Thursday, 4 March 2021



Lithuania Riles China With Taiwan Trade-Office Plan as Ties Sour

  • Vilnius also considering leaving Chinese-led East Europe forum
  • China opposes any official exchanges with Taiwan, other states

Lithuania is planning to open a trade office in Taiwan this year and is chewing over leaving a Chinese-led forum for eastern European states, complicating Beijing’s push to deepen its influence in the continent’s ex-communist sphere.

China’s government has sought for years to boost investment, political ties and other aspects of its relationship with the European Union by wooing the bloc’s eastern members. While some countries like Hungary have embraced that effort, others have bristled, shunning Chinese technology and deepening ties with Taiwan.

The ruling coalition in Lithuania, an EU member of 2.8 million bordering Russia, has made supporting “freedom fighters from Belarus to Taiwan” a pillar of its governing program. Now it aims to “strengthen and diversify economic diplomacy” in Asia, said Skaiste Barauskiene, a spokeswoman for the economy and innovation minister.

“One of the steps is to open a Lithuanian enterprise office in Taiwan by the end of the year,” she said Thursday.

The plan triggered a rebuke from China, whose Communist Party requires countries to accept Taiwan as part of the People’s Republic of China as a pre-condition for diplomatic ties. The issue has exacerbated tensions elsewhere too, with a planned trip to Taipei by a top Czech official triggering a dispute between Prague and Beijing last year.

“We are firmly against the mutual establishment of official agencies and official exchanges in all forms between the Taiwan region and countries having diplomatic relations with China, including Lithuania,” Chinese Foreign Ministry spokesman Wang Wenbin told a briefing Thursday.

Other issues are grating as well. Last month, Lithuania barred a Chinese state-owned company from supplying its airports with luggage-scanning equipment over national security concerns.

Lithuania has also shown waning enthusiasm for the China and Central and Eastern European Countries forum -- more commonly referred to as the 17+1 -- which took shape in 2012 as a way for China to forge ties with eastern Europe.

Some European participants sent lower-level officials rather than presidents or prime ministers to this year’s meeting. Lithuania was among them, and its parliamentary Foreign Affairs Committee has recommended exiting the format. Instead, the country said it favors a 27+1 that also includes the EU’s western members.

“Lithuania is interested in developing mutually beneficial bilateral relations with China, based on mutual respect for democratic values, human rights and freedoms,” the Foreign Ministry said. “The 17+1 format failed to meet our expectations and doesn’t correspond to the interests of the EU.”

— With assistance by Brendan Scott


China’s BBC Attacks Show Growing Sophistication in Propaganda, Report Says

  • Beijing targeting Western audiences: Australian think tank
  • China has frequently attacked the research group’s credibility

China’s attempts to discredit the BBC show an increased sophistication in tailoring propaganda for Western audiences, an Australian research group said Thursday.

Chinese officials participated in a social media campaign against the BBC after it aired a report on Feb. 2 featuring Uighur women who alleged that detainees in camps in the province of Xinjiang were systematically raped, sexually abused and tortured. China’s Foreign Ministry denied the allegations and accused the BBC of making a “false report.”

The ensuing weeks saw a spike in social-media activity from Chinese diplomats and state media accounts on Twitter, Facebook and YouTube criticising the BBC, said Jacob Wallis, a senior analyst at the International Cyber Policy Centre, which is under the umbrella of the Australian Strategic Policy Institute, or ASPI. He authored the report with researcher Albert Zhang.

“This was a particularly sustained period of activity,” Wallis said in an interview. “It was also novel in terms of the coordination across different media, diplomatic Twitter accounts retweeting Chinese television reports featuring Western voices based in China, because they know those voices will be effective at penetrating international discourse.”

Tensions between the U.K. and China increased after Beijing last year imposed a new national security law on Hong Kong and Prime Minister Boris Johnson’s government offered a path to citizenship for millions of the city’s residents. On Feb. 4, U.K. government regulator Ofcomm revoked the license of state-run China Global Television Network after investigators found it didn’t have editorial control over broadcasts in the U.K. A week later China took the BBC off the air, saying its reports weren’t “truthful and fair.”

China’s diplomats have become more aggressive in recent years in seeking to shape the narrative around Beijing’s actions, leading some to describe them as “Wolf Warriors” in reference to a nationalist Chinese movie released in 2015. Whereas once Chinese officials used party talking points on Western social media to defend government policy, they are now more adept at messaging, according to the ASPI report.

China’s repurposing of domestic internet content to influence Chinese-language audiences around the world, along with using Western voices to resonate internationally, demonstrate its increased understanding in finding new ways to drive influence across cultural and linguistic boundaries, Wallis said. They are also using bespoke content, established social themes and shared political ideologies like anti-Western imperialism, he added.

China’s Foreign Ministry didn’t immediately respond to ASPI’s findings, and nor did the BBC. Chinese state media and diplomats have frequently attacked the credibility of the research group, which was established by the Australian government in 2001 and has disclosed additional funding from global defense contractors and Western diplomatic missions. Wallis said this report “hasn’t flowed from any specific project so is untied to any specific funder.”

When it came to targeting the BBC, Wallis said, Chinese officials used an existing narrative around criticism of the broadcaster by its own domestic audience in the U.K. A Chinese diplomat in Lebanon named Cao Yi retweeted a tweet from the BBC defending its reporting but which had dozens of replies criticizing it. He called the BBC the “Biased Broadcasting Channel,” a phrase used for years by the broadcaster’s domestic critics, the ASPI report noted.

Beijing’s online advocates have “become a lot more like the Russians, who are very skilled at making their messages look genuine and authentic,” said John Lee, a Sydney-based senior fellow at the Hudson Institute, a Washington-based research group.

“It used to be a group of bloggers based somewhere in China, inserting themselves into conversations happening around the world,” he said. “Now it’s clearly people who understand the conversation very well and are tapping into it quite effectively.”

Wednesday, 3 March 2021



Hong Kong Dumped From Economic Freedom List It Had Dominated

Updated on 
  • Hong Kong, Macau now part of China’s economic freedom ranking
  • “Policies are ultimately controlled from Beijing,” report says

A year ago, when Hong Kong was dethroned by Singapore in the annual Heritage Foundation ranking of the world’s freest economies, a top official predicted the city would soon return to the spot it had held for 25 straight years.

Instead, Hong Kong disappeared entirely from the latest edition of the list, published Thursday. Together with Macau, it is now counted as part of China to reflect Beijing’s increasing sway over policy following months of pro-democracy protests in 2019.

Fresh Hong Kong Protests Signal Gridlock Facing Lam 
Demonstators clash with riot police in July 2019. Photographer: Justin Chin/Bloomberg

China resides in 107th place in the ranking, sandwiched between Uganda and Uzbekistan among economies rated as “mostly unfree.”

While Hong Kong and Macau residents benefit from policies that offer greater economic freedom than on the mainland, “developments in recent years have demonstrated unambiguously that those policies are ultimately controlled from Beijing,” the study’s authors wrote.

Hong Kong remained at the top of the list of freest economies following its 1997 return to Chinese rule, buttressing the argument that it was the ideal gateway to China, with an independent judiciary, free press and deep financial markets. Officials often referred to the Heritage Foundation ranking when touting Hong Kong’s credentials as a financial hub.

Unrest Erupts

But the cracks in that edifice were exposed in 2019, when simmering discontent with Beijing’s rising influence boiled over into months of mass demonstrations and violence that sapped business confidence. The unrest led to Hong Kong losing its top Heritage Foundation ranking for the first time since its inception in 1995.

At the time, Hong Kong officials struck a defiant tone. “I can confidently say that the conditions that have long made Hong Kong a place with a high level of economic freedom won’t change because of what we experienced in the past,” Edward Yau, the secretary for commerce and economic development, told reporters after the 2020 ranking was published in March last year. He said he expected Hong Kong’s ranking to recover.

Yau’s office had no immediate comment on Hong Kong being dropped from the rankings.

Singapore retained the top spot in the latest report, leading a crop of just five economies the Heritage Foundation rates as “free.” The other four are New Zealand, Australia, Switzerland and Ireland.

Economic Freedom

China ranked 107th in 2021 economic freedom index, far behind more open societies

Source: 2021 Index of Economic Freedom, Heritage Foundation

Note: Foundation ranks economies with score of 80-100 as "free"

The move to scrap Hong Kong and Macau’s independent ratings comes as top Communist Party officials prepare to meet in Beijing for the National People’s Congress, where they’re expected to unveil more measures designed to bring Hong Kong’s pro-democracy movement to heel. In June, they imposed a sweeping national security law on the city, under the auspices of which police have arrested 100 people accused of crimes such as sedition.

Hong Kong Chief Executive Carrie Lam, whose approval rating stood at 23% in a February survey, will attend the NPC opening ceremony in Beijing on Friday. Last year, Lam made the unprecedented move to delay her annual policy address so she could first consult with Chinese leaders.

When she finally delivered the address in late November, it was heavy on policies aimed at integrating Hong Kong more with the mainland.

Hong Kong Chief Executive Carrie Lam News Conference

Carrie Lam

Photographer: Paul Yeung/Bloomberg

“What has become clear over the last two years is that the city’s administrators are now extremely hesitant to make policy decisions without clearance from Beijing,” said Terry Miller, an editor of the index and a director of the Center for International Trade and Economics at the foundation. “And Beijing has shown that it is not reluctant to impose its will, and specific changes in law, on the people of Hong Kong.”

‘Unique Position’

China’s ranking dropped in the latest economic freedom index, trailing far behind other large Asian economies like Japan and South Korea -- in part because business there is still dominated by large, opaque, state-linked enterprises.

The Fraser Institute, which compiles its own annual economic freedom ranking, warned last year that Hong Kong’s long reign as the freest economy is at risk due to China’s efforts to quell dissent.

“Hong Kong’s importance and vitality as a financial center have always depended on its unique position as a bridge between Chinese and western systems,” Miller said. “That uniqueness has been eroded over time by the development of alternative channels of commercial and financial interaction between China and other countries, and also, importantly in recent years, by the loss of confidence in the fair and impartial administration of world standards of law and respect for human rights within Hong Kong itself.”



Inspector General’s Report Cites Elaine Chao for Using Office to Help Family

The Justice Department under the Trump administration declined to open a criminal investigation into the actions by Ms. Chao when she was transportation secretary.

Elaine Chao testifying before a House subcommittee last year.
Elaine Chao testifying before a House subcommittee last year. Credit... T.J. Kirkpatrick for The New York Times
Eric LiptonMichael Forsythe

WASHINGTON — While serving as transportation secretary during the Trump administration, Elaine Chao repeatedly used her office staff to help family members who run a shipping business with extensive ties to China, a report released Wednesday by the Transportation Department’s inspector general concluded.

The inspector general referred the matter to the Justice Department in December for possible criminal investigation. But in the weeks before the end of Trump administration, two Justice Department divisions declined to do so.

Ms. Chao, the wife of Senator Mitch McConnell of Kentucky, the Republican leader, announced her resignation on Jan. 7, the day after the Capitol riot. At the time of her departure, an aide to Ms. Chao said her resignation was unrelated to the inspector general’s investigation.

The investigation of Ms. Chao came after a 2019 report in The New York Times that detailed her interactions with her family while serving as transportation secretary, including a trip she had planned to take to China in 2017 with her father and sister. The inspector general’s report confirmed that the planning for the trip, which was canceled, raised ethics concerns among other government officials.


As transportation secretary, Ms. Chao was the top Trump administration official overseeing the American shipping industry, which is in steep decline and is being battered by Chinese competitors.

“A formal investigation into potential misuses of position was warranted,” Mitch Behm, the Transportation Department’s deputy inspector general, said to House lawmakers on Tuesday in a letter accompanying a 44-page report detailing the investigation into “use of public office for private gain.”

The investigators did not make a formal finding that Ms. Chao violated ethics rules. But they detailed more than a dozen instances where her office took steps to handle matters related to her father, who built up a New York-based shipping company after immigrating to the United States from Taiwan in the late 1950s, and to her sister, who runs the company now.

These included an interview with a Chinese-language television station at the New York City headquarters of Foremost Group, the shipping company. The focus of the conversation there, according to a Transportation Department translation of the media plan prepared for the interview, was to discuss how Ms. Chao’s father, James Chao, had been “dubbed ‘Chinese Ship King,’ how Foremost Group ‘ascended to its status in the world,’ and Dr. Chao’s business endeavors.”


Mr. Chao, 93, who was born in China, built a business that centered around transporting commodities like coal and iron ore to the Chinese market. Elaine Chao, his eldest daughter, who was raised in and around New York City, has been prominent in Republican politics for decades, including an eight-year term as labor secretary under President George W. Bush.

Foremost Group was responsible as of 2019 for a large portion of orders at one of China’s biggest state-funded shipyards, and had secured long-term charters with a Chinese state-owned steel maker, The Times reported.

The Chao family’s American success story has vaulted the family to celebrity status in China, and the Chaos regularly meet with top officials on their trips to the country.

In a statement on Wednesday, a public relations firm representing Ms. Chao said the report cleared her of any wrongdoing.


“This report exonerates the secretary from baseless accusations and closes the book on an election-year effort to impugn her history-making career as the first Asian-American woman appointed to a president’s cabinet and her outstanding record as the longest tenured cabinet member since World War II,” the statement said.

Ms. Chao had declined to respond to questions from the inspector general and instead provided a memo that detailed the importance of promoting her family as part of her official duties.

“Anyone familiar with Asian culture knows it is a core value in Asian communities to express honor and filial respect toward one’s parents,” the September 2020 memo said. “Asian audiences welcome and respond positively to actions by the secretary that include her father in activities when appropriate,” it continued.

Democrats seized on the report as further evidence of ethical problems throughout the Trump administration.


“Public servants, especially those responsible for leading tens of thousands of other public servants, must know that they serve the public and not their family’s private commercial interests,” said Representative Peter DeFazio, Democrat of Oregon and the chairman of the House Committee on Transportation and Infrastructure, which requested the investigation after the report in The Times.

The investigators found that Ms. Chao had used her staff to arrange details for Mr. Chao’s trip to China in October 2017, including asking, through the State Department, for China’s Transport Ministry to arrange for two cars for a six-person delegation, which included Ms. Chao’s younger sister Angela Chao, who had succeeded their father as head of the family shipping company, and Angela Chao’s husband, the venture capitalist Jim Breyer.

The trip had been scheduled to include stops at locations in China that had received financial support from the company and also a meeting with “top leaders” in China that was to include Elaine Chao’s father and sister, but not other members of Transportation Department staff. The trip was canceled just before Ms. Chao’s planned departure after ethics concerns were raised by officials at the State and Transportation Departments.

The investigators also found that she repeatedly asked agency staff members to help do chores for her father, including editing his Wikipedia page and promoting his Chinese-language biography. They said she directed two staff members from her office to send a copy of Mr. Chao’s book “to a well-known C.E.O. of a major U.S. corporation” to ask if he would write a foreword for it.


In one instance in 2017, staff members from Ms. Chao’s office were assigned to check with the Department of Homeland Security on the status of a work permit application for a foreign student studying in the United States who had received a scholarship from a Chao family foundation, the report said.

The student, according to the report, had interviewed Mr. Chao at the New York headquarters of the family’s shipping company in order to share Mr. Chao’s experience “with Chinese millennials.”

In 2018, Ms. Chao’s staff at the Transportation Department helped promote her father at events at Columbia University, SUNY Maritime College, Lloyd’s List, and the Massachusetts Maritime Academy, according to the report.

The report cited a media plan that a department staff member was asked to proofread: “We recommend amplifying the coverage in regional press a means to build Dr. Chao’s profile and to share the story of his journey.”


On a separate occasion, a Foremost employee called the secretary’s office to help her father get an appointment of some kind — the specifics were blacked out in the report. “Secretary — I am more than happy to assist but just want to make sure you are okay with me handling this?” the aide wrote to Ms. Chao, the report said.

The report said that none of the Transportation Department employees interviewed “described feeling ordered or coerced to perform personal or inappropriate tasks for the secretary.”

In deciding not to take up a potential criminal case, the report said, the Justice Department notified the inspector general that “there may be ethical and/or administrative issues to address but there is not predication to open a criminal investigation.”

Given the lack of “prosecutorial interest” from the Justice Department, the inspector general closed its own investigation but referred it to the Transportation Department general counsel “for any action it deems appropriate.”

Eric Lipton reported from Washington, and Michael Forsythe from New York.


Totalitarian CCP unqualified to lecture on racism

Sinophiles regard China as an exemplar of human development that has transformed the dream of Marxism into a self-evident truth.

As a self-appointed arbiter of equality, the Chinese Communist Party sees fit to lecture other nations on racial divisions even as it demands conformity to the one-party state. The result is an absurd reality in which the CCP can confine an ethnic minority in internment camps while lecturing the world about racial equality.

Like much media in China, the Global Times represents the totalitarian government, not the free press. Last week it smeared the Five Eyes intelligence alliance as white supremacist after some members had criticised the Chinese government’s treatment of ethnic minorities.

Denial is the CCP’s first line of defence against criticism. Its second is counter-attack, and the race card is the red state’s rhetorical ace. But when the Chinese government stands accused of genocide and the victims are ethnic minorities, the CCP looks very much like the racist in chief.

The US and Canada have accused the Chinese regime of enacting genocide against Uighurs, a mostly Muslim minority group in Xinjiang, northwestern China.

Last week, the Canadian government passed a motion put by Conservative MPs to recognise the CCP’s actions against Uighurs as a contravention of the UN Genocide Convention. Australia and the other members of the Five Eyes alliance — Britain and New Zealand — have yet to follow suit.

The campaign to stop the CCP’s genocide of Uighurs has been strengthened by witness accounts of atrocities in the Xinjiang camps that were built to “re-educate” the Muslim ethnic minority in politically correct communist thought. It also was assisted by Japanese intelligence about the construction and location of the concentration camps. Japan is seeking closer ties with the multilateral Five Eyes alliance, in part to shore up its defences against China’s increasingly aggressive foreign policy.

Speaking to the BBC, witnesses to the CCP re-education camps have recounted horrific scenes of public humiliation, thought reform, torture and rape.

A former inmate, Tursunay Ziawudun, fled China after her release from a camp where she had spent nine months. Speaking to the BBC from the US, she recounted women being removed from the cells and enduring gang-rape by masked Chinese men.

Like most early accounts of genocide, the testimony cannot be proven while the ruling regime maintains control of the targeted minority.

However, the BBC pointed out that the records she provided corroborated her timeline, her description of the camp matched satellite imagery and her detailed account of camp life bore a strong similarity to statements made by other former detainees. A former camp worker also has recounted horrific details of having to prepare detainees for rape by handcuffing and undressing them, and cleaning rooms afterwards.

A recent defector from China, Cai Xia, explained in the journal Foreign Affairs that under President Xi Jinping the communist regime had become more brutal, in part because it was an administrative state where lowbrow officials wielded too much power. It is reminiscent of Hannah Arendt’s description of the banality of evil that enabled Nazism to develop from a revolutionary politics into a sustained state of genocide.

Cai writes of scholars who privately confess that Xi is illogical and lacks basic judgment. Chinese intellectuals are concerned by the CCP’s political censorship, punishment of dissidents, rejection of scientific truth during the COVID-19 outbreak and mistreatment of ethnic minorities.

Since the end of the Nazi regime, historians have grappled with how to define genocide. In part the question is a legal one, but its intellectual root grows from deep-seated anxiety about how humanity can prevent atrocities by recording the unique sequence of events or patterns that give rise to genocidal sentiment.

China’s totalitarian model of state and closed society empower that sense of ethnic supremacy that is a motive force for genocide.

The Han constitute about 91 per cent of China’s population. China has a one-party political system with an official ideology inspired by state Marxism. It is profoundly intolerant of belief systems, cultures and practices that deviate from the CCP line. It is a closed, nativist state and society.

The CCP condemns Western nations for their treatment of indigenous people but is less forthcoming about China’s own history of colonisation.

Indigenous people constitute about 2 per cent of Taiwan’s population. They have lower college participation rates, lower average annual income and are under-represented in managerial posi­tions. Taiwan’s government has introduced affirmative action measures, but the International World Group for Indigenous Affairs notes that it refuses to recognise several indigenous groups.

Taiwan’s indigenous people issued a public statement in 2019 after Xi threatened to force the unification of Taiwan with China. Quartz reported that indigenous groups asserted their independence, stating: “We do not share the monoculturalism, unification and hegemony promoted by you, Mr Xi.”

They added that they did not belong to the “so-called Chinese nation”. The representatives of Taiwan’s indigenous people rejected Xi’s promotion of ethnic Han culture as superior to other ethnic and religious groups.

But Han supremacy remains a significant problem and a root of the communist regime’s forceful assertion of its right to take Taiwan by force, to occupy Tibet and to “re-educate” Xinjiang’s Muslim population. The CCP stands accused of genocide against its Uighur minority. It has threatened to assimilate Taiwan’s population, including its indigenous people, by force. It has brutally suppressed Tibetans for decades and celebrates Han supremacy. The CCP is not qualified to lecture the free world on race relations.


Chinese labour schemes aimed to cut Uighur population density – report

Accidental publication adds to growing body of evidence of Beijing’s efforts to persecute minority

A picture taken in June 2019 shows the Chinese flag behind razor wire at a housing compound in Yangisar, in China’s Xinjiang region
A picture taken in June 2019 shows the Chinese flag behind razor wire at a housing compound in Yangisar, in China’s Xinjiang region Photograph: Greg Baker/AFP/Getty Images

Last modified on Wed 3 Mar 2021 10.00 GMT

Chinese labour programmes in Xinjiang are designed at least partly to reduce the population density of the Uighur ethnic minority group, according to a study accidentally published online.

The Chinese report, by academics of Nankai University, was taken down in mid-2020, but a copy was archived by the academic Dr Adrian Zenz. It adds to the growing body of evidence of Beijing’s concerted efforts to persecute Uighurs in what human rights experts and some governments have labelled cultural genocide.

The Chinese government denies accusations of forced labour and labour transfers in Xinjiang, saying work programmes are a voluntary element of its poverty alleviation goals. However, the Nankai report said the labour transfers were also a long-term measure that “not only reduces Uighur population density in Xinjiang, but also is an important method to influence, melt, and assimilate Uighur minorities.”

“Let them gradually change their thinking and understanding, and transform their values and outlook on life through a change of environment and through labour work,” the report said.

It recommended the government expand the programmes to eastern and central regions of China to meet labour demands.

The report emphasised that programmes were “voluntary” but also provided contradictory details, such as worker export targets and the need for security guards in the labour sourcing teams.


Who are the Uighurs?


The Uighurs are a predominantly Muslim Turkic-speaking ethnic group, primarily from China’s northwestern region of Xinjiang. They have been subject to religious and ethnic persecution by Chinese authorities, with rights groups claiming that in recent years more than 1 million people have been held in detention camps. 

Having initially denied the existence of the camps, China has described them as “vocational education centres” in the face of mounting evidence in the form of government documents, satellite imagery and testimonies from escaped detainees. Satellite images have also suggested that more than two dozen Islamic religious sites have been partly or completely demolished since 2016.

In July 2019 China claimed that most of the people sent to the mass detention centres have “returned to society”, but this has been disputed by relatives of those detained. Around 1-1.5m Uighur are estimated to live overseas as a diaspora, many of whom have campaigned against the treatment of their families. China repeated these claims in December 2019, but offering no evidence of their release.  

In July 2020, China's UK ambassador denied abuse of Uighurs, despite the emergence of drone footage of hundreds of blindfolded and shackled men.

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It also appeared to suggest the authorities have gone too far in their crackdown, and that the demonisation of Uighurs had resulted in some local and provincial authorities refusing to accept workers from Xinjiang on “security grounds”. This situation was a “serious obstacle” to the country’s goals, it said.

Uighurs who had “participated in riots” were a minority, and all have been admitted to education and training centres – what Chinese authorities call the network of detention camps. “The entire Uighur population should not be assumed to be rioters,” it said. “This is very detrimental to the long term stability of Xinjiang.”

A review of the Nankai report and other supporting materials by Zenz included legal analysis by the former senior adviser to the US Holocaust Memorial Museum, Erin Farrell Rosenberg, who found “credible grounds to conclude” that Xinjiang’s labour transfer programme met the criteria of two crimes against humanity.

“Specifically, there is substantial evidence that the Chinese government is carrying out a widespread and systematic attack against the Uighur civilian population pursuant to a government policy,” said Rosenberg. “Further, there are credible grounds to conclude that, as a part of the attack, the crimes against humanity of forcible transfer and persecution are occurring.”

Zenz and Rosenberg both expressed concern that the Uighur transfer programmes had been looked at primarily through the lens of forced labour “and not in regards to the forced displacement of Uighurs from their homes and community”, wrote Rosenberg.

“While there may be overlap depending on the factual circumstances at issue, the protected interests at stake that have led to the prohibitions on enslavement and forcible transfer are distinct and each merit accountability for the perpetrators and a robust international response in their own right.”

In a statement to the BBC, the Chinese government said the report “reflects only the author’s personal view and much of its contents are not in line with the facts”.

China maintains blanket denials of atrocities committed in Xinjiang, including accusations of the arbitrary detention of an estimated 1 million people, forced sterilisation and assault of women, suppression or destruction of cultural and religious traditions and sites, and intense surveillance. It says the detention camps – which it once denied existed – are vocational training centres used to address religious extremism. In recent weeks officials have also publicly targeted individual Uighur women who have spoken about their experiences.

China said on Tuesday it was discussing a visit to its Xinjiang region by the United Nations human rights chief, Michelle Bachelet, but that she should not set out with the aim of condemning its policies.

Bachelet said on Friday that reports about arbitrary detention, ill-treatment, sexual violence and forced labour in Xinjiang necessitated a thorough and independent assessment of the situation.

“The door to Xinjiang is always open, and we welcome the high commissioner to visit Xinjiang. Communication is kept up between the two sides, but the aim of the visit is to provide exchanges and cooperation rather than … so-called investigation based on ‘guilty before proven’,” China’s delegate, Jiang Duan, told the UN human rights council.


US and Asia allies plan Covid vaccine strategy to counter China

Joe Biden has identified China as the US foreign policy priority and sees the Quad as central to his efforts to challenge Beijing’s influence in Asia © Bloomberg

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The US is working with Japan, India and Australia to develop a plan to distribute Covid-19 vaccines to countries in Asia as part of a broader strategy to counter China’s influence.

The White House has held discussions with other members of the Quad, a diplomatic and security initiative between the countries, in recent weeks, according to six people familiar with the talks.

The plan to use vaccine distribution to counter Chinese efforts is among a range of measures the countries hope to announce soon, according to two people familiar with the situation.

President Joe Biden has stressed that he would work more closely with allies and his efforts have been met by rising regional concerns over China’s military and economic aggression.

“The Biden administration is making the Quad the core dynamic of its Asia policy,” said a person familiar with the strategy.

Kurt Campbell, the White House Indo-Pacific policy co-ordinator who is spearheading the effort, has held several meetings with ambassadors from the group, which was initially launched in 2004 to respond to the tsunami that devastated Indonesia and parts of south-east Asia.

One person familiar with the discussions said the strategy being developed was more ambitious than vaccines and would have a lasting impact. “The US is in the final stages of preparation for what it hopes to be a major, bold-stroke initiative in the Indo-Pacific,” the person said.

There was “deep recognition” about the need to respond to pan-national problems, the person added, including the pandemic and climate change, as well as regional security issues. The Quad was also discussing how it could boost maritime co-operation and do more in areas such as cyber security.

China has distributed its homegrown vaccines to a number of countries in the region, including the Philippines © Rolex Dela Pena/EPA-EFE/Shutterstock

China has criticised the grouping, describing it as an Asian “Nato” that would increase tensions in the region.

The Quad nations have couched their plans as focusing on positive initiatives as opposed to a pure counterweight to China. Privately, however, officials said the impetus for more action was based on escalating Chinese aggression.

Tanvi Madan, an India expert at the Brookings Institution think-tank, said the focus on vaccines would ease concerns among other Asian countries that the Quad was only about containing China.

“If they can show the value to the region, as they did after the tsunami, it is a visible way of conveying that this is not just about the four countries and is a value add for the region,” she said.

Donald Trump, the former US president, revived the Quad after it had lapsed partly for political reasons in Australia, Japan and India. Biden wants to significantly boost the initiative, exploiting greater goodwill towards the US from allies in the region.

“The US is making a major push to build on previous efforts in the Quad and to raise it to a level where it will play a defining role in the region,” the person familiar with the negotiations said.

Biden has made clear that China is the top US foreign policy issue. In a recent speech, he assailed Beijing for its “economic abuses and coercion” and his administration has criticised China’s military hostility.

China has grown more assertive around the Senkaku Islands in the East China Sea that are administered by Japan but claimed by Beijing, which calls them the Diaoyu. It has also engaged in economic coercion of Australia after Canberra called for an investigation into the origins of the coronavirus.

Relations between India and China plummeted last year after a border clash in which 21 Indian soldiers and at least 4 Chinese soldiers died. India has since sought to reduce its economic dependence on China.

The White House did not comment on the plan. A senior Indian official confirmed talks were under way about an initiative that was expected to see wealthier states pay for vaccines made in the country to be dispatched abroad.

India has a big export-oriented pharmaceutical industry and several local companies have partnered with overseas organisations to produce vaccines. The country has exported about 41m vaccine doses to emerging markets as well as to the UN and the Covax programme, a World Health Organization-backed initiative to supply jabs to low- and middle-income countries.

 Friends will recall how recently we followed Professor Michael Pettis in warning that China’s growing inflow of Western finance will expose it inevitably to the collapse of its own credit pyramid. In this article,  Stephen Bartholomew has cleverly detected how the Butchers of Beijing are now softening up their own people to the impending blaming the actions of Western monetary authorities !  Hahaha....

‘There will be problems’: China fears the blowback from global financial bubbles

Global markets are awash with liquidity, with the risk of financial “bubbles” rising as central banks continue to pour monetary stimulus into their economies in response to the COVID-19 pandemic. That has China’s authorities worried.

In unusual, and unusually blunt, comments on Tuesday, the head of China’s Banking and Insurance Regulatory Commission, Guo Shuqing, said China was very worried that foreign asset bubbles would burst soon and identified the US markets as representing the greatest risk to the global economy.

Sombre warnings from Guo Shuqing, the chairman of the China Securities Regulatory Commission.

Sombre warnings from Guo Shuqing, the chairman of the China Securities Regulatory Commission.CREDIT:BLOOMBERG

The massive injections of liquidity into the US and European financial markets from their stimulus measures in response to the pandemic had pushed asset valuations above levels justified by economic fundamentals, risking a “serious run in the opposite direction,” Guo said.

“If financial markets diverge too much from the real economy, there will be problems,” he said.

While it might appear unusual, even odd, that a senior Chinese regulator would be commenting on the monetary policies and markets in the US and Europe, there’s an explanation that lies closer to his home.

China is clearly concerned that, having opened some of its markets to foreign capital, the ultra-loose conditions elsewhere – which will be exacerbated if the Biden administration is able to add its latest $US1.9 trillion ($2.4 trillion) stimulus package to the $US4 trillion US pandemic response last year -- will lead to destabilising inflows of speculative capital into its own system.

China was trying to deleverage and shrink some of the vulnerabilities in its own financial system when the pandemic struck, forcing it into its own very large stimulus program. As it brought the pandemic under control, it began removing liquidity and tightening access to credit.

De-risking the economy

It has put a ceiling on bank lending for property, cracked down on shadow banking and, controversially, embarked on a brutal assault on the unregulated but fast-growing peer-to-peer lending sector, with billionaire Jack Ma’s planned $US35 billion initial public offering of the Ant Group an early and very high-profile casualty. The float, which would have been the biggest IPO in history, was aborted only days ahead of its planned listing.

The reasons for China’s pre-pandemic efforts to de-risk its financial system were obvious. Its response to the global financial system crisis in 2008 was arguably the largest of any major economy’s, and left a legacy of dangerously high corporate debt levels at about 150 per cent of GDP and massive levels of unproductive investment.

The authorities were trying to address that leverage, and the inefficiency with which China’s corporate sector has deployed its capital, particularly within the state-owned sector, when the pandemic hit and they had to reverse course.

They are also trying to deflate what appears to be another property bubble within its own economy, a bubble inflated by last year’s stimulus and China’s strong and early economic recovery from the pandemic. It was the only major economy to post positive growth last year.

“If financial markets diverge too much from the real economy, there will be problems.”

Guo Shuqing

The subsequent tightening of conditions resulted in a slew of Chinese company defaults last year on bonds they had issued in both the domestic and offshore markets. About 40 Chinese entities, including state-owned enterprises, defaulted on about $US30 billion of bonds they had issued, including defaults on bonds issued offshore.

There have been more than $US8 billion of new defaults already this year, about a third of them on bonds issued offshore - including disturbing missed payments by a big property developer, China Fortune, whose biggest shareholder is China’s largest insurance company, Ping An. China Fortune has $US4.6 billion of dollar-denominated debt.

No bail-outs

The absence of bail-outs for state-owned enterprises signals the greater willingness of China’s authorities to allow even state-backed companies to fail or be forced into restructuring. It is a sign of their commitment to financial and economic reforms – and an indicator of the severity of the perceived challenges within their corporate sector.

Guo’s concern about liquidity and bubbles elsewhere probably relates to what has been happening to that excess liquidity churning through global markets.

In their efforts to deleverage and reform their corporate sector and improve the quality of lending by banks and shadow banks – and under pressure from the Americans and Europeans – China’s authorities have been carefully opening up segments of their financial system to foreign capital and firms.

Higher interest rates in China, particularly for bonds issued by riskier issuers, are seeing big inflows of foreign capital. China’s more lowly-rated bonds trade at a massive premium – as much as five percentage points -- to the “high-yield” or “junk” bonds in the US.

Not surprisingly, in a world where investors have been prepared to take ever-increasing risks to chase yields, the returns on offer in China – the yield differentials -- are attracting capital and exposing China to the risks in other financial systems.

Given that it’s in the midst of a difficult and delicate attempt to deleverage its own system and reform its industrial base and financial sector while still trying to maintain a reasonable level of economic growth, China is exposed and vulnerable to external shocks.

While Guo’s comments were unusual, they aren’t particularly controversial. It’s inevitable that the gushers of liquidity unleashed by central banks will produce unintended consequences and stretch financial asset valuations to levels that could result in messy, disruptive and probably destructive outcomes somewhere down the track.

For the moment the sole focus of the central banks and their governments in developed economies is on their real economies and their recovery from the economic fallout from the pandemic, with the risks of asset price bubbles and/or adverse impacts on others’ economies and financial systems acknowledged but regarded as second-order issues.

China, clearly, isn’t as sanguine about pumping all that liquidity into the global financial system without sufficient regard for the consequences.