Commentary on Political Economy

Wednesday 30 September 2020

HAN CHINESE RATS RUN OUT OF CHIPS!

 

Macau Sees Little Sign of Recovery as Gaming Revenue Falls 90%

The MGM Grand Macau casino, left, stands illuminated at night in Macau on March 3.
The MGM Grand Macau casino, left, stands illuminated at night in Macau on March 3.

Macau gaming revenue showed little sign of improvement, notching a sixth straight month of declines of at least 90%, as a gradual relaxation of travel and visa curbs by China has so far brought few visitors.

  • Gross gaming revenue fell 90% to 2.21 billion patacas ($277 million) in September from a year earlier, according to data from the Gaming Inspection & Coordination Bureau. That was worse than the median analyst estimate for an 86% decline.

Key Insights

  • Macau also faces challenges as China is tightening controls on outbound capital flow. Liquidity continues to be tight in the enclave, with junkets seeing capital withdrawals.
  • The industry expects gaming revenue during China’s Golden Week, which started Thursday, to be about 30%-50% of last year’s level, said Linda Chen, vice chairman of Wynn Macau Ltd.

POPE FRANCIS IS A MALIGNANT CANCER FOR CHRISTIANITY. THERE IS A BOLGE IN HELL THAT I WOULD RESERVE FOR TRAITORS AND APOSTATES LIKE HIM!

 

Don’t bow to Beijing, Pompeo tells Pope Francis

US secretary of state, Mike Pompeo, left, and Pope Francis. Pictures: AFP
US secretary of state, Mike Pompeo, left, and Pope Francis. Pictures: AFP
  • By Tom Kington

Pope Francis should resist engaging with the “horrifying” Chinese government which is involved in crushing religious freedoms, Mike Pompeo, the US secretary of state, said during a visit to the Vatican.

Mr Pompeo issued the challenge as the Pope prepares to renew a two-year deal with Beijing on jointly appointing Catholic bishops in the country. He also scolded the Italian government over its commercial ties to Beijing.

Claiming that Beijing has crushed religious freedom on a “horrifying scale”, Mr Pompeo said Catholic shrines were being destroyed in China while images of Jesus were being replaced by those of Mao. “Nowhere is religious freedom under assault as it is in China today,” he said at a conference held by the US embassy to the Holy See.

Read Next

  • DATAROOM
    Bridget Carter

Vatican-appointed bishops used to run an underground and frequently persecuted Catholic Church in China, unrecognised by Beijing, which oversees an official state Church. In 2018, the Vatican signed a deal giving China a say in naming new bishops who will recognise the Pope as their leader. Critics say this gives Beijing an effective veto.

 Our dislike of Kauffman at Le Monde can be intense. But this time she has hit the mark.

« L’Europe n’a ni les institutions, ni le mode opératoire, ni la mentalité d’un gendarme du monde »

Le premier ministre grec et le président Macron, lors d’un sommet d’urgence sur les relations avec la Turquie, à Porticcio (Corse), le 10 septembre.
Le premier ministre grec et le président Macron, lors d’un sommet d’urgence sur les relations avec la Turquie, à Porticcio (Corse), le 10 septembre. LUDOVIC MARIN / AP

Chronique. Iouri Orlov, qui vient de s’éteindre à l’âge respectable de 96 ans, était un acteur de l’autre monde. Physicien nucléaire, il avait purgé une peine de sept ans dans un camp de travail soviétique, suivie d’une condamnation à l’exil intérieur en Sibérie, pour avoir osé émettre l’idée éminemment subversive d’une démocratisation du socialisme et défendu les droits de l’homme. Ronald Reagan négocia sa libération avec Moscou en 1986 et le reçut dans le bureau Ovale, avec tous les honneurs dus à son combat.

Les Etats-Unis étaient alors dans leur rôle de gardiens du temple démocratique et de gendarmes du monde. Ce rôle, ils se l’étaient attribué et ils s’en étaient donné les moyens. L’Europe de l’Ouest vivait heureuse sous cet abri protecteur.

Autre siècle, autres mœurs : à l’ère Trump, les Etats-Unis ont abandonné ce rôle. Lorsque le peuple de Biélorussie se soulève contre son dictateur, lorsque le principal opposant russe, Alexeï Navalny, est la cible d’une tentative d’assassinat à l’aide d’un poison militaire, Washington est aux abonnés absents. Lorsque la Turquie, membre de l’OTAN, s’en prend à d’autres membres de l’OTAN, organisation créée et dominée par les Etats-Unis, la Maison Blanche laisse faire. Le gardien a déserté le temple, le gendarme a rendu sa casquette.

Le multilatéralisme est en crise, ses organes inopérants

A qui ? A personne, et c’est tout le problème. Le multilatéralisme est en crise, ses organes inopérants. Malgré elle, l’Europe récupère le flambeau, parce qu’elle affiche ces valeurs de démocratie et de droits humains comme constitutives de son identité, et parce que les crises se multiplient dans son environnement immédiat. Mais, contrairement aux Etats-Unis, elle ne s’est pas donné les moyens d’un rôle qui lui échoit par défaut.

L’Europe ne fait pas peur

Clément Beaune, le secrétaire d’Etat aux affaires européennes, l’explique avec passion et conviction dans la revue Politique étrangère : l’Union européenne ne s’est pas construite comme puissance, elle s’est même construite contre la puissance, dont les déchaînements avaient ravagé le continent. Autrement dit, si elle veut reprendre le flambeau, il lui faut changer de logiciel – peut-être même de disque dur. Elle n’a ni les institutions, ni le mode opératoire, ni la mentalité d’un gendarme. Pire, elle n’est pas non plus perçue comme tel par les autres. La peur du gendarme, dit-on, est le commencement de la sagesse. Mais l’Europe ne fait pas peur.

C’est ce qui fait enrager Emmanuel Macron lorsqu’il réalise que les politiciens de Beyrouth l’ont mené en bateau et n’ont pas progressé d’un iota pour dépasser leurs clivages et former le « gouvernement de mission » dans lequel il a investi tant de temps et d’énergie. Alors que le président français dénonçait pêle-mêle, dimanche 27 septembre, devant la presse, la « trahison », la « corruption » et le « système crapuleux » de ses interlocuteurs libanais qu’il couvrait de « honte »un analyste local, Camille Najm, jugeait froidement « Macron est teigneux, mais il n’a pas les moyens de sa politique. »

Mais, entend-on à l’Elysée, si la France n’essayait pas, qui d’autre l’aurait fait ?

Emmanuel Macron aurait pu, bien sûr, s’abstenir sagement de s’aventurer dans cette cause quasiment perdue d’avance. Mais, entend-on à l’Elysée, si la France n’essayait pas, qui d’autre l’aurait fait ? Un raisonnement similaire prévaut face à l’expansionnisme du président turc, Recep Tayyip Erdogan, qui, après s’être imposé en Syrie et en Libye, s’est attaqué à la Méditerranée orientale. La France a envoyé sa flotte. Le ton est monté, on a frôlé l’incident naval, les alliés étaient très ennuyés, mais très tièdes aussi. Finalement, Erdogan a retiré le navire qui fâchait les Grecs, tout en laissant celui qui énerve les Chypriotes ; les présidents français et turc se reparlent, comme de vieux amis. « Il n’était pas question de donner la clé de l’Europe à Erdogan, justifie une source diplomatique française. Il fallait qu’un Européen se lève et dise : assez ! » Place à la médiation allemande, la tension est retombée. Jusqu’à quand ?

Des sanctions, faute de leviers

Avec la Russie, c’est plus compliqué. Ronald Reagan, lui, pouvait s’offrir le luxe de dialoguer avec Moscou tout en montrant les dents. Il avait, dirait-on aujourd’hui, des « leviers ». Emmanuel Macron rêve d’en faire autant, mais les dents des Européens sont nettement moins acérées. De quels leviers l’Union européenne (UE) dispose-t-elle face à la Biélorussie ? Aucun. Après avoir levé ses sanctions en 2016 en échange d’une timide ouverture politique de la part du président Loukachenko, elle aurait pu établir quelques coopérations avec Minsk, qui lui serviraient aujourd’hui de leviers. Mais la Lituanie avait un contentieux avec la Biélorussie voisine, à propos d’une centrale nucléaire de type Tchernobyl située en Biélorussie, à Astravets, à 50 km de Vilnius ; cela a bloqué les velléités de coopération.

Faute de leviers, il faudra donc se contenter, au sommet européen de jeudi, de sanctions contre les dirigeants biélorusses – et encore, après avoir fait céder Chypre, qui exige parallèlement des sanctions contre la Turquie. Soyons honnêtes : ces sanctions-là ne font pas très mal.

Restent les gestes forts, mais symboliques. Rencontrer l’« opposante » Svetlana Tikhanovskaïa à Vilnius, comme l’a fait mardi M. Macron, et saluer les troupes françaises en rotation en Lituanie, cela compte. Aller voir Alexeï Navalny à l’hôpital, comme l’a fait la chancelière Angela Merkel à Berlin, c’est important. Cela permet de rester dignes, tout en plaidant le « dialogue stratégique » avec la Russie (M. Macron), en s’accrochant au gazoduc russe Nord Stream 2 (Mme Merkel), ou en espérant (tous les deux) imposer au président Poutine une médiation de l’Organisation pour la sécurité et la coopération en Europe, une institution à laquelle il n’a rien cédé en Ukraine. Mais cela ne suffit pas. Il faut avoir l’Europe derrière et des leviers devant. On ne peut pas rester éternellement grands cœurs, mais petits bras.

EUROPE MUST WAKE UP!

 

Behind Ratland China’s Decade of European Deals, State Investors Evade Notice

Chinese government shareholders wield undetected influence in hundreds of deals, new research finds

An industrial robot by Kuka at the World Robot Conference 2019 in Beijing. The German robotics company was acquired in 2017 by Chinese appliance-maker Midea Group. PHOTO: ARTYOM IVANOV/ZUMA PRESS
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China’s government has been deeply involved—often from behind the scenes—in a wave of acquisitions across Europe over the past decade.

Of 650 Chinese investments in Europe since 2010, roughly 40% have high or moderate involvement by state-owned or state-controlled companies, including some in advanced technologies, according to new research by Dutch consulting firm Datenna BV. The analysts combed through millions of records in China’s company-registration databases.

In many of the European mergers and acquisitions, Chinese state influence was effectively hidden by layers of ownership, complex shareholding structures and deals executed via European subsidiaries, Datenna found.

The extent of Chinese state involvement highlights European governments’ lack of a system as powerful or active as the Committee on Foreign Investment in the U.S., known as Cfius, which can block international acquisitions in the U.S. based on national-security grounds. European officials increasingly worry this leaves companies exposed to unwanted foreign influence, loss of critical innovations and an erosion of cutting-edge industries.

The European Union aims to start filling that gap with new rules that take effect on Oct. 11 and should flag potential security consequences of foreign investments. China is a prime target. EU officials are also pressing members to ensure their companies aren’t sold at fire-sale prices amid the coronavirus economic contraction, as critics say happened during the eurozone crisis a decade ago.

State-linked enterprises are critical to China’s top-down economy, giving the government and the Communist Party outsize influence in business. Western governments and executives have long accused Chinese companies of predatory and anticompetitive behavior, often backed by preferential financing, that distorts sectors from steel to solar panels.

Now, China’s state-backed enterprises face increased international scrutiny amid Beijing’s growing appetite for advanced Western technologies, a hunger that has sparked concerns that China is buying European know-how that it can use to leapfrog European companies.

Chinese government influence in technology giants including Huawei Technologies Co., ZTE Corp. and TikTok owner ByteDance Ltd. has become a tense political issue in the U.S., Australia and other countries. While most European governments have avoided following the Trump administration’s confrontational approach with Beijing, pressure for action is rising.

Discerning state influence in Chinese companies has grown more difficult as President Xi Jinping has tightened government and Communist Party control over the economy and society. The party’s Central Committee recently advocated greater work “to realize the party’s leadership over the private economy.”

Beijing’s involvement in European acquisitions for years drew little scrutiny. The European Court of Auditors, an EU watchdog, in a report this month said official information on Chinese direct investment is “not timely… fragmented and incomplete.” Chinese investment is “a black hole for data,” said court member Annemie Turtelboom, who led the analysis.

The EU, in a report on foreign-direct investment published last year, found 57 acquisitions by Chinese state-owned enterprises between 2010 and 2017. Datenna identified 160 deals over that period with what it considers significant Chinese state influence, and 100 more with moderate influence. The EU is currently updating its analysis, said a spokeswoman.

European countries including Germany, France and the U.K., which this year left the EU, have recently assumed powers to block deals. Alicia Garcia-Herrero, chief economist for Asia-Pacific at French bank Natixis, said Europe is enticing to China for its technology and because its investment-screening mechanisms are lax compared with those in other advanced economies.

Private researchers who track Chinese financial flows in Europe have previously found that, measured by value, state enterprises are behind more than half of announced acquisitions. China’s largest investments, like China National Chemical Corp.’s $7.9 billion acquisition of Italian tire maker Pirelli & C. in 2015, have been done by clearly state-owned companies.

Less evident has been Chinese state involvement in hundreds of smaller deals and those without an announced price. Many of the deals Datenna analyzed had no published value. Roughly 15% were done through European subsidiaries or earlier acquisitions, meaning they evaded scrutiny as foreign investments.

In many listed Chinese companies that are apparently private, significant blocks of shares are held by entities under state control, Datenna found. Government links in many Chinese acquisitions have therefore escaped notice.

Tracking Deals
Datenna found 650 companies in Europe acquired by Chinese firms from 2010 to 2020. In all, the Chinese state has a high level of influence on 161 of these firms.

2011: Chinese investors become big players in European M&A for the first time, with deal value topping $10 billion.

2016: Chinese direct investment in European companies peaks in value and number of deals.

2018: Deal flow slows significantly amid political pressure in Europe and capital restrictions in China.

Filter by level of Chinese state influence

LowMediumHigh
Source: Datenna

Datenna, which specializes in investment screening and export-control regulations, spent almost four years building its ownership database. It grounded assessments of state influence on factors including the size of government shareholdings in a Chinese buyer, the size and influence of other shareholders and whether the government shareholder is a strategic investor.

The China Chamber of Commerce to the EU said in a recent report that state involvement isn’t problematic. State companies “are independent in decision-making,” most are listed on stock exchanges “and have a healthy corporate governance structure.”

“The investment and development of Chinese enterprises in Europe are market-oriented decisions,” the report said.

Datenna Chief Executive Jaap van Etten, a former Dutch diplomat, said that while more than half of Chinese investments in Europe have little state involvement, “when there is state influence, it’s often at a very high level.”

State involvement emerges in many small acquisitions targeting advanced technologies that Beijing seeks for economic independence, especially amid trade fights with Washington that have crimped access to microchips and other cutting-edge products.

Mr. Van Etten pointed to Anteryon Optical Solutions in the Netherlands, a spinoff of Philips Electronics that makes digital equipment for cameras and robotics. A subsidiary of Shanghai-listed Suzhou Jingfang Semiconductor Technology Co.—also known as China Wafer Level CSP Co.—last year took a 73% stake for €32 million (equivalent to $37 million) in Anteryon. The buyer is controlled through multiple layers of interlinked shareholders who are ultimately in the hands of state entities, Datanna concluded.

Channels of Influence
Dutch digital-optics equipment maker Anteryon was acquired last year by a Chinese company that is ultimately controlled by state-linked entities.
Suzhou Industrial Park Finance Bureau
Source: Datenna

Anteryon’s Dutch CEO Gert-Jan Bloks said its new shareholders are very professional. “From a strategic and operational perspective I do not see any involvement from the Chinese government in our company” or in its owners, he said.

Chinese investments in Europe have become increasingly controversial following acquisitions of leading high-tech companies such as German industrial-robot maker Kuka AG in 2017 and storied brands like Pirelli.

Europe hasn’t had a mechanism to intercede in deals like Northeast Industries Group’s 2015 purchase of Germany’s Fuba Reception System for an undisclosed price. Fuba, a spin-off of former General Motors Co. unit Delphi Co., has long been a world leader in vehicle communications.

Northeast’s parent, giant defense contractor Norinco Group, is controlled by an arm of China’s State Council, so Fuba “is now controlled by the Chinese government,” Datenna concluded.

Fuba is one of several European companies that previously focused on advanced civilian technologies and since their Chinese takeovers have become part of groups making products with potential military applications, known as dual-use technologies, Datenna found.

Fuba managers didn’t respond to requests for comment.

Europeans a decade ago welcomed Chinese-state investment. When the euro crisis crushed southern European economies, leaders across the continent urged Portugal, Greece and Italy to sell big-ticket infrastructure assets such as power companies and ports to Chinese buyers.

As a result, it has long been evident that Chinese state investors dominated deal value in Europe. Consulting firm Rhodium Group found that 56% of $188 billion in Chinese direct investments into the EU between 2010 and the first half of this year came from state companies.

Large investments by overtly state-owned Chinese enterprises have dwindled in recent years as a result of capital restrictions placed by Beijing and a cooler reception in Europe, according to a recent report by Rhodium and Germany’s Mercator Institute for China Studies.

But shareholding structures of Chinese state-linked companies are frequently complex, involving multiple investment funds, agencies and layers of ownership, which can complicate determining where final control sits.

The EU Chamber of Commerce in China said in a report last year that “the continued mixing of politics and business, with the [Communist Party] insinuating itself into the governance structures of private companies,” is blurring the distinction between business and the state.

Write to Daniel Michaels at daniel.michaels@wsj.com

KILL EVERY HAN CHINESE RAT TO THE LAST EVIL SPECIMEN!

 China’s Xi is doubling down on genocide



A guard tower and barbed wire fences are seen around a facility in the Kunshan Industrial Park in western China's Xinjiang region in 2018. (Ng Han Guan/AP)
Opinion by the Editorial Board
September 30 at 4:25 am AET
FOR THE past three years, China’s Communist regime has waged a campaign of cultural genocide in the sprawling western region of Xinjiang. It has confined more than 1 million ethnic Uighurs and Kazakhs to detention centers and sought to eradicate their allegiance to Islam. Detainees have been forced to eat pork and memorize Chinese songs; women have been sterilized, and children separated from their parents and sent to boarding schools. An Orwellian system of electronic surveillance has been established to monitor the rest of the population, using technologies such as facial recognition.
Slowly, the United States and other Western governments have begun to react to this extraordinary crime. Though President Trump reportedly signed off twice on the repression in meetings with Chinese ruler Xi Jinping, the Trump administration has imposed sanctions on officials responsible for carrying out the crackdown and imposed some restrictions on imports from the region. Last week, the House passed a bill that would bar imports from Xinjiang that were not proved to be untainted by forced labor.
Mr. Xi, however, is unfazed. At a conference of Xinjiang and party officials last weekend, he declared that “practice has proven that the party’s strategy for governing Xinjiang in the new era is completely correct.” He ordered more measures to “make a shared awareness of Chinese nationhood take root deep in the soul” of the Uighurs and other Muslim minorities. Mr. Xi is doubling down on genocide.
Two new studies released last week showed his words were more than bluster. The Xinjiang Data Project of the Australian Strategic Policy Institute found that the regime is building scores of new prison-like compounds where Uighurs are held. Satellite imagery showed 380 suspected detention sites created or expanded since 2017, including 61 since July 2019.
The Post’s Anna Fifield provided a rare eyewitness account of one of the new facilities near the city of Kashgar. Encompassing more than 60 acres and surrounded by 45-foot walls and guard towers, it has 13 five-story residential buildings that can hold more than 10,000 people, she reported. Barbed-wire fences and floodlights belie the regime’s propaganda claims that these are vocational training centers and that most people once in them have been released. On the contrary, many Uighurs who were at first confined to lower-security camps have since been transferred to the new prisons, while others have been enlisted in forced labor.
A second report by the Xinjiang Data Project, also based on satellite imagery, found that some 8,500 mosques in the region had been destroyed since 2017, and an additional 7,500 had been damaged. That represents two-thirds of Xinjiang’s mosques — and again demonstrates that Chinese official claims to be protecting mosques are lies.
Mr. Xi has clearly signaled his intent to continue these criminal acts. Yet the international response remains weak. The European Union, for example, has confined itself to feckless requests to send observers to the region. What’s needed is a concerted and unified response by Western democracies that imposes much higher costs on Beijing. That’s not likely to happen unless Mr. Trump, who according to former national security adviser John Bolton believed that Mr. Xi’s attack on the Uighurs was “exactly the right thing to do,” is voted out in November.

EXTERMINATE THE VILE EVIL HAN CHINESE RACE!

 TikTok was just the beginning: Trump administration is stepping up scrutiny of past Chinese tech investments


By Jeanne Whalen
September 30 at 5:12 am AET


The Committee on Foreign Investment in the United States has contacted dozens of U.S. companies to screen shareholders for national-security risks.


TikTok is not the only company whose Chinese ties have sparked interest from the federal government. (Patrick Semansky/AP)
The federal government is stepping up its scrutiny of past Chinese investments in U.S. tech start-ups, sending a flurry of inquiries about deals that are at times years old.
The emailed requests for information are being sent by a new enforcement arm of a government committee that monitors foreign investment for national-security risks, according to lawyers and a redacted copy of one email reviewed by The Washington Post. After the Committee on Foreign Investment in the United States (CFIUS) gathers details from the companies, it can decide whether to probe the matter further and even push the foreign investor to divest, as it did in the case of TikTok.


The letters, which began landing in dozens of companies’ email inboxes in the spring, reflect the broadly held view among U.S. officials and lawmakers that the United States failed in recent years to adequately screen investments pouring in from China and other countries — particularly low-profile venture-capital investments that didn’t make the headlines. The 2018 Foreign Investment Risk Review Modernization Act, or FIRRMA, aimed to address that by boosting CFIUS’s funding and powers.
Tech executives say the inquiries are part of a growing chill in U.S.-China relations that has made Silicon Valley companies more cautious about accepting foreign investments and caused some China-backed venture-capital funds to curb their activity.
[Trump orders Chinese company to divest ownership of U.S. firm, citing national security concerns]
The decoupling can be seen in data showing that Chinese venture-capital investment in the United States dropped to a six-year low in the first half of 2020, to $800 million, according to research provider Rhodium Group. VC investment by U.S. firms in China hit its lowest level in four years, at $1.3 billion.
Michael Borrus, the founding general partner of XSeed Capital, said CFIUS scrutiny is causing investors and companies to think twice about deals.
“We’ve had Chinese VCs or Chinese families who have been interested in putting money in” to some companies where XSeed Capital is a shareholder, Borrus said. “In the current environment, we’ve decided it’s too complicated.”
Start-ups decide which investments to accept, but existing shareholders often have a say in the matter, Borrus said. “You have discussions with companies, ‘You need to think about this very seriously, it could open you up to CFIUS investigations … if you have alternatives, you should consider them,’ ” he said. “They usually see the wisdom.”


In addition to boosting CFIUS’s work, the government is also sending national-security officials to visit venture capitalists and other tech leaders in Silicon Valley to advise them to exercise caution about accepting Chinese investments, industry executives say.
Some tech companies have overlooked the CFIUS emails because they are brief and cryptic, requesting a phone call to discuss a confidential matter, tech-industry lawyers said.
[U.S. restricts tech exports to China’s biggest semiconductor manufacturer in escalation of trade tensions]
CFIUS is particularly focused on companies and apps that collect sensitive personal information on users, such as location or financial data, and on companies involved in technology seen as critical for national security, such as certain types of battery technology and biotechnology, lawyers said, requesting anonymity to discuss sensitive matters. The committee is mostly inquiring about Chinese investment, but on a few occasions has asked about Russian investors.
CFIUS, an interagency committee chaired by the Treasury Department, has several powers to influence foreign investments it sees as risky. The committee can impose conditions, such as limiting a foreign investor’s access to information on the company’s research and development, or mandating that the company’s board members be government-approved. In extreme cases, CFIUS can advise the parties to abandon or unwind a deal, or kick the matter up to the president for a formal ban or divestment order.


The Treasury Department declined to comment for this story.
CFIUS’s more aggressive role stems from the authority FIRRMA gave the committee to scrutinize more types of foreign investment, including minority shareholdings and real estate transactions. The legislation also gave CFIUS funds to set up a new enforcement arm.
The Treasury Department introduced the enforcement arm in a tweet this summer, linking to a Web page that included an email address where the public can send tips about transactions that might carry national-security risks.
The email tip line “has the potential to ratchet up CFIUS enforcement activity by giving commercial competitors a mechanism to create CFIUS troubles for their rivals seeking foreign investment,” the law firm Wilson Sonsini Goodrich & Rosati warned this summer.
The 2018 FIRMMA law made it mandatory for companies to report to CFIUS some investments involving foreign governments or certain technologies. Previously, it had been optional for companies to notify CFIUS of planned transactions. If they did and CFIUS cleared them, it protected the parties from further CFIUS interference. If they didn’t, they ran the risk CFIUS could take an interest in their deal after it closed and demand changes.
“CFIUS is increasingly contacting parties that didn’t make filings,” said Stephen Heifetz, a lawyer at Wilson Sonsini. “We’ve heard about matters going back almost 10 years. Historically, it was unusual for [CFIUS] to reach back more than three years. 

But there is in theory no time limitation, and we are increasingly hearing about long reach-back periods.”
[U.S. bans WeChat, TikTok as China becomes major focus of election]
CFIUS’s scrutiny of TikTok shows how a foreign investment can raise alarms years after the fact.
The committee only late last year began probing the November 2017 acquisition that helped TikTok’s owner build its U.S. presence. In that deal, Beijing-based ByteDance spent about $1 billion on a karaoke app, Musical.ly, that was popular with American tweens, and rebranded the app as TikTok.
TikTok’s quick rise in the U.S. was shadowed by signs that Beijing was influencing the videos that could appear on the app. In September 2019, The Washington Post reported that a search for “#hongkong” on TikTok yielded few images of the city’s pro-democracy protests, while such images were common on Twitter.
The Post also reported that ByteDance imposed strict rules on what could appear on the app, in keeping with China’s restrictive view of acceptable speech, a policy that sparked a backlash from the company’s U.S. employees.


In October 2019, Sen. Marco Rubio (R-Fla.) asked CFIUS to review the 2017 Musical.ly acquisition out of concern that TikTok was “censoring content” around the world to satisfy Beijing’s leaders.
CFIUS opened a review the following month. In keeping with protocol, it did not publicly disclose the probe or the reasons behind it, but when it concluded its review nine months later, it suggested TikTok’s access to user data was a primary concern.
In August, the Treasury Department said CFIUS had advised President Trump to order ByteDance to divest its U.S. business.
“CFIUS conducted an exhaustive review of the case and unanimously recommended this action to the President in order to protect U.S. users from exploitation of their personal data,” Treasury Secretary Steven Mnuchin said in a statement.
A Trump executive order that same day ordered ByteDance to sell within 90 days, a deadline that expires Nov. 12.

HEAR! HEAR!

 

Trump Sent a Warning. Let’s Take It Seriously.

Our democracy is in terrible danger — more than since the Civil War, more than after Pearl Harbor, more than during the Cuban missile crisis.

Thomas L. Friedman

President Trump has made it unmistakably clear in recent weeks — and even more crystal clear at the Tuesday debate — that there are only two choices before voters on Nov. 3 — and electing Joe Biden is not one of them.

The president has told us in innumerable ways that either he will be re-elected or he will delegitimize the vote by claiming that all mail-in ballots — a time-honored tradition that has ushered Republicans and Democrats into office and has been used by Trump himself — are invalid.

Trump’s motives could not be more transparent. If he does not win the Electoral College, he’ll muddy the results so that the outcome can be decided only by the Supreme Court or the House of Representatives (where each state delegation gets one vote). Trump has advantages in both right now, which he has boasted about for the past week.

I can’t say this any more clearly: Our democracy is in terrible danger — more danger than it has been since the Civil War, more danger than after Pearl Harbor, more danger than during the Cuban missile crisis and more danger than during Watergate.

I began my career as a foreign correspondent covering Lebanon’s second civil war, and it left a huge impact on me. I saw what happens in a country when everything becomes politics, when a critical mass of politicians put party before country, when responsible people, or seemingly responsible people, think that they can bend or break the rules — and go all the way — and that the system won’t break.

But when extremists go all the way, and moderates just go away, the system can break. And it will break. I saw it happen.

I would like to think that such a thing could not happen in America. I’d like to think that … but I am very, very worried.

I worry because Facebook and Twitter have become giant engines for destroying the two pillars of our democracy — truth and trust. Yes, these social networks have given voice to the voiceless. That is a good thing and it can really enhance transparency. But they have also become huge, unedited cesspools of conspiracy theories that are circulated and believed by a shocking — and growing — number of people.

These social networks are destroying our nation’s cognitive immunity — its ability to sort truth from falsehood.

Without shared facts on which to make decisions, there can be no solutions to our biggest challenges. And without a modicum of trust that both sides want to preserve and enhance the common good, it is impossible to accomplish anything big.

“Politics needs a reference point outside of politics,’’ argues the Hebrew University religious philosopher Moshe Halbertal. “It needs values, it needs facts and it needs leaders who respect that there is a sacred domain of decisions that will never be used to promote political gain, only the common good.’’

Public trust is eroded, added Halbertal, when people feel that this notion of the common good doesn’t exist because everything has become politics. That describes the United States today. The institutions we have relied upon to be outside the game of politics so as to adjudicate what is right and true — scientists, certain news media, the courts — have become so ensnared by politics that fewer and fewer of them are universally trusted to define and pursue the common good. Even mask-wearing has become partisan.

You cannot sustain a healthy democracy under such conditions.

And that is why the only choice in this election is Joe Biden. The Democrats are not blameless when it comes to playing politics, but there is no equivalence to the Republicans. The Democratic Party sorted through all the choices, and, led by older Black men and women in South Carolina, rejected the Democratic socialist candidate and said they wanted a moderate unifier named Joe Biden.

The Republicans — who in the past voted for Ronald Reagan and George H.W. Bush, sane conservatives who could be counted upon to uphold the common good — have done no such equivalent thing. They have fallen in line lock step behind a man who is the most dishonest, dangerous, meanspirited, divisive and corrupt person to ever occupy the Oval Office. And they know it. Four more years of Trump’s divide and rule will destroy our institutions and rip the country apart.

To me, the only hope for America is to elect Biden and split the G.O.P. between the Trumpists and whatever is left of the moderate Republicans, and then hope that a big center-left and small center-right can agree on enough things to propel the country forward, heal the divide and act together for the common good.

Admittedly, Biden did not particularly shine in tonight’s debate. Alas, I have never seen him shine in any debate. But I have no doubt that the people, values and integrity he would bring into government would be of a quality that the nation deserves.

If Trump’s monstrous performance left you feeling that you want four more years of his presidency — that he will respect the outcome of the election if it goes against him, that he will reunite the county, that he will do the presidency proud and surround himself with people of the quality that the country deserves — then you and I were watching different debates.

To get back a semblance of unity and sanity, Biden has to win. And that is why I have only one answer to every question now: Vote for Biden — do it by mail early if you must, but if you can, please, put on a mask and do it in person. If enough of us do that, Biden can win outright with the votes cast on Election Day, instead of waiting for all the mail-in ballots to be counted, thereby giving time for Trump and Fox News to muddy the outcome.

So help register someone to vote for Joe Biden. Phone bank for Joe Biden. Talk to your neighbor about Joe Biden. Volunteer for Joe Biden. Drive someone to the polls to vote for Joe Biden.

Do it as if your country’s democracy depends on it, because it does.

The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: letters@nytimes.com.

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Thomas L. Friedman is the foreign affairs Op-Ed columnist. He joined the paper in 1981, and has won three Pulitzer Prizes. He is the author of seven books, including “From Beirut to Jerusalem,” which won the National Book Award. @tomfriedman  Facebook

Tuesday 29 September 2020

 As we emphasized, the Chinese Dictatorship's attempt to escape its internal contradictions through old-fashioned corporatism are doomed to failure once its SOEs are no longer bound to the discipline of the world capitalist market. Ratland China's era of mercantilism is drawing to an ignominious and disastrous close. 

Xi Jinping’s Tech Wonderland Runs Into Headwinds

China’s Greater Bay Area is supposed to rival clusters like Tokyo Bay and San Francisco-Silicon Valley. But distrust of Beijing is throwing up obstacles.

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Huawei Technologies Co.’s R&D campus in Dongguan, foreground, is emblematic of China’s strained engagement with the outside world. Photographer: Qilai Shen for Bloomberg Markets
Jeff Black and Allen Wan, with Zhu Lin
From

At a new 400-acre research-and-development center on China’s south coast, Huawei Technologies Co. engineers chat, tap at their phones, or chill out on a small electric tram that whirs them between buildings modeled variously on the Sorbonne or England’s great universities. They move through neighborhoods built in the style of Versailles or Renaissance Italy, passing by some of the 3,000 gardening and maintenance staff needed to keep the vast parklands immaculate.

It’s late July, and on this Disneyland-like corporate campus about an hour and a half’s drive from Hong Kong, Huawei seems to be basking in the wealth from its leadership in 5G mobile technology. No other company has done more to project the image of a technologically advanced China on the international stage. And no other company stands as a greater symbol of China’s engagement with the outside world.

Huawei’s vaulting ambition to be at the forefront of future-defining technologies has landed the company in the crosshairs of the U.S. and other governments that see it as a conduit for the geopolitical objectives of the Chinese Communist Party. In mid-August the U.S. Department of Commerce, at President Trump’s direction, handed down yet another round of restrictions aimed at cutting Huawei’s access to commercially available computing chips it needs to make 5G base stations and smartphones.

The fortunes of China’s largest technology company by revenue are entwined with a vast project that’s now the front line of the hugely consequential tech war between the U.S. and China: the Greater Bay Area, a region tasked by President Xi Jinping with pushing the nation toward global technology leadership.

The GBA’s ability to innovate and integrate enough to succeed in that task is facing its stiffest challenge yet from a U.S.-led global backlash against Chinese tech and Beijing’s political crackdown in Hong Kong. If the GBA’s companies can surmount the obstacles being placed in their path, they could well determine how advanced and prosperous China can become under Xi.

The Pearl River Delta—long one of China’s richest and most economically dynamic regions and rebranded by Xi as the Greater Bay Area—stretches from the forested hills around Zhaoqing in the northwest to the concrete towers of Hong Kong Island in the southeast. It’s the epicenter of Xi’s strategy to attain high-income status, bind the former colonial centers of Hong Kong and Macao into the motherland, and complete what he calls the “rejuvenation” of the Chinese nation. He wants this region of about 70 million people to rival the clusters of Tokyo Bay or San Francisco-Silicon Valley and the role they play in driving innovation, entrepreneurship, and growth.

MKT_GBA_02_CMS
A waterway runs through the Huawei campus in Dongguan. Photographer: Kevin Frayer/Getty Images

Huawei reflects Xi’s grand vision for the Pearl River Delta. But as pressure from the Trump administration grows, executives of the company, which had a record $122 billion in sales last year, show signs of recognizing the changing, narrowing world in which they’re now living.

Guo Fulin, a two-decade veteran of the company who ran parts of its business in Europe and is now its president of international media affairs, deploys gnomic understatement to describe Huawei’s predicament. “The star in the sky will shine either to the west or to the east,” he says, meaning there will be opportunities for Huawei whether the U.S. slams the door shut or not. “We are not targeting every customer in the world. Customers who choose Huawei will eventually live better.”

With his actions—restricting sales of high-end semiconductors to Huawei, banning Americans from doing business with Tencent Holdings Ltd.’s WeChat app—Trump threatened revenue and product development at China’s most innovative companies. The importance of that is magnified by the timing of his actions, which come as China is upgrading its industries, with many sectors still in need of expertise from abroad to complete the development Xi expects.

China’s leaders maintain their public commitment to the open, globalized world economy that’s benefited the nation so handsomely over the past two decades. But Xi is also adopting inward-looking ideas of self-sufficiency in a shift back to an industrial model less integrated into global supply chains. That’s not necessarily in China’s interest, says David Dollar, a former U.S. Treasury emissary to the country who’s now a senior fellow at the Brookings Institution in Washington. “The danger is if you feel you have to respond to the U.S. protectionism with Chinese protectionism,” he says. “If you go down that road, then all this aspiration to become a more innovative economy is pretty hopeless.”

The Growth Issue
From the October/November issue of Bloomberg Markets Illustrator: Dexter Maurer

The Greater Bay Area strategy is rooted in an earlier time in Xi’s chairmanship that was all about China going out into the world through investment, acquisitions, and geopolitical partnership-building through initiatives such as the “Belt and Road” enterprise. First mooted by Shenzhen local authorities in 2014, and then elevated into a central government policy blueprint unveiled last year, the plan outlines the ambition to build a tech hub to “target the most advanced technologies and industries in the world.”

Far from Beijing and close to the open sea, the Pearl River Delta has long been China’s most mercantile and innovative place. The crowded islands that form Hong Kong and Macao remain separate jurisdictions even today, with their own laws, currencies, and political traditions shaped by the legacy of British and Portuguese colonialism. In Hong Kong, the differences between local society and the political culture across the border are a major source of friction, with hundreds of thousands of people in Hong Kong taking to the streets in often violent protests last year to push back against increased control by the Communist Party.

Standing among the futuristic towers of Shenzhen, just across the marshy borderland from Hong Kong, it’s easy to imagine the goal of technological leadership being within reach. In this city, mythologized as rising from a mere fishing village to a global metropolis within four decades, companies with a genuine claim to world leadership have their home.

More than a dozen Fortune Global 500 companies in the Guangzhou-Hong Kong-Shenzhen conurbation help drive a trillion-dollar economy that exports more than Japan does. The region spends double the national average on R&D, and Shenzhen alone accounts for more than a fifth of China’s high-end exports.

Growth Indicators in China’s Pearl River Delta

*At industrial enterprises with revenue from principal activities of more than 20 million yuan.

Sources: Guangdong Statistics Bureau; Guangdong Administration for Market Regulation

Huawei began in 1987 with its founder, Ren Zhengfei, repeatedly crossing the border, importing telephone switching gear from Hong Kong that he then resold to customers in China who were desperate for upgraded communications. Today the employee-owned company has sales in about 170 countries. At its corporate headquarters in Shenzhen, lavish reception rooms for visitors are modeled on Japan’s old Kyoto, with refreshments intended to make executives feel at ease before being pitched for deals on telecom hardware.

But the list of nations that see Huawei as a proxy for China’s geopolitical ambitions is growing. Following the U.S. lead, the U.K. is banning the company from its next-generation 5G networks and requiring that Huawei technology already installed in existing equipment be stripped out by 2027. Australia has shut the company out, as has Japan. India may curb Huawei and its tech neighbor in Shenzhen, ZTE Corp., from its networks as relations between the two states deteriorate.

This kind of tech decoupling could cost the world economy some $3.5 trillion in wasted output over the next five years, according to a report in July by Deutsche Bank AG. The costs arise from extra R&D, demand disruption, and supply chain rerouting that would become necessary if the current flow of know-how and parts—much of which already passes through China—shifts permanently.

That’s already happening at Huawei and, more broadly, in China. Huawei says that Trump sanctions enacted in May, which forbid companies using U.S. technology from supplying the Chinese company, cut it off from about 2% of its imported parts, which can’t be sourced elsewhere. To be able to completely replace lost technology could take Huawei an additional five to eight years, it says; outside estimates point to 10 years or more. That’s “a big loss for us,” Yu Chengdong, chief executive officer of Huawei’s consumer business group, said publicly in August.

Chinese leaders have frequently said that pressure from the outside will make the nation redouble its efforts to catch up technologically. There’s evidence that a broad push is under way to increase research and design capacity. Initial public offerings by Chinese semiconductor companies had raised a record $10 billion as of August as companies seek to localize supply chains.

That’s exactly the kind of duplication of effort that Deutsche Bank warns of, and there’s no guarantee that local companies can make up for what they’ve lost from the outside anytime soon. That could leave the GBA in the position of being a leading tech hub within and for China’s domestic market, but falling short of playing that role for the world.

Even as U.S. actions have hurt some tech companies in the Greater Bay Area, the Covid-19 pandemic has boosted others. The headquarters of Shenzhen Mindray Bio-Medical Electronics Co. is an appropriately clinical-looking, 35-story tower in Shenzhen’s Nanshan District. It manufactures, among other products, the SV800 and SV300 series of medical ventilators vital to treating patients severely affected by Covid-19.

The company’s three founders—including Li Xiting, a Singapore resident who was already the city-state’s second-richest man—had added about $17 billion to their combined wealth this year as demand soared. Mindray Vice President Huang Haitao says the company, which plows 10% of revenue back into R&D, aims to break into the global top 20 of medical equipment companies and push the industry’s frontiers into automation and artificial intelligence.

But Mindray, which says its medical equipment is used in the Johns Hopkins Hospital in Baltimore and at Mayo Clinic campuses, may not be immune from U.S. targeting forever. In August, as part of his presidential campaign, Democratic Party candidate Joe Biden vowed to end American reliance on Chinese medical equipment. “Some parts of our equipment are manufactured in the U.S.,” Huang says. “For the sake of supply chain safety, we’ll abide by all American and international laws. At the same time, we’re also actively developing backup plans, which include looking for alternative suppliers.”

Innovation in the GBA is driven largely by companies, not universities, making the pace of progress more susceptible to the business cycle and the fortunes of any individual company. There is no Berkeley or Stanford here. China’s best minds in science, technology, engineering, and mathematics still graduate from Tsinghua and Peking universities in the capital and Fudan University in Shanghai, thousands of kilometers away.

That’s an issue singled out by Eric Guo, chief artificial intelligence scientist at Guangdong Oppo Mobile Telecommunications Corp., the world’s fifth-largest smartphone manufacturer. The 36-year-old former Microsoft Corp. researcher has a Ph.D. from Purdue University in Indiana.

Sitting in corporate offices soon to be superseded by headquarters designed by Zaha Hadid, Guo praises the quality of life in Shenzhen. He points out that branches of China’s top-flight colleges are coming to Shenzhen, but more needs to be done, because the beauty and efficacy of university research is that it’s not constrained by making money in the short term. “Universities are the engines of innovation,” he says.

Less than 20 miles away, in central Hong Kong, it was university students who took to the streets during the summer of 2019, protesting first against a law that would erode the legal separation between the former British colony and the mainland, and then more generally against Beijing’s rule over the city.

In many ways, Hong Kong is doing what it’s always done—getting on with doing business with China—and it’s still the funnel through which most foreign direct investment flows into the wider GBA. But large parts of its population now see closer ties with the mainland as anathema, and rising tensions have divided a community that might have been expected to help knit together the GBA’s future economy.

That doesn’t bode well for what many in the business community see as the best long-term growth opportunities for either Hong Kong or the Greater Bay Area. “Hong Kong’s role is getting GBA companies to go global—a kind of adapter,” says Ben Simpfendorfer, founder of consulting firm Silk Road Associates. “Hong Kong needs to retain its connectivity to international markets.”

Beijing still pledges allegiance to the constitutional principle of “one country, two systems,” but the implementation of a national security law this past summer drew a quick response from the U.S., which removed a long-standing special trade privilege Hong Kong had enjoyed. That in itself “deepens pessimism” about the long-term business prospects in the city, according to a statement issued by the American Chamber of Commerce.

Policymakers in Beijing are plowing ahead with measures to ensure Hong Kong continues to play its role as the offshore financial center of the Greater Bay Area. The so-called Wealth Management Connect, for example, was announced in June, allowing residents in Hong Kong, Macao, and Guangdong to invest across the border.

But uncertainty is riding high. Nicholas Kwan, head of research for the Hong Kong Trade Development Council, stresses that without an open and connected business and political environment, the city can’t play its proper role in the broader strategy. “We can’t just be part of China,” he says. “We also have to be part of the rest of the world.”

Some would say the same of the Greater Bay Area. As it was when Deng Xiaoping opened the region to foreign investment four decades ago, China’s dynamic south has once more been handed the role of driving the nation’s rise. But in an era when China, like Huawei, is being challenged on all sides, grand economic growth projects like the GBA have no guarantee of success, and Xi’s plans for the region now hang in the balance. —With Edwin Chan, Gao Yuan, Venus Feng, and Iain Marlow

 

Ratland China’s Economic Recovery Leaves the Bottom 60% Behind

The migrant laborers who lost their jobs received no benefits and aren’t counted as unemployed.
By
Shuli Ren
relates to China’s Economic Recovery Leaves the Bottom 60% Behind
ILLUSTRATION: GEORGE WYLESOL FOR BLOOMBERG BUSINESSWEEK

China doesn’t care about its bottom 60%.

The country seems to have bounced back from the Covid-19 slowdown. Exports are growing by double digits, and retail sales, which had been lagging for months, are back to pre-virus levels. With daily life mostly back to normal, the country seems to be humming again.

But poorer households are still struggling. The rebound Beijing engineered is K-shaped, exacerbating widening income inequality, which was already a problem before the pandemic.

Most households in the bottom 60%, or those earning less than 100,000 yuan ($14,650) a year, said their wealth declined in the first half of 2020, the China Household Finance Survey finds. Those earning more than 300,000 yuan a year reported net gains. We get a glimpse of the upper tier’s confidence from sales of luxury items: High-end autos are doing well, and ChanelLouis Vuitton, and other brands raised prices this year.

This has happened in part because China’s fiscal stimulus is different from that of the U.S. Beijing feels it has more control over businesses than consumers, so it stimulates the economy by building new bullet trains and 5G telecom stations. There are no equivalents to the $1,200 check from Uncle Sam, or the $600-per-week enhanced unemployment benefit from the Treasury Department. China went for trickle-down economics.

The country’s decision to aid business owners rather than workers may have long-term repercussions. Of its 442 million urban workers, more than one-third, or 174 million, are migrants. They mostly work in low-paying jobs in construction, delivery, manufacturing, and restaurant services. When those industries were shut down, migrants not only lost their jobs but also failed to collect unemployment checks. With their hukou, or permanent residency, tied to the rural areas, in Beijing’s books they were never employed in the cities in the first place. They were just going home to farm.

The economic loss borne by the poorest 60% could be as much as 1.35 trillion yuan ($198 billion), estimates Gavekal Dragonomics, a research firm. Some continue to be underemployed. In August, sales from the catering industry, which employs about 12 million migrant workers, were still down 7% from a year earlier.

China’s urban unemployment rate has come down to 5.6% in August from February’s 6.2% high, the statistics bureau proudly proclaimed. This figure is likely a big understatement. Migrant workers are hardly present in the government’s urban survey.

Make China a cautionary tale for Washington. If the political impasse over stimulus continues, the U.S. will end up in the same situation, with the wealthy wondering whether work from home means they should sell their Hermès ties while the poor scramble to survive. A K-shaped recovery is worse than a U- or W-shaped one.
 

 

Xi’s dictatorship can’t be trusted

Chinese President Xi Jinping. Picture: AFP
WE WILL KILL THIS BEAST AND SMASH EVERY CELL IN HIS STINKING CARCASS

When I was governor of Hong Kong, one of my noisiest critics was Sir Percy Cradock, a former British ambassador to China. Cradock always argued that China would never break its solemn promises, memorialised in a treaty lodged at the UN, to guarantee Hong Kong’s high degree of autonomy and way of life for 50 years after the return of the city from British to Chinese sovereignty in 1997.

Cradock once memorably said that although China’s leaders may be “thuggish dictators”, they were “men of their word” and could be “trusted to do what they promise”. Nowadays, we have overwhelming evidence of the truth of the first half of that observation.

Chinese President Xi Jinping’s dictatorship is certainly thuggish. Consider its policies in Xinjiang. Many international lawyers argue that the incarceration of over one million Muslim Uighurs, forced sterilisation and abortion, and slave labour meet the UN definition of genocide. This wicked repression goes beyond thuggery.

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A recent Australian Strategic Policy Institute study based on satellite images indicates that China has built 380 internment camps in Xinjiang, including 14 still under construction. Having initially denied that these camps even existed, some Chinese officials now claim that most people detained in them have already been returned to their own communities. Clearly, this is far from the truth.

Chris Patten, right, the 28th and last governor of Hong Kong, receives the Union Jack flag after it was lowered at his official residence on June 30, 1997, when Britain returned the territory to China. Picture: AFP
Chris Patten, right, the 28th and last governor of Hong Kong, receives the Union Jack flag after it was lowered at his official residence on June 30, 1997, when Britain returned the territory to China. Picture: AFP

So, what about Xi and his apparatchiks being “men of their word”? Alas, that part of Cradock’s description has no basis in reality. The last thing the world should do is trust the Communist Party of China. Four examples of the Chinese leadership’s duplicity and mendacity – four out of many – should make this obvious to all.

First, consider the China-sourced COVID-19 pandemic, which has killed one million people globally and destroyed jobs and livelihoods on a horrendous scale in recent months. After the 2002-03 SARS epidemic, which also originated in China, the World Health Organisation negotiated with its members — including China — to establish a set of guidelines known as the International Health Regulations. Under these rules, especially Article 6, the Chinese government is obliged — like all other signatories to the agreement — to collect information on any new public-health emergency and report it to the WHO within 24 hours.

Instead, as the University of Ottawa professor Errol Patrick Mendes, a distinguished international human-rights lawyer, has pointed out, China “suppressed, falsified, and obfuscated data and repressed advance warnings about the contagion as early as December” last year.

The result is that the coronavirus has become a far greater menace than it otherwise would have been. This is the CPC’s coronavirus, not least because the party silenced brave Chinese doctors when they tried to blow the whistle on what was happening.

Former US president Barack Obama also can attest to Xi’s lack of trustworthiness. In September 2015, Xi assured Obama that China was not pursuing militarisation in and around the Spratly Islands in the South China Sea.

But this was a pledge with Chinese communist characteristics: it was completely untrue. Satellite imagery released by the Centre for Strategic and International Studies, a US think tank, provides convincing evidence that the Chinese military has deployed large batteries of anti-aircraft guns on the islands. At the same time, the Chinese navy has rammed and sunk Vietnamese fishing vessels in these waters and tested new anti-aircraft carrier missiles there.

A third example of the CPC’s dishonesty is its full-frontal assault on Hong Kong’s autonomy, freedom, and rule of law. Hong Kong represents all those aspects of an open society that Chinese communists, despite their professed confidence in their own technological totalitarianism, regard as an existential threat to the surveillance state they have created.

Xi has therefore torn up the promises that China made to Hong Kong and the international community in the 1984 Joint Declaration (and subsequently) that the city would continue to enjoy its liberties until 2047.

Students at a commencement ceremony on Sunday at Wuhan University in Wuhan, the Chinese city where the pandemic is believed to have started. Picture: AFP
Students at a commencement ceremony on Sunday at Wuhan University in Wuhan, the Chinese city where the pandemic is believed to have started. Picture: AFP

Moreover, the law that China imposed to eviscerate Hong Kong’s freedom has extra-territorial scope. Article 38 of the National Security Law can apply to anyone in Hong Kong, mainland China, or any other country. So, for example, an American, British, or Japanese journalist who wrote anything in his or her own country criticising the Chinese government’s policy in Tibet or Hong Kong could be arrested if he or she were to set foot in Hong Kong or China.

Finally, one can add China’s sackful of broken trade and investment promises, which overturned both the letter and spirit of what CPC officials had previously pledged. China’s coercive commercial diplomacy includes threats not to buy exports of countries whose governments have the courage to stand up to Xi. This has happened to Australia, Norway, South Korea, Japan, Germany, Britain, France, Canada, the US, and others. The end result is often less than China had threatened, but not before an industry or economic sector has begged its government to back down.

One thing is clear: the world cannot trust Xi’s dictatorship. The sooner we recognise this and act together, the sooner the Beijing bullies will have to behave better. The world will be safer and more prosperous for it.

Chris Patten — a minister in the Thatcher government, the last British governor of Hong Kong and a former EU commissioner for external affairs — is Chancellor of the University of Oxford.