Trade War

Newsletter 62

Welcome to the 62nd edition of Trade War.

This week’s issue looks at what’s behind China’s wolf warrior diplomacy. Beijing dials up the pressures on foreign journalists reporting on Covid and Xinjiang. A state-produced documentary reveals that Muslim Uyghur intellectuals were sentenced to death for writing officially-approved textbooks.

Meanwhile, U.S. officials prepare to meet with auto and semiconductor industry leaders to discuss the ongoing global chips shortage. And the new head of USTR, Katherine Tai, says the U.S. is not yet ready to lift tariffs on China.

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The end of the American-led order

Why does Beijing persist with its blustering “wolf warrior” approach to diplomacy even as it sours public perceptions towards China in the U.S. and Europe? That’s because most of China’s leaders believe their country inevitably will rise in power as the U.S. declines, reports the Economist’ David Rennie.

"China is now applying calculated doses of pain to shock Westerners into realizing that the old, American-led order is ending.” Rennie writes. “China is increasingly sure that America is in long-term, irreversible decline, even if other Western countries are too arrogant and racist to accept that “the East is rising, and the West is in decline”, as Chinese leaders put it.”

Time and momentum on China’s side

“President Xi Jinping and others have been touting that time and momentum are on China’s side in its quest to move closer to the center of the world stage,” writes Brookings scholar and former national security council official Ryan Hass in China Leadership Monitor. “There appears to be broad agreement among officials and experts in China that America’s power in the international system is declining relative to China’s.”

Still, China faces substantial challenges including everything from how its control over companies stifles innovation, falling economic productivity and the rising costs of an aging population, while the “tighter Beijing squeezes, the more that negative attitudes toward China appear to be hardening along the country’s inner periphery and in many parts of the world,” writes Hass. That has some Chinese experts “warning against presupposing that China will continue to ascend on a linear trajectory indefinitely in the direction of its national ambitions.”

But aggressive ‘Wolf Warrior’ diplomacy backfires

“As a rising power, China frequently seeks to rally foreign public support while simultaneously pursuing policies that might provoke an angry backlash. How do foreign citizens respond to this mix of friendly words and unwelcome actions?” write political scientist Daniel C. Mattingly of Yale University and doctoral candidate James Sundquist.

“We find that public diplomacy focusing on promoting Chinese aid improves perceptions of China in times of peace and, strikingly, that it was just as effective in times of violent escalation,” Mattingly and Sundquist write. “However, reputational damage from the conflict itself outweighs the conciliatory effect of public diplomacy. Morever, there is suggestive evidence that aggressive “Wolf Warrior” diplomacy backfires.”

Twitter avatar for @mattingleeDan Mattingly @mattinglee
My research with James Sundquist shows these aggressive messages from Chinese diplomats can be met with shrugs by foreign audiences —- but really backfire in places where relations w/China have already soured.
static1.squarespace.com/static/51cdc7e… @emilyrauhala

Seva @SevaUT

wondering if wolf warrior diplomacy is just an intra-elite signaling mechanism. because I can't see how this would work for either domestic or foreign audiences https://t.co/fXUrvzSrjC

Running dogs, mad dogs, and wolves

Beijing’s recent undiplomatic name-calling where foreign academics and officials have been compared to ‘running dogs’ and ‘mad dogs,’ is a throwback to a Mao era where shrill political insults were often used to distract from internal criticisms, now brought into the digital age, writes China Media Project’s David Bandurski.

“These tactics, which draw on a deep well of historical resentment, are digital-era echoes of past mobilization campaigns. For the Chinese Communist Party, online rage is the conflagration needed to suck the oxygen out of any debate over substance, and distract attention away from criticism. Facts and hard questions on issues like Xinjiang are consumed in the blaze,” Bandurski writes.

“For those who remember the world before the WeChat public account, before the instant rage machine of microblogging, going back even to the youthful days of the Party press of the 1950s and 1960s, much of this may seem familiar. Mao Zedong had his ‘outrage machine’ too, and the anger fomented internally over perceived enemies externally – from ‘hostile forces’ to Soviet revisionists – was very often about building a wall of rage against internal criticism.”

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China’s Outrage Machine

“China’s week of outrage at foreign apparel brands is not new, but it’s incredible calibration is. State media amplified user generated memes and made some of its own, while censors controlled narratives that took the anger in unwanted directions,” tweets the New York Times’ Paul Mozur.

China’s authorities “can whip up anger framed around what they like, then dial it up or down as the situation calls for. The ability, broadly called public opinion management, has become one of Xi Jinping’s more impressive achievements,” Mozur writes.

“The hate-fest part is not sophisticated; it’s the same logic they’ve followed going back decades,” Xiao Qiang, founder of China Digital Times, a website that monitors Chinese internet controls, told the New York Times. But “their ability to control it is getting better,” he said. “They know how to light up those ultra-pro-government, nationalist users,” Mr. Xiao continued. “They’re getting very good at it. They know exactly what to do.”

H&M does damage control in China

H&M appears to be trying for damage control with a statement it issued related to the Xinjiang cotton uproar.

“We are working together with our colleagues in China to do everything we can to manage the current challenges and find a way forward,” the statement from March 31 says. “China is a very important market to us and our long-term commitment to the country remains strong.”

And gets boycotted in Vietnam

But Vietnamese are now calling for a boycott of H&M after it “added the 9-dash line to its map of China to assuage Chinese netizens’ negative reactions,” tweets Khang Vu, a doctoral student in Political Science at Boston College.

“One day after the call for boycott, H&M stores in Hanoi were mostly empty,” he writes. The 9-dash line is the demarcation used on Chinese maps indicating Beijing’s contested claim to about 90 percent of the South China Sea.

Followed by plainclothes goons through airport

After nine years in China, the BBC’s China correspondent has suddenly relocated to Taipei, Taiwan, after facing repeated threats and harassment from Chinese authorities angered at his reporting on Covid and Xinjiang.

“[The] BBC’s John Sudworth and his family were followed by plainclothes goons all the way through the airport as they left China over safety concerns," reports the Telegraph’s Sophia Yan.

As China grew richer it would grow freer? ‘utterly naive’

“That starry-eyed assumption - that as China grew richer it would grow freer - could still frequently be heard in news analysis and academic discussion of China when I first began working here in 2012,” writes the BBC’s Sudworth in a post-departure from China piece.

“But my arrival that year coincided with a development that has come to make that prediction seem utterly naïve - the appointment of Xi Jinping to the most powerful job in the country, general secretary of the Chinese Communist Party.”

Foreign journalists threatened with exit bans from China

“Alarmingly, Chinese authorities have also shown a greater willingness to threaten journalists with legal measures, proceedings that could subject them to exit bans, barring them from leaving China,” tweets the Foreign Correspondents Club of China.

Sentenced to death over a textbook

A new “documentary” from China’s state broadcaster CGTN, known for its use of forced confessions in its reports, claims that versions of Xinjiang’s Uyghur language textbooks from 2003 and 2009 contained material that incited "blood, violence & extremism" and describes how those responsible for their publication were sentenced to lifetime in prison and even death sentences.

“All those involved, the former directors general of the education department, the director of the publishing house, and the chief editor, were sentenced to death or got life sentence because of these textbooks,” according to the CTGN video, tweets Queen’s University Belfast professor Chenchen Zhang.

Boasting about death sentences for intellectuals

The CGTN report “boasts of sentencing Uighur intellectuals to life imprisonment or death because of ... writing textbooks in their own language, textbooks that were approved and used by the Chinese-run school system at the time,” tweets Foreign Policy deputy editor James Palmer. (The CGTN report also includes forced confessions by those sentenced.)

U.S. officials/industry to meet on global chips shortage

Biden administration officials including national security advisor Jake Sullivan will meet with semiconductor and auto companies on April 12 to discuss the global shortage of chips, reports Bloomberg News. Auto makers have had to slow production in their North American plants because of chip shortages as microprocessor demand soared during the pandemic.

“Consumers drove up sales of laptops, home networking gear and appliances while shifting to remote work and schooling,” reports Bloomberg. “The Biden administration is examining incentives for domestic production of semiconductors and is reviewing supply chain vulnerabilities.”  

Samsung and TSMC have announced plans for expanding chip production in the U.S., while Intel will invest $20 billion in two new fabrication plants in Arizona.

$1.4 trillion into China chip production but workers struggle

Meanwhile, while China has announced plans to spend $1.4 billion in its chip industry over the next five years, it workers remain woefully underpaid, reports China Labor Bulletin. “After up to 1yr of training, the salary is about 3k yuan/mo, compared to similarly skilled workers who can make 6k in other factories,” the Hong Kong-based labor advocacy group tweets.

USTR Tai: China tariffs staying for now

In her first interview as the new head of the USTR, Katherine Tai says that the U.S. won’t lift some $370 billion of tariffs on Chinese imports anytime soon but may be ready to reopen trade negotiations with Beijing.

“She indicated some interest in suggestions by free traders such as former Treasury Secretary Hank Paulson and the Business Roundtable, a big-business group, that lifting tariffs should come as part of new negotiations with China over issues of subsidies, state-owned businesses and other structural issues,” reports the Wall Street Journal.

“Every good negotiator retains his or her leverage to use it,” Tai told the Journal. “Every good negotiator is going to keep all of their options open.”

China economy surpass U.S. by 2028?

Here’s a cool Bloomberg visual data piece that considers whether China’s economy could surpass the U.S. by 2028, two years earlier than many expected before the pandemic.

But not surprisingly given uncertainty about the future course of China’s economy, the piece includes a huge caveat: "Still, there are no guarantees and other experts warn the mix of aging population and debt will keep it confined to second place," reports Bloomberg News.

Notable/In Depth

As the Chinese Communist Party prepares for its 100th birthday on July 1, Merics breaks down the changing composition of the CCP.

“Although the number of female members is rising, there are almost no women in the party elite,” with only one woman, Sun Chunlan, in the central party administration, writes the Berlin-based think tank (Merics was recently sanctioned by the CCP). Meanwhile, 73 percent of China’s 15.61 million private companies now have a party cell.

”The Chinese contracts contain unusual confidentiality clauses that bar borrowers from revealing the terms or even the existence of the debt,”writes the Center for Global Development in a rare look at 100 contracts between Chinese state entities and 24 government borrowers from developing countries.

“Cancellation, acceleration, and stabilization clauses in Chinese contracts potentially allow the lenders to influence debtors’ domestic and foreign policies“ showing China “as a muscular and commercially-savvy lender to the developing world.”

Here’s a useful timeline of all the executive actions on China carried out under the Trump U.S. administration.

How the boycotts against H&M and other firms could signal a far wider threat to foreign companies is the topic by Economist’ Simon Rabinovitch in this podcast.

‘Unequal and Unbalanced’ China

I will be talking about China’s unequal and unbalanced economic system and what it means for its future, next Tuesday via the Montana World Affairs Council. More information in the link.

’低端中國:黨,土地,農民工,與中國即將到來的經濟危機‘

Read selected excerpts from the Chinese edition of my book 《低端中國》 published in Taiwan’s non-profit investigative news agency The Reporter.

*Buy the book*

And if you want to read more here is a link to buy the book.

Blue Montana skies

And finishing with a picture from a recent morning walk.