CRG Weekly: UK crackdown on forced labour, final Trump moves and Chinese vaccine rollout
Four new events to kickstart 2021, the week in review and weekend reads.
News from the China Research Group
Our regular free events series restarts next week. Full event details can be found on our website.
Thursday 21 January at 6:30pm | The Next Four Years: US-China relations under Biden. Join us for expert insight into Biden’s China policy from Gideon Rachman (Chief Foreign Affairs Commentator at the FT), Evan S. Medeiros (Former lead advisor on Asia-Pacific to President Obama) and Jude Blanchette (Freeman Chair in China Studies at CSIS). Register here.
Tuesday 26 January at 10am | CCP influence and interference in the UK with Charles Parton, Mareike Ohlberg and Juliet Samuel. Register.
Tuesday 2 February at 10am | In conversation with Sherard Cowper-Coles (Chair of China-Britain Business Council). Register.
Tuesday 16 February at 10am | What does China really think of Britain? With Professor Rana Mitter. Register.
The week in review
On Tuesday, Dominic Raab set out long-awaited new policies to combat the use of forced labour in supply chains. Largely aimed at the use of Uyghur forced labour, these included fines for non-compliance with obligations under the Modern Slavery Act and robust guidance on Xinjiang-related sourcing and due diligence issues. In a hard-hitting statement, Raab told the Commons the picture of human rights abuses in Xinjiang was “harrowing” and the UK had a “moral duty to respond”.
Although welcomed, Raab’s policies seem unlikely to quell vocal parliamentary protest on the issue. A Commons vote on an amendment that seeks to give UK courts the right to make a preliminary determination on genocide (with China top of mind) is set to take place next Tuesday. The amendment is opposed by the government but backed by a cross-party alliance of MPs, including Labour frontbenchers.
In the US, the Congressional-Executive Committee on China said that it had concluded that “crimes against humanity - and possibly genocide - are occurring” in Xinjiang. The Trump administration also announced a ban on imports of Xinjiang-produced cotton, food and seeds, regardless of whether they travel into the US directly from China or through another country.
New evidence emerged that a Huawei patent for AI facial recognition software was designed to detect Uyghurs. The source report also names two other large Chinese tech companies with patents that specifically refer to recognition of Uyghurs, while Alibaba and Baidu patents refer to classification by ethnicity. In a society where facial recognition is widespread, new data privacy laws in China are under review.
In China, WHO's COVID-19 investigative team was granted access after a long standoff. The US State Department released a factsheet of allegations on activity at the Wuhan Institute of Virology, calling for full transparency in the Covid-19 investigation. Fighting the pandemic has played a core role in Chinese foreign minister Wang Yi’s tour this week to Southeast Asia. Indonesia became the first foreign country to approve the Sinovac vaccine, while President Joko Widodo and Erdogan became the first two world leaders to receive the Sinovac jab. But the WSJ reported that Sinovac's vaccine achieved only 50.4% efficacy in state trials in Brazil, much lower than the purported 91% efficacy reported for the same vaccine in Turkey.
In Hong Kong, the justice department hired British QC David Perry to prosecute a protest case against Jimmy Lai and eight others pro-democracy activists. Senior lawyers and MPs expressed surprise and concern. There is also concern that China’s Great Firewall system of internet censorship may be coming to Hong Kong. For the first time, a domestic internet provider blocked a website in response to a request issued under the national security law.
In Europe, speculation continues on the details of the EU-China Comprehensive Agreement on Investment. Politico reported that the EU has taken a softer line on Beijing's subsidies than the line it took in the UK’s Brexit deal. China, buoyed by the CAI, is said to be seeking to revive plans for a ‘17+1’ summit with central and eastern European nations in early February. The 17 + 1 grouping was established in 2012 as a way to accelerate Chinese-backed economic development in the CEE region. But all 17 countries involved have seen their trade deficit with China increase since 2012. At our View from Europe discussion last year, Czech senator Pavel Fischer proposed abandoning the format, given it “serves more Beijing and Chinese interests than it serves the West.”
As Donald Trump’s presidency draws a tumultuous close, his administration has unleashed a final wave of policies targeted at China. Perhaps most interesting was the declassification of the US Strategic Framework for the Indo-Pacific, 21 years ahead of schedule. The strategy indicated an emphasis on deepening diplomatic, military and financial ties to “accelerate India’s rise” as a regional counterweight to China. The US also lifted restrictions on official diplomatic contact with Taiwan.
The Pentagon’s investment blacklist was expanded to include Xiaomi and CNOOC. Xiaomi had been one of the big beneficiaries of the Huawei crackdown, even overtaking Apple to become the world’s third largest smartphone maker. Separately, the US commerce department was also given the power to block or curb technology imports including infrastructure, telecommunications, AI and quantum computing. Not of all the Trump administration's moves were successful: Steve Mnuchin is believed to have thwarted Mike Pompeo and Chris Miller’s attempts to blacklist Alibaba, Tencent and Baidu.
One notable addition to last week's slate of policy decisions was deal signed between the US International Development Finance Corporation and the government of Ecuador. It will see the DFC assist Ecuador’s repayment of billions in loans to China and boost development projects - in return for China's exclusion from telecommunications networks. It may be a sign of things to come; DFC chief Adam Boehler said the Biden team viewed the new structure as an “interesting, innovative approach”.
In brief
28 million citizens in China were placed under home quarantine in response to 138 new cases in one day - the country's highest since July 2020.
China's trade surplus hit all-time monthly highs in December at $78bn; exports grew 18.1% year-on-year in dollar terms.
Lenovo announced plans to list on the Shanghai tech-focused Star Market, fulfilling long-held goals for more domestic stock listings.
Beijing rebuked UK Prime Minister Boris Johnson after he attacked the “demented” belief in the use of pangolin scales to aid virility.
Xi Jinping wrote to Starbucks CEO Howard Schultz, proposing that “China... will provide a broader space for companies from all over the world, including Starbucks and other American companies, to develop in China.”
Chinese social media debate over working practices continued after an Alibaba worker set himself on fire over unpaid wages.
Biden confirmed two more appointments: Kurt Campbell as 'Indo-Pacific coordinator' and Laura Rosenberger as White House China director.
Weekend reads
Jack Ma vs Xi Jinping: the future of private business in China. A long read weighing up where the road will take commerce under Xi. FT.
Why Trump's attempt to delist China from US will backfire. Harvard Law School professor argues that only China wins from investment blacklisting. FT.
A Hong Kong dissident’s daring escape. Great Escape-style story of two Danes and fake climate conference. WSJ.
Chaguan: Many in China are strikingly accepting of harsh virus controls. The Economist.
Decoupling - severed ties and patchwork globalisation. A joint European Chamber of Commerce and MERICS paper argues that the effects of the technology war have been greater than those the trade war. MERICS.