Britain’s Dilemma, A Central Asian Scramble, and Ukraine Drifts East

China Influence Monitor
China Influence Monitor

Hello, and welcome to China Influence Monitor, a weekly newsletter published by CEPA and Coda Story and edited by me, Edward Lucas. We track the westward footprint of China’s influence operations, and their effects on politics, economies, societies, and alliances across Central Asia, the Caucasus, Russia, and Europe.

ROUND UP THE USUAL SUSPECTS

On July 9, Britain mustered 21 friendly countries from the 47-member Media Freedom Coalition to issue a joint statement protesting the media crackdown in Hong Kong. They were “highly concerned,” so it wasn’t exactly megaphone diplomacy. The main interest here is the numbers: only 16 signed up last time when the coalition complained about China’s persecution of Zhang Zhan, a citizen journalist who challenged the official narrative about the Covid-19 pandemic. This time Japan and Italy were notable newcomers, which is good. But still, none of the coalition’s African or Latin American members took part — a reminder of how Chinese influence prevails outside core Western countries.

Warnings abound in London: Ken McCallum, director of MI5 (Britain’s security service), says hostile states (Russia and China) now rival terrorism as a domestic threat. And a stinging new report from MPs on the foreign affairs committee highlights the danger of lax scrutiny of foreign investment in sensitive industries.

But Britain still wants it both ways. Following finance minister Rishi Sunak’s call for “nuance,” Prime Minister Boris Johnson is caricaturing critics of Chinese money as “pitchfork”-wielding naysayers. (More on the contentious sale to China of Britain’s biggest maker of semiconductors here).

The tone in Washington, D.C. is quite different. The State Department lambasted “horrific abuses” in Xinjiang and warned companies doing business thereof a “high risk” of violating U.S. law. Similar guidance on Hong Kong is expected shortly. It will be interesting to see how Apple, Disney, HSBC, and others react. The choice is binary: appease the party-state and risk Western ire, or vice versa.

The European Union is on the case too. It issued new guidance on supply chains that use forced labor (without mentioning China explicitly). The European Parliament is voting on a new China strategy, and MEPs are pushing for an investment deal with Taiwan, while the Comprehensive Agreement on Investment with mainland China remains stalled. Here’s a useful roundup of MEPs’ increasingly hawkish views on China.

The EU has also launched an ambitious new infrastructure plan to rival China’s Belt and Road Initiative. A good place to start would be in its own backyard: poor connectivity in the eastern half of the continent is the lasting legacy of the communist-era division of Europe. Remedying that is supposedly the job of the Three Seas Initiative. However, this 12-country framework spanning the Adriatic, Baltic, and the Black Sea generates more talk than action. Still, Greece attended last week’s summit as a guest and Japan is on board.

One small bit of progress: Montenegro has restructured its crippling $1 billion debt to China, with help from the U.S. and French banks. Let’s hope that other cash-strapped countries take a harder look at Chinese infrastructure projects in the future.

While its influence ebbs in the EU, the PRC’s recent success is in Ukraine, where decision-makers are increasingly exasperated with Western inattention. President Volodymyr Zelensky had a friendly phone call with Xi Jinping, who stressed his support for Ukraine’s territorial integrity. That’s a potential point of friction with the Chinese leader’s supposedly close pal Vladimir Putin, who has just published an essay claiming that Ukraine is not a real country.

Xi’s other interesting phone call this week was with Recep Tayyip Erdoğan. The Turkish leader pushed back mildly on Uyghurs, saying that they needed to be treated equally. The party-state’s account of the meeting is rather different, stressing China’s economic help to the embattled Turkish economy. Turkey is a center of Uyghur agitation. China doesn’t like that. Something’s going to give — we’ll keep you posted.

Amid the security vacuum created by the U.S. withdrawal, China is boosting its engagement with Afghanistan’s Central Asian neighbors. Foreign Minister Wang Yi has been touring the region and told the Taliban to make a clean break from its terrorist ties. The Taliban has already said it won’t harbor Uyghur fighters. So that’s going to be fine.

China seems to be focusing particularly on Tajikistan, the poorest of the five Central Asian states, with a tempting mix of infrastructure and other help.

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BUSINESS NEWS

  • Estonia is countering Chinese dominance in the rare-earth supply chain. The country’s Soviet legacy includes expertise in refining these metals, vital in much high-tech electronics. They are not actually rare, but tricky to process.
  • Huawei is appealing the Swedish court decision that ruled it out of 5G networks in the country.
  • Serbia — the hotspot of the party state’s influence in Europe — has agreed to produce the Sinopharm vaccine.

WHAT WE’RE READING

  • What does China want with your unborn baby’s genetic data? Reuters investigates.
  • A new Japanese defense assessment highlights Taiwan
  • Andrew S. Erickson and Gabriel Collins in Foreign Affairs, on why we don’t need to grovel to get China’s help on climate change
  • A BBC investigation on foreigners who help promote PRC propaganda
  • Next-generation microchip research in the Belgian town of Leuven is the frontline of the tech tussle, says Bloomberg
  • British schools in China have to teach a CCP-approved curriculum
  • This useful new database on PRC leaders’ travel
  • A searing piece by Charlie Campbell in Time about the erasure of linguistic and ethnic diversity in China. (SupChina’s piece from last week is also excellent)

Many thanks to Makuna Berkatsashvili, Mariam Kiparoidze, and Katia Patin at Coda Story, and to Michael Newton at CEPA.

We’ll be back in your inboxes next week.

Best regards,
Edward

July 15, 2021