Rogue Nation

I-Spy in China: a revival of Mao-era paranoia
By Verna Yu

During the Cultural Revolution in the 1960s, when Siu Ying Lee’s kindergarten-age daughter saw a photo of her mother in a white lace wedding dress, instead of wishing she could look pretty like her, she pointed her finger and shouted: “Spy! Spy!”
Her mother, frightened at the prospect of the family getting into deep trouble, sternly told her not to tell anyone at school.
During the tumultuous Mao Zedong era, having any foreign ties—even having relatives living abroad—could easily lead to accusations of being a spy. 

Children were taught at school to be on the look-out for ubiquitous spies who might be lurking anywhere and to report them promptly. 

Many innocent people wrongly accused of being spies were brutally persecuted or killed as “class enemies” in the numerous political movements throughout the 1950s and ’60s, especially during the Cultural Revolution.
China has come a long way since then. 

But 40 years after the end of the Cultural Revolution, schoolchildren in China are once again being mobilized for an anti-espionage drive reminiscent of the Mao era.
Primary and secondary school children are the targets of this national security education campaign to “mobilize them as a huge counter-spy force,” the English-language state newspaper Global Times reported in mid-April.
“The concept of state security has to be firmly grasped, starting with young children,” Liu Wanghong, the deputy head of a state-backed think tank, Jiangsu Provincial Academy of Social Sciences, told the semi-official China News Service. 

“We need to incorporate national security education into our education system.”
To mark “National Security Education Day” on April 15 as the front-runner in a national pilot scheme, the eastern province of Jiangsu launched a set of school textbooks that feature topics such as “National security is of paramount importance” and “We cannot let down our guard even during peacetime.”
According to state reports, the books use easy-to-read language and comic strips to explain to children the concept of national security and to teach them about threats posed by spies as well as “how to spot potential terror threats.” 

To make the message more appealing to children, the books feature games such as “find the spy.”
The anti-espionage drive is part of a broader national security campaign. 

China implemented its first Counter-Espionage Law in November 2014, and in July 2015, it passed a National Security Law which has wide-ranging powers to cope with what officials said was an increasingly “severe” national security situation.
Earlier in April, Beijing authorities offered cash rewards of up to 500,000 yuan (U.S. $72,400) to citizens who report foreign spies or activities that they believe are endangering state security or involve the theft of state secrets.
Cartoons and video clips have been posted on microblog accounts of China Central Television, the Communist Party Youth League and the Ministry of Public Security showing how ordinary people could identify spies and to encourage them to report suspicious people to the authorities. 

“Come on, be brave, go and report!” said a narrator to the beat of rap music on a video.
Last year, a 16-panel cartoon titled “Dangerous Love” posted in subway stations and streets warned young women against dating foreign men who could turn out to be spies.
The Chinese authorities’ fixation on national security stems from insecurity over the stability of its own regime, said political commentator and veteran journalist Ching Cheong. 

Mr. Ching, a Hong Konger, was jailed for three years in China on trumped-up espionage charges.
Since Xi Jinping came to power in late 2012, he has repeatedly warned about “unprecedented security risks” faced by the country. 

He personally heads the National Security Commission, which he created in late 2013. 

He has emphasized that national security must be under “the absolute leadership of the Communist Party” and told officials to take preemptive steps to prevent “all kinds of risks” to national security.
In an internal speech made early in Xi’s presidency, he lamented the collapse of the Soviet Union, blaming it on a lapse in ideological control. 

Since then, Xi has overseen a tightening of ideological control and a clamp down on civil society, silencing liberal scholars and cracking down on human rights lawyers, dissidents, activists and N.G.O. workers.
“The leadership is very paranoid that China would follow in the Soviet Union’s footsteps,” said Mr. Ching. 

To prevent this, the authorities are attempting to raise people’s vigilance over national security using Mao-era tactics of “struggling against the class enemies,” he said.
Observers say the mobilization of ordinary people to report on spies is a throwback to the disastrous Mao era, in which there were constant rumors of neighbors, colleagues and classmates being secret spies of foreign powers.
At the start of Communist Party rule in 1949, posters were put up on the streets warning people against spies. 

Children were indoctrinated with the idea that “class enemies” such as landowners, capitalists, intellectuals and anyone seen to pose a threat to the ruling Communist regime had to be ruthlessly eliminated.
“These unsubstantiated rumors of the Mao era led to countless human rights violations and countless ruined lives,” said William Nee, China researcher at Amnesty International. 

“Since the Chinese government has not dealt with history honestly or objectively, it is no wonder that it seems to be willing to repeat the same mistakes.”
Mr. Nee said the real goal of the national security education campaign seemed to be creating “an atmosphere of paranoia” and to indoctrinate Chinese society, especially the young, to be inherently suspicious of foreigners, foreign ideas and foreign organizations.
“The Chinese leadership wants young people to imbibe their own worldview that sees the risk of ‘ideological penetration’ around every corner,” Mr. Nee said. 

“The government—at the very highest levels—is convinced that there is some sort of conspiracy and that China is at risk of ‘ideological penetration’ by ‘foreign forces’ who are changing the mentality of Chinese people by promoting things like democracy, human rights, religion.”
Observers say this kind of indoctrination could have lasting and damaging effects. 

Children who were indoctrinated with hostility towards “class enemies” in the early days of the Communist rule grew up to be red guards in the Cultural Revolution—many ruthlessly beat others, even their teachers, to death. 

Some remain unrepentant even to this day.
“The Cultural Revolution didn’t happen without a reason. It’s because people were instilled with a sense of suspicion and hostility from their childhood,” Mr. Ching said. 

“Now, the authorities appear to be reviving this Cultural Revolution practice again.”

Chinese Paranoia

Dalai Lama's Tawang visit: Unhinged rage against India betrays China's deep strategic insecurity

By Sreemoy Talukdar

China's overreaction on Dalai Lama's Tawang visit is indicative of a strategic insecurity it still suffers from despite projecting itself as the great economic, continental and maritime hegemony on the cusp of replacing America as the next global superpower. 

The seeds of this insecurity lie in the fact that while as the world's second-largest economy it seeks to adopt the mantle of global leadership and fashions itself as the new champion of free trade, China has been unable to shake off its image as a hostile, outlier nation whose foreign policy is rooted in the dualism of bullying or patronage and economic policy is guided by blatant mercantilism.

Consider the two issues China grapples with due to this problem of perception. 

One, its repeated refusal to respect the World Trade Organisation architecture and frequent flouting of market rules that govern the global trading system has given rise to huge trade imbalance and resentment among its trading partners. 

US President Donald Trump made China's flouting of norms his core election plank and evidently profited from it. 

Trade imbalance corners a huge degree of attention as Trump and Xi Jinping sit across the table in Mar-a-Lago, Florida.
Second, and this has direct relevance to the recent fracas between India and China over Dalai Lama's visit, Beijing has shown a marked inability to develop friendly relationship with nations even as it seeks to rapidly translate its considerable economic prowess into hard military and political power.
China has never lent itself to international alliances, coalitions or treaty-based relationships, preferring instead to plough a lonely furrow guided by an ambition to restore its 'Middle Kingdom' glory. 

While seeking to do so, under Xi Jinping, it has emerged as a revisionist power seeking to rewrite global order by blatant imperialism. 

Its propagation of a so-called Nine Dash Line in defiance of The Hague Tribunal ruling and aggressive reclamation programme over South China Sea littoral, for instance, point to the scant regard it has for international rules-based system.
There is obviously a commercial and strategic angle to China's misadventures in the South China Sea. Its neighbours such as Philippines fear that China will restrict navigation and secure for itself exclusive rights for oil exploration and fishing. 

The US feels that China is altering the topography because it seeks to shore up its naval, air and missile systems. 

However, these are incidental to a larger Chinese design of establishing its supremacy over south-east Asia.
As Malcolm Davis writes in The Strategist, "This dispute (over the South China Sea) is one aspect of a broader Chinese ambition towards rejuvenation under a China Dream and restoration to ‘middle kingdom’ status that would see its neighbours in Southeast Asia relegated to tributary powers. That new Chinese hegemony would challenge US strategic primacy in Asia. The crisis feeds into a Chinese narrative of a ‘Century of Humiliation’ promoted by the Chinese Communist Party (CCP) to sustain its political legitimacy."

It is inevitable that China will exert its geopolitical influence over South Asia as it climbs up the ranks of global power. 

But the problem lies in the fact that its rise has been abrasive and impatient, not peaceful. 

Its penchant for flouting international laws have driven its neighbours into deep anxiety. 

For instance, it brashly dismissed the jurisdiction of the Hague Tribunal when the ruling over the South China Sea went against it and opened up maritime disputes against a host of nations including Malaysia, Vietnam, Brunei and Indonesia, all of whom claim parts of the South China Sea.
Not only has it rejected the global rules-based order, it has been placing more faith in coercive and/or debt-trap diplomacy while negotiating with neighbours instead of taking a persuasive approach by highlighting and mitigating areas of mutual benefits and concerns. 

These strategies have predictably triggered a pushback from neighbours — including India. 

Based on individual threat perceptions, the nations have responded by promoting greater mutual economic ties and have struck (or attempted to strike) military-strategic rebalanced to counter Chinese adventurism.
Barack Obama's Asia Pivot may have been a non-starter but many of these nations, threatened by the scale and rapidity of China's ambition, have quietly been synergizing their areas of mutual interests. 

India, Japan and Australia, for instance, have seen the benefit of a greater strategic cooperation that will certainly be aimed at (but not limited to) counterbalancing China.
As Council for Foreign Relations fellow Alyssa Ayres recently noted on this subject, "As Japan and India look to further harmonise their respective strategic visions—witness the coming together last November of Modi’s “Act East” policy and Abe’s “Free and Open Indo-Pacific Strategy”—Australia-India cooperation has also been expanding. Following the elevation of the relationship to a “strategic partnership” in 2009, bilateral maritime dialogues and exercises have followed, and a civil nuclear cooperation agreement has now entered into force. The two countries have also agreed to hold a “2+2” meeting with their defense and foreign secretaries."
This is where lies the germination of Chinese insecurity as it notes with increasing concern the coming together of nations against its imperialist designs. 

Its state-controlled media, which China uses to deliver messages it prefers not to through official channels, stopped just short of declaring war against India. 

"If New Delhi ruins the Sino-India ties and the two countries turn into open rivals, can India afford the consequence? With a GDP several times higher than that of India, military capabilities that can reach the Indian Ocean and having good relations with India's peripheral nations, coupled with the fact that India's turbulent northern state borders China, if China engages in a geopolitical game with India, will Beijing lose to New Delhi?"
No matter the level of real or perceived provocation, it doesn't behove a 'great power' to appear as unhinged in rage as China has been over an octogenarian spiritual leader's visit to meet his followers. China must grow up and show a greater degree of maturity that suits its status as the global superpower-in-waiting.

Sina Delenda Est

As Trump prepares for office, concerns about China’s unfair trade and investment practices intensify
By Simon Denyer

A Chinese laboorer works at an unauthorized steel factory, foreground, on Nov. 4, 2016, in Inner Mongolia, China. 

BEIJING — Around the world, concerns are mounting about China’s unfair trade and investment practices. 

How Donald Trump responds could have a far-reaching impact on the global economy and financial markets.
Trump has threatened to declare China a currency manipulator, but experts say he has little legal or economic basis to take such a step. 

He has also threatened to impose a tariff of up to 45 percent on Chinese imports if Beijing doesn’t “behave,” a move that could lead to a trade war and damage the economies of both nations.
Yet he is not alone in sounding the alarm about unfair competition and a playing field sharply tilted in China’s favor. 

And there are plenty of options on the table if he wants to show he is tougher than his predecessor.
The American Chamber of Commerce in China, which usually is very measured in any criticism of China, complained this month about a rise in Chinese protectionism and “economic hegemony,” with doors closing to foreign investment, regulations biased against foreign companies, and new national security-related laws breeding “distrust and paranoia.”
The United States “needs to raise its game with the Chinese to drive for a sense of urgency” in dealing with these issues, it said.
But it is not just the treatment of foreign companies in China, and their lack of access to the Chinese market, that has raised tensions.
Chinese companies are also engaged in a state-sponsored buying spree of foreign companies, diplomats and experts say, in sectors identified by the government as key to an industrial modernization strategy known as Made in China 2025.
China has been using the state’s vast financial resources to buy up key foreign innovation and technology, often in sectors where the Chinese economy is largely closed to inward investment.
So as U.S. investment into China slowly declines, Chinese investment into the United States has surged, overtaking money going the other way for the first time in 2015, according to a new report by the Rhodium Group, an economic research consulting firm.
It is a similar story in Europe. 

Trade tensions between China and Germany have ratcheted up this year.
Ambassador Michael Clauss talks of an “unprecedented wave” of complaints by German companies about the problems of doing business here, and a “definite rise in protectionism” — at the same time as China pours billions of dollars into buying German firms, including several of its most innovative high-tech companies.
That has raised deep concerns in Berlin about national security and Germany’s ability to innovate in the future.
“This is not just an American problem,” Clauss said. 

“China has to realize these concerns are real.”
In Washington this month, the U.S.-China Economic and Security Review Commission recommended changing U.S. law to bar state-owned Chinese companies from buying American businesses.
“We don’t want the U.S. government owning large chunks of the U.S. economy, so why do we want the Chinese Communist Party owning large chunks of the U.S. economy?” asked Dennis Shea, the Republican chairman of the bipartisan commission.
So what are Trump’s options?
To judge China a currency manipulator under U.S. law, the Treasury Department would have to determine that it runs a “significant” bilateral trade surplus with the United States, a “material” current account surplus, and is “engaged in persistent one-sided intervention in the foreign exchange market.”
Although China has by far the largest trade surplus with the United States of any country — $356 billion in 2015 — its current account surplus is under 3 percent of gross domestic product, and it has actually been intervening to prop up its currency, not depress its value.
In other words, it met only one of the three criteria last year, the Treasury Department reported. 

“It would be difficult for the new administration to direct the Treasury to say China is a currency manipulator,” said Eric Shimp, a policy adviser at Alston & Bird in Washington, and a former U.S. diplomat and trade negotiator.
Still, Shimp said, a Trump administration could initiate a broader investigation into China’s trade practices and the state subsidies Chinese exporters enjoy.
Across-the-board punitive tariffs are unlikely, not least because they would invite likely Chinese retaliation that could bring down entire industries, experts said. 

But specific measures are possible in specific industries.
In Washington last week, Chinese Vice Premier Wang Yang said that problems in the trade relationship could damage the global economic recovery and that cooperation was “the only right choice.”
Chinese media have warned of canceled orders for Boeing aircraft, depressed iPhone sales and halted corn and soybean imports if a trade war erupted.
Nevertheless, Trump will be looking closely at the steel industry, especially with Dan DiMicco, former chief executive of the steel company Nucor, leading his transition team at the U.S. Trade Representative’s office.
The Obama administration has already imposed heavy anti-dumping and anti-subsidy duties on some types of Chinese steel, but Shimp said broader tariffs on all steel and aluminum imports might be considered under U.S. “global safeguard” rules — if a Trump administration decides that rising imports have caused “serious” economic injury.
“The harm to global industry from China’s excess capacity in steel and aluminum are well known,” said Claire Reade, senior counsel at Arnold & Porter in Washington and former assistant U.S. trade representative for China. 

“If Trump took action to curb this injury, China would not find itself holding the moral high ground in international public opinion. This might temper any reaction.”
Similarly, a blanket ban on investment by Chinese state-owned companies appears unlikely, experts say. 

The Rhodium Group said Chinese firms employ more than 100,000 people in the United States, and experts say there is still an appetite for investment that rescues indebted companies, builds infrastructure and creates jobs.
But experts expect greater scrutiny of who is behind the deals and where the money is coming from.
Trump prides himself on being the consummate dealmaker, and whether his dire warnings were a negotiating tactic remains in question.
“You’ve thrown out the bomb on tariffs, now let’s use that as leverage,” said Christopher Balding, an associate professor at the HSBC Business School in Shenzhen, China.
But there are risks. 

For one, it is far from certain that China will agree to the sort of demands Trump might make: strengthening big state-owned companies is central to its current economic strategy.
The temptation for Trump to show his supporters that he is standing up to China, and Beijing’s desire to stand strong, means that some kind of action-reaction sequence is entirely possible.