Newsletter 61 - March 27, 2021
Welcome to this week’s edition of Trade War, the 61st.
China pushes boycotts of multiple multinational brands and retailers as punishment for speaking out on Xinjiang, and slaps sanctions on British, European, Canadian and U.S. officials, academics and institutions.
Taiwan faces the largest ever incursion by Chinese jets into its air defense zone raising new fears of a military confrontation. And the South China Sea is back in the news as Chinese ships mass around a reef off the coast of the Philippines.
Wanting to eat rice but throwing away your rice cooker!
China is encouraging boycotts of multinational brands and retailers, including Nike, Adidas, Swedish retailer H&M, and the Gap, punishment for speaking out on Xinjiang, reports RTHK.
“The slew of reports prompted online shopping platforms to pull products, mainland celebrities to cancel endorsement deals, and netizens pledging on social media to boycott the brands and dump products they already own,” reports the Hong Kong public broadcaster now facing its own free speech challenges.
“Whoever dares to make money in China and yet criticizes us has no way out”, a commentary from Xinhua said. “The act amounts to wanting to eat rice but throwing away your rice cooker!”
H&M’s 505 mainland stores under threat
Swedish fast fashion retailer which has 505 stores on the mainland, is facing a severe backlash to its earlier comments against sourcing cotton from forced labor in Xinjiang, reports Bloomberg News.
At least six stores in cities including Urumqi, Yinchuan, and Changchun have been shut down and “local media have reported more closures, with pictures showing H&M’s brand billboards being removed.”
“The closures come amid rising outcry and calls for a boycott on Chinese social media against an undated H&M statement over its website that expressed concern about reports of forced labor in the far west region,” while “the global clothing retailer’s outlets have also vanished on Apple Maps and Baidu Maps searches.”
Irreversible blow in the world’s 2nd largest market
Multinational brands speaking out against labor abuses in Xinjiang and facing boycotts from Chinese consumers are likely to see their business hit hard, reports the Global Times.
These companies could “face an irreversible situation in the world’s second largest economy,” writes the Chinese tabloid. “It is now a fully competitive market in China, and once a firm loses its slice of the market share, another one will swiftly slip in.”
“The effective brand value of these companies, measured in terms of growth, could be cut in half over the next five years,” the paper continues (I’m not exactly sure what the paper means by that..)
We love Xinjiang cotton!
Meanwhile some multinationals are pledging to continue using Xinjiang cotton, apparently to forestall being hit with sanctions.
Italian headquartered clothing and footwear company FILA “has explicitly said on Weibo that it will continue to source cotton from Xinjiang,” tweets Nathan Ruser of the Australian Strategic Policy Institute, and is “one of the first companies to suggest they value access to the Chinese market over ethical supply.”
Property frozen, banned from entering & doing biz in China
In response to coordinated sanctions by the EU, U.K. Canada and the U.S. against Chinese officials involved in human rights violations in Xinjiang, Beijing continues with its wave of counter sanctions.
Accusing the U.K. and E.U. of “lies and disinformation” and “grossly [interfering] in China's internal affairs,” Beijing announced over the last week that it will freeze the property and ban named individuals and their immediate families from entering the mainland, Hong Kong and Macao, while prohibiting companies associated with them from doing business with China.
Malicious acts violating China’s sovereignty
And here’s a handy chart with some of the many sanctions imposed by China so far, in this tweet by the Global Times (China is sanctioning so fast it’s hard to keep up.)
Stop political manipulation or get your fingers burnt
Like I said, it’s hard to keep up: on Saturday Beijing announced new sanctions against Canada and the U.S., including a “Canadian lawmaker and a parliamentary committee on human rights, as well as the heads of the U.S. Commission on International Religious Freedom, known as USCIRF,” reports Bloomberg News.
“They must stop political manipulation on Xinjiang-related issues, stop interfering in China’s internal affairs in any form and refrain from going further down the wrong path,” the Foreign Ministry said. “Otherwise, they will get their fingers burnt.”
And for a taste of just how weird this is getting…
It was inevitable and now it has happened: China has come out with a rap song attacking “Western forces slandering Xinjiang cotton.”
Marx’s commodity fetishism?
China’s commerce minister is getting riled up about international efforts to impugn “pure cotton from Xinjiang,” and won’t tolerate its reputation being hurt by “external forces.”
Alas, poor Burberry!
Hong Kong Executive & Legislative Council Member Regina Ip gets sentimental about the ultimate sacrifice facing her: performative patriotism means giving up her Burberry scarves.
1925 anti-colonial protests; 2021 pro-China worker abuse
What a shift we’ve seen: whereas in 1925 “repression of worker protests in Shanghai against a Japanese cotton mill [sparked a] massive city-wide general strike against labor exploitation and imperialism,” in 2021 Japanese company Muji which has promised to continue using Xinjiang cotton “is deemed pro-China for... promising to exploit Chinese workers,” tweets Cornell University professor of industrial and labor relations Eli Friedman.
Whataboutism run amok
Chinese foreign ministry spokesperson Hua Chunying makes an analogy to slavery in 1908 Mississippi and Georgetown professor James Millward writes about how “flaws in the argumentative logic are so cringe-worthy, but also so telling,” in a tweet thread on China’s now rampant “whataboutism over racial, indigenous issues.”
Hua Chunying 华春莹 @SpokespersonCHN#Mississippi in 1908 🆚 #Xinjiang in 2015 A shotgun and several hounds 🆚 smiles and harvests. Forced labor? https://t.co/BygvPaGkHD
And a disturbing look at how children in Xinjiang are faring
Finally, here is a disturbing report from CNN on how Uyghur children in Xinjiang are being separated from their parents.
Xi pushes closer economic ties with Taiwan
Xi Jinping has called on companies in Fujian, the province across from Taiwan, to “be bold in exploring new paths for integrated cross-strait development,” reports Bloomberg News citing the official Xinhua News Agency.
“China works to entice companies and individuals to work on the mainland, while at the same time isolating the current government of the island, which sits just 130 kilometers (80 miles) across a strait from Fujian. Beijing said earlier this month it would let agricultural firms sell bonds on the mainland and also enjoy preferential insurance and credit policies,” Bloomberg reports.
Flirt with the idea of unification
The Biden administration is increasingly worried that China is seriously considering a military move against Taiwan, reports the Financial Times. This comes in the context of 20 Chinese warplanes flying into Taiwan’s air defense zone, the “biggest ever incursion.”
"The US is concerned that China is flirting with the idea of seizing control of Taiwan as President Xi Jinping becomes more willing to take risks to boost his legacy. 'China appears to be moving from a period of being content with the status quo over Taiwan to a period in which they are more impatient and more prepared to test the limits and flirt with the idea of unification' a senior US official told the Financial Times.”
“As we prepare for a period in which Xi Jinping will likely be entering his third term, there’s concern that he sees capstone progress on Taiwan as important to his legitimacy and legacy,” the official said. “It seems that he is prepared to take more risks.”
200 Chinese vessels in Philippine waters
“China has provoked international alarm by massing ships in the South China Sea near a reef claimed by both China and the Philippines,” reports NPR.
In response, Manila formally protested against what it called a violation of "its sovereignty, sovereign rights, and jurisdiction," and the U.S. backed “the Philippine call for China to immediately withdraw what appears to be a flotilla of fishing vessels.” Watch this video from CNN of the Chinese ships here.
Here is a thread with timely comments on the new reality facing multinationals operating in China, from the recent address by former deputy national security advisor Matt Pottinger, at the Mansfield Center (video link here.)
My comments to RFA’s Jane Tang on China boycotting MNC’s over their stance on Xinjiang cotton are in this article (Chinese).
A good reminder of the key role provincial and local governments play in China’s economic policymaking is laid out in this podcast featuring University of Oregon’s Yeling Tan and Notre Dame’s Kyle Jaros.