July 8, 2022- Stealth War 95: China Begins Construction of First Commercial Space Station on Hainan Island; U.S. Imposes New Sanctions on Illicit Iran-China Oil Trade; BI, MI5 Issue Joint Warning on China Threat; State Media Claims China Can Stabilize Global Food Crisis; PLA Navy Warship Chases Russian Frigate Near Japan-controlled Senkaku Islands in “Awkward” Encounter

By: Jamestown Foundation

Fri July, 2022, Age: 11 months


July 8, 2022

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

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Stat Du Jour 
This issue’s number to watch27 weeks 

Average lead time for semiconductor chip deliveries in June, which fell by a day from 27.1 weeks in May. Despite the minor fall, shortages remain severe (e.g., the average lead time for semiconductor chip deliveries in June 2020 was 13.8 weeks).

This Week: 

China Begins Construction of First Commercial Space Station on Hainan Island

U.S. Imposes New Sanctions on Illicit Iran-China Oil Trade

* FBI, MI5 Issue Joint Warning on China Threat

* State Media Claims China Can Stabilize Global Food Crisis

* PLA Navy Warship Chases Russian Frigate Near Japan-controlled Senkaku Islands in “Awkward” Encounter

Top Stories

(source: Wikipedia)

China Begins Construction of First Commercial Space Station on Hainan Island

The People’s Republic of China (PRC) began constructing its first commercial spacecraft launch site on July 6. The facility is located near Wenchang City on the island province of Hainan, which lies just east of Vietnam. The location and timing are notable for several reasons. First, the province is already home to one of the PRC’s four launch sites. However, these facilities are not able to keep up with booming commercial demand. Beijing needs its commercial aerospace industry to continue to grow rapidly in order to achieve its outer space ambitions, such as developing a low earth orbit  satellite mega-constellation and building a moon base. This proximity to an existing space center will allow for greater public-private collaboration.

Second, there are plans to significantly expand the island’s high-tech industrial base, which was established in 1991. One of the main focuses of the current efforts is in the aerospace industry (research, design, production, missions), especially the manufacture of satellites and manned spacecraft.

Third, Hainan’s location offers significant advantages. Its latitude enables greater fuel efficiency for launching objects into space. The island location makes it accessible to seaborne transportation of large equipment,  and  reduces the danger of crash debris hitting population centers. It also renders launching and landing reusable rockets, which are easier to recover at sea, more feasible.

Fourth, these investments are rooted in the province’s 2018 designation as the 12th pilot free-trade zone (PFTZ) in the nation, with plans to make it the first Free Trade Port (FTP) (e.g., Hong Kong, Singapore) established by the PRC since its founding. A FTP is ambiguously defined, but “usually refers to a port area outside of the customs checkpoints but within the borders of countries and regions, which allows free entry and exit of foreign goods, funds, and means of transportation,” functioning as a means of economic stimulus. This could attract a significant amount of foreign investment and human capital, and potentially enable cheaper access to resources in one of the world’s busiest shipping lanes.

(source: Wikipedia)

U.S. Imposes New Sanctions on Illicit Iran-China Oil Trade 

The United States Department of the Treasury’s Office of Foreign Asset Control (OFAC) recently sanctioned a network of individuals and companies involved in facilitating the sale of Iranian oil and petrochemicals to the People’s Republic of China (PRC) and other East Asian countries. The companies sanctioned include United Arab Emirates-based Edgar Commercial Solutions FZE, Oligei International Trading Co. Limited, and Hong Kong-based Lustro Industry Limited. In addition, UAE-based Iranian nationals Morteza Rajabieslami and Mahdieh Sanchul were sanctioned over their role in exporting Iranian oil on behalf of the Switzerland-based Naftiran Intertrade Company (NICO), which is a part of the National Iranian Oil Company (NIOC). In June, OFAC sanctioned another network of companies funneling Iranian oil to East Asia. Notably, PRC-based broker Jingfeng Gao was among the individuals targeted by U.S. sanctions.

Recent sanctions follow failed talks in Doha to revive the Joint Comprehensive Plan of Action (JCPOA), more commonly known as the Iran nuclear deal. Since the Trump administration withdrew the U.S. from the deal in 2018, Washington has steadily increased sanctions on Iran. Under Secretary of Treasury for Terrorism and Financial Intelligence Brian Nelson stated that while the U.S. is committed to reaching an agreement with Iran to revive the JCPOA, it is currently unwilling to lift sanctions on Iranian oil and petrochemicals. Moreover, former Treasury official Brian O’Toole hypothesized that Iran’s continued oil sales to China are “a point of leakage in the sanctions regime.” Since Iran is heavily reliant on oil exports to keep its economy afloat, sales to China have allowed the country to survive, despite harsh sanctions.

Tehran has also recently expressed interest in joining the Brazil, India, Russia, China, and South Africa (BRICS) group. In a June 28 press conference, Chinese Foreign Ministry Spokesperson Zhao Lijian stated that China was potentially willing to expand BRICS to include Iran. On June 23, Chinese Foreign Minister Wang Yi and Iranian Foreign Minister Hossein Amir-Abdollahian held a phone call to discuss BRICS and the JCPOA negotiations. In the call, Wang voiced indirect  support for Amir-Abdollahian’s statement that the main obstacle to JCPOA cooperation was the “bullying behavior of the United States.”

(source: MI5)

FBI, MI5 Issue Joint Warning on China Threat

This week, United States Federal Bureau of Investigation (FBI) Director Christopher Wray and United Kingdom Security Service (MI5) Director General Ken McCallum issued a joint warning on the growing threat posed by the People’s Republic of China (PRC) to U.S. and UK interests. The joint briefing detailed the respective agencies’ efforts to prevent intensifying Chinese cyber-attacks and penetration by the PRC’s hacking program, which Wray described as “bigger than that of every other major country combined.”

China’s influence operations, which seek to interfere in the internal political affairs of the U.S. and the UK, have also picked up. Wray stated that Beijing had directly interfered in a New York Congressional election this year, as one of the candidates was an outspoken critic of the Chinese government and a former Tiananmen Square protester. Industrial espionage by China has also increased. Director McCallum noted that MI5 had recently rebuffed a “sophisticated [PRC] attack” targeting UK Aerospace companies. McCallum also warned Western businesses to be vigilant, particularly if they are involved in advanced technological industries that are of “material interest to the CCP.”

In a July 7 press briefing, Chinese Foreign Ministry spokesperson Zhao Lijian denounced the FBI-MI5 joint statements as an example of Anglo-American “Cold War zero-sum mentality and ideological prejudice.” PRC state media also accused Directors Wray and McCallum of using “sensationalist language” to sow division between China and the West. In addition, Chinese sources were highly critical of the U.S., stating that the PRC is being scapegoated into an “enemy” of the West. Despite these accusations, the PRC has been ramping up its malicious cyber activities. In July of last year, affiliates of the PRC’s Ministry of State Security launched a cyber-attack on Microsoft’s servers, resulting in the theft of trade secrets, intellectual property, and other sensitive information.

(source: News.cn)

State Media Claims China Can Stabilize Global Food Crisis

On July 7, state media agency Xinhua published an article proclaiming that the People’s Republic of China (PRC) is “injecting stability” into the global food market. In the context of what the United Nations calls “an unprecedented global hunger crisis,” the writer describes how the country’s investment in science and technology has allowed the PRC to obtain “basic self-sufficiency in grain and absolute security in staple foods.” It is explained that such achievements enable Beijing to help other nations become similarly self-sufficient by not “stash[ing] agricultural technologies,” and instead sharing them. In other state-run media, the PRC touts its ability to both export and donate food, presenting itself as a world savior.

However, in December 2021, before Russia’s February invasion of Ukraine led to mass shortages in world food supplies, Nikkei Asia reported that the PRC “has managed to stockpile more than half of the globe’s maize and other grains,” despite having less than 20 percent of the world’s population, “leading to steep price increases across the planet and dropping more countries into famine.”  In March, the PRC’s Minister of Agriculture noted that China is experiencing what may be the “worst” winter wheat harvest in its history, further driving up market prices and inducing it to intensify grain “hoarding.” In short, it was clear by the end of 2021, if not sooner, that Beijing was concerned its food supplies were running low. The reality on the ground has become more apparent as reports emerge from regions locked down under the Zero-COVID policy. During the recent lockdowns in Xi’an and Shanghai, the government sometimes failed to ensure regular food deliveries to citizens, and delays often led to produce rotting before it reached quarantined residents. China has long struggled with the issue of food waste. During times of prosperity, people tend to indulge in over-consumption. However, in times of scarcity, historical memories of past deprivation, such as the last large-scale famine in 1959-1961 during the Great Leap Forward, drive citizens to hoard grain and other essentials, leading to price spikes and temporary shortages.

(source: ChinaMil)

PLA Navy Warship Chases Russian Frigate Near Japan-controlled Senkaku Islands in “Awkward” Encounter

Earlier this week, a Chinese PLA Navy (PLAN) ship chased a Russian warship near Japanese territorial waters around the Senkaku Islands in the East China Sea, according to Japanese government sources.

The incident occurred on Monday, when a Chinese frigate sailed through the contiguous zone of the uninhabited islands for about six minutes from 7:44 to 7:50 AM.  According to the Japanese Defense Ministry, the Chinese warship was chasing a Russian frigate through waters that China claims as its own. The Russian vessel stayed in the area from 7:05 to 8:16 AM in order to avoid a typhoon. The PLAN’s  response to the Russian incursion was a calculated one to make it appear as if they were patrolling around Chinese territorial waters, in a bid to demonstrate control over the Senkaku Islands, which the Chinese call the Diaoyu Islands.

Following the incursions of both the Chinese and Russian vessels, Tokyo lodged an official protest with Beijing. In the notice, Japan stated that it will “respond firmly but in a calm manner” to further Chinese encroachments. Through diplomatic channels, Tokyo also called on Moscow to take an “appropriate response” to prevent future such incidents, but did not lodge a formal diplomatic complaint. Per Tokyo, this is because unlike their Chinese counterparts, Russia does not claim the Senkaku Islands and the Russian warship had sailed into Japanese waters to avoid a typhoon. The incident was both an awkward situation and an opportunity for Beijing as China has repeatedly asked other countries to respect the sovereignty of its maritime claims, including those not recognized under international law. By sailing into the contested waters, Russia stepped on China and Japan’s feet, but also provided a chance for Beijing to demonstrate its authority in waters over which it seeks total control. The incident marked the first time since June 2016 that Chinese and Russian naval vessels have been spotted entering the contiguous zone at around the same time. Under international law, ships of any nation, warship or civilian, possess the right to sail through the contiguous waters of a coastal nation unless they are threatening the nation’s safety.




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