Geo-Strategic Trend - 132. page

The major Taiwanese newspaper China Times recently reported that The Federation of German Industries called on the European Union to take a stronger economic position against Mainland China to help EU companies fight against unfair competitive methods like product dumping, compulsive technology transfer, and inequality in financial backing. The BDI published its official announcement on January 10 with 54 requests for the German government and the EU to provide assistance. The announcement emphasized that, while German companies need the Chinese market, the Chinese government has refused to provide necessary market access. The BDI also called for establishing a stronger economic framework to regulate companies from non-market economies. The announcement highlighted the requests to stop subsidizing products not manufactured in the EU and to increase EU investments on EU infrastructure and innovation. The German BDI is the joint organization of 36 industrial associations. It is the most important lobbying organization representing the German Industries.

Source: China Times, January 10, 2019
https://www.chinatimes.com/cn/realtimenews/20190110005040-260408

The BBC reported that the Polish Internal Security Agency ABW arrested a Chinese senior executive of China Telecom giant Huawei and a Polish engineer. They were accused of conducting espionage for Chinese intelligence. Polish public television station TVP reported that the Polish security department searched Huawei’s office in Poland on Friday January 11. The Polish public television station TVP mentioned in the report that the arrested Chinese executives were the sales managers of Huawei in the Polish branch, and the arrested Polish engineer Piotr D was a senior official who worked for the National Security Agency.
In addition to searching the Huawei office, the Polish National Security Agency also searched the office of another telecommunications operator, Orange, the latest employer of the arrested Polish engineer.

According to the Polish public television station, Wang Weijing graduated from Beijing Foreign Studies University with a Polish major. He worked at the Chinese Consulate in Gdansk since 2006. Huaweie hired him in 2011 and he was sent to Poland to work in the public relations department of Huawei in Poland. In 2017, Wang became the sales manager of Huawei Poland, responsible for selling Huawei products to the public sector.

The Chinese official media reprinted the response of the Chinese Foreign Ministry saying that China is highly concerned that Wang Weijing was detained by the Polish Internal Security Bureau. The Chinese Embassy in Poland had already met with the Ministry of Foreign Affairs of Poland and asked Poland for an update about the case. However on January 12 Huawei fired Wang Weijing. In its statement, Huawei noted that Wang Weijing was arrested for “personal reasons” for allegedly violating Polish laws and “has adversely affected Huawei’s global reputation.” Huawei decided to terminate its employment relationship with Wang Weijing immediately.

At the same time, the Polish government said they are considering banning Huawei’s operation in the Polish market. Karol Okonski, head of network security at the Polish government, said they will make decisions in the coming weeks. He also said that any “decision on Huawei’s future in Poland” will be consistent with the EU and NATO, because Poland is a member of the EU and of NATO.

In addition, on the same day that Polish media reported the arrest of Wang Weijing, Scott Bradley, senior vice president of public affairs at Huawei Canada, announced his resignation. Earlier, the president of Huawei Canada said that the company “has no obligation to abide by Chinese laws” and (will) “never spy for the Chinese government.”

The arrest in Poland came after the arrest of Huawei’s vice chairman and chief financial officer Meng Wanzhou who was arrested in Canada on December 1, 2018. Meng Wanzhou, daughter of Huawei’s founder, was detained by the Canadian authorities at the request of the U.S.. The U.S. extradited Meng because of a suspected violation of Washington’s trade sanctions against Iran. The Chinese Foreign Ministry said that the incident seriously violated human rights and lodged solemn representations to the U.S. and to Canada.

Source: BBC Chinese, January 13, 2019
https://www.bbc.com/zhongwen/simp/chinese-news-46837367

Uganda Sze Pui Kwan, an associate professor at the Chinese Division of Nanyang Technological University in Singapore, had to terminate cooperation with the Hong Kong based Joint Publishing for her new book because she refused to edit politically sensitive contents.

Kwan, who grew up in Hong Kong, originally planned to publish her new book, Global Hong Kong Literature: Translation, Publication, Communication, and Version Control were to be in Hong Kong.

According to a January 9 article that a Chinese University of Hong Kong scholar Wong Nim-yan, who is also Kwan’s friend, wrote in the Hong Kong newspaper Ming Pao, the contents included a mention of  ‘June 4’ and described the publishing situation in China during its reform and opening up the 80s and 90s. The publisher hoped the author would edit these items out herself. June 4 refers to the Tiananmen Massacre in 1989.

The state-owned enterprise Sino United Publishing, owns Joint Publishing with the Chinese’s government’s liaison office in Hong Kong as its largest shareholder.

Kwan will likely publish the book, uncensored, with the Taiwanese company, Linking Publishing.

Source: Central News Agency, January 12, 2019
https://www.cna.com.tw/news/acn/201901120202.aspx

An official of the Taiwan Criminal Investigation Bureau, headquartered in Taipei, said on Monday, January 7, that Taiwan is investigating allegations that six current and former employees of the German chemical company BASF allegedly leaked trade secrets. BASF headquarters said it has taken steps to support the law enforcement investigations in Taiwan.

The Criminal Investigation Bureau said in a statement that one of the executives was suspected of stealing electronic processing technology, among other trade secrets, and leaking and selling it at a high price to a Chinese competitor.

BASF said that, among those under investigation, only one person is a current employee. All contacts with the suspects have now been cut. According to BASF, steps have been taken to support local law enforcement officials immediately in their investigations and to protect important information. Both BASF and Taiwan authorities refused to provide data on possible economic losses.

The incident came at a time when German political and industrial circles are showing deep concern about industrial espionage.

In November last year, Reuters reported that the German prosecutor pressed a charge against a former employee of the German chemical company Lanxess, accusing him of stealing trade secrets and replicating a chemical reactor in China.

Authorities in Taiwan and the United States have accused Chinese companies of stealing intellectual property, including chip secrets, for their semiconductor industry. Taiwan is determined to defend the chip industry as one of its economic pillars; it has set strict regulations and penalty measures for industrial espionage.

Source: Deutsche Welle Chinese Channel, January 7, 2019
https://p.dw.com/p/3B9A8

China has pledged to provide Pakistan with a total of $2 billion in financial aid to increase its foreign exchange reserves. Russian experts pointed out that there is a high possibility that China will respond to Pakistan’s request to provide financial support for its all-weather strategic partners.

In the year 2018, the value of the rupee shrank by more than 20 percent with respect to the dollar. Repayment of foreign debts, including $8 billion paid in December 2018, almost emptied Pakistan’s foreign exchange reserves.

The ongoing three-month negotiation with the International Monetary Fund (IMF) has not generated any tangible results. The two sides will resume negotiations on January 15 for a loan of $7 to 8 billion. It is very likely that Pakistan will satisfy the conditions that the IMF has set and will make transparent all terms to international lenders of Chinese loans and infrastructure projects under the framework of the China-Pakistan Economic Corridor. However, due to the budget gap, the Pakistani side has been in arrears in paying for the amount of work and services that the Chinese companies have completed. Therefore, it is very likely that the future loans received from the IMF will be used to pay to Chinese companies. The United States, which plays a major role within the IMF, has warned the IMF that the U.S. membership fee at the IMF is taxpayer’s money and should not be used to pay the Chinese lenders or Pakistani bond holders.

Pakistan’s foreign exchange reserves fell to a critically low amount of only $7.3 billion, which cannot even cover imports in recent months. The international rating agency Fitch has listed Islamabad’s debt rating as junk. Against this backdrop, China’s commitment of $2 billion will strengthen the Pakistani economy, improve the overall foreign exchange reserves, and, more importantly, will help increase the confidence of foreign investors.

The current promised $2 billion is the second allocation within six months. In July 2018, Beijing already pledged $2 billion to Pakistan to deal with the economic crisis. Earlier, according to Pakistan’s newspaper The Express Tribune, quoting from a Chinese Ministry of Finance’s anonymous source, China will give additional financial support. However, this information has not been corroborated; nor has any other source denied it.

In view of this, Russian experts pointed out in an interview with the Russian Sputnik News that China and Pakistan have reached a consensus and will not disclose information on the specific amount and conditions of the financial assistance. Pakistan’s Minister of Finance, Asad Umar, did not answer inquiries from foreign media about China’s new financial assistance. Zhao Lijian, representative of the Chinese Embassy in Islamabad, insisted that he did not have the information regarding the amount of loans and investments under the framework of the China-Pakistan Economic Corridor. However, he pointed out that China will continue to provide assistance for Pakistan’s economic development.

Source: Sputnik News, January 4, 2019
http://sputniknews.cn/opinion/201901041027279641/

DW News reported that Yonhap News Agency, a Korean media, made a suggestion in an article that, in addition to the arrest of two Canadian citizens, China has three more ways to take revenge on Canada for its arrest of Huawei executive Meng Wanzhou.

China can hit Canada in the following three areas:

• Real Estate: Despite the drop in Vancouver’s housing prices, some Chinese investors can choose to cancel or delay their plans to purchase Canadian properties.
• Tourists: 680,000 Chinese visited Canada in 2017 and spent on average US $2,400 per person. If China restricts Chinese visitors from going to Canada, it will have some impact.
• Trade: China is Canada’s second largest trade partner, after the U.S. There have been reports that the negotiation on the free trade treaty between China and Canada has been postponed.

Source: DW News, December 17, 2018
http://news.dwnews.com/global/news/2018-12-17/60105785.html