Evidently those Chinese Flu Manchu lockdowns are even crazier than we thought:
No matter how crazy China seems to get under Xi Jinping, it shows the amazing ability to always get crazier…
Evidently those Chinese Flu Manchu lockdowns are even crazier than we thought:
No matter how crazy China seems to get under Xi Jinping, it shows the amazing ability to always get crazier…
Remember Tsinghua Unigroup, a wholly owned business unit of Tsinghua University and itself owner of Yangtze Memory Technologies Co. (YMTC) (Previously mentioned here.) Well, it turns out that a bunch of their top executives just got arrested:
How a company runs with three presidents I couldn’t tell you. Must be a Chinese thing.
It’s ironic that just as Washington was passing a giant graft bucket of semiconductor subsidies because China was supposedly kicking our ass, China itself was sacking the very people presiding over China’s own bucket of graft for not catching up to the west. The truth is somewhere between.
China was never going to catch up to western semiconductors because the gap was too large and you need a crazy swarm of free market capitalist entrepreneurs risking private money to eek out important incremental process tweeks to keep Moore’s Law going. China was never going to have that as long as they suffered under Communist rule. And a huge percentage the government money that was sloshed into semiconductors was indeed swallowed up by graft and diversion of funds. But all that money does appear to have helped China close the gap some. Granted, a lot of that was via systematic IP property theft, but it got them into the game.
Ultimately it wasn’t nearly enough, just as the prophecy foretold.
Is China’s semiconductor industry a giant pit of graft, disappointment and failure? Yeah, but probably less than most of the rest of the economy.
Remember the bank runs in China story after all those bank accounts in Hunan were frozen? I’ve been looking for signs of wider contagion amidst the Chinese banking sector, and mostly haven’t seen it. But I have seen a lot of other cracks appear in China’s overall economic system, so here’s a roundup.
A large crowd of angry Chinese bank depositors faced off with police Sunday in the city of Zhengzhou, and many were injured as they were taken away, amid the freezing of their deposits by some rural-based banks.
The banks froze millions of dollars worth of deposits in April, telling customers they were upgrading their internal systems. The banks have not issued any communication on the matter since, depositors said.
According to Chinese media the frozen deposits across the various local banks could be worth up to $1.5 billion and authorities are investigating the three banks.
On Sunday, about 1,000 people gathered outside the Zhengzhou branch of China’s central bank on Sunday to demand action; they held up banners and chanted slogans on the wide steps of the entrance to a branch of China’s central bank in the city of Zhengzhou in Henan province, about 620 kilometers (380 miles) southwest of Beijing.
(Plus more on the property slump.)
A rapidly increasing number of “disgruntled Chinese homebuyers” are refusing to pay mortgages for unfinished construction projects, exacerbating the country’s real estate woes and stoking fears that the crisis will spread to the wider financial system as countless mortgages default.
According to researcher China Real Estate Information, homebuyers have stopped mortgage payments on at least 100 projects in more than 50 cities as of Wednesday, up from 58 projects on Tuesday and only 28 on Monday, according to Jefferies Financial Group Inc. analysts including Shujin Chen.
And that was over a week ago.
According to Citi analysts, average selling prices of properties in nearby projects in 2022 were on average 15% lower than purchase costs in the past three years. Meanwhile, it’s only getting worse as China’s home prices fell for a ninth month in May, with June figures set for release Friday.
The crisis engulfing Chinese developers is reaching a new phase, with a debt selloff expanding to firms once deemed safe from the cash crunch, including investment-grade names such as Country Garden Holdings, the largest builder by sales.
The payment refusals, which come at a time when China’s economy is set to post what may be a negative GDP print due to the latest economic shutdown over Xi’s catastrophic zero covid policies, underscore how the storm engulfing China’s property sector is now affecting hundreds of thousands of average citizens, posing a threat to social stability ahead of a Communist Party Congress later this year. Chinese banks already grappling with challenges from liquidity stress among developers now also have to brace for homebuyer defaults.
As a result of the unprecedented push for a debt jubilee, shares of China’s banks extended their recent decline Thursday, with the CSI 300 Banks Index falling as much as 3.3% before closing down 2.2%. A Bloomberg Intelligence index of Chinese developer stocks slid as much as 2.7%, even though Chinese lenders were quick to try and dispel fears that the movement could crash the economy: according to Bank of Communications, its outstanding balance of overdue mortgage loans linked to housing projects with risks of delayed delivery is 99.8 million yuan, accounting for 0.0067% of its domestic housing mortgage balance. The bank added that its housing mortgage loan quality is stable and risks are controllable, the Shanghai-based lender says in an exchange filing. At the same time, Postal Savings Bank of China says its overdue mortgage loans linked to halted housing projects is 127m yuan, and risks are controllable. Of course, it’s not like Chinese banks would ever lie, now is it?
The Great Debt Jubilee is picking up speed: China’s homebuyer mortgage boycott, which prompted Beijing to scramble to avoid a potentially devastating crash in what is the world’s biggest asset is spreading, and according to Bloomberg, some suppliers to Chinese real estate developers are now also refusing to repay bank loans because of unpaid bills owed to them, a sign that the loan boycott that started with homebuyers is starting to spread.
In a jarring case study of what happens when a ponzi scheme goes into reverse, hundreds of contractors to the property industry complained that they can no longer afford to pay their own bills because developers including China Evergrande Group still owe them money, Caixin reported, citing a statement it received from a supplier Tuesday.
Similar to homebuyers who have taken a stand and refuse to pay for properties that remain uncompleted, one group of small businesses and suppliers circulated a letter online saying they will stop repaying debts after Evergrande’s cash crisis left them out of pocket.
“We decided to stop paying all loans and arrears, and advise our peers to decline any requests to be paid on credit or commercial bill,” the group said in the letter dated July 15, which was sent to the developer’s Hubei office. “Evergrande should be held responsible for any consequence that follows because of the chain reaction of the supply-chain crisis.”
As Bloomberg oh so perceptively puts it, “the payments protest is the latest sign of how a movement by homebuyers to boycott mortgages on unfinished homes in China is spreading to affect other sectors in the economy.”
Yes it is, and it’s also why Beijing should be freaking out (if it isn’t), because what is taking place in China is far worse than what took place in March 2020 when the global credit machinery ground to a halt, only back then it’s because there was no other option, now it’s a voluntary development and not even fears of reprisals from China’s ruthless, authoritarian, Lebron-beloved dictatorship is stopping millions of people from calling for a systemic boycott, one which can topple China’s entire $60 trillion financial system in moments.
Probably an overstatement, just because it takes a whole lot to overcome the inertia of the average Chinese citizen just wanting to keep their head down and not be the nail that sticks up.
Embattled Chinese real estate giant Evergrande is expected to deliver a preliminary restructuring plan this week, following the exit of two bosses.
The firm says its chief executive and finance head have resigned, after an internal probe found that they misused around $2bn (£1.7bn) in loans.
Chinese businessmen misusing funds? Try to contain your shock.
Evergrande has more than $300bn in liabilities and defaulted on its debts late last year.
The crisis has spooked traders who fear contagion in China’s property sector.
On Friday, Evergrande said it found that chief executive Xia Haijun and chief financial officer Pan Darong were involved in diverting 13.4bn yuan ($2bn; £1.7bn) in loans secured by its property services unit to the wider group.
The firm said in a filing to the Hong Kong Stock Exchange that Mr Xia and Mr Pan had resigned because of their “involvement in the arrangement of the pledges”.
Getting caught trying to cook the books even after it’s hit the fan. Classic Chinese management.
The U.S. Securities and Exchange Commission has started the process, compelled by a 2020 law, and investors have started to pay attention. So has China, which moved to potentially clear a big hurdle that stymied U.S. regulators for years.
1. Why does the U.S. want access to audits?
The 2002 Sarbanes-Oxley Act, enacted in the wake of the Enron Corp. accounting scandal, required that all public companies have their audits inspected by the U.S. Public Company Accounting Oversight Board. According to the SEC, more than 50 jurisdictions work with the board to allow the required inspections, while two historically have not: China and Hong Kong. The long-simmering issue morphed into a political one as tensions between Washington and Beijing ratcheted up during the administration of President Donald Trump. The Chinese chain Luckin Coffee Inc., which was listed on Nasdaq, was found to have intentionally fabricated a chunk of its 2019 revenue. The following year, in a rare bipartisan move, Congress moved to force action.
2. Where does it stand?
As required by the law, known as the Holding Foreign Companies Accountable Act or HFCAA, the SEC in March started publishing its “provisional list” of companies identified as running afoul of the requirements. While the move had long been telegraphed, the first batch of names fueled a sharp decline in U.S. shares of companies based in China and Hong Kong as it dashed hopes for some kind of compromise. In all, the PCAOB has said it’s blocked from reviewing the audits of more than 200 of those businesses. The companies say Chinese national security law prohibits them from turning over audit papers to U.S. regulators. SEC Chair Gary Gensler said in late March that the Chinese authorities faced “a hard set of choices.” Days later, China announced it would modify a 2009 rule that restricted the sharing of financial data by offshore-listed firms, potentially clearing one obstacle.
3. What is China changing?
The China Securities Regulatory Commission said the requirement that on-site inspections should be mainly conducted by Chinese regulatory agencies or rely on their inspection results would be removed. It said it would provide assistance for cooperation with foreign regulators. The CSRC said it’s rare in practice that companies need to provide documents containing confidential and sensitive information. However, if required during the auditing process, they must obtain approvals in accordance with related laws and regulations.
4. What’s the broader issue?
Critics say Chinese companies enjoy the trading privileges of a market economy — including access to U.S. stock exchanges — while receiving government support and operating in an opaque system. In addition to inspecting audits, the HFCAA requires foreign companies to disclose if they’re controlled by a government. The SEC is also demanding that investors receive more information about the structure and risks associated with shell companies — known as variable interest entities, or VIEs — that Chinese companies use to list shares in New York. Since July 2021, the SEC has refused to greenlight new listings. Gensler has said more than 250 companies already trading will face similar requirements.
5. How soon could Chinese companies be delisted?
Nothing is going to happen this year or even in 2023, which explains why markets initially took the possibility in their stride. Under the HFCAA, a company would be delisted only after three consecutive years of non-compliance with audit inspections. It could return by certifying that it had retained a registered public accounting firm approved by the SEC.
6. How many companies will be affected?
There’s not much discretion. If a company from China or Hong Kong trades in the U.S. and files an annual report, it will soon find itself on the SEC’s list simply because those have been identified as non-compliant jurisdictions. In the March interview, Gensler pointed out that the law focuses on non-compliant countries, rather than specific companies.
“Demographically they’re in collapse…China’s not even going to survive this decade. They don’t even have the numbers to try…China doesn’t have the naval capacity to secure markets and resources….Xi Jinping has enacted a cult of personality that is tighter than anything that has existed through Chinese history. It’s gotten so tight that no one wants to bring him information about anything…This is how countries die.” Plus: China doesn’t know how to store grain.
The widely acclaimed globalization of the post-Cold War era is now running in reverse. A protracted slowdown in global trade has been reinforced by persistent pandemic-related supply-chain disruptions, ongoing pressures of the US-China trade war, and efforts to align cross-border economic ties with geostrategic alliances (“friend-shoring”). These developments tighten the noose on China, arguably the country that has been the greatest beneficiary of modern globalization.
Of the many metrics of globalization, including financial, information, and labor flows, the cross-border exchange of goods and services is most closely tied to economic growth. Largely for that reason, the slowdown in global trade, which commenced in the aftermath of the 2008-09 global financial crisis and intensified in the COVID-19 era, points to a sea change in globalization. While global exports went from 19% of world GDP in 1990 to a peak of 31% in 2008, in the thirteen years that followed (2009-21), global exports have averaged just 28.7% of world GDP. Had world exports expanded on a 6.4% trajectory – halfway between the blistering 9.4% pace of 1990-2008 and the subdued post-2008 rate of 3.3% – the export share of global GDP would have soared to 46% by 2021, far above the actual share of 29%.
China’s gains from the globalization of trade have been extraordinary. In the decade prior to China’s 2001 accession to the World Trade Organization, Chinese exports averaged just 2% of total world exports. By 2008, that share had risen nearly fourfold, to 7.5%. China had timed its WTO membership bid perfectly, just when the global trade cycle was on a major upswing. While the financial crisis took a brief toll on Chinese export momentum, the interruption was short-lived. By 2021, Chinese exports had surged to 12.7% of world exports, well above the pre-2008 peak.
China is unlikely to maintain this performance. Overall growth of global trade is slowing, and China’s slice of the trade pie is under mounting pressure.
The ongoing trade war with the United States is especially problematic. During the first phase of China’s export-led growth surge in the aftermath of WTO accession, the US was consistently China’s largest source of external demand. Largely due to former US President Donald Trump’s tariffs, that is no longer the case. By 2020, US imports of Chinese goods and services had fallen 19% below the peak levels of 2018. Despite rebounding sharply on the heels of the US economy’s post-pandemic snapback, in 2021, US imports from China remained 5% below the 2018 peak. Partial tariff rollbacks for selected consumer products, which President Joe Biden’s administration is apparently considering as an anti-inflation gambit, are unlikely to jump-start bilateral trade.
At the same time, enduring pandemic-related supply-chain disruptions are likely to take a sharp toll on China and the rest of the world.Over the six months ending in April, a “global supply chain pressures index” constructed by researchers at the Federal Reserve Bank of New York averaged 3.6, well above the 2.3 reading in the first 21 months following the February 2020 onset of pandemic-related lockdowns, and sharply higher than the “zero” reading associated with the absence of supply-chain disruptions.
This is a big deal for a world connected by supply chains. Global value chains accounted for more than 70% of the cumulative growth in overall global trade from 1993 to 2013, and China has enjoyed an outsize share of this GVC-enabled expansion. As supply-chain disruptions persist, exacerbated by China’s zero-COVID policies, pressures on Chinese and global economic activity are likely to remain intense.
Mounting geostrategic tensions are the wild card in deglobalization, especially their implications for China. “Friend-shoring” in effect turns Ricardo’s efficiency calculus of cross-border trade into an assessment of the security benefits that come from strategic alliances with like-minded countries. China’s new unlimited partnership with Russia looms especially relevant in this regard. With China edging closer to crossing the line by providing support to Russian military efforts in Ukraine, the US has recently moved to impose sanctions on five more Chinese companies through its so-called Entity List.
No doubt I’ve missed many other examples of cracks in China’s economic edifice. Feel free to share them in the comments below.
Here are two videos where Peter Zeihan argues that China is screwed for many reasons, not least of which is demographics.
Takeaways:
Now let’s forward to March 24, where Russia’s colossal failure in Ukraine has actually made China even more screwed.
Takeaways:
The biggest damage that we are seeing from the Ukraine war (outside of Ukraine, obviously) is in China. Because in one month the Russians have pulled back the blinders on what has been a 50-year strategic program, the idea that China can come to global power with American sponsorship, with American indifference, that it can take Taiwan, that it can intimidate Japan, that they can dominate all of east Asia and yet not suffer economically at all. It was always ridiculous, but now it’s been shown to just be absolutely stupid.
We have insurance companies not doing it, shipping companies not doing it, dock workers not doing it and now Halliburton, Baker Hughes and Schlumberger have pulled out, and they do the technical work that makes a lot of this possible. All the super majors are gone, and we even have a couple of major projects out in Sakhalin that are probably just going to die because the Russians can’t make those projects work by themselves. Most of the oil and gas out of that goes to China, so we’re actually looking at an environment where the Chinese see reduced flows rather than increased, as Russia is just melon-scooped out of the market.
When the Russians fell under sanctions, everything that the Chinese thought was true about their future was laid bare as, at best, wishful thinking and bad analysis. So they are now looking east to the United States and west to the Russians in a little bit of a panic, because they are being tied indirectly to what’s going on in Ukraine. And they have now found out not only does the west’s and specifically the United States’ financial tools work very well, they now know they would work much better against China than against Russia, because at its core Russia is a commodities exporter, most notably oil, natural gas and food. China imports all those things, so if an equivalent sanctions regime was done against the Chinese, you’d have 500 million dead Chinese in less than a year from starvation.
Here I think he overstates the case, as there are a lot of emergency avenues a communist government could pursue to stave off starvation. Like invading Mongolia and turning it into emergency farmland. Which is not to so they wouldn’t have some starvation, especially in worse-case scenarios…
As tight as the sanctions are, as big as they’re getting, they’re nothing compared to the corporate boycotts. Almost every single company that left Russia was under no legal requirement to do so, they just didn’t want to be associated with the war. And we’re talking about those ESG, social goody two-shoes mammoth companies like Exxon and Halliburton, who are now gone, and everyone else followed. So if that happened to China, you know that’s all of their investment that matters. That’s all of their technology transfers, that’s all of their end markets. This system, if it turned against China, would be far more damning than anything we’ve seen out of Russia so far.
I think Zeihan overstates the case a bit, and probably immanizes the timeline of crisis more than warranted, but the demographic and economic challenges China faces are very real.
Also keep in mind that no one in 1988 expected the Soviet Union to collapse as quickly as it did, either…
A goodly part of the world is pleased about the manifest failure of Vlad’s Big Ukraine Adventure, some are indifferent to it, but only Russia, client-state Syria, and puppet-state Belarus really seem upset about it.
Know who else is bummed? China.
Operation Desert Storm was a turning point in modern Chinese military history. As military planners with the People’s Liberation Army watched U.S. and allied forces make short work of the world’s fourth-largest military (on paper), equipped with many of the same systems as the PLA, it became obvious that China’s quantitatively superior but qualitatively lacking massed infantry would stand no chance against the combination of modern weaponry, C4ISR, and joint operations seen in Iraq. The result was new military concepts and over two decades of often-difficult reforms, which produced the modern, far more capable, “informationized” PLA of today.
Today, the PLA is no doubt closely observing its Russian contemporaries in Ukraine as they under-perform in multiple areas, from failing to take key targets or claim air supremacy to running low on fuel and supplies and possibly experiencing morale collapse, and surely taking away lessons that will shape its own future. Of note, Russia’s experience appears to have confirmed many of China’s recent assumptions behind its investments, such as the utility of unmanned aerial systems in high-intensity conflict, as well as the necessity for the PLA’s 2015 reforms, which aim to fix many of the issues driving Russian failure that the PLA recognizes in itself.
Of the many issues that have contributed to Russia’s physical battlefield woes in Ukraine, one of the most important has been the lack of effective joint or combined arms operations, widely considered essential to any effective modern fighting force. Russia’s poor level of coordination between its various services and branches can only be generously described as incompetent. For example, it has repeatedly failed to provide effective air support to its ground forces or deconflict its air and air-defense forces to avoid friendly fire.
The PLA has long had its own serious issues with joint operations. Traditionally dominated by the Army, the PLA had little success developing a truly joint force until a series of sweeping reforms in 2015 that replaced the former Army-dominated system with a series of joint theater commands. The PLA is thus aware of its own shortcomings and taking steps to fix it, but likely remains far off from being able to conduct truly effective, seamless joint operations. Efforts to conduct joint exercises are becoming more common, but most senior PLA leaders are still relatively inexperienced with joint operations, and even new officers typically do not receive joint education below the corps level. Further, it remains to be seen how far these reforms will go or to what extent they will “stick;” indeed, one reason the PLA did not attempt these reforms until 2015 was because of strong institutional pushback from the Army, whose leaders wished to retain their dominant status.
To China, the Ukraine invasion will reinforce the importance of joint and combined arms operations, while also making clear that such operations are highly difficult to conduct in practice. Russia’s stumbles may give the PLA pause as to whether it is truly ready for all the joint elements that a successful Taiwan seizure would require, including close coordination between sea, air, and land forces.
As well they should be. Russia shares a giant land border with Ukraine, was able to through something like 150,000 troops into the fight, and still got mauled while failing to meet their initial objectives. A giant land border is world’s away from having to conduct fiercely contested landing operations against the heavily defended island of a sophisticated, technological peer foe who’s had over half a century to prepare.
Also, it can’t be encouraging that Russia was unable to hold control of Hostemel Airport during the early stages of the war, since airport seizures for an airbridge into Taiwan has played a large role in many wargamed invasion scenarios.
Some paragraphs on conscript armies and information warfare skipped.
China has also taken note of Russia’s disasterous logistics:
Another ongoing issue has been Russia’s serious problems with poor logistics. The sight of broken-down or abandoned vehicles has become common as Russian forces run out of fuel and other vital supplies. To its credit, the PLA has also been rapidly reforming and modernizing its logistical system as part of the same broad set of 2015 reforms. As part of these reforms, the PLA has emphasized its logistics organizations and created the Joint Logistics Support Force. This force’s training has focused on cooperation with other branches of the PLA, and it has cut its teeth training to establish supply lines during natural disasters. In 2018, the JLSF launched its first major exercise, dubbed “Joint Logistics Support Mission 2018,” featuring medical drones, helicopter-dropped refueling depots, and operations in harsh and remote terrain.
Hey, remember all that stuff I said about long land borders vs. amphibious and airborne invasion? It applies double (if not quadruple) for logistics. China can’t assume it will have complete air and sea control of the Taiwan strait, and it’s really hard to run an invasion if you’ve run out of ammo, food and fuel.
However, while the outward manifestation of many of the issues faced by the Russian military appear to be logistical in nature, the true heart of the issue may be corruption. There are reports that before the invasion Russian military officers sold off their fuel and food supplies, and that these corrupt practices may be responsible for the stalling of a Russian tank column outside Kyiv. In this regard, the PLA has much to fear. Corruption has plagued the PLA for decades, with some PLA officers bluntly stating in 2015 that it could undermine China’s ability to wage war. Reportedly, more than 13,000 PLA officers have been punished in some capacity for corruption since Xi Jinping took power, including more than a hundred generals. This was a particular problem in the logistics sector, where there are more opportunities for corruption and links to the civilian economy.
Yet, despite the reorganization of the PLA and widespread prosecution of corruption cases, it still appears to be a major issue. Anti-corruption efforts are ongoing, with Chinese Gen. Zhang Youxia recently calling for innovative measures to keep up the fight. But the fact that Fu Zhenghua, the man brought in to take down the corrupt former security chief Zhou Yongkang, is himself now under investigation for corruption does not bode well for the long-term effectiveness of China’s efforts. The troubled invasion of Ukraine provides a stark real-world example to Xi, the CCP, and PLA about the impact corruption can have on military effectiveness, and will no doubt cause them to redouble their anti-corruption efforts with a newfound urgency. However given its similar authoritarian system and emphasis on career advancement through patronage, systemic corruption may be baked into the system.
China without corruption is like Norway without snow.
But not everything is that’s made life difficult for Russia will apply to China.
While China will benefit from Russia’s increasing reliance on its goods and services, Beijing can be expected to retool its geo-economic strategy to reduce its vulnerability to a similar nightmare scenario. For example, it will likely redouble its efforts to promote its Cross-Border Interbank Payment System—an alternative to the SWIFT international banking system—among its strategic partners and foreign aid recipients in the developing world.
Likewise, China’s recent “Dual Circulation” economic strategy appears to be aimed at countering a decoupling from China’s trade partners. Further, Beijing has surely observed how easy it was for corporations to withdraw from Moscow. If China is to be exposed to the risk of global sanctions and corporate withdrawal, so too are countries and corporations exposed to dependence on the world’s second-largest economy, and thus the government will likely take efforts to make any sanctions or corporate turn against China as painful a prospect as possible. Either way, policymakers in Washington need to understand that the sanctions being used today against Russia are unlikely be as effective the next time around, as China is not just a different economy, but also will learn from the current conflict and adjust accordingly.
This is undoubtedly true, and China has a much broader and more modern economic and industrial base with which to wage war. All the more reason for America to bring critical manufacturing and other economic business outsourced to China back home.
For all these valuable lessons, there is little doubt that China has been watching the ongoing conflict with no small amount of chagrin. Chinese leaders are reportedly surprised and unsettled by the poor military performance of its Russian partners, Ukraine’s resistance, and the level of solidarity from the international community. The image of a much smaller state, against all odds, successfully resisting a larger neighbor surely sits uneasily in the psyches of CCP apparatchiks and PLA officials. It also counters the narrative of overwhelming force and grim inevitability Beijing has sought to instill in the psyches of the Taiwanese people. It is notable that early attempts by Chinese state media to capitalize on the Ukraine invasion in precisely this fashion, illustrating how the United States will surely abandon Taiwan when the chips are down, quietly ceased after the initial days of the war, when it became apparent that the U.S. was not, in fact, abandoning Ukraine. Beyond purely psychological factors, Ukraine also offers a blueprint for successful resistance via asymmetric warfare very similar to Taiwan’s proposed Overall Defense Concept, perhaps giving a jolt to a plan that most analysts agree offers Taiwan its best chance of success against the PLA but has stalled out in the face of bureaucratic resistance.
While China and the PLA will surely watch Ukraine closely and try to take away the correct lessons, there is one uncomfortable parallel which China may be unable to avoid by the very nature of its authoritarian system. The runup to the Ukraine invasion featured multiple strategic miscalculations by Putin, driven at least in part by him surrounding himself with the yes-men who inevitably cling to authoritarian leaders, eager to please and afraid to speak truth to power. This was obvious in the visibly uncomfortable reaction of Russia’s SVR (foreign intelligence) chief as he was publicly pressured to agree with Putin in the days leading up to the war, as well as in the sackings and arrests of multiple military and intelligence officials after the war turned poorly. Authoritarian leaders have systemic problems in gaining reliable intelligence, oftentimes magnified by their overconfidence in their own singular understanding of a situation. As China continues its slide away from a system of intra-Party consensus toward a one-man cult of personality in which dissenting views are increasingly unwelcome, Xi is bound to encounter the same problem. It is unclear whether Xi will learn this lesson from Putin, or make his own similar miscalculations in the future towards China’s own neighbors.
Dictatorships (especially communist dictatorships) greatly increase the possibility of a “Thermocline of Truth” building up between bad news and fawning yes-men fearful of making the dictator angry. There’s very little reason to believe that Xi Jinping’s chain of command suffers from the problem any less than Putin’s.
In war, comforting lies will get your ass kicked.
When I previously covered the possibility of China invading Taiwan, I quoted:
The invasion will happen in April or October. Because of the challenges posed by the strait’s weather, a transport fleet can only make it across the strait in one of these two four-week windows. The scale of the invasion will be so large that strategic surprise will not be possible, especially given the extensive mutual penetration of each side by the other’s intelligence agencies.
Well, guess what month it is?
Over the past few days, over 150 Chinese aircraft have violated Taiwan’s airspace. The sabre-rattling has been serious enough that Taiwan has asked for Australia’s help.
In some way the timing is right for Beijing to go to war. Their economy is faltering, the Biden White House has proved its weakness in Afghanistan (and may be compromised by CCP ties), and a “Great Patriotic War” to bring a “renegade province” in line may be just what the doctor ordered to distract the nation.
In another way, this is exactly the wrong time to launch an attack, with global supply chains snarled and ports clogged up, how is China supposed to transport troops across the Taiwanese Strait, especially since they need civilian transports to carry troops.
The Chinese navy now has access to 1.5 million tons of shipping that could carry an assault force across the Taiwan Strait and initiate an invasion of Taiwan.
For those of you keeping score at home, that’s a transport fleet equal in displacement to U.S. Military Sealift Command’s own quasi-civilian fleet.
In other words, a lot of ships.
To have any chance of conquering Taiwan, China might need to transport as many as 2 million troops across the rough 100 miles of the Taiwan Strait and land them under fire at the island’s 14 potential invasion beaches or 10 major ports.
That’s a lot of people—far, far more than the People’s Liberation Army Navy can haul in its 11 new amphibious ships, together displacing around 370,000 tons. To transport the bulk of the invasion force, Beijing almost certainly would take up into naval service thousands of civilian ships.
The National Defense Transportation Law of 2017 mandates that all of China’s transport infrastructure, including ships, be available for military use. Naval engineers have begun modifying key vessels to make them better assault ships—in particular adding heavy-duty ramps that can support the weight of armored vehicles.
If I was of conspiratorial cast, I might suspect that the shipping snarl was designed to hide the presence of troops ships in the Taiwanese strait.
Taiwan is taking the threat seriously enough to prepare for war:
Taiwan is preparing for potential war with China following a series of increasingly aggressive military activity from Beijing, with Taipei’s foreign minister warning that should the nation attack, it would “suffer tremendously.”
China on Monday sent 52 military aircraft into Taiwan’s air defense identification zone, the largest military provocation seen yet.
In anticipation of further aggression, the self-ruled island is preparing to repel any strike and has asked Australia to increase intelligence sharing and security cooperation, Taiwanese Foreign Minister Joseph Wu told the Australian Broadcast Corporation’s “China Tonight.”
“The defense of Taiwan is in our own hands, and we are absolutely committed to that,” Wu told ABC’s Stan Grant in an interview to be broadcast Monday.
“I’m sure that if China is going to launch an attack against Taiwan, I think they are going to suffer tremendously as well.”
China, which claims that Taiwan is part of its territory, in the past week has stepped up its saber rattling against the island to press it to back down and accept Chinese rule. Taipei, meanwhile, maintains it is a sovereign country separate from Beijing.
Is China getting ready to invade? I have no way of reading Xi Jinping’s mind, but I think if a real war were in the offering, we’d see less saber-rattling tests of airspace and more signs of troop mobilization. I looked for any evidence that this was happening, but I haven’t seen in.
That said, we should still be doing our best to arm Taiwan to the teeth:
It’s been completely obvious for a long time that China has been preparing, if it so chooses, to take Taiwan by force of arms and keep us from being able to do anything about it.
It has massively increased its force of ballistic missiles, better to target a wide array of ships and hold at risk U.S. ground units. Prior to the latest, more serious iteration of the missile threat, Tom Shugart of the Center for New American Security estimated that a preemptive Chinese strike on our bases in the region “could crater every runway and runway-length taxiway at every major U.S. base in Japan, and destroy more than 200 aircraft on the ground.”
China has been churning out long-range strike aircraft and engaged in a historic naval buildup. It now has the largest navy in the world.
Nonetheless, invading and occupying Taiwan after launching a gigantic, logistically taxing amphibious operation across a 110-mile strait would be no small feat, to put it mildly.
It should be our objective to keep China at bay, toward the goal of keeping it from establishing its dominance over Asia, as former Trump defense official Elbridge Colby argues in his compelling new book The Strategy of Denial.
But the Taiwanese haven’t exhibited the urgency one would expect of an island of 24 million people coveted by a nearby nation of 1.4 billion people that makes no secret of its compulsion to try to swallow it whole.
Until a few years ago, Taiwan’s defense budget was shockingly inadequate. Its military reserves are lackluster. Its frontline units tend not to operate at full strength. It has often been seduced by the allure of so-called prestige weapons, such as top-end fighter aircraft that are irrelevant to its predicament.
We should be fortifying Taiwan and making it as difficult as possible for China to take. That means stockpiling food, energy, and munitions against a Chinese blockade. It means making its infrastructure more resilient and enhancing its cyber capabilities. It means increasing its capability to detect an early mustering of Chinese forces. It means more mines, anti-ship missiles, air-defense capabilities, and unmanned systems to frustrate a cross-strait invasion.
Speaking of arming countries against China, Japan is now testing flying F-35Bs off an aircraft carrier. If adopted, F-35s would be Japan’s first carrier aircraft since World War II.
We started the year with China lying about the deadly virus that was about to sweep the world, so let’s end the year with a China news roundup:
A major leak containing a register with the details of nearly two million CCP members has occurred – exposing members who are now working all over the world, while also lifting the lid on how the party operates under Xi Jinping, says Sharri Markson.
Ms Markson said the leak is a register with the details of Communist Party members, including their names, party position, birthday, national ID number and ethnicity.
“It is believed to be the first leak of its kind in the world,” the Sky News host said.
“What’s amazing about this database is not just that it exposes people who are members of the communist party, and who are now living and working all over the world, from Australia to the US to the UK,” Ms Markson said.
“But it’s amazing because it lifts the lid on how the party operates under President and Chairman Xi Jinping”.
Ms Markson said the leak demonstrates party branches are embedded in some of the world’s biggest companies and even inside government agencies.
“Communist party branches have been set up inside western companies, allowing the infiltration of those companies by CCP members – who, if called on, are answerable directly to the communist party, to the Chairman, the president himself,” she said.
“Along with the personal identifying details of 1.95 million communist party members, mostly from Shanghai, there are also the details of 79,000 communist party branches, many of them inside companies”.
I’ve poked around a bit to find a copy of that database, but all I could locate was an excerpt featuring the first 5,000 names or so. If anyone knows where I can find the full list, let me know in the comments.
Arm Ltd., the chip designer owned by SoftBank Group Corp., accused the ousted head of its China joint venture of hurting its business there, escalating a dispute that’s becoming a test of Beijing’s willingness to protect foreign investment in the world’s second-largest economy.
The U.K. chip giant in June announced it was firing Allen Wu, the head of its Chinese unit, over undisclosed breaches of conduct, but the executive has refused to step down and remains in control of the strategically important operation. Rather than the peaceful, rapid resolution that both sides have said they want, the situation has deteriorated.
Wu has hired his own security and won’t let representatives of Arm Ltd. or his board on the premises, said a person familiar with the situation. He’s refused to hold a planned event to connect Chinese chipmakers with Arm Ltd. and avoided negotiations despite public statements to the contrary, said the person, who asked not to be named.
Wu is “propagating false information and creating a culture of fear and confusion among Arm China employees,” the U.K.-based company said in a statement. “Allen’s focus on his own self-preservation has also put China semiconductor innovation at risk as he has attempted to block the critical communication and support our China partners require from Arm for ongoing and future chip designs.”
Arm China disputed the claims in an emailed response to queries, adding that Wu was open to talks and there have been no disruptions in business engagement between Arm Ltd. and its China clients.China is the largest market for semiconductors and the U.K. firm relies on Arm China to conduct business with local customers, including Huawei Technologies Co. The country accounts for a large proportion of the company’s global revenue and resolving the conflict will be crucial to SoftBank’s reported plans to sell Arm, a lynchpin in the global smartphone and computing industry that the Japanese firm bought for $32 billion in 2016.
In early June, Arm China’s board – which includes representatives from Arm Ltd. and Chinese investors – ousted Wu for setting up an investing firm that competes with its own businesses there. He refused to accept the decision, saying it was invalid and has remained in control at Arm China’s headquarters in Shenzhen.
The intricacies of Chinese rules confer an advantage to Wu as the holder of key registration documents. As the legal representative of Arm China, Wu holds the company’s registration documents and the company seal, or stamp. Changing the legal representative requires taking possession of the company stamp — something Wu has refused to give up.
It was once an accepted truth that China’s increased economic trade and participation in international bodies such as the World Trade Organization would benefit everyone.
China and its citizens would benefit through the jobs and wealth earned from their vast export market. Americans and Europeans would benefit from access to an ever-greater array of ever-cheaper goods. Asian, African, and other American nations would benefit from access to both sides of this market and the incentive to replicate a version of China’s export model. And the world’s democracies, the cornerstones of the post-Cold War international order, would benefit from China’s recognition that it would gain more by abiding the rules of the game than by breaking them.
To borrow from Shakespeare, “the jest of the truth savors but of shallow wit, now that thousands weep more than did celebrate it.”
The weeping is real. Each week brings us increasingly horrific stories of the suffering endured by China’s already impoverished Uighur population. More than 2 million of these innocent citizens have been forced into concentration camps over the past decade. They have been indoctrinated to believe that there is no ideology of value save that of the Communist Party and its god-emperor Xi Jinping. Some have been forcibly sterilized, others sent far from their homes and families. As reported just this month, hundreds of thousands of Uighurs are forced into annual servitude as cotton pickers.
There’s a defining lesson here. China was supposed to be a top partner to the liberal international order. Instead, it is now taking inspiration from the Antebellum South’s slave economy, using forced labor in support of an unaccountable elite. Even were it not beholden to China, Hollywood could not invent a better example than the Uighurs’ plight to expose the lie that China’s economic development would usher in a kinder and gentler policy on its part.
Of course, Hollywood’s pathetic deference to Beijing isn’t a solitary American corporate story. It is the story. Instead of markets leading to more economic and political freedom in China, they have led major U.S. corporations to self-censor in order to gain access to Chinese consumers and their cheap labor. As with the NBA, which rightly cares a great deal about black lives but apparently not one iota about Uighur lives, major corporations such as Disney, Dell, and Walmart deal with China even if they must do so with terrible strings attached.
Beijing is explicit in its expectation that trade opportunities come with the price of silent acquiescence. Where the Chinese Communist Party signs treaties — whether the rules of the WTO, promises on intellectual property regimes, or carbon emissions targets — its pledges must be greeted only with applause from the West, never with any enforcement or demands that Xi be held to his word.
US carriers and telecommunications companies receiving Universal Service funding are now required to remove all Huawei technology, by order of the federal government.
The US Federal Communications Commission has ordered certain carriers to “rip and replace” all equipment produced by Huawei. It follows continuing investigations into claims that Huawei represents a threat to national security, and Huawei’s application for a review of a similar ruling by the Public Safety and Homeland Security Bureau in June.
“A laundry list of evidence before us compels this result,” said FCC chairman Ajit Pal in a statement. “But to summarize some of the main points, Huawei has a long and well-documented history of close ties to the Chinese military and intelligence communities, as well as the Chinese Communist Party, at every level of the company— all the way up to its founder.”
“Huawei is subject to sweeping Chinese intelligence laws compelling Huawei’s assistance and cooperation with Chinese intelligence services and forbidding the disclosure of that assistance,” he continued. “Moreover, the concerns about Huawei aren’t just hypothetical: Independent entities have identified numerous security vulnerabilities in Huawei equipment and found it to be less secure than that of other companies— perhaps deliberately so.”
The Trump administration is poised to add China’s top chipmaker SMIC and national offshore oil and gas producer CNOOC to a blacklist of alleged Chinese military companies, Reuters reported citing a document and sources, curbing their access to U.S. investors and escalating tensions with Beijing.
The latest crackdown comes after a report from Reuters earlier this month that the Department of Defense (DOD) was planning to designate four more Chinese companies as owned or controlled by the Chinese military, bringing the number of Chinese companies affected to 35. A recent executive order issued by President Donald Trump would prevent U.S. investors from buying securities of the listed firms starting late next year.
It was not immediately clear when the new tranche, would be published in the Federal Register. But the list comprises China Construction Technology Co Ltd and China International Engineering Consulting Corp, in addition to Semiconductor Manufacturing International Corp (SMIC) and China National Offshore Oil Corp (CNOOC), Reuters reported.
On paper the Chinese army looks pretty impressive, with 78 combat brigades and nearly as many specialized brigades. Over the last decade the Chinese army has been converting its divisions to brigades, many of them independent brigades like the American Brigade combat teams. That conversion is still underway, although by now nearly all the regiments that formerly comprised the major subunits of divisions have been converted to brigades.
The task of turning all those new brigades into well-equipped and trained ones is still underway. There are three types of combat brigades. The most potent is the heavy brigade, each with about a hundred tanks and dozens of tracked IFVs (infantry fighting vehicles) plus detachments of engineers and other specialists. The problem with these heavy brigades is that not all of them have the latest tanks. China has not built enough of its most modern tank to replace all the older models. As more of the latest tank enter service heavy brigades receive them and have to go through months of training to learn how to get the most out of them.
Snip.
The major problem with the army is that all the elite units (special operations and airborne) as well as key units stationed in the capital and a few other places have few conscripts. Nearly all the conscripts are assigned to the combat brigades and the support brigades assigned to each of the 13 Group Armies. Units with conscripts spend about half the year training the new ones and if there is a war these units would, half the time, have a large portion of their troops poorly trained and not fully integrated into the unit. This is a major problem for combat units that depend on well-trained troops who have been with their units long enough for commanders to know what they can get out of them.
(Previously.)
As China pushes to become a blue-water power, nuclear-powered submarines are critically important to Beijing’s plan. Historically the Chinese Navy’s (PLAN) nuclear-powered submarine fleet has been constrained by its limited construction capacity. There is only one shipyard in the country up to the task. But that yard has been undergoing a massive enlargement. And now, recent satellite imagery suggests an additional capacity expansion.
China’s nuclear-powered submarine fleet was already expected to get much larger in the coming years. This latest development suggests that China could pump out submarines at an even greater rate.
Just how many nuclear submarines China will build over the next ten years is a hot topic. The Office of Naval Intelligence (ONI) recently forecast China’s submarine fleet to grow by six nuclear-powered attack submarines by 2030. Other observers, such as retired Capt. James Fanell who was Director of Intelligence and Information Operations for the U.S. Navy’s Pacific Fleet, place their estimates even higher.
A senior Chinese People’s Liberation Army officer, Lt. Gen. He Lei, penned an article explaining why China’s Korean War experience should guide its modern military strategy toward the United States.
The executive officer of the PLA’s Academy of Military Science, He is a known hard-liner on Taiwan and the U.S. In his present assignment, the general is responsible for training PLA officers and strategy development. His words carry weight both for what they say about evolving PLA doctrine and their influence on Beijing’s Central Military Commission. His arguments are certainly forward-leaning, referencing the PLA’s rising expectation that it will have to fight a near-term war with either the U.S., Taiwan, or both.
Beginning with a creative history of the Korean War, He explains that Mao Zedong’s deployment of the PLA against the U.S. military in North Korea shattered “the myth that U.S. imperialism is invincible.” Here, we see a presentation of the U.S. military as a force that can be both contested and defeated. The centrality of the Korean War to the Chinese military psyche takes on significant importance in the context of three factors. First, the war is seen as a necessary defense of the motherland against a great external threat. Second, the PLA has limited post-Korean War experience of major conflict. Third, China views the outcome of that war as being broadly in its favor. Taken together, He thus uses the Korean War to reinforce the idea that China can take on a more powerful foe and triumph.
China’s military might be shocked to find America’s military a wee bit more advanced and prepared than it was in 1950…
More than half a million Tibetan farmers and pastoralists have been placed in military training facilities to be turned into wage workers controlled by the authorities. This model replicates the one used in Xinjiang internment camps where more than a million Uyghur Muslims are imprisoned and indoctrinated.
A study by the Australian Strategic Policy Institute shows that the Chinese regime runs 380 “concentration camps” in the Xinjiang autonomous region. According to the Chinese Communist Party, Tibetans are a “lazy people” who need to be reprogrammed. To this end, Chinese leaders want to reduce the “negative influence” of the Buddhist religion.
First of a three-part series. Second Part. Third part.
The FBI is warning law-enforcement agencies to beware of cooperating with a Chinese government campaign to coerce U.S. residents to return to China to face criminal charges, according to a counterintelligence bulletin obtained by Yahoo News.
The bulletin comes after eight people, including a former New York Police Department officer, were indicted on charges of acting as illegal agents for Beijing.
“State and local public safety personnel should be aware that Chinese Government officials, such as diplomats and officials with China’s primary law enforcement agency, the Ministry of Public Security (MPS), may seek assistance to obtain sensitive US law enforcement or non-public personally identifiable information on individuals of interest,” which is marked for official use only and was distributed to law enforcement agencies around the country.
The warning concerns China’s long-standing policy of reaching beyond its borders to target people it accuses of financial crimes, even if they are permanently living abroad. The repatriations, often coerced by blackmail or threats, are part of Beijing’s anti-corruption campaign called Fox Hunt.
There has been an increasing number of allegations that China has coerced, even kidnapped, its citizens living abroad, and that it targets political dissidents as well as those accused of financial crimes.
When it comes to the impact of COVID-19 on the People’s Republic of China (PRC), the conventional wisdom seems to be that the emergence of the virus was mishandled and the Communist government has yet to be transparent about it, but that the spread was arrested through aggressive public-health practices and the economy has rebounded.
As usual with the PRC, the reality is more complex. In fact, recent signs of tension between President Xi Jinping and other leaders, notably Premier Li Keqiang, indicate the additional impact the pandemic had on an underlying soft economy and the country’s growing isolation because of Beijing’s poor handling of the crisis and other factors.
Snip.
In the past few years, Xi has centralized his personal authority to a degree not seen in a Chinese leader since Chairman Mao. In 2017, Xi took control of the country’s military and often appears in public in a military uniform. He is, in effect, the head of the National Security Council, the head of the foreign policy apparatus, and of multiple economic commissions. In recent public appearances, the state news agency Xinhua has referred to him as “People’s Leader.” Can “Chairman Xi” be far off? In additional to title inflation, in 2018, he imposed constitutional changes on the National People’s Congress that removed a term limit preventing him from seeking a third term in 2023. Xi’s moves and power consolidation mean he is responsible and accountable for both the good and the bad. And lately, there’s been far more bad than good.
Starting with the economy: However the government may have controlled the pandemic, the economy remains weak. Economic growth prior to the pandemic — according to China watchers skeptical of government numbers — was probably flat or negative, notwithstanding official statistics that had it closer to 6 percent. Government at every level and households had combined debt of about 300 percent of GDP. U.S. debt/GDP even after trillions in coronavirus relief spending is less than half China’s level, which leaves fewer levers for Beijing to pull to help stimulate the economy.
While the U.S. Federal Reserve and Congress have injected more than $6 trillion into the economy through massive purchases across many asset classes, the People’s Bank of China balance sheet has remained flat this year. The U.S. Congress provided about $630 billion in direct support to small businesses, compared with less than one-tenth that amount the PRC made available to small businesses in China. Retail sales in China for each month of 2020 are down compared with the same month the year prior. The real data are certainly worse than what the government discloses. In the U.S., retail sales in July were at all-time highs, eclipsing their pre-pandemic levels. According to economist Carlos Casanove at French insurer Coface, the PRC “recovery narrative has been overplayed.”
This is contributing to the tension between Xi and Li. At a press conference in May, the prime minister acknowledged that 600 million people in China — about half the population — subsist on 1000 yuan ($140) a month. This number includes the estimates of 80 million who lost work due to the virus who may have no income and no meaningful social safety net in China. Li’s data track with World Bank data which show a vast disparity in income between the urban elite and the mostly poor rural population. Even so, his comments were out of step with other government-touted figures, including a central bank survey in April of 30,000 urban residents who have an average of nearly half a million dollars in household assets. This figure generated so much controversy that the central bank withdrew it.
Read the whole thing.
The Guardian newspaper in London had an exclusive story in which Victor Zhang, the vice president of Huawei, stated that in light of Trump’s defeat, Britain should review its decision to ban the telecoms giant from its 5G network. Zhang warned that this decision would have economic repercussions for Britain, adding: “As a global company, we want to work with governments to ensure they have the policies to secure growth. The decision was a political one motivated by U.S. perceptions of Huawei, and not those of the U.K. This is not really motivated by security, but about a trade war between the U.S. and China.”
Or consider the fact that this year, some British politicians have shown a certain amount of moral grit by expressing concerns about new authoritarian security laws in Hong Kong and China’s persecution of its Muslim Uyghur minority in Xinjiang. How have the Chinese reacted? This week, Fang Wenjian, chairman of the Chinese Chamber of Commerce in the U.K. and the Bank of China’s boss, issued another menacing warning. The Sunday Times and City A.M. have both published stories linking him to the threat that any decline in U.K.-China relations could force some Chinese firms out of the U.K. In other words: “Don’t criticize China’s abysmal human rights record, or you risk losing our business.”
Alarms bells are also ringing because of Citiking International, a Chinese-backed private equity firm with offices around the world and, it has been reported, possible ties to the Chinese Communist Party. It is trying to buy Eclipse Aerospace, a small firm based in Albuquerque, New Mexico, that employs 65 people. According to Defense News, Eclipse Aerospace produces “very light jets” that are used for intelligence, surveillance and reconnaissance. Defense News states that its planes feature “sophisticated avionics, engines (originally designed for cruise missiles) and a full authority digital engine control system that all contain sensitive national security design information.” Everybody should be deeply worried about the Chinese having access to this sensitive technology, for obvious reasons.
Snip.
The fact is, China has ruined the world in 2020 by its reckless handling of COVID-19. For this, it ought to pay very heavy reparations. It will not. Instead, the reverse is happening. China’s economy is powering ahead, and its leaders are bullying weaker Western nations. With Trump all but gone from the White House, and faltering Joe Biden preparing to move in, it now looks as though China’s quest for world domination is back on track. What a calamity.
One of the oldest and most well-known iPhone suppliers has been accused of using forced Muslim labor in its factories, according to documents uncovered by a human rights group, adding new scrutiny to Apple’s human rights record in China.
The documents, discovered by the Tech Transparency Project and shared exclusively with The Washington Post, detail how thousands of Uighur workers from the predominantly Muslim region of Xinjiang were sent to work for Lens Technology. Lens also supplies Amazon and Tesla, according to its annual report.
Lens Technology is one of at least five companies connected to Apple’s supply chain that have now been linked to alleged forced labor from the Xinjiang region, according to human rights groups. Lens Technology stands out from other Apple component suppliers because of its high-profile founder and long, well-documented history going back to the early days of the iPhone.
Meng Yu, former chief investment officer of the California Public Employees’ Retirement System (CalPERS), received more than $1.7 million in total pay and benefits in 2019, according to the latest financial disclosures obtained by Transparent California, a taxpayer watchdog group. Under Meng’s leadership the pension fund, which covers two million members in the retirement system and 1.5 million members under its health program, has been subject to federal inquiries into its investments in Chinese government entities.
Meng took the lead at the pension fund after China’s Thousand Talents Program recruited him to serve as the deputy CIO of China’s State Administration of Foreign Exchange (SAFE), a state-controlled entity. The FBI considers the Thousand Talents Program an example of “China’s non-traditional espionage against the United States” that seeks to recruit people to transfer U.S. trade secrets and taxpayer-funded research into the hands of the Chinese government. Meng told the propaganda outlet People’s Daily that he worked for SAFE out of patriotic commitment to “the motherland.”
When a hacking organization’s secret tools are stolen and dumped online for anyone to pick up and repurpose, the consequences can roil the globe. Now one new discovery shows how long those effects can persist. Five years after the notorious spy contractor Hacking Team had its code leaked online, a customized version of one of its stealthiest spyware samples has shown up in the hands of possibly Chinese-speaking hackers.
At an online version of the Kaspersky Security Analyst Summit this week, researchers Mark Lechtik and Igor Kuznetsov plan to present their findings about that mysterious malware sample, which they detected on the PCs of two of Kaspersky’s customers earlier this year.1 The malware is particularly unusual—and disturbing—because it’s designed to alter a target computer’s Unified Extensible Firmware Interface, the firmware that is used to load the computer’s operating system. Because the UEFI sits on a chip on the computer’s motherboard outside of its hard drive, infections can persist even if a computer’s entire hard drive is wiped or its operating system is reinstalled, making it far harder to detect or disinfect than normal malware.
The malware the Kaspersky researchers discovered uses its UEFI foothold to plant a second, more traditional piece of spyware on the computer’s hard drive, a unique piece of code Kaspersky has called MosaicRegressor. But even if that second-stage payload is discovered and wiped, the UEFI remains infected and can simply deploy it again. “Even if you would take the physical disk out and replace it with a new one, the malware will keep reappearing,” says Lechtik, who along with Kuznetsov works as a researcher on Kaspersky’s Global Research and Analysis Team. “So I think to date, it’s the most persistent method of having malware on your device, which is why it is so dangerous.”
On 4 May 2016, a sudden mass death of fish in the Lichu River in Minyak Lhagang, Dartsedo County in Karze Prefecture brought hundreds of local Tibetans out on the street, protesting against a lithium mining company (Ronda Lithium Co Ltd) that released mine waste into the Lichu River, a tributary of Nakchu/Yalong river, the biggest river that merges with Yangtse downstream.
Yet another case of contaminated mine waste released into Tibetan rivers by a Chinese mining company clearly contradicts Beijing’s call for Green Development in their 13th Five Year plan. In recent years, there have been an increase in the number of cases of environmental degradation caused by Chinese mining companies in Tibet, resulting in more than 20 large scale mining-related protests since 2009.
More than a year since the first known person was infected with the coronavirus, an AP investigation shows the Chinese government is strictly controlling all research into its origins, clamping down on some while actively promoting fringe theories that it could have come from outside China.
The government is handing out hundreds of thousands of dollars in grants to scientists researching the virus’ origins in southern China and affiliated with the military, the AP has found. But it is monitoring their findings and mandating that the publication of any data or research must be approved by a new task force managed by China’s cabinet, under direct orders from President Xi Jinping, according to internal documents obtained by the AP. A rare leak from within the government, the dozens of pages of unpublished documents confirm what many have long suspected: The clampdown comes from the top.
As a result, very little has been made public. Authorities are severely limiting information and impeding cooperation with international scientists.
A host of corporate media outlets including CNN, The New York Times, The Washington Post, and MSNBC have participated in private dinners and sponsored trips with the China-United States Exchange Foundation, a Chinese Communist Party-funded group seeking to garner “favorable coverage” and “disseminate positive messages” regarding China, The National Pulse can reveal.
Other outlets involved in the propaganda operation include Forbes, the Financial Times, Newsweek, Bloomberg, Reuters, ABC News, the Economist, the Wall Street Journal, AFP, TIME magazine, LA Times, The Hill, BBC, and The Atlantic.
The relationship is revealed in the Department of Justice’s Foreign Agent Registration Act (FARA) filings, which reveal a relationship spanning over a decade between establishment media outlets and the China–United States Exchange Foundation (CUSEF).
(Hat tip: Stephen Green at Instapundit.)
The president of Columbia University is asking Joe Biden to end the monitoring of foreign-born students, especially those who are ethnically Chinese.
He characterized such monitoring as “paranoia.”
Columbia President Lee Bollinger issued the letter on December 3 as part of a broader statement asking Biden to “End the Trump Administration’s Assault on the International Exchange of Ideas.” In 2019, Bollinger wrote an op-ed in the Washington Post, warning that he would not “start spying” on foreign students.
Won’t someone please think of the plight Ivy league university presidents desperate to keep sucking China’s teat?
Huawei very much is the spearhead, because in the Chinese model of economic expansion and the development of world economic power, broadband is the opener to everything else.
It’s a company with a lot of very talented people. Ten years ago – if you asked people, “What Chinese products do you buy?” – you wouldn’t mention a single brand name. But everyone now knows Huawei. They produce the world’s best smartphones. They certainly dominate 5G internet. But Huawei is not a Chinese company. It is an imperial company.
The Chinese empire is doing better than us because it’s absorbed the talent of a very large number of others. Fifty percent of their engineers are foreign. They bankrupted their competition and hired their talent. They have 50,000 foreign employees, and a very disproportionate amount of their research and development (R&D) is conducted by foreign employees.
I’ve seen this personally. I worked for several years as an investment banker in Hong Kong for a Chinese-owned boutique. During that time, I collaborated with people from Huawei. I introduced them to foreign governments. Huawei was very clear about its objectives. They’d tell, for example, the government of Mexico, “Let us build a national broadband network. Once you get broadband, you get e-commerce and e-finance, and then we’ll supply the logistics and the financing for that, and we’ll integrate you into the world market.”
They’ve become one of the most connected societies on earth. China has, by far, the highest percentage of e-commerce of any society in the world. Electronic payment systems and electronic banking are much more advanced there than anywhere else.
Snip.
China has a set of weak spots. First, they’ve got a very rapidly aging population. Like all countries with aging populations, they need to export capital and employ young people and other countries to pay for the pensions of their own people. Germany does this, too. That’s part of the motivation for China’s strategy. They will have an enormous burden supporting the aged in the future. They’re hoping to deal with that through automation, through more efficient health care.
Their biggest problem is the ambitions of their young people. The Chinese created a generation of which 10 million people each year take the gaokao (university) exam. A third of them study engineering. They expect opportunities.
If China loses its edge in technology, if they fall behind the West, if the Communist Party is seen to have failed in competing with the West, I think that will be a significant threat to its power.
Worth reading, even if you take it with several grains of salt.
If I missed any China news, feel free to share in the comments.
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Two different pieces have come out recently, painting competing pictures of what a Chinese attempt to conquer Taiwan would look like. First up, this Samson Ellis piece for Bloomberg:
Beijing’s optimistic version of events goes something like this: Prior to an invasion, cyber and electronic warfare units would target Taiwan’s financial system and key infrastructure, as well as U.S. satellites to reduce notice of impending ballistic missiles. Chinese vessels could also harass ships around Taiwan, restricting vital supplies of fuel and food.
Airstrikes would quickly aim to kill Taiwan’s top political and military leaders, while also immobilizing local defenses. The Chinese military has described some drills as “decapitation” exercises, and satellite imagery shows its training grounds include full-scale replicas of targets such as the Presidential Office Building.
An invasion would follow, with PLA warships and submarines traversing some 130 kilometers (80 miles) across the Taiwan Strait. Outlying islands such as Kinmen and Pratas could be quickly subsumed before a fight for the Penghu archipelago, which sits just 50 kilometers from Taiwan and is home to bases for all three branches of its military. A PLA win here would provide it with a valuable staging point for a broader attack.
As Chinese ships speed across the strait, thousands of paratroopers would appear above Taiwan’s coastlines, looking to penetrate defenses, capture strategic buildings and establish beachheads through which the PLA could bring in tens of thousands of soldiers who would secure a decisive victory.
In reality, any invasion is likely to be much riskier. Taiwan has prepared for one for decades, even if lately it has struggled to match China’s growing military advantage.
Taiwan’s main island has natural defenses: Surrounded by rough seas with unpredictable weather, its rugged coastline offers few places with a wide beach suitable for a large ship that could bring in enough troops to subdue its 24 million people. The mountainous terrain is riddled with tunnels designed to keep key leaders alive, and could provide cover for insurgents if China established control.
Taiwan in 2018 unveiled a plan to boost asymmetric capabilities like mobile missile systems that could avoid detection, making it unlikely Beijing could quickly destroy all of its defensive weaponry. With thousands of surface-to-air missiles and anti-aircraft guns, Taiwan could inflict heavy losses on the Chinese invasion force before it reached the main island.
Taiwan’s military has fortified defenses around key landing points and regularly conducts drills to repel Chinese forces arriving by sea and from the air. In July outside of the western port of Taichung, Apache helicopters, F-16s and Taiwan’s own domestically developed fighter jets sent plumes of seawater into the sky as they fired offshore while M60 tanks, artillery guns and missile batteries pummeled targets on the beach.
Chinese troops who make it ashore would face roughly 175,000 full-time soldiers and more than 1 million reservists ready to resist an occupation. Taiwan this week announced it would set up a defense mobilization agency to ensure they were better prepared for combat, the Taipei Times reported.
Doesn’t sound like a cakewalk, does it?
This Tanner Greer piece in Foreign Policy like Beijing’s chances even less:
When Chinese President Xi Jinping spoke to the 19th Party Congress about the future of Taiwan last year, his message was ominous and unequivocal: “We have firm will, full confidence, and sufficient capability to defeat any form of Taiwan independence secession plot. We will never allow any person, any organization, or any political party to split any part of the Chinese territory from China at any time or in any form.”
This remark drew the longest applause of his entire three-hour speech—but it’s not a new message. The invincibility of Chinese arms in the face of Taiwanese “separatists” and the inevitability of reunification are constant Chinese Communist Party themes. At its base, the threat made by Xi is that the People’s Liberation Army has the power to defeat the Taiwanese military and destroy its democracy by force, if need be. Xi understands the consequences of failure here. “We have the determination, the ability and the preparedness to deal with Taiwanese independence,” he stated in 2016, “and if we do not deal with it, we will be overthrown.”
Snip.
Two recent studies, one by Michael Beckley, a political scientist at Tufts University, and the other by Ian Easton, a fellow at the Project 2049 Institute, in his book The Chinese Invasion Threat: Taiwan’s Defense and American Strategy in Asia, provide us with a clearer picture of what a war between Taiwan and the mainland might look like. Grounded in statistics, training manuals, and planning documents from the PLA itself, and informed by simulations and studies conducted by both the U.S. Defense Department and the Taiwanese Ministry of National Defense, this research presents a very different picture of a cross-strait conflict than that hawked by the party’s official announcements.
Chinese commanders fear they may be forced into armed contest with an enemy that is better trained, better motivated, and better prepared for the rigors of warfare than troops the PLA could throw against them. A cross-strait war looks far less like an inevitable victory for China than it does a staggeringly risky gamble.
Chinese army documents imagine that this gamble will begin with missiles. For months, the PLA’s Rocket Force will have been preparing this opening salvo; from the second war begins until the day the invasion commences, these missiles will scream toward the Taiwanese coast, with airfields, communication hubs, radar equipment, transportation nodes, and government offices in their sights. Concurrently, party sleeper agents or special forces discreetly ferried across the strait will begin an assassination campaign targeting the president and her Cabinet, other leaders of the Democratic Progressive Party, officials at key bureaucracies, prominent media personalities, important scientists or engineers, and their families.
The goal of all this is twofold. In the narrower tactical sense, the PLA hopes to destroy as much of the Taiwanese Air Force on the ground as it can and from that point forward keep things chaotic enough on the ground that the Taiwan’s Air Force cannot sortie fast enough to challenge China’s control of the air. The missile campaign’s second aim is simpler: paralysis. With the president dead, leadership mute, communications down, and transportation impossible, the Taiwanese forces will be left rudderless, demoralized, and disoriented. This “shock and awe” campaign will pave the way for the invasion proper.
This invasion will be the largest amphibious operation in human history. Tens of thousands of vessels will be assembled—mostly commandeered from the Chinese merchant marine—to ferry 1 million Chinese troops across the strait, who will arrive in two waves. Their landing will be preceded by a fury of missiles and rockets, launched from the Rocket Force units in Fujian, Chinese Air Force fighter bombers flying in the strait, and the escort fleet itself.
Confused, cut off, and overwhelmed, the Taiwanese forces who have survived thus far will soon run out of supplies and be forced to abandon the beaches. Once the beachhead is secured, the process will begin again: With full air superiority, the PLA will have the pick of their targets, Taiwanese command and control will be destroyed, and isolated Taiwanese units will be swept aside by the Chinese army’s advance. Within a week, they will have marched into Taipei; within two weeks they will have implemented a draconian martial law intended to convert the island into the pliant forward operating base the PLA will need to defend against the anticipated Japanese and American counter-campaigns.
This is the best-case scenario for the PLA. But an island docile and defeated two weeks after D-Day is not a guaranteed outcome. One of the central hurdles facing the offensive is surprise. The PLA simply will not have it. The invasion will happen in April or October. Because of the challenges posed by the strait’s weather, a transport fleet can only make it across the strait in one of these two four-week windows. The scale of the invasion will be so large that strategic surprise will not be possible, especially given the extensive mutual penetration of each side by the other’s intelligence agencies.
Easton estimates that Taiwanese, American, and Japanese leaders will know that the PLA is preparing for a cross-strait war more than 60 days before hostilities begin. They will know for certain that an invasion will happen more than 30 days before the first missiles are fired. This will give the Taiwanese ample time to move much of their command and control infrastructure into hardened mountain tunnels, move their fleet out of vulnerable ports, detain suspected agents and intelligence operatives, litter the ocean with sea mines, disperse and camouflage army units across the country, put the economy on war footing, and distribute weapons to Taiwan’s 2.5 million reservists.
There are only 13 beaches on Taiwan’s western coast that the PLA could possibly land at. Each of these has already been prepared for a potential conflict. Long underground tunnels—complete with hardened, subterranean supply depots—crisscross the landing sites. The berm of each beach has been covered with razor-leaf plants. Chemical treatment plants are common in many beach towns—meaning that invaders must prepare for the clouds of toxic gas any indiscriminate saturation bombing on their part will release. This is how things stand in times of peace.
As war approaches, each beach will be turned into a workshop of horrors. The path from these beaches to the capital has been painstakingly mapped; once a state of emergency has been declared, each step of the journey will be complicated or booby-trapped. PLA war manuals warn soldiers that skyscrapers and rock outcrops will have steel cords strung between them to entangle helicopters; tunnels, bridges, and overpasses will be rigged with munitions (to be destroyed only at the last possible moment); and building after building in Taiwan’s dense urban core will be transformed into small redoubts meant to drag Chinese units into drawn-out fights over each city street.
Interesting analysis of a PLA grunt’s disillusioning journey toward war snipped.
But by the time he reaches the staging area in Fuzhou, the myth of China’s invincibility has been shattered by more than rumors. The gray ruins of Fuzhou’s PLA offices are his first introduction to the terror of missile attack. Perhaps he takes comfort in the fact that the salvos coming from Taiwan do not seem to match the number of salvos streaking toward it—but abstractions like this can only do so much to shore up broken nerves, and he doesn’t have the time to acclimate himself to the shock. Blast by terrifying blast, his confidence that the Chinese army can keep him safe is chipped away.
The last, most terrible salvo comes as he embarks—he is one of the lucky few setting foot on a proper amphibious assault boat, not a civilian vessel converted to war use in the eleventh hour—but this is only the first of many horrors on the waters. Some transports are sunk by Taiwanese torpedoes, released by submarines held in reserve for this day. Airborne Harpoon missiles, fired by F-16s leaving the safety of cavernous, nuclear-proof mountain bunkers for the first time in the war, will destroy others. The greatest casualties, however, will be caused by sea mines. Minefield after minefield must be crossed by every ship in the flotilla, some a harrowing eight miles in width. Seasick thanks to the strait’s rough waves, our grunt can do nothing but pray his ship safely makes it across.
As he approaches land, the psychological pressure increases. The first craft to cross the shore will be met, as Easton’s research shows, with a sudden wall of flame springing up from the water from the miles of oil-filled pipeline sunk underneath. As his ship makes it through the fire (he is lucky; others around it are speared or entangled on sea traps) he faces what Easton describes as a mile’s worth of “razor wire nets, hook boards, skin-peeling planks, barbed wire fences, wire obstacles, spike strips, landmines, anti-tank barrier walls, anti-tank obstacles … bamboo spikes, felled trees, truck shipping containers, and junkyard cars.”
At this stage, his safety depends largely on whether the Chinese Air Force has been able to able to distinguish between real artillery pieces from the hundreds of decoy targets and dummy equipment PLA manuals believe the Taiwanese Army has created. The odds are against him: As Beckley notes in a study published last fall, in the 1990 to 1991 Gulf War, the 88,500 tons of ordnance dropped by the U.S.-led coalition did not destroy a single Iraqi road-mobile missile launcher. NATO’s 78-day campaign aimed at Serbian air defenses only managed to destroy three of Serbia’s 22 mobile-missile batteries. There is no reason to think that the Chinese Air Force will have a higher success rate when targeting Taiwan’s mobile artillery and missile defense.
But if our grunt survives the initial barrages on the beach, he still must fight his way through the main Taiwanese Army groups, 2.5 million armed reservists dispersed in the dense cities and jungles of Taiwan, and miles of mines, booby traps, and debris. This is an enormous thing to ask of a private who has no personal experience with war. It is an even great thing to ask it of a private who naively believed in his own army’s invincibility.
They know war would be a terrific gamble, even if they only admit it to each other. Yet it this also makes sense of the party’s violent reactions to even the smallest of arms sales to Taiwan. Their passion betrays their angst. They understand what Western gloom-and-doomsters do not. American analysts use terms like “mature precision-strike regime” and “anti-access and area denial warfare” to describe technological trends that make it extremely difficult to project naval and airpower near enemy shores. Costs favor the defense: It is much cheaper to build a ship-killing missile than it is to build a ship.
But if this means that the Chinese army can counter U.S. force projection at a fraction of America’s costs, it also means that the democracies straddling the East Asian rim can deter Chinese aggression at a fraction of the PLA’s costs. In an era that favors defense, small nations like Taiwan do not need a PLA-sized military budget to keep the Chinese at bay.
My feeling is that Greer’s analysis is probably more correct, though not to the extent that the United States or Taiwan can rely on it to guarantee victory over a Chinese invasion.
A few further thoughts:
Time to zig while everyone else is zagging over the Supreme Court nomination fight, and once again offer up a roundup of Communist China’s ongoing perfidy:
Chances are that by the time you get to the end of this article, there will be news of another information operation targeting Donald Trump. There’s one a day now—each trumpeting a new mortal threat to the republic or some dastardly revelation based on sources that are usually anonymous. Whatever it is, it will serve the same purpose as the hundreds of similar sallies launched over the last four years—namely, to preserve and protect the position and privileges of America’s ruling elite.
Trump stories are rarely about Trump. The same stories, or versions of them, would have targeted anyone who threatened to sever the American political, corporate, and cultural elite’s economic lifeline to the Chinese Communist Party. It is largely because Trump sought to decouple the United States from the CCP that America’s China Class, which owns the platforms on which Americans communicate, has waged a relentless campaign of information warfare against him through its social media and prestige media brands.
Consider the last two anti-Trump info ops: He gratuitously denigrated the historical suffering of African Americans, and he expressed contempt for America’s war dead. These are the sort of false allegations that political operatives are tasked to manufacture and disseminate during election season. Their purpose is to reinforce a negative impression of the opposing party among whatever cohort is being addressed, and make the target spend resources—time and money and sometimes blood—on defense. That’s politics 101, since the time of the Romans.
What’s new is that this is now journalism too. Since the internet defunded the press at the end of the 20th century and social media became the dominant player in America’s information space, journalism has abandoned the traditional standards and practices that once defined reporting. For instance, the smear holding that Trump is contemptuous of the military was supposedly based on four anonymous sources recalling exchanges from three years ago, which have been contradicted by dozens of named sources, some of whom were physically present when the comments were supposedly made—and some of whom have been public Trump opponents. In traditional journalistic terms, that’s not a news story—that’s a failed attack line.
The press that existed in America from the end of the 19th century until the turn of this one was designed to inform, influence, and sometimes inspire or inflame fellow citizens. But for people under 30, the only kind of “journalism” they’ve ever known is more like Pravda in the old Soviet Union or the kinds of party media found throughout the Third World. Journalism is an insider’s game, in which the stories are often outlandish, but rarely true; their actual news value is the hints they may offer about shadowy maneuverings that affect people’s lives but take place out of public view, like the rise or fall of a particular colonel who is pictured standing closer to or farther away from El Caudillo or Al Rais. Stories aren’t about the realities they purport to depict; the real stories are always the stories about the story.
American journalists, who now draw their paychecks directly and indirectly from the country’s largest economic interest—technopolies like Amazon, Apple, Google, and Facebook—are now turning the public sphere into a phantasmagoria of conspiracy theories and hysteria to cement the politburo’s position and privilege.
Accordingly, the debate in Washington, D.C., over which great power is feeding more disinformation into the 2020 election cycle isn’t real—it’s not Russia, as collusion impresario and Democratic Rep. Adam Schiff claims, nor, as Attorney General William Barr says, is it China, though he’s closer to the truth. The source of the purposeful disinformation pouring into the American public sphere like untreated sewage is the American elite, led by its tech oligarchs, who own the platforms on which information campaigns are staged and laundered to protect their core interests—foremost among them being cheap Chinese labor and access to Chinese markets.
Snip.
By the time the Clinton White House granted China most favored nation trade status in 2000, all of Washington knew that America was running a vast trade deficit that was destined to increase with accession to the World Trade Organization. The price for lifting tens of millions of rural Chinese peasants out of poverty through favorable trade arrangements would be tens of millions of American lives ruined, even as large American companies like Apple and Nike and bankers like JPMorgan and Goldman Sachs got richer. The elite reasoned that they had no choice: The rise of China was inevitable. Why fight it?
American political and corporate elites didn’t choose decline. They chose to get rich. By shipping America’s manufacturing base off to China, they seized a business opportunity the likes of which had never been seen before—an enormous captive labor force controlled by an authoritarian regime that guaranteed the steady production of goods at a fraction of what it would cost at home. American cultural elites (Hollywood, sports, art, etc.) who exploited the increasingly large Chinese market for their products provided cover for the China Class cohort with messaging that dovetailed with CCP propaganda.
Who were Americans to judge a great and ancient civilization like China’s for jailing dissidents and enslaving the Uighur minority? Doesn’t America have its own history of slavery and political prisoners? It’s racist to protect American jobs. Those jobs aren’t coming back and there is nothing to be done about it, as Barack Obama famously said—unless you have a magic wand …
Calling out the American elite for betraying American interests in the service of their own personal and corporate bottom lines helped Donald Trump win the presidency. But it’s not clear that he truly understood how deeply entwined Beijing’s interests were with America’s China Class—and that trying to decouple the two would lead to an attempt at a permanent coup by the new techno-elite, targeting not just him and his supporters but the foundations of the republic, from our military to the media, and from our justice system to the institution of the presidency itself.
The American elite’s financial relationship with China is the key to understanding what’s been happening in America the past four years. Any president, Democrat or Republican, who took on China would have been targeted by the China Class. Because it was Trump flying the Republican banner who sided with America’s working men and women, the Democrats resorted to alliances with powers that now threaten the stability and security of the country.
Overstated? A bit. But there are several kernels of truth in there…
Hong Kong-based virologist Yan Li-Meng, currently in hiding at an undisclosed location, claims that the COVID-19 coronavirus came from a People’s Liberation Army lab, and not from a Wuhan wet market as Beijing has claimed.
EconoTimes reports on Yan:
Speaking on a live stream interview on Taiwan’s News Agency Lude Press, she said, “At that time, I clearly assessed that the virus came from a Chinese Communist Party military lab. The Wuhan wet market was just used as a decoy.”
“I knew that once I spoke up, I could disappear at any time, just like all the brave protesters in Hong Kong. I could disappear at any time, even my name would no longer exist,” Yan said according to a translation.
Yan has been in hiding in the U.S. after fleeing Hong Kong in April. She last made waves in July after an interview with Fox News:
Yan told Fox News in an exclusive interview that she believes the Chinese government knew about the novel coronavirus well before it claimed it did. She says her supervisors, renowned as some of the top experts in the field, also ignored research she was doing at the onset of the pandemic that she believes could have saved lives.
She adds that they likely had an obligation to tell the world, given their status as a World Health Organization reference laboratory specializing in influenza viruses and pandemics, especially as the virus began spreading in the early days of 2020.
On July 30th, Chinese state media published details of the upcoming fifth plenary session. The Party’s leaders have traditionally used the conference to lay out their next five-year plan, but this time a new detail was included—a pointed reference to “targets for 2035.” The date may give us some indication of how long Xi Jinping intends to retain his position as president. China has reached a crucial stage of its development, with superpower status at last in sight, and Xi has decided that only one man can be trusted to guide the country through the final stages of its glorious journey. That man is himself, of course. He has assumed the role of Great Helmsman, famously ordering the removal of presidential term limits in 2018 to ensure that the inferior leaders of the future don’t botch the job.
In the years since becoming president, Xi has drawn state powers to himself like no other Chinese leader since Mao. Today he oversees all aspects of economic, political, cultural, social, and military reform, and at the same time he directs all aspects of national, internet, and information security.1 This dramatic fortification of his personal power requires him to focus on the silencing of dissent—again, to a greater degree than any of his predecessors since Mao. But dissent crops up in many and varied forms, even in China, and as a result we find that the president’s power base is built on countless personal tragedies.
Xi has authorised his secret police to kidnap, “interrogate” (torture), and detain for six months anyone charged with endangering state security, which means, in reality, anyone who has expressed heretical views. Tens of thousands have disappeared as a result. Others have been caught in his anti-corruption dragnet—a convenient cover for him to get rid of dissenting voices. And more than a million people have been locked in concentration camps, most of them guilty only of belonging to the wrong ethnic group. If Xi really does stay in power until 2035 then we can expect the casualties to keep piling up for another 15 years. We owe it to these victims to tell a few of their stories, and to remember some of their names.
Xi’s Gestapo thugs will sometimes come for TV newscasters just before they are due to go on air, but in 2018 they came for an elderly professor while he was actually on the air. Six or seven policemen turned up to drag Sun Wenguang, 83, away from his live interview with Voice of America. These are cynical terror tactics. It’s one thing to read a detached news report about someone having been arrested; it’s quite another to actually hear the panic in the old man’s voice as he shouts: “What are you doing? What are you doing? It’s illegal for you to come into my home!” That interview will not quickly be forgotten by Chinese listeners to Voice of America.
“Deng Xiaoping kept everyone together by promising to make them rich,” says Nicholas Bequelin, East Asia Director of Amnesty International. “What keeps things together under Xi is fear. Fear of the system, where no matter how high you are, from one day to the next you can disappear.” 243 Party officials are reported to have killed themselves during Xi’s first few years in office, apparently terrified at the prospect of investigation by his dreaded Central Commission for Discipline Inspection. It is not difficult to understand why they might have chosen this route. Both body and will are broken in the Party’s detention centres. Each of those officials knew that after just a few months in police custody, he would no longer be the same person.
Several sad examples of Chinese individuals broken by torture snipped.
Xi Jinping has more in common with an emperor of the ancient world than the chairman of a revolutionary vanguard party. Despite this, somewhat paradoxically, he has resurrected the language of Mao’s era. In the words of John Garnaut, one-time advisor to the Australian government, “Xi’s language of ‘party purity’; ‘criticism and self-criticism’; ‘the mass line’; his obsession with ‘unity’; his attacks on elements of ‘hostile Western liberalism,’ ‘constitutionalism,’ and other variants of ideological ‘subversion’—this is all Marxism-Leninism as interpreted by Stalin as interpreted by Mao.”
The Communist Party of the 21st century is a classic Chinese dynasty rather than the temporary guardian of a workers’ revolution. Its leaders are concerned with the Party itself, not with communism. But Xi is using elements of Marxism-Leninism as the glue to hold society together—like a religion, perhaps, or like Confucianism in earlier dynasties. “Our red nation will never change colour,” he tells the people. And with the return of the old phrases comes the return of the old practices. Xi knows that Western ideas are forever infecting the minds of his subjects; always perverting the purity of students, of lawyers, of government officials. Like Stalin and Mao, he knows that regular purges are necessary in order to preserve the spiritual health of the people.
Xi’s main legacy, however, is surely the Xinjiang nightmare. Over the past few years a million or more Uyghur Muslims (and smaller numbers of Kazakhs and Kyrgyz) have been shut in concentration camps scattered about the western province. This mass incarceration is a response to terrorist attacks carried out by Uyghur separatists in Kunming and Ürümqi in 2014—attacks that came at the end of decades of tension between Uyghurs and Han Chinese, the country’s dominant ethnicity.
The camps are designed to stamp out extremist thinking. Unfortunately, as with so many of Xi’s policies, there is no concern for collateral damage. Party leaders have been given instructions to round up anyone acting suspiciously, but this definition of “suspicious” appears to have been provided by a paranoid schizophrenic. Uyghurs have been interned for growing a beard; making plans to travel abroad; praying too much (or, on other occasions, not praying enough); setting clocks to two hours after Beijing time; even simply having been born in the 1990s. The wrong skin colour is itself cause for suspicion.
From the outset, Xi told his officials to show no mercy. They took him at his word, and now the personal tragedies are mounting.
Read the whole thing.
Xinjiang is a massive region larger than Mongolia pic.twitter.com/e60gYo0E5g
— Color Revolutionary Poso (@JackPosobiec) August 3, 2020
China's planned route to the Arabian Sea is key for their Westward expansion – and strategically located next to the India-China border, not to mention their largest oil supplier Iran, and of course, Afghanistan.
Welcome to Great Power politics… pic.twitter.com/TzBVny4zXs
— Color Revolutionary Poso (@JackPosobiec) August 3, 2020
The conventional wisdom has long been that, if there is to be a major war involving China and the U.S., it will be the result of either of a rising China initiating war to displace the failing U.S. hegemon, or a declining U.S. initiating a war to stymie a rising China. But this ignores the possibility that systemic or hegemonic war between China and the U.S. may not have anything to do with a rising power. It ignores the possibility that such a war might be initiated by what I will call a faltering contender, a once-rising power whose ascent is running out of steam and whose leaders believe that it must decisively reshape the global order now while it still can.
The logic linking a faltering bid for hegemony to systemic war is simple enough. Faced with the prospect that it is losing the demographic or developmental race with other potential challengers, or merely with non-hegemonic rivals, a faltering contender will sometimes launch what might be thought of as a war of desperation. In this kind of war, a faltering contender will initiate hostilities because, having realized that it has reached the peak of its relative power, it decides it must initiate war now, even under unfavorable circumstances, because if it doesn’t, it will not only fail to achieve predominance but will face the prospect of catastrophic defeat in the near future. Such wars are not caused by states leaping through open windows of opportunity created by the military advantage they enjoy over their potential rivals. Instead, they are caused by stalled rising powers, at a current or imminent military disadvantage, attacking despite this disadvantage because it is the least bad of several very bad options open to them.
Analogies to Germany in World War I and Japan in World War II snipped.
China’s explosive economic growth since the beginning of reform in 1979 is a unique success story, as is the concomitant growth of its military power and global influence. Few could have predicted that within one generation of Richard Nixon’s visit to Beijing in 1972, China would have risen to undisputed number two in the global pecking order. China now has the world’s second-largest economy, a world-class military with growing force projection capabilities, a worldwide network of ‘silk roads’ making it a central node in the global economy, and a diplomatic profile that makes it, if not an ‘indispensable nation,’ then something pretty close. And yet, at precisely the moment when its tide has reached heights not seen for centuries, the Chinese leadership has reason to believe that China’s star may not be in the ascendant much longer. President Xi’s failed One-Belt initiative, botched COVID-related ‘medical soft power’ play, abrogation of the ‘one-country, two-systems’ modus vivendi with Hong Kong, inconclusive border clashes with India, failure to sustain China’s economic momentum, policy-induced demographic time-bomb, and a growing sentiment that China is becoming less powerful and therefore less relevant player on the world stage suggest that China is no longer a rising power, but a faltering one. Viewed through this lens, the picture of the future that comes into focus is one of counterbalancing, containment, economic ‘decoupling,’ social turmoil, ethnic unrest, and general entropy culminating in collapse. Unless a forward-thinking Chinese leader might conclude, decisive steps are taken now to put things aright. And what might those steps be? Well, if history is any guide, they might include launching a war of desperation in the hope of securing the best geopolitical settlement possible before China is weakened to the point where it is simply condemned to another ‘hundred years of humiliation.’ What that war might look like – how it might erupt, whom it might involve, what course it might take – cannot be forecast with any certainty. But then neither could the war started by Germany in 1914 nor that by Japan in 1941. The point is that in those two earlier cases, the only rational course of action for the faltering challenger was the strategic Hail Mary pass. The question is, will a China whose rise is similarly stalling throw a comparably desperate strategic pass the early in the 21st century?
The U.S. Justice Department this week indicted seven Chinese nationals for a decade-long hacking spree that targeted more than 100 high-tech and online gaming companies. The government alleges the men used malware-laced phishing emails and “supply chain” attacks to steal data from companies and their customers. One of the alleged hackers was first profiled here in 2012 as the owner of a Chinese antivirus firm.
Charging documents say the seven men are part of a hacking group known variously as “APT41,” “Barium,” “Winnti,” “Wicked Panda,” and “Wicked Spider.” Once inside of a target organization, the hackers stole source code, software code signing certificates, customer account data and other information they could use or resell.
APT41’s activities span from the mid-2000s to the present day. Earlier this year, for example, the group was tied to a particularly aggressive malware campaign that exploited recent vulnerabilities in widely-used networking products, including flaws in Cisco and D-Link routers, as well as Citrix and Pulse VPN appliances. Security firm FireEye dubbed that hacking blitz “one of the broadest campaigns by a Chinese cyber espionage actor we have observed in recent years.”
Snip.
One of the men indicted as part of APT41 — now 35-year-old Tan DaiLin — was the subject of a 2012 KrebsOnSecurity story that sought to shed light on a Chinese antivirus product marketed as Anvisoft. At the time, the product had been “whitelisted” or marked as safe by competing, more established antivirus vendors, although the company seemed unresponsive to user complaints and to questions about its leadership and origins.
Those charged also include Zhang Haoran, Jiang Lizhi, Qian Chuan and Fu Qiang.
The Trump administration plans to soon scrap a 2013 agreement between U.S. and Chinese auditing authorities, a senior State Department official said, a move that could foreshadow a broader crackdown on U.S.-listed Chinese firms under fire for sidestepping American disclosure rules.
The deal, which set up a process for a U.S. auditing watchdog to seek documents in enforcement cases against Chinese auditors, was initially welcomed as a breakthrough in U.S. efforts to gain access to closely guarded Chinese financial information and bestowed a mark of legitimacy on Chinese regulators.
But the watchdog, known as the Public Company Accounting Oversight Board (PCAOB), has long complained of China’s failure to grant requests, meaning scant insight into audits of Chinese firms that trade on U.S. exchanges.
The lack of transparency has prompted administration officials to lay the groundwork to exit the deal soon, according to Keith Krach, undersecretary for economic growth, energy and the environment, in a sign the PCAOB will give up on efforts to secure information from the Chinese.
Good.
His doctorate research was about Chinese foreign policy and he was about to discover firsthand how the rising superpower seeks to attain influence.
After his presentation, Jun Wei, also known as Dickson, was, according to US court documents, approached by several people who said they worked for Chinese think tanks. They said they wanted to pay him to provide “political reports and information”. They would later specify exactly what they wanted: “scuttlebutt” – rumours and insider knowledge.
He soon realised they were Chinese intelligence agents but remained in contact with them, a sworn statement says. He was first asked to focus on countries in South East Asia but later, their interest turned to the US government.
That was how Dickson Yeo set off on a path to becoming a Chinese agent – one who would end up using the professional networking website LinkedIn, a fake consulting company and cover as a curious academic to lure in American targets.
Five years later, on Friday, amid deep tensions between the US and China and a determined crackdown from Washington on Beijing’s spies, Yeo pleaded guilty in a US court to being an “illegal agent of a foreign power”. The 39-year-old faces up to 10 years in prison.
Snip.
In 2017, Germany’s intelligence agency said Chinese agents had used LinkedIn to target at least 10,000 Germans. LinkedIn has not responded to a request for comment for this story but has previously said it takes a range of measures to stop nefarious activity.
Some of the targets that Yeo found by trawling through LinkedIn were commissioned to write reports for his “consultancy”, which had the same name as an already prominent firm. These were then sent to his Chinese contacts.
One of the individuals he contacted worked on the US Air Force’s F-35 fighter jet programme and admitted he had money problems. Another was a US army officer assigned to the Pentagon, who was paid at least $2,000 (£1,500) to write a report on how the withdrawal of US forces from Afghanistan would impact China.
In finding such contacts, Yeo, who was based in Washington DC for part of 2019, was aided by an invisible ally – the LinkedIn algorithm. Each time Yeo looked at someone’s profile it would suggest a new slate of contacts with similar experience that he might be interested in. Yeo described it as “relentless”.
According to the court documents, his handlers advised him to ask targets if they “were dissatisfied with work” or “were having financial troubles”.
When globalism’s obituary is finally written, and the mourners file past in their crisp suits and pantsuits, the cause of death will almost certainly read, the People’s Republic of China.
China is the most obvious offender. Even before the Wuhan virus cut off countries from each other, the communist oligarchy had abused the world economy with massive digital theft, even more massive counterfeiting, product dumping and every possible form of economic warfare.
That’s why any halfway serious adult on the other side supports Trump’s fight against China.
Last year, even George Soros, the uber-globalist, called Trump’s trade war with China his greatest achievement. This year, during the coronavirus crisis, Soros came out against working with the People’s Republic of China against the virus.
This certainly doesn’t buttress my theory that both Soros and China are backing antifa/#BlackLivesMatter, but it doesn’t entirely invalidate either.
Dozens of universities, including Columbia and Stanford, are hosting the Chinese government-funded Confucius Institute despite increasing scrutiny from the federal government.
Many elite universities with Confucius Institute programs appear to be unfazed by the Trump administration’s decision last week to designate the D.C-based headquarters of the program as a “foreign mission”—a label the U.S. government applies to entities it finds to be directly controlled by a foreign power. Despite the announcement, nearly 50 colleges and universities will continue their partnership with Confucius Institute programs, which comes with up to $1 million in Chinese government funding.
The cushy partnership between American universities and the Chinese regime has restricted academic freedom on campus, frequently forcing administrators and faculty members to self-censor to avoid Beijing’s wrath. While many universities rely on the organization to support Mandarin language classes and Chinese culture lessons, the program also bars its staff from discussing topics considered taboo by the Chinese Communist Party, such as the Xinjiang concentration camps or the Hong Kong protests.
Many who view the rise of China, and especially its growing technological competence, with a mixture of fear and awe should ask themselves why if emphasizing critical race theory and gender studies has not been a mistake.
— wretchardthecat (@wretchardthecat) August 14, 2020
Well, not all of them. No blog is big enough for all China’s lies. But here’s an update on the lies being told, and crimes being committed, by China’s ruling Communist Party.
There are plenty of direct ways the new national security law could backfire on economic freedom in Hong Kong.
For example, it criminalizes “foreign interference” without specifying who the measure targets or where the boundaries lie. Might a Goldman Sachs report out of Hong Kong questioning China’s gross domestic product data put its business charter at risk? What about Nomura Holdings downgrading a key China Inc. company?
International news organizations might feel paranoid about reporting on fraud at Hong Hong-listed companies or China corralling more than 1 million ethnic minority residents in Xinjiang province into “indoctrination camps.” It is hard to see how short sellers like Muddy Waters Research maintain Hong Kong offices when they spotlight alleged fraud at mainland companies, most recently Nasdaq-listed Luckin Coffee.
The extradition bill that helped fuel the 2019 protests, which allowed people to be moved from Hong Kong to the mainland, could return, perhaps imposed by fiat from Beijing. What multinational corporate board or startup team eying an IPO wants to have that worry in the backs of their minds? Or the specter of the Chinese Communist Party remaking Hong Kong’s judiciary and banking system in its image?
The more Xi damages China’s liberal financial zone, the more the foreign companies generating millions of jobs in Hong Kong will question why they should stay.
The Trump administration said it could no longer certify Hong Kong’s political autonomy from China, a move that could trigger sanctions and have far-reaching consequences on the former British colony’s special trading status with the U.S.
Secretary of State Michael Pompeo announced the decision Wednesday, a week after the government in Beijing declared its intention to pass a national security law curtailing the rights and freedoms of Hong Kong citizens.
“Hong Kong does not continue to warrant treatment under United States laws in the same manner as U.S. laws were applied to Hong Kong before July 1997,” Pompeo said in a statement. “No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground.”
Snip.
A finding on Hong Kong’s autonomy was compelled by last year’s Hong Kong Human Rights and Democracy Act. The law signed by Trump requires such a certification each year.
Pompeo’s decision opens the door for a range of options, from visa restrictions and asset freezes for top officials to possibly imposing tariffs on goods coming from the former colony.
“The United States stands with the people of Hong Kong as they struggle against the CCP’s increasing denial of the autonomy that they were promised,” Pompeo said, referring to the Chinese Communist Party.
As with Berlin, how the U.S., Western Europe and, more importantly, the key nations in the Indo-Pacific region react to the events in Hong Kong will end up determining the geopolitical course of this century.
That Hong Kong is no more is a fact. The form of Hong Kong, with its culture forged by the productive union of British rule of law and individual rights with Chinese entrepreneurship and diligence, may last another year or two. But the idea of Hong Kong is dead, killed by the Chinese Communist Party’s (CCP) insatiable quest for total control.
The proximate cause of Hong Kong’s demise is the CCP’s demand to use extrajudicial kidnappings, torture and executions to terrorize its 7.5 million people into submission—in short, to rule Hong Kong as it rules Turkestan (Xinjiang), Tibet and, someday soon it hopes, Taiwan.
The people of Hong Kong saw this day coming, but they were powerless to stop it. Hong Kong’s Basic Law agreement, the contract acknowledging Hong Kongese’ human rights, was always subject to termination whenever the CCP felt powerful enough to do so. It is, as with any agreement the CCP signs, worthless.
In the meantime, China’s communist leaders ramp up their paranoid rantings, claiming foreign “black hands” are behind the unrest in Hong Kong. Concurrently, China’s propaganda mouthpieces continue to press the absurd notion that America started the coronavirus pandemic.
Thus, crushing Hong Kong’s spirit while murdering a few thousand student democracy activists will only embolden Beijing. How can it be otherwise, as it perceives fewer consequences than the slap on the wrist it received after the Tiananmen Square massacre in 1989?
The problem with bombastic propagandistic lies is that they are sometimes believed. And the CCP appears predisposed to believing its own lies. To “defend” itself, the CCP may soon order its modernized armed forces into action along the first island chain, from the southern tip of Japan to the coast of Vietnam, with Taiwan and, to a lesser extent, the Philippines.
The urgent task before our generation is to prevent a monstrous darkness from snuffing out freedom’s flame. We must deter the PRC from expanding its horizon to the first island chain while setting the conditions for victory—removing the CCP, as it exists today, from power. We win, they lose.
This task has already started, when the Trump administration, for the first time since the Reagan-era effort to win the Cold War, declared that the U.S. will engage a “whole-of-government” strategic approach to the challenge presented by the PRC. This approach acknowledges that the CCP doesn’t merely present an economic threat, with its unfair trade practices and intellectual property theft, as well as a military threat—but that it also seeks to supplant our values.
Over the past month, China’s People’s Liberation Army (PLA) has reportedly moved at least 5,000 troops to the “Line of Actual Control,” which demarcates the border between China and India. The mobilization of troops to the Galwan River valley, on the westernmost border between the two countries, led to a clash on May 5, when Chinese and Indian forces engaged in fisticuffs and stone-throwing. In keeping with Sino–Indian border protocols, both sides were unarmed, but the skirmish — and another in the Naku La region near Tibet on May 12 — left several troops injured.
Though the facts on the ground in the remote Himalayan border region are unclear, satellite imagery of the area confirms a rapid military buildup by Chinese forces since April. India has responded in kind, mobilizing troops and artillery to the area in recent days, according to Bloomberg News. An Indian policy analyst who requested anonymity adds that there is also evidence that the two sides have moved aircraft closer to the region.
The apparent trigger for China’s military buildup is the completion of an Indian road in the Galwan River valley up to the Line of Actual Control, according to Indian national-security analyst Nitin Gokhale. The People’s Republic of China (PRC) has long held a superior position in this frontier region, with roads and electricity lines that far surpass those on the Indian side. However, “in the last few years, India has been playing catch-up, and has finally built roads up to the LAC,” according to Dhruva Jaishankar, the director of the Observer Research Foundation’s U.S. Initiative. India’s Border Roads Organization, which is currently constructing 61 roads, has now developed the infrastructure to compete with the PLA in the disputed territory. In turn, China has attempted to preserve its advantage by pushing back Indian development, leading to intermittent confrontations. Most recently, in 2017, China’s construction of a road through Doklam, near Bhutan, an ally of India, set off two months of brinkmanship, ending with a Chinese retreat but heightening caution on both sides.
The border dispute pertains primarily to two contested territories: the Aksai Chin plateau to the west and the Indian state of Arunachal Pradesh to the east. Chinese offensives in the two areas ignited the 1962 Sino–Indian War, ending with an informal ceasefire as the two sides agreed to the loosely demarcated Line of Actual Control. To Beijing, the LAC granted territory claimed by Delhi on the western side of the border, which contains a strategically crucial road between Tibet and Xinjiang. In the eastern portion of the LAC, however, the PRC effectively ceded what it calls “South Tibet,” retreating to the McMahon Line, the Tibetan–Indian border drawn by British colonial officials in the early 20th century. But PRC officials still consider the McMahon Line a vestige of imperialism, and continue to lay claim to Arunachal Pradesh, an Indian state of 2 million people with strong cultural ties to Tibet.
India PM Narendra Modi doesn’t strike me as the kind of person who willingly backs down…