CRG Weekly: Cyber strategy, UK-Australia trade deal and a Lithuanian evacuation
This is the final weekly newsletter before we break for the festive period.
It has been a busy 2021: thank you for your support and please do visit our website to catch up on policy briefs and events from throughout the year.
We have been busy over the past couple of months, lining up some exciting announcements for next year. Until then - 圣诞快乐 and see you in 2022.
News from the China Research Group
New analysis: We have published our final piece of 2021: an Analysis by Charles Dunst on the UK’s South East Asian opportunity. Listen to the breakdown on our new podcast channel, where Charles is interviewed by Julia Pamilih.
More podcast: We will be publishing a bonus podcast episode next week: Tom Tugendhat interviews Jude Blanchette on a dramatic year of Chinese politics. Subscribe to Talks on China to be notified when it is released.
New event: Register for a virtual January panel discussion on the CPTPP - and what changes if the UK and China join - chaired by Andrew Bowie MP with Wendy Cutler and David Henig.
A new cyber blueprint and the China cyber challenge
This week, the Cabinet Office unveiled the UK’s new five-year National Cyber Strategy. The National Cyber Security Centre (NCSC) said that the strategy is aimed at ensuring that the UK remains “confident, capable and resilient” in the fast-moving digital era and becomes even more resilient to cyber attacks.
The document name-checked both China and Russia in a particular warning that powerful autocratic states want to engage in irresponsible cyber activity and influence internet and technology standards.
Under David Cameron’s government, the UK signed a cybersecurity pact with China in 2015. Xi Jinping - embarking on a (now iconic) state visit at the time - made a commitment to the UK not to conduct or support cyber-enabled theft of intellectual property of trade secrets, following in the footsteps of a similar pact between the US and China.
Things haven’t exactly turned out as envisioned. Cyber attacks from China have grown increasingly aggressive since control of cyber operations was transferred from the People’s Liberation Army (PLA) to the Ministry of State Security (MSS). With a preference for using proxies such as front companies and contractors to carry out its bidding, the MSS is believed to have been behind a number of mass hacking campaigns, including the June 2021 compromising of computer networks across the world via Microsoft Exchange servers.
The cyber challenges emanating from China have now prompted a robust response from British ministers, cyber experts and spy chiefs.
During a recent speech in which he designated China as the “single greatest focus for intelligence service”, MI6 chief Richard Moore accused China of conducting large-scale espionage operations against the UK and said the spy agency had to recruit technology firms to help it stay ahead of hostile states in strategic areas such as artificial intelligence and quantum computing.
Last weekend, the director of GCHQ, Sir Jeremy Fleming, warned of the risks associated with the rolling out of China’s digital renminbi. “If wrongly implemented, it gives a hostile state the ability to exercise control over what is conducted on digital currencies,” he said. Digital payments represent just one of the key strategic areas in which Beijing is starting to exercise real influence on the way in which the rules of the road are going to operate in a technology and digital context.
The clash of values between countries that want to preserve a system based on open societies and systemic competitors like China and Russia who are promoting greater state control as the only way to secure cyberspace is likely to be a critical feature of geopolitical competition as we move into 2022 and beyond.
In brief
Leaders discussed a range of China-related challenges, such as the situations in Hong Kong and Xinjiang, the East and South China Seas, Taiwan, and Beijing’s coercive economic policies at the G7 Foreign and Development Ministers Meeting in Liverpool last weekend. The Chinese embassy in Britain urged the G7 to “desist from deliberate tarnishing of China's image and hurting its interests.”
UK and Australia signed a ‘world-class’ historic trade deal that will see tariffs removed on almost all goods and boost the UK’s bid to join the CPTPP Indo Pacific trading bloc.
Lithuania pulled its remaining diplomats out of China over concerns for their safety after the Chinese government had demanded Lithuanian officials in Beijing hand in their IDs to have their diplomatic status lowered.
The UK government published its latest six-monthly report on Hong Kong, in which it concluded that the National Security Law is “doing clear damage to the way of life of the people of Hong Kong” and reaffirmed the UK’s commitment to working with international partners to hold China to its legally binding obligations.
Jimmy Lai, the Hong Kong media tycoon and one of the city’s most high-profile critics of Beijing, was sentenced to 13 months in prison for inciting others to take part in a banned assembly last year to commemorate the Tiananmen Square massacre. Seven other activists involved in organising the vigil also received prison terms
UK International Trade Secretary outlined a plan to position the UK at the heart of growth opportunities in the Indo-Pacific as US Secretary of State Antony Blinken upheld Washington’s commitment to a region “free from coercion and accessible to all” in a speech in Jakarta.
Russia and China should stand firm in rejecting Western interference and defending each other's security interests, presidents Vladimir Putin and Xi Jinping agreed in a video call on Wednesday.
A review by the Washington Post of more than 100 confidential Huawei presentations revealed that the company pitched how its technologies can help governments identify individuals by voice, monitor political individuals of interest, and manage ideological re-education.
The US Congress passed the Uyghur Forced Labor Prevention Act, which will require companies to prove that goods imported from China's Xinjiang region were not produced with forced labour.
SenseTime postponed its US$768 million IPO in Hong Kong after it was blacklisted by the US over its alleged human rights abuses in Xinjiang. The US added eight more companies to its “Chinese military-industrial complex companies” blacklist this week and put China’s Academy of Military Medical Sciences and 11 affiliated biotechnology research institutes on an export blacklist for allegedly helping the Chinese military to develop “brain-control” weapons.
A Hong Kong study showed that China’s Sinovac offers inadequate protection against Omicron, presenting a challenge for the Chinese authorities to re-engage their population’s commitment to another round of vaccines.
Seeking influence, the Chinese government has been expanding its practice of taking minority stakes in private companies possessing large amounts of key data, those with knowledge of the matter told Reuters.
Beijing issued local government borrowing quotas early to speed up infrastructure spending, although several jurisdictions said their quotas for new special purpose bonds (SPBs) were smaller than expected.
Nicaragua received one million Covid vaccines from China, days after it cut diplomatic ties with Taiwan in favour of Beijing.
Weekend reads
Beyond Global Britain: A realistic foreign policy for the UK. This policy brief sets out a comprehensive European vision for Global Britain on the world stage. Jeremy Shapiro and Nick Witney. European Council on Foreign Relations, Beijing to Britain
Borrowing mouths to speak on Xinjiang. How the CCP uses foreign social media influencers to shape and push messages about Xinjiang and that are aligned with its own preferred narratives. ASPI
China’s big new idea. Why Xi Jinping won’t stop talking about “common prosperity”. Michael Schuman. The Atlantic
Podcasts
The power of Weibo. Cindy Yu chats with Manya Koetse, the founder of whatsonweibo.com, as well as Shen Lu, a reporter for Protocol who covers China and tech, about the role of the digital space in Chinese lives. Chinese Whispers
With China on the sidelines, what’s next for African infrastructure financing? Johnson Kilangi is optimistic that new financing models will help to fill the gap being left by China. China in Africa Podcast
Is there a transatlantic approach to China and the Indo Pacific? Asia Matters Podcast