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August 21, 2020 – Stealth War Newsletter 5

By: Jamestown Foundation

Fri August, 2020, Age: 3 years



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August 21, 2020

Strategic Indicator
This issue’s number to watch

$1 trillion

The potential cost over the next five years for U.S. and European companies to bring their manufacturing assets out of China, according to Bank of America analysts. .

Top Stories

The U.S. Justice Department announced that the former CIA officer Alexander Yuk Ching Ma has been arrested and charged with conducting espionage for China. The arrest sends a strong reminder of the effectiveness of Chinese espionage just as Washington and Beijing have closed consulates in a tit-for-tat over spying allegations. As we reported in last week’s newsletter, the U.S. State Department has recently designated Chinese media organizations as well as the state-backed Confucius Institutes to be “foreign missions,” giving the U.S. government greater oversight of their staffing and budgets.

As the U.S.-China relationship has grown increasingly rocky over the course of the COVID-19 pandemic, many analysts pointed to trade as a high point in bilateral ties, in a reversal from last year. Now signs are beginning to emerge that trade conflicts will once again become a bigger point of contention in the relationship. China’s economy, which is experiencing a “V-shaped” and slow recovery from the impact of COVID-19, is not on track to meet its Phase 1 trade deal promises, and high-level meetings discussing the fulfillment of the deal expected to take place this week were cancelled. It was not clear why the two sides failed to meet on August 15, and although the talks are planned to continue, there has been no new reported date. A delay gives Chinese officials more time to buy U.S. goods and show that they are trying to live up to the deal’s ambitious purchase targets.

In related economic news, new data from the U.S. Treasury Department shows that China cut its U.S. debt holdings for the third time this year, down to a total of $1.07 trillion. China was overtaken by Japan as the U.S.’s largest foreign debtor last year and now holds the second-largest amount of U.S. debt. In June, China sold $9.3 billion dollars’ worth of its U.S. Treasury assets.

New sanctions issued on Monday may be the “lethal blow” against Huawei. The new rules are designed to bypass Huawei’s circumventing of previous export controls by buying from third-party vendors and will essentially choke off the company’s ability to procure any semiconductors developed or produced using U.S. technology.

Tencent, the parent company of WeChat and one of the latest Chinese companies to get caught in the U.S. government’s crosshairs, hired its first DC lobbyist earlier this week.

Finally, the Wall Street Journal has reported that colleges around the nation have rolled out anonymizing measures meant to protect their students from being implicated by China’s new and far-reaching National Security law. China watchers have argued that universities need push back harder, with Sinocism’s Bill Bishop calling on schools to decline any PRC or Hong Kong-related funding so long as they carry out these programs.

Stealth War Flyover


The Jamestown Foundation is proud to release the inaugural episode of a new video series, Stealth War Flyover. Part of Jamestown’s new website, Stealth War, this periodic series will feature Brigadier General (ret.) Robert Spalding and Jamestown Foundation President Glen Howard dissecting the latest news in the ongoing competition between China and the United States.

In this first episode, Howard and Spalding discuss the recent decision by the United Kingdom to ban Huawei from its 5G infrastructure; the announcement by Taiwan Semiconductor Manufacturing Company that they will cease processing new orders from Huawei; and the sudden closure of China’s Consulate in Houston.

Watch Here

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