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Strategic Indicator
This issue’s number to watch
12
As of August 3, the number of detected COVID-19 cases in Wuhan, last year’s epicenter of the pandemic, now experiencing a resurgence largely due to the highly contagious delta variant. Continuing China’s zero-sum approach to containing the virus that has worked to halt 30+ previous outbreaks, the city government has implemented a massive quarantine and testing campaign across Wuhan’s 12 million residents.
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| This Week:
* China Seeks to Influence and Control Reporting on Itself
* Progress in Sino-Indian Border Disengagement as Indian Navy Heads to South China Sea
* BRI Roundup – Chinese Businesses Moving into Volatile Iraq, Tigray
* Huawei Boosts Cloud Services as Meng Wanzhou Extradition Trial Arguments Close
* Chinese Regulators Seek to Calm Investors Following Recent Chaos |
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China Seeks to Influence and Control Reporting on Itself
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This week, the Centre for Information Resilience revealed that a network of social media accounts seeks to distort international perceptions on significant issues, elevates China’s reputation, and discredit claims critical of the Chinese government. The coordinated influence operation uses a mix of artificial and repurposed accounts to push pro-China narratives and distort perceptions on important issues via Twitter, Facebook and YouTube. Although there is no concrete evidence that the network is linked to the Chinese government, it resembles pro-China networks previously taken down by Twitter and Facebook that amplified pro-China narratives as well as disinformation similar to those promoted by Chinese state representatives and state media. Foreigners sympathetic to China have also been leveraged to promote seemingly grassroots support for the state’s narratives. A German woman on a mission to “refute Western media’s smear campaign against China” has been widely praised and featured in Chinese media, despite foreign criticisms that the influencer’s followers appear to display signs of inauthentic behavior.
China also continues to use official means to influence reporting on topics related to it, including issuing official complaints to the British BBC over its reporting on historic flooding in Henan and its reporting on Taiwanese athletes participating in the Olympics. At the Olympics, two Chinese gold medallists are facing investigation over Mao badges, which Chinese media celebrated and then censored. |
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Progress in Sino-Indian Border Disengagement as Indian Navy Heads to South China Sea
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Indian Army officials announced today that both their forces and Chinese counterparts have ceased forward deployments at Gogra Post. Gogra Post, located in India’s Ladakh province, has been a key confrontation point throughout the Sino-Indian border crisis that began in May 2020. The disengagement was agreed to during the 12th round of border talks that took place on July 31. Both Indian and Chinese troops pulled back from their forward deployments on August 4 and 5, and temporary infrastructure and structures created to house and supply troops have been dismantled. This is the second disengagement to occur, with the first having taken place at Pangong Lake in February. At Gogra Post, the border seems to have returned to the status quo ante.
Meanwhile, the Sino-Indian border remains far from stable. Despite earlier reports emerging from Indian security officials that substantial progress was being made in disengaging from the Hot Springs area—another of the original face-off points in the crisis—Chinese officials allegedly stated that they were “not inclined” to move back from that confrontation point. And though Hot Springs is now likely to be the focus for Indian and Chinese negotiators, soldiers from both countries remain in a state of confrontation in several other areas.
China’s recent aggressive actions toward India on the border has triggered a change in strategic thinking in New Delhi. Nearly three decades of normalization in Sino-Indian ties have fallen apart, and Indian officials are now seeking to more closely align with the United States and are finding new ways to confront Beijing. Demonstrating this, India recently sent a naval task force of four ships to the South China Sea to expand security ties with friendly countries experiencing their own (maritime) border problems with China. The task force, which includes a guided missile destroyer and a missile frigate will go to Southeast Asia, the South China Sea and the Western Pacific over a two-month deployment. The group will take part in annual drills with the United States, Japan and Australia off the coast of Guam. These countries, along with India, make up the Quadrilateral Security Dialogue, or the “Quad,” which Beijing has criticized as being designed to limit China. |
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| Chinese Businesses Move into Volatile Iraq, Tigray |
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On July 25, Chinese officials announced that Beijing would finance the construction of an airport in the central Iraqi city of Nasiriyah and 90,000 houses in Baghdad. These projects are taking place under a 2019 “oil for projects” agreement between Iraq and China. The Nasiriyah and Baghdad projects are the first under the agreement, for which China will receive 100,000 barrels of Iraqi crude oil, according to an adviser to the Iraqi Prime Minister. China is investing heavily into Iraq, with state-owned companies constructing a potentially 300,000 barrels a day oil refinery in al-Faw peninsula, which will be created exclusively for exports and will be entirely funded by the Chinese government. Another 100,000 barrels a day refinery construction project in Dhi Qar governorate will be predominantly made with Chinese participation.
Meanwhile, Chinese businesses are also expanding in the war-torn Tigray province in Ethiopia. Zijing Mining Group, based in China, has signed a non-binding letter of intent with East Africa Minerals to acquire 55 percent ownership stake in the “Harvest Project.” The Harvest Project is located in the Asmara Mineral Belt in Tigray, and according to preliminary estimates from 2018 produce up to 17,800 ounces of gold and 57,250 ounces of silver per year. Zijing’s investment comes as two other Chinese companies pulled their investments from Tigray as the civil war between the local Tigrayan Defense Forces and the central Ethiopian government escalated, potentially signaling a return of Chinese investment. However, the civil war has not subsided and continues today, bringing to question how Zijing intends to handle the operational security of this project. These investments also come as Beijing has indicated its increasing interest in Afghanistan, leading observers to worry about China’s strategic aims and ability to project power as it seeks to deepen its economic investments in unstable regions.
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Huawei Boosts Cloud Services as Meng Wanzhou Extradition Trial Arguments Close
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Huawei is poised to become one of Asia’s top cloud service providers in the next three years. As a part of an effort to bolster its cloud program, Huawei has set aside $100 million to incentivize start-up companies in the region to use its platform. Other major competitors include Microsoft Azure, Amazon Web Services and Alibaba, the latter has the largest market share in China. Huawei CEO and founder Ren Zhengfei has underscored the importance of Huawei’s business pivot to cloud services as the company’s smartphone sales suffer given its inclusion on the United States’ trade blacklist for security reasons. American allies have also clamped down on business with Huawei. Possibly in retribution, China Mobile, a government-owned wireless operator, has reduced its business in China with competitors Nokia and Ericsson in favor of Huawei. Beijing previously warned that it would retaliate against the firms after Sweden banned Huawei equipment from its 5G networks. In addition, Huawei Chief Security Officer Andy Purdy, a former cybersecurity adviser to the president, recently criticized the Biden administration’s executive order to bolster cybersecurity measures in the United States and pushed for closer collaboration with China in cyberspace.
Meanwhile, Huawei CFO Meng Wanzhou has entered the final stages of her extradition trial to the United States in Canada. Meng was detained in 2018 in Vancouver per request of the United States, which accused Meng of attempting to flout U.S. sanctions on Iran by providing misleading information to bank HSBC. Lawyers for Meng argued for a stay in proceedings, claiming that the United States used a misleading record in the fraud case. The case has inflamed tensions between Beijing and Washington as well as Ottawa.
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Chinese Regulators Seek to Calm Investors Following Recent Chaos
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On Sunday, the China Securities Regulatory Commission (CSRC) said it would seek closer cooperation with its American counterpart, the U.S. Securities and Exchange Commission (SEC) to support overseas listings. This comes after the SEC signaled that it will increase scrutiny of Chinese companies aiming to sell shares in the U.S. Cybersecurity and financial regulators in China have recently targeted companies seeking to list overseas over a variety of concerns, including anti-monopoly enforcement and data security. A Politburo economic policy review concluded at the end of July concluded that China’s economic recovery from the ongoing pandemic was “still not firm and unbalanced,” and added that it was necessary to keep a closer eye on the overseas listings of Chinese technology companies that could impact national security.
Even as the central government has doubled down on increasing subsidies for high-technology manufacturing sectors such as semiconductors, electric-car batteries, and commercial aircraft, it has moved to crack down on consumer service internet companies that previously boomed amid loose regulation. Most recently, Chinese regulators targeted the variable interest entity corporate structure, which Chinese firms notoriously used to circumvent rules limiting foreign ownership. Bloomberg analysts have estimated that the recent crackdown on technology companies across industries ranging from e-commerce to logistics and tutoring has led to more stock market losses totalling more than $1 trillion, spooking investors worldwide. Although this week’s moves are aimed to calm foreign investors, which China still seeks to buttress its economic development, it is unlikely that this alone will succeed in doing so amid the recent stock market turmoil.
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