
George Magnus, an associate at Oxford university’s China Centre, has long warned of the risks of closer western engagement with China and argues that encouraging its economic rise has manifestly not made it less threatening. “The upshot of all this,” he says, “will not be so much a collapse in world trade but a significant stall in growth — beyond what’s been going on anyway — and, importantly, a shift in patterns.
While China’s overall size and role in world trade is unlikely to change soon and some things cannot change quickly, I suspect all the rhetoric about China being the engine of global exports and growth is pretty much over.”
What is clear is that the high tide of the second great globalisation has passed.
While the prospect might not be quite as bleak as in Churchill’s Hobbesian vision, the world is undoubtedly a more dangerous place than it was before the confluence of calamities. There can be no denying that economically liberal internationalism has, at least in aggregate, enhanced global welfare. But it has once again delivered a very disappointing political outcome.
COMMENT: Just to reinforce that point – “What is clear is that the high tide of the second great globalisation has passed.”
52. Harvard Should Answer for Legitimizing the Chinese Communist Party
Former Secretary of State Michael Pompeo, Hudson Institute, October 6, 2022
Seth Cropsey, Real Clear Defense, October 6, 2022
54. Responding to the China Challenge: Blueprint 2.0
Dean Cheng and James Carafano, Heritage Foundation, September 29, 2022
China as the most persistent and consequential foreign policy challenge that will confront the U.S. for the next several decades.
It compounds other threats to the U.S. like those posed by Russia and Iran.
The U.S. doesn't need simply a game plan for “managing competition” with China—it needs a strategy for winning.
55. It's Moving Time: Taiwanese Business Responds to Growing U.S.-China Tensions
Scott Kennedy, CSIS, October 4, 2022