Planes, trains and automobiles: Transport is at the forefront of China President Xi Jinping’s mind as he doubles down on “new industrialization” and “high-quality development” to advance national rejuvenation for the new era. What this means in practice is another manufacturing drive, and, since it is his signature economic policy, it would be distinctly embarrassing were it to dissolve like a distressed property developer.
Unfortunately, this is precisely what may happen to some Chinese automotive makers, as the European Union deepens its pesky probes into whether they are receiving anticompetitive state subsidies. Indeed, the European Commission, its executive branch, ordered customs registration of electric vehicles (EV) imported from China to begin on March 7, 2024 with a view to possible retroactive tariffs. The U.K. is considering similar moves. This is bad news for EV-makers like the indebted NIO, who may be looking to rescue themselves from overproduction and a sluggish economy at home by dumping excess automotives on overseas markets.
China is putting its dukes up with its own probe into French brandies, while its Chamber of Commerce to the E.U. expressed its (and no doubt Xi’s) disappointment via the state media Global Times. However, the blow was softened by Mercedes-Benz, the German carmaker with a plentiful recent history of groveling in front of Beijing and supplying equipment to the Hong Kong Police Force, which begged Europe to instead lower its tariffs on China’s cars, thereby perhaps sealing its own death warrant someday in the future. German carmakers do not seem to get it: Xi is never going to trade in his Hongqi limo for a Merc, even if he did apparently enjoy rolling through Pyongyang with Kim Jong-un in a sanctioned one a few years ago.
Across the Atlantic Ocean, U.S. President Joe Biden is clamping down on China-produced vehicles for other reasons. First, citing national security concerns, he has ordered an investigation into connected cars. These are so-named for their range of navigation and other gadgets, many of which could bleed sensitive data to entities under the Chinese government’s control. Second, on February 21, the White House announced $20 billion of investment aimed at providing “safe, secure cranes to U.S. ports” as part of a wider executive order that is intended to beef up the cybersecurity of America’s shipping infrastructure. Ports have attracted particular scrutiny after a congressional report determined that unexplained communication devices were installed on many ship-to-shore cranes produced by the Chinese state-owned Shanghai Zhenhua Heavy Industries Company Limited (ZPMC), which supplies approximately 80% of such machinery in the U.S.
Instead of looking to reassure Washington, perhaps by not preinstalling such equipment, China’s spokesperson for its U.S. embassy, Liu Pengyu (劉鵬宇), gave the opinion that, in safeguarding itself against potential data harvesting or remote attacks to critical infrastructure, America is “abusing national power.” Responding to the moves by both the U.S. and E.U. regarding electric vehicles, the Chinese Foreign Ministry further sniffed that “to turn normal trade activities into security and ideological issues, build ‘small yards with high fences’ in the name of ‘de-risking,’ and attempt to ‘trip others up’ instead of ‘running faster’” is encumbering “the progress and prosperity of the world.”
Getting back to ports, India has ratcheted up geopolitical tensions with its opening of a new naval base on Minicoy Island, 125 kilometers from the Maldives, with whom China has just signed a military assistance deal. The move compensates New Delhi’s withdrawal of troops from its Indian Ocean neighbor, which prefers closer ties with Beijing following a democratic election in 2023. To the north, India has also reportedly stationed 10,000 troops along its border with the Middle Kingdom, which the latter considers “not conducive to safeguarding peace and tranquility” of the region.
In the Pacific, China is even bolder and angrier: Agence France Presse reported broken windows and injured sailors after a Filipino supply vessel was rammed and attacked with a water cannon by the China Coast Guard on March 5 in waters around the Spratly Islands, which China regards as its own despite its claims having been shot down in a 2016 arbitration ruling under the United Nations Convention on the Law of the Sea. Vice Admiral Alberto Carlos of the Philippines Navy described the incident as the worst in the last two years, a period during which confrontations between the two countries have escalated worryingly.
It follows the approval of the Philippine Maritime Zones Bill on February 26, by the Senate in Manila, a measure which strengthens its sovereignty over geographical features like the Spratly Islands under the aforementioned convention and even places artificial constructions built by China under its jurisdiction. The Philippine ambassador to the U.S. has backed that up by saying the country is ready to work with Western partners to develop offshore oil and gas resources.
Enraged, China’s Ministry of Foreign Affairs has refuted the aforementioned arbitral decision, lodged solemn demarches to the Philippines, cried that Manila’s bill “severely violates China’s territorial sovereignty and maritime rights and interests in the South China Sea” and unilaterally declared that “no one shall draw forces outside the region into the issues.” It also hit out at the Republic of South Korea, which had responded to the March 5 collision by calling for adherence to a rules-based order and freedom of navigation. Korea should “refrain from following others to hype up the matter, and avoid adding unnecessary burden to the China-R.O.K. relations,” in the ministry’s opinion.
The U.S. irritates Beijing by standing firmly with the Philippines, and China’s mood may have darkened due to developments further afield in the Pacific, too. There, after weeks of delays caused by congressional impasse in Washington, on March 9, U.S. President Joe Biden was finally able to sign legislation into law that will provide billions of dollars of funds for the Marshall Islands, Micronesia and Palau. This in turn paves the way for the already negotiated renewal of Compacts of Free Association with the three countries, guaranteeing defense and aid cover for them in exchange for U.S. access to huge strategic swathes of ocean.
Xi Jinping had been looking to upend these relationships and switch them to his side, but, for now, the tide seems to be turning against him, a Pacific pattern matched elsewhere. Yes, he has survived a review into police exchanges with Fiji, managed to get his police officers on the ground in Kiribati as has been the case with police advisors for a while in Vanuatu, but both the latter countries have announced boardings of Chinese fishing vessels in cooperation with the U.S. Coast Guard in recent days.
Not only is this embarrassing to China, but it reaffirms America’s practical commitment to the region on an issue of political significance and sovereign integrity for several nations. It also has a surveillance component. In Vanuatu, it was the first such boarding in years and a turnaround since 2023 when, according to Reuters, the U.S. Coast Guard was denied entry to one of the country’s ports. Moreover, illegality was determined from a Chinese state-owned fishing vessel that has a joint venture with the island state’s government. The optics are, therefore, a little awkward.
But it gets worse for China. If its maritime strategy is to block or impede Washington’s path to Taiwan in case Beijing decides to invade its neighbor, its diplomatic component is to strip Taipei of its allies one by one. However, Washington’s above-mentioned steps forward with Palau and the Marshall Islands make it less likely that they will dissolve their recognition of Taiwan’s leadership, whose vice president-elect Hsiao Bi-Khim (蕭美琴) is quietly visiting stateside at the moment, according to the Wall Street Journal. What is more, post-election Tuvalu, which was widely expected to flip ties from Taipei to Beijing, has instead moved to “reaffirm its commitment to the long-term and lasting special relationship” with Taiwan.
Seizing defeat from the jaws of victory is always painful for Xi, but, in truth, Taiwan will need all the help it can get. Another incident with a Chinese fishing boat, this time in waters surrounding the archipelago of Kinmen, which Taiwan claims as its territory, resulted in the deaths of two fishermen on February 14, after they were chased by the Taiwanese Coast Guard.
Predictably, Beijing puffed itself into a fury condemning the tragedy, although its anger may not be all it seems. The flashpoint is, after all, the perfect excuse to draw its authority around Kinmen, a gift horse it will not look in the mouth. So far, in response to the deaths, it has intercepted and boarded a Taiwanese sight-seeing vessel, asserted that Kinmen’s waters are not off-limits to its fishing craft and upped Coast Guard patrols around the islands, placing them deeper in its snare (even as joint rescues between Taiwan and China for emergencies do still take place).
The real value of the Kinmen incident, however, could be to put it in the back pocket for later, although frustrations lie in this tactic, too. China does still need time and investment to modernize its attack forces, but that gives Taiwan the opportunity to prepare its defense against invasion. Militarily, this is happening as conscripts receive training from U.S. personnel, reminding of preparations in post-2014 Ukraine. Diplomatically, the more aggressively Beijing projects itself, the more it is driving politicians from countries like Japan into Taipei’s arms: Over ten times more Japanese Diet members visited Taiwan than China in 2023. Beijing would prefer to see them going to its side, but they are frightened of never being allowed to leave.
Taiwan was, of course, one of the victims of the cyberespionage that seems to have been revealed in a mid-February leak of documents to GitHub from a Chinese company called I-Soon. These left Beijing red-faced, not only by exposing the nuts and bolts of a hacking and monitoring industry whose existence it routinely denies, but also because various government entities and other organizations around the world were also targets of I-Soon’s enterprise. Afghanistan, India, Malaysia, Mongolia, Pakistan, South Korea, Thailand, Vietnam and even NATO all feature in the documents, despite several being close to Beijing, leaving China plenty of explaining to do.
Data capture, intellectual property theft, espionage, covert influence and cyber gray zone antics, including those described in the I-Soon leak, are finding less fertile ground in general. In Australia, a former candidate for the Liberal party became the first person to be jailed under foreign influence laws after he was convicted in December 2023 of operating on behalf of the Chinese Communist Party, and the director general of the Australian Secret Intelligence Organization publicly called out China’s Ministry of State Security as the previously anonymous entity that has a division dedicated to targeting Australian citizens.
Not to be outdone, the U.S. is prosecuting an army intelligence analyst who is suspected of conspiring to sell information to Beijing about response plans in the eventuality of an attack on Taiwan, while a federal jury from the country has indicted a former Google engineer and Chinese citizen in relation to the theft of artificial intelligence technology. President Biden is also outlawing sale of various categories of sensitive data to adversarial countries, as a bill to force the Chinese company ByteDance to sell its video-hosting platform TikTok on pain of seeing it banned has progressed from Washington’s house to its senate on the way to possibly becoming law. China has hit out at both moves, accusing the U.S. of overstretching the concept of national security and sabotaging the world’s normal economic and trade order with “hegemonic moves.”
It has similar views about the steadily proliferating sanctions that its entities and individuals are facing at the hands of the EU, U.K. and U.S., the price it has to pay for its persistent technological support for Russia’s war of invasion against Ukraine and multiple human rights abuses. China Foreign Minister Wang Yi (王毅) has described them as reaching “bewildering levels of unfathomable absurdity.” Calmness, this is not.
BEIJING ANGER-OMETER 76/100: Exasperation at iron that does not become steel (恨鐵不成鋼)
Leave a Reply