The consensus on 'One China' is collapsing
Friends,
The first two articles this week highlight a trend I’ve been watching for a while now: the breakdown of consensus on “One China.”
Since the 1970s, most countries thought it was a good idea diplomatically to accept the Chinese Communist Party’s insistence that there was just one China and that it was ruled by the CCP in Beijing. Under this “One China principle,” Taiwan was not an independent country, but simply an inherent part of Greater China, temporarily controlled by the losers of the Chinese Civil War. If countries wanted to establish relations with the Government in Beijing, and thereby gain access to the PRC market, the Party insisted that countries accept this narrative and break their formal relations with Taiwan.
Most countries, as well as the United Nations and other international organizations, humored Beijing by adopting some formulation of this as a “One China policy.” The thinking was that as the PRC underwent reform and opening, Beijing’s politics would soften and that leaders on both sides of the Strait could come to a pragmatic and peaceful resolution. Observing, acknowledging, or adopting a policy based on “One China” became a pragmatic solution to a thorny problem.
Unfortunately, things have not worked out as many had assumed.
Over the past several decades, several things changed. Politics in Beijing did not soften and the era of ‘reform and opening’ ended. Xi Jinping is unwinding the legacy of Deng Xiaoping and has staked his legacy on one-upping Mao by annexing Taiwan. Coercion, threats of attack and invasion, political interference, and promises of re-education now feature prominently in Beijing’s approach to Taiwan.
More importantly, over the last three decades, Taiwan has become a vibrant democracy. Its citizens no longer base their identity on a Chinese Civil War that took place three generations ago. They see themselves as being Taiwanese, with their own unique culture, political traditions, and identity. Families that crossed over from the Mainland in 1949 have become assimilated and alongside the indigenous Taiwanese population, they have created their own new identity. Taiwanese certainly share many cultural traditions with their neighbors across the Taiwan Strait, as well as with Japan, and would welcome stable economic relations, just as countless other countries share similar traditions and economic relations with their neighbors. But that doesn’t mean they want to be annexed. The Taiwanese people have moved on, their lived experience is one of independence, democracy, and freedom, while the CCP remains obsessed with 1949 and achieving absolute victory.
Beijing’s crushing of Hong Kong’s vibrant political life and identity in 2020 has driven home the awareness among Taiwanese that they would likely share a similar fate.
These changes in the PRC and Taiwan are making it nearly impossible for other countries to maintain the fiction of “One China.” It is plain to see for everyone that Taiwan is independent and the only thing that maintains the lie is the fear of retaliation by the PRC.
Stability, peace, and prosperity can’t be built on a foundation of fear.
***
By now, I’m sure everyone has seen the horrible images of Hamas’ attacks and killings of hundreds of Israelis nearly 50 years to the day of the Yom Kippur War, in which multiple Arab states launched a surprise attack against Israel. With their invasion into Israel, Hamas took dozens of Israeli elderly and children as hostages, as those families were celebrating Jewish holidays in their homes.
We will likely learn more in the coming weeks, but it appears that Hamas, and its Iranian sponsors, were desperate to prevent the expansion of the Abraham Accords with the formal signing of a Saudi-Israeli peace deal. For Tehran, driving a wedge between Israel and the Sunni Arab states is an imperative and the best way to do that from the Iranian perspective is to instigate a multi-pronged attack on Israel from Gaza. As Israel defends itself and seeks to destroy Hamas’ capability to kill Israelis, images of destruction in Gaza will stream across the Arab world, forcing Arab leaders to distance themselves from Israel.
The world is going to get more dangerous.
Thanks for reading!
Matt
MUST READ
1. Time for the UN to recognize Taiwan’s voice
Jonas Parello-Plesner, Politico, September 28, 2023
By legitimizing the aggressor in the Taiwan Strait and ignoring Taiwan’s existence, the U.N. is failing in its mission.
Despite mounting fears about a clash between Taiwanese and Chinese forces, few dared mention Taiwan during the U.N. General Assembly in New York.
The People’s Republic of China (PRC) has used its economic clout and its position as a permanent member of the U.N. Security Council to silence any discussion of Taiwan’s status in the intergovernmental organization. And it also blocks any contact between the government in Taipei and the U.N.’s agencies.
This leaves 23 million Taiwanese citizens without a voice in the world’s leading international institution, meaning the U.N. is shunning its own commitment to the “self-determination of peoples.”
Beijing, of course, points to Resolution 2758 as the ostensible reason to overlook Taiwan. Passed in 1971, the resolution recognized the PRC as “the only legitimate representative of China to the United Nations” and removed “the representatives of Chiang Kai-shek’s government.” Beijing interprets this to mean that Taiwan is just part of China, and thus shouldn’t be represented at the U.N. — but this is a willful misinterpretation, as the resolution doesn’t even mention Taiwan.
Since Chiang Kai-Shek’s death in 1975, Taiwan has morphed into one of Asia’s most successful economies. It has become a technology superpower, leading the world in the production of advanced microchips, and it has blossomed into a vibrant multiparty democracy. It has a vast amount to offer the world, but at the U.N., this potential is stifled by China’s malign lobbying.
Taiwan is a responsible global actor, contributing to international efforts from public health to disaster relief. However, its exclusion from international organizations impedes its ability to help address global challenges.
Take COVID-19 as an example: Taiwan’s response to the pandemic received plaudits from around the world, but when a senior World Health Organization (WHO) official was asked about it at the peak of the crisis, he pretended to be cut off rather than answer the question.
Taiwan started screening travelers coming from China as early as December 2019. And while the whole world could have benefited from emulating this response in the initial days of the pandemic, Resolution 2758 blocked the Taiwanese from sharing their strategy and thinking behind it at WHO and the U.N.
COMMENT – The United Nations has become the tool of an aggressor and has violated its own principles of self-determination when it comes to Taiwan.
As Beijing seeks to erase Taiwan's identity and legitimacy, the United Nations has allowed itself to become a willing accomplice in the violation of principles that the organization was set up to protect.
This contradiction will continue to eat away at the legitimacy of the United Nations until it is resolved.
2. Telling the Truth About Taiwan
Eliot A. Cohen, The Atlantic, October 3, 2023
For some 50 years, American policy toward Taiwan has been based on the assertion that people on both sides of the Taiwan Straits believe that they are part of the same country and merely dispute who should run it and precisely how and when the island and the continent should be reunified. It is a falsehood so widely stated and so often repeated that officials sometimes forget that it is simply untrue. Indeed, they—and other members of the foreign-policy establishment—get anxious if you call it a lie.
It may have been a necessary lie when the United States recognized the People’s Republic of China, although it is more likely that the United States got snookered by Chinese diplomats in the mid-1970s, when they needed us far more than we needed them. It may even be necessary now, but a lie it remains. Acknowledging this fact is not merely a matter of intellectual hygiene but an imperative if we are to prevent China from attempting to gobble up this island nation of 24 million, thereby unhinging the international order in Asia and beyond.
On a recent visit to Taiwan, I had the chance to talk with the president, the candidates to replace her, senior ministers, academic experts, diplomats, and soldiers. Those conversations brought home to me just how pernicious the falsehood has been. Taiwan is an independent country. Its people have (on the evidence of repeated polling) little interest in becoming part of the mainland, and by substantial majorities consider themselves more Taiwanese than Chinese. It has its own currency, a thriving economy, lively democratic politics, sizable armed forces, a more and more desperate foreign policy—everything that makes a country independent.
The reflexive reaction of American officials and experts today when one mentions Taiwan is, as in the past, a red-faced insistence that they better not go for independence. Those officials rarely produce evidence that the Taiwanese are about to declare independence. They do not even seem to realize that Taiwan already is independent in every meaningful sense. They are just conditioned to fulminate, grimly or histrionically depending on their nature.
This finger-wagging is a pompous assertion of hegemony over a protectorate that we have yet to say unambiguously we will protect. When President Joe Biden repeatedly lets slip that we would do so with force, his aides, in a bureaucratic reflex created by years of unthinking habit, insist that the president does not mean it. As a result, once again Americans have set up a minor ally for failure, and then blamed them for our shortsightedness.
In this case, 50 years of being told, in effect, to sit in a corner and not disturb the grown-ups has made Taiwan more difficult for the United States to defend, and less able to defend itself. Because of Taiwan’s military isolation, its armed forces are literally insular, inexperienced, and deprived of all the benefits that countries like South Korea or Japan get from regular, routine training and operation with the U.S. armed forces. Because the United States, in a superfluity of cleverness and caution, continues to refuse to say whether it would fight for Taiwan, the Taiwanese themselves are not sure that they would adopt the New Hampshire motto “Live free or die.” And honestly, who can blame them?
Lie follows lie. A president of Taiwan cannot visit the United States—rather, they are “in transit” somewhere else, usually one of the few Caribbean countries (St. Kitts, for example) that China has not yet coerced into cutting diplomatic recognition. The United States has an “American Institute in Taiwan,” not an embassy. The deputy assistant secretaries of state responsible for Taiwan (and the same goes for those in the Defense Department, of course) cannot visit the country. The handful of American service personnel there cannot go about in uniform. The U.S. does not openly conduct exercises with the forces with which it would—maybe—fight side by side. All this when Washington needs, more than ever, intimate connections with Taiwan.
It is a comfortable lie, which the government is unwilling to acknowledge as such, let alone confront, because the United States has allowed China’s Communist rulers to shape how we understand this part of the world. And while China prepares its forces for a bloody invasion of the island, its real strategy is more that of the constant squeeze, in multiple dimensions simultaneously—bribing countries to drop their recognition of Taiwan, pushing it out of international forums, seducing and suborning Taiwanese surrogates and likely collaborators, and an intense ramping up of military operations around the island to unnerve its population and exhaust its defenders. In the past, the Chinese armed forces rarely crossed the “median line” between the island and the mainland—now they do so routinely. China periodically fires missiles near the island. It has violated the Taiwanese air-defense interception zone so far this year several times more frequently than it did in 2020. And, of course, it maintains a drumbeat of threats directed as much against the United States as against Taipei.
The Chinese are masters at the art of incremental and psychological pressure, which suggests the counter—namely, doing the same to them. Why not let American military personnel operate on the island in uniform? Why not let senior diplomats and defense officials visit? Why not conduct open training? Why not, come to think of it, maintain a knowing silence the next time President Biden slips and says that we would defend the island? The Chinese would react—but then again, American inaction over Chinese base-building in the South China Sea merely encouraged more such activity. Passivity is the greater danger here.
And the United States should be prepared to fight for Taiwan. Should the island fall to China, America’s most potent geopolitical rival will have gained the world’s 21st-largest economy, roughly equivalent to Switzerland’s or Poland’s. China would also gain a dense clot of advanced technology, particularly in the area of computer chips. A key piece of the so-called first island chain in the Pacific would be in hostile hands, endangering the sea lanes of our closest Pacific allies, particularly Japan. American credibility would take a brutal blow, and our allies would have to wonder whether they should accommodate China or resort to the development of their own nuclear arsenals to substitute for the guarantees of an unreliable superpower.
And not least important: Another liberal democratic state would be snuffed out, in a world in which free government, liberty, and rule of law are already under pressure.
Eighty-five years ago, the leader of the world’s greatest global power shrugged off interest in a “quarrel in a faraway country, between people of whom we know nothing.” There are those who would say the same today of Ukraine. Neville Chamberlain’s foolish words were seared in the memory of an earlier generation, who learned the hard way that the stakes in such places can be far larger and far graver than domestically obsessed politicians might imagine.
It is now generally acknowledged that history is very far from being at an end and that, pressing as they are, issues of transnational significance such as climate change and environmental degradation are not the only urgent ones. We are back in a world of great-power politics, and to deal with it, those who make policy need to do the simplest, if sometimes the hardest, thing: start with the truth, and take prudent but firm steps to undo the effects of falsehood.
COMMENT – The consensus around respecting the CCP’s “One China policy” is breaking down. As relations with Beijing deteriorate and the PRC becomes openly aggressive against its neighbors, it is difficult to understand why countries should humor Beijing about something that is so obviously false.
The typical explanation that we hear is that if we openly denounce Beijing’s “One China policy” as illegitimate and recognize Taiwan as an independent country, then that will FORCE the PRC to attack Taiwan. As if the Party has no agency in its own actions or that invading a neighboring country is somehow a legitimate response.
If we really believe that the PRC will invade an internationally recognized Taiwan, then the only responsible action is to drastically reduce our economic ties to the PRC and to do far more to strengthen our military deterrence.
3. How the Big Chip Makers Are Pushing Back on Biden’s China Agenda
Tripp Mickle, David McCabe, and Ana Swanson, New York Times, October 5, 2023
Nvidia, Intel and Qualcomm are campaigning to protect their businesses before further crackdowns on the sale of semiconductor technology to Beijing.
A year after the Biden administration took its first major step toward restricting the sale of semiconductors to China, it has begun drafting additional limits aimed at denying Beijing the technology critical to modern-day weapons.
But in recent months, its progress has been slowed as American chip companies have pushed back with a blunt warning: Cutting sales to China would gut their businesses and derail the administration’s plan to build new semiconductor factories in the United States.
Since July, Nvidia, Intel and Qualcomm, three of the world’s largest chip makers, have pressed their case that cracking down on China would have unintended consequences. They have challenged the White House’s national security wisdom in meetings with officials like Secretary of State Antony J. Blinken and Commerce Secretary Gina M. Raimondo, wooed think tanks and urged leaders across Washington to reconsider additional chip controls, according to interviews with two dozen officials across the government, industry and policy organizations.
The companies have warned that a U.S. pullback could accelerate China’s development of an independent chip industry, paving the way to a world dominated by Chinese-created chips rather than American-designed chips.
“What you risk is spurring the development of an ecosystem that’s led by competitors,” said Tim Teter, Nvidia’s general counsel, who has helped lead the lobbying campaign. “And that can have a very negative effect on the U.S. leadership in semiconductors, advanced technology and A.I.”
The campaign has contributed to the delay of new restrictions and narrowed the list of changes that the administration may make, two people familiar with the process said. But spokespeople for the Commerce Department and the National Security Council, which lead the rule-making process, said the agencies were committed to protecting sensitive technology.
“The timing and scope of export control decisions are carefully designed to have the maximum impact,” said Sarah Weinstein, a spokeswoman for the Commerce Department.
The push by the big chip companies has rankled some national security experts, lawmakers and semiconductor rivals. Many favor confronting Beijing and find it distasteful that the companies have questioned the White House shortly after the government committed $50 billion to the industry through the CHIPS and Science Act. The 2022 measure provides money to bolster American chip manufacturing and counter China.
COMMENT – It is becoming difficult to straddle the growing U.S.-PRC rivalry (see Articles 1 and 2 this week)… but some companies are so committed to their existing business models that they simply cannot imagine how they might do business in another way.
Rather than work hard to adapt their businesses to the changing geopolitical landscape and explain to shareholders that they must make necessary adaptations, they hide their heads in the sand and spend money on lobbying efforts in Washington to prevent the inevitable.
For companies that pride themselves for being on the cutting edge of technology innovation, they are surprisingly traditionalist when it comes to their business models.
I predict that the companies that will succeed in the future will be those who shed the preconceived notions developed by the best McKinsey consultants of the 2000s. The companies that will succeed will be those that develop innovative business models that fit the reality of the 2020s (Harvard Business School and Stanford’s GSB won’t write case studies about those companies until the 2030s).
Unfortunately, companies like the ones mentioned in this article and the next, are likely to be the last to change because trying to maintain the status quo is such a powerful tendency for incumbent companies… it’s called the Kodak Effect.
4. Blacklisted Chinese Chip Maker Does a Thriving Business with U.S.
Kate O’Keeffe and Asa Fitch, Wall Street Journal, October 5, 2023
SMIC’s role in America’s semiconductor industry fuels debate on whether technology restrictions are tough enough.
China’s largest semiconductor maker has been declared a Chinese military supplier by the Pentagon, blacklisted by the Commerce Department and added to a Treasury Department list banning Americans from trading its shares.
Still, its business with the U.S. is booming.
Semiconductor Manufacturing International Corp. last year grabbed a record $1.5 billion in revenue—a fifth of its overall sales—from American semiconductor-design companies that hire SMIC to make their chips. In May, droves of U.S. semiconductor industry executives packed a celebratory opening of the Chinese state-backed company’s office in Irvine, Calif.
“I still hope that one day we will see SMIC will build a fab right here in the United States,” said Roawen Chen, a senior vice president at the chip-design company Qualcomm, referring to a chip-making plant. His comment drew applause from the crowd and a “thank you” from SMIC’s co-chief executive, according to a video of the event.
The comment was made in jest, a Qualcomm spokeswoman said. The video was originally posted on YouTube by an events company, and, after The Wall Street Journal inquired about it, the settings were changed to restrict who could view it.
COMMENT – I doubt the comment was “made in jest.”
Too many U.S. companies remain oblivious to how the tectonic plates of geopolitical rivalry are shifting.
5. China Is Suffering a Brain Drain. The U.S. Isn’t Exploiting It.
Li Yuan, New York Times, October 1, 2023
China’s brightest minds, including tech professionals, are emigrating, but many are not heading to America. We spoke to them to ask why.
They went to the best universities in China and in the West. They lived middle-class lives in Beijing, Shanghai and Shenzhen and worked for technology companies at the center of China’s tech rivalry with the United States.
Now they are living and working in North America, Europe, Japan, Australia — and just about any developed country.
Chinese — from young people to entrepreneurs — are voting with their feet to escape political oppression, bleak economic prospects and often grueling work cultures. Increasingly, the exodus includes tech professionals and other well-educated middle-class Chinese.
“I left China because I didn’t like the social and political environment,” said Chen Liangshi, 36, who worked on artificial intelligence projects at Baidu and Alibaba, two of China’s biggest tech companies, before leaving the country in early 2020. He made the decision after China abolished the term limit for the presidency in 2018, a move that allowed its top leader, Xi Jinping, to stay in power indefinitely.
“I will not return to China until it becomes democratic,” he said, “and the people can live without fear.” He now works for Meta in London.
I interviewed 14 Chinese professionals, including Mr. Chen, and exchanged messages with dozens more, about why they decided to uproot their lives and how they started over in foreign countries. Most of them worked in China’s tech industry, which was surprising because the pay is high.
But I was most surprised to find that most of them had moved to countries other than the United States. China is facing a brain drain, and the United States isn’t taking advantage of it.
COMMENT – The United States should make it easier for large numbers of citizens to flee the PRC and make a life for themselves in the United States.
Perhaps the only way to get the kind of political consensus to make necessary reforms to the U.S. immigration system is to make the ideological argument within the context of a new cold war with Beijing.
Over the past decade about 40,000 Chinese per year became naturalized U.S. citizens. With reforms, the United States could likely double or triple that number. It should be remembered that barely a tenth of that annual number has immigrated to the PRC in the last three quarters of a century. If given a choice, huge numbers of Chinese, rich or poor, educated or uneducated, flee the oppressive rule of the CCP and set out to make a new life for themselves somewhere else. To persuade Chinese to return, Beijing is forced to offer cash and other perks.
6. Global Engagement Center Special Report: How the People’s Republic of China Seeks to Reshape the Global Information Environment
U.S. Department of State, September 28, 2023
Every country should have the ability to tell its story to the world. However, a nation’s narrative should be based on facts and rise and fall on its own merits. The PRC employs a variety of deceptive and coercive methods as it attempts to influence the international information environment.
Beijing’s information manipulation spans the use of propaganda, disinformation, and censorship. Unchecked, the PRC’s efforts will reshape the global information landscape, creating biases and gaps that could even lead nations to make decisions that subordinate their economic and security interests to Beijing’s.
COMMENT – Great job GEC!
I’ve heard rumors that it took a year to get this report approved for release in the State Department. If true, this is unfortunate and suggests that the Administration still lacks the agility to wage this rivalry at the proper pace.
7. Alibaba accused of ‘possible espionage’ at European hub
Laura Dubois and Qianer Lu, Financial Times, October 4, 2023
Belgium’s intelligence service has been monitoring Alibaba’s main logistics hub in Europe for espionage following suspicions Beijing has been exploiting its growing economic presence in the west.
European governments have been increasing scrutiny of the alleged security and economic risks posed by Chinese companies, which has been part of a wider reassessment of the EU’s traditional openness to trade with China.
In specific reference to Alibaba’s logistics arm at the cargo airport in Liège, Belgium’s security services told the Financial Times they were working to detect “possible espionage and/or interference activities” carried out by Chinese entities “including Alibaba”.
8. Is US security dependent on limiting China’s economic growth?
Cameron F. Kerry, Mary E. Lovely, Pavneet Singh, and Liza Tobin, Brookings Institution, October 4, 2023
Brookings assembles four scholars to examine whether U.S. security is dependent on limiting the PRC’s economic growth considering that the Biden administration’s National Security Strategy identifies China as “the only competitor with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military, and technological power to do it.”
COMMENT – Great arguments by my friends Liza Tobin and Pavneet Singh… I’ll post the video of the October 4th debate when I can find it.
Authoritarianism
9. German climate envoy given cold shoulder on trip to Beijing after ‘dictator’ remarks
Finbarr Bermingham, South China Morning Post, September 29, 2023
10. Holding Sway: China’s United Front Work Department, Known for Its Influence Operations Abroad, Is Even Busier at Home
Jessica Batke, China File, September 28, 2023
“You could say the United Front works (together with other Party organs) to create a massive CCP Theme Park of social life, devoid of any authenticity or spontaneous expression,” says Martin Hála, a sinologist with Charles University in Prague and founder of the China-focused website Sinopsis.cz. In a fully successful implementation of its program, “all social activity would be organized and directed by designated ‘mass organizations,’ ultimately controlled by the Party. There would be just the Party-state and the mass organizations masquerading as civil society. No other social activity allowed.”
11. Watching China in Europe - October 2023
Noah Barkin, GMF, October 4, 2023
COMMENT – As usual, it is worth reading Noah’s commentary. He has excellent access across Berlin, Brussels and Paris and provides an insider’s view that is difficult to replicate.
This month’s report suggests that President Macron continues his efforts to triangulate Europe (France) between the United States and the PRC.
12. China border city thrives as trade with Russia booms
Shin Watanabe, Nikkei Asia, October 4, 2023
The 12 hours from 8 a.m. to 8 p.m. were no longer enough to accommodate trade in this Chinese city located on the border with Russia. So port operations in Manzhouli, located in Inner Mongolia, had to go round the clock to deal with the increased traffic.
On a reporter's visit to the city in late August, trucks carrying machinery and containers were lined up in rows waiting at a customs station on China's side. Russia-bound freight trains pass through Manzhouli as well.
13. Trade between Russia and China is booming so much that shipping containers are 'piling up'
Simone McCarthy, CNN, September 29, 2023
Shipping containers from China are “piling up” in Russia amid a surge of Chinese goods flowing into the country as trade soars, a new analysis has found.
Russia has an extra 150,000 shipping containers that importers are scrambling to return to China, logistics platform Container xChange said in a report released Thursday, citing information provided by a customer.
“There is significant cargo movement from China into Russia but very scarce movement back to China from Russia. Containers are piling up in Russia which means that the secondhand container prices are very low in Russia,” CEO Christian Roeloffs said in the report.
COMMENT – Moscow can only maintain its war on Ukraine because of the enormous support provided by Beijing.
14. Russia is increasingly using China’s currency to evade sanctions
Henry Foy, Financial Times, September 27, 2023
15. China Blocks Executive at U.S. Firm Kroll from Leaving the Mainland
Rebecca Feng and Chun Han Wong, Wall Street Journal, September 29, 2023
16. China bans West End-bound theatre production
Eryk Bagshaw, Sydney Morning Herald
Chinese authorities have banned a Mongolian theatre production soon to show in London’s West End by shutting down power, blocking 130 production staff and putting the cast under constant surveillance.
The Mongol Khan, which is due to open at the London Coliseum next month, was approved by Chinese authorities to perform in the city of Hohhot in Inner Mongolia, China’s northernmost province.
But 30 minutes before the play was due to start on September 19, the performance at the Ulaan Theatre was shut down due to a power outage.
The multimillion-dollar production has spent the past two weeks at an alternative venue in the town of Ordos, where they were subject to constant surveillance, according to cast members.
“They were not permitted to retrieve their set, costumes, or technical equipment, and therefore were unable to rehearse, perform or even return home,” said a Mongol Khan spokeswoman.
Thousands of tickets were sold for the performance, leaving theatregoers turned away without explanation.
Witnesses said they saw Mongolian stage production workers suddenly being driven away by Chinese nationals before 1300 spectators were ordered to leave after a message was delivered over the speakers at the theatre.
“The production team of 130 members, including six British nationals, were expelled from the theatre building where £2 million [$3.8 million] worth of set and technical equipment was set up,” the Mongol Khan spokeswoman said.
“The production team was also banned from wearing traditional Mongolian dress in public.”
17. Estimating Chinese corruption
Robin Wigglesworth, Financial Times, October 3, 2023
18. Apple’s Latest China Challenge: A Crackdown That Could Shrink Its App Store
Yoko Kubota, Yang Jie and Aaron Tilley, Wall Street Journal, September 29, 2023
19. After Being Raided, Chinese Firm Says It Will Toe National-Security Line
Dave Sebastian and Rebecca Feng, Wall Street Journal, October 4, 2023
20. Finland hopes China will help end Russia's invasion of Ukraine
Rhyannon Bartlett-Imadegawa, Nikkei Asia, October 1, 2023
21. Ukraine’s War of Drones Runs into an Obstacle: China
Paul Mozur and Valerie Hopkins, New York Times, September 30, 2023
22. The 8-Year-Old Boy at the Heart of a Fight Over Tibetan Buddhism
David Pierson, New York Times, October 4, 2023
Environmental Harms
23. China's green tech giants link supply chains to Southeast Asia
Erwida Maulia, Nikkei Asia, October 4, 2023
24. China Swore Off Overseas Coal Plants. Is Xi Keeping His Climate Promise?
Sha Hua, Wall Street Journal, October 4, 2023
A pledge by China two years ago to stop building new coal plants overseas won applause from global climate activists, but Beijing’s decision to press ahead with some projects has spurred questions about whether the world’s largest carbon emitter is going back on its word.
This year, China and Pakistan resurrected long-dormant plans for a coal plant in Gwadar, a port city that is at the center of an economic corridor Beijing is seeking to develop. China is also forging ahead with plans for new coal-fired power plants in Indonesia, where the government wants them to supply energy for processing nickel, a metal used to make batteries for electric cars.
COMMENT – Beijing will continue to sacrifice climate commitments to gain market advantage in Electric Vehicles and the wider energy transition.
25. US warns green transition raises ‘complex’ China security concerns
Harry Dempsey, Financial Times, September 28, 2023
Foreign Interference and Coercion
26. Taiwan says China has 'very diverse' ways of interfering in election
Reuters, October 4, 2023
China has "very diverse" ways of interfering in Taiwan's elections in January, from military pressure to spreading fake news, including manipulating opinion polls, a senior Taiwanese security official said on Wednesday.
Ahead of elections, Taiwan routinely flags the risk of interference from Beijing, which claims the democratically governed island as its own, saying China seeks to sway the outcome to candidates who may be more favourable toward the country.
27. Key Taiwan Tech Firms Helping Huawei with China Chip Plants
Bloomberg, October 3, 2023
Several Taiwanese technology companies are helping Huawei Technologies Co. build infrastructure for an under-the-radar network of chip plants across southern China, an unusual collaboration that risks inflaming sentiment on a democratic island grappling with Beijing’s growing belligerence.
28. Two elves and a scroll: China military releases animation on Taiwan 'reunification'
Ryan Woo, Reuters, October 2, 2023
The Chinese military released an animated short film on National Day showing pieces of a scroll painting torn in two more than 300 years ago being reunited, in a show of the mainland's determination to bring self-ruled Taiwan into the fold.
The pieces of the "The Dwelling in the Fuchun Mountains", one of China's best-known ancient paintings, are kept separately in museums in China and Taiwan, the democratically governed island that Beijing claims as one its provinces, and which it reserves the right to take over by force.
On National Day on Sunday, the People's Liberation Army's Eastern Theatre Command, known for belligerent videos of exercises around Taiwan, released an animated short film called "Dreams Come True on Fuchun River", appealing to the shared cultural roots of people on both sides of the Taiwan Strait.
The film featured two elves, representing the two pieces of the painting by Yuan dynasty master Huang Gongwang, which was torn apart in the 17th century by one of its owners.
At the end of the movie, the two characters came together, magically making the painting whole again.
The shorter piece of the scroll, known as "The Remaining Mountain", about 51 cm long, is at the Zhejiang Provincial Museum in Hangzhou city. Taiwan's National Palace Museum has kept the 640-cm long "Master Wuyong Scroll" since the 1950s.
The two pieces were reunited in 2011 when China lent its fragment to the Taiwanese museum for two months during a period of warmer relations as Taiwan pursued a policy of economic rapprochement with China.
But in recent years, as relations have cooled, China has ramped up military activities around Taiwan, including drills over the past month that Beijing said were targeted at combating separatist forces.
At the same time, China is drafting ambitious plans to "integrate" the economies of its Fujian province and Taiwan, on both sides of the Taiwan Strait, offering Taiwan firms a chance to take part in a joint development plan, which Taiwan's government has spurned.
While China is keen to woo Taiwan with promises of economic gains, the threat of taking Taiwan by force is unrelenting.
During the journey by the two elves in the film, the Eastern Theatre Command inserted shots of aircraft carrier formations and J-20 fighter jets, reminding viewers of its battlefield capabilities.
COMMENT – Here’s the video, posted on Twitter (X) by Global Times.
29. Choppy waters as Europe navigates China-US rivalry
Mark John, Reuters, October 4, 2023
30. China keeps Sri Lanka in debt grip, stalling IMF relief
Marwaan Macan-Markar, Nikkei Asia, October 3, 2023
31. Singapore focuses on money laundering laws, denies China pressure
Dylan Loh, Nikkei Asia, October 3, 2023
32. Gifts, Gadgets and Greece: Inside a Huawei Lobbying Campaign
Adam Satariano and Eliza Triantafillou, New York Times, September 28, 2023
Leaked internal messages detail efforts by the Chinese tech giant to court Greek officials and fight an American-led effort against its technology.
In November 2020, executives at Huawei, the Chinese telecom-equipment maker, exchanged messages about holding a meeting with a “friend” and an “adviser” in Greece.
The contacts, identified as Greek government advisers, were set to provide Huawei with something valuable: a document outlining government contracts and “first priority projects” that the company might want to work on in the country. Huawei managers discussed giving the advisers a Huawei Mate XS smartphone, the company’s GT 2 smartwatch and wine, according to internal text messages and other documents reviewed by The New York Times.
The plans are “strictly confidential among us,” a Huawei manager wrote in a group chat named after Greece’s digital ministry.
The exchange was part of more than 120 messages and summaries of internal Huawei communications provided to The Times by a person working for a European government that investigated the company. The materials, which identified the contacts as government officials, offer a rare look at how Huawei tried to cultivate relationships with high-ranking figures in Greece, a small but important country for the company, and pushed the limits of Greek rules that restrict gifts to civil servants and government ministers.
33. Maldives’ new pro-China president-elect vows to kick out Indian military
South China Morning Post, October 3, 2023
Mohamed Muiz told supporters at a celebration of his election victory that he wouldn’t stand for a foreign military staying in the Maldives. It is a serious blow to India in its rivalry with China, as the Maldives’ presidential election was seen as a virtual referendum on the regional powers.
The president-elect of the Maldives said he will stick to his campaign promise to remove Indian military personnel stationed in the archipelago state, promising he would initiate the process.
Mohamed Muiz told his supporters gathered on Monday night at a celebration of his election victory that he wouldn’t stand for a foreign military staying in the Maldives against the will of its citizens.
“The people have told us that they don’t want foreign military here,” he said.
34. Pandas could be gone from America's zoos by the end of next year
Ashraf Khalil and Didi Tang, Associated Press, October 3, 2023
35. How $1M From China-linked Groups Oiled New York Politics
Didi Kirsten Tatlow and John Feng, Newsweek, September 28, 2023
36. US government quizzes British firms on Chinese investment links
Stefan Boscia, Politico, September 29, 2023
37. Das China-Gate des AfD-Spitzenkandidaten [China Gate of top AfD's Candidate]
J. Mueller-Töwe, A. Leister, L. Wienand, C. Janz, and M. Graewert, t-online, October 1, 2023 – ORIGINAL IN GERMAN
38. China Is Gaining Long-Coveted Role in Arctic, as Russia Yields
Austin Ramzy, New York Times, October 2, 2023
39. US raises concern with Peru over Chinese control of infrastructure
Michael Stott and Joe Daniels, Financial Times, October 3, 2023
40. Indian police raid news site alleged to be Chinese propaganda outlet
John Reed and Jyotsna Singh, Financial Times, October 3, 2023
41. IMF head backs reforms that could give China more voting power
Colby Smith, Financial Times, October 2, 2023
42. A Rural Michigan Town Is the Latest Battleground in the U.S.-China Fight
Alan Rappeport, New York Times, October 3, 2023
43. As China arrives with a splash in Honduras, the U.S. wrings its hands
Karen DeYoung, Washington Post, October 2, 2023
44. Biden Administration Indicts Chinese Firms Allegedly Tied to Fentanyl Distribution
Sadie Gurman, Wall Street Journal, October 3, 2023
Human Rights and Religious Persecution
45. Chinese police harass family of Washington DC student activist
Jenny Tang, Radio Free Asia, October 1, 2023
46. How to Keep History from Going Down the Memory Hole in China
Jiayang Fan, New York Times, September 30, 2023
47. Lawmakers Press NBA, Players Union on Forced Labor
Richard Vanderford, Wall Street Journal, October 3, 2023
Industrial Policies and Economic Espionage
48. HSBC to acquire Citigroup China consumer wealth business
Selena Li, Reuters, September 28, 2023
49. Chinese carmaker BYD to buy US firm Jabil's mobility business for $2.2 bln
Sameer Manekar and Yelin Mo, Reuters, August 28, 2023
50. Who Killed the Chinese Economy?
Zongyuan Zoe Liu, Michael Pettis, and Adam S. Posen, Foreign Affairs, October 3, 2023
51. EU to unveil technologies targeted in China ‘de-risking’ agenda, but plan remains divisive within bloc
Finbarr Bermingham, South China Morning Post, September 29, 2023
52. Are China’s state-owned giants about to get even bigger? Party journal flags ‘a matter of survival’
Chuqin Jiang, South China Morning Post, October 04, 2023
53. Japan courts Canada, Australia for China-free EV supply chain
Ryohtaroh Satoh, Nikkei Asia, October 4, 2023
54. China pushes ‘pivot to South and Southeast Asia’ with Yunnan province as gateway to vast market
Mia Nulimaimaiti, South China Morning Post, September 29, 2023
55. At WTO, growing disregard for trade rules shows world is fragmenting
Philip Blenkinsop, Reuters, October 2, 2023
56. Ties between foreign businesses and China go from bad to worse
The Economist, September 26, 2023
57. Evergrande's chairman has been detained. The company will struggle to survive
Laura He, CNN, September 29, 2023
58. Out of Bounds
Luke Patey, The Wire China, October 1, 2023
59. US warned China to expect updated export curbs in October - US official
Karen Freifeld and Alexandra Alper, Reuters, October 2, 2023
60. German manufacturers resist trade tensions in China’s Mittelstand enclave
Thomas Hale and Wang Xueqiao, Financial Times, October 2, 2023
61. VIDEO – China Dominates the Global Lithium Industry. Can the U.S. Ever Catch Up?
Wall Street Journal, October 2, 2023
62. How China’s Property Crisis Is Testing Its Too-Big-to-Fail Banks
Keith Bradsher, New York Times, September 30, 2023
63. Rare Look Inside TikTok Parent’s Finances Shows Slowing Revenue Growth
Salvador Rodriguez and Georgia Wells, Wall Street Journal, October 3, 2023
64. How China’s BYD Became Tesla’s Biggest Threat
River Davis and Selina Cheng, Wall Street Journal, October 4, 2023
65. Congressional U.S.-China Commissioner Warns of Global Tech Supply Chain Risk
Belle Lin and Steven Rosenbush, Wall Street Journal, October 3, 2023
Cyber & Information Technology
66. European countries who put curbs on Huawei 5G equipment
Reuters, September 29, 2023
67. In boost for semiconductor ambitions, Japan approves US$1.3 billion in subsidies for US chip firm Micron’s plant in Hiroshima
Bloomberg, South China Morning Post, October 3, 2023
68. TikTok sends team to Jakarta in scramble to respond to Indonesia’s ban on social media e-commerce
Zhou Xin, South China Morning Post, September 29, 2023
69. SMIC, Which Made the Kirin 9000S, Is Just Four Years Behind the Most Advanced Node, U.S. Sanctions Were Aimed To Limit Capabilities By 10 Years
Omar Sohail, WCCFtech, September 30, 2023
70. Senators Probe TikTok’s Executive Transfers from ByteDance
Georgia Wells, Wall Street Journal, October 3, 2023
Military and Security Threats
71. 55 Chinese sailors feared dead after submarine 'caught in trap'
Mark Nicol, Daily Mail, October 3, 2023
Fifty-five Chinese sailors are feared dead after their nuclear submarine apparently got caught in a trap intended to ensnare British sub-surface vessels in the Yellow Sea.
According to a secret UK report the seamen died following a catastrophic failure of the submarine's oxygen systems which poisoned the crew.
The captain of the Chinese PLA Navy submarine '093-417' is understood to be among the deceased, as were 21 other officers.
COMMENT – Reports of a submarine accident have been circulating for a few weeks. According to this report from the Daily Mail, which cites a British intelligence report, the accident took place on August 21 in the Yellow Sea.
I’m not yet convinced this accident happened. Had it happened, then there would have been a rescue/recovery effort and commercial satellite imagery would have shown it. I’ve seen no evidence of a rescue/recovery effort.
72. Will Xi’s Military Modernization Pay Off?
David M. Finkelstein, Foreign Affairs, October 4, 2023
China’s Armed Forces Are More Capable—but Beijing Feels Less Secure.
For months, all eyes have been on the high-level personnel turmoil in the Chinese military. Chinese Defense Minister Li Shangfu has not been seen in public for weeks, raising questions about whether he still holds his position. Li Yuchao, the commander of the People’s Liberation Army (PLA) Rocket Force, which oversees China’s arsenal of conventional and nuclear missiles, has also been replaced. Many observers have interpreted these shakeups as a sign that deep problems plague the highest reaches of the Chinese military or that Chinese President Xi Jinping intends to continue consolidating his power. But the frenzied media speculation around these personnel changes should not distract from the fact that the Chinese armed forces are making impressive strides in modernization.
Since he came to power in 2012, Xi has overseen a series of reforms that have strengthened and modernized the PLA’s warfighting abilities while reemphasizing its political role as “the armed wing of the Chinese Communist Party.” Accomplishing this has not been easy; efforts by previous Chinese leaders to overhaul the PLA have often fallen short thanks to the military’s insularity. Throughout the late 1970s and 1980s, Deng Xiaoping sought to rearm and reorganize the PLA to better defend China’s land borders from a menacing Soviet military presence to the north and an aggressive Vietnam to the south. But today, China’s biggest military challenges lie farther afield. Consequently, Xi and his generals have sought to create a PLA that is more integrated and outward facing—a PLA that can shape the country’s external security environment in Asia, secure Beijing’s expansive maritime claims in its neighborhood, back up Xi’s global political and economic objectives, and credibly challenge other advanced militaries operating in the Indo-Pacific. In short, a PLA that can project military power close to home and far away in support of Beijing’s larger global agenda.
Xi’s progress to date in revamping the Chinese military has been impressive. But even as his efforts have made the PLA stronger, they have generated new risks. The military’s improved capabilities, coupled with foreign leaders’ growing concerns about how Beijing intends to employ its military, have already prompted a degree of pushback from abroad that Beijing may not have anticipated. Moreover, Xi’s leadership overhauls may well be unnerving to the military officials charged with China’s defense. As Xi prepares the PLA for the future, he must acknowledge that military modernization alone cannot make China more secure—and that if he fails to accompany it with appropriate communication, especially with the United States, it could even backfire.
73. Russia and China’s super weapons and the threat of nuclear war
Lewis Page, The Telegraph, October 1, 2023
74. Chinese hackers stole emails from US State Dept in Microsoft breach, Senate staffer says
Raphael Satter and Zeba Siddiqui, Reuters, September 28, 2023
75. The US warns of a Chinese global disinformation campaign that could undermine peace and stability
Didi Tang, Associated Press, October 4, 2023
76. Taiwan cultivates homegrown drone industry with eye on China
Hideaki Ryugen, Nikkei Asia, October 3, 2023
77. Philippines doesn’t want war but will stand up to China’s ‘bullying’, defence chief says
Amy Sood, South China Morning Post, September 29, 2023
78. Marcos vows: PH will defend borders
Catherine S. Valente, Manila Times, September 30, 2023
One Belt, One Road Strategy
79. China spurned Pakistan's proposals for new Belt and Road projects
Adnan Aamir, Nikkei Asia, October 2, 2023
Meeting minutes reflect Beijing's concerns over political instability, security.
China rejected calls to invest in fresh Belt and Road projects in Pakistan, according to the minutes of a high-level meeting between the neighboring nations, a stance experts chalk up mainly to the political uncertainty and deteriorating security plaguing Islamabad.
Two officials who have seen the minutes told Nikkei Asia that the Chinese side turned down Pakistan's suggestions to add more projects related to energy, climate change, electricity transmission lines and tourism under the China-Pakistan Economic Corridor (CPEC) -- the $50 billion Pakistani component of the Belt and Road.
COMMENT – Investing more money in Pakistan is probably a terrible idea, but Beijing is stuck. Beijing has committed itself to propping up a volatile nuclear state, with the fifth largest population and no good prospects for economic prosperity. The Party has aligned itself with Pakistani elites who are divided and can barely keep the state functioning.
The most obvious thing for Pakistan to do would be to make peace with its neighbor India, which would create the conditions for outside investment and development, but Pakistani elites can’t do that and Beijing wouldn’t support that course of action (Beijing only supports Pakistan as a counterweight to India).
Beijing needs Pakistan to be its client state and to continue its 75-year rivalry with Delhi.
If Pakistan were to settle its differences with India and pursue the kinds of reforms that would make economic development possible, then Pakistan wouldn’t need the PRC and India would pose a greater challenge to Beijing’s plans.
So, Beijing will continue to prop up Pakistan and lose enormous amounts of money doing it.
80. Bye Bye BRI? Why 3 New Initiatives Will Shape the Next 10 Years of China’s Global Outreach
Ruby Osman, Time, October 1, 2023
Ten years after a freshly inaugurated President Xi Jinping announced the Belt and Road Initiative, China is gearing up to celebrate the decade anniversary of what has been called the “most ambitious” geopolitical project of the century. The sweeping initiative, initially introduced as the “Silk Road Economic Belt and 21st-Century Maritime Silk Road Development Strategy” in September and October 2013, promised to boost connectivity, trade, and cultural exchange along routes loosely inspired by the ancient Silk Road—no small task.
But dig a little deeper beyond the headlines, and the numbers start to get strange. Why can no-one agree on total spending? And where are the official Chinese figures? Why isn’t there even an officially agreed-upon list of BRI countries?
None of this is to say the BRI hasn’t been impactful. Chinese projects have, by some metrics, poured more than $1 trillion into addressing global infrastructure gaps faster and with less bureaucracy than their western counterparts, built up invaluable overseas experience for Chinese firms and banks, and provided an undisputable wake-up call on the scale of Chinese ambitions.
And yet, 10 years on, it remains impossible to pin down exactly what constitutes the BRI.
That’s in large part because the BRI was never quite what observers thought it was. In fact, the BRI is more branding exercise than masterplan—a fragmented and often inexperienced range of actors, juggling commercial and political incentives.
Opinion Pieces
81. ‘Be not afraid’: The world needs Pope Francis to be fearless on China
Representative Mike Gallagher, Washington Post, October 5, 2023
“We want God!” chanted the hundreds of thousands gathered to see Karol Wojtyla, now Pope Saint John Paul II, celebrate Mass near Krakow, Poland, in June 1979. Poland was entering its 32nd year of communist rule, and the ground was shifting.
John Paul’s exhortation to the faithful to live in truth and stand against aggression helped end the regime. He often said these three words: Be not afraid.
As the Synod of Bishops meets at the Vatican this week to debate and advise the pontiff, those gathered should heed John Paul’s fearless example in their dealings with the Chinese Communist Party. This is not the course the Catholic Church appears to be charting.
Last month, in a half-empty room in Mongolia, the current pope sent a message to a different tyrant. It should have been another chance for the church to speak truth to communist oppression. But instead of courage, Pope Francis chose what looks more like its opposite.
Without setting foot inside the People’s Republic of China, Francis called on Catholics in the country to be “good Christians and good citizens,” a phrase that left far too much unsaid. Francis did not mention that the Chinese government is engaged in religious oppression: a genocide against Uyghurs, a majority of whom are Muslim, in Xinjiang, and cultural atrocities in Tibet. He did not call for the release of Jimmy Lai, the Catholic Hong Kong publisher persecuted for his support of democracy. He did not ask for the exoneration of Hong Kong’s 91-year-old Cardinal Joseph Zen, arrested for challenging the CCP.
John Paul understood that Soviet communism preached a false gospel that demanded acceptance without question and to have its diktats applied without exception. To maintain their stranglehold, Soviet leaders sowed envy, suspicion and paranoia. Fearing their own people, they often turned to repression.
Chinese President Xi Jinping, too, is a totalitarian. His teachings must be accepted by all and are often imposed by force. Yet Francis has not called him to account.
Instead, the Vatican made a pact with the CCP. A 2018 deal gave the Communist Party the right to nominate Catholic bishops — in practice, tantamount to appointing them. Avowedly atheist party members in Beijing notify the Vatican of their choices; Francis provides a rubber stamp — a shocking way to decide upon the consecrated successors to Jesus’ apostles. The agreement has been a disaster for other faiths in China. The CCP has leveraged the deal to pressure other religions to allow Beijing to appoint their leaders. Notably, it has bolstered its attempt to coerce Tibetan Buddhists into accepting its choice of successor to the Dalai Lama. The CCP has not even kept its side of the bargain. It has often given the Vatican mere days to “vet” candidates.
Earlier this year, the CCP notified Rome of the appointment of a new bishop of Shanghai after he had taken office. Yet the Vatican has extended the agreement twice, in 2020 and 2022. In so doing, Francis has in effect abetted Xi’s decade-long project to sinicize religion in China. There have been reports, for example, of churches being forced to replace the Ten Commandments with quotes from Xi and of plans to rewrite the Bible to accord with socialist values.
Meanwhile, perhaps the largest internment of an ethno-religious minority since World War II is taking place in Xinjiang, and the CCP lies about it every day. If this does not deserve the church’s condemnation, what does?
Francis has the power to confront Beijing. Truth, combined with the fearlessness to speak it, is fatal to every ideology of oppression. In 1979, John Paul knew that the power of communism in Poland lay not in Soviet tanks but in the acceptance of the lies that drove them. Destroy the lies, and China’s tanks, too, will rust in fields. It’s not too late. Francis can still follow John Paul’s example. He cannot force the CCP to keep its word or to embrace Christianity. But he can challenge its values in front of the world. As a Catholic, I pray for Francis: Holy Father, be not afraid.
82. The Missing Piece in America’s Strategy for Techno-Economic Rivalry with China
Robert D. Atkinson and Liza Tobin, Lawfare, October 3, 2023
Pooling market demand with like-minded partners to reduce dependence on China.
The steady stream of U.S. senior officials traveling to Beijing in the past few months has underscored the administration’s quest for a fresh approach to navigating the economic and technological rivalry between the United States and China. As the world closely observes these diplomatic exchanges, a question looms large: Are traditional methods of engagement effective in addressing the growing challenges posed by China’s techno-economic malpractice to U.S. economic interests and those of other democratic market economies?
China employs an array of market-distorting tactics we have described elsewhere as innovation mercantilism and brute force economics to gain dominance in sectors that matter for economic competitiveness and national security. These include steel, solar panels, drones, shipbuilding, pharmaceutical ingredients, high-speed rail, and telecommunications equipment, among others. Tactics include market access restrictions, massive industrial subsidies that fuel overcapacity, technology transfer requirements for market access, preferential financing and procurement contracts for domestic firms, intellectual property theft, cyber- and human-enabled espionage, coercion and bullying, forced labor and other poor labor conditions, and other market-distorting policies.
By all available evidence, Beijing is intent on continuing to employ these mercantilist practices to acquire leadership positions in virtually every emerging and advanced industry that matters for the future, including some that have garnered significant attention in Washington, like artificial intelligence (AI), aerospace, semiconductors, biotechnology, networking technologies, and electric vehicles and batteries, as well as others that have attracted less attention but are nonetheless critical, such as cloud computing, flat panel displays, advanced materials, autonomous systems, and LiDAR technology.
…
To prevent a significant erosion of their competitive edge in advanced industries, the United States and its allies must take decisive action on all three fronts—promotion, protection, and pooling. China’s rapid progress and the nature of innovation industries, where gaining competitive advantage can tip the balance decisively, give many advantages to China. But by leveraging their collective market power, America and its allies and partners can chart a path toward preserving and enhancing their positions in these critical sectors.
83. South China Sea: US-China confrontation looms large
Mark J. Valencia, South China Morning Post, September 29, 2023
84. China’s Belt and Road Shows the High Price of Beijing’s Money
Karishma Vaswani, Bloomberg, October 2, 2023
Xi Jinping’s geopolitical infrastructure project turns 10 this year. He should enjoy the party — the next decade won’t be so smooth.
Birthdays are in equal parts celebratory but also inherently tinged with regret, for opportunities missed and mistakes made. All of which may well be weighing on Beijing as its Belt and Road Initiative marks its 10th anniversary this year. For the most part, it has been a success, coinciding with a coming of age for China’s financial and political importance on the global stage. But the next 10 years are unlikely to be as prosperous or smooth. The external geopolitical environment, combined with the nation’s domestic challenges, will make the BRI, as it is known, far less prominent than it has been.
Called the “project of the century” and “China’s Marshall Plan, but bolder,” the BRI’s vision was articulated during a speech in Kazakhstan in 2013 by President Xi Jinping. He evoked a golden era of trade and friendship between the Chinese and the rest of Central Asia, proclaiming that “a near neighbor is better than a distant relative.”
85. Bob Lighthizer on Changing the Balance in U.S.-China Trade
David Barboza, The Wire China, October 1, 2023
86. US has the trade tools needed for China’s EVs — but it must use them
Wendy Cutler, Financial Times, October 2, 2023
Amid resounding applause from the European parliament, Commission president Ursula von der Leyen recently announced the initiation of a subsidies investigation into China’s unfair trade practices in the electric vehicle sector.
This was a bold move in light of possible retribution against European car and other companies operating in China. Recalling how Chinese unfair and predatory practices led to the demise of the European solar industry, von der Leyen stressed the urgency for Europe to pre-empt a similar fate in the auto sector.
The EU’s move will hopefully lead US policymakers to evaluate their own policy tools and develop a proactive response.
Over the past decade, the Chinese EV industry has benefited from massive state subsidies and other government support. This paved the way for the country to become the largest global vehicle exporter this year, surpassing Germany and Japan. “New energy vehicles and equipment” was one of the 10 technology sectors targeted for global leadership in Beijing’s Made in China 2025 policy.
Moreover, China has strategically secured critical mineral deposits around the world needed for battery production, such as lithium. That means for several years Beijing has been able to dictate that EVs use Chinese-made batteries, which account for up to 60 per cent of the value of a car. While China has the world’s largest domestic automotive market at some 26mn vehicles, its EV companies are producing way more than the domestic market can consume — an excess of as much as 10mn a year, according to some estimates.
In many respects, the EV playbook looks similar to those followed by Beijing in developing its solar, steel and aluminium sectors. In those industries, massive subsidies led to overproduction and excess supply, saturating global markets and crippling international competitors. The oversupply of EVs has already found its way to Europe and many other corners of the world.
So far, the US has been spared an influx of Chinese cars due to a number of factors. First, the American tariff of 27.5 per cent (a 2.5 per cent toll on all auto imports plus the 25 per cent China import-specific one) is relatively high. Second, Chinese vehicles are ineligible for consumer EV tax credits under the Inflation Reduction Act, disadvantaging them in the US market. Third, geopolitical tensions are likely to have steered Chinese auto manufacturers away from the American market.
But there is no guarantee that this situation will continue, particularly as Chinese companies face rising pressure to offload their excess production. As a result, it’s in the US interest to act early.
The Biden administration has a number of tools at hand to do this. Like Europe, it can initiate a subsidies investigation under the US countervailing duty law, and even couple it with an antidumping probe if it can show that Chinese car companies are charging unfairly low prices. The challenge here would be demonstrating — as required by statute — that the domestic industry was injured by imports from China when the volume of Chinese cars imported so far has been negligible.
An alternative could be a new investigation under Section 301 of the Trade Act focused exclusively on Chinese unfair practices in the automotive and battery sectors, but this would take time. The administration could also consider initiating cases on national security grounds or over safeguards, but such remedies would not be China-specific and could result in contentious disputes with allies and partners.
Rather than begin lengthy trade investigations, the Biden administration has another mechanism at its disposal. It could adjust the vehicle levy as part of the trade representative’s ongoing, mandated Section 301 review of the wider China tariffs imposed by former president Donald Trump.
This review, which is due to be completed by the end of the year, could enable the US to raise the 27.5 per cent duty to a level that would, with more certainty, shield the American market from an onslaught of Chinese EVs.
Importantly, this could be done as part of an overall rebalancing of the tariffs, paving the way for the US to reduce tariffs on other consumer and industrial goods that are hurting America’s interests more than China’s.
Trade representative Katherine Tai has repeatedly said the US needs to use its trade tools in a strategic manner. This is the perfect opportunity to put this policy objective into practice.
87. Beijing aims to snatch the entire South China Sea. The US Navy is backing down
Tom Sharpe, The Telegraph, September 26, 2023
88. China's Fukushima blowback follows old Japan-bashing playbook
Hiroyuki Akita, Nikkei Asia, September 13, 2023
The Chinese backlash against Japan's release of treated wastewater from the Fukushima Daiichi nuclear plant shows no sign of ending.
At the ASEAN+3 summit in Jakarta on Sept. 6, Chinese Premier Li Qiang blasted Japan's handling of what he called "nuclear-contaminated water." China has already suspended all imports of Japanese seafood. ASEAN+3 consists of Association of Southeast Asian Nations members plus Japan, China and South Korea.
The International Atomic Energy Agency has confirmed that the water is safe, and other major countries have expressed their understanding. The Chinese criticism is a conspicuous outlier. The fact that Beijing does not even accept the IAEA's findings hints at the presence of political motives.
In my last column, I touched on how domestic political flashpoints are often at work when China's foreign policy turns combative. Right now, the real estate market is in a slump, youth unemployment exceeds 20%, and uncertainty is spreading among the public. There is a danger that President Xi Jinping's government will rely on bashing Japan to distract from discontent with the Communist Party.
Similar dangers apply to other countries, but territorial and historical issues make Japan one of the easiest targets for China. It is important for Tokyo to analyze Beijing's past patterns and respond calmly.
This is not the first time that internal issues have spurred China to get tougher on Japan. There have been at least a handful of such instances over the past 30 years or so.
Japan's nationalization of the Senkaku Islands in September 2012 is a classic example. It sparked anti-Japan protests that were reportedly among the largest ever of their kind and a string of attacks on Japanese factories, department stores and restaurants in major cities.
89. The West has a massive Chinese spy problem
David Wilezol, The Hill, September 26, 2023
90. Siemens is case study in China de-risking dilemma
Pamela Barbaglia, Reuters, October 5, 2023