How China Systematically Pries Technology From U.S. Companies

Beijing leans on an array of levers to extract intellectual property coercively

By Lingling Wei in Beijing and Bob Davis in Washington

When China set out to build the C919 jet, it made clear it would buy components only from joint ventures whose foreign partners would share technology. 

DuPont Co. suspected its onetime partner in China was getting hold of its prized chemical technology, and spent more than a year fighting in arbitration trying to make it stop.
Then, 20 investigators from China’s antitrust authority showed up.
For four days this past December, they fanned out through DuPont’s Shanghai offices, demanding passwords to the company’s world-wide research network, say people briefed on the raid. Investigators printed documents, seized computers and intimidated employees, accompanying some to the bathroom.
Beijing leans on an array of levers to pry technology from American companies—sometimes coercively so, say businesses and the U.S. government.
Interviews with dozens of corporate and government officials on both sides of the Pacific, and a review of regulatory and other documents, reveal how systemic and methodical Beijing’s extraction of technology has become—and how unfair Chinese officials consider the complaints.
China’s tactics, these interviews and documents show, include pressuring U.S. partners in joint ventures to relinquish technology, using local courts to invalidate American firms’ patents and licensing arrangements, dispatching antitrust and other investigators, and filling regulatory panels with experts who may pass trade secrets to Chinese competitors.
In DuPont’s case, the dispute concerned a process to produce supple textile fibers from corn, a $400 million business for the company in 2017. 

The antitrust investigators, say the people briefed on the raid, told DuPont to drop the case against its former Chinese partner.
U.S. companies have long complained that Beijing pressures them to hand over intellectual property. More recently, their concerns have escalated as China turns into an advanced rival in industries ranging from chemicals to computer chips to electric vehicles.
Coerced technology transfer is now a central part of the spiraling U.S.-China trade fight, a standoff that appears to be only more entrenched. 

The White House estimates China inflicts $50 billion yearly in damages on U.S. companies. 

That transfer weakens American businesses’ competitiveness and undermines the incentive to innovate.

Coerced technology transfer is part of the spiraling U.S.-China trade war.

Chinese authorities referred questions to a paper issued on Monday by the State Council, China’s cabinet, that says: “Foreign companies are allowed to access China’s markets but they would need to contribute something in return: their technology.”

U.S. companies have gone into China with eyes wide open, for the most part, and many are wary of going public with complaints. 

American companies initially brought the idea of joint ventures to China as a way to get access to a market of 1.4 billion people and tap a low-cost workforce. 

The bargain included helping Chinese firms become more technologically advanced.
At a January U.S. Chamber of Commerce dinner in Washington, executives pressed U.S. Ambassador to China Terry Branstad not to hit Beijing too hard on technology issues, according to dinner attendees. 

China has many ways to get even, warned Christopher Padilla, a vice president of International Business Machines Corp., which licenses technology to Chinese firms.
“If someone gets knifed in a dark alley, you don’t know who did it until the next morning,” Mr. Padilla said at the dinner. 

“But there has been a murder.”
DuPont briefed U.S. officials on its problems but didn’t want its case raised in trade talks, say some of the people familiar with the case. 

Its former Chinese partner, Zhangjiagang Glory Chemical Industry Co., continues to sell chemicals used to make fibers that DuPont believes are knockoffs of its technology. 

DuPont and Glory declined to make executives available for comment.
China’s antitrust regulator said “the investigation is still ongoing,” declining to elaborate.

‘Notable pressure’
About one in five members of the American Chamber of Commerce in Shanghai say they have been pressured to transfer technology, according to a survey conducted in the spring. 

Of those companies, 44% in aerospace and 41% in chemicals report “notable pressure.” 

China considers both industries strategically important.
Trading market access for technology dates to Chinese leader Deng Xiaoping’s effort to launch the pro-market policies that propelled China’s rise. 

General Motors Co. executives on an exploratory 1978 visit proposed a joint venture with a local company to boost a then-antiquated Chinese industry, say Chinese government advisers, historians and auto-industry executives.
The idea fit with Deng’s desire to obtain Western technology but limit Western influence. 

China “needs to give up portions of the domestic market in exchange for advanced technologies we need,” he pronounced in 1984. 

The policy was a success, according to a March 2018 paper by economists at the universities of Colorado, Hong Kong and Nottingham, who found that foreign technology “diffuses beyond the confines of the joint venture” and boosts competitors’ technology.
Foreigners bring cash, technology, management know-how and other intellectual property while the Chinese partner usually contributes some land-use rights, financing, political connections and market know-how. 

As the practice increased, one U.S. administration after another, with only modest success, pressed Beijing to ease requirements that U.S. companies fork over technology. 

The Trump administration says it wants to “change the paradigm” by hitting Beijing with tariffs.
China mandates that foreign companies wanting to open or expand in 35 sectors do it through joint ventures, though it announced a plan in April to phase out rules requiring foreign auto makers to share factory ownership and profits with Chinese companies by 2022.
The arrangement has worked for some. 

When China set out to build its first large commercial passenger jet in 2008, state-owned Commercial Aircraft Corp. of China made clear it would buy components only from joint ventures whose foreign partners would share technology. 

General Electric Co. agreed.
GE’s venture with state-owned Aviation Industry Corp. of China now is a main supplier of avionics for the domestic C919 aircraft. 

The joint venture helped GE avoid writing down a struggling avionics unit, according to former and current GE employees.
GE says “there was never a write down at our avionics business, nor was there risk of one.” 

It says, referring to intellectual property, that GE is “highly sensitive to the protection of our IP whether in our wholly-owned operations or in our” joint ventures.
Advanced Micro Devices Inc., a Silicon Valley chip company, entered a joint venture in 2016 with Chinese private and state-owned entities, including the government’s Chinese Academy of Sciences. AMD licenses microprocessor technology to the venture and is developing new computer chips with it.
AMD has received about $140 million in licensing through 2017, enough to help boost it into the black last year for the first time since 2011. 

“We created a joint venture that was very much a win-win,” AMD Chief Executive Lisa Su said at a 2016 conference. 

An AMD spokesman says the joint venture is “part of our strategy to create a complementary product offering.”
Chinese leaders see innovative technologies as forces to propel its industries up the value chain into more sophisticated sectors and the country into rich-nation ranks. 

To ensure foreigners bring their best, phalanxes of regulatory panels scrutinize foreign investments to make sure they meet government goals.
Huntsman Corp. has singled out these review panels as a conduit for siphoning trade secrets. 

The Woodlands, Texas, chemicals maker is thriving in China, which accounted for about 14% of its 2017 revenues.
Still, “our competition isn’t going to be standing on the sidelines cheering a song,” CEO Peter Huntsman told analysts in June. 

They could be “trying to either steal the technology or develop the technology themselves.” 

Mr. Huntsman declined to be interviewed.
Regulatory panels, packed with industry experts, must approve many chemicals before they can be produced in China and require detailed information on formulas and production processes, say U.S. trade groups and chemical firms. 

“Enough information to duplicate the product,” is how the American Chemical Council trade group put it in a filing to the U.S. government.
For Huntsman, these panels have drilled down on specialized knowledge, such as how it makes plastics with high transparency and elasticity—the kind of material often used for making sports shoes—people close to Huntsman say. 

Soon after those experts conducted their evaluations, local competitors used the same kind of technology in their own products, they say.
Huntsman is battling over a crown jewel of its business, a black dye used in textiles that is less polluting to make. 

It filed a lawsuit in Shanghai against a Chinese company for infringing a patent on the dye in 2007. Huntsman then found a court-appointed review panel stacked against it, it said in a 2011 complaint it filed with the U.S. Commerce Department.
The three-panel members included an engineer from the company Huntsman was suing, another from a local dye-research group and a third who once worked at a local dye firm, according to the complaint and people with knowledge of the matter. 

The experts’ work “effectively turned them into allies and ‘spokespersons’ ” for the Chinese competitor, the complaint said.
Litigation of the patent-infringement case has dragged on. 

Huntsman has asked the Trump administration to consider blocking Chinese firms if they set up operations in the U.S. using disputed Huntsman technology.
For foreign auto makers, the review panels have become a battleground over electric-vehicle technology. 

New vehicles must get government approval before mass production, undergoing a mandatory technology audit that usually lasts several days, foreign makers say.

An electric-vehicle manufacturing line in China. 

An audit this year convinced an employee at one foreign auto maker there was “clear evidence of collusion” between the audit team and Chinese auto makers. 

When the audit began, the person says, inspectors asked for only the blueprints of the electric-vehicle components the foreign company was striving to protect from its Chinese joint-venture partner.
“Somehow they knew exactly the areas to look at,” the person says. 

“There wasn’t a single question about any of the other very complex systems on the vehicle.”

The DuPont raid
DuPont also shared information with its Chinese partner, Zhangjiagang Glory, when it licensed the Chinese firm in 2006 to produce and distribute Sorona, the textile polymers made from corn. 

Within DuPont, the Glory deal was called a “tolling” partnership—a relationship that serves as a kind of toll to enter the market. 

DuPont trained Glory to set up a factory to produce Sorona polymers and to spin them into fibers.
Around 2013, say the people familiar with the case, DuPont didn’t renew Glory’s license amid suspicions the Chinese firm was ripping off its intellectual property to sell products similar to Sorona, which has grown to a $70 million business in China. 

DuPont filed two arbitration cases in China, alleging patent infringement, with hearings stretching through 2017.
Around that time, officials with the National Development and Reform Commission’s antitrust division in Beijing took an interest in the matter and started holding meetings with DuPont. 

The commission showed little interest in DuPont’s planned merger with Dow Chemical Co., completed late last year, even though it launched an antitrust investigation into the combined entity in December.
Rather, investigators focused on the DuPont-Glory standoff, say the people briefed on the case. During three days of meetings in December, DuPont became worried about a raid on its office. 

It planned an employee-training session on how to deal with one, but the investigators showed up first.
An investigator told DuPont officials they were looking at antitrust behavior, specifically their unwillingness to license technology to Chinese firms and their pursuit of the Glory case, say these people. 

DuPont officials, they say, now fear that even dropping the case won’t be sufficient to satisfy Beijing, which may want a hostage in the trade fight with Washington.
Trump administration officials see cases like this as evidence of China’s economic aggression. 

“The combination of naiveté and hubris on the part of U.S. companies seeking to enter the Chinese market, coupled with a sophisticated Chinese effort to extract technology has been a lethal combination,” says White House trade adviser Peter Navarro.

Micron Technology chips. 

During August trade talks, U.S. negotiators pressed Beijing about coerced technology transfer. 

They cited memory-chip maker Micron Technology Inc., which filed a lawsuit in U.S. District Court in California in December alleging technology theft by Fujian Jinhua Integrated Circuit Co. 

Jinhua sued Micron in January in a court in Fujian province—whose government partly controls Jinhua—and won a temporary order blocking some Micron subsidiaries from selling products in China that each company claims patents to.
Jinhua declined to comment. 

In a July statement, it said Micron has “recklessly” infringed on its patents. 

Micron says it intends “to vigorously protect our intellectual property and business interests through all available means.”

Rogue Nation

Backlash against China jeopardizes its free ride
By BRAHMA CHELLANEY 

On a recent official visit to China, Malaysian Prime Minister Mahathir Mohamad criticized his host country’s use of major infrastructure projects – and difficult-to-repay loans – to assert its influence over smaller countries. 

While Mahathir’s warnings in Beijing against “a new version of colonialism” stood out for their boldness, they reflect a broader pushback against China’s mercantilist trade, investment and lending practices.
Since 2013, under the umbrella of its Belt and Road Initiative, China has been funding and implementing large infrastructure projects in countries around the world, in order to help align their interests with its own, gain a political foothold in strategic locations, and export its industrial surpluses. 

By keeping bidding on BRI projects closed and opaque, China often massively inflates their value, leaving countries struggling to repay their debts.
Once countries become ensnared in China’s debt traps, they can end up being forced into even worse deals to compensate their creditor for lack of repayment. 

Most notably, last December, Sri Lanka was compelled to transfer the Chinese-built strategic port of Hambantota to China on a 99-year, colonial-style lease, because it could longer afford its debt payments.
Sri Lanka’s experience was a wake-up call for other countries with outsize debts to China. 

Fearing that they, too, could lose strategic assets, they are now attempting to scrap, scale back, or renegotiate their deals. 

Mahathir, who previously cleared the way for Chinese investment in Malaysia, ended his trip to Beijing by canceling Chinese projects worth almost US$23 billion.
Countries as diverse as Bangladesh, Hungary and Tanzania have also canceled or scaled back BRI projects. 

Myanmar, hoping to secure needed infrastructure without becoming caught up in a Chinese debt trap, has used the threat of cancellation to negotiate a reduction in the cost of its planned Kyaukpyu port from $7.3 billion to $1.3 billion.
Even China’s closest partners are now wary of the BRI. 

In Pakistan, which has long worked with China to contain India and is the largest recipient of BRI financing, the new military-backed government has sought to review or renegotiate projects in response to a worsening debt crisis. 

In Cambodia, another leading recipient of Chinese loans, fears of in effect becoming a Chinese colony are on the rise.
The backlash against China can be seen elsewhere, too. 

The recent annual Pacific Islands Forum meeting was one of the most contentious in its history. Chinese policies in the region, together with the Chinese delegation leader’s behavior at the event itself, drove the president of Nauru – the world’s smallest republic, with just 11,000 inhabitants – to condemn China’s “arrogant” presence in the South Pacific. 

China cannot, he declared, “dictate things to us.”
When it comes to trade, US President Donald Trump’s escalating trade war with China is grabbing headlines, but President Trump is far from alone in criticizing China. 

With policies ranging from export subsidies and non-tariff barriers to intellectual-property piracy and tilting the domestic market in favor of Chinese companies, China represents, in the words of Harvard University’s Graham Allison, the “most protectionist, mercantilist, and predatory major economy in the world.”
As the largest merchandise exporter in the world, China is many countries’ biggest trading partner. Beijing has leveraged this role by employing trade to punish those that refuse to toe its line, including by imposing import bans on specific products, halting strategic exports (such as rare-earth minerals), cutting off tourism from China, and encouraging domestic consumer boycotts or protests against foreign businesses.
The fact is that China has grown strong and rich by flouting international trade rules. 

But now its chickens are coming home to roost, with a growing number of countries imposing anti-dumping or punitive duties on Chinese goods. 

And as countries worry about China bending them to its will by luring them into debt traps, it is no longer smooth sailing for the BRI.
Beyond Trump’s tariffs, the European Union has filed a complaint with the World Trade Organization about China’s practices of forcing technology transfer as a condition of market access. 

China’s export subsidies and other trade-distorting practices are set to encounter greater international resistance. 

Under WTO rules, countries may impose tariffs on subsidized goods from overseas that harm domestic industries.
Now, Chinese dictator Xi Jinping finds himself not only defending the BRI, his signature foreign-policy initiative, but also confronting domestic criticism, however muted, for flaunting China’s global ambitions and thereby inviting a US-led international backlash. 

Xi has discarded one of former Chinese strongman Deng Xiaoping’s most famous dicta: “Hide your strength, bide your time.” 

Instead, Xi has chosen to pursue an unabashedly aggressive strategy that has many asking whether China is emerging as a new kind of imperialist power.
International trade has afforded China enormous benefits, enabling the country to become the world’s second-largest economy, while lifting hundreds of millions of people out of poverty. 

The country cannot afford to lose those benefits to an international backlash against its unfair trade and investment practices.
China’s reliance on large trade surpluses and foreign-exchange reserves to fund the expansion of its global footprint makes it all the more vulnerable to the current pushback. 

In fact, even if China shifts its strategy and adheres to international rules, its trade surplus and foreign-currency reserves will be affected. 

In short, whichever path it chooses, China’s free ride could be coming to an end.

China’s Muslim Concentration Camps Spark Protests in Islamic World

Backlash grows over mass internment of Uighurs as Pakistani traders press for action

By Jeremy Page and Eva Dou in Beijing and Saeed Shah in Islamabad

When Bacha Khan, a Pakistani trader, returned from a trip abroad to his home in China’s northwest this spring, his Chinese wife and three of his children had disappeared and their house had been demolished.

Police told him his family had been taken into custody, he said, adding to the up to 1 million people, most of them Muslim ethnic Uighurs, that the United Nations estimates have been detained by China in camps in its East Turkestan colony.
Mr. Khan and dozens of other Pakistanis whose Uighur wives are in the camps have lobbied Pakistani authorities for help for months.

Last week, they got a boost when a minister in Pakistan’s new government spoke out for the first time about China’s policies in East Turkestan.
It was a rare indication of official concern about the issue within the Islamic world, and added to a growing backlash among Muslims world-wide that presents a thornier challenge for Beijing than Western government censure.

Pakistani trader Mirza Imran Baig shows a picture of himself with his wife, who is Uighur, outside the Pakistan Embassy in Beijing on Wednesday. He said he had met the ambassador the previous day to seek help in getting her a Chinese passport. 

Muslim groups in India and Bangladesh held protests over the Chinese camps for the first time this month after former inmates began to talk publicly about their treatment, including being bound to chairs for hours on end and forced to renounce Islamic beliefs.
In Kazakhstan, many people were also outraged, and local lawyers and activists say hundreds of people have lobbied their government for help, following the detention of several Kazakh citizens and many more ethnic Kazakh Chinese nationals in the camps.
Hizb ut-Tahrir, an Islamist group that claims a million members in 40 countries, called on Muslims this month to be wary of Chinese investment and to oppose Chinese rule in East Turkestan.
On Saturday, the group accused Pakistan’s government of betraying the Uighurs for the sake of China’s infrastructure program in the country, known as the China-Pakistan Economic Corridor, or CPEC.
“Should the Muslims of Pakistan quietly observe the persecution of Uighur Muslims for the sake of CPEC and China?” it asked.
China began the mass detentions about two years ago as part of a drive to snuff out an occasionally violent Uighur separatist movement that Beijing says has links to foreign jihadists. 

However, rights groups and Uighur activists abroad say unrest in East Turkestan is driven mainly by heavy-handed policing, tight restrictions on religious activities and one of the world’s most intensive electronic surveillance systems.

Policemen patrol on Aug. 31 in China’s East Turkestan colony, where the government has established tight security and pervasive electronic surveillance.

The U.S. has strongly criticized the detention camps and some European countries are reviewing immigration and asylum policies. 

Sweden this month joined Germany in suspending deportations of Uighurs to China.
The backlash in the Islamic world is more troubling for China as it could rally international support for the Uighurs and foment opposition to its “Belt and Road” infrastructure building initiative.
Concerns about the restrictions on Muslims in East Turkestan were raised by Pakistan’s religious affairs minister, Noorul Haq Qadri, in a meeting with China’s ambassador to Islamabad on Sept. 19, according to a person familiar with the matter.
After Pakistani media reported Mr. Qadri’s message, the Chinese Embassy issued a statement to assert that the reports were incorrect, and that the two men had reached consensus on promoting religious harmony. 

A Wall Street Journal investigation reveals what goes on inside China's growing network of internment camps, where hundreds of thousands of ethnic Uighurs are detained.

Chinese officials say the camps are "vocational training centers" for minor criminals and deny that a million people have been detained, without providing their own estimate of the numbers.
Governments in the Islamic world have been reluctant to criticize China, fearing they could lose out on “Belt and Road” funding.

Those governments have also often put pressure on local clerics and media not to discuss the camps.
“They’re scared. Nobody wants to say anything,” Anwar Ibrahim, who is in line to become Malaysia’s next premier, said in an interview with Bloomberg Television this month when asked why Muslim countries had been largely silent on the Uighur issue.
Pakistan has been the biggest recipient of Chinese infrastructure loans; its last government, whose term ended in May, made no public statement about China’s policies in East Turkestan, which borders Pakistan, India and several other countries.

Indian Muslims protest China’s detention of Muslim minorities in East Turkestan, in Mumbai on Sept. 14.

The new government in Islamabad, under Prime Minister Imran Khan, is pressing China to revise the goals of its $62 billion infrastructure program in Pakistan and working with Beijing to shrink Pakistan’s trade deficit, goals that could be complicated by complaints about one of China’s most sensitive national-security issues.
“Before Pakistan government and China government, they no care about this. But this government now Imran Khan, they start help,” said Shahid Ilyas Hussain, a Pakistani man whose wife has been detained.
Mr. Hussain said he hasn’t been able to contact her since she was taken from their home in East Turkestan’s capital, Urumqi, while he was away in Beijing in April 2017.
He and others involved in lobbying Pakistan’s government said there were more than 300 Pakistani men whose Chinese wives had been detained in the camps, many of whom were now seeking Chinese or Pakistani passports for their spouses so they could leave China.
Mr. Khan, the trader, said local police wouldn’t allow him to see his family and demanded 100,000 yuan ($14,500) per child to have them released.
“If my wife has broken the law, then go through the legal process for her,” he said, speaking from Urumqi. 

“But what crime have my children committed? They are so young and innocent.”
Two Pakistani traders, Mirza Imran Baig and Asif Mohammad, said they met Pakistan’s ambassador in Beijing on Tuesday to seek help obtaining Chinese passports for their Uighur wives.
A Pakistan Embassy official in Beijing said several Pakistani citizens had filed applications for assistance for their detained wives, which he said had been forwarded to Islamabad. 

He declined to provide further details and Pakistan’s foreign ministry didn’t respond to requests for comment.

Pakistani trader Mirza Imran Baig and a compatriot sit outside the Pakistan Embassy in Beijing as they campaign for assistance for their Chinese Uighur wives. 

A Chinese foreign ministry spokesman didn’t respond directly to a question at a news briefing Tuesday about Pakistani nationals whose Chinese wives have been detained.
Pakistan’s Islamic clerics and organizations, which often protest over rights abuses against Muslims in other countries, have mostly remained silent on East Turkestan.
But in Bangladesh, which has the world’s fourth biggest Muslim population, an Islamist group held a demonstration against China’s Muslim camps in front of the national mosque in the capital, Dhaka, on Sept. 7.
The group, Islami Andolan Bangladesh, threatened a Muslim boycott of Chinese products if Beijing didn’t release those detained.
In India, a Muslim organization called Raza Academy, which claims hundreds of thousands of followers, held a protest over China’s camps in Mumbai on Sept. 14.
About 150-200 Muslim scholars and community leaders took part, shouting “Stop using Chinese products” and carrying placards with messages such as “Chinese government must stop atrocities on Muslims.”
“The Communist government is forcing the Muslims to give up their faith,” said Mohammed Saeed Noori, Raza Academy’s general secretary. 

“It must stop.”

The protest march by activists from Islamist group Islami Andolan Bangladesh in Dhaka on Sept. 7. The group has threatened to boycott Chinese goods. 

China's war on Christianity

'We are scared, but we have Jesus' 

Crackdown on unofficial churches comes as Vatican and Beijing sign ignoble deal on appointment of bishops
By Benjamin Haas

 A man waits outside during a mass at the South Cathedral in Beijing

Pastor Jin Mingri has felt firsthand the pain of one of Chinese dictator Xi Jinping’s harshest crackdowns on religion in years.
Jin’s Zion Church in Beijing, one of the biggest unofficial congregations in the country, was abruptly demolished by authorities this month, who then sent him a bill for 1.2m yuan (£133,000) for the related costs. 

Jin had preached there every Sunday for decades.
“Before, as long as you didn’t meddle in politics the government left you alone,” he said. 

“But now if you don’t push the Communist party line, if you don’t display your love for the party, you are a target.

“Of course we’re scared, we’re in China, but we have Jesus.”
Zion belonged to a vast network of unofficial “house” churches that function outside of the government mandated system, and for decades were tolerated by authorities.
They have long been vulnerable, but have become more vulnerable as China’s leaders call for the “Sinicisation” of religious practice. 

New regulations that came in in February require tighter control of places of worship, with some forced to install CCTV cameras that fed live footage to local authorities. 

In the months that followed, officials across China have removed crosses from church buildings and demolished others perceived as too large in the hope of reducing the public visibility of religion.

Jin Mingri in Beijing days after authorities shut down one of China’s largest “underground” protestant churches.

The crackdown comes as the Vatican and Beijing signed a provisional agreement last week that would give the Pope a say in the appointment of bishops in China, an issue that has long caused friction between the two. 

As part of the deal the pope will recognise seven Chinese bishops who were appointed unilaterally by Beijing and had been excommunicated by the Vatican.
But some within the church have called the arrangement “an incredible betrayal” of underground Catholics who have remained faithful to Rome despite facing potential repercussions.
At the same time, an estimated 1 million Muslims have been detained in “re-education” camps in East Turkestan colony. 

The measures ultimately have the same goal: to give Beijing tighter control over groups officials see as a potential threat to their grip on power.
Bob Fu, founder of the religious rights group ChinaAid, said Chinese officials were trying to shrink both the official and unofficial branches of the church. 

He said he had received reports of dozens of rural village chiefs forcing residents to sign papers denouncing Christianity, lest they lose state welfare benefits.
But Fu said the church would survive.
“I have hope for the future, these campaigns were done in Roman times, under Stalin and under Mao, and none succeeded,” he said. 

“It will only have the opposite effect, and if Communist party cadres studied history they would see this. Crackdowns will cause the church to grow faster, and help church be more united.”

‘Burning Bibles, destroying churches, and jailing Muslims’
US lawmakers held a hearing this week on “China’s war on Christianity and other faiths”, and focused extensively on the crackdown on house churches and the agreement between Beijing and the Vatican.
Chris Smith, a US congressman who led the hearing, accused China of “taking a hammr and sickle to the cross”.
“Burning Bibles, destroying churches, and jailing Muslims by the million is only part of the Chinese Communist Party’s audaciously repressive assault on conscience and religion,” he said.
For decades after the Communist revolution in 1949, believers in any religion were harshly persecuted as Mao Zedong pursued his socialist dream. 

In 1982, China adopted a new constitution that technically guaranteed freedom of religion, but it has not stopped authorities from shutting churches, demanding patriotic loyalty from pastors and imams and even dictating how the faithful can pray.
Even while religions were technically allowed to exist – there are 60 million Christians in China – the constitution says “religious bodies and religious affairs are not subject to any foreign domination”, a key hurdle for the Catholic church. 

China limits the number of officially sanctioned religions to five: Buddhism, Taoism, Protestantism, Catholicism and Islam.
Pamela Kyle Crossley, a history professor at Dartmouth College in the US, warned that the Vatican agreement could be just the first step in an escalating series of demands and said the church was being naive in its negotiations with Beijing.
“If the Vatican is willing to give the [Communist party] the right to appoint amenable bishops in China, the [Communist party] will soon point out that it has a distinct interest in promoting amenable bishops in many parts of Asia, and certainly in Africa, probably in Latin America, and very possibly in Italy itself,” she wrote in a recent blog post.
“Where Chinese investment goes, [Communist party] interest in acquiescence and harmony follow. Nobody advises on turning the other cheek or handing over your cloak with your tunic like the Church.”

China's Heydrich

The Architect of China's Concentration Camps Is a Rising Star Under Xi

• Chen Quanguo, the Butcher of  East Turkestan, heads government’s brutal crackdown on Uighurs
• His Final Solution's methods will be used more widely by Beijing

Bloomberg News

Chen Quanguo is the father of China's Final Solution to the Uighur Question

If one individual sums up the values gap between a rising China and the West, it may well be Chen Quanguo.
The most senior Communist Party official in the far western colony of East Turkestan is the architect behind a brutal crackdown against Muslim minority Uighurs. 

The United Nations says the campaign has placed as many as 1 million of them -- roughly a tenth of the territory’s population -- in concentration camps.
The European Union has condemned the mass detentions and U.S. lawmakers have called for sanctions on Chen and other top Chinese officials.

Senator Marco Rubio described the reports out of East Turkestan as “like a horrible movie.”
But in China, Chen has been a rising star. 

His actions in East Turkestan, along with demonstrations of loyalty to Xi Jinping, won him a promotion last year to the Communist Party’s powerful Politburo -- making him one of China’s 25 most powerful officials. 

In 2023, the 62-year-old Chen may be considered for a spot on its supreme Standing Committee, which has seven members.
Chen’s ascendance is bigger than one man. 

It’s fueling concern among Western governments about whether East Turkestan is being used to test a new model of authoritarian rule that could transform the way the country is governed, and be exported around the region. 

It risks a new front to growing U.S.-China tensions that already span trade, cyber-security, and a battle for influence across much of Asia-Pacific as Xi seeks to make his nation a global superpower by 2050.
Any U.S. move to sanction Chen would stoke fears in China of a foreign plot to promote independence movements in Hong Kong, Taiwan and Tibet. 

More than any of China’s top leaders currently in power, Chen has been at the forefront of China’s efforts to subdue those restive colonies.

The old town of Kashgar in East Turkestan.

“What we have is a clash of values,” said James Leibold, a senior lecturer at La Trobe University in Melbourne. 

“The policies that have been enacted under his watch in East Turkestan are the leading edge of a far more heavy-handed coercive form of Chinese governance that some in the West are starting to realize could have big consequences for China’s position in the world, as well as China’s relationship with the liberal West.”

Self-Made Man
Within the Communist Party, Chen amounts to a self-made man. 

Unlike Xi, whose father was a senior revolutionary under Mao Zedong and Deng Xiaoping, Chen had no known family connections to help him climb through the ranks. 

Relatively little has been written about him compared with China’s other top leaders, with only scraps of information appearing on party websites in Hebei, Tibet and East Turkestan.

People carry a Communist Party flag past a billboard of Xi Jinping in Kashgar, East Turkestan.

Chen grew up in the inland province of Henan around the time of Mao’s Great Leap Forward, which saw almost one in eight adults in his prefecture die of starvation, beatings or suicide. 

He joined the military after turning 18, eventually became a Communist Party member and attended college.
Though Chen graduated when China was opening up to the world, his first job out of college saw him join a rural commune in Henan, beginning a nearly four-decade journey from lowly apparatchik to Politburo member. 

While rising through the ranks, he served at one point under Li Keqiang, China’s current premier.

Chen received his big break in 2011, when he was appointed as the party’s top official in Tibet -- one of the only places in China where foreign diplomats and journalists need permission to travel. 

It was a prestigious appointment: Hu Jintao had headed the region about a decade before he became president.
At the time Tibet was still reeling from an outbreak of violence against Beijing’s rule. 

Chen gave speeches celebrating the Communist Party’s “peaceful liberation” of Tibet, saying its leadership had taken the region “from darkness to light.”
Chen then rolled out a set of policies that would establish him as Beijing’s point man for quelling ethnic unrest. 

He told the cadres that social stability was their “first responsibility,” instructed them to live in Tibetan villages and assigned party officials to Buddhist temples. 

Buddhism in Tibet, Chen said, should be adapted to “socialist civilization.” 

Temples were ordered to display Chinese flags and images of Communist Party leaders.

A Chinese flag flies in a village in Tibet.

By 2015, Chen stationed some 100,000 cadres in Tibetan villages and more than 1,700 temples had established party organizations, according to state media. 

Between 2011 and 2016, the Tibetan government advertised for 12,313 police-related positions -- more than four times as many positions as the preceding five years combined, according to research by Leibold and scholar Adrian Zenz.
Meng Jianzhu, head of China’s security apparatus during Chen’s time in Tibet, described it as a “leading example for the whole country” in “stability maintenance.”
Chen also kept a close eye on power shifts in Beijing. 

In February 2016, he publicly hailed Xi as China’s “core” leader months before his title was made official, and has described Xi as a “wise leader” with a “magnificent plan” for China. 

Members of Chen’s delegation to China’s national legislative sessions that year wore lapel pins emblazoned with Xi’s portrait -- the type of adulation common during Mao’s reign of personality.

Delegates wear lapel pins with Xi’s portrait in Beijing on March 3, 2016.

As Chen clamped down on dissent in Tibet, Xi had a problem in East Turkestan -- a region with some 10 million Turkic-speaking Uighurs where Beijing has long struggled to enforce its rule. 

They have chafed under Chinese authority, seen by a rise in violent attacks and ethnic violence beginning in 2009.
East Turkestan also sits at the center of Xi’s signature Belt and Road infrastructure initiative, which has promised more than $100 billion to reconstruct ancient trading routes from China to Eurasia. 

Xi needed it under firm control, and in August 2016 he put Chen in charge of the region to implement a policy to “strike first” against Uighurs population.
Chen immediately set about replicating the system that brought him success in Tibet. 

He sent Communist Party officials to Uighur villages, created a network of checkpoints and facial-recognition cameras, and shuttered mosques in an effort to “Sinify” Islam in the region. 

According to one Chinese-language profile, Chen drilled East Turkestan’s security forces using a technique perfected in Tibet: timing police to the second on responding to emergency calls.

Police patrol a night market in Kashgar, East Turkestan

Most controversially, Chen set up the mass concentration camps that have sparked outcry in the U.S. and Europe, as well as barbs from U.S. Secretary of State Michael Pompeo. 

A fax to East Turkestan’s publicity department asking about the camps wasn’t immediately answered.
Chen is the only person ever to have served as both party boss of both East Turkestan and Tibet, according to domestic media reports. 

His dual strategy of tough security measures and reeducation are designed to “take the ethnicity out of the people and lock them down,” said James Millward, a professor at Georgetown University’s School of Foreign Service.
In East Turkestan Chen “came in and he was highly positioned in the party and was given a mandate to do what he wanted to do and tons of funding to do it,” Millward said. 

“He clearly has Xi’s support to a remarkable degree.”

China's Final Solution

Young Uyghur Woman Dies in East Turkestan Concentration Camp
By Shohret Hoshur

Police officers on duty in the vicinity of a concentration camp in East Turkestan's Korla city, Nov. 2, 2017.

A young Uyghur woman has died while incarcerated in a political “re-education camp” in northwest China’s East Turkestan colony, according to a local official, who said she may have suffered from a heart condition that went untreated by camp authorities.
A Uyghur in her early 30s from Onsu county, in East Turkestan’s Aksu prefecture, died “at the beginning of the year,” an officer at the Onsu Police Station recently told RFA’s Uyghur Service.
The officer, who spoke to RFA on condition of anonymity, said that the young woman was from Village No. 6, or Tuman village, in Onsu’s Jam Bazar township, but could not provide any further information.
When asked the name of the woman, a staffer from the Jam Bazar Police Station said he had received a notice “not to give out sensitive information over the phone,” and referred further inquiries on to the local Public Security Bureau.
But an officer at the station, who also spoke on condition of anonymity, told RFA her name was Amine Kadir, aged 30 or 31, and that he was at work when it happened.
He said Kadir was one of “seven or eight people” from the township who have died while detained in East Turkestan’s network of concentration camps, where authorities in the region began jailing and detaining Uyghurs accused of harboring “strong religious views” and “politically incorrect” ideas beginning in April 2017.
Her husband “died some time ago,” the officer said, adding that the couple have a child who is three or four years old.
RFA also contacted the local Public Security Bureau, where an official said Kadir “may have suffered a heart attack, possibly because she was frightened” about her treatment at the camp.
“I heard that she suffered from a heart condition,” he added, when asked what might have caused someone to die at such a relatively young age.
According to the official, Kadir’s body was “returned to her parents,” who he said have lodged no complaint in the matter, without elaborating.

Camp network
Western governments have increasingly drawn attention to re-education camps in East Turkestan in recent months as media reports detail the stories of Uyghurs who have been detained in the facilities.
U.S. State Department spokesperson Heather Nauert recently said the U.S. government was "deeply troubled" by the crackdown on Uyghurs in East Turkestan, adding that “credible reports indicate that individuals sent by Chinese authorities to detention centers since April 2017 numbers at least in the hundreds of thousands, and possibly millions.”
The official warned that “indiscriminate and disproportionate controls on ethnic minorities’ expressions of their cultural and religious identities have the potential to incite radicalization and recruitment to violence.”
A group of U.S. lawmakers, in a recent letter, asked President Donald Trump’s administration to swiftly act to sanction Chinese government officials and entities complicit in or directing the ongoing human rights crisis in East Turkestan.
The position of China's central government authorities has evolved from denying that large numbers of Uyghurs have been incarcerated in camps to disputing that the facilities are political re-education camps. 

Beijing now describes the camps as educational centers.
Adrian Zenz, a lecturer in social research methods at the Germany-based European School of Culture and Theology, has said some 1.1 million people are detained in the concentration camps, which equates to 10 to11 percent of the adult Muslim population of the region.
Poor conditions
Sources say detainees face rough treatment at the hands of their overseers in the camps and endure poor diets and unhygienic conditions in the often overcrowded facilities—circumstances that can lead to severe complications for people already vulnerable to health issues.
In January, sources told RFA that detention centers in Korla the seat of central East Turkestan’s Bayin’gholin Mongol Autonomous Prefecture, are “completely full” and have been turning detainees away because they could not accommodate them.
One source quoted a friend who was admitted to a camp in the area describing cells that had previously held eight people being made to accommodate 14 inmates, who “were not allowed pillows” and “had to lay on their sides because there was not enough room to lay flat,” let alone space to turn over or stretch their legs.
While the report from Onsu county doesn’t indicate that beatings or physical torture were the cause of Kadir’s death, information previously provided to RFA suggests that poor conditions in the facilities and disregard for detainees’ medical needs are likely to have played a critical role.

The Stone Age Message to China

US sends B-52 bombers ripping through the South China Sea twice in less than a week

By Ryan Pickrell

• Twice in just three days, the US sent heavy bombers through the disputed South China Sea, sending a message to China which claims the vast majority of the South China Sea.
• The US did the same last month.
• Secretary of Defense James Mattis says that these flights would not mean a thing to anyone if China had not militarized the waterway.

The US Air Force sent B-52H Stratofortress heavy long-range bombers through the South China Sea twice this week, sending a clear message to China.
A single B-52 bomber assigned to the 96th Expeditionary Bomb Squadron conducted training in the South China Sea and Indian Ocean on Sunday, Pacific Air Forces Public Affairs told Business Insider on Wednesday. 

Two days later, another B-52 bomber conducted a training mission in the South China Sea.
"U.S. Indo-Pacific Command's Continuous Bomber Presence (CBP) operations have been ongoing since March 2004," PACAF told BI, adding that these recent missions are "consistent with international law and United States's long-standing and well-known freedom of navigation policies."
"The United States military will continue to fly sail and operate wherever international law allows at a times and places of our choosing," Pentagon spokesman Lt. Col. Dave Eastburn told Business Insider on Tuesday.
Secretary of Defense James Mattis stressed Wednesday that if China has a problem with these flights, it will be because China made it a problem through its activities in contested waters.
"If it was 20 years ago and had they not militarized those features there it would have been just another bomber on its way to Diego Garcia or wherever," the secretary explained. 

"There's nothing out of the ordinary about it."
Last month, the US sent B-52s through the East and South China Sea four times, twice in each waterway. 

The US also sent B-52s through the South China Sea in April and June, prompting the Chinese Ministry of Foreign Affairs to accuse the US of "running amok" in the region.
The latest flights come at a time of rising tension between Washington and Beijing.
Not only are the US and China locked in an escalating and intensifying trade war involving tariffs on hundreds of billions of dollars in goods, but tensions are also causing military-to-military relations to deteriorate.
Last week, the US sanctioned a procurement division of the Chinese military for purchasing Russian weapons systems in violation of sanctions, namely the advanced Su-35 fighter jet and the S-400 surface-to-air missile system. 

China then suddenly canceled a meeting between Vice Admiral Shen Jinlong and his US counterpart, Chief of Naval Operations Adm. John Richardson. 

Beijing also rejected a request by the US Navy to permit a port call by the amphibious assault ship USS Wasp in Hong Kong.

American Tech Quisling

Ex-Google Employee Urges Lawmakers to Take On Company

By Kate Conger

Google’s chief privacy officer is set to testify on Wednesday before a congressional committee about the company’s approach to data protection.

SAN FRANCISCO — Google is facing increased scrutiny by lawmakers in Washington over its size and influence. 

Now, a research scientist who recently resigned from the company in protest is urging them on.
In a harshly worded letter sent this week, the former employee, Jack Poulson, criticized Google’s handling of a project to build a version of its search engine that would be acceptable to the government of China. 

He said the project was a “catastrophic failure of the internal privacy review process.”
He said lawmakers should increase transparency and oversight of the company and technology industry, saying that there is a “broad pattern of unaccountable decision making.”
Dr. Poulson left the company after news articles revealed the existence of the project last month. 

It was first reported on by the Intercept news site.
Google’s chief privacy officer, Keith Enright, testified on Wednesday before a congressional committee about the company’s approach to data protection. 

Executives from Apple, AT&T, Amazon, Twitter and Charter Communications also appeared at the hearing.
Dr. Poulson said the Chinese project, called Dragonfly, had several “disturbing components.” 

A prototype would allow a partner company in China to view a person’s search history based on his or her phone number. 

He said the project also censored an extensive list of subjects that included information about air quality and Chinese dictator Xi Jinping.
He also pointed lawmakers to commitments Google made as part of a settlement with the Federal Trade Commission in 2011. 

Google, among other requirements, must submit to regular privacy audits and follow a comprehensive privacy program under the settlement. 

The privacy program includes reviews of all Google products for privacy issues before they are released.

Google’s privacy reviewers are assigned to analyze Google code and make sure it does not violate user privacy. 

But after Dragonfly became public, several reviewers said they had signed off on sections of code for Dragonfly without fully understanding the project or its privacy implications, according to two people familiar with the process. 

The reviewers felt that pertinent information about Dragonfly’s code had been withheld from them, and raised questions about the review process that went unanswered.
In his testimony on Wednesday, Enright said Google was not close to releasing a search product in China.
“If we were, in fact, to finalize a plan to launch a search product in China, my team would be actively engaged,” he said. 

“Our privacy and security controls would be followed, and any such project or product would follow and be consistent with our values in privacy and data protection.”
Google on Monday released a framework for privacy legislation that describes to lawmakers how the company views its role in data protection.
“Innovative uses of data shouldn’t be presumptively unlawful just because they are unprecedented, but organizations must account for and mitigate potential harms,” the framework says. 

“This includes taking particular care with sensitive information that can pose a significant risk. To enable organizations to develop effective mitigations, regulators should be clear about what constitutes a harm.”
In a blog post, Enright said the company supported comprehensive regulation on privacy. 

Google has also recently increased its privacy efforts, forming a team dedicated to privacy and data protection.
Google left China in 2010, denouncing government censorship. 

That year the company also said it had discovered that Chinese hackers had attacked the company’s corporate infrastructure.
“It should be pretty obvious that they should be asked what changed between 2010 and today,” said Cynthia Wong, a senior researcher at Human Rights Watch.

Sore Loser

China is Interfering in Midterm Elections Because the U.S. Are Winning on Trade

By Mark Landler
President Trump told the United Nations Security Council on Wednesday that the Chinese “do not want me or us to win, because I am the first president to ever challenge China on trade.”

UNITED NATIONS — President Trump on Wednesday accused a foreign power of meddling in an American election: not Russia, but China.
The Chinese are trying to damage his political standing before the midterm elections because of his imposition of tariffs on billions of dollars in Chinese goods. 

Speaking at the United Nations Security Council, where China’s foreign minister was also present, he said, “They do not want me or us to win because I am the first president to ever challenge China on trade.”
It was not the first time the president has accused the Chinese of meddling in the nation’s affairs: He has complained that in response to his tariffs, China had imposed retaliatory ones aimed at American farmers and other politically sensitive constituencies in states that support him. 

But he has never leveled the accusation so bluntly or in such a high-profile international setting.

President Trump did not suggest that China’s behavior was on the scale of Russia’s sophisticated campaign of manipulating social media and the release of hacked emails during the 2016 presidential election.

“Well, I think it’s different,” President Trump said at a news conference later in the day, when he was asked to compare the Chinese and Russian efforts.
Still, by raising the specter of interference in the midterms, he reintroduced the notion that a foreign power could alter the outcome of an American election.
The president’s accusation hijacked a busy day of diplomacy at the United Nations — one in which President Trump also reversed his position that North Korea needed to relinquish its nuclear weapons rapidly. 

He now said he had years to come to an agreement with the North’s leader, Kim Jong-un, and would impose no timeline on the negotiations.
The accusation was at odds with President Trump’s repeated claims that he has a thriving relationship with Chinese dictator Xi Jinping, who presumably has had a strong hand in the retaliatory actions the country has taken.

Yet President Trump did not back down. 

After the meeting, he asserted in a tweet that the Chinese had placed an ad in The Des Moines Register and other papers, designed to resemble a news article, that highlighted the economic costs of President Trump’s trade battle with China.
“That’s because we are beating them on Trade, opening markets, and the farmers will make a fortune when this is over!” he wrote.
Before a subsequent meeting with Prime Minister Shinzo Abe of Japan, President Trump said, “I don’t like it when they attack our farmers,” referring to China.
He added, “They are trying to meddle in our elections, and we’re not going to let that happen, just as we’re not going to let that happen with Russia.”
As if to underscore the rift with China, President Trump announced that the United States and Japan had agreed to open negotiations for a trade agreement — something Japan has long resisted.
President Trump did not accuse China of using its cybercapabilities to interfere in the midterm elections, and there is no evidence it has done so. 

The country has some of the most advanced capabilities among America’s cyberadversaries, and it has used them extensively to steal corporate secrets, obtain American weapons designs and monitor Chinese dissidents around the world.
China has also been accused of mounting politically related influence operations in Australia and New Zealand.
A senior administration official cited an array of other general Chinese propaganda efforts, including pressure on think tanks and film studios that distribute material critical of China, intimidation of Chinese-language media organizations in the United States and influence campaigns on college campuses with students and teachers.
China and the United States have escalated their trade dispute in recent weeks, with President Trump imposing tariffs on an additional $200 billion in Chinese exports to the United States, and China striking back with tariffs on $60 billion in American goods.
In its early rounds of tariffs, China hit agricultural products, drawing an outcry from farm groups across the United States and consternation in many of the Midwestern and Plains states that President Trump carried in 2016.
This month, the president’s national security adviser, John R. Bolton, said the United States had seen efforts by China, as well as Iran, to interfere in elections.
“We’re monitoring it very, very closely,” Mr. Bolton said on Sept. 12. 

“It’s just an ongoing process.”
“What we see is the capability and attempts,” he continued. 

“But in terms of what the influence will be — is and will be — we continue to analyze all that.”
The director of national intelligence, Dan Coats, regularly includes China on a list of countries with the capability of conducting broad cyberoperations in the United States, including interfering in elections.

For President Trump, presiding over the Security Council was an unusual exercise because it exposed him to public criticism — something rarely seen in his cabinet meetings or at his political rallies.
Russia took issue with his statements on Syria, and Bolivia’s leftist president, Evo Morales, assailed the United States for just about everything, going back to what he said was its role in ousting Iran’s democratically elected leader in a coup in 1953.
“Thank you, Mr. President,” President Trump said stonily when he was finished.
But President Trump also won praise from most of the members for his diplomatic opening to North Korea’s leader, Kim Jong-un, as well as for his broader focus on the threat from chemical, biological and nuclear weapons.
On Wednesday, Secretary of State Mike Pompeo met with North Korea’s foreign minister, Ri Yong-ho, in New York. 

Mr. Pompeo said he intended to travel to Pyongyang next month to help prepare for a second summit meeting between President Trump and Mr. Kim.
In his meeting with Mr. Abe, President Trump pulled out what appeared to be a letter to him from Mr. Kim, which he said was further evidence of their good relationship.
Initially, the president had planned to devote the Security Council session exclusively to the threat posed by Iran. 

The White House agreed to broaden the theme to proliferation after European officials protested that a focus on Iran would showcase dissent within the West, and that it could offer Iran a platform to respond.
Although he did not mention Russia’s meddling in the 2016 election, he did fault the country, along with Iran, for enabling the “butchery” of Bashar al-Assad in Syria.
But he also thanked the countries for agreeing to suspend, at least temporarily, their assault on the rebel stronghold of Idlib to avert a humanitarian crisis.

Another round of President Trump tariffs means economic shock waves for China

• The next round of tariffs from U.S. administration would hit both large multinational companies producing goods in China for export, as well as Chinese small and medium-sized enterprises that are part of the global supply chain.
• Rising unemployment will be a result

By Weizhen Tan

Chinese employees working on micro and special motors for mobile phones at a factory in Huaibei, China.

Key consumer tech products have so far mostly escaped the heat of the ongoing trade war. 

But if U.S. President Donald Trump makes good on his threat to impose tariffs on the full range of Chineseimports into his country, it could hit that sector hard, experts said.
Rajiv Biswas, Asia Pacific chief economist at IHS Markit, said that products such as mobile phones and smart watches and other wearable devices could be targeted in the next round, while ANZ Greater China Chief Economist Raymond Yeung pointed to mobile phones as well as other consumer goods.
"If the US Administration imposes a third tranche of tariff measures on a further USD267 billion of Chinese exports, this will significantly ramp up the economic shock waves to Chinese exporters," Biswas told CNBC in an email.
Apple said earlier this month that the tariffs could affect the Apple Watch and AirPods as well as adapters and chargers for a host of products. 

But according to the latest list of tariffs that kicked in this week, they have been spared so far.
Autos is another sector that could continue to be targeted, said Carol Liao, a senior China economist at J.P. Morgan.
According to ANZ, key items at stake include consumer goods, which form 45 percent of China's exports to the U.S., and autos, which is at 4 percent.
The next round of tariffs, according to Biswas, would hit large multinational companies producing goods in China for export, as well as Chinese small and medium-sized enterprises that are part of the global supply chain.
Automakers are already feeling the heat, with Trump slapping a 25 percent levy on China-made autos, in July. 

Ford scrapped a plan to sell its new Chinese-made Focus Active crossover model in the U.S., while Volvo moved the production of its XC60 crossover from China to Sweden. 

General Motors, meanwhile, sought an exemption for its Buick Envision model, also made in China.

President Trump's administration levied tariffs of 10 percent on $200 billion of Chinese products this week, and that's set to increase to 25 percent on Jan. 1 2019. 

In response, China said it would impose taxes on U.S. imports worth about $60 billion.
President Trump had said any retaliatory action from China would prompt Washington to "immediately pursue phase three, which is tariffs on $267 billion of additional imports."
China is limited in the amount of retaliatory tariffs it can apply simply because it doesn't import as much in American goods compared with the amount the U.S. imports in Chinese products. 

China imported just $129.9 billion from the U.S. in 2017, compared with $505.5 billion in exports.
Before this week's moves, the U.S. and China had already applied tariffs to $50 billion of each other's goods.

Chinese jobs will be lost
While the economic impact on China could still be manageable if the U.S. imposes tariffs on all Chinese imports, rising unemployment could be a result, according to a recent report from J.P. Morgan.
The bank estimated that China could lose as many as 3 million jobs if it does not have any countermeasures to the next round of tariffs. 

J.P. Morgan said the loss in employment could be reduced to 700,000 jobs if the country imposes retaliatory tariffs — and assuming that the yuan depreciates 5 percent.
Biswas added: "As (multinational corporations) readjust their supply chains for exports to the US market to production hubs outside of China, Chinese (small and medium-sized enterprises) are facing weakening new manufacturing orders and job losses."

Taiwan Can Win a War With China

Beijing boasts it can seize the island easily. The PLA knows better.
BY TANNER GREER

When Chinese dictator Xi Jinping spoke to the 19th Party Congress about the future of Taiwan last year, his message was ominous and unequivocal: “We have firm will, full confidence, and sufficient capability to defeat any form of Taiwan independence secession plot. We will never allow any person, any organization, or any political party to split any part of the Chinese territory from China at any time or in any form.”
This remark drew the longest applause of his entire three-hour speech—but it’s not a new message. The invincibility of Chinese arms in the face of Taiwanese “separatists” and the inevitability of reunification are constant Chinese Communist Party themes. 

At its base, the threat made by Xi is that the People’s Liberation Army has the power to defeat the Taiwanese military and destroy its democracy by force, if need be. 

Xi understands the consequences of failure here. 

“We have the determination, the ability and the preparedness to deal with Taiwanese independence,” he stated in 2016, “and if we do not deal with it, we will be overthrown.”
China has already ratcheted up economic and diplomatic pressure on the island since the 2016 election of Tsai Ing-wen and the independence-friendly Democratic Progressive Party. 

Saber-rattling around the Taiwan Strait has been common. 

But China might not be able to deliver on its repeated threats. 

Despite the vast discrepancy in size between the two countries, there’s a real possibility that Taiwan could fight off a Chinese attack—even without direct aid from the United States.
Two recent studies, one by Michael Beckley, a political scientist at Tufts University, and the other by Ian Easton, a fellow at the Project 2049 Institute, in his book The Chinese Invasion Threat: Taiwan’s Defense and American Strategy in Asia, provide us with a clearer picture of what a war between Taiwan and the mainland might look like. 

Grounded in statistics, training manuals, and planning documents from the PLA itself, and informed by simulations and studies conducted by both the U.S. Defense Department and the Taiwanese Ministry of National Defense, this research presents a very different picture of a cross-strait conflict than that hawked by the party’s official announcements.
Chinese commanders fear they may be forced into armed contest with an enemy that is better trained, better motivated, and better prepared for the rigors of warfare than troops the PLA could throw against them.
A cross-strait war looks far less like an inevitable victory for China than it does a staggeringly risky gamble.

Chinese army documents imagine that this gamble will begin with missiles. 

For months, the PLA’s Rocket Force will have been preparing this opening salvo; from the second war begins until the day the invasion commences, these missiles will scream toward the Taiwanese coast, with airfields, communication hubs, radar equipment, transportation nodes, and government offices in their sights. 

Concurrently, party sleeper agents or special forces discreetly ferried across the strait will begin an assassination campaign targeting the president and her Cabinet, other leaders of the Democratic Progressive Party, officials at key bureaucracies, prominent media personalities, important scientists or engineers, and their families.
The goal of all this is twofold. 

In the narrower tactical sense, the PLA hopes to destroy as much of the Taiwanese Air Force on the ground as it can and from that point forward keep things chaotic enough on the ground that the Taiwan’s Air Force cannot sortie fast enough to challenge China’s control of the air. 

The missile campaign’s second aim is simpler: paralysis. 

With the president dead, leadership mute, communications down, and transportation impossible, the Taiwanese forces will be left rudderless, demoralized, and disoriented. 

This “shock and awe” campaign will pave the way for the invasion proper.
This invasion will be the largest amphibious operation in human history. 

Tens of thousands of vessels will be assembled—mostly commandeered from the Chinese merchant marine—to ferry 1 million Chinese troops across the strait, who will arrive in two waves. 

Their landing will be preceded by a fury of missiles and rockets, launched from the Rocket Force units in Fujian, Chinese Air Force fighter bombers flying in the strait, and the escort fleet itself.
Confused, cut off, and overwhelmed, the Taiwanese forces who have survived thus far will soon run out of supplies and be forced to abandon the beaches. 

Once the beachhead is secured, the process will begin again: With full air superiority, the PLA will have the pick of their targets, Taiwanese command and control will be destroyed, and isolated Taiwanese units will be swept aside by the Chinese army’s advance. 

Within a week, they will have marched into Taipei; within two weeks they will have implemented a draconian martial law intended to convert the island into the pliant forward operating base the PLA will need to defend against the anticipated Japanese and American counter-campaigns.
This is the best-case scenario for the PLA. 

But an island docile and defeated two weeks after D-Day is not a guaranteed outcome. 

One of the central hurdles facing the offensive is surprise. 

The PLA simply will not have it. 

The invasion will happen in April or October. 

Because of the challenges posed by the strait’s weather, a transport fleet can only make it across the strait in one of these two four-week windows. 

The scale of the invasion will be so large that strategic surprise will not be possible, especially given the extensive mutual penetration of each side by the other’s intelligence agencies.
Easton estimates that Taiwanese, American, and Japanese leaders will know that the PLA is preparing for a cross-strait war more than 60 days before hostilities begin. 

They will know for certain that an invasion will happen more than 30 days before the first missiles are fired. 

This will give the Taiwanese ample time to move much of their command and control infrastructure into hardened mountain tunnels, move their fleet out of vulnerable ports, detain suspected agents and intelligence operatives, litter the ocean with sea mines, disperse and camouflage army units across the country, put the economy on war footing, and distribute weapons to Taiwan’s 2.5 million reservists.
There are only 13 beaches on Taiwan’s western coast that the PLA could possibly land at. 

Each of these has already been prepared for a potential conflict. 

Long underground tunnels—complete with hardened, subterranean supply depots—crisscross the landing sites. 

The berm of each beach has been covered with razor-leaf plants. 

Chemical treatment plants are common in many beach towns—meaning that invaders must prepare for the clouds of toxic gas any indiscriminate saturation bombing on their part will release. 

This is how things stand in times of peace.
As war approaches, each beach will be turned into a workshop of horrors. 

The path from these beaches to the capital has been painstakingly mapped; once a state of emergency has been declared, each step of the journey will be complicated or booby-trapped. 

PLA war manuals warn soldiers that skyscrapers and rock outcrops will have steel cords strung between them to entangle helicopters; tunnels, bridges, and overpasses will be rigged with munitions (to be destroyed only at the last possible moment); and building after building in Taiwan’s dense urban core will be transformed into small redoubts meant to drag Chinese units into drawn-out fights over each city street.

To understand the real strength of these defenses, imagine them as a PLA grunt would experience them. 

Like most privates, he is a countryside boy from a poor province. 

He has been told his entire life that Taiwan has been totally and fatally eclipsed by Chinese power. 

He will be eager to put the separatists in their place. 

Yet events will not work out as he has imagined. 

In the weeks leading up to war, he discovers that his older cousin—whose remittances support their grandparents in the Anhui countryside—has lost her job in Shanghai. 

All wire money transfers from Taipei have stopped, and the millions of Chinese who are employed by Taiwanese companies have had their pay suspended.
Our private celebrates the opening of hostilities in Shanwei, where he is rushed through a three-week training course on fighting in the fetid and unfamiliar jungles of China’s south. 

By now, the PLA has put him in a media blackout, but still rumors creep in: Yesterday it was whispered that the 10-hour delay in their train schedule had nothing to do with an overwhelmed transportation system and everything to do with Taiwanese saboteurs. 

Today’s whispers report that the commander of the 1st Marine Brigade in Zhanjiang was assassinated. 

Tomorrow, men will wonder if rolling power outages really are just an attempt to save power for the war effort.
But by the time he reaches the staging area in Fuzhou, the myth of China’s invincibility has been shattered by more than rumors. 

The gray ruins of Fuzhou’s PLA offices are his first introduction to the terror of missile attack. Perhaps he takes comfort in the fact that the salvos coming from Taiwan do not seem to match the number of salvos streaking toward it—but abstractions like this can only do so much to shore up broken nerves, and he doesn’t have the time to acclimate himself to the shock. 

Blast by terrifying blast, his confidence that the Chinese army can keep him safe is chipped away.
The last, most terrible salvo comes as he embarks—he is one of the lucky few setting foot on a proper amphibious assault boat, not a civilian vessel converted to war use in the eleventh hour—but this is only the first of many horrors on the waters. 

Some transports are sunk by Taiwanese torpedoes, released by submarines held in reserve for this day. 

Airborne Harpoon missiles, fired by F-16s leaving the safety of cavernous, nuclear-proof mountain bunkers for the first time in the war, will destroy others. 

The greatest casualties, however, will be caused by sea mines. 

Minefield after minefield must be crossed by every ship in the flotilla, some a harrowing eight miles in width. 

Seasick thanks to the strait’s rough waves, our grunt can do nothing but pray his ship safely makes it across.
As he approaches land, the psychological pressure increases. 

The first craft to cross the shore will be met, as Easton’s research shows, with a sudden wall of flame springing up from the water from the miles of oil-filled pipeline sunk underneath. 

As his ship makes it through the fire (he is lucky; others around it are speared or entangled on sea traps) he faces what Easton describes as a mile’s worth of “razor wire nets, hook boards, skin-peeling planks, barbed wire fences, wire obstacles, spike strips, landmines, anti-tank barrier walls, anti-tank obstacles … bamboo spikes, felled trees, truck shipping containers, and junkyard cars.”
At this stage, his safety depends largely on whether the Chinese Air Force has been able to able to distinguish between real artillery pieces from the hundreds of decoy targets and dummy equipment PLA manuals believe the Taiwanese Army has created. 

The odds are against him: As Beckley notes in a study published last fall, in the 1990 to 1991 Gulf War, the 88,500 tons of ordnance dropped by the U.S.-led coalition did not destroy a single Iraqi road-mobile missile launcher. 

NATO’s 78-day campaign aimed at Serbian air defenses only managed to destroy three of Serbia’s 22 mobile-missile batteries. 

There is no reason to think that the Chinese Air Force will have a higher success rate when targeting Taiwan’s mobile artillery and missile defense.
But if our grunt survives the initial barrages on the beach, he still must fight his way through the main Taiwanese Army groups, 2.5 million armed reservists dispersed in the dense cities and jungles of Taiwan, and miles of mines, booby traps, and debris. 

This is an enormous thing to ask of a private who has no personal experience with war. 

It is an even great thing to ask it of a private who naively believed in his own army’s invincibility.

This sketch makes sense of the anxiety the PLA officer manuals express. 

They know war would be a terrific gamble, even if they only admit it to each other. 

Yet it this also makes sense of the party’s violent reactions to even the smallest of arms sales to Taiwan. 

Their passion betrays their angst. 

They understand what Western gloom-and-doomsters do not. 

American analysts use terms like “mature precision-strike regime” and “anti-access and area denial warfare” to describe technological trends that make it extremely difficult to project naval and airpower near enemy shores. 

Costs favor the defense: It is much cheaper to build a ship-killing missile than it is to build a ship.
But if this means that the Chinese army can counter U.S. force projection at a fraction of America’s costs, it also means that the democracies straddling the East Asian rim can deter Chinese aggression at a fraction of the PLA’s costs. 

In an era that favors defense, small nations like Taiwan do not need a PLA-sized military budget to keep the Chinese at bay.
No one needs to hear this message more than the Taiwanese themselves. 

In my trips to Taiwan, I have made a point of tracking down and interviewing both conscripts and career soldiers. 

Their pessimism is palpable. 

This morale crisis in the ranks partly reflects the severe mismanagement of the conscription system, which has left even eager Taiwanese patriots disillusioned with their military experience.
But just as important is the lack of knowledge ordinary Taiwanese have about the strength of their islands’ defenses. 

A recent poll found that 65 percent of Taiwanese “have no confidence” in their military’s ability to hold off the PLA. 

Absent a vigorous campaign designed to educate the public about the true odds of successful military resistance, the Taiwanese people are likely to judge the security of their island on flawed metrics, like the diminishing number of countries that maintain formal relations with Taipei instead of Beijing. 

The PLA’s projected campaign is specifically designed to overwhelm and overawe a demoralized Taiwanese military. 

The most crucial battlefield may be the minds of the Taiwanese themselves. 

Defeatism is a more dangerous threat to Taiwanese democracy than any weapon in China’s armory.
Both Westerners and Taiwanese should be more optimistic about the defense of Taiwan than is now normal.
Yes, the Taiwanese Army projects that it can only hold off its enemy for two weeks after the landing—but the PLA also believes that if it cannot defeat the Taiwanese forces in under two weeks, it will lose the war! 

Yes, the disparity between the military budgets on both sides of the strait is large, and growing—but the Taiwanese do not need parity to deter Chinese aggression. 

All they need is the freedom to purchase the sort of arms that make invasion unthinkable. 

If that political battle can be resolved in the halls of Washington, the party will not have the power to threaten battle on the shores of Taiwan.