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Scooped by Malcolm Riddell

‘Tech Rivalry Intensifies Over 5G, TikTok’

‘Tech Rivalry Intensifies Over 5G, TikTok’ | ANALYSIS | Scoop.it

Council on Foreign Relations

Adam Segal | Council on Foreign Relations

‘The U.S.-China struggle over technology will not disappear in 2021.’

‘This year saw significant escalation in the technology competition between the United States and China.’

  • ‘Most important, in May, the U.S. Commerce Department tightened the noose on Huawei, cutting the telecommunications manufacturer off from critical semiconductor suppliers and expanding restrictions on U.S. technology.’
  • ‘These measures dealt a severe blow to the company’s 5G business, and, as a result, several European countries announced restrictions on Huawei’s participation in their telecommunication networks.’

‘In addition, the Trump administration moved to ban the Chinese-owned apps TikTok and WeChat for national security reasons, which would mark the first time the United States widely blocks foreign information technology.’

  • ‘While these restrictions have so far been halted by the courts, the Trump administration further announced its intention to limit Chinese telecom carriers and cloud service providers as well as restrict Chinese developers’ access to American mobile application stores.’

‘Beijing is trying to insulate itself from Washington’s pressure.’

  • ‘In recent months, it announced a new strategy to maintain economic growth and reduce its reliance on foreign markets and technology.’

‘The domestic chip industry is an especially important area of focus.’

  • ‘The government is spending billions of dollars to support research and development, encouraging small firms to enter the sector, recruiting talent from Taiwan and conducting cyberattacks on Taiwanese chip firms, and exploring open-source technologies that could be beyond the reach of American export control laws.’

‘In addition, the Chinese leadership is asserting more political control over the technology sector:’

  • ‘it issued new guidelines to increase the influence of the Chinese Communist Party within firms; blocked the IPO of Ant Group, one of the world’s highest valued financial technology companies; and unveiled new anti-monopoly regulations that limit the influence of the biggest companies.’

‘The U.S.-China struggle over technology will not disappear in 2021.’

  • ‘The Biden administration’s technology policy will likely be more multilateral and more closely tied to domestic economic initiatives, but still oriented toward competition with China.’
  • ‘Beijing will not abandon its efforts to increase indigenous innovation capabilities and reduce U.S. leverage.’
  • ‘Technology competition is now a defining element of the bilateral relationship.’
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Scooped by Malcolm Riddell

‘Trump’s China Gift’

‘Trump’s China Gift’ | ANALYSIS | Scoop.it

‘Trump’s China Gift’

Elizabeth C. Economy, Senior Fellow for China Studies

‘The more policies the Trump administration piles on, the greater the leverage and range of options it leaves for the Biden team.’ 

‘The Trump administration’s China policy is here to stay—or at least that is what the administration is working furiously to ensure.’

  • ‘In the weeks following the U.S. presidential election, administration officials have undertaken a flurry of activities related to TibetTaiwan, financial decoupling, and the South China Sea, adding to the vast edifice of initiatives they have constructed over the past four years.’

‘While it may appear as though these last-minute actions will make it more difficult for the incoming Biden administration, the opposite is true.’

  • ‘The more policies the Trump administration piles on, the greater the leverage and range of options it leaves for the Biden team.’ 

‘The Biden administration will have the luxury of deciding how much to retain of what the Trump team has built.’

  • ‘Some decisions, such as whether to maintain tariffs on $370 billion worth of Chinese goods, will be challenging.
  • ‘The tariffs have hurt the U.S. economy, but they have also given the United States economic leverage.
  • ‘Moreover, unwinding them too quickly will leave the new administration open to accusations of being soft on China.

‘Other moves, including reviving the Quadrilateral Security Dialogue with Australia, India, and Japan; elevating the U.S.-Taiwan relationship; and sanctioning officials and companies suspected of human rights abuses in Xinjiang, are likely here to stay.

  • ‘Some efforts, such as the aggressive prosecution of those involved in Chinese influence activities in the United States, could be maintained but tempered significantly.’

‘The Biden administration could realize some quick wins by filling in the gaping holes the Trump team has created by abandoning traditional sources of U.S. leverage and influence.’

  • ‘Rejoining international institutions and agreements, partnering with European allies, strengthening the United States, and reconstructing the U.S.-China diplomatic framework are likely all on Biden’s agenda.’

‘But realizing the benefits and rectifying the mistakes of the Trump administration’s China policy is good only for the first one hundred days.’

  • ‘The true test for the Biden administration is what it will do about China in the remaining 1,360.’
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'China rethinks the Jack Ma model'

'China rethinks the Jack Ma model' | ANALYSIS | Scoop.it

Nikkei

‘The vertiginous rise of China's Big Tech companies has clearly spooked the government and triggered a rethink of its monopoly-friendly attitudes.’

‘In antitrust enforcement in China, the government has often been uniquely tolerant of monopolies, which dominate industries from shipbuilding to telecoms.’

‘Previously, lax enforcement is seen as an expression of the Communist Party's conventional wisdom:’

  • ‘Domestically, monopolies are more manageable than a messily competitive market, and internationally, they are more competitive.’
  • ‘But the vertiginous rise of China's Big Tech companies has clearly spooked the government and triggered a rethink of its monopoly-friendly attitudes.’

‘The proposed antitrust guidelines will give Chinese law enforcement bodies more space for discretion in determining abuse by companies.’

  • ‘According to the 22-page consultation document - published one day ahead of Alibaba's blockbuster annual Singles Day shopping event in November - practices such as selling goods below cost, price discrimination based on customer data analytics, and exclusive sales agreements would also be in violation of the proposed regulations.’

‘While some countries define monopolistic behavior by market share, for example, China's new guidelines for internet companies are more flexible.’

  • ‘Regulators only need to prove that their conduct has hindered consumer interests to come in for enforcement.’

‘China's government may well be operating with two motives in mind:’

  • ‘checking the power of the internet conglomerates to maintain domestic control and stability, and’
  • ‘bringing regulations on areas like data privacy and internet finance up to international standards - that would put their companies in a better position to compete abroad.’

 ‘In addition to the concerns of instability domestically, Kendra Schaefer of Trivium believes another motivation for Beijing's push for new internet regulations is to advance the fortunes of its companies internationally.’

  • ‘In other words, China may suddenly be interested in internet regulation because other countries are too.’
  • ‘ "It's no secret that China aims to become a technological superpower in areas such as blockchain, AI, big data, etc. There is a growing awareness among top leadership that it cannot do that without a solid foundation of data governance principles," she said.’

‘ "China wants to empower its tech companies, and want its tech companies to be strong enough to compete with the likes of Google and Facebook, Uber on foreign ground," said Kendra Schaefer.’

  • ‘ "But at the same time, their ultimate, ultimate goal is stability. They are free to innovate to a certain extent, but as soon as they stepped on [the Party's] toes, they are going to get jerked back. We see this going on and on for the past 20 years." ’
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'Taiwan, Biden and China’s High-Tech Ambitions'

'Taiwan, Biden and China’s High-Tech Ambitions' | ANALYSIS | Scoop.it

Bloomberg

‘As Biden ponders which path to choose on China’s technological ascent, it increasingly looks like Taiwan may play an outsized role in those deliberations.’ 

‘What’s going on at China’s largest chipmaker?’

‘Semiconductor Manufacturing International Corp. is trying to clarify the intentions of a top executive after reports he’d submitted his resignation, apparently miffed the company appointed a vice chairman without consulting him.’

  • ‘What may seem like a little corporate intrigue in fact matters to China and the world.’

‘The state-backed company lies at the heart of Beijing’s intentions to build a world-class semiconductor industry free of U.S. technology.’

  • ‘Co-Chief Executive Officer Liang Mong Song was seen as key to SMIC’s ambitions of eventually matching industry leaders Samsung or TSMC:
  • ‘SMIC shares sank almost 10% on news of his apparent departure.’

‘SMIC is also at the forefront of navigating U.S.-China ties that have taken a dive during Donald Trump’s presidency.’

  • ‘Washington recently labeled SMIC a national security threat, threatening to cripple its access to crucial components.’

‘SMIC and Huawei Technologies are Chinese national champions, central to President Xi Jinping’s plans to become self-sufficient in future-oriented technologies from AI to 5G and autonomous vehicles.’

  • ‘Semiconductors lie at the core of all these developments.’

‘The incoming administration of Joe Biden will now decide if SMIC is hobbled or allowed to continue its advance.’

‘The role of democratically-governed Taiwan, which China regards as its territory, is another factor.’

  • ‘Liang is an alumnus of Taiwan’s TSMC, the world’s leading manufacturer of cutting-edge chips, underscoring how key the island is to China’s development.’

‘As Biden ponders which path to choose on China’s technological ascent, it increasingly looks like Taiwan may play an outsized role in those deliberations.’ 

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Henry Paulson: How to Fix Our Relationship With China

Henry Paulson: How to Fix Our Relationship With China | ANALYSIS | Scoop.it

The Wall Street Journal

Hank Paulson | former Secretary of the Treasury

‘Competition without unnecessary confrontation should be our goal—because confrontation without effective competition has produced some poor results for the American people.’

‘President-elect Joe Biden is inheriting a relationship with China that will be fraught for the foreseeable future.

  • ‘Over the past several years—and increasingly during 2020—we’ve seen signs of stress: more tariffs, heightened restrictions, revoked visas, fewer student and scholar exchanges, inflammatory rhetoric and much more.’

‘To be sure, while the new administration can bring new policies, competition is the cornerstone of the U.S. relationship with a power that has a rival ideology and very different economic and political systems.’

  • ‘But keeping that competition healthy, and not pernicious, is vitally important.
  • ‘Relentless, debilitating competition where the two governments seek to curtail all trade, investment and technology flows will make that nearly impossible.’

‘We will need to rebuild our relationships with allies and shape the environment to create incentives and disincentives for China’s choices and conduct.’

  • ‘It is essential to put in place new global rules for trade, investment, technology, the environment and the digital world.’

‘Here, President Biden should join with our allies, such as Japan, the European Union, the U.K., South Korea and Australia, to leverage a coordinated policy to upgrade the global trading system and its governing bodies, like the World Trade Organization.’

  • ‘If these allied economies can agree on a framework, they will be in a far stronger position to invite China to join, if it is willing to meet the agreed-upon global standards.’
  • ‘If Beijing refuses to join us in this new multilateral effort, we should look to a punitive tool kit built on targeted reciprocity that includes jointly withholding access to our markets.’

‘The Biden administration should initiate a comprehensive new round of bilateral negotiations with China aimed at achieving a fair, sweeping and reciprocal trade relationship focused on markets of the future.’

  • ‘Such an agreement would open key areas to investment and export, address the market distortions of China’s state-owned firms, and deal with structural and process issues that include both services and goods.’

In return, the U.S. should be more predictable and prepared to make our own market open to trade and investment from Chinese firms.’

  • ‘Of course, investments that threaten our national security should be prohibited.’
  • ‘But we must be careful to avoid sequestering so much technology that American companies lose their ability to commercialize and deploy their products in the world’s fastest-growing market.’

‘Similarly, preventing legitimate Chinese companies from U.S. capital-market listings on vague national-security grounds only makes London, Hong Kong or Tokyo more attractive.’

  • ‘Such actions will do more to hurt America’s credibility, leadership and economic competitiveness than halt China’s progress.’

‘The key is to get strategic competition with China right.’

  • ‘Competition without unnecessary confrontation should be our goal—because confrontation without effective competition has produced some poor results for the American people.’
  • ‘It has damaged our economy. It has stunted our export opportunities. In time, it will threaten the peace of the world and doesn’t make us safer.’
  • ‘And so, we will have chaos and conflict if we cannot get this right.’
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Economic Policy Likely Less Accommodative Than Expected in 2021 

Economic Policy Likely Less Accommodative Than Expected in 2021  | ANALYSIS | Scoop.it

MacroPolo

Houze Song | MacroPolo

‘There will likely be more fiscal consolidation in 2021, which means that fiscal spending will become more conservative, putting a drag on growth.’  

‘A central theme of this year’s Central Economic Work Conference (CEWC) will likely focus on the implementation of the recently announced 14th Five–Year Plan (FYP) that starts in 2021.’ 

  • ‘This means the policy direction will center on supply side structural reforms, such as innovation, improving the business environment, and addressing inequality.’
  • ‘Meanwhile, de-risking and deleveraging is back on Beijing’s agenda, which implies that demand-side policies will be relatively restrictive as well.’  
  • ‘Combined, this policy direction should inject some caution into the latest bullish growth forecasts for 2021, since the signal is still deemphasizing growth.’ 

‘In fact, President Xi Jinping has already set expectations on growth by elaborating on why the 14th FYP doesn’t contain an explicit growth target as in the past.’ 

  • ‘It appears that Xi believes downplaying the growth target will help Beijing focus on improving productivity and avoid constantly diverting resources to prop up growth.’   

‘This apparent shift in emphasis from focusing on recovery to structural reforms takes place in a relatively deflationary environment.’ 

  • ‘For example, November CPI is the weakest it has been in years.’ 

‘Meanwhile, fewer migrants have so far managed to find jobs, suggesting there is still sizeable slack in the labor market.’

  • ‘In other words, the supply side still has a lot of potential for recovery.’  

‘Yet unleashing that supply-side potential to support the recovery crucially depends on how accommodative policy will be, especially in the first half of 2021.’ 

  • ‘This is why the direction of policy from the Central Economic Work Conference will matter—prioritizing supply side reforms will naturally mean less attention paid to supporting growth.’  

‘At the same time, the demand side picture also does not look particularly rosy for growth, as de-risking climbs back to a top priority and as Beijing emphasizes economic security—including supply chain integrity, indigenous technology development, and financial stability—as an expansive and guiding principle.’ 

  • ‘Just last month,Ding Xuexiang, Xi’s chief of staff, instructed officials to treat tail risks as if they are high probability events.’  

‘Supply chains and technology decoupling have attracted much attention.’

  • ‘But it is the renewed emphasis on financial risk that will have the largest near–term impact on growth because it will lead to an aggressive withdraw of fiscal stimulus.’ 
  • ‘That’s because this year’s stimulus further increased local fiscal deficits, exacerbating existing fiscal vulnerabilities.’
  • ‘Reports of debt-fueled financing of white elephant projects have once again alarmed Beijing.’  

‘So Beijing has recently signaled that policy needs to revert back to proactive mitigation of risk rather than simply preventing it, putting local government debt front and center once again.’ 

  • ‘But unlike the disruptive deleveraging campaign of 2017-2018, Beijing will likely employ a more targeted approach rather than one that was across the board.’ 
  • ‘As a result, there will likely be more fiscal consolidation in 2021, which means that fiscal spending will become more conservative, putting a drag on growth.’  

‘In general, the economic signals from Central Economic Work Conference will likely be broadly growth negative, even as the post-Covid recovery remains incomplete.’

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Semiconductors | 'Pound for Pound, Taiwan Is the Most Important Place in the World' 

Semiconductors | 'Pound for Pound, Taiwan Is the Most Important Place in the World'  | ANALYSIS | Scoop.it

The New York Times

Ruchir Sharma | chief global strategist, Morgan Stanley Investment Management

‘Taiwan is at the center of the battle for global technological supremacy. Pound for pound, it is the most important place in the world.’

‘The new Cold War, between the United States and China, is increasingly focused on access to just one industry in one place:’

  • ‘computer chips made in Taiwan.’

‘Over the past year, Taiwan has taken a lead in the race to build thinner, faster and more powerful chips, or semiconductors.’

  • ‘Its fastest chips are the critical building blocks of rapidly evolving digital industries like artificial intelligence and high-speed computing.’
  • ‘The thinnest chips will be powering the coming “internet of things,” in which homes, cars, appliances and even clothes will connect to smartphones and voice-activated speakers over 5G networks.’

‘As of now, any country looking to dominate the digital future has to buy these superfast, ultrathin chips from either Taiwan or South Korea.’

  • ‘And Taiwan has the edge in both technology and market power.’

‘It is a small island of just 24 million people, but it is at the center of the battle for global technological supremacy.’

  • ‘Pound for pound, it is the most important place in the world.’

‘After World War II, only two major emerging economies managed to grow faster than 5 percent for five decades in a row and to rise from poverty into the ranks of developed economies.’

  • ‘One was Taiwan, the other South Korea.’

‘They kept advancing up the industrial ladder by investing more heavily in research and development than did any of their rivals among emerging economies.’

  • ‘Now they are among the research leaders of the developed economic world as well.’

‘How did they accomplish this feat? Competent governments played a major role.’

  • ‘South Korea nurtured giant conglomerates like Samsung and Hyundai, which exported consumer products under their own brand names.’
  • ‘Taiwan cultivated smaller companies focused on making parts or assembling finished products for foreign brands.’
  • ‘Today the flexibility goes a long way toward explaining its success.’

‘Taiwan always managed to stay near the cutting edge, at first by borrowing technology from Western nations.’

  • ‘As early as the 1970s, electronics had replaced textiles as its leading manufacturing industry.’
  • ‘Through every phase of the computer revolution, from PCs to software to the mobile internet, Taiwanese factories managed to retool fast enough to remain important global suppliers.’

‘Inspired by Silicon Valley, Taiwan’s government in 1980 set up the first of its science parks.’

  • ‘Each park would have its own tech-focused university, and the government offered bonuses for Taiwanese-born engineers to return home from other countries to work there.’
  • ‘Mixing overseas experience with young local graduates, the science parks became hothouses for entrepreneurial start-ups.’

‘A few start-ups went on to become giant companies, though still relatively unknown to the global public.’

  • ‘By the 2010s a Taiwanese company, Foxconn Technology, was assembling 40 percent of the world’s consumer electronic products, using plants in Asia, Europe and Latin America.’
  • ‘Today Taiwanese companies are major suppliers of a wide range of parts — smartphone lenses, e-paper displays — and the indispensable suppliers of computer chips.’

‘One of the Taiwanese government’s early star recruits was Morris Chang, a graduate of the Massachusetts Institute of Technology and a veteran of Texas Instruments.’

  • ‘Tasked with building a semiconductor industry, Chang reviewed Taiwan’s strengths and weaknesses, and rejected the idea of trying to go head-to-head with global brands like Intel.’
  • ‘Instead, he built the world’s first chip foundry, Taiwan Semiconductor Manufacturing Company, or T.S.M.C.’

‘Much like the Taiwan contract manufacturers that once made toys and textiles, a “pure foundry” like Mr. Chang’s stayed in the background, cranking out chips for global brands rather than its own devices.’

  • ‘Today foundries are a small corner of the $430 billion global chip market, but all of the most advanced chips come from foundries.’
  • ‘And two-thirds of foundry production comes out of Taiwan, most of it from T.S.M.C.’

‘Intel fell behind the leaders this year because of production delays.’

  • ‘That left only two real competitors standing: Samsung and T.S.M.C.’
  • ‘Both introduced five-nanometer chips this year and plan to introduce the first three-nanometer chips in 2022.’

‘Going forward, many tech analysts predict that Taiwan’s business model gives it a clear edge.’

  • ‘Most customers prefer a pure foundry that does not compete with them to design chips or build devices, and only Taiwan offers this service.’
  • ‘That is a big reason Apple has been switching from Samsung to T.S.M.C. for the processing chips in the iPhone and why Intel is expected to outsource production of its most advanced chips mainly to T.S.M.C.’

‘Taiwan has tried to position itself as the “Switzerland” of chips, a neutral supplier, but it increasingly finds itself at the center of the jousting between China and the United States.’

  • ‘U.S. sanctions against China’s leading smartphone maker, Huawei, were designed in part to block Huawei’s access to chips from T.S.M.C. Beijing responded by accelerating a campaign to build its own advanced chip plants on Chinese soil.’
  • ‘And the Trump administration countered by inviting T.S.M.C. to build a U.S. chip fabrication plant, which will be in Arizona.’

‘In this contest, it is not clear which superpower has the upper hand.’

  • ‘China still relies more heavily on imports and foreign technology, but the United States is investing less aggressively in local production, and the Arizona plant won’t be nearly big enough to fill the gap.’

‘Unlike Taiwan’s other factories, which are scattered worldwide, its chip fabrication plants are concentrated on its home island, just 100 miles off the mainland coast of China.’

  • ‘In the event of military conflict or rising tension,S. access to those chip fabrication plants could be vulnerable to missile threat or naval blockade.’
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Scooped by Malcolm Riddell

China Macro Reporter Archive

Greetings!

In this issue:

Lock Him Up!

  • 'Jimmy Lai Charged Under Hong Kong Security Law'
  • 'Hong Kong media tycoon Jimmy Lai used tabloid and Twitter to push for illegal sanctions against local and Chinese authorities, prosecutors say'
  • 'HK anti-govt figure Lai charged under national security law; ‘severe sentence’ highly likely'

China, Wall Street, & the Art of Market Entry

  • 'China Has One Powerful Friend Left in the U.S.: Wall Street'

China, Wall Street, & the Art of the Spin

  • 'China Censors Viral Boast of Influence Over Wall Street, Biden'
  • 'Tucker Carlson: Our elites' collusion with China is real and widespread'

Riding the Default Wave

  • 'Investors Are Learning to Live with China’s Corporate Defaults'
  • 'No Guarantees - China’s Bond Market is Jolted by Some Surprising Defaults'
  • 'Guaranteed Government Bailouts: Is the End Nigh?'  

Katherine Tai & the Biden Trade Agenda

  • 'Biden Can Make American Trade Deals Great Again'
  • 'Biden-Harris Transition Announcement: USTR'
  • 'Katherine Tai on Trade Policy'

CHINADebate, the publisher of the China Macro Reporter, aims to present different views on a given issue.

Including an article here does imply agreement with or endorsement of its contents.

 

In 1992, before China had formally opened its life insurance market to foreign companies, AIG was unexpectedly granted a branch license to do business in Shanghai.

  • All other insurers immediately stepped up their efforts to likewise be allowed to enter the market.

But AIG had laid the groundwork, and the others hadn’t.

  • In the late 1980s, when Zhu Rongji was mayor of Shanghai, AIG had sponsored a McKinsey study to help plan Shanghai’s ascent to become a world-class city.
  • AIG had financially-backed the building of the first contemporary, multi-use complex in Shanghai since 1949, the Shanghai Center.
  • AIG granted a scholarship to the Mayor Zhu’s child to study abroad.
  • AIG purchased at auction (this could have been after the license) for $500,000 artifacts looted from the Summer Palace during the Boxer Rebellion, which AIG president, Hank Greenberg, then presented to China.
  • And more things I am sure than I remember both for Shanghai and China.

AIG had bet on the right horse.

  • In 1991, Zhu became vice-premier.
  • And as mentioned got a license well-before any other firms were invited to apply.

I remember talking with a senior executive at one of those firms who recounted seeing, before the granting of the AIG license, Hank Greenberg and Henry Kissinger together entering the offices of top finance officials.

  • “How can I beat that,” he said.
  • AIG has carried out a well-planned and ultimately successful campaign.

I started my boutique investment bank, RiddellTseng, in 1988 in Taipei with aim of helping foreign financial firms enter the Taiwan market – then a notoriously torturous and often unsuccessful endeavor.

  • When China opened up, my clients said let’s go.

The difficulties I encountered there were entirely different from those in Taiwan.

  • In life insurance, the competition to get an invitation to apply for a license was fierce. (A firm couldn’t just apply in those days, it had to be invited – and only two a year received invitations.)

And the field of competition was trying to outdo each other with favors to China.

  • Firms, for example, built or sponsored schools and medical facilities, even orphanages; gave endowments to graduate schools; and their CEOs joined the boards of top business schools. And training, always a lot of free training.

All by of saying that China has always been adept at squeezing benefits out of foreign financial services firms in exchange for a crack at the Chinese market.

  • Saying ‘just be patient, you’ll get your shot. In the meantime how about our seconding some more actuaries to your company for training’.

So fast forward a few decades, and I wasn’t surprised when I read in 'China Has One Powerful Friend Left in the U.S.: Wall Street' in The Wall Street Journal that:

  • ‘In February 2018, Beijing’s chief trade negotiator was in Washington to try to avert a trade war.’
  • ‘Before meeting his U.S. counterparts, he turned to a select group of American business executives—mostly from Wall Street.’
  • “We need your help,” Vice Premier Liu He told guests gathered in a hotel near the White House, according to people with knowledge of the matter.’

‘Looking for allies in trade talks with the Trump administration, Mr. Liu dangled a prize, the people say:’

  • ‘Beijing offered to give U.S. financial firms a new opportunity to expand in China.’

‘The get-together helped turn Wall Street into one of the biggest cheerleaders for a deal.’

  • ‘In the trade agreement that was eventually signed in January, China’s financial opening stood out as a prominent concession.’

Whether in financial services or any other industry, it pays to be a ‘friend of China.’

 

But I was surprised a couple of days later when a friend, a former partner in a major Wall Street investment bank, sent me clip of ‘The Tucker Carlson Show’ on Fox News. Mr. Carlson had picked up on a speech given by Di Dongsheng, a professor at Renmin University, who said, according to Bloomberg, among many other things:

  • “We have a network of ‘China’s old friends’ on Wall Street, who had access and control over the D.C. politicians,” Di said, adding that those connections failed to help during the trade war because “Wall Street can’t control Trump.”
  • ‘Di, bragged about Beijing’s sway over Wall Street and Biden’s son Hunter and said: “Biden is back! Our old game is back.” ’

‘Carlson seized on the comments on his Monday broadcast as proof that U.S. elites have been working on behalf of China,’ Bloomberg reported.

  • ‘By Thursday, video of the talk had been removed from Chinese social media and video platforms.’
  • Even the firebrand Global Times editor, Hu Xijin, tweeted, “There are some Chinese scholars who like to brag and spice-up tales about their ties with high-level figures to seek attention and promote oneself.’

Mr. Carlson spun this speech, saying:

  • ‘Top leaders in American government and business have been compromised by a foreign power that seeks to undermine our country and our democratic system.’
  • ‘This is as close to a smoking gun as we have ever seen.’

Mr. Carlson, that gun has been smoking for as long as I have been doing business in China – and that’s a long time.

 

If you don’t follow finance in China, you may have missed a trend that may portend serious reform in the industry: ‘Beijing is allowing a wave of defaults by state-linked companies in the country’s $15 trillion credit market.’ (Bloomberg)

  • ‘In China, about 96%of onshore credit ratings are the equivalent of investment grade.’
  • “2021 could be an inflection point” for the introduction of a “genuine credit risk mechanism in China.” ’

‘A more accurate pricing of risk gives buyers of bonds greater transparency in a relatively opaque economy.’

  • ‘That would boost the allure of Chinese debt, drawing more inflows, which in turn would help reduce the reliance of the nation’s capital markets on the government.’

But, as he often does, Houze Song of MacroPolo, revealed the deeper implications:

  • ‘One of the main distortions in the Chinese economy is that local state-owned enterprises (SOEs) can borrow at artificially low interest rates, which affects credit allocation throughout the economy.’ 
  • ‘Investors widely believe that local governments will always bail out troubled firms, an implicit guarantee that meant investors did not need to price in the risk of default.’
  • ‘This is why the recent spate of local SOE defaults sent jitters among investors, because it appears that the previous assumption no longer held and a wholesale repricing of risk is in order.’ 

But ‘declaring the end of the implicit guarantee is still premature for several reasons.’

  • ‘While the impact of this case could well lead to a systemic repricing of bonds, it has not shaken the foundation of the local government implicit guarantee.’
  • ‘That foundation is built on bank lending, which is about five times larger than bonds as a source of local financing.’ 
  • ‘So long as the relationship between local governments and banks holds, a form of implicit guarantee will persist.’ 

 

President-elected Biden named Katherine Tai to be the U.S. Trade Representative.

  • Given the praise for the pick and her background, she seems qualified (although I would have preferred someone with more heft).

Not knowing much about Ms. Tai, I looked for any public comments she had made on trade policy and China.

  • I found a Center for American Progress webcast she participated in in November.

Goodness knows that I have gotten tongue-tied in similar forums. But, then, I’m not up for the USTR post.

  • I have transcribed her comments on China here.
  • And…well, have a look and make your own judgement.

Same for a WSJ op-ed by Robert Zoellick. Mr. Zoellick, we expect better from you.

  • Believe me, I only included it because Mr. Zoellick wrote it – and that makes it important – certainly not for the deep insights.

 

Finally, the news that I had been watching for finally appeared:

  • Jimmy Lai, 73-year-old billionaire and media magnate has been formally charged under Hong Kong’s National Security Law.
  • He faces life imprisonment.

The Chinese Communist Party’s mouthpiece, the Global Times, says:

  • ‘He is a traitor, a criminal and a force of evil who has sowed violence and chaos in arguably one of the freest and most prosperous cities in the world.’

I say he’s a hero and incredibly courageous.

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'HK anti-govt figure Lai charged under national security law; ‘severe sentence’ highly likely'

'HK anti-govt figure Lai charged under national security law; ‘severe sentence’ highly likely' | ANALYSIS | Scoop.it

The Global Times

‘He is a traitor, a criminal and a force of evil who has sowed violence and chaos in arguably one of the freest and most prosperous cities in the world.’

The Global Times is daily newspaper under the auspices of the Chinese Communist Party's People's Daily newspaper.

‘Anti-government media tycoon in Hong Kong Jimmy Lai, deemed as a "modern-day traitor" for his notorious acts and deeds in instigating one of the most violent and chaotic riots in the city in 2019, was officially charged under the national security law for Hong Kong.’

‘After an in-depth investigation by the National Security Department of the Hong Kong Police, the 72-year-old man was charged with an additional offense of "collusion with a foreign country or with external elements to endanger national security," the Hong Kong Police Force (HKFP).’
‘Some Western media and political figures have been trying to portray Lai and his infamous Apple Daily newspaper as the spiritual leader of the so-called free press, which is considered as naïve thinking that fails to listen to the true voices of Hong Kong's people, experts said.’

‘To the fair-minded people familiar with the 72-year-old's words and actions - and the grave consequences of them for the roughly 7 million residents in the city - he is a traitor, a criminal and a force of evil who has sowed violence and chaos in arguably one of the freest and most prosperous cities in the world.’

‘He was arrested on August 10 by the HKPF, about 40 days after the enactment of the highly anticipated national security law for Hong Kong.’

  • ‘Being the most high-profile case, it also delivered a heavy blow to local secessionists, experts said.’ 

‘Some legal experts considered that given Lai's infamous behaviors, it's highly possible that he could face a severe sentence under the national security law for Hong Kong, and "life imprisonment can't be ruled out," Tian Feilong, a legal expert at Beihang.’
‘As the Trump administration, which has been severely confronting with China over Hong Kong affairs, has now entered its transition period, observers see this as the window of opportunity to continue consolidating the victorious fruits of the national security law for Hong Kong, which aims at secessionists like Lai and Joshua Wong.’

  • ‘And in the coming months, more reforms in the law enforcement, legal, education and civil affairs sectors are expected to be accelerated to "clean up the mess" left by anti-government rioters in the Chinese city.’

 

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'HK anti-govt figure Lai charged under national security law; ‘severe sentence’ highly likely'

'HK anti-govt figure Lai charged under national security law; ‘severe sentence’ highly likely' | ANALYSIS | Scoop.it

The Global Times

‘He is a traitor, a criminal and a force of evil who has sowed violence and chaos in arguably one of the freest and most prosperous cities in the world.’

‘Anti-government media tycoon in Hong Kong Jimmy Lai, deemed as a "modern-day traitor" for his notorious acts and deeds in instigating one of the most violent and chaotic riots in the city in 2019, was officially charged under the national security law for Hong Kong.’

‘After an in-depth investigation by the National Security Department of the Hong Kong Police, the 72-year-old man was charged with an additional offense of "collusion with a foreign country or with external elements to endanger national security," the Hong Kong Police Force (HKFP).’
‘Some Western media and political figures have been trying to portray Lai and his infamous Apple Daily newspaper as the spiritual leader of the so-called free press, which is considered as naïve thinking that fails to listen to the true voices of Hong Kong's people, experts said.’

‘To the fair-minded people familiar with the 72-year-old's words and actions - and the grave consequences of them for the roughly 7 million residents in the city - he is a traitor, a criminal and a force of evil who has sowed violence and chaos in arguably one of the freest and most prosperous cities in the world.’

‘He was arrested on August 10 by the HKPF, about 40 days after the enactment of the highly anticipated national security law for Hong Kong.’

  • ‘Being the most high-profile case, it also delivered a heavy blow to local secessionists, experts said.’ 

‘Some legal experts considered that given Lai's infamous behaviors, it's highly possible that he could face a severe sentence under the national security law for Hong Kong, and "life imprisonment can't be ruled out," Tian Feilong, a legal expert at Beihang.’
‘As the Trump administration, which has been severely confronting with China over Hong Kong affairs, has now entered its transition period, observers see this as the window of opportunity to continue consolidating the victorious fruits of the national security law for Hong Kong, which aims at secessionists like Lai and Joshua Wong.’

  • ‘And in the coming months, more reforms in the law enforcement, legal, education and civil affairs sectors are expected to be accelerated to "clean up the mess" left by anti-government rioters in the Chinese city.’
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Hong Kong media tycoon Jimmy Lai used tabloid and Twitter to push for illegal sanctions against local and Chinese authorities, prosecutors say

Hong Kong media tycoon Jimmy Lai used tabloid and Twitter to push for illegal sanctions against local and Chinese authorities, prosecutors say | ANALYSIS | Scoop.it

South China Morning Post

‘According to prosecutors, Lai called for overseas countries to “voice out and take action” over Beijing’s suppression in a tweet tagging United States Secretary of State Mike Pompeo, even after the national security law came into force.’

‘Hong Kong media tycoon Jimmy Lai Chee-ying used his Apple Daily tabloid and his Twitter account to call for sanctions against local and mainland Chinese authorities, according to a document prosecutors submitted to court on Saturday.’

  • ‘The 17-page filing, obtained by the Post, was submitted to West Kowloon Court where Lai was charged with one count of colluding with foreign powers, an offence under the Beijing imposed on Hong Kong in June.’

‘Lai, the 73-year-old founder of Next Digital that owns Apple Daily, was handcuffed and chained around the waist while being escorted to court.’

  • ‘He was denied bail and is expected to spend the coming four months in detention while police comb through his social media posts and examine his overseas visits to gather evidence.’

‘According to prosecutors, Lai called for overseas countries to “voice out and take action” over Beijing’s suppression in a tweet tagging United States Secretary of State Mike Pompeo, even after the national security law came into force.’

  • ‘In another tweet, he urged the US to “be lenient” towards young Hongkongers seeking asylum in the country.’
  • ‘Prosecutors also targeted Lai’s commentaries published in his newspaper, in which he said he believed international sanctions against Beijing over the new law would be more severe than the penalties imposed over the 1989 Tiananmen Square crackdown.’

‘According to the filing, Apple Daily also hosted online chats with prominent guests such as Nicholas Kristof, a US-based journalist, and Mark Clifford, executive director of the Asia Business Council and former editor-in-chief of the Post more than a decade ago.’

  • ‘Prosecutors said Lai would discuss how he thought Western countries would unite against China and why the West should be on guard against Chinese President Xi Jinping – whom he called Mao Zedong No 2.’

‘Some of the allegations also covered activities carried out before the national security law was enacted on June 30, including interviews he did with American news networks Fox News and CNN and a meeting with US Vice-President Mike Pence.’

 

‘The document also noted Lai had 120,000 Twitter followers and pointed to prominent individuals he followed such as Pompeo and Taiwanese President Tsai Ing-wen, as well as Benedict Rogers and Luke de Pulford, from concern group Hong Kong Watch based in Britain.’

  • ‘Lai was not required to enter a plea at this stage.’
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'Jimmy Lai Charged Under Hong Kong Security Law'

'Jimmy Lai Charged Under Hong Kong Security Law' | ANALYSIS | Scoop.it

The New York Times

Vivian Wang & Chris Buckley | The New York Times

“This is a show of defiance telling the world that in spite of the sanctions and so forth, there is no possibility that they would relax this tight regime.”

‘In two strokes unveiled on Friday, the Chinese Communist Party laid out in stark relief the rapidly shrinking space for speech and independent journalism in China.’

‘In Hong Kong, the police said on Friday that Jimmy Lai, the outspoken founder of an ardently antigovernment newspaper, had been charged under the city’s new national security law with colluding with foreign forces.’

  • ‘The police did not specify what Mr. Lai was accused of having done to violate the security law.’

‘Mr. Lai was already in jail after being denied bail on unrelated fraud charges, a decision he is appealing.’

  • ‘But because of the charge under the national security law, which grants the authorities sweeping powers to hold defendants without bail, it is unlikely that he will win release.’

‘As written, the law is not supposed to be retroactive.’

  • ‘And since it was imposed, Lai has said that he would be more careful about his words, shying away for example from explicit requests to American lawmakers.’

‘The move against Mr. Lai, the most high-profile person to be charged under Hong Kong’s new law, was not a surprise.’

  • ‘State-run news outlets have railed against him as a “black hand” behind last year’s protests, pointing to his trip last year to the United States to lobby Vice President Mike Pence and Secretary of State Mike Pompeo for action against China. Chinese officials have openly thirsted for him to be punished.’
  • ‘That call was answered in August, when Mr. Lai was arrested on suspicion of violating the security law, and police officers raided the headquarters of Apple Daily, his newspaper.’
  • ‘The indictment on Friday stems from that arrest.’

‘Under the national security law, court proceedings can be held behind closed doors, and defendants can even be removed to mainland China to stand trial.’

  • ‘If convicted, Lai could face up to life in prison.’

 

‘Hours later, Bloomberg News disclosed that plainclothes security officials had earlier that week detained Haze Fan, a Chinese staffer in Beijing, also on potential national security violations.’

  • ‘Chinese officials said only that Ms. Fan, who had been taken four days earlier from her apartment, was accused of “criminal activities that jeopardize national security,” according to Bloomberg’s report.’
  • ‘In the mainland, the news of Ms. Fan’s detention sent ripples of disquiet among foreign news outlets, which have already been beleaguered by expulsions of journalists and tightening reporting restrictions.’

‘But both cases made clear how potent the party’s aggressive use of national security concerns has been in spreading fear, both among its own people and in foreign organizations.’

‘Pro-democracy activists in Hong Kong said the indictment of Mr. Lai was a clear warning that Beijing intended to use the security law, which was just enacted in June, to silence dissent and erode free speech.’

‘Many supporters of democracy in once-freewheeling Hong Kong have long feared that the Communist Party is seeking to turn the semiautonomous territory into just another mainland city.’

  • ‘Friday’s dual revelations showed some of them just how much the differences between the two places had collapsed.’

‘But Claudia Mo, a former pro-democracy lawmaker, said many believed the authorities were merely looking for a premise on which to shut down Apple Daily, which has continued to needle the government even after the security law was enacted.’

  • ‘ “This seems likely a key part of their ideological control over Hong Kong,” Ms. Mo said.’
  • ‘ “They hate Lai’s high political profile and find his media influence more than bothersome.” ’

‘Mr. Lai’s indictment and Ms. Fan’s detention come at a potentially sensitive time for China geopolitically.’

  • ‘China has come under heavy fire from Western countries, especially the United States, Britain and Australia, for its new constrictions on Hong Kong.’

‘The Communist Party has aggressively rejected those criticisms.’

  • ‘But some officials and state newspapers have also indicated that they would seek a reset with the United States under Mr. Biden — a reset that these moves could endanger.’

‘But Willy Lam, a professor of Chinese politics at the Chinese University of Hong Kong, said China’s leader, Xi Jinping, was determined to broadcast strength against “the so-called bullying and intimidation from the U.S. and the Western world.” ’

  • “This is a show of defiance,” Professor Lam said of the charge against Mr. Lai, “telling the world that in spite of the sanctions and so forth, there is no possibility that they would relax this tight regime.” ’
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Tucker Carlson: Our elites' collusion with China is real and widespread

Tucker Carlson: Our elites' collusion with China is real and widespread | ANALYSIS | Scoop.it

Fox News

Tucker Carlson |Fox News

‘This is as close to a smoking gun as we have ever seen.’

‘Top leaders in American government and business have been compromised by a foreign power that seeks to undermine our country and our democratic system.’

  • ‘It turns out that many of the very people who ranted so hysterically about Russia  were doing precisely what they claimed to decry.’
  • ‘They were working on behalf of our chief global rival, the government of China.’

 

‘On Nov. 28, Di Dongsheng, a professor at Renmin University in Beijing, appeared on a Chinese television show about Wall Street and international trade.’

  • ‘Like so many in academia in China, Di is a servant of his country's government.’
  • ‘This video was deleted from Chinese social media soon after being uploaded, and here's why:’

‘DI DONSHENG (translation): “The Trump administration is in a trade war with us, so why can't we fix the Trump administration? Why, between 1992 and 2016, did China and the U.S., use to be able to settle all kinds of issues? No mater what kind of crises we encountered ... things were solved in no time ... We fixed everything in two months. What is the reason? I'm going to throw out something maybe a little bit explosive here. It's just because we have people at the top. At the top of America's core inner circle of power and influence, we have our old friends.” ’

‘This is as close to a smoking gun as we have ever seen.’

‘So who are these people and how many of them work in our media and in our government?’

  • Well, Di didn't say precisely.’ 

‘The problem came when Donald Trump was elected.’

  • After that, he says, everything changed.’

‘DI DONGSHENG (translation): “For the past 30 years, 40 years, we have been utilizing the core power of the United States ... Since the 1970s, Wall Street had a very strong influence on the domestic and foreign affairs of the United States, so we had a channel to rely on. But the problem is that after 2008, the status of Wall Street has declined, and more importantly, after 2016, Wall Street can't fix Trump. Why? It's very awkward. Trump had a previous soft default issue with Wall Street, so there was a conflict between them. But I won't go into details, I may not have enough time. So during the U.S.-China trade war they [Wall Street] tried to help. And I know that, my friends on the U.S. side told me that they tried to help, but they couldn't do much” ’.

‘Since the 1970s, Di said, Wall Street has had enormous influence over the way the United States government operates.’

  • The Chinese government, he says, has enormous influence on Wall Street, and that arrangement worked very well for a long time.’

Then Donald Trump unexpectedly was elected in 2016 and Wall Street was infuriated.’

  • "Wall Street can't fix Trump," he said, but they tried.’
  • This gives the game away.’
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'Guaranteed Government Bailouts: Is The End Nigh?'  

'Guaranteed Government Bailouts: Is The End Nigh?'   | ANALYSIS | Scoop.it

MacroPolo

Houze Song | MacroPolo

‘So even if bond holders start to discount the implicit guarantee, banks won’t be much deterred by these defaults because they can recover their lending to local SOEs in more ways than one. In fact, when regions have experienced large–scale defaults, bank lending actually increases relative to other forms of financing 

‘One of the main distortions in the Chinese economy is that local state-owned enterprises (SOEs) can borrow at artificially low interest rates, which affects credit allocation throughout the economy.’ 

  • ‘Investors widely believe that local governments will always bail out troubled firms, an implicit guarantee that meant investors did not need to price in the risk of default.’
  • ‘This is why the recent spate of local SOE defaults sent jitters among investors, because it appears that the previous assumption no longer held and a wholesale repricing of risk is in order.’ 

‘On the one hand, Beijing has been increasingly moving away from implicit guarantees on state assets and has become more tolerant of defaults.’

  • ‘This is ultimately a positive development for the Chinese economy because it gets rid of a major distortion.’
  • ‘But a sudden change to the prevailing belief of guaranteed bailouts invariably will be disruptive and spook markets.’  

‘On the other hand, declaring the end of the implicit guarantee is still premature for several reasons.’

  • ‘For one, some of the latest defaults are not as surprising.’
  • ‘As I’ve been highlighting, the deteriorating fiscal health of local governments has already chipped away at their ability to bail out local firms, particularly among the more debt-laden provinces.’
  • ‘Not only are those provinces less able to bail out firms, investors are also less willing to hold bonds of struggling firms.’     

‘More surprising was the case of Henan’s Yongcheng Coal, a gigantic triple-A rated SOE that suddenly defaulted on its bond in early November.’ 

  • ‘That default roiled China’s bond market because it happened to a firm in a relatively fiscally sound province, upending the notion that defaults will be limited to financially struggling regions.’   

‘While the impact of this case could well lead to a systemic repricing of bonds, it has not shaken the foundation of the local government implicit guarantee.’

  • ‘That foundation is built on bank lending, which is about five times larger than bonds as a source of local financing.’ 

‘Because bonds pale in comparison to bank financing, that also means bond investors are a much less important interest group than state banks for local governments.’

  • ‘So long as the relationship between local governments and banks holds, a form of implicit guarantee will persist.’ 

‘First, banks have disproportionate influence over local finance because they provide around two–thirds of total credit and are the biggest holder of local government bonds.’ 

  • ‘This means local governments have reciprocal and entrenched relationships with banks and generally want to placate them.’ 

‘For instance, even a fiscally struggling local government controls many valuable resources, and it can award banks with fiscal deposits or financing opportunities for future infrastructure projects as compensation.’ 

  • ‘So even if bond holders start to discount the implicit guarantee, banks won’t be much deterred by these defaults because they can recover their lending to local SOEs in more ways than one.’
  • ‘In fact, when regions have experienced large–scale defaults, bank lending actually increases relative to other forms of financing (see Figure 1, above).’  

‘The recent SOE defaults may have rocked the bond market, and the eventual outcome will lead to some local SOEs paying higher interest rates.’ 

  • ‘But the local government implicit guarantee problem that distorts credit allocation has not been resolved.’

‘For that to happen will require a more fundamental reset of the relationship between local governments and banks.’

  • ‘That paradigm is starting to shift, but there is still quite a distance to go.’ 
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'Investors Are Learning to Live With China’s Corporate Defaults'

'Investors Are Learning to Live With China’s Corporate Defaults' | ANALYSIS | Scoop.it

Bloomberg

‘Beijing is allowing a wave of defaults by state-linked companies in the country’s $15 trillion credit market.’

‘Beijing is allowing a wave of defaults by state-linked companies in the country’s $15 trillion credit market.’

  • ‘This week, prominent chipmaker Tsinghua Unigroup Co.defaulted on $450 million of dollar debt triggering cross-defaults on another $2 billion -- equivalent to almost two-thirds of the total defaulted debt in China’s offshore bond market in 2019.’

‘While this may be bad news for the weakest state-owned enterprises, it’s an improvement for investors, the credit market and China overall.’

  • ‘A more accurate pricing of risk gives buyers of bonds greater transparency in a relatively opaque economy.’
  • ‘That would boost the allure of Chinese debt, drawing more inflows, which in turn would help reduce the reliance of the nation’s capital markets on the government.’
  • ‘State banks are among the biggest buyers of onshore corporate debt.’

‘ “For the first time we might have opportunity in the medium term to have a genuine local high-yield market, that’s what has been missing for years in China,” according to Jean-Charles Sambor, head of emerging markets fixed income at BNP Paribas Asset Management in London.’

  • ‘ “2021 could be an inflection point” for the introduction of a “genuine credit risk mechanism in China.” ’

‘In China, about 96% of onshore credit ratings are the equivalent of investment grade.’

  • ‘Yet the recent defaults are prompting investors to put a premium on state-owned firms, especially the weakest ones.’
  • ‘The average yield on riskier SOE bonds rose to a record 7.36% on Thursday.’
  • ‘Even top-rated SOEs are starting to feelsome pain; the average yield on their bonds is about 5%. That’s up 32 basis points from a year earlier.’
  • ‘ “Between the best and worst provinces and the best and worst SOEs there was a very limited difference in terms of credit risk, and this is changing,” Sambor said.’

‘Authorities will be on guard to limit any broader impact from defaults, according to Thu Ha Chow, a portfolio manager at Loomis Sayles Investments Asia Pte.’

  • ‘ “We do not expect regulators will allow for a disorderly sell-off to cause a systemic risk,” said Chow, who is looking for buying opportunities among onshore SOEs in the year ahead.’
  • ‘ “What is important for China’s bond market development is for defaults to be resolved in a fast and predictable manner so that companies and investors can appropriately price risk rather than artificially avoid defaults which lead to moral hazard.” ’
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'Biden Can Make American Trade Deals Great Again'

'Biden Can Make American Trade Deals Great Again' | ANALYSIS | Scoop.it

The Wall Street Journal

Robert Zoellick | former president of the World Bank (2007-12) and U.S. trade representative

‘Mr. Biden will have to defuse Donald Trump’s trade wars and connect his economic and foreign policies.’

‘President-elect Joe Biden probably wishes he could avoid trade policy. He can’t.’

  • ‘To re-establish partnerships with allies, devise rules for a changing world economy, and prepare the American labor force for the future, Mr. Biden will have to defuse Donald Trump’s trade wars and connect his economic and foreign policies.’

‘The press reported on Wednesday that Mr. Biden will nominate Katherine Tai, a talented trade lawyer with experience in Congress, to be U.S. Trade Representative.’

  • ‘Ms. Tai has an opportunity to reshape policy and realign trade politics.’

‘Since 1947, America’s leadership has included setting the world’s trade agenda.’

  • ‘Yet last month, without U.S. participation, 15 other countries in the Asia-Pacific, including China and U.S. allies, signed a new Regional Comprehensive Economic Partnership to establish rules for the most dynamic 30% of the world economy.’

‘The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, launched in 2018, drew from provisions in U.S. free-trade agreements. But President Trump dropped out.’

  • ‘If for political reasons Biden decides not to rejoin President Obama’s Trans-Pacific Partnership, Mr. Biden could begin with a digital accord.’

‘Countries around the world are negotiating the business standards of the future.’

  • ‘The new architects of international economics are adapting to changes in supply chains, including the move to digital platforms and services.’
  • ‘The U.S. has instead been preoccupied with raising tariffs.’
  • ‘If the U.S. doesn’t show up for modern trade negotiations, it can hardly expect to set the rules.’

‘The Biden administration has an opportunity to build a new domestic coalition for trade.’

  • ‘Groups ranging from digital denizens to farmers know that economic isolationism is a loser.’
  • ‘Even so, Biden’s political advisers may be inclined to bury the trade topic to avoid fights with labor unions.’

‘A new Biden approach should highlight the digital economy, environmental goods and services, and health supplies, as well as intellectual property and agriculture.’

‘A Biden strategy also will need to face China.’

  • ‘The U.S. will gain leverage if it builds a liberalizing coalition connected with a modernizing agenda.’

‘China doesn’t want to be isolated.’

  • ‘The problem now is that Mr. Trump isolated America.’

‘Mr. Biden shouldn’t double down on protectionism.’

  • ‘He could package openness to trade with assistance to workers and an increase in the minimum wage.’

‘Mr. Biden and Ms. Tai can redirect the future international economy by combining good trade policy and politics.’

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China Censors Viral Boast of Influence Over Wall Street, Biden 

China Censors Viral Boast of Influence Over Wall Street, Biden  | ANALYSIS | Scoop.it

Bloomberg

“We have a network of ‘China’s old friends’ on Wall Street, who had access and control over the D.C. politicians.”

‘A Chinese professor’s speech boasting about Beijing’s influence over President-elect Joe Biden was removed from the country’s social media platforms after going viral in the U.S., underscoring how sensitive ties between the world’s two biggest economies are after strife under Donald Trump.’

  • ‘The speech by Di Dongsheng, a professor of international relations at Renmin University, was delivered in November, and boosted Monday after Fox News host Tucker Carlson talked about the remarks and Trump tweeted a clip.’
  • ‘Di, who was speaking at an annual event hosted by the nationalistic Chinese website Guan Video, bragged about Beijing’s sway over Wall Street and Biden’s son Hunter and said: “Biden is back! Our old game is back.” ’

‘Carlson seized on the comments on his Monday broadcast as proof that U.S. elites have been working on behalf of China.’

  • ‘By Thursday, video of the talk had been removed from Chinese social media and video platforms.’

‘Di said that China “used to know people at the top” in the U.S. financial world.’

  • ‘ “We have a network of ‘China’s old friends’ on Wall Street, who had access and control over the D.C. politicians,” Di said, adding that those connections failed to help during the trade war because “Wall Street can’t control Trump.” ’

‘The incident illustrates the difficulty Biden faces crafting a China policy, after months of efforts by Trump and his supporters to paint the former vice president as soft on Beijing.’

  • ‘Such comments by a high-profile Chinese academic could add to the pressure on the incoming administration to take a harder line.’

‘Di suggested that Biden’s son Hunter was a path to influence over the incoming president, feeding a narrative pushed by Trump and his supporters during the campaign.’

  • ‘ “We just need to toss out some olive branch to signal some good will,” Di said.’

‘Global Times Editor-in-Chief Hu Xijin, who also spoke at the Guan Video event, dismissed Di’s claims, commenting multiple times on Trump’s tweet.’

  • ‘ “There are some Chinese scholars who like to brag and spice-up tales about their ties with high-level figures to seek attention and promote oneself,” he wrote.’
  • ‘ “It’s unserious to judge China-U.S. relations with stories told by these kind of people.” ’
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'China Has One Powerful Friend Left in the U.S.: Wall Street'

'China Has One Powerful Friend Left in the U.S.: Wall Street' | ANALYSIS | Scoop.it

The Wall Street Journal

‘Looking for allies in trade talks with the Trump administration, Mr. Liu dangled a prize, the people say: Beijing offered to give U.S. financial firms a new opportunity to expand in China.’

‘The trade war presented a new opportunity for Wall Street.’

  • ‘Throughout the battle, Chinese leaders regularly counted on Stephen Schwarzman, the billionaire co-founder of private-equity firm Blackstone Group, Hank Paulson and John Thornton, another former Goldman senior executive, as go-betweens with the Trump administration.’

‘In February 2018, Beijing’s chief trade negotiator was in Washington to try to avert a trade war.’

  • ‘Before meeting his U.S. counterparts, he turned to a select group of American business executives—mostly from Wall Street.’

‘ “We need your help,” Vice Premier Liu He told guests gathered in a hotel near the White House, according to people with knowledge of the matter.’

‘Looking for allies in trade talks with the Trump administration, Mr. Liu dangled a prize, the people say:’

  • ‘Beijing offered to give U.S. financial firms a new opportunity to expand in China.’

‘The get-together helped turn Wall Street into one of the biggest cheerleaders for a deal.’

  • ‘In the trade agreement that was eventually signed in January, China’s financial opening stood out as a prominent concession.’

‘America’s money men have long held a special place in Beijing’s corridors of power, but until now their firms have had little to show for it.’

  • ‘Since the signing of the trade deal, JPMorgan will get full control of a futures venture in which it had a minority stake. Goldman Sachs and Morgan Stanley became controlling owners of their Chinese securities ventures. Citigroup, meanwhile, won a custodian license to act as a safe keeper of securities held by funds operating in the country. And in August, BlackRock became the first foreign firm to win preliminary approval to start a wholly owned mutual-fund business in China, a potential admission ticket to a vast market of largely untapped mom-and-pop investors.’

‘Despite the burst of activity, skeptics wonder whether Beijing will ever let Wall Street gain more than a foothold.’

  • ‘They note that by delaying an opening for decades, the Communist Party has enabled Chinese institutions it largely controls to thoroughly dominate every sector in finance, from commercial and investment banking to private equity and asset management. Wall Street firms have little name recognition among average Chinese savers.’

‘As late and as limited as the opportunity is now, foreign financial firms are happy to get whatever perch they can:’

  • ‘China is still the world’s fastest-growing market for financial services, at a time when their own margins are getting squeezed at home.’

‘Their long-term lobbying efforts—including taking Beijing’s side in some heated disputes with the West—reflect their eagerness to crack the market.’

  • ‘In July, more than 40 American trade groups, representing industries from agriculture and pharmaceuticals to airlines, signed a letter urging Beijing to do more to implement the trade deal with Washington, which also laid out purchases of American airplanes, farm products, oil and others that China hasn’t yet made in full.’
  • ‘Unlike other business groups, Wall Street is pleased with how China has carried out its promises in January, according to people close to the industry.’
  • ‘No group focused on banks and asset managers was among those who signed the letter.’

‘Even after the January trade deal gave Wall Street what it had long sought, China’s financial markets remain highly regulated and Beijing still holds the key to who gets in.’

  • ‘Whether the Biden administration will help is an open question.’

‘Senior Biden advisers say they want to de-emphasize financial firms’ access to the Chinese market in trade talks.’

  • ‘ “Why, for example, should it be a U.S. negotiating priority to open China’s financial system for Goldman Sachs?” said Jake Sullivan, who has been tapped for national security adviser, in an article he co-wrote earlier this year.’

‘That view is becoming widely held in Democratic Party circles, including former Clinton Treasury Secretary Larry Summers, whose agency pushed for Chinese financial liberalization.’

  • ‘He recently published a policy paper advising Mr. Biden “to be clear at the outset that you will not spend your scarce political capital or U.S. political capital on the commercial agenda of U.S. financial firms operating abroad where their success has almost no nexus with U.S. job creation.” ’
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Katherine Tai, United States Trade Representative

Katherine Tai, United States Trade Representative | ANALYSIS | Scoop.it

'Katherine Tai is a dedicated, deeply respected public servant and veteran international trade expert who has spent her career working to level the playing field for American workers and families. Currently, Tai serves as the chief lawyer on trade to the Chairman and Democratic Members of the Committee on Ways and Means on matters of international trade as Chief Trade Counsel. In this role, she has secured key victories for workers in U.S. trade policy and has been praised by lawmakers and lawyers for her work. Prior to the Committee, Tai served in the USTR’s Office of the General Counsel, first as Associate General Counsel from 2007 to 2011 and then as Chief Counsel for China Trade Enforcement with responsibility for the development and litigation of U.S. disputes against China at the World Trade Organization (WTO).'

'Before joining USTR, Tai worked in the international trade departments in various Washington, D.C. law firms. From 1996 to 1998, she lived and worked in Guangzhou, China teaching English at Sun Yat-Sen University as a Yale-China Fellow. Tai was born in Connecticut — the first American-born citizen in her family — and raised in the Washington, D.C. area.  She is a graduate of Yale University and Harvard Law School.'

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Official Transition Website

Official Transition Website | ANALYSIS | Scoop.it

Katherine Tai is a dedicated, deeply respected public servant and veteran international trade expert who has spent her career working to level the playing field for American workers and families. Currently, Tai serves as the chief lawyer on trade to the Chairman and Democratic Members of the Committee on Ways and Means on matters of international trade as Chief Trade Counsel. In this role, she has secured key victories for workers in U.S. trade policy and has been praised by lawmakers and lawyers for her work. Prior to the Committee, Tai served in the USTR’s Office of the General Counsel, first as Associate General Counsel from 2007 to 2011 and then as Chief Counsel for China Trade Enforcement with responsibility for the development and litigation of U.S. disputes against China at the World Trade Organization (WTO). 

Before joining USTR, Tai worked in the international trade departments in various Washington, D.C. law firms. From 1996 to 1998, she lived and worked in Guangzhou, China teaching English at Sun Yat-Sen University as a Yale-China Fellow. Tai was born in Connecticut — the first American-born citizen in her family — and raised in the Washington, D.C. area.  She is a graduate of Yale University and Harvard Law School.

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Katherine Tai, United States Trade Representative

Katherine Tai, United States Trade Representative | ANALYSIS | Scoop.it
DOMESTIC NOMINEES AND APPOINTEES

Katherine Tai

United States Trade Representative

  • Served as chief lawyer on trade for the House Ways and Means Committee
  • Has deep experience in trade policy, including service in the Office of the United States Trade Representative, and serving as Chief Counsel for China Trade Enforcement
  • Would be the first Asian American and first woman of color to serve as U.S. Trade Representative

Katherine Tai is a dedicated, deeply respected public servant and veteran international trade expert who has spent her career working to level the playing field for American workers and families. Currently, Tai serves as the chief lawyer on trade to the Chairman and Democratic Members of the Committee on Ways and Means on matters of international trade as Chief Trade Counsel. In this role, she has secured key victories for workers in U.S. trade policy and has been praised by lawmakers and lawyers for her work. Prior to the Committee, Tai served in the USTR’s Office of the General Counsel, first as Associate General Counsel from 2007 to 2011 and then as Chief Counsel for China Trade Enforcement with responsibility for the development and litigation of U.S. disputes against China at the World Trade Organization (WTO). 

Before joining USTR, Tai worked in the international trade departments in various Washington, D.C. law firms. From 1996 to 1998, she lived and worked in Guangzhou, China teaching English at Sun Yat-Sen University as a Yale-China Fellow. Tai was born in Connecticut — the first American-born citizen in her family — and raised in the Washington, D.C. area.  She is a graduate of Yale University and Harvard Law School.

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Progressive Visions for Trade

Progressive Visions for Trade | ANALYSIS | Scoop.it

Center for American Progress

‘We have to think about the fact that, yes, we are facing very stiff competition from China, but China is not going away.’

Katherine Tai | Chief Trade Counsel, House Ways & Means Committee

Mara Rudman | Center for American Progress

Comments on China trade by Katherine Tai, President-elect Biden’s nominee for U.S. Trade Representative at an’ online discussion with a diverse group of progressive voices to chart a path forward on progressive trade policy’ held by the Center on American Progress on August 5, 2020.

Mara Rudman: ‘Hi, Katherine. Let me turn to you now, and I'm going to ask you to focus particularly on China related issues, given your experience and vantage point at the Ways and Means in the House, as well as a USTR, handling China trade enforcement.’

  • ‘How would you characterize how the United States has approached economic and security competition with China, given the very strong competitor that China is at this point? And then would you have any kind of specific commentary on the current administration's approach in that respect as well?’
  • ‘How should we be thinking about this going forward?’

Katherine Tai: ‘So on your question on China, let me just start with also saying that I so appreciate that we are having this conversation and that, to me, this is an important indication that we are on a good path because we were talking about what a progressive vision for trade is.’

  • ‘I think with respect to China, as a part of our trade landscape, what I would say about the dynamics on US-China competition, which has both economic elements and also strategic elements, which make it very challenging, but also incredibly important, is that the lessons that we have had over these most recent years in trying to formulate, articulate, and advance a progressive trade agenda should also be taken into consideration in the approach to China.’

‘And I think one of the most important lessons is to have robust political support, and that is within the Congress and also with the American people in terms of what you are going to do on trade.’

  • ‘With the China issues, one of the really special aspects of the US-China trade dynamic is that traditionally you have really broad, robust bipartisan support on the issue of China and US-China competition.’

‘What I would say is we need to apply the same progressive principles to the US-China competitive aspect, which is to think hard about where the political support is in terms of rising up to all of the different China challenges, and also to be inclusive, which I think is a key part of progressive trade policy, in our strategy, and I think that also gets at the most critical part is we have to be really smart about what we are going to do here.’

‘So on the China issue, I think that it's not for fractured political support for taking steps.’

  • ‘I think that there will be really robust, and we are seeing it, really robust political support for taking aggressive and bold steps with respect to how we compete with China.’

‘But what we need to do, and this will be my sort of oblique commentary on this administration's approach, is we have to be really strategic about it.’

  • ‘We have to think about the fact that, yes, we are facing very stiff competition from China, but China is not going away.’
  • ‘And so I think that critically a good and progressive trade policy has to have both offensive and defensive elements.’

‘And on this, I would say that in terms of what we've experienced over these most recent years with this administration, they have been very strong on confronting China very aggressively, but I would characterize those measures as actually largely defensive.’

  • ‘And, again, you must have both defensive and offensive, but with respect to counteracting unfair trade practices, enforcing our trade rights, I see those primarily as defensive maneuvers.
  • ‘That is to make sure that China is playing by the rules, or if not playing by the rules, that we are taking countermeasures.’

‘I think the offense has got to be about what we are going to do to make ourselves and our workers and our industries and our allies faster, nimbler, be able to jump higher, be able to be able to compete stronger and ultimately be able to defend this open democratic way of life that we have.’

  • ‘It is about more than just economics and economic values.’
  • ‘It is also about our political and our broader values, but there is a lot at stake, and I think that there is a lot of opportunity.’
  • ‘There's clearly also a very, very great challenge.’
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China Macro Reporter Archive

Greetings!

In this issue:

The DNI on China: 'China Is National Security Threat No. 1'

China's Terms for the Biden Administration:  

  • 'What Does China Think U.S.-China Relations Should Look Like?'
  • 'Cooperative Competition Is Possible Between China and the U.S.'

China Bullies Because It Works

  • ‘China Prefers to be Admired, but will Settle for Fear.’
  • 'The Provocateur Driving China’s "Wolf Warrior" Pack' 

The World China Wants

  • 'How Power Will—And Won’t—Reshape Chinese Ambitions'
  • 'China: Present at the Creation of the Post-WW2 World Order'

CHINADebate, the publisher of the China Macro Reporter, aims to present different views on a given issue.

Including an article here does imply agreement with or endorsement of its contents.

‘Does China want to transform the global order to advance its own interests and to reflect its own image? That may be the most important question in geopolitics today,’ writes Oxford’s Rana Mitter.

  • ‘Yet,’ he goes on, ‘the answers it elicits tend to reveal more about modern biases than they do about what a future Chinese superpower would look like.’

One answer is from John Ratcliffe: ‘As Director of National Intelligence, I am entrusted with access to more intelligence than any member of the U.S. government other than the president.’

  • ‘If I could communicate one thing to the American people from this unique vantage point, it is that the People’s Republic of China poses the greatest threat to America today, and the greatest threat to democracy and freedom world-wide since World War II.’
  • ‘Beijing intends to dominate the U.S. and the rest of the planet economically, militarily and technologically.’

Another answer is from Ambassador Fu Ying: ‘The United States believes that China craves world hegemony.’

  • ‘China does not want to replace U.S. dominance in the world.’

Neither of these extreme answers can, of course, be proven or disproven. As Dr. Mitter points out:

 

  • ‘Such projections are far too rigid and sweeping to usefully describe the complexity of China’s rise—either to capture the inherent uncertainty in China’s future aims or to recognize the essential elements that have shaped its aspirations.’
  • ‘China’s increasingly authoritarian direction under Xi offers only one possible future for the country.’

How then to analyze China’s ambitions in the face of ‘the inherent uncertainty in China’s future’?

Dr. Mitter suggests a template: ‘Chinese power today is a protean, dynamic force formed by the nexus of:’

  1. ‘authoritarianism,’
  2. ‘consumerism,’
  3. ‘global ambitions, and’
  4. ‘technology.’

He says: ‘Call it the ACGT model: with the same initials as the nucleotides in DNA, these strands of Chinese power combine and recombine to form China’s modern political identity and approach to the rest of the world.’

  • ‘The Chinese Communist Party (CCP) wants to firm up its grip on Chinese society, encourage consumerism at home and abroad, expand its global influence, and develop and export China’s own advanced technology.’
  • ‘China’s current standing and future prospects cannot be understood without seeing all four of those goals together.’

While I certainly am not good enough to determine if Dr. Mitter has selected the right forces, I do believe that in principle such a template gives us the best shot at tracking China’s ambitions.

  • And, importantly for the makers of China policy, a better way to make decisions and allocate resources.

Because, as Dr. Mitter rightly concludes, ‘The four ACGT forces [or what whichever forces are selected to track] have a significance that extends beyond any one leader or crisis.’

  • ‘They shape Beijing’s idea of its place in a reconstituted world order, in which China would take a preeminent role in Asia and export its model of economic investment, which draws on communitarian ideas of development and is indifferent to liberal norms (although not always actively hostile to them).’

At present in the U.S. the narrative of China’s seeking dominance has taken hold. As DNI Ratcliffe contends:

  • ‘China believes that a global order without it at the top is a historical aberration.’

Given China’s earlier and long-held conception of itself as the ‘Middle Kingdom’ and elements of Xi Jinping’s ‘China Dream’ that assertion is not unreasonable.

  • Add to that China’s increasing assertiveness.

Take what has been called China’s bullying - with Australia as notable recent example. As The Economist reports:

  • ‘Just now, it is Australia’s turn for punishment.’

‘Its transgressions include taking a lead among American allies in banning the use of 5g network equipment from Huawei, a Chinese telecommunications giant, and calling for an independent probe into the origins of covid-19.’

  • ‘China has imposed hefty tariffs on Australian wine and blocked imports of everything from coal to lobsters.’

‘If Australia does not cave, and China decides to sacrifice relations with Australia for years to come, a ghastly warning will be sent to other trade partners that imagine they can criticise China with impunity.’

  • ‘China seems bent on changing countries that it deems hostile, so that governments, news outlets, universities and other institutions never defy China again.’

And nobody embodies this better than Minister of Foreign Affairs spokesperson, Zhao Lijian, who ‘has pioneered an extreme approach by becoming a populist provocateur who owes his career to a willingness to shock, needle and troll Beijing’s critics on Twitter.’

  • ‘As China’s most high-profile official on Twitter, with nearly 860,000 followers, Mr Zhao, 48, has built a personal brand that is rare for a foreign ministry spokesperson.’

Not sure where bullies and ‘Wolf Warriors’ fit in Dr. Mitter’s ACGT Model.

  • ‘But, as evidence of China’s immediate intentions, these and other similar actions put more in DNI Ratcliffe’s camp than in Ambassador Fu Ying’s.

One final thing. Dr. Mitter’s essay also described how the Chinese Communist Party is revising China’s role in World War II to give it standing within the post-WWII world order to call for changes as a founding member.

  • Fascinating analysis. It’s in the last post. Have a look.

Go deeper into these issues - Browse the posts below.

To read the original article, click the title.

Let me know what you think. And please forward the China Macro Reporter to your friends and colleagues.

All the best,

Malcolm 

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‘China Prefers to be Admired, but will Settle for Fear.’

‘China Prefers to be Admired, but will Settle for Fear.’ | ANALYSIS | Scoop.it

The Economist

 

‘China prefers to be admired, but will settle for fear.’

 

‘China bullies other countries because it works.’

  • ‘Once told that they have crossed a “red line” by harming China’s interests or calling out its misdeeds, many governments crumble swiftly.’
  • ‘Others fold after suffering months of threats, trade boycotts and cancelled official meetings.’
  • ‘But in China’s long experience, almost all—even sometimes America—climb down eventually, sending envoys to sue for peace.’

‘True, some Western leaders pay public lip-service to their own country’s values as they land in far-off Beijing.’

  • ‘Once the press is shooed from the room, however, the foreign visitors get down to dealmaking.’
  • ‘They bow to China’s mix of market power, geopolitical importance and ruthlessness.’

‘Lately, bullying others into furtive submission has not been enough for Communist Party chiefs.’

  • ‘Increasingly, they seem bent on humiliating countries that show defiance, notably small or mid-sized allies of America.’

‘Just now, it is Australia’s turn for punishment.’

  • ‘Its transgressions include taking a lead among American allies in banning the use of 5g network equipment from Huawei, a Chinese telecommunications giant, and calling for an independent probe into the origins of covid-19.’
  • ‘China has imposed hefty tariffs on Australian wine and blocked imports of everything from coal to lobsters.’

‘In November Chinese diplomats made public a list of 14 ways in which Australia was “poisoning bilateral relations”.’

  • ‘The charge-sheet rebuked Australia for allowing news outlets, members of parliament and think-tanks to criticise China.’

‘Late last month China’s foreign ministry pounced on an Australian government report into unlawful, brutal killings of prisoners and civilians in Afghanistan by Australian troops.’

  • ‘Zhao Lijian, a ministry spokesman and licensed provocateur on social media, said the report exposed the hypocrisy of Western concerns about human rights.’
  • ‘On November 30th Mr Zhao tweeted a crude photo-montage made to look like an Australian soldier slitting an Afghan child’s throat.’
  • ‘Mr Zhao demanded that troops be held accountable—serenely ignoring the fact that Australia’s inquiry had already recommended that 19 soldiers face criminal investigation.’

‘At first sight, such Chinese provocations look clumsy, indeed self-defeating.’

  • ‘By offending lots of ordinary Australians, they complicate life for those businesspeople and politicians who want their government to placate China in hopes of restoring normal, profitable trade flows.’
  • ‘That underestimates the calculating nature of Mr Zhao’s tweets and other Chinese attacks, which are not intended to win over Australian hearts and minds.’

‘Their aim is partly domestic: to demonstrate the foreign ministry’s fighting spirit to Chinese leaders and online nationalists.’

  • ‘The intention is also to demonstrate China’s strength and to provoke such a sense of crisis that Australian political and business leaders are desperate to seek a truce.’
  • ‘China’s outlandish attacks are pseudo-populism: a calculated ploy to press elites into cutting a deal.’

‘China seems bent on changing countries that it deems hostile, so that governments, news outlets, universities and other institutions never defy China again.’

  • ‘If Australia does not cave, and China decides to sacrifice relations with Australia for years to come, a ghastly warning will be sent to other trade partners that imagine they can criticise China with impunity.’
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China Is National Security Threat No. 1

China Is National Security Threat No. 1 | ANALYSIS | Scoop.it

The Wall Street Journal

John Ratcliffe | Director of National Intelligence

‘The intelligence is clear: Beijing intends to dominate the U.S. and the rest of the planet economically, militarily and technologically.’

‘As Director of National Intelligence, I am entrusted with access to more intelligence than any member of the U.S. government other than the president.’

  • ‘I oversee the intelligence agencies, and my office produces the President’s Daily Brief detailing the threats facing the country.’

‘If I could communicate one thing to the American people from this unique vantage point, it is that:’

  • ‘the People’s Republic of China poses the greatest threat to America today, and the greatest threat to democracy and freedom world-wide since World War II.’

‘The intelligence is clear:’

  • ‘Beijing intends to dominate the U.S. and the rest of the planet economically, militarily and technologically.’
  • ‘Many of China’s major public initiatives and prominent companies offer only a layer of camouflage to the activities of the Chinese Communist Party.’

To address these threats and more, I have shifted resources inside the $85 billion annual intelligence budget to increase the focus on China.’

  • ‘This shift must continue to ensure U.S. intelligence has the resources it needs to give policy makers unvarnished insights into China’s intentions and activities.’

‘Within intelligence agencies, a healthy debate and shift in thinking is already under way.’

  • ‘For the talented intelligence analysts and operators who came up during the Cold War, the Soviet Union and Russia have always been the focus.’
  • ‘For others who rose through the ranks at the turn of this century, counterterrorism has been top of mind.’
  • ‘But today we must look with clear eyes at the facts in front of us, which make plain that China should be America’s primary national security focus going forward.’

‘We shouldn’t assume that Beijing’s efforts to drag the world back into the dark will fail just because the forces of good have triumphed before in modern times.’

  • ‘China believes that a global order without it at the top is a historical aberration.’
  • ‘It aims to change that and reverse the spread of liberty around the world.’

‘Beijing is preparing for an open-ended period of confrontation with the U.S. Washington should also be prepared.’

‘This is our once-in-a-generation challenge.’

  • ‘Americans have always risen to the moment, from defeating the scourge of fascism to bringing down the Iron Curtain.’
  • ‘This generation will be judged by its response to China’s effort to reshape the world in its own image and replace America as the dominant superpower.’

‘The intelligence is clear.’

  • ‘Our response must be as well.’
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