Hi everyone, hope you had a good weekend. Thanks to those of you that came and spend Valentine’s Day with us in Sydney. What better way of spending a romantic evening than talking about Australia’s China challenges, right?

A reminder to Canberra folks: on Thursday (Feb 20), a few of us are meeting at Joe’s Bar in Kingston from 6pm for drinks. Hope to see you there!

- Yun and Adam

Virus and state power

The wide-spread effects of Coronavirus (COVID-19) are hard to overstate. In China, many big cities are effectively shut down, resembling ghost cities. Hundreds of millions of people are living with restrictions, such as travel restrictions.

The social, economic, personal, and political consequences of the COVID-19 outbreak, over the long term, is likely to be quite profound. One area that is worth attention is state power. The Chinese party-state already wield more power over the lives of individuals than in any democracy. In democracies, such power over the lives of people is neither desirable nor possible.

The experience of this crisis is likely to push the Party towards further enhancing party-state institutional capability and power, a trend that has already been prominent under Xi.

Andrew Batson, China research director for Gavekal, argues:

The commands cascading down the chain of the Chinese government, from Xi Jinping’s meetings of the Politburo Standing Committee down to the management of individual city districts and even individual residential compounds, are not simply technical public health measures. They are the product of a mindset that perceives the virus outbreak as a challenge to the power and authority of the Chinese party-state, to which the only appropriate response is to demonstrate that the Chinese party-state indeed has the power and authority to overcome it. As Xi Jinping himself declared, the outbreak is “a major test of China’s system and capacity for governance.”

…

[T]here is clearly an element of theater, of performance for the public, in China’s response, but the theme of this theater is not so much security or health as it is state power. By its overwhelming response and massive disruption of everyday life, the Chinese party-state is showing just how much power it has, and that this power is being used to stop a feared enemy.

…

One thing that the China’s response to the coronavirus outbreak has conclusively demonstrated is that the Chinese state is in fact more powerful, more effective, and more organized than it was in 2003. Its response to this outbreak is more forceful than the response to SARS because, in part, it can be.

[T]his increase in state power should be a bigger part of the standard narrative of how China has changed over the past two decades than it now is.

…

What it not yet so clear is whether the Chinese state is getting better at deploying that power in service of the public interest.

The theatre of state power has a long tradition in China. It’s especially prominent today in places like Xinjiang where the party-state displays overwhelming power over the fate of individuals.

Chinese military hacking

The US Department of Justice has indicted four members of the Chinese People’s Liberation Army (PLA), the armed wing of the Communist Party of China, for alleged hacking and stealing the personal data of 145 million Americans from credit reporting agency Equifax as well as its trade secrets.

The perpetrators are said to come from the PLA’s 54th Research Institute, under the PLA Strategic Support Force (SSF), the Chinese military’s information warfare branch.

They allegedly took steps to evade detection and mask identities, including by routing traffic through 34 servers located in 20 countries, using encrypted communication channels within Equifax’s network, and deleting log files to eliminate records of their activity.

In announcing the indictments, Attorney General William Barr said:

This was a deliberate and sweeping intrusion into the private information of the American people…we hold PLA hackers accountable for their criminal actions, and we remind the Chinese government that we have the capability to remove the Internet’s cloak of anonymity and find the hackers that nation repeatedly deploys against us. Unfortunately, the Equifax hack fits a disturbing and unacceptable pattern of state-sponsored computer intrusions and thefts by China and its citizens that have targeted personally identifiable information, trade secrets, and other confidential information.

Chinese state-sponsored hacking is nothing new. But the US is getting more serious about responding to it. In this case, it means going so far as to indict members of the Chinese military.

This is the second time that the US has made criminal charges against PLA hackers. The first time was back in May 2014 against five members of a PLA unit that is now part of the SSF’s cyber corps for cyber-espionage against US companies.

It would be a fantasy to think that China would admit to these charges or let its military personnel stand trial in the court of law in the US. But what this does is the name and shame the Chinese government and military in order to deter future misbehaviour. It also serves to inform the public and companies on the risks of cyber intrusion.

Not all countries, however, have taken the approach of public attribution. Australian education institutions, companies, web hosts, political parties and even the parliament has also been hacked in recent years. The Australian Government had seemingly taken a different approach of leaking to media the state-actor they think is responsible without formally attributing.

This approach shows that Australia is unwilling to publicly name and shame the perpetrator even with strong evidence. It believes that the potential costs of formal attribution outweigh the benefits. Perhaps it doubts the deterrence effect of attribution or is unwilling to reveal more details about how it comes to the conclusion.

CIA spying and Huawei

It turns out, shock and horror, that China is not the only great power spying. Since 2013, there has been a series of revelations of US’ world-wide spying and surveillance activities. This week, one more bombshell: the CIA has been secretly reading encrypted communications of numerous foreign governments, both allies and foes, since the 1970s.

Described as the “the intelligence coup of the century” by the CIA’s official history of the operation, the CIA and Western German intelligence jointly and covertly controlled Swiss company Crypto AG, which sold encryption devices in more than 120 countries worldwide.

This enabled US and then-West German intelligence to spy on a global scale. The Germans were aghast at US’ willingness to spy on their allies, including NATO members Spain, Greece, Turkey Italy.

This is especially relevant in the current global discussion on Huawei, 5G and cybersecurity. In order to hinder Huawei’s global expansion, the US has pressured countries around the world to not let Huawei build their 5G infrastructure, citing strategic and security concerns.

This week at the Munich Security Conference US House Speaker Nacy Pelosi again publically urged countries to stay away from Huawei:

China is seeking to export its digital autocracy through its telecommunication giant Huawei…[our] nations cannot cede our telecommunication infrastructure to China for financial expediency.

Such an ill-conceived concession would only embolden Xi (Jinping) as he undermines democratic values, human rights, economic independence and national security.”

Secretary of State Michael Pompeo, in his speech at the conference titled “The West Is Winning” (now, don’t get us to start on this one) said: “Huawei and other Chinese state-backed tech companies are Trojan horses for Chinese intelligence”.

The bipartisan consensus underlying the US campaign against Huawei is a broader US-China competition for technological supremacy, one that will be with us for some time.

For many countries around the world, both the US and China present espionage risks and cannot be trusted. So the question boils down to: which of the two great powers is more benevolent?

US leadership and alliances

What a perfect point to go back to Pompeo’s “The West Is Winning” thesis! We see authoritarianism advances around the world, and democracies backsliding, including in Eastern Europe, Asia and, of course, the US.

The triumphalism in the superiority of the West is hard to sustain at a time of declining American leadership, and increasing anxiety among allies and partners over US commitments as well as US character.

From an Australia perspective, Michael Fullilove from the Lowy Institute wrote in The Atlantic:

[Australians]  know that the U.S. presence in Asia over the past three-quarters of a century has underpinned regional stability and prosperity. Australians do not relish the idea of living in a region dominated by China. We prefer a balance of forces in Asia, with a general acceptance of international norms and the rule of law, as well as the long-term presence of the United States.

…

Trump’s prejudices have undermined America’s interests. He is not convinced that the United States does well when others do well; he likes others to do poorly. He is oblivious to the advantages of global leadership. He prefers protection rackets to alliances. Although the United States is a great trading nation, he is hostile to free trade. His weird affinity for strongmen—and his silence about their crimes—has emboldened dictators everywhere.

…

Previous presidents have defined America’s self-interest broadly. But how can the rest of us find our place in the “America first” worldview? If Trump is not exercised by the dismemberment of a Washington Post columnist in a Saudi consulate or the detention of as many as 1 million Uighurs in reeducation camps, does anyone really believe that he cares about a few islands in the South China Sea?

…

I don’t believe that America is finished. If Trump is replaced by a more normal president, the United States can still course-correct. But what if, come November, American voters say, “More, please”? What further violence would Trump do to the United States and the world? What message should the rest of us take from such a result?

The world still wants to believe in America. But we need Americans to help us believe.

The US needs to face the hard truth that its allies and partners around the world are increasingly disillusioned and nervous regarding US leadership, especially in light of a changing geopolitical landscape with the rise of China.

Chinoiserie

• NüVoices (女性之声) is an international editorial collective that celebrates and supports the diverse creative work of self-identified women working on China.

• “The goddess: a Vancouver Valentine of love, lawsuits, mansions and millionaires,” by Ian Young at South China Morning Post, is a read that left us…speechless.

• China’s Foreign Ministry spokesperson is now finally on Twitter, which of course, is banned in China for its own citizens. The current spokesperson, Hua Chunying (华春莹), started off by predicting the fate of the party-state:

• Harry Potter x COVID-19

Briefing | Analysis | Events | Media | About