Friends,
Lots of material this week.
The musical reference this week is “Find the Cost of Freedom” by Crosby, Stills, Nash, and Young. It was released as the B side of the single, “Ohio” which Neil Young wrote in reaction to the Kent State Shootings in May 1970. Stephen Stills wrote “Find the Cost of Freedom” and it is much more ambiguous about its meaning when compared with the protest song of “Ohio.”
The first five articles point to an important trend: The Chinese Communist Party appears to be confident that it can interfere in the internal affairs of the United States and pay little to no cost for doing so.
Whether it is placing an agent inside the highest levels of a U.S. State Government, enabling their supporters to beat up and intimidate American citizens inside the United States, or manipulating social media platforms ahead of the Presidential Election, the Party seems increasingly confident that it can conduct these operations and will suffer very little pushback.
I suspect Beijing thinks these activities are successful AND that they should expand them.
I feel particularly frustrated by the circ*mstances surrounding the revelation that an alleged PRC agent has been serving at the highest staff levels of the New York State Governor’s Office for years under both Kathy Hochul and Andrew Cuomo. Linda Sun, who had served as Hochul’s deputy chief of staff and Cuomo’s deputy diversity officer, and her husband, Chris Hu, were arrested last week. They are accused of using Sun position as a senior New York State Official to further the interests and agenda of the Chinese Communist Party.
Some have responded with surprise and disbelief that something like this could happen, but of course it has been well known for years that the PRC seeks to gain influence and shape U.S. policy THROUGH their relations at the subnational level.
State Governors and their staffs have been told about these problems over and over again… and the Federal Government under both the Trump and Biden Administrations have invested considerable time and effort to provide those officials with resources, information, and examples.
In February 2020, Secretary of State Pompeo gave an entire address to the National Governors Association (NGA) titled “U.S. States and the China Competition”… by the way, Governor Cuomo was the Vice Chair of NGA at the time and was sitting in the audience.
Over the past six years, there have been dozens of presentations on these subnational tactics by the Chinese Communist Party to U.S. Governors, their Chiefs of Staff, and the NGA (I’ve done at least five presentations on this topic myself and likely touched at least three quarters of U.S. States). For example, here is a public flyer from the National Counterintelligence and Security Center (NCSC) published in July 2022 titled, “Protecting Government and Business Leaders at the U.S. State and Local Level from People’s Republic of China (PRC) Influence Operations.” In just the past three years, the U.S. State Department has set up an Office of City and State Diplomacy to help U.S. State and Local officials understand dynamics like this. In March 2023, the Associated Press published an investigative report into the CCP’s influence operations in the State of Utah which leveraged access and relationships with Utah State Legislators to shape laws and policies in Beijing’s favor.
So, I reject the idea that somehow State leaders were unaware of these dangers, public officials should be held responsible for allowing this happen. Hiding your head in the sand shouldn’t be allowed any longer.
Thanks for reading!
Matt
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MUST READ
1. Former aide to 2 New York governors is charged with being an agent of the Chinese government
Anthony Izaguirre, Associated Press, September 4, 2024
A former aide to two New York governors was charged Tuesday with acting as an illegal agent of the Chinese government who used her state positions to subtly advance Beijing’s agenda in exchange for financial benefits worth millions of dollars.
Linda Sun, who held numerous posts in New York state government, including deputy chief of staff for Gov. Kathy Hochul and deputy diversity officer for former Gov. Andrew Cuomo, was arrested Tuesday morning along with her husband, Chris Hu, at their $4 million home on Long Island.
Federal prosecutors said Sun, at the request of Chinese officials, blocked representatives of the Taiwanese government from having access to the governor’s office and shaped New York governmental messaging to align with the priorities of the Chinese government, among other things.
In return, her husband got help for his business activities in China — a financial boost that prosecutors said allowed the couple to buy their multimillion-dollar property in Manhasset, New York, a condominium in Hawaii for $1.9 million, and luxury cars including a 2024 Ferrari, the indictment said.
Sun also received smaller gifts, the indictment said, including tickets to performances by a visiting Chinese orchestra and ballet groups and “Nanjing-style salted ducks” that were prepared by the personal chef of a Chinese government official and delivered to Sun’s parents’ home in New York.
If true, the allegations show that Chinese authorities were able to gain influence at the highest levels of state government in New York for nearly a decade.
“As alleged, while appearing to serve the people of New York as Deputy Chief of Staff within the New York State Executive Chamber, the defendant and her husband actually worked to further the interests of the Chinese government and the CCP,” United States Attorney Breon Peace said, using the acronym for the Chinese Communist Party. “The illicit scheme enriched the defendant’s family to the tune of millions of dollars.”
COMMENT – Shameful.
2. How a New York State Aide Moved in China’s Corridors of Power
James T. Areddy, Wall Street Journal, September 4, 2024
Linda Sun’s insider status is the focus of a U.S. indictment that alleges she acted on orders from Beijing.
At a banquet in Beijing to mark the 70th anniversary of the Chinese Communist Party’s rule almost five years ago, Linda Sun posed in the Great Hall of the People smiling with the national emblem as the backdrop.
In Chinese media accounts, Sun was identified as a representative of a group of overseas party advisers. There was no mention of her job in the U.S.—as a top aide to then-New York Gov. Andrew Cuomo.
The trip was one of several to China by Sun that illustrated how even as a gubernatorial aide she enjoyed insider access at top levels of the party—a status that could be very lucrative in China.
Now, Sun’s competing allegiances are the focus of a federal indictment that alleges she acted on orders from Beijing to influence New York state policy on China. In return, the indictment said, her husband, Christopher Hu, a lobster exporter and liquor-store owner, won lucrative business in China, fueling a lavish lifestyle for the couple that included multimillion-dollar homes in New York and Hawaii and luxury cars including a Ferrari.
Sun, 40 years old, was charged with eight criminal counts, including acting as an unregistered agent, visa fraud and conspiring to launder money. Hu was also charged with bank fraud and money-laundering conspiracies.
The two pleaded not guilty in Brooklyn federal court. Sun posted a $1.5 million bond, 41-year-old Hu $500,000.
“We are disappointed by the filing of these charges, which are inflammatory and appear to be the product of an overly aggressive prosecution,” a lawyer for Sun said in a statement. “We are also troubled by aspects of the government’s investigation. As we said yesterday in court, our client is eager to exercise her right to a speedy trial and to defend against these accusations in the proper forum—a court of law,” the lawyer said.
The Justice Department alleges that in her positions working for Gov. Kathy Hochul and her predecessor, Cuomo, Sun aligned with Chinese government representatives to influence official policy.
COMMENT – I wonder how many other states have a similar “China policy advisor” on staff, wielding similar influence and receiving similar direction and compensation from the Chinese Communist Party.
I had discussions with a State legislator from a Western state two years ago and that individual described a similar sounding individual who played a critical role advising the Speaker of the State Legislator, writing proposed legislation and weighing in on state bills that were seen as “anti-China.”
I hope the Justice Department is pursuing more investigations.
3. After NY governor says China’s consul general was removed, State Department says ‘there was no expulsion action’
Gloria Pazmino, Mark Morales, and Celina Tebor, CNN, September 4, 2024
Following New York Gov. Kathy Hochul’s comments Wednesday that China’s consul general in New York was removed from his position after her former aide was charged with acting as an agent for the Chinese government, the US State Department said later that “there was no expulsion action.”
The diplomat had reached the end of their regularly scheduled rotation and left at the end of August, State Department spokesperson Matthew Miller said Wednesday at a briefing.
However, a spokesperson for the Chinese Consulate General in New York said diplomat Huang Ping is “performing his duties as usual,” according to a statement to CNN Wednesday, seemingly conflicting with the comments made by Hochul and the State Department.
At a news conference earlier Wednesday, Hochul said she was on the phone with a high-ranking State Department official at the request of Antony Blinken about Huang Ping’s status. Hochul spoke with Deputy Secretary of State Kurt Campbell, Miller said.
Hochul said during the phone call she “conveyed my desire to have the consul general from the People’s Republic of China at the New York Mission expelled, and I’ve been informed that the consul general is no longer in the New York Mission.”
When asked to clarify if the consul general was expelled, Hochul responded, “I know that they’re no longer in their position. That’s all I know.”
Miller said there was no expulsion action: “The consul general was not expelled. Our understanding is that the consul general reached the end of a regularly scheduled rotation in August, and so rotated out of the position, but was not expelled.”
COMMENT – Why not expel the PRC Consul General in New York City?
It seems like the absolute least we could do to impose some cost on the flagrant violations of U.S. sovereignty and the interference in American domestic politics (we don’t need to wait for the jury to decide the guilt of Sun and Hu to take action against the PRC Government).
Will Beijing retaliate and will relations become more tense… certainly.
But at least the Administration could send a strong message to its own citizens (and other elected officials and government employees) that this kind of activity is unacceptable (which clearly was NOT understood in Albany). Additionally, Beijing would understand that interfering in the internal affairs of the United States carries high costs (they clearly don’t believe that now… see the next article).
By downplaying this crime in the U.S.-PRC bilateral relationship and not taking direct public action against Beijing and its representatives, we risk sending the message that this isn’t a big deal.
Sure Sun and Hu will likely suffer some severe consequences, but the CCP doesn’t care about that.
It seems to me that the whole surveillance balloon ordeal made the Biden Administration gun-shy about confronting Beijing… which of course was the CCP’s entire rationale for feigning outrage that the United States would shoot down a Chinese spy balloon floating over the United States. All the CCP had to do to get the Biden Administration to tone down its public criticism, was to threaten bilateral meetings between the two countries. By caving to these tactics, Washington encourages Beijing to keep doing what they are doing.
4. How China extended its repression into an American city
Shibani Mahtani, Meg Kelly, Cate Brown, Cate Cadell, Ellen Nakashima, and Chris Dehghanpoor, Washington Post, September 3, 2024
Chinese diplomats and pro-China diaspora groups based in the United States organized demonstrations in San Francisco that harassed and silenced protesters opposed to Beijing’s policies, including through violence, during Chinese leader Xi Jinping’s visit to the city in November, a six-month investigation by The Washington Post shows.
The events in San Francisco illustrate how the Chinese Communist Party (CCP) is willing to extend its intolerance of any dissent into the United States and target people exercising their First Amendment rights in an American city. It is part of a broader global pattern of China attempting to reach beyond its borders and suppress parts of its diaspora advocating against the CCP and ongoing rights abuses in Tibet, Xinjiang, Hong Kong and mainland China, the U.S. government and human rights groups say.
A number of diaspora group leaders have long-standing links to Beijing, according to Chinese state media, photos of high-level events and interviews, including with Chinese activists, former FBI officials and researchers. These include ties to the United Front Work Department, an arm of the Communist Party which uses non-state actors to further China’s political goals overseas, blurring the line between civilians and state officials.
This investigation into Xi’s visit to San Francisco during the Asia-Pacific Economic Cooperation (APEC) summit is based on an analysis of more than 2,000 photos and videos from Students for a Free Tibet, the Hong Kong Democracy Council, the China Democracy Party, observers, social media and live streams; as well as interviews with more than 35 witnesses, U.S. officials and analysts; text messages from American security guards working with Chinese diplomats, messages shared in Chinese diaspora WeChat groups, medical reports and police reports obtained by The Post.
The Post also used facial recognition software to search more than 21 hours of footage to identify the actions of pro-CCP diaspora group leaders and Chinese officials. Several people were identified through leads from a separate facial recognition search engine, which were then independently verified by cross-referencing against news clips, interviews and publicly available information. Some of the most violent figures were wearing face masks, sunglasses and hats that obscured their faces and could not be identified.
The Post investigation found:
While there was aggression from both sides, the most extreme violence was instigated by pro-CCP activists and carried out by coordinated groups of young men embedded among them, verified videos show. Anti-Xi protesters were attacked with extended flagpoles and chemical spray, punched, kicked and had fistfuls of sand thrown in their faces.
The Chinese Consulate in Los Angeles paid for supporters’ hotels and meals as an incentive to participate, according to messages shared in WeChat groups reviewed by The Post. At least 35 pro-CCP Chinese diaspora groups showed up to the APEC summit protests — including groups from New York, Pennsylvania and Washington state.
Videos show at least four Chinese diplomats from the consulates in Los Angeles and San Francisco among the crowd of pro-CCP protesters, sometimes directly interacting with aggressive actors over four days of protests from Nov. 14-17. Some Chinese diaspora group leaders with ties to the Chinese state participated in some of the violence, the videos show.
Chinese diplomats hired at least 60 private security guards to “protect” Chinese diaspora groups gathered to welcome Xi, according to seven people involved in the arrangement.
A screenshot of the multimedia presentation in WaPo’s online version of this article.
COMMENT – Kudos to the Washington Post on this piece of investigative journalism, but it does beg some questions.
Why hadn’t the State Department, FBI and Justice Department done this investigation and made it public… why wait for a newspaper to do it?
Will Secretary Blinken declare the PRC diplomats responsible for this persona non grata and expel them?
Why not order the closure of the PRC Consulates in Los Angeles or San Francisco?
Beijing will certainly retaliate if we did these things… but as U.S. Ambassador to China Nick Burns has already pointed out, the PRC Government doesn’t allow U.S. diplomats to do their jobs in China anyway (“In Rare Rebuke, U.S. Ambassador Accuses China of Undermining Diplomacy,” Jonathan Cheng, Wall Street Journal, June 25, 2024).
We have completely lost touch with the concept of reciprocity and our inaction is simply reinforcing the Party’s bad behavior.
Perhaps we shouldn’t be inviting the PRC leader to the United States until the PRC Government demonstrates that it won’t organize activities inside the United States to coerce and harm Americans. And maybe we should follow a no-nonsense approach to PRC diplomats in the United States.
5. China is pushing divisive political messages online using fake U.S. voters
Shannon Bond, National Public Radio, September 3, 2024
A long-running Chinese influence operation is posing as American voters on social media in an attempt to exacerbate social divisions ahead of the 2024 presidential election, according to a new report from the research company Graphika.
The push by the campaign known as “Spamouflage” includes accounts claiming to be American voters and U.S. soldiers. They posted about hot-button topics including reproductive rights, homelessness, U.S. support for Ukraine, and American policy toward Israel. They criticized President Joe Biden and Vice President Kamala Harris as well as former President Donald Trump and the Republican Party, and sometimes used artificial intelligence tools to create content.
The group of fake accounts Graphika identified is small — 15 accounts on X (formerly known as Twitter), one on TikTok, as well as a persona impersonating a U.S. news outlet across platforms. They claimed to be U.S. citizens or U.S.-focused activists “frustrated by American politics and the West,” the report said. With the exception of one TikTok video, they didn’t gain much traction with real users online.
Still, the activity underscores how China is “engaging in these more advanced deceptive behaviors and directly targeting these organic but hyper-sensitive social rifts” as part of a broader effort “to portray the U.S. as this declining global power with weak political leadership and a failing system of governance,” said Jack Stubbs, Graphika’s chief intelligence officer.
The U.S. intelligence community said in its most recent election security update in late July that China’s influence operations “are using social media to sow divisions in the United States and portray democracies as chaotic.”
However, intelligence officials say they do not believe Beijing plans to influence the outcome of the presidential election, which may explain why the Spamouflage cluster Graphika identified targeted both Democrats and Republicans.
“Generally, the accounts were very critical of Biden, but we also saw them criticizing Trump as well, and in more recent weeks, actually increasingly targeting Kamala Harris since Biden dropped off the ticket,” Stubbs said. “It looks to us like they were attempting to build their fake identities less around an individual party or individual party candidate and more around the idea of U.S. patriotism or national pride.”
Graphika is a research company that studies social networks and online communities for companies, tech platforms, human rights organizations and universities.
The findings build on another report earlier this year from the Institute for Strategic Dialogue, a nonprofit which studies extremism and disinformation, that uncovered four other Spamouflage accounts on X posing as supporters of Trump and the MAGA movement.
Graphika first publicly identified the Spamouflage operation in 2019. It’s grown into one of the most sprawling networks of fake accounts across the internet. It has largely focused on pushing pro-China narratives, including attacks on pro-democracy protesters in Hong Kong, praise for China's COVID-19 response, and AI-generated news videos promoting Chinese leadership. More recently, it has also begun posting about American politics and elections. Last year, Facebook owner Meta linked the operation to Chinese law enforcement.
The accounts Graphika identified bore many hallmarks of Spamouflage activity, including coordinated posting and sharing content that has previously been linked to the operation. Some accounts occasionally slipped up and posted in Chinese. One account on X, calling itself “Common fireman,” was previously branded as a pro-China media outlet, Graphika said.
Stubbs cautioned that the cluster of accounts Graphika found is “one small sliver of this wider operation.” He noted a larger portion of the Spamouflage network is also targeting the U.S. using different types of accounts. “And then there are huge parts of the network that are targeting issues in Hong Kong, for example, or the broader Indo-Pacific, that aren't directly concerned with the upcoming U.S. election.”
COMMENT – Not surprising at all… yet more evidence that the CCP does not feel deterred about interfering in the internal affairs of the United States.
6. China's Economy Has Peaked. Can Beijing Redefine its Goals?
Logan Wright, China Leadership Monitor, September 4, 2024
The phrase “peak China” is having a moment in discussions of the global economy, even though the phrase is usually accompanied by a question mark to indicate skepticism about the premise. The debate over whether China is “peaking” typically focuses on Beijing’s perceived power and international influence, and whether China’s nascent decline or continued ascendance will change Beijing’s behavior and policymaking. At the foundation of this discussion, however, are the fundamentals of China’s economic performance and the prospects for China’s future economic growth.
The decline of China’s economy over the past three years, linked to the collapse of the property sector and weakness in local government infrastructure investment, has raised new questions about whether a return to the previous growth rates is possible, or whether China is facing a structural economic slowdown. The question is not only significant in foreign conversations but within China as well. In Chinese social media discussions, the phrase “garbage time of history” has begun to circulate surrounding China’s current economic prospects, to the consternation of the domestic censors.
This article makes three arguments related to this debate. First, while nothing in economic development is certain, as a proportion of the global economy, China’s economy probably peaked in 2021. Second, nothing about Beijing’s behavior in response to China’s structural economic slowdown is inevitable. Beijing’s own economic objectives and expectations about China’s trajectory are the most important influences on its policymaking, and these goals can change. Third, if China’s economic slowdown continues, Beijing can ease tensions with the rest of the world by publicly acknowledging such trends.
China’s current expectations about its own economic growth—to achieve socialist modernization by 2035, a goal that is widely interpreted by Chinese officials to mean a doubling of the gross domestic product (GDP) from 2020 levels by that date—are unrealistic. Beijing’s tendency to engage in gradualism may prevent near-term downgrades of such economic goals. However, a China that is no longer trying to overtake the United States economically—or Chinese leaders who realize that surpassing the United States is highly improbable—can refocus its development objectives on slower but more sustainable consumption-driven growth, while reducing trade frictions with the rest of the world. China’s politics currently prevent these expectations from shifting, but the Party can always redefine the country’s economic goals. Similarly, Western policymakers who define the economic challenge from China as foundational—based on a flawed view of China’s economic prospects—ironically limit their options in responding to Beijing’s policy choices and risk overshooting with restrictions that end up blowing back on their own economies.
COMMENT – I think Logan makes an important distinction that is often lost in the discussions on this topic. While “economic growth” may have peaked, that doesn’t mean the PRC’s influence has peaked, and that the Party could adopt different policies which would change its trajectory.
7. How national security has transformed economic policy
Sam Fleming, Demetri Sevastopulo and Claire Jones, Financial Times, September 4, 2024
Nationalism is reshaping the global economy. In the first in a series, the FT explores how fears about spying and dual-use technologies have eclipsed free market orthodoxy.
The White House is currently finalising the details of President Joe Biden’s latest exercise in economic sparring with Beijing: a planned 25 per cent tariff on imports of the Chinese cranes which dominate the container-unloading business at American ports.
On the surface, the tariffs have a conventional rationale — Biden hopes that, over time, the measures could help bring crane-building back to the US and boost the country’s manufacturing base.
But the measures also reflect the way national security concerns have intruded into economic policy. US officials have fretted that China could employ the hulking cranes to conduct espionage at US ports, for example by using their sophisticated logistics software to monitor military-related shipments.
The crane tariffs are a window into a seismic change in America’s economic thinking that seems likely to be reinforced after the election in November — with dramatic implications for the future of the global economy.
The new economic nationalism
Over the past decade, there has been a much greater willingness to use tariffs as part of industrial and trade policy. Under Biden, there has also been a parallel emphasis on employing subsidies and other forms of state intervention to boost investment in key sectors.
This process is being turbocharged by the way that security issues are becoming entrenched in US government thinking about large segments of the economy, from manufacturing to new technologies.
The growing intersection of economic policy and national security has many roots. It accelerated after 9/11 and the war on terror; with the Covid pandemic, which snarled supply chains; and with Russia’s belligerence and invasion of Ukraine.
But the biggest factor has been China. US officials have watched with awe and trepidation at the advances of Chinese state capitalism in many of the industries that are likely to dominate the first half of this century. Retaining and restoring American manufacturing competitiveness has come to be seen as a defining geopolitical challenge.
At the same time, officials have become increasingly alarmed at the number of products and technologies that they fear could have a parallel use in the military sphere or be used as espionage tools.
The result is a mindset where economic priorities and national security concerns become fused in a way that is unrecognisable from the more free market approach that took hold at the end of the cold war.
“The trend is everything is a national security issue,” says Daniel Drezner, professor of international politics at Tufts University.
The cranes decision is a case in point. After identifying the potential risks from using Chinese port cranes, White House staffers sketched out a strategy to get investment from manufacturers from US allies, first Japan and later Finland. It is the “kind of thing that can be replicated across a number of different areas where there are core national security concerns,” says a US official.
In an interview with the Financial Times, US national security adviser Jake Sullivan said the US was not the only country that was increasingly linking economic and national security.
“The role of national security in trade and investment policy and strategy is rising everywhere,” Sullivan adds. “There are changes in the way that people are approaching the question of trade policy, international economic policy and that’s true in market economies the world over.”
For some observers, the administration’s new approach will spur greater economic competitiveness.
“The Biden team has created a playbook here that other countries are likely to follow,” says Ryan Mulholland, a former White House official who is senior fellow for international economic policy at the Center for American Progress think-tank. “The US has been pretty successful in coupling real investments in our manufacturing base with some more defensive strategies such as tariffs and export controls.”
But the shift in US policy has huge implications for the rest of the world — not just with rivals such as China but also with close allies, many of whom worry that Washington is pulling back from its role as a trustworthy anchor of the global economy.
As the presidential election looms, America’s allies are braced for a further intensification of these policies, regardless of the winner. The US appears set on a strategy driven by a combination of China-related security considerations and economic nationalism that will further shake up relations with partners in Europe and the Indo-Pacific.
“There is no set of norms, rules or institutions to guide these interventions, now that we have blown open the barn doors using national security justification,” says Emily Kilcrease, a former US official who is a trade and security expert at CNAS, a think-tank. “There is a real risk of calling everything national security and using it to justify doing whatever you want.”
Donald Trump’s departure from office in 2021 was greeted with widespread relief among US allies. Many believed that the Biden administration would take a less abrasive approach on everything from trade to China.
In Brussels, a European Commission plan called Biden’s arrival a “once in a generation” opportunity to revitalise the transatlantic partnership. Such were the expectations that some Japanese officials even fretted that Biden would be too soft towards China.
The reality has proven very different. Over the past three years, Biden has gone much further than Trump in linking economic security to national security in ways that have complicated policy for allies from Berlin and The Hague to Tokyo and Seoul.
Many of these measures have been designed to slow China’s military modernisation and tackle what Washington says is Beijing’s unfair industrial policy, especially subsidies for domestic industry. But even when allies agree with the goal of countering China, they see the spectre of protectionism lurking beneath the surface.
The Inflation Reduction Act, a sweeping 2022 law designed to cut carbon emissions and spur the US domestic clean energy industry, won plaudits for addressing the climate crisis, but also triggered fury within the EU because of its incentives to produce in the US.
Last May, Biden imposed 100 per cent tariffs on imports of Chinese electric vehicles. The move was an attempt to provide space for the domestic green economy to develop, but was also driven by security concerns about China gaining access to data from onboard computers.
The president’s ongoing opposition to Nippon Steel’s proposed $14.9bn acquisition of Pittsburgh-based US Steel — which vice-president Kamala Harris is expected to continue if she wins — was taken in the name of national security. The move angered Japan, which is the most important US ally in the Indo-Pacific as it works to counter China in the region.
In a speech in April 2023 outlining the rationale for a new Washington consensus, Sullivan listed four challenges facing the US that have dictated the shift in economic policy. These included the hollowing out of the US industrial base, the need to develop global public goods like clean energy where markets are inefficient, and tackling economic inequality partially sparked by trade. The fourth was “adapting to a new environment defined by geopolitical and security competition, with important economic impacts” — which was mainly focused on China.
The Biden administration insists that the new approach is not upending the international trading system and that the new use of industrial policy has been designed with the co-operation of key allies. “It’s not throwing the baby out with the bath water,” says the US official.
One of Biden’s highest-profile moves was the introduction of sweeping chip export controls in October 2022, which were expanded a year later. Officials say the moves have been carefully designed to focus only on the most advanced chips.
As part of the strategy, the US reached an agreement with Japan and the Netherlands after complex, long-running negotiations to make it harder for China to obtain machine tools to make advanced semiconductors.
In an effort to pressure Tokyo and The Hague to go even further, the Biden team several months ago warned about the possibility of using an extraterritorial measure known as the “Foreign Direct Product Rule”. The rule allows the US commerce department to prohibit foreign companies from exporting products that contain American technology.
The threat has since rolled back according to people familiar with the move.
But the administration’s controls on exports of key technologies to China have shaken up the global industry — including in key US allies such as Germany.
One company at the sharp end is Trumpf, a family-owned laser maker based near Stuttgart. It has established itself as a key supplier to the semiconductor industry by providing cutting-edge lasers to ASML, the hugely important Dutch chip toolmaker that was one of the companies sitting at the centre of the US deal with The Hague and Tokyo.
Under US pressure, the German government has restricted many of Trumpf’s exports to China on the basis that they are considered “dual use” with potential military applications.
Hagen Zimer, head of the group’s laser operations, says it is losing patience with the costly delays these caused, warning that rapidly rising German wages were already making the country uncompetitive.
“If I am further penalised with these restrictions and delays on exports to China, then we will just relocate to China,” he says, adding that it had recently relocated some 3D-laser cutting machine manufacturing to near Shanghai.
“That means the loss of German jobs,” Zimer adds. “This is what our government in Germany does not understand.”
US officials say the new policies are also helping America’s allies. Congress complemented its semiconductor export controls with 2022’s Chips and Science Act. This provided $39bn in subsidies to develop the US chip industry, but money has also been channelled to chipmakers in South Korea and Taiwan.
“We believe in investing and building here in the US and in trying to empower our allies to invest and build in their countries,” says Sullivan. “This is not just, ‘how do we make sure we’re not harming our friends’ by pursuing a particular strategy, but where are the areas where we can regenerate industry in the US specifically through partnerships with allies.”
This is not just, ‘how do we make sure we’re not harming our friends’ by pursuing a particular strategy, but where are the areas where we can regenerate industry in the US
The administration cites its approach to ports as an example. Earlier this year, the Biden administration said it would invest $20bn to help produce cranes domestically with “trusted partners” and that Paceco Corp, a US-based subsidiary of Japan’s Mitsui E & S, would help bring crane manufacturing back to America for the first time in three decades. More recently, the White House said that the Finnish firm Konecranes would also start building port cranes in the US.
But industry executives say these investments will take years to pay off, insisting there are other ways of tackling any security concerns.
The “overwhelming majority” of the existing cranes are Chinese made, says Mike Jacob, president of the Pacific Merchant Shipping Association, which represents owners and operators of marine terminals along the US west coast.
With few other alternatives than to buy from China, the move, he says, will leave them little choice but to pass on costs to their customers — ultimately US consumers — and invest less in modernising their infrastructure. “You’re creating more complexity in your system, more cost, more inefficiency,” Jacob says.
“Our concern with this new 25 per cent tariff is that there are no viable alternatives to meet not only Port Houston’s demand, but the demand of all North American gateways in the near term,” says Ryan Mariacher, chief port operations officer at Port Houston in Texas.
With just nine weeks to go before the US election, allies are now trying to discern how this approach will evolve.
If Trump wins a second term, US international economic policy is likely to become more transactional and unpredictable, with a more nakedly protectionist edge. Trump has vowed to impose 60 per cent tariffs on imports from China.
But his broader approach to China, and also to the intersection of economic and national security, is less clear.
There have been few signs yet from Harris that she would take a different tack from Biden and she will be drawing from a pool of advisers who largely share the same views on China.
“She’s got quite a similar mindset on the major issues and has been part of the conversations about the big strategic moves that we’ve made,” says the US official.
Mulholland believes a Harris presidency would continue in the same direction set by Biden, because the current president’s approach has been “effective”. He adds: “You are seeing lots of money flowing into US manufacturing for the first time in generations, frankly.”
Some observers warn, however, about the risk of mission creep as national security concerns come to determine more economic policy issues. “The problem becomes if everything is a national security issue, nothing is a national security priority,” says Drezner. “When something becomes a declared national security issue, the ratchet effect is it almost never goes away.”
Matthew Goodman, a former White House official now at the Council on Foreign Relations, says it is hard to argue that Trump was an “aberration” on US trade policy. “There is a deeper trend under way in the US towards protectionism, and it will continue no matter who wins the election in November.”
The problem becomes if everything is a national security issue, nothing is a national security priority
American economic policy is increasingly hard to interpret, he says. “Is the goal to promote manufacturing jobs in the US, or to promote national security, or to accelerate clean energy? It’s not clear.”
Europe was initially alarmed at the Biden administration’s more aggressive industrial policy and left scrambling for answers. It has attempted to sharpen its approach, including in ways that mirror aspects of the American approach, for example levelling tariffs on Chinese electric vehicles.
Brussels has also been urging EU member states to back proposals for tougher economic safeguards against rivals including China, in areas such as the scrutiny of outbound investments and export controls on highly sensitive technology.
But member states are wary of EU intrusion into sensitive areas of national security and are heavily divided over how hard a line they should pursue against China. And whereas Brussels was once able to use its role as a regulatory standard-setter to strongly influence the global debate, some analysts expect it to struggle amid a more nationalistic era of economic policymaking.
Valdis Dombrovskis, European Commission executive vice-president, told the FT that further action would inevitably follow as the bloc responds to more “conflictual political contexts”.
“As regards security and export controls, clearly, we expect those issues to feature very prominently in the next political cycle, both in the EU and US,” he says.
Trump’s potential return is being observed with particular trepidation in Brussels, where retaliatory trade measures are already being prepared in case the former president goes ahead with threats to impose across-the-board tariffs on imports to the US. The scenario is also causing anxiety in many countries in Asia.
But there is a growing recognition that both parties have embarked on a more “America First” approach to economic policymaking.
“They couch it in pleasant wording and give us a heads-up in advance, but the Biden policies have not been much better,” says one EU diplomat. “It’s like a small sailboat going into a storm. You can tie a few things down and prepare, but it’s going to be rough.”
COMMENT – I know no one is asking for this… but if I were to rewrite this article, I would have approached it differently.
These trends aren’t new at all… they only seem that way if one’s historical memory is narrowly focused on the last three decades.
To pretend that the intersection of economic and national security policy is somehow “new” or only arose and “accelerated after 9/11 and the war on terror; with the Covid pandemic, which snarled supply chains; and with Russia’s belligerence and invasion of Ukraine,” is to ignore centuries of human history.
The reality is that economic and national security policies have always been closely tied together. Treating them as separate only makes sense under very unique circ*mstances.
The end of the First Cold War, the collapse of the Soviet Union, and the perception that we were experiencing the “End of History” created those unique circ*mstances. But that was an aberration at best. It duped many into believing that economic and national security policymaking could be treated as separate activities forever. Only folks who believe that great power rivalry had been tossed into the trash-bin of history, and that the only national security threats they face would come from terrorist groups and a couple of rogue regimes, could convince themselves that these are separate and unrelated activities. (Only under this kind of fantastical and anti-strategic thinking, could leaders of a large European economy, highly dependent on energy-intensive manufacturing, convince themselves that purposefully becoming energy dependent on Russia was a good idea… we all know who I’m talking about.)
Rather than reinforcing the narrow historical context that many of its readers have, it would be helpful if the Financial Times were to provide its readers with this wider context. Many still treat geopolitics before 1991 as an antediluvian period with the End of the First Cold War marking the dawning of a new age, in which folks could pursue economic initiatives and business models completely divorced from national security concerns. Highlighting these fallacies would allow the FT’s readers to have a better understanding as to why both Republican and Democratic Administrations have been pursuing these policies (hint: it isn’t because they hate free markets).
It might also help their readers demand more strategic thinking from naïve European politicians and business leaders who appear unable to grasp that great power rivalry has returned with a vengeance (or who maintain the fantasy that they can sit on the sidelines). Maintaining a hard division between economic and national security policymaking (an affliction the Europeans suffer from due to structural impediments: EU vs NATO), refusing to cooperate with its ally, the United States, and pursuing policies that assume the heyday of 1990s Globalization is just around the corner, is just poor policymaking.
8. Biden-Harris Undercut Aukus, Their One Foreign-Policy Success
Michael McCaul, Wall Street Journal, August 30, 2024
Joe Biden’s most significant foreign-policy accomplishment is Aukus, the September 2021 deal between the U.S., U.K. and Australia. But the Biden-Harris administration is putting it in jeopardy.
Along with allowing the U.S. to sell conventionally armed nuclear-powered submarines to Australia, Aukus includes an agreement to increase cooperation on research and development in advanced technologies with military applications. Known as Pillar II, this provision provides a generational opportunity to ensure a more secure Indo-Pacific through cooperation on artificial intelligence, quantum computing and hypersonic capabilities and other innovations.
To clear the way for this critical new security deal, I ensured the inclusion of bipartisan language in the 2024 National Defense Authorization Act providing that “exports and transfers of . . . defense articles and services” between Aukus partners are to be exempt from “licensing or other approval requirements,” with limited exceptions.
After four months of delays, the Biden-Harris administration has finally issued these congressionally mandated exemptions for Australia and the U.K. Disappointingly, it also included a lengthy Excluded Technologies List, effectively creating a new, burdensome regulatory framework for approving defense transfers to Aukus partners. Congress envisioned streamlining technological collaboration. Instead, the White House is maintaining far too many of the barriers that were in place before Aukus.
The Biden-Harris administration is restricting Pillar II’s collective cooperation on such key technologies as advanced weapons and unmanned underwater vehicles. One key requirement for Pillar II innovation is sharing manufacturing know-how. But the Excluded Technologies List prevents information sharing between foreign companies that is vital for research and development. The administration seems content in its heavy-handedness—the newly released Excluded Technologies List is longer than the one the administration initially proposed in May, which itself was widely critiqued by the defense industry as overly burdensome.
COMMENT – Admittedly, Chairman McCaul has a partisan axe to grind, but the Biden Administration’s inability to remove the regulatory barriers to their own AUKUS Agreement is a real head-scratcher.
The Administration’s own strategy in built on greater cooperation and collective effort with allies, but Blinken and Austin appear unable (or unwilling) to force their own subordinate bureaucrats in the State Department and the Defense Department to follow through on an agreement that has massive bipartisan support.
President Biden announced this agreement three years ago (one of the first major achievements of his Administration) and got immediate bipartisan support for it in both chambers of Congress. It appears that mid-level employees at State and Defense have been throwing sand in the gears of AUKUS and trying to derail it since then.
This is a serious own-goal.
9. If China wants Taiwan, it should also reclaim land from Russia, says president
Helen Davidson, The Guardian, September 2, 2024
If the Chinese Communist party truly believes it has a territorial claim to Taiwan, then it should also be trying to take back land from Russia, Taiwan’s president, Lai Ching-te, has said.
Lai made the remark in an interview to local media on Sunday, noting Beijing’s very different approach to two similar historical moments of territorial loss.
Under the rule of Xi Jinping, the CCP claims Taiwan is a Chinese province run by illegal separatists, and he has vowed to annex Taiwan under what it calls “reunification”.
Beijing says Taiwan has been part of China since “ancient times” but was taken by Japan during the “century of humiliation”, the period between 1839 and 1949 during which China was repeatedly subject to defeat and subjugation. Complete restoration of China’s losses in that time is a driving narrative of the CCP, and today is largely focused on Taiwan.
However, Lai, who was elected president in January, noted that China also lost land to Russia during that period but was not making any effort to take it back. He said this showed Beijing’s plans to annex Taiwan – which it has not ruled out using force to achieve – were not driven by territorial integrity.
“If it is for the sake of territorial integrity, why doesn’t it take back the lands occupied by Russia that were signed over in the treaty of Aigun? Russia is now at its weakest, right?” he said, referencing an 1858 treaty under which, along with an 1860 convention, Russia annexed about 1m sq km of Chinese territory, including Haishengwei – today known as Vladivostok.
“You can ask Russia (for the land back) but you don’t. So it’s obvious they don’t want to invade Taiwan for territorial reasons,” Lai said.
He said Beijing’s true motivations were geopolitical, wanting to change the world order in its favour. Taiwan is a major island in the first island chain of the Pacific, and control would give the CCP highly strategic access and passage, as well as increased control of the Taiwan strait.
Wen-ti Sung, a China analyst at the Australian National University, said the treaty of Aigun was China’s most humiliating defeat of the 20th century, in terms of total land area lost, but noted that Chinese officials had repeatedly attended Russian economic forums in Vladivostok, “thereby conferring legitimacy to Russian rule over the territory”.
“If the driver of Chinese ambition towards Taiwan is to bring the ‘century of humiliation’ to a complete end then you’d expect China to prioritise taking back from Russia the land lost in the treaty of Aigun,” Sung said.
“But Beijing is not, and barely ever talks about it, let alone gets anywhere near talk that it will recover those territories ‘by force if necessary’.”
The Qing, China’s largest and last imperial dynasty, signed over Taiwan to Japan in 1895 in another “unequal” treaty, and in 1945 at the end of the second world war it was handed over to the Republic of China government, which fled China in 1949 after being defeated by the Communists in the Chinese civil war, establishing an authoritarian government in exile on Taiwan.
Taiwan transitioned to democracy in the late 1980s, and is one of Asia’s most vibrant. Its elected government says Taiwan is a sovereign nation and that its future is for its people, not the CCP, to decide.
China’s government is yet to respond to Lai’s remarks.
COMMENT – President Lai makes a great point, the PRC’s claim over vast Russian occupied territory in the Far East might be pretty strong (far stronger than the CCP’s claim over Taiwan).
Perhaps scholars from around the world could help Beijing conduct the research that would be necessary to strengthen the PRC’s claims over this territory seized with an “unequal treaty” in 1858 and 1860. Then those researchers could make their evidence public and help educate the Chinese and Russian people on how the Tsars took advantage of a weakened Qing Dynasty to seize territory that Russia still holds. During the mid-19th Century, the Qing Dynasty was consumed by a bitter and bloody civil war (the so-called “Taiping Rebellion”) in which many ethnic Chinese fought to overthrow a foreign dynasty that was ruling their lands. The Qing weren’t Chinese, they were Manchus, they had conquered China and other lands during the early 1600s, overthrowing the Ming Dynasty, the last ethnic Chinese rulers who had risen following the collapse of even earlier conquerors of China, the Mongol-led Yuan Dynasty.
Conversely, this independent research might also reveal that the Qing Dynasty was itself a multi-national empire and perhaps we shouldn’t legitimize the borders of today’s PRC with what Qing Emperors controlled a few hundred years ago (side-eye at Tibet, Xinjiang, and Taiwan). Just because Roman Emperors controlled North Africa and the Levant at one point in time, doesn’t mean the Italian Republic “deserves” to control the same territory, just because the Russian Empire of the 19th Century controlled Finland, it doesn’t mean that the Russian Federation today “deserves” Finland back, just because Algeria had once been a French Department during the French Third Republic, it doesn’t mean the French Fifth Republic deserves it back, or just because the British Empire once controlled India and countless other colonies, it doesn’t mean that the United Kingdom of today “deserves” those territories back.
I suspect that independent research might just reveal that the “idea of China” (one whose borders are eternal and everlasting) that CCP leaders propagandize today to justify their territorial aggression against their neighbors is really just the same kind of longing for imperial greatness and colonial expansion that most of the rest of the world has abandoned.
If PRC leaders were responsible and abandoned their neo-imperialistic desires, the world would be much more peaceful and stable. Perhaps the PRC Government could begin to truly address their massive domestic economic problems if they could only let go of an outdated concept of “rejuvenation” through the conquest of their neighbors territories.
Authoritarianism
10. China detains artist for scathing Mao works created more than a decade ago, family says
Nectar Gan, CNN, September 3, 2024
11. Hong Kong keeps Russia’s dark fleet afloat
Selwyn Parker, The Interpreter, September 3, 2024
Operating under flags of convenience, hundreds of vessels are evading the sanctions meant to stifle movement.
As a fleet of between 600 and 1,000 mostly ageing vessels continues to sail under the umbrella of suspected flags of convenience to evade international sanctions against Russia, the role of Hong Kong in undermining the measures has become clear according to a much-cited report by the Washington DC-based Committee for Freedom in Hong Kong Foundation. The findings are largely based on data from the Center for Advanced Defense Studies (C4ADS), a non-profit devoted to identifying “illicit networks that threaten global peace and security”.
Chaired by James Cunningham, the former US consul general for Hong Kong and ambassador to the United Nations, the Committee for Freedom in Hong Kong Foundation has considerable weight and continues to highlight civil rights abuses in the territory.
The report claims that Hong Kong’s exports of semiconductors to Russia almost doubled after the invasion of Ukraine in February 2022. Between August and December 2023, 40 per cent of the $2 billion worth of shipments to Moscow contained goods on the US and EU’s lists of advanced components – including semiconductors, computer processors, digital storage units, and integrated circuits – many of them sought by Russia for its war effort. The report also identified numerous locally registered companies that are working with Russia, Iran and North Korea to facilitate their shipping needs, including the transport of sanctioned oil and gas.
“Simply put, Hong Kong has gone rogue,” concludes the 62-page report, Beneath the Harbor: Hong Kong’s Leading Role in Sanctions Evasion. Released in July and written by Samuel Bickett, a lawyer and former political prisoner in Hong Kong, the report has aroused comment in a wide variety of publications, including Nikkei Asia, and from bodies such as the Hudson Institute, which supports American leadership for peace.
“Hong Kong was once the freest economy in the world. But it has now experiencing a rapid erosion in the rule of law, which affects how businesses operate on the island,” the Hudson Institute stated. “In recent years, the city has emerged as a top sanctions violator, a money laundering hub, and a transshipment centre that plays a key role in providing Russia dual-use technology for its war effort.”
COMMENT – Hong Kong has not gone rogue; it is simply a full and complete part of the People’s Republic of China, and it should no longer be treated as a separate entity.
12. Bad information is a grave threat to China’s economy
The Economist, September 5, 2024
Both officials and the private sector struggle to make informed decisions.
China’S giant economy faces an equally giant crisis of confidence—and a growing deficit of accurate information is only making things worse. Even as the country wrestles with a property crash, the services sector slowed by one measure in August. Consumers are fed up. Multinational firms are taking money out of China at a record pace and foreign China-watchers are trimming their forecasts for economic growth.
COMMENT – Given these conditions, the only responsible reaction by foreign investors and businesses is to leave the Chinese economy.
When they know they are being deceived, their higher responsibility is to their clients and shareholders who should not be exposed to the enormous risks that dependence on the Chinese economy presents.
13. The Chinese authorities are concealing the state of the economy
The Economist, September 5, 2024
Zhao jian’s article was online for just a few hours on August 16th before censors erased it. To Western readers the content would have appeared anodyne, but to a Communist Party official it was laced with dangerous ideas. Mr Zhao, a respected economist, argued that it was hard to grasp why China’s government was not making more effort to stimulate the economy. The most serious economic downturn in a generation had caused uncertainty about the future to “coil around the hearts of the people”, he wrote. “The logic and constraints of decision-makers cannot be understood by the market.”
COMMENT - … and the IMF is helping the CCP conceal the state of their economy.
14. For many investors and intellectuals leaving China, it’s Japan — not the US — that’s the bigger draw
Yuri Kageyama and Dake Kang, Associated Press, September 5, 2024
One by one, the students, lawyers and others filed into a classroom in a central Tokyo university for a lecture by a Chinese journalist on Taiwan and democracy — taboo topics that can’t be discussed publicly back home in China.
“Taiwan’s modern-day democracy took struggle and bloodshed, there’s no question about that,” said Jia Jia, a columnist and guest lecturer at the University of Tokyo who was briefly detained in China eight years ago on suspicion of penning a call for China’s top leader to resign.
He is one of tens of thousands of intellectuals, investors and other Chinese who have relocated to Japan in recent years, part of a larger exodus of people from China.
Their backgrounds vary widely, and they’re leaving for all sorts of reasons. Some are very poor, others are very rich. Some leave for economic reasons, as opportunities dry up with the end of China’s boom. Some flee for personal reasons, as even limited freedoms are eroded.
COMMENT – Great news! I’m glad that Japan is able to offer sanctuary for Chinese citizens, it gives lie to Xi’s propaganda that Chinese people don’t want and can’t handle the kinds of liberties and freedoms that are offered in prosperous countries with the rule of law.
15. Has Xi Jinping Reached His Peak? Power Concentration versus Governance Capability
Guoguang Wu, China Leadership Monitor, September 1, 2024
16. AUDIO –Cognitive hazing: The Disinformation War on Taiwan?
The Little Red Podcast, August 31, 2024
Environmental Harms
17. VW Turns on Germany as China Targets Europe’s EV Blunders
Elisabeth Behrmann, John Ainger, and Monica Raymunt, Bloomberg, September 3, 2024
18. John Podesta, Biden’s Top Climate Negotiator, to Visit China
Lisa Friedman, New York Times, September 3, 2024
19. Record Rainfall Spoils Crops in China, Rattling Its Leaders
Tiffany May and Claire Fu, New York Times, September 2, 2024
Foreign Interference and Coercion
20. China warns Malaysia to immediately cease activities in oil-rich waters off Sarawak, says report
MalaysiaNow, September 3, 2024
21. Malaysia to investigate leak of Chinese diplomatic note over South China Sea row
Associated Press, September 4, 2024
Malaysia’s Foreign Ministry called Wednesday for a police investigation into a leaked diplomatic note from China over the South China Sea dispute.
The ministry said details of a Feb. 18 diplomatic note from China’s Foreign Ministry to the Malaysian Embassy in Beijing was published by a Filipino media outlet on Aug. 29. It didn’t give details but alluded to the South China Sea row in its statement.
The Philippine Daily Inquirer had published a diplomatic note in which Beijing reportedly demanded that Malaysia immediately halt all activities in an oil-rich maritime area off Sarawak state on Borneo island.
The report said China had accused Malaysia of encroaching on areas covered by its 10-dash line, Beijing’s controversial map showing its claims to sovereignty in the South China Sea. The diplomatic note also expressed Beijing’s displeasure over Malaysia’s oil and gas exploration activities near the Luconia Shoals, which is near to Sarawak, it said.
COMMENT – Not a good look Malaysia. Another Malaysian Prime Minister in the pocket of the Chinese Communist Party which makes them more concerned about an embarrassing leak than Beijing’s violations of Malaysian sovereignty.
No one in Kuala Lumpur should be surprised when Malaysia’s Prime Minister Anwar Ibrahim gets portrayed this way:
Particularly when headlines like this were being published two months ago:
Link here
Perhaps it isn’t surprising to see the next article:
22. Malaysia says it won't bow to China's demands to halt oil exploration in the South China Sea
Washington Post, September 5, 2024
Prime Minister Anwar Ibrahim said Thursday that Malaysia will not bow to demands by China to stop its oil and gas exploration in the South China Sea as the activities are within the country’s waters.
Anwar said Malaysia would continue to explain its stance following China’s accusations in a protest note in February to the Malaysian Embassy in Beijing that Kuala Lumpur had infringed on its territory. Malaysia’s Foreign Ministry said Wednesday it was investigating the leak of the diplomatic protest note that was published by a Filipino media outlet on Aug. 29.
“We have never intended in any way to be intentionally provocative, unnecessarily hostile. China is a great friend, but of course we have to operate in our waters and secure economic advantage, including drilling for oil in our territory,” Anwar said in a televised news conference from Russia, where he is on an official visit.
COMMENT – Note to Anwar… “great friends” don’t steal your territory, violate your sovereignty, corrupt your domestic politics, and make you look like a fool.
But of course, this kind of manipulation and interference in Malaysian domestic politics by the PRC is par for the course:
Malaysian PM to sign 'significant' defence deal with China amid US strains
The Guardian, November 1, 2016
China Offered to Bail Out Troubled Malaysian Fund in Return for Deals
Tom Wright and Bradley Hope, Wall Street Journal, January 7, 2029
A Malaysian corruption scandal shows the dark side of China’s Belt and Road Initiative
Washington Post, January 11, 2019
Malaysians slam Chinese group for inviting ex-PM Najib as keynote speaker
Radio Free Asia, December 30, 2021
Prime Minister Anwar’s predecessor Najib Razak is still serving a prison sentence for the corruption he was guilty of with his side deals with the PRC.
23. ASML CEO says US desire to restrict exports to China 'economically motivated'
Toby Sterling, Reuters, September 4, 2024
The chief executive of Dutch computer chip equipment supplier ASML (ASML.AS), opens new tab said on Wednesday a U.S.-led campaign to restrict the company's exports to customers in China in the name of national security has become more "economically motivated" over time.
Christophe Fouquet, speaking at a Citi conference in New York, said he expects push-back against U.S.-led restrictions to grow. At the same time, he argued Chinese advances in chip making are slowing due to restrictions that are already in place.
"I think to make the case that this is about national security is getting harder and harder," Fouquet said.
"Most probably there will be more pressure for restrictions, but I also think there will be more push-back and I think we have to hope we reach a certain equilibrium because as a business what we all want is a bit of clarity, a bit of stability."
The Netherlands' prime minister said on Friday he would carefully weigh the economic interests of ASML, the country's largest company and Europe's largest technology firm, following successive rounds of U.S. and Dutch restrictions in 2022 and 2023.
COMMENT – I think this meets the psychological definition of “projection,” Christophe Fouquet is clearly the one who is “economically motivated.”
He seeks to shirk the enormous responsibilities that come from the technology his company produces and relies on a weak and divided Europe to maximize ASML’s profits at the expense of everyone else’s security.
24. New Zealand’s intelligence service warns of growing foreign interference risks
David Capie, The Interpreter, September 4, 2024
But it is the report’s expansive sections on foreign interference and espionage that will doubtless draw the most attention. Last year’s assessment named China, Russia, and Iran as state actors involved in foreign interference in New Zealand. This year’s report spends more time explaining out the nature and scope of the challenge, adding detail and multiple case studies in an effort to build public understanding.
China is the key focus. Beijing is described as a “complex intelligence challenge”, one of a “small number of illiberal states” that carry out “malicious activit[ies]” in the country. The report says that the People’s Republic of China (PRC) carries out interference activities against New Zealand’s diverse Chinese communities, using front groups to stifle dissent and amplify perspectives that are sympathetic to Beijing’s interests. One of the case studies says an un-named New Zealand Chinese-language news outlet is “almost certainly responsive to PRC direction and repeats approved talking points in New Zealand.”
On espionage, the report devotes a section to the “insider threat”, highlighting the well-documented use of networking sites such as LinkedIn by intelligence agencies to try and recruit sources in business or government. It talks about a case where a foreign state manufactured a business opportunity to build influence with a “politically connected New Zealander” as part of a covert influence-building campaign. In an extended interview timed to coincide with the report’s launch, Director-General of Security Andrew Hampton told Radio New Zealand the person was not a Member of Parliament but was connected to one of the country’s political parties. Hampton also warned about the use of front companies seeking to establish satellite tracking stations and high-powered telescopes in New Zealand while concealing their links to foreign governments.
Little of this will be surprising to anyone who has been following these issues closely in Australia, Canada, Europe, or Southeast Asia. But New Zealand’s ministers or government agencies have rarely talked about foreign interference or espionage in any detail before. The 2023 National Security Strategy included “foreign interference and espionage” as one of 12 “core” national security issues but discussed it at a high level of abstraction. Collectively, the NZSIS cases collectively paint a vivid picture of a complex set of external and internal threats to business, government, and community groups.
COMMENT – Good morning sleepyhead! Great to see New Zealanders finally rousing from their slumbers.
Years of denying the obvious efforts by Beijing to undermine New Zealand’s democracy have not been helpful.
25. Kiribati ex-leader calls on Pacific to confront assertive China
Sophie Mak and Rurika Imahashi, Nikkei Asia, September 5, 2024
Pacific island nations must have "courage and dignity" and stand up to China's attempts to influence affairs in the region, former Kiribati President Anote Tong told Nikkei Asia in an interview on Tuesday.
Tong, who served three terms as leader of the island country from 2003 to 2016, was referring to the Pacific Islands Forum's removal of a clause reaffirming Taiwan's status as a PIF development partner from the joint communique following the annual meeting of the group's leaders in late August.
Human Rights and Religious Persecution
26. China Buddhist Association Works with Police to Deprogram Falun Gong Practitioners
Dong Deming, Bitter Winter, September 2, 2024
27. Hundreds of Taiwanese 'disappear' in China over past 10 years
Huang Chun-mei and Jing Wei, RFA, August 30, 2024
28. Gao Zhen, Artist Who Critiqued the Cultural Revolution, Is Detained in China
Yan Zhuang and Zixu Wang, New York Times, September 2, 2024
29. China cuts off internet, phones of outspoken journalist Gao Yu
Qian Lang, RFA, August 27, 2024
Industrial Policies and Economic Espionage
30. Chinese state shipbuilders plan merger with eye on 'strong military'
Kenji Kawase, Nikkei Asia, September 3, 2024
31. China home presales sink to 18-year low amid unfinished properties
Kentaro Shiozaki, Nikkei Asia, September 4, 2024
32. China’s Double Threat to Europe
Liana Fix and Heidi Crebo-Rediker, Foreign Affairs, September 5, 2024
How Beijing’s Support for Moscow and Quest for EV Dominance Undermine European Security.
As Russian President Vladimir Putin continues his brutal war in Ukraine, China’s support for Russia’s war machine has alarmed the United States and NATO. Not only is Beijing helping Moscow evade Western sanctions. It is also, through its supply of dual-use goods such as computer chips and machine parts, providing a huge portion of the inputs Putin needs to sustain his forces. At a time when Ukraine is struggling to build its own military resources, this trade poses a growing threat to the European countries that sit on Ukraine’s doorstep.
In fact, propping up Russia’s war in Ukraine is only one of several ways in which China has become a major challenge to Europe. In 2024, Beijing is far more than just a competitor or rival, as the EU has described its relationship with China since 2019. By flooding European countries with cheap solar panels and, most important, inexpensive electric vehicles (EVs), Beijing also threatens the existence of core domestic industries on which the continent depends. Combined with the economic and military lifeline it is providing Russia, China’s industrial overcapacity—that is, its practice of subsidizing the production of more goods than needed and then dumping them in foreign markets—poses a significant threat to Europe’s security and its economy, especially in the automotive sector.
Yet despite these concerns, Europe’s response has been muted. On the Russia question, the European Union has placed only ten companies from mainland China on its sanctions list, in addition to companies based in Hong Kong. This step is so marginal that, as of the end of August, Beijing had not bothered to retaliate. During their spring trips to Beijing, German Chancellor Olaf Scholz and French President Emmanuel Macron asked Chinese leader Xi Jinping to prohibit dual-use exports. Yet shortly thereafter, Putin had his own meeting with Xi, in which he concluded numerous Chinese-Russian business and defense agreements, including expanded military drills. As for industrial policy, Europe’s current tariffs on Chinese imports are not nearly sufficient to stem the tidal wave of cheap Chinese EVs now flooding the continent, to give sufficient breathing room for Europe’s automotive industry to catch up and survive.
33. Europe reliant on Chinese drugs after local products priced out
Jens Kastner, Nikkei Asia, September 5, 2024
Paris-listed pharmaceutical manufacturer Euroapi is phasing out production of 13 medical ingredients, leaving Europe dependent on cheaper Chinese imports for its most commonly used drugs such as paracetamol.
As part of the pullback, Euroapi, formerly a unit of industry major Sanofi, will sell its manufacturing plants in the Italian city of Brindisi and the U.K. town of Haverhill by the end of 2027. A spokesperson told Nikkei Asia the moves were necessary because of "decreasing or stagnant markets and increasing competition from Asian players."
34. US-China AI competition could reshape innovation as we know it
Mercator Institute for China Studies, August 29, 2024
In July, two tech leaders, Sam Altman (OpenAI) and Marc Zuckerberg (Meta), outlined opposing visions for how the United States can secure its artificial intelligence (AI) leadership amid strategic competition with China. Their op-ed exchange showed how closely our global technology future is tied to an increasingly zero-sum China debate in the United States. In the background is a new draft bill, the ENFORCE Act, that would take AI export controls to a new level, controlling not just hardware exports, but also access to the models themselves.
Policymakers in Washington increasingly worry that foreign adversaries like China’s government could exploit powerful machine learning models for dangerous purposes, such as developing weapons of mass destruction or launching cyber-attacks. Congress is now working through the details of the ENFORCE Act, which would allow the Commerce Department to impose export controls on AI models with capabilities that could threaten US national security. So far, US export controls targeting China have focused on the chips needed to train AI. Open-source models would likely be exempted, yet the Biden administration is reportedly thinking through the risks of keeping certain frontier models fully open.
Likely in preparation for more AI restrictions, Altman’s OpenAI in June blocked Chinese developers entirely from using its ChatGPT, following earlier actions against malicious uses of its services by state-affiliated actors. In his op-ed, Altman said that some security restrictions are warranted to ensure the US stays ahead. He envisages a future where a US-led club of democracies keeps control of the most advanced AI capabilities.
OpenAI’s proprietary, closed-source model differs from Meta’s embrace of open-source AI. Unsurprisingly, Zuckerberg’s commentary advocated for “decentralized and open innovation.” He believes China-based actors will exploit US-origin models anyway and sees openness as the main advantage over China. Also: Most homegrown Chinese AI models were built on Meta’s own Llama architecture.
MERICS analysis: “It’s not inconceivable that the geopolitical situation will force some paradigm shift in the governance and use of open-source software for innovation,” says Rebecca Arcesati, Lead Analyst at MERICS. “Clearly, different camps and powerful interest groups within Big Tech will try to use the China card to lobby for their preferred policy outcomes.”
Xue Gong, RSIS, September 5, 2024
36. Chinese State Investors Do Not Seem to Profit from Higher U.S. Interest Rates
Brad W. Setser, Council on Foreign Relations, September 2, 2024
37. China’s Bulging Commodity Stockpiles Show Depth of Economic Woes
Bloomberg, September 2, 2024
38. Cold War in Asia? For Business It’s an Everyone-Makes-The-Rules Rumble
Evan A. Feigenbaum, Forbes, September 1, 2024
39. Europe to Ramp Up Lithium Mining to Cut China’s Market Grip
Christian Moess Laursen, Wall Street Journal, September 5, 2024
A fleet of new lithium mines are set to open across Europe in the next few years as the European Union pushes to increase supply of the metal deemed vital for the energy transition in a bid to combat China’s grip on the market.
Lithium is crucial to limiting carbon-emissions due to its use in electric vehicle batteries. Demand from BEVs is set to triple in Europe in the next ten years, according to commodity-research firm Fastmarkets.
This poses a problem for the EU as 97% of lithium used in the bloc comes from a single source: China.
“We are totally dependent on China,” President of the European Commission Ursula von der Leyen said at a clean-tech conference earlier this year.
40. China’s Persistent Global Influence Despite Economic Growth Challenges
Zongyuan Zoe Liu, China Leadership Monitor, September 1, 2024
41. Transparency and Integrity Risks in China’s Research Ecosystem: A Primer and Call to Action
Jeffrey Stoff, Leslie McIntosh, and An Chi Lee, Center for Research Security & Integrity, 2024
Governments and research institutions in liberal democracies espouse and stress the importance of values such as academic freedom, transparency, integrity, and reciprocity concerning the conduct of research and international research collaboration. However, party-state organs and research institutions of the People’s Republic of China routinely violate these norms that are critical to beneficial research collaboration.
No efforts have been made by liberal democracies to systematically identify, catalog, and characterize (or assess) China’s practices in a manner that can be shared across the international research community and used to support risk assessments and mitigation. This study seeks to address these deficiencies within the research community by:
Initiating a foundational effort to catalog problematic transparency and integrity practices of PRC research entities and providing case studies and methodologies that can be incorporated into due diligence and risk assessment processes
Demonstrating the value of producing a study through joint efforts of US and Canadian academic, non-profit, and private sector entities that share resources toward a common goal
Offering recommendations for governments and civil society institutions to expand on related scholarship, systematize information-sharing mechanisms, and promote policies that enforce basic values of transparency and integrity among allied democracies
42. Chinese steel exports to reach 8-year high
Leslie Hook, Harry Dempsey, Joe Leahy, and Cheng Leng, Financial Times, September 1, 2024
43. China Needs More Factory Robots. Can It Build Its Own?
Jacky Wong, Wall Street Journal, September 3, 2024
44. China to Launch Trade Probes into Some Canadian Agriculture, Chemical Products
Wall Street Journal, September 3, 2024
45. 'Dark' tanker crash exposes dangers of China's thirst for cheap oil
Rebecca Tan, Pei-Lin Wu, and Júlia Ledur, Washington Post, September 2, 2024
46. Why It’s So Hard for China to Fix Its Ailing Economy
Daisuke Wakabayashi and Claire Fu, New York Times, September 3, 2024
47. Investment banks cut China GDP forecasts as confidence wanes
Thomas Hale and Joe Leahy, Financial Times, September 4, 2024
48. New unproductive forces: the Chinese youth owning their unemployment
Laurie Chen, Reuters, September 2, 2024
49. Trade War II will be easy to lose for China
Hudson Lockett, Reuters, September 4, 2024
50. Chinese fund manager asks staff to return excess pay from past five years, sources say
Julie Zhu and Serena Li, Reuters, September 4, 2024
A top 10 Chinese fund manager has asked senior executives to return pay received over the past five years that exceeds a new cap, to tally with a government initiative promoting economic equality, said two people with direct knowledge of the matter.
China Merchants Fund Management (China Merchants FM) wants the executives to repay income beyond a 3 million yuan ($421,330) limit imposed this year for each year from 2019 to 2023, the people said.
The firm, wholly owned by China Merchants Group (CMG) - one of the country's largest state-owned conglomerates - is run by six executives and there are another three who run subsidiaries.
Neither China Merchants FM nor CMG responded to Reuters requests for comment.
Capping salaries and recalling pay have become avenues through which state-owned companies can adhere to the government's "common prosperity" campaign which since 2021 has sought to address social and income inequality as economic growth slows.
COMMENT – What a great way to motivate Chinese citizens… this is what it looks like to live in a society without the rule of law.
Cyber & Information Technology
51. Canada Reviewing Request to Sanction Hikvision, Other Chinese Surveillance Companies
Richard Vanderford, Wall Street Journal, September 5, 2024
The country said it is looking into an application to impose sanctions on the companies and potentially seize their assets over alleged human-rights violations.
52. China's chip capabilities just 3 years behind TSMC, teardown shows
Kotaro Hosokawa, Nikkei Asia, August 31, 2024
53. China Warns Japan of Retaliation for Possible New Chip Curbs
Jenny Leonard, Mackenzie Hawkins, and Takashi Mochizuki, Bloomberg, September 2, 2024
54. China buys more chip tools than South Korea, Taiwan, U.S. combined
Cheng Ting-Fang and Lauly Li, Nikkei Asia, September 2, 2024
Record $25bn spent in first half in Beijing push to develop local supply chain.
China spent more on chipmaking equipment in the first half of the year than South Korea, Taiwan and the U.S. combined amid a frantic push to localize chip supplies and mitigate the risk of further Western export restrictions, according to global chip industry association SEMI.
China, the world's biggest semiconductor equipment market, spent a record $25 billion on chip tools in the first six months of 2024, SEMI data showed. China maintained robust spending into July, and could be on track for another full-year record.
55. Chips on the Line
The Merge, August 2024
56. Huawei’s bug-ridden software hampers China’s efforts to replace Nvidia in AI
Eleanor Olcott, Ryan McMorrow, and Tina Hu, Financial Times, September 3, 2024
57. Europe must rely less on Chinese technology, Danish PM says
Raphael Minder, Financial Times, September 2, 2024
Military and Security Threats
58. The Arctic Great Game Won’t Be Won in U.S. Shipyards
Keith Johnson, Foreign Policy, September 3, 2024
59. Why China Keeps Ramming Philippine Ships and Where That’s Headed
Andreo Calonzo and Cliff Harvey Venzon, Bloomberg, September 3, 2024
60. RTX fined $200M for exporting defense tech to China, Russia, Iran
Audrey Decker, Defense One, August 30, 2024
Among other violations, employees traveled abroad with unauthorized technical data about U.S. aircraft and other weapons.
Raytheon will pay a $200 million fine for the unauthorized export of defense technology to China, Russia, Iran, and elsewhere, the State Department announced today.
The settlement will cover 750 violations of the Arms Export Control Act and the International Traffic in Arms Regulations, or ITAR, according to State’s press release. It allows the company to put half of the fine toward “remedial compliance measures to strengthen RTX’s compliance program.”
The settlement “addresses RTX’s unauthorized exports of defense articles resulting from the failure to establish proper jurisdiction and classification; unauthorized exports of defense articles, including classified defense articles; unauthorized exports of defense articles by employees via hand-carry to proscribed destinations,” according to the statement.
Those destinations include China, Iran, Lebanon, and Russia, according to the department’s charging letter, which includes additional details about the settlement. The letter describes violations from August 2017 to September 2023.
Company employees traveled to these countries bearing classified and controlled technical data from a slew of Pentagon aircraft and weapons programs, including the stealthy F-22 fighter jet and the E-3 radar plane.
Last month, RTX told investors during an earnings call that it set aside more than $1 billion to settle a number of government investigations, including a State Department inquest into export-control violations.
In a statement today, RTX said: “Today’s action is in line with the company’s expectations, which we disclosed during the company’s second quarter earnings report on July 25, 2024.”
Company officials declined to answer further questions about the settlement.
COMMENT – Looks like a slap on the wrist… RTX (Raytheon) set aside $1 billion to settle this case and only had to pay a fifth of that… actually a tenth since half the fine they are paying goes back to themselves to pay for “remedial compliance measures to strengthen RTX’s compliance program.” Essentially RTX gets a contract from the USG to train itself on compliance. (big bonus time for the General Counsel who negotiated that one).
And it appears that no one is going to jail… nor are Executives being fired.
The company’s stock is also up 30% over the past 6 months… so apparently the market doesn’t punish this kind of behavior either.
Pretty disturbing message to send to industry: if you knowingly aid Russia, China, and Iran for years, the U.S. Government will only impose a fine that is lower than expected and everyone keeps their jobs.
This happened under the watch of RTX’s former CEO Greg Hayes, who a year ago stressed how important it was for America “find a way to get along with China”, instead of figuring out how his company should end its dependencies on the PRC.
IMO Greg Hayes is the poster boy for everything that is wrong with the U.S. defense industry and the wider U.S. commercial sector.
NOTE: Hayes owns about 400,000 shares of RTX stock worth about $114 million.
61. US shifts nuclear focus to counter China’s growing arsenal
Amrita Jash, The Interpreter, August 29, 2024
Beijing’s nuclear modernisation means its intentions and commitments to non-proliferation will continue to be questioned.
The New York Times has reported that in March, US President Joe Biden approved a highly classified nuclear strategic plan for the United States. The paper goes on to say that for the first time, America’s deterrent strategy has reoriented to focus on China’s rapid expansion in its nuclear arsenal, as it also seeks to prepare for possible coordinated nuclear challenges from China, Russia and North Korea.
This shift in Washington’s policy comes after a Pentagon assessment that over the next decade China’s nuclear arsenal stockpiles will rival the size and diversity of those in the United States and Russia. In its Annual Report to Congress last year, the US Department of Defence highlighted two key aspects of China’s nuclear capabilities: First, that China has more than 500 active nuclear weapons, exceeding earlier estimates of 400 warheads, and following earlier assessments is expected to have a stockpile of about 1,500 warheads by 2035; and second, that in keeping with its modernisation objectives, China is expected to have more than 1,000 operable nuclear weapons by 2030, many of which will probably be “deployed at higher readiness levels”.
A White House spokesperson was careful to say the new plan was “not a response to any single entity, country, nor threat” and that the guidance provided, while secret, was in keeping with actions taken by earlier administrations.
Beijing, however, raised “grave concerns” over the reported plan, with China’s Foreign Ministry declaring “the US has called China a ‘nuclear threat’ and used it as a convenient pretext to shirk its obligation of nuclear disarmament, expand its own nuclear arsenal, and seek absolute strategic predominance.”
62. America’s Space Force Is Preparing for the Risk of War
Warren Strobel and Brett Forrest, Wall Street Journal, September 4, 2024
Space Force Col. Raj Agrawal commands a 500-person military unit with teams located around the world that track every man-made object in orbit, watching for potential threats.
As China and Russia build arsenals of weapons that could target American military and civilian satellites, those threats are growing, and Agrawal’s unit is part of a relatively new military branch that is quietly preparing for a new era of warfare.
With 15,000 military and civilian personnel, and an annual budget of about $30 billion, Space Force is far smaller and less well known than any other branch of the military services.
Founded nearly five years ago under former President Donald Trump, Space Force met with initial ridicule for its quirky dress uniforms, calling its members “Guardians,” and adopting an anthem hastily penned by a Nashville-based Air Force veteran. A triangular emblem that resembled those worn on the uniforms in the “Star Trek” TV show only added to the jokes.
63. Beijing-Backed Trolls Target U.S. Voters as Election Nears
Dustin Volz, Wall Street Journal, September 3, 2024
64. An Incomplete List of Everything Threatening China’s National Security
Vivian Wang, New York Times, September 3, 2024
65. China and the Philippines Trade Blame for the Latest Sea Collision
David Pierson and Camille Elemia, New York Times, September 1, 2024
66. South Korea Says an Official Leaked a Classified Spy Roster to China
Choe Sang-Hun, New York Times, August 30, 2024
67. Taiwan’s defence reforms will help stabilise relations with China, says US envoy
Kathrin Hille, Financial Times, September 4, 2024
One Belt, One Road Strategy
68. China’s Xi promises one million jobs for Africa
Al Jazeera, September 5, 2024
Chinese President Xi Jinping has pledged to create “at least” one million jobs in Africa as he seeks to position Beijing as the development partner of choice for the Global South.
Speaking at the Forum on China-Africa Cooperation on Thursday, Xi said China would provide African countries 360 billion yuan ($51bn) in new financing and support 30 infrastructure projects to boost connectivity across the continent.
Addressing delegates from more than 50 African nations gathered in Beijing for the forum, he said 210 billion yuan ($29.6bn) of the financing would be disbursed through credit lines and at least 70 billion yuan ($9.9bn) in new investment by Chinese companies, with smaller amounts provided through military aid and other projects.
The financial assistance would be in yuan, in an apparent bid to further internationalise the Chinese currency.
The Chinese leader also called for a China-Africa network of land and sea links and coordinated development.
“We have together built roads, railways, schools, hospitals, industrial parks and special economic zones. These projects have changed the lives and destiny of many people,” Xi told African leaders, according to state news agency Xinhua.
Xi said that the Chinese and African people working together could “accomplish new and even greater feats” and spearhead the “modernisation” of the Global South.
After the opening ceremony, delegates adopted the Beijing Declaration on building “a shared future in the new era” as well as the Beijing Action Plan for 2025-27, according to Xinhua.
…
‘Historic injustices’
Xi did not mention debt in his speech, despite China being many African states’ biggest bilateral lender but the Action Plan included terms for repayment postponements and called for the establishment of an African rating agency.
In attendance at the summit, United Nations Secretary-General Antonio Guterres said that African countries’ inadequate access to debt relief and scarce resources was a recipe for social unrest.
It was time, he said, to correct “historic injustices” against the continent, stating that it was “outrageous” that the continent had no permanent seat on the UN Security Council.
He added that “China’s remarkable record of development, including on eradicating poverty, provides a wealth of experience and expertise”.
On Thursday, Xi said China was ready to tackle power deficits that have delayed the Africa’s efforts to industrialise, launching 30 clean energy projects and offering to cooperate on nuclear technology.
COMMENT - None of us should be surprised as African countries slip into an anti-liberal orbit around the PRC.
69. African leaders look to China for project funds and trade deals at Beijing summit
Jevans Nyabiage, South China Morning Post, September 3, 2024
70. China Shores Up Ties with Africa Despite Slowing Economy and Friction Over Debt
Sha Hua and Gabriele Steinhauser, Wall Street Journal, September 5, 2024
71. China Woos Africa, Casting Itself as Global South’s Defender
Mara Hvistendahl and Joy Dong, New York Times, September 4, 2024
72. Xi Wants Bigger Returns, Fewer Headaches from African Debt Deals
Neil Munshi and Peter Martin, Bloomberg, September 3, 2024
73. China Signs Deal to Revamp Mao-Era Southern African Railway
Matthew Hill, Bloomberg, September 4, 2024
Opinion Pieces
74. Rising dissent in China puts Xi Jinping's vision for 2025 at risk
William Pesek, Nikkei Asia, September 4, 2024
75. The Chinese Agent Inside Albany
Wall Street Journal, September 4, 2024
A former state aide faces charges of covert efforts on Beijing’s behalf.
If there are American officials left who aren’t on notice of Chinese influence operations, they should read the indictment unsealed this week against a former deputy chief of staff for New York Gov. Kathy Hochul. Prosecutors allege that Linda Sun quietly pushed Beijing’s agenda from inside state government, while taking millions in benefits from China.
Ms. Sun pleaded not guilty, as did her husband, Chris Hu, who’s also charged, and the legal system in the free United States (unlike China) presumes them innocent until they’re proved otherwise. Still, the indictment’s details are startling. While working for Albany, Ms. Sun seems to have kept in close touch with Beijing’s consulate, including about her efforts to fend off Taiwanese outreach to state leaders.
In 2019, according to the indictment, she was informed, amid a banquet invitation, “that the Taiwanese President would be visiting New York City on July 12.” She quickly alerted one of Beijing’s apparatchiks, saying: “I sent you an email / Just an FYI / I already blocked it.” Ms. Sun then declined the banquet, with the excuse that the state official, identified as Politician-1, “is hosting summer activity day for staff in the Catskills on that day.” That summer funfest was actually held July 11.
In 2021 an official for Beijing floated the idea of a statement from Albany commemorating the Lunar New Year. Ms. Sun asked for talking points. The Chinese official proposed a mention of Covid and “how we fought the virus together.” Later, Ms. Sun confirmed that Politician-2 had agreed to give some remarks. She then sent an advance preview, while complaining she’d had to argue with a speechwriter who’d wanted to mention the “Uyghur situation.”
There’s more, and meantime Ms. Sun allegedly took gifts that included travel expenditures to China, concert tickets, and “Nanjing-style salted ducks,” prepared by the personal chef of a Chinese official. Prosecutors say the bigger payoff was “the facilitation of millions of dollars in transactions” for China-based business activities of Mr. Hu.
The indictment says he “laundered unlawful proceeds through bank accounts opened in the name of a close relative.” The couple bought New York real estate for $3.6 million and a Hawaii condo for $1.9 million, with no mortgages, despite relatively meager tax returns.
The federal charges against Ms. Sun include violating the Foreign Agents Registration Act, or FARA. Enforcement of this law has been inconstant, but if the allegations in the indictment are true, this case looks warranted. Kudos to the feds for their continued work to uncover Chinese influence. The message for Albany and other state capitals is to be on guard for Chinese bearing gifts.
COMMENT – How did this go on for so long? The problems with subnational political interference were well documented as far back as 2018… does it really take six years for a New York Governor to detect this kind of stuff from her own deputy chief of staff?
When a State Government employee starts driving a new Ferrari, that is probably a red flag.
76. Watching China in Europe—September 2024
Noah Barkin, GMF, September 4, 2024
77. China: The top 10 priorities for early Labour government action
Charles Parton, Council on Geostrategy, September 3, 2024
Labour has declared that its ‘China strategy’ is based on three Cs: challenge, compete, and cooperate. It is now launching a ‘China audit’ aimed at formulating a strategy which should elucidate that slogan. The party’s election manifesto declared that, ‘After 14 years of damaging Conservative inconsistency over China, Labour will bring a long-term and strategic approach to managing our relations.’1
Ideally, the new strategy should be published by June 2025, preferably earlier. It should be followed by all departments. The 10 priorities below represent early priorities for reacting to the nature of the threat and opportunities presented by the Chinese Communist Party (CCP). They reflect the need for a consistent and respectful bilateral relationship, a better organised government approach, and recognition of the importance of technology.
COMMENT – Great! Another ill-defined, all-things to all-people “China Strategy” which seeks to make a feature out of the bug of indecision.
Of course, London is simply following the lead that the Biden Administration has set out with “managed competition” which mirrors it by naming the PRC as the “pacing threat” (sorry “pacing challenge”… we wouldn’t want to offend Beijing), while simultaneously seeking a mutually beneficial economic relationship. Which one is the priority? Both.
78. Four Geopolitical Disruptions and How to Exploit Them
Nadia Schadlow, Hudson, August 26, 2024
79. Global supply chains can’t skirt China rare earths crackdown
Financial Times, September 2, 2024
80. General's smile hints at changes in China power balance
Katsuji Nakazawa, Nikkei Asia, September 5, 2024
81. Organizing American Policy Around “Peak China” is a Bad Bet
Ryan Hass, China Leadership Monitor, September 1, 2024
82. If South Korea Goes Nuclear, So Will the World
Hal Brands, Bloomberg, August 28, 2024
Nuclear nonproliferation is one of America’s greatest, and most underrated, strategic achievements. Almost 80 years after Hiroshima, fewer than 10 countries possess the world’s deadliest weapons — a testament to international cooperation and US power. On a recent trip to Seoul to participate in the annual Munhwa Future Report, hosted by the Munhwa Ilbo newspaper, I got a glimpse of what makes the nonproliferation regime so resilient, and what could eventually bring it down.
Nuclear weapons are clearly on the collective South Korean mind these days. Last year’s Washington Declaration between presidents Joe Biden and Yoon Suk Yeol committed the US to make South Korea a closer partner in planning for the potential wartime use of nuclear weapons. Analysts and politicians now debate whether Seoul should seek the return of US tactical nuclear weapons to the Korean peninsula after nearly three decades. According to opinion polling, a strong majority of South Koreans even want the country to build its own nuclear weapons.
The sentiment is understandable. North Korea’s nuclear and missile arsenals are growing more fearsome. South Korean analysts I spoke to fear that the north’s dictator, Kim Jong Un, could soon boast a true nuclear triad of land-based missiles, nuclear-missile submarines and nuclear-armed aircraft. They also worry that Kim’s new alliance with Russia will bring technological aid for the development of his missiles.
Once North Korea’s arsenal outstrips America’s homeland missile defenses, the thinking goes, the US won’t fight to defend Seoul if doing so could bring nuclear strikes on America itself. Then there is the Donald Trump factor. The publicly unstated, but unmistakable, fear is that a second Trump presidency would rupture the alliance with Washington, leaving South Korea alone and vulnerable.
Still, the odds are against South Korea building the bomb anytime soon. South Korea would find it hard to pay for nuclear weapons without gutting its conventional forces. Quitting the Treaty on the Non-Proliferation of Nuclear Weapons (or NPT) could put South Korea in the company of the world’s rogues. The US came down hard when Seoul thought seriously about acquiring nukes in the 1970s; a new push could seriously damage the alliance today.
Yet the South Korean nuclear debate remains noteworthy, for what it reveals about the larger nonproliferation regime.
That global order is enshrined in the NPT, an accord signed by nearly all the world’s countries. But international cooperation, in this instance, has rested on a foundation of US power.
For decades, the US has threatened potential proliferators with sanctions, isolation and even military action. It has cultivated international norms and agreements meant to keep the nuclear club small and elite. Most important, America has offered its allies military protection that makes it unnecessary for them to acquire nuclear arms. In doing so, it has held back the international anarchy in which countries everywhere might conclude that those weapons represent their only means of survival.
That only nine countries have nuclear weapons — of the dozens that have the technological capacity and other resources to build them — is a marker of this strategy’s success. But a scan of the contemporary international landscape highlights three factors that could eventually rupture that regime.
One is the shifting military balance. The US and its allies still dominate their enemies conventionally in Europe and the Middle East. But in Asia, an epochal change is underway.
China’s buildup is putting frontline states under ever-greater pressure. If that expansion of Beijing arsenal continues for another decade, key countries — perhaps Japan or Australia — could reluctantly conclude that conventional resistance is hopeless and nuclear weapons are a vital means of defense.
A second factor is aggression by nuclear-armed predators against non-nuclear prey. Russia has brutally assailed Ukraine, which gave up its nuclear weapons in the 1990s. Moscow then used its arsenal to deter the US from intervening directly. That Ukraine has held its own in this war has limited the global fallout. But a world in which countries with the bomb repeatedly brutalize countries without it will quickly become a far more nuclearized world. If China was to invade Taiwan — and the US was unable or unwilling to stop it — proliferation pressures could increase dramatically.
The final factor, and what most concerns South Korean officials — a potential American withdrawal — is what would most devastate the non-proliferation regime.
As long as US alliances are strong and credible, US allies have better, cheaper options than nuclear self-help. Even if Iran goes nuclear, for instance, stronger US security guarantees for Saudi Arabia — and support for the kingdom’s civil nuclear program — can probably keep it from doing likewise.
But if the US pulls back, erstwhile allies from Eastern Europe to East Asia might feel that they face a choice between nuclear proliferation and national suicide — which is why debates about acquiring those weapons have gotten louder in the age of Trump.
COMMENT – I’m more pessimistic than Hal Brands, I think the failure to prevent North Korea from building and expanding a nuclear weapons program (largely through acts of commission and omission by the PRC) has doomed the cause of nonproliferation.
There is only one country that could have prevented this from happening (China) and CCP leaders chose their own narrow self-interests instead of acting as responsible world leaders.
83. The EU has a playbook to de-risk from China. Is it working?
Daniel S. Hamilton, Brookings Institution, September 3, 2024
84. Overcoming China’s dominance in gallium will not be easy
Financial Times, August 31, 2024
85. The Gulf of Thailand may be the next U.S.-China flashpoint
Derek Grossman, Nikkei Asia, September 2, 2024
86. America Is Losing Southeast Asia
Lynn Kuok, Foreign Affairs, September 3, 2024
Why U.S. Allies in the Region Are Turning Toward China.
The United States has recently been touting its “convergence” with Asian partners. At the annual Shangri-La Dialogue in Singapore in June, U.S. Secretary of Defense Lloyd Austin titled his remarks the “New Convergence in the Indo-Pacific.”At the Brookings Institution the following month, U.S. Secretary of State Antony Blinken maintained that the United States enjoys “much greater convergence” with key Asian partners, citing improved ties with Japan and South Korea and the strengthening security links between NATO and the Indo-Pacific. And, also in July, at the Aspen Security Forum, Blinken reiterated that he had “not seen a time when there’s been greater convergence between the United States and our European partners and our partners in Asia in terms of the approach to Russia, but also in terms of the approach to China.”
But the truth is that the United States is losing ground in important parts of Asia. Each year, the ISEAS-Yusof Ishak Institute—a research institute funded primarily by the Singaporean government but that conducts its work independently—polls between 1,000 and 2,000 respondents in academia, think tanks, the private sector, civil society, nonprofit organizations, the media, government, and regional and international organizations from the ten countries in the Association of Southeast Asian Nations (ASEAN). The survey is the closest thing the region has to a longitudinal study of “elite opinion” on regional and international matters, providing a good sense of the trajectory of perceptions, even if some might quibble with its finer details. In the poll this year, the majority of respondents picked China over the United States when asked whom ASEAN should align with if forced to choose between the two. This was the first time respondents picked China since the survey began posing this question in 2020.
This drop in support for the United States should sound alarm bells in Washington, which sees China as its main competitor and the Indo-Pacific as a critical battleground. Southeast Asia lies at the geographic heart of this vast and dynamic region. It is home to two U.S. allies (the Philippines and Thailand) and several important partners. United States’ goals in the Indo-Pacific are hampered by the loss of ground to China. The Philippines and Singapore, where the United States has military facilities, would be particularly important in the event of outright conflict between China and the United States, but short of war, China’s growing sway in Southeast Asia still dampens America’s ability to engage bilaterally and multilaterally to strategic effect. Many Southeast Asian countries are not liberal democracies, and governments there do not necessarily implement foreign policies that reflect public opinion. But the group polled included government officials, and even illiberal democracies now feel pressure to respond to citizens’ views.
COMMENT – I don’t agree with all of Lynn Kuok’s points, but she makes an important argument.
The efforts over the past 3+ years have not achieved the kinds of alignment the Biden Administration hoped for.
87. Biden’s Record on China Leaves Big Problems for His Successor
Hal Brands, Bloomberg, September 2, 2024
88. What is an Italian Carrier Strike Group Doing in the Indo-pacific?
Alessio Patalano, War on the Rocks, August 29, 2024
89. The U.S. Navy’s Chief Supplier Is in Peril
Seth Cropsey, Wall Street Journal, September 3, 2024
The U.S. Navy has struggled to maintain personnel and readiness across the fleet, which makes its new plan for the Military Sealift Command to lose 17 ships under a “force generation reset” deeply troubling.
The Military Sealift Command keeps the Navy supplied and operational. By losing ships, the Navy is severing critical sinews of combat power that will jeopardize deterrence across Eurasia, making it harder to threaten China. The Navy must persuade Congress to modify pay, leave and benefits for MSC to increase personnel. Congress also should appropriate funds to repair the antiquated Merchant Marine Academy in King’s Point, N.Y., thereby increasing the pool of qualified mariners.
To evaluate U.S. Navy combat power, the public and analysts often look at the number of fighting ships. That tally is shrinking. Since 2022 the Navy has decommissioned 10 Ticonderoga-class cruisers and plans to decommission the remaining 12 by 2027. Those cruisers are the Navy’s top air-defense assets, with more missile-launch cells than their Arleigh Burke-class destroyer counterparts. Typically, the Navy’s Carrier Strike Groups deploy with a Ticonderoga as the key air-defense platform. These ships are old, having entered service late in the Cold War. Retiring them nevertheless cuts into the Navy’s deployed missile-cell numbers, while forcing the Arleigh Burkes to cover another full mission, that of fleet air defense, which will further strain the destroyer fleet.
Less discussed but crucial for combat power are the Navy’s support ships. MSC operates these ships with some 5,500 civilian mariners and naval reserve officers, the latter group mostly U.S. Merchant Marine Academy graduates. MSC ships include several special-mission units, namely missile instrumentation ships and undersea surveillance and cable repair ships, alongside all the Navy’s oiler, ordnance, cargo and heavy-lift ships.
These 125 vessels sustain U.S. military operations, providing supplies to American warships from the Mediterranean to the Pacific and to ground forces at coastal bases. Without MSC ships, absent a robust logistical system, the U.S. Navy can’t fight for more than a few weeks. The Air Force’s heavy-lift aircraft are more flexible, but physical capacity constraints make it impossible to replace ship-based logistics with aerial logistics.
COMMENT – Is Secretary of Defense Austin holding anyone responsible for this? Or is it just another shoulder shrug?
90. White House thinks it's time to fix the insecure glue of the internet: Yup, BGP
Thomas Clauburn, Register, September 3, 2024
91. The Fight for Informational Freedom Is Moving to Space
Ilan Berman, Newsweek, September 4, 2024
Propaganda
COMMENT – I didn’t know where to place this last piece… it purports to be a piece of journalism reporting on a research report, but the underlying report seems like just a long OpEd disguised as a piece of academic scholarship.
92. US arms advantage over Russia and China threatens stability, experts warn
Dan Sabbagh, The Guardian, September 4, 2024
The US and its allies are capable of threatening and destroying all of Russia and China’s nuclear launch sites with conventional weapons, creating what two experts describe as a potentially unstable geopolitical situation.
Prof Dan Plesch and Manuel Galileo, from SOAS University of London, describe a “quiet revolution in military affairs” reflecting increased US military power relative to Moscow and Beijing, particularly in missile technology.
They argue that this could create the conditions for a fresh arms race as China and Russia try to respond – and even create a risk of miscalculation in a major crisis as either country could resort to launching nuclear weapons to get ahead of the US.
In a paper published on Thursday, Plesch and Galileo write that the US has “a plausible present day capacity with non-nuclear forces to pre-empt Russian and Chinese nuclear forces” – giving it a military edge over the two countries.
There are, the authors estimate, 150 Russian remote nuclear launch sites and 70 in China, approximately 2,500km (1,550 miles) from the nearest border, all of which could be reached by US air-launched JASSM and Tomahawk cruise missiles in a little more than two hours in an initial attack designed to prevent nuclear weapons being launched.
COMMENT – Here is the “research paper” that Dan Plesch and Manuel Galileo produced to provide Beijing and Moscow with rationale for their own nuclear expansion programs (here).
Under the guise of academic research, these “experts” make the case that the real danger in the world today is that the U.S. possesses too much conventional military capability that could wipe out all Russian and Chinese nuclear weapons in a matter of minutes (how the U.S. would find and target the more than 1000 Russian and Chinese nuclear warheads on submarines… or road-mobile ballistic missiles… that isn’t covered in any feasible way).
Professor Dan Plesch is an “arms control” scholar straight out of the 1980s European mold (blinders on what the Soviets were doing, while obsessed with dangers generated by Washington and NATO… we used to call those people “useful idiots”). Plesch heads a program at SOAS University of London called SCRAP Weapons (Strategic Concept for the Removal of Arms and Proliferation)… just a warning, the website for SCRAP Weapons has an annoying automatic audio that you can’t turn off. His co-author, Manuel Galileo, is a “China and military balance analyst” at SCRAP Weapons who spent years working on behalf of China’s Belt and Road Initiative in Africa and claims to have “ties to China Foreign Affairs University.”
Given their backgrounds and other “scholarship” they have published, it shouldn’t be surprising that, in their opinion, the danger of war originates not from the expansionist policies in Moscow and Beijing, but from Washington. Based on their telling, China and Russia are just vulnerable countries being intimidated by big, bad America… and if America and its allies were to get rid of their dangerous conventional weapons and missile defenses, then Moscow and Beijing pursue peaceful policies.
It is amazing that Beijing and Moscow can get this kind of propaganda for free from a University in the UK.
