Friends,
This week’s title refers to the first article of the week.
Thanks again to Stanford Center on China’s Economy and Institutions (SCCEI) at the Freeman Spogli Institute for International Studies (FSI) for their excellent work identifying and amplifying articles from academic journals. Connecting the general audience to deeply researched academic journal articles is incredibly valuable work and I’m very appreciative.
***
On to some stuff in the news that caught my attention this morning…
Extraterritorial intimidation popped up at the Paris Olympics, this time at the hands of the International Olympic Committee (IOC). As Taiwanese athletes competed in badminton, fans had their signs ripped away by Olympic officials.
The signs mentioned the word “Taiwan” or showed a map of the island, and apparently the IOC has decided (likely at the insistence of Beijing) that any mention or representation of Taiwan is an offense that must be removed from all venues.
[Of note, the IOC requires Taiwanese athletes to compete under the title “Chinese Taipei” and a made up flag with Olympics rings on it. And at the insistence of the PRC Government, Taiwanese athletes who win gold medals don’t get their national anthem played, a national “flag” anthem is played instead.]
I think we should recognize that the IOC has, in many ways, become an extension of the Chinese Communist Party’s harassment of Taiwanese wherever they are in the world. The IOC doesn’t treat any other country to these kinds of indignities. Other countries that are the products of messy and unresolved civil wars get to represent themselves with their own flags. But not Taiwan, an island democracy with 23 million people that the Chinese Communist Party wants to annex.
Instead of telling the PRC that their demands are unreasonable for a sporting event that is supposed to be above geopolitics, the IOC gladly enforces Beijing’s demands and helps legitimize the Chinese Communist Party’s coercion and threats against Taiwan.
If you think my criticism of the IOC is exaggerated, remember that just a week ago the IOC threaten to reject Salt Lake City’s bid to host the 2034 Winter Games unless state officials in Utah signed a contract to undermine the U.S. Justice Department’s investigation into IOC and WADA collusion with the PRC over doping in the Tokyo Olympics. It appears that WADA, (World Anti-Doping Agency), a foundation set up by the IOC in 1999, colluded with the PRC Government to cover up two dozen Chinese athletes that tested positive for banned steroids in the last summer Olympics. Those athletes won medals in Tokyo and are competing and winning medals this year. The PRC Government came out with the lame excuse that they had eaten contaminated meat and WADA/IOC has sought to absolve them of any wrong-doing.
Rather than take this cheating seriously, the IOC is outraged that their collusion and corruption with Beijing might come to light and are doing everything they can to impede the investigation.
China’s anti-doping organization, an arm of the PRC Government, accused the New York Times this week of “unfair and immoral” reporting on these events and it seems clear that the IOC and WADA are lining up behind them (see #38 below).
For an organization that claims to be above geopolitics and strives to “develop harmony,” the IOC spends an awful lot of time pushing the petty geopolitical interests of one of its biggest funders.
***
Lots of stuff this week, but one thing to follow up on from last week’s commentary on the Beidaihe summer retreat and what the CCP leadership might be thinking about.
Just before heading out to their seaside resort, Xi and the rest of the Politburo held a “study session” to review and analyze the PRC’s coastal and air defenses. This day-long event focused on reviewing the country’s air and maritime defense plans, as well as an examination of military modernization programs and likely civil defense preparedness.
Combine that with reporting last week that the PRC is stockpiling various commodities (The Economist, “Why is Xi Jinping building secret commodity stockpiles?“ July 23, 2024).
As well as evidence over the past few years of U.S. Navy ship-shaped missile targets in the Taklamakan Desert (USNI News, “China Builds Missile Targets Shaped Like U.S. Aircraft Carrier, Destroyers in Remote Desert,” November 7, 2021)… here are a few examples:
Here is a target constructed in the middle of a PLA missile range in the Taklamakan Desert in central China, made around the outline of the U.S. Navy’s newest aircraft carrier, the USS Gerald R. Ford.
Within a few kilometers of the aircraft carrier target is this target which is built on the specifications of the U.S. Navy’s Arleigh Burke Class Destroyer, which accompanies aircraft carriers and provides missile defense.
And perhaps the most interesting is this target located on the same missile range. It appears to be a scaled down version of the U.S. Navy’s Tarawa Class Amphibious Assault Ship and it is built on rails so that the PLA can practice firing missiles at a moving target.
[NOTE: Keep those images in mind the next time you hear CCP officials talking about their peaceful intentions]
All this stuff strikes me as suggestive evidence that the political and military leadership of the PRC believe they might fight a war in the near future, and they are preparing themselves from a ‘whole-of-government’ perspective. They also seem to believe that any war will involve Chinese forces targeting and sinking U.S. Navy ships.
I wonder if the U.S. President has ever taken his entire cabinet on a day-long retreat to review potential defense plans like Chairman XI is doing? 🤔
***
Lastly…
Happy Birthday United States Coast Guard!
Today is the 234th birthday of a service that doesn’t get the credit it deserves.
The service is filled with great Americans and here is a short video from a few years ago to celebrate Coasties doing bad-ass things, like jumping on top of a drug-running submarine several hundred miles out in the Pacific:
He is yelling, “ALTO TU BARCO!” (STOP YOUR BOAT!) and yes, he is banging on the hatch to make them stop. The submarine had 17,000 pounds of narcotics on board.
I suspect the drug runners were a bit surprised to open their hatch and see that guy standing there screaming at them.
Thanks for keeping us safe Coast Guard!
Matt
MUST READ
1. How Do Narratives of Historical Victimization in China Shape National Identity and Regime Support?
Stanford Center on China’s Economy and Institutions, Stanford University, August 1, 2024
INSIGHTS
In the early 1990s, China’s state-controlled media began amplifying a victimization narrative centered around China’s “Century of Humiliation,” a historical period of foreign invasion and domination.
Evoking the victimization narrative in a survey experiment of 1,890 netizens increased the sense of national humiliation of respondents, their suspicion of foreigners, and feelings of national superiority.
The victimization narrative also induced heightened suspicion of foreign governments in international disputes, increased the view that foreign actions sought to slow China’s rise, and boosted support for China’s political system.
All these effects were more pronounced among respondents without a college degree and were absent among respondents with a college degree.
COMMENT – I think this is an incredibly important piece of research. As the Soviet Union collapsed and other Communist regimes crumbled, the Chinese Communist Party devised a new narrative to bolster support for itself: make the Chinese people feel shame and blame foreigners for imposing indignities on China.
Under this logic, the outside world was portrayed as implacably hostile to China and that only the Chinese Communist Party could restore dignity to the Chinese people and return them to their rightful place as leaders of the world. All of this ignores that in the wake of the Second World War, foreigners welcomed China to the table with a seat as one of the great powers and that China’s poverty and weakness since the establishment of the People’s Republic in 1949 was primarily the fault of Mao and the Chinese Communist Party’s own policies… when the Party changed those policies in the late 1970s, China was welcomed and its economy flourished.
To avoid facing responsibility for these failures in the first three decades of their rule, the Party set out to convince the Chinese people that their current poverty wasn’t caused by them, but by foreign imperialists a century before.
In multi-party systems, domestic opponents can hold the ruling party responsible and there are constitutional ways to change the leadership. But in a Leninist system (one party rule), there is no moderating function or constitutional way for the people to hold their leaders accountable. As the ruling party takes control of everything, they face a loss in domestic support should things go wrong or the population becomes frustrated. A Leninist Party cannot take the blame themselves, since that would lead to the kind of historical nihilism that Xi Jinping has warned brought down the Soviet Union.
Therefore, someone else must be held accountable.
At the start of these one-party regimes, this usually manifests as “counter-revolutionaries,” those domestic hold-outs who either represent the ancien régime, or who can be conveniently painted that way (Stalin’s kulaks and the entire campaign of dekulakization). But over time the narrative of counter-revolutionary threat becomes less persuasive as the ruling party consolidates power and there are no obvious domestic political opponents left. Mao’s anti-rightist campaigns and the obsession with counter-revolutionaries fill in the gap in the chart above.
When blaming domestic enemies loses its persuasive power (because everyone can see there aren’t any left), blaming the foreign enemies becomes imperative.
It is interesting to consider what happened domestically when the Party didn’t rely on blaming counter-revolutionaries or foreigners to boost their domestic legitimacy, in other words what the Party did during the 1980s. The result was that when a broad-based protest arose at the end of the decade, the Party had no one to blame.
NOTE: I’ve manipulated the chart from the article with speculation on my part (this NOT based on actual research).
I have not done the research (and would encourage someone to do it) but my assumption is that mentions of a counter revolutionary (or anti-rightist) narrative in the People’s Daily would track to the Red dashed line above.
When Deng Xiaoping came to power after Mao’s death the use of the counter-revolutionary narrative dropped to nearly zero. In the aftermath of the Tiananmen Massacre, the Party realized it needed a new narrative to shift blame away from, and to consolidate domestic political support for, the Party. Victimization at the hands of foreigners became the replacement narrative.
When things were going well for China in the late 1990s and 2000s, it did not need to rely on that narrative as much. But as Xi came to power in 2012, the Party was undergoing its own crisis of confidence after years of diminishing Party discipline. Xi sought to reinvigorate the Party and in doing so, brought back the need for an enemy to blame.
This is why I’ve never been convinced that “reassurance” is a feasible approach to U.S.-China relations. The uptick in mentions of the victimization narrative in 2013 corresponds with the era of “high engagement” and reassurance from the United States. The decision to deploy this narrative and influence Chinese public opinion isn’t about what America is doing or not doing… it is about the pathologies of a Leninist regime that must create enemies to justify their own hold on power.
Building a policy around reassuring Beijing, or simply privileging stability above friction, has a perverse incentive for the Chinese Communist Party. The more that the Washington seeks to prevent escalation and take it upon itself to “manage competition,” the more the Party is incentivized to portray the United States as the cause of China’s problems. If Beijing is certain that Washington will avoid escalation at all costs, then it can confidently use that narrative for its own domestic political purposes.
2. Joint Statement of the Security Consultative Committee ("2+2")
U.S. Department of Defense, July 28, 2024
Secretary of State Blinken, Secretary of Defense Austin, Minister for Foreign Affairs KAMIKAWA, and Minister of Defense KIHARA (referred to collectively as "the Ministers") convened the U.S.-Japan Security Consultative Committee (SCC) in Tokyo, Japan, on July 28, 2024.
Recognizing the profound level of global threats to our Alliance's shared vision and common values, the Ministers affirmed the enduring U.S. and Japanese commitment to stand shoulder-to-shoulder in upholding and protecting the free and open international order based on the rule of law, and to redouble our work with allies and partners in furtherance of this goal. The Ministers reiterated the importance of the U.S.-Japan Alliance as the cornerstone of peace, security, and prosperity in the Indo-Pacific region and beyond. The Ministers confirmed steady progress in implementing both countries' national strategic documents and in holding intensive consultations on Alliance roles and missions to further strengthen deterrence and response capabilities. The Ministers reaffirmed their intent to implement new strategic initiatives following Prime Minister KISHIDA's historic Official Visit with State Dinner on April 10, with the vision to build a global partnership for the future, including upgrading Alliance command and control (C2), deepening defense industry and advanced technology cooperation, and enhancing cross-domain operations.
Given the increasingly severe security environment caused by recent moves of regional actors, the United States restated its unwavering commitment to the defense of Japan under Article V of the U.S.-Japan Treaty of Mutual Cooperation and Security using its full range of capabilities, including nuclear. Japan reaffirmed its steadfast dedication to reinforce its own defense capabilities and to enhance its close coordination with the United States. In line with the U.S.-Japan Treaty of Mutual Cooperation and Security and the U.S.-Japan Guidelines for Defense Cooperation, Japan reaffirmed its role in maintaining peace and security in the Indo-Pacific region by seamlessly responding to any situation from peacetime to contingencies. This has been further enabled by Japan's 2015 Legislation for Peace and Security, which enhances U.S.-Japan Alliance deterrence and response capabilities. The United States welcomed Japan's reinforcement of its defense capabilities, including the sustained increase in its defense budget, the creation of the Japan Self-Defense Forces (JSDF) Joint Operations Command (JJOC), the focus on cybersecurity, and the possession of counterstrike capabilities.
Acknowledging the evolving security environment and the challenges posed to the Alliance today and in the future, the Ministers reaffirmed their commitment to promote a free and open Indo-Pacific region. The Ministers concurred that the People's Republic of China (PRC)'s foreign policy seeks to reshape the international order for its own benefit at the expense of others. They highlighted that the PRC employs political, economic, and military coercion of countries, companies, and civil society, as well as facilitates its military modernization through the diversion of technology to achieve these objectives. Such behavior is a serious concern to the Alliance and the entire international community and represents the greatest strategic challenge in the Indo-Pacific region and beyond.
…
Upgrading Alliance Coordination, Command and Control
The Ministers affirmed the need to strengthen Alliance policy and operational coordination at all levels through exercise and discussion, and to foster a shared understanding of Alliance processes from peacetime through contingencies. To facilitate deeper interoperability and cooperation on joint bilateral operations in peacetime and during contingencies, the United States intends to reconstitute U.S. Forces Japan (USFJ) as a joint force headquarters (JFHQ) reporting to the Commander of U.S. Indo-Pacific Command (USINDOPACOM). This reconstituted USFJ is intended to serve as an important JJOC counterpart. Through a phased approach, USFJ would enhance its capabilities and operational cooperation with the JJOC, as well as assume primary responsibility for coordinating security activities in and around Japan in accordance with the U.S.-Japan Treaty of Mutual Cooperation and Security. In coordination and consultation with the U.S. Congress, the Department of Defense intends to reconstitute USFJ, in parallel with the development of the JJOC. The United States and Japan will closely consult and establish working groups to further develop bilateral aspects of this proposal, building upon the following shared C2 principles.
COMMENT – This “upgrading” was billed as a major announcement, but I struggle to find much there, there.
On the U.S. side, Secretary Austin announced that the Department would “reconstitute” U.S. Forces Japan as “a joint force headquarters reporting to the commander of the Indo-Pacific Command.”
But, U.S. Forces Japan (USFJ) already exists as a joint force headquarters that reports to the commander of Indo-Pacific Command. USFJ has been there for decades… just read the history of USFJ at their own website… or look at the published Organization Chart on the INDOPACOM website:
So, I’m scratching my head on what this actually means.
From what I understand, the U.S. Defense Department and the Japanese Ministry of Defense have been negotiating for years to “elevate” USFJ, at least since 2011 and the lessons learned from the response to the earthquake, tsunami, and nuclear accident.
Japan wants the United States to elevate the rank of the USFJ Commander, now a 3-star Air Force General to a 4-star command, to bring it in line with the importance both countries place on their alliance and to at least match the headquarters the United States has in Korea (United States Forces Korea (USFK) which is commanded by an Army 4-star).
The announcement this week appears to be that we will maintain the status quo, even as we make a public announcement that there is a major change.
Could this change in the future?
Perhaps.
There are five 4-star commanders in the INDOPACOM theater, one in Korea and four in Honolulu. Of note, the collection of four 4-star commands in Honolulu is the largest concentration of U.S. 4-stars in one location outside of Washington DC and the Pentagon (which, by my count is 13 4-stars, 15 if you count the U.S. Coast Guard).
Could one of those four 4-stars move their headquarters from Honolulu to Japan? Sure, but it doesn’t appear that Secretary Austin has made the decision to done so.
There are also five 4-star military commanders in Europe, but those are spread out across different countries and cities (four under EUCOM and the Africa Command Commander is based in Stuttgart, Germany… not Africa).
It seems to me that there are a handful of options to consider:
Option #1 – Move the Commander of U.S. Pacific Fleet (PACFLT) from Pearl Harbor to Japan and make that 4-star Admiral the Commander of U.S. Forces Japan (as well as the Commander of U.S. Pacific Fleet).
Option #2 – Move the Commander of Pacific Air Forces (PACAF) from Hickam Air Force Base in Honolulu to Japan and make that 4-star Air Force General the Commander of U.S. Forces Japan (as well as the Commander of Pacific Air Forces).
Option #3 – Move the Commanding General of U.S. Army Pacific (USARPAC) from Fort Shafter in Honolulu to Japan and make that 4-star Army General the Commander of U.S. Forces Japan (as well as the CG of USARPAC).
Option #4 – Identify a 4-star command somewhere else in the Department of Defense reduce that position to a 3-star and elevate Commander, U.S. Forces Japan (COMUSFJ) to a 4-star command position. This would give U.S. Indo-Pacific Command six 4-star positions.
Option #5 – Perhaps the boldest option would be to move the Commander of Indo-Pacific Command (INDOPACOM) from Camp Smith in Honolulu to Japan. This would establish the headquarters for INDOPACOM in Japan instead of Hawaii. This would be perhaps the strongest signal to the Japanese, and the region, that the United States is focused on the Western Pacific and the defense of the first island chain (The Philippines, Taiwan, South Korea, and Japan. The remaining three 4-stars (as well as the 3-star Marine Corps command, Marine Forces Pacific (MARFORPAC)) would stay on the island of Oahu with the preponderance of their forces, but the overall commander of the theater would be forward in Japan with the nation’s most important ally.
The current location of INDOPACOM (formerly Pacific Command) dates back to WWII when Admiral Nimitz established his headquarters there (in fact current commanders live in Nimitz’s old house). Things have changed since the 1940s and given the current situation, it might make sense to move the headquarters forward. We did it in Europe decades ago, understanding that the Commander of U.S. forces in Europe needed to be forward with our most important allies on a daily basis.
[Secretary Austin – I’d be happy to come in and brief this if you’re interested]
One last note… to all my readers at INDOPACOM, I’m sorry for suggesting a move to Japan, I know how spectacular it is to live on Oahu. But Tokyo is really great too… try my favorite cocktail bar called Mixology Heritage on the line between Chiyoda and Ginza, you’ll love it.
Here is their classic martini made with four types of gin from the 1970s.
3. New US rule on foreign chip equipment exports to China to exempt some allies
Karen Freifeld, Reuters, July 31, 2024
President Joe Biden's administration plans to unveil a new rule next month that will expand U.S. powers to stop exports of semiconductor manufacturing equipment from some foreign countries to Chinese chipmakers, two sources familiar with the rule said.
But shipments from allies that export key chipmaking equipment - including Japan, the Netherlands and South Korea - will be excluded, limiting the impact of the rule, said the sources who were not authorized to speak to media and declined to be identified.
COMMENT – I find this development to be really disturbing.
Just as the U.S. and Japan hold their most important government to government talks (with Secretaries Blinken and Austin in Tokyo), the U.S. Commerce Department caves under pressure from Tokyo, Seoul, and Amsterdam. Beijing has been exploiting loopholes between the four countries to gain access to advanced semiconductors and the equipment to make them and this effort to tighten export controls was meant to close those loopholes.
From what I understand, Tokyo, Seoul, and Amsterdam have been hammering Washington with pressure to exempt their companies from complying with export controls… and this week, the Administration surrendered. Commerce essentially announced that the controls would only apply to U.S. companies (which means that despite the rhetoric with this announcement, Commerce will likely approve the export licenses of U.S. companies making the tightening of these rules all but moot).
It looks like this issue was left to low-level officials on the American side and when push-came-to-shove with our allies, no senior elected officials showed up and the Administration backed down. I suspect the Administration will try to portray their actions as being “responsible” and “cooperative” with allies, but the reality is that the Administration caved on its own initiative because it refused to press its allies to do the right thing.
This capitulation will only encourage more pressure on the Administration to dismantle its toughest measures on China.
Mark this up as a win for the global semiconductor industry that has sought to dismantle export controls on its products… and a win for Beijing that has put enormous pressure on Japan, South Korea, and the Netherlands to force the Biden Administration to neuter their export controls on high-end chips and the equipment to make them.
Almost on cue, see the next three articles…
4. ASML shares pop 7% after report that U.S. will exempt allies from new China chip restrictions
Arjun Kharpal, CNBC, July 31, 2024
Shares of Dutch firm ASML jumped as much as 10% on Wednesday after a Reuters report suggested the company could be exempt from expanded export restrictions on chipmaking gear to China.
Reuters reported on Thursday that the U.S. is considering expanding the so-called foreign direct product rule.
But allies that export key chipmaking equipment — including Japan, the Netherlands and South Korea — will be excluded, according to the report.
5. Qualcomm revenue from China smartphone makers grows 50%, driven by AI
Yifan Yu, Nikkei Asia, August 1, 2024
Qualcomm recorded over 50% year-on-year revenue growth from Chinese smartphone makers in the April-June quarter, the U.S. chipmaker said Wednesday, as growing demand for AI features in smartphones has fueled sales.
"AI has expanded the size of the premium [handset] tier. So even in a market which is kind of flattish to a low single digit in growth, the premium tier is actually growing faster. And we've seen that. We've seen a larger premium tier enabled by AI," Qualcomm CEO Cristiano Amon said at an earnings call, adding that he expects several Chinese handset makers to launch flagship phones with AI features soon.
6. The U.S. Wanted to Knock Down Huawei. It’s Only Getting Stronger.
Liza Lin, Stu Wood, and Raffaele Huang, Wall Street Journal, July 29, 2024
The Chinese telecom giant struggled at first under U.S. sanctions—then Beijing stepped in.
Five years ago, Washington sanctioned Huawei, cutting off the Chinese company’s access to advanced U.S. technologies because it feared the telecommunications giant would spy on Americans and their allies. Many in the industry thought it would ring the death knell for one of China’s most vital tech players.
Bolstered by billions of dollars in state support, Huawei has expanded into new businesses, boosted its profitability and found fresh ways to curb its dependence on U.S. suppliers. It has held on to its leading position in the global telecom-equipment market, despite American efforts to squeeze Huawei out of its allies’ networks. And it’s making a big comeback in high-end smartphones, using sophisticated new chips developed in-house to take buyers from Apple.
Along the way, a company that portrayed itself as independent from Beijing has morphed into something more like a national champion, helping China wean itself off foreign suppliers—part of a broader campaign to eliminate U.S. technology in China, dubbed “Delete A,” for Delete America. Its resurgence shows why it’s so hard for America to contain China’s technological ambitions.
“The U.S. government’s campaign against Huawei is inadvertently bolstering the company’s resilience, echoing the age-old adage that what doesn’t kill you makes you stronger,” said Sameh Boujelbene, an analyst at research firm Dell’Oro Group.
State money was critical. While China’s government has backed Huawei since its earliest days, government support ramped up in recent years. Huawei’s profit more than doubled last year, the largest jump in at least two decades. Roughly two-thirds of its revenue comes from domestic clients.
Government contracts and company registration records, as well as interviews with former and current employees, reveal that billions of dollars flowed from the Chinese government to Huawei through preferential buying contracts and subsidies. State-owned enterprises, government agencies and Communist Party bodies sought Huawei chips, smartphones, cloud services and software, with some procurement contracts calling for Huawei gear by name.
COMMENT – The technology war between the U.S. and the PRC requires persistence and a willingness to put pressure on both companies and allies. I fear the effort has suffered several setbacks that will require even more effort to reverse.
I’m most frustrated with the approach that Washington has apparently adopted, one of half-measures.
7. Cyber-attacks on shipping rise amid geopolitical tensions
Oliver Telling, Financial Times, July 27, 2024
The shipping industry is increasingly facing cyber-attacks, with 64 incidents reported in 2023. Most attacks originate from Russia, China, North Korea, or Iran. The growing digitization of ships and the use of internet-enabled devices at sea have created new vulnerabilities. Experts warn that the industry is underprepared for these threats, risking significant disruptions in global trade.
8. Germany says China was behind a 2021 cyberattack on a government agency and summons its ambassador
Geir Moulson, Associated Press, July 31, 2024
In 2021, Chinese state actors carried out a cyberattack on Germany's Federal Agency for Cartography and Geodesy, prompting Germany to summon the Chinese ambassador for the first time since 1989. This incident is part of growing tensions between Germany and China, which include recent espionage arrests and Germany's ban on Chinese components in 5G networks.
COMMENT – It took Germany three years to figure this out… or at least three years to work up the courage to say this publicly.
Also, despite the enormous evidence that Beijing is supplying Moscow with all the materials it needs to carry on its war in Ukraine, it appears that the German Government has never called the Chinese Ambassador in for a dressing down… disgraceful.
I wonder how many times the German Ambassador to the PRC has been called in to the Chinese Foreign Ministry to be disciplined since 1989… I don’t know for sure, but I’d bet it’s more than once.
9. Libel Lawfare
Bethany Allen, The Wire China, July 28, 2024
On the day after Thanksgiving in 2020, Scott Paul got some bad news. BYD, the Chinese electric vehicle giant, was suing his organization and several of its employees in a defamation suit filed in U.S. federal court.
BYD, Paul knew, had deep pockets. The EV giant had a market cap of $75 billion at the time, with a staff of around 224,000 employees in China alone. By contrast, his organization was the Alliance for American Manufacturing (AAM), a D.C.-based non-profit advocacy group that had a staff of around 20 and an annual budget ranging between $4.8 million and $6.5 million.
As AAM’s president, Paul was immediately concerned not just for the future of the organization, but also for the communications staffers who were named in the complaint and could be held personally liable.
“These staffers have families with young kids. I was thinking about how this would hit them as well,” Paul told The Wire China. “It caused an enormous amount of anxiety right away.”
He had good reason to be worried. BYD had hired Charles Harder, a celebrity libel lawyer who had represented Hulk Hogan in the lawsuit against Gawker Media that eventually resulted in a $140 million judgment, forcing Gawker into bankruptcy. Harder had also won First Lady Melania Trump’s defamation suit against The Daily Mail, and defended Donald Trump against defamation lawsuits filed by Stormy Daniels.
AAM, by contrast, was hardly a big name or media heavyweight. It was formed in 2007 as a partnership between U.S. manufacturers and the United Steelworkers, the country’s largest industrial union. But AAM did have a fair amount of political sway.
In the year before the lawsuit, it had argued that federal transit dollars shouldn’t go to entities of concern or companies that are headquartered in non-market economies — such as China. Paul was invited to give congressional testimony at a May 2019 hearing on transportation and infrastructure, where he singled out BYD and China Railroad Rolling Stock Corporation (CRRC) as “state-owned, state-subsidized, and state-supported enterprises” that have “begun securing lucrative, U.S. taxpayer-supported contracts to supply our major cities with transit rail cars and electric buses,” part of a trend that is “systematically destroying the competitive national landscape for U.S. rolling stock manufacturing.”
BYD’s lawsuit accused AAM of engaging in a “malicious, fraudulent, outrageous, and reckless campaign to damage BYD’s reputation and brand with false allegations and misleading rhetoric.” The complaint pointed to several AAM statements it claimed were defamatory, though none of them came from Paul’s testimony to Congress. One was a statement Paul had made that BYD is “simply an arm of China’s military and government,” responding to new research into the Chinese government’s extensive subsidies and other support for BYD. Another was a blog post published to AAM’s website that called BYD “a company controlled by the Chinese state.” Another AAM blog post listed BYD as among 83 companies whose supply chains were linked to Uyghur forced labor in China, citing findings in a report that had received widespread media coverage.
In a national debate full of China critics, Paul believes that BYD was targeting AAM in particular as punishment for its successful advocacy. In December 2019, Congress enacted a ban on the use of federal transit funds to purchase rolling stock from Chinese-owned companies, which prevented BYD from winning valuable contracts in California and elsewhere.
“It felt like retribution for the public policy work that we had done to limit BYD’s access to tax dollars,” Paul says.
BYD did not respond to requests for comment.
AAM isn’t alone in facing such a lawsuit. In recent years, several large Chinese companies have filed defamation suits against small organizations or individual researchers for pointing out their close ties to China’s party-state or for repeating other claims already published in major media outlets. With many of these companies facing political headwinds in European and U.S. markets, some analysts warn that the Chinese firms pursued “SLAPP” suits, a legal tactic that is intended to chill free speech through frivolous lawsuits that drain the financial resources of critics. (SLAPP stands for “strategic lawsuits against public participation.”)
Diego Zambrano, a law professor at Stanford University who specializes in transnational litigation, warns that the rise of SLAPP cases represents the ability of authoritarian governments, such as Russia, China, and Turkey, to extend repression far beyond their borders.
“In the U.S. we give immunity to foreign governments and their instrumentalities, and yet it’s quite easy for foreign governments and their proxies to file claims in U.S. courts,” Zambrano told The Wire China. Sometimes these suits are frivolous and intended to punish media outlets and political dissidents, or to pursue other state goals, Zambrano noted, adding, “I’m quite worried about this transnational repression.”
Moreover, according to experts, SLAPP cases are quite effective at silencing potential critics.
“One of the hallmarks of a SLAPP suit is that it is brought to punish and, in a sense, terrorize people or organizations that don’t have those types of resources, teach them a lesson, and deter other people from engaging in similar conduct,” says Art Spitzer, senior counsel at the American Civil Liberties Union, District of Columbia chapter.
COMMENT – This is crazy.
10. China’s Fortress Economy
Jimmy Goodrich, IGCC, July 30, 2024
Jimmy Goodrich's working paper explores China's "fortress economy" policy under Xi Jinping, focusing on national self-sufficiency and resilience against external shocks.
The policy, formalized in China's 14th Five-Year Plan, is analyzed through key areas like food security, energy independence, and supply chain resilience. Goodrich examines official documents and speeches, revealing the CCP's perception of a hostile international environment and a strategic shift toward prioritizing national security and economic self-reliance.
COMMENT – Worth reading in full.
11. ‘Circle the wagons’: State pension funds are dumping Chinese investments
Phelim Kine, Politico, July 26, 2024
A growing number of states are forcing public employee pension funds to divest from China, pulling out of the world’s second-largest economy because of hostility toward Beijing and fear that U.S. assets could be frozen if conflict breaks out in the Indo-Pacific.
Five states — Indiana, Florida, Missouri, Oklahoma and Kansas — have directed state fund administrators to begin the divestment process over the past year. And more are considering doing so — the latest sign of deteriorating relations between the U.S. and China.
COMMENT – This is an important win… I just wish it were happening in a bipartisan manner and that the White House and the rest of the Executive Branch were leading the charge on this… serious outbound investment restrictions would send a strong message.
Authoritarianism
12. China's cyberspace ID proposal triggers fear of stricter social control
Cissy Zhou, Nikkei Asia, August 1, 2024
Lawyers worry system would expand surveillance and make access a licensed privilege.
A Chinese government proposal to issue individual online identifiers to citizens has sparked concerns that authorities could use the system to further tighten already strict social control.
A draft of the measure says individuals would use the National Network Identity Authentication (NNIA), a trial application already launched on app stores earlier this year, to obtain a cyberspace ID composed of letters and numbers along with a "cyberspace certificate." This would be used for authentication on internet platforms.
13. New CCTV cameras in Hong Kong to be equipped with facial recognition technology, security chief says
Hillary Leung, Hong Kong Free Press, July 26, 2024
14. Long arm of the law: China’s extraterritorial reach
Danielle Ireland-Piper, Lowy Institute, July 31, 2024
15. VIDEO – Australian media commentator smeared with false allegations by Chinese intelligence
Sam Cooper, The Bureau, July 17, 2024
16. Reimagining China in Tokyo
Chang Che, New Yorker, July 30, 2024
17. Xi’s Ten-Year Bid to Remake China’s Media
David Bandurski, China Media Project, July 24, 2024
18. Why Chinese Propaganda Loves Foreign Travel Influencers
Vivian Wang, New York Times, July 31, 2024
19. China Wants to Start a National Internet ID System
Meaghan Tobin and John Liu, New York Times, July 31, 2024
20. Authorities in Xinjiang rearrest son of prominent Uyghur businessman
Gulchehra Hoja, Radio Free Asia, July 29, 2024
21. Leaked plan reveals bid to get Chinese officials to have more kids
Chen Zifei, Radio Free Asia, July 23, 2024
22. Xinjiang authorities intensify reporting requirements for Uyghur visitors
Shohret Hoshur, Radio Free Asia, July 23, 2024
23. Migrants from China ‘walk the line’ to U.S. border, testing Biden and Xi
Cate Cadell, Nick Miroff, and Li Qiang, Washington Post, July 29, 2024
Environmental Harms
24. China Defends Manufacturing Push, Says World Needs More EVs
Bloomberg, July 26, 2024
25. China is itching to mine the ocean floor
The Economist, July 28, 2024
Foreign Interference and Coercion
26. EU’s Borrell Disputes China’s Take on Meeting About Middle East
Philip Heijmans, Bloomberg, July 27, 2024
27. China clandestinely targeting First Nations leaders to procure Canada's natural resources: NSICOP
Sam Cooper, The Bureau, August 1, 2024
28. Why Chinese Propaganda Loves Foreign Travel Bloggers
Vivian Wang, New York Times, July 31, 2024
Videos by influencers documenting their trips have been widely promoted on Chinese media — if they tell a certain story.
Spend some time browsing YouTube or Instagram and you might come across a growing new genre: China travel vlogs.
There’s the American who made a four-hour “vlogumentary” about eating dumplings in Shanghai. There’s the German traveler marveling at how quickly China’s bullet trains accelerate. There’s a British couple admiring colorful traditional clothing in the far western region of Xinjiang. All have hundreds of thousands of views.
The videos are even more popular on Chinese social media. YouTube and Instagram are banned in China, but Chinese users have found ways to reshare them to Chinese sites, to avid followings. The bloggers have been interviewed by Chinese state media and their experiences promoted with trending hashtags such as “Foreign tourists have become our internet spokespeople.”
The emergence of these videos reflects the return of foreign travelers to China after the country isolated itself for three years during the Covid pandemic. The government has introduced a slew of visa-free policies to attract more tourists. Travel bloggers have leaped at the chance to see a country to which they previously had limited access.
But for China, the videos do more than help stimulate its economy. They are a chance for Beijing to hit back at what it calls an anti-China narrative in the West. China in recent years has encouraged locals to treat foreigners as potential spies; expanded its surveillance state; and expelled or arrested journalists at Chinese and foreign media outlets. But it points to the carefree travel videos as proof — from Westerners — that criticisms about those issues are manufactured.
“Overseas audiences find that through these videos, they see a real, fast-developing China that differs from the one under the mainstream narrative in the West,” said one article in The Global Times, a Communist Party-controlled tabloid.
The bloggers themselves sometimes feed the official Chinese argument, with video titles such as “The Media Lied to EVERYONE about China? We Share the TRUTH.”
“This is considered as one of the most controversial areas in China if you rely on the Western media,” the British couple, Libby Collins and Tauseef Ahmed, said in their video about traveling to Urumqi, the capital of the Xinjiang region. Western countries and human rights groups have accused China of abuses in the region, including the mass detention and surveillance of Uyghurs and other Muslim minorities. China says tight security measures are needed to root out terrorism.
“The Uyghur people, everyone seemed fine,” Mr. Ahmed said.
The influencers have denied any ties to the government. Many of the videos in the genre appear authentic, without the typical hallmarks of state involvement, said Fang Kecheng, a professor at the Chinese University of Hong Kong who studies Chinese propaganda. The market for the videos — in the West as well as China — points to a real hunger for more diverse, human-oriented stories about China, Professor Fang said.
29. Wong announces new digital cable centre to limit China’s influence in Indo-Pacific
Amy Remeikis, The Guardian, July 28, 2024
30. UAE blocks meetings between AI firm G42 and US congressional staffers, spokesperson says
Alexandra Alper, Reuters, July 30, 2024
The United Arab Emirates scuttled meetings this month between U.S. Congressional staffers and G42 after U.S. lawmakers raised concerns the Emirati AI firm could transfer powerful U.S. AI technology to China, according to a congressional spokesperson.
The UAE Ambassador to the U.S. "personally intervened" to stop staffers from the House Select Committee on China from meeting G42 and Emirati government officials, said the person, who was briefed on the cancellations and declined to be named because of internal committee policies.
U.S. lawmakers have raised concerns about a $1.5 billion investment by Microsoft (MSFT.O) in G42, fearing sensitive technology could be transferred to the UAE firm, which has historic ties to China.
"The committee has even more concerns about the G42-Microsoft deal given the UAE refusal to meet with congressional staff to discuss these issues. As a result, expect Congress to get more involved in oversight of these negotiations," the committee spokesperson told Reuters.
COMMENT – There is something fishy with this Microsoft-G42 deal that the Commerce Department helped negotiate. The fact that UAE’s Ambassador to the U.S. is intervening to cancel meetings with an oversight committee raises several troubling red flags.
The fact that the Commerce Department caved this week on strengthening export controls on advanced chips by proactively exempting Japanese and Dutch equipment makers suggests that Commerce is not all that serious about their national security mission these days. I’m chalking this up to the lame duck nature of the current Administration… allies and partners feel emboldened to defy Washington and we are seeing this play out in a number of areas.
31. Fear and ambition: why the South China Sea is so important to Beijing
Shi Jiangtao, South China Morning Post, July 30, 2024
32. King’s College London donor linked to Communist Party of China
Fiona Hamilton, Times, July 29, 2024
33. Blinken and a Top Chinese Official in Talks on U.S.-China Tensions
Edward Wong, New York Times, July 27, 2024
34. China used ‘shocking’ bullying tactics ahead of Taiwan IPAC meeting, organiser says
Helen Davidson, The Guardian, July 30, 2024
Member countries from the global south were intimidated in an attempt to dissuade them from attending meeting, says executive director.
China’s attempts to stop foreign parliamentarians from attending a meeting in Taiwan were “massively overstepping” acts of bullying, the organiser has said at the end of the gathering at which the group designed to counter China expanded.
The Inter-parliamentary Alliance on China (IPAC) held its fourth annual “summit” in Taipei this week, attended by about 50 parliamentarians from 23 countries.
The coalition is aimed at countering threats from China and shifting domestic China policies in members’ respective countries. This year’s location was always bound to annoy China’s ruling Communist party (CCP), which considers Taiwan to be its own territory. In the days leading up to the meeting, reports emerged of some delegates being contacted by Chinese diplomats in what they said was a “clear attempt to intimidate and dissuade” them from attending.
35. Lawmakers from 6 countries say Beijing is pressuring them not to attend conference in Taiwan
Dake Kang, Associated Press, July 28, 2024
36. U.S. Pledges $500 Million in New Military Aid to the Philippines, as China Asserts Sea Claims
Edward Wong, New York Times, July 30, 2024
37. In South China Sea, a U.S. Ally Navigates Deal with China
Michael R. Gordon, Wall Street Journal, July 30, 2024
38. China anti-doping agency accuses New York Times of sabotage over report
Amy Tennery, Reuters, July 31, 2024
China's anti-doping agency (CHINADA) has accused the New York Times of politicizing doping issues and said the publication was trying to "affect the psychology" of Chinese athletes at the Paris Olympics.
CHINADA said it strictly follows anti-doping guidelines and condemned the Times as "unfair and immoral" a day after the newspaper reported two of the country's swimmers in 2022 tested positive for a banned steroid but had their provisional suspensions lifted.
COMMENT – The truth hurts.
Human Rights and Religious Persecution
39. Translations: Rampant Abuse, Unexplained Deaths Fuel Calls to Abolish RSDL Detention
Cindy Carter, China Digital Times, July 26, 2024
40. Hong Kong Christian Institute to disband, citing ‘social environment’
Hillary Leung, Hong Kong Free Press, July 24, 2024
Human Rights in China, July 22, 2024
42. Rights advocates cite uptick in Uyghur refugee detentions in Turkey
Kasim Kashgar, VOA, July 25, 2024
43. Tortured Chinese activist Cheng Yuan released from prison
Chen Zifei, Radio Free Asia, July 23, 2024
Cheng remains under surveillance and separated from his family, who are shocked by his appearance in a video call.
Chinese rights activist Cheng Yuan has been released from a prison where his family say he was subjected to torture, looking 20 years older than when he was taken away five years ago, his wife told RFA Mandarin on Tuesday.
Cheng, who founded the non-government organization Changsha Funeng to campaign for the rights of people living with HIV and other disabilities, was released from Chishan Prison in the central province of Hunan on Sunday, his U.S.-based wife Shi Minglei said in an interview.
Shi said she was shocked when she saw her husband in a video call following his release.
"I was shocked when I saw him," said Shi, who has lived in the United States with the couple's daughter since fleeing China in 2021. "He looked 20 years older than when he was taken away."
"He was very thin, with a very dark tan and bald, with broken teeth," she said.
But Cheng seemed to have kept his sense of humor intact despite a grueling sentence that included a stint in the top security wing of Chishan Prison, where he was kept in a tiny cell and subjected to bright lights and chronic sleep deprivation, according to letters received by his family in July 2022.
Shi said Cheng had even joked with her about his hair loss, telling her: "Don't tell anyone I'm bald, so they still remember me as good-looking and charming."
But he had kept quiet about his experiences inside, she said.
"So far, he hasn't said much about what it was like inside," Shi said. "He needs more time to process it."
"But he did say that the saddest thing was that he was arrested and taken away in front of my daughter, and keeps remembering how scared she was," she said. "He was so sad when he said that."
Cheng stood trial alongside his Changsha Funeng colleagues Liu Dazhi and Wuge Jianxiong for "subversion of state power" behind closed doors at the Changsha Intermediate People’s Court at some point between Aug. 31 and Sept. 4, 2020, rights groups said.
The trio had already been held incommunicado for nearly 18 months, and while Liu and Wuge were handed three- and two-year sentences in July 2021, no announcement was made in respect of Cheng, who has effectively served five years.
44. Buddhist Monastery destroyed to make way for Chinese hydropower project
Pelbar and Gai Tho, Radio Free Asia, July 26, 2024
Industrial Policies and Economic Espionage
David Olive, Toronto Star, August 1, 2024
To meet passenger demand, the Big Two manufacturers need to build twice as many jets in the next 20 years as they did the previous two decades, writes David Olive. Can China’s Comac fill the gap?
Cracking the aircraft manufacturing duopoly of Boeing Co. and Airbus SE can’t come soon enough for an airline industry unable to obtain enough planes to serve record passenger demand.
Is China’s state-owned Comac the one to crack the duopoly? Quite possibly, but not as soon as the industry would like or that critics of China fear it will.
COMMENT – We have seen this problem coming for 15 years and we did nothing about it.
It just amazes me that the U.S. and Europe can’t get their act together and collaborate to prevent the PRC from disrupting one of the most valuable industries in terms of economic prosperity and national security (successful commercial aviation sectors prop up successful military aviation sectors… see commercial shipbuilding: CSIS, “The Threat of China’s Shipbuilding Empire” May 10, 2024).
Due to an utter failure of Europe and the United States to set their mutual problems aside, the PRC will undermine both of them and we will only have ourselves to blame.
Concerted and coordinated export controls (and investment restrictions) imposed a decade ago on American and European aviation suppliers would have prevented this from happening.
However, strong lobbying by the very companies who will suffer the most from this, prevented that kind of concerted action. It is the same dynamic playing out in the semiconductor sector.
46. China’s Home Sales Slump Again, Signaling Crisis Not Over Yet
Wall Street Journal, August 1, 2024
Sales of new homes at China’s largest property developers declined at a faster pace in July.
A fresh batch of China property data suggests that the sector remains in bad shape, heaping pressure on policymakers to take bolder action to address what has become a major drag on the economy.
Sales of new homes at China’s largest property developers declined at a faster pace in July, according to figures from data provider China Real Estate Information Corp. Transactions at the country’s top 100 real-estate developers fell 20% to 279.1 billion yuan last month from a year ago, equivalent to about $38.7 billion, widening from the 17% drop seen in June. On a monthly basis, sales slid 36%.
The data, plus a bundle of surveys showing continued weakness in China’s sprawling manufacturing sector, suggest that the economy isn’t off to a great start in the third quarter. And after a weaker-than-expected performance in the second quarter, economists are skeptical that Beijing’s efforts to revive the real-estate market and the broader economy are yielding results.
47. China’s Global Activity: Building Grabs the Spotlight from Owning
Derek Scissors, American Enterprise Institute, July 22, 2024
48. Where are China's ultra-rich parking their wealth amid a slowing economy?
Lee Ying Shan, CNBC, July 29, 2024
49. China’s cash-strapped small banks face limitations amid shake-up, with no easy fix
Kinling Lo, South China Morning Post, July 31, 2024
50. Southeast Asia pushes back on cheap Chinese imports
Francesca Regalado, Erwida Maulia, and Norman Goh, Nikkei Asia, July 31, 2024
51. China M&A deals down 45% in first half as economic slump continues
Kensho Motowaki, Nikkei Asia, July 30, 2024
52. Chinese EV maker BYD tells Ottawa it plans to enter Canadian market
Steven Chase, The Globe and Mail, July 30, 2024
53. BMW’s Key Automotive Unit Held Back by China Struggles
Dominic Chopping, Wall Street Journal, August 1, 2024
BMW’s key automotive unit reported slightly lower-than-forecast profitability in the second quarter as revenue was weighed by heightened competition and weaker consumer sentiment in China.
The German luxury-car maker’s operating margin was 8.4% in the division, short of a company-compiled consensus of 8.7% and at the lower-end of the company’s 8% to 10% full-year target range.
“Under the challenging conditions in the first half of the year, we are leading within our direct competitive environment with our electric growth—and at the same time, we have delivered high profitability within the full-year target corridor for 10 consecutive quarters,” Chairman Oliver Zipse said.
Competition in China has intensified with a flood of local manufacturers ramping up production of new, cheaper models, sparking a price war as carmakers try and gain market share. However, BMW said Thursday that it expects the economic situation in China to begin to stabilize in the third quarter.
Sales in China remains tough because of intense competition from local manufacturers who have faster software development cycles, while Chinese consumers lack brand loyalty and quickly switch brands for better prices and new features, Third Bridge analyst Orwa Mohamad said in a note.
Chinese manufacturers are also gaining traction in the west, but Mohamad thinks Chinese competition poses little threat to BMW in Europe for the next two years.
54. China Home Sales Slump Drags on Despite Latest Rescue Effort
Bloomberg, July 31, 2024
55. Xi Struggles to Fix Chinese Consumer Gloom That’s Stinging World
Bloomberg, July 30, 2024
56. China Investors Pile into Saudi ETFs as Two Nations Grow Closer
Bloomberg, July 28, 2024
57. Hungary quietly takes €1B loan from Chinese banks
Csongor Körömi, Politico, July 25, 2024
Hungary borrowed €1 billion — the largest loan ever taken out by Budapest — from three Chinese banks this spring, data from the government's debt agency website revealed.
The loan, provided by the China Development Bank, the Export-Import Bank of China and the Hungarian branch of the Bank of China, was fully drawn on April 19 and must be repaid within three years.
Budapest itself did not announce the agreement. It was first reported on Thursday by Hungarian business publication Portfolio, then confirmed by the government agency.
COMMENT – I suspect that Beijing is absolutely giddy about this development.
This is like pouring water into the most prominent crack in the European Union. Brussels has sought to deny funding to Budapest, as a way to force policy changes by Orban… now Beijing is providing him a lifeline.
Also, it may have the added benefit (from Beijing’s perspective) of paying dividends with a potential second Trump Administration with Orbán persuading Trump that China isn’t so bad and that his real rivals are in Brussels, Berlin and Paris.
58. One Step Forward, Two Steps Back
Senator James Risch, U.S. Senate Committee on Foreign Relations, July 2024
In the 2020 edition of this report, I challenged the Biden-Harris Administration to execute a concrete transatlantic agenda to counter China’s efforts to bend the international order to its authoritarian ends and its pursuit of destructive political, security, and economic policies. Four years later, the need for unified and coordinated action on China by the United States, Europe, and other partners is even greater. Russia’s full-scale invasion of Ukraine and the growing alliance among Russia, China, Iran, and others has brought China deeper into European security affairs.
As President Biden’s term draws to a close, and five years after the European Union (EU) declared China a “systemic rival,” it is appropriate to examine the effectiveness of transatlantic cooperation on China and determine what actions and changes are required next.
This report evaluates the Biden-Harris Administration's execution and coordination with European partners on the seven core areas of recommendations from the 2020 edition. Both execution and coordination are scored on a scale of 0 to 3 to determine a final grade of its policies from A to F.
The Biden-Harris Administration has made grand announcements, but repeatedly failed to implement them. Worse, the administration continues to pursue counterproductive policies that weaken U.S. and allied competitiveness against China.
59. China’s state-owned funds and lenders claw back pay and bonuses
Cheng Leng, Chan Ho-him, and Tina Hu, Financial Times, July 28, 2024
60. Anger Lingers Over Positive Doping Tests for Chinese Swimmers
Jenny Vrentas and Tariq Panja, New York Times, July 26, 2024
61. Chinese low-tech manufacturers hanging on by ‘their fingernails’
William Langley, Financial Times, July 29, 2024
62. Japan Built Thailand’s Car Industry. Now China Is Gunning for It.
Daisuke Wakabayashi, River Akira Davis, and Claire Fu, New York Times, July 30, 2024
Japanese companies established Thailand’s auto industry virtually from scratch, dating back to the years after World War II. By the late 1970s, Japanese brands commanded around 90 percent of car sales in Thailand. They invested in building Thai supply chains, and their cars were also widely perceived by customers as reliable.
In the 1990s, American and South Korean automakers targeted the Thai market but barely made a dent in Japan’s share.
Now Japanese automakers’ stronghold is finally being loosened by Chinese manufacturers that offer something they don’t: electric vehicles at affordable prices. The influx of Chinese brands like BYD, Great Wall Motor and SAIC Motor in the past two years is ringing alarms in Japan.
In December, Srettha Thavisin, Thailand’s prime minister, traveled to Japan with a message for Japanese companies: Move quickly, invest in electric vehicles or lose out to China.
COMMENT – “Alarm bells” might be ringing in Tokyo, but it looks an awful lot like business as usual there.
63. China’s factory activity falls for third straight month
Joe Leahy, Financial Times, July 30, 2024
64. US says start of new China tariffs will be delayed by at least two weeks
David Shepardson, Reuters, July 30, 2024
65. China's new 2029 reform goal shows Xi Jinping is worried
Katsuji Nakazawa, Nikkei Asia, July 25, 2024
Cyber & Information Technology
66. TikTok Collected U.S. Users’ Views on Gun Control, Abortion and Religion, U.S. Says
Georgia Wells and Sadie Gurman, Wall Street Journal, July 27, 2024
TikTok collected data about its users’ views on sensitive topics and censored content at the direction of its China-based parent company, the Justice Department said Friday, making its most forceful case to date that the video-sharing app poses a national-security threat.
The sensitive topics TikTok tracked included the views of its U.S.-based users on gun control, abortion and religion, the Justice Department said.
The Justice Department made the details public in court filings late Friday in response to a federal lawsuit TikTok filed in May arguing that a new law requiring a sale or ban of the popular social-media app violates the free-speech rights of millions of Americans under the banner of national security. The measure bans Chinese-backed TikTok in the U.S. unless its parent company, ByteDance, divests itself of the platform by mid-January.
COMMENT – I’m very glad to see the Justice Department taking this seriously. I hope it continues into the next Administration, which ever one that is.
67. China Is Closing the A.I. Gap with the United States
Meaghan Tobin and Cade Metz, New York Times, July 25, 2024
68. One of America’s Hottest Entertainment Apps Is Chinese-Owned
Raffaele Huang, Wall Street Journal, July 27, 2024
69. Uber strikes EV deal with Chinese Tesla rival BYD
Joao da Silva, BBC, August 1, 2024
Uber has announced a deal which aims to bring 100,000 electric vehicles (EVs) made by China's BYD to the ride-hailing giant's global fleet of cars.
The two companies say they will offer Uber drivers incentives to switch to electric cars, including discounts on maintenance, charging, financing and leasing.
The multi-year agreement will be rolled out first in Europe and Latin America, before being made available in the Middle East, Canada, Australia and New Zealand.
The announcement comes as EV sales around the world have slowed and Chinese car makers face higher import charges in places like the US and the European Union.
70. US Weighs Restrictions on China’s Access to AI Memory Chips
Mackenzie Hawkins, Bloomberg, July 31, 2024
The US is considering unilateral restrictions on China’s access to AI memory chips and equipment capable of making those semiconductors as soon as next month, a move that would further escalate the tech rivalry between the world’s biggest economies.
The measure is designed to keep Micron Technology Inc. and South Korea’s leading memory chipmakers SK Hynix Inc. and Samsung Electronics Co. from supplying Chinese firms with so-called high-bandwidth memory, or HBM, chips, according to people familiar with the matter, who emphasized that no final decision has been made. The three firms dominate the global HBM market.
The Biden administration is working on several restrictions aimed at keeping vital technology out of the hands of Chinese manufacturers, including limits on sales of chipmaking equipment. This rule would deliver a new set of constraints against memory chips for artificial intelligence, the latest arena of US-China competition.
COMMENT – My suspicion is that this was leaked to sabotage the implementation of these controls.
Military and Security Threats
71. China imposes export controls on drones and parts with potential for military use
Jun Mai, Liu Zhen, and Hayley Wong, South China Morning Post, July 31, 2024
72. Commission on the National Defense Strategy
Commission on the National Defense Strategy, RAND, 2024
The Commission on the National Defense Strategy reviewed the 2022 NDS and recommended significant changes to address current global threats. Key findings include the need for an "all elements of national power" approach, improvements in DoD operations, increased industrial production, and resolving workforce challenges. The report calls for a new Multiple Theater Force Construct to handle simultaneous threats and suggests increased and smarter defense spending.
73. Why Did China and Russia Stage a Joint Bomber Exercise near Alaska?
Heather Williams, Kari A. Bingen, and Lachlan MacKenzie, CSIS, July 30, 2024
74. China Has Wiped Out US Military Advantage in Western Pacific: Commission
Micah McCartney, Newsweek, July 30, 2024
75. US warns tech start-ups on security threats from foreign investors
Stefania Palma, Tabby Kinder, and George Hammond, Financial Times, July 24, 2024
76. India tells two state firms not to use China telecoms gear, source says
Sankalp Phartiyal, Reuters, June 2020
One Belt, One Road Strategy
77. Indonesia moves to reduce Chinese ownership of nickel projects
A. Anantha Lakshmi, Financial Times, July 25, 2024
Lt Gen S. L. Narasimhan, Gateway House, August 1, 2024
China’s relations with South Asian countries are generally portrayed as very good. In the same breath, it is also mentioned that India is losing its influence in these countries to China. Both statements may not portray the real situation. China follows a foreign policy of Friendly Neighbourhood. India follows a foreign policy of Neighbourhood First. From these it is clear that both China and India give more importance to countries in their neighbourhood.
Therefore, there will also be competition between them to gain influence in these countries. Nepal, Bhutan and Myanmar have boundaries with both India and China. Pakistan which is a neighbour of India has also a border with China through Indian territory that it occupied in 1947-48. Bangladesh, Sri Lanka and Maldives are neighbours of India and China has an interest in them for access to Bay of Bengal and the Indian Ocean. So, when one looks at China in South Asia it is also imperative to analyse South Asian countries’ relations with India. Aim of this paper is to analyse China–South Asia relations.
It is proposed to study each South Asian country’s relations with China in three dimensions. That is, the views from these countries, China’s and India’s relations with each country and then deduce how China’s relations with South Asian countries are likely to go forward in future.
Opinion Pieces
79. The US Needs a Techno-Industrial Strategy
Liza Tobin and Addis Goldman, Project Syndicate, July 17, 2024
In the wake of the Great Recession of 2008-09, practically everyone seemed convinced that China’s economy would surpass that of the United States by 2030. Today, China is facing a range of crises that could spell doom for its economic “miracle.” In an effort to get back on track – and strengthen its strategic position – China has lately been seeking to position advanced industries, rather than real estate, as the economy’s main growth engine. How the US responds will help determine the outcome of the two countries’ strategic competition – and the future of the global economy.
America’s economic dynamism remains robust, as the rapid recovery from the COVID-19 shock showed. One of the many factors underpinning this dynamism is US leadership in artificial intelligence, which is already creating economic value across industries and shows promising signs of boosting productivity. With US technology companies investing heavily in cloud infrastructure, the US innovation ecosystem is set to benefit from enterprise-scale AI capabilities. As 2030 approaches, these developments could accelerate innovation in “deep-tech” sectors like robotics and biotechnology.
For all its strengths, however, the US economy has one glaring deficiency: a lack of production capacity in the advanced industries, such as semiconductors and clean energy, that are crucial to America’s economic competitiveness and national security. Since 1980, the share of the world’s high-tech goods that are manufactured in the US has fallen from over 40% to just 18%.
While the US has undergone deindustrialization, China has emerged as the world’s manufacturing superpower, and moved from dominance in textiles and toys to leadership in advanced-technologies, such as networking components, electrical equipment, and machine tools. China now accounts for more than half of global electric-vehicle production, and through 2026, it will possess more than 80% of the world’s solar-cell manufacturing capacity.
With President Xi Jinping having identified advanced manufacturing industries as the main engines of China’s future economic growth, the Chinese government is boosting its efforts to dominate these industries’ value chains. In a sign of what is to come, Chinese net lending to manufacturing surged from $63 billion in 2019 to over $680 billion in 2023.
Worryingly, these investments are guided by mercantilist policies designed to entrench China’s dominance over advanced industries by flooding global markets with subsidized exports. If this strategy is allowed to succeed, US firms in advanced industries will be wiped out, leaving the US increasingly dependent on China for critical goods.
Leon Aron, Wall Street Journal, July 31, 2024
China is Russia’s lifeline. It supplies almost all key imports for the Russian war machine: microelectronics for missiles, tanks and aircraft; machine tools for ammunition production; and nitrocellulose, a critical explosive ingredient for artillery shells. A Group of Seven communiqué in June identified Chinese support as indispensable to Russian military aims, and leaders at last month’s North Atlantic Treaty Organization summit in Washington labeled China the “decisive enabler” of Russia’s war against Ukraine.
Western nations must put to rest the pipe dream of enlisting Xi Jinping’s China to restrain Vladimir Putin’s Russia. Mr. Xi won’t seek to end the Ukraine war with “one phone call,” as Finnish President Alexander Stubb has suggested. That’s because Mr. Xi’s motive for supporting Mr. Putin’s war is bound up with passionate ideological conviction. Namely, Mr. Xi is a fervent Marxist.
No Chinese Communist Party general secretary since Mao has pledged allegiance to Marxist doctrine with such ardor. For Mr. Xi, China’s “rejuvenation,” the legitimizing leitmotif of his rule, has been inseparable from rekindling devotion to Marx’s teachings. Less than two months into his tenure as general secretary, Mr. Xi enjoined the party’s Central Committee to “keep up with the living soul of Marxism.” Communism, he said, is the party’s “highest ideal and its ultimate goal.” Mr. Xi has since called Marx the “greatest thinker in human history” and declared that his teachings retain their “vigor and vitality” and remain the party’s “guiding theory.”
To celebrate Marx’s 200th birthday in 2018, Mr. Xi gave an address titled “Marx’s Theory Still Shines With Truth.” The Marxist theory of history of which Mr. Xi spoke, known as historical materialism, postulates the inexorable development of society’s “forces of production.” The changed “economic base” scraps the old “superstructure”—politics, culture, values—and replaces it with a new system befitting economic progress. The overthrow of capitalism and the onset of communism are inevitable consequences of this process.
Some comrades, Mr. Xi said at the start of his rule, may regard communism as “beyond reach,” even “illusory,” but that’s due to their “infirm” appreciation of historical materialism. He asserted that reality has repeatedly proved Marx and Friedrich Engels’s analysis of the basic contradictions of capitalist society is true. That “capitalism is bound to die out and socialism is bound to triumph,” he said, is “the irreversible general trend of social and historical development.”
Historical materialism is key to what Mr. Xi has extolled as Marxism’s “practical character,” with which the party “arms itself.” The Marxist theory of history, he has emphasized, quoting Lenin, who was quoting Engels, “is not a rigid dogma” but rather a “guide to action.”
China did take action. “Hide your strength and bide your time,” Deng Xiaoping, another devoted Marxist and the father of post-Mao economic reform, decreed in the 1980s. China’s gross domestic product was then less than $350 billion. By the time Mr. Xi assumed power in late 2012, China’s GDP had grown more than 24-fold, to $8.53 trillion. By last year, that figure had in turn more than doubled, to $18 trillion.
Having unleashed the “forces of production,” Mr. Xi proclaimed in his 2018 address on Marx’s birthday, the party had achieved in a brief window a degree of economic success that it took the West centuries to reach. Apparently, the time had come to adjust Deng-designed “superstructure.” In growing “prosperous,” Mr. Xi said, China was “becoming strong”—strong enough, he explained separately, to be “willing and able to contribute more to mankind.”
Here, too, Marx pointed the way. Philosophers “only interpret” the world, but “the point is to change it,” Marx famously wrote. It follows that Mr. Xi has emphasized Marx’s “unremitting fight to overturn the old world and establish a new one.” The new world order, Mr. Xi has vowed, “cannot be just dominated by capitalism and the West, and the time will come for a change.” It’s telling that Fidel Castro once hailed Mr. Xi as “one of the strongest and most capable revolutionary leaders” he had ever met.
The prospect of revolutionary change is all the more alluring because of what Mr. Xi has described as “once in a century” and “profound” changes sweeping the world. Explaining Mr. Xi’s address before the 2017 Party Congress, the People’s Daily, the Central Committee’s official newspaper, argued that Western dominance of international relations has become “hard to sustain,” as have the “Western values” intrinsic to international relations.
Enter Mr. Putin’s war. Beyond obvious geopolitical gains, a Russian victory would offer a powerful vindication of the Marxist theory of history. A demoralized and degraded West would be Exhibit A of the decay of “bourgeois democracies,” validating what the Central Committee has called the party’s place on the “right side of history and the side of human progress.”
Mr. Xi’s inspirations—Lenin, Stalin, Mao—all forged or expanded communist regimes during or following wars. Stalin’s 1939 pact with Hitler also offers an uncanny parallel to Mr. Xi’s support for Mr. Putin: a communist state aiding a fascist state in its war on the capitalist West.
Driven by what the People’s Daily has called a “powerful sense of mission,” the faithful Marxist in Beijing, who holds a doctorate in Marxist theory, will stand by Russia in pursuit of a victory that his dogma foretells.
COMMENT – Don’t underestimate the power of Marxism AND Leninism to explain Beijing’s actions and worldview. For many steeped in the neoliberal triumphalism of the 1990s and 2000s, it is hard to contemplate that anyone would take these seemingly dead ideologies seriously… but they do.
For over three decades, folks in Europe and the United States tried to erase the “Communist” out of the Chinese Communist Party in an effort to imagine that their counterparts in Beijing shared the faith in markets and neoliberal reforms. Perhaps that was true to a point, there certainly were (and are) some important thinkers and officials in Beijing who shared the faith, but leaders in Europe and the United States failed to perceive that those “liberal reformers” were marginalized (they also fail to admit that their own faith in markets and neoliberal reforms are under assault in their own countries and across the developing world, which means that it is hard to imagine we will ever return to the heyday of the WTO and globalization).
Unfortunately, many choose to believe those “liberal reformers” are still there in Beijing, dormant for the time-being, but ready to sprout back up as soon as Xi Jinping leaves the scene.
I think that is wishful thinking (or more uncharitably it is “magical thinking”) since it seems pretty clear that the Party, as a whole (not just the handful who meet with foreigners), rejects liberal ideals. The Party has both a Marxist (economic) and Leninist (political) worldview that is in direct conflict with their rivals, those who represent liberal establishment views in Tokyo, Brussels, Berlin, London, and Washington.
The Party embraces this ideological struggle, their rivals pretend it doesn’t exist and seek to “manage the competition.”
81. Beijing Can Take the South China Sea Without Firing a Shot
Oriana Skylar Mastro, New York Times, July 25, 2025
82. Not Just Boots on the Beach
Jude Blanchette and Hal Brands, CSIS, July 25, 2024
83. Would Trump defend Taiwan?
Hiroyuki Akita, Nikkei Asia, July 26, 2024
84. Does China Prefer Harris or Trump? Why Chinese Strategists See Little Difference Between the Two
Wang Jisi, Hu Ran, and Zhao Jianwei, Foreign Affairs, August 1, 2024
Over the past few weeks, the upheavals in the U.S. presidential election season have drawn enormous global attention. Even before the summer began, countries were weighing the implications of former President Donald Trump’s return to the White House and, conversely, what a second term for U.S. President Joe Biden might bring. To many countries, these two possibilities presented markedly different prospects for geopolitics and for the future role of the United States in world affairs.
Then came nine remarkable days in July, during which Trump was almost assassinated and Biden abruptly announced that he would not seek reelection. Upending the U.S. presidential race for both parties, these events have created further uncertainty about the coming direction of the United States. Many countries see an increasingly stark divergence between the anticipated continuation of Biden’s internationalist foreign policy under a future President Kamala Harris and a far more isolationist approach under a reelected President Trump and his running mate, J. D. Vance.
From China, however, the view is somewhat different. Eight years ago, the first Trump administration ushered in a far more confrontational approach to relations with Beijing, which many Chinese observers found bewildering. Rather than treating China as a trading partner and sometimes a rival, the United States began to call it a “revisionist power,” a strategic competitor, and even a threat. More striking still, despite changes in tone, the Biden administration, has reinforced that shift and even taken it further on some issues. Indeed, there seems to be a bipartisan consensus in Washington that China must now be treated as a major adversary, with a growing contingent of analysts arguing for a cold war framing.
COMMENT – While the authors might be right that “many Chinese observers found [the confrontational approach of the U.S.] bewildering,” Chinese leaders didn’t find it bewildering at all. Xi has been predicting a long and dangerous struggle with the United States since he assumed the leadership role in January 2013.
85. The Puzzle of Chinese Escalation vs Restraint in the South China Sea
Andrew Taffer, War on the Rocks, July 26, 2024
86. China's Muscle-Flexing in the South China Sea Needs a New Name
Karishma Vaswani, Bloomberg, July 24, 2024
87. Watch what China does, not just what it says, after unsurprising economic plenum
Thomas Kwan, CNA, July 31, 2024