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Geo-Strategic Trend

Serbia Purchases China’s Missile Defense System

Serbia has purchased a new generation of medium-range radar-guided surface-to-air missiles from China. The move is considered the latest sign of deepening cooperation between Beijing and Belgrade.

According to Reuters report on August 3, “the purchase of the FK-3 missile defense system was included in the state-run arms company Jugoimport SDPR’s annual report, submitted to the state Business Registers Agency last week and seen by Reuters.”

The FK-3 is an export version of China’s latest generation of HQ-22 medium-range air defense missiles, which first appeared at the 2016 Zhuhai Air Show.

“Jugoimport SDPR said it made 163 import deals with 31 countries for $620.3 million in 2019. The weapons purchases included armed drones from China and Europe’s first known purchase of the FK-3.”

The FK-3 air defense missile, which Serbia purchased has a maximum range of 100 kilometers and a shooting height of 50 meters to 27,000 meters. The source said that Serbia has purchased 3 sets of FK-3 systems.

“In late June, Serbia’s air force received six CH-92A combat drones armed with laser-guided missiles, the first such deployment of Chinese unmanned aerial vehicles in Europe.”

China’s state media Global Times said that this drone is mainly used for reconnaissance and surveillance, but it also has certain strike capabilities.

The Serbian military traditionally uses the technology of the former Soviet Union. In recent years, Belgrade has purchased MiG-29 fighter jets, missiles, helicopters, tanks and armored personnel carriers from Russia.

China has been pumping money into Balkan countries, mainly on soft loans, infrastructure and energy projects. Beijing sees Serbia as part of its “One Belt, One Road” initiative and an important springboard to enter the Balkans.

In April last year, the Chinese government stated that, under the framework of the “One Belt, One Road,” the cooperation between the two countries achieved remarkable results. In the past six years, until 2019, the bilateral trade volume increased by 55.7 percent; the number of tourists from China to Serbia has also increased significantly. 2018 saw more than 100,000 Chinese tourists; the total contractual value of infrastructure construction projects of Chinese-funded enterprises exceeded US$5 billion. In recent years, China’s construction in the western Balkans and issuance of preferential loans in the name of promoting the development of infrastructure has attracted widespread international attention. The European Union expressed its concern that Southeast European countries in the western Balkans might suffer from China’s “debt trap diplomacy.”

Source: Voice of America, August 3, 2020

Samsung Closed Its Last PC Factory in China

Voice of America (VOA) Chinese Edition recently reported that, on August 1, Samsung announced  that it is closing its last personal computer manufacturing factory in China – Samsung Electronics Suzhou Computer. Over 800 employees may see their contracts end. The Suzhou factory was established in 2002. It is Samsung’s only laptop manufacturing factory in the world. Last year, Samsung closed its last cellphone manufacturing factory in China and moved to Vietnam. That closure had a major economic impact locally. Now Samsung has only two factories left in China. One makes LCD displays and the other makes DRAM memory chips. Experts pointed out that, in the past two years, with the trade war, the coronavirus pandemic, and the worsening U.S.-China relations, the global supply chain is rapidly moving out of China and moving to countries such as Vietnam, India and Mexico. The trend is especially clear for companies from the United States, Japan, South Korea and Europe. At the same time, China’s low labor cost advantage has been weakening as well.

Source: VOA Chinese, August 1, 2020

Global Times: India to Increase Troops along India-China Border

Global Times recently reported that, according to Indian media quoting anonymous sources, India plans to send 35,000 more troops to strengthen its military presence along its border with China. The reasoning behind the decision is that the Indian government found the probability of quickly reducing the tension between the two countries is getting lower. Although some recent negotiations cooled down the situation, yet there are still plenty of issues left that have not been resolved. This new decision of adding troops is expected to add a greater burden to India’s tight defense budget as well. Some Indian military leaders said it has been more than a couple of weeks with no improvements on the ground. A full disengagement between the two armies was not achieved. In the meantime, the Indian government just announced new trade sanctions and investment restrictions against China.

Source: Global Times, August 1, 2020

Three Major Portuguese Telecom Operators Refuse to Use Huawei 5G

Well-known Chinese news site Tencent News recently reported that all three Portuguese telecommunications operators, NOS, Altice and Vodafone, announced they will not use Huawei’s 5G technology in their 5G networks. This is the fourth European country, after Britain, France, and Italy, to refuse to use Huawei 5G. The three companies explained that the reason for their choice was purely technical. The decision was made despite an estimated total financial loss of 1.1 billion Euros and a no-risk conclusion of a government risk assessment. In the meantime, Huawei has lost its primary chip supplier TSMC, due to the U.S. ban based on the use of U.S. technology. It appears Huawei is slowly losing the entire European market. The latest data showed that the European company Ericsson has signed 99 contracts for 5G deployments. This achievement surpassed Huawei, making Ericsson the world’s number one 5G supplier.

Source: Tencent News, July 31, 2020

Apple’s Second Largest Supplier Plans Move to India

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that Pegatron, Apple’s number two manufacturing supplier, is setting up a new factory in India. Pegatron has been looking for a proper location for at least its partial iPhone manufacturing capabilities. Now the company has reportedly registered a branch in India. Another place of interest for Pegatron was Northern Vietnam. Among the three Apple iPhone manufacturers (the other two are Foxconn and Wistron), Pegatron is the only one that does not manufacture in India. Half of Pegatron’s business depends on orders from Apple. The new Pegatron branch was registered in Chennai in eastern India. However, the actual factory location is still being discussed with multiple Indian provincial governments. Once settled, Pegatron will move its equipment. The Indian government has been pushing its “Made in India” strategy for a while now. Back in June, the Indian government announced a US$6.6 billion plan to attract top cellphone manufacturers to invest in India. The goal is to reach a US$190 billion cellphone manufacturing capacity by 2025. India’s current smartphone industrial output is only US$24 billion.

Source: NetEase, July 18, 2020

Corruption Allegation in Namibia involves 5G deal with Huawei

As the “Five Eyes Alliance” countries are taking countermeasures against China’s telecom giant Huawei, Huawei continues to accelerate its expansion in Africa.

Al Jazeera ran an exclusive report on July 15 that Brunhilde Cornelius, a city councilor in Namibia’s capital city Windhoek, disclosed that, in order for Huawei to obtain an exclusive contract for 5G network construction in the city, a local politician was bribed and asked to give up her opposition to the deal.

Earlier this year, Cornelius publicly opposed the memorandum of understanding (MOU) between the city council and Huawei. According to Al Jazeera, Cornelius filed a charge with the police on June 19. Cornelius, who is also the secretary-general of the opposition Rally for the Democracy and Progress Party (RDP), alleged the bribe was offered by Nicanor Ndjoze, her colleague who is also the RDP’s director of elections. Ndjoze allegedly paid bribes on behalf of his nephew, Reckliff Kandjiriomuini, the head of the Information and Communication Technology (ICT) division of the City of Windhoek (COW).

Cornelius said that Ndjoze mentioned a bonus fund of about US$2.4 million, which could be used for potential beneficiaries of the deal that would give Huawei the exclusive right to develop local 5G network construction. She was told that she could receive an amount between US$300,000 and US$360,000 dollars. According to Cornelius, Ndjoze told her on May 12 that she could get the money if she gave up her opposition to the MOU. Allegedly, Ndjoze also told Cornelius that his nephew, Kandjiriomuini, led the transaction with Huawei. Kandjiriomuini hoped that Ndjoze would help persuade his party members to accept bribes and sign the MOU.

Andy Keiser, a former professional staff member of the U.S. House of Representatives Intelligence Committee testified before the U.S. Congress in June 2018, exposing that Huawei and ZTE have been subject to corruption investigations, charges, or corruption convictions in as many as 21 countries in the past 12 years. In 2009, Nuctech, a Chinese state-owned IT firm was involved in a bribery and corruption case in Namibia.

Source: Radio Free Asia, July 17, 2020

Top Apple Supplier Foxconn to Invest $1 Billion in India

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, per a strong request from Apple, its top supplier Foxconn is about to invest US$1 billion in Southern India to expand it manufacturing capacity. With the trouble of trade disputes between China and the United States, as well as the coronavirus impact, this is part of Apple’s quiet plan of moving its manufacturing center out of China. According sources familiar with the plan, Foxconn will establish a new factory in Sriperumbudur – 50 kilometers from Chennai. The factory will mainly be used to assemble the iPhone XR. The investment plan will create around 6,000 new jobs. Some of the other iPhone models currently made in China will move to this new factory as well. Currently Foxconn already has some capabilities in India  to assemble low-end iPhones. Foxconn refused to comment on any news regarding its customers and their products. Apple did not respond to this report either.

Source: Sina, July 12, 2020

Lianhe Zaobao: Deutsche Bank Asian CEO Office Moved to Singapore

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that Deutsche Bank just announced its new Asian-Pacific CEO Alexander von zur Muehlen will move the office of his new regional headquarters to Singapore. He is replacing  Werner Steinmueller, who is retiring and still has his office in Hong Kong. Another member of the leadership team of the Bank, Kamran Khan, will also move to Singapore. Singapore has long been the competitor of Hong Kong to be the central hub of the Asian-Pacific financial market. Nearly all major banks like Goldman Sachs, JP Morgan Chase and Citigroup have their Asian Chiefs in Hong Kong. However, in the past couple of years, Hong Kong’s political stability has been under serious question and is now at the center of the storm between China and the U.S. Currently Singapore also has Credit Suisse as well as UBS who have their Asian-Pacific chiefs there. Singapore has played a significant role in Deutsche Bank’s Asian-Pacific strategy for many years.

Source: Lianhe Zaobao, July 16, 2020

UDN: Taiwan Representatives in Hong Kong Were Refused Visas

United Daily News (UDN), one of the primary Taiwanese news groups, recently reported that the Taipei Economic and Cultural Representative Office in Hong Kong said that several leaders did not receive their visas upon renewal. Four of the five group leaders in the Hong Kong Office left Hong Kong and returned to Taiwan. The Office is still operating. The Taiwanese government concluded that the officials were refused their visas due to the fact that they did not agree to sign the document that recognizes the “One China” policy. The Office performs the equivalent functions of an embassy in Hong Kong. Currently the Hong Kong Office does not even have a Chief Officer. The Taiwanese media described the situation as the direct result of the new Hong Kong National Security Law taking effect. In addition to top level group leaders of the Office, multiple secretary personnel are also waiting for visa renewals. The Hong Kong government did not respond to their renewal applications. The Office is still providing Taiwan visa services to foreigners and Hong Kong local residents. The Hong Kong government declined to comment on this matter.

Source: UDN, July 17, 2020

After Accepting Money from Beijing, Cambridge University College Issued Report Praising Huawei

The British newspaper The Times reported on July 10 that Cambridge University’s Jesus College produced a paper accused of “reputation laundering” for Huawei and that it had received £200,000 (US $255,000) from the Chinese state and £155,000 (US $198,000) from the telecom giant, despite repeated warnings from British intelligence about Huawei’s possible espionage activities for Beijing.

In February, the UK-China Global Issues Dialogue Centre, which is under Jesus College, published a white paper on global communications reforms, which gave a favorable portrayal of Huawei. The paper also said that “transnational governance” of the technology industry “needs to consider differences in the normative standards accepted by different countries.”

The Times also revealed that, in September 2018, when the UK-China Global Issues Dialogue Centre was created, it banked £200,000 (US $255,000) from an agency of China’s State Council, the country’s administrative authority. Jesus collage also confirmed that it received £155,000 (US $198,000) from Huawei last September to “cover a two-year research co-operation.”

Zhu Rui, a doctoral student from the Hong Kong University of Science and Technology (HKUST), told Radio Free Asia (RFA) that Huawei, nominally a private company, is the property of the Chinese Communist Party (CCP). When Jesus College turned a blind eye to the potential consequences and accepted donations from Huawei, it was subjecting its academic freedom to the influence of the CCP. On issues of religious freedom, human rights, and democracy, it cannot say what it wants to say, as if someone’s throat is being choked.

Teng Biao, a legal scholar living in exile in the United States, who has been studying the CCP’s overseas infiltration, criticized Jesus College for selling its soul for money. “Many universities around the world have kowtowed to the Chinese government for money and have conducted self-censorship. This is a typical example of China’s accelerated infiltration and expansion. With the almost unlimited financial resources that the Chinese government has plundered from its people, it is able to use economic means to buy favorable political expressions about Beijing.”

RFA found that the cooperation between Jesus College and Huawei is only the tip of the iceberg of Cambridge University’s connections with China. The Cambridge Centre for Chinese Management (CCCM), under Cambridge’s Judge Business School, has Tian Tao, a senior adviser from Huawei, and Hu Yanping, former SVP at Huawei among its directors.

The China Centre, a separate entity, is also affiliated with Jesus College and a charitable trust oversees it. It organizes a two-week training course for executives from Chinese state-owned companies. Professor Peter Nolan, 71, one of the charity’s trustees, is the director of the China Centre and a fellow at Jesus College. He became the first ever “Chong Hua” professor at Cambridge, a role founded in 2012 “to further the study of China.” According to The Times, the daughter of former Chinese prime minister Wen Jiabao backed the professorship with a £3.7 million donation she made. The Times reported that the charitable trust which oversees the China Centre was sent £55,000 in November 2018 from a group linked to China’s State Council.

Huawei’s donations to British academic and scientific research institutions have attracted broad attention. At the beginning of last year, Oxford University said it would suspend accepting donations or sponsorships from Huawei. RFA also reported earlier that Huawei provided £5 million in research funding to Imperial College London and a super-fast 5G network to the university. Because the university is studying the corona virus, the incident triggered widespread public criticism; the criticisms allege that Huawei has a mission to interfere with virus research and affect the university’s objectivity in virus investigations. As early as 2017, Huawei and British Telecoms jointly announced a new round of a five-year cooperation plan, which will invest £25 million to establish a joint research team with Cambridge University.

Source: Radio Free Asia, July 13, 2020