Newsletter 60 - March 20, 2021
Welcome to this week’s edition of Trade War, the 60th.
The U.S. and Chinese officials who met in Anchorage traded barbs and seemed to accomplish little. Meanwhile, in Dandong, China, the trial began for one of two high profile Canadians held in Chinese prisons; the trial for the second opens Monday.
More Hong Kong officials are facing sanctions following an announcement by the Biden administration. And Alibaba is being pressured to divest its media business, including the South China Morning Post, bad news for Hong Kong’s beleaguered free press.
Anchorage derailment came fast
Not much seems to have been accomplished at the U.S.-China meetings in Anchorage which instead quickly erupted into acrimony. U.S. Secretary of State Antony Blinken opened the talks with a laundry list of U.S. concerns mentioning Chinese treatment of “Xinjiang, Hong Kong, Taiwan, cyber attacks on the United States, and economic coercion toward our allies.”
Yang Jiechi, a member of the Chinese Communist Party’s Politburo, responded with a 20 minute monologue suggesting the U.S. had a “cold war mentality,” and criticizing it for using “force” and “financial hegemony” and “persuading some countries to launch attacks on China.”
WCNA @WorldCNAYang Jiechi: "We thought you too well. We think you will abide by basic diplomatic etiquette. We have to clarify our position just now!" "Let me say one thing now, you are not qualified to say in front of China that you start from the position of strength and talk to China!" https://t.co/aDMkU9cIEq
Rare and fiery kickoff
"The first high-level in-person talks since President Joe Biden took office, wrapped up after a rare and fiery kickoff on Thursday when the two sides publicly skewered each others’ policies in front of TV cameras,” reports Reuters.
With no diplomatic breakthroughs made, “the bitter rivalry on display suggested the two countries had little common ground to reset relations that have sunk to the lowest level in decades,” the news agency writes.
One small hint that the two sides may still have room to move forward on areas of mutual concern came when Yang and Blinken made conciliatory remarks to each of their country’s reporters in final press conferences.
While noting there were still “some important differences between the two sides,” Yang described the talks as “candid, constructive and helpful.” Saying he was not surprised by the “defensive response” from China, Blinken said “the two sides also had intersecting interests on Iran, North Korea, Afghanistan, and climate change, and that the United States had accomplished during the meetings what it had come to do,” reports Reuters.
China so confident in its ascendancy
“An optimistic read is that Yang’s public performance was entirely for a domestic audience, and behind closed doors it will still be possible to make progress,” Tom Orlik, the chief economist for Bloomberg Economics, wrote in a note. “A more straightforward interpretation is that China is now so confident in its ascendancy that it sees no benefit to working cooperatively except on its own terms.”
Decades-old insecurities & America’s best days behind it
Bloomberg’s Peter Martin explains why the Chinese “wolf warrior” stance apparent in Anchorage should hardly be a surprise.
“Yang’s display in Alaska was both old and new He showed us how decades-old insecurities play out when they’re combined with a powerful sense that America's best days are behind it The talks in Anchorage likely provide a flavor of things to come,” Martin writes in a tweet thread.
Encircled by an alliance of democracies
Also arguing that insecurities help explain the Chinese approach, Hoover Institution senior fellow Elizabeth Economy notes that “it's not all coming from a place of confidence with China … They're very concerned about being encircled by an alliance of democracies.” (Nine out of the ten largest economies are democracies, she notes.)
800 days in Chinese prison
While U.S. and Chinese officials were meeting in Anchorage, the politically-charged trial of businessman Michael Spavor, a Canadian citizen charged with espionage, began in the Northeastern city of Dandong. The trial of a second Canadian, Michael Kovrig who is facing similar charges, is set to begin Monday.
“Spavor and Kovrig have had almost no contact with the outside world since they were detained more than 800 days ago, and extremely limited access to Chinese lawyers. Virtual consular visits resumed only in October after a nine-month hiatus which authorities said was necessary because of the coronavirus,” reports Al Jazeera.
Although Beijing has formally denied it, many believe the Canadians are being held in retaliation for the arrest in Canada, of a senior Huawei official Meng Wanzhou, on an extradition warrant to the U.S. Meng also is the daughter of the company’s founder Ren Zhengfei.
“Officials from the Canadian embassy as well as other nations including [the] United States, Netherlands, United Kingdom, France, Denmark, Australia, Sweden and Germany tried to attend the hearing, but were not allowed to enter,” Al Jazeera reports.
Nathan VanderKlippe @nvanderklippeAt the Dandong courthouse, Canadian diplomats seeking access. https://t.co/42rDgn7luv
Sanctions for those whose actions reduce HK autonomy
Even as Blinken, along with National Security Advisor Jake Sullivan, prepared for the meeting in Anchorage with Yang and state councilor Wang Yi, the U.S. secretary of state was announcing new sanctions on Chinese officials, as part of an update to the Hong Kong Autonomy Act.
The twenty-four Chinese and Hong Kong officials sanctioned “whose actions have reduced Hong Kong’s high degree of autonomy” include National People’s Congress members and officials in the Hong Kong police in charge of national security. “Foreign financial institutions that knowingly conduct significant transactions with the individuals listed in today’s report are now subject to sanctions,” Blinken said.
13-month jail sentence for Facebook post
A Hong Kong activist who urged people on Facebook to “rescue protesters” from a detention center where he said they were being sexually assaulted by police, has been given a 13-month jail sentence, writes RTHK English News.
“Prosecutors said a lower court did not fully consider that the 37-year-old referred to "snatching arrestees" from the police, and his remarks online could have incited many people to act, noting that there were up to 20,000 users in the Facebook group.”
RTHK English News @rthk_enews#HongKong's high court increases the punishment for a man who urged people to "rescue protesters" he said were being sexually assaulted by police at the San UK Ling detention centre. https://t.co/R6sk8OAuUQ
China economy: prolonged period of muddling through
Former National Security Council official Evan Medeiros and CSIS China expert Jude Blanchette examine what they see as the myths in U.S. debates on China, in a piece for War on the Rocks. These “myths” include that a war between China and Taiwan is imminent, that China’s planning tendencies inevitably give it an edge over the U.S., and that China’s economy faces two diametrically opposite outcomes - either it will collapse or take over the world.
"A far more realistic scenario than collapse-or a surge ahead-is for China to continue a prolonged period of muddling through. This would be characterized by growth settling into the low single digits, as Xi’s statist policies put downward pressure on productivity gains and policymakers contend with an aging society and a shrinking workforce,” Medeiros and Blanchette write. “China will continue to be an important global player given its sheer scale, but much of its great power economic luster may fade away.”
Still that doesn’t mean we don’t need to worry about China’s economic rise. “It is also worth keeping in mind that China doesn’t need to fully “succeed” in any of its big endeavors for the global ripple effects to be significant. Even partial success — or partial failure — can fundamentally change entire global industries and supply chains, for better or worse. Even China as “a partial power,” as David Shambaugh described it, will change the world."
Alibaba forced SCMP sale bad for HK media freedom
News that the Chinese government is pressuring Alibaba Group to sell its media holdings including the South China Morning Post, is bad news for Hong Kong’s already battered status as a holdout on free speech, writes Bloomberg Opinion’s Matthew Brooker.
“The timing looks ominous. As China remakes Hong Kong’s political system to remove the last vestiges of independent opposition, it is simultaneously engaged in an endeavor to make its narrative of events stick,” writes Brooker.
“The last thing authorities need is a Chinese-owned news outlet with global reach that continues to question whether, rather than “improving” Hong Kong’s democracy, Beijing is destroying it.”
Non-controversial, politically correct tech tycoon proposals
China’s heads of tech companies, with the notable exception of Jack Ma, raised proposals at the legislative meeting in Beijing, including advocating for more regulation and government support, writes TechCrunch’s Rita Liao.
“Given how one of their peers is being treated, [it’s] no surprise that Tencent's Pony Ma, Xiaomi's Lei Jun, and Baidu's Robin Lin offered non-controversial, politically correct proposals at the Two Sessions,” tweets CSIS China business expert Scott Kennedy.
Want to get U.S.-China relations back on track? Start with small steps like reopening shuttered consulates in Houston and Chengdu, while allowing expelled correspondents in both countries to return, argues author and China journalist Ian Johnson.
Don’t read too much into the contentious first U.S.-China meeting, points out Columbia University adjunct professor Patrick Chovanec. “This is a long game. Nobody is going to “own” the other simply because they showed up to a meeting with a feisty attitude.”
"There are many reasons to think that the West cannot penalize the Chinese Communist Party out of power,” writes The Economist in a must-read leader. “Forced to take sides, many countries might choose China over the West … China is the largest goods trading partner of 64 countries … just 38 for America."
This interesting analysis of China’s economy predicts only 5.6 percent growth this year, below Beijing’s target. “Household income growth—the wellspring of consumption—will be a challenge until the private Chinese firms that account for 80% of urban employment feel confident that they have a place in the Communist Party’s vision of the future,” writes Rhodium Group’s Daniel Rosen.
“Xi Jinping doesn't believe that economic development alone is sufficient to transform the ethnic frontier and its people, secure Party rule, and achieve the “China dream,” says scholar James Leibold in this interesting interview on China’s ethnic minority policy.
Another recent hike, this one featuring Montana skies, by the author of Trade War.