Newsletter 50 - December 19, 2020
Welcome to the 50th edition of Trade War. This will be the last one of 2020 as I take some time off. My aim is to be back with an issue by the latest January 16th. Happy holidays to all until then. Now for the week..
Beijing has announced national security rules for foreign investment and the hunt for a U.S. ambassador to China continues. Vast efforts to control the Internet inside China are revealed in a New York Times piece on the online response to Covid. And even as Russia steals headlines with its massive hack of U.S. government agencies, concern is growing about China’s ambitious plans to control online discourse around the world.
Policymakers in Beijing have come up with yet another economic slogan for the times - demand side reform - and new research shows the prevalence of the Communist Party in China’s private companies.
Tightening the fence and opening up..
On Saturday China’s state planning agency, the National Development and Reform Commission (NDRC), announced rules to deal with national security issues involving foreign investment in industries related to the military, as well as natural resources, energy, internet technology, financial services and agriculture, reports Reuters.
A body to enforce the new rules will be established jointly by the NDRC and Ministry of Commerce. “Only by tightening the fence against security risks can China lay the solid foundations for a new round of opening up that is broader, wider and deeper,” the commission said, reported the news service.
Hunt for US ambassador to China continues
So now that the U.S. ambassador to China won’t be Pete Buttigieg (he will be appointed Transportation Secretary, if confirmed) the speculation is centering on Disney’s Bob Iger as a potential candidate, a possibility being roundly criticized by China watchers.
“It appears that Bob Iger might have a future in public service after all. The Disney executive chairman, who once toyed with the idea of a 2020 presidential run, is at the top of President-elect Joe Biden’s wish list for a key ambassador post, namely China or the U.K.,” writes The Hollywood Reporter.
“I'm not buying (at all) this bit of gossip about Iger,” tweets Economist’s Gady Epstein, who has covered both Hollywood and China for many years. “The conflicts with Disney's business in China are too massive to take this idea seriously. And that's before even factoring in the controversy over filming part of Mulan in Xinjiang.”
Controlling online reporting inside China
The New York Times has come out with a blockbuster piece detailing Beijing’s vast and successful efforts to control online reporting in China during the early days of the Covid outbreak.
“China is manipulating online discourse to enforce the Communist Party’s consensus,” the New York Times writes.
“To stage-manage what appeared on the Chinese internet early this year, the authorities issued strict commands on the content and tone of news coverage, directed paid trolls to inundate social media with party-line blather and deployed security forces to muzzle unsanctioned voices.”
And Beijing’s global disinformation strategy..
Meanwhile, even as Russia steals headlines with a massive hack of U.S. government agencies, concern is growing about the Chinese authorities’ increasingly sophisticated efforts to control the Internet globally. On Thursday, I joined a panel of distinguished experts to discuss its fast-expanding disinformation strategy.
Chinese discourse power
Meanwhile, here are five new reports from the Atlantic Council examining the Chinese government efforts to push propaganda and disinformation beyond China’s borders, in Hong Kong, Taiwan, and in the Chinese diaspora community in the U.S.. (I wrote one of them.)
China’s latest economic slogan: demand-side reform
You’ve heard of the “dual-circulation strategy” but what about “demand-side reform”? It’s China’s newest economic slogan and it centers on finding ways to boost domestic consumption.
“Beijing has initiated a new push to unleash the economy’s domestic consumption potential, pledging to institute a series of reforms to overhaul long-standing structural problems in the economy,” reports the South China Morning Post.
“The new focus on “demand-side reforms” would mean greater efforts on addressing difficult structural issues, such as unequal income distribution, improving the social safety net, and reforming land-use and ownership policies as an alternative to large-scale government-provided consumer subsidies and investment stimulus measures.”
Communist Party committees in private firms
Private businesses in China more and more are home to Communist Party committees, with the number climbing from just four percent of firms in 1993 to 48.3% in 2018, a new report from MacroPoloChina shows.
“Party organizations are far more pervasive in China's top 500 private firms (by revenue), with 92-93% coverage,” tweets Neil Thomas, author of the report.
“Private firms constitute 84.1% of all enterprises, increasing from just 443,000 in 1996 to 15.6 million in 2018. That’s why General Secretary Xi Jinping hopes to lift the presence and power of “Party organizations“ (dang zuzhi)—to boost private sector compliance with central priorities,” writes Thomas.
Southern cities are taking over from those in the north, as the new powerhouses driving China’s growth, this chart shows vividly.
Couldn’t resist pointing this out: thanking the CCP and Xi Jinping as “the core” is now boilerplate (for quite some time already) for statistics announcements in China.
The Peterson Institute’s Chad Bown is becoming a key expert to follow for interesting analysis of the increasingly politicized world of semiconductors. Check out his latest here.
Here’s a substantial report on “An allied strategy for China,” from Atlantic Council Scowcroft Center colleague Matthew Kroenig - very much worth reading.
An alarming but important piece in Foreign Affairs looking at the prospect of near term hostilities with China, by Michael Beckley and Hal Brands. Also a thread below that lays out its main points.
A huge neighbor that has to be reckoned with
Here’s a review for In the Dragon’s Shadow, what looks an interesting new book on China’s push into Southeast Asia. I was asked by the reviewer what comes next for the region and had this quick take:
Even as China’s growth inevitably slows, "no one else will step into the vacuum and become the engine of growth. China will still be a huge neighbor that has to be reckoned with."