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Trade War

Newsletter 57 - February 27, 2021

Dexter Roberts
Feb 27, 2021
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Welcome to the 57th edition of Trade War. While Xi is using China’s successful elimination of absolute poverty to further burnish his image as great leader, Chinese authorities are punishing anyone who dares to even mildly criticize the party.

Biden has announced plans for a sweeping review of critical supply chains and his choice for trade czar says she intends to take on China’s state-directed economic model. Meanwhile, China continues to move away from its previous reliance on manufacturing and announces further rural land reform but emphasizes caution.

Xi’s splendid miracle shining in history

In a triumphant speech delivered from Beijing’s Great Hall of the People, Xi Jinping announced a “complete victory” over extreme poverty, reports the Washington Post’s Lily Kuo.

“This is the glory and honor of the Chinese people” and “a splendid miracle shining in history,” Xi said while bestowing medals on local officials he heralded as “model fighters” in “a massive people’s war against poverty.” (Here is Xi’s full speech in Chinese.)

In the eight years since Xi took over as China’s top leader as much as 1.6 trillion yuan ($246 billion) has been spent on bringing some 100 million people out of poverty, a policy “key to Xi’s legacy as he works to cement his position as the country’s most powerful leader since Mao Zedong,” according to the Washington Post.

Party mouthpiece People’s Daily ran a three-page spread touting Xi’s leadership in the massive campaign declaring that “the problem of absolute poverty that has plagued us for thousands of years has come to an end.”

Twitter avatar for @nerysinchina
Nerys Avery @nerysinchina
“Can someone tell me what the official standard is for eliminating poverty? Why can I still see people on the street begging?” one asked on Weibo. Another joked, “China has eliminated absolute poverty. That’s right. Everyone is just relatively poor.”
washingtonpost.comChina claims to have eliminated poverty, but the figures mask harsh challengesChinese leader Xi Jinping’s declaration of “complete victory” over extreme poverty was met with some derision.
6:02 AM ∙ Feb 26, 2021
6Likes3Retweets

Equal (or surpass) Mao?

Noting that the People’s Daily article mentioned Xi a stunning 139 times, Fordham University law professor Carl Minzer writes that “party propaganda is setting things up for Xi to claim personal credit for eradicating poverty in China” and that it will be “a core element of efforts in the near future to raise Xi’s personal status in the Party ideological pantheon to a Mao-like level.”

“In Party doctrine, Mao unified China after decades of civil war, and ended the century of humiliation at the hands of foreign powers. But if Xi is to be personally credited with ending *millennia* of poverty in China ….” writes Minzer, who is also author of End of an Era: How China's Authoritarian Revival is Undermining its Rise.

Twitter avatar for @CarlMinzner
Carl Minzner @CarlMinzner
Xi Declares Victory Over Poverty: A Step in His Efforts to Equal (or Surpass) Mao? thechinacollection.org/peoples-daily-… via @TheChinaCollect
thechinacollection.orgXi Declares Victory Over Poverty: A Step in His Efforts to Equal (or Surpass) Mao? | The China CollectionWant a sense of where elite Chinese politics are going? Take a look at this unusual 3-page article splashed over first three pages of the top Party paper, the People’s Daily, on Feb. 24. It starts on page one, occupies the entirety of pages 2 and 3. [It also follows an analogous article yesterday (…
11:29 AM ∙ Feb 24, 2021
12Likes5Retweets

Winning the People’s Daily headline game

Meanwhile, this interesting chart from University of Vienna China Studies professor Christian Goebel shows that Xi is now significantly outperforming Mao in frequency of headline mentions in the People’s Daily.

Twitter avatar for @Chri5tianGoebel
Christian Goebel @Chri5tianGoebel
My first slide: Xi outperforming Mao in frequency of People's Daily headline mentions
Image
Twitter avatar for @GIGA_Institute
GIGA Institute @GIGA_Institute
“Stretching Boundaries: How Chief Executives Expand their #Power”: Register for #GIGA #event on #politicalleaders in democratic & authoritarian #regimes bolstering their power, 24 Feb 4pm (CET) https://t.co/V9aY9ylIMO @Chri5tianGoebel @MarianaLlanosHa @thomaserichter @grauvogelj
5:35 PM ∙ Feb 22, 2021
271Likes111Retweets

“Blasphemies of heroes and martyrs will not be tolerated”

While Xi is getting over-amplified, government censors are busy cracking down on anyone who express even a hint of criticism of the party, reports the New York Times’ Li Yuan.

“At least seven people over the past week have been threatened, detained or arrested after casting doubt over the government’s account of the deaths of Chinese soldiers during a clash last year with Indian troops,” Li writes. “The internet is not a lawless place,” said the police notices issued in their cases. “Blasphemies of heroes and martyrs will not be tolerated.”

An online database of speech crimes in China, maintained by a someone who identifies himself as only Wang “paints a bleak picture of a government that punishes its citizens for the slightest hint of criticism,” and “shows how random and merciless China’s legal system can be when it punishes its citizens for what they say, even though freedom of speech is written into China’s Constitution.”

Twitter avatar for @dtiffroberts
Dexter Roberts @dtiffroberts
Xi sees the Internet as both a threat and tool to guide public opinion. “The internet is the biggest variant we’re facing,” he said in a 2018 speech. “Whether we can win the war over the internet will have a direct impact on national political security.”
nytimes.comChina Persecutes Those Who Question ‘Heroes.’ A Sleuth Keeps Track.An online spreadsheet with an anonymous minder tabulates Xi Jinping’s crackdown on speech.
8:36 PM ∙ Feb 26, 2021

Pandemics, cyberattacks, climate shocks & supply chains

You read it here last week: Biden has issued an executive order aiming to strengthen on supply chains focusing on semiconductor chips, electric-vehicle batteries, rare earths, and pharmaceuticals (this last one is new).

The plan calls for government agencies to begin with a 100 day review of supply chain risks. The U.S. needs “resilient, diverse, and secure supply chains to ensure our economic prosperity and national security,” the order says, that can guard against “pandemics and other biological threats, cyber-attacks, climate shocks and extreme weather events, terrorist attacks, geopolitical and economic competition.”

Twitter avatar for @EvanFeigenbaum
Evan Feigenbaum @EvanFeigenbaum
Executive Order on America's Supply Chains | The White House
whitehouse.govExecutive Order on America’s Supply Chains | The White HouseBy the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows: Section 1. Policy. The United States needs resilient, diverse, and secure supply chains to ensure our economic prosperity and national security. P…
5:34 AM ∙ Feb 25, 2021
39Likes23Retweets

Trade Czar Tai to take on ‘state-directed economics’

Katherine Tai, Biden’s nominee for U.S. Trade Representative, told U.S. senators she will work to strengthen supply chains and ensure China meets its trade promises, reports Reuters.

Tai, a skilled trade lawyer and fluent Mandarin speaker, said it was crucial the United States have a clear plan to help U.S. companies compete with China’s “state-directed economics” model.

“China is simultaneously a rival, a trade partner, and an outsized player whose cooperation we’ll also need to address certain global challenges,” she said in prepared testimony, seen by Reuters. “We must remember how to walk, chew gum and play chess at the same time.”

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Jim Stevenson @VOAStevenson
Biden's trade pick, Tai, vows focus on enforcement, supply chains, alliances reut.rs/3qTZjJN @Reuters
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2:20 AM ∙ Feb 25, 2021
2Likes3Retweets

WTO compliance: provinces & cities vie with Beijing

China’s record on meeting World Trade Organization commitments - now under fire from those who argue it was a mistake to bring Beijing into the multilateral trading organization - has been complicated by a political system with vying interests for and against reform, writes political scientist Yeling Tan in Foreign Affairs.

“Given the multitude of actors and interests involved in Chinese economic affairs, traditional state-to-state diplomacy, centered on communications between national capitals, is necessary but insufficient,” Tan writes.

“Substate actors, such as provinces and cities, wield substantial authority over economic affairs. The actions of Chinese firms do not necessarily represent the will of Beijing. Countries must therefore take a multipronged approach to engage with China at different levels.”

Twitter avatar for @clark_packard
Clark Packard @clark_packard
A really thoughtful essay by @YelingT on China's economic trajectory since joining the WTO:
foreignaffairs.comHow the WTO Changed ChinaIt’s not impossible to foster positive change in China, but it will be uneven, contested, and require ongoing pressure from the outside.
5:26 PM ∙ Feb 19, 2021
14Likes11Retweets

China: deindustrialization still to come

While growth in the number of workers in industry stopped in 2012, China still lags others in deindustrialization, writes Peterson Institute for International Economics senior fellow Mary Lovely.

In 2019, those employed in industries in China amounted to more than 27 percent of the workforce; by contrast, in other upper-middle-income economies, industry accounted for about 22 percent of jobs.

“Similarly, China’s manufacturing sector contributed more to GDP than those in other comparable economies,” Lovely writes. The value added from manufacturing made up more than 27 percent of GDP, which was almost 15 percentage points higher than the upper-middle-income average, “indicating there is more deindustrialization to come.”

Twitter avatar for @melovely_max
Mary Lovely @melovely_max
China is deindustrializing but has a way to go to match other upper-middle-income economies | PIIE
piie.comChina is deindustrializing but has a way to go to match other upper-middle-income economiesIn 2012, China’s industrial employment growth stopped. In subsequent years, the Chinese economy began deindustrializing. Industrial employment as a share of total employment declined as the sector shed millions of jobs.
6:08 PM ∙ Feb 26, 2021
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More cautious rural land reform

As part of Xi’s plan to boost “rural revitalization” - a policy that aims to lift incomes in the countryside following the conclusion of the battle against poverty - Chinese authorities will encourage land reform, reports Bloomberg News.

“China will push forward rural land reforms in a cautious manner as it tries to balance bolstering food security, particularly during the coronavirus pandemic, with economic growth,” reports Bloomberg. The plan calls for measures including the transfer and leasing of rural land to boost incomes for those in the countryside which still lag urbanites.

“On rural land issues, we cannot simply calculate the economic returns,” agriculture minister Tang Renjian said in an article on the ministry’s website. “It’s important for farmers to have a house and piece of land as this has played an important role in stabilizing the countryside, especially during the pandemic when 30 million migrant farmers were unable to travel to cities to find work, he added.”

Tang also stressed that China should continue to maintain its “red line” of having at least 1.8 billion mu (120 million hectares) of arable land and “ensure that permanent farmland is mainly planted with grains, fruits and vegetables so that the country can be self-reliant,” Bloomberg reports. “We will try to produce and store as much grains as possible to deal with any uncertainty in the external environment,” Tang said.

Twitter avatar for @dtiffroberts
Dexter Roberts @dtiffroberts
“It’s important for farmers to have a house and piece of land as this has played an important role in stabilizing the countryside, especially during the pandemic when 30 million migrant farmers were unable to travel to cities to find work”
bloomberg.comBloomberg - Are you a robot?
8:49 AM ∙ Feb 22, 2021

A crushing of Hong Kong unimaginable a year ago

With a speed that few expected, authorities have used the National Security Law in Hong Kong to “stamp out street protests, ban activists from lobbying foreign governments, gut the city’s legislature and arrest most of the opposition,” writes the Wall Street Journal’s Wenxin Fan.

“Officials see a need to use the law’s broad provisions more firmly to tame critical media, revamp education and tighten internet controls, fashioning the liberal financial center in the authoritarian mold of China’s other cities,” writes Fan. “Everything that’s happening in Hong Kong today was unimaginable a year ago,” political satirist Sam Ng told his 250,000 YouTube followers earlier this year.

Twitter avatar for @xinwenfan
FAN Wenxin @xinwenfan
8 months since the national security law came, Hong Kong has been almost brought to heel. It's only a start. In areas like the internet, "uncertainties is in the long-term future." wsj.com/articles/china… My review of NSL's impact on this beautiful city. 香港如何飄香 鄉里歡聚異鄉
wsj.comChina’s Campaign to Crush Democracy in Hong Kong Is WorkingFreewheeling former British colony almost brought to heel by new national security law used to quell street protests, ban foreign lobbying and gut the legislature
4:53 AM ∙ Feb 26, 2021
61Likes48Retweets

Notable/In Depth

The disturbing collapse in birthrates in Xinjiang is shown by the plummeting red line in this graph.

Twitter avatar for @jnzst
John Stone @jnzst
Ten years of birth rate data shows how remarkable the situation in Xinjiang is, where the birth rate has halved in two years. Red is Xinjiang. Black is China's average. Every other province is blue.
Image
10:58 AM ∙ Feb 24, 2021
926Likes635Retweets

Taiwan “is becoming the most dangerous flash point in the world for a possible war that involves the United States, China, and probably other major powers,” warns a new Council on Foreign Relations report.

]When governments declare that real news is fake, but then later get caught out in deception, the damage done to their reputation is large, says a new paper by political scientists Chengli Wang and Haifeng Huang.

Twitter avatar for @dtiffroberts
Dexter Roberts @dtiffroberts
1/ "We find that citizens can be persuaded by the authorities’ denials and reduce their belief in a piece of news that has been declared “fake.” But when the denied news turns out to be real, citizens will reduce their belief not only in the denial at hand but..."
Twitter avatar for @cps_journal
Comparative Political Studies @cps_journal
New from @haifeng_huang (UC Merced) & @wang_chengli (Shanghai U Finance & Econ) asks what happens when false govt claims are shown to be real. In China at least motivated reasoning doesn't save the govt: credibility suffers in both short and long term https://t.co/WCqMmxVHbK
5:55 AM ∙ Feb 23, 2021
7Likes5Retweets

Fascinating, in-depth podcast on the back-in-the-news topic of rare earths; Sinica Podcast’s Kaiser Kuo talks to Julie Klinger, a professor at the University of Delaware’s Department of Geography and Spatial Sciences.

Twitter avatar for @supchinanews
SupChina @supchinanews
A discussion about rare earths: @Prof_Klinger debunks many of the myths surrounding China and rare earths, and lays out her ideas about why China has dominated production of these vitally important minerals for decades:
supchina.comJulie Klinger on China’s rare earth frontier - SupChinaThis week on Sinica, Kaiser chats with Julie Klinger, an assistant professor at the University of Delaware’s Department of Geography and Spatial Sciences, about rare earths — a family of 17 elements that are essential to the function of modern industry and are indispensable in everyday technology.
9:00 PM ∙ Feb 26, 2021

Morning hike view

A morning hike by the author of Trade War yields this view.

Twitter avatar for @dtiffroberts
Dexter Roberts @dtiffroberts
Missoula valley
Image
10:58 PM ∙ Feb 24, 2021
19Likes2Retweets
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Trade War

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Karen Nesbitt
Mar 1, 2021

Thank you for all your hard work and for sharing this information. It’s great to the up-to-date on what’s going on. Thank you again.

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