Friends,
The Biden-Xi summit has come and gone with both sides counting it as a “win”… though I think it is clear that Xi got more out of the week than Biden did.
The Good – It appears that the two leaders had a cordial meeting and President Biden did not publicly bow to Xi’s unrelenting pressure on Washington to abandon Taiwan ahead of the country’s elections in January.
Also Biden wisely told the truth at the press conference after the summit when Selina Wang of ABC News asked if he still considered Xi a dictator. His response, cut to the video, was:
“Well look, he is a dictator in the sense that he is a guy that runs a communist country that’s based on a form of government completely different than ours.”
The look on Secretary Blinken’s face as Biden said this was absolutely golden – it’s the look of a life-long staffer who has tried in vain to get his boss to stick to the talking points he gave him. Sarah Beran, Kurt Campbell, and Dan Kritenbrink all mask their reactions much better.
From NBC News.
The Bad – It appears that we’ve continued to accept Xi’s ‘I’ll gladly pay you Tuesday for a hamburger today’ approach to solving bilateral problems.
Apparently, the price for [re]establishing a counter-narcotics working group where the PRC *might* restrict the export of fentanyl precursors to Mexican drug cartels is that the United States had to lift sanctions on an element of the Ministry for Public Security which is responsible for using forensics to execute Xi’s policy of genocide against Uyghur Muslims.
Instead of holding Xi and his cronies responsible for deliberately worsening the fentanyl epidemic in the United States (ten of thousands of American deaths) and conducting a genocide against their own people, the Administration capitulated on the latter to get Beijing to return to the table on the former.
Beijing now knows that the Administration will trade reducing pressure on the PRC’s horrendous human rights record for potential help on reducing fentanyl flows into the United States. Which means that they will undoubtably use the tactic again: the next time something happens in the relationship that Beijing doesn’t like, the counter-narcotics cooperation will be canceled, flows of precursors will accelerate, and the price of re-starting the talks and reducing the flow will be the further relaxation of sanctions on Beijing for human rights abuses.
It’s a terrible cycle to fall into and completely predictable. It demonstrates an unsophisticated view of diplomacy which refuses to learn from past mistakes.
In a similar vein, the Administration celebrated the [re]establishment of military-to-military talks, another area that Beijing has learned to use as leverage against Washington to gain concessions.
In Washington, the obsession with military-to-military talks is based on a fallacy, something I call the “accidental war” fallacy. Much of the rationale for this summit and why the U.S. shouldn’t exploit Beijing’s vulneabilities, was based on the logic that the two countries might “accidentally stumble into a military conflict” (one of many examples of this thought process is cited in the FT piece below, #2).
I think we should critically examine this concept of an “accidental war” because Beijing does not share this concern in the way that we do.
To start, Beijing does not believe that the United States and the PRC will “accidentally” start a war with one another. Xi is certain of his control of the PLA and does not believe that the U.S. is planning to attack or invade the PRC.
From the PRC’s perspective, the only way a conflict will start between the US and the PRC is if Xi directs it to happen.
To be clear, accidents can and do happen (we need look no further than the EP-3 incident in April 2001)… but wars don’t start by “accident.” Wars are the most intentional of human activities. Leaders might make mistakes in calculating their chances of success, or the costs of a war, or the duration of a war, but a war isn’t accidental. To think of war as something that is accidental is to completely misunderstand the nature of war.
Beijing knows that many in Washington are obsessed with this notion of “accidental war,” particularly those who are dedicated to engagement. This obsession and the ill-conceived notions of “accidental war” can be easily manipulated to the Party’s benefit. When it wants something or it wants Washington to stop doing something, it can hold military-to-military talks at risk, when that doesn’t work, Beijing can ramp-up its own dangerous behavior, increasing the fears in Washington of an “accidental war” and placing further pressure on Washington to conform to Beijing’s wishes.
Rather than obsessing about holding formal military-to-military talks, we should understand that Beijing’s manipulation of these talks and holding them hostage is just another form of dialogue.
I suspect that Xi’s main take-away from the Summit this week is that holding hostage military-to-military communications and the counter-narcotics working group, as well as leader-level crisis communications, is an effective strategy to get the kind of cooperation he wants from President Biden.
The Ugly – Perhaps the worst part of the week was the way that the Administration seemed to invite and encourage political interference by Beijing at the subnational level and through the U.S. business community.
One of the elements of the climate agreement the two countries announced on Tuesday before the Summit was to push Sino-American cooperation on climate issues to the subnational level:
“Subnational Cooperation
16. The United States and China will support climate cooperation among states, provinces, and cities with regard to areas including, inter alia, the power, transportation, buildings, and waste sectors. Both sides will facilitate subnational governments, enterprises, think tanks, and other stakeholders to actively participate in the cooperation. The two countries will meet periodically, as agreed, for policy dialogue, best practices sharing, information exchange, and to facilitate cooperative programs.
17. The United States and China intend to hold a high-level event on subnational climate action in the first half of 2024.
18. Both sides welcome with appreciation existing subnational cooperation between the two countries and encourage states, provinces, and cities to promote practical climate cooperation.”
This is a horrible idea which invites the Chinese Communist Party to divide U.S. states and municipalities from the federal government and make coherent national policy on China even more difficult to develop and implement. It essentially ensures fragmentation of U.S. policy by inviting the Party to drive wedges in our federal system. The only way to fix this mistake is to rescind this portion of the agreement.
And don’t get me started on the dinner hosted by NCUSCR (National Committee on U.S.-China Relations) and the U.S.-China Business Council for business leaders to praise and applaud Xi Jinping. It is a complete failure by the Administration for not discouraging American business leaders from showing up to the dinner or demanding that NCUSCR/USCBC cancel the event. Even as Xi threatens the United States about “interfering in China’s internal affairs” (a clear reference to Taiwan), the Administration seems to welcome and enable the Party’s interference in U.S. internal affairs.
I almost get the idea that there are folks who want the Chinese Communist Party to interfere with and manipulate U.S. foreign policy, economic policy, and national security decision-making.
Thanks for reading!
Matt
MUST READ
1. The Biden-Xi Truce of the Moment: The new era of good feelings is less than meets the photo-op.
Wall Street Journal, November 15, 2023
President Biden met Chinese President Xi Jinping on Wednesday in California, and the atmospherics suggested a new era of bilateral good feelings. But no one should be fooled that this is anything other than an era of intense competition, or that Mr. Xi is giving up his ambition to upend the U.S.-led international order.
Both sides have reasons at the moment to appear to be getting along better. Mr. Xi needs foreign investment and export markets to offset the real-estate crash and excessive debt that are slowing China’s economy. He wants a respite from further economic sanctions or U.S. limits on the sale of technology to Chinese firms. He’s put Beijing’s “wolf warrior” diplomats in the closet for now, though they could return at any time.
Mr. Biden wants to smooth relations to avoid another security crisis in a world that already has too many. With the wars in Ukraine and the Middle East, and bad actors in Russia and Iran stirring up trouble, the President wants to put China on ice—at least through his re-election next year. He especially wants to avoid a hot crisis over Taiwan.
There are certainly good reasons for the two sides to meet to talk and better understand each other. The U.S. wants to avoid a war with China that would be destructive for both countries and the world. The restoration of military-to-military communications, which China has resisted for months, is a useful step forward. Greater transparency and cooperation over advances in artificial intelligence would also be welcome.
The question is how much any of these verbal commitments will matter given the Chinese Communist Party’s ideology and ambitions. Beijing has promised to round up the usual fentanyl-producing suspects before, with little to show for it. China’s pledges to reduce carbon emissions in the future are worthless given its plan to build 366 gigawatts of new coal-fired power. Mr. Xi must laugh privately at U.S. climate envoy John Kerry’s pleas that China act against its energy self-interest. It won’t happen.
The sign of a real thaw in relations would be if China eased up on its relentless military buildup and its military harassment of Taiwan and the Philippines. The People’s Liberation Army has stepped up its almost daily aircraft incursions across the median line in the Taiwan Strait. Some of the air and naval maneuvers are the sort that could presage an invasion or military blockade.
Chinese Coast Guard and maritime military are also interfering with Manila’s attempts to resupply the Second Thomas Shoal. This includes recent use of a water cannon to force a Philippine supply ship to alter course. The shoal is part of the Philippine holdings in the Spratly Islands, which China claims as its own, as it does pretty much the entire South China Sea. If Mr. Xi really wants to play by global rules, he’d call off the war hawks.
Mr. Xi also continues his diplomatic and economic help to Russia in Ukraine, and China is buying oil from Iran that helps Tehran finance jihadist militias targeting Israel and Americans. This is the pattern that anyone who has attended a Chinese banquet knows: Chinese leaders smile and toast to the friendship between our two peoples, while they undermine U.S. interests wherever they can.
Mr. Biden has responded to all this with far more solicitousness than is deserved. He hasn’t sought significant military aid for Taiwan as part of his $106 billion supplemental aid request to Congress. Mr. Biden didn’t want Mr. Xi to decline this week’s visit as part of the annual summit of Asia-Pacific countries. Congress should make a bigger arms buy for Taiwan a condition of passing the aid bill.
Mr. Xi is no doubt sizing up Mr. Biden personally, contemplating how formidable the soon-to-be 81-year-old U.S. President will be as an adversary if relations again take a turn for the worse. The Chinese leader is set on retaking Taiwan on his watch, and Mr. Biden has shown little urgency in shoring up America’s military deterrent in the Asia-Pacific.
The decline of American deterrence has let the world’s rogues think they can take advantage of weaker neighbors in Europe and the Middle East. Let’s hope Mr. Biden sent a sterner message to Mr. Xi and backs it up soon with more hard power.
COMMENT – Nothing in Wednesday’s meeting between President Biden and Chinese leader Xi should suggest that we are experiencing anything other than an era of intense rivalry or that the Chinese Communist Party intends to give up its long-term goal of upending the liberal international order.
2. A hint of thaw in the new cold war
Demetri Sevastopulo, Ryan McMorrow, and Joe Leahy, Financial Times, November 17, 2023
The summit between Joe Biden and Xi Jinping was a sign of progress after a period of high tensions. But the roots of the growing rivalry remain.
…
The outcomes from the meeting should not be mistaken for a rapprochement, officials cautioned, but the US came out feeling that it had achieved its goals. “Usually, in negotiations with the Chinese, you don’t end up with anything near what you wanted,” the official adds. “In this one, we ended up with two really solid deliverables.”
The rosy account that China’s state media gave of the meeting reflected the country’s eagerness for detente. The People’s Daily stressed the personal connection between the leaders, including Biden waving Xi off in his customised Hongqi sedan — which the car-loving president appeared to inspect with admiration — when the Chinese leader left.
Biden was not Xi’s only desired audience in the US. In a downtown hotel after the meeting, the Chinese president launched a charm offensive with US business leaders, including Apple chief executive Tim Cook and BlackRock chief Larry Fink, at a $2,000-a-plate dinner of black Angus steak and broccolini.
In a speech, Xi said he and Biden had reached an “important consensus” in a seeming attempt to reignite foreign investor interest in the stagnant Chinese economy, which is struggling with a sagging property market and a crisis of confidence in the private sector. “The world needs the US and China to work together,” he said.
Kevin Rudd, the former Australian prime minister who is also a former ambassador to China, says Beijing’s desire for stabilisation is partly driven by its economic difficulties, and represents an effort “to allay international and domestic investor concerns about geopolitical risk”.
China is also attempting to take advantage of a split within the Biden administration, says Matt Turpin, a US-China expert at the Hoover Institution. Treasury secretary Janet Yellen favours a sounder economic relationship, he says, while national security adviser Jake Sullivan and his camp are focused on trying to shape the international environment around China in ways that would put pressure on the regime. “Beijing prefers the Yellen approach,” Turpin says.
Each country has different reasons to want a good outcome, says Wang Yiwei, a foreign relations expert at Renmin University in Beijing. The US knows its allies are anxious about its pressure to limit economic ties with China, he says, while Beijing wants to lower tension before the US enters election mode next year. “There might be more turbulence, so stabilising China-US relations now is the hope for China [so that it can] focus on the economy,” says Yiwei.
Yet critics question whether the meeting had achieved anything that would actually solve the fundamental problems in the relationship — particularly given how they remain at such odds over Taiwan.
“We’re exactly where we were one year ago in Bali,” says Turpin. “Agreeing to have dialogue is nice, but does it lead us anywhere out of the hostile rivalry?”
COMMENT – My opinion of the Summit came across in my quotes for this piece.
3. Don’t get too optimistic about Biden-Xi
Rana Foroohar, Financial Times, November 13, 2023
They’ll be together at the APEC summit in San Francisco on Wednesday, in a highly ceremonial meeting billed as an opportunity to discuss contentious topics — trade, security, Taiwan etc — and also to stabilise relations between the two countries. It looks like many big-time chief executives will be there too.
Certainly, there’s plenty for Joe Biden and Xi Jinping to discuss, including the US fentanyl crisis and China’s role in the trade of this highly addictive narcotic, a topic that the Financial Times covered in this wonderful graphic feature, and that I take on in my column today. Perhaps most importantly, the two countries are looking to re-establish military communications to avoid accidental conflict.
But while you’ll see a lot of cheery optics around the meeting, the core issues between the two countries aren’t getting any easier. I recently asked one White House official if they could imagine the two countries collaborating on any aspect of the clean energy transition, for example, something everyone has a stake in. This person, who is not a China hawk, started to sound off on how it was impossible to imagine any sort of co-operation there given decades of intellectual property theft by Beijing. Was there any global issue the two countries could conceivably work together on? Answer: maybe emerging market debt relief. But I’ll believe that when I see it, since China has its own massive internal debt problems as well as the Belt and Road Initiative writedowns to deal with.
Things certainly won’t get easier if Donald Trump is elected president, which many political analysts now see as a likely possibility (he’s already a shoo-in for the Republican nomination). But even if you assume there will be no 10 per cent US tariff on Chinese goods, and no conflict around Taiwan, core economic agendas of the two nations simply don’t work well together mathematically at the moment.
China and the US are decoupling, but that doesn’t mean that the Chinese economy is rebalancing away from manufacturing and towards more consumer spending. In fact, the country’s share of manufacturing GDP is rising, not falling, as it moves the fiscal stimulus that used to be doled out to the real estate sector into factories. That means that the Chinese economy is going to become more state driven, and more investment oriented, at a time when the US and Europe are also investing more fiscal stimulus into their own regions. That makes for an uncomfortable truth — not every country can grow its manufacturing sector at the same time (see economist Michael Pettis on this topic in the FT.
The Biden administration has made it clear that if China tries to dump more cheap stuff into the US market it will use tariffs to prevent this. You can say the same and more if we get Trump 2. Even Europeans are taking on the problem of Chinese dumping, with a new investigation into cheap Chinese electric vehicles. The US-EU clean steel talks will begin again towards the end of the year, which might provide an opportunity for the two regions to come together on shared supply chains that would create more synergies and reduce replication and inflation in the transatlantic clean tech market. But that won’t solve the core issue, which is that China hasn’t been able to stimulate its own consumer spending, and is still reliant on being a factory to the world, albeit in higher-margin goods. All of this seems to me like a recipe for more trade wars in the year ahead.
COMMENT – I think Rana called the Biden-Xi Summit right.
4. More Americans concerned China’s rise is threat to US national interest than any time since 1990: survey
Laura Zhou, South China Morning Post, November 14, 2023
Chicago Council on Global Affairs poll highlights concerns over American response to intellectual property theft, economic competition and global supply chains
Leaders’ meeting unlikely to change people’s views on China if not accompanied by ‘significant progress on issues important to the American people’: analyst
Nearly three in five Americans consider China’s rise a critical threat to US interests, a higher level than at any other point since the end of the Cold War, according to a new survey.
It found that large numbers believe US leaders are not paying enough attention to the issue of competition with China, particularly when it comes to the US response to intellectual property theft (65 per cent of respondents), economic competition (52 per cent) and China’s role in global supply chains (49 per cent). The poll was carried out on September 7-18 by the Chicago Council on Global Affairs.
The results of the survey released on Monday came ahead of a high-stakes meeting between Chinese President Xi Jinping and his US counterpart Joe Biden on the sidelines of the Apec summit in San Francisco on Wednesday, as Washington and Beijing seek to stabilise ties despite their heightened rivalry on everything from military supremacy, technological advances and global influence.
COMMENT – I think surveys like this point to some important trends in the U.S. electorate and that while certain business elites will welcome the Administration’s attempts at détente with Beijing and to further enable close Sino-American economic ties… those efforts conflict with what most Americans want.
Those who disagree with what these surveys show will dismiss this as populism or as being motivated by protectionism (or even racism), but I think it would be a mistake for political leaders to ignore or to only pay lip-service to these trends. Secretary Yellen’s efforts to rekindle a close Sino-American economic relationship might be really popular with some folks on Wall Street and in the halls of some think tanks inside the Beltway, but it simply reinforces a general perception by many Americans that the political elite are out of touch with what threatens them.
5. China's chipmaking equipment imports surge 93% despite curbs
Ryosuke Eguchi, Nikkei Asia, November 14, 2023
Chinese imports of semiconductor manufacturing equipment rose more than 90% on the year last quarter, as the country has proven able to produce advanced chips despite trade controls imposed by the U.S. and its allies.
Imports of machinery and equipment for producing semiconductors or integrated circuits jumped 93% in the three months through September to 63.4 billion yuan ($8.7 billion), a Nikkei analysis of Chinese customs data shows.
COMMENT – While some aspects of U.S. restrictions on semiconductor manufacturing have been successful, it appears that the restrictions have been drawn far too narrowly and understanding of the semiconductor industry inside the U.S. Government is still too immature.
6. Applied Materials under US criminal probe for shipments to China's SMIC
Karen Freifeld, Reuters, November 17, 2023
Semiconductor equipment maker Applied Materials is under U.S. criminal investigation for potentially evading export restrictions on China's top chipmaker SMIC, according to three people familiar with the matter.
The largest U.S. semiconductor equipment maker is being probed by the Justice Department for sending equipment to SMIC via South Korea without export licenses, the sources said. Hundreds of millions of dollars of equipment is involved, one of the people said. Reuters is reporting details of the probe for the first time.
Shares in Applied Materials fell 7.3% after the news and the company reported quarterly results.
The U.S. has restricted shipments of advanced chips and chipmaking equipment to China for national security, and the Justice and Commerce departments launched a task force earlier this year to investigate and prosecute criminal violations of export controls. The rules are aimed at stemming the flow of U.S. technology that could be used to bolster China's military and intelligence capabilities.
Santa Clara, California-based Applied Materials said Thursday it first disclosed in October 2022 that it had received a subpoena from the U.S. Attorney's Office in Massachusetts for information on certain China customer shipments."The company is cooperating with the government and remains committed to compliance and global laws, including export controls and trade regulations," it said in a statement.
The U.S. Attorney's office in Boston said: "We do not confirm or deny investigations."
Prosecutors in the office's National Security Unit are handling the ongoing probe, two sources said.
Reuters could not determine whether Applied Materials violated the law, and it isn't clear whether the investigation will result in charges.
The company produced semiconductor equipment in Massachusetts, then repeatedly shipped the equipment from its plant in Gloucester to a subsidiary in South Korea, the people said. From there, the equipment went to China's Semiconductor Manufacturing International Corporation (SMIC), the people, familiar with the probe, said.
The shipments began after the U.S. Commerce Department added SMIC to its "Entity List" in December 2020, which restricted exports of goods and technology to the company, two of the sources said, and took place in 2021 and 2022.
SMIC was placed on the list over its apparent ties to the Chinese military. SMIC did not immediately respond to a request for comment on the shipments from Applied Materials. In 2020, SMIC denied ties with the Chinese military, saying that it manufactures chips and provides services "solely for civilian and commercial end-users and end-uses."
A spokesperson for the Commerce Department, which oversees export controls, declined comment. A spokesperson for China's embassy in Washington was not aware of the Applied Materials probe. But Liu Pengyu, the spokesperson, said that, as a general principle, "imposed restrictions" are "at odds with market economy principles and fair competition."
When asked about the probe, Mao Ning, a spokesperson for the Chinese foreign ministry, told a regular news briefing on Friday that the U.S. should stop disrupting the global semiconductor industry's production and supply chain.
"China will pay close attention to relevant developments and resolutely safeguard its own rights and interests."
SUBJECT TO UNCERTAINTIES
In adding SMIC to its trade blacklist in 2020, the Commerce Department said that licenses for equipment uniquely capable of producing chips at advanced technology nodes are likely to be denied to "prevent such key enabling technology from supporting China’s military modernization efforts,” according to a 2020 posting in the Federal Register.
Licenses for other items are subject to a case-by-case review, it added.
In March 2021, Reuters reported that the U.S. government had been slow to approve licenses for American companies like Lam Research Corp and Applied Materials to sell to SMIC.
"This matter is subject to uncertainties, and we cannot predict the outcome, nor reasonably estimate a range of loss or penalties, if any, relating to this matter," the company said in an August 2023 filing with the U.S. Securities and Exchange Commission, in reference to its 2022 receipt of the subpoena relating to certain China customer shipments.
COMMENT – This is probably to be expected given the confusing signals out of Washington.
Rather than provide a clear signal to industry leaders that the United States Government will not tolerate companies assisting Beijing in its quest to dominate the semiconductor industry, Washington has sent mixed signals that it will narrowly interpret its restrictions while welcoming “legitimate” commercial activity. Of course, this legitimate commercial activity is in the eye of the beholder.
This approach encourages companies to push the boundaries of what is permitted and to collaborate with their commercial partners in the PRC to exploit the grey space.
This is one of the many drawbacks of having two contradictory China policies from the Administration. On the one hand companies know that there are “some” restrictions on their business with Beijing and serious national security concerns (the extent of those restrictions is subject to their own disclosure and lobbying) and on the other hand, companies know that there is another policy within the Administration which seeks to strengthen business and economic ties with Beijing.
Given these contradictory policies, companies do what profit-seeking companies are supposed to do: if there isn’t a clear and unambiguous prohibition, they MUST pursue sales.
This is the fatal flaw of the “small garden, high fence” approach.
7. Plateau China: Reform in the ten years after the Third Plenum of 2013
Charles Parton, Council on Geostrategy, November 9, 2023
Executive summary
In the Chinese political system, Third Plenums take place a year after a Party Congress and usually set the agenda for economic development and reform. For example, the Third Plenum of the landmark 11th Central Committee (1978) launched ‘reform and opening up’; that of the 14th (1993) established the socialist market economy; and that of the 16th (2013) centred on ‘perfecting the socialist market economy’.
On the tenth anniversary of the 2013 Third Plenum, this Report revisits its scope and intention, considers progress in implementing reforms, and thus highlights how an autumn 2023 plenum needs to put things back on track. Given the enormous scope of Xi’s 2013 ambitions – the ‘Decision’ contained 15 chapters, 60 sections and 380 items – the focus is on the issues most fundamental to making the model sustainable in the long-term. Four areas are key: relations between the party-state and the market/private enterprise; reforms to state owned enterprises (SOEs); fiscal reform, particularly tax reform and balancing central/local government shares of expenditure/revenue; and labour mobility (the closely linked issues of hukou (the PRC’s household registration system) and land reform). These four issues spill over into each other.
Despite its aspirations and deadlines, the CCP has failed to implement these underlying reforms. It has not substantially changed the old, unsustainable model. This will make it difficult to deal with the problems which the PRC currently faces, in particular rising debt, demographic decline, water scarcity, and a mismatch of skills/education versus industry needs. Ultimately, behind the inadequacies of the economic model, which the CCP does admit, lie the inadequacies of the political model, which the party cannot acknowledge. Reform of the political system was not on the 2013 agenda; tightening of CCP control was.
Despite the above, it is possible that the Third Plenum will not be held this year. No date was set at the November Politburo meeting. A December Third Plenum would be unusual. Thus a necessary re-energising of reform may be delayed. The 19th Central Committee left consideration of economic affairs until its Fifth Plenum in October 2020 – perhaps because the 2013 reform programme set a deadline of 2020 for completion, to coincide with the 2021 ‘First Centennial Goal’, the establishment of a ‘moderately prosperous society’. That 2020 plenum also coincided with the adoption of the 14th Five-Year Plan (2021–2025) and the ‘Long-Range Objectives Through the Year 2035’, all of which underpinned Xi’s bid for a third term as CCP leader. It is possible that Xi has decided to align the economy centred plenum with the adoption of the 15th Five-Year Plan, scheduled for 2025. On the other hand, current economic problems make the need for a new model more pressing. Welcome once again to the black box of CCP politics.
COMMENT – A number of analysts and commentators have highlighted the problem Charlie Parton describes well in his piece: despite a fairly accurate diagnosis of the problems facing the PRC economy back in 2013, the Chinese Communist Party, under Xi’s unquestioned leadership, has failed to implement the reforms that the Party itself asserted must be done.
This failure to follow through on economic reforms has important implications.
First, the political system that enabled the PRC to reach its current level of development hinders its ability to make it to the next level of development.
Second, in an attempt to turn things around and within what the Party perceives as a hostile international environment, the Party will exert even greater centralized control over the economy.
Third, as these failures compound and the Chinese people become frustrated that their expectations are not being met (i.e. a breakdown in the implicit contract that the party will always deliver economic prosperity), the Party will likely to direct that frustration outward by blaming foreigners for their predicament in an attempt to deflect the consequences from themselves.
Bottom Line: Foreigners will NOT be welcome in this China and no amount of pleading by outsiders will convince the Party to change course. The best approach is to distance oneself from an increasingly dysfunctional PRC.
I think Ursula von der Leyen gets this… see the next article.
8. EU leader Ursula von der Leyen urges states to begin economic de-risking from China or face trouble
Finbarr Bermingham, South China Morning Post, November 17, 2023
European Commission president Ursula von der Leyen has warned the EU’s 27 member states to get moving with de-risking economic ties with China or prepare for their businesses to be steamrollered by unfair Chinese competition.
During two pointed speeches in Berlin on Thursday, von der Leyen painted a bleak picture of bilateral relations, with few notes of optimism, as she prepares to travel to Beijing next month for the EU-China Summit.
In an address to conservative lawmakers at the German Bundestag – the national parliament – she tried to drum up support for her de-risking agenda, suggesting that European businesses in China will eventually run into trouble if governments do not take action.
COMMENT – I’ve heard some rumors that the German center-right party (the CDU, Christian Democratic Union) is going through a conversion on China policy. Abandoning the disastrous “Handel durch Wandel” (Change through Trade) policies of Angela Merkel and embracing a realist view of both Russia and the PRC.
Ursula von der Leyen is the most high-profile CDU leader, so seeing her lead on this issue is important.
One might even venture to say this shift represents a return to the kind of leadership that Konrad Adenauer (CDU Leader and German Chancellor, 1949-1963) provided West Germany after World War II… leadership that built NATO and provided stability for the West to stand up against the Soviet Union.
9. HMAS Toowoomba naval divers forced to exit water over Chinese warship sonar pulses
Andrew Greene, ABC News, November 17, 2023
Key points:
Australian divers suffered injuries to their ears after being forced to exit the water
The federal government has expressed its serious concerns to the Chinese government
It comes less than a fortnight after Anthony Albanese's meeting with President Xi Jinping
Australian naval personnel have sustained minor injuries after being subjected to sonar pulses from a Chinese warship, with the federal Opposition calling for the prime minister to say if he raised the issue with Xi Jinping.
HMAS Toowoomba had been operating in international waters off Japan in support of a United Nations mission to enforce sanctions when the incident occurred on Tuesday.
Naval divers were working to clear fishing nets from the Australian frigate's propellers, when the Chinese warship began operating its hull-mounted sonar.
According to Defence Minister Richard Marles, the Australian frigate provided multiple warnings to vessels in the area that diving operations were underway.
"Despite acknowledging Toowoomba's communications, the Chinese vessel approached at a closer range," he said.
"Soon after, it was detected operating its hull-mounted sonar in a manner that posed a risk to the safety of the Australian divers who were forced to exit the water."
It's understood the divers suffered injuries to their ears, likely due to the sonar pulses.
The federal government has expressed its serious concerns to the Chinese government, with Mr Marles labelling the incident "unsafe and unprofessional interaction".
COMMENT - This is the kind of risky and dangerous behavior that Beijing encourages the PLA to do in order to put pressure on countries to back off.
Considering that Canberra expended significant political capital to [re]establish high-level relations with Beijing, Beijing feels confident that Canberra will do very little about this.
10. Hack at ICBC Targeted the Digital Underbelly of Financial Markets
Eric Wallerstein, Rebecca Feng, and David Uberti, WSJ, November 10, 2023
There is a new reason to worry about the hardiness of the market for U.S. government debt: hackers.
Cybercriminals held hostage this week a New York unit of the world’s largest bank, Industrial and Commercial Bank of China, disrupting trading in U.S. Treasurys. The impact was relatively minor, market participants said, but the fear wasn’t.
Treasury markets have been on edge this year. Traders have raised concerns that the world’s most liquid market is becoming strained, while worries about demand for U.S. debt have driven a spike in yields.
The idea of hackers being able to interrupt trading adds to the angst, and it is also a blow to Washington’s efforts to tamp down a ransomware scourge in recent years. Hackers in previous incidents often locked up companies’ computer systems and demanded millions of dollars in payment to restore them.
Bankers and U.S. officials have long feared an incident that could disrupt the plumbing that enables trading and recordkeeping in Treasury markets. The attack shows that criminals aren’t just threatening to steal money, but hold up for ransom the financial system’s flows of data and information.
“A boundary has been broken. We haven’t seen something like this involving a large bank before,” said Marcus Murray, the founder of Truesec, a cybersecurity company.
Treasury Secretary Janet Yellen said officials are working with the Chinese government, the Federal Bureau of Investigation and the Cybersecurity and Infrastructure Security Agency.
“Very good progress has been made, we’ve not seen an impact on the Treasury market,” Yellen said during a press conference in San Francisco, where she met with her Chinese counterpart this week.
The ransomware victim on Wednesday was ICBC Financial Services, a New York-based entity of the gigantic ICBC. The unit is a clearing house, which means it ensures brokers’ trades and transactions go through.
In ransomware incidents, hackers infiltrate companies’ computer systems and inject malware intended to lock up or disable key processes. Cybersecurity analysts say attackers have demanded sums reaching into eight figures in return for decryption keys that help victims restore their systems—only sometimes successfully.
ICBC was forced to disconnect and isolate some of its systems after the attack and it was unplugged from the Treasury market in the U.S. by Bank of New York Mellon, which sits in the middle of the transactions. The bank resorted to manually clearing trades.
That meant clients whose trades are routed through ICBC were in limbo, unable to determine which positions were still open or which trades have closed.
Some analysts conflated the hack on ICBC with a poorly received sale of 30-year Treasurys by the U.S. government on Thursday, worrying that Chinese buyers who use ICBC’s platform were unable to participate.
ICBC is an important intermediary for cash-reserve managers in China, according to Ed Al-Hussainy, an analyst at Columbia Threadneedle Investments. But it is rare for Chinese buyers to be a major source of demand in long-term U.S. bond auctions.
“That was the case 10 or 15 years ago, not so much today,” he said.
Even if big buyers weren’t prevented from stepping up, it is possible that investors were spooked by the hack and therefore reluctant to participate, Al-Hussainy added. It speaks to the fragility of the Treasury market, he said, that a small player could potentially have such an impact on more important sources of demand.
The hack hit the repo market, where banks and other financial institutions exchange trillions of dollars tied to Treasurys mostly overnight, much of it moving through the Depository Trust & Clearing Corp. More than $62 billion of U.S. Treasurys failed to deliver Thursday, DTCC data shows, meaning either sellers didn’t send securities or buyers didn’t receive them in time to settle a trade.
COMMENT – When this hack of ICBC was first announced, I didn’t think much of it… just another ransomware attack that we have all become far too desensitized to.
But upon further examination it suggests a real strategic vulnerability that I hope folks in the U.S. Treasury are taking seriously.
It’s not like the United States has a lot of fiscal head-room to play with… side-eye at Congress, the Fed, and the Treasury.
Authoritarianism
11. New Law Will Bring All Charities in China Under Police Control
Zhou Kexin, Bitter Winter, November 2, 2023
It is time for “all charitable work to be put under the leadership of the Chinese Communist Party,” the amended Charity Law proclaims.
What is still not under direct control of the CCP in China? Not much. But let me think of it—charities. They did not exactly like the law regulating them in 2016, but it left them some space to breathe. This space will be eliminated by a new law, whose draft has been published for comments, a practice giving the cosmetic impression that citizens participate in drafting new statutes, while in fact their comments are rarely taken into account.
The draft does not create a brand-new Charity Law but amends the one of 2016. The amendment to Article 5 clearly states what the new law is all about: “All charitable work should be put under the leadership of the Chinese Communist Party.” Not that this principle did not exist before, but the control will now move from indirect to direct.
In addition to the existing supervision by the civil affairs agencies, tax authorities, the cyberspace administration (whose powers are reinforced), and others, charity organizations will now be directly controlled by police and public security.
Overseas donations and any relationship with non-Chinese counterparts should be previously approved by the Civil Affairs Department at or above the county level. These Departments will thus acquire considerable power on religion-based charities, including those connected with the five authorized religions, some of which largely rely on foreign donations. It has been explained that one of the concerns leading to the amended law is that charities may be used by foreign powers as vehicles for espionage.
12. U.S. refused to help Joshua Wong flee Hong Kong, sources say
Pak Yiu, Nikkei Asia, November 8, 2023
Former U.S. President Donald Trump's administration refused to help prominent Hong Kong democracy activist Joshua Wong leave the city before the enactment of a draconian national security law imposed by China, resulting in his imprisonment later that year.
Despite Washington's vociferous support for Hong Kongers' fight for democracy, the U.S. State Department denied Wong's request to enter its consulate, where he hoped to seek refuge. Wong met with consular staff in a building across from the foreign mission in Hong Kong at the end of June 2020, according to several people familiar with the situation.
COMMENT – This is pretty shameful.
13. How secure is Xi Jinping’s rule?
Patrick Triglavcanin, Council on Geostrategy, November 10, 2023
14. Americans Say US Has Not Gone Far Enough on China Trade Issues
Craig Kafura, Chicago Council on Global Affairs, November 12, 2023
Key Findings
A quarter of Americans (23%) identify China’s economic power as their greatest concern about China.
Americans say the United States has not gone far enough in responding to China on intellectual property theft (65%), economic competition (52%), and China’s role in global supply chains (49%).
Pluralities of Americans view US trade policies toward China as being bad for creating US jobs (48%), for the US economy (47%), for American companies operating in China (45%), and for US national security (43%).
Majorities of Republicans view US-China trade policy as being bad for nearly all areas asked about, while Democrats are more divided.
The public is divided over whether the United States (33%) or China (32%) is the stronger economic power; another third (33%) say the two are tied.
COMMENT – An interesting chart from the study:
15. Beijing’s data and spy laws threaten to spur decoupling with Europe, says business group
Joe Leahy, Financial Times, November 12, 2023
16. Russia and China are opening a new anti-western front in the Arctic
Kristina Spohr, Financial Times, November 9, 2023
17. Taiwan Opposition Parties Unite Against Presidential Candidate China Sees as Threat
Joyu Wang, Wall Street Journal, November 15, 2023
18. As Xi Heads to San Francisco, Chinese Propaganda Embraces America
Vivian Wang and Joy Dong, New York Times, November 14, 2023
China is shifting its propaganda strategy ahead of Xi Jinping's meeting with Joe Biden. Previously, Chinese propaganda warned against American attempts to ease tensions, but now it emphasizes the "enduring strength" of Xi's affection for ordinary Americans; this shift in tone may be an effort to reassure investors and foreign businesses amid China's economic struggles.
While aimed primarily at an overseas audience, Chinese social media users have noticed the abrupt change, sparking both humor and skepticism.
COMMENT – It is important to put this shift in propaganda in context. Since Xi is in the United States and meeting with Americans, the Party’s mouthpieces must show that Xi is right to do so. We have seen this shift in rhetoric ahead of other visits… to be replaced once the trip is over.
19. How an executive's arrest struck a blow to Japan-China business
Yukiko Toyoda, Kiyoshi Takenaka, and Laurie Chen, Reuters, November 14, 2023
20. First Chinese law company set to open branch in North Korea
Kawala Xie, South China Morning Post, November 15, 2023
21. U.S. Manages Expectations of a Breakthrough Before Biden and Xi Meet
Katie Rogers and David E. Sanger, New York Times, November 14, 2023
22. APEC Summit: Biden-Xi Talks Lead to Little but a Promise to Keep Talking
Katie Rogers and David E. Sanger, New York Times, November 15, 2023
23. Private schools rethink China future after flunking growth test
Farah Master and Kane Wu, Reuters, November 8, 2023
24. China is Hoarding the World's Gold
Aleks Phillips, Newsweek, November 4, 2023
25. China Is Making Too Much Stuff—and Other Countries Are Worried
Stella Yifan Xie and Tom Fairless, Wall Street Journal, November 10, 2023
26. China and US to agree crackdown on fentanyl trade
Demetri Sevastopulo, Financial Times, November 14, 2023
Environmental Harms
27. EU calls on China to stop building coal plants and contribute to a climate fund for poor nations
Associated Press, November 16, 2023
28. China Bends to Seoul’s Demands on Tracking Fishing Boats
Christy lee, Voice of America, November 8, 2023
A new maritime deal requiring Chinese fishing vessels to keep location tracking devices turned on when operating in South Korean waters signals a concession by Beijing — a small gesture to save ties from declining further with Seoul, experts say.
China agreed with South Korea that it will be mandatory for its fishing fleets to install and keep on the internationally accepted automatic identification system (AIS) while sailing in South Korea’s exclusive economic zone (EEZ) starting in 2024.
The requirement to install and turn on the location tracking devices will help South Korea deal with China’s illegal fishing, Seoul’s Ministry of Oceans and Fisheries said in a statement announcing the deal on Nov. 3.
The agreement goes into force on May 1, 2024. It also reduces the number of fishing boats each country will allow in its EEZ to 1,200 — down from 1,250 in 2022.
The agreement reached on Nov. 2 came a week after South Korea seized a Chinese vessel for illegal fishing in its waters near Hongdo, an island in the Yellow Sea. The vessel underreported its catch in violation of South Korea’s EEZ restrictions, said Cho Seung Hwan, spokesperson for the Ministry of Oceans and Fisheries.
29. How a Tiny Team of Journalists Held the World’s Biggest Fishing Fleet to Account
Ian Urbina, Time, October 26, 2023
On the high seas roughly a thousand miles north of the Falkland Islands, an 18-year-old deckhand working on a Chinese squid ship nervously ducked into a dark hallway to whisper his plea for help. “Our passports were taken,” he said to me. “They won’t give them back.”
Instead of speaking more, he then began typing on his cell phone, for fear of being overheard. “Can you take us to the embassy in Argentina?” Just then, my minder rounded the corner and the deckhand abruptly walked away. Minutes later, I was ushered off the ship.
After I returned to shore, I contacted his family. “My heart really aches,” his older sister, a math teacher in Fujian, China, said, after hearing of her brother’s plea for help. Her family had begged him not to go to sea, but he was drawn to the idea of seeing other countries. She hadn’t known that he was being held captive, and she felt helpless to stop it. “He’s really too young,” she said. “And now there is nothing we can do, because he’s so far away.”
This was one of many stark encounters during a four-year investigation I conducted with an international team of reporters at sea and on land that revealed a broad pattern of severe human rights abuses tied to the global seafood industry. We focused on China because it has by far the largest high-seas fishing fleet and processes much of the world’s catch.
30. Beijing Tightens Its Grip on the Critical Minerals Sector
Christina Lu, Foreign Policy, November 7, 2023
Foreign Interference and Coercion
31. U.S.-China: One summit, two different goals for Biden and Xi
Ken Moriyasu, Nikkei Asia, November 14, 2023
32. US Grants Chinese Journalists Hundreds of Visas to Cover APEC
Bloomberg, November 14, 2023
33. Federal prosecutor raises alarm about Chinese election interference
Betsy Woodruff Swan and Christopher Cadelago, Politico, November 1, 2023
34. Chinese Investments in European Maritime Infrastructure
European Parliament, September 2023
This study looks at Chinese investments in maritime infrastructures through the lens of ‘de-risking’ for the first time. It provides a comprehensive overview of Chinese investments in the European maritime sector over the past two decades and weighs the associated risks. The study borrows the framework adopted by the National Risk Assessment of the Kingdom of the Netherlands 2022 for its risk assessment and further develops it to score the impact and likelihood of the investments across five major threat areas: EU-level dependency risk, individual dependency risk, coercion/influence risk, cyber/data risk and hard security risk. The analysis illustrates that the risks remain insufficiently understood by Member States, despite their high likelihood and/or impact. This is particularly true for economic coercion and cyber/data security risks.
35. Resettlement offer to Pacific a win for Australia over China
Kirsty Needham and Martin Quin Pollard, Reuters, November 13, 2023
36. The Evolution of Chinese Engagement with the Dominican Republic
Evan Ellis, CSIS, October 31, 2023
37. India, China Fight for Influence Over Tiny Archipelago Nation
Rajesh Roy, Wall Street Journal, November 11, 2023
38. What It Took to Get Biden and Xi to the Table
Charles Hutzler and Lingling Wei, Wall Street Journal, November 12, 2023
39. Can the U.S. Handle China While Supporting Israel and Ukraine Wars?
Damien Cave, New York Times, November 9, 2023
Human Rights and Religious Persecution
40. China leads list of labor abusers, sometimes akin to slavery, detected on fishing vessels worldwide
Joshua Goodman, Associated Press, November 15, 2023
41. Tibetan Parents Told They Should “Educate Minors Not to Believe in Religion”
Lopsang Gurung, Bitter Winter, November 8, 2023
42. U.S. forced labor laws strain China-dependent garment supply chains
Shaun Turton, Nikkei Asia, November 13, 2023
Industrial Policies and Economic Espionage
43. Elon Musk and Jane Fraser Are Just Some of the CEOs Hoping to Woo China’s Xi
Thomas Black and Dina Bass, Bloomberg, November 14, 2023
44. Japan Prepares $13 Billion to Support Country’s Chip Sector
Takashi Mochizuki, Bloomberg, November 10, 2023
45. Lawmakers say Costco’s decision to continue selling banned China surveillance tech is ‘puzzling’
Zack Whittaker, Techcrunch, November 1, 2023
46. Ant Group rolls out global expansion strategy from new Singapore office
Ann Cao, South China Morning Post, November 14, 2023
47. The ghosts haunting China’s cities
Andrew Kipnis, The Guardian, November 14, 2023
48. China Mulls $137 Billion of New Funds to Aid Housing Market
Bloomberg, November 14, 2023
49. PE Firms Get Trapped in China After $1.5 Trillion Betting Spree
Cathy Chan and Preeti Singh, Bloomberg, November 13, 2023
50. Apple Supplier Luxshare Ups Vietnam Investment by $330 Million
Mai Ngoc Chau, Bloomberg, November 10, 2023
51. China orders local governments to cut exposure to public-private projects as debt risks rise
Reuters, November 14, 2023
52. How Shein and TikTok Shop are trying to shake the ‘Made in China’ reputation
Peiyue Wu and Daniela Dib, Rest of World, November 14, 2023
53. How Chinese e-commerce fuels counterfeit fashion in Nigeria
Damilare Dosunmu, Rest of World, November 14, 2023
54. United States to Host Indo-Pacific Economic Framework for Prosperity (IPEF) Ministerial in San Francisco
U.S. Department of Commerce, November 6, 2023
55. AUDIO – Enterprise China: Adopting a competitive strategy for business success. Talking with co-author, Professor of Global Management. Allen Morrison.
Allen Morisson, San Francisco Experience, November 3, 2023
56. Nvidia Develops New AI Chips, Again, to Keep Selling to China
Raffaele Huang and Asa Fitch, Wall Street Journal, November 10, 2023
57. Yellen Says U.S. Wants ‘Healthy’ Economic Ties with China
Alan Rappeport, New York Times, November 10, 2023
58. Beauty Stocks Tell an Ugly Story About China
Jacky Wong, Wall Street Journal, November 13, 2023
59. China’s economy falls back into deflation in blow to recovery
Joe Leahy, Financial Times, November 9, 2023
Cyber & Information Technology
60. ‘150 films in 1 second’: China begins roll-out of world’s fastest internet
Zhang Tong, South China Morning Post, November 14, 2023
61. Chinese Big Tech firms JD.com, NetEase and Meituan in rush to hire HarmonyOS-based app developers as Huawei aims to sever Android ties
Ben Jiang, South China Morning Post, November 13, 2023
62. Huawei Mate 60 Pro teardown reveals 47% Chinese parts in phone
Masaharu Ban and Nami Matsuura, Nikkei Asia, November 13, 2023
63. Tech leakage to China can't be stopped but can be delayed, says expert
Toru Tsunashima, Nikkei Asia, November 12, 2023
64. China AI Startup Stockpiled 18 Months of Nvidia Chips Before Ban
Saritha Rai and Yoolim Lee, Bloomberg, November 10, 2023
65. Nvidia's New China AI Chips Circumvent US Restrictions | H20 Faster Than H100 | Huawei Ascend 910B
Dylan Patel, Daniel Nishball, and Myron Xie, Semianalysis, November 9, 2023
66. Huawei’s 5G chip breakthrough needs a reality check
Zeyi Yang, MIT Technology Review, November 15, 2023
67. Nepal Is Banning TikTok Over Hate Content, Officials Say
Bhadra Sharma, New York Times, November 13, 2023
68. U.S. Shift on Global Tech Rules Jeopardizes Effort to Counter China
Yuka Hayashi, Wall Street Journal, November 13, 2023
Military and Security Threats
69. Government to sweep away export barriers in ‘AUKUS revolution’
Matthew Knott, Sydney Morning Herald, November 13, 2023
70. U.S. defense chief won't meet Chinese officials in Jakarta: Pentagon
Ryo Nakamura, Nikkei Asia, November 15, 2023
71. The shadowy network smuggling European microchips into Russia
Chris Cook and Max Seddon, Financial Times, November 12, 2023
72. Japan envisions 'quasi-alliance' with Philippines
Kana Baba, Nikkei Asia, November 1, 2023
73. For survivable resupply, look to autonomous submarines
Bill Rivers and Matt DiRisio, C4ISRNet, November 8, 2023
74. Hezbollah entry into war would mean Taiwan trade-off, U.S. analysts say
Ken Moriyasu, Nikkei Asia, October 31, 2023
75. Don’t expect Xi to restore the US-China military hotline this week
Michael E. O’Hanlon, Brookings Institution, November 13, 2023
76. The US is quietly arming Taiwan to the teeth
Rupert Wingfield-Hayes, BBC, November 6, 2023
77. Chinese Navy’s Suspected New Overseas Base in Cambodia Now Even Larger
H I Sutton, Naval News, November 13, 2023
78. VIDEO – In Ayungin, PCG’s smarts and daring trump China’s 11-ship blocking team
Rappler, YouTube, November 13, 2023
79. China's 'communist spies' in the dock in Taiwan
Kelly Ng, BBC, November 9, 2023
80. Xi and Biden to try to ease tensions as Taiwan looms over US-China talks
Demetri Sevastopulo and Joe Leahy, Financial Times, November 13, 2023
81. Taiwan says US using ‘all possible ways’ to support defence against China
Kathrin Hille, Financial Times, November 14, 2023
82. How a Decaying Warship Beached on a Tiny Shoal Provoked China's Ire
Camille Elemia, New York Times, November 11, 2023
One Belt, One Road Strategy
83. Nepal Is Investigating New Airport Made by China
Daisuke Wakabayashi, Bhadra Sharma, and Claire Fu, New York Times, November 12, 2023
84. Developing countries owe China at least $1.1 trillion – and the debts are due
Simone McCarthy, CNN, November 13, 2023
Developing countries owe Chinese lenders at least $1.1 trillion, according to a new data analysis published Monday, which says more than half of the thousands of loans China has doled out over two decades are due as many borrowers struggle financially.
Overdue loan repayments to Chinese lenders are soaring, according to AidData, a university research lab at William & Mary in Virginia, which found that nearly 80% of China’s lending portfolio in the developing world is currently supporting countries in financial distress.
For years, Beijing marshalled its finances toward funding infrastructure across poorer countries – including under an effort that Chinese leader Xi Jinping branded as his flagship “Belt and Road Initiative,” which launched a decade ago this fall.
That funding flowed liberally into roads, airports, railways and power plants from Latin America to Southeast Asia and helped power economic growth among borrowing countries. Along the way, it drew many governments closer to Beijing and made China the world’s largest creditor, while also sparking accusations of irresponsible lending.
Now, 55% of China’s official sector loans to developing countries have entered their repayment periods, according to the analysis of more than two decades of China’s overseas funding across 165 countries released by AidData.
Those debts are coming due during a new and challenging financial climate of high interest rates, struggling local currencies and slowing global growth.
“A lot of these loans were issued during [the Belt and Road period starting in 2013] and they came with five- or six- or seven-year grace periods … and then [international debt suspension efforts during the pandemic] tacked on two additional years of grace where borrowers didn’t have to repay,” AidData executive director and report author Brad Parks told CNN.
“Now the story is changing … for the last decade or so China was the world’s largest official creditor, and now we’re at this pivot point where it’s really about (China) as the world’s largest official debt collector,” he said.
AidData’s figures are based on its database tracking what amounts to $1.34 trillion in loan and grant commitments from China’s government and state-owned creditors to public and private sector borrowers in low- and middle-income countries between 2000 and 2021.
That dataset, built through collecting official and public source information about the individual loans and grants, provides one of the widest windows available into what are notoriously opaque Chinese funding activities.
The researchers also cited data reported by lenders to the Switzerland-headquartered Bank of International Settlements, which they said indicates developing country borrowers owe Chinese lenders at least $1.1 trillion and up to $1.5 trillion as of 2021.
COMMENT - Looks like a series of debt traps to me.
Opinion Pieces
85. Why Do Young Americans Support Hamas? Look at TikTok.
Rep. Mike Gallagher, The Free Press, November 2, 2023
86. U.S. needs containment, not engagement, to win the new Cold War with China
David Stilwell, Washington Times, November 8, 2023
The recent Biden administration idea of assertive transparency is a good first step toward Information containment. In the past, public diplomacy was reluctant to expose Chinese malfeasance, allowing Beijing to explain away the intentional violation of U.S. sovereign airspace as an errant weather balloon. We have the surveillance payload and should have exposed the disinformation for what it was, undermining China‘s credibility and legitimacy. Assertive transparency takes the initiative in the Information domain, leaving Beijing to react to us, exposing and containing Chinese disinformation.
A recent essay in Foreign Affairs asserts that the U.S. has been operating without a strategy to deal with China. During my time in the Obama administration, we gave the “engage, bind, balance” strategy our best effort, but it was doomed to fail since the engage and bind pillars both require China‘s cooperation, which was obviously not forthcoming.
So we’re left with balance: Use a mix of hard and soft power to contain and deter China.
We know how to do this; we work with allies and partners (Beijing only has clients) to identify, surround and eliminate China’s corrosive activities in our open systems. This is the same strategy that George Kennan proposed to isolate and contain Soviet malfeasance; we’ve just been loath to admit the return to great power competition. But the adversary gets a vote, and the time for soft diplomacy has expired.
It’s time to admit the failure of the many handcrafted, artisan strategies that haven’t survived in the real world and get busy with modernized deterrence and containment strategies. Churchill was right.
87. The global constraints to Chinese growth
Michael Pettis, Financial Times, November 7, 2023
88. The Rise and Fall of the U.S.-China Economic Partnership
Peter S. Goodman, New York Times, November 14, 2023
89. A new nuclear arms race is here. How to slow it down.
Washington Post, November 19, 2023
The world is entering a dangerous nuclear arms race unlike anything since the first atomic bomb, but it does not have to end in catastrophe. Treaties controlling nuclear arms — verifiable and binding, to limit or reduce stockpiles and prevent miscalculation or error — can lead to more stability. They will require a political willpower from leaders of the United States, Russia and China that does not exist today.
The new factor is China, which aspires to roughly match the nuclear arsenals of the United States and Russia over the next decade or so. If the first arms race led to two-way bargaining — often with the strategic maneuvering of chess — the new one will be three-way and excruciatingly difficult. The concept of cocked-pistols deterrence — maintaining a credible nuclear threat to keep others from attacking — will be even more unpredictable and scary than during the Cold War.
Why does it matter? Nuclear weapons can destroy societies; as we’ve noted before, nuclear fire is more powerful by a factor of 10 million to 100 million than chemical fire in conventional explosives. While a nuclear weapon has not been used in combat since World War II, there have been significant risks: At least Eight nuclear-armed nations have carried out 2,056 nuclear weapons tests underground and in the air, as well as dozens of false alarms and close calls. The danger of misunderstanding or miscalculation grows when nuclear weapons are kept on launch-ready alert, as they are by the United States and Russia today. Moreover, Russia has repeatedly threatened to use nuclear weapons during its war against Ukraine, showing how, even when nuclear weapons are not used, they can play an outsize role in coercion and conflict.
The new arms race is already underway. The congressional Commission on the Strategic Posture of the United States recently concluded, “China is pursuing a nuclear force build-up on a scale and pace unseen since the U.S.-Soviet nuclear arms race that ended in the late 1980s.” China, which a few years ago had about 200 nuclear warheads, now is believed to have more than 500 and to be aiming for more than 1,000 by 2030, compared to the 1,550 deployed warheads of the United States and Russia.
COMMENT – Some truly breathtaking naïveté from the Washington Post… we are in this new nuclear arms race BECAUSE Moscow and Beijing refuse to be constrained by “verifiable and binding” treaties.
The lessons that Moscow and Beijing have learned from the last 60 years of arms control negotiations is that the United States will manipulate them for advantage, not for some higher good that benefits all countries. We can condemn this cynical view, but it is there and we must account for it.
90. The World Won't Be the Same After the Israel-Hamas War
Stephen M. Walt, Foreign Policy, November 8, 2023
91. Small packages are causing big problems in the US
Rana Foroohar, Financial Times, November 13, 2023
92. President Biden’s Trade Gift to China
Wall Street Journal, November 14, 2023
93. Tensions in Middle East threaten security in Asia
Hiroyuki Akita, Nikkei Asia, October 29, 2023
94. Mike Froman on the China Trade Question
Bob Davis, The Wire China, November 12, 2023
95. Farewell to the U.S.-China Golden Age
Farah Stockman, New York Times, November 14, 2023
96. Placating Xi Won’t Change China’s Behavior
Thomas J. Duesterberg, Wall Street Journal, November 12, 2023
97. China’s Misunderstood Nuclear Expansion
M. Taylor Fravel, Henrik Stålhane Hiim, and Magnus Langset Trøan, Foreign Affairs, November 10, 2023
98. Australia should keep appropriate distance from China
Nikkei Asia, November 15, 2023
99. Biden Needs to Build a Post-Panda Partnership with Xi
Andreas Kluth, Bloomberg, November 15, 2023
100. China’s aircraft carrier fleet is playing for high stakes
George Allison, Telegraph, November 9, 2023
101. How America Should React to China’s Economic Slowdown
Daniel Rosen and Logan Wright, Foreign Affairs, November 13, 2023
102. Biden Has a Spending Choice: Guns or Butter
The Editorial Board, Wall Street Journal, October 31, 2023