Skip to content

US-China Relations - 11. page

Chinese Companies Stocked Up as US Chip Export Controls Tighten

On October 17th the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued an announcement expanding the scope of controls on the export of advanced computer chips to China. This action directly affects semiconductor giant NVIDIA’s sale of “special edition” A800 and H800 chips to China and other regions. The expanded export controls also restricts Dutch ASML from exporting certain machine models to China. Additionally, it added Chinese companies Biren Technology and Moore Thread and their subsidiaries to the “Entity List” to restrict export to them.

Many Chinese Artificial Intelligence (AI) startups have already acted to stock up on chips prior to the ban. Through various channels such as service providers, middlemen, and foreign trade agents, these Chinese companies are trying to prevent their previous orders from being cancelled while exploring avenues for obtaining additional chips in the short term.

Market research firm Counterpoint estimated that Chinese companies are now lagging behind global counterparts by about 2.5 to 3 years in fields like generative AI. According to Counterpoint, chip acquisition is not the sole factor driving this lag. The gap between China and its global counterparts is expected to widen over the next few years.

Source: Central News Agency (Taiwan), October 23, 2023
https://www.cna.com.tw/news/acn/202310230203.aspx

Briefings | | |   Economy/Resources US-China Relations

China Alienates Israel: Picking Sides by Bloc, Not by Country-Level Relationship

Zhang Ping, a Chinese scholar living in Israel, posted a tweet on X about why China has chosen not to condemn Hamas, alienating Israel following the start of the Israel-Hamas war. China made this decision despite good relations between Israel and China in the past.

Zhang Ping said that the world’s nations are now bifurcating into two blocs: the China-Russia-Iran camp, and the opposing camp led by the U.S. and its allies (including Israel). This bloc-based logic is now guiding China’s strategy for international relations.

In the past, China’s modus operandi was something like “which camp you belong to doesn’t matter; what matters is whether our relationship is good.” Recently, however, China’s operating principle has changed to “our relationship does not matter; what matters is which camp you belong to.” According to Zhang Ping, this shift in attitude started during the Russia-Ukraine War and has further developed during the recent Israel-Hamas war. Both Israel and Ukraine had good relations with China in the past. However, once conflicts arose, China chose to use bloc membership as its guiding principle, being unwilling to support either Ukraine or Israel.

During the time of globalization prior to these recent wars, individual relationships between countries held more weight [in Beijing’s eyes] than did bloc allegiances. This enabled countries, including Israel and Australia, to engage with China despite their being U.S. allies. Both Israel and Australia provided strategic port access to the Chinese, with Israel even allowing China a certain amount of control over two of its largest strategic ports in Haifa and Ashdod. Now, however, China will not support these countries no matter how good their past relations have been, as they belong to the Western camp rather than the Chinese camp. Meanwhile, European nations relied on Russia for their energy needs in the past, whereas the West has unified against Russia following the Russian invasion of Ukraine in 2022.

Source: Twitter @pingzhang632, Oct 17, 2023

Briefings | | |   @CS Geo-Strategic Trend US-China Relations

CCTV: Beijing Cracks Another U.S. Spy Case

State broadcaster China Central Television (CCTV) said in a special program that an employee of a Chinese defense company was coerced into revealing Chinese state secrets while he was a visiting scholar at a U.S. university in 2013. The employee, named Hou, was then developed into a spy for the U.S., according to the report. Hou was arrested for espionage. CCTV’s coverage of his case highlights Beijing’s desire to steer public sentiment in China regarding Chinese state security and involvement with the U.S.

CCTV said that a professor in the U.S. introduced Hou to someone claiming to work for a consulting firm, and that this person was actually a U.S. intelligence officer. Over time, the intelligence officer cultivated a close relationship with Hou and paid him to provide information about China. Although Hou acted under duress, he was arrested in July 2021 by Chinese authorities and charged with espionage. The report stated that Hou has now been sent to stand trial, and that the case was a major security breach engineered by the U.S.

The CCTV program said that “any acts jeopardizing China’s security would be punished” and that China’s Ministry of State Security had issued a reminder that espionage often involves deception. The program did not name the university that Hou visited, nor did it name his work unit.

Source: Radio France International, October 22, 2023
https://rfi.my/A2Yb

Briefings | | |   US-China Relations

Chinese Warplanes Aggressive Maneuver Near Canadian and U.S. Planes

On October 17 a Chinese military aircraft provocatively intercepted a Canadian Armed Forces Aurora aircraft in international airspace near China’s territorial waters. At the time, the Canadian aircraft was in an operation to enforce United Nations sanctions that prevent illegal transportation of oil to North Korea. The Canadian crew had identified a “suspicious vessel” that was on a watchlist.

During its eight hours of flight, the Canadian aircraft was intercepted by at least two Chinese fighter jets who flew with the Canadian plane for several hours. Chinese jet aircraft at one point came as close as 15 feet from the Canadian aircraft. The Chinese aircraft also launched multiple illumination flares in the vicinity of the Canadian aircraft.

The Washington Post reported that in the past few years Beijing has intensified these kinds of dangerous maneuvers targeting planes of the U.S. and its allies and partners. The total number of such encounters is now near 300. On October 17, Pentagon released videos and photos of some incidents, including an incident in January 2023 where a Chinese J-11 fighter jet flew about 30 feet from an American RC-135 plane and lingered for 15 minutes, and an incident in May 2022 where a Chinese fighter jet flew 15 feet laterally below a US Navy EP-3 plane.

Sources:
1. Radio France International, October 17, 2023
https://www.rfi.fr/cn/国际/20231017-加媒-中国战机以-挑衅方式-拦截加拿大军机
2. Washington Post, October 17, 2023
https://www.washingtonpost.com/national-security/2023/10/17/china-fighter-jet-dangerous-maneuvers/

Briefings | | |   @CS Defense/Military Geo-Strategic Trend US-China Relations

China’s “Panda Diplomacy”

The Epoch Times reported that the Chinese Communist Party (CCP) has been using giant pandas for its diplomacy agenda. As Sino-U.S. relations have soured, China plans to take back three pandas on loan to the U.S. National Zoo at Washington, DC. by end of this year. If the Atlanta Zoo cannot renew its panda contract with Beijing by next year, then the U.S. will have no panda for the first time in 50 years.

The CCP started its “Panda Diplomacy” with the West in 1972 when it gifted two giant pandas to the U.S. following Nixon’s visit to China.

Scholar Kathleen Buckingham published a research paper in 2013 outlining three phases of the CCP’s “Panda Diplomacy.”

  • The first phase, during Mao Zedong’s era, involved gifting giant pandas purely for political purposes.
  • In the second phase, under Deng Xiaoping, panda diplomacy aligned with economic reforms, with China adopting a capitalistic model to generate revenue by leasing the pandas.
  • In The third phase, starting in 2008, the leasing model has leaned towards countries with free trade agreements and technology transfer agreements with the CCP. For instance, Australia, France, and Canada have received pandas after agreeing to sell nuclear technology and uranium to China. Scotland received a pair of pandas in 2011 as part of an agreement to share offshore drilling technology and supply salmon to China. In 2013, the Netherlands received pandas as they agreed to provide advanced medical services.

To attract attention and as a means of leverage, the CCP now requires foreign heads of state to personally request pandas before deciding whether to lease them.

The CCP has also been recalling pandas as a punitive tool. In 2010, two days after Beijing warned President Obama not to meet the Dalai Lama, China called back the first batch of panda cubs born in the Atlanta Zoo and the Washington National Zoo. Amid the tensions over the U.S.-China trade war in 2019, Beijing retrieved pandas “Bai Yun” and her cub and “Little Gift” from the San Diego Zoo. This year, due to the Netherlands’ adherence to U.S. restrictions on the sale of advanced semiconductor processing equipment to China, Beijing recalled the three-year-old panda “Fan Xing” from a Dutch zoo.

Source: Epoch Times, October 10, 2023
https://www.epochtimes.com/gb/23/10/10/n14091930.htm

Briefings | | |   @CS Geo-Strategic Trend US-China Relations

China Uses Israel-Hamas War in Anti-US Propaganda

China’s state newspaper Global Times has used the war in Middle East to criticize the United States.

One editorial states, “It should be noted that the Palestinian-Israeli issue is a complex collection of problems, and that the interference of external forces is one of the main reasons for the delay in resolving the issue and even for the intensification of hatred. The United States-led Western countries have long been ‘pulling the strings’ on the Palestinian-Israeli issue, and it is obvious that the United States has been behind a number of wars in the Middle East throughout history. After the escalation of the Israeli-Palestinian conflict, the decisions of the United States and other Western countries to hastily take sides has not helped to solve the problem; rather, it is likely to add fuel to the fire.”

Another editorial argued, “It must be said that the prolonged marginalization of the Palestinian issue by the United States and the West is cruel. It is even more hypocritical for the elites of the United States and the West to ignore the actual humanitarian catastrophe [in Palestine] and to discuss the abstract concept of human rights. We have noticed that many in the US and the West have publicly expressed opinions, trying to create pressure to ‘choose sides’, keeping track of those countries that ‘have not condemned Hamas.’ In a phone call with the Saudi foreign minister, U.S. Secretary of State Antony Blinken even unapologetically ‘instructed’ the Saudis to ‘unequivocally condemn’ the attack. Truth be told, Washington is in no position to educate anyone on this issue.”

Source: Global Times, October 8, 2023
https://opinion.huanqiu.com/article/4ErWijmRxmd
Global Times, October 9, 2023
https://opinion.huanqiu.com/article/4EsMjhCtt0J

Briefings | | |   US-China Relations

Lianhe Zaobao: U.S. Companies Pessimistic About Business Prospects in China

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that, according to a survey of its member companies by the U.S.-China Business Council, rising bilateral tensions are affecting every aspect of U.S. companies’ operations in China. This includes hurt sales, lower profits, and canceled or delayed investments.

In this latest annual survey, the proportion of companies expressing pessimism about the prospects of their business in China over the next five years rose to 28 percent from 21 percent last year, setting a new record high. The share of companies with an optimistic outlook dropped to a record low of 49 percent. More than one-third of the companies surveyed said they had reduced or suspended investment plans in China during the past year, also a record high and well above the 22 percent in last year’s survey. This means the businesses’ commercial presence in China will likely see further decline.

These businesses’ decisions are driven by the increased costs and uncertainty of doing business in China, as well as by increased restrictions on selling products into the Chinese market. Particularly unsettling for U.S. companies are China’s far-reaching rules on data handling, personal information, and cybersecurity. Some 97 percent of the companies surveyed expressed concern over these issues.

The U.S.-China Business Council said that most of the companies involved in the survey are large U.S. multinationals that have been operating in China for decades.

Source: Lianhe Zaobao, September 27, 2023
https://www.zaobao.com.sg/realtime/china/story20230927-1437188

Briefings | | |   US-China Relations