Asia Pacific Geopolitics – December 3, 2021

Alessandro Ponzetto | December 3rd, 2021

Today’s Geopolitics has three main themes, in a way all tied together.

The first is the geopolitical aspect of the Chinese/US relations and its impact on businesses. China is effectively acting as a master in the US, with Beijing warning US businesses to ‘speak out’ and lobby in its defence (or else) while effectively doing the SEC work in the case of Didi.

At the same time, US politics is unwilling to act, as shown by the Nikkei Asia interview of an ex-Trump official, with the current admin seeming to hold a similar opinion, and the example of ‘China Day’ in New York, which shows the Chinese influence spreading more or less unchallenged.

The second is the developments between China and the EU, with Lithuania demanding action after being removed from custom registry and a Joint Press Release by Deputy Secretary of State Wendy R. Sherman and European External Action Service Secretary General Stefano Sannino.

Finally, there is Taiwan and the wider implications of the inter-Strait relations. In this regard, there is an op-ed arguing for more US clarity, which is in line with what was said previously, plus yet another example from Japan, with former Defence Minister Kono comments.

Then there are developments regarding the Solomon Islands’ crisis, with the premier of the Taiwan-friendly Malaita calling for a switch back in favour of Taipei after the current PM moved closer to the mainland, and a change of heart from the new Honduras government, which first promised ties with China, but now seems reluctant to do so.

  1. CHINA

1.1 Beijing warns China-linked US businesses: you cannot ‘make a fortune in silence’ – The Guardian

Beijing has urged US business groups with interests in China to “speak out” and lobby the US government in its defence, warning that as bilateral relations deteriorate they cannot make money “in silence”.

The vice-foreign minister Xie Feng, in charge of managing China’s relationship with the US, also urged against political boycotts of the upcoming Beijing Winter Olympics, saying it harms the interests of athletes and was “unpopular”.

Key business groups including the American Chamber of Commerce in Shanghai and the US-China Business Council, met Xie at a virtual forum on Tuesday, according to a transcript of his address.

In his address, published by the ministry of foreign affairs, Xie urged the US business representatives to “speak up and speak out, and push the US government to pursue a rational and pragmatic policy towards China, stop conducting wars in trade, industry and technology, and stop creating … ideological and geopolitical confrontations and conflicts”.

The meeting’s warning added to letters sent by China’s embassy in Washington directly to US businesses last month, making similar threats and urging them to lobby against US bills that would affect Chinese interests.

“We hope that our friends in the business community will clearly oppose the politicisation of economic and trade issues and the abuse of the concept of national security, push the Biden administration to lift the tariffs imposed on China, stop the suppression and sanctions against Chinese enterprises and provide a level playing field for enterprises of both countries.”

Comment: This makes all US companies operating in China compromised at best or Chinese state actors at worst, as all those companies would effectively kowtow to Beijing and do its dirty work for fear of repercussions (or worse in the hope of pleasing them enough to get more access to the Chinese market). 

On one thing Xie Fe is right however: there should be a level playing field for enterprises on both countries, as the US is pulling its punches in this regard while China is not. An example to this is below. 

1.2 U.S. unlikely to screen investments in China: ex-Trump official – Nikkei Asia

The U.S. is not expected to screen outbound investments unless something dramatic forces its hand, a key Trump administration trade official told Nikkei, downplaying a proposal here aimed at preventing sensitive technologies from leaking to China.

“Outbound investment restrictions can be used to prevent, to a degree, technology transfers when export controls have not met the challenge,” said Nazak Nikakhtar, who served as acting undersecretary of commerce for industry and security.

The Biden administration is believed to be weighing the option to bolster America’s economic security. “But this is going to be such a polarizing topic for the industry,” Nikakhtar said, pointing to growing interest in investing in China by financial firms and other foreign companies.

“Unless we see some kind of massive Chinese government intervention in the market in a way that significantly disrupts U.S. private capital investments, I don’t think the U.S. government will articulate to private industry the urgency for taking extreme action like this,” she said.

Comment: Considering the situation regarding data, as shown yesterday, the lack of action in this regard from the US is not good. This is however part of a wider issue, which is the different treatment of Chinese companies in the US compared to US companies in China.

The solution here would be to reciprocate, by applying the same laws China enacts, and prevent the Chinese from further taking advantage of the situation. This is not limited to companies however, as shown below

1.3 ‘China Day’ in New York: A Case Study in United Front Work – The Diplomat

On June 18, 2019, the same day that U.S. President Trump and Chinese President Xi held a phone call agreeing to meet after the breakdown of trade talks amid the intensifying trade war, the New York State Senate unanimously adopted a resolution introduced four days prior by Senator James Sanders Jr., chairman of the Senate Committee on Banks, and co-sponsored by 61 other lawmakers. Sander’s resolution sought to designate October 1, 2019, coinciding with the 70th anniversary of Chinese Communist Party (CCP) rule, as China Day, and the first week of October 2019 as Chinese American Heritage Week.

[…] A delegation of Chinese American representatives led by Huang Ping, current consul general of the Chinese Consulate in New York, was invited to attend the Senate session and “witness the resolution’s passing.” When introducing the motion on the floor, Sanders added, “I want to say that the warmth that the delegation has shown to us is one that I personally wanted to note.” He went on to thank and praise Huang’s work.

[…] The resolution received wide coverage across Chinese state media. At an event celebrating its adoption, Huang noted that “the timing of this resolution couldn’t be better” and applauded: “This is an extremely friendly move and has been widely acclaimed by both Chinese and American people.” Then-Chinese Foreign Affairs Ministry spokesperson Lu Kang also praised the move, noting at a press briefing: “I would like to emphasize that none of the achievements made in the past four decades would have been possible without subnational support. People-to-people friendship is the fountainhead of bilateral relations.”

Based on available media coverage, there is circumstantial evidence that the Chinese Consulate may have encouraged the introduction and adoption of the China Day resolution. Huang visited the state capitol in March 2019 and met with a group of legislators, including Sanders and Carlucci. Huang expressed the hope that the state legislature “would continue to support exchanges and cooperation with China and contribute to further development of bilateral relations.”

Two months later on May 28, 2019, even as relations between Beijing and Washington were rapidly deteriorating, a delegation of state lawmakers led by Senator Toby Ann Stavisky, also including Sanders and Carlucci, visited Huang at the Consulate. Huang again expressed his hope that the legislature can “continue supporting exchanges with China” and “properly handle sensitive China-related issues.”

About two weeks later, on June 14, Sanders introduced the China Day resolution. On the same day, Senator Stavisky also introduced a resolution “commemorating the 54th anniversary of Sing Tao Daily New York,” a pro-Beijing newspaper that is a subsidiary of Sing Tao U.S., which the Department of Justice recently recognized as a foreign agent for being a part of Beijing’s media influence operations.

Comment: The issue of Chinese influence is widespread, which is of particular concern. While there is no reason to advocate for something akin to the Red Scare post WWII, it would be prudent not to have legislators and businesses overtly compromised and simply watch the Chinese do as they please. 

1.4 Didi’s US exit shows Xi is the ultimate arbiter for China’s companies – FT

US politicians have been firing pop guns at China Inc for years. On Friday, Xi Jinping responded with a bazooka, making it clear that while Chinese companies listed in the US irked Democrats and Republicans, they enraged the Communist party.

[…] US politicians pushing for such measures were missing the forest for the trees. The fact that China’s leading and overwhelmingly private-sector technology companies routinely preferred New York to Shanghai or Hong Kong to launch initial public offerings was a big endorsement of American capital markets and a vote of no confidence in China’s. Didi, after all, was merely following a path well-worn by predecessors including Alibaba, Jack Ma’s ecommerce group, and Sina Weibo, which runs the closest in China to Twitter.

It was not a situation that Xi, who is poised to take an unprecedented third five-year term as head of the party, government and military, was going to tolerate for very long. His obsession with perceived national security risks — first in volatile and politically unreliable Chinese regions such as Xinjiang and Hong Kong, more recently in cyber space — hastened this trend. Having crushed alleged “separatists”, Xi has turned his attention to China’s politically unreliable companies.

Didi’s move to Hong Kong is also telling and links Xi’s crackdown on dissent in the territory to his “rectification” of China’s private sector. Chinese regulators would probably have had reservations about Didi listing in Hong Kong, rather than Shanghai, before a new national security law imposed by Beijing marked the beginning of the end of both the territory’s once vigorous pro-democracy movement and its freewheeling media environment.

Comment: Having Didi delisted from NYSE to then relist in Hong Kong is very much a power move from Xi and the Chinese authorities, providing yet further proof that Hong Kong has become part of the mainland in all but name. 

1.5 Tory rebels back amendment to allow young Hong Kongers to move to UK – The Telegraph

Nearly 30 Tory MPs are backing a rebel amendment to allow young Hong Kongers to come to Britain. The MPs, led by Damian Green, are seeking to open up the British visa scheme to those aged 18 to 25, many of whom have been involved in pro-democracy protests against the Chinese.

They are currently unable to apply independently to the scheme which is closed to those born after the British colony was handed back to the Chinese in 1997, unless their parents bring them as part of their family.

Twenty-seven Conservative MPs have backed the amendment, including Tom Tugendhat, chairman of the foreign affairs committee, Andrew Mitchell, the former International Development Secretary, Jeremy Hunt, the former Health Secretary,  and father of the House Sir Peter Bottomley.

The amendment is due to be debated on Tuesday and Johnny Patterson, policy director of Hong Kong Watch, warned: “If the Government isn’t willing to adopt it, they will find their majority under threat.” Research published earlier this week by Hong Kong Watch showed that 93 per cent of those who have faced protest-related charges by the Chinese are aged between 18 and 25.

Comment: It is good to see that some MPs in the UK have the moral courage to act in this issue. After all, even if China protests, they were the first to violate the Treaty with which Hong Kong was transferred and makes no sense for London to abide by something not worth the paper it is written on. 

1.6 China top representative in Macau to advise govt on national security-state media – Reuters

China’s top representative in the semi autonomous gambling hub of Macau will begin advising the former Portuguese colony’s government on national security matters, state news agency Xinhua reported on Friday.

The move highlights increased scrutiny from Beijing over Macau affairs after the central government declared outflows of Chinese gambling-related funds into Macau and other gaming hubs a national security risk.

Last week Macau authorities arrested Alvin Chau, the founder of Macau’s biggest junket operator, which brings in high rollers to play at casinos, along with 10 others, for allegedly using Macau as a base for an illegal “live web betting platform.”

A warrant for Chau’s arrest has also been issued by the mainland Chinese city of Wenzhou, accusing him of forming an extensive junket agent network that helps citizens engage in gambling activities and of setting up a company that helps gamblers make cross-border fund transfers. read more

Comment: Now Macau too is going to face the same treatment as Hong Kong, most likely in order to squeeze even more the cross-border fund transfers. It is not entirely surprising, as gambling is illegal in the mainland and as the politicking for next year’s Congress is in full swing. 

  1. EUROPE

2.1 Lithuania demands EU response to China removing it from customs registry – Taiwan News

Lithuanian Parliamentarian Matas Maldeikis on Friday (Dec. 3) said the Lithuanian government will question China’s removal of the Baltic nation from its customs registry.

Maldeikis, who is in Taiwan for the 2021 Open Parliament Forum, said that because the impact pertains to the EU it should be investigated. Lithuania will communicate with China through the EU to understand the situation, Liberty Times cited him as saying.

It is assumed that this development is retaliation for Lithuania expanding its relations with Taiwan. A Taiwan representative office was officially opened in the Lithuanian capital of Vilnius in November.

Ausrine Armonaite, the economy and innovation minister also said the issue requires EU involvement. She added that a response will be formulated in coordination with the Lithuanian Ministry of Foreign Affairs and the central government.

She also said the Baltic country had already implemented protective measures in case such an incident took place, per Liberty Times. Armonaite said there would be an increase in the number of loan guarantees for various domestic businesses.

The Lithuanian foreign ministry said on Thursday that it will ask the EU to respond to China’s actions. President of the Lithuanian Confederation of Industrialists, Vidmantas Janulevicius, said that it is worthwhile raising EU trade restrictions against China as a clear response must be sent.

Comment: Removing Lithuania from the custom registry is quite a diplomatic escalation from China, which has to be answered in some way. While there seems to be some positive development in Europe, it is still all words but no substance.

2.2 Joint Press Release by the EEAS and Department of State on the Second High-Level Meeting of the EU-U.S. Dialogue on China – EEAS

Deputy Secretary of State Wendy R. Sherman and European External Action Service Secretary General Stefano Sannino held the second high-level meeting of the EU-U.S. Dialogue on China on December 2 in Washington. They reviewed the work of the six working groups that were launched since the first high-level meeting in May. They reiterated that the EU’s and United States’ respective relations with China are multifaceted and emphasized the importance of the EU and United States maintaining continuous and close contacts on our respective approaches as we invest and grow our economies, cooperate with China where possible, and manage our competition and systemic rivalry with China responsibly.

Deputy Secretary Sherman and Secretary General Sannino also discussed the growing list of China’s actions that are of concern, including those that breach international law and run counter to the shared values and interests of the United States and the EU. They discussed ongoing human rights abuses and violations in China, including the systemic repression of ethnic and religious minorities in Xinjiang and in Tibet, and the erosion of autonomy and democracy in Hong Kong.  They expressed a shared interest in continued exchanges and cooperation, including in multilateral fora, on human rights issues in China. They also reaffirmed the importance of upholding international law and principles, and strengthening the effectiveness of multilateral institutions by coordinating to advance shared priorities related to human rights, global standards, clear institutional procedures, and wherever possible on elections in international organizations.  Noting the harmful effects of disinformation on democratic societies, they expressed their readiness to deepen U.S.-EU information sharing on disinformation sponsored or supported by China.

[…] They expressed strong concern over China’s problematic and unilateral actions in the South and East China Seas and the Taiwan Strait that undermine peace and security in the region and have a direct impact on the security and prosperity of both the United States and European Union. They further reaffirmed the importance of upholding and promoting freedom of navigation and overflight in accordance with international law as reflected in the 1982 Law of the Sea Convention and discussed how to counteract risks in the areas of strategic stability and cybersecurity.

Comment: This is good in principle but it is questionable whether action would follow. European countries have not been the most reliable of partners as far as China is concerned, notwithstanding the cases in which they have actively sided with the Chinese

The two best examples are German military tech finding its way onto Chinese vessels and submarines or Italy’s current largest parties having opened the door to the Chinese (to the point of their founder visiting the Chinese ambassador while PM Draghi was in the UK for the G7 talking about China, among other things). 

Things may change with the shake-up in leadership in several key nations but it is unlikely, or at least there is no indication of a major shift in this regard. 

  1. SOUTH KOREA

3.1 Natl. security adviser to visit China amid push to declare formal end to Korean War – Korea Herald

National security adviser Suh Hoon will visit China this week to meet with Beijing’s top diplomat, Cheong Wa Dae said Wednesday, as Seoul pushes to declare a formal end to the 1950-53 Korean War. Suh will visit the northeastern port city of Tianjin on Thursday and Friday at the invitation of Chinese Communist Party foreign affairs chief Yang Jiechi, the presidential office said.

The two plan to meet Thursday and “exchange opinions on issues of mutual concern, such as South Korea-China relations, Korean Peninsula issues, and regional and international affairs,” it said.

The agenda will likely include Seoul’s push for an end-of-war declaration after the Korean War, in which South Korea and a US-led United Nations Command fought against invading North Korean forces backed by China, ended in an armistice in 1953.

Comment: On the one hand it is good to involve China in this matter, as Beijing was very much involved in the war (North Korea would not have survived without Mao’s intervention in 1950). On the other, it is debatable whether this attempt will garner meaningful results, considering Moon is a lame duck and North Korea does not seem open to actual peace talks. 

In any case, Yang was quoted as saying, “(We) support the push for the end-of-war declaration and believe that the end-of-war declaration will contribute to promoting peace and stability on the Korean Peninsula.”

This sounds good but it is unclear what exactly the Chinese would do to promote peace and stability in the Peninsula, as the de facto guarantor of North Korea. 

  1. TAIWAN

4.1 Clarity Out of Chaos: America Must Explain Its Taiwan Policy – The National Interest

The past few weeks revealed much about U.S.-Taiwan relations, U.S.-China relations, and the clarity of U.S. policy. Given that Taiwan is deemed by many thoughtful people to be the most dangerous place on Earth, and that it is unarguably the place where the vital interests of two contending major powers overlap, clarity is important. Deterrence depends on it. Our ongoing defense policy and strategy reviews may wish to take note of this.

[…] There was surely amused satisfaction in the leadership compound at Zhongnanhai in late October. President Joe Biden became the latest U.S. president to be tripped up by the hoary catechisms governing acceptable descriptions of our relations with Taiwan. At a CNN Town Hall, the president was asked if the U.S. military would defend the country (the word “country” applied to Taiwan is also considered inappropriate by China) in the event of a Chinese attack. Biden said, “Yes, we have a commitment to do that.” A White House official attempted to clarify Biden’s comments on Taiwan after the town hall, saying the president was “not announcing any change in our policy and there is no change in our policy.” It sounds like the staff version of “OK Boomer.” Apparently, our “unchanged policy” was assumed to be obvious to all, as no further explanation was offered. But is it?

It didn’t have to be this way, and it must not remain this way. If we are to prevail in what our Interim Strategic Guidance calls a strategic competition with China or any other nation, and work in common cause with our allies and partners, we must have a clear, concise, and understandable policy. We need strategic clarity about our position and our commitments. We must be properly ambiguous about what, exactly, we would do to fulfill our obligation in any hypothetical situation.

[…] Strategic clarity does not mean we should reveal operational plans or intentions or address hypothetical events. It does mean that we can make clear that the U.S. legal obligation to resist coercion and to provide defense articles and services entails a moral obligation to ensure success.

Comment: This op-ed effectively summarises the issues of the current administration regarding Taiwan. The lack of clarity, due to mixed messaging, is not serving anyone. On the one hand it damages the US reputation further, especially after the disastrous disengagement from Afghanistan, while on the other it creates opening for misunderstandings with China, as it may view this as a lack of commitment. An example of clarity is the following

4.2 China attack on Taiwan could draw economic sanctions: Japan’s Kono – Kyodo News

Former Japanese Defense Minister Taro Kono warned China on Thursday not to attempt to seize Taiwan by force, saying such an act would come at a high cost to Beijing, such as drawing economic sanctions from the international community.

“If China actually tries to use force against Taiwan, it would probably lead to a very dire situation that would probably include some kind of economic sanctions,” Kono said at a news conference, remarks likely to draw a strong protest from Beijing.

Kono, a senior lawmaker of the ruling Liberal Democratic Party, added measures may “not be limited to economic sanctions only,” without elaborating.

The comments came a day after former Prime Minister Shinzo Abe — under whom Kono served as foreign and later defense minister — said a Taiwan contingency would be an emergency for Japan and the Japan-U.S. alliance, and a Chinese attack on Taiwan would amount to “economic suicide.”

Comment: Japan has maintained a very consistent stance on Taiwan, without having to clarify precisely the specifics of their actions. Ultimately what has to be very clear is the objective, not the finer details. 

4.3 Solomon Islands politician calls for switch in diplomatic ties back to Taiwan – SCMP

The head of the most populous province in the Solomon Islands said the country would likely switch diplomatic ties back to Taiwan if the prime minister is ousted from his post following next week’s no-confidence vote, after looting and violent protests shook the capital city last month.

Daniel Suidani, the premier of Malaita, on Friday said he thinks the Solomon Islands should partner with Taiwan because they share democratic values.

Prime Minister Manasseh Sogavare angered many in 2019, particularly leaders of Malaita, when he cut the country’s diplomatic ties with Taiwan to recognise Beijing instead. Suidani said the switch was done without adequately consulting the public.

Comment: This articles shows that the issue of China vs Taiwan has a role to play in the Solomons’ recent flashpoint, although it is but a factor in a wider problem between Malaita and Guadalcanal. The situation may have also had effects elsewhere, as shown below.

4.4 Incoming Honduras government backs away from pre-election China stance – SCMP

A high-ranking ally of incoming Honduran president Xiomara Castro has signalled a reversal of her pre-election stance in favour of establishing diplomatic ties with China.

Honduras, with a population of just under 10 million, is one of a shrinking club concentrated in Central America and the Caribbean that maintains relations with US-backed Taiwan.

Castro’s pledge on China relations before Sunday’s election had prompted diplomatic jostling between Beijing and Washington as each seeks to exert influence on the Central American nation.

Comment: Of course it could be merely coincidental but it is unlikely that it happened entirely in a vacuum, without being influenced by events such as the ones in the Solomons or the issues countries who buddied up with China have been facing, like Pakistan and Sri Lanka as we saw yesterday.