April 30, 2021 – Stealth War 35: Anti-Espionage Regulations; China-Japan; Huawei’s Troubles; Defense Spending; Vaccine Diplomacy to India; and Space Station Launch

By: Jamestown Foundation

Fri April, 2021, Age: 2 years

 

 


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April 30, 2021

Welcome to the Stealth War Newsletter, a collection of the top 5 recent news items, collected on The Jamestown Foundation’s new website, stealth-war-org.cdn-pi.com. To continue to receive this weekly collection, click the button below to subscribe.  

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Strategic Indicator
This issue’s number to watch
92.3 percentAmount by which China’s industrial profits rose on a year-by-year comparison to March 2020, driven by strong demand for raw materials.

Top Stories

On Monday, China’s Ministry of State Security (MSS) rolled out new counter-espionage regulations which create new responsibilities for companies and institutions operating “within the scope of national defense, diplomacy, economy, finance and high-tech industry” to take precautions against foreign espionage. The regulations come amid a new push to expand a holistic and all-encompassing definition of national security while also expanding the ruling Chinese Communist Party’s (CCP) control of society and business ahead of CCP centenary celebrations later this year. According to one foreign analyst, the rules will help Beijing to “bring commercial companies, universities, media and think tanks even more under government control to monitor and report the activities of Western entities operating in China.”

For their part, Western countries have focused on domestic fears of Chinese political and industrial espionage, with U.S. and UK intelligence leaders recently voicing concerns about the dangers of Chinese information operations undermining state sovereignty and liberal freedoms. In May, the UK Prime Minister Boris Johnson is expected to announce a bill to counter hostile foreign espionage, while the U.S. Senate is currently debating the “Strategic Competition Act of 2021” that includes provisions for a “Countering Chinese Influence Fund.” Just this week, a Chinese national investigated as part of the U.S. Department of Justice’s China Initiative pleaded guilty to felony charges that he had illegally procured U.S. marine drone technology for a Chinese military research institute.

But growing fears of foreign espionage are also mirrored in China, where national authorities have taken a broad definition of spying and targeted foreign nationals and citizens alike under opaque claims of spying for foreign forces. During celebrations of China’s sixth annual National Security Education Day on April 15, Chinese experts called the threat of Western-backed “color revolutions” in places such as Hong Kong a “top threat” to China’s political and national security. At the same time, a recent article in the Economist noted that the Chinese state’s expansive internet censorship regime weakens its network security protocols, making its citizens’ digital security extra vulnerable to cybercrime as well as foreign surveillance.

Tensions between China and Japan on maritime and security issues have become increasingly vocal, even as the two countries’ business interests have continued to find common ground. On Wednesday, the Japanese legislature approved the Regional Comprehensive Economic Partnership (RCEP), which is set to be the world’s largest free trade agreement. 15 countries in the Asia-Pacific signed onto the deal in November, including the 10 members of the Association of Southeast Asian Nations (ASEAN), China, Australia and New Zealand. Under the deal, 91 percent of goods will be traded tariff-free in the world’s largest free trade zone. The RCEP will be Japan’s first free trade agreement with its largest trade partners, China and South Korea. Thus far, Singapore, Thailand and China have ratified the agreement. Six ASEAN nations and three other countries are yet to ratify it.

Yet even while seeking closer economic ties, Japan has raised concerns over China’s growing assertiveness in the region. In the 2021 edition of its Diplomatic Blue Book, Japan highlighted China’s expanded military capabilities, lack of transparency and use of unilateral action to enforce its contested maritime claims. In addition, the report noted alleged human rights violations in Xinjiang and the erosion of civil liberties in Hong Kong–notably increasing the severity of its criticisms from previous editions. In response, China has accused Japan of “hyping up the so-called China threat” and “interfering in China’s internal affairs.”

In Germany, the Bundestag has approved the IT Security Law 2.0, which limits “untrustworthy” 5G vendors’ ability to operate in Europe’s largest market and requires telecommunications firms to alert the government when signing contracts for critical 5G components, as well as giving the government the power to block 5G deals. The legislation will effectively exclude Huawei from the German market. Germany’s policy toward China has been pulled in opposite directions as it aims to balance a tougher security stance while preserving one of its most lucrative trade relationships. The law brings Germany in line with France and Britain, who have also taken steps to ban Huawei in their national 5G networks.

In the face of EU bans and U.S. sanctions, Huawei has reported a 16.5 percent drop in its first quarter sales this year. Nonetheless, its profit margin grew by 3.8 percentage points. U.S. sanctions have blocked Huawei from accessing critical components for its smartphones, including computer chips and digital services. As Huawei’s sales in smartphones have staggered, the company has turned to other avenues of growth, including electric vehicles and industrial networks. In light of the revenue report, Huawei rotating chairperson Eric Xu noted that 2021 would be “another challenging year.”

A new report from the Stockholm International Peace Research Institute (SIPRI) has estimated that China spent $252 billion on its defense budget last year, up 1.9 percent from 2019 estimates. The Chinese military budget is notoriously opaque, with official calculations failing to take into account key spending areas. As a result, SIPRI’s estimates were 41 percent higher than the official budget last year. China’s 2.3 percent GDP growth amid the pandemic buffered its military spending: the SIPRI researcher Nan Tian noted that “China stands out as the only major spender in the world not to increase its military burden in 2020 despite increasing its military expenditure.”

But the days of this economic buffer provided by GDP growth could be limited. Ahead of the delayed release of China’s ten-year census results, the Financial Times has reported that China’s population declined last year for the first time in five decades, falling to just under 1.4 billion. If the reports are true, China may very soon be surpassed by India (1.38 billion) as the world’s most populous nation. In response, China’s National Bureau of Statistics issued a statement refuting the report, claiming that China’s population continued to grow in 2020, and that details of the census would be released soon.

Before the pandemic, expert consensus had estimated that China’s population would peak in 2027 or 2030, as the country’s policymakers seek to ameliorate simultaneous demographic crises of low birth rates and a rapidly aging population. Although it is doubtful that the population decline is due directly to the COVID-19 pandemic, it is possible that uncertainties due to last year’s pandemic exacerbated Chinese prospective parents’ existing hesitance to have children, increasing birth rate decline. But China’s economic growth is still heavily dependent on labor, and unlike European countries or the United States it cannot rely on immigration to counteract fertility loss. As a result, a population decline would have severe ramifications for its continued economic growth as well as its investment-driven foreign policy and security spending.

Today, Chinese President Xi Jinping offered India assistance in its fight against the coronavirus pandemic, according to state media. India’s catastrophic wave of coronavirus infections has recently dominated world headlines, but the Indian government has largely remained silent on the proposed assistance from China. The lack of response can be explained by a latent distrust caused by recent border skirmishes, as well as New Delhi not wishing to grant China a platform to drive a wedge between India and the U.S.

U.S. President Joe Biden announced on Monday that the United States would send vaccines to India. Many in developing nations have accused the U.S. and other wealthy countries of vaccine hoarding, as increased vaccination rates in the U.S. in particular have accelerated while other countries still lack access. Neither the EU nor the U.S., which own the most effective COVID-19 vaccines, have waived vaccine patents, although the White House is reportedly considering doing so. Public health advocates urge that such measures would dramatically improve the global south’s ability to fight the ongoing pandemic, which has surged in developing countries. But as the U.S.’s vaccine diplomacy has so far been anemic compared to other countries’—notably China and Russia, Indian citizens’ criticisms have grown. The Indian government itself has been careful not to make the same accusations.

Beijing has attempted to exploit this potential fissure in the relationship by releasing multiple articles on state media criticizing the United States for failing to assist to India. A new COVID-19 disinformation report by the European External Action Service notes that both China and Russia have continued to leverage “zero-sum logic” to promote their own state-produced vaccines while undermining confidence in Western vaccines. Beijing has also castigated New Delhi for moving closer to Washington, arguing that the U.S. is an unreliable partner that treats India “like a pawn” to be “discarded like used tissue” when no longer useful. According to former Indian Foreign Secretary Kanwal Sibal, “There’s always a hidden agenda behind Beijing’s outreach in such matters. China wants to signal to India that America [which initially refused help to India] is not a reliable partner and drive a wedge between Delhi and Washington who share a good relationship.”

Finally, China has just launched the first module of its new space station, which is planned to become operational in 2022. Beijing plans to complete ten more similar launches before then that will carry additional equipment into orbit. Although China has been blocked from sending astronauts to the International Space Station (ISS), which is a joint collaboration between Russia, the U.S., Canada, Europe and Japan, experts have noted that with the ISS due to retire in 2024, Beijing could feasibly then have the only major space station in orbit and might be able to leverage its rapidly developing strength in space to cooperate with Russia and other allies such as Pakistan.

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Huawei "sales and profits stabilize after more than 3 years of US sanctions"- Asia Times
https://asiatimes.com/2022/11/huaweis-industrial-5g-takes-off/

Globally, China's campaign to influence global media is intensifying https://www.voanews.com/a/china-s-global-media-influence-campaign-growing-says-freedom-house-/6736696.html


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