CRG Weekly: UK-Australia cooperation, Uyghur motion, China tech
News from the China Research Group
The CPTPP, UK and China. Andrew Bowie MP chaired an absorbing, fast-paced discussion with trade experts David Henig and Wendy Cutler, covering the UK and China’s applications to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. They unpacked the benefits to the UK of acceding, whether China can live up to the CPTPP’s rules and regulations, Taiwan’s bid to join and much more. If you missed the event, you can watch it back on our YouTube channel.
MI5's intervention on China marks a watershed moment. By publicly acknowledging Chinese Communist Party interference in the UK, we've made an essential step towards a better long-term strategy, writes CRG Director of Research Julia Pamilih in The Telegraph.
China’s tech landscape: where Beijing’s priorities lie
2021 was a tumultuous year for China’s tech industry. Casualties of Beijing’s crackdown included internet conglomerates Tencent and Alibaba, food delivery app Meituan, ride-hailing app Didi, as well as companies in online gaming, private tutoring and cryptocurrency.
In his must-read end of year letter, tech analyst Dan Wang explained that while Beijing has reined in tech companies that were creating financial risk or didn’t comply with Xi Jinping’s ‘common prosperity’ agenda, China’s leadership continues to pile resources into science-based industries like semiconductors and renewables. Offering tax breaks, subsidies, and other forms of political support, the Chinese Communist Party recognises the urgent need to get ahead in key strategic manufacturing industries. This prioritisation of ‘dynamism’ in strategic sectors will remain a feature of Chinese tech policy in 2022.
The consumer internet giants that have embodied China’s meteoric commercial rise face uncertain futures. Beijing has determined that these platforms cause social problems and can even lead to national security headaches. The crackdown on online tutoring came as a result of fears of widening social inequality. The Cyberspace Administration of China pulled the plug on Didi’s New York IPO over an alleged violation of data privacy laws that had the potential to endanger China’s national security.
2022 has kicked off in the much the same vein. This week the National Development and Reform Commission (NDRC) published a policy document calling for the revision of legislation relating to monopolies and data security in data-driven online platforms.
The Financial Times reported that Didi was struggling to re-launch its public listing in Hong Kong. Alibaba CEO Daniel Zhang quit the board of social media platform Weibo amid government scrutiny of its management of online discussions. In a leaked speech, Tencent founder Pony Ma - already known for keeping a low profile - warned that the company is replaceable should it “cross any lines” and will endeavour to pursue a quieter investment strategy.
Beijing may inadvertently extinguish economic dynamism writ large should it continue to periodically crackdown on tech - but this doesn’t seem to have emerged as a trend yet. Despite a plethora of new rules for tech companies to contend with, they are still the places that Chinese college graduates want to launch careers at. Additionally, it was recently revealed that venture capital investments - which lend themselves to consumer internet business models - reached an all-time high in China in 2021. And, as Protocol’s Shen Lu says, China’s entrepreneurs are resilient and (still) innovative.
The CCP is steadfast in its belief that a state-driven approach towards tech will enable China to achieve self-sufficiency in strategic sectors while promoting more evenly distributed growth. It’s prepared to ruffle a few more feathers along the way.
Chris Cash
In brief
Business Secretary Kwasi Kwarteng ordered a 'deep dive review' into whether Chinese ‘agent’ Chrstine Lee tried to secure information about Britain's civil nuclear programme. On Monday, Home Secretary Priti Patel said the threat of interference in UK politics from hostile powers is ‘growing and diversifying’.
UK Foreign Secretary Liz Truss called on allies to “face down global aggressors” during a trip to Australia. At the annual Australia-United Kingdom Ministerial Consultation, the two nations signed deals to fund infrastructure in the Indo-Pacific region and agreed a cyber and critical technology partnership.
A Backbench Business Committee debate on the Uyghur Tribunal judgement that China is committing genocide took place on Thursday, with the House unamimously passing a motion calling on the Government to assess the “serious risk of genocide” in Xinjiang within two months and to place sanctions on perpetrators.
Speaking via video link at the World Economic Forum’s annual meeting, Xi Jinping defended Beijing’s crackdowns in its ‘common prosperity’ drive. He insisted that China remained committed to being open to foreign business and warned the US and Europe against a rapid rise in interest rates.
MEPs told EU chiefs to take action against China’s economic coercion against Lithuania, warning that inaction will allow Beijing to intensify ‘divide and rule’ practices and weaken European unity. Chinese customs data revealed that there was a 91.4% drop in shipments from Lithuania in December, amid a row over the Baltic state opening a Taiwanese Representative Office.
The European Commission published a toolkit to help mitigate foreign interference in research and innovation.
US President Joe Biden said he was 'not there yet' on the possible easing of tariffs on Chinese goods as China fell short of its two-year Phase 1 trade agreement target.
It was revealed that China-Africa trade in 2021 amounted to $254 billion, breaking an all-time record. Whereas the majority of China’s imports arrived a small group of mostly-resource wealthy nations, there are signs that China is broadening its import base across the continent.
China’s GDP expanded 4% year on year, exceeding economists’ forecasts but falling short of the 6.5% growth over the same period in 2020. People's Bank of China said it was lowering the interest rate on 700bn yuan worth of one-year medium-term lending facility loans to 2.85%, the first such cut since April 2020, to boost the economy.
A new report by human rights group Safeguard Defenders found that Chinese authorities captured more than 2,500 fugitives and brought them back to China during the pandemic, using methods ranging from family intimidation to “state-sanctioned kidnapping”.
Beijing city officials urged end to overseas deliveries after saying a local woman may have been infected by Omicron after opening a parcel. Twice as many Chinese are set to head home for Lunar New Year next week despite government calls to ‘stay put’.
International bondholders in heavily indebted property group Evergrande have hired an offshore lawyer and warned of legal action if the company continues to refuse “substantive engagement” over its finances and restructuring plans.
China’s 2021 population growth rate fell to its lowest level in six decades, despite major government efforts to increase population growth and stave off a demographic crisis.
Weekend reads
Joining the Trans-Pacific free trade pact is an economic and geopolitical no-brainer. In a new report with the Centre for Policy Studies, Anthony Mangnall MP argues that becoming part of the CPTPP would boost the UK economy and reduce dependence on China. The Telegraph
Addressing debt distress in Africa. Despite promising signs of a continuing global economic recovery in 2022, the African debt situation remains worrying. Chatham House
Kingdom of Characters - when China got lost in transliteration. Jing Tsu’s fascinating history reveals how traditional Chinese script was a hindrance to progress in an age of globalisation. James Kynge. FT, 20 January
Podcasts
Dan Wang on China in 2021: “Common prosperity,” cultural stunting, and shortcomings of the “modal China story”. Sinica
Growing security concerns in East Asia. SOAS China Institute
How China’s economic and security interests converge in Africa. The China Africa in Podcast