Friends,
Happy Labor Day Weekend!
I just re-read Nelly Lahoud’s August 2021 Foreign Affairs article “Bin Laden’s Catastrophic Success” and was reminded about two truisms that are important for this newsletter:
1 – misperception is endemic in humans.
2 – despite all of our progress, uncertainty reigns supreme.
Everyone makes assumptions about the future based on their own perceptions of how the world works, sometimes those assumptions and perceptions are correct, but more often they are wrong. The world doesn’t work the way we construct it in our minds or in the models and algorithms we design. Neither more perfect theories, nor additional compute, will change that.
During the raid in May 2011 that killed Osama Bin Laden, Navy SEALs collected a trove of letters, recordings and documents from his compound in Pakistan (thanks Pakistan for letting OBL hide in the retirement community of your senior military and intelligence leaders, we won’t forget that). Years later, the U.S. Government began declassifying those documents which allowed researchers like Lahoud a glimpse into Bin Laden’s thinking before the 9/11 attacks and all the way up to his death.
The thing that jumped out at me in her analysis is that Bin Laden believed that the 9/11 attacks would inspire the American people to rise up against their government and demand the withdrawal of U.S. military forces from the Middle East, leaving the corrupt dictatorships of that region defenseless and enabling Bin Laden and his followers to mount a political takeover.
We all know what happened next. Rather than precipitating a withdrawal, the attacks activated what one senior U.S. military leader described to me as the “American OODA Loop” (Observe, Overreact, Destroy, Apologize).
So why was Bin Laden mistaken in his assumptions and perceptions? Like most questions about cause-and-effect, the answer is almost certainly multicausal. He was seized with an ideology that blinded him to alternative interpretations. He wasn’t exposed to a wide variety of opinions and perspectives. He cherry-picked the data that confirmed the course of action he wanted to take, falling victim to confirmation bias. He believed that he was a man of destiny, endowed by a higher power with the mission of changing the world.
We often think of folks who make decisions like the one Bin Laden made in late October 2000, as irrational. But I think that is wrong. Bin Laden’s decision to conduct what would become the 9/11 attacks was rational based on his perception of how the world works and his assumptions about what would happen next. Those assumptions and perceptions were mistaken.
Bin Laden’s other failure was in planning only for success. Lahoud’s research demonstrates that Al Qaeda was completely unprepared for the American invasion of Afghanistan and the global effort to hunt them down, even though one might reasonably assume that an attack that would be significant enough to compel an American withdrawal from the Middle East, might also be significant enough to compel an American attack against the organizers.
So, what does this have to do with the main topic of this newsletter? Well, I hope it helps us consider that the assumptions and perceptions our rivals, might not be the same ones we have (as well as the likelihood that our own assumptions and perceptions might be wrong… mine included). Our rivals likely possess a different mental model for how the world works and make rational decisions based on that model (just as we do). They likely construct formulas, algorithms, and strategies based on these mental models for how the world works and interpret data and signalling based upon preconceived notions (just as we do). They are also prone to making mistakes and falling victim to psychological biases (just as we are). These dynamics, along with the countless decisions individuals make, create what Clausewitz described as the ‘fog of war’ or uncertainty.
Because these activities involve humans and it is a contest of will between humans without hard rules accepted by all the players, uncertainty reigns supreme. This means that to be effective under these conditions one must internalize the ‘fog of war’ and account for it. Things might turn out as one expects, and one should be ready and able to seize the opportunity to achieve their objectives. While simultaneously being prepared that one’s assumptions and perceptions might be wrong, which forces one to conduct sufficient contingency planning to account for this and have the resources on hand to execute against undesirable, but feasible, scenarios.
This kind of thinking flies in the face of management practices focused on achieving efficiency (concepts like ‘just in time logistics’), in which current conditions are assumed to be permanent with known and predictable rules. This allows leaders to design their “business models” and organizations to optimize to those “rules.” It also flies in the face of thinking based in mathematics and engineering, which assumes that uncertainty can be erased through the accumulation of more data, as well as possessing ever greater computational power with ever more accurate formulas and algorithms.
This doesn’t mean we should get all Luddite and smash the machinery, throw away our smartphones, and abandon spreadsheets for physical accounting ledgers.
But we should be circumspect about what these concepts and technologies can achieve and realistic about what they can’t.
Side-eye at Leopold Aschenbrenner and his manifesto about Artificial General Intelligence (AGI) called “Situational Awareness: The Decade Ahead”… just a piece of advice, history is rarely kind to folks who “trust the trendlines.” (I’ll wade into that mess another time, suffice it to say I’m not persuaded by his thesis.)
Watch the full clip here.
Will we lift the ‘fog of war’?
Probably not.
In December 2001, the book Lifting the Fog of War hit book shelves just after the 9/11 attacks and offered an enticing vision of the future: rather than depending on costly “obsolete” weapon systems, the United States could embrace the new information age and achieve a long-held dream of erasing uncertainty with technology.
The promise of knowing all things, everywhere and immediately was within grasp, which opened the portal to predicting the future (OK, fair, the proponents of this rarely claimed this extreme position, but it certainly did encourage folks to imagine an unrealistic future).
This book fit within a wider debate happening in defense circles over the Revolution in Military Affairs (RMA) and a warfighting concept called Effects-based Operations (EBO). It also helped advance arguments about achieving greater efficiencies in the Department of Defense and the military services through better top down planning. Technology, namely information technologies, could reduce or eliminate uncertainty and therefore defense leaders could “trim the fat” from military planning and programming. Wartime contingencies wouldn’t require those extra resources that were only needed “just in case.” By erasing uncertainty and lifting the ‘fog of war,’ the country could do more with less while still shaping the future in a direction that was favorable to the United States.
This kind of thinking was on display in 2002 and 2003 in the run-up to the Iraq War. If it took 700,000 troops to expel Sadam Hussain from Kuwait in 1991, then with all the new information technologies that had been introduced since then, it would only require a quarter of that number to topple Saddam and bring about a new democratic regime in Iraq a little more than a decade later.
Erasing uncertainty is a perennial dream of social engineers everywhere seeking to perfect the human condition. Progress, whether through perfecting social institutions or through leveraging technology, promises to deliver what folks desire. Never mind that folks don’t agree on what they desire. It allows folks to disregard messy facts and conflicting signals while exuding a confidence that would be unwarranted based on the historical record.
The danger we face today is that our rivals in Beijing, Moscow, Tehran, and Pyongyang each have their own models for how the world works and what they want to achieve, their own perspectives on how we might respond to their efforts to achieve what they desire, and their own assumptions about possible scenarios. No matter what we do or how good we are at collecting and analyzing intelligence, there will be significant uncertainty about those factors and the dynamics of how they might play out.
At the same time, we have very little slack in our own systems (whether military, commercial, or financial), should that uncertainty lead to scenarios we haven’t anticipated or that we choose to ignore because they are undesirable.
We should be adopting tools and methods to better understand these dynamics, but at the same time, we should be humble about what we can “know” (there isn’t an Easy Button) and therefore we need a lot more resources dedicated to hedging against those risks.
***
Speaking of folks with an unwarranted level of confidence, the author of Lifting the Fog of War plays a bit part in the main topic of this newsletter.
Admiral William Owens was a Rhodes Scholar and nuclear submarine officer, who served as the Vice Chairman of the Joint Chiefs of Staff during the first term of the Clinton Administration (1994 to 1996). He left the military to run a series of information technology companies, as well as serve as CEO of AEA Holdings Asia, overseeing the company’s private equity and real estate investments in Asia with most concentrated in the PRC.
While advocating strongly for the adoption of the technology that his companies were selling, Admiral Owens also was an outspoken promoter of closer U.S.-China ties and sought to downplay the security risks of the PRC (by 2009, most of his technology business models depended upon selling Chinese information technology equipment to the United States). He served for nearly two years as the CEO of the Canadian telecom equipment manufacturer, Nortel Networks (2004-2005) just as Huawei was stealing its technology (“Nortel collapse linked to Chinese hackers,” CBC, February 15, 2012 and “Did Huawei bring down Nortel? Corporate espionage, theft, and the parallel rise and fall of two telecom giants,” National Post, February 20, 2020). Four years after he left, Nortel collapsed in Canada’s largest bankruptcy (called by some Canada’s Enron). At one point Nortel had made up a third of the value of the Toronto Stock Exchange. For more, read Sam Olsen’s account from 2021, “The destruction of Nortel: Why protecting IP matters for Western economies.”
The same year Nortel collapsed, Admiral Owens started lobbying heavily on behalf of Huawei Technologies through a partnership with a company he founded called Amerilink Telecom Corp., lending his bona fides as a national security professional and retired U.S. Navy Admiral, to assuage security concerns over the use of Huawei equipment (I guess he felt comfortable about Huawei’s tech since he knew where it came from… Nortel). He waged a public and closed-door battle against professionals at NSA, the Department of Defense, and FBI, as well as Members of Congress, who warned against letting Huawei establish a foothold in American telecommunications infrastructure. Luckily, he failed to convince his former colleagues, though his efforts wasted valuable resources and time that could have been spent improving U.S. security rather than simply preventing a catastrophe.
While pursuing these business ties with the PRC, Admiral Owens also started and led the American side of the Sanya Initiative at the EastWest Institute from 2008 to 2020. A project that collaborated with the PLA and United Front organizations like CAIFC (China Association for International Friendly Contact) to bring together retired U.S. four-star generals and admirals with their Chinese counterparts to promote greater understanding between the U.S. and China. His work there culminated with his 2020 book, China-US 2039: The Endgame?: Building Trust Over Future Decades, which advocated policies that his Chinese counterparts had pushed for years.
Owens spent much of the last 25 years going out of his way to condition senior U.S. military leaders (some of whom he had mentored throughout his career) to view the PRC as a partner, as opposed to a rival and potential adversary. I suspect he thought he was doing something noble, but his efforts, which clearly overlapped with his personal financial interests, complicated the U.S. policymaking process during a critical period of time.
Thanks for reading!
Matt
MUST READ
1. In a First, a Chinese Military Plane Breaches Japan’s Territorial Airspace
River Akira Davis and Hisako Ueno, New York Times, August 26, 2024
A Chinese military surveillance plane breached Japanese airspace off the country’s southwestern coast on Monday, marking what Japan’s defense ministry described as the first known incursion by China’s military into its territorial airspace.
According to a ministry official, a Chinese reconnaissance aircraft briefly entered Japanese territory near Nagasaki Prefecture around 11:30 a.m. on Monday. In response, Japan’s Self-Defense Force put fighter jets on high alert and issued a warning to the Chinese aircraft.
While Chinese planes frequently appear in international airspace around Japan, this incident represents the first confirmed entry of a military aircraft into Japan’s territorial airspace.
Over the past two decades, Japan has increasingly faced foreign aircraft encroachments. Last year, Japan’s Self-Defense Force scrambled fighter jets to intercept foreign planes on 669 occasions — more than three times the number of such responses two decades ago.
2. Two more Chinese airlines to start flying China-made COMAC C919 jet
Reuters, August 28, 2024
Air China and China Southern Airlines will become the second and third Chinese carriers to fly China's homegrown COMAC C919 passenger jet after receiving their first planes on Wednesday, state-run Chinese Central TV (CCTV) said.
The two state-owned carriers received the C919 at Chinese planemaker COMAC's Pudong base in Shanghai, according to CCTV.
The C919 delivered to Air China has 158 seats, with eight business class and 150 economy class.
Air China and China Southern are expected to receive another two C919 jets each this year, according to domestic media outlet Yicai.
COMAC is trying to break into a passenger jet market dominated by Western manufacturers Airbus and Boeing that has been hit by aircraft shortages and a Boeing safety crisis.
The C919 entered domestic service in May last year with China Eastern, which flies seven of the jets domestically.
COMMENT – I think we are really going to regret allowing American and European aerospace companies to help COMAC build a competitive passenger jet business (side-eye at Honeywell, General Electric, Safran SA, Collins, Boeing, Airbus, etc.).
Had we imposed even moderate export controls on these companies who were rushing headlong into providing the PRC aerospace industry with technology and knowhow, we could have prevented this… but we failed to take proactive action and now we will suffer far higher costs to our own companies (as the PRC localizes the aerospace industry and squeezes out foreign suppliers, a playbook they have used over and over and over again), as well as our national security, since an advanced commercial aerospace industry in the PRC will be used to the advantage of the PRC’s defense aerospace industry.
This was a totally predictable outcome, which could have been prevented a decade ago had U.S. and European leaders demonstrated a modicum of backbone.
But we didn’t, largely because our dual-use export control regulations were implemented by folks who had taken their eye off the ball. They lost track of the reason for their jobs (national security) and had become captured by the companies they were supposed to regulate (and Congress failed to exercise sufficient oversight). We allowed those folks in places like the Commerce Department, the State Department, the Treasury Department, and the Defense Department to fall under the sway of the siren song of Wandel durch Handel (“Change through Trade”).
Perhaps I should start creating a list of maxims that folks can paste to their walls and look at each day as they start their jobs protecting our national security, one of them could be:
“Never help your rival build an advanced aerospace industry.”
3. The inside story of the secret backchannel between the US and China
Demetri Sevastopulo, Financial Times, August 25, 2024
Three months after a Chinese spy balloon flew over the US, sending relations with Beijing to their lowest point since diplomatic ties were established in 1979, Jake Sullivan embarked on his own stealth mission.
The US national security adviser flew to Vienna on May 10 2023 for a highly consequential meeting — one that would be held in the kind of clandestine fashion in keeping with the Austrian capital’s historic reputation.
Sullivan was in Vienna to meet Wang Yi, a veteran Chinese diplomat who had become his country’s top foreign policy official in January. After handshakes and a group photograph, the two teams began a series of talks at the Imperial Hotel that spanned more than eight hours over two days.
It was the first of several secret rendezvous around the world, including Malta and Thailand, now called the “strategic channel”. Sullivan will arrive in Beijing on Tuesday for another round of talks with Wang in what will be his first visit to China as US national security adviser.
The channel has played a vital role managing relations between the rival superpowers during a period fraught with tensions. At a time when the US is consumed by the idea of competition with China and Beijing can shift abruptly between supreme confidence and paranoia about its standing in the world, the channel has been a shock absorber that officials say has helped cut the risk of a miscalculation by both nations.
COMMENT – This strikes me as a love song to “managed competition” and “zombie engagement.”
It seeks to portray the ‘ardent suitor’ approach as something brave and sophisticated.
4. Chinese, US officials discuss new round of talks between Biden and Xi
Trevor Hunnicutt and Antoni Slodkowski, Reuters, August 28, 2024
Top Chinese and U.S. officials discussed holding fresh talks between Presidents Joe Biden and Xi Jinping in the near future, the two countries said on Wednesday during high-level meetings in Beijing.
The discussion occurred during lengthy talks between China's top diplomat, Wang Yi, and U.S. national security adviser Jake Sullivan held against the backdrop of sharp disagreements between the superpowers and the 2024 U.S. election race to replace Biden.
COMMENT – It really doesn’t make much sense for President Biden to hold yet another call with Xi at this point… unless the Chinese side is asking for it, which I doubt very much (and if they are, force them to ask publicly).
This isn’t meant to be mean, but Biden is a lame duck. It would be far better if his team spent its final 20 weeks shoring up American military shortfalls and trying to put the next Administration into a position of strength, then pleading with Xi to do another phone call.
Particularly when things like what’s highlighted in the next article are going on.
5. Chinese government hackers penetrate U.S. internet providers to spy
Joseph Menn, Washington Post, August 27, 2024
Beijing’s hacking effort has “dramatically stepped up from where it used to be,” says former top U.S cybersecurity official.
Chinese government-backed hackers have penetrated deep into U.S. internet service providers in recent months to spy on their users, according to people familiar with the ongoing American response and private security researchers.
The unusually aggressive and sophisticated attacks include access to at least two major U.S. providers with millions of customers as well as to several smaller providers, people familiar with the separate campaigns said.
“It is business as usual now for China, but that is dramatically stepped up from where it used to be. It is an order of magnitude worse,” said Brandon Wales, who until earlier this month was executive director of the Cybersecurity and Infrastructure Security Agency, CISA.
The hacks raise concern because their targets are believed to include government and military personnel working undercover and groups of strategic interest to China.
6. The West’s Next Challenge Is the Rising Axis of Autocracies
Yaroslav Trofimov, Wall Street Journal, August 24, 2024
U.S. and its allies consider whether to confront all rivals at once, or seek accommodation with some.
The coalescing partnership of autocracies led by China and Russia will impose strategic choices on Western democracies, no matter who wins the U.S. presidential election.
Can the U.S. and its allies deter all these rivals—including Iran and North Korea—at the same time, given the decay in the West’s military-industrial base and the unwillingness of voters to spend dramatically more on defense?
And if not, should, and could, an accommodation be sought with one of the rival great powers? If so, which one—and at what cost?
The current moment is uniquely complicated, with multiple crises around the world increasingly interconnected. Bloody wars in Ukraine and the Middle East are showing no signs of abating, Iran is contemplating a military response against Israel, China is engaging in low-level sea clashes with the Philippines and intimidating Taiwan, and North Korea is ramping up provocations against South Korea.
COMMENT – I think it would be safe to assume that our rivals believe that we would backdown if confronted with multiple simultaneous crises.
7. There’s a China-Shaped Hole in the Global Economy
Greg Ip, Wall Street Journal, August 29, 2024
China’s low-consuming, high-investing economy guarantees conflict with other countries.
China’s economy is unusual. Whereas consumers contribute 50% to 75% of gross domestic product in other major economies, in China they account for 40%. Investment, such as in property, infrastructure and factories, and exports provide most of the rest.
Lately, that low consumption has become a headwind to China’s growth because property investment, once a major component of demand, has collapsed.
This isn’t just a problem for China; it’s a problem for the whole world. What Chinese companies can’t sell to Chinese consumers, they export. The result: an annual trade surplus in goods now of almost $900 billion, or 0.8% of global gross domestic product. That surplus effectively requires other countries to run trade deficits.
China’s surplus, long a sore spot in the U.S., increasingly is one elsewhere, too. While China’s 12-month trade balance with the U.S. has risen by $49 billion since 2019, it’s up $72 billion with the European Union, $74 billion with Japan and Asia’s newly industrialized economies, and about $240 billion with the rest of the world, according to data compiled by Brad Setser of the Council on Foreign Relations.
Logan Wright, head of China research at Rhodium Group, a U.S. research firm, said China accounts for just 13% of the world’s consumption but 28% of its investment. That investment only makes sense if China takes market share away from other countries, rendering their own manufacturing investment unviable, he said.
“China’s growth model is dependent at this point on a more confrontational approach with the rest of the world,” he said.
COMMENT – Great commentary by Greg Ip at the Wall Street Journal.
I think we can safely call Beijing’s economic approach to be “beggar thy neighbor.” Since Party leaders wish to avoid taking actions that might reduce the political dominance of the Chinese Communist Party, the Party’s leaders are happy to “export” their pathologies on to the rest of the global economy.
The sooner we stop making excuses for Beijing by trying to persuade them to be “responsible,” and take serious action to impose costs on their behavior, the better off the rest of us will be. And for American, European, Japanese, and Korean companies who might get caught in the crossfire… well you’ve been warned of these dangers for years.
8. US scientist convicted for China ties considering jobs in Hong Kong, mainland
Victoria Bela, South China Morning Post, August 24, 2024
Ex-Harvard professor Charles Lieber, targeted under now-axed China Initiative, says he is exploring opportunities at ‘several institutions’.
Chemist and nanoscientist Charles Lieber says he is “very interested” in starting a centre to carry out “world-leading research and technology transfer that benefits all people in the world”.
COMMENT – This is the least surprising news I’ve seen in a while.
Authoritarianism
9. A History Museum Shows How China Wants to Remake Hong Kong
Tiffany May, New York Times, August 23, 2024
The Hong Kong Museum of History was the place to go to understand the city’s transformation from fishing village to a glittering metropolis. It housed a life-size replica of a traditional fishing boat and a recreation of a 19th-century street lined with shops.
That exhibit, known as “The Hong Kong Story,” is being revamped. People have instead been lining up for a splashy new permanent gallery in the museum that tells a different, more ominous story about the city — that Hong Kong is constantly at risk of being subverted by hostile foreign forces. The exhibit features displays about spies being everywhere and footage of antigovernment street protests in the city that were described as instigated by the West.
As he kicked off the exhibition this month, John Lee, the Beijing-backed leader of Hong Kong, made clear that its overarching purpose was to be a warning to the city. “Safeguarding national security is always a continuous effort. There is no completion,” he said. The gallery, which is managed by Hong Kong’s top national security body, opened to the public on Aug. 7.
The exhibit points to a new aspect of the Hong Kong government’s crackdown on the city after antigovernment protests in 2019 posed the greatest challenge to Beijing’s rule in decades. The authorities have introduced security laws to quash dissent in the years since. They are now pushing to control how people will remember the recent political turmoil.
In the government’s telling, the protests were not organic expressions of the residents’ democratic aspirations, as the city’s opposition activists have said, but part of an ongoing plot by Western forces to destabilize China.
The national security exhibit opens with a short video highlighting the unfair treaties of the 19th century that forced China to cede Hong Kong to the British, as well as the Japanese occupation of the city during World War II. Describing the protests in 2019, the video highlighted footage of protesters hurling Molotov cocktails. “Law and order vanished,” the narrator said. Then it credited new national security laws imposed by Beijing in the crackdown that followed, for turning the tide “from chaos to order.”
The exhibit displayed the battered shields, helmets and boots used by the riot police who quashed protests. It listed the casualties and damage purportedly inflicted by the protesters: 629 police officers injured and more than 5,000 Molotov cocktails thrown by violent protesters.
There was no mention of the tear gas, rubber bullets, beanbag rounds and pepper spray deployed by the police. The display did not mention the attack on protesters at a subway station by a mob armed with sticks and poles, and the police’s slow response to that violence.
“One point of this exhibit is to stoke fears of social ‘turmoil’ and ‘chaos’ so as to persuade Hong Kongers to embrace the social stability that the Chinese Communist Party purports to offer,” said Kirk Denton, an emeritus professor at Ohio State University and author of a book about the politics of history museums in modern China.
Winnie Lu, 61, a Hong Kong resident who works in sales and who was visiting the museum on a recent weekday, said that the exhibit reminded her of how hard it was for her to get to work during the protests, when demonstrators blocked roads and paralyzed the subway. “Without national security, how can ordinary people live a good life?” she said.
In many ways, the national security exhibit appeared to take a page out of the Chinese government’s playbook after the Chinese military’s brutal suppression of the 1989 Tiananmen Square pro-democracy movement left widespread disillusionment. In the months and years that followed, the authorities pushed an intensive patriotic education campaign in mainland China that cast Japan as an enemy of the Chinese people and the Communist Party as the sole engine of progress in Chinese history.
10. A Heavy-Hitting Publisher Languished in Xi’s China. Now He Hand-Sells Books in Japan.
Wenxin Fan, Wall Street Journal, August 24, 2024
In his past life, Zhang Shizhi oversaw book sales worth millions of dollars a year, sealing deals over private banquets in Beijing as an executive at a major publishing firm. Nowadays, he pulls a collapsible shopping trolley around Jimbocho, Tokyo’s book district, personally entreating shops to stock the three titles he has to offer as a self-funded publisher.
Some of his books in Beijing sold tens of thousands of copies a month. In Japan, his entire catalog has sold fewer than 2,000 prints since January.
Zhang is part of a broader brain drain in China that has continued largely unabated since the Covid-19 pandemic, as intellectuals and entrepreneurs trickle out of the country to escape a radical tightening of political controls under leader Xi Jinping.
In launching a scaled-down, offshore stage of his career, Zhang has joined a wave of Chinese thinkers, artists and cultural workers who are trying to carve out space overseas after deciding they can’t live the lives they want in the country of their birth.
Zhang is happy with his “downshift,” as he calls it. Outside China, he says, he is free of the country’s cutthroat competition and able to publish the sort of thoughtful, critical work that Chinese authorities can no longer tolerate.
“I left Beijing to ‘go to that happy land,’ ” the 47-year-old says, quoting a line from the Book of Odes, China’s oldest recorded collection of poetry, about escaping a tyrannical regime.
While activists and dissidents have long fled China after falling foul of the Communist Party, many of those leaving now are political moderates who were content to contribute to the country’s cultural and intellectual life under Xi’s less draconian predecessors. Slowing economic growth has intensified the exodus by piling financial anxiety on top of feelings of creative malaise.
This swelling population of self-exiles has landed in cities across the globe. Chai Jing, one of China’s most recognizable broadcast journalists, recently launched an interview show on YouTube from her current home in Barcelona. Yu Miao, owner of a celebrated bookstore in Shanghai, is preparing to open a new shop in Washington, D.C. Acclaimed movie director Wang Xiaoshuai, who recently fell back into censors’ crosshairs after years of official acceptance, has moved to London.
11. Shanghai’s shut-down liberal bookstore poised for new lease on life in Washington
Yuanyue Dang, South China Morning Post, August 25, 2024
Jifeng hosted some 800 seminars in the five years before it closed, a tradition that will continue at the US store, owner says on WeChat.
12. Can China Tech Find a Home in Silicon Valley?
Li Yuan, New York Times, August 29, 2024
Entrepreneurs and venture capitalists are setting up firms across the Pacific, only to find that any investment with Chinese ties is a hard sell.
One Saturday evening in late July, more than 100 people attended an elaborate party in the lush garden of a mansion in Silicon Valley. The host was David Wei, a former chief executive of Alibaba, the Chinese e-commerce giant, and now a venture capital investor. Guests, most dressed in white, were offered Panama hats as the bright California sun set and models walked a catwalk between large round tables covered with white cloths.
Many of the guests were current or former investors or entrepreneurs in China’s tech industry. Their conversations, like those at a number of similar gatherings in Silicon Valley this summer, bounced among three topics: how little confidence they have in China; how many opportunities artificial intelligence presents in the United States; and how they can get into the game on this side of the Pacific.
Chinese tech professionals are moving to Silicon Valley for opportunities they don’t believe are available in China anymore. They’re part of a wave of Chinese companies “going global,” as a growing number of businesses look outside their home country for growth.
With China’s economy in a lasting slump, investors and entrepreneurs are seeking the next China. They feel unwelcome by their government, which in recent years has sent an ominous message by clamping down on private companies. The heightened tensions between China and the United States make it tough to operate as a Chinese-based business with international ambitions. There are opportunities in Southeast Asia, the Middle East and Africa. But only one other market can compare to China in size and potential. That’s the United States.
13. U.S. Officials Meet Dalai Lama in New York, Triggering Protest from China
Austin Ramzy, Wall Street Journal, August 22, 2024
Senior U.S. officials met with the Dalai Lama on Wednesday in New York, a show of support for the exiled Tibetan spiritual leader that sparked an angry reaction from China, as anxiety grows in Beijing over his succession.
Uzra Zeya, the undersecretary of state for civilian security, democracy, and human rights, said she traveled to New York to meet with the Dalai Lama, where she delivered greetings from President Biden and a message of “the United States’ unwavering support for the Tibetan community.”
The Chinese government accuses the Dalai Lama, who has been based in India after fleeing there in 1959, of seeking Tibet’s independence from China.
The Tibetan spiritual leader has long sought “genuine autonomy” for his homeland, with protections for Tibetans’ religion, language and culture. While Tibet, which was annexed by the People’s Republic of China in 1951, is officially an autonomous region of China, in practice it has been under strict control by China’s Communist Party.
Communist Party leaders in Beijing have sought to control the selection of the next Dalai Lama, a contentious ambition that has come under increasing scrutiny as the current Dalai Lama nears the age of 90.
Mao Ning, a Chinese foreign ministry spokeswoman, said China had made “serious protests” with the U.S. over the meeting, describing the Dalai Lama as “a political exile engaged in anti-China separatist activities under the cloak of religion.”
“China firmly opposes any country allowing the Dalai Lama to make visits under any pretext and opposes government officials of any country to meet with the Dalai Lama in any form,” Mao said at a regularly scheduled press conference in Beijing.
14. Protests in China on the Rise Amid Housing Crisis, Slowing Economy
Rebecca Choong Wilkins, Bloomberg, August 28, 2024
Protests in China are on the rise as the effects of a slowing economy rattle citizens and Beijing refrains from taking bolder steps to shore up growth.
Cases of dissent increased 18% in the second quarter compared to the same period last year in figures documented by the China Dissent Monitor at Freedom House, a US advocacy group. The majority of events linked to economic issues, according to a report published Wednesday.
15. China’s new age of swagger and paranoia
The Economist, August 28, 2024
16. What if China Invades? For Taiwan, a TV Show Raises Tough Questions.
Chris Buckley and Amy Chang Chien, New York Times, August 25, 2024
17. U.S. targets 105 Russian and Chinese firms for aiding Russian military
Alexandra Alper, Reuters, August 24, 2024
The United States on Friday added 105 Russian and Chinese firms to a trade restriction list over their alleged support of the Russian military as Washington seeks to keep up pressure on Moscow's war effort in Ukraine.
The companies -- 63 Russian and 42 Chinese as well as 18 from other countries -- were targeted for a host reasons, from sending U.S. electronics to Russian military-related parties to producing thousands of Shahed-136 drones for Russia to use in Ukraine.
Being added to the entity list forces U.S. suppliers to get a difficult-to-obtain license before shipping to the targeted companies. Many of the firms added to the list on Friday were given a special designation that also forces overseas suppliers to get the same U.S. licenses before shipping to the targeted companies.
The moves show the Biden administration is trying to keep up pressure on the companies sustaining Moscow's war in Ukraine despite a raft of Western sanctions aimed at hobbling that effort and amid reports that restricted American technology is still reaching Russia's defense industry.
18. China slams U.S. for adding firms to export control list over alleged support for Russian military
Sheila Chiang, CNBC, August 25, 2024
The U.S. said it was tightening export controls on 123 entities, including 42 in China, to further restrict Russia’s access to U.S. technology and goods for use in its war on Ukraine.
19. China calls for more support for its Ukraine peace plan created with Brazil
Huizhong Wu, Associated Press, August 27, 2024
20. Russia’s Putin and China’s No. 2 official praise deepening ties as Ukraine war grinds on
Simone McCarthy, CNN, August 21, 2024
21. In Beijing’s Quest for Control of the South China Sea, a New Flashpoint Emerges
Niharika Mandhana, Wall Street Journal, August 25, 2024
For months, the Philippines has pushed back against Beijing in the South China Sea. China has responded with increasing hostility, directing its ire against Philippine vessels and crew.
Now, a 97-meter coast-guard ship has become a new symbol of the David-and-Goliath fight between America’s top geopolitical rival and an ally it has pledged to defend in the event of an armed attack. Tensions around the vessel this week have shown China’s willingness to escalate its use of forceful tactics to tighten its control of the South China Sea.
22. A top White House official says US and China are working to avoid conflict at talks in Beijing
Ken Moritsugu, Associated Press, August 27, 2024
The United States and China are working to ensure the competition between them does not veer into conflict, a top White House official said Tuesday as the two sides started talks on a relationship that has been severely tested during President Joe Biden’s term in office.
Jake Sullivan, the U.S. national security adviser, is meeting over two days with Wang Yi, a senior foreign policy official for Chinese leader Xi Jinping, in a scenic lake area on the northern outskirts of Beijing.
“President Biden has been very clear in his conversations with President Xi that he is committed to managing this important relationship responsibly,” Sullivan told Wang before the talks got underway.
The goal of his visit, which lasts through Thursday, is limited — to try to maintain communication in a relationship that broke down for the better part of a year in 2022-23 and was only nursed back over several months.
COMMENT – I know the Administration is trying to portray itself as “responsible,” particularly to its European allies, but a visit like this only comes across as weak and likely confirms to Party leaders that the United States will back down when push comes to shove. When paired with the refusal to increase defense spending (even as the United States spends massive amounts on climate related projects) and the Administration’s headlong rush into an energy transition that only deepens American dependence on the Chinese economy, folks like Sullivan appear unable (or unwilling) to see that they are emboldening the Chinese Communist Party, rather than deterring them.
It is as if the Administration is only interested in persuading Europeans that they are being “responsible” even as the Europeans refuse to be responsible themselves.
Sullivan et al should be much more focused on what genuinely deters Beijing, rather than what makes Brussels (Berlin and Paris) comfortable.
23. Sullivan meets Xi as wide-ranging China-US talks near end in Beijing
Trevor Hunnicutt, Reuters, August 29, 2024
24. Xi tells Sullivan to view China 'rationally' ahead of planned Biden call
CK Tan, Nikkei Asia, August 29, 2024
Chinese President Xi Jinping on Thursday told U.S. national security adviser Jake Sullivan that despite "great changes" in bilateral ties, Beijing is committed to forging a stable relationship with Washington, according to Chinese state broadcaster CCTV.
"We hope that the U.S. will work with China towards the same goal, view China and its development in a positive and rational manner, see each other's development as an opportunity rather than a challenge, and work with China to find a correct way for the two major countries to get along," Xi was quoted as saying, as Sullivan wrapped up his three-day visit to Beijing.
25. China Has Another Firm in Its Crosshairs Over Its Epic Property Bust: PwC
Rebecca Feng, Wall Street Journal, August 28, 2024
Environmental Harms
26. China’s War on Pollution Adds Two Years of Life but There’s Much More to Do
Bloomberg, August 28, 2024
27. China Dampens Green Hopes of an Early Peak in Carbon Emissions
Bloomberg, August 28, 2024
China’s top energy officials downplayed growing speculation that the country’s carbon emissions have already peaked years ahead of target, saying on Thursday that just meeting the goal on time still required “great efforts.”
While China is confident that it will achieve its goal of hitting peak emissions before 2030, domestic energy demand is still growing and the outlook is uncertain, said Song Wen, head of law and institutional reform at the National Energy Administration. Song was responding to a question about whether surging clean-power generation had helped the world’s top polluter turn a corner.
COMMENT – Another unsurprising development.
Foreign Interference and Coercion
28. Optica CEO Departs Amid Probes into Society’s Links to Huawei
Kate O’Keeffe, Bloomberg, August 26, 2024
The leader of Washington-based scientific society Optica and the head of its foundation have left the group amid investigations into its decades-long alliance with sanctioned Chinese telecommunications giant Huawei Technologies Co.
Optica Chief Executive Officer Elizabeth Rogan and Chad Stark, who ran the group’s foundation, are no longer with the organization, according to an internal email seen by Bloomberg News. Their departures come after Bloomberg reported how Optica had cultivated ties with Huawei for years despite national-security concerns around the company.
The departures were linked to Rogan and Stark’s work with Huawei, according to one person familiar with the matter. An Optica spokesman declined to comment beyond the email announcing the departures. Neither Rogan, Stark, nor Huawei returned requests for comment.
Lawmakers on the House Science, Space and Technology Committee began investigating the connections between Optica and Huawei in May after Bloomberg reported that the company had secretly sponsored a research contest run by the group. The competition has awarded millions of dollars to top university researchers since its inception in 2022.
COMMENT – Another example of how investigative reporting about the PRC’s efforts to sway U.S. policy and gain access to the U.S. technology ecosystem can have a positive impact.
Here is the link to the Bloomberg report by Kate O’Keeffe back in May which sparked these developments, “Huawei Secretly Backs US Research, Awarding Millions in Prizes.”
29. The 4 Key Strengths of China’s Economy — and What They Mean for Multinational Companies
Mitch Presnick and James B. Estes, Harvard Business Review, August 26, 2024
In 1978, Deng Xiaoping launched his “Reform and Opening” policy to leverage Western technology and know-how for China’s development. It was a politically risky move: Ideological hardliners in the Communist Party resented the implicit assumption of China’s economic backwardness under socialism — and the superiority of the capitalist West. But Deng recognized that China’s modernization required both pragmatism and humility.
Today, the roles are reversing. Although it’s too early to say whether China’s hybrid “state capitalist” system will outmatch Western models, it has undeniable strengths. China leads in 53 out of 64 critical technological fields, according to the Australian Strategic Policy Institute. This success is built on centralized planning and control, but also features ruthless competition that produces global winners able to compete on price and quality in developed and emerging economies alike. No other country can match China’s market scale, or consumer enthusiasm for the latest tech wizardry.
Leaders of multinational corporations must adopt a certain Deng-like pragmatism and humility to achieve success in China today. Those who do will see profitable global growth and will have a leg up in their home markets, provided they seize opportunities in the four key strengths of the Chinese economy:
Its Innovation Ecosystem
Its Investment in the Global South
Its Ultra-Competitive Markets
Its 1.4 Billion Consumers
COMMENT - This is written like a Chamber of Commerce promotion flyer, the author makes absolutely no mention of the geopolitical risks that companies face from doing business in the PRC or making their business models completely dependent on the whims of the Chinese Communist Party. Nor does Presnick mention the how the PRC Government refuses to implement the economic reforms that foreign companies have been asking for for decades. (I fault Presnick because he should know better… not his co-author, who is a high school student)
I’m putting this article in the “Foreign Interference and Coercion” section because it is just another example of how Beijing employs “borrowed boats,” like Presnick, to spread their story about the PRC. At the very least HBR should have included a disclaimer.
It reads like an unscrupulous real estate agent trying to sell homes on the side of the Kilauea volcano without acknowledging the risk that lava might wipe the whole thing out (“The 4 Key Strengths of Owning a Home in Kilauea Estates”).
It is this kind of mindless (willfully ignorant) cheerleading of the Chinese economy that got us into the problem we are in… the author advocates ignoring all of that because of FOMO and that business leaders should just push more investment into a deeply unstable and hostile market.
30. How Taiwan counters China’s disinformation
Lasse Karner, Gateway House, August 29, 2024
Governments across the globe are struggling to tackle the growing mountain of alternate facts and deliberate lies designed to deceive and create fragmentation. Yet, in some places on the map, the information war is fought more intensely than in others. Taiwan finds itself in a particularly vulnerable situation. According to data released by the V-Dem research project led by the University of Gothenburg, no other country is more exposed to false information disseminated by foreign governments.
While attribution remains a challenge, the underlying cause of much of the disinformation found in Taiwan is rooted in the cross-strait issue and its historical legacy. The Chinese Communist Party (CCP), viewing Taiwan as a breakaway province, has long employed asymmetrical strategies to undermine Taiwan’s political stability, sway public opinion, and erode national unity. These efforts exploit the openness of Taiwan’s democratic society, targeting both physical and virtual spheres.
The challenge has intensified in recent years, driven by several factors:
New Chinese leadership: Under the current CCP leadership, China has adopted a markedly more assertive foreign policy stance and increased its aggressive posturing both in Asia and on the global stage, with Taiwan emerging as a focal point of this shift
Geopolitical tensions: The growing rivalry between the United States and China has amplified the strategic importance of Taiwan
Technological advancements: Emerging technologies have created new vectors for disinformation dissemination and manipulation
Changing media landscape: Evolving patterns of media consumption and communication have opened new avenues for influence operations
Political shifts in Taiwan: Since the Democratic Progressive Party (DPP) came to power in 2016, China has escalated its efforts to disrupt Taiwan’s political system and erode public trust in the government
Rebecca Ratcliffe and Guill Ramos, The Guardian, August 25, 2024
Intensifying struggles with China are playing out on the doorstep of the almost 400 Philippine civilians on remote Thitu Island.
From the sandy beaches of Thitu Island, blue waters stretch for as far as the eye can see. It feels like a tranquil paradise: there’s no noisy road traffic, air pollution or crowds. But Thitu is not a luxury retreat, it’s a tiny island in the remote Spratly chain and one of the world’s most fiercely contested maritime sites.
Thitu has been occupied by the Philippines since 1974 and is home to 387 civilians. However, China also claims the island and much of the surrounding South China Sea. Thitu and its people are on the frontline of an intensifying struggle against their superpower neighbour.
Human Rights and Religious Persecution
32. UN rights chief renews call for Chinese movement on abuses documented in Xinjiang
Radio Free Asia, August 27, 2024
Two years after the U.N.’s human rights chief said China’s repression of Uyghurs in Xinjiang may constitute “crimes against humanity,” her successor on Tuesday called for a full investigation into the charges, while rights groups demanded more pressure on Beijing.
On Aug. 31, 2022, in a long-awaited report issued on her last day on the job, then U.N. High Commissioner of Human Rights Michelle Bachelet said that “serious human rights violations” were committed in the Xinjiang Uyghur Autonomous Region (XUAR) in the context of the Chinese government’s application of counter-terrorism and counter-extremism strategies.
Her successor, Volker Türk, has repeatedly called on China to address concerns documented in the damning, 46-page Bachelet report, including China’s arbitrary detention of Uyghurs and the separation of children from their families. UN efforts, however, have met angry denunciations and stonewalling by Chinese diplomats.
On Tuesday, Türk’s office in Geneva repeated its call for action.
“On Xinjiang, we understand that many problematic laws and policies remain in place, and we have called again on the authorities to undertake a full review, from the human rights perspective, of the legal framework governing national security and counter-terrorism and to strengthen the protection of minorities against discrimination,” the office of UN rights chief said in a statement Tuesday.
“Allegations of human rights violations, including torture, need to be fully investigated,” said Ravina Shamdasan, spokesperson for the UN High Commissioner for Human Rights in Geneva, Switzerland.
“We are also continuing to follow closely the current human rights situation in China, despite the difficulties posed by limited access to information and the fear of reprisals against individuals who engage with the United Nations,” added Shamdasan.
The statement also urged Beijing to “take prompt steps to release all individuals arbitrarily deprived of their liberty, and to clarify the status and whereabouts of those whose families have been seeking information about them.”
33. Hong Kong Editors Convicted of Sedition in Landmark Press-Freedom Verdict
Austin Ramzy, New York Times, August 29, 2024
Two top editors of a pro-democracy Hong Kong news outlet were found guilty of sedition charges on Thursday, the first convictions under the colonial-era law against the media in decades as the city’s Beijing-backed authorities press a sweeping legal campaign to clamp down on dissent.
The editors, Chung Pui-kuen and Patrick Lam Shiu-tung, led Stand News—a now closed online outlet that was a leading source on the city’s campaign for democracy, often through the cameras of reporters who spent hours on the streets, dodging pepper spray and tear gas to document the protests that swept the city in 2019.
Judge Kwok Wai-kin ruled that during the protests, Stand News “became a tool to smear and vilify” China’s government and the Hong Kong authorities.
34. Uyghur entrepreneur serving 18 years for charitable contributions
Shohret Hoshur, RFA, August 22, 2024
Elijan Ismail made a name for himself as a prominent Uyghur entrepreneur in the 2000s.
He founded Xinjiang Sadaqet Bio-Technology Co., Ltd., in his hometown of Maralbexi in southern Xinjiang, and in 2008 moved it to Xinjiang’s capital Urumqi.
It was there that Ismail joined a group of young businessmen who began making charitable donations, particularly to those who needed medical treatment in city hospitals, according to Abduweli Ayup, founder Uyghur Hjelp, or Uyghuryar, a Norway-based nonprofit organization that documents Uyghurs who have been arrested and imprisoned.
But because China had forbidden the practice of zakat — a religious obligation for Muslims to donate a portion of their wealth each year to charitable causes — in Xinjiang since 2016, with few exceptions, police branded them an “ethnic separatist group,” Ayup said.
After investigating their charitable activities as well as those they helped, authorities arrested Ismail and the others.
Ismail, now 49, was picked up in Urumqi in 2017 and sentenced the following year to 18 years in prison for “inciting separatism” because the recipients of his donations included families of political prisoners, said an officer at the Maralbexi market police station in Kashgar prefecture.
35. Fire breaks out at Chinese dissident-run sculpture park in California desert
Wu Yitong, RFA, August 20, 2024
It was the second fire in 3 years at the park, which remembers victims of the 1989 Tiananmen massacre.
36. China, Anti-Religious Propaganda Targets Mentally Ill Patients and Their Families
Liu Wangmin, Bitter Winter, August 26, 2024
37. Uyghurs sentenced to cumulative 4.4 million years in prison: study
Roseanne Gerin, RFA, August 20, 2024
38. American drug firms accused of clinical trials in Uyghur region
Alex Willemyns, RFA, August 21, 2024
Industrial Policies and Economic Espionage
39. Canada to follow US lead in imposing 100% tariff on Chinese electric vehicles
The Guardian, August 26, 2024
Canada, following the lead of the United States, on Monday said it would impose a 100% tariff on the import of Chinese electric vehicles and also announced a 25% tariff on imported steel and aluminum from China.
The prime minister, Justin Trudeau, said Ottawa was acting to counter what he called China’s intentional, state-directed policy of over-capacity. But he did not specify whether tariffs would be softened or would be the same on Tesla, whose shares were down over 3% on Monday after the announcement.
“I think we all know that China is not playing by the same rules,” he told reporters. The tariffs will be imposed starting on 1 October this year.
“What is important about this is we’re doing it in alignment and in parallel with other economies around the world,” Trudeau said on the sidelines of a three-day closed-door cabinet meeting in Halifax, Nova Scotia.
40. Canada imposes a 100% tariff on imports of Chinese-made electric vehicles, matching the US
Rob Gillies, Associated Press, August 26, 2024
41. Chinese EV Stocks Tumble on Worries About Weak Auto Demand
Jiahui Huang, Wall Street Journal, August 29, 2024
42. China’s ghost stations show a nation haunted by debt
Richard Spencer, Times of London, August 25, 2024
An infrastructure boom linked to the country’s property bubble has collapsed, leaving empty apartments, stranded railways, and councils unable to pay teachers.
When Yizhuang, a fast-growing suburb southeast of Beijing, announced it would open a train station on the high-speed line to the coast this year, it caused a minor stir.
The excitement, though, might be misleading, for Yizhuang was not the symbol of success it seemed. The station was actually built in 2010, but in all the years since had been one of dozens of “ghost stations” dotted around China, built for a railway boom that ended up passing it by.
Over the past 15 years, China has constructed 25,000 miles of high-speed railways, adding as much track each year as Japan’s whole celebrated “bullet train” network. Now, the party is coming to an end.
43. China high-speed rail operator forced to hike fares as debt balloons
Kohei Fujimura, Nikkei Asia, August 22, 2024
Rapid expansion leaves China Railway with $859bn in debt along with unused stations.
44. Harris and Trump Embrace Tariffs, Though Their Approaches Differ
Ana Swanson, New York Times, August 27, 2024
45. Chinese Imports of Chip Gear Hit Record $26 Billion This Year
Bloomberg, August 22, 2024
Chinese imports of equipment to make semiconductors hit a record for the first seven months of this year as the Asian nation’s companies continue to ramp up their purchases in case the US and its allies further block them from buying.
Chinese firms imported almost $26 billion worth of chipmaking machinery, according to fresh trade data released by China’s General Administration of Customs this week. That surpassed the previous high mark in 2021 and comes as American, Japanese and Dutch officials work on increasing restrictions on Chinese companies.
46. Western airlines were excited about returning to China after Covid. But not anymore
Chris Lau, CNN, August 25, 2024
When China finally reopened its borders after years of Covid restrictions, Western airlines seemed poised to return to the once bustling market.
Last year, foreign carriers scrambled to reinstate direct routes to the world’s second biggest economy, previously known for its export of lavishly spending tourists. Some even touted plans to boost flight schedules.
But fast forward a year, the mood looks strikingly different.
Several Western airlines are slashing flights they brought back just a year ago, with aviation industry analysts citing lukewarm demand due to China’s slumping economy.
47. Walmart Dumps Entire Stake in China’s JD.com
Daisuke Wakabayashi and Claire Fu, New York Times, August 21, 2024
48. China-EU Trade Rift Deepens with Probe of European Cheese
Clarence Leong and Kim Mackrael, Wall Street Journal, August 21, 2024
49. European Spirits Makers Surge After China Pauses Measures Against Brandy Imported From EU
Andrea Figueras, Wall Street Journal, August 29, 2024
50. A Time Bomb Is Threatening Economies Across Asia
Jon Emont, Wall Street Journal, August 27, 2024
Asia’s fastest-growing economies are hiding a dirty secret: Their youngest workers are battling stubbornly high rates of unemployment.
Bangladesh—long considered a development model for slashing extreme poverty—clocked an average of 6.5% economic growth a year for the last decade. But over the past few years, youth unemployment climbed to 16%—the highest level in at least three decades, according to data from the United Nations International Labor Organization.
China and India recorded the same percentage of young people who are seeking work without success. In Indonesia, the rate is 14%. Malaysia’s is 12.5%.
Across these populous nations, that adds up to 30 million people between the ages of 15 and 24 who are looking for jobs but can’t find suitable ones. They account for just less than half the global total of 65 million jobless youth in that age range, according to ILO data.
The figures are worse than in rich countries such as the U.S., Japan and Germany, where young people tend to get snapped up, though not as bad as slow-growing southern European countries such as Italy and Spain where around a quarter of young people are failing to find work.
For Asian countries that don’t have China’s broad manufacturing base, the double-digit youth unemployment rates raise urgent questions about how to move up the development ladder—and the costs of failing to do so.
Anger over dwindling prospects was a key driver of this month’s tumultuous events in Bangladesh, where large crowds of students forced Sheikh Hasina to relinquish power after more than 15 successive years as prime minister and flee the country. In India, whose economy grew at 8% in the year ended March, Prime Minister Narendra Modi’s party lost its parliamentary majority in elections this year.
Though India’s youth unemployment has come down in recent years, it remains above the global average. Analysts cited poor work opportunities as a major factor in Modi’s setback.
China’s government last year stopped publishing a youth unemployment statistic for a time after it showed more than a fifth of young people weren’t able to find work—a record. Indonesia’s solid economic growth of 5% is coming in large part from an unprecedented expansion in mining and mineral processing, sectors that employ lots of heavy machines and not a lot of people.
COMMENT – If the directionality of trendlines provides insight into the future (a big “if” since past performance is not indicative of future results… and I criticized the reliance on straight line trends at the start of this issue, so I appreciate the irony), then India appears to be in much better shape than the PRC.
It might take a while for that perception to sink in (and change the way investors perceive the two economies). But folks who have a confirmation basis towards the Chinese economy will likely stick with it too long (side-eye at German automobile companies and the whole collection of analysts who have been cheerleading the Chinese economy for years) and those who listen to those voices will miss just how much things are changing.
It seems to me that many of the assumptions we held over the past three decades of Chinese economic growth should be re-examined and folks should make new decisions. For those who are already deeply invested in the Chinese economy (significant sunk costs), it will be very difficult for them to adapt… which creates enormous opportunities for those who do NOT have those same sunk costs. Entrepreneurs who aren’t attached to 20 years of manufacturing in the PRC have an incredible opportunity to disrupt the incumbents who find it nearly impossible to shift away.
IMHO Elon Musk’s decision in 2018/19 to push Tesla (and its largest Gigafactory) into China and double down there was a huge mistake that will come back to bite them.
51. German firms ignore calls to shrink China investments
Nik Martin, Deutsche Welle, August 26, 2024
Germany's investments in China are growing despite efforts to reduce reliance on the Asian power. China continues to be a critical trade partner for Europe's largest economy, so how to get the balance right?
Germany formally acknowledged last year that the country had become overly reliant on China for essential materials, goods and components needed to reboot the sluggish German economy following the COVID-19 pandemic.
Despite cries of unfair competition and calls for a full-scale decoupling from the world's second-largest economy, Berlin published its first "Strategy on China" paper in July 2023. Chancellor Olaf Scholz spoke of the need to reduce dependency on China, adding on X, formerly Twitter, that: "The aim is not to disconnect ourselves," while acknowledging that the Asian power was a "systemic rival."
That de-risking call, however, appears to have been somewhat ignored. According to Bundesbank data, German foreign direct investment (FDI) to China is on course to double this year, if firms continue to pour funds into the Asian country as fast as they did in the first six months of the year. The German central bank figures show that China's economy has benefitted from €7.28 billion ($8.03 billion) of German direct investments from January to June — almost 13% higher than the total figure for 2023.
52. Great while it lasted: Chinese demand for Australian minerals is sagging
David Uren, The Strategist, August 26, 2024
Australia’s 20-year-long economic party, funded by China, may be drawing to a close, with consequences for federal and state budgets, superannuation returns and living standards generally.
The iron ore price is the most obvious pointer to China’s declining demand for Australia’s raw materials: it has come down from an extraordinary peak of US$144 a tonne at the beginning of January to a spot price of US$92 this month, and the fall is expected to continue.
It is amazing that it has remained high for as long as it has, given that the construction of housing in China—traditionally accounting for 30 percent of its domestic steel use—has turned down since the biggest builder, Evergrande, struck financial trouble in 2021.
53. Gloom Falls Over One of China’s Most Successful E-Commerce Giants
Shen Lu, Wall Street Journal, August 28, 2024
The gloomy outlook from Temu owner PDD Holdings this week underlined the severity of China’s economic slowdown and the need for one of China’s most successful e-commerce companies to improve its supply chain.
Executives outlined how belt-tightening Chinese consumers have pushed PDD’s rivals into its space and gave a cautious outlook for Temu, PDD’s international bargain site whose soaring popularity has landed it in the crosshairs of regulators and lawmakers in the West. After months of protests by PDD suppliers, they said that profit will suffer as the company invests to address supply-chain inefficiencies and reduces fees for merchants.
The subdued tone from a company that quarter after quarter had beaten profit forecasts spooked investors, who drove down its shares nearly 29%.
Until Monday, PDD had been the bright spot among Chinese e-commerce companies. With low-cost products attracting bargain hunters in China and around the globe, PDD had regularly outperformed Chinese competitors Alibaba Group and JD.com. Its stock had risen 73% over the past 12 months as its earnings beat forecasts. However, in the past few quarters, executives sought to tamp down investors’ expectations for never-ending profit growth.
54. Britain’s unusual stance on Chinese electric vehicles
The Economist, August 27, 2024
Unlike America or Europe, Britain is welcoming the cheap cars—for now.
COMMENT – Disappointing.
55. Prudential reports stalling growth in Hong Kong
Financial Times, August 28, 2024
COMMENT – Not disappointing.
56. China’s debt divide is hurting its economy
Financial Times, August 28, 2024
57. China’s international use of renminbi surges to record highs
Financial Times, August 28, 2024
Cyber and Information Technology
58. China may be putting the Great Firewall into orbit
Mercedes Page, The Strategist, August 26, 2024
The first satellites for China’s ambitious G60 mega-constellation are in orbit in preparation for offering global satellite internet services—and we should worry about how this will help Beijing export its model of digital authoritarianism around the world.
The G60’s inaugural launch on 5 August 2024 carried 18 satellites into low-Earth orbit (LEO) on a Long March 6A rocket. Led by Shanghai Spacecom Satellite Technology and backed by the Shanghai Municipal Government, the project aims to compete in the commercial satellite internet market with SpaceX’s Starlink, providing regional coverage by 2025 and global coverage by 2027.
The G60 is one of three mega-constellations that China is planning, alongside the Guowang project, run by state-owned China Satellite Services, and the Honghu-3 constellation, led by Shanghai Lanjian Hongqing Technology Company. These constellations provide the infrastructure to support China’s rapidly growing commercial space sector, including its satellite internet initiatives which are making rapid advances.
China launched the world’s first 6G test satellite into LEO in January. GalaxySpace recently made headlines by deploying satellite internet services in Thailand, the first time Chinese LEO satellite internet had been deployed overseas. In June, the Chinese company OneLinQ launched China’s first civilian domestic satellite internet service, indicating it would expand through countries that had signed up to China’s Belt and Road Initiative.
Yet through these efforts, China is not only securing its position in the satellite internet market but laying the groundwork for expanding its digital governance model far beyond its borders.
COMMENT – We should start examining the implications of these moves and what the world might look like if the PRC can succeed.
We should also take steps now to impede their progress, make it much more costly, and mitigate the risks that might arise.
59. Why are VPNs getting slower in China?
The Economist, August 22, 2024
60. Chinese entities turn to Amazon cloud and its rivals to access high-end US chips, AI
Eduardo Baptista, Fanny Potkin and Karen Freifeld, Reuters, August 23, 2024
61. Huawei revenue up by a third in 2024 amid resurgent smartphone sales in China
Iris Deng, SCMP, August 29, 2024
62. How America Lost its Global Connectivity Lead and Why the Future Depends on Getting it Back
Alexander Harstrick, War on the Rocks, August 28, 2024
It could be a boat anchor that kicks off the invasion of Taiwan, not a bullet. The thousands of miles of sub-sea cables are what make everything function — not just in Taiwan — and it’s clear to any invading force that owning this is key to winning any proposed invasion. That prospect has never been easier. Having something banal like a “fisherman” turn off the connection for a second is all it takes to launch an attack. That’s because the global telecommunications network is increasingly owned and maintained by entities that can be manipulated against the United States. And America and its allies have dropped their deserved lead as innovators in this industry. For the United States, regaining a technological and strategic lead in telecommunications is an urgent necessity for national security. That’s what I will try to convince you of here: The United States used to dominate in this sector. It does not anymore.
It is critical that American industry focuses on the next deep horizon, specifically in optimization, private networks, and free space optics, with a lot of help from the U.S. Department of Defense. It’s also a great opportunity for investment. Both public and private sector players can work now to meet this challenge and should, before it’s too late to re-establish dominance.
When Things Go Wrong Internationally, America Has Had No Answers
America’s lack of sophistication here is already being revealed by its two biggest global competitors, China and Russia. In February of 2023, Chinese maritime vessels disabled internet access to Taiwan’s Matsu Island, effectively cutting off the internet to the archipelago’s 13,000 residents. The activity was allegedly caused by Chinese fishing and shipping vessels within six days of each other. As a part of its invasion of Ukraine, Russia’s first move was to shut off the country’s internet service. Six months after the incident in Matsu Island, a Ukrainian counterattack against Russian submarines was thwarted when their single point of communication was suddenly cut off in the middle of the mission. Without any redundancy, the fighting forces on the ground were forced to retreat and the mission was scrapped. The message was clear: If this war is to be fought, it must be fought on a single telecommunications provider’s terms. These activities have been referred to as “invisible blockades.” The United States and its allies would be foolish to treat these incidents as anything less than a tactical rehearsal for a larger war.
It’s amazing America ended up here. American innovation made the industry. But as it has become more commoditized, the United States has fallen way behind in the race to the bottom and is increasingly dependent on a variety of unaligned actors to make sure things work as they should. That’s why the free world needs the U.S. Department of Defense to do what it does best for industry: de-risk the short-term barriers to entry for the next great technologies to emerge and ensure they run uninterrupted and uncorrupted globally. My bias here is clear: I am a venture capitalist, running a firm — J2 Ventures — focused on, among many things, global telecommunications, so I want to invest in these technologies too. But for a space that is so large and so important, it is much harder than it used to be to find innovators among the United States and her allies doing good work here. Moreover, I often find myself in very small company when the deals finally materialize. For the future of the free world, which has to be able to communicate unencumbered, I’d like this to stop.
America and its Allies Made this Industry What It Is
American naval dominance after World War II paved the way for the telecommunications industry the world has now. Thanks to the miracle of almost 500 undersea fiber optic cables that span nearly 750,000 miles, paired with a domestic broadband cable network that can go across the United States over 22 times in its current form, you are reading this online now. You even likely carry a supercomputer in your pocket connected to 142,100 cell towers and 452,200 small cell nodes, as of 2022, in the U.S. alone. The statistics in developing countries are harder to count but easier to appreciate as you need only look up to see the thousands of wires connecting everything.
That’s because knowledge is power and knowledge is transmitted, so it serves to reason the U.S. military would be interested in its transmission after taking the stage as the dominant power after World War II. The father of this industry is well known, Alexander Graham Bell, who would create the first telephone, the first big telephone company (AT&T), and then make the first transcontinental phone call from New York to San Francisco. But this industry would not hyperscale until it collided with venture capital and entwined with the U.S. military in the 1950s in the form of Bell lab’s influenced Fairchild Semiconductor. The company was funded by significant government research and development dollars and made commercially relevant by a B-70 Bomber guidance deal supercharged by the need for Minuteman Nuclear Ballistic Missile guidance chips. Now you can scroll on Instagram from your couch. The importance of this technology is existential, and it is why everyone in the world cares about the potential future of Taiwan today.
A Losing Race to the Bottom
The problem is that over time good enough became good enough, and it was then about how to scale the most cheaply with all other metrics being measured linearly not exponentially. Shareholders like cheap because in a world measured in quarterly time increments that means more profits. Where America sees profits, its despotic rivals, who measure influence in lifetimes, see opportunities. America is great at a lot of things. Patience and being the lowest-cost provider are rarely those things.
It’s hard to overstate how bad this problem is for the future of telecom in its current state. Most of the global traffic for the internet happens through seabed cables, most of which are the size of a garden hose and can be as fragile as one, which is a dually bad problem. Breaks are serviced by obscure maintenance companies of which Chinese companies are, by far, one of the most active.
So, America has given both the technology and the maintenance over to those without motivation or responsibility to uphold the U.S. conception of global security. Why else would the dynamic cabling off the coast of Taiwan suspiciously seem to be some of the most prone to breaking? According to a report from ABC, the cabling that connects Taiwan to the rest of the world has seen 27 breaks over the last five years – a number categorized by the same report as “a lot” (I concur). It should not come as a surprise that direct cable servicing rival, HMN Tech, formerly known as “Huawei Marine Networks”, based in Tianjin, China, is the fastest-growing company in the cable fixing space.
America’s cures are proving to be as bad as the disease. The United States (including the public and private sectors) is seeking to build thicker cables, have them built by our corporations (sometimes specifically for their use), and route these cables by different countries that are not as geopolitically targeted. Moreover, common opinion views satellites as a panacea without appreciating that the satellites themselves are just the conduit to what the United States should be focusing on. My view is that low earth orbit-based beaming technology will liberate us, but at best it degrades precipitously with each incremental user (there is a reason satellites never replaced cable internet and for a long time will not), and at worst, the state’s “diplomatic relations’’ reliance on just a few companies put them in a very bad position militaristically, see: Ukraine Counteroffensive.
Don’t worry, it gets worse. With an increasing percentage of telecommunications giants being Chinese or beholden to Chinese regulations, a growing share of the global information and computer technology market is going to the preferred providers of equipment of these companies, of which, the Chinese have by far had the best growth in developing economies. You do not have to look far to see this. The Atlantic Council’s African Center elucidated this in 2021 (and since then, I bet it’s gotten worse) that 50 percent of the continent’s 3G networks and 70 percent of its 4G networks are built by Huawei alone (yes, the same company that also services the cables). As recently as 2019, you could get Huawei pucks (little Wi-Fi hotspots to connect your phone and call home, check email, etc.) on American military bases in Afghanistan (I was offered a hand-me-down in-country in 2017). It would be another two years before the U.S. government realized what was happening and banned a company that was obviously bad for the country. If you think connecting to cell towers is the way to a spy-free and efficient future, think again, as the list of Chinese dependencies in this industry would go beyond the word limit of this article.
63. China's AI Governance: Engaging the Global South
Ngor Luong, National Bureau of Asian Research, August 29, 2024
Amid competition for leadership on artificial intelligence (AI), the People’s Republic of China (PRC) is advancing its own governance vision, particularly in the global South. In this Q&A, Charis Liu interviews Ngor Luong from the Center for Security and Emerging Technology about the PRC’s approach to AI governance, its role in shaping AI governance in the global South, and the country’s approach to balancing its own interests with those of other countries in the region.
Military and Security Threats
64. Asia ‘rapidly sliding towards war’ and US is to blame, Chinese professor says
Meredith Chen, South China Morning Post, August 28, 2024
Asia risks becoming a “powder keg” that could trigger World War III, according to a prominent Chinese academic who blamed the United States and its allies.
Zheng Yongnian, a professor at the Chinese University of Hong Kong’s Shenzhen campus, warned that China would be at the “eye of the storm” as the US shifts NATO’s strategic focus, while warning nuclear tensions on the Korean peninsula could also trigger a crisis.
COMMENT – Sounds like a Russian narrative… cover one’s own war of aggression by accusing others of causing it.
I’m also reminded of a colorful phrase employed by the PRC Ministry of Foreign Affairs: a thief crying “stop the thief” (贼喊捉贼 zéi hǎn zhuō zéi).
65. Anger in Beijing over Biden’s new nuclear focus on China
Richard Spencer, Times of London, August 21, 2024
Beijing has reacted angrily to reports that President Biden changed the United States’ nuclear weapons posture to focus more on a rising threat from China.
According to The New York Times, Biden ordered the Pentagon to prepare for the possibility of a co-ordinated nuclear confrontation with Russia, North Korea and China. Its new guidance lays particular weight on China, because it is fast increasing its previously small arsenal of nuclear warheads.
The report prompted a stern response from Beijing. Mao Ning, the foreign ministry spokeswoman, said: “The US is peddling the China nuclear threat narrative, finding excuses to seek strategic advantage.” She added that the US had “stirred up the so-called China nuclear threat theory in recent years”.
COMMENT – The United States has a “China nuclear threat theory” because China is massively expanding its nuclear weapons program and fielding a modernized nuclear force aimed at the United States and it refuses to talk about it.
Perhaps if the Chinese Communist Party were willing to openly talk about their nuclear program and provide a degree of transparency, the United States could be reassured.
Don’t hold your breath.
The next story points to why folks don’t trust Beijing to act responsibly.
66. Breakup of Chinese Rocket Prompts Warnings About Space Junk
Clarence Leong and Micah Maidenberg, Wall Street Journal, August 23, 2024
The breakup of a Chinese rocket following a satellite launch generated a fresh field of debris—and new concern over Beijing’s attitude toward space junk.
The Long March 6A rocket, launched Aug. 6, was carrying the first batch of satellites that aim to form a rival system to Starlink, the satellite broadband service offered by Elon Musk’s SpaceX. After releasing those satellites, the rocket broke up into hundreds of pieces, for reasons unknown.
The U.S. Space Command, a unit of the Pentagon, said days later it detected more than 300 pieces of debris in low-Earth orbit as a result of the rocket breakup, though it said there was no immediate danger to the International Space Station or its Chinese counterpart.
LeoLabs, a U.S. space-tracking firm, said the event might create at least 700 fragments floating some 500 miles above earth, making it one of the largest rocket breakups in history. Starlink said the debris didn’t pose significant immediate risks to its fleet, but the fragments are “likely to remain in space for decades due to the incident occurring at a high altitude.”
67. China ships ram, blast water at BFAR vessel
Nestor Corrales, Inquirer.net, August 26, 2024
It was as if a typhoon slammed into this Bureau of Fisheries and Aquatic Resources (BFAR) vessel after five China Coast Guard (CCG) ships fired water cannons at the fishery agency’s boat for about an hour and rammed it six times near Escoda (Sabina) Shoal in the West Philippine Sea on Sunday.
The CCG ship with bow No. 4202 first fired a water cannon at the port side of the vessel about 20 kilometers from Escoda at 1:46 p.m, but it did not directly hit Datu Sanday.
The water cannon from the same CCG ship finally hit the vessel at 2:13 p.m., two minutes after a CCG ship with bow No. 21551 rammed and damaged its starboard side. The extent of the damage has yet to be inspected by the crew.
Minutes later, the CCG ship that first rammed the Datu Sanday also fired its water cannon at the BFAR vessel’s starboard side.
68. Taiwan's $8.9bn plan for more submarines meets political resistance
Thompson Chau, Nikkei Asia, August 26, 2024
69. Floating piers and sinking hopes: China’s logistics challenge in invading Taiwan
Erik Davis, The Strategist, August 27, 2024
70. Taiwan drills with anti-amphibious landing missiles to deter China
Johnson Lai, Associated Press, August 26, 2024
Taiwan drilled Monday with anti-amphibious landing missiles as part of strategy to remain mobile and deadly in an attempt to deter an attack from China, which claims the democratically ruled island as its own territory to be brought under its control by force if necessary.
Troops fired tube-launched, optically tracked, wire-guided missiles known as TOW 2A missiles mounted on M1167 Humvees at floating targets off a beach in Pingtung County during the two days of exercises. The area on Taiwan’s southern tip faces both toward the Taiwan Strait and China, and toward the Pacific Ocean.
COMMENT – I’ve fired a few TOW missiles and I was always taught that TOW missiles don’t work over water. They are wired guided and if the wire touched water it would short out the missile guidance.
I guess we fixed that problem ¯\_(ツ)_/¯
71. Philippines says China was ‘dramatically’ alarmed over US missile system deployed to its north
Politico, August 17, 2024
China expressed its “very dramatic” alarm over a mid-range missile system that the U.S. military recently deployed to the Philippines, and warned it could destabilize the region. But Manila’s top diplomat said Friday he reassured his Chinese counterpart that the weaponry was only in the country temporarily.
Philippine Foreign Secretary Enrique Manalo said his Chinese counterpart, Wang Yi, expressed China’s concern over the U.S. mid-range missile deployment to the Philippines during their talks last month in Laos on the sidelines of the Association of Southeast Asian Nations meetings with Asian and Western countries.
COMMENT – Probably my favorite Instagram post of the year.
72. China says it ‘destroyed large network’ of Taiwanese spies
Taejun Kang, RFA, August 14, 2024
73. How China Could Blockade Taiwan
Bonny Lin, Brian Hart, Matthew P. Funaiole, Samantha Lu, and Truly Tinsley, CSIS, august 22, 2024
74. In Beijing’s Quest for Control of the South China Sea, a New Flashpoint Emerges
Niharika Mandhana, Wall Street Journal, August 25, 2024
75. US forces ready with a ‘range of options’ to deal with South China Sea aggression, US admiral says
Jim Gomez and Joeal Calupitan, Associated Press, August 29, 2024
76. If a China and America war went nuclear, who would win?
The Economist, August 22, 2024
77. US military open to escorting Philippine ships in the South China Sea, senior admiral says
Jim Gomez, Associated Press, August 28, 2024
The U.S. military is open to consultations about escorting Philippine ships in the disputed South China Sea, the head of U.S. Indo-Pacific Command said Tuesday amid a spike in hostilities between Beijing and Manila in the disputed waters.
Adm. Samuel Paparo’s remarks, which he made in response to a question during a news conference in Manila with Philippine Armed Forces chief Gen. Romeo Brawner Jr., provided a glimpse of the mindset of one of the highest American military commanders outside the U.S. mainland on a prospective operation that would risk putting U.S. Navy ships in direct collisions with those of China.
COMMENT – Having Admiral Paparo in command at INDOPACOM makes me sleep much better.
78. Indonesia and Australia sign defense agreement
Edna Tarigan, Associated Press, August 29, 2024
Indonesia and Australia signed a defense agreement on Thursday that both sides described as a significant upgrade to their military relationship.
Indonesia’s president-elect Prabowo Subianto, who also serves as defense minister, signed the Defense Cooperation Agreement with Australian Defense Minister Richard Marles at Indonesia’s National Military Academy in Magelang, Central Java province.
Marles said the agreement, whose text has not been published, is “an important piece of international architecture, a treaty-level agreement” but not a military alliance. He added that the two countries plan to hold the largest joint military exercise in their history in November, which will be Australia’s largest overseas exercise of the year.
The bilateral relationship is becoming increasingly important to Australia in face of growing tensions with China in the region. New Australian prime ministers typically make Jakarta one of their first overseas destinations.
COMMENT – I think this is an important development and glad to see Canberra pushing forward on initiatives like this.
When paired with Japan’s recent defense agreements with the Philippines, it shows that the collective security architecture is not solely driven by the United States but shared by countries across the region.
79. PLA sends advanced landing craft for ‘high-intensity’ drills amid South China Sea tensions
Zhao Ziwen, South China Morning Post, August 22, 2024
The Chinese navy has staged combat drills in the South China Sea featuring one of its most advanced amphibious warfare ships.
The Jinggang Shan, a Type 071 landing ship, “recently” took part in an extensive drill over several days, according to a social media post by the People’s Liberation Army Southern Theatre Command.
It said this “high-intensity maritime training” was designed to improve the navy’s operational coordination and ability to perform diverse missions in challenging environments.
80. ASPI’s two-decade Critical Technology Tracker
Jennifer Wong Leung, Stephen Robin, and Danielle Cave, ASPI, August 28, 2024
The Critical Technology Tracker is a large data-driven project that now covers 64 critical technologies spanning defence, space, energy, the environment, artificial intelligence, biotechnology, robotics, cyber, computing, advanced materials and key quantum technology areas. It provides a leading indicator of a country’s research performance, strategic intent and potential future science and technology capability.
81. China now global leader in 90% of critical tech research: think tank
Shogo Kodama and Masaya Kato, Nikkei Asia, August 29, 2024
One Belt, One Road Strategy
82. China's lending to Africa rises for first time in seven years, study shows
Duncan Miriri, Reuters, August 29, 2024
Chinese lenders approved loans worth $4.61 billion to Africa last year, marking the first annual increase since 2016, an independent study showed on Thursday.
Africa secured more than $10 billion in loans a year from China between 2012-2018, thanks to President Xi Jinping's Belt and Road Initiative (BRI), but the lending fell precipitously from the start of the COVID-19 pandemic in 2020.
Last year's figure, a more than three-fold increase from 2022, shows China is keen to curb risks associated with highly indebted economies, the study by Boston University's Global Development Policy Centre found.
83. China’s influence over Iran limited by teapot refineries
Yang Xiaotang, Asia Times, August 27, 2024
84. Pakistan delays China-funded airport opening over security fears
Adnan Aamir, Nikkei Asia, August 23, 2024
Critics say $246m 'vanity' project risks turning into a white elephant.
Pakistan has postponed the opening of a nearly $250 million airport over security fears, dealing another blow to efforts to boost Chinese investment in its crisis-hit economy.
Prime Minister Shehbaz Sharif was due to attend the inauguration of New Gwadar International Airport (NGIA), close to a port at the center of the $50 billion China-Pakistan Economic Corridor (CPEC).
But the planned opening on Aug. 14 -- Pakistan's Independence Day -- was suddenly halted over what local officials said were security concerns after mass protests brought southwestern Gwadar to a near standstill this month.
No new opening date has been announced for the $246 million China-funded project, which got off the ground following a grant deal with Beijing in 2015.
"All the required work and prerequisite arrangements on [the New Gwadar] airport have been completed and it's ready for flight operations," a government official familiar with the situation told Nikkei on condition of anonymity.
The delayed opening -- after an initial postponement last year -- comes amid concerns that lower-than-expected demand for flights into the region, beset by deadly militant attacks and a separatist insurgency, would quickly turn it into a white elephant.
The single-runway airport, about 45 kilometers from Chinese-controlled Gwadar port, is spread over 4,300 acres (1,740 hectares) and can handle large-body planes like the Airbus A380. That will make it the country's largest airport by size, ahead of Islamabad's gateway.
Gwadar's faltering efforts to kick off as a major hub have led to just three weekly scheduled flights to a smaller airport in the area from Pakistan's commercial capital Karachi -- and some of those trips are routinely canceled.
Even with Chinese airlines expected to start running direct flights once the new airport opens, analysts warn there's little chance of a surge in demand.
"The inauguration of NGIA is symbolic in nature because it is not commercially viable for any airline in the short term," Afsar Malik, an expert in airline economics, told Nikkei Asia.
Successive Pakistani governments have claimed that the multibillion-dollar investment framework with China would help turn Gwadar into the next Singapore.
But on Monday, the country's prime minister ordered that half of all sea cargo for government agencies, originally destined for southern Karachi, instead be unloaded at Gwadar's port -- highlighting its underuse.
Some fear the area's newest transport hub will become the next Mattala Rajapaksa International, a large Sri Lankan airport built with a Chinese loan that's been dubbed the "world's emptiest international airport" due to a lack of flights.
"Vanity projects are not new for the Chinese, they have built similar projects back home which have limited use," said Mohammad Shoaib, an assistant professor at Quaid-i-Azam University Islamabad. "The Chinese are biding their time and the NGIA can be of use once Gwadar kicks off. ... In the meantime, NGIA and old Gwadar airport can be used by other support missions from China."
This month, Gwadar saw huge protests staged by groups pushing for civil, political and economic rights for locals in resource-rich Balochistan province, home to the China-funded port.
COMMENT – I wonder if the Chinese people realize just how much money the Party has wasted on Pakistan over the years. They likely would have been better off putting that money in a pile and lighting it on fire.
85. Tracking China’s Control of Overseas Ports
Zongyuan Zoe Lin, CFR, August 26, 2024
The China Overseas Ports interactive visualizes degrees of China’s overseas port ownership by types of investment across regions and time. It also evaluates the dual-use (commercial and military) potential of ports owned, constructed, or operated by Chinese entities.
The database supporting this interactive includes 129 port projects of which Chinese entities have acquired varied equity ownership or operational stakes. China operates or has ownership in at least one port in every continent except Antarctica.
Of the 129 projects, 115 are active, whereas the remaining 14 port projects have become inactive due to cancellation or suspension by the end of July 2024. Reasons for cancellation or suspension include environmental concerns, souring of political relations, financial problems, and security issues raised domestically and internationally. Suspended projects, such as China’s construction of the Khalifa Port in the United Arab Emirates, could resume construction.
COMMENT – Charts like the one above help illuminate that the Chinese Communist Party likely views influence and control over clients differently than we view alliance relationships.
86. Can NATO Ice Out China and Russia in the Arctic?
Matthew P. Funaiole and Aidan Powers-Riggs, Foreign Policy, August 28, 2024
87. Nepal Asks China to Wipe Away a Loan It Can’t Afford to Pay Back
Bhadra Sharma and Daisuke Wakabayashi, New York Times, August 23, 2024
When Nepal’s new international airport opened last year in one of the country’s biggest cities, it was the type of landmark project expected to elevate the fortunes of one of Asia’s poorest countries while deepening its ties with China, which built and financed the project.
But the Pokhara airport has become a symbol of another sort: the pitfalls of China’s international infrastructure projects, which face criticism for sometimes costly and poor-quality construction that leaves borrower countries awash in debt.
On Thursday, Nepal’s one-month-old government, led by the country’s largest communist party, which has close ties to Beijing, formally asked China to convert a $216 million loan for the airport into a grant, wiping away the debt. It made the request during a visit by a Chinese delegation including Sun Weidong, China’s vice foreign minister.
The airport has been beset by problems. A few weeks after it opened in January 2023, a domestic flight headed for the city crashed into a river gorge, killing 72 people. The airport has not attracted any regular international flights, dimming the financial outlook for the project. Over the last year, Nepal’s anti-corruption agency and a parliamentary committee started investigations into the airport’s construction.
88. In a Likely Overture to China, Nepal Lifts Ban on TikTok
Bhadra Sharma, New York Times, August 22, 2024
The new prime minister of Nepal, K.P. Sharma Oli, on Thursday overturned a ban on TikTok that his predecessor imposed in November, an apparent sign that the veteran politician intended to strengthen the country’s relations with China, its northern neighbor.
The popular social media app, which is owned by the Chinese company ByteDance, was banned for its refusal to curb what the previous Nepalese government had described as hate speech that disturbed “social harmony.” At the time, Nepali officials said that they had resorted to the ban after TikTok declined to address concerns about troubling content.
Opinion Pieces
89. Can Taiwan Count on the U.S. if Trump Wins?
Mark Montgomery and Bradley Bowman, Wall Street Journal, August 28, 2024
A disturbing diffidence from some experts in his orbit, who want Taipei to spend more on defense.
The race to curry favor with Donald Trump is leading some Republican foreign-policy experts in disturbing directions. Consider Elbridge Colby, who co-led the Trump administration’s development of its National Defense Strategy and could assume a prominent Pentagon position in a second Trump term. In recent days, Mr. Colby has fired off a flurry of social-media commentary suggesting the U.S. may not come to Taiwan’s defense in the event of Chinese aggression. Or listen to Robert O’Brien, who served as Mr. Trump’s national security adviser and has been mentioned as a potential secretary of state. “We’ve got to have burden sharing,” Mr. O’Brien told reporters last month, urging Taiwan to spend at least 5% of its gross domestic product on defense.
Suggesting Washington may not defend Taiwan if the island doesn’t spend enough on defense is straight out of Mr. Trump’s playbook for the North Atlantic Treaty Organization. Asked about Mr. Colby’s comments, Trump campaign spokesman Steven Cheung told NatSec Daily that “official policy will be unveiled by either President Trump or his campaign, nobody else.” That may suggest the campaign considers Mr. Colby’s view a political liability.
Regardless, threatening to abandon Taiwan is misguided and dangerous. It undermines American deterrence and increases the chances of Chinese aggression against the island, which could lead to a catastrophic war. Increased defense spending by NATO allies is a worthy and necessary goal. The same is true of Taiwan. Yet in both theaters there are smart and less-smart ways to encourage partners to spend more on defense.
On Aug. 21 Mr. Colby called Taiwan’s defense efforts “laggardly” and reposted commentary by Republican Sen. Josh Hawley’s national-security adviser suggesting it may not be in America’s interest to come to Taiwan’s aid in the event of naked aggression from Beijing. Mr. Colby wrote that Washington should “avoid unnecessarily poking Beijing on a ‘core issue’ for them,” contradicting years of effective and prudent advocacy on his part for a muscular U.S. policy toward Beijing and robust assistance for Taipei.
Taiwan spends roughly 2.5% of its GDP on defense. That’s an impressive level compared with other democracies. The average estimated defense expenditure of European NATO nations in 2024 is 2% of GDP. Out of the 32 NATO members, only Poland, Estonia, the U.S., Latvia, Greece and Lithuania spend more than Taiwan on defense as a percentage of GDP, according to a NATO report from June. The U.S. will spend about 3% this year.
Taiwan’s defense spending is far from “laggardly.” It doubtless could spend more, but such messages are best delivered candidly and in private. And even if Taiwan doubled its defense spending, it would still need U.S. help. The economic and military imbalance between Beijing and Taipei is too large. China’s economy is more than 20 times the size of Taiwan’s.
That’s why other steps by both Taiwan and the U.S. are essential. Taipei should reform the development and use of its reserve forces, building a system more similar to Israel’s, Finland’s or Estonia’s. Those countries use regular forces to strengthen the training, mobilization and readiness of their reserves. Taiwan should also continue to focus its procurement funds on counter-intervention capabilities such as sea mines, portable air defenses, armed drones and antiship missiles. Finally, the island should enhance the resilience of its critical infrastructure and reduce vulnerabilities to Chinese cyber and economic coercion. This includes developing alternative communications capability, hardening power-generation capabilities, and increasing liquid natural-gas storage.
U.S. lawmakers should enact a defense budget that meets the Indo-Pacific Command’s requirements related to a major war over Taiwan. Congress should consider establishing a separate fund for which U.S. services can compete to provide those requirements. The defense secretary’s office could come up with a list of the Indo-Pacific Command’s most urgent unmet requirements. The Pentagon could then oversee a quick-turnaround competition to determine which service can credibly meet the capability requirement as quickly as possible. That would further align service priorities with combatant commander priorities, get war fighters what they need sooner, and provide the services an opportunity to augment their existing budgets.
Congress should also demand the Pentagon implement the U.S.-Taiwan military exercises and war planning required by the 2023 National Defense Authorization Act.
“The Pentagon regularly says that preparing for conflict with China over Taiwan is its top priority. And rightly so,” Mr. Colby and Alex Velez-Green, who has also advised Mr. Hawley on national security, wrote in a May 2023 op-ed. “If Taiwan falls to a Chinese assault, the United States’ military position in the region, and Asian states’ confidence in Washington’s ability and resolve to confront Beijing, will both be gravely weakened. The result would be a major step toward Chinese hegemony over the world’s largest and most important market.”
Mr. Colby was right then, and the argument remains sound. Suggesting that the U.S. might not come to Taiwan’s defense makes the nightmare scenario he has worked hard to prevent more likely.
COMMENT – I think Admiral Montgomery does a good job pointing out what is helpful and what isn’t.
90. Cold War Two is real, and Xi’s spies can track you down anywhere
Michael Sheridan, Times of London, August 25, 2024
91. China threat prompts Japan to rethink its security
Alexander Görlach, Politico, August 19, 2024
Japan’s foreign and security policy orbit sits far from Europe’s east, with Tokyo around 8,200 kilometers from Kyiv as the crow flies. And yet, Japan has supported Ukraine since it was attacked by Russia more than two years ago. In mid-June this year, Tokyo pledged its support even more concretely, as part of a 10-year security agreement worth $4.5 billion, signed by Japanese Prime Minister Fumio Kishida and Ukrainian President Volodymyr Zelenskyy on the sidelines of the G7.
But beyond aid to Ukraine, Japan now stands determined to be recognized as an important part of the transatlantic and European security architecture. The example that best illustrates this is perhaps Kishida’s visit to Kyiv in March 2023, with the Japanese leader’s presence intended to signal — both to Moscow and its main partner China — that his country would abandon the neutral stance it adopted after World War II.
From Tokyo’s perspective, the Ukraine war has called Asia’s security architecture into question. As a result, it’s not only Japan but also countries like South Korea, Taiwan and the Philippines that are strengthening their alliances with each other and the U.S. And in return for its commitment to Europe, Tokyo now wants the support of the free world in the event of a Chinese attack on democratic Taiwan.
As it stands, Putin supports his counterpart in the People’s Republic of China, Xi Jinping, in the belief that Taiwan is part of China and, if necessary, must be “reunified” with the motherland by force of arms. Furthermore, unlike his predecessors, Xi has made it clear he wants to resolve the “Taiwan issue” during his rule and bring the island under his control.
Japan, for its part, is a close ally of the small island nation. Though the Japanese Empire took control of Taiwan and colonized it, the colonial power there acted differently than it did in South Korea and China, where it committed horrific crimes. Since post-war Japan hasn’t clearly distanced itself from these racist crimes, relations with Seoul and Beijing remain tense. Yet, in Taiwan, where the locals didn’t end up being killed en masse, people today speak warmly of Japan.
Furthermore, there’s no war scenario in which Japan wouldn’t be affected by China’s aggression against Taiwan. Not only is it very closely situated to the island nation, there are also around 54,000 American soldiers stationed in Japan, many of them on the island of Okinawa. And Washington has repeatedly declared it will support Taiwan militarily should Xi attack. In addition, half of the world’s container traffic plies the Taiwan Strait — the sea route that separates Taiwan and China.
So, Japan is now calling on Europe, not least in its own interests, to prepare for a potential conflict.
92. Putting “Asia First” Could Cost America the World
Hal Brands, Bloomberg, August 25, 2024
As America’s presidential campaign nears its climax, domestic politics and geopolitics are combining to stimulate an important strategic debate. Briefly stated, the question is: Should Washington deprioritize, perhaps even disengage from, regions outside East Asia so it can concentrate on the threat posed by China?
Global events are making that debate more pressing. The US is struggling to manage wars in the Middle East and Ukraine, even as the Chinese military buildup nears an ominous crescendo. Washington is finding it ever harder to contain an axis of autocracies that is pressing on several fronts at once. And if Donald Trump regains the presidency this November, US foreign policy could be steered by people who believe that it is truly time to put Asia First.
This Asia First movement features think-tankers, prominent Republican senators, and — more ambiguously — the former president himself.
They argue that China, not Russia or Iran, is America’s primary rival, and that every dollar, missile or minute spent dealing with secondary problems raises the risk of crushing defeat in the region that matters most. Whether they know it or not, they are echoing an Asia First movement from an earlier great-power struggle.
During the early Cold War, and amid a brutal hot war in Korea, the original Asia Firsters argued that the US had to get out of Europe so it could get real about containing communism in Asia. Then as now, the Asia Firsters blended partisan warfare with serious strategic arguments. And then as now, a hard pivot to Asia would incur huge strategic costs.
Today’s Asia Firsters are right that the US needs greater urgency in grappling with the Chinese challenge. They are wrong if they believe that Washington can disengage from other regions without undercutting its ability to beat Beijing — and weakening its position around the globe.
Failing the China Challenge
If the Asia First movement has traction today, that’s because the US has been trying, and failing, to meet the China challenge for years. As early as 2001, President George W. Bush announced that America was facing an era of strategic rivalry with Beijing. A decade later, President Barack Obama launched his own “pivot” to Asia. Neither initiative turned out as planned.
Bush’s Asia shift was waylaid by 9/11 and the conflicts that followed. Obama’s was an underfunded, desultory effort that was ultimately undone by — this may sound familiar — wars in the Middle East and Ukraine.
Since then, Trump and President Joe Biden have focused the Pentagon on China while bolstering US alliances in Asia. But the US military budget is barely keeping pace with inflation, while China amasses ships, submarines, planes, missiles, nuclear weapons and other deadly tools it could use to seize Taiwan or teach its neighbors a violent lesson. Blue-ribbon panels and even current US officials are stridently warning that America could lose if it has to fight.
The US has been procrastinating on China for a quarter of a century. Today, with that threat growing and other conflicts grabbing US attention, a cohort of Republicans is calling for a stark strategic shift.
Republican senators such as Josh Hawley, and influential think-tankers such as Kevin Roberts and Elbridge Colby, have called for the US to slash aid to Ukraine and send more weapons to Taiwan. Robert O’Brien, Trump’s former national security adviser, writes that Washington should shift aircraft carriers — currently being used to deter Iran and protect the sea lanes of the Middle East — and the entire Marine Corps to the Pacific.
Some Asia Firsters even imply the US should leave the defense of Europe — and America’s North Atlantic Treaty Organization allies — to the Europeans. As vice presidential candidate JD Vance has put it, Europe must “stand on its own feet.” Going further, MAGA mouthpiece Tucker Carlson has said that he hopes Putin wins in Ukraine.
Trump himself is harder to pin down, because his views are so idiosyncratic. But his animosity toward NATO, his calls to end the conflict in Ukraine, his condemnation of “endless wars” in the Middle East, and his belligerence toward China make him the political leader on which Asia Firsters pin their hopes.
Politics always suffuses debates on foreign policy, and advocacy of an Asia First strategy is part of a predictable election-year critique of a Democratic administration. No less, it is the leading edge of a bid to wrest control of the GOP from outgoing Senate Minority Leader Mitch McConnell, a staunch supporter of Ukraine and NATO, and his fellow “globalists.”
If Trump wins in November, Asia Firsters will likely be prominent in his administration. So it’s worth understanding the merits and antecedents of this approach.
Trump, Truman and Taft
This isn’t the first time leading Republicans have raised the Asia First banner. In the early 1950s, as President Harry Truman’s administration was making unprecedented commitments to Europe, it faced objections from conservatives who believed the real fight was on the other side of the world.
Washington did not grasp that “it is Asia which has been selected for the test of Communist power,” General Douglas MacArthur wrote in December 1950, as US forces were being mauled in Korea. He called for America to bomb and blockade Communist China, which had joined the conflict a few weeks earlier, and otherwise take a victory-at-all-costs approach to waging the Cold War there.
Senator Robert Taft and former president Herbert Hoover argued that the US should gradually disengage from Europe while stiffening its defenses in the Pacific. Many Republicans condemned Truman for failing to halt Mao Zedong’s takeover of China in 1949 while investing so heavily in the Marshall Plan, the North Atlantic Treaty and other transatlantic initiatives.
This Asia First movement engaged serious issues, such as how to handle a bloody, stalemated fight in Korea, and whether to focus on America’s most powerful rival, the Soviet Union, or its most aggressive rival, China. It was also an intensely politicized effort by conservative Republicans to end 20 years of Democratic dominance in Washington, and to dethrone an earlier generation of GOP “globalists” led by Senator Arthur Vandenberg (a converted isolationist) and New York governor Thomas Dewey, whom they blamed for the party’s electoral defeat in 1948.
Asia Firsters like Taft sometimes shaded into neo-isolationism, just as Trump sometimes seems hostile to US alliances everywhere. And the earlier Asia First movement — with its claims that Truman was soft on communism — fed McCarthyite paranoia in the 1950s, just as Trump mixes calls to get tough on China with claims that America is infested with “Communists” and “Marxists” today.
The Asia First movement of the 50s ultimately foundered, mainly because escalation in Korea might have caused a third world war, while abandoning Europe would have punched a continent-sized hole in America’s containment strategy. Instead, Truman fought a limited war in Korea, while using the sense of fear and urgency the war created to launch a huge military buildup and strengthen US alliances in Europe and Asia alike.
As Truman understood, the US couldn’t win the Cold War by taking an Asia-centric approach to a global competition. A popular political cartoon of the time had MacArthur fixating on a square globe dominated by Asia. “We’ve been using more of a roundish one,” Defense Secretary George Marshall remarks — a comment that might be directed to today’s Asia Firsters, too.
Global Economy at Risk
In fairness, the Asia Firsters get a lot right. Of America’s rivals, only China has the mix of military power, economic heft and technological innovation needed to contend for global leadership, a fact that President Biden himself has often acknowledged. When it comes to military power in particular, the US and its allies are running out of time to avoid a potentially deadly imbalance in the western Pacific: Some analysts fear the risk of war will rise as the People’s Liberation Army completes its current round of reforms in the late 2020s.
If war does come, because China attacks Taiwan or tangles with Japan or the Philippines, the effects could be mind-bogglingly bad. A Sino-American clash might crater the global economy; it could spread throughout the western Pacific and even escalate to nuclear war. If the US loses, there would be an epic shift of power in Asia, with reverberations around the world.
Asia Firsters are also right that the US stubbornly refuses to face up to this danger: Defense budgets are stagnant, munitions stockpiles are deficient and the shipbuilding industry is pathetic in light of China’s naval expansion. And they aren’t wrong that the US is overextended globally. The Pentagon is pulling aircraft carriers from the Pacific for use in the Middle East, but it is nonetheless losing a conflict in the Red Sea with the Houthis because it can’t spare the cruise missiles and laser-guided bombs needed to punish them more severely.
There’s no debating that the US is trying to do too much with too little, and that it must do more, faster to stay ahead of the Chinese threat. Nonetheless, the costs and weaknesses of an Asia First strategy are vastly higher than its proponents admit.
Ditching Ukraine
For one thing, the “ditch Ukraine” attitude of many Asia Firsters is striking. Yes, the US has been generous to Ukraine, to the tune of over $100 billion in bilateral aid. But that support has inflicted catastrophic harm on Russian President Vladimir Putin’s military, and thus on China’s closest ally, at the cost of a few percent of the Pentagon’s annual budget and without taking a single American life.
Many of the weapons given to Ukraine, such as tanks and artillery shells, probably won’t be crucial in a China fight. And if the China challenge is as epochal as the Asia Firsters say, the outcome of a war in the Pacific won’t be decided by the disposition of a few hundred missiles sent to Ukraine. It will be decided by whether America and its allies start rearming with the alacrity a dire situation demands.
Asia Firsters are also remarkably blasé about the consequences of US retrenchment. Pulling back from Europe and the Middle East would be difficult even if those areas were peaceful. Today, however, they are rife with conflict. A hyper-militarized Russia is still trying to destroy Ukraine; the Middle East is seeing its worst instability in decades. Friendly countries in both regions would struggle to contain their enemies without US leadership. An America that veers sharply toward Asia won’t leave behind regions blessed by tranquility: It will encourage violent disorder that eventually gets so bad the US is forced to return.
And America would have to return, because regions beyond East Asia still matter quite a lot. Europe represents a sizable chunk of global economic power and the world’s largest concentration of liberal democracies. The Middle East commands the energy resources that still power the global economy, and the critical waterways that connect Europe to Asia. East Asia may be the most important theater of competition, but that doesn’t mean Washington can let the others burn.
Asia Firsters also fail to recognize that what happens outside East Asia will profoundly affect what happens within it. Countries on the front lines of conflict in that region — Taiwan, Japan and South Korea in particular — don’t want the US to cut Ukraine loose. They see that war in Europe as a test of strength between a free world supporting Kyiv and a cast of Eurasian autocracies backing Russia. They know that successful aggression against one vulnerable democracy will leave others more exposed.
Asia Firsters can never quite explain how absorbing a massive setback in one theater will position the democracies for success in another. What’s more, an America that focuses too intently on Asia may struggle to rally the global coalition needed to keep China in check.
If the US leaves Europe alone against Russia, good luck convincing European governments to follow America’s lead in the economic and technological competition with China. If the US can’t or won’t protect the Middle East from Iran and its proxies, it will struggle to keep ambivalent partners such as Saudi Arabia and the United Arab Emirates onside against Beijing.
A great virtue of America’s security network is that Washington can summon global responses to pressing challenges. The flip side is that regionalizing US foreign policy could, ironically, undercut America’s ability to out-compete Beijing.
Wavering on Taiwan
The deepest problem with Asia First is that it misunderstands US politics. Think-tank analysts may imagine that America will back away from Ukraine, and perhaps even Europe, and then go all-out to prepare for a future war in Asia. It practice, it likely wouldn’t work out that way.
If Asia Firsters convince Americans that one faraway democracy confronting autocratic aggression isn’t worth supporting, will they really succeed in convincing Americans that the next faraway democracy confronting autocratic aggression is? Put differently, a country that has decided it isn’t worth sending money and guns to aid Ukraine may well be a country that declines to send its young men and women to die for Taiwan.
There are already signs that some Asia Firsters aren’t so committed to Taiwan after all. Earlier this year, Tucker Carlson declared that Washington shouldn’t “spend a ton of time worrying about Taiwan” since “it’s far away, and honestly, who cares?” More sober analysts are also suggesting that Taiwan may not be worth a fight. Trump himself has repeatedly cast doubt on whether he would aid Taiwan if it is attacked. Don’t be surprised if the road from Asia First to America First is short indeed.
The Asia Firsters have done a duty in pointing out the severity of the China challenge, and how unready the US remains. But they offer a false solution in saying that America can solve its problems simply by concentrating on China above all else.
The international order the US has constructed since World War II is under assault in multiple regions, at the hands of multiple adversaries who are increasingly working together. Dealing with that situation will require serious, sustained efforts to expand US defense capabilities and to strengthen US alliances on a global basis. It will demand using the urgency created by a crisis that erupts in one region to catalyze action in others, just as Truman used the Korean War to buttress America’s defenses in both Europe and Asia.
That’s a tough task given how long the US has waited to shore up a sagging global order. But the fundamental choice before America isn’t Ukraine versus Taiwan, Europe versus Asia. It is whether to pay the rising cost of international stability or risk becoming a regional power in an age of cascading global turmoil.
COMMENT – Read Hal’s piece in full.
93. The U.S. and China Should Consider Partnering in Space
Howard French, Foreign Policy, August 27, 2024
The benefits could outweigh the risks—and allow the superpowers to leave competition to earthly problems.
COMMENT –See the above maxim about never aiding your rival in building an advanced aerospace industry. Howard French has a long history of bad ideas, but this one tops the list.
94. Xi Prefers Fleet Power to Street Protest
Raphael J. Piliero and Elliot S. Ji, Foreign Policy, August 26, 2024
In 1999, American bombers accidentally blew up China’s embassy during an attack on Belgrade, killing three. The Chinese reacted with outrage, demanding reparations and official apologies. To prove their seriousness, they made nationalist speeches that whipped Chinese citizens into a frenzy, culminating in tens of thousands of protesters throwing rocks and encircling the U.S. embassy in Beijing.
For Chinese leaders, this was par for the course. In responding to international crises, China long hewed to a simple playbook: stoking anti-foreign protests to show resolve and pressure the other side to desist.
But today, something has changed: Chinese leader Xi Jinping, hardly averse to invoking nationalism when it suits him, has nonetheless eschewed stirring up frenzied protests when facing international crisis. During the biggest foreign-policy crisis for China in decades, House Speaker Nancy Pelosi’s 2022 visit to Taiwan, Xi did not encourage Chinese protests—in fact, nationalist fervor was met with online repression, including a temporary shutdown of social media. Instead, the People’s Liberation Army (PLA) carried out a series of unprecedented exercises to punish Taiwan and redraw the cross-strait status quo.
Xi’s avoidance of anger on the Chinese street is not a one-off. In the past decade under Xi, crises have not abated but accelerated—yet they’ve been matched by the effective absence of anti-foreign protests in the streets and frequent displays of military force. The reasons for Xi’s shift away from protest bargaining are multifaceted, rooted in domestic politics and a preference for showing strength both at home and abroad. The result of a new crisis-signaling playbook is a China that shows resolve in crises not through anger in the streets but through warplanes and the fleet.
95. How the Forced Energy Transition and Reliance on China Will Harm America
Diana Furchtgott-Roth and Miles Pollard, Heritage Foundation, August 22, 2024
This Special Report documents how costly green policies will make America dependent on China and harm American energy, economic, and national security. The U.S. is currently one of the world’s largest energy producers, and this should be a significant advantage over China, which is the world’s largest energy importer. But China is trying to turn the tables by dominating the green energy infrastructure mandated by American politicians and to which the American Left is addicted.
The goals of American energy policy should be crystal clear: to remain energy-independent using domestic sources of legacy fuels and nuclear power; to foster affordable, abundant, and reliable energy, both domestically and among allies; and to avoid dependence on China’s green energy industry.
Key Takeaways
China has succeeded in dominating the world’s supply chains in green energy products and components.
Continuing to require the use of these green energy products will cede economic power to China, giving China control of American energy security.
Only by using its own oil and natural gas resources and passing prudent trade, tax, and regulatory policy can America remain strong and energy-independent.
96. Tension in the South China Sea raises fears of a superpower war
Richard Lloyd Perry, Times of London, August 19, 2024