Matt Turpin's China Articles - October 30, 2022
Friends,
The return to a Maoist dictatorship is complete with markets and other governments responding accordingly. While some had predicted that Xi would be constrained, he comes out of the 20th Party Congress more powerful than ever as he successfully packed the new Politburo Standing Committee with allies and pushed the so-called reformist faction out of the leadership.
Despite being younger than the traditional retirement age, both Premier Li Keqiang and Wang Yang were removed from the Politburo Standing Committee and did not even get seats within the Central Committee.
Of note, the 205-member Central Committee of the Chinese Communist Party, only 11 are women and there are less than 10 ethnic minorities, proportions that are consistent with earlier Central Committees.
There’s a lot to cover this week, let’s dive in…
Thanks for reading!
Matt
MUST READ
Emily Baker-White, Forbes, October 20, 2022
The project, assigned to a Beijing-led team, would have involved accessing location data from some U.S. users’ devices without their knowledge or consent.
A China-based team at TikTok’s parent company, ByteDance, planned to use the TikTok app to monitor the personal location of some specific American citizens, according to materials reviewed by Forbes.
The team behind the monitoring project — ByteDance’s Internal Audit and Risk Control department — is led by Beijing-based executive Song Ye, who reports to ByteDance cofounder and CEO Rubo Liang.
The team primarily conducts investigations into potential misconduct by current and former ByteDance employees. But in at least two cases, the Internal Audit team also planned to collect TikTok data about the location of a U.S. citizen who had never had an employment relationship with the company, the materials show. It is unclear from the materials whether data about these Americans was actually collected; however, the plan was for a Beijing-based ByteDance team to obtain location data from U.S. users’ devices.
COMMENT – I suspect that TikTok’s future in the United States is in serious doubt after the mid-terms.
2. Intelligence in an Age of Data-Driven Competition
Peter Mattis, Meaghan Waff, and Katherine Kurata, SCSP, October 20, 2022
The team at SCSP have done a great job analyzing the U.S. Intelligence Community and making important recommendations for its reform.
Jack Lau, South China Morning Post, October 27, 2022
Exposing Chinese population to information beyond state propaganda would help to distract authorities from military moves, Virginia-based non-profit says in report.
The United States should use artificial intelligence to defeat China’s censors and undermine social stability in case Beijing attacks Taiwan, a US-based think tank has advised.
Such a move would expose the Chinese population to information beyond state propaganda and distract authorities from offensive military operations, according to the Special Competitive Studies Project (SCSP). The Virginia-based non-profit grew from the former National Security Commission on Artificial Intelligence (NSCAI), an independent commission in the US government.
4. Biden Just Clobbered China’s Chip Industry
Farhad Manjoo, New York Times, October 20, 2022
COMMENT – Expect to see a lot more written about the significance and consequences of these regulatory changes. These will have important effects on the course of the Sino-American cold war.
5. 2022 National Defense Strategy
U.S. Department of Defense, October 27, 2022
The U.S. Department of Defense published its National Defense Strategy, the Nuclear Posture Review, and Missile Defense Review. As expected, the PRC is the pacing threat for the United States.
6. Xi's clean sweep: China marks new era with loyalist lineup
Richard McGregor, Nikkei Asia, October 26, 2022
New standing committee shows party and the world Xi will brook no dissent in third term.
7. China’s new corporate top dogs
Amit Bhandari, Gateway House, October 27, 2022
A quick look at the list of top Chinese companies shows that the vaunted private sector has receded and the state-owned giants now dominate. Under the new Xi Jinping regime, they are unlikely to relinquish their position. What does this mean for China – and for India?
The Chinese economy has long been sold to outsiders as a mixed economy, offering market access in return for capital, technology, and political concessions. Many of its cheerleaders and optimists have hoped that greater economic engagement with China will lead to a more open society.
These hopes are misplaced. The recent reinstatement of Xi Jinping as China’s supreme leader shows that after three decades of the so-called China model – socialism with Chinese characteristics and a vibrant private sector – the Chinese economy is now once again dominated and controlled by the state. Some of the best-known Chinese entrepreneurs have seen their wings clipped, and high-flying companies have been brought down to earth via regulatory action. This will have long term implications for China, as well as its neighbours.
A Gateway House assessment of China’s most valuable throws up an interesting winner for 2022: Kweichow Moutai, a state-owned distillery that makes and sells Maotai, a brand of baiju (traditional Chinese alcoholic drink). Kweichow Moutai is now more valuable than Chinese tech giants Tencent and Alibaba, which once were snapping at the heels of U.S. tech giants such as Amazon and Google, but whose market value has eroded over the past two years.
Alibaba was the poster child of China’s tech sector and a bell-weather for all that was worth investing in China. In October 2020, Alibaba had a market capitalization of over $800 billion – not far behind Alphabet (Google) which was then valued at just over $1 trillion. Around that same time, founder Jack Ma criticized China’s regulatory system.[1] Immediately after, he vanished from public view for several months. He has since been seen in public only intermittently. A crackdown by State Administration for Market Regulation (SAMR), a regulatory body, on Alibaba followed, for various past transgressions. It resulted in the $37 billion IPO of Alibaba’s fintech affiliate Ant Financial on the Shanghai and Hong Kong Stock exchanges being scrapped – after retail investors had already placed bids worth over $3 trillion for the shares. Alibaba was subsequently slapped with a record high regulatory penalty from SAMR for abusing its dominant market position[2]. The current value of Alibaba is a little over 20% of the peak valuation.
The other tech giant, Tencent, which was worth over $900 billion at its peak in January 2021 tried to avoid political entanglements but still got caught in China’s crackdown – or ‘delayed regulation’ as it is often described – against big tech… It is today worth less than a third of its peak valuation. These companies no more compare with their US counterparts.
A little about China’s new corporate top dogs. Kweichow Moutai is a state-owned enterprise, with a government entity holding 60% of its shares. Seven of China’s ten most valuable companies are now state-owned enterprises: names such as ICBC, China Construction Bank, China Mobile and PetroChina. In contrast, only one of India’s ten most valuable firms is a state-owned enterprise – the State Bank of India at number seven.[3] The next closest state-owned Indian company is oil major ONGC – at number 31, nowhere near the top.
What are the implications of this dramatic change? First, that China is not a market economy. It may have had some characteristics of a market economy in the past, but the current scenario clearly shows that the state will retain its controlling position.
Second, China’s slowdown will be long term. The country’s growth rate has dropped sharply in the past few years. Hampering the private sector and favouring State Owned Enterprises, which tend to be inefficient with capital, is one reason. Growth does not seem to be the priority of the Chinese government.
8. Bund will Übernahme von deutscher Chip-Fabrik Elmos zulassen – Geheimdienste warnen [Federal government wants to allow takeover of German chip factory Elmos - warn secret services] – ORIGINAL IN GERMAN
Joachim Hofer, Martin Murphy, Julian Olk, and Arno Schutze, Handelsblatt, October 27, 2022
[GOOGLE TRANSLATE] After the Port of Hamburg, the federal government must decide on the next critical China deal - and it apparently wants to say yes.
The federal government wants to allow the takeover of the chip production of the Dortmund company Elmos by the competitor Silex. The Handelsblatt learned this from government circles. The Swedish buyer is a wholly owned subsidiary of the Chinese group Sai Microelectronics. The sale of the factory is currently being examined by the Federal Ministry of Economics, and the final decision on the approval should be made within the next few weeks.
The federal government is thus defying the advice of the Federal Office for the Protection of the Constitution. According to Handelsblatt information, he advised against approving the deal and pointed out the risk of increasing dependency on China in the semiconductor market.
9. Japanese companies explore how to go 'zero-China' amid tensions
Nikkei Asia, October 23, 2022
Japanese companies are striving to build supply chains that do not depend on China, amid that country's growing conflict with the U.S. This is expected to dramatically increase the costs of all manner of products. Are companies prepared for "zero-China?"
This past summer, a top-secret project was in full swing at Honda Motor -- a massive restructuring plan to explore building passenger cars and motorcycles using as few China-made parts as possible.
10. COVID-19 Origins: Investigating a “Complex and Grave Situation” Inside a Wuhan Lab
Katherine Eban and Jeff Kao, Vanity Fair, October 28, 2022
The Wuhan Institute of Virology, the cutting-edge biotech facility at the center of swirling suspicions about the pandemic’s onset, was far more troubled than previously known, explosive documents unearthed by a Senate research team reveal. Following the trail of evidence, Vanity Fair and ProPublica provide the clearest picture yet of a laboratory institute in crisis.
AUTHORITARIANISM
11. China Hangs on Xi’s Every Word. His Silence Also Speaks Volumes.
Chris Buckley, New York Times, October 22, 2022
At the important Communist Party congress this week, the Chinese leader didn’t mention two long-repeated maxims. To many, it’s a warning of the turbulent times ahead.
As China’s leader, Xi Jinping, laid out his priorities this week for a breakthrough third term in power, officials parsed his words for signs of where the country was headed. What he did not say was as revealing.
The omission of two phrases from his key report to a Communist Party congress exposed his anxieties about an increasingly volatile world where Washington is contesting China’s ascent as an authoritarian superpower.
For two decades, successive Chinese leaders have declared at the congress that the country was in a “period of important strategic opportunity,” implying that China faced no imminent risk of major conflict and could focus more on economic growth.
For even longer, leaders have said that “peace and development remain the themes of the era,” suggesting that whatever may be going wrong in the world, the grand trends were on China’s side.
But the two slogans, so unvarying that they rarely drew attention, were not in Mr. Xi’s report to the congress, which began last Sunday and ended Saturday. Not in his 104-minute speech summarizing the report. Nor in the 72-page Chinese full version given to officials and journalists.
Their exclusion, and Mr. Xi’s somber warning of “dangerous storms” on the horizon, indicated that he believed international hazards have worsened, especially since the start of the war in Ukraine in February, several experts said. Mr. Xi, who is nearly assured re-election on Sunday as its general secretary, sees a world made more treacherous by American support for the disputed island of Taiwan, Chinese vulnerability to technology “choke points,” and the plans of Western-led alliances to increase their military presence around Asia.
“China’s external environment now can be described as unprecedentedly perilous, and that’s also the judgment of China’s high echelon,” Hu Wei, a foreign policy scholar in Shanghai, said in an interview.
In the Communist Party, the leader’s words matter enormously, shaping China’s policies, legislation and diplomacy. And the report to the party congress, every five years, is the fundamental guide for officials. Each phrase, each tweak, each omission is weighed to signal priorities.
12. China's Xi deals knockout blow to once-powerful Youth League faction
Martin Quin Pollard, Reuters, October 26, 2022
The three most glaring omissions from China's new Communist Party leadership share one common trait: all rose through its Youth League and were considered members of a once-powerful faction whose influence Xi Jinping has now effectively crushed.
Premier Li Keqiang and Vice Premier Wang Yang, both 67 and young enough to be re-appointed to the elite seven-member Politburo Standing Committee, were left off even the wider Central Committee, as Xi installed loyalists in top party posts during the recent twice-a-decade leadership reshuffle.
13. Politics Will Determine China’s Economic Future During Xi’s Third Term
Zongyuan Zoe Liu, Council on Foreign Relations, October 25, 2022
Xi Jinping received a rare third term as head of the Chinese Communist Party and elevated his loyalists to its top leadership body. Here’s what that means for China’s economy.
During the twentieth congress of the Chinese Communist Party, Chinese President Xi Jinping secured a third five-year term as the party’s general secretary and stacked its seven-man Politburo Standing Committee with his loyalists. These leadership appointments, as well as Xi’s speech to the congress, indicate that major decisions in China will now place more emphasis on politics—particularly loyalty to Xi—rather than on economic outcomes.
14. China’s Leader Now Wields Formidable Power. Who Will Say No to Him?
Chris Buckley, Keith Brads, and Chang Che, New York Times, October 26, 2022
Xi Jinping has created a new ruling elite packed with loyalist officials primed to elevate his agenda of bolstering national security and of turning China into a technological great power.
15. How is China's Communist Party changing its constitution?
Japan Times, October 22, 2022
16. Xi’s Vow of World Dominance by 2049 Sends Chill Through Markets
Bloomberg, October 26, 2022
17. China’s wealthy activate escape plans as Xi Jinping extends rule
Edward White and Mercedes Ruehl, Financial Times, October 24, 2022
Rich citizens fearing high taxes and personal safety move capital out of country and arrange residences overseas.
18. He Helped Pioneer Chinese Nationalism. Now He Says It’s Gone Too Far.
Vivian Wang, New York Times, October 27, 2022
Wang Xiaodong, once called the standard-bearer of Chinese nationalism, now fends off criticisms of being too moderate, even a traitor. “They’ve forgotten,” he said, “I created them.”
Wang Xiaodong once gave a speech declaring that “China’s forward march is unstoppable.” He published essays calling on China to build up its military. He co-wrote a book, bluntly titled “China Is Unhappy,” in which he said the country should aim to control more land and shape global politics. “We should lead this world,” he said.
Now, Mr. Wang, a 66-year-old Beijing-based writer once called the standard-bearer of Chinese nationalism, has another message: That nationalism has gone too far.
For years, it was Mr. Wang whom many Chinese dismissed as too radical, as he railed that the Chinese establishment was too beholden to Western ideas and global trade, too content to let China ease into a world order rigged by the United States.
Then, as China grew more powerful, his message championing nationalism — and his combative, only-idiots-disagree-with-me style — found a following. His book became a best seller. Today, swagger about the country’s greatness is a staple of Chinese public conversation, from diplomatic declarations to social media chatter.
But rather than reveling in that success, Mr. Wang has become alarmed by it. Egged on by government propaganda, Chinese nationalism has become increasingly volatile and vitriolic. And so Mr. Wang has found himself in the unexpected position of trying to tamp down the movement that he helped ignite nearly 35 years ago.
To his millions of social media followers, he now opines that excessive self-regard imperils China’s rise, which he no longer calls inevitable. In blog posts and videos infused with a professorial — some say lecturing — demeanor, he warns that cutting off relations with the United States would be self-defeating. He lashes out at other nationalist influencers, accusing them of stoking extreme emotions to win followers.
Now, this pioneer of nationalist bravado is the one fending off criticisms of being too moderate, too cozy with the West, even a traitor.
19. The Future of Xi's China. Scenarios and Implications for Europe
Alessia Amighini, Istituto per gli Studi di Politica Internazionale (ISPI), October 17, 2022
20. New Title for Xi Stokes Concern of a Mao-Style Personality Cult
Bloomberg, October 19, 2022
21. China reaffirms Xi’s dominance, removes No. 2 Li Keqiang
Ken Moritsugu, Associated Press, October 22, 2022
China’s ruling Communist Party reaffirmed President Xi Jinping’s continued dominance in running the nation Saturday, one day ahead of giving him a widely expected third five-year term as leader.
A party congress effectively removed Premier Li Keqiang from senior leadership. Li, the nation’s No. 2 official, is a proponent of market-oriented reforms, which are in contrast to Xi’s moves to expand state control over the economy.
The weeklong meeting, as it wrapped up Saturday, also wrote Xi’s major policy initiatives on the economy and the military into the party’s constitution, as well as his push to rebuild and strengthen the party’s position by declaring it absolutely central to China’s development and future.
Analysts were watching for signs of any weakening of or challenge to Xi’s position, but none was apparent. The removal of Li, while not unexpected, signaled Xi’s continuing tight hold on power in the world’s second-largest economy.
“The congress calls on all party members to acquire a deep understanding of the decisive significance of establishing comrade Xi Jinping’s core position on the party Central Committee and in the party as a whole and establishing the guiding role of Xi Jinping Thought,” said a resolution on the constitution approved at Saturday’s closing session.
“Xi Jinping Thought” refers to his ideology, which was enshrined in the party charter at the previous congress in 2017.
In brief closing remarks, Xi said the revision to the constitution “sets out clear requirements for upholding and strengthening the party’s overall leadership.”
Li was among four of the seven members of the party’s all-powerful Politburo Standing Committee who were missing from its new 205-member Central Committee, which was formally elected at the closing session.
That means they won’t be reappointed to the Standing Committee in a leadership shuffle that will be unveiled Sunday. Xi is widely expected to retain the top spot, getting a third term as general secretary.
The three others who were dropped were Vice Premier Han Zheng, party advisory body head Wang Yang, and Li Zhanshu, a longtime Xi ally and the head of the largely ceremonial legislature.
Li Keqiang will remain as premier for about six more months until a new slate of government ministers is named.
22. Team of journalists resigned after SCMP axed 3-part series on Xinjiang abuses, ex-editor says
Tom Grundy, Hong Kong Free Press, October 25, 2022
Two reporters quit the South China Morning Post (SCMP) last year after a senior editor axed their three-month investigation into human rights abuses in China’s Xinjiang region, according to an editor who resigned shortly after.
During a Foreign Correspondents’ Club talk in Japan on October 13, Peter Langan revealed that he quit his senior editor role at the newspaper’s China desk following multiple conference calls with management in 2021 about the three-part series on birth control policies in the Xinjiang region. The SCMP told HKFP the feature failed to meet its “editorial verification process and publishing standards,” despite them relying on a review of official government data.
23. Hu Jintao mystery tests the limits of China-watching
Adam Taylor, Washington Post, October 26, 2022
China’s annual Communist Party congress was a highly choreographed affair, designed to cement Xi Jinping’s status as the unquestioned leader of China. But it was an apparently unscripted moment that really got people talking: The unexplained public ouster of former leader Hu Jintao.
The incident, which saw Hu escorted away from the stage as the party congress wound down on Saturday, has led to fervent speculation among both seasoned China watchers and moonlighters.
24. China’s Xi Jinping, Secure in Power, Faces Deepening Economic Challenges
Stella Yifan Xie, Wall Street Journal, October 24, 2022
25. Cina: la nuova cerchia di Xi [China: the new circle of Xi] – ORIGINAL IN ITALIAN
Filippo Fasulo, Istituto per gli Studi di Politica Internazionale (ISPI), October 24, 2022
[GOOGLE TRANSLATE] The symbolic image of the XX Congress of the Communist Party of China which, as expected, celebrated the triumph of Xi Jinping as an increasingly undisputed leader is an official who approaches the almost eighty-year-old Hu Jintao, sitting next to Xi Jinping and carrying him away by force. As he left, Hu Jintao, who until ten years ago ruled the most populous country in the world and now appears visibly aged, whispered something to Xi and stroked the shoulder of Li Keqiang, his missing dolphin. It is not known exactly what this scene is due to, but some hypotheses - for now without the possibility of verification - claim that it may be linked to the desire to anticipate any angry gestures of Huon the occasion of the imminent presentation of the list of members of the XX Central Committee, from which Li Keqiang and others of Hu Jintao's faction have been excluded. This is a cross between the hypothesis of purging live in the world and a simple illness, taking into account that the most total mystery remains.
26. Chinese Communism with North Korean Characteristics and “ZERO-China”
Dan Harris, China Law Blog, October 23, 2022
For years I’ve been saying that China was trending more towards North Korea than Germany or Japan. I would base this “prediction” on China’s increasing belligerence towards other countries, its increasing government control over its economy, its increasing control over its own citizens, and Xi Jinping’s increasing megalomania. China’s just completed Party Congress has borne all of these things out.
FOREIGN INTERFERENCE AND COERCION
China-Linked Internet Trolls Try Fueling Divisions in U.S. Midterms, Researchers Say
Dustin Volz, Wall Street Journal, October 26, 2022
Google cybersecurity arm says activity shows a new interest in sowing discord in American politics, but impact has been minimal.
Internet trolls linked to China are trying to fuel political division and discord in the U.S. ahead of the November midterm elections, suggesting Beijing is interested in meddling in American politics after largely abstaining during previous contests, according to researchers at Alphabet Inc.’s Google unit.
The efforts, which also include attempts to create rifts between the U.S. and its European allies around the war in Ukraine, appear to have had minimal impact so far, the researchers said. But they warned that the troll group’s tradecraft was rapidly maturing, and the group seemed intent on injecting disinformation into Americans’ internet feeds in ways that resemble past Russian and Iranian efforts to disrupt elections.
It didn’t appear the group was attempting to support or damage any one candidate or political party, unlike prior campaigns linked to Moscow and Tehran, researchers said.
27. Australia rides out Chinese sanctions as exports boom
Nic Fildes, Financial Times, October 26, 2022
Expansion in other Asian markets and Beijing’s dependence on iron ore lift trade.
China’s introduction of trade sanctions on some Australian products in 2020 has resulted in unexpected benefits, with the latest economic statistics showing exports booming for the resource-rich country as it has been forced to shift its focus to other markets.
Australia’s trade figures have also improved due to Chinese dependence on critical products, notably iron ore, wool and natural gas. They were spared the punishment of new tariffs, with increased demand boosting their sales.
The country’s long record of economic growth had looked vulnerable when China introduced punitive tariffs and controls on an array of Australian imports two years ago, as political tensions between the two sides intensified.
The measures, introduced after Australia’s then prime minister Scott Morrison called for an inquiry into the origins of Covid-19, threatened to weaken its economic resilience.
Even after the imposition of sanctions, China was the destination for more than 42 per cent of Australia’s exports in 2021 compared with only 14 per cent in 2007, as demand for iron ore and other minerals, fossil fuels and goods grew rapidly, according to the Australian Strategic Policy Institute think-tank.
“Australia had not been as dependent on a single market since 1938, when that was the ‘mother country’ of the United Kingdom,” said David Uren, a senior fellow at ASPI. For the first time in its history, it was dealing with a situation where its largest trading partner had become an adversary, he said.
28. Global Times Voice: Australia ‘rides out Chinese sanctions’? Just more delusions
Global Times, October 27, 2022
Australia recorded booming exports recently as it "rides out Chinese sanctions," thanks to increased trade with other Asian countries in addition to Chinese demand for iron ore and other critical products, the Financial Times reported on Thursday.
According to the report, a shift has taken place in Australia's trade over the past two years. China's share of Australia's exports had dropped to 29.5 percent as of August, according to Australian Bureau of Statistics data - the first time it had dipped below the 30-percent mark since October 2015. China's share of imports has also dwindled to 26 percent in the three months to September, compared to 30 percent in 2021.
First and foremost, China has never imposed trade "sanctions" on Australia, and any claim of "sanctions" is just delusional. Clearly, some in Australia were quite proud about the recent figures, thinking they had successfully reduced the dependence on China. What they didn't realize was that cutting themselves off from China and becoming a pawn in the US' strategic containment against China will end up costing Australia even more, sabotaging its prospect as a bridge between the West and the East.
COMMENT – I rarely highlight anything from the CCP’s tabloid, Global Times, but I found this one particularly interesting… one day after the Financial Times reported that Australia has largely diversified away from the PRC after Beijing imposed sanctions on Canberra, the Global Times feels compelled to refute the story.
29. House Democratic Aide Fired after Ties to Chinese Embassy Revealed
Jimmy Quinn, National Review, October 28, 2022
Matthew Olsen, U.S. Department of Justice, October 24, 2022
These three cases highlight, once again, the threat individuals acting at the direction of the PRC government pose to our institutions and to the rights of people in the United States. These operations include the harassment and attempted repatriation by force of individuals living in the U.S.; the effort to corrupt our judicial system; and the attempt to recruit agents for the PRC under the cover of a front academic organization. We will not tolerate these actions.
Attorney General Merrick Garland, U.S. Department of Justice, October 24, 2022
Good afternoon. I am joined today by Deputy Attorney General Monaco, FBI Director Wray, and Assistant Attorney General Olsen. Also here are Assistant United States Attorneys from the Eastern District of New York and the District of New Jersey.
Over the past week, the Justice Department has taken several actions to disrupt criminal activity by individuals working on behalf of the government of the People's Republic of China (PRC). As always, the defendants in these cases are presumed innocent until proven guilty in a court of law.
Earlier today, in the Eastern District of New York, a complaint was unsealed charging two PRC intelligence officers with attempting to obstruct, influence, and impede a criminal prosecution of a PRC-based telecommunications company.
The complaint alleges that, in 2019, the defendants directed an employee at a U.S. government law enforcement agency to steal confidential information about the United States’ criminal prosecution of the company.
The defendants believed they had recruited the U.S. government employee as an asset. But in fact, the individual they recruited was actually a double agent, working on behalf of the FBI.
As the complaint alleges, the defendants paid a bribe to the double agent to obtain non-public information, including files from the U.S. Attorney’s Office in the Eastern District. They did so in the hope of obtaining the prosecution’s strategy memo, confidential information regarding witnesses, trial evidence, and potential new charges to be brought against the company.
The double agent provided the defendants with documents that appeared to present some of the information they sought. In fact, the documents were prepared by the United States government for the purpose of this investigation and did not reveal actual meetings, communications, or strategies.
This was an egregious attempt by PRC intelligence officers to shield a PRC-based company from accountability and to undermine the integrity of our judicial system.
Also earlier today, in the District of New Jersey, an indictment was unsealed charging four individuals, including three PRC intelligence officers, with conspiring to act in the United States as illegal agents on behalf of a foreign government.
The indictment alleges that, between 2008 and 2018, the defendants used the cover of a purported Chinese academic institute to target, co-opt, and direct individuals in the United States to further the PRC’s intelligence mission.
Those directives included attempts to procure technology and equipment from the United States and to have it shipped to China. They also included attempts to stop protected First Amendment activities – protests here in the United States – which would have been embarrassing to the Chinese government.
Separately, in the Eastern District of New York, the Justice Department charged seven individuals, who were working on behalf of the PRC, with engaging in a multi-year campaign of threats and harassment to force a U.S. resident to return to China. Last Thursday, we arrested two of those defendants.
Those activities were part of the PRC's global, extralegal effort, known as “Operation Fox Hunt.” Its purpose is to locate and bring back to China alleged fugitives who have fled to foreign countries, including the United States. The PRC has a history of targeting political dissidents and critics of the government who have sought refuge in other countries.
The indictment alleges that the defendants, working at the direction of the government of the PRC, engaged in a campaign of harassment, threats, surveillance, and intimidation aimed at coercing the victim to return to China.
We also allege that the defendants threatened and harassed the victim’s family members, both in the U.S. and in China.
The PRC government forced the victim’s nephew to travel from China to the United States to convey the PRC’s threats to the victim's son.
The defendants threatened the victim, saying that “coming back and turning yourself in is the only way out.” They showed up at the home of the victim’s son in New York. They filed frivolous lawsuits against the victim and his son and said it would be “endless misery” for the [father] and son to defend themselves.
And they made clear that their harassment would not stop until the victim returned to China.
As these cases demonstrate, the government of China sought to interfere with the rights and freedoms of individuals in the United States and to undermine our judicial system that protects those rights. They did not succeed.
The Justice Department will not tolerate attempts by any foreign power to undermine the Rule of Law upon which our democracy is based.
We will continue to fiercely protect the rights guaranteed to everyone in our country. And we will defend the integrity of our institutions.
Deputy Attorney General Lisa Monaco, U.S. Department of Justice, October 24, 2022
The Department of Justice will not tolerate threats from a foreign power to the rights of Americans or to our nation’s institutions.
As the Attorney General laid out, the cases unsealed today take place against a backdrop of malign activity from the People’s Republic of China (PRC) that includes espionage, harassment, obstruction of our justice system, and unceasing efforts to steal sensitive U.S. technology.
In the words of our Intelligence Community, China seeks to be a major power on the world stage and to challenge the United States in multiple arenas, and today’s cases make clear that Chinese agents will not hesitate to break the law and violate international norms in the process.
Two of those cases in particular show the lengths they are willing to go in pursuit of unfair advantage. But the defendants charged today met their match in the agents, analysts, and prosecutors of the Department of Justice.
U.S. Department of Justice, October 24, 2022
Charges Include Conspiracy to Forcibly Repatriate PRC Nationals, Attempted Obstruction of a Criminal Prosecution, and Conspiracy to Act as an Illegal Agent of a Foreign Country
In three separate cases in the U.S. Attorneys’ Offices for the Eastern District of New York and the District of New Jersey, the Justice Department has charged 13 individuals, including members of the People’s Republic of China (PRC) security and intelligence apparatus and their agents, for alleged efforts to unlawfully exert influence in the United States for the benefit of the government of the PRC.
34. U.S. Says Chinese Tried to Obstruct Huawei Prosecution
Sadie Gurman and Dustin Volz, Wall Street Journal, October 24, 2022
Failed scheme included an effort by two alleged Chinese intelligence officers to bribe a U.S. law-enforcement official, prosecutors say.
Two Chinese intelligence officers tried to bribe a U.S. law-enforcement official to obtain what they believed was inside information about the U.S. criminal case against Chinese telecommunications giant Huawei Technologies Co., prosecutors alleged in a case unsealed Monday.
The defendants, Guochun He and Zheng Wang, were charged in a federal criminal complaint filed in Brooklyn last week and made public on Monday. The charging papers don’t name Huawei, instead referring to an unnamed telecommunications company based in China. People familiar with the case said it concerns Huawei.
COMMENT – Will the U.S. DOJ reconsider its agreement with the Huawei CFO given the clear indication that the PRC Government tried to manipulate the case… as per the agreement with Meng, the U.S. DOJ has until December 2022 to recharge her.
35. Belgium triggers Chinese backlash with port security warning
Barbara Moens, Politico, October 25, 2022
A diplomatic dispute has broken out between China and Belgium, amid rising concerns over Beijing's involvement in European infrastructure.
According to a leaked diplomatic cable, seen by POLITICO, a Chinese official demanded that Belgian Foreign Affairs Minister Hadja Lahbib "retract" an interview in which she cited warnings that China's commercial ships could be "converted into warships for military equipment.”
A couple of days after the interview, a diplomat from the Chinese Embassy in Belgium met with a Belgian foreign ministry official at the request of the Chinese, according to the cable. The diplomat criticized the accusations from Lahbib that China would be disguising military ships as civil ships and stressed that the minister shouldn’t listen to “rumors." China then asked Belgium to retract the interview, which the foreign affairs ministry declined to do.
In a thinly veiled threat, the Chinese diplomat also pointed out that trade between Chinese and Belgian ports is lucrative for Belgium. The Belgian government should respect that economic activity if it wants this to continue, the diplomat added.
The leak provides a rare glimpse into the worsening tensions between Europe and China that normally stay hidden from view in the closely guarded world of diplomatic relations.
It comes at an increasingly fraught time, with mounting unease in European capitals over China's investment in ports and other critical infrastructure.
Jonathan Holslag, a professor at the Free University of Brussels, recently warned about the role of the Chinese maritime sector in the Belgian ports.
Lahbib referred to Holslag’s report in the interview with Belgian media earlier this month. “You have also read how Chinese merchant ships can be converted into warships for military equipment,” Lahbib said.
When asked whether Belgium should tackle the investments of Chinese shipping company Cosco, she said her country should think about it and that “together with the rest of the EU, we have to reduce our strategic dependency on China.”
Lukas Lecluyse, VRT News, October 4, 2022
[GOOGLE TRANSLATE] We need to be more aware of the political and military role of the major Chinese shipping companies. That is what professor of International Politics Jonathan Holslag (VUB) tells in "The appointment". In a report, he emphasizes that China purposefully designs ships so that they can later be used in conflicts. "We must learn our lessons from the conflict in Ukraine and focus on the resilience and security of our ports," says Holslag.
37. Illegal Chinese ‘police stations’ uncovered in the Netherlands, reports say
Wilhelmine Preussen, Politico, October 26, 2022
China has illegally opened at least two “police stations” in the Netherlands since 2018 in an attempt to pressure Chinese dissidents, RTL Nieuws and Follow the Money revealed Tuesday.
The so-called overseas service stations offer diplomatic services to Chinese Dutch citizens, such as renewing their driving licenses — but they also attempt to silence Chinese dissidents in Europe, the media outlets reported, citing a Chinese victim named Wang Jingyu.
Wang told Dutch journalists his story, saying that he fled to the Netherlands after he was followed by police in China for criticizing the regime on social media. But when he arrived, the Chinese police station in Rotterdam asked him “to go back to China to solve my problems,” adding that he should also consider his family.
“These agencies are illegal,” a spokesman from the Dutch foreign ministry said, adding that the government is going to investigate and take “appropriate actions.”
While the Chinese embassy told reporters that they are not aware of the existence of the stations in Amsterdam and Rotterdam, the Dutch media outlets point to Chinese reports according to which a senior embassy official was present at a meeting where the establishment of the Amsterdam outpost was discussed.
38. VIDEO – China accused of illegal police stations in the Netherlands
BBC News, October 26, 2022
Dutch media found evidence that the "overseas service stations", which promise to provide diplomatic services, are being used to try to silence Chinese dissidents in Europe.
A spokeswoman for the Dutch foreign ministry said the existence of the unofficial police outposts was illegal.
The Chinese foreign ministry has rejected the Dutch allegations.
39. Chinese police operatives working in Canada, U.S. says in new court filing
Steven Chase, Globe and Mail, October 27, 2022
40. Chinese overseas police station in Dublin ordered to shut
Jack Power, Irish Times, October 27, 2022
Department of Foreign Affairs told Chinese embassy to close ‘police service station’ in Dublin city.
41. Three Arrests, Two Superpowers and a Secret Prisoner Swap
Drew Hinshaw, Joe Parkinson, and Aruna Viswanatha, Wall Street Journal, October 27, 2022
42. Frontier influencers: the new face of China’s propaganda
Fergus Ryan, Daria Impiombato, and His-Ting Pai, Australian Strategic Policy Institute, October 20, 2022
This report explores how the Chinese party-state’s globally focused propaganda and disinformation capabilities are evolving and increasing in sophistication. Concerningly, this emerging approach by the Chinese party-state to influence international discourse on China, including obfuscating its record of human rights violations, is largely flying under the radar of US social media platforms and western policymakers.
In the broader context of attempts by the Chinese Communist Party (CCP) to censor speech, promote disinformation and seed the internet with its preferred narratives, we focus on a small but increasingly popular set of YouTube accounts that feature mainly female China-based ethnic-minority influencers from the troubled frontier regions of Xinjiang, Tibet and Inner Mongolia, hereafter referred to as ‘frontier influencers’ or ‘frontier accounts’.
Despite being blocked in China, YouTube is seen by the CCP as a key battlefield in its ideological contestation with the outside world, and YouTube’s use in foreign-facing propaganda efforts has intensified in recent years. Originally deployed on domestic video-sharing platforms to meet an internal propaganda need, frontier-influencer content has since been redirected towards global audiences on YouTube as part of the CCP’s evolving efforts to counter criticisms of China’s human rights problems and burnish the country’s image.
Alongside party-state media and foreign vloggers, these carefully vetted domestic vloggers are increasingly seen as another key part of Beijing’s external propaganda arsenal. Their use of a more personal style of communication and softer presentation is expected to be more convincing than traditional party-state media content, which is often inclined towards the more rigid and didactic.
For the CCP, frontier influencers represent, in the words of one Chinese propaganda expert, ‘guerrillas or militia’ fighting on the flanks in ‘the international arena of public opinion’, while party-state media or the ‘regular army’ ‘charge, kill and advance on the frontlines’.
43. China using influencers to whitewash human rights abuses, report finds
Helen Davidson, The Guardian, October 20, 2022
Social media videos by people from the Uyghur community are part of a sophisticated propaganda campaign, thinktank says.
44. Ministers urged to expel China diplomat over Manchester protest violence
Josh Halliday, The Guardian, October 20, 2022
British ministers have been urged immediately to expel a senior Chinese diplomat who admitted being involved in violence against protesters in Manchester, as the government faced growing criticism over its “weak and supine” response.
Zheng Xiyuan, the Chinese consul general, said it was his “duty” to grab the hair of a pro-democracy campaigner who was badly injured after being dragged inside the consulate grounds on Sunday.
Zheng, one of the most senior Chinese diplomats in the UK, denied attacking anybody but said he had tried to “control the situation”, adding: “The man abused my country, my leader – I think it’s my duty.”
MPs from across the Commons called on Thursday for the government to take tough and immediate action against the Chinese officials involved.
The Foreign Office minister Jesse Norman told MPs that if police believed criminal offences had taken place then the UK would expect China to waive diplomatic immunity for the suspects. If Beijing refused to waive this immunity, he said, then “diplomatic consequences will follow”.
Addressing MPs, Norman said footage of the incident looked “damning”.
COMMENT – I can almost hear the chanting: Hey-Hey, Ho-Ho… Zheng Xiyuan has got to Go!!!
45. Allies blast Scholz over Chinese investment in German port
Associated Press, October 20, 2022
Lawmakers from two of Germany’s governing parties on Thursday slammed plans for Chinese shipping group COSCO to take a major stake in the operator of the country’s biggest container terminal, warning that they pose a national security risk.
Public broadcaster NDR reported that Chancellor Olaf Scholz has asked officials to find a compromise that would allow the investment in Hamburg to happen, after six ministries initially rejected it on the grounds that COSCO, already the port’s biggest customer, could get too much leverage.
Two officials with knowledge of the matter, who spoke on condition of anonymity as they weren’t authorized to be quoted, confirmed that several ministries opposed the deal. Scholz’s office said the investment review would follow existing rules but declined further comment, citing business confidentiality.
Lawmakers from the Green party and the Free Democrats, which formed a coalition last year with Scholz’ Social Democrats, openly criticized the plan.
Nahal Toosi, Politico, October 23, 2022
In Panama, a bridge to connect the country highlights China’s growing diplomatic presence and sway, while the U.S. goes four-and-a-half years without an ambassador.
Jennifer Korn, CNN, October 21, 2022
HUMAN RIGHTS AND RELIGIOUS PERSECUTION
48. Parliament votes to help Uyghurs and condemn genocide in China
Steven Chase, The Globe and Mail, October 25, 2022
Canadian MPs voted 258 to 0 to endorse a report calling on Ottawa to extend special immigration measures that would grant refuge to Uyghurs and other Turkic minorities fleeing repression from China.
49. Uyghur group challenges Britain over 'slave labour' cotton
Sam Tobin, Reuters, October 25, 2022
A Uyghur rights group told a London court on Tuesday that the British government has unlawfully failed to investigate the importation of cotton produced with "slave labour" in the Chinese province of Xinjiang.
The World Uyghur Congress (WUC), an international organisation of exiled Uyghur groups, is taking legal action at London's High Court against the state's Home Office, HM Revenue and Customs (HMRC) and National Crime Agency (NCA).
INDUSTRIAL POLICIES AND ECONOMIC ESPIONAGE
50. China Summons Chip Firms for Emergency Talks After US Curbs
Bloomberg, October 19, 2022
China’s top technology overseer convened a series of emergency meetings over the past week with leading semiconductor companies, seeking to assess the damage from the Biden administration’s sweeping chip restrictions and pledging support for the critical sector.
The Ministry of Industry and Information Technology has summoned executives from firms including Yangtze Memory Technologies Co. and supercomputer specialist Dawning Information Industry Co. into closed-door meetings since Washington unveiled measures to contain China’s technological ambitions.
51. Beijing Has Few Good Options to Retaliate for Chip Bans
Jacky Wong, Wall Street Journal, October 28, 2022
Extreme nature of the restrictions demands a forceful response—of some kind.
Beijing so far hasn’t retaliated against the Biden administration’s extensive semiconductor export controls targeting China. That might be set to change, however, now that the 20th Party Congress has formally confirmed President Xi Jinping as party leader for a third consecutive term.
There are no easy options for China, but the way in which the country responds will be a key signal on how the two superpowers’ fencing match will evolve in the new era of Biden and Xi.
The sweeping U.S. restrictions on technology exports this month came while China’s leaders were busy preparing for the critical twice a decade meeting of the ruling Communist Party. Beijing will now need to consider how to respond given how far-reaching the chip curbs are: They will set China’s semiconductor industry back years, effectively crushing President Xi’s hope to become more self-sufficient in chip making if they are strictly enforced.
A tit-for-tat response in the semiconductor sector would be almost impossible given China’s still-heavy reliance on foreign technology. Many American semiconductor companies like Qualcomm make a significant proportion of their revenue in China, but refusing to buy from them would be self-defeating.
Going after other American companies with big exposure in China could be one option. Apple, which manufactures most of its iPhones in China and makes nearly a fifth of its revenue there, has long been highlighted as a possible target—particularly during President Trump’s trade war against the country. But nothing substantial has materialized. That is partly because Apple, and companies along its supply chain, employ a huge number of people in China. Getting too tough on the company would entail significant collateral damage to a Chinese labor market that is underperforming. And after all, American businesses are some of the few remaining advocates Beijing has in Washington. Full-blown retaliation could undermine that.
There wasn’t much punishment of American companies in the wake of the Trump administration’s sanctions on Huawei—but Beijing did let Qualcomm’s planned acquisition of NXP Semiconductors wither on the vine. Several other deals including Intel’s $6 billion purchase of Tower Semiconductor are now before Beijing for approval. Research group Gavekal says the fate of that deal could be a leading indicator of future treatment of U.S. companies.
Beijing could also impose its own export controls on products that it dominates like battery materials or pharmaceutical ingredients. But China’s previous experience with Japan—when it restricted supplies of rare earths—ended up pushing Japan and other countries to look for other sources. There is a movement to onshore manufacturing of products that are dominated by China, and more export restrictions could accelerate that. Gavekal thinks this option is unlikely but if Beijing does go ahead, it would be a sign that retaliation this time will be less restrained than before.
The devastating impact of the chip restrictions requires some kind of forceful response from Beijing. Yet there are no easy choices that won’t inflict damage on China itself. How far China will be willing to go will be a strong signal on just how bad the relationship between the two countries could get.
52. Joe Biden crushes Xi Jinping’s precious semiconductor ambitions
George Magnus, The New Statesman, October 21, 2022
The US has imposed sweeping sanctions on a sector key to China’s goal of global technological dominance.
53. SK Hynix weighs future of China chip plant after U.S. tech curbs
Kim Jaewon, Nikkei Asia, October 26, 2022
54. AUDIO – This Is What the US Just Did to China on Semiconductors
Tracy Alloway and Joe Weisenthal, Bloomberg, October 24, 2022
55. Two Men Rode a Decadelong Tech Wave in China—Only One Is Staying
Shen Lu and Karen Hao, Wall Street Journal, October 25, 2022
Two Chinese entrepreneurs, Derek Li and Rick Chang, separately jumped into the country’s tech boom nearly a decade ago, in the early days of Xi Jinping’s rule.
China’s mobile-technology market was exploding, fueled by generous government subsidies and a light touch from regulators. Their respective businesses benefited greatly from the dynamism in China’s tech sector, underpinned by Mr. Xi’s push for innovation and entrepreneurship.
That atmosphere has now soured, with the Chinese leader targeting what he calls the ills of unchecked capitalism. While he still lavishes support on strategic tech sectors, Mr. Xi has aimed a regulatory fusillade at “monopolistic” practices of internet giants and their handling of troves of citizen data.
The shift has put the two entrepreneurs on diverging paths. Mr. Chang, who is greatly dismayed by today’s environment, has moved to the U.S. Mr. Li, who sees the change as a blip in the country’s steady upward trajectory, says he will remain in China and continue expanding his latest tech venture.
56. 4 current, former Samsung employees indicted on semiconductor technology theft charges
Yonhap News Agency, October 27, 2022
Prosecutors have indicted four current and former employees of electronics giant Samsung Group on charges of stealing highly valued semiconductor technologies from the South Korean conglomerate and leaking them to overseas firms, officials said Thursday.
The Seoul Central District Prosecutors Office has indicted two Samsung Engineering researchers and two other former Samsung engineers with physical detention on charges of violating the unfair competition prevention act and the industrial technology protection act, the officials said.
One of the former employees, who worked in the semiconductor field, was accused of receiving an operation manual and a blueprint for an ultrapure water system and other key technology data from two Samsung Engineering workers and leaking them in August 2018 while he was trying to find a new job at a Chinese semiconductor consulting firm.
After getting a job at a Chinese firm, the engineer allegedly used the stolen materials to place an order for an ultrapure water system.
Ultrapure water is water purified of any ions, organic matter or microbe to be used for cleansing in the semiconductor manufacturing process.
Samsung Electronics has invested over 30 billion won (US$21.2 million) each year since 2006 to develop the ultrapure water system.
Prosecutors said the other former employee faces charges of leaking a computer file carrying a key foundry semiconductor technology of Samsung Electronics Co. to semiconductor rival Intel while he worked for the Korean firm.
He was in the process of moving his job to Intel at that time, and accessed the firm's semiconductor technology data online and stole the file by taking photos, according to prosecutors.
57. As US-China relations worsen, expect supply chain chaos
John Paul Hampstead, Freight Waves, October 27, 2022
The trans-Pacific trade lane connecting the world’s most important countries is a pillar of the global economy. But now it’s becoming an epicenter of supply chain, financial and geopolitical risk.
58. Is China the Answer? Nine Years On.
Fred Rocafort, China Law Blog, October 25, 2022
59. The end of Apple’s affair with China
The Economist, October 24, 2022
Covid-19, costs and geopolitics are driving the iPhone-maker to manufacture and sell its gadgets elsewhere.
By a dusty stretch of the deafening road from Chennai to Bengaluru lie three colossal, anonymous buildings. Inside, away from the din of traffic, is a high-tech facility operated by Foxconn, a Taiwanese manufacturer. A short drive away Pegatron, another Taiwanese tech firm, has erected a vast new factory of its own. Salcomp, a Finnish gadget-maker, has set one up not far away. Farther west is a 500-acre campus run by Tata, an Indian conglomerate. What these closely guarded facilities have in common is their client: a demanding and secretive American firm known locally as “the fruit company”.
The mushrooming of factories in southern India marks a new chapter for the world’s biggest technology company. Apple’s extraordinarily successful past two decades—revenue up 70-fold, share price up 600-fold, a market value of $2.4trn—is partly the result of a big bet on China. Apple banked on China-based factories, which now churn out more than 90% of its products, and wooed Chinese consumers, who in some years contributed up to a quarter of its revenue. Yet economic and geopolitical shifts are forcing the company to begin a hurried decoupling. Its turn away from China marks a big shift for Apple, and is emblematic of an even bigger one for the world economy.
CYBER AND INFORMATION TECHNOLOGY
60. Huawei Posts Sharp Profit Fall in Year Without Phone Cash Cow
Bloomberg, October 27, 2022
Huawei Technologies Co.’s net income fell about 40% in the first three quarters of this year as the Chinese telecom giant couldn’t revive its cash cow smartphone business and spent heavily on research and development.
The Shenzhen-based company, once the world’s biggest smartphone maker, generated 27.2 billion yuan ($3.8 billion) in net income between January and September with a profit margin of 6.1%, according to Bloomberg calculations. It marked a slump from 46.5 billion yuan net income in the same period a year ago, when Huawei reported a double-digit profit margin. Revenue for the September quarter rose 6% to 144.2 billion yuan, per Bloomberg calculations.
MILITARY AND SECURITY THREATS
61. China Nods to Even Tighter Ties with Russia in Xi Jinping’s Third Term
Josh Chin, Ann Simmons, and Wenxin Fan, Wall Street Journal, October 28, 2022
Beijing eager to deepen relationship with Moscow ‘at all levels,’ China’s foreign minister says in call with Russian counterpart.
China’s top diplomat signaled that Chinese leader Xi Jinping, fresh from extending his power for a norm-breaking third term, intends to double-down on his tight relationship with Russia’s Vladimir Putin—driving an even deeper wedge between the two authoritarian rulers and the West.
In a Thursday phone call with Russian counterpart Sergei Lavrov, Chinese Foreign Minister Wang Yi said Beijing wants to deepen its relationship with Moscow “at all levels,” according to a readout published by China’s Ministry of Foreign Affairs late that night.
China firmly supports the efforts of Mr. Putin “to unite and lead the Russian people in overcoming difficulties” and “further establish Russia’s status as a major power on the international stage,” Mr. Wang said.
Mr. Lavrov congratulated Mr. Xi on his “utter success” at a recently concluded Communist Party congress in Beijing, according to the Chinese readout. In addition to securing his third term, Mr. Xi used the congress to stack the party’s top leadership with his allies and protégés, paving the way for him to rule China essentially unchallenged.
62. China's Uncertain Times and Fading Opportunities
Brock Erdahl and David Gitter, Center for Advanced China Research, October 23, 2022
63. China, Russia Deepen Partnership on Satellite Navigation
John Hardie, Foundation for the Defense of Democracy, October 20, 2022
China and Russia signed contracts late last month to host ground stations for their respective global navigation satellite systems (GNSSs), BeiDou and GLONASS, which are alternatives to the U.S.-run Global Positioning System (GPS). These stations will improve the performance of their systems, which provide precision, navigation, and timing (PNT) services for both military and civilian purposes.
The two sides inked the contracts during the September 27 annual meeting of their Project Committee on Important Strategic Cooperation in Satellite Navigation, launched in 2015. He Yubin, head of the China Satellite Navigation System Committee, and Yuri Borisov, head of Russia’s state corporation Roscosmos, co-chaired the meeting.
Under the contracts, Beijing will place three ground monitoring stations at various locations throughout Russia, while Moscow will do the same in China. Both countries have sought to expand their respective networks of ground stations in recent years, aiming to bolster the performance of their systems. Sino-Russian talks on mutual hosting of ground stations have been ongoing since at least 2014.
Beijing and Moscow sides also said the China Satellite Navigation Office’s Testing and Evaluation Research Center and the Information and Analysis Center for Positioning, Navigation and Timing at Roscosmos’ Central Research Institute of Machine-Building signed a statement “on the joint provision of information support services” to BeiDou and GLONASS customers, without offering additional details.
Improving the PNT services offered by BeiDou and GLONASS would benefit Chinese and Russian military as well as civilian users. Both militaries are working to integrate PNT and other space services into their weapons and command-and-control systems, as the U.S. intelligence community warned last year. Some industry observers also fear Sino-Russian cooperation could help erode GPS’ international market share. Indeed, China’s People’s Daily has boasted that the GLONASS-BeiDou partnership could “break the U.S. ‘hegemony’ in satellite navigation” while mitigating the risk of reliance on GPS.
64. China: Can It Control Japan’s Taiwan Policy?
Niklas Swanström, Istituto per gli Studi di Politica Internazionale (ISPI), September 27, 2022
China’s reaction to US Speaker of the House Nancy Pelosi’s visit to Taiwan was resolute. The military exercises with live-fire drill were a nearly Pavlovian reaction suggesting they were long pre-planned. China’s message to the US and the international community was a clear warning not to assist Taiwan, oppose a reunification, prevent a military escalation, or provide political support through visits and exchanges.
The challenge faced by the international community now is on how to move forward. Will countries bow down to Chinese threats, or will they uphold their values and attempt finding a peaceful solution?
In this process, Japan has grown into a central actor, not least due to its increased engagement in international security, very capable military (above all its navy), and its growing commitment to global peace. Japan is instinctively positive towards Taiwan and its democratic development; however, at the same time, it is also concerned about the economic impact of potential Chinese reactions in light of Japan’s growing relations with Taiwan. Beijing’s boycott of South Korea when Seoul placed a new THAAD system on its soil is fresh enough in the Japanese memory. This article will look at how China could increase pressure on Japan and the extent to which it is willing — and able — to go.
65. Why People Are Flocking to a Symbol of Taiwan’s Authoritarian Past
Amy Chang Chien, John Liu, and Chris Horton, New York Times, October 25, 2022
At a museum dedicated to Taiwan’s not-so-distant authoritarian past, Taiwanese see China’s present, and a dark vision of one possible future under autocratic rule.
ONE BELT, ONE ROAD STRATEGY
66. The Gulf: Dragon on the Prowl
J. Mohan Malik, Focus Asia, October 18, 2022
The geopolitical sands are shifting in the Persian Gulf. Investments in critical infrastructure allow Beijing to project power, reap financial rewards, secure resources, expand markets, acquire strategically located bases, and undermine America’s security alliances. The Russian invasion of Ukraine has further brought into sharp focus simmering tensions and stresses and strains. Economic diversification, strategic hedging, pragmatism and “Look East” are the buzzwords.
The Gulf sheikhdoms are on the cusp of history where choices made today will shape their future. Washington can no longer expect a monogamous relationship in a region ripe for polygamy with multiple suitors. Nonetheless, this paper argues that the logic of geopolitics dictates that China’s expansionist moves would prevent America’s retreat because the success of Washington’s Indo-Pacific strategy is linked to maintaining its presence in the resource-rich Gulf, and not letting China dominate it. Besides, when the chips are down, nearly all Gulf states still “Look West” for security against regional threats.
67. Chinese tech giants are creating a new class of elite workers in Latin America
Daniela Dib and Meaghan Tobin, Rest of the World, October 26, 2022
As companies like Didi, Kuaishou, Huawei, and TikTok expand across Latin America, they are hiring young, local tech professionals and accelerating their corporate careers. In return, Chinese companies are forming a specialized talent pool to gain an edge in a region where roles at American and European companies have long held prestige.
Rest of World spoke with nine employees at Chinese tech companies in Argentina, Mexico, Brazil, and Colombia — Latin America’s largest markets — and found that these firms commonly serve as young corporate employees’ gateway into the region’s coveted tech cohort. Employees’ positions ranged broadly from mid to high-level management roles in marketing, operations, and compliance, among others.
China’s digital inroads into the Middle East
James Calabrese, East Asia Forum, October 19, 2022
China’s engagement with the Middle East and North Africa (MENA) is driven by the need to maintain access to vital energy supplies. Beijing is also motivated by its ambition to expand markets for Chinese products and investment, establish ‘trade hubs’ along the 21st Century Maritime Silk Road — the sea-based component of the Belt and Road Initiative (BRI) — and enlist partners in efforts to revise the standards and norms of an international order no longer dominated by the United States.
OPINION PIECES
68. An Era Just Ended in China
Yuen Yun Ang, New York Times, October 26, 2022
Forty-four years ago, Deng Xiaoping launched the period of “reform and opening up” that transformed China from a poor, autarkic nation into an emerging global power.
President Xi Jinping officially ended that era last week. Mr. Xi emerged from the Chinese Communist Party’s congress in Beijing with unchallenged authority and plans for China that revolve around his obsession with control and security — even if that means harming the economy.
It’s a momentous change in outlook.
Mr. Deng’s strategy for China’s spectacular economic achievements had two main components. The first was a collective leadership arrangement within the Communist Party. Mr. Deng rejected Western-style democracy, but China’s tumultuous decades under Mao Zedong had taught him that one-man rule is dangerous. He and the party introduced partial checks and balances into politics at the highest level, including term limits. The second component was a single-minded pursuit of economic growth which, Deng famously declared, would be China’s “hard principle.” Officials throughout China dove headlong into promoting growth at all costs — bringing prosperity but also corruption, inequality and massive industrial pollution.
Last week in Beijing, Mr. Xi dismantled those foundations. He ensured that he would remain paramount leader of China for a third term — if not for life — and packed the party’s leadership with loyalists while heavily prioritizing national security over the pursuit of economic growth.
69. Xi Jinping is seduced by a vision of greater isolation. A mistake that will make China poorer
Rana Mitter, The Guardian, October 23, 2022
As the leader enters his third term, there are increasing signs that the country is turning inwards, replacing the outside world with cyber ‘reality’.
In August, there was an unexpected stir in China about a scholarly article. The piece, published in a respected but specialist journal, argued that during the Ming dynasty (1368-1644) and Qing dynasty (1644-1911), China had been a country relatively closed off to the outside world. Most recent scholarship has assumed that this was a bad thing and that greater openness in the modern era had led to China’s rise in global standing and growth.
But the article took a contrarian position, suggesting that there were economic and social advantages to the doors being closed in large part. The argument might have stayed in the realms of the academic. But it was then sent out on the social media feed of a thinktank closely linked to the Chinese Communist party (CCP). There was plenty of social media comment, mostly wondering whether the CCP was hinting that today, too, China should think about whether openness was quite such a good idea.
At first glance, it might seem that the opening speech last Sunday by Xi Jinping at the 20th party congress was giving a very different message: indeed, there was a specific pledge praising the idea of openness in the next five years that will mark Xi’s third term. And attention at the end of the Congress has been on the sudden, still unexplained escorting of former president Hu Jintao out of the meeting, and the new Politburo standing committee whose members owe their standing almost entirely to Xi. But there are other signs that the China of the 2020s may be considerably less open than the one we have known for some four decades from the 1980s to 2020. China since the 80s has been defined by the idea that “reform” and “opening” have gone together. Yet that openness created an anomaly in the first two decades of the present century. China became a society highly connected with the outside world but also deeply controlled and monitored at home: open but illiberal, a combination that many theorists of democracy thought impossible. Unlike the old Soviet bloc, there was little sense that China tried to restrict its citizens, except political dissidents, from travelling abroad. The Chinese of the reform era studied in Britain, did deals in America, and saw the sights and bought luxury goods in Italy. Nobody stopped visitors from observing democracy in all its guises in the liberal world, but they understood that open discussion of the concept stopped when they arrived back at Beijing airport.
That open but illiberal Chinese world ended – at least for now – in March 2020 when China shut down and closed its borders against Covid. Now, its population moves around at home with relative freedom, as long as their regular PCR test remains negative, but always aware that a stray Covid case may cause a sudden lockdown for days or weeks. But travel in and out of China, for foreigners and Chinese alike, has become much harder. China is now the only major country with a zero-Covid strategy. The decision is not entirely political: part of the problem is that China continues to have a huge proportion of unvaccinated older people and its patchily effective domestic vaccines do not prevent infection or transmission very well. But the zero-Covid policy is very much associated with Xi personally and his speech made it clear that there is no prospect of it changing in the short term at least.
70. The ‘Anti-Navy’ the U.S. Needs Against the Chinese Military
Representative Mike Gallagher (R-WI), Wall Street Journal, October 25, 2022
Congress needs to bend the Pentagon bureaucracy, in service of a defense strategy that prioritizes hard power. Doing so demands we understand the paradox of deterrence: that to avoid war, you must convince your adversary that you are both capable and willing to wage war.
If we ignore the hard lessons about hard power that we have learned in Ukraine, if we succumb to the utopian path of disarmament, and if we allow the fear of escalation to dominate our decisions, we will feed Mr. Xi’s appetite for conquest and invite war. By choosing to put an anti-navy in Mr. Xi’s path, we can deter war in the short term and buy time to build a Navy that defeats communism over the long term.
71. Rising to the Sharp Power Challenge
Christopher Walker, Journal of Democracy, October 2022
Democratic complacency in the face of ever-more brazen authoritarianism has brought the world to a perilous juncture. There is perhaps no better example than the brutal crackdown on Hong Kong's political and civic freedoms by the Chinese Communist Party (CCP), which has systematically hollowed out the city's democratic integrity.
In September 2021, a few months before pro-Beijing candidates swept a sham election with record-low turnout, Hong Kong democracy activist Nathan Law argued that his city's fate demonstrates "how the institutions of an international free city can be eroded in such a short period of time" and thus "how precious and fragile our freedoms are."
72. Infrastructure Development in the India-China Border: Factoring the Western Support
Satoru Nagao, Institute for Security and Development Policy, October 27, 2022
73. Xi Jinping’s Historic Bid at the Communist Party Congress
Evan Osnos, The New Yorker, October 23, 2022
In his efforts to escape the “cycles of order and disorder, rise and fall” that China’s emperors could not, is Xi himself slipping into them?
74. The Vatican Extends Xi’s Pontificate
Francis X. Maier, Wall Street Journal, October 24, 2022
The Holy See misunderstands the nature of the Chinese regime—and in so doing, abandons the Catholic faithful.
The Vatican announced on Saturday a two-year extension to its provisional agreement with Beijing governing Catholic affairs in China. On the same day, Hu Jintao, China’s former Communist Party general secretary (2002-12) and president (2003-13) and Xi Jinping’s immediate predecessor, was forcibly removed from the party’s National Congress. That body’s convention, which occurs every five years, marks a signature event in the nation’s political life. This year, it anointed Mr. Xi to an unprecedented third five-year term. Whether Mr. Hu’s very public exit was owing to age-related health issues or a brute display of Mr. Xi’s new power is unclear. But there’s a lesson in it for Rome either way.
The exact contents of the Vatican’s deal with Beijing, first signed in 2018, remain secret. Yet certain elements are known. The Vatican has recognized the formerly illicit bishops of China’s regime-controlled Catholic Patriotic Association. It has also agreed to the government’s role in the naming of new bishops. In return, Beijing has reportedly promised increased tolerance for China’s Catholics and legal protection for the unofficial “underground” church traditionally loyal to Rome.
Such arrangements aren’t new. The church has a centuries-long history of this kind of engagement when it seemed necessary. The trouble with such deals is simple: Sometimes they work; more often they don’t. And the church usually loses. Even when honored, the arrangements tend to turn religion into a chaplaincy for the reigning power. This erodes the church’s credibility and evangelical mission. States can also ignore whatever details of a deal they find inconvenient, since the church has little recourse. The 1933 Reichskonkordat between Germany and the Holy See is a classic example. The Nazi regime began violating the deal almost as soon as the ink had dried.
Pope Francis has defended the deal with Beijing. Responding to critics, he stressed that “diplomacy is the art of the possible and of doing things to make the possible become a reality.” The Vatican secretary of state, Cardinal Pietro Parolin, has stated that the China deal is “still in the experimentation phase. . . . As is always the case, such difficult and delicate situations require adequate time for implementation in order to then be able to verify the effectiveness of the result and identify possible improvements.”
Diplomatic gobbledygook can’t obscure awkward facts. Four years after the provisional agreement, many Chinese dioceses remain without a bishop. The underground church is still underground. Local Communist officials continue to bulldoze churches at their discretion. Bishops continue to be arrested or simply disappear. Hong Kong’s former bishop, Cardinal Joseph Zen Ze-Kiun, is currently on trial for “colluding with foreign forces” for his involvement with a fund defending protesters. Beijing continues to make amply clear that the Catholic Church is subservient to the state—with Catholic belief and practice subject to party doctrine.
One might argue that the church is skilled at thinking in the very long term, knowing that times, conditions and regimes change. A neutral observer might easily see the current moment as an inflection point in global affairs. Chinese power and influence are on the rise. Western hegemony seems to be in decline. The papacy has rarely been averse to shrewd realpolitik, so a Vatican strategy that bets on China and an eventual softening of Beijing’s approach to religion could make sense. It also fits comfortably with chronic European resentments of the U.S., shared at times within the Holy See, and the Latin American animus against the giant to the North in Francis’s pontificate.
But as former Czech dissident Václav Havel warned decades ago, ideological states are resilient. They’re not like standard dictatorships. China’s ruling elite and vigorous nationalism may seem familiar, but they’re not. They’re sustained by a left ideology that functions as a gnostic religion, hostile to any competitors. When combined with China’s social-credit and control system—the most invasive and pervasive in history—the church faces an entirely new kind of Caesar.
Which leads us back to the ejection of Mr. Hu.
Charles Chaput, then archbishop of Denver, served a term in the early 2000s on the U.S. Commission on International Religious Freedom. Archbishop Chaput traveled to China on an agency fact-finding mission during the Hu years, where he met the Patriotic Association’s bishop of Beijing: a man secretly married and little more than a flack for party policy. But Archbishop Chaput remembers that while “the Hu government was trying to fully control the church, there was also an unspoken hope that the two versions of the Catholic Church—Patriotic Association and underground—would easily come together once there was more actual freedom.”
That seemed plausible at the time. Many U.S. policy makers presumed economic engagement and its benefits would slowly democratize the Chinese system. They didn’t bank on being outsmarted. Mr. Hu, hardly a soft man on matters of religion, was succeeded by the much tougher and more focused Xi Jinping. “The kind of control of the church today is much sharper in its intensity,” Archbishop Chaput says. “And with the pope now on the wrong side of the issue, the China situation seems so very different.”
Different, yes. And for Chinese Catholics who might reasonably feel both betrayed and abandoned, worse.
75. China Is About to Fall into the Middle-Income Trap
Mickey D. Levy, Wall Street Journal, October 26, 2022
By turning away from free enterprise, Xi Jinping ensures that the country’s economy will stop growing.
The 20th National Congress of the Chinese Communist Party solidified Xi Jinping’s power and confirmed his ideological view of China’s future. Beyond that, it revealed little about how China will deal with its faltering economy. Growth is slowing and increasing autocracy will only aggravate long-run problems. The command-and-control model of governance is inherently flawed. The drags it places on economic growth will mount and compound as Beijing tightens its grip.
There’s a stark irony in Mr. Xi’s intensifying shift away from markets, for markets are what made China the economic powerhouse it is today. The robust growth that lifted China from poverty was driven by a hybrid model: a form of state capitalism in which Beijing allowed private ownership and U.S.-style free enterprise to flourish alongside large, low-productivity state-owned enterprises. China’s booming export-related manufacturing was driven by low-cost labor, government investment and highly efficient acquisition of foreign technology and know-how. With free enterprise, human capital flowed into China and drove innovation and productivity. China’s share of global exports rose from 4% in 2000 to 14% in 2015, creating well-paying jobs and domestic prosperity that financed modern urban infrastructure. China accounted for 30% of global growth in this period.
Some commentators touted China’s economic-growth model as a favorable alternative to U.S. capitalism and projected rapid growth far into the future. This was naive. That’s not how economies work. As China’s supply of cheap labor was absorbed, wages and costs of production rose sharply, while returns on capital investment declined. Total productivity from combined capital and labor inputs diminished. China’s goal of making a transition from export-related manufacturing to domestic consumption has failed, and growth relies increasingly on government spending, a policy doomed to fail.
Mr. Xi’s regime has throttled back free enterprise, undercutting what brought China prosperity. Tighter controls are squeezing private entrepreneurship, innovation and capital mobility. The government’s increasing ownership of industry and bureaucratic allocation of national resources are generating inefficiencies and excesses.
76. Why Joe Biden faces a ‘decisive decade’ in contest with China
John Lee, Australian Financial Review, October 17, 2022
If America wants to show its staying power in the region, then it cannot let China dominate economic institutions like the CPTPP.
77. Biden’s National Security Strategy Is Undone by Fantasy
Nadia Schadlow, Wall Street Journal, October 23, 2022
It acknowledges the threat from China, then makes wholly unrealistic pledges of cooperation.
78. Xi Jinping is China’s most audacious leader for decades, argues Kevin Rudd
Kevin Rudd, The Economist, October 25, 2022
He has smashed the economic and political precedents set by his predecessors, says Australia’s former prime minister
79. How Will the 20th National Congress Change China?
Jagannath P. Panda, Institute for Security and Development Policy, October 7, 2022
80. Improving US Relations Is Not a Priority for China [ORIGINAL IN KOREAN]
Kim Dong-hyun and Patrick Cronin, Yonhap News Agency, October 23, 2022
KIM - In light of the direction Xi Jinping laid out during the Chinese Communist Party's 20th National Congress, do you see the US and China on a path to intensifying rivalry, or is there room for reconciliation during Xi's third term in power?
CRONIN - Xi Jinping’s priority is rejuvenating the CCP and restoring China's unsurpassed influence, not improving relations with the United States. The 20th Party Congress report offers a foreboding geopolitical assessment, warning of “black swan” and “gray rhino” events that demand the Chinese people be prepared for “high winds, choppy waters, and even dangerous storms.” Prior party reports placed more emphasis on peace and development, while this latest directive sees dark, hegemonic forces resorting to “force and subterfuge.” This sounds more like a rival state than an actor seeking great-power reconciliation
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KIM - Regarding Taiwan, Xi vowed to continue to strive for peaceful reunification. Yet, at the same time said, "we reserve the option of taking all measures necessary." How do you assess the likelihood of China trying to take over Taiwan by force? What do you think about the prediction that Xi will attempt unification by force in 2027 timed with modernization of the People's Liberation Army?
CRONIN - What is most worrisome about Taiwan is Xi Jinping’s utter disregard for the wishes of the people of Taiwan. When he declares this issue must be left to China, he means the CCP. Xi’s stranglehold on the party is unquestioned. Xi’s mind is made up about Taiwan. Xi will do whatever he can to crush Taiwan’s democratic self-rule because its existence is an existential threat to the party-state. For now, “peaceful” approaches comprise pressure, inducement, and subversion. At some point, perhaps as soon as five years from now, Xi may escalate for various reasons and seek forceful unification. For now, Xi knows that using overt force is an inferior strategy to relying more on more indirect approaches for subjugating Taiwan. Beijing thinks it knows what is best for the people living in Taiwan, and, ultimately, it is that conceit that should send shivers throughout East Asia and the Indo-Pacific.
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KIM - What is the general expectation in Washington and among US scholars about South Korea's role regarding the Taiwan situation?
CRONIN - Washington doubts that South Korea would fully support US military action to prevent a blockade or invasion of Taiwan. This means the expectation is that America’s linchpin ally would, at a minimum, do nothing to undermine efforts to preserve peace across the Taiwan Strait and, at a maximum, provide indirect diplomatic, economic, and logistical support for efforts aimed at thwarting unprovoked aggression against the people of Taiwan. Should conflict erupt, all calculations would be reassessed in response to the unfolding situation.
KIM - The Biden administration is making significant efforts to deny China access to critical technology, such as advanced semiconductors used in AI and supercomputers. And Xi called for achieving China's self-reliance and strength in science and technology. Are two countries heading towards decoupling? Where do you see US-China economic and trade relations going forward?
CRONIN - Xi Jinping’s dual circulation, technological ambitions, and industrial policies seek to make China less dependent on the world and make the world more dependent on China. The United States and like-minded powers are belatedly waking up to this unfair competition. They are beginning to move to protect critical technologies and supply chains, so they are less vulnerable to coercion or surprise. In rolling out the new National Security Strategy earlier this month, National Security Advisor Jake Sullivan stressed that the US will follow the principle of “small yards, high fences.” That means selective decoupling, more significant investment in national technological and scientific capabilities, and rising cooperation with trusted partners. But it should not mean severing mutually beneficial trade and engagement with China. However, there are bound to be some problematic tensions as the United States and others seek to rebalance economics and security.
81. Ora Xi non ha più alibi [Now Xi has no more alibis] – ORIGINAL IN ITALIAN
Filippo Fasulo, Istituto per gli Studi di Politica Internazionale (ISPI), October 28, 2022
[GOOGLE TRANSLATE] This appointment tells us a lot about the management of power under Xi Jinping. Li Qiang, in fact, had been the subject of much criticism for the harsh and disorganized anti-Covid measures applied in Shanghai last spring. The personal relationship between the two, however, evidently had the upper hand as well as certifying Xi's personal endorsement for the adoption of very harsh anti-Covid measures for which it is not, therefore, an excess of zeal by local officials, but of directives shared and awarded by Beijing.
Li Qiang is also representative of the so-called "new Zhejiang army" , that is Xi Jinping's personal faction built on the basis of relations developed while the Secretary General operated in that province between 2002 and 2007.The new number 5 of the CCP, the outgoing secretary of Beijing Cai Qi, is also part of the same group.
Gabriel Scheinmann, American Purpose, October 24, 2022
83. How China Abuses U.S. Diplomats
Wall Street Journal, October 25, 2022
Emails and diplomatic cables show how Beijing uses Covid protocols to harass and monitor Americans.