US-China Relations - 41. page

President-elect Joe Biden has appointed Thomas Zimmerman as a Special Assistant to the President for Presidential Personnel as part of the new appointments he announced on December 30, 2020. Zimmerman will serve as Deputy Lead for National Security Personnel on the Biden-Harris Transition team.

Mr. Zimmerman has prior experience working in China as a visiting scholar at the Department of International Relations of the Shanghai Academy of Social Sciences (SASS).

For example, on February 10, 2015, Mr. Zimmerman, senior project officer of the International Cooperation Office of New York University, delivered a speech at the SASS International Relations Institute on the future of the U.S. policy in Afghanistan. In his speech, he discussed the changes in the future U.S. security mission in Afghanistan and the corresponding policy adjustments, how U.S. domestic political changes in the general election would affect U.S. Afghanistan policy, and how China and the United States can jointly cooperate to carry out projects to achieve common goals.

On March 12, 2015, Mr. Zimmerman also participated and spoke at a forum titled, “U.S. Anti-Terrorism Policy and the Asian-African Counter-Terrorism Posture.” The Shanghai Institute of American Studies and the Center for West Asian and North African Studies of the SASS jointly organized the event. During the discussions, Mr. “Zimmerman expressed the belief that, in resolving the Afghanistan issue, the United States is also pinning its hopes on China, hoping that China can play an active role in it. The United States and China share common interests and goals on the issue of Afghanistan. China is advocating the construction of the ‘One Belt, One Road’ strategy, but due to the continued civil war in Afghanistan, the potential for economic cooperation in Afghanistan is difficult to evaluate. Western countries led by the United States have been making strategic retreats from this region and China’s role in resolving the Afghanistan issue has become increasingly apparent.”

In June 2016, Mr. Zimmerman visited the Shanghai Institute of American Studies and conducted internal discussions with attendees from SASS and the Shanghai Institute of American about the “One Belt and One Road,” terrorism issues, and the Sino-US anti-terrorism cooperation in Afghanistan and Pakistan.

SASS, a leading think tank in China, was established in 1958 and is primarily funded by the Chinese government. According to a criminal complaint filed by the U.S. Department of Justice against Keven Mallory in June 2017, since 2014, the FBI has assessed that the Shanghai State Security Bureau (SSSB), a sub-component of China’s Ministry of State Security, has had a close relationship with SASS and uses SASS employees as spotters and assessors. The FBI has further assessed that SSSB intelligence officers have also used SASS affiliation as cover identities.

Sources:
Shanghai Institute of American Studies
http://www.sias.org.cn/uploadfiles/2016/09/201609070918471847.pdf
U.S. Department of Justice
https://www.justice.gov/opa/press-release/file/975671/download

On January 11, China’s State media Global Times issued the second editorial responding to the January 9, 2021, U.S. Secretary of State Pompeo’s lifting of all restrictions on the official interactions with Taiwan. Global Times issued its first editorial on January 10.

Global Times complained that, “The American establishment is watching from the sidelines and Pompeo and his cohorts are doing whatever they want with Sino-US relations, without any restraints.”

The editorial stated that Pompeo’s moves on Taiwan lack strong support and many want to see the moves fail. “We [China] must turn the final ten days of struggle into a closure that defines a clear bottom line and show to the U.S. and Taiwan the grave consequences when they hit the bottom line.”

The editorial stressed that China must hit back hard. Otherwise, “the Biden Administration will mistakenly believe that the room for pressure on China may be further expanded. The Sino-U.S. relations in the next four years will have a very unfavorable start for China.”

Source: Global Times, January 11, 2021
https://opinion.huanqiu.com/article/41TJNf78eEB

On January 10, 2021, China’s State media Global Times published an editorial in response to the U.S. Secretary of State Pompeo’s announcement on January 9, 2021, that lifts self-imposed restrictions on the U.S.-Taiwan relationship in terms of interactions between diplomats, service members, and other officials of the United States and their Taiwanese counterparts. 

Entitled “Pompeo may have started the count-down of Taiwan’s final days,” the Global Times editorial stated, “Pompeo once again is frantically digging holes and placing mines for Sino-US relations and the Taiwan issue. This is a criminal, structural sabotage to cross-strait peace and the bottom-line stability of Sino-US relations. The extent of its severe consequences is unpredictable.”

The editorial believes Pompeo’s announcement indicates two uncertainties: whether Biden will implement this policy and whether Pompeo will make further big moves such as Pompeo’s surprise visit to Taiwan before stepping down.

“Whether [we should] push the Biden Administration to abolish the crazy decision of the last days of the current U.S. Administration or prevent Pompeo and others from taking actions beyond the bottom line at the last minute, Beijing must clearly and resolutely oppose the U.S. extreme provocations and be determined to fight head-on.” 

 “Beijing needs to send a strong signal that the United States must stop before it is too late. It must let the United States and Taiwan’s Democratic Progressive Party authorities know that if they dare to let Pompeo visit Taiwan before the end of his term, Beijing’s response will be overwhelming.”

The editorial continued with a threat to Taiwan saying, “The last few days of the current U.S. administration may also be the last few days of the existence of the Taiwan Democratic Progressive Party.”

The editorial stated that Biden is “worried that the Trump administration may do stupid things including the use of atomic bombs in the last few days.” “If they had a sudden showdown on the Taiwan issue, it would be equivalent to throwing an atomic bomb into world peace. We must give the most severe punishment to those that destroy peace.”

Source: Global Times, January 10, 2021
https://opinion.huanqiu.com/article/41SWawR9QGt

The recent military orders that Beijing introduced appear to suggest that China might be preparing to launch a war in the South China Sea or Taiwan or against U.S. military targets. On January 4, Xi Jinping signed the first Central Military Commission order of 2021. That order stressed that the PLA should use Xi’s thought as the guide while strengthening the party’s leadership in the military. It stated, “Focus on preparations for war.” “Comprehensively improve real time combat training and the ability to win,” and the PLA must practice combat training to ensure it is ready to fight at any time. Prior to this, there were two other orders that went into effect on January 1: “Regulations on Military Logistics” and the Amendment to the “National Defense Law.” In the Amendment to the “National Defense Law,” it gave legal grounds to launch a war if China feels that there is threat to its national interest.

Coincidentally, on January 4, the same day that Xi signed the first military order, U.S. Secretary of State Pompeo and Billingslea, the Special Presidential Envoy for Arms Control, published a joint opinion paper urging Beijing to come clean on the nuclear weapons threat and buildup. It warned that the U.S. has the knowledge of Beijing nuclear development despite Beijing’s secrecy about its activities. It called for China’s transparency and for it to join the U.S. and Russia in crafting a new arms control agreement. In the opinion paper, it stated that “over the past four years, the Trump administration has awakened the world to the China challenge. Beijing’s two-decades-long asymmetric arms race is a core part of that challenge. It endangers the American homeland, our strategic positions in the Indo-Pacific, and our allies and partners. It is of concern to all peace-loving nations. We’ve briefed allies, partners and even the highest levels of the Russian government on China’s nuclear buildup.”

Source:
1. Xinhua, January 4, 2021
http://www.xinhuanet.com/politics/leaders/2021-01/04/c_1126944155.htm
2. Newsweek, January 4, 2021
https://www.newsweek.com/chinas-nuclear-madness-opinion-1558342

Well-known Chinese news site NetEase (NASDAQ: NTES) reported on New Year’s Day that the New York Stock Exchange (NYSE) officially announced it will suspend trading of the stocks of China Telecom, China Mobile and China Unicom (Hong Kong) from January 7 to January 11, and delisting these three stocks has started. The action is to comply with the executive order President Trump signed in November, which was to ban investment in companies related to the Chinese military. The executive order does not allow U.S. investors to buy the stock of the companies that made it to the list that the Pentagon provided. This event is a sign that the United States is upping its game on the economic sanctions against China. It is expected that more Chinese companies will be forced out of the U.S. stock market in the future.

On January 5, Singapore’s primary Chinese newspaper Lianhe Zaobao reported that the NYSE decided to stop the delisting process of the three Chinese companies. This was right after the Chinese Ministry of Commerce’s statement on the willingness to take the “necessary steps” to counter the delisting. The report did not explain why the NYSE changed its mind.

Again on January 5, the BBC Chinese Edition reported that the NYSE decided to change its opinion for the second time and would continue the delisting of the three Chinese telecommunications giants. The new announcement said the decision was made based on the latest detailed instructions from the Department of the Treasury. This sudden and unexpected change caused stock market volatility.

China Mobile is China’s largest telecommunications provider with 946 million customers. It also has the world’s largest mobile network and customer population. China Telecom is China’s second largest telecommunications provider, with 346 million customers. The U.S. FCC withdrew China Telecom’s license to operate in the U.S. on December 10. China Unicom, also serving Hong Kong, is China state-owned and is the world’s fourth largest telecommunications company.

Sources:
(1) NetEase, January 1, 2021
https://www.163.com/dy/article/FV8NGKTD0534TJBN.html
(2) Lianhe Zaobao, January 5, 2021
https://www.zaobao.com.sg/realtime/china/story20210105-1113936
(3) BBC Chinese, January 5, 2021
https://www.bbc.com/zhongwen/simp/world-55545795

On Tuesday December 22, the U.S. Department of Homeland Security issued a business advisory to American businesses warning them of the risks associated with the use of data services and equipment from firms linked to the People’s Republic of China (PRC).

According to Acting Secretary of Homeland Security Chad F. Wolf, “For too long, U.S. networks and data have been exposed to cyber threats based in China which are using that data to give Chinese firms an unfair competitive advantage in the global marketplace.”  “Practices that enable the PRC government to gain unauthorized access to sensitive data – both personal and proprietary – put the U.S. economy and businesses in the position of having a direct risk of exploitation. We urge businesses to exercise caution before entering into any agreement with a PRC-linked firm.”

This advisory highlights the persistent and increasing risk of PRC government-sponsored data theft due to newly enacted PRC laws that can compel PRC businesses and citizens – including academic institutions, research service providers, and investors – to take actions related to the collection, transmission, and storage of data even though these actions run counter to principles of U.S. and international law and policy.

The advisory lists six types of situations that pose risks to U.S. businesses or individuals when engaging in data sharing with PRC firms or entities: data centers owned or operated by PRC firms; foreign data centers built with PRC equipment, joint ventures, legally acquired data augmenting illicitly acquired data, software and mobile device applications owned or operated by PRC firms, fitness trackers and other wearable electronic devices.

The advisory recommended that “businesses and individuals that operate in the PRC or with PRC firms or entities should scrutinize any business relationship that provides access to data— whether business confidential, trade secrets, customer personally identifiable information (PII), or other sensitive information. Businesses should identify the sensitive personal and proprietary information in their possession. To the extent possible, they should minimize the amount of at-risk data being stored and used in the PRC or in places that PRC authorities can access.”

In particular, DHS provides a list of examples of the types of data that should be considered particularly sensitive:

1. Technology and other data in connection to export-controlled products.
2. Intellectual property, including trade secrets, relating to emerging technologies identified in China 2025 and other PRC plans.
3. Biotech, genomic data, and medical test data.
4. Personally-identifiable and other sensitive information.
5. Geolocation data.

Source: U.S. Department of Home Security, December 22, 2020
https://www.dhs.gov/news/2020/12/22/dhs-warns-american-businesses-about-data-services-and-equipment-firms-linked-chinese

Global Times recently reported that the world’s largest stock index company MSCI announced that, after the market closes on January 5, it will remove seven Chinese companies from its indexes. Earlier, S&P Dow Jones Indexes and FTSE Russell already made similar moves. This is following U.S. President Donald Trump’s having issued an executive order to ban U.S. investment in 31 military-tied Chinese companies. The impacted stocks hold a share of 0.04 percent in the MSCI ACWI Investable Market Index and 0.28 percent in the Emerging Market Index. China says this shows the U.S. hegemony in capital markets. (Editor’s note: MSCI indexes are often used to allocate elements in major U.S. funds automatically, such as pension funds and other retirement funds).

Source: Global Times, December 17, 2020
https://finance.huanqiu.com/article/418PjinqXwF