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China Detains Alleged MI6 Spy

China’s Ministry of State Security (MSS) announced on Monday (January 8th) that the head of a foreign consulting firm, surnamed Huang, was found to be spying for the British foreign intelligence agency MI6. According to MSS, Huang was recruited by MI6 in 2015 and established an “intelligence cooperation relationship” with them.

MSS claims that MI6 instructed Huang to enter China several times using his identity as a cover to collect China-related intelligence and identify potential recruits for MI6. Huang allegedly provided his MI6 handlers with “9 classified-level state secrets, 5 secret-level state secrets, and 3 intelligence reports.”

MSS states that MI6 provided Huang with professional intelligence training in the UK and equipped him with special espionage gear to facilitate intelligence gathering in China. Chinese national security authorities allegedly uncovered evidence of Huang’s espionage and have taken him into criminal custody. No further details (besides the surname) were provided regarding Huang’s identity, current status, or location. The MSS announcement did not elaborate on Huang’s background, which consulting firm Huang was running, or who his MI6 handlers were.

Source: Deutsche Welle, January 8, 2024
https://p.dw.com/p/4ayJ9

Briefings | | |   Geo-Strategic Trend

Beijing Criticizes US Proclamation Cracking Down On Corruption, Accuses US of Harboring Corrupt Fugitives

On December 11, 2023, U.S. President Biden issued “A Proclamation on Suspension of Entry as Immigrants and Nonimmigrants of Persons Enabling Corruption.” On January 7th, Chinese state media outlet China Discipline Inspection and Monitoring News criticized this proclamation as U.S. “hypocrisy” and “double standards” on anti-corruption efforts. Its article reported that 20 of China’s most wanted fugitives are currently hiding in the U.S.

The article states that, in recent years, the U.S. has expanded the concept of national security “to justify long-arm jurisdiction and suppress its rivals, while perpetuating its own hegemony.” The report argues that U.S. anti-corruption efforts highlight hypocrisy and hegemonic goals, as well as expose the U.S. as “the world’s largest safe haven for corruption assets and fugitives.”

Specifically, the article claims that the U.S. hosts the highest concentration of persons from developing countries who are suspected of corruption and white-collar crimes. Of the “100-Person Red Notice List” published by the Chinese Interpol office, 20 out of the 38 fugitives who have not yet been brought to justice in China are said to be hiding in the U.S. (The “100-Person Red Notice List” refers to 100 Chinese former state officials who were suspected of corruption and became fugitives targeted for pursuit by Chinese authorities.)

Some Chinese netizens questioned why the CCP’s state media is criticizing the new U.S. entry ban, which ostensibly would make life harder for corrupt individuals fleeing from Chinese authorities. Some netizens speculated that corrupt people [within the CCP] and their families are angry that they can no longer travel to or study in the U.S. One netizen remarked that many families of corrupt Chinese officials will now have to return to China.

Sources:
Central News Agency (Taiwan), January 8, 2024
https://www.cna.com.tw/news/acn/202401080123.aspx

The White House (US), December 11, 2023
https://www.whitehouse.gov/briefing-room/presidential-actions/2023/12/11/a-proclamation-on-suspension-of-entry-as-immigrants-and-nonimmigrants-of-persons-enabling-corruption/

Briefings | | |   US-China Relations

RFA Report: Korean Students Studying in China Down 80% Over Six Years

A recent report by the Korean Ministry of Education reported that the number of South Korean students going to China for higher education has decreased by nearly 80 percent over the past six years.

In 2017, there was a peak of 732,400 Korean students in China. As of April 1, 2023, there were only 158,570 Korean students in China, a 6.5 percent drop from 2022 and a 78.3 percent plunge compared to 2017. Each of the past six years has seen a declining number of Korean students in China compared with the year before.

The proportion of Korean international students who study in China has also shrunk substantially. In 2017, 30.5 percent of all Korean students abroad were in China. By 2021 the figure fell to 17.2 percent, and it has remained below 20 percent since then.

Analysts cite several reasons for the sharp decline in Korean students opting for Chinese universities. China’s slowing economic growth is likely a major factor discouraging foreign students, as were China’s strict epidemic control policies of recent years. A third potential factor could be Koreans’ declining opinions of China — polls have shown that the percentage of Koreans holding negative views about China has risen in recent years, especially among young Koreans.

Source: Radio Free Asia, December 26, 2023
https://www.rfa.org/mandarin/Xinwen/3-12262023110441.html

Briefings | | |   Geo-Strategic Trend

Head of China’s Aircraft Carrier Programs Sentenced to 13 years for Massive Bribery

Hu Wenming has been sentenced to 13 years in prison and fined 5 million RMB (US$ 700,500) for accepting bribes and abusing his power. Hu was the chairman of the board of directors of China State Shipbuilding Corporation Limited (CSSC) as well as the secretary of the company’s Chinese Communist Party committee.

From 2001-2020, Hu took advantage of his positions to unlawfully accept nearly 60 million RMB (US$ 8.4 million) in bribes related to projects, business deals, promotions, etc. He also caused major losses to state-owned assets during a corporate restructuring from 2013-2015.

In May 2020, Hu was put under disciplinary review for suspected violations. Investigators raised concerns about Hu potentially leaking state secrets, but this was not mentioned during trial. The Shanghai court found that Hu’s actions constituted “accepting bribes” and “abuse of power by a state-owned company officer.” His bribes were extremely large and his favoritism caused particularly significant asset losses, meriting punishment. Mitigating factors included: attempted bribes, recovering some losses, confessing crimes, actively returning stolen goods, and having other statutory/discretionary lenient circumstances.

After participating in earlier aircraft carrier construction in Liaoning Province, Hu was appointed in 2017 to be chief commander overseeing development of China’s first domestically built aircraft carrier in Shandong Province.

Source: Radio France International, December 26, 2023
https://rfi.my/AD0h

Briefings | | |   Government/Politics

Xi Urges Politburo Members to Report Issues Objectively, Not Just the Positives

At a recent Chinese Communist Party’s (CCP) Politburo meeting, General Secretary Xi Jinping emphasized the need for top leaders to “maintain high political sensitivity and unity under the centralized leadership of the CCP’s Central Committee.” He warned about “transforming non-political risks into political ones” and called for “objective and timely reporting of issues.” The CCP Politburo is a top decision-making body of the Chinese Communist Party, consisting of 24-members.

Xi said that members should uphold the authority of the CCP Central Committee, strengthen the “Four Awarenesses,” “Four Confidences,” and “Two Upholds.” Amid complex domestic and international environments, leaders must “grasp the strategic initiative” and “enhance foresight to see essence through phenomenon and understand situations politically.”

He stressed the importance of preventing and resolving political risks, promptly blocking various hidden dangers from turning into political ones. Leaders should “reflect real-life situations objectively, not just reporting good news.” Xi stated that members should adhere to “high-quality development over blind expansion, seek practical results rather than falsified data, and build long-term foundations instead of damaging finances.”

Source: Central News Agency (Taiwan), December 23, 2023
https://www.cna.com.tw/news/acn/202312230031.aspx

Briefings | | |   Government/Politics

Wang Huning’s Directive: Manipulate Taiwan’s Election Through Fragmented Grassroots Infiltration

Top Chinese government official Wang Huning reportedly held a meeting in Beijing in early December to coordinate efforts to intervene in Taiwan’s upcoming presidential election, which is scheduled for January 13, 2024. A number of different Chinese government departments and agencies were reportedly assigned specific tasks with the aim of subtly influencing Taiwan’s presidential election without attracting international scrutiny. Agencies with representatives attending the meeting include the CCP’s Department of Propaganda, the Department of Taiwan Affairs, the Ministry of Defense, the Ministry of National Security, and the CCP’s United Front Work Department.

The key strategy of China’s cognitive warfare against Taiwan has been to present voters with a “choice between war and peace.” Although Xi Jinping recently stated in public that China does not have plans to attack Taiwan in 2027 or 2035, Beijing still wants Taiwanese voters to feel that there is a threat of war if Taiwan refuses to peacefully integrate with Mainland China.

Beijing’s layered, multi-channel information campaign aims to manipulate Taiwanese public opinion while avoiding the most overt forms of interference that could provoke international condemnation.

The shift from overt influence strategies of the past to a more subtle, distributed approach may reflect China’s current economic weakness, which limits its ability to spend large amounts of money on influence campaigns. Beijing’s continued efforts to influence the politics of Taiwan despite current economic headwinds demonstrates the importance that China places on its Taiwan unification objective.

One specific tactic employed by Beijing is to offer visits or discounted tours in China for Taiwanese representatives from the media, businesses, and government. Local officials are taken on exchanges and given discounted tours with the hope that Beijing can win influence and change these representatives’ perceptions and voting behavior. Other tactics includes using China’s propaganda departments to amplify Beijing’s criticisms of Taiwan’s Democratic Progressive Party (DPP) government, as well as distorting media reports coming out of Taiwan before disseminating them through Chinese social media to sway public opinion.

Taiwan has implemented safeguards against electoral interference, and analysts say that China’s influence / incentives may have limited impact on voting behavior. However, the high-level coordination led by a senior Chinese leader demonstrates the priority Beijing places on covertly intervening in the Taiwanese democratic process to serve its political agenda of asserting control over the island.

Source: Voice of America, December 8, 2023
https://www.voachinese.com/a/china-keeps-interfering-in-taiwan-s-elections-ignoring-biden-s-warnings-20231208/7389984.html

Briefings | | |   Government/Politics

Chinese Money Flows into Gold

Gold demand in China continues to rise, supporting high international gold prices. Chinese spot prices have exceeded international benchmarks since August 2023. Reasons for the high demand from China include economic concerns like the Chinese real estate slump and devaluation of the yuan, as well as global instability resulting from deteriorating Chinese foreign relations and wars abroad.

Chinese demand for gold reach 789 tons in 2022, making up 20% of global demand. Increasing purchases by Chinese individuals are lifting prices. Gold ETF holdings are up 27% since the end of 2022 as investors seek stability.

China’s economy is showing signs of slowdown. Both the manufacturing and property sectors are struggling, and heavy corporate debts are threatening operations. The yuan hit 15-year lows against the US dollar in September 2023, sparking speculation that China has limited gold imports to defend its currency.

Chinese investors distrust the yuan amid uncertainty, buying gold as a “stateless currency” and inquiring about offshore real estate, e.g. Japanese properties. Inquiries from China, Hong Kong and Taiwan to one Japanese real estate agency rose 40% between January and November of 2023.

Ongoing gold inflows and foreign property investment reflect persistent economic unease. But with policy stimulus now improbable, the poor outlook on growth may remain until issues around housing, the yuan, and debt show improvement. For the foreseeable future, Chinese demand for gold looks set to keep international prices elevated.

Source: Nikkei, December 15, 2023
https://zh.cn.nikkei.com/china/ceconomy/54310-2023-12-15-08-38-33.html

Briefings | | |   Economy/Resources

China: Negative Commentary on Economy is a National Security Risk

China’s Ministry of State Security recently published an article saying that economic security is the foundation of national security. It said that economic threats must be dealt with to promote China’s economic recovery and “high-quality development [of the economy]. The article accused foreign critics of fabricating false narratives about China’s economy to undermine market confidence and impede growth. It vowed to crack down on illegal activities that jeopardize economic security.

Meanwhile, social media platforms like Weibo are instructing bloggers to avoid pessimistic comments about China’s economy or face severe punishment. Some users were notified that downplaying the economy has become a “red line” that risks heavy penalties if crossed. This reflects the CCP’s heightened sensitivity to dissent and its effort to control public discourse about economic issues.

The article tied economic security to the national security concepts emphasized by Xi Jinping. It blamed foreign actors for creating “discourse traps,” manufacturing false narratives about China’s economic decline. The article did not address concerns about how China’s own policies have contributed to the trend of economic decoupling between China and global economy.

By framing economic commentary as a national security issue rather than just economic analysis, the CCP is severely restricting speech within China. Self-censorship by firms like the China International Capital Corporation (CICC) and social media platforms show the chilling effect of this new policy. Some Chinese netizens have noted that, ironically, the act of banning negative comments about the economy may itself be damaging to perceptions about the Chinese economy and business environment.

Source: Voice of America, December 15, 2023
https://www.voachinese.com/a/china-s-ministry-of-state-security-says-badmouthing-china-s-economy-endangers-national-security-20231215/7399543.html

Briefings | | |   Social Stability