[Senate Prints 116-46]
[From the U.S. Government Publishing Office]
116th Congress} { S. Prt.
2d Session } COMMITTEE PRINT { 116-46
======================================================================
THE UNITED STATES AND EUROPE:
A CONCRETE AGENDA FOR
TRANSATLANTIC COOPERATION
ON CHINA
__________
A MAJORITY REPORT
PREPARED FOR THE USE OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
One Hundred Sixteenth Congress
SECOND SESSION
November 18, 2020
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
__________
U.S. GOVERNMENT PUBLISHING OFFICE
42-155 PDF WASHINGTON : 2020
-----------------------------------------------------------------------------------
COMMITTEE ON FOREIGN RELATIONS
JAMES E. RISCH, Idaho, Chairman
MARCO RUBIO, Florida ROBERT MENENDEZ, New Jersey
RON JOHNSON, Wisconsin BENJAMIN L. CARDIN, Maryland
CORY GARDNER, Colorado JEANNE SHAHEEN, New Hampshire
MITT ROMNEY, Utah CHRISTOPHER A. COONS, Delaware
LINDSEY GRAHAM, South Carolina TOM UDALL, New Mexico
JOHN BARRASSO, Wyoming CHRISTOPHER MURPHY, Connecticut
ROB PORTMAN, Ohio TIM KAINE, Virginia
RAND PAUL, Kentucky EDWARD J. MARKEY, Massachusetts
TODD YOUNG, Indiana JEFF MERKLEY, Oregon
TED CRUZ, Texas CORY A. BOOKER, New Jersey
DAVID PERDUE, Georgia
Christopher M. Socha, Staff Director
Jessica Lewis, Democratic Staff Director
John Dutton, Chief Clerk
(ii)
C O N T E N T S
----------
Page
LETTER OF TRANSMITTAL............................................ vii
EXECUTIVE SUMMARY................................................ 1
INTRODUCTION..................................................... 5
CHAPTER ONE--POLITICAL AND CULTURAL INFLUENCE.................... 9
Introduction..................................................... 9
The Challenge to Academic Freedom................................ 10
Media and Film................................................... 14
The Chinese Communist Party and Political Influence.............. 18
Local and National Leaders................................... 18
Rewarding Friends............................................ 20
Punishing Enemies............................................ 22
Democracies Respond.............................................. 24
Conclusion....................................................... 29
CHAPTER TWO--INTERNATIONAL ORGANIZATIONS......................... 31
Introduction..................................................... 31
History of China at the United Nations........................... 32
China: Shaping the United Nations in Its Own Image............... 32
China Weakens Human Rights At the United Nations................. 34
Checkbook Diplomacy.............................................. 36
Personnel at United Nations Agencies............................. 37
Contributions to the United Nations.............................. 38
The Need for Transatlantic Cooperation........................... 41
Conclusion....................................................... 42
CHAPTER THREE--TRADE, INVESTMENT, AND ECONOMIC STATECRAFT........ 43
Introduction..................................................... 43
China's Discriminatory Practices................................. 45
The Power of the State....................................... 45
Forced Technology Transfer................................... 47
State-Sponsored Industrial Espionage......................... 48
State Subsidies and Other State Support...................... 52
Restricted Market Access..................................... 53
Trade Retaliation............................................ 54
Conclusion....................................................... 56
(iii)
CHAPTER FOUR--TECHNOLOGY......................................... 59
Introduction..................................................... 59
The China Challenge.............................................. 60
Mapping the Emerging Technology and Digital Landscapes in Europe
and the United States.......................................... 62
Research and Development..................................... 63
Data and Digitalization...................................... 65
Standards Setting............................................ 68
Transatlantic Cooperation........................................ 69
Conclusion....................................................... 71
CHAPTER FIVE--OVERSEAS COMMERCIAL ACTIVITY....................... 73
Introduction..................................................... 73
Energy........................................................... 74
Overview..................................................... 74
Power Grids, Nuclear Energy, and Coal Plants................. 75
Illegal Trade Practices and Standards Setting................ 79
Security and Political Leverage.............................. 80
Confronting These Challenges................................. 82
Ports and Shipping............................................... 83
Overview..................................................... 83
Economic Challenges.......................................... 84
Security Risks............................................... 85
Implications for the United States and Europe................ 88
Undersea Cables.................................................. 90
Overview..................................................... 90
Undersea Cables and the Digital Silk Road.................... 90
PRC Cable Projects........................................... 91
Conclusion....................................................... 96
CHAPTER SIX--THE TRANSATLANTIC ALLIANCE AND AFRICA............... 99
Introduction..................................................... 99
Africa Matters................................................... 99
The China Factor................................................. 101
Transatlantic Cooperation in Sub-Saharan Africa.................. 104
Trade, Jobs, and Growth...................................... 105
Security..................................................... 105
Development and Civil Society................................ 106
Conclusion....................................................... 107
CHAPTER SEVEN--THE TRANSATLANTIC ALLIANCE AND THE INDO-PACIFIC... 109
Introduction..................................................... 109
Areas of Potential Cooperation................................... 111
Private Sector-Led Investment................................ 111
Maritime Security............................................ 114
Good Governance and Human Rights............................. 116
Environment.................................................. 116
Conclusion....................................................... 119
CONCLUSION AND RECOMMENDATIONS................................... 121
Safeguarding Our Open Societies.................................. 121
Protecting the Integrity of International Organizations.......... 123
Defending the International Trading System....................... 124
Shaping the Future of Technology................................. 126
Addressing the Implications of China's Strategic Investments..... 127
Growing U.S.-Europe Cooperation in Africa and the Indo-Pacific... 129
Both Regions................................................. 129
Africa....................................................... 129
Indo-Pacific................................................. 131
ABBREVIATIONS AND ACRONYMS....................................... 133
LETTER OF TRANSMITTAL
----------
United States Senate,
Committee on Foreign Relations,
Washington, DC, November 18, 2020.
Dear Colleagues: Since the end of the Cold War, the
international community has experienced enormous economic
prosperity and a period of sustained stability. However, as
nations with authoritarian ideologies and imperial tendencies
increasingly look to grow their power and influence on the
world stage, the United States must remain committed to
safeguarding freedom and defending the principles of democracy
and the rule of law.
In particular, we must be prepared to work with our trusted
allies and partners to counter an increasingly confrontational
China that attempts to undermine prosperity, security, and good
governance in every region of the globe. I consider this
foreign policy issue to be the most important of our time, and
I have pursued it at length during my time in the U.S. Senate
and especially since becoming chairman of the Senate Foreign
Relations Committee.
In the past, the United States and Europe have worked
together to help create an open system of rules, norms, and
institutions that uphold individual rights and freedoms,
advance market-based economic prosperity, and safeguard shared
security interests. The United States and Europe must work
together once again to defend these principles and confront
China's attempts to undermine the rule of law.
In this report, I lay out a number of areas in which the
United States should collaborate with our European colleagues
on the challenges posed by China. Transatlantic security and
prosperity require that we continuously renew our commitment to
each other and pledge to use all of our combined tools to
succeed. I am confident that by engaging with the forthcoming
recommendations in this report, the United States and Europe
will be able to find a shared vision to defend the system we
built together.
Sincerely,
James E. Risch
Chairman.
(vii)
EXECUTIVE SUMMARY
----------
Introduction
The United States and Europe increasingly agree that the
People's Republic of China (PRC) poses significant political,
economic, and even security challenges. Legislators and
parliamentarians on both sides of the Atlantic have played an
active and leading role in shifting approaches to meet these
challenges. The next step is to turn this growing agreement
into a constructive and concrete transatlantic agenda to defend
shared interests and values. This report puts forward concrete
ideas for collaboration in six key areas:
Fending off malign political influence,
Protecting the integrity of international organizations,
Addressing anti-competitive trade and economic practices,
Investing in future technologies and shaping how they are
used,
Confronting the security implications of the PRC's
strategic investments in energy, transport, and digital
infrastructure through ``One Belt, One Road'' (OBOR),
and
Invigorating partnerships in Africa and the Indo-Pacific.
Political and Cultural Influence
Since Xi Jinping took over as General Secretary of the
Chinese Communist Party (CCP) in 2012, the PRC has undertaken
extensive operations to manipulate the information space to its
advantage and legitimize the Party's authority on the global
stage. The PRC, alongside its affiliated entities, leverages
its vast economic resources to coerce universities, think
tanks, the media, and local and national politicians to accept
the CCP's narrative by punishing criticism and rewarding
support. Democracies have begun to realize the threat this
coercive influence poses to free and open societies and have
taken actions to protect themselves. However, there is much
more the community of democracies should do to push back on the
PRC's malign influence. This includes:
Combating disinformation,
Strengthening transparency structures,
Developing independent expertise on China, and
Establishing codes of conduct to inoculate institutions
from all malign influences, including from the PRC.
International Organizations
The principal reason for the formation of international
organizations, including the United Nations (UN), was to uphold
and promote an international system characterized by liberal
principles and to play a decisive role in maintaining
international security. However, a major goal of the PRC's
foreign policy is to re-shape global governance such that the
international system defers to CCP interests, specifically
garnering credibility for its regime and for norms and
standards compatible with authoritarianism. To do so, it
inserts CCP language into UN documents, leverages OBOR-
compatible UN funds to support CCP goals, whips UN votes to
shield itself from criticism, and orchestrates the election of
Chinese diplomats to head UN agencies. Moreover, the PRC uses
its financial contributions and peacekeeping personnel to
advance its own global agenda. To push back on PRC attempts to
undermine the system and encourage good governance at the UN,
the United States and Europe should:
Adopt a holistic approach to coordination that spans the
entire UN system,
Work together on reforming specific agencies,
Combine support for UN officials that will uphold the UN
Charter, and
Protect the norms and practices that have served the
international system well.
Trade, Investment, and Economic Statecraft
After several decades in the international trade and
economic system, it is clear the PRC has no intent to
liberalize and adopt free market principles. Instead, China has
continued to advance an ecosystem of anti-competitive economic
and industrial policies that use discriminatory practices and
coercion to further its strategic goals. Such actions hamper
legitimate private enterprise and present an unprecedented
challenge to the international trading system. If the United
States and Europe hope to preserve the role of free markets,
then they must find areas for cooperation that strengthen the
system itself and push back on specific PRC behavior. This
includes:
Advancing shared interests in the World Trade Organization,
Revitalizing transatlantic trade negotiations,
Fixing current points of conflict such as the Boeing/Airbus
disputes,
Coordinating on export controls with respect to China, and
Strengthening supply chain resilience.
Technology
China's massive market, as well as the political focus and
economic resources directed towards the development,
manufacturing, and regulation of emergent technologies, means
that the United States and Europe are at risk of being
subjected to PRC technological infrastructure and the intrusive
way the CCP uses such technologies. This threat is particularly
acute in areas such as research and development, data and
digitization, and standards setting. Losing their technological
advantage would present severe challenges to U.S. and European
economies, militaries, and shared values such as individual
freedom and privacy. The United States and Europe should thus:
Prioritize areas where there are little to no regulatory
obstacles for increased transatlantic cooperation on
technology development,
Create a technology coalition of advanced democracies,
Seek to harmonize regulatory practices in key areas, and
Take other steps to regain a competitive stance in the
global technology race.
Overseas Commercial Activity
China's most visible foreign policy priority is the OBOR
initiative. This project is a means by which to increase the
economic influence of state-owned Chinese firms in global
markets, engender undue PRC political leverage with governments
around the world, create a China-centric technology regime, and
provide greater access to strategic nodes for the People's
Liberation Army. There is a growing transatlantic realization
of the inherent economic and security risks of PRC acquisitions
and investments. Three areas where the United States and Europe
must address these risks are in power grids and energy
infrastructure, ports and shipping, and undersea cables.
Initial measures to address these issues include:
Coordinating between relevant U.S. and European agencies on
priority sectors where shared vulnerabilities could
have long-term ramifications,
Examining the security of U.S. and European power grids and
establishing fail-safe measures to protect increasingly
connected grids,
Holding China accountable for environmental harm resulting
from its energy investments,
Conducting a thorough review of the implications of PRC
port investments for the North Atlantic Treaty
Organization (NATO), and for U.S. and European
engagement in Africa and the Indo-Pacific, and
Initiating discussions on the risks posed to NATO by PRC
undersea cable investment.
The Transatlantic Alliance and Africa
Enormous demographic and economic shifts underway across
the African continent will elevate Africa's role in global
affairs. This requires the transatlantic alliance, along with
its African partners, to collaborate on managing these shifts,
countering malign influence, and promoting the growth of
healthier, more stable, democratic societies that share our
values and interests. Through bilateral investment and loans,
infrastructure projects, and technological partnerships, China
is increasingly invested in and becoming tied to Africa's
destiny. The United States and Europe must recognize the
importance Africa plays in the world and strengthen their
partnerships with the continent on trade, security,
development, and governance. This includes steps such as:
Reframing the ``transatlantic relationship'' to include
African partners,
Codifying the Prosper Africa initiative in the United
States, and considering an intercontinental Prosper
Africa initiative together with Europe, and
Expanding assistance that promotes democracy, increases
government accountability, and fights corruption.
The Transatlantic Alliance and the Indo-Pacific
Currently, the Indo-Pacific is the world's economic center
of gravity and home to many key democratic allies. Moreover,
China has become much more aggressive economically and
militarily in this region. China's ability to project power
worldwide will be determined by how large a foothold China can
gain in this region. Both the United States and Europe have
recognized the importance of the Indo-Pacific for its own sake,
with countries on both sides of the Atlantic issuing Indo-
Pacific strategies. There are important opportunities to avoid
duplication and build on this through more concrete
cooperation, such as:
Encouraging private sector-led growth, including through
greater cooperation between development finance
institutions,
Partnering to develop human capital in the Indo-Pacific
through technical assistance and training,
Strengthening collaboration on maritime security, and
Pursuing joint efforts to safeguard the environment and
bolster natural resource governance.
Conclusion and Recommendations
Neither side of the Atlantic can respond to the China
challenge alone. The only successful path forward is to work
together. Transatlantic security and prosperity requires that
the United States and Europe renew our commitment to each other
and pledge to use all of our combined tools to succeed. The
recommendations offered are a starting point from which we can
build upon our shared assessments of the challenges the PRC
poses, and begin to address the issues that will define the
decades to come. If we do not, then we risk:
Losing the fundamental principles of open societies,
Undermining the prosperous free-market and global trading
system,
Weakening the integrity of international organizations,
Falling behind in the global technology race,
Harming shared security interests, and
Losing an opportunity to engage with increasingly important
partners in Africa and the Indo-Pacific.
INTRODUCTION
----------
Given everything that's happening in the world and the
rise in authoritarian powers, it is important to have
strong cooperation with like-minded democracies. The EU
and U.S. should be at the heart of this effort, but we
should also be working closely with Japan, India, South
Korea, Australia, New Zealand, Canada and others.\1\
---------------------------------------------------------------------------
\1\ Borrell, Josep Fontelles. ``China, the United States and us.''
European Union External Action Service, 31 Jul. 2020, https://
eeas.europa.eu/headquarters/headquarters-homepage/83644/china-united-
states-and-us--en.
--Josep Fontelles Borrell, High Representative of the
---------------------------------------------------------------------------
European Union for Foreign Affairs and Security Policy
Transatlantic conversations on the People's Republic of
China (PRC) often include the following statement: we share
your assessment of the problem. Indeed, the United States and
Europe increasingly agree that China poses significant
political, economic, and even security challenges.\2\ The
United States views the PRC as its top strategic competitor,
even though it continues to seek out avenues of cooperation.\3\
The European Union identifies China as a ``cooperation
partner'' in certain areas, but also recognizes it as an
``economic competitor'' and a ``systemic rival.'' \4\ Recent
surveys by the European Council on Foreign Relations (ECFR)
point to ``an emerging consensus'' within the European Union on
China that is characterized by a ``shared sense of economic
imbalance, disappointment, and unease.'' \5\ The ECFR survey
also shows broad alignment across political parties in Europe,
similar to the general agreement between Republicans and
Democrats in the United States on China.\6\ The PRC's lack of
transparency and use of disinformation during the COVID-19
pandemic, bullying behavior in its own neighborhood as well as
in Europe, and serious violations of its international
obligations in Hong Kong and the South China Sea has only
further hardened attitudes in the United States and Europe.\7\
---------------------------------------------------------------------------
\2\ In this report, the People's Republic of China will be referred
to interchangeably as ``PRC'' and ``China.''
\3\ United States Strategic Approach to the People's Republic of
China. The White House, 20 May 2020, https://www.whitehouse.gov/wp-
content/uploads/2020/05/U.S.-Strategic-Approach-to-The-Peoples-
Republic-of-China-Report-5.20.20.pdf.
\4\ ``Joint Communication to the European Parliament, the European
Council and the Council: EU-China--A strategic outlook.'' European
Commission High Representative of the Union for Foreign Affairs and
Security Policy, 12 Mar. 2019, p. 1, https://bit.ly/38jcldB.
\5\ Oertel, Janka. ``The new China consensus: How Europe is growing
wary of Beijing.'' European Council on Foreign Relations, 07 Sep. 2020,
p. 7, https://bit.ly/3p7lefY.
\6\ Oertel, Janka. ``The new China consensus: How Europe is growing
wary of Beijing.'' European Council on Foreign Relations, 07 Sep. 2020,
p. 5, https://bit.ly/3p7lefY.
\7\ For the purposes of this report, Europe is considered to be the
27 members of the EU, plus Iceland, the United Kingdom and all
continental European nations up to the Russian and Turkish borders.
---------------------------------------------------------------------------
Legislators and parliamentarians on both sides of the
Atlantic have played an active role in shifting to a new
approach on China and promoting policy changes in a variety of
areas. The United States Congress has come together to enact
legislation on the PRC's human rights abuses in Hong Kong\8\
and the Xinjiang Uyghur Autonomous Region,\9\ as well as
investment screening and export controls.\10\ By similarly
shining a spotlight on human rights and other issues, the EU
Parliament is playing the role of ``path breaker'' on Europe's
China policy, as Green Party parliamentarian Reinhard Butikofer
has put it.\11\ Conservative Party parliamentarians in the
United Kingdom have formed the China Research Group.\12\ German
Parliamentarians have been immensely vocal in influencing their
nation's 5G decisions.\13\ The Dutch Parliament hosted a robust
debate in September 2019 on Prime Minister Mark Rutte's China
strategy.\14\ Czech lawmakers are standing up to the PRC's
bullying over Taiwan.\15\ Finally, a diverse group of
legislators from the United States, Europe, Australia, Japan,
and elsewhere, formed the Inter-Parliamentary Alliance on
China, an unofficial group ``working towards reform on how
democratic countries approach China.'' \16\
---------------------------------------------------------------------------
\8\ United States, Congress, Senate, Committee on Foreign
Relations. Hong Kong Human Rights and Democracy Act of 2019.
Congress.gov. 116th Congress, 2nd Session, Senate Resolution 1838,
passed 19 Nov. 2019, https://www.congress.gov/bill/116th-congress/
senate-bill/1838/text.
\9\ United States, Congress, Senate, Committee on Foreign
Relations. Uyghur Human Rights Policy Act of 2020. Congress.gov, 116th
Congress, 2nd Session, Senate Resolution 3744, passed 17 Jun. 2020,
https://www.congress.gov/bill/116th-congress/senate-bill/3744.
\10\ United States, Congress, House, Committee on Armed Services.
``Foreign Investment Risk Review Modernization Act of 2018.'' John S.
McCain National Defense Authorization Act for Fiscal Year 2019,
Congress.gov, 115th Congress, 2nd Session, House Resolution 5515, Title
XVII, passed 13 Aug. 2020, https://www.congress.gov/bill/115th-
congress/house-bill/5515.
\11\ Timsit, Annabelle. ``Parliaments are on the frontlines of
Europe's face-off with China.'' Quartz, 19 Jun. 2020, https://bit.ly/
38jcldB.
\12\ China Research Group News. China Research Group. https://
chinaresearch-group.substack.com.
\13\ von der Burchard, Hans and Joshua Posaner. ``German MPs urge
Merkel to keep Huawei out of 5G network.'' Politico Europe, 22 Oct.
2019, https://www.politico.eu/article/german-mps-huawei-5g-network-
germany-angela-merkel.
\14\ The Netherlands and China: a new balance. Ministry of Foreign
Affairs of the Netherlands, 15 May 2019, https://www.government.nl/
documents/policy-notes/2019/05/15/china-strategy-the-netherlands--
china-a-new-balance.
\15\ Aspinwall, Nick. ``Czech Delegation Pledges Support for
Taiwan, Vows Not to Bow to Chinese Threats''. The Diplomat, 05 Sep.
2020, https://thediplomat.com/2020/09/czech-delegation-pledges-support-
for-taiwan-vows-not-to-bow-to-chinese-threats/.
\16\ Inter-Parliamentary Alliance on China. https://ipac.global/.
---------------------------------------------------------------------------
The next step is to turn this growing agreement on China
into a constructive and concrete agenda to defend shared
transatlantic interests. This important work has already
started. We have implemented investment screening mechanisms to
safeguard critical assets and technologies from state-directed
investment or acquisition, come together at the United Nations
to stand up for the rights of the Chinese people, and advanced
shared principles on secure future telecommunications networks.
The EU-U.S. Dialogue on China proposed in June 2020 by High
Representative of the European Union for Foreign Affairs and
Security Policy Josep Borrell provides a new and important
forum to discuss shared challenges more comprehensively and
hopefully to coordinate on tangible actions.\17\
---------------------------------------------------------------------------
\17\ Borrell, Josep Fontelles. Video conference of Foreign Affairs
Ministers: Remarks by High Representative/Vice-President Josep Borrell
at the press conference. European External Action Service, 15 Jun.
2020, https://bit.ly/36g703S. And Pompeo, Michael R. ``A New
Transatlantic Dialogue.'' Brussels Forum, German Marshall Fund of the
United States, 25 Jun. 2020, https://www.state.gov/a-new-transatlantic-
dialogue/.
---------------------------------------------------------------------------
We must advance new and creative thinking about how the
transatlantic alliance can pursue a more coordinated approach
to the various problems that China poses to the international
system that we've built over the decades. This report aims to
contribute to this important endeavor by examining and
proposing concrete ideas in six key areas: fending off malign
political influence; protecting the integrity of multilateral
organizations; addressing anti-competitive trade and economic
practices; investing in future technologies and shaping how
they are used; contending with the implications of the PRC's
strategic investments in energy, transport, and digital
infrastructure through ``One Belt, One Road''; and invigorating
our partnerships in Africa and the Indo-Pacific. In all these
areas, there is already strong agreement on shared principles
and a foundation for future collaboration, but each area also
highlights future challenges that the United States and Europe
must begin to grapple with now. These issues also encourage
both sides of the Atlantic to view the China challenge through
a global lens.
Tackling this challenge will require a shared and sustained
commitment not only to prioritizing China as a major issue in
our respective foreign and economic policies, but also to
partnering with each other, even as differences arise.
Alongside the irritants that sometimes emerge in the
transatlantic relationship, the United States and Europe will
continue to have differences on how to approach the PRC. It is
imperative that we overcome and work through these differences
and find a shared vision to defend the system we built
together. Europe and the United States, as well as our
democratic allies, have much to lose in this changing world,
but there is also much to gain through cooperation. The Senate
Foreign Relations Committee is deeply interested in partnering
with Europe on this important challenge, and offers this report
as a starting point.
CHAPTER ONE--POLITICAL AND
CULTURAL INFLUENCE
----------
My view is that if we focus on money, we will lose our
values and the money, too.\18\
---------------------------------------------------------------------------
\18\ ``Czech Senate President Defends Taiwan Trip as Based on
`values'.'' Focus Taiwan, 08 Aug. 2020, https://focustaiwan.tw/
politics/202008080002.
--Milos Vystrcil, President, Senate of the Parliament
of the Czech Republic
Introduction
Since Xi Jinping's appointment as General Secretary of the
Chinese Communist Party (CCP) in 2012, the People's Republic of
China (PRC) has sought to increase Chinese influence in the
world and expand the authority of the CCP domestically and
abroad.\19\ From influence operations around the globe to the
manipulation of global media and information in order to
legitimize the Party's authority in the eyes of international
observers,\20\ Beijing's methods are a sharp contrast to the
public diplomacy conducted by other nations. As former
Australian Prime Minister Malcolm Turnbull noted, these
influence activities are ``covert, coercive or corrupt.'' He
added, ``that is the line that separates legitimate influence
from unacceptable interference.'' \21\ The United States,
Europe, and our democratic allies all enjoy open societies, but
without an appropriate awareness of outside attempts to
undermine it, our openness leaves us vulnerable to
exploitation.
---------------------------------------------------------------------------
\19\ Economy, Elizabeth. ``China's New Revolution.'' Foreign
Affairs, May/June 2018, www.foreignaffairs.com/articles/china/2018-04-
17/chinas-new-revolution.
\20\ Shulman, David. ``Protect the Party: China's Growing Influence
in the Developing World.'' 22 Jan. 2019. The Brookings Institution,
www.brookings.edu/articles/protect-the-party-chinas-growing-influence-
in-the-developing-world.
\21\ ``Speech Introducing the National Security Legislation
Amendment (Espionage and Foreign Interference) Bill 2017.'' Malcolm
Turnbull, 07 Dec. 2017, https://bit.ly/2U0dLRV.
---------------------------------------------------------------------------
The CCP's unacceptable interference in our open societies
stems from a governance structure in China in which every
person, business, and organization is subservient to the CCP.
In 2017, this subservience was enshrined in the CCP
Constitution: ``Party, government, army, society and
education--east and west, south and north, the party leads on
everything.'' \22\ In its effort to preserve its leadership
through total control, the CCP has created a network of
interlinked government, quasi-government, and ostensibly
private entities to conduct internal and external influence
operations.\23\ Many of these organizations are part of the
United Front Work Department,\24\ the primary government agency
charged with influence operations, which includes the China
Council for the Promotion of Peaceful National Reunification
and the Overseas Chinese Affairs Office of the State Council. A
recent report estimates that the United Front system spends at
least $1.4 billion annually on its influence efforts.\25\ Other
influence operations are also conducted by China's People's
Liberation Army (PLA) through the China Association for
International Friendly Contact,\26\ the International
Department of the Communist Party of China,\27\ and the Chinese
Ministry of Education through Confucius Institutes.
---------------------------------------------------------------------------
\22\ ``Shouquian fabu: Zhongguo gongchandang zhangcheng--Xinhua
wang.'' [Authorized Version: The Chinese Constitution--Xinhua].
Xinhuanet, 28 Oct. 2017, www.xinhuanet.com/2017-10/28/c--
1121870794.htm. An English version can be found at: ``Constitution of
the Communist Party of China.'' Xinhuanet, 19th Congress of the
Communist Party of China, 24 Oct. 2017, https://bit.ly/2I3cGq8.
\23\ Grunberg, Nis and Katja Drinhausen. ``The Party Leads on
Everything.'' Mercator Institute for China Studies, 24 Sep. 2019,
https://merics.org/en/report/party-leads-everything. And Bowe,
Alexander. China's Overseas United Front Work: Background and
Implications for the United States. U.S.-China Economic and Security
Review Commission, 24 Aug. 2018, https://bit.ly/3p48TcG.
\24\ Bowe, Alexander. China's Overseas United Front Work Background
and Implications for the United States. U.S.-China Economic and
Security Review Commission, 24 Aug. 2018, https://bit.ly/3p48TcG.
\25\ Fedasiuk, Ryan. Putting Money in the Party's Mouth: How China
Mobilizes Funding for United Front Work. The Jamestown Foundation, vol.
20, no. 16, 16 Sep. 2020, https://bit.ly/38hRAPp.
\26\ Lulu, Jichang. ``Decoding united front work from Australia to
Europe.'' Sinopsis, 15 Jun. 2020, https://sinopsis.cz/en/joske-uf-
system/.
\27\ Hackenesch, Christine, and Julia Bader. ``The Struggle for
Minds and Influence: The Chinese Communist Party's Global Outreach.''
Oxford Academic International Studies Quarterly, vol. 64, Issue. 3, 09
Jun. 2020, p. 723-733, https://academic.oup.com/isq/article/64/3/723/
5855278.
---------------------------------------------------------------------------
The United States, Europe, and other countries have only
recently started to realize the challenges posed by the CCP and
its influence. For example, the Dutch Government concluded
that, ``China has a variety of means at its disposal to achieve
its strategic goals. Its pursuit of these goals could impact
our own security.'' \28\ The EU High Representative Josep
Borrell has echoed these concerns about a China that
``safeguard[s] its main interests in an unambiguous and
unconditional manner.'' \29\ These realizations echo those in
the United States: ``We opened our arms to Chinese citizens,
only to see the Chinese Communist Party exploit our free and
open society.'' \30\ The threat posed by Beijing's influence
operations is the slow and insidious corruption of our shared
cultural, political, and economic institutions. We cannot
tackle this threat individually. The Chinese government uses
these operations to divide us internally and externally in an
effort to prevent a cohesive response to its attempts to shape
a more compliant international system favorable to the CCP. It
is undeniable that the transatlantic relationship itself
currently faces difficulties. But only together can free, open,
and democratic nations protect ourselves and our alliance of
democracies.
---------------------------------------------------------------------------
\28\ The Netherlands and China: a new balance. Government of the
Netherlands Ministry of Foreign Affairs, 15 May 2019, https://bit.ly/
2Icsarv.
\29\ Borrell, Josep Fontelles. The Sinatra Doctrine. How the EU
Should Deal with the US-China Competition. Istituto Affari
Internazionali, 24 Sep. 2020, https://bit.ly/2TYqzYO.
\30\ Pompeo, Michael R., Communist China and the Free World's
Future. U.S. Department of State, 23 Jul. 2020, https://www.state.gov/
communist-china-and-the-free-worlds-future/.
---------------------------------------------------------------------------
The Challenge to Academic Freedom
Academic freedom, diverse cultural and political thought,
and encouragement of invention and creativity in the United
States and Europe have driven a plethora of technological and
scientific innovations throughout history. That the CCP has
identified the educational institutions that foster these
values as a target for influence and corruption should come as
no surprise. China appears to have two central goals when
attempting to influence academic institutions in other
countries: first, to gain technological knowhow, either by
participation or theft, and second, to suppress unwelcome
criticism.
Several recent high-profile cases at universities and
research institutions in both the United States and Europe have
brought to the fore Beijing's use of Chinese and foreign
scholars and researchers as instruments of espionage and
influence. Last year, a Chinese professor at the Vrije
Universiteit Brussel in Belgium was accused of supporting
Chinese intelligence in Brussels. This professor served as the
head of the school's Confucius Institute, educational centers
that teach Chinese language and history run by a branch of the
PRC Ministry of Education called Hanban.\31\ Reports indicate
that the university initially ignored the Belgian state
security services' warnings of the security risk, but the
university eventually closed the Confucius Institute.\32\ In
the United States, the Trump Administration closed the Chinese
consulate in Houston, Texas, over concerns about espionage of
key biomedical research from a local research institution and
other technologies.\33\ Moreover, the U.S. Justice Department
exposed a network of researchers that had applied for U.S.
visas without disclosing their ties to the PLA.\34\ While we
should not assume that all Chinese students and researchers are
spying for Beijing, we must also acknowledge that such
activities are more pervasive than previously thought. Our
academic institutions should remain open and free, but they
must also remain vigilant against efforts to exploit them by
foreign militaries and intelligence agencies.
---------------------------------------------------------------------------
\31\ Benner, Thorsten, et al. Authoritarian Advance: Responding to
China's Growing Political Influence in Europe. Global Public Policy
Institute/Mercator Institute for China Studies, Feb. 2018, https://
bit.ly/38e3VUK. And Epstein, Ethan. ``How China Infiltrated U.S.
Classrooms.'' Politico Magazine, 17 Jan. 2018, https://
www.politico.com/magazine/story/2018/01/16/how-china-infiltrated-us-
classrooms-216327.
\32\ Galindo, Gabriela. ``Brussels University to Close Chinese-
Funded Institute after Espionage Accusations.'' Brussels Times, 11 Dec.
2019, www.brusselstimes.com/belgium/83195/brussels-university-to-close-
chinese-funded-institute-after-espionage-accusations-vub-confucius-
institute/. And Follorou, Jacques. ``La Belgique Se Rebiffe Face Aux
Espions Chinois.'' Le Monde, 15 May 2020, https://bit.ly/38jmpmT.
\33\ Briefing With Senior U.S. Government Officials On the Closure
of the Chinese Consulate in Houston, Texas. U.S. Department of State,
24 Jul. 2020, https://bit.ly/2IkrEIg. And Brunnstrom, David, and Daphne
Psaledakis. ``Houston Consulate One of Worst Offenders in Chinese
Espionage, Say U.S. Officials.'' Reuters, 24 Jul. 2020,
www.reuters.com/article/us-usa-china-consulate-houston/houston-
consulate-one-of-worst-offenders-in-chinese-espionage-say-u-s-
officials-idUSKCN24P1XT. And Chinese Attempts to Illegally Transfer
U.S. Technologies - Syntactic Foam Case Study. U.S. Department of
Justice, 2020, p. 1-4, https://bit.ly/3lgxTuY.
\34\ ``Researchers Charged with Visa Fraud After Lying About Their
Work for China's People's Liberation Army.'' U.S. Department of Justice
Office of Public Affairs, 23 Jul. 2020, https://bit.ly/3k1kq8J.
---------------------------------------------------------------------------
Through attempts to exercise financial leverage over
academic intuitions that accept PRC funds and host Confucius
Institutes and student associations, the CCP seeks to curtail
academic freedom and push CCP propaganda. Substantial tuition
payments from PRC students are a point of leverage that has
been used to pressure universities.\35\ Donations from the PRC
government and PRC companies to academic institutions are
rightfully facing increased scrutiny. Cambridge University's
Jesus College came under heavy criticism in 2020 after a
freedom-of-information request revealed it had accepted a
155,000 donation from Huawei and a
200,000 donation from the PRC government. Observers
noted that a later study by the college on global
communications reforms treated the Chinese telecoms giant
favorably.\36\ A 2019 report by the Permanent Subcommittee on
Investigations of the Senate Committee on Homeland Security and
Governmental Affairs found that the Office of Chinese Language
Council International (known as Hanban) of the PRC Ministry of
Education contributed more than $113 million to 100 American
schools that hosted Confucius Institutes at some point between
2012 and 2018, more than seven times the amount the schools
reported to the government.\37\ Citing this Senate report, the
U.S. Department of Education launched an investigation in 2020
into donations to Harvard and Yale by foreign entities.\38\
---------------------------------------------------------------------------
\35\ In 2014, Chinese students contributed about one-third of the
tuition, fees, and living expenses of U.S. universities' international
student population. According to the Institute of International
Education, in the 2018/2019 academic year, China sent the most
international students to the U.S. for the 10th straight year with
369,548 students. Barta, Patrick, et al. ``How International Students
Are Changing U.S. Colleges.'' Wall Street Journal, https://bit.ly/
3526CGR. And ``Number of International Students in the United States
Hits All-Time High.'' Institute of International Education, 18 Nov.
2019, https://bit.ly/2U3tfEI. For a more detailed discussion of the use
of tuition as a point of leverage, see: Lloyd-Damnjanovis, Anastasya. A
Preliminary Study of PRC Political Influence and Interference
Activities in American Higher Education. Wilson Center Kissinger
Institute on China and the United States, Aug. 2018, https://bit.ly/
2I8Z4cy.
\36\ Fisher, Lucy. ``Jesus college accepted 155,000
contribution from Huawei.'' The Times, 10 Jul. 2020, https://
www.thetimes.co.uk/article/jesus-college-accepted-155-000-contribution-
from-huawei-53rr7qmcf. And Holl-Allen, Genevieve, 10 Jul. 2020. ``Jesus
College under fire for accepting donations from Huawei.'' Cambridge
Tab, https://thetab.com/uk/cambridge/2020/07/10/jesus-college-under-
fire-for-accepting-donations-from-huawei-139444.
\37\ China's Impact on the U.S. Education System. U.S. Senate
Committee on Homeland Security and Governmental Affairs Permanent
Subcommittee on Investigations, 28 Feb. 2019, https://bit.ly/3l1fZfw.
\38\ ``U.S. Department of Education Launches Investigation into
Foreign Gifts Reporting at Ivy League Universities.'' U.S. Department
of Education, 12 Feb. 2020, https://bit.ly/3l7eWL1.
---------------------------------------------------------------------------
Confucius Institutes have awakened U.S. and European
governments and universities to the potential for campus
organizations to curtail academic freedom and disseminate CCP
propaganda. Many Confucius Institutes use opaque contracts and
hiring policies with host institutions, maintain requirements
to promote CCP propaganda, and include prohibitions on
violating Chinese law.\39\ Topics deemed sensitive by the CCP
are targeted with censorship and controls, including Tibet,
Tiananmen Square, and Falun Gong.\40\ Even the North Atlantic
Treaty Organization (NATO) has warned of Confucius Institutes'
potential effect on ``the sovereignty of foreign policy making,
including public opinion and academic thinking that could
influence policy making in favour of the PRC.'' \41\ Realizing
the risks to academic freedom posed by Confucius Institutes,
many universities have begun to reconsider these arrangements.
Sweden recently closed all Confucius Institutes,\42\ and 54
U.S.-based Confucius Institutes have closed or are planning to
do so.\43\
---------------------------------------------------------------------------
\39\ Diamond, Larry and Orville Schell. Chinese Influence and
American Interests Promoting Constructive Vigilance. The Hoover
Institution, 24 Oct. 2018, https://hvr.co/352CKu6. And Schrader, Matt.
Friends and Enemies: A Framework for Understanding Chinese Political
Interference in Democratic Countries. German Marshall Fund Alliance for
Securing Democracy, 22 Apr. 2020, https://bit.ly/3p1viHw.
\40\ Sahlins, Marshall. ``China U.'' The Nation, 30 Oct. 2013,
https://bit.ly/3p0tj6t.
\41\ Hybrid Threats: Confucius Institutes. NATO Stratcom Centre of
Excellence, https://www.stratcomcoe.org/hybrid-threats-confucius-
institutes.
\42\ Flittner, Sofia. ``Sweden has closed all Confucius Institutes
and Classrooms.'' ScandAsia, 20 May 2020, https://scandasia.com/sweden-
has-closed-all-confucius-institutes-and-classrooms/.
\43\ ``How Many Confucius Institutes Are in the United States?''
National Association of Scholars, 08 Sep. 2020, https://bit.ly/355n3SX.
---------------------------------------------------------------------------
Chinese Students and Scholars Associations (CSSAs) provide
another important avenue for PRC influence on university
campuses. CSSA exploitation of Chinese students abroad is
particularly disturbing. The Chinese government forces students
into advancing its agenda through pressure, monitoring, and
persecution of their families back in China.\44\ CSSAs receive
guidance from PRC embassies and consulates which, in turn,
report to the Ministry of Foreign Affairs.\45\ In 2018, at
least 142 CSSAs chapters were operating in the United
States.\46\ In 2011, the Georgetown University CSSA revealed
that it received approximately half of its budget from the
Chinese government;\47\ it is likely many other CSSAs have a
similar arrangement. These CSSAs often work to suppress speech
viewed as anti-China. At the U.K.'s Durham University, the CSSA
lodged a complaint against the debate society for inviting a
Falun Gong practitioner to speak at an event.\48\ At the
University of California San Diego, the CSSA protested the
university's invitation to the Dalai Lama to speak at its
commencement and publicly disclosed its coordination on the
matter with the Chinese consulate in Los Angeles.\49\
---------------------------------------------------------------------------
\44\ Saul, Stephanie. ``On Campuses Far From China, Still Under
Beijing's Watchful Eye.'' New York Times, 04 May 2017, https://nyti.ms/
2U3cAAU. And Craymer, Lucy. ``China's National-Security Law Reaches
Into Harvard, Princeton Classrooms.'' Wall Street Journal, 19 Aug.
2020, https://on.wsj.com/32jBrVV.
\45\ China's Overseas United Front Work: Background and
Implications for the United States. U.S.-China Economic and Security
Review Commission, 24 Aug. 2018, https://bit.ly/3l1feDf.
\46\ Ibid.
\47\ Allen-Ebrahimian, Bethany. ``Chinese Government Gave Money to
Georgetown Chinese Student Group.'' Foreign Policy, 14 Feb. 2018,
https://foreignpolicy.com/2018/02/14/exclusive-chinese-government-gave-
money-to-georgetown-chinese-student-group-washington-china-communist-
party-influence/.
\48\ Benner, Thorsten, et al. Authoritarian Advance: Responding to
China's Growing Political Influence in Europe. Global Public Policy
Institute/Mercator Institute for China Studies, Feb. 2018, https://
bit.ly/38e3VUK.
\49\ ``Chinese student organizations denounce Dalai Lama as
commencement speaker.'' Triton, 03 Feb. 2017, https://triton.news/2017/
02/chinese-student-organizations-denounce-dalai-lama-commencement-
speaker/. And Redden, Elizabeth. ``Chinese Students vs. Dalai Lama.''
Inside Higher Ed, 16 Feb. 2017, https://bit.ly/32iDx8c.
---------------------------------------------------------------------------
Moreover, students with PRC citizenship attending foreign
universities are often nervous or unwilling to participate in
activities that could be interpreted as critical of the CCP for
fear of the PRC's extraterritorial system of surveillance and
harassment. A Chinese student studying at the University of
Minnesota refused to comment on a movie critical of the PRC
``because we don't know who might be listening to us.'' \50\
Not only does the PRC keep tabs on Chinese students at foreign
universities, but it harasses and surveils their families back
in China.\51\ The family of a Chinese student studying in
Australia, who controls a CCP-critical Twitter account, was
summoned by PRC police for questioning on multiple occasions in
an attempt to coerce the student's compliance.\52\
---------------------------------------------------------------------------
\50\ Lloyd-Damnjanovis, Anastasya. A Preliminary Study of PRC
Political Influence and Interference Activities in American Higher
Education. Wilson Center Kissinger Institute on China and the United
States, Aug. 2018, https://bit.ly/2I8Z4cy.
\51\ Ibid.
\52\ Chou, Shih-Wei and Xiao Yu. ``China Tries to Muffle Those
Living Abroad by Intimidating their Families.'' Voice of America, 09
Jul. 2020, https://www.voanews.com/east-asia-pacific/china-tries-
muffle-those-living-abroad-intimidating-their-families.
---------------------------------------------------------------------------
The harm to academic freedom presented by such systematic
efforts by the CCP to restrict free and open expression is
extensive. The Netherlands' Clingendael Institute found that:
China's political influence in higher education and
science in the Netherlands has two broad consequences:
it negatively affects China knowledge in the
Netherlands, and it negatively influences the quality
of China research, as well as research in other areas
that is (partly) conducted in or with China.\53\
---------------------------------------------------------------------------
\53\ (quote translated) d'Hooghe, Ingrid, and Brigitte Dekker.
``China's invloed op onderwijs in Nederland.'' Clingendael Magazine, 03
Jul. 2020, https://www.clingendael.org/publication/chinas-invloed-op-
onderwijs-nederland.
In some cases, the universities themselves may be
facilitating censorship on their own campuses.\54\ Schools and
universities struggling with funding are particularly
vulnerable, including those in Central and Eastern Europe.\55\
Individual institutions, states, national governments, and the
transatlantic community must work together to combat these
attempts by the PRC to influence our education systems to
promote its political objectives.
---------------------------------------------------------------------------
\54\ Wilby, Peter. ``Academic freedom is precious--so why have UK
universities sold out to China?'' The Guardian, 11 Aug. 2020, https://
bit.ly/3exbYgq. And Lloyd-Damnjanovis, Anastasya. A Preliminary Study
of PRC Political Influence and Interference Activities in American
Higher Education. Wilson Center Kissinger Institute on China and the
United States, Aug. 2018, https://www.wilsoncenter.org/sites/default/
files/media/documents/publication/prc--political--influence--full--
report.pdf.
\55\ Karaskova, Ivana. ``Countering China's Influence Campaigns at
European Universities.'' The Diplomat, 22 Feb. 2020, https://bit.ly/
2I8Z4cy.
---------------------------------------------------------------------------
Media and Film
At the National Meeting on Ideology and Propaganda in 2018,
General Secretary Xi said, ``We will improve our ability to
engage in international communication so as to tell China's
stories well, make the voice of China heard, and present a
true, multi-dimensional, and panoramic view of China to the
world.'' \56\ In Xi's China, only the Party decides if a story
is told ``well'' and ``true.'' For that, Beijing needs a
supportive and compliant media atmosphere, rather than the
democratic model of independent, watchdog journalism and a
culture of free and open expression. As China's Ambassador to
Sweden, Gui Congyou put it, ``the role of the media is to play
a positive part...they should spread friendship, kindness,
solidarity, and cooperation, instead of inciting hostility or
hatred.'' \57\ To the PRC, ``spreading friendship, kindness,
and solidarity'' allows for no discussion, dissent, or
criticism of the Party or of Chinese history. To put this into
practice, Beijing deploys an ever-expanding PRC state media
system around the globe, leverages its financial power to coopt
Western media, conducts aggressive diplomacy through social
media outlets banned in China, and spreads disinformation to
deflect and manipulate the truth.
---------------------------------------------------------------------------
\56\ Bo, Xiang. ``Xi calls for better fulfilling missions of
publicity work.'' Xinhua News, 22 Aug. 2018, https://bit.ly/366yNUs.
\57\ Ambassador Gui Congyou Gives Interview with SVT on the Role of
Media and Swedish Media's Reporting on China. Embassy of the People's
Republic of China in Sweden, 17 Jan. 2020, http://www.chinaembassy.se/
eng/sgxw/t1733543.htm.
---------------------------------------------------------------------------
Chinese state media entities span radio, television, social
media, and print journalism, and have increasingly become a
part of the Western media ecosystem. As an example of the
breadth of this expansion, between 2009 and 2018, state-
directed newspaper Xinhua News expanded from 120 to 200 bureaus
worldwide reporting in seven languages.\58\ China Global
Television Network (CGTN) opened a London office in 2019,\59\
but it already faces a possible ban on U.K. airwaves for airing
forced confessions.\60\ CGTN is reportedly considering opening
a Brussels headquarters, as well.\61\ PRC state-run news
outlets advance PRC government messages through paid inserts in
newspapers and magazines that are hard to distinguish from
legitimate news publications. China Daily is, or has been,
distributed inside The Washington Post, The Wall Street
Journal, and the Des Moines Register, as well as European
outlets like the U.K.'s Telegraph and Spain's El Pais.\62\ Not
only does this mislead news consumers, but the enormous revenue
injections could provide the CCP with future leverage over
outlets that become reliant on such payments. Some, like the
Daily Telegraph, stopped publishing CCP-paid content, but in a
difficult media environment, many outlets are unable to refuse
the revenue.\63\
---------------------------------------------------------------------------
\58\ Diamond, Larry and Orville Schell. Chinese Influence and
American Interests Promoting Constructive Vigilance. The Hoover
Institution, 24 Oct. 2018, https://hvr.co/352CKu6. And Stone Fish,
Isaac. ``Is China's Xinhua the Future of Journalism?'' Newsweek, 03
Sep. 2010, https://www.newsweek.com/chinas-xinhua-future-journalism-
71961.
\59\ Nilsson, Patricia. ``China's state broadcaster set for UK
launch.'' Financial Times, 28 Aug. 2019, https://www.ft.com/content/
71d0e972-c998-11e9-a1f4-3669401ba76f.
\60\ Hern, Alex. ``UK-based Chinese news network CGTN faces
possible ban.'' The Guardian, 06 Jul. 2020, https://
www.theguardian.com/media/2020/jul/06/uk-based-chinese-news-network-
cgtn-faces-possible-ban.
\61\ Parrock, Jack. ``Voice of China's European ambitions.''
Politico, 08 Sep. 2020, https://www.politico.eu/article/china-europe-
media-voice-ambitions-global-television-news-cgtn-global-television-
news/.
\62\ Diamond, Larry and Orville Schell. Chinese Influence and
American Interests Promoting Constructive Vigilance. The Hoover
Institution, 24 Oct. 2018, https://hvr.co/352CKu6. And Benner,
Thorsten, et al. Authoritarian Advance: Responding to China's Growing
Political Influence in Europe. Global Public Policy Institute/Mercator
Institute for China Studies, Feb. 2018, https://bit.ly/38e3VUK.
\63\ Waterson, Jim and Dean Sterling Jones. ``Daily Telegraph stops
publishing section paid for by China.'' The Guardian, 14 Apr. 2020,
https://www.theguardian.com/media/2020/apr/14/daily-telegraph-stops-
publishing-section-paid-for-by-china.
---------------------------------------------------------------------------
Moreover, unlike the nearly unfettered access granted to
PRC media in the United States, Europe, and elsewhere, the
PRC's media environment is highly restrictive. According to the
Foreign Correspondents' Club of China, the New York Times,
Reuters, The Wall Street Journal, Le Monde, Der Spiegel, BBC,
and The Economist, among many others, are blocked in China.\64\
In September 2020, the U.S. Department of State released a
scathing statement on this inequity, after The People's Daily
refused to publish an op-ed by U.S. Ambassador to China Terry
Branstad, despite the Chinese Ambassador to the United States
Cui Tiankai having published five op-eds in American outlets in
2020.\65\
---------------------------------------------------------------------------
\64\ ``FCCC Statement on the Blocking of Foreign News Websites in
China.'' Foreign Correspondents' Club of China, 22 Oct. 2019, https://
bit.ly/2JKU4vp.
\65\ Pompeo, Michael R. The Hypocrisy of the PRC's Propaganda
System. U.S. Department of State, 09 Sep. 2020, https://www.state.gov/
the-hypocrisy-of-the-prcs-propaganda-system/.
---------------------------------------------------------------------------
Finally, PRC authorities' use of visa renewals, denials,
and travel restrictions within China to punish negative media
coverage and curtail journalists' freedom of movement is long-
standing.\66\ In 2015, a China-based French journalist for
L'Obs was refused a visa renewal after she published an article
questioning whether China's expression of solidarity with
France after the Paris terrorist attacks was a way to gain
international sympathy for the CCP's campaign against Uyghurs
on terrorist grounds.\67\
---------------------------------------------------------------------------
\66\ ``China Delays Approving Press Credentials for Foreign
Reporters in Media Standoff.'' Wall Street Journal, 07 Sep. 2020,
www.wsj.com/articles/china-delays-approving-press-credentials-for-
foreign-reporters-in-media-standoff-11599401714.
\67\ Darkened Screen: Constraints on Foreign Journalists in China.
PEN America, 22 Sep. 2016, https://bit.ly/3ezQsaR.
---------------------------------------------------------------------------
PRC government officials have also become more aggressive
in their use of social media through ``wolf warrior'' diplomacy
and global disinformation campaigns during the COVID-19
pandemic.\68\ Coined by Chinese state media and named for two
action movies in which the Chinese military conquers American
forces, ``wolf warrior'' diplomacy describes the new ethos of
Chinese diplomats, a more aggressive push of CCP messaging
through various mediums.\69\ PRC government officials use
social media like Twitter and Facebook--still blocked in
China--to suppress the undesirable, amplify the positive, and
spread disinformation.\70\ PRC diplomats' Twitter use
dramatically increased in response to the COVID-19 crisis to
amplify its ``mask diplomacy'' charm offensive,\71\ flood the
internet with the disinformation about the virus' origin,\72\
and rebut any criticism of how the CCP's handling of the
outbreak harmed the global response. Moreover, PRC diplomats
engaged in a reportedly successful pressure campaign to force
the European Union to water down its finding about the PRC's
peddling of COVID-19 disinformation.\73\ However, the
production and issuance of a joint communication on tackling
COVID-19 disinformation did signify progress, representing the
first time that the European Commission publically accused
China of spreading disinformation.\74\
---------------------------------------------------------------------------
\68\ ``China's `Wolf Warrior' diplomacy gamble.'' The Economist, 28
May 2020, https://www.economist.com/china/2020/05/28/chinas-wolf-
warrior-diplomacy-gamble. And Palmer, James. ``Why Chinese Embassies
Have Embraced Aggressive Diplomacy.'' Foreign Policy, 15 Apr. 2020,
https://foreignpolicy.com/2020/04/15/chinese-embassies-embrace-
aggressive-diplomacy-coronavirus-pandemic-misinformation/.
\69\ Wong, Chun Han and Chao Deng. ``China's `Wolf Warrior'
Diplomats Are Ready to Fight.'' Wall Street Journal, 19 May 2020,
https://www.wsj.com/articles/chinas-wolf-warrior-diplomats-are-ready-
to-fight-11589896722. And Dettmer, Jamie. ``China's 'Wolf Warrior'
Diplomacy Prompts International Backlash.'' Voice of America, 06 May
2020, https://bit.ly/3mZRfor.
\70\ ``Propaganda beyond the Great Firewall.'' Mercator Institute
for China Studies, 05 Dec. 2019, https://merics.org/en/graphic/
propaganda-beyond-great-firewall. And Feng, Zhaoyin. ``China and
Twitter: The year China got louder on social media.'' BBC News, 29 Dec.
2019, https://www.bbc.com/news/world-asia-china-50832915. And Scott,
Mark. ``Chinese diplomacy ramps up social media offensive in COVID-19
info war.'' Politico, 29 Apr. 2020, https://www.politico.eu/article/
china-disinformation-covid19-coronavirus/.
\71\ ``Mask diplomacy'' is the PRC's effort to deflect from its
poor handling of the COVID-19 outbreak in Wuhan, China through Chinese
medical aid sent to suffering countries, some donated and some sold,
followed by amplification of the generosity of these shipments in
traditional and social media. For more information, see: Soula,
Etienne, et al. Masks Off: Chinese Coronavirus Assistance in Europe.
German Marshall Fund, 02 Jul. 2020, https://bit.ly/3k7hrvu. And
Hornung, Jeffrey W. ``Don't Be Fooled by China's Mask Diplomacy.'' RAND
Blog, RAND Corporation, 05 May 2020, https://www.rand.org/blog/2020/05/
dont-be-fooled-by-chinas-mask-diplomacy.html.
\72\ Gilbert, David. ``China's Been Flooding Facebook With Shady
Ads Blaming Trump for the Coronavirus Crisis.'' Vice News, 06 Apr.
2020, https://bit.ly/3l5NY6L.
\73\ Peel, Michael, and Tom Mitchell. ``China warned EU 3 times
over virus propaganda report.'' Financial Times, 26 Apr. 2020, https://
www.ft.com/content/a2f66f6a-50cb-46fe-a160-3854e4702f1c. And Van Dorpe,
Simon, et al. ``China put pressure on EU to soften coronavirus
disinformation report.'' Politico, 25 Apr. 2020, https://
www.politico.eu/article/china-put-pressure-on-eu-to-soften-coronavirus-
disinformation-report/. And ``EEAS Special Report Update: Short
Assessment of Narratives and Disinformation Around the COVID-19
Pandemic (Update 2-22 April).'' EU vs Disinfo, 24 Apr. 2020, https://
euvsdisinfo.eu/eeas-special-report-update-2-22-april/
\74\ ``Joint Communication To The European Parliament, The European
Council, The Council, The European Economic And Social Committee And
The Committee Of The Regions: Tackling COVID-19 disinformation -
Getting the facts right.'' European Commission, 06 Oct. 2020, https://
eur-lex.europa.eu/legal-content/EN/TXT/HTML/
?uri=CELEX:52020JC0008&from=EN. And Scott, Mark, et al. ``European
Commission accuses China of peddling disinformation.'' Politico, 10
Jun. 2020, https://www.politico.eu/article/european-commission-
disinformation-china-coronavirus/.
---------------------------------------------------------------------------
These aggressive ``wolf warrior'' tactics appear to have
largely backfired.\75\ For instance, the French Foreign
Ministry summoned the Chinese Ambassador after Chinese
diplomats claimed France negligently allowed its elderly to die
of COVID-19.\76\ European public attitudes toward China are
hardening,\77\ and the EU approach toward China is
stiffening.\78\ Negative views of China reached historic highs
in Australia, Canada, Germany, the Netherlands, South Korea,
Spain, Sweden, the United Kingdom, and the United States,
according to recent Pew polling.\79\ COVID-19 is not the only
cause of this shift, but it certainly is an accelerant.
---------------------------------------------------------------------------
\75\ Myers, Steven Lee. ``China's Aggressive Diplomacy Weakens Xi
Jinping's Global Standing.'' New York Times, 17 Apr. 2020, https://
www.nytimes.com/2020/04/17/world/asia/coronavirus-china-xi-
jinping.html. And Shih, Gerry. ``China's bid to repair its coronavirus-
hit image is backfiring in the West.'' Washington Post, 14 Apr. 2020,
https://wapo.st/32kK3eC.
\76\ Wintour, Patrick. ``France summons Chinese envoy after
coronavirus `slur'.'' The Guardian, 15 Apr. 2020, https://
www.theguardian.com/world/2020/apr/15/france-summons-chinese-envoy-
after-coronavirus-slur.
\77\ Oertel, Janka. ``China, Europe, and covid-19 headwinds.''
European Council on Foreign Relations, 20 Jul. 2020, https://bit.ly/
3mTsbiW. And Silver, Laura, et al. ``People around the globe are
divided in their opinions of China.'' FactTank, Pew Research Center, 05
Dec. 2019, https://pewrsr.ch/2I5usZQ.
\78\ Oertel, Janka. ``The new China consensus: How Europe is
growing wary of Beijing.'' European Council on Foreign Relations, 07
Sep. 2020, https://bit.ly/3p7lefY.
\79\ Silver, Laura, et al. Unfavorable Views of China Reach
Historic Highs in Many Countries. Pew Research Center, 06 Oct. 2020,
https://www.pewresearch.org/global/2020/10/06/unfavorable-views-of-
china-reach-historic-highs-in-many-countries/.
---------------------------------------------------------------------------
Finally, there is increasing concern over PRC-directed
control and censorship of the film industry, executed through
editorial changes demanded by the CCP, purchases of theater and
production companies by PRC companies, and visa denials to
directors, actors, and others critical of PRC policies.\80\
Free-speech watchdog PEN America released a report entitled
``Made in Hollywood, Censored by Beijing,'' in which it
describes how Hollywood has almost completely acquiesced to the
CCP's censorship demands, through production modifications or
anticipatory self-censorship.\81\ In a particularly egregious
example, the 2013 film World War Z, originally a novel about a
zombie outbreak caused by a virus released in China, was
deliberately changed from the original plotline so that the
virus originated elsewhere.\82\ The French and British film
industries experience similar censorship demands.\83\ The live-
action remake of Disney's Mulan received widespread criticism
after it was revealed that Disney filmed part of the movie in
Xinjiang province, the location of Uyghur reeducation camps,
and thanked CCP propaganda and security departments for their
assistance.\84\ Of course, media coverage of this controversy
was censored within China.\85\
---------------------------------------------------------------------------
\80\ Forsythe, Michael. ``Dalian Wanda of China Buys Legendary
Entertainment for Up to $3.5 Billion.'' New York Times, 12 Jan. 2016,
https://nyti.ms/38hX9xh. And Schwartzel, Erich. ``Wanda's AMC to Buy
European Theater Chain.'' Wall Street Journal, 12 Jul. 2016, https://
on.wsj.com/32nrUgi. And ``China's Dalian Wanda buys Australian cinema
chain Hoyts.'' Reuters, 02 Jun. 2015, https://reut.rs/2GByQyX.
\81\ Tager, James. ``Made in Hollywood, Censored by Beijing.'' PEN
America, https://pen.org/report/made-in-hollywood-censored-by-beijing/.
\82\ Ibid.
\83\ Tsui, Clarence. ``In search of Chinese box office success,
French filmmakers face censorship and erratic regulation.'' South China
Morning Post, 29 Mar. 2018, https://bit.ly/3p3quBx. And Chan, Hiu Man.
``A New Era of Sino-British Film Collaboration.'' ChinaFilmInsider, 14
Jan. 2019, http://chinafilminsider.com/a-new-era-of-sino-british-film-
collaboration/.
\84\ Dou, Eva. ``Disney's `Mulan' faces criticism for filming in
China's Xinjiang region.'' Washington Post, 08 Sep. 2020, https://
wapo.st/36cNLYV.
\85\ ``Exclusive: China bars media coverage of Disney's `Mulan'
after Xinjiang backlash--sources.'' Reuters, 10 Sep. 2020, https://
reut.rs/3mX6HSk.
---------------------------------------------------------------------------
CCP censorship of the film industry not only prevents
Chinese people from seeing diverse stories and ideas, but often
imposes censorship on the rest of the world. Hollywood
sometimes makes a PRC-approved version or simply declines to
move forward with films that might run afoul of CCP
censorship.\86\ Just as in the film and media industries, the
PRC uses its massive market to coerce compliance with
censorship and surveillance requirements from foreign
artists.\87\ One well known Hollywood director, Judd Apatow,
summed up this phenomenon succinctly, ``Instead of us doing
business with China and that leading to China becoming more
free, what has happened is a place like China has bought our
silence with their money.'' \88\
---------------------------------------------------------------------------
\86\ Tager, James. ``Made in Hollywood, Censored by Beijing.'' PEN
America, https://pen.org/report/made-in-hollywood-censored-by-beijing/.
\87\ Cutchin, James. ``How U.S. video game companies are building
tools for China's surveillance state.'' Los Angeles Times, 22 Jul.
2019, https://lat.ms/3l5Ggcx. And Olesen, Alexa. Censorship and
Conscience: Foreign Authors and the Challenge of Chinese Censorship.
PEN America Center, 20 May 2015, https://bit.ly/3mXufXi.
\88\ Feldman, Josh. ``Judd Apatow Calls Out `Chilling' Hollywood
Censorship: `China Has Bought Our Silence'.'' Mediaite, 14 Sep. 2020,
https://www.mediaite.com/tv/judd-apatow-calls-out-chilling-hollywood-
censorship-china-has-bought-our-silence/.
---------------------------------------------------------------------------
The EU-China 2020 Strategic Agenda for Cooperation aims to
``promote exchanges and cooperation between the European Union
and China in the fields of press, publication, radio, film and
television.'' \89\ Yet it is clear, China's authoritarian
system uses the media to promote propaganda and disinformation,
as well as to enforce censorship and deny reciprocity.
Democratic societies that value free and independent media and
journalism as a pillar of democracy must proceed cautiously and
stand together in combatting the CCP's media strategy to ensure
our citizens' ability to obtain information in a free and
transparent manner.
---------------------------------------------------------------------------
\89\ EU-China 2020 Strategic Agenda for Cooperation. European
External Action Service, 2020, https://bit.ly/3evEM9a.
---------------------------------------------------------------------------
Chinese Communist Party and Political Influence
China's expansive network of organizations built to
influence Western politicians and thought leaders at the local
and national level has significant consequences for U.S. and
European foreign policy. The goal of this influence is
threefold: maintain and grow its economic advantage, control
the narrative on PRC policies, and reshape the international
system so that it accedes to China's authoritarian model.
Local and National Leaders
The CCP has realized that to reach its goals it must
influence past, current, and future leaders. Party-to-party
engagement between foreign political parties and the
International Department of the Communist Party of China (ID-
CPC) seeks to create links and relationships between the CCP
and lawmakers outside traditional channels.\90\ The ID-CPC has
focused on Asia, Europe, and Africa, pushes positive messages
of China, and exports its authoritarian model to foreign
political leaders.\91\ To influence the U.S. Congress, the PRC
funds trips for approximately 200 Congressional staff per year
under the Mutual Educational and Cultural Exchange Act.\92\
While many foreign governments conduct similar trips, the scale
of these trips and the network of PRC-funded organizations that
conduct them is far beyond any other country. In addition, the
PRC has increased embassy personnel charged with legislative
affairs to help manage its image and lobby against legislation
that criticizes the CCP.\93\
---------------------------------------------------------------------------
\90\ Hackenesch, Christine and Julia Bader. ``The Struggle for
Minds and Influence: The Chinese Communist Party's Global Outreach.''
International Studies Quarterly, vol. 64, no. 3, 2020, p. 723-733,
https://bit.ly/2UeOAv3.
\91\ Ibid.
\92\ Congressional Research Service.
\93\ Diamond, Larry and Orville Schell. Chinese Influence and
American Interests Promoting Constructive Vigilance. The Hoover
Institution, 24 Oct. 2018, https://hvr.co/352CKu6.
---------------------------------------------------------------------------
At the local level, the PRC emphasizes the Sister Cities
program, most recently to support its ``One Belt, One Road''
(OBOR) initiative.\94\ According to China Daily, the number of
U.S.-China sister cities nearly doubled between 2005 and 2015,
from 88 to 164,\95\ and in 2019 China had sister city
relationships with 2,629 cities around the world.\96\ Research
has found that ``city twinning'' had an impact on
entrepreneurial collaborations between U.K. and Chinese cities,
with data showing increased exports from China to the United
Kingdom.\97\ The CCP uses these arrangements as a mechanism to
increase adherence by local governments to the CCP's ``One-
China Principle'' and preclude these cities from engaging with
Taiwan.\98\ \99\ Shanghai canceled its sister city agreement
with the Czech capital of Prague after the Prague City Council
supported a sister city agreement with Taipei, Taiwan.\100\
---------------------------------------------------------------------------
\94\ Timsit, Annabelle. ``The surprisingly vital role sister cities
play in Chinese diplomacy.'' Quartz, 01 May 2020, https://qz.com/
1846303/sister-cities-play-surprisingly-vital-role-in-eu-chinese-
relations/. And Li Jing. ``Sister city relations promote cooperation.''
China Daily, 26 Apr. 2019, https://bit.ly/38mMWQ2.
\95\ ``Sister Cities: Siblings' relations are changing.'' China
Daily, 06 Nov. 2015, https://bit.ly/32kBD7c.
\96\ Li, Jing. ``Sister city relations promote cooperation.'' China
Daily, 26 Apr. 2019, https://bit.ly/38mMWQ2.
\97\ Acuto, Michele, et al. `City Diplomacy' and Twinning: Lessons
from the UK, China and Globally. Government of the UK Office for
Science, 2016, https://assets.publishing.service.gov.uk/government/
uploads/system/uploads/attachment--data/file/545780/gs-16-13-future-of-
cities-diplomacy-uk-china-twinning.pdf.
\98\ The ``One-China Principle'' is the policy of the Government of
the People's Republic of China (PRC) which states that ``Taiwan is an
alienable part of China.'' This is separate and distinct from the
United States ``One China Policy,'' which recognizes ``the Government
of the People's Republic of China as the sole legal government of
China, acknowledging the Chinese position that there is but one China
and Taiwan is part of China.'' Despite this acknowledgement of the
PRC's position, the United States does not assert, as the PRC does,
that the PRC has sovereignty over Taiwan. See ``White Paper--The One-
China Principle and the Taiwan Issue.'' The Taiwan Affairs Office and
The Information Office of the State Council, 21 Feb. 2000, https://
www.fmprc.gov.cn/ce/ceno/eng/ztxw/twwt/t110655.htm. And ``U.S.
Relations With Taiwan Bilateral Relations Fact Sheet.'' U.S. Department
of State, 31 Aug. 2018, https://www.state.gov/u-s-relations-with-
taiwan/.
\99\ Diamond, Larry and Orville Schell. Chinese Influence and
American Interests Promoting Constructive Vigilance. The Hoover
Institution, 24 Oct. 2018, https://hvr.co/352CKu6.
\100\ Simalcik, Matej and Adam Kalivoda. ``Sister-City Relations
and Identity Politics: The Case of Prague, Beijing, Taipei, and
Shanghai.'' China Observers in Central and Eastern Europe, 03 Mar.
2020, https://chinaobservers.eu/sister-city-relations-and-identity-
politics-the-case-of-prague-beijing-taipei-and-shanghai/.
---------------------------------------------------------------------------
Beijing also enlists former politicians and the business
community as agents of influence. Two former British Prime
Ministers, a former German Vice Chancellor, and former French
Prime Minister now hold senior positions at PRC companies and
foundations.\101\ One former British Prime Minister's position
with the U.K.-China Fund, an investment fund supporting OBOR,
has raised concerns that China is using him to gain access to
U.K. expertise and financial markets.\102\ In the United
States, the Trump Administration's ban on Chinese
telecommunications firm ZTE was lifted after the company spent
millions on lobbyists, including notable former U.S. senators
with substantial national security experience and two former
Trump campaign officials.\103\ PRC tech giant Tencent recently
hired as a lobbyist the former chairman of the U.S. House
Foreign Affairs Committee, who previously authored several
pieces of legislation aimed at pushing back on China.\104\ In
addition to paying for direct lobbying, Beijing uses business
groups to connect with and influence politicians. In Europe,
Luigi Gambardella, the founder of the China-EU Business
Association, has been called ``Brussels' biggest Beijing
booster.'' \105\ In 2015, he escorted Lu Wei, the architect of
the Chinese government's censorship crackdown, around Brussels,
arranging a meeting with the EU's digital commissioner who
tweeted afterward that the two had agreed to deepen digital
policy collaboration.\106\
---------------------------------------------------------------------------
\101\ Benner, Thorsten, et al. Authoritarian Advance: Responding to
China's Growing Political Influence in Europe. Global Public Policy
Institute/Mercator Institute for China Studies, Feb. 2018, https://
bit.ly/38e3VUK.
\102\ Pickard, Jim, and Sebastian Payne. ``David Cameron pushes
ahead with troubled $1bn China fund.'' Financial Times, 15 Jun. 2020,
https://www.ft.com/content/a0b3858e-4e92-4db2- 83fd-a6550d0b1427. And
Macaes, Bruno. ``David Cameron Didn't Just Sell Out to China.'' Foreign
Policy, 20 Dec. 2017, https://foreignpolicy.com/2017/12/20/david-
cameron-didnt-just-sell-out-to-china/.
\103\ Meyer, Theodoric. ``Chinese companies spend big to fend off
Trump.'' Politico, 20 Jun. 2019, https://politi.co/2U3EkFz.
\104\ Allen-Ebrahimian, Bethany. ``Ed Royce, once an outspoken
critic of Vietnam's Communist Party, now lobbying for Tencent.'' Axios,
15 Sep. 2020, https://bit.ly/3n4BsoB.
\105\ ``Follow the New Silk Road: China's growing trail of think
tanks and lobbyists in Europe.'' Corporate Europe Observatory, 08 Apr.
2019, https://corporateeurope.org/en/2019/04/follow-new- silk-road-
chinas-growing-trail-think-tanks-and-lobbyists-europe.
\106\ Hirst, Nicholas. ``Europe's Mr. China.'' Politico, 31 May
2017, https://www.politico.eu/article/gambardella-is-radio-beijing/.
And Liu Jia, and Gao Shuang. ``Digital Silk Road to span Eurasia.''
ChinaEU, 10 Jul. 2015, https://www.chinaeu.eu/digital-silk-road-to-
span-eurasia/.
---------------------------------------------------------------------------
The CCP has also turned to think tanks to deepen its
influence in the United States and Europe.\107\ The Chinese-
U.S. Exchange Foundation, which is tied to the PRC government,
provides grants to prominent American think tanks, such as
Brookings, the Carnegie Endowment for International Peace, and
the Asia Society.\108\ The PRC has also created networking
arrangements in Europe, such as the ``16+1 think tank network''
and eSilks, a think tank network aligned with OBOR.\109\ In
2017, the Chinese Academy of Social Sciences, a government
think tank, opened a branch in Budapest presumably as a reward
for Hungary's political cooperation and to influence future
European debate on cooperation with China.\110\ As a result of
their connections to the Chinese government, think tanks may be
significantly undermining their credibility as centers of
independent expertise on China.\111\
---------------------------------------------------------------------------
\107\ Benner, Thorsten, et al. Authoritarian Advance: Responding to
China's Growing Political Influence in Europe. Global Public Policy
Institute/Mercator Institute for China Studies, Feb. 2018, https://
bit.ly/38e3VUK. And ``Follow the New Silk Road: China's growing trail
of think tanks and lobbyists in Europe.'' Corporate Europe Observatory,
08 Apr. 2019, https://bit.ly/2IgdQOM.
\108\ Diamond, Larry and Orville Schell. Chinese Influence and
American Interests Promoting Constructive Vigilance. The Hoover
Institution, 24 Oct. 2018, https://hvr.co/352CKu6. And Allen-
Ebrahimian, Bethany. ``This Beijing-Linked Billionaire Is Funding
Policy Research at Washington's Most Influential Institutions.''
Foreign Policy, 28 Nov. 2017, https://bit.ly/3k5tud0.
\109\ Ha?la, Martin. ``A New Invisible Hand: Authoritarian
Corrosive Capital and the Repurposing of Democracy.'' Sharp Power and
Democratic Resilience Series, National Endowment for Democracy
International Forum for Democratic Studies, Mar. 2020, https://bit.ly/
32uisYR.
\110\ ``China launches `China-CEE Institute' think tank in
Hungary.'' Xinhua, 25 Apr. 2017, https://bit.ly/3k31kz7.
\111\ Ibid.
---------------------------------------------------------------------------
Rewarding Friends
Government-directed economic and cultural investments have
produced positive political results for Beijing. In this
regard, support from Greece and Hungary for PRC foreign policy
objectives are well known and prominent examples. In one
example, the year after the Chinese shipping giant COSCO bought
a majority stake in Greece's largest port, Piraeus, Greece
vetoed the European Union's statement at the UN condemning PRC
human rights violations.\112\ The year before, Greece was
joined by Hungary, the first European country to participate in
China's OBOR initiative, in insisting that the European Union
water down its statement on the illegality of China's claims in
the South China Sea.\113\
---------------------------------------------------------------------------
\112\ Emmot, Robin, and Angeliki Koutantou. ``Greece blocks EU
statement on China human rights at U.N.'' Reuters, 18 Jun. 2017,
https://www.reuters.com/article/us-eu-un-rights/greece-blocks-eu-
statement-on-china-human-rights-at-u-n-idUSKBN1990FP.
\113\ Chung, Lawrence. ``Hungary is first in Europe to sign up for
China's New Silk Road plan.'' South China Morning Post, 07 Jun. 2015,
https://bit.ly/3k7f8c3. And Norman, Laurence. ``EU Issues South China
Sea Statement Ending Discord Within Bloc.'' Wall Street Journal, 17
Jul. 2016, .
---------------------------------------------------------------------------
More attention is also being paid to the growing economic
and political ties between Serbia and China over the past
decade.\114\ With the support of Serbian President Aleksander
Vucic, Serbia has opened its doors to Chinese investment,
including infrastructure, steel, and telecommunications.\115\
In a 2016-2017 survey, Serbians ranked China second to Germany
as ``credible investors'' in Serbia.\116\ In a survey conducted
during the COVID-19 pandemic, 40 percent of Serbians thought
China was their country's largest donor,\117\ when in fact the
European Union is the largest, and China ranks fifteenth.\118\
China has rewarded Serbia with investments in its economy and
culture. The Basketball Federation of Serbia signed a
cooperation agreement with the Chinese Basketball Association
to develop basketball in China,\119\ and 8,000 Chinese citizens
virtually ran the Belgrade marathon ``as a sign of
friendship.'' \120\ China is even planning to remake classic
films from the Balkan region as a diplomatic nicety.\121\
---------------------------------------------------------------------------
\114\ Conley, Heather A. et al. Becoming a Chinese Client State:
The Case of Serbia. Center for Strategic and International Studies,
Sep. 2020, https://bit.ly/3l75RSB.
\115\ Le Corre, Philippe, and Vuk Vuksanovic. ``Serbia: China's
Open Door to the Balkans.'' The Diplomat, 01 Jan. 2019, https://
thediplomat.com/2019/01/serbia-chinas-open-door-to-the-balkans/
\116\ Ibid.
\117\ Velebit, Vuk. ``China Has Overtaken Russia as Serbia's Great
Ally.'' Balkan Insight, BIRN, 08 Jul. 2020, https://bit.ly/355hLqD.
\118\ ``Weekly: EU largest donor to Serbia, China holds 15th place,
Russia below.'' N1, 27 Mar. 2020, http://rs.n1info.com/English/NEWS/
a582483/EU-largest-donor-to-Serbia.html. And EU Assistance to Serbia.
Delegation of the European Union to the Republic of Serbia, 2020,
https://bit.ly/3l7RiOq.
\119\ Tan, Kelvin. ``Chinese and Serbian federations to sign
basketball development MoU.'' SportBusiness, 14 Jan. 2020, .
\120\ Todic, Maja. ``Chinese run Belgrade virtual marathon.'' N1,
21 Apr. 2020, http://rs.n1info.com/English/NEWS/a593616/Some-8-000-
Chinese-run-Belgrade-virtual-marathon.html.
\121\ Davis, Rebecca. ``China to Remake Classic Balkan Films as
Part of Diplomatic Charm Offensive.'' Variety, 09 May 2019, https://
variety.com/2019/film/news/china-serbia-bosnia-bridge-sarajevo-
1203209766/.
---------------------------------------------------------------------------
In the EU-China Strategic Agenda for Cooperation, both
parties agreed ``to establish cultural centres'' and to ``boost
long-term and stable cooperation between major cultural
institutions and between important art festivals.'' \122\ The
PRC is establishing these culture centers around the globe,
including in Sofia, Bulgaria,\123\ Brussels, Belgium,\124\ and
Ames, Iowa,\125\ with the motivation of bringing CCP messaging
to local populations. However, the CCP recently blocked U.S.
Ambassador Branstad from visiting an American culture center in
China, which indicates that this cooperation is and will be far
from reciprocal.\126\
---------------------------------------------------------------------------
\122\ EU-China 2020 Strategic Agenda for Cooperation. European
External Action Service, 2020, https://bit.ly/3evEM9a.
\123\ ``Largest Chinese cultural centre in Central and South-
Eastern Europe opens in Bulgarian capital Sofia.'' The Sofia Globe, 23
Nov. 2017, https://sofiaglobe.com/2017/11/23/largest-chinese-cultural-
centre-in-central-and-south-eastern-europe-opens-in-bulgarian-capital-
sofia2/.
\124\ ``Chinese cultural exhibitions held for two weeks in
Brussels.'' China Daily, 16 May 2019, http://www.chinadaily.com.cn/a/
201905/16/WS5cdcfbc2a3104842260bc083.html.
\125\ ``In Memory of Governor Bobert D. Ray 1928-2018.'' Chinese
Cultural Center of America, http://www.cccaiowa.org/default.htm.
\126\ Perlez, Jane and Luz Ding. ``China Thwarts U.S. Effort to
Promote American Culture on Campuses.'' New York Times, 30 Dec. 2018,
https://nyti.ms/32ngE3L.
---------------------------------------------------------------------------
Punishing Enemies
``We treat our friends with fine wine, but for our enemies
we got shotguns,'' was the threat from Chinese Ambassador to
Sweden Gui Congyou during recent tensions between the two
countries.\127\ Beijing has no qualms about pulling that
``shotgun'' on its enemies to chastise offending nations and
deter others from making similar ``mistakes.'' The ``shotgun''
comes in the form of economic, diplomatic, or cultural
intimidation, and often all three. The German Federal Ministry
of the Interior, Building and Community acknowledged this in
its 2019 Report on the Protection of the Constitution (Facts
and Trends):
---------------------------------------------------------------------------
\127\ ``How Sweden copes with Chinese bullying.'' The Economist, 20
Feb. 2020, https://www.economist.com/europe/2020/02/20/how-sweden-
copes-with-chinese-bullying.
Governmental, semi-governmental and private actors use
well-connected German decision-makers and multipliers
to lobby on behalf of Chinese interests. Chinese
investment in Germany also creates economic
dependencies that China can use as leverage to gain
political concessions if necessary.\128\
---------------------------------------------------------------------------
\128\ 2019 Annual Report on the Protection of the Constitution
(Facts and Trends). Federal Republic of Germany Ministry of the
Interior, Building and Community, Bundesamt fur Verfassungsschutz, Jul.
2020, https://bit.ly/2U83EKx.
Over the past decade, the world has come to understand the
reality of the PRC's use of coercion to gain political
concessions. Norway, Australia, and the Czech Republic have
been particular targets of this coercion.\129\ In the Czech
Republic, Chinese investors stopped financing the Slavia Praha
soccer team after Prague cancelled its sister city agreement
over Beijing's refusal to remove the ``One-China Principle.''
\130\
---------------------------------------------------------------------------
\129\ Propper, Eyal. When Beijing Is Angry: China's Punitive
Reprisals when Its Interests are Harmed. INSS Insight, no. 1377, The
Institute for National Security Studies, 27 Aug. 2020, https://
www.inss.org.il/publication/china-punishments/. And Kolstad, Ivar.
``Too big to fault? Effects of the 2010 Nobel Peace Prize on Norwegian
exports to China and foreign policy.'' International Political Science
Review, vol. 41(2), 2020, p. 207-223, https://www.cmi.no/publications/
6354-too-big-to-fault. And Pannett, Rachel. ``Australia Worries Coal Is
China's Next Target as Ties Fray.'' Wall Street Journal, 14 Oct. 2020,
https://bit.ly/3k7gun9.
\130\ ``China to stop financing Slavia Praha football club in the
wake of Prague-Beijing dispute, says Czech President.'' CTK, expast.cz,
11 Oct. 2019, https://bit.ly/3k6knIP.
---------------------------------------------------------------------------
The very real threat of being frozen out of the PRC market
is enough to force even the biggest companies to
acquiesce.\131\ In recent years, Marriott, Mercedes-Benz, Gap,
Mattel, Apple, Delta Airlines, Versace, and many more companies
have been forced to walk back or apologize for running afoul of
the CCP orthodoxy.\132\ Recent high profile examples from the
sports industry resonate broadly with the general population on
both sides of the Atlantic, and demonstrate the PRC's leverage
over important cultural institutions. In 2019, the general
manager of the National Basketball Association's (NBA) Houston
Rockets, Daryl Morey, tweeted support for Hong Kong democracy
advocates, leading the PRC to suspend broadcasts of Rockets
games immediately and Chinese companies to cancel endorsement
deals.\133\ Within days, Morey apologized,\134\ the NBA
commissioner issued a lukewarm statement,\135\ and NBA
superstar LeBron James lamented publicly that Morey ``was not
educated on the situation at hand.'' \136\ The NBA is likely to
lose hundreds of millions of dollars as a result of this
situation.\137\ That an organization like the NBA and its
individual players, who openly advocate for free speech in the
United States, would so quickly betray their principles to
appease the CCP astounded many.\138\
---------------------------------------------------------------------------
\131\ Spector, Mike, and Wayne Ma. ``If You Want to Do Business in
China, Mind Your T's: Taiwan and Tibet.'' Wall Street Journal, 03 Jun.
2018, https://www.wsj.com/articles/if-you-want-to-do-business-in-china-
mind-your-ts-taiwan-and-tibet-1527937201.
\132\ Ma, Wayne. ``Gap Irks China With Map on Shirt, Quickly
Apologizes.'' Wall Street Journal, 15 May 2018, https://on.wsj.com/
2Ic3pMl. And Casey, Nicholas. ``Mattel Seeks to Placate China With
Apology.'' Wall Street Journal, 22 Sep. 2007, https://www.wsj.com/
articles/SB119037171135935172. And ``Delta Air Lines apologizes after
listing Taiwan, Tibet as countries on website.'' Reuters, 12 Jun. 2018,
https://reut.rs/3pfrl25. And Wernau, Julie. ``Geopolitical Faux Pas
Prompts Foreign Brands to Apologize to China Consumers.'' Wall Street
Journal, 13 Aug. 2019, https://on.wsj.com/3p44vKy. And ``Statement from
Arne Sorenson, President and CEO, Marriott International, Inc.'' News
Center, Mariott International, 11 Jan. 2018, https://bit.ly/38qMjVw.
And ``Germany's Daimler issues 'full apology' to China over Dalai
Lama.'' BBC, 08 Feb. 2018, https://www.bbc.com/news/world-asia-china-
42986679.
\133\ ``A Timeline of the Complicated Controversy Between the NBA
and China.'' Complex, 14 Oct. 2019, https://bit.ly/2TZMf6K.
\134\ Morey, Daryl (dmorey). ``1/ I did not intend my tweet to
cause any offense to Rockets fans and friends of mine in China. I was
merely voicing one thought, based on one interpretation, of one
complicated event. I have had a lot of opportunity since that tweet to
hear and consider other perspectives.'' 06 Oct. 2019, 8:18 PM. Tweet.
https://bit.ly/2IceZqO.
\135\ Charania, Shams (ShamsCharania). ``Adam Silver has released
statement on league's relationship status with China, reading in part:
``The NBA will not put itself in a position of regulating what players,
employees and team owners say or will not say on these issues. We
simply could not operate that way.'''' 08 Oct. 2019, 5:13 AM. Tweet.
https://bit.ly/3ey67Yh.
\136\ Golliver, Ben (BenGolliver). ``Lakers' LeBron James on NBA's
China controversy: ``I don't want to get into a ... feud with Daryl
Morey but I believe he wasn't educated on the situation at hand and he
spoke.'''' 14 Oct. 2019, 9:29 PM. Tweet. https://bit.ly/2GBDKfl.
\137\ Young, Jabari. ``NBA will lose hundreds of millions of
dollars due to rift with China, commissioner says.'' CNBC, 16 Feb.
2020, https://www.cnbc.com/2020/02/16/nba-will-lose-hundreds-of-
millions-of-dollars-due-to-rift-with-china-commissioner-says.html.
\138\ Golliver, Ben. ``NBA under fire from all directions after
response to Rockets-China incident.'' Washington Post, 08 Oct. 2019,
https://www.washingtonpost.com/sports/2019/10/07/nba-under-fire-all-
directions- after-response-rockets-china-incident/. And Weiss, Bari.
``The World's Wokest Sports League Bows to China.'' New York Times, 07
Oct. 2019, https://nyti.ms/3k7a5Z8.
---------------------------------------------------------------------------
Just two months later in the United Kingdom, Arsenal soccer
star Mesut Ozil posted on social media about the horrific
treatment of the Uyghurs by the CCP in Xinjiang.\139\ In
response, China pulled down TV coverage of the upcoming Arsenal
game,\140\ prompting the team to issue a statement on Chinese
social media platform Weibo about ``not involving itself in
politics.'' \141\ China is also punishing the Premier League
over the U.K.'s support for Hong Kong and its decision to ban
Huawei equipment from its telecommunications network.\142\
---------------------------------------------------------------------------
\139\ Ozil, Mesut (MesuzOzil1088). ``#HayirliCumalarDoguTurkistan .
. . .'' 13 Dec. 2019, 5:50 AM. Tweet. https://twitter.com/
mesutozil1088/status/1205439723302469632?lang=en.
\140\ CNN, John Sinnott. ``Chinese State Media Pulls TV Coverage of
Arsenal Game after Mesut Ozil Shows Uyghur Support.'' CNN, 16 Dec.
2019, https://cnn.it/2TYCaHk.
\141\ Ames, Nick. ``Arsenal Distance Themselves from Mesut Ozil
Comments on Uighurs' Plight.'' The Guardian, 13 Dec. 2019, https://
bit.ly/2TY9LRT.
\142\ ``China's State TV Demotes English Soccer Amid Spat With
U.K.'' Bloomberg, 23 Jul. 2020, www.bloomberg.com/news/articles/2020-
07-23/china-state-tv-blacks-out-english-soccer-amid-spat-with-u-k. And
``CCTV's Premier League Broadcasts `Demoted' amid Diplomatic Tension.''
SportBusiness, 23 Jul. 2020, www.sportbusiness.com/news/cctv-cuts-
premier-league-broadcasts-amid-diplomatic-tension/.
---------------------------------------------------------------------------
The most disturbing form of PRC coercion is not economic in
nature, but rather ``hostage diplomacy,'' or the targeting of
citizens of other countries in retaliation against their
governments.\143\ In 2018, the PRC detained and imprisoned two
innocent Canadian citizens and later indicted them for
espionage, all in retaliation for Canada's arrest of Huawei's
Chief Financial Officer in response to a lawful U.S.
extradition request.\144\ China likewise arrested two prominent
Australians in 2020 as relations soured between the two
countries.\145\ The United Kingdom, United States, and
Australia have recently issued travel advice to their citizens
warning of possible arbitrary detentions in China.\146\
---------------------------------------------------------------------------
\143\ Bolton, John. ``China's Hostage Diplomacy.'' Wall Street
Journal, 07 Jul. 2020, www.wsj.com/articles/chinas-hostage-diplomacy-
11594140841.
\144\ ``Michael Kovrig and Michael Spavor: China charges Canadians
with spying.'' BBC, 19 Jun. 2020, https://www.bbc.com/news/world-asia-
china-53104303. Vikander, Tessa. ``Canada Refuses to Release Emails
with U.S. over Huawei Exec's Arrest.'' Reuters, 18 Aug. 2020,
www.reuters.com/article/us-usa-huawei-tech-canada/canada-refuses-to-
release-emails-with-u-s-over-huawei-execs-arrest-idUSKCN25D13X.
\145\ Smyth, Jamie and Christian Shepherd. ``Beijing detains
Australian TV anchor working for Chinese state media.'' Financial
Times, 31 Aug. 2020, https://on.ft.com/2TZjIOH.
\146\ ``Britain Warns It Citizens of Risk of Arbitrary Detention in
China.'' Reuters, 15 Sep. 2020, https://reut.rs/38gyyZG. And ``US
follows Australia and United Kingdom, issuing updated travel warning to
citizens about travel to China.'' Australian Broadcasting Corporation
News, 16 Sep. 2020, https://www.abc.net.au/news/2020-09-16/us-issues-
china- travel-warns-citizens-of-arbitrary-detention/12667150. And
O'Keefe, Kate and Aruna Viswanatha. ``China Warns U.S. It May Detain
Americans in Response to Prosecutions of Chinese Scholars.'' Wall
Street Journal, 17 Oct. 2020, https://www.wsj.com/articles/china-warns-
u-s-it-may- detain-americans-in-response-to-prosecutions-of-chinese-
scholars-11602960959.
---------------------------------------------------------------------------
Democracies Respond
The CCP's use of influence operations, as well as
inducement and punishment of politicians, businesses, thought
leaders, and citizens, makes clear its motivation to subvert
the freedom and openness of democratic societies and silence
critics who stand in its path. A former Australian Defence
Department official described the consequences of the CCP's
insidious behavior this way:
The point for Australia is simply that, short of
complete capitulation of our interests and values,
there is nothing Canberra can do or say that will avoid
China's criticism . . . The lesson for Australia, and
all democracies, is that making concessions to
Beijing's wolf warrior behaviours will only encourage
more coercion.\147\
---------------------------------------------------------------------------
\147\ Jennings, Peter. ``China turns into wolf warrior at the
world's door under Xi Jinping.'' The Australian, 12 Sep. 2020, https://
bit.ly/38ntGBZ.
These influence operations blatantly undermine the
principles of freedom of speech and the rule of law that are
foundational to the world's democracies. Unfortunately, it has
also created a system that incentivizes Westerners to favor
short-term profits over long-term security and prosperity.
However, democratic governments and politicians are beginning
---------------------------------------------------------------------------
to stand up to PRC bullying and coercion.
In the United States, senior administration officials have
delivered a series of speeches on the threat of the
CCP, including on forms of undue PRC influence that
have gained little attention.\148\ For example,
Secretary Pompeo delivered an address to the National
Governors' Association in an effort to underscore the
importance of coordinating U.S. strategy between the
federal and subnational levels.\149\
---------------------------------------------------------------------------
\148\ Wray, Christopher. The Threat Posed by the Chinese Government
and the Chinese Communist Party to the Economic and National Security
of the United States. U.S. Department of Justice Federal Bureau of
Investigation, 07 Jul. 2020, https://bit.ly/32kGo0y. And Barr, William
P. Attorney General William P. Barr Delivers Remarks on China Policy at
the Gerald R. Ford Presidential Museum. U.S. Department of Justice, 16
Jul. 2020, https://bit.ly/2IfGgIX. And O'Brien, Robert C. The Chinese
Communist Party's Ideology and Global Ambitions. U.S. National Security
Council, 24 Jun. 2020, https://bit.ly/2JNqVQp.
\149\ Pompeo, Michael R. ``U.S. States and the China Competition.''
National Governors Association Meeting, 08 Feb. 2020, www.state.gov/u-
s-states-and-the-china-competition/.
During a recent visit to Germany by Chinese Foreign
Minister Wang Yi, German Foreign Minister Heiko Maas
called for China to adhere to ``One Country, Two
Systems'' in Hong Kong and to allow an independent
observer mission into Xinjiang.\150\
---------------------------------------------------------------------------
\150\ ``Germany's Maas Calls for Withdrawal of Hong Kong Security
Law.'' Deutsche Welle, 09 Sep. 2020, www.dw.com/en/germanys-maas-calls-
for-withdrawal-of-hong-kong- security-law/a-54781315.
Czech Senate President Vystrcil traveled to Taiwan this
summer and announced ``I am Taiwanese'' to the
Taiwanese Parliament, echoing President John Kennedy's
1963 speech ``Ich bin ein Berliner.'' \151\
Additionally, the Mayor of Prague, Zdenek Hrib, refused
to acquiesce to Beijing's demands to disinvite
Taiwanese diplomats to a gathering.\152\
---------------------------------------------------------------------------
\151\ Hille, Katherin. `` `I am a Taiwanese': Czech Senate
president addresses parliament in Taipei.'' Financial Times, 01 Sep.
2020, https://www.ft.com/content/fb018ddd-2591-4355-94b1-602ff2b025af.
\152\ Tait, Robert. ``Zdenek Hrib: The Czech Mayor Who Defied
China.'' The Guardian, 3 Jul. 2019, https://bit.ly/3p4krwy.
The European Commission under President Ursula von der
Leyen upheld the EU's determination of China as a
``systemic rival.'' \153\ The EU High Representative
for Foreign Policy Josep Borrell joined the Group of
Seven (G7) countries in condemning China's imposition
of its national security law on Hong Kong in June.\154\
The European Commission has also launched a Democracy
Action Plan to bolster the EU's resilience to foreign
interference in European democracies.\155\
---------------------------------------------------------------------------
\153\ Von der Leyen, Ursula. ``State of the Union Address by
President von der Leyen at the European Parliament Plenary.'' European
Commission, 16 Sep. 2020, https://bit.ly/3mXciIk.
\154\ ``G7 Foreign Ministers Statement on Hong Kong.'' European
External Action Service, 17 Jun. 2020, https://eeas.europa.eu/
headquarters/headquarters-homepage/81075/g7-foreign-ministers%E2%80%99-
statement-hong-kong--en.
\155\ ``Public consultation: Commission seeks citizens' views in
preparation of new European Democracy Action Plan.'' European
Commission, 15 Jul. 2020, https://bit.ly/36aGB7M.
Transatlantic legislative bodies are also leading the
charge on various aspects of China policy, informing the public
and creating pressure on executive branches to take more
---------------------------------------------------------------------------
decisive actions.
The U.S. Congress hosts the Congressional Executive
Commission on China\156\ and the U.S.-China Economic
and Security Review Commission, which provide
independent assessments and recommendations on China
policy.\157\
---------------------------------------------------------------------------
\156\ Congressional-Executive Commission on China. www.cecc.gov/.
\157\ Charter. United States-China Economic and Security Review
Commission, https://bit.ly/2U0rqZd.
The U.K. Parliament's Foreign Affairs Committee published a
report entitled ``China and the Rules-Based
International System,'' \158\ and a group of Tory
Parliamentarians founded the China Research Group to
push a tougher stance.\159\
---------------------------------------------------------------------------
\158\ United Kingdom, Parliament, House of Commons, Foreign Affairs
Committee. China and the Rules-Based International. 04 Apr. 2019,
https://bit.ly/3eyYnVM.
\159\ Payne, Sebastian. ``Senior Tories launch ERG-style group to
shape policy on China.'' Financial Times, 24 Apr. 2020, www.ft.com/
content/b354c58b-06fc- 4848-a823-584bcc0c3869.
A cross-party, multinational group of parliamentarians
founded the International Parliamentary Alliance on
China in 2020 to reform how democracies deal with
China.\160\
---------------------------------------------------------------------------
\160\ Inter-Parliamentary Alliance on China. https://ipac.global/.
In 2020, the European Parliament created the Special
Committee on Foreign Interference in all Democratic
Processes in the European Union to analyze the risks
and identify solutions.\161\ The European Think Tank
Network on China commended the European Parliament for
taking ``the most principled stance of all the EU
institutions and serves an important watchdog
function'' given the parliament's advocacy for human
rights in China.\162\
---------------------------------------------------------------------------
\161\ ``Parliament Sets up Special Committees and a Permanent
Subcommittee.'' European Parliament, 19 Jun. 2020,
www.europarl.europa.eu/news/en/press-room/20200615IPR81228/ parliament-
sets-up-special-committees-and-a-permanent-subcommittee.
\162\ Ruhlig, Tim Nicholas, et al. Political values in Europe-China
relations. European Think-tank Network on China, Dec. 2018, https://
bit.ly/2I7FYU2.
European governments are making it more difficult for the
PRC and other malign actors to exert undue influence by
implementing lobbying registration regimes with similarities to
---------------------------------------------------------------------------
the U.S. Foreign Agents Registration Act.
In 2011, the European Commission and the European
Parliament created the joint Transparency
Register,\163\ which incentivizes entities that lobby
these two EU institutions to declare those activities
voluntarily.\164\ Negotiations are currently underway
among the European Commission, Council, and Parliament
to create a joint register for all three
institutions.\165\
---------------------------------------------------------------------------
\163\ Transparency and the EU. European Commission, https://
ec.europa.eu/transparencyregister /public/homePage.do.
\164\ ``Public consultation: Commission seeks citizens' views in
preparation of new European Democracy Action Plan.'' European
Commission, 15 Jul. 2020, https://bit.ly/36aGB7M. And
Interinstitutional Agreement on a Common Transparency Register between
the Parliament and the Commission. European Parliament, 11 May 2011,
https://bit.ly/3p4kMiO.
\165\ Inter-institutional negotiations on the Transparency
Register. European Parliament, 2020. https://www.europarl.europa.eu/tr-
negotiations/en/home/welcome-page.html.
In 2014, the United Kingdom enacted a law requiring
consultant lobbyists to publically register.\166\
---------------------------------------------------------------------------
\166\ Feikert-Ahalt, Clare. ``Lobbying Disclosure Laws.''
Www.Loc.Gov, 01 Mar 2017, www.loc.gov/law/help/lobbying-disclosure/
unitedkingdom.php. And ``Bill Documents--Transparency of Lobbying, Non-
Party Campaigning and Trade Union Administration Act 2014.'' Parliament
UK, 02 May 2014, https://bit.ly/38efnzI.
employee, or member whose primary activities are to
influence the French government.\167\
---------------------------------------------------------------------------
\167\ Boring, Nicolas. ``Lobbying Disclosure Laws: France.''
Library of Congress, 01 Mar. 2017, www.loc.gov/law/help/lobbying-
disclosure/france.php.
In July 2020, the German governing coalition agreed to
implement a mandatory transparency register for members
of the Bundestag.\168\
---------------------------------------------------------------------------
\168\ Posaner, Joshua. ``Germany to Introduce Lobbying Register for
MPs.'' Politico Europe, 03 Jul. 2020, www.politico.eu/article/germany-
lobbying-register/.
Austria, Ireland, Lithuania, Poland, and Slovenia have also
instituted mandatory lobbying registry and transparency
requirements.\169\
---------------------------------------------------------------------------
\169\ Bauer, Elisabeth, et al. ``Transparency of lobbying in Member
States.'' Transparency Unit, DG Presidency, European Parliamentary
Research Service, Nov. 2019, https://www.europarl.europa.eu/EPRS/
Lobbying-transparency-comparative-analysis.pdf.
In education, governments are pushing for greater
transparency, and universities are moving to protect their
---------------------------------------------------------------------------
students.
In February 2020, the European Commission published a draft
``Concept Note On Tackling Foreign Interference In
Higher Education Institutions And Research
Organisations'' to begin discussions at the EU-level on
effective responses that will ``protect . . . academic
freedom, integrity and institutional autonomy . . .
[and] key research findings and intellectual assets.''
\170\
---------------------------------------------------------------------------
\170\ 170 ``Concept Note on Tackling Foreign Interference in Higher
Education Institutions and Research Organizations.'' European
Commission, 20 Feb. 2020, https://bit.ly/3kabf62.
The U.S. Government has engaged, warned, and investigated
American universities regarding their ties to the
CCP.\171\ Included in this is the designation of the
``Confucius Institute U.S. Center'' as a foreign
mission of the PRC.\172\
---------------------------------------------------------------------------
\171\ Krach, Keith. ``Letter From Under Secretary Keith Krach to
the Governing Boards of American Universities.'' U.S. Department of
State, 18 Aug. 2020, www.state.gov/letter-from-under-secretary-keith-
krach-to-the-governing-boards-of-american-universities/. And ``U.S.
Department of Education Launches Investigation into Foreign Gifts
Reporting at Ivy League Universities.'' U.S. Department of Education,
12 Feb. 2020, www.ed.gov/news/press-releases/test-0. And DeVos, Betsy,
and Michael R. Pompeo. ``Joint Letter to Chief State School Officers.''
U.S. Department of Education and U.S. Department of State, 09 Oct.
2020, https://bit.ly/3l6PoOg. And DeVos, Betsy, and Michael R. Pompeo.
``Letter to the Presidents of American Institutions of Higher Education
and Affiliates.'' U.S. Department of Education and U.S. Department of
State, 09 Oct. 2020, https://bit.ly/2GAoUpg.
\172\ Pompeo, Michael R. ``Designation of the Confucius Institute
U.S. Center as a Foreign Mission of the PRC.'' U.S. Department of
State, 13 Aug. 2020, https://bit.ly/3kcQtmw.
In a 2019 government communication, Sweden proposed the
establishment of a national knowledge center on China,
to strengthen Swedish proficiency and address knowledge
gaps on China.\173\ Sweden has also closed all of the
Confucius Institutes and Confucius classrooms.\174\
---------------------------------------------------------------------------
\173\ Lofven, Stefan. ``Approach to matters relating to China'',
Ministry for Foreign Affairs of Sweden, 26 Sep. 2019, https://bit.ly/
3k57izu.
\174\ Flittner, Sofia. ``Sweden Has Closed All Confucius Institutes
and Classrooms.'' ScandAsia, 19 May 2020, https://scandasia.com/sweden-
has-closed-all- confucius-institutes-and-classrooms/.
In September 2020, to prevent intellectual property theft
by Chinese students, the United Kingdom added Advanced
Conventional Military Technology to the list of
sensitive subjects that require certain foreign
students to obtain U.K. government certification to
study under its Academic Technology Approval
Scheme.\175\
---------------------------------------------------------------------------
\175\ Academic Technology Approval Scheme (ATAS). UK Foreign,
Commonwealth & Development Office, 06 Oct. 2020, https://www.gov.uk/
guidance/academic-technology-approval-scheme. And Fisher, Lucy.
``Chinese students face ban amid security fears.'' Times UK, 01 Oct.
2020, https://bit.ly/3p7BTA7.
Harvard, Princeton, and Oxford are altering their teaching
methods to protect students at risk of PRC
extraterritorial coercion, including through anonymous
assignment submissions and the use of codes to identify
students.\176\
---------------------------------------------------------------------------
\176\ Craymer, Lucy. ``China's National-Security Law Reaches Into
Harvard, Princeton Classrooms.'' Wall Street Journal, 19 Aug. 2020,
www.wsj.com/articles/chinas-national-security-law-reaches-into-harvard-
princeton-classrooms-11597829402. Wintour, Patrick. ``Oxford moves to
protect students from China's Hong Kong security law.'' The Guardian,
28 Sep. 2020, https://www.theguardian.com/education/2020/sep/28/oxford-
moves-to-protect-students-from-chinas-hong-kong-security-
law#::text=Students%20at%20Oxford%20University
%20specialising,months%20ago%20in%20Hong%20Kong.
Social media companies are starting to curb covert
influence on their platforms, albeit under intense consumer and
---------------------------------------------------------------------------
political pressure.
Similar to the Daily Telegraph's decision mentioned above,
Twitter banned advertisements by state-controlled media
following reports that the platform had promoted CCP
disinformation on the plight of the Uyghurs.\177\
---------------------------------------------------------------------------
\177\ ``Updating Our Advertising Policies on State Media.'' Company
Blog, Twitter Inc., 19 Aug. 2019, https://bit.ly/36cUKkB. And
Gallagher, Ryan. ``Twitter Helped Chinese Government Promote
Disinformation on Repression of Uighurs.'' The Intercept, 19 Aug. 2019,
https://bit.ly/36a3QP7.
Twitter, Facebook, and Instagram now designate accounts
from state-sponsored media, which include Xinhua and
The People's Daily.\178\
---------------------------------------------------------------------------
\178\ ``New labels for government and state-affiliated media
accounts.'' Company Blog, Twitter Inc., 06 Aug. 2020, https://bit.ly/
3eGFxfK. And ``Facebook Starts Labeling Russian, Chinese, Iranian State
Media.'' VOA News, RFE/RL, 05 Jun. 2020, https://bit.ly/32l6pwW. And
Bonifacic, Igor. ``Instagram starts labeling `state controlled media'
accounts and posts.'' Engadget, 05 Oct. 2020. https://www.engadget.com/
instagram-state-controlled-media-application-
220248779.html?guccounter=1.
Google was forced to terminate a project to create a
censored search engine in China following outrage from
its own employees.\179\
---------------------------------------------------------------------------
\179\ Su, Jeb. ``Confirmed: Google Terminated Project Dragonfly,
Its Censored Chinese Search Engine.'' Forbes, 19 Jul. 2019,
www.forbes.com/sites/jeanbaptiste/2019/07/19/confirmed-google-
terminated-project-dragonfly-its-censored-chinese-search-engine/
#755be97e7e84. And Gallagher, Ryan. ``Google Shut Out Privacy and
Security Teams From Secret China Project.'' The Intercept, 29 Nov.
2018, https://theintercept.com/2018/11/29/google-china-censored-
search/.
Presidential election.\180\
---------------------------------------------------------------------------
\180\ Goldman, Adam. ``Facebook Takes Down Fake Pages Created in
China Aimed at Influencing U.S. Election.'' New York Times, 23 Sept.
2020, https://nyti.ms/2IgkRPC.
Additionally, a growing number of governments and
multilateral organizations are countering disinformation from
---------------------------------------------------------------------------
authoritarian nations, including the PRC.
In 2014, seven NATO allies created the NATO Strategic
Communications Center of Excellence to contribute to
NATO allies and partners' strategic communications
capabilities.\181\
---------------------------------------------------------------------------
\181\ ``About Us'' NATO Stratcom Centre of Excellence,
www.stratcomcoe.org/about-us. And ``Seven Allies Establish NATO's
Strategic Communications Center of Excellence in Latvia.'' Atlantic
Council, 07 Jul. 2014, www.atlanticcouncil.org/blogs/natosource/seven-
allies-establish-nato-s-strategic-communications-center-of-excellence-
in-latvia/.
In December 2016, the U.S. Congress authorized the Global
Engagement Center within the State Department to combat
foreign propaganda and disinformation.\182\
---------------------------------------------------------------------------
\182\ Global Engagement Center. U.S. Department of State, https://
nyti.ms/2IgkRPC.
In 2018, G7 leaders announced the creation of the G7 Rapid
Response Mechanism, led by Canada, ``to respond to
efforts of foreign actors seeking to `undermine our
democratic societies and institutions, our electoral
processes, our sovereignty and our security.' '' \183\
---------------------------------------------------------------------------
\183\ Rapid Response Mechanism Canada--Protecting Democracy.
Government of Canada, 06 Sep. 2019, https://bit.ly/2U3GG7C.
In 2018, the European Union debuted a disinformation action
plan and created a strategic communication task force
within the European External Action Service.\184\ In
its effort to tackle COVID-19 disinformation, the
European Union named China as a source.\185\
---------------------------------------------------------------------------
\184\ ``Joint Communication to the European Parliament, The
European Council, The Council, The European Economic and Social
Committee and the Committee of the Regions: Action Plan against
Disinformation.'' European Commission High Representative of the
European Union for Foreign Affairs and Security Policy, JOIN(2018) 36
final, 12 May 2018, https://bit.ly/2JKLWLq.
\185\ ``Joint Communication to the European Parliament, The
European Council, The Council, The European Economic and Social
Committee and the Committee of the Regions: Tackling COVID-19
disinformation - Getting the facts right.'', European Commission High
Representative of the Union for Foreign Affairs and Security Policy, 10
Jun. 2020, https://bit.ly/3n1vuEY. And ``European Commission Accuses
China of Peddling Disinformation.'' Politico Europe, 10 Jun. 2020,
www.politico.eu/article/european-commission-disinformation-china-
coronavirus/.
In 2020, the U.S. Department of State designated as foreign
missions fifteen PRC state-run media outlets, including
The People's Daily, Xinhua News Agency, and CGTN.\186\
---------------------------------------------------------------------------
\186\ Ortagus, Morgan. ``Designation of Additional Chinese Media
Entities as Foreign Missions.'' U.S. Department of State, 22 Jun. 2020,
www.state.gov/designation-of-additional-chinese-media-entities-as-
foreign-missions/.
As free and independent media has eroded in parts of
Central and Eastern Europe as a result of foreign and
domestic influences, the United States' Radio Free
Europe/Radio Liberty reinstated services in Hungary,
Bulgaria, and Romania, to help inoculate these
societies from influence attempts, including by the
PRC.\187\
---------------------------------------------------------------------------
\187\ ``RFE/RL Expands To Bulgaria, Romania.'' RFE/RL, 18 Jul.
2018, https://bit.ly/3p7CIcb. And ``RFE/RL Relaunches Operations In
Hungary Amid Drop In Media Freedom.'' RFE/RL Hungarian Service, 08 Sep.
2020, https://bit.ly/3n1vEMA. And Karaskova, Ivana. ``China has
successfully planted its narratives on topics like the Hong Kong
protests into major news outlets across Central and Eastern Europe.''
The Diplomat, 19 Nov. 2019, https://thediplomat.com/2019/11/how-china-
influences-media-in-central-and-eastern-europe/. And ``About the
Project'' ChinfluenCE, 2020, https://bit.ly/2Gz8Vrs.
Finally, and perhaps most importantly, citizens and publics
are beginning to take notice of the efforts of PRC influence,
---------------------------------------------------------------------------
particularly censorship and human rights abuses.
In 2019, a German newspaper issued a poll asking for names
for the Berlin Zoo's two new panda cubs. ``Hong'' and
``Kong'' won the poll.\188\
---------------------------------------------------------------------------
\188\ Staudenmaier, Rebecca. ``German Media Call to Name Berlin's
New Pandas Hong and Kong.'' Deutsche Welle, 6 Sep. 2019, www.dw.com/en/
german-media-call-to-name-berlins-new-pandas-hong-and-kong/a-50321006.
In September 2020, #BoycottMulan became a prominent social
media hashtag after viewers discovered that Disney
filmed portions of the movie in Xinjiang.\189\
---------------------------------------------------------------------------
\189\ Chow, Andrew. ``Here's What to Know About the Mulan
Boycott.'' TIME, 02 Mar. 2020, https://time.com/5653973/mulan-boycott-
liu%20yifei/.
---------------------------------------------------------------------------
Conclusion
The depth and breadth of CCP influence operations,
disinformation, and coercion underscores its insidiousness and
the urgency with which the community of democracies must tackle
these problems. The founding documents of our democratic
institutions leave no question as to what should be our path
forward. The U.S. Constitution enshrines ``the freedom of
speech, of the press, and the right of the people to peaceably
assemble,'' and the Fourth Amendment guarantees ``the right of
the people to be secure in their persons, houses, papers, and
effects.'' \190\ Similarly, the EU's Lisbon Treaty mandates
that the Union ``shall contribute to . . . the protection of
human rights . . . as well as to the strict observance and the
development of international law, including respect for the
principles of the United Nations Charter.'' \191\ NATO's
Washington Treaty unambiguously stipulates that its members
``are determined to safeguard the freedom, common heritage and
civilisation of their peoples, founded on the principles of
democracy, individual liberty and the rule of law.'' \192\
---------------------------------------------------------------------------
\190\ U.S. Constitution. Amend. I, https://bit.ly/3559X8d. And U.S.
Constitution. Amend. IV, https://bit.ly/3kdg925.
\191\ ``Consolidated Versions of the Treaty on the Functioning of
the European Union.'' Official Journal of the European Union, 07 Jun.
2016, https://bit.ly/3kcS3os.
\192\ ``The North Atlantic Treaty.'' North Atlantic Treaty
Organization, 04 Apr. 1949, https://bit.ly/3eCIA8K.
---------------------------------------------------------------------------
The world's democracies have a responsibility and mandate
to ensure the posterity of these rights. As the United States
and Europe begin to combat and buffer our societies against
malign CCP influence, there is much more we can and should do
together. The EU-U.S. Dialogue on China is a strong start and
will hopefully engender constructive dialogue on Chinese
influence operations, as well as other critical issues. Through
greater cooperation, we can prevent the CCP from sowing dissent
within and between our societies, and maintain our freedom and
prosperity.
CHAPTER TWO--INTERNATIONAL ORGANIZATIONS
----------
Authoritarian actors have long recognized the power of
multilateral bodies and have used them to advance their
interests and limit the freedom of their own citizens.
If the United States cedes leadership of these bodies
to adversaries, opportunities to shape developments
that are positive for the United States will be
lost.\193\
---------------------------------------------------------------------------
\193\ National Security Strategy of the United States of America,
The White House, Dec. 2017, p. 40, https://www.whitehouse.gov/wp-
content/uploads/2017/12/NSS-Final-12-18-2017-0905.pdf
--2017 U.S. National Security Strategy
Introduction
International organizations (IOs) play an important role in
shaping the international system. In a world of almost 200
countries, each with its own national interests and agenda, IOs
provide a framework for collective action and shared
responsibility in matters of global consequence. This includes
everything from responding to humanitarian crises and
vaccinating children, to exposing human rights abuses and
holding malign actors accountable. As stated in the United
Nations (UN) Charter, the purpose of the institution is to
maintain international peace and security, promote friendly
relations among nations, foster cooperation to address
international problems of an economic, social, cultural, or
humanitarian character, and promote and encourage respect for
human rights and fundamental freedoms.\194\ As the UN
celebrated its 75th anniversary in 2020, all member countries
signed a declaration acknowledging its accomplishments,
including saving hundreds of thousands of lives, providing
education around the world, and safeguarding public
health.\195\
---------------------------------------------------------------------------
\194\ Charter of the United Nations and Statute of the
International Court of Justice. United Nations, 1945, https://
treaties.un.org/doc/publication/ctc/uncharter.pdf.
\195\ ``Strengthening of the United Nations system'', 75th Session
of the United Nations General Assembly, United Nations, 16 Sep. 2020,
https://undocs.org/A/75/L.1.
---------------------------------------------------------------------------
While far from perfect in practice, the principal reason
for the formation of IOs, including the UN, was to uphold and
promote an international system characterized by liberal
principles, including respect for freedom and human rights, and
to play a decisive role in the maintenance of international
security. The United States and Europe, who led the effort to
establish the international system, recognize the importance of
these foundational principles and cooperate accordingly,
despite periodic disagreements and differing approaches. Today,
however, the nations committed to upholding liberal principles
face an immense challenge, as countries like China seek to
subvert IOs to serve their own interests.
History of China at the United Nations
China's relationship with IOs, and the UN in particular,
has a complicated history. While China was a founding member of
the UN, along with 50 other nations, it was represented by the
Republic of China (now known as Taiwan) from 1945 until
1971.\196\ The UN General Assembly (UNGA) voted to recognize
the People's Republic of China (PRC) as the legitimate
representative of China to the UN in Resolution 2758 on October
25, 1971.\197\ The PRC thereafter represented China in the
UNGA, the UN Security Council (UNSC), and all other UN-related
organizations.
---------------------------------------------------------------------------
\196\ Han, Cheung. ``The day China joined the UN: UN Resolution
2758, passed in 1971, still carries ramifications for Taiwan today.''
18 Oct. 2015. Taipei Times, https://www.taipeitimes.com/News/feat/
archives/2015/10/18/2003630319.
\197\ Ibid.
---------------------------------------------------------------------------
Unlike the PRC, the United States is a founding member of
the UN and signed the UN Charter in 1945. Of the 51 UN
founders, 14 were European: Belarus, Belgium, Czechoslovakia,
Denmark, France, Greece, Luxembourg, the Netherlands, Norway,
Poland, Turkey, Ukraine, the United Kingdom, and
Yugoslavia.\198\ As original members of the UN, the United
States and European allies have a long-term vested interest in
the institution and its work.
---------------------------------------------------------------------------
\198\ Charter of the United Nations and Statute of the
International Court of Justice. United Nations, 1945, https://
treaties.un.org/doc/publication/ctc/uncharter.pdf.
---------------------------------------------------------------------------
China: Shaping the United Nations in Its Own Image
Although the PRC has been present in the UN since 1971, it
was not until the 2000s that it began to employ a concerted
effort to exhort its influence on the UN. This effort
contributes to a major goal of the PRC's foreign policy--to
``reform global governance'' such that the international system
is more conducive to Chinese Communist Party (CCP)
interests.\199\ The PRC strategy to reshape the international
system uses China's economic and military strength as
justification for increasing its influence in international
organizations. At the 75th anniversary of the UN in September
2020, CCP General Secretary Xi Jinping said that the ``global
governance system needs to reflect this reality of
international politics and the process of multi-polarization.''
\200\ Yet evidence shows that Chinese influence in IOs does not
merely advocate for a greater PRC role, but actively works to
reshape international norms and institutions in favor of CCP
ideology and objectives. By reshaping institutions along these
lines, the CCP strives to provide a circular guarantee for its
own longevity.\201\
---------------------------------------------------------------------------
\199\ Tobin, Liza. ``Xi's Vision for Transforming Global
Governance: A Strategic Challenge for Washington and Its Allies.'' The
Strategist, vol. 2, no. 1, Texas National Security Review, 12 Nov.
2018, http://dx.doi.org/10.26153/tsw/863.
\200\ Xi, Jinping. ``Full text: Xi Jinping's speech at high-level
meeting to mark UN's 75th anniversary'' CGTN. 22 Sep. 2020. https://
bit.ly/38i59yj.
\201\ Weiss, Jessica. ``A World Safe for Autocracy? China's Rise
and the Future of Global Politics.'' Foreign Affairs, Jul./Aug. 2019,
https://fam.ag/2GBnevP. and Chu, Yun-han. ``Sources of Regime
Legitimacy and the Debate over the Chinese Model.'' The China Review,
vol. 13, no. 1, Chinese University of Hong Kong Press, Spring 2013,
https://www.jstor.org/stable/23462227?seq=1.
---------------------------------------------------------------------------
In June 2018, the CCP inserted Xi Jinping Thought, which
ensures CCP leadership over all forms of policy work in China,
into its global diplomacy. At the Central Conference on Work
Relating to Foreign Affairs, Xi urged China's foreign affairs
apparatus to ``take an active part in leading the reform of the
global governance system, and build a more complete network of
global partnerships, so that new advances will be made in major
country diplomacy with Chinese characteristics to create a
favorable environment for . . . building . . . a great modern
socialist country in all aspects.'' \202\ During Xi's speech on
the occasion of the 40th anniversary of China's economic
reforms in December 2018, he reiterated that China must ``play
the role of a responsible big country . . . and actively
participate in the global governance system reform and
construction.'' \203\
---------------------------------------------------------------------------
\202\ ``Xi urges breaking new ground in major country diplomacy
with Chinese characteristics.'' XinhuaNet, 23 Jun. 2018, https://
bit.ly/2JL5VJZ.
\203\ ``Xi Jinping's Speech on 40th Anniversary of China's Reforms,
Opening Up--Full Text.'' ranscend Media Service, 18 Dec. 2018, https://
www.transcend.org/tms/2018/12/xi-jinpings-speech-on-40th-anniversary-
of-chinas-reforms-opening-up-full-text/.
---------------------------------------------------------------------------
The PRC's vision of a ``reformed'' global governance system
starkly contrasts with the current international system that
recognizes limits to state authority under the UN Charter, and
which charges the UN to encourage and promote fundamental
freedoms, self-determination of peoples, and universal human
rights. China's actions indicate a CCP vision for a global
governance system based on authoritarian principles instead of
following common rules and standards.\204\
---------------------------------------------------------------------------
\204\ Hart, Melanie and Blaine Johnson. Mapping China's Global
Governance Ambitions: Democracies Still Have Leverage to Shape
Beijing's Reform Agenda. Center for American Progress, 28 Feb. 2019,
https://www.americanprogress.org/issues/security/reports/2019/02/28/
466768/mapping-chinas-global-governance-ambitions/. and Ikenberry, G.
John and Darren J. Lim. China's emerging institutional statecraft: The
Asian Infrastructure Investment Bank and the prospects for counter-
hegemony. Project on International Order and Strategy, Brookings
Institution, Apr. 2017, https://www.brookings.edu/research/chinas-
emerging-institutional-statecraft/. And Goldberg, Richard. ``Trump's
New China Strategy Must Focus on International Organizations.''
Foundation for Defense of Democracies, 02 Jun. 2020, https://
www.fdd.org/analysis/2020/06/02/trump-china-strategy-focus/.
---------------------------------------------------------------------------
The CCP has become adept at finding new points of leverage
to build its influence within the UN. These efforts include,
but are not limited to: blocking humanitarian efforts in Syria,
gaining credibility for its views and policies by inserting
signature CCP language into key UN documents and initiatives,
blocking non-governmental organizations critical of China from
participating at the UN, creating new UN funds and then
stacking the boards of those funds, and offering debt relief,
investments, and job opportunities in exchange for votes in UN
bodies.\205\
---------------------------------------------------------------------------
\205\ Fung, Courtney and Shing-Hon Lam. ``China already leads 4 of
the 15 U.N. specialized agencies--and is aiming for a 5th.'' Washington
Post, 03 Mar. 2020, https://www.washingtonpost.com/politics/2020/03/03/
china-already-leads-4-15-un-specialized-agencies-is-aiming-5th/. And
Lee, Kristine. ``It's Not Just the WHO: How China is Moving on the
Whole U.N.'' Politico, 15 Apr. 2020, https://www.politico.com/news/
magazine/2020/04/15/its-not-just-the-who-how-china-is-moving-on-the-
whole-un-189029.
---------------------------------------------------------------------------
As a permanent UNSC member, China is supposed to support
international peace and security. However, China has instead
used its position to do the opposite, using its veto power
eight times since 2011 to block UNSC resolutions on the Syrian
conflict.\206\ The most recent veto in July 2020 resulted in
the closing of a six-year-old border crossing that facilitated
the flow of humanitarian aid to millions of civilians inside of
Syria. The vote result was 13-2, with the rest of the UNSC,
except for Russia, supporting the assistance.\207\ While China
has no visible interest in the Syrian conflict, it has decided,
with the assistance of Russia, that humanitarian assistance
should not be provided to Syrians. China's unwillingness to
shine light on the abuses of the Syrian regime demonstrate its
concern that the same light may next focus on the PRC's own
abuses against Uyghurs and Tibetans. The PRC continues to block
not only resolutions, but also discussions at the UNSC on
issues where it believes it could become a target of criticism.
---------------------------------------------------------------------------
\206\ ``UN Security Council Working Methods: The Veto.'' Security
Council Report, United Nations, 03 Sep. 2020, https://
www.securitycouncilreport.org/un-security-council-working-methods/the-
veto.php.
\207\ DeYoung, Karen and Sarah Dadouch. ``Humanitarian aid to
Syrians threatened as Russia and China veto proposals at U.N.''
Washington Post, 10 Jul. 2020, https://wapo.st/3ewZyoX.
---------------------------------------------------------------------------
China Weakens Human Rights At the United Nations
Further, China sits on the UN Human Rights Council (UNHRC),
despite being one of the world's worst abusers of human rights.
In 2018, China was successful in passing a resolution through
the UNHRC that included language on ``universality'' and
``constructive international dialogue.'' These terms are used
by those nations seeking to water down the international
consensus on basic human rights. ``Universality'' is frequently
used to promote the lowest common denominator in defining human
rights, and is significantly weaker than what is enshrined in
the Universal Declaration of Human Rights and other human
rights treaties. ``Constructive international dialogue'' is
used to promote non-interference in a nation's treatment of its
own people, and calls for dialogue and a nebulous concept of
cooperation instead of the investigation of serious human
rights abuses.\208\
---------------------------------------------------------------------------
\208\ Fisher, John. ``China's `Win-Win' Resolution Is Anything
But.'' Human Rights Watch, 05 Mar. 2018, https://www.hrw.org/news/2018/
03/05/chinas-win-win-resolution-anything; And Piccone, Ted. ``China's
Long Game on Human Rights at the United Nations.'' Brookings
Institution, Sep. 2018, https://brook.gs/32jLudB.
---------------------------------------------------------------------------
In addition to these terms, the PRC also successfully
inserted the phrase ``community of shared future for human
beings'' that is synonymous to wording in its own constitution,
an example of garnering international acceptance for CCP
language.\209\ Of the UNHRC's 47 members, only the United
States voted against this resolution, while 17 other
delegations, including many European nations, abstained.\210\
This resolution was only the second that China has ever
sponsored in its 12-year history on the UNHRC. While this
victory may seem small, it supports China's claim that it
offers a superior definition of and approach to human rights,
and internationalizes terms that the CCP uses to describe how
it will advance its own interests. Further, the UN often refers
back to language from previous resolutions, giving this CCP
language legitimacy in the UN lexicon that the PRC can now use
as a basis for expanding its views on human rights issues
across the UN system.
---------------------------------------------------------------------------
\209\ Tobin, Liza. ``Xi's Vision for Transforming Global
Governance: A Strategic Challenge for Washington and Its Allies.'' The
Strategist, vol. 2, no. 1, Texas National Security Review, 12 Nov.
2018, p. 155-156, http://dx.doi.org/10.26153/tsw/863.
\210\ Nebehay, Stephanie. ``U.S. and China clash at U.N. rights
forum on Beijing text.'' Reuters, 23 Mar. 2018, https://
www.reuters.com/article/us-china-rights-un-usa/u-s-and-china-clash-at-
u-n-rights-forum-on-beijing-text-idUSKBN1GZ1D0.
---------------------------------------------------------------------------
China responds to criticism of its human rights record not
with action to address the concerns, but with an alternative
false narrative. In 2019, 50 nations, led by the Chinese
government, signed a letter calling allegations of gross
violations of human rights by the CCP in Xinjiang unfounded.
This was more than double the number of nations who condemned
these abuses in an earlier letter.\211\ Given China's push to
alter views on human rights matters and the CCP's efforts to
control votes, the challenge to remove or stop such language
from becoming an entrenched norm will require greater alignment
between the United States and Europe going forward.
---------------------------------------------------------------------------
\211\ Yellinek, Roie and Elizabeth Chen. ``The `22 vs. 50'
Diplomatic Split Between the West and China Over Xinjiang and Human
Rights.'' China Brief, The Jamestown Foundation, 31 Dec. 2019, https://
jamestown.org/program/the-22-vs-50-diplomatic-split-between-the-west-
and-china-over-xinjiang-and-human-rights/.
---------------------------------------------------------------------------
China's political influence in countries like Greece and
Hungary has also succeeded in frustrating EU consensus at the
UN on human rights issues. In March 2017, Hungary prevented the
European Union from joining a letter expressing concern over
lawyers being tortured in detention. Hungary is a large
recipient of Chinese investment and was the first EU nation to
sign up for China's ``One Belt, One Road'' (OBOR)
initiative.\212\ In June 2017, Greece, another large recipient
of Chinese investment in Europe, blocked the European Union
from making a statement at the UNHRC that was critical of
China's crackdown on activists and dissidents. The Greek
government indicated that the proposed statement was an
``unconstructive criticism of China'' and preferred that the
European Union raise this issue outside of the UN.\213\
---------------------------------------------------------------------------
\212\ Denyer, Simon. ``Europe divided, China gratified as Greece
blocks E.U. statement over human rights.'' 19 June 2017. The Washington
Post, https://wapo.st/2GEjVnC.
\213\ Emmott, Robin, and Angeliki Koutantou. ``Greece blocks EU
statement on China human rights at UN.'' 18 June 2018. Reuters, https:/
/www.reuters.com/article/us-eu-un-rights/greece-blocks-eu-statement-on-
china-human-rights-at-u-n-idUSKBN1990FP
---------------------------------------------------------------------------
China undertakes significant efforts to minimize criticism
of its human rights record within the UN system. China sits on
the UN's Economic and Social Council's (ECOSOC) Non-
Governmental Organizations committee. This 19-member committee
decides which non-governmental organizations (NGOs) will
receive consultative status with the ECOSOC, a prestigious
status that provides the organizations with access to many UN
bodies and human rights mechanisms, as well as physical access
to UN facilities. China uses this perch to not only block NGOs
critical of China, but to approve organizations that are
closely aligned with the CCP.\214\ \215\ One such CCP-backed
NGO is the ``China Association for Preservation and Development
of Tibetan Culture'' (CAPDTC). CAPDTC has been accredited since
2007 and, on multiple occasions, has parroted the CCP's
position on Tibetan issues.\216\
---------------------------------------------------------------------------
\214\ Lee, Kristine and Alexander Sullivan. ``People's Republic of
the United Nations: China's Emerging Revisionism in International
Organizations.'' Asia-Pacific Security Program, Center for New American
Security, May 2019, https://bit.ly/36gmdlu.
\215\ Lieberman, Amy. ``For many human rights NGOs, UN access
remains out of reach.'' Devex, 06 Feb. 2020, https://www.devex.com/
news/for-many-human-rights-ngos-un-access-remains-out-of-reach-96516.
\216\ Lee, Kristine and Alexander Sullivan. ``People's Republic of
the United Nations: China's Emerging Revisionism in International
Organizations.'' Asia-Pacific Security Program, Center for New American
Security, May 2019, https://bit.ly/36gmdlu.
---------------------------------------------------------------------------
This also occurs at the UNHRC. Of the 47 NGOs based in
China, Hong Kong, or Macau with access to the UNHRC, 34 are
government-organized NGOs controlled by the CCP or a PRC
government agency, or headed by retired CCP or government
officials.\217\ China also harasses and intimidates Chinese
dissidents who testify before UN bodies or participate in other
UN activities, and frequently intervenes to prevent citizens
from leaving China for these purposes.\218\ In 2013, human
rights activist Cao Shunli was detained at the Beijing airport
on her way to Geneva. She later died in prison after being
denied medical care for liver disease and tuberculosis.\219\
---------------------------------------------------------------------------
\217\ Wee, Sui-Lee and Stephanie Nebehay. ``At U.N., China uses
intimidation tactics to silence its critics.'' Reuters Investigates, 06
Oct. 2015, https://www.reuters.com/investigates/special-report/china-
softpower-rights/.
\218\ Ibid.
\219\ Ibid.
---------------------------------------------------------------------------
Checkbook Diplomacy
``Checkbook diplomacy,'' or offering substantial loans,
grants, or other funding to advance a Chinese objective has
also become a hallmark of the CCP's activity at the UN. In
2015, during Xi Jinping's first speech to the UNGA, he made
clear that the PRC's activities at the UN would no longer be
limited to ``development'' issues, but would now expand to
matters of peace and security. In this speech, Xi promised a $1
billion fund for peace and development.\220\ China's decision
to make this unrequested donation begs the question of whether
these funds are, in fact, intended to promote sustainability,
development, peace, and security worldwide, or rather to
solidify a connection between the UN and China's OBOR
initiative.
---------------------------------------------------------------------------
\220\ Feltman, Jeffrey. ``China's Expanding Influence at the United
Nations--And How The United States Should React.'' Global China,
Brookings Institution, Sep. 2020, https://brook.gs/3mTBe3o.
---------------------------------------------------------------------------
The answer is simple. China created a fund outside normal
UN processes and organizations in order to facilitate OBOR as a
preferred instrument of the UN. After this speech, a variety of
UN officials, including the UN Secretary General Antonio
Guterres, began a campaign to legitimize OBOR within UN systems
and around the world, particularly in developing nations.
Interestingly, in May 2016, Beijing and the UN signed a decade-
long agreement to allocate $20 million a year into a ``UN Peace
and Development Trust Fund,'' which is directed by a steering
committee of three current Chinese government officials, in
addition to China's former Vice Minister of Foreign Affairs Liu
Zhenmin.\221\ Liu currently leads the UN's Department of
Economic and Social Affairs (DESA), a position that has been
filled by a PRC national since 2007. This fund, according to
the UN website, has a mandate of ``proposing cost and action
plan[s] and identifying priorities of the Fund; prioritizing
among projects and activities to be funded.'' \222\ This board,
by design, advises the UN secretary general on development
projects around the globe.
---------------------------------------------------------------------------
\221\ Lynch, Colum. ``China Enlists U.N. to Promote Its Belt and
Road Project.'' Foreign Policy, 10 May 2018, https://bit.ly/32nHhW9.
\222\ ``Steering Committee.'' United Nations Peace and Development
Trust Fund, https://www.un.org/en/unpdf/about.shtml.
---------------------------------------------------------------------------
Shortly after its conception, China's State Information
Center asked DESA to conduct a study to examine how the
Development Fund could aid the UN in meeting its sustainable
development goals. In summer 2016, one of DESA's top
economists, also a Chinese national, determined that OBOR was
``in line'' with UN goals and policies to tackle global poverty
by 2030.\223\ The marriage of this fund, DESA, and OBOR,
provides Beijing not only with insight into every UN
development project in the world, but also political and
investment opportunities. If the PRC sincerely wanted to
contribute to peace and security, it could have easily provided
funds within the existing system, but chose instead to operate
outside of it.
---------------------------------------------------------------------------
\223\ Lynch, Colum. ``China Enlists U.N. to Promote Its Belt and
Road Project.'' Foreign Policy, 10 May 2018, https://bit.ly/32nHhW9.
---------------------------------------------------------------------------
Finally, China uses its influence in IOs to further its
agenda on Taiwan, in particular its view that Taiwan is a part
of the PRC and therefore should not participate in the
international system. Several UN members in Latin America, the
Pacific Islands, and Africa still recognize Taiwan
diplomatically, and therefore it is not the consensus view
within the UN system that Taiwan is part of China. Taiwan has
applied for UN membership numerous times, only to be blocked by
the PRC. Even in IOs where UN membership is not a requirement,
China blocks Taiwanese participation.\224\ By contrast, the
Palestinian Authority has been able to achieve observer status
over the objection of UN member countries. China also goes to
great lengths to prohibit Taiwanese citizens from even being
able to tour the UN headquarters building in New York by
pressuring the UN to reject Taiwanese passports as an official
form of identification.\225\
---------------------------------------------------------------------------
\224\ Winkler, Sigrid. ``Taiwan's UN Dilemma: To be or Not to be'',
Brookings Institution, 20 Jun. 2012, https://www.brookings.edu/
opinions/taiwans-un-dilemma-to-be-or-not-to-be/.
\225\ Horton, Chris. ``As U.N. Gathers, Taiwan, Frozen Out,
Struggles to Get Noticed.'' New York Times, 21 Sep. 2018, https://
nyti.ms/3557r1G.
---------------------------------------------------------------------------
Personnel at United Nations Agencies
Beyond China's influence over policy matters, the true key
to the CCP's strategy to reshape the UN according to its own
agenda is orchestrating the election of its top diplomats as
the heads of UN agencies--a strategy that has enjoyed
significant success in recent years. As of October 2020, China
leads four of the fifteen specialized UN agencies: the
International Civil Aviation Organization (ICAO); the
International Telecommunication Union (ITU); the Food and
Agriculture Organization (FAO); and the UN Industrial
Development Organization.\226\ No other country leads more than
one specialized agency. (The United States leads two other UN
entities outside of the specialized group, and EU members lead
more than ten.)\227\ China's bid to lead a fifth specialized
agency, the World Intellectual Property Organization, failed in
March 2020, after Europeans and Americans made clear their
concern that a PRC citizen in the position would exacerbate
already huge economic and security challenges associated with
China's state-sponsored intellectual property theft.\228\ It is
notable that while China is eager to put up candidates to lead
UN specialized agencies that develop norms or set standards, it
does not compete to lead UN funds and programs focused on
humanitarian and development work.
---------------------------------------------------------------------------
\226\ Fung, Courtney, and Shing-Hon Lam. ``China already leads 4 of
the 15 U.N. specialized agencies--and is aiming for a 5th.'' 03 Mar.
2020. Washington Post, https://www.washingtonpost.com/politics/2020/03/
03/china- already-leads-4-15-un-specialized-agencies-is-aiming-5th/.
\227\ Schaefer, Brett. ``How the U.S. Should Address Rising Chinese
Influence at the United Nations.'' Backgrounder, no. 3431, 20 Aug.
2019. Margaret Thatcher Center for Freedom, The Heritage Foundation,
https://herit.ag/2JL6Xpl.
\228\ Runde, Daniel F. ``Trump Administration wins big with WIPO
election'', The Hill, 09 Mar. 2020. https://bit.ly/3l6SrGc.
---------------------------------------------------------------------------
Although UN employees are required to represent the
interests of all member states over those of their own
respective countries, many PRC nationals behave in precisely
the opposite manner. One example, as illustrated by Brett
Schaefer of the Heritage Foundation, is the case of Zhao Houlin
as the head of the ITU. The ITU is responsible for policies and
standards-setting for information and communication
technologies. Zhao has sought not only to promote Chinese
technology companies, but also to encourage Chinese companies
and internet service providers to circumvent the process set
forth by the Internet Corporation for the Assignment of Names
and Numbers, and instead go solely through Beijing's National
Internet Registry. Zhao has publicly spoken out against U.S.
criticism of the use of Huawei in the UN and promoted OBOR as a
model for development, even though it is China's own signature
foreign policy initiative rather than a multilateral strategy.
Zhao's lack of neutrality as an international civil servant
makes clear China's view that international fora exist to suit
Beijing's ends, often to the detriment of other members.\229\
---------------------------------------------------------------------------
\229\ Schaefer, Brett, Dean Cheng, and Klon Kitchen. ``Chinese
Leadership Corrupts Another U.N. Organization.'' The Heritage
Foundation, 11 May 2020, https://on.wsj.com/2I9W27J.
---------------------------------------------------------------------------
In addition to these top jobs, PRC nationals are in
numerous subsidiary positions that influence decision-making
across the UN system. For example, China is successfully
placing its nationals within UN agencies through the Junior
Professional Officer (JPO) program. The JPO program allows a UN
member country to sponsor its nationals to work at IOs at the
member government's expense.\230\ Once placed, they are likely
to parlay their experience in the JPO program into a permanent
placement within the UN system, and thereby exert influence at
higher levels. The United States and Europe have both welcomed
the recruitment of experts from around the world to serve
within the UN system. However, given the record of the PRC
government in leveraging these positions to advance its own
interests and the control it often seeks to exert over its
citizens, the growing number of junior officers who may be
positioned to reshape organizations in China's favor should be
a cause for concern.
---------------------------------------------------------------------------
\230\ ``Junior Professional Officer Programs.'' International
Organization Careers, https://iocareers.state.gov/Main/Content/Page/
junior-professional-officer-programs.
---------------------------------------------------------------------------
Contributions to the United Nations
In addition to personnel, member states can influence the
UN system through contributions ranging from financial
contributions to the deployment of peacekeeping personnel. The
United States and its European allies historically have
provided the bulk of UN funding over the years. China, as its
economy has grown, is now paying an increasing share of
assessed contributions (often referred to as ``UN dues''), and
currently trails only the United States in its rate of
assessment. While this improved burden-sharing arrangement is
welcome and long overdue, China must not be empowered to
leverage its contributions to twist the UN to fit its own
agenda, rather than promote the goals of the UN Charter.
After years of claiming ``developing country status'' and
thereby artificially reducing its assessment rate, the PRC is
now the second largest financial contributor to the UN regular
budget, surpassing Japan in 2018. That same year, the UNGA
passed a resolution cementing China's assessment for the
regular budget at 12.005 percent for 2019 to 2021, up from
7.921 percent for 2016 to 2018.\231\ (In 1995, China paid only
0.72 percent of the UN regular budget.)\232\ The United States
currently pays 22 percent of the UN regular budget, the maximum
amount that any country may be assessed for support.\233\
---------------------------------------------------------------------------
\231\ ``China passes Japan to become UN's No. 2 contributor.''
Nikkei Asian Review, 24 Dec. 2018, https://asia.nikkei.com/Politics/
International-relations/China-passes-Japan-to-become-UN-s-No.-2-
contributor.
\232\ ``Status of Contributions as at 31 December 1975.'' United
Nations, 22 Jan. 1976, http://undocs.org/en/ST/ADM/SER.B/224.
\233\ ``Resolutions adopted by the General Assembly'', 55th Session
of the United Nations General Assembly, 22 Jan. 2001, https://
undocs.org/A/RES/55/5b-f.
---------------------------------------------------------------------------
China now is also the second largest contributor to the UN
peacekeeping budget, and provides more personnel to
peacekeeping missions than any other permanent UNSC
member.\234\ With an assessed peacekeeping budget of $6.5
billion from 2019 to 2020, the top contributors based on
assessed contributions for 2019 were: the United States (27.89
percent), China (15.21 percent), Japan (8.56 percent), Germany
(6.09 percent), the United Kingdom (5.79 percent), France (5.61
percent), and Italy (3.30 percent).\235\
---------------------------------------------------------------------------
\234\ Lee, Kristine and Alexander Sullivan. ``People's Republic of
the United Nations: China's Emerging Revisionism in International
Organizations.'' Asia-Pacific Security Program, Center for New American
Security, May 2019, https://bit.ly/36gmdlu.
\235\ While the United States has been assessed at a rate of 27.89%
since 2017, the United States has been paying at a rate of 25%,
consistent with current law. See: ``How We Are Funded.'' United Nations
Peacekeeping, 2020, https://peacekeeping.un.org/en/how-we-are-funded.
---------------------------------------------------------------------------
Beyond these required UN dues, the UN and its affiliated
organizations are also funded by voluntary contributions.
Though China's required contributions to the UN have been
increasing, it has only marginally increased its voluntary
contributions. The United States and European allies remain, by
far, the largest voluntary contributors to the UN and its
affiliated agencies, with the majority of their contributions
going to humanitarian operations.\236\ In 2018, China's
voluntary contributions to the UN were only $580 million, in
stark contrast to nearly $8 billion voluntarily contributed by
the United States.\237\
---------------------------------------------------------------------------
\236\ Schaefer, Brett. ``How the U.S. Should Address Rising Chinese
Influence at the United Nations.'' Backgrounder, no. 3431, Margaret
Thatcher Center for Freedom, The Heritage Foundation, 20 Aug. 2019,
https://herit.ag/2JL6Xpl.
\237\ ``Statistics'', United Nations System Chief Executives Board
for Coordination, 2016, https://www.unsystem.org/content/statistics.
Three examples are illustrative:
In 2019, the largest donors to the UN Office of
Humanitarian Affairs were the United States ($55.1
million), Sweden ($34.6 million), and the United
Kingdom ($30 million). China provided a paltry
$30,000.\238\
---------------------------------------------------------------------------
\238\ Annual Report 2019. United Nations Office for the
Coordination of Humanitarian Affairs, https://www.unocha.org/sites/
unocha/files/2019OCHAannualreport.pdf.
The UN Refugee Agency's top donors in 2019 were the United
States ($1.7 billion), the European Union ($473
million), and Germany ($391 million). China donated
just $1.9 million.\239\
---------------------------------------------------------------------------
\239\ Funding Update 2019: Global Overview. United Nations High
Commissioner for Refugees, https://www.unhcr.org/5eddeb394.
The World Food Program's top donors were the United States
($3.4 billion), Germany ($887 million), and the United
Kingdom ($698 million). China contributed $30 million.
At a time when more than 20 million refugees and 47.5
million internally displaced persons have been forced
from their homes, and 135 million people in 55
countries are facing starvation--the highest levels of
human displacement and humanitarian need in recorded
history--China has shirked its humanitarian
responsibilities and instead provided the bare
minimum.\240\
---------------------------------------------------------------------------
\240\ ``Figures at a Glance.'' United Nations High Commissioner for
Refugees, 18 Jun. 2020, https://www.unhcr.org/en-us/figures-at-a-
glance.html. And ``Fact Sheet: Hunger and Conflict.'' World Food
Program, Oct. 2020, https://docs.wfp.org/api/documents/WFP-0000119678/
download/?--ga=2.173870179.1360960934.1602808352-1420031420.1602808352.
Rather than stepping-up voluntary contributions to the UN
humanitarian organizations it does not control, China has since
2015 sought to raise its international profile and advance its
political, economic, and military interests by dramatically
increasing the number and types of troops it contributes to UN
peacekeeping operations. According to the Council on Foreign
Relations (CFR), in 1990, ``China provided only five personnel
to all total peacekeeping operations.'' \241\ Today, China
deploys 2,531 peacekeeping personnel (as of August 2020), more
than all other permanent UNSC members combined.\242\
---------------------------------------------------------------------------
\241\ Best, Lucy. ``What Motivates Chinese Peacekeeping?'' Asia
Unbound, The Council on Foreign Relations, 07 Jan. 2020, https://
www.cfr.org/blog/what-motivates-chinese-peacekeeping.
\242\ Schaefer, Brett. ``How the U.S. Should Address Rising Chinese
Influence at the United Nations.'' Backgrounder, no. 3431, The Heritage
Foundation, 20 Aug. 2019, https://herit.ag/2JL6Xpl.
---------------------------------------------------------------------------
The UN's troop contributing countries (TCCs) receive
reimbursements and training made available through the assessed
peacekeeping budget.\243\ Notably, some TCCs are more motivated
by the operational experience and financial incentives gained
through participation than by the overall objectives of such
missions. Moreover, TCCs are able to negotiate memorandums of
understanding that cover when, where, how, and what types of
troops are deployed. This presents a clear opportunity for
China to expand its military-to-military contacts and ensure
its personnel serve only in areas where it has other interests.
CFR research makes this clear: over the last six years, Chinese
peacekeeping personnel appeared in countries with significant
Chinese financial investment in the years prior. For example,
China has contributed specialized peacekeeping forces to
multiple missions where it has significant interest in securing
access to natural resources, including Western Sahara; Darfur,
Sudan; South Sudan; and the Democratic Republic of Congo.
---------------------------------------------------------------------------
\243\ ``Deployment and Reimbursement.'' United Nations
Peacekeeping, https://bit.ly/32nhWLZ.
---------------------------------------------------------------------------
China only pays its required share of peacekeeping
contributions. Its People's Liberation Army personnel deployed
to UN missions are paid for by dues collected from all UN
member states. The United States and the European Union
consistently provide the voluntary financial, political, and
enabling contributions upon which all successful peacekeeping
operations depend. As of August 2020, 27 EU member states
contributed 5,145 staff to peacekeeping missions around the
globe.\244\ Moreover, despite being slightly risk-averse to
deploying troops to high conflict areas, the European Union
maintains numerous technical, diplomatic, and specialized
training programs--to include counter-improvised explosive
device programs provided through the UN Mine Action Service and
the EU Military Advisory Mission, including the successor EU
Training Mission in the Central African Republic. Both of these
missions are outside of the traditional UN peacekeeping
contributions.
---------------------------------------------------------------------------
\244\ ``Troop and Police Contributions.'' United Nations
Peacekeeping, https://bit.ly/2GF9oZo.
---------------------------------------------------------------------------
Similarly, the United States provides vital training and
equipment to support UN peacekeeping forces through various
programs and initiatives, including the U.S. Department of
State's Global Peace Operations Initiative (GPOI) and the
complementary African Peacekeeping Rapid Response Partnership.
Through GPOI, the United States has contributed nearly $1.3
billion in assistance to help TCCs build critical enabling
peacekeeping capabilities, enhance readiness, support rapid
deployment, increase the participation of women, and become
self-sufficient. GPOI partners have increased their military
deployment rates to the UN and African Union operations by 150
percent overall; the number of females deployed has increased
by 114 percent since April 2010 alone.\245\
---------------------------------------------------------------------------
\245\ ``Key Topics--Office of Global Programs and Initiatives.''
U.S. Department of State Bureau of Political-Military Affairs, https://
bit.ly/36eIjon.
---------------------------------------------------------------------------
The transatlantic alliance provides not only the political
leadership but also technical assistance, training, and
enabling capabilities that advance international peace and
security. In stark contrast to the PRC, these efforts extend
well beyond assessed contributions and economically motivated
troop deployments.
The Need for Transatlantic Cooperation
There is huge potential for the United States and Europe to
build greater diplomatic momentum to encourage impartiality and
good governance at the UN. One example is in the area of global
health. In response to the CCP's efforts to hide the nature and
scope of the COVID-19 outbreak that originated in Wuhan--
including by delaying the entry of the World Health
Organization's (WHO) investigative team into China and
launching a massive disinformation campaign--the United States
and the European Union began discussions about how to rebuild
the WHO as an independent institution inoculated against the
outsized and undue influence of the Chinese government.
Notably, the Chinese government paid only 0.2 percent of the
WHO's budget from 2018-2019, while the European Union funded
nearly 11 percent and the United States funded 15 percent.\246\
Similar to the current U.S. position on the imperative of WHO
reform, in the summer of 2020, EU health ministers stated that
``an evaluation and reform of the WHO was needed.'' Germany,
which began its six-month EU presidency in July 2020, put WHO
reform on its agenda.\247\ Despite European Union concerns
about the U.S. decision to withdraw from an unreformed WHO, the
opportunity to work collaboratively towards our mutual
objective is apparent, and should be explored at other
specialized agencies.
---------------------------------------------------------------------------
\246\ ``Europeans Working with US to Restructure WHO, Top Official
Says.'' 19 Jun. 2020. Voice of America, https://bit.ly/3l6eTPJ.
\247\ Ibid..
---------------------------------------------------------------------------
Another area where the United States and Europe can
cooperate is in the election of top UN officials. A recent
example was the successful joint effort to elect a Singaporean
national to lead WIPO. This should not be a one-time success.
The United States and European partners should reflect on the
lessons from both the successful WIPO election and previously
failed FAO election and work together to produce future
positive outcomes.
Equally important to note, though not all UN agencies and
programs rise to the same level of importance, supporting
qualified and independent candidates to lead these agencies and
programs can bolster our current diplomatic ties, as well as
those with our allies outside the transatlantic relationship.
By focusing on maintaining consistent, early diplomatic
engagement coupled with high-level discussions, the United
States and Europe can sustain the hard-fought efforts to
champion impartiality and good governance across the UN system.
Future elections depend on the critical bond between the United
States and Europe. Upcoming elections for leadership of the
Organization for Economic Cooperation and Development,
Universal Postal Union, World Trade Organization, and the ICAO
provide opportunities to achieve success that serves the shared
transatlantic interest in an international system characterized
by liberal principles and commitment to the UN Charter.
Working together, the United States and Europe can also
make meaningful reforms to the UN and restore the organization
as a model of transparency and good governance. The
transatlantic alliance should continue to push for transparency
throughout the UN system. In a recent example, the European
Union and United States supported a resolution led by Chile,
Mexico, and Uruguay that resulted in the webcasting of ECOSOC's
NGO committee for the first time.\248\ Prior to this successful
resolution in 2017, those committee meetings were held in
private.
---------------------------------------------------------------------------
\248\ Amadeo, Stefanie. ``Remarks at the Economic and Social
Council Meeting on Non-Governmental Organizations.'' U.S. Mission to
the United Nations, 19 Apr. 2017, https://bit.ly/38gCObC.
---------------------------------------------------------------------------
Conclusion
China is clear about its intentions to disregard the rules-
based international system that the UN was founded upon, and to
instead slowly chip away and reshape the UN system to fit the
CCP's agenda. While the PRC only joined the UN in 1971, it has
made up for lost time by pushing its influence across the UN
system, from heading UN specialized agencies to increasing its
number of peacekeepers. It is unrealistic to presume that China
will not use its influence to shape the international system.
Indeed, the United States and its European allies must expect
them to do so and respond by using their own influence to
protect the norms and practices that have served the
international system so well. Finally, despite China's
increasing monetary contributions, the reality is that the
United States, Europe, and other advanced democracies continue
to provide the lion's share of financial support to the UN and
other IOs. Both sides of the Atlantic must be steadfast in
insisting that their contributions not subsidize goals that
undermine the system that they have founded and continue to
value.
CHAPTER THREE--TRADE, INVESTMENT,
AND ECONOMIC STATECRAFT
----------
With the US--and with other democracies--we do share a
number of deep concerns on the substance of Chinese
behaviour that must be addressed: the persistent lack
of a level-playing field in the economic area; the
distorting effects of industrial subsidies; the absence
of reciprocity in procurement rules. The list is quite
long. And our impatience is growing that despite
Chinese commitments to address these concerns, there is
insufficient follow through in terms of actual
reforms.\249\
---------------------------------------------------------------------------
\249\ Borrell, Josep Fontelles. ``China, the United States and
us.'' European External Action Service, 31 Jul. 2020, https://
eeas.europa.eu/headquarters/headquarters-homepage/83644/china-united-
states-and-us--en.
--Josep Fontelles Borrell, High Representative of the
European Union for Foreign Affairs and Security Policy
Introduction
U.S. and European governments and companies' earlier
optimism\250\ about China's commitment to economic reform and
liberalization consistent with free and private markets has
been replaced with growing frustration. The People's Republic
of China's (PRC) continued advancement of an ecosystem of anti-
competitive economic and industrial policies that further its
strategic goals and hamper legitimate private enterprise
presents an unprecedented challenge to the international
trading system and to all other participants in international
commerce. The most damaging PRC policies include:
---------------------------------------------------------------------------
\250\ Kartnitschnig, Matthew. ``How Germany opened the door to
China--and threw away the key.'' Politico Europe, 10 Sep. 2020, https:/
/politi.co/3keycVX
---------------------------------------------------------------------------
Selective and policy-driven market access restrictions;
Government-sanctioned (or -tolerated) intellectual property
(IP) theft;
Endorsement of forced technology transfers;
Trade retaliation or the threat thereof for political
decisions;
Support to Chinese state-owned enterprises (SOEs) that
heavily underbid on international contracts; and
Use of state subsidies (many of dubious consistency with
China's obligations under various trade commitments)
for research and development in certain lucrative
sectors.
While China's accession to the World Trade Organization
(WTO) did lead to some openness and greater opportunities for
foreign firms, progress in establishing a non-discriminatory,
free, and open market in the PRC has long since stalled. It has
become clear that the PRC government intends to pursue an
economic model that couples the nearly limitless resources and
power of the state with subservient economic actors in a bid to
expand their footprints and revenues. It does so at the expense
of public and private foreign companies seeking to compete
according to longstanding market principles and rules.
Given the immense size of the PRC market and its global
reach today, China's practices have the potential to upend a
global economic community previously characterized by open
markets and trade liberalization. The PRC government, newly
enriched through the benefits of participation in the free
market trade liberalization system established under the
General Agreement on Tariffs and Trade (GATT), WTO, and related
agreements, now seeks to undermine and potentially displace
that system by advancing a CCP-centric agenda that exploits
gaps in that system and which furthers China's national goals
at the expense of all other participants. For instance, despite
being the world's second largest economy, the PRC continues to
insist that it is a ``developing nation'' under WTO rules and
takes resources and advantages truly needed by much poorer
nations while competing unfairly with richer ones. The PRC
government is pursuing a neo-mercantilist policy of placing the
power and resources of the state at the disposal of supposedly
private Chinese economic actors in a bid to distort markets to
advance and promote Chinese political ends, displace non-
Chinese competitors, and dominate Chinese-favored sectors
globally.
Both U.S. and European companies face this threat. In the
European Union, surveys reveal that, ``Member states are
increasingly dissatisfied with the [PRC's] unwillingness to
reciprocate the openness of the EU market.'' \251\ For their
part, American businesses working in China see ``advocat[ing]
more strongly for a level playing field for U.S. business in
China'' as the best thing the U.S. government could do to
``help foreign businesses in China.'' \252\
---------------------------------------------------------------------------
\251\ Oertel, Janka. ``The new China Consensus: How Europe is
growing wary of Beijing.'' European Council on Foreign Relations, 07
Sep. 2020, https://bit.ly/3kaiBq1.
\252\ 2020 China Business Climate Survey Report. American Chamber
of Commerce in the People's Republic of China, Mar. 2020, https://
bit.ly/2GyZEj8.
---------------------------------------------------------------------------
If the United States and Europe hope to preserve the vision
of free markets that provide non-discriminatory benefits
equally to all, this challenge cannot go unmet. The United
States and Europe created the modern free market system in
response to the horrors of the early 20th century wars. For
seven decades, this system has helped to realize the
aspirations of billions of people using their individual
talents to advance their personal economic interests, cutting
global poverty by two-thirds since 1995 alone.\253\ That system
is now under assault. The United States and Europe have a
shared interest in protecting, strengthening, and advancing the
free market on behalf of and at the direction of their
citizens.
---------------------------------------------------------------------------
\253\ See 2020 Index of Economic Freedom. The Heritage Foundation,
May 2020, https://www.heritage.org/index/. And Kim, Anthony and Patrick
Tyrrell. ``Economic Freedom Enables Great Escape from Poverty.'' The
Heritage Foundation, 13 Feb. 2018, https://herit.ag/2I5uIYO .
---------------------------------------------------------------------------
The transatlantic community shares many concerns with
Chinese practices and tends to agree on the scope and nature of
the problems we face in the trade sphere. The next step, and
best path forward, is to find potential areas for cooperation
that strengthen the system itself and push back on specific PRC
behavior. Such cooperation should be grounded by our shared
beliefs in preserving and promoting an open and non-
discriminatory free market environment, while upholding the
legitimate interest of the state in establishing appropriate
rules that protect consumers and investors, and protecting
individuals and private property from undue foreign coercion
and theft, particularly the IP rights that are foundational to
U.S. and European prosperity. The United States and Europe must
rise to the challenge and boldly and openly reaffirm these
principles together.
China's Discriminatory Practices
The Power of the State
As China's market has become more saturated and advanced,
the large revenue gains previously realized by Western
companies are increasingly difficult to achieve. And
technologically, China is catching up quickly and moving into
more advanced manufacturing sectors. For instance, German
technology and machinery, long seen as the world's most
advanced, is no longer so confident in its technological
advantage.\254\ Another expert notes:
---------------------------------------------------------------------------
\254\ Staff discussions with a European energy expert.
In the past, German industrial companies combatted
China's attempts to steal their technology by holding
back their latest innovations from the Chinese market.
In most cases, even if the gear they sold to China
wasn't state-of-the-art, it was generally superior to
what Chinese suppliers could offer. That strategy has
become increasingly difficult as Chinese rivals have
become more sophisticated, forcing German companies to
put their top-shelf offerings on the Chinese
market.\255\
---------------------------------------------------------------------------
\255\ Kartnitschnig, Matthew. ``How Germany opened the door to
China--and threw away the key.'' Politico Europe, 10 Sep. 2020, https:/
/politi.co/32lMuOf.
Market economy states have also grown increasingly
concerned about PRC-directed and controlled investments in
strategic sectors, as well as acquisitions of key technology
companies by firms with government ties. An examination of
Chinese acquisitions in Sweden by the Swedish Defense Research
Agency highlights the concentration of these purchases in
smaller companies that work in industrial products and
machinery, biotechnology, information and communications
technology, electronics, and the automotive sector. The report
further notes that around half of these Chinese acquisitions
align with priorities set by the Chinese government in its Made
in China 2025 plan.\256\
---------------------------------------------------------------------------
\256\ Hellstrom, Jerker, Oscar Almen and Johan Eglund. ``Kinesiska
bolagsforvarv i Sverige: en kartlaggning.'' Swedish Defense Research
Agency (FOI), 29 Nov. 2019, https://bit.ly/3p9Fqy8.
---------------------------------------------------------------------------
Made in China 2025 is designed to marshal the Chinese
economy to make huge strides in certain industrial areas that
the state considers to be of great strategic importance.\257\
Not surprisingly, the 10 areas highlighted by the program have
also been the targets of many of China's most malign trade
practices. These sectors are: new generation information
technology; new energy and energy-saving vehicles; high-end
computerized machines and robots; energy equipment; aerospace;
agricultural machines; maritime equipment and high-tech ships;
new materials; advanced railway transport equipment; and
biopharma and high-tech medical devices. And while the PRC
government has certainly focused on bolstering the role of SOEs
in these sectors, private Chinese companies have also recently
been commanded to ``organize and mobilize private economic
professionals to devote themselves to major national strategies
such as innovation-driven development strategies.'' \258\
---------------------------------------------------------------------------
\257\ Sutter, Karen. Made in China 2025 Industrial Policies: Issues
for Congress. Congressional Research Service, 11 Aug. 2020, https://
fas.org/sgp/crs/row/IF10964.pdf.
\258\ ``Zhonggong zhongyang bangong tin yinfa ``guanyu jiaqiang xin
shidai minying jingji tongzhan gongzuo de yijian''.'' [The General
Office of the CPC Central Committee issued the ``Opinions on
Strengthening the United Front Work of Private Economy in the New
Era'']. Xinhua, 15 Sep. 2020, https://bit.ly/2IbEUOW.
---------------------------------------------------------------------------
The Chinese Communist Party (CCP) has increasingly
mobilized its power to quickly achieve these goals. As Martin
Hala of Charles University writes, ``The CCP sets the rules and
can determine the success or failure of `private' ventures by
controlling access to capital from state and policy banks, by
offering and withdrawing licenses and permits, and ultimately
through direct administrative intervention. . . . It can allow
billion-dollar companies to spring up overnight and then
dissolve them by fiat and redirect the flow of capital to other
players.'' \259\
---------------------------------------------------------------------------
\259\ Hala, Martin. ``A New Invisible Hand: authoritarian Corrosive
Capital and the Repurposing of Democracy.'' Sharp Power and Democratic
Resilience Series, National Endowment for Democracy's International
Forum for Democratic Studies, Mar. 2020, https://www.ned.org/wp-
content/uploads/2020/03/New-Invisible-Hand-Authoritarian-Corrosive-
Capital-Repurposing-Democracy-Hala.pdf.
---------------------------------------------------------------------------
Forced Technology Transfer
Forced technology transfer is among the most ``unreasonable
and discriminatory'' practices that the PRC imposes, strongly
encourages, or supports through administrative action on
foreign companies seeking market access in China.\260\ In 2020,
13 percent of American companies\261\ and 16 percent of
European companies operating in China reported being asked to
transfer their technology.\262\ More worrisome is analysis from
the EU Chamber of Commerce in China which reveals, ``In
industries like medical devices, aerospace and aviation, and
environment--the crown jewels of European innovation--nearly a
third of members report having been compelled to transfer
technology in order to maintain market access.'' \263\ These
targeted sectors correspond with the priority areas laid out in
Made in China 2025.
---------------------------------------------------------------------------
\260\ ``Findings of the Investigation Into China's Acts, Polices,
and Practices Related to Technology Transfer, Intellectual Property,
and Innovation Under Section 301 of the Trade Act of 1974.'' Office of
the United States Trade Representative, 22 Mar. 2018, p. 11-12, https:/
/bit.ly/369oAGM .
\261\ 2020 Member Survey. The U.S.-China Business Council, p. 13,
https://bit.ly/3540YUx.
\262\ European Business In China: Business Confidence Survey 2020.
European Union Chamber of Commerce in China, Jun. 2020, p. 43, https://
bit.ly/3mUTidm.
\263\ Ibid, p. 43-44.
---------------------------------------------------------------------------
Joint venture requirements with Chinese companies are a key
vector for the transfer of proprietary IP and technology. These
joint ventures often include requirements that the Chinese
partner be provided access to the foreign investor's core
technologies. The U.S. Trade Representative explains that the
goal behind this requirement is made clear in the PRC's trade
strategies, which ``articulate the concept of Introducing,
Digesting, Absorbing, and Reinnovating foreign intellectual
property and technology (IDAR).'' \264\
---------------------------------------------------------------------------
\264\ ``Findings of the Investigation Into China's Acts, Polices,
and Practices Related to Technology Transfer, Intellectual Property,
and Innovation Under Section 301 of the Trade Act of 1974.'' Office of
the United States Trade Representative, 22 Mar. 2018, p. 11-12, https:/
/bit.ly/369oAGM.
---------------------------------------------------------------------------
This practice has been visible for some time, but its true
effects are only now being felt and understood. Siemens, in
order to tap the potentially lucrative market for high-speed
trains in China, signed a technology transfer agreement with
its Chinese partner; China's high-speed train companies have
now used that technology to become a competitor to
Siemens.\265\ German industry group BDI notes that Chinese
companies are often rewarded and incentivized by the PRC
government with tax exemptions for creating technology
transfer.\266\
---------------------------------------------------------------------------
\265\ ``The importance of China's high-speed tech transfer
policy.'' Railway Technology, 1 Mar. 2017, https://www.railway-
technology.com/features/featurethe-importance-of-chinas-high-speed-
tech-transfer-policy-5748075/ .
\266\ ``Partners and Systemic Competitor--How Do We Deal With
China's State-Controlled Economy?'' Jan. 2019. Federation of German
Industries (BDI), Jan. 2019, p. 7, https://english.bdi.eu/media/
publications/?publicationtype=Positions#/publication/news/china-
partner-and-systemic-competitor/.
---------------------------------------------------------------------------
Spain's Gamesa, a producer of wind turbines, has
experienced these IDAR strategies firsthand.\267\ To enter the
Chinese market in the 2000s, Gamesa followed local content
rules that compelled them to make 70 percent of their parts
inside China. Gamesa-trained local suppliers then began to sell
the same parts to Gamesa's PRC competitors, who also benefited
from low-interest state loans and access to cheap land for
factories and wind farms.\268\ Other sectors, including solar
energy, have had nearly identical experiences.\269\ This type
of manipulated or forced transfer of expertise is now simply
seen as a cost of doing business. Gamesa remains a leader in
the field, but companies that benefited from its technology are
gaining ground. In 2005, not one PRC company was in the top ten
manufacturers of wind turbines.\270\ In 2019, five of the top
ten producers were from China, though most of their sales were
inside the PRC.\271\ The Chinese government has continuously
promised to end the practice of forced technology transfer, but
has not done so.\272\
---------------------------------------------------------------------------
\267\ Gamesa is now known as Siemens Gamesa. It merged with Siemens
Wind Power in 2017.
\268\ Bradsher, Keith. ``To Conquer Wind Power, China Writes the
Rules.'' New York Times, 14 Dec. 2010.
https://www.nytimes.com/2010/12/15/business/global/
15chinawind.html.
\269\ Bradsher, Keith. ``China Racing Ahead of U.S. in the Drive to
Go Solar.'' New York Times, 24 Aug. 2009, nyti.ms/2IgTcO8.
\270\ Schmitz, Hubert and Lena, Rasmus Lema. ``The Global Green
Economy: Competition or Cooperation Between Europe and China.'' In The
Triple Challenge for Europe: Economic Development, Climate Change, and
Governance, Fegerberg, Jan et al., editors, Oxford UP, 2015, p.119-41.
Publisher: Oxford University Press Editors: Jan Fagerberg, Steffan
Laestadius, Ben Martin. 2015.
\271\ Stromsta, Karl-Erik. ``WoodMac: Vestas Tops Global Wind
Turbine Supplier Rankings in 2019.'' Green Tech Media, 11 May 2020,
https://www.greentechmedia.com/articles/read/woodmac-vestas-tops-
ranking-of-global-wind-turbine-suppliers-in-2019.
\272\ ``Findings of the Investigation Into China's Acts, Polices,
and Practices Related to Technology Transfer, Intellectual Property,
and Innovation Under Section 301 of the Trade Act of 1974.'' Office of
the United States Trade Representative, 22 Mar. 2018, p. 6-8, Office of
the United States Trade Representative.
https://ustr.gov/sites/default/files/Section%20301%20FINAL.PDF.
---------------------------------------------------------------------------
State-Sponsored Industrial Espionage
State-sanctioned IP theft by PRC actors continues unabated,
in contravention of established norms against economic
espionage and despite prior commitments by the Chinese
government. U.S. President Barack Obama and PRC General
Secretary Xi Jinping signed an agreement in 2015 that ``neither
government will conduct or knowingly support cyber-enabled
theft of intellectual property, including trade secrets or
other confidential business information, with the intent of
providing competitive advantages to companies or commercial
sectors.'' \273\ However, a 2019 survey of the 23 companies on
the CNBC Global CFO Council revealed that 20 percent of them
had IP stolen by China during the prior year.\274\ A November
2019 investigation by the U.S. Senate Homeland Security and
Governmental Affairs Committee found that the U.S. government
``has failed to stop China from acquiring knowledge and
intellectual property from U.S. taxpayer funded researchers and
scientists'' and lacked ``a comprehensive strategy to combat
this threat.'' \275\
---------------------------------------------------------------------------
\273\ ``FACT SHEET: President Xi Jinping's State Visit to the
United States.'' White House Office of the Press Secretary, 25 Sep.
2015, https://obamawhitehouse.archives.gov/the-press-office/2015/09/25/
fact-sheet-president-xi-jinpings-state-visit-united-states. 25 Sept.
2015. https://bit.ly/3l65qb9.
\274\ Rosenbaum, Eric. ``1 in 5 corporations say China has stolen
their IP within the last year: CNBC CFO survey.'' 01 Mar. 2019,
CNBC,com. https://cnb.cx/3p1YFtb.
\275\ ``Threats to the U.S. Research Enterprise: China's Talent
Recruitment Plans.'' United States Senate Committee on Homeland
Security and Governmental Affairs Permanent Subcommittee on
Investigations, 18 Nov. 2019, https://bit.ly/3k7TJ2l.
---------------------------------------------------------------------------
This rampant IP theft is in large measure directed and
supported by Chinese government entities to systematically
acquire foreign technology in violation of clear commitments by
the PRC government. The most well-known of these programs is
the Thousand Talents Program, which states its goal as ``to
follow the unified deployment of the Central Coordinating Group
on Talent and focus on the needs of China's economic and social
development in key industries and key areas, recruiting 50-100
foreign experts each year over about 10 years so as to recruit
500-1,000 high-level foreign experts.'' \276\
---------------------------------------------------------------------------
\276\ ``Detailed Rules for the `Thousand Talents Program' High-
Level Foreign Expert Project.'' SeBeijing Institute of Technology Human
Resources Department Webpage, translated by Etcetera Language Group.
Communist Party of China Central Organization Department, 2011, https:/
/cset.georgetown.edu/research/detailed-rules-for-the-thousand-talents-
program-high-level-foreign-expert-project/.
---------------------------------------------------------------------------
PRC-sponsored professional associations that openly
announce their intent to transfer technology (often acquired in
violation of national laws) back to China have been established
in Europe, North America, and Australia. Take, for example, the
Federation of Chinese Professional Associations in Europe. This
umbrella organization for more than 60 professional guilds has
established two ``innovation bases'' in Europe. The base in
Belgium openly advertises that it ``symbolizes how Chinese
companies can directly make use of Europe's technological
resources and its strong research.'' \277\ One of the
individual members, the China-Sweden Life Science Association,
says its ``purpose is to promote knowledge exchange'' \278\ and
boasts of its connection to BGI Genomics, a rising giant that
combines big data with genetics and has been implicated in
human rights violations in Xinjiang.\279\
---------------------------------------------------------------------------
\277\ Tatlow, Didi Kirsten, Hinnerk Feldwisch-Drentrup and Ryan
Fedasiuk. ``Europe: A technology transfer mosaic.'' China's Quest for
Foreign Technology: Beyond Espionage, Hannas, William D. and Didi
Kirsten Tatlow, editors, Routledge, 2020, https://www.routledge.com/
Chinas-Quest-for-Foreign-Technology-Beyond-Espionage/Hannas-Tatlow/p/
book/9780367473570.
\278\ China-Sweden Life Science Association, https://bit.ly/
2UeP6sZ.
\279\ Needham, Kirsty. ``Special Report: COVID opens new doors for
China's gene giant.'' Reuters, 05 Aug. 2020, https://www.reuters.com/
article/us-health-coronavirus-bgi-specialreport/special-report-covid-
opens-new-doors-for-chinas-gene-giant-idUSKCN2511CE.
---------------------------------------------------------------------------
Democratic governments, including the United States,
Australia, and New Zealand, are beginning to investigate and
prosecute legal violations connected with these kinds of
programs. A recent and very public case is that of Harvard
Professor Charles Lieber, chair of the Department of Chemistry
and Chemical Biology, who is charged by the U.S. Department of
Justice with failing to disclose his affiliation with and
income from the Thousand Talents Program.\280\ Turab Lookman,
formerly a scientist at Los Alamos National Laboratory, pled
guilty when charged with lying to a federal investigator about
his involvement in the Thousand Talents Program.\281\
---------------------------------------------------------------------------
\280\ ``Harvard University Professor and Two Chinese Nationals
Charged in Three Separate China Related Cases.'' U.S. Department of
Justice Office of Public Affairs, 28 Jan. 2020, https://
www.justice.gov/opa/pr/harvard-university-professor-and-two-chinese-
nationals-charged-three-separate-china-related.
\281\ ``Former scientist from Los Alamos National Laboratory pleads
guilty in federal court to making false statement about involvement
with Chinese government technology program.'' U.S. Department of
Justice U.S. Attorney's Office District of New Mexico, 24 Jan. 2020,
https://www.justice.gov/usao-nm/pr/former-scientist-los-alamos-
national-laboratory-pleads-guilty-federal-court-making-false.
---------------------------------------------------------------------------
In the medical field, the U.S. National Institutes of
Health and Federal Bureau of Investigation (FBI) are cracking
down on research stolen by the PRC government. In one of many
such cases, Wang Xin, a visiting medical researcher at the
University of California at San Francisco (UCSF) and also a
member of the People's Liberation Army, told investigators that
he had sent research back to his lab in China and had been
instructed to ``observe the layout of the UCSF lab and bring
back information on how to replicate it in China.'' \282\
Another case involved Dr. Alan List, Thomas Sellers, and four
researchers at Florida's H. Lee Moffitt Cancer Center &
Research Institute. They all resigned after their involvement
in Thousand Talents came under scrutiny.\283\ The U.S. Justice
Department also alleges that the medical industry was recently
targeted by two PRC hackers working with China's Ministry of
State Security.\284\ Companies victimized by these hackers are
located not only in the United States, but also Australia,
Belgium, Germany, Japan, Lithuania, the Netherlands, South
Korea, Spain, Sweden, and the United Kingdom.\285\
---------------------------------------------------------------------------
\282\ ``Officer of China's People's Liberation Army Arrested At Los
Angeles International Airport.'' U.S. Department of Justice U.S.
Attorney's Office Northern District of California, 11 Jun. 2020,
https://www.justice.gov/usao-ndca/pr/officer-china-s-people-s-
liberation-army-arrested-los-angeles-international-airport.
\283\ Griffin, Justine. ``Moffitt Cancer Center shakeup: CEO and
others resign over China ties.'' Tampa Bay Times, 18 Dec. 2019, https:/
/bit.ly/3mTu9zQ.
\284\ ``Two Chinese Hackers Working with the Ministry of State
Security Charged with Global Computer Intrusion Campaign Targeting
Intellectual Property and Confidential Business Information, Including
COVID-19 Research.'' U.S. Department of Justice Office of Public
Affairs, 21 Jul. 2020, https://www.justice.gov/opa/pr/two-chinese-
hackers-working-ministry-state-security-charged-global-computer-
intrusion.
\285\ United States, District Court for the Eastern District of
Washington. United States of America v. Li and Dong. Docket no. 4:20-
CR-6019-SMJ, 07 Jul. 2020, https://www.justice.gov/opa/press-release/
file/1295981/download.
---------------------------------------------------------------------------
Indeed, much of China's industrial espionage takes place
under the guise of academia. In 2018, Belgium extradited to the
United States an alleged Chinese spy, Xu Yanjun, who according
to prosecutors, often presented himself as affiliated with the
Jiangsu Science and Technology Promotion Association to get
close to and obtain proprietary information from aviation
experts working for U.S. companies like GE Aviation. The
criminal complaint alleges that Mr. Xu was in close contact
with the Nanjing University of Aeronautics and Astronomics,
which is a regular collaborator with Commercial Aircraft
Corporation of China (COMAC) and Aviation Industries of
China.\286\ As alleged in the criminal complaint, ``Xu sent a
document to an individual believed to be associated with a
Chinese company that . . . pertain[ed] to a specific technology
related to diesel engine variable nozzle turbocharging
technology.'' \287\ As part of Made in China 2025 and
extensively detailed in the 13th Five-Year Plan for the
Development of Strategic Emerging Industries,\288\ COMAC is
developing a new large-size airliner that would compete with
Airbus and Boeing--the two companies that dominate the market
for large passenger airliners--but has run into technical
difficulties and is looking for solutions.\289\ This COMAC
project was also the likely destination for IP that another FBI
investigation alleges was stolen from an unnamed French
aerospace company with an office in Suzhou, China. The FBI
charges that Chinese intelligence used two local employees to
hack that company to steal trade secrets and then used that
route to make ``further computer intrusions'' into thirteen
other American, Australian, British, and French aerospace
companies, to obtain information about ``a turbofan engine used
in commercial jetliners.'' \290\ Says the indictment: ``At the
time of the intrusions, a Chinese state-owned aerospace company
was working to develop a comparable engine for use in
commercial aircraft manufactured in China and elsewhere.''
\291\
---------------------------------------------------------------------------
\286\ United States, District Court for the Southern District of
Ohio. United States of America v. Xu. Docket no. 1 18MJ-190, 21 Mar.
2018, p. 5, https://bit.ly/36cPddP.
\287\ Ibid p. 13.
\288\ 289. ``Circular of the State Council on Issuing the National
13th Five-Year Plan for the Development of Strategic Emerging
Industries.'' Translated by Etcetera Language Group, Ben Murphy,
editor, The State Council of the People's Republic of China, 09 Dec.
2019, https://cset.georgetown.edu/research/national-13th-five-year-
plan-for-the-development-of-strategic-emerging-industries/.
\289\ Qiu, Stella and Tim Hepher. ``China's bid to challenge Boeing
and Airbus falters.'' Reuters, 09 Jan. 2020, https://www.reuters.com/
article/us-china-aviation-comac-insight/chinas-bid-to-challenge-boeing-
and-airbus-falters-idUSKBN1Z905N.
\290\ ``Chinese Intelligence Officers and Their Recruited Hackers
and Insiders Conspired to Steal Sensitive Commercial Aviation and
Technological Data for Years.'' U.S. Department of Justice Office of
Public Affairs, 30 Oct. 2018, https://www.justice.gov/opa/pr/chinese-
intelligence-officers-and-their-recruited-hackers-and-insiders-
conspired-steal.
\291\ United States, District Court for the Eastern District of
Washington. United States of America v. Li and Dong. Docket no. 4:20-
CR-6019-SMJ, 07 Jul. 2020, https://bit.ly/32guJjp.
---------------------------------------------------------------------------
Despite this shared grave threat and the need to take
immediate action to protect highly advanced and valuable IP
from what appears to be a coordinated Chinese government plan
to steal it, both Boeing and Airbus remain far more focused on
the short-term challenge of competition with each other,
including by lodging WTO complaints. Some, however, are
starting to highlight the emerging threat. As EU High
Representative for Foreign Affairs and Security Policy Josep
Borrell noted, ``while the U.S. is punishing Airbus and we
prepare measures on Boeing, China is fully subsidising wide-
body aircrafts which they will sell everywhere in the world,
including to our own private companies.'' \292\
---------------------------------------------------------------------------
\292\ Borrell, Josep Fontelles. ``China, the United States and
us.'' European External Action Service, 31 Jul. 2020, https://
eeas.europa.eu/headquarters/headquarters-homepage/83644/china-united-
states-and-us--en.
---------------------------------------------------------------------------
There are many further examples of the Chinese state either
sanctioning IP theft outright or demonstrating complicity
through gross negligence or failure to take action. For every
company that decides to publicize China's aggressive theft,
dozens of others remain quiet to safeguard their market access
and avoid reprisals by the Chinese government.
State Subsidies and Other State Support
The global reach of China's state-owned and ostensibly
private firms appears to be underpinned by a vast array of
declared and undeclared subsidies and other support designed to
further the industrial objectives of Made in China 2025 and
other economic and industrial policies. The PRC government, at
the national and subnational levels, grants special privileges
or statuses to Chinese firms or provides less transparent (but
no less effective and market distorting) signaling of official
state favor in designated strategic sectors. Enterprises
receive these preferences in the form of favorable loans, tax
exemptions, and preferential land access, among others.
Further, as Germany's BDI notes, ``politically mandated large-
scale mergers create national champions'' that can out-muscle
Western firms operating under normal market conditions.\293\ In
July 2020, the Central Comprehensively Deepening Reforms
Commission chaired by General Secretary Xi approved a three-
year plan to further augment the support given to SOEs.\294\
---------------------------------------------------------------------------
\293\ Partners and Systemic Competitor--How Do We Deal with China's
State-Controlled Economy? The Federation of German Industries (BDI),
Jan. 2019, p. 3, https://bit.ly/2TYdiQ6.
\294\ Tang, Frank. ``China approves plan to boost prominence of
state firms, despite complaints from trade partners.'' South China
Morning Post, 08 Jul. 2020, https://bit.ly/2IczrHP.
---------------------------------------------------------------------------
State subsidization enables PRC companies to sell goods
below market prices, allowing them to outbid and crowd out
market-based competitors and thereby pursue global dominance of
key sectors. Such government support distorts the global market
economy by undermining longstanding and generally accepted
market-based principles of fair competition, leading to
barriers to entry and forced exit from the market for foreign
or private firms, not only in the PRC but in markets around the
world. Further, such subsidies create government-sponsored or
supported de facto monopolies, cartels, and other anti-market
arrangements in key sectors, limiting or removing opportunities
for other firms.
Subsidies are concentrated in specific areas identified as
``Major Special Projects'' in the State Council's 2006-2020
National Medium- and Long-Term Program for Science and
Technology Development. These align with the ten Made in China
2025 sectors mentioned earlier and include: core electronic
devices; high-end generic chips and basic software; super
large-scale integrated circuit manufacturing technology and
techniques; next generation broadband mobile communication;
machine tools and basic manufacturing technology; large oil-gas
fields and coal-bed methane; high temperature gas-coolant
reactor nuclear power stations; major new drugs; large
passenger aircraft; and high resolution earth observation
systems, among others.\295\ Areas termed ``Frontier
Technologies,'' like facial and gait identification,
information technology, advanced materials, and advanced energy
technology are also heavily promoted.\296\
---------------------------------------------------------------------------
\295\ The National Medium- and Long-Term Program for Science and
Technology Development (2006-2020): An Outline. The State Council of
the People's Republic of China, https://bit.ly/2I9NwFN.
\296\ Ibid.
---------------------------------------------------------------------------
The PRC's push into artificial intelligence (AI) and
technology-based security represents one example illustrative
of its subsidization practices. PRC developers, including
facial recognition start-up SenseTime, are backed by access to
government data to help them build their product,\297\ large
purchases of surveillance software for use in China,\298\ and
what China Daily calls ``special programs for top AI companies
and startups that include perks like free rent, subsidies for
hiring locals and housing benefits.'' \299\ Partnerships with
government agencies, like SenseTime's project with the People's
Bank of China to integrate AI and digital currencies, further
help companies develop the products they need to become key
players on the international market.\300\ Companies are then
able to further boost their resources by raising capital in
foreign markets. After two initial funding rounds in 2017 and
2018 that drew most of their support from PRC entities
including Alibaba and state-backed Sailing Capital,\301\
SenseTime was able to raise $620 million in 2018 from Western
investors, including U.S. firms like Fidelity International and
Silver Lake.\302\ Thus, enterprises, with credit, resources,
and the backing of the Chinese government, are positioned to
exploit foreign capital markets established on presumptions of
free markets.\303\
---------------------------------------------------------------------------
\297\ Bergen, Mark and David Ramli. ``China's Plan for World
Domination in AI Isn't So Crazy After All.'' Bloomberg, 14 Aug. 2017,
https://www.bloomberg.com/news/articles/2017-08-14/china-s-plan-for-
world-domination-in-ai-isn-t-so-crazy-after-all.
\298\ Mozur, Paul. ``One Month, 500,000 Face Scans: How China Is
Using A.I. to Profile a Minority.'' New York Times, 14 Apr. 2019,
https://nyti.ms/366BEwE.
\299\ He, Wei. ``A budding highland for innovations.'' China Daily,
10 Oct. 2018, https://bit.ly/3mYzPsh.
\300\ Dai, Sarah. ``National AI champion SenseTime enters pact with
China's central bank amid digital currency trials.'' South China
Morning Post, 27 Apr. 2020, https://bit.ly/369RmqR.
\301\ Jiang, Sijia and Julie Zhu. ``China's SenseTime valued at
$4.5 billion after Alibaba-led funding: sources.'' Reuters, 08 Apr.
2018, https://reut.rs/3n3chCy.
\302\ Ibid.
\303\ Ryan, Fergus, Danielle Cave, and Vicky Xiuzhong Xu. Mapping
more of China's technology giants. No. 24/2019, Australian Strategic
Policy Institute, 28 Nov. 2019, p. 17, https://www.aspi.org.au/report/
mapping-more-chinas-tech-giants.
---------------------------------------------------------------------------
Restricted Market Access
Both the United States and Europe continue to experience
unfair market access restrictions in spite of years of promises
by the Chinese government to open and liberalize, per its
commitments under its WTO accession in 2001. China continues to
create barriers, both formal and informal, to foreign
competition and, when pressed, has only grudgingly removed
minimal barriers to entry in recent years. These small measures
of public action deflect inquiry into and provide cover for
ignoring more extensive and pervasive market barriers. As the
European Chamber of Commerce in China reports:
``In 2019, 41% of companies reported at least some market
opening. However, most advances were related to the fixing of
minor irritants, such as improved bureaucratic procedures,
rather than the deep and substantial reforms needed to create a
truly open, fair and competitive playing field. Almost half of
respondents continue to face market access barriers.'' \304\
---------------------------------------------------------------------------
\304\ European Business In China: Business Confidence Survey 2020.
European Union Chamber of Commerce in China, Jun. 2020, https://bit.ly/
3mUTidm.
---------------------------------------------------------------------------
Indeed, U.S. and European companies are very familiar with
these challenges. Although the number of restricted sectors on
China's National Negative List has decreased over time, 69
percent of U.S. companies operating in the PRC in 2019 told the
American Chamber of Commerce in China that a ``lack of market
access [inhibited their] operations in China.'' \305\
Similarly, 44 percent of EU companies operating in China
reported some kind of restricted access to the market, whether
direct or indirect.\306\ For these companies, increased market
access is cited as the most important deliverable out of the
potential EU-China Comprehensive Agreement on Investment,
followed closely by a push for non-discrimination between
Chinese SOEs and other companies.\307\
---------------------------------------------------------------------------
\305\ ``Waishang touzi zhun ru tebie guanli cuoshi (fumian qingdan)
(2020 nian)'' [Special Administrative Measures for Foreign Investment
Access (Negative List) (Year 2020)], The State Council of the People's
Republic of China, 23 Jun. 2020, https://bit.ly/3n2AmtA.
\306\ European Business In China: Business Confidence Survey 2020.
European Union Chamber of Commerce in China, Jun. 2020, https://bit.ly/
3mUTidm.
\307\ Ibid.
---------------------------------------------------------------------------
Instead of committing to opening its market to foreign
competition in a non-discriminatory manner, as envisaged by
long-standing GATT principles that would foster a healthy
market environment under which the nation's citizens can
benefit from innovation and competition, the PRC government
instead carefully stages any openings so as to benefit its own
favored companies over foreign competition. China will
frequently only start to open up certain sectors after domestic
firms have already secured a dominant market position. As the
European Chamber noted, ``Financial services opening, for
example, only took place after the entire market was saturated
with Chinese SOEs, leaving only niche, albeit profitable, roles
to the few European players that were able to obtain the
necessary operating licenses.'' \308\
---------------------------------------------------------------------------
\308\ Ibid.
---------------------------------------------------------------------------
Trade Retaliation
After World War II, the United States, Europe, and other
nations established more rigorous and predictable rules to cope
with the unilateral trade protectionism and retaliatory
practices that contributed to the Great Depression. A work in
progress even today, the procedures established through GATT
and the WTO have provided a formal process for determining
whether a country has violated or ignored its trade
obligations. This system allows, under appropriate
circumstances, WTO member countries to withdraw benefits from
an offending trading partner that has been found to have
violated agreed upon trading rules and caused economic harm.
While this process can often be slow and cumbersome, its core
objective is to consider trade disputes on their merits and
resolve legitimate differences on the basis of free market
principles and not on the basis of unrelated political
objectives.
CCP leadership, however, has blurred the lines between
politics and economics, increasingly operating outside this
system by taking unilateral and punitive trade actions to
punish countries economically for espousing positions contrary
to CCP political orthodoxy and objectives. The impact of these
practices extend beyond economic harm. The PRC is interfering
in the sovereign affairs and decisions of free and democratic
nations and, in effect, seeking to turn them into co-
conspirators by coercing from them their acceptance of CCP
political positions.
One early such instance was the PRC's imposition of harsh
import controls on Norway's second largest export--salmon--
following the awarding of the Nobel Peace Prize to Chinese
democracy advocate Liu Xiaobo.\309\ Norwegian academic Ivar
Kolstad recently found that Norway lost between US$780 million
and $1.3 billion in direct total exports to China in the
following three years, and subsequently aligned its votes on
human rights issues in the UN more closely with China's.\310\
Since then, China has imposed tighter restrictions on the
import of Philippine bananas amidst a dispute in the South
China Sea in 2012, and blocked canola (rapeseed),\311\
soybean,\312\ and pork imports after Canada arrested Huawei
executive Meng Wanzhou.\313\ Most recently, the PRC followed
through on threats to punish Australia for demanding an
independent international investigation into the origins of the
COVID-19 pandemic. China conjured up dubious technical excuses
to place import duties of 80.5 percent on Australian
barley,\314\ suspended some beef imports,\315\ and opened an
investigation into Australian wine imports.\316\
---------------------------------------------------------------------------
\309\ Lewis, Mark. ``Norway's salmon rot as China takes revenge for
dissident's Nobel Prize.'' The Independent, 06 Oct. 2011, https://
www.independent.co.uk/news/world/europe/norways-salmon-rot-as-china-
takes-revenge-for-dissidents-nobel-prize-2366167.html.
\310\ Kolstad, Ivar. ``Too big to fault? Effects of the 2010 Nobel
Peace Prize on Norwegian exports to China and foreign policy.''
International Political Science Review, vol. 41(2), 10 Jan. 2020, p.
207-223, https://www.cmi.no/publications/6354-too-big-to-fault.
\311\ Nickel, Rod, and Hallie Gu. ``'Like gold': Canadian canola
prices spike as shippers find back door to China.'' Reuters, 09 Aug.
2020, https://reut.rs/3590jkQ. For more, see World Trade Organization.
China--Measures Concerning the Importation of Canola Seed from Canada.
DS589, 09 Sep. 2019, https://bit.ly/36f4RFL.
\312\ Powell, Naomi. ``Canadian soybean exports to China plunge 95%
after hitting record high, as diplomatic dispute continues.'' Financial
Post, 17 May 2019, https://bit.ly/2GzD6Ph.
\313\ Chase, Steven. ``China says lifting of ban on meat imports
not a sign of better relations with Canada.'' Globe and Mail, 07 Nov.
2019, https://tgam.ca/35aaRAd.
\314\ Packham, Colin and Jonathan Barrett. ``Australia appeals
China's barley import tariff as trade tensions worsen.'' Reuters, 18
Aug. 2020, https://reut.rs/2I9j9PZ.
\315\ Foley, Mike and Eryk Bagshaw. ``China suspends Australian
beef imports from four abattoirs.'' Sydney Morning Herald, 12 May 2020,
https://www.smh.com.au/politics/federal/china-suspends-australian-beef-
imports-from-four-abattoirs-20200512-p54s4k.html.
\316\ ``China launches second Australian wine probe amid
tensions.'' BBC, 31 Aug. 2020, https://www.bbc.com/news/world-
australia-53970006.
---------------------------------------------------------------------------
Three trends in trade retaliation by the PRC should alarm
both U.S. and EU policy makers. First, China's perceived
successes in coercing smaller nations has given it confidence
to target larger economies like Canada and Australia. These
examples must serve as a warning to the United States, the
United Kingdom, and larger EU economies, especially given the
PRC's likely use of these tools if both sides of the Atlantic
increase their focus on its violations of human rights and
international law, or take stronger actions to confront its
unfair trade and economic practices.
Second, China has proven adept at limiting its retaliation
to sectors and products that harm the other country but not
itself. For example, in Australia's case, China has not
targeted iron ore--the Australian export that is key to
building the PRC's infrastructure and economy. More than 60
percent of China's iron ore comes from Australia. China has not
targeted its sizeable liquefied natural gas imports from
Australia,\317\ but has recently banned some imports of
Australian coal, one of the commodities for which it is less
reliant.\318\ Likewise in the 2012 dispute with the
Philippines, China did not target electronic products and metal
components, the largest category of Philippine exports to
China.\319\ In the 2010 Norwegian case, China did not retaliate
against the Norwegian exports it needed most--machinery and
electrical equipment or raw materials.\320\
---------------------------------------------------------------------------
\317\ Tan, Huileng. ``China may punish Australia with trade curbs--
but it can't stop buying iron ore from Down Under.'' CNBC, 11 Jun.
2020, https://cnb.cx/3k5bf7r.
\318\ Tan, Su-Lin. ``China's ban on Australian coal could be
`indefinite' amid heightened political tensions.'' South China Morning
Post, 13 Oct. 2020, https://bit.ly/3mWAniz.
\319\ Foreign Trade Statistics of the Philippines: 2012. Philippine
Statistics Authority, 07 Nov. 2013, https://bit.ly/32wWQef.
\320\ ``Product Exports by Norway to China 2010.'' The World Bank
World Integrated Trade Solution, https://bit.ly/3n4NTAC.
---------------------------------------------------------------------------
Finally, in a novel development, China is exploring the use
of export restrictions as punishments. In response to the
recent U.S. decision to sell Patriot missiles to Taiwan, China
announced that it would cut off Lockheed Martin's access to
China's rare earth minerals, contrary to its WTO
commitments.\321\ Japan has also experienced a PRC government-
directed rare earths cut-off.\322\ During the COVID-19 crisis,
export controls imposed by the PRC on medical supplies led to
shortages of personal protective equipment around the
world.\323\ Such tactics may come into greater use as China
considers passing legislation on broader export restrictions.
Current proposals raise questions of consistency with the WTO
and GATT. Moreover, this trend may force governments and
companies alike to reconsider current dependency on an
unpredictable PRC market for the commodities upon which stable
supply chains depend.\324\ If the PRC's behavior continues, the
United States and Europe must seriously consider taking
measures to ensure that the supply chains for advanced
manufacturing and global health commodities, including for
active pharmacological ingredients and personal protective
equipment, is diverse enough to deny China's ability to
manipulate markets.
---------------------------------------------------------------------------
\321\ Liu, Xuanzun, Chu, Daye and Tu, Lei ``Lockheed Martin faces
China's sanctions over Taiwan deal.'' Global Times, 14 Jul. 2020,
http://www.globaltimes.cn/content/1194528.shtml.
\322\ Harrell, Peter, Elizabeth Rosenberg and Edoardo Saravalle.
China's Use of Coercive Economic Measures. Center for a New American
Security Energy, Economics, and Security Program, 11 Jun. 2018, p. 42,
https://bit.ly/3mWAniz.
\323\ O'Keeffe, Kate, Liza Lin, and Eva Xiao. ``China's Export
Restrictions Strand Medical Goods U.S. Needs to Fight Coronavirus,
State Department Says.'' Wall Street Journal, 16 Apr. 2020, https://
www.wsj.com/articles/chinas-export-restrictions-strand-medical-goods-u-
s-needs-to-fight-coronavirus-state-department-says-11587031203.
\324\ Zhang, Jing, Tamer A. Soliman and Yoshihide Ito. ``Key
Changes in the Jul. 3, 2020, Draft of China's Export Control Law.''
Mayer Brown, 09 July 2020, https://bit.ly/32mzwjk.
---------------------------------------------------------------------------
Conclusion
While some companies only experience some of these
detrimental PRC practices, some like U.S. semiconductor
manufacturer Micron have run the full gamut of trade abuses.
Made in China 2025 details the PRC's push to make most of
China's semiconductors in-country.\325\ In pursuit of that
goal, the PRC founded and heavily subsidized Fujian Jinhua
Integrated Circuit.\326\ Wired Magazine explains that the head
of Micron's Taiwan subsidiary then ``quit and moved to UMC
[United Microelectronics Corporation], set up a $700 million
joint agreement with Jinhua (owned by the Chinese government),
and then hired two more MMT employees, who starting in roughly
2016 began to bring over Micron trade secrets.'' \327\ The U.S.
indictment of both companies and the individuals in question
highlighted that prior to these events, ``the PRC did not
possess DRAM technology,'' a cutting-edge device used in memory
storage.\328\
---------------------------------------------------------------------------
\325\ Ye, Josh. ``China to fall short of Made in China 2025
localisation target for integrated circuits, says US research firm,''
South China Morning Post, 22 May 2020, https://bit.ly/357tl4x.
\326\ U. S. District Court, Northern District of California, U.S.
Department of Justice. United States v. United Microelectronics
Corporation, et al.: Indictment. 27 Sep. 2018, https://www.justice.gov/
usao-ndca/press-release/file/1107341/download.
\327\ Rogers, Adam. ``US Accuses Chinese Company of Stealing Micron
Trade Secrets.'' Wired Magazine, 01 Nov. 2018, https://bit.ly/32hvicv.
\328\ ``PRC State-Owned Company, Taiwan Company, And Three
Individuals Charged With Economic Espionage.'' U.S. Department of
Justice--U.S. Attorney's Office, Northern District of California, 01
Nov. 2018, https://www.justice.gov/usao-ndca/pr/prc-state-owned-
company-taiwan-company-and-three-individuals-charged-economic-
espionage.
---------------------------------------------------------------------------
The PRC's continued use of anti-competitive regulations,
policies, and practices, if allowed to progress unchecked, will
have detrimental effects not only for transatlantic economies,
but for the global international trading system and free market
economies. Despite U.S. and EU efforts to push for changes
through good faith trade negotiations with the PRC, little
progress, even after repeated promises by the PRC, has been
forthcoming.\329\ Despite the continued complaints from foreign
investors and companies, China is betting that foreign
companies will continue to see opportunities in China and are
therefore willing to contend with persistent trade barriers and
government discrimination.
---------------------------------------------------------------------------
\329\ ``Economic And Trade Agreement Between The United States of
America and The People's Republic of China--Fact Sheet.'' U.S. Trade
Representative, 15 Jan. 2020, https://bit.ly/2I9OJgj. And Timsit,
Annabelle. ``Why the EU-China economic agreement seems to be going
nowhere.'' Quartz, 02 Oct. 2020, https://qz.com/1906588/why-the-eu-
china-economic-agreement-seems-to-be-going-nowhere/.
---------------------------------------------------------------------------
Both sides of the Atlantic, inside or outside of the
European Union, should work together to present an increasingly
united front against the practices highlighted above. The
decision by the United States, Japan, and Taiwan to join the
EU's WTO complaint against the PRC for violations related to
forced technology transfer is a good place to start.\330\ The
European Union, Japan, and the United States have also worked
together to build a new trilateral proposal to the WTO that
would put further strictures on state subsidies.\331\
Presenting a united front also means fixing some current issues
in transatlantic economic relationship--like the continued
sparring between Boeing and Airbus--so the United States and
Europe can redirect our attention to the larger challenge.
Finally, in light of the increased use of trade retaliation,
the United States and Europe should remain in close discussions
on re-evaluating areas of supply chain reliance on China and
how to support friends and allies subjected to such coercion.
These are just a few of the initial steps both sides of the
Atlantic can start taking to ensure the international trading
system does not regress into a might-makes-right paradigm.
---------------------------------------------------------------------------
\330\ World Trade Organization. China--Certain Measures on the
Transfer of Technology. DS549, 01 Jun. 2018, https://bit.ly/3k6jjVs.
\331\ Wu, Wendy. ``US, EU and Japan take aim at China with proposed
WTO rules targeting state subsidies.'' South China Morning Post, 15
Jan. 2020, https://bit.ly/38qKYxY.
CHAPTER FOUR--TECHNOLOGY
----------
[China] is a key global actor and leading technological
power. Its increasing presence in the world, including
in Europe, should be accompanied by greater
responsibilities for upholding the rules-based
international order, as well as greater reciprocity,
non-discrimination, and openness of its system.
--EU-China: A Strategic Outlook (2019)
Introduction
The nature of modern and emerging technologies necessarily
expands beyond national borders. The critical civilian and
military technologies of the coming decades will require
hardware, software, and supply chains that span across country
borders and company lines. Countries and companies that are
able to capitalize upon, set standards for, and manufacture
these technologies will have an unparalleled advantage in
shaping the structures of the world's cities, military
operations, and even individual behavior of the future.
Due to its sheer size, the People's Republic of China (PRC)
already has an inherent edge in developing these technologies.
The PRC is the second largest economy by nominal gross domestic
product (GDP) (first by purchasing power parity), and as of
2019, has the world's largest labor force--although it is not
as large as many may assume.\332\ In 2020, China is predicted
to surpass the United States as the world's biggest consumer
market.\333\ Moreover, the Chinese Communist Party (CCP) has
made it a priority to invest in, shape the rules for, and
dominate critical technology sectors largely by employing a
vast suite of ``mercantilist'' and unfair policies favoring PRC
firms at the expense of foreign companies. At the 19th Party
Congress, General Secretary Xi called upon China to ``aim for
the frontiers of science and technology, strengthen basic
research, and make major breakthroughs in pioneering basic
research and groundbreaking and original innovations . . . [as
well as] strengthen basic research in applied sciences, launch
major national science and technology projects, and prioritize
innovation in key generic technologies, cutting-edge frontier
technologies, modern engineering technologies, and disruptive
technologies.'' \334\ The CCP's goal to become a technological
and manufacturing superpower and achieve technological
superiority, while weakening other nations' technological
competitiveness, is critical to advancing the CCP's political
goals of shaping the international landscape into one that is
safe for an authoritarian China to grow and dominate.
---------------------------------------------------------------------------
\332\ ``Labor Force, Total--China.'' The World Bank, 21 Jun. 2020,
https://bit.ly/2JJ5T5k.
\333\ Sun, Nikki. ``China to Surpass US as World's Biggest Consumer
Market This Year.'' Nikkei Asia, 24 Jan. 2019, s.nikkei.com/3k5bShj.
\334\ Xi, Jinping. ``Secure a Decisive Victory in Building a
Moderately Prosperous Society in All Respects and Strive for the Great
Success of Socialism with Chinese Characteristics for a New Era.'' 19th
National Congress of the Communist Party of China, Xinhua, 18 Oct.
2017, https://bit.ly/2U44FDD.
---------------------------------------------------------------------------
While the United States and EU member states, along with
Japan, South Korea, and Taiwan, remain important leaders in
technological development, they will find it increasingly
difficult to compete with the PRC's massive market, systemic
``innovation mercantilist'' government focus, and resources for
emerging technology.\335\ Says Stanford University's Anja
Manuel, ``[Chinese] initiatives . . . aim to end the
technological lead of the west and its allies by dominating
market share, controlling international standards, and
hollowing out industrial capacity. It is time for like-minded
allies to unite.'' \336\ If the United States and Europe are
not aligned, then there is a risk of a `tri-polar world'--with
the United States, China, and Europe all acting as `technology
leaders', but with Europe as the weakest pole and the United
States struggling to keep up with the PRC.\337\ If the United
States and Europe work together, however, governments and
businesses alike will be in a much stronger position to
properly manage the PRC as a systemic rival and shape the
future of technological development, including the
international regulatory environment surrounding the use of
emerging technology.
---------------------------------------------------------------------------
\335\ Atkinson, Rob. ``How China's mercantilist policies have
undermined global innovation in the telecom equipment industry,'' ITIF,
22 Jun. 2020, https://bit.ly/369r73K
\336\ Manuel, Anja. ``US, Europe, and UK must unite to keep Chinese
tech at bay,'' Financial Times, 05 Oct. 2020, https://www.ft.com/
content/bc7abf86-f13e-4025-a120-004361aef21a.
\337\ Zillner, Michael. ``Why is Europe Lagging Behind in the Tech
Race?'' European Generation, 14 Feb. 2019, https://
www.europeangeneration.eu/single-post/2019/02/14/Why-is-Europe-Lagging-
Behind-in-the-Tech-Race. And staff discussion with ex-U.S. government
official.
---------------------------------------------------------------------------
The China Challenge
The CCP has made technological superiority a priority in
its developmental and political goals. At the 19th Party
Congress in 2017, Xi Jinping congratulated the Party for
``propelling China into a leading position in terms of economic
and technological strength'' and declared that by 2035, China
will become a ``global leader in innovation.'' \338\ The Party
is mobilizing all aspects of national power for science and
technology--from labs, to universities, to private companies,
to the military--in support of these national goals. At the
July 2020 Symposium of Entrepreneurs, Xi noted that
``enterprise marketing knows no borders [but] entrepreneurs
have a motherland'' and that ``patriotism is the glorious
tradition of [China's] outstanding entrepreneurs in modern
times.'' \339\ The CCP's military-civilian fusion strategy,
which effectively eliminates the barriers between China's
civilian research and commercial sectors and its military and
defense industrial sectors by giving the CCP legal authority to
co-opt civilian manufacturing for defense purposes, only
further demonstrates how the CCP is mobilizing both the
civilian and defense sectors to support Party goals.\340\
---------------------------------------------------------------------------
\338\ Xi, Jinping. ``Secure a Decisive Victory in Building a
Moderately Prosperous Society in All Respects and Strive for the Great
Success of Socialism with Chinese Characteristics for a New Era.'' 19th
National Congress of the Communist Party of China, Xinhua, 18 Oct.
2017, https://bit.ly/2U44FDD.
\339\ Xi, Jinping. ``Xi Jinping: Speech at the Symposium of
Entrepreneurs.'' Teller Report, 21 Jul. 2020, https://bit.ly/38sdyzc.
\340\ ``Military-Civil Fusion and the People's Republic of China.''
U.S. Department of State Bureau of International Security and
Nonproliferation, 28 May 2020, https://bit.ly/32r90W7.
---------------------------------------------------------------------------
The CCP is not only dedicating mass amounts of political
will to advance this goal, but is investing heavily in
infrastructure, research and development (R&D), and industrial
subsidies needed to achieve it. For example, in 2020, the
National People's Congress unveiled another five-year plan
under which municipalities, provinces, and companies will
invest close to $2.4 trillion in building ``new
infrastructure'' through artificial intelligence (AI), data
centers, 5G, the Industrial Internet, and more.\341\
---------------------------------------------------------------------------
\341\ Lin, Liza. ``China's Trillion-Dollar Campaign Fuels a Tech
Race With the U.S.'' Wall Street Journal, 11 Jun. 2020, https://
www.wsj.com/articles/chinas-trillion-dollar-campaign-fuels-a-tech-race-
with-the-u-s-11591892854?mod=hp--listb--pos3.
---------------------------------------------------------------------------
Yet despite this massive national effort to become a
technological superpower, Chinese development is still highly
reliant upon global trade, acquiring both innovation and
investment from abroad.\342\ More than half of the suppliers to
China's tech-intensive sectors are foreign-based.\343\ As the
strategic competition between the United States and China
intensifies, the PRC has pushed to become more self-sufficient
in technologies for which it currently relies upon foreign
companies. For example, to avoid U.S. sanctions, Huawei has
pledged to invest $1 billion to attract developers to an open-
source replacement for Google Mobile Services.\344\ Another
example is the $29 billion semiconductor fund Chinese officials
announced in October 2019, designed to fund the research
necessary to reduce its reliance on U.S. semiconductors.\345\
---------------------------------------------------------------------------
\342\ ``Chapter 4--China.'' S&T Strategies of Six Countries:
Implications for the United States, National Academic Press, 21 Jan.
2010, p. 22-34, https://www.nap.edu/read/12920/chapter/6#23.
\343\ Wernau, Julie. ``Forced Tech Transfers Are on the Rise in
China, European Firms Say.'' Wall Street Journal, 20 May 2019, https://
www.wsj.com/articles/forced-tech-transfers-are-on-the-rise-in-china-
european-firms-say-11558344240.
\344\ Cheng Ting-Fang and Lauly Li. ``Huawei to replace Google on
smartphones as it faces US threat.'' Nikkei Asia Review, 10 Sep. 2020,
https://s.nikkei.com/2Uc94o5.
\345\ Segal, Adam. ``The Coming Tech Cold War With China Beijing Is
Already Countering Washington's Policy.'' Foreign Affairs, 09 Sep.
2020, https://fam.ag/32kC01G.
---------------------------------------------------------------------------
The CCP has also been particularly active in setting
standards and regulations for the use of these technologies and
the data that accompanies them. China is ``attempting to
develop national technology and industry standards, which are
intended to promote home-grown technologies that can serve as
regional and global standards.'' \346\ This year, the CCP is
expected to release China Standards 2035, a 15-year ``standards
plan'' that includes goals such as increasing the number of
Chinese standards adopted as international standards and
influencing international standards setting bodies.\347\ The
plan lays out standards for new technologies that currently
lack adopted- or agreed-upon international standards, such as
5G internet, the Internet of Things, and AI.
---------------------------------------------------------------------------
\346\ ``Chapter 4--China.'' S&T Strategies of Six Countries:
Implications for the United States, National Academic Press, 21 Jan.
2010, p. 22-34, https://www.nap.edu/read/12920/chapter/6#23.
\347\ Koty, Alexander Chipman. ``What is the China Standards 2035
Plan and How Will it Impact Emerging Industries?'' China Briefing,
Dezan Shira & Associates, 02 Jul. 2020, https://www.china-briefing.com/
news/what-is-china-standards-2035-plan-how-will-it-impact-emerging-
technologies-what-is-link-made-in-china-2025-goals/.
---------------------------------------------------------------------------
The CCP's political will, investments, and regulatory
support towards technology development and innovation are
concerning not only because they put the PRC on track to
outpace the United States and Europe, but because such
technologies can be utilized by the Party and the government
when necessary. Despite repeated assurances by the Chinese
government that its technology companies are separate from the
state, the CCP has directed ``approaches for the Party to
improve its influence over the private sector, including
strengthening ideological and political guidance for
entrepreneurs . . . to be `politically sensible' '' that the
Party can rely on at ``critical moments.'' \348\ The decree
also calls upon the Party to strengthen control over the
private sector since the private economy is ``an important part
of the development of socialism with Chinese characteristics.''
\349\ In other words, to the CCP, all technological innovation,
production, and creations by Chinese nationals or creations in
China belong to the CCP and can be utilized to achieve
(sometimes predatory and nefarious) CCP goals.
---------------------------------------------------------------------------
\348\ Li, Jane. ``Beijing is publicizing its philosophy of how tech
firms like TikTok must aid China's rise.'' Quartz, 16 Sep. 2020,
https://qz.com/1904063/china-issues-decree-to-enhance- control-of-
firms-like-bytedance/.
\349\ ``Zhonggong zhongyang bangong ting yinfa ``guanyu jiaqiang
xin shidai minying jingji tongzhan gongzuo de yijian.'' The State
Council of the People's Republic of China, 15 Sep. 2020, https://
bit.ly/2IbEUOW. Staff translation.
---------------------------------------------------------------------------
Mapping the Emerging Technology and Digital Landscapes in Europe and
the United States
Across the continent, Europe has been particularly strong
in technology sectors such as aerospace, machinery,
telecommunications equipment, and pharmaceuticals and
biotechnology.\350\ Within Europe, certain countries have
carved out competitive advantages in several niche technology
markets. For example, Finland's great strides in autonomous
transport technology and application development have allowed
Finnish technology companies to constitute more than 50 percent
of the country's total exports.\351\ Yet as a whole, Europe
still has room for improvement on several technologies related
to information technology (IT) including AI and mass data
storage infrastructure.
---------------------------------------------------------------------------
\350\ The State of European Tech 2017, Atomico, https://bit.ly/
2U0TN9v. And ``Europe first: the EU's digital industrialisation
challenge.'' Financial Times, https://www.ft.com/ content/73213036-
1dd8-11ea-97df-cc63de1d73f4.
\351\ ``Technology Finland.'' Technology Industries, 16 Apr. 2020,
https://bit.ly/3k3EjMn.
---------------------------------------------------------------------------
Meanwhile, the United States still leads the world in
technology development and global R&D. Holding this leadership
position is critical to maintaining the U.S. economic strength
and military advantage upon which many countries around the
world rely. The U.S. technology sector accounts for $1.9
trillion--or approximately 10 percent of the total U.S.
economy. It is the third largest sector in the U.S. economy,
behind more traditional manufacturing and government.\352\ In
defense, the U.S. military relies heavily on new and emerging
technologies to maintain readiness, seek operational advantages
against potential adversaries, and modernize its fighting force
to deter aggression in new domains, such as cyber and
space.\353\
---------------------------------------------------------------------------
\352\ CompTIA. ``US Tech Employment Surpasses 12 Million Workers,
Accounts for 10% of Nation's Economy.'' CISION PR Newswire, 21 Apr.
2020, https://prn.to/3p2fYdH.
\353\ Science and Technology Strategy. U.S. Air Force, Apr. 2019,
https://bit.ly/3nkgLoT. And McGrath, Beth, Joe Mariani and Akash Keyal.
``Military technology advances enable ``ready anywhere'' mentality.''
Deloitte Insights, Deloitte, 02 Aug. 2019, https://bit.ly/32s5FG1; and
Flournoy, Michele and Gabrielle Chefitz. Sharpening the U.S. Military's
Edge: Critical Steps for the Next Administration. Center for a New
American Security, 13 Jul. 2020, https://bit.ly/35fnYAm.
---------------------------------------------------------------------------
Yet the PRC is making inroads in areas where Europe has
less technological development capability and investing heavily
to overtake the United States as the world's technology leader.
As such, the United States and Europe face individual as well
as joint challenges from the PRC regarding technology. Some of
these individual challenges are structural. For example, Europe
will struggle to compete because it lacks a single market for
many goods, including digital goods. While the United States
does have a single market, its fragmented regulatory structure
makes it difficult to set standards for emerging technology.
Other individual challenges stem from specific policies and
ideologies, for example differing American and European views
on how to regulate data collection, storage, and usage and how
to approach antitrust for innovation-based industries.
Despite these differences, the United States and Europe
have a lot of shared concerns when it comes to PRC
technological encroachment and predation. One major issue that
both Europe and the United States face is the PRC's leveraging
of its massive market to force technology transfers from our
respective companies. Moreover, through foreign direct
investment, government-backed venture capital investments,
mandatory joint ventures, cyber espionage, licensing
agreements, and talent acquisition, PRC companies regularly
acquire U.S. and European intellectual property and
knowhow.\354\ In a 2020 annual survey by the EU Chamber of
Commerce in China, 20 percent of participants said they felt
compelled to transfer technology to maintain market access--up
from 10 percent in 2017.\355\ Likewise, the U.S.-China trade
deal emphasized intellectual property enforcement, and early
drafts include provisions on clearer rules on forced technology
transfers.\356\
---------------------------------------------------------------------------
\354\ O'Connor, Sean. How Chinese Companies Facilitate Technology
Transfer from the United States. U.S.-China Economic and Security
Review Commission, 06 May 2019, https://bit.ly/2U2DQ2w.
\355\ Wernau, Julie. ``Forced Tech Transfers Are on the Rise in
China, European Firms Say.'' Wall Street Journal, 20 May 2019, https://
on.wsj.com/2JJJq8d.
\356\ Lester, Simon and Huan Zhu. ``What Will the US??China Deal
Accomplish on Tech Transfer, IP Protection and Innovation?'' Cato
Institute, 14 Feb. 2020, https://www.cato.org/blog/what-will-us- china-
deal-accomplish-tech- transfer-ip-protection-innovation.
---------------------------------------------------------------------------
The United States and European nations recognize
increasingly problematic PRC efforts to shape and dominate
certain technology spheres, and both face different but crucial
obstacles to competing with the PRC on their own. This is
evident in three key areas necessary for emerging technology:
R&D; data and digitalization; and standards setting. As such,
joint efforts by the United States and European nations are key
to maintaining the lead in technology and ensuring the use of
critical technology does not infringe upon our shared values of
freedom, transparency, and human rights.
Research and Development
While the United States and Europe still lead in R&D
investment, the PRC is quickly catching up. Of the 2,500
largest R&D investors worldwide, which account for
approximately 90 percent of total global R&D, 769 were
American, 551 were EU-based, and 507 were Chinese.\357\ Given
how quickly the PRC is increasing its year-to-year investments
in R&D, there may soon be far more contributing Chinese
companies than European ones. According to the European
Commission's 2019 Industrial R&D Investment Scoreboard, between
2018 and 2019, Europe increased its R&D investment by 4.7
percent, with most R&D growth coming from Europe's automotive
companies. Comparatively, the United States and China increased
their investment by 10.3 percent and 26.7 percent,
respectively, largely driven by the information communications
technology sectors.\358\
---------------------------------------------------------------------------
\357\ Joint Research Centre. ``The 2019 EU Industrial R&D
Investment Scoreboard.'' Publications Office of the European Union, 19
Dec. 2019, https://bit.ly/3lb1xSg.
\358\ Ibid.
---------------------------------------------------------------------------
Moreover, European firms are not entering the market as
quickly as their U.S. and PRC counterparts. Among the top 2,500
firms, the United States and China represent 37 percent and 25
percent, respectively, of new entrants. The European Union
captured only 13 percent.\359\ Lastly, the share of R&D
investment by the business sector is lower in the European
Union than in the United States, China, and South Korea.\360\
The share of business R&D within total R&D expenditures is
substantially lower in the European Union (at 64 percent) than
in the United States (72 percent), or China, Japan, and South
Korea combined (almost 80 percent).\361\ In the PRC especially,
the business sector is the largest share and driver of the
rapid increase in R&D expenditure--although in the PRC this
``business-driven'' expenditure is supported and subsidized by
the government.\362\
---------------------------------------------------------------------------
\359\ Ballard, Barclay. ``Behind the Curve: Why Europe Is
Stuttering in the Global Tech Race.'' European CEO, 17 Jun. 2019,
https://bit.ly/3ka84LE.
\360\ Ibid.
\361\ Total R&D expenditures is the aggregation of all sectors
carrying out R&D activities: the business sector, government, higher
education, and private non-profit institutions. Ballard, Barclay.
``Behind the Curve: Why Europe Is Stuttering in the Global Tech Race.''
European CEO, 17 Jun. 2019, https://bit.ly/3ka84LE.
\362\ Ruirui Wu et al. ``Effect of government R&D subsidies on
firms' innovation in China.'' Asian Journal of Technology Innovation,
vol. 28, no.1, Korean Society for Innovation Management and Economics,
19 Nov. 2019, p. 42-59, DOI: 10.1080/19761597.2019.1693901.
---------------------------------------------------------------------------
Though the United States today is in a better position than
the European Union on overall R&D, the PRC is projected to
overtake U.S. spending by 2030.\363\ The Information Technology
& Innovation Foundation (ITIF) catalogues 36 indicators of
China's scientific and technological progress compared to the
United States, particularly in innovation.\364\ The United
States also struggles with diminishing federal support for
investment in R&D. According to ITIF, in ``21 of the 27 years
following 1990, federal R&D spending has made up a smaller
share of GDP than the year before . . .. [which] has resulted
in stagnant productivity growth, lagging competitiveness, and
reduced innovation.'' \365\
---------------------------------------------------------------------------
\363\ ``2018 Global R&D Funding Forecast Snapshot - Research &
Development World.'' Research & Development World, 12 Mar. 2018,
https://bit.ly/38l7qJ8.
\364\ Atkinson, Robert D. and Caleb Foote. Is China Catching up to
the United States in Innovation? Information Technology and Innovation
Foundation, 08 Apr. 2019, https://bit.ly/36fYXnE.
\365\ Foote, Caleb and Robert D. Atkinson. Dwindling Federal
Support for R&D Is a Recipe for Economic and Strategic Decline.
Information Technology and Innovation Foundation, 14 Dec. 2018, https:/
/bit.ly/3lhS7Es.
---------------------------------------------------------------------------
That the United States lacks federal support on the issue
of emerging technology is even evident in one of its strongest
technology sectors: AI.\366\ The United States was named the
``undisputed leader'' in AI according to the 2019 Global AI
Index, which is the first index to ``benchmark nations on their
level of investment, innovation, and implementation of AI.''
\367\ The United States received more than 80 percent in all
categories of the index--talent, infrastructure, operating
environment, R&D, and commercial investment.\368\ Yet U.S.
government strategy received only 68.5 percent, which was
significantly lower than the government strategy ranking for
all other top five leaders in AI.\369\ The PRC, on the other
hand, came in second with a 58.3 percent total score, but its
government strategy was rated at 100 percent.\370\ This is just
one statistic that demonstrates the need for the U.S.
government to take stronger action on developing a strategy to
manage, encourage, and protect emerging technological needs.
---------------------------------------------------------------------------
\366\ Castro, Daniel, Michael McLaughlin, and Eline Chivot. ``Who
is Winning the AI Race: China, the EU or the United States? '' Center
for Data Innovation, 19 Aug. 2019, https://www.datainnovation.org/2019/
08/who-is-winning-the- ai-race-china-the-eu-or-the-united-states/.
\367\ The Global AI Index. Tortoise Media, https://
www.tortoisemedia.com/intelligence/ai/.
\368\ Ibid.
\369\ Ibid.
\370\ Ibid.
---------------------------------------------------------------------------
Comparatively, in an indication of the Chinese government's
focus on emerging technologies, the PRC currently has 15 times
the number of deployed 5G base stations as the United States,
and has almost twice as many supercomputers.\371\ As the chair
of the Defense Innovation Advisory Board at the U.S. Department
of Defense testified to the House Committee on Science, Space,
and Technology in January 2020, the United States may be soon
``competing with a country that has a bigger economy, more R&D
investments, better quality research, wider application of new
technologies, and stronger computing infrastructure.'' \372\
---------------------------------------------------------------------------
\371\ Woo, Stu. ``In the Race to Dominate 5G, China Sprints
Ahead.'' Wall Street Journal, 07 Sep. 2019, https://on.wsj.com/2Ip6Mz2.
\372\ Schmidt, Eric. ``Testimony'', Hearing on Losing Ground: U.S.
Competitiveness in Critical Technologies, U.S. House of Representatives
Committee on Science, Space and Technology, 29 Jan. 2020, https://
science.house.gov/imo/media/doc/Schmidt%20Testimony.pdf. Witness
testimony.
---------------------------------------------------------------------------
Data and Digitalization
Data and digitalization are crucial to the future of
civilian and military technology, as digital transformations
will disrupt nearly all processes, practices, and industries in
high capital markets.\373\ Europe lags behind the United States
and the PRC in data and digitalization. Of the world's 15
largest digital firms, not one is European.\374\ However,
digitization has been a particular focus of the European
Commission over the past few years. In February 2020, European
Commission President Ursula von der Leyen wrote that ``the
digital transformation could not be left to chance.'' \375\ The
European Data Strategy recognizes this need and attempts to set
a general framework for the future of European data and data
industries.\376\ Europe also established the General Data
Protection Regulation (GDPR), although the standards in these
regulations differ from those in the United States and have
caused what the U.S. government has called ``disproportionate
barriers'' to effective digital trade.\377\ Finally, several
European states and the European Union have taken deliberate
steps to focus on production of new technologies in this
sphere, including large infrastructure projects like the
European Commission's ``smart cities'' initiative, which will
create demand for a larger ecosystem of digitization, data, and
integrated software.\378\
---------------------------------------------------------------------------
\373\ Llewellyn, Alicia. ``Digitalization--Future of Work.'' NASA
Blogs, NASA, 15 Apr. 2019, https://blogs.nasa.gov/futureofwork/tag/
digitalization.
\374\ Tsanova, Iliyana and Roger Havenith. ``Europe Is No Longer an
Innovation Leader. Here's How It Can Get Ahead.'' World Economic Forum,
14 Mar. 2019, https://bit.ly/38poZb3.
\375\ von der Leyen, Ursula. ``Shaping Europe's Digital Future.''
European Commission, 19 Feb. 2020, https://bit.ly/3p4SGnt.
\376\ ``European Data Strategy.'' European Commission, https://
bit.ly/32sBKOi.
\377\ 2020 National Trade Estimate Report on Foreign Trade
Barriers. United States Trade Representative, 31 Mar. 2020, https://
bit.ly/35ex0NQ.
\378\ ``Smart Cities.'' European Commission, https://bit.ly/
3evIJuw.
---------------------------------------------------------------------------
Meanwhile, U.S. regulations on data issues focus on sector-
specific rules and state laws.\379\ This fragmented regulatory
environment makes creating standards regarding data
particularly difficult. The United States continues to make
efforts to bring together these domestic regulations in a way
that provides mechanisms to comply with EU data protection
requirements, such as in the case of the EU-U.S. Privacy Shield
Framework.\380\ In addition, there is a bipartisan interest in
advancing national privacy legislation. However, there is still
much debate in the United States and Europe among academics,
policymakers, and businesses about who can own data, where data
can be stored, how data can be used, and what obligations
providers have to protect data.\381\ To properly facilitate
data transfers and support transatlantic commerce, it is
imperative that the United States and the European Union find
ways to answer these questions together.
---------------------------------------------------------------------------
\379\ ``The Future of Regulation.'' Deloitte Insights, Deloitte, 19
Jun. 2018, https://bit.ly/36bD6hh.
\380\ ``2020 National Trade Estimate Report on Foreign Trade
Barriers,'' United States Trade Representative, 31 Mar. 2020, https://
bit.ly/3l8JxI9.
\381\ ``The Future of Regulation.'' Deloitte Insights, Deloitte, 19
Jun. 2018, https://bit.ly/36bD6hh.
---------------------------------------------------------------------------
However, efforts to reach agreement on these questions will
be for nothing if such data goes through infrastructure
produced in part or in whole by countries without such data
protections. Without transatlantic collaboration on proper IT
development, digitization, and mass data storage
infrastructure, the United States and Europe will still face
severe economic, personal privacy, and national security
challenges.
Unfortunately, development of this type of infrastructure
in Europe is largely hindered by the lack of a common market
for services and the digital economy. For example, the EU's
common market for physical goods allowed a few European mobile
phone companies, such as Nokia and Ericsson, to take advantage
of the full European market. Yet, there is no corresponding
market for software and digital platforms. Such technology
companies are often met with differing national regulations and
market considerations, limiting their overall growth potential
and creating barriers to capturing market share large enough to
compete with global technology companies. Software or digital
platform companies in the United States and China, by
comparison, can ``capture a significant chunk of the U.S.' 327
million customers with a relatively homogenous business
strategy . . . [and] can do likewise when targeting a [Chinese]
population of 1.4 billion.'' \382\ Any European company, on the
other hand, would need to customize its digital product and
create country-specific business strategies in order to fully
capture Europe's 500 million inhabitants. It is unlikely that
European technology companies will be able to gain an effective
market share to compete with Chinese companies internationally.
---------------------------------------------------------------------------
\382\ Ballard, Barclay. ``Behind the Curve: Why Europe Is
Stuttering in the Global Tech Race.'' European CEO, 17 Jun. 2019,
https://bit.ly/3ka84LE.
---------------------------------------------------------------------------
This is evident in Europe's `smart city' initiative. The
sectors that support smart city initiatives are all sectors in
which Europe is currently highly reliant upon foreign
companies, particularly Chinese companies.\383\ According to
the Australian Strategic Policy Institute, European countries
currently have 22 cooperative agreements with Chinese companies
for technologies such as surveillance equipment for various
`smart cities' across France, Belgium, the Netherlands, Spain,
and Romania, as well as five signed memorandums of
understanding (MOUs) between European cities and Chinese
companies for further cooperation and potential
development.\384\ All parties contracting with the PRC on smart
cities must be made aware of the risks inherent in these
agreements and MOUs, particularly given how the PRC employs and
uses `smart city' technologies domestically to monitor its
citizens and suppress dissent. Moreover, the PRC's 2017
cybersecurity law requires all Chinese companies to provide
data and information to the Chinese government when asked, so
European cities risk losing control of the data they collect
through their smart cities programs. This raises massive
concerns surrounding data privacy, surveillance, and economic
coercion. Such risks should concern any country that values
liberal, open, democratic societies, as the United States and
Europe both do. European decisions on data issues could
simultaneously undermine Europe's active leadership in
protecting its citizens' data and privacy rights and support
the CCP's political goals at home and abroad.
---------------------------------------------------------------------------
\383\ ``Cities of Tomorrow: Safety, Smarts, and Surveillance.''
Center for Strategic and International Studies, 23 Jan. 2020, https://
bit.ly/3ljMRk1. Panel discussion.
\384\ Cave, Danielle et al. Mapping China's Tech Giants. Australian
Strategic Policy Institute, https://chinatechmap.aspi.org.au/#/map/f5-
Smart% 20City-Public%20Security%20project. Database.
---------------------------------------------------------------------------
The United States faces similar concerns, as the PRC is
quickly surpassing it in creating, replicating, and storing
data. By 2025, it is projected that the PRC will be responsible
for storing 27.8 percent of total global online data, while the
United States will store approximately 17.5 percent.\385\ Such
shifts in the utilization and storage of global internet data
have huge implications, especially for the future of Chinese AI
and machine learning development, as well as the PRC's ability
to undermine global data privacy, surveil citizens around the
world, and use such data to leverage its economic might against
countries and individuals to coerce them into conforming with
CCP goals. Some of this shift can be attributed to the sheer
size of the PRC. As a large market with more than four times
the population of the United States, the PRC naturally has far
more opportunities for data collection, even with its lower
internet penetration rate.\386\ Yet this disparity is also
partially because of slow U.S. government responses to the
unique needs of emerging technologies and the changes necessary
to protect and encourage such innovation. For example, the
United States has been slow to adopt proactive policies to
support the Internet of Things, AI, facial recognition, smart
cities, smart health, and other digital policy areas. If the
PRC will soon control much of the world's data, it is that much
more important for the United States and Europe, along with
other advanced democracies, to combine their data markets of
scale and set global standards for how such data is collected,
stored, utilized, and protected.
---------------------------------------------------------------------------
\385\ Reinsel, David, John Gants and John Rydning. DataAge 2025--
The Digitalization of the World From Edge to Core. International Data
Corporation, May 2020, https://bit.ly/3eCDMAe.
\386\ Thomala, Lai Lin. ``Penetration rate of internet users in
China from December 2008 to March 2020.'' Statista, 30 Apr. 2020,
https://bit.ly/36e70RY.
---------------------------------------------------------------------------
Standards Setting
Much like with data collection, the PRC's vast market and
manufacturing capability gives it a natural advantage when
competing with European- or U.S.-set standards. The PRC also
builds on that advantage by subsidizing Chinese firms to
participate in international standards setting bodies and
pressuring Chinese companies to toe the line on CCP standards
decisions.\387\ To mitigate this advantage, the United States
and the European Union have taken a few steps to better
harmonize their technical and emerging technology usage
standards. The United States has proposed legislation to reduce
barriers to joint-technical development with trusted allies and
partners and expand participation and leadership in
international standards-setting bodies.\388\ Meanwhile, the
European Union set out a process for ``harmonization
regulation,'' which defines the essential requirements a
product or service has to comply with and creates a presumption
of conformity for standards.\389\
---------------------------------------------------------------------------
\387\ Haley, Usha C.V. and George T. Haley, ``How Chinese subsidies
changed the world,'' Harvard Business Review, 25 Apr. 2013, https://
hbr.org/2013/04/how-chinese-subsidies-changed.
\388\ United States, Congress, Senate, Risch, James E. STRATEGIC
Act. Congress.gov, 116th Congress, 2nd Session, Senate Bill 4272,
introduced 22 Jul. 2020, https://bit.ly/3mY5Roq.
\389\ Staff interviews.
---------------------------------------------------------------------------
But by the nature of the process, even established
international standards do not necessarily mean that all
countries and companies around the world are required to abide
by them. Rather, international standards for technologies give
companies the option to choose to conform new technologies to
such standards to facilitate interoperability, but they don't
have to.\390\ Therefore, any country that is able to secure a
foothold in creating a large market of goods with the same
standards can direct the development of complementary
technologies around the world and will have a large comparative
advantage when fighting for such technology markets.\391\
Because new technologies such as 5G and Internet of Things
naturally cross multiple sub-sectors of technology, there may
be a larger need to ensure more standardization for these
technologies across the hard and soft infrastructure. If
markets are not big enough such efforts are likely to backfire,
leading to a ``Galapagos Island'' effect in which countries'
indigenous technologies are isolated from global
standards.\392\ This is why standards cooperation between the
European Union and United States is critical to ensuring that
any PRC standard is limited.
---------------------------------------------------------------------------
\390\ Wilson, Naomi. ``China Standards 2035 and the Plan for World
Domination--Don't Believe China's Hype.'' Council on Foreign Relations,
03 Jun. 2020, https://on.cfr.org/32lmthW.
\391\ O'Sullivan, Eoin and Laure Brevignon-Dodin. Role of
Standardisation in support of Emerging Technologies A Study for the
Department of Business, Innovation & Skills (BIS) and the British
Standards Institution (BSI). Institute for Manufacturing, Jun. 2012,
https://bit.ly/2IgX0io.
\392\ Ezell, Stephen J. and Robert D. Atkinson. ``The Middle
Kingdom Galapagos Island Syndrome: The Cul-De-Sac of Chinese Technology
Standards.'' The Information Technology and Innovation Foundation, Dec.
2014, https://bit.ly/3ljNaLH.
---------------------------------------------------------------------------
Take, for example, the PRC's substantial share of the
lithium battery market. As global demand for rechargeable
batteries grew through the rise of electric vehicles and other
green technologies, the Chinese government recognized trend
lines early on and heavily subsidized its rechargeable battery
production industry. As of 2019, China controlled about two-
thirds of global lithium production capacity, as compared to
the 13 percent of global capacity the United States
controls.\393\ Since the PRC was able to capture such a large
market share, the standard for rechargeable batteries in any
type of electronic vehicle is now lithium-ion.\394\ Other
smaller producers can neither gain a foothold in the global
battery industry, nor are their new, often cleaner and more
efficient battery formulas as marketable.\395\ For both
economic as well as security reasons, it is imperative that the
United States and Europe do not allow the PRC to gain this
advantage in other sectors, particularly given how the
technology and data that flow through PRC-based or PRC-made
systems is subject to control and usage by the CCP.
---------------------------------------------------------------------------
\393\ Mai, HJ. ``To compete in the global battery arms race, the US
must spur its domestic market, analysts say.'' Utility Dive, 24 Jun.
2019, https://bit.ly/2I5zMMO.
\394\ Rapier, Robert. ``Why China is dominating lithium-ion battery
production.'' Forbes, 04 Aug. 2019, https://bit.ly/3oYp5vU.
\395\ Austin, Robert. ``Lithium-ion is a pawn in economic
domination.'' CIO, International Data Group, 02 May 2019. https://
bit.ly/3p6gTJZ.
---------------------------------------------------------------------------
Transatlantic Cooperation
The United States and Europe may have different policy
positions and different market environments, but they share
many similar interests and challenges. Alone, the United States
and Europe cannot compete with China's massive market and the
large state resources the PRC is pouring into emerging
technology. Both are struggling with the lack of national
strategy on key sectors such as AI, database management, and
data storage, sharing, and usage. Neither can either afford to
waste any time in developing new technologies and corresponding
regulations alone, while China develops the same with no regard
for the challenges to data privacy and individual freedoms. The
combined economies of scale of the United States and European
Union put the two regions in a much stronger position to
compete against China's immense market power on issues such as
technology standardization and production.
There are many areas in which U.S. and European interests
do align, and in which there are little to no regulatory
barriers to cooperation. First, there are opportunities for
more cooperation in developing and regulating AI-enabled
manufacturing. Both the European Union and the United States
are in the process of developing standards for trustworthy AI,
so there's an opportunity to coalesce around good ongoing
work.\396\ The United States and European nations can also
discuss ways to manage the potential social implications of
this shift, as well as work together to support the network
processes in AI-enabled manufacturing. The United States and
Europe should seek opportunities to work together to become the
world leaders in these and other new technologies.
---------------------------------------------------------------------------
\396\ Staff interviews.
---------------------------------------------------------------------------
Second, both the United States and the European Union will
need to tackle the challenges that arise from massive database
storage, protection, and development. A regular dialogue to
discuss best practices and challenges to digital trade from
legislation such as the GDPR, the path to digitalization for
Europe, and database storage practices would be a very positive
development. The U.S.-U.K. Special Relationship Economic
Working Group Meeting is one good example of such a dialogue
that looks at these issues, as well as others surrounding
emerging technology. Through sustained and targeted
communication between the United States and the European Union,
we can find common ground to create a framework of standards on
how cyber-enabled technology can be protected from
cybersecurity threats, and use this to set the agenda at the
multinational level for big data collection, storage,
protection, and sharing. Discussing these technologies could
serve joint security efforts as well, such as using the Common
Identity Repository to track terrorist activity.
Third, the United States and Europe can also cooperate on
issues involving the environment. In 2019, green energy patents
filed globally increased by 28 percent compared to 2018,
demonstrating this growing and important market.\397\ As the
number of green energy patent filings rapidly grows, the United
States still holds the largest share, followed by Japan and
Europe.\398\ There is a lot of U.S. and EU cooperation at the
ministerial level on this issue, for example the Clean Energy
Ministerial, Generation IV International Framework, and the
U.S.-EU Energy Council.\399\ But the United States and Europe
could work more closely together to encourage further
scientific cooperation and standards setting for new, cleaner
technologies.
---------------------------------------------------------------------------
\397\ News Byte. ``Green energy patents filed globally jump 28% in
a year.'' Science Business,, 28 Jan. 2020, https://bit.ly/3pd0EuU.
\398\ ``Patenting of Sustainable Energy Technologies.'' Global
Trends in Sustainable Energy Research and Technologies, National
Science Board, 2018, https://bit.ly/32ni1PX.
\399\ ``U.S.-EU Energy Council.'' U.S. Department of Energy Office
of International Affairs, https://bit.ly/35bKI3V.
---------------------------------------------------------------------------
Finally, the United States and European countries should
work together to mobilize and create economies of scale with
trusted democracies around the world in critical technology
development. Creating supply chains for sensitive technologies
in trusted countries would help promote this cooperation and
provide the rest of the world with a reliable and safe
alternative to the risks associated with Chinese technology.
The general framework for this type of arrangement already
exists. The United States and Japan have the legal and
regulatory framework for science and technology cooperation
through their defense relationship, such as the 1980 U.S.-Japan
Systems and Technology Forum that boosted defense-applicable
scientific cooperation between the two countries under the
auspices of their mutual defense treaty.\400\ To a lesser
extent, the European Union and Japan have also sought increased
cooperation in science, technology, and innovation through the
2011 Japan-EU Science and Technology Cooperation
Agreement.\401\
---------------------------------------------------------------------------
\400\ Schoff, James L. U.S.-Japan Technology Policy Coordination:
Balancing Technonationalism With a Globalized World. Carnegie Endowment
for International Peace, 29 Jun. 2020, https://bit.ly/2U9s86f6.
\401\ ``EU and Japan step up cooperation in science, technology and
innovation.'' European Commission, 26 May 2020, https://bit.ly/32lgHwU.
---------------------------------------------------------------------------
Yet these are just the general frameworks that show intent
and interest to cooperate, and much more needs to be done. The
United States, the United Kingdom, and the European Union could
explore avenues for more tangible cooperation; on the defense
side, the United States and North Atlantic Treaty Organization
countries could do likewise. The United States and Europe could
combine these efforts where there is overlap to further
trilateral cooperation with Japan. Expanding such agreements to
include other allies like Australia, New Zealand, Canada, and
Japan would help leverage all of our complementary strengths to
protect the basic common interests that we all share--
protecting individual freedoms and rights, safeguarding the
environment, and avoiding PRC monopolization of critical
technologies.\402\ \403\
---------------------------------------------------------------------------
\402\ Staff discussions.
\403\ United States, Congress, Senate, Risch, James E. STRATEGIC
Act. Congress.gov, 116th Congress, 2nd Session, Senate Bill 4272,
introduced 22 Jul. 2020, https://bit.ly/32lgHwU.
---------------------------------------------------------------------------
Conclusion
Cooperation in these areas will only occur if both the
United States and Europe have the sustained political will to
align agendas and continue regular dialogue on technology
cooperation specifically. All areas in which the United States
and Europe struggle--from mobilizing manufacturing and
dwindling R&D investment to fractured markets and regulatory
environments--are areas where the PRC either does not face the
same structural problems or can subsidize to compensate for
these shortfalls.
Eventually, the United States, Europe, and other democratic
allies will need to find avenues to work together to maintain a
competitive position against the PRC's massive scale and
resources dedicated to its emerging technology market. The
United States and Europe in particular should seek in the
short-term to bolster areas within our domestic markets that
face little to no obstacles to cooperation and align our
positions with those of our other democratic partners to regain
a competitive stance in the global technology race. Such an
agenda has the combined benefits of spurring domestic economic
growth, improving our companies' competitiveness around the
world, protecting the rights and security of our citizens, and
strengthening our resilience to the threats posed by China.
Without further transatlantic cooperation, both regions face a
real risk of being left behind on global technology standards,
production, and development.
CHAPTER FIVE--OVERSEAS
COMMERCIAL ACTIVITY
----------
If a foreign, state-owned, company wants to purchase a
European harbour, part of our energy infrastructure or
a defence technology firm, this should only happen in
transparency, with scrutiny and debate. It is a
political responsibility to know what is going on in
our own backyard so that we can protect our collective
security if needed.
--Jean-Claude Juncker, former President of the European
Commission\404\
---------------------------------------------------------------------------
\404\ ``State of the Union 2017--Trade Package: European Commission
proposes framework for screening of foreign direct investments.''
European Commission. 14 Sep. 2017, https://bit.ly/3l7U06y. Emphasis
added.
---------------------------------------------------------------------------
Introduction
In 2009, two Dutch scholars wrote an article in the
Financial Times advocating for ``a transparent European review
body'' to scrutinize growing investment from China. They argued
that while Europe stood to benefit from this increased
investment, Europe should also ``identify which entities are
vital to European security, what level of Chinese investment
constitutes an undesirable influence, and what the benefits of
foreign investment are in relation to national security
interests.'' \405\ Similarly, as Chinese investment in U.S.
land, factories, and businesses began to grow, U.S. observers
raised concerns. As one example, a 2013 report by the U.S.-
China Economic and Security Review Commission noted that, ``The
possibility of government intent or coordinated strategy behind
Chinese investments raises national security concerns.'' \406\
Today, stronger investment screening to protect national
security stands out as among the greatest transatlantic
achievements when it comes to the challenges posed by China.
---------------------------------------------------------------------------
\405\ Okano-Heijmans, Maaike, and Frans-Paul van der Putten.
``Europe Needs to Screen Chinese Investment.'' Financial Times, 11 Aug.
2009, www.ft.com/content/8ba0192e-86b7-11de-9e8e-00144feabdc0.
\406\ ``Executive Summary.'' 2013 Annual Report, United States
Economic and Security Review Commission, 20 Nov. 2013, p. 2, https://
bit.ly/3ljNv0V.
---------------------------------------------------------------------------
The People's Republic of China's (PRC) 1997 ``Going Out''
strategy marked the beginning of its drive to increase overseas
investment, including through acquiring strategic assets and
foreign technology.\407\ This policy has grown into today's
``One Belt, One Road'' (OBOR) initiative--the most visible
directive for these activities globally. The transatlantic
community's approaches to OBOR and investment from the PRC are
certainly not uniform. The U.S. government holds decidedly
negative views of OBOR, which it sees as a means to increase
the economic influence of state-owned Chinese firms in global
markets, to engender undue PRC political leverage with
governments around the world, and to provide greater access to
strategic nodes that facilitate a global presence of the
People's Liberation Army. Views among European governments are
far more varied--17 EU member states have signed OBOR memoranda
of understanding (MOU).\408\ French and German leaders have
criticized the initiative publicly, but have in fact attracted
more PRC investment than the Central and Eastern European
states that officially endorsed OBOR.\409\ On both sides of the
Atlantic, certain industries view OBOR as a significant
opportunity. Large American and European banks, including
Deutsche Bank, Standard Chartered Bank, and Citigroup, are very
involved in the financing of OBOR projects.\410\ Other sectors,
however, see OBOR challenging their own competitiveness,
particularly in third country markets, where concessional
lending by the PRC government, non-transparent procurement
processes, and closed digital standards combine to cement
greater reliance on PRC supply chains and technical
standards.\411\
---------------------------------------------------------------------------
\407\ Bhattacharya, Amar et al. China's Belt and Road: The new
geopolitics of global infrastructure development. Brookings
Institution, Apr. 2019, https://www.brookings.edu/research/chinas-belt-
and- road-the-new-geopolitics-of-global-infrastructure-development/.
\408\ Sarsenbayev, Madi, and Nicolas Veron. ``European versus
American Perspectives on the Belt and Road Initiative.'' China & World
Economy, vol. 28, no. 2, Peterson Institute for International
Economics, 2020, p. 88, www.piie.com/sites/default/files/documents/
sarsenbayev-veron2020-04.pdf.
\409\ Duchatel, Mathieu and Alexandre Sheldon Duplaix. Blue China:
Navigating the Maritime Silk Road to Europe. European Council on
Foreign Relations, Apr. 2018, p. 5, https://bit.ly/354Elzk.
\410\ Skala-Kuhmann, Astrid. ``European Responses to BRI: An
Overdue Assessment'', Horizons Journal of International Relations and
Sustainable Development, no. 14, Center for International Relations and
Sustainable Development, Summer 2019, p. 144-155, https://bit.ly/
36cDPyH. And ``Citi's Strong Momentum Across Belt and Road Initiative
Recognized by Asiamoney.'' Citigroup, 03 Oct. 2019, https://bit.ly/
36cDPyH.
\411\ The Road Less Travelled: European Involvement in China's Belt
and Road Initiative. European Union Chamber of Commerce in China, Jan.
2020, https://bit.ly/2I462Qt.
---------------------------------------------------------------------------
Despite differing approaches, governments in the United
States and Europe clearly recognize the inherent risks in
certain PRC acquisitions and investments. Recent U.S.-Europe
discussions on Chinese investment have focused intensely on
Huawei's construction of 5G networks. There are, however,
several other areas where PRC investments and acquisitions
require further transatlantic attention. China's acquisition of
major footholds in these three areas presents long-term
economic and security implications for the United States and
Europe:
Energy infrastructure, particularly electrical grids;
Ports and shipping; and
Undersea cables.
While not an exhaustive list, these examples are
representative of increasingly concerning PRC activities in
sensitive sectors. The United States and its European partners
must align our policies and work together, including through
the North Atlantic Treaty Organization (NATO), to safeguard our
shared interests.
Energy
Overview
China is extending its international reach in the realm of
energy, setting as one of its primary goals the mastery of both
old and new power sources. Increasingly, it is looking to exert
greater influence and control over those resources abroad,
including as part of OBOR. These developments pose several
serious economic, security, and environmental challenges for
the United States and Europe.
As it has since the Industrial Revolution, the creation,
control, and utilization of energy sources remains one of every
nation's biggest challenges. Whether the British Imperial
Navy's need for mid-Pacific coking stations, disputes over
access to Middle Eastern oil fields, or more modern quests to
develop energy sources not reliant on fossil fuels, securing an
adequate supply of fuel for the modern means of production
remains a prize. The past 10 years have seen a marked growth in
international Chinese investment in energy installations of all
kinds.\412\ China is the world's largest consumer and producer
of energy, and its needs will only grow.\413\
---------------------------------------------------------------------------
\412\ In much of the research available, these projects are
variously described as ``energy'' or ``infrastructure and utilities.''
\413\ ``China.'' U.S. Energy Information Administration, 14 May
2015, https://bit.ly/38fSHiB.
---------------------------------------------------------------------------
While Chinese investment in Europe has fallen rather
dramatically from its heights in 2016 and 2017, investments in
infrastructure to generate and provide energy continue to
constitute a significant proportion of total investment.\414\
Examining the goal behind these investments, scholars have
found that, ``Chinese penetration of the European energy sector
serves both political and commercial purposes.'' Domestically,
these investments ``address the need to balance supply chain
security of fossil fuels,'' greener production techniques, and
greater energy efficiency, while offering the ``opportunity to
improve the market position and energy-industrial capabilities
of Chinese energy companies.'' \415\ Internationally, they form
a key part of OBOR and the basis for increased Chinese
influence: energy and utility projects comprise 37 percent of
all OBOR projects.\416\
---------------------------------------------------------------------------
\414\ Kratz, Agatha, et al. ``Chinese FDI in Europe: 2019 Update.''
Rhodium Group/Mercator Institute for China Studies, Apr. 2020, https://
merics.org/en/report/chinese-fdi-europe-2019-update. Their evaluation
of 2019 investment inflows noted that ``transport, utilities and
infrastructure came fourth [in sectors of Chinese investment in the EU]
with EUR 0.8 billion in investment.''
\415\ Liedtke, Stephan. ``Chinese Energy Investments in Europe: An
Analysis of Policy Drivers and Approaches.'' 22 Sept. 2017. Energy
Policy, vol. 101, pp. 659-669., doi:10.1016/j.enpol.2016.09.037.
https://bit.ly/38fSHiB.
\416\ Committee calculations from China Global Investment Tracker.
American Enterprise Institute/The Heritage Foundation. Full data set
accessible here: https://bit.ly/355wlOQ.
---------------------------------------------------------------------------
Power Grids, Nuclear Energy, and Coal Plants
In the PRC's National Medium- and Long-Term Program for
Science and Technology Development for 2006-2020, energy topped
the list of China's many priorities. The program called for
improved energy savings, increased energy supplies, promotion
of more efficient use of coal, full absorption of ``imported
energy technologies,'' mastery of equipment for coal and
nuclear plants, and focused development of ``technologies to
realize large volume, long distance, efficient power
transmission.'' \417\ Energy equipment is also one of the PRC's
priorities under Made in China 2025. Electrical power grids,
nuclear plants, and coal-fired power plants are three major
priorities in realizing the objectives of its economic and
industrial plans.
---------------------------------------------------------------------------
\417\ ``The National Medium- and Long-Term Program for Science and
Technology Development (2006-2020).'' The State Council of the People's
Republic of China, https://bit.ly/2I9NwFN.
---------------------------------------------------------------------------
Created as a national energy transmission champion in 2002,
State Grid Corporation of China (State Grid) is the world's
largest utility and the third most profitable company in the
Fortune 500 ranking.\418\ No longer content with the PRC
market, State Grid has rapidly expanded its international
holdings over the past 10 years, buying up the third-largest
electricity players in both Chile and Brazil, taking a 40
percent share in the Philippines' national electrical
grid,\419\ and making huge inroads in Australia.\420\ In Europe
since 2009, State Grid has purchased 35 percent of CDP Reti,
the holding company that manages the Italian gas and
electricity grid,\421\ 24 percent of Greek power grid operator
ADMIE,\422\ and become the largest shareholder in the
Portuguese electrical grid operator REN.\423\ State Grid
publicly notes that its increased international activities are
based around OBOR, and openly states that it has ``enhanced its
. . . ability to serve national strategies'' and is ``boosting
China's influence worldwide.'' \424\
---------------------------------------------------------------------------
\418\ ``Global 500.'' Fortune, https://bit.ly/3l9SEsi. Accessed 25
Aug. 2020. It is superseded only by Wal-Mart in first place and Sinopec
in second.
\419\ Ahmed, Sara. ``IEEFA update: China's state grid group
triggers oversight controversy in the Philippines.'' Institute for
Energy Economics and Financial Analysis, 18 Feb. 2020, https://bit.ly/
2TYadQ5.
\420\ Wade, Geoffrey. ``The State Grid Corporation of China: Its
Australian engagement and military links.'' Interpreter, The Lowy
Institute, 17 Dec. 2015, https://www.lowyinstitute.org/the-interpreter/
state-grid-corporation-china-its-australian-engagement-and-military-
links.
\421\ Pagni, Luca. ``Un alleato cinese per lo Stato italiano State
Grid diventa socio di Snam e Terna.'' La Repubblica, 30 Jul. 2014,
https://bit.ly/2JGduS1.
\422\ Note: ADMIE is also known as IPTO, for the English
translation of its name - Independent Power Transmission Operator.
``State Grid Europe Limited.'' Independent Power Transmission Operator,
www.admie.gr/en/company/participation/state-grid.
\423\ ``Shareholder Structure.'' REN, https://bit.ly/3p230wt.
\424\ ``International Cooperation Overview.'' State Grid
Corporation of China, https://bit.ly/2IbEgRW.
---------------------------------------------------------------------------
China Southern Power Grid Company, which covers the areas
of China that State Grid does not, is also going abroad, moving
into Laos, the Philippines,\425\ Vietnam,\426\ and
Myanmar.\427\ In September 2020, the company signed a deal with
Ee du Laos that will give China Southern majority shares in a
new company that will control Laos' power grid and the rights
to buy and sell power in the country.\428\
---------------------------------------------------------------------------
\425\ ``MVIP in Full-scale Construction in the Philippines.'' China
Southern Power Grid, 26 Nov. 2019, https://bit.ly/36b2XpE.
\426\ ``Two units of Vinh Tan 1 Thermal Power Plant put into
operation.'' State-owned Assets Supervision and Administration
Commission of the State Council, 30 Nov. 2018, https://bit.ly/38jErFy.
\427\ ``International Cooperation.'' China Southern Power Grid,
http://eng.csg.cn/Cooperation/201603/t20160320--133961.html.
\428\ ``Financially Strapped Laos Partners with Chinese Company to
Manage Power Grid.'' Radio Free Asia, 10 Sep. 2020, https://
www.rfa.org/english/news/laos/grid-09102020153801.html.
---------------------------------------------------------------------------
Another national energy champion, this time in the realm of
nuclear energy, is China General Nuclear Power Corporation
(CGNPC), China's largest domestic nuclear power operator. Like
State Grid, CGNPC is looking to expand internationally. Through
OBOR, China is reportedly looking to build more than 30 nuclear
power plants outside of China.\429\ Three projects in the
United Kingdom represent CGNPC's initial entry into the
international market. At Hinkley Point C, which is currently
under construction, CGNPC has a 33 percent stake and also has
an option to acquire 20 percent of the potential Sizewell C
plant. Should it go ahead despite mounting opposition, a second
plant at Bradwell could be the first Chinese-built nuclear
plant outside of China.\430\ Robert Davies, the Chief Operating
Officer of CGNPC's U.K. presence said, ``For us, the U.K. is an
important stepping stone into Europe. The Generic Design
Assessment process [U.K. regulatory approval] is recognised in
the nuclear world as having a lot of clout.'' \431\ The PRC has
also worked to gain access to uranium deposits around the
world,\432\ including one of the world's largest uranium mines
in Namibia.\433\ The China National Nuclear Corporation has
worked with Saudi Arabia to help that country discover its
indigenous uranium reserves.\434\
---------------------------------------------------------------------------
\429\ ``China could build 30 'Belt and Road' nuclear reactors by
2030: official.'' Reuters, 20 Jun. 2020, https://reut.rs/3lsDRZX.
\430\ Pratley, Nils. ``No business need at all now for a Chinese
nuclear plant in the UK.'' The Guardian, 07 Jul. 2020, https://bit.ly/
2TYTuvZ.
\431\ Vaughan, Adam, and Lily Kuo. ``China's Long Game to Dominate
Nuclear Power Relies on the UK.'' The Guardian, 26 Jul. 2018,
www.theguardian.com/environment/2018/jul/26/chinas-long-game-to-
dominate-nuclear-power-relies-on-the-uk.
\432\ Zhang, Hui and Yunsheng Bai. ``China's Access to Uranium
Resources.'' Project on Managing the Atom, Harvard Kennedy School
Belfer Center for Science and International Affairs, May 2015,
https://www.belfercenter.org/sites/default/files/legacy/files/
chinasaccesstouraniumresources.pdf.
\433\ ``Husab Uranium Project, Namib Desert, Namibia.'' Mining
Technology, https://www.mining-technology.com/projects/husab-uranium-
project-namibia-swakop/.
\434\ Graham-Harrison, Emma, Stephanie Kirschgaessner and Julian
Borger. ``Revealed: Saudi Arabia may have enough uranium ore to produce
nuclear fuel.'' The Guardian, 17 Sep. 2020, https://
amp.theguardian.com/world/2020/sep/17/revealed-saudi-arabia-may-have-
enough-uranium-ore-to-produce-nuclear-fuel.
---------------------------------------------------------------------------
Finally, PRC companies are investing heavily in coal-fired
power generation, despite the Chinese government presenting
itself as a leader in fighting climate change and a champion of
green energy. China is the world's largest investor in green
energy,\435\ but only a very small percentage of its OBOR
energy projects--around 2.8 percent--are in clean energy.\436\
China is also slowly decreasing the number of coal-fired power
plants it builds within the PRC, but its manufacturing of the
equipment used in these plants has not slowed down, leaving it
with a stockpile of technology and anxious executives
incentivized to sell it.\437\ China is, at competitive prices,
creating the means to support coal burning plants abroad for
the long life-cycles of these plants, not decreasing the use of
coal abroad.
---------------------------------------------------------------------------
\435\ ``How Is China's Energy Footprint Changing?'' China Power,
Center for Strategic and International Studies. 15 Feb. 2016, https://
chinapower.csis.org/energy-footprint/.
\436\ ``Clean energy'' is defined here as solar, wind, and other
renewables. Author calculations based on data from China's Global
Energy Finance. Boston University Global Development Policy Center,
www.bu.edu/cgef/.
\437\ Downs, Erica. China-Pakistan Economic Corridor Power
Projects: Insights into Environmental and Debt Sustainability. Columbia
University Center on Global Energy Policy, 03 Oct. 2019, https://
www.energypolicy.columbia.edu/research/report/china-pakistan-economic-
corridor-power-projects-insights-environmental-and-debt-sustainability.
---------------------------------------------------------------------------
The American Enterprise Institute's Chinese Investment
Tracker lists 48 major Chinese investments in coal since 2007,
the vast majority of them in South and Southeast-Asia.\438\ In
Vietnam alone, China has built 15 coal power plants and is
working on eight more.\439\ Since 2000, Chinese development
banks have funded 21 coal-based projects in Indonesia, all of
which are now touted as part of OBOR, even those constructed
prior to the initiative's announcement in 2013.\440\ In Europe,
81 percent of China's investment in energy between 2008 and
2015 went into coal, gas, and oil.\441\ Most of these investors
were Chinese state-owned companies.\442\ By contrast, the U.S.
Development Finance Corporation operates under environmental
rules that place restrictions on support for investment in
projects, particularly energy projects, which might produce
large greenhouse gas emissions.\443\ The European Investment
Bank has begun to ``phase out support to energy projects
reliant on unabated fossil fuels.'' \444\
---------------------------------------------------------------------------
\438\ China Global Investment Tracker. American Enterprise
Institute, https://bit.ly/3ewWsRR.
\439\ Inskeep, Steve and Ashley Westerman. ``Why Is China Placing A
Global Bet On Coal?'' NPR, 29 Apr. 2019, https://www.npr.org/2019/04/
29/716347646/why-is-china-placing-a-global-bet-on-coal.
\440\ China's Global Energy Finance. Boston University Global
Development Policy Center, www.bu.edu/cgef/.
\441\ Liedtke, Stephan. ``Chinese Energy Investments in Europe: An
Analysis of Policy Drivers and Approaches.'' Energy Policy, vol. 101,
Elsevier, 14 Sep. 2016, p. 665, table 2, https://bit.ly/3eGDacQ.
\442\ Ibid.
\443\ ``Environmental and Social Policy and Procedures.'' U.S.
Development Finance Corporation, Jan. 2020, https://bit.ly/3mWE5sv.
\444\ ``EIB energy lending policy: Supporting the energy
transformation'' European Investment Bank, 15 Nov. 2019, p. 4, https://
www.eib.org/en/publications/eib-energy-lending-policy.htm.
---------------------------------------------------------------------------
A 2019 report from the Institute for Energy Economics and
Financial Analysis explains that Chinese financing is often a
last resort for those looking to fund a coal plant. Many more
traditional financing sources--such as Standard Chartered U.K.,
Generali of Italy, and Nippon Life of Japan--have determined
coal-fired power plants are no longer worth the
investment.\445\ But as demand for coal persists, PRC companies
are meeting it: more than 70 percent of coal plants currently
under construction outside of China are being financed by PRC
banks.\446\ Clearly, the Chinese government believes the
political and financial benefits of these investments outweighs
the political and market trends in the opposite direction, such
as global efforts to reduce carbon emissions.
---------------------------------------------------------------------------
\445\ Brown, Melissa, and Tim Buckley. ``IEEFA China: Lender of
Last Resort for Coal Plants.'' Institute for Energy Economics &
Financial Analysis, 22 Jan. 2019, https://bit.ly/32kEsVW.
\446\ Numbers produced by data firm Refinitiv in ``The Belt and
Road's Decarbonization Dilemma.'' Quartz. https://qz.com/1760615/china-
quits-coal-at-home-but-promotes-the-fossil-fuel-in-developing-
countries/.
---------------------------------------------------------------------------
The lack of respect for the environmental regulations and
guidelines of national governments is a growing concern related
to PRC investment. For instance, as CEE Bankwatch warned in its
examination of several state-owned enterprise (SOE)-funded
southeastern-European projects, ``despite Chinese policy
guidelines requiring compliance with host country legislation,
most of the projects breach national and EU environmental,
procurement and state aid law.'' \447\ In Serbia, the
municipality of Bor has brought criminal charges against the
managers of a Chinese copper smelting plant where excessive
levels of sulfur dioxide have begun to choke the local
population.\448\ China's purportedly greener power projects
have also produced disastrous environmental outcomes elsewhere.
In Ecuador, a Chinese-built hydroelectric dam has nearly 8,000
cracks, but Ecuador is still repaying China for the dam with
oil that Ecuador is moving further and further into the Amazon
to extract.\449\ And China's extensive damming of the Mekong
River within China is having disastrous consequences for those
who live downstream in Thailand, Laos, Cambodia, and Vietnam.
Water levels are falling precipitously, causing drought, lack
of fresh drinking water, and decreasing numbers of the fish
that locals rely on to feed their families.\450\
---------------------------------------------------------------------------
\447\ ``EU-China leaders' meeting: EU must do more to tackle legal
breaches by Chinese companies in Europe, say civil society
organisations.'' CEE Bankwatch Network, 14 Sep. 2020, https://
bankwatch.org/press--release/eu-china-leaders-meeting-eu-must-do-more-
to-tackle-legal-breaches-by-chinese-companies-in-europe-say-civil-
society-organisations.
\448\ ``Local authorities sue Chinese Zijin over pollution.'' N1,
15 Sep. 2020, https://bit.ly/3ewk1dw.
\449\ Casey, Nicholas and Clifford Krauss. ``It Doesn't Matter if
Ecuador Can Afford This Dam. China Still Gets Paid.'' New York Times,
24 Dec. 2018, https://nyti.ms/352Z1rG.
\450\ Eyler, Brian. ``Science Shows Chinese Dams Are Devastating
the Mekong.'' Foreign Policy, 22 Apr. 2020, https://bit.ly/35bUnaI. See
also: Forsyth, Luc. ``China's Domestic Dams: Hydropower not only an
export for world's biggest dam builder.'' Mongabay, 28 Feb. 2017,
https://bit.ly/3eHWS7P.
---------------------------------------------------------------------------
Illegal Trade Practices and Standards Setting
The Chinese government directly supports PRC energy
companies in making inroads into external markets through
industrial espionage operations, massive state subsidies, and
support for standards-setting campaigns. These well-
orchestrated campaigns by the PRC have harmful effects on, and
strongly disadvantage, businesses that play by the established
free trading rules and are not backed by the power of a unitary
state.
A key example is PRC state support to fund thousands of
engineers and researchers, which has been instrumental in
helping State Grid develop the Ultra-High Voltage (UHV) grid
technology that it now sells and operates.\451\ When building
out these UHV technologies, reports indicate that the Chinese
government required 80 to 90 percent of the equipment be
sourced locally, largely cutting out foreign competition.\452\
The PRC allows some foreign companies to participate in Chinese
energy projects but only in limited ways and many have involved
forced technology transfer. Xu Yi-chong writes that State
Grid's ``collaboration with the multinationals was not always
easy, as SGCC [State Grid] wanted to gain control of core
technologies . . . and wanted to be in the driver's seat in
collaboration, while the [multi-national corporations] refused
to surrender their control.'' \453\ As in other sectors, PRC
SOEs have also established research centers abroad that then
work to transfer pertinent technology back to China. In 2011,
State Grid founded the Global Energy Interconnection Research
Institute,\454\ which now has branches in Santa Clara,
California\455\ and Berlin, Germany.\456\
---------------------------------------------------------------------------
\451\ Fairley, Peter. ``China's Ambitious Plan to Build the World's
Biggest Supergrid.'' Technology, Engineering, and Science News, IEEE
Spectrum, 21 Feb. 2019, https://bit.ly/2JzeQ0P.
\452\ Fairley, Peter. ``China's Ambitious Plan to Build the World's
Biggest Supergrid.'' Technology, Engineering, and Science News, IEEE
Spectrum, 21 Feb. 2019, https://bit.ly/2U76nUO. And ``Power Play:
China's Ultra-High Voltage Technology and Global Standards.'' Paulson
Papers on Standards The Paulson Institute, Apr. 2015, https://bit.ly/
2If6ZVD.
\453\ Xu, Yi-chong. ``The Search for High Power in China.'' Policy,
Regulation, and Innovation in China's Electricity and Telecom
Industries, Brandy, Loren and Thomas G. Rawski, editors, Cambridge UP,
2019, p. 242.
\454\ Ibid.
\455\ `About GEIRI North America.'' GEIRINA, www.geirina.net/about.
\456\ ``About GEIRI Europe.'' GEIRI Europe, www.geiri.eu/about-us/.
---------------------------------------------------------------------------
The PRC's quest to master the nuclear fuel cycle has been
facilitated in part by industrial espionage. In 2019, CGNPC was
placed on the U.S. Entity List\457\ after a nuclear scientist
employed there was convicted of ``enlisting U.S.-based nuclear
experts to provide assistance in developing and producing
special nuclear material in China for a Chinese state-owned
nuclear power company.'' \458\ For nearly twenty years, he had
worked to obtain ``technical assistance related to CGNPC's
Small Modular Reactor Program; CGNPC's Advanced Fuel Assembly
Program; CGNPC's Fixed In-Core Detector System; and
verification and validation of nuclear reactor-related computer
codes.'' \459\ Such state-sponsored industrial espionage has
the potential to lead to disastrous outcomes, additional
nuclear proliferation, and damage to the business prospects of
responsible nuclear companies like Westinghouse and Areva.
---------------------------------------------------------------------------
\457\ The entity list names entities that conduct activities
contrary to U.S. national security interests and are thus subject to
licensing requirements for the purposes of exports, re-exports, or in-
country transfers of specific goods. See: ``Entity List.'' U.S.
Department of Commerce Bureau of Industry and Security, https://
www.bis.doc.gov/index.php/policy-guidance/lists-of-parties-of-concern/
entity-list. And ``Addition of Certain Entities to the Entity List,
Revision of Entries on the Entity List, and Removal of Entities From
the Entity List.'' Federal Register, U.S. Department of Commerce Bureau
of Industry and Security, 14 Aug. 2019, https://
www.federalregister.gov/documents/2019/08/14/2019-17409/addition-of-
certain-entities-to-the-entity-list-revision-of-entries-on-the-entity-
list-and-removal.
\458\ ``U.S. Nuclear Engineer Sentenced to 24 Months in Prison for
Violating the Atomic Energy Act.'' U.S. Department of Justice, 31 Aug.
2017, https://bit.ly/2U1oMlL.
\459\ Ibid.
---------------------------------------------------------------------------
The PRC has stated its ambitions to lead in ``the
formulation of general energy internet standards, cross-
industry public standards and important technical standards
that are coordinated with smart cities.'' \460\ State Grid has
``attached great importance to the development of international
standards and Chinese electric engineering technologies and
standards to become international standards so as to improve[e]
the influence and say of China.'' \461\ To that end, the former
chairman of State Grid\462\ and current chairman of China
Huaneng Group, \463\ one of China's largest electricity
generating companies, Dr. Shu Yinbiao, was also installed as
president of the International Electrotechnical Commission
(IEC) in 2020.\464\ The IEC is ``the leading global
organization that publishes consensus-based international
standards and manages conformity assessment systems for
electric and electronic products, systems and services.'' \465\
---------------------------------------------------------------------------
\460\ ``News Release: Uphold Multilaterism and Jointly Build Human
Community with Shared Future.'' Peoples Republic of China National
Development and Reform Commission, 24 Sep. 2020, https://bit.ly/
2JL15ML.
\461\ ``International Standards.'' State Grid Corporation of China,
https://bit.ly/2I2TkkV.
\462\ ``Shu Yinbiao.'' World Economic Forum, www.weforum.org/
people/shu-yinbiao.
\463\ ``IEC Officers.'' International Electrotechnical Commission,
www.iec.ch/about/profile/officers.htm.
\464\ Note also that three of the IEC's eight ``ambassadors'' are
representatives of major Chinese entities and their interests: Huawei,
CHINT Group, and the China Information Security Certification Center.
See: ``IEC Ambassadors.'' International Electrotechnical Commission,
https://bit.ly/2GA5fpq.
\465\ ``What we do.'' International Electrotechnical Commission,
https://www.iec.ch/about/activities/?ref=menu.
---------------------------------------------------------------------------
While still chairman of State Grid and then an IEC vice-
president, Dr. Shu stated that ``during the last ten years,
along with the rapid development of Chinese technology, more
and more of our technical standards have been adopted as IEC
International Standards.'' \466\ Many of the new standards are
in UHV transmission. The Argonne National Laboratory warns that
``the potential internationalization of China's domestic UHV
standards will almost certainly affect the global market share
for both Chinese manufacturers and dominant multinational
companies.'' \467\
---------------------------------------------------------------------------
\466\ Shu, Yinbiao. ``IEC Global Visions - State Grid Corporation
of China: Sharing Know-How--Advancing Progress.'' Global Visions,
International Electrotechnical Commission, https://bit.ly/3n101T8.
\467\ ``Power Play: China's Ultra-High Voltage Technology and
Global Standards.'' Paulson Papers on Standards, The Paulson Institute,
Apr. 2015, https://bit.ly/32kS5UO.
---------------------------------------------------------------------------
Security and Political Leverage
While Russian dominance of gas pipelines in Europe has long
been a deep concern for many on both sides of the Atlantic,
continent-wide electric power transmission, or supergrids, may
soon be a real possibility and point of concern.\468\ Like oil
and gas pipelines, the parties that control the energy and its
transmission will be in a very powerful position. This requires
substantial U.S. and European vigilance of PRC control in this
area. Already, government reports in the Philippines have
warned that their state electricity grid, which is partially
run by State Grid, can be shut down on the Chinese government's
orders and ``disrupt national power systems.'' \469\ The
Brookings Institution's Tom Stefanick writes:
---------------------------------------------------------------------------
\468\ ``What is a Supergrid?'' The Economist, 17 Jan. 2020, https:/
/econ.st/2U1hVsD.
\469\ Griffiths, James. ``China can shut off the Philippines' power
grid at any time, leaked report warns.'' CNN, 26 Nov. 2019, https://
www.cnn.com/2019/11/25/asia/philippines-china-power-grid-intl-hnk/
index.html.
[O]perat[ion of] continental-scale power networks
requires tight integration of massive high-voltage
generators, transformers, and cables on the one hand,
and precision real-time sensing, synchronization, and
control on the other. Data networks are critical to
enabling human and automated control of power grids
through devices often referred to as supervisory
control and data acquisition (SCADA) systems.\470\
---------------------------------------------------------------------------
\470\ Stefanick, Tom. ``Secure power: Gigawatts, Geopolitics, and
China's Energy Internet.'' Global China, The Brookings Institution,
Apr. 2020, https://brook.gs/3mXASZG.
Indeed, the Cyberspace Administration of China's vision for
a ``ubiquitous power Internet of Things'' as ``the application
of modern information technologies such as mobile Internet and
artificial intelligence to realize the interconnection of
everything in the power system'' is representative of the
policy guidance that directs and informs State Grid's endeavors
to connect electrical grids to the Internet of Things.\471\
With this aim in mind, State Grid is now in the top twenty of
companies filing artificial intelligence patents with the World
Intellectual Property Organization, and is the clear leader in
patent filings for ``energy management.'' \472\
---------------------------------------------------------------------------
\471\ Rengong zhineng rang dianwang bian `` congming'' le''
[Artificial Intelligence Makes the Power Grid `Smart' ''], Cyberspace
Administration of China, 26 Jul. 2019, https://bit.ly/3eASRCf.
\472\ ``WIPO Technology Trends 2019: Artificial Intelligence.''
Technology Trends 2019, World Intellectual Property Organization, 2019,
https://bit.ly/2Idw5Ec.
---------------------------------------------------------------------------
Today's less advanced, but computer-run technologies have
already shown themselves to be vulnerable to state-sponsored
infiltration or shutdown. Russian attacks temporarily took down
parts of Ukraine's transmission grid in 2015 and 2016 and were
only saved from serious damage by manual backups and analog
relays.\473\ Should State Grid--or another state-controlled
actor like it--come to control large swathes of international
power grids, the geopolitical consequences could be severe. In
the internet-powered supergrids of the future, argues Phillip
Cornell, ``even if local grids are independently operated, deep
interconnection means that supply and demand will increasingly
be matched across the super-grid, making them more
interdependent.'' \474\
---------------------------------------------------------------------------
\473\ Greenberg, Andy. ``How an Entire Nation Became Russia's Test
Lab for Cyberwar.'' Wired, Conde Nast, 20 Jun. 2017, www.wired.com/
story/russian-hackers-attack-ukraine/.
\474\ Cornell, Phillip. ``Energy Governance and China's Bid for
Global Grid Integration.'' EnergySource, Atlantic Council, 05 Sept.
2019, https://bit.ly/3p24Ayp.
---------------------------------------------------------------------------
While the rules contained in the EU's Third Energy
Package\475\ may provide some protection in Europe, and
investment screening rules in both the United States and
European nations may prove effective, a growing Chinese-
controlled UHV grid is a distinct possibility. The Global
Energy Interconnection Development and Cooperation
Organization, established by State Grid, states its goal is to
see the construction of power grid interconnection between Asia
and Europe\476\ and envisions at least four projects touching
Europe by 2035.\477\ Control over international power grids may
begin to affect the political choices of nations that become
dependent on the PRC or State Grid for their energy needs. More
worrisome, said Yobun Inoue of Japan's Institute of Energy
Economics, ``Getting hold of power grids gives [State Grid] a
lot of information about a country's energy supply and
demand.'' \478\ PRC access to such information could inform
China's energy investment decisions.
---------------------------------------------------------------------------
\475\ ``Third Energy Package - Energy European Commission.''
Energy, European Commission, 16 Mar. 2020, https://ec.europa.eu/energy/
topics/markets-and-consumers/market-legislation/third-energy-package--
en.
\476\ Research Report on the Belt and Road Energy Interconnection.
Global Energy Interconnection Development and Cooperation Organizations
(GEIDCO), Apr. 2019, https://bit.ly/2Ickbuw. Powerpoint Presentation.
\477\ Ibid, slide 18.
\478\ Okutsu, Akane and Cliff Venzon and CK Tan. "China's Belt and
Road power grids keep security critics awake." Nikkei Asia, 03 Mar.
2020, https://asia.nikkei.com/Spotlight/Asia-Insight/China-s-Belt-and-
Road-power-grids-keep-security-critics-awake.
---------------------------------------------------------------------------
In the nuclear arena, as in other areas, the PRC is likely
to take a page from the Russian textbook and its state-owned
nuclear firm RosAtom, and begin building nuclear plants as part
of larger coercive diplomatic packages.\479\ Unlike private
companies, PRC SOEs can afford to bankroll civil nuclear
projects that might not be profitable for private companies and
can provide further sweeteners to close deals. As China is not
a member of the Organization for Economic Cooperation and
Development, PRC companies are also not held to the agreed
rules on chargeable interest rates and loan tenor.\480\
---------------------------------------------------------------------------
\479\ Thoburn, Hannah. ``Russia building nuclear reactors - and
influence - around the globe.'' Reuters, 05 May 2015, https://
www.reuters.com/article/thoburn-rosatom/column-russia-building-nuclear-
reactors-and-influence-around-the-globe-idUSL1N0XW1U320150505.
\480\ ``Trade And Agriculture Directorate Participants To The
Arrangement On Officially Supported Export Credits.'' Organisation for
Economic Co-Operation and Development, 15 Jan. 2020, p. 1-15,https://
bit.ly/2GBiWo5.
---------------------------------------------------------------------------
Confronting These Challenges
Recognizing these dangers, the German government in 2018
acted in extraordinary circumstances to prevent State Grid from
purchasing 20 percent of 50Hertz, a large utility in
Germany.\481\ Although the percentage of potential purchase was
below the 25 percent threshold then needed to trigger
investment screening procedures, the German government utilized
its state investment bank KfW to purchase the shares and keep
them out of PRC hands.\482\ But this scenario has been--until
now--relatively rare. Sellers tend to take the best offer, and
often, that comes from China and state-backed companies. As the
United States and Europe have not traditionally engaged in the
kind of state-supported enterprise purchases that Beijing
supports, we must develop a joint strategy for how to contend
with the risks of purchases of key utilities or industries.
Market decisions now have to be calculated with a political
risk factor that was once not necessary.
---------------------------------------------------------------------------
\481\ Braw, Elisabeth. ``Chinese Acquisitions of Western Firms
Threaten National Security.'' Foreign Policy, 24 Aug. 2020, https://
foreignpolicy.com/2020/08/24/chinese-acquisitions-of-western-firms-
threaten-national-security/.
\482\ ``KfW acquires temporary stake in German TSO 50Hertz on
behalf of the Federation.'' The Federal Government of Germany Federal
Ministry of Finance, 27 Jul. 2018, https://
www.bundesfinanzministerium.de/Content/EN/Pressemitteilungen/2018/2018-
07-27-50-Hertz.html.
---------------------------------------------------------------------------
Awareness of the dangers inherent in super-connected power
grids is also growing. A recently-passed law in the United
States takes the first steps towards protecting the American
electric grid from cyber-attacks. The law mandates a study,
currently underway, on the efficacy of replacing some key
points of digital infrastructure with physical, unhackable
infrastructure.\483\ A new approach pioneered by Idaho National
Labs, called the ``consequence-driven, cyber-informed
engineering methodology,'' requires utility operators to
``identif[y] the most essential processes and functions and
then reduc[e] or eliminate[e] the digital pathways attackers
could use to reach them.'' \484\ Creating these ``gaps'' in the
grid can either buy time to stop a hack or diminish the
severity of one. The United States has also banned the further
use and import of ``bulk-power system electrical equipment''
with ties to ``a foreign adversary.'' \485\ As grids around the
world grow more interconnected and more tied to the internet,
the European Union and individual nations should examine
similar steps.
---------------------------------------------------------------------------
\483\ ``Risch, King Bill Protecting Energy Grid from Cyberattacks
Becomes Law.'' Office of Senator James Risch, 23 Dec. 2019, https://
bit.ly/3lcxXvS.
\484\ Bochman, Andy. ``Internet Insecurity.'' The End of
Cybersecurity, Harvard Business Review, Harvard Business Publishing,
May 2018, https://hbr.org/cover-story/2018/05/internet-insecurity.
\485\ ``Executive Order 13920: Securing the United States Bulk-
Power System.'' Federal Register, Executive Office of the President, 01
May 2020, https://bit.ly/2TZmcN1.
---------------------------------------------------------------------------
Ports and Shipping
Overview
China's port investments--though extending back several
decades--have taken on a new significance as a critical element
of the Maritime Silk Road, the maritime part of OBOR.\486\
Ports are, in effect, the first stepping stone to the rest of
OBOR, linking PRC companies, goods, and services to other forms
of transport infrastructure. This provides overseas markets to
the PRC and economic opportunities for host countries. However,
port investments also serve clear strategic purposes that
should cause concern for the United States and Europe. Ports
provide PRC access to strategic locations, thereby helping the
People's Liberation Army Navy (PLAN) project power further
afield and increase PRC influence globally. Alongside PRC
consideration of establishing overt military bases, commercial
port investments present a significant challenge for the U.S.
military today, could have a greater impact on NATO access and
planning in the future, and could complicate efforts by the
United States and Europe seeking to deepen engagement in Africa
and the Indo-Pacific. A second and more immediate challenge is
the use of untrusted technology in this highly sensitive
sector, aiding intelligence gathering opportunities and
potentially providing access to commercially sensitive
information as well.
---------------------------------------------------------------------------
\486\ Thorne, Devin and Ben Spevack. Harbored Ambitions: How
China's Port Investments are Strategically Reshaping the Indo-Pacific.
C4ADS, 2018, p. 10, https://bit.ly/355puEX.
---------------------------------------------------------------------------
Addressing these challenges will require long-term
cooperation between the United States and Europe. This is
particularly true now that PRC port investments are a global
enterprise. In the Indo-Pacific region, PRC companies have
markedly stepped up investments along strategic sea routes in
places like Cambodia, Myanmar, Malaysia, Indonesia, and Sri
Lanka.\487\ In sub-Saharan Africa, PRC companies are involved
in 46 ports, operating 11 of them.\488\ PRC companies have
stakes in five of the top 10 European ports by container
volume.\489\ In the United States, PRC state-owned enterprises
have stakes in ports at Los Angeles and Seattle.\490\ A COSCO
Shipping Corporation Limited (COSCO) subsidiary recently sold
its stake in the Port of Long Beach, California, as part of a
deal with the Departments of Homeland Security and Justice,
which both raised security concerns about the investment.\491\
---------------------------------------------------------------------------
\487\ Ibid.
\488\ Devermont, Judd. ``Assessing the Risks of Chinese Investments
in Sub-Saharan African Ports.'' Center for Strategic and International
Studies, 04 Jun. 2019, https://www.csis.org/analysis/assessing-risks-
chinese-investments-sub-saharan-african-ports.
\489\ Petkova, Mirela and Frans-Paul Van der Putten. ``Building the
`Belt and Road' in Europe? Chinese construction companies and transport
infrastructure in the European Union.'' Clingendael Institute, Apr.
2020, p. 3-4, https://bit.ly/355yyK8.
\490\ Haire, Chris. ``Chinese company to sell Long Beach Container
Terminal for $1.78 billion.'' Long Beach Press-Telegram, 01 May 2019,
https://www.presstelegram.com/2019/04/30/chinese-company-to-sell-long-
beach-container-terminal-for-1-78-billion/; And Gallagher, John.
``Experts warn of China's influence at U.S. ports.'' Freight Waves, 22
Oct. 2019, https://www.freightwaves.com/news/experts-warn-of-chinas-
influence-at-us-ports.
\491\ Yiu, Enoch. ``US Security Concerns Force Cosco-Owned Orient
Overseas to Sell Long Beach Port in California.'' South China Morning
Post, 01 May 2019, https://bit.ly/369WNWN.
---------------------------------------------------------------------------
Economic Challenges
PRC port investment has resulted in economic benefits. For
example, the throughput at the Port of Piraeus increased 200
percent from 2007 to 2017 under the management of COSCO,
benefitting the port and certainly benefitting COSCO
itself.\492\ However, European observers have pointed to long-
term economic detriments, as well. In its January 2020 report
on the economic challenges OBOR presents to European companies,
the EU Chamber of Commerce noted: ``[T]he greatest concern is
the emergence of the still-growing SASAC [China's State-owned
Assets Supervision and Administration Commission of the State
Council] monopoly of the shipping sector's value chain, as it
raises serious questions about how global competition can be
maintained and casts the maritime aspect of the BRI [Belt and
Road Initiative] in a grim light.'' \493\ European shipping
giants are not competing against individual SOEs but rather
against SASAC, which is overseeing industry consolidation
across the maritime value chain, as well as a variety of
government subsidies to help SOEs compete globally.\494\
---------------------------------------------------------------------------
\492\ Van der Putten, Frans-Paul. ``European seaports and Chinese
strategic influence: The relevance of the Maritime Silk Road for the
Netherlands.'' Clingendael Institute, Dec. 2010, p. 14-15, https://
www.clingendael.org/publication/european-seaports-and-chinese-
strategic-influence-0.
\493\ The Road Less Travelled: European Involvement in China's Belt
and Road Initiative. European Union Chamber of Commerce in China, Jan.
2020, p. 21, https://bit.ly/2I462Qt.
\494\ Ibid, p. 21.
---------------------------------------------------------------------------
Two of the largest state-owned firms involved in port
investment, operation, and management are the aforementioned
COSCO and China Merchants Port Holdings Co. (CMPort). As of
2020, COSCO had an operating and management role at 36 ports
worldwide, and CMPort's portfolio spans 41 ports in 25
countries.\495\ Ports are simply one piece of COSCO and
CMPort's expanding role across global maritime supply chains.
CMPort's parent company is now the world's largest port and
logistics company, and COSCO the world's third largest shipping
firm.\496\
---------------------------------------------------------------------------
\495\ ``About CSP Corporate Profile.'' COSCO Shipping Ports
Limited, 2020, https://ports.coscoshipping.com/en/AboutCSP/
CorporateProfile/Overview/; ``Zhaoshang ju gangkou knoggu youxian
gongsi'' ``[Company Profile],'' China Merchants Port Holdings Co. Ltd.,
23 Sep. 2020, www.cmport.com.hk/EN/about/Profile.aspx?from=2.
\496\ Blanchette, Jude, et al. ``Hidden Harbors: China's State-
backed Shipping Industry.'' CSIS Briefs, Center for Strategic and
International Studies, Jul. 2020, p. 1, https://bit.ly/2TYFa6y.
---------------------------------------------------------------------------
SOEs are found throughout the maritime supply chain, and
are receiving direct and indirect subsidies, state-backed
financing, and other non-market forms of support.\497\ Analysis
of the shipping and shipbuilding industries by the Center for
Strategic and International Studies, for example, found that
these companies received $127 billion in state-backed financing
from 2010 to 2018, and about $5 billion in direct subsidies.
The authors note that this is likely a ``conservative
estimate,'' given the data does not include potential indirect
subsidies, state-backed fundraising, preferential borrowing,
barriers to foreign competitors in the PRC market, advantages
garnered via SASAC's consolidation policies, and forced
technology transfer and intellectual property theft.\498\
---------------------------------------------------------------------------
\497\ The Road Less Travelled: European Involvement in China's Belt
and Road Initiative. European Union Chamber of Commerce in China, Jan.
2020, p. 21, https://bit.ly/2I462Qt
\498\ Blanchette, Jude, et al. ``Hidden Harbors: China's State-
backed Shipping Industry.'' CSIS Briefs, Center for Strategic and
International Studies, Jul. 2020, p. 6, https://bit.ly/2TYFa6y.
---------------------------------------------------------------------------
Security Risks
The link between OBOR and the PRC's aspirations for its
military is becoming more direct. Former CCP General Secretary
Hu Jintao was the first to prioritize China becoming a ``strong
maritime country,'' and current CCP General Secretary Xi
Jinping was the first to connect China's overseas development
and economic goals (particularly via OBOR) more explicitly to
its security goals.\499\ In January 2019, Xi emphasized
completing a ``security system'' for OBOR, so as to
``strengthen protection of [China's] interests and ensure the
security of major overseas projects.'' \500\
---------------------------------------------------------------------------
\499\ Duchatel , Mathieu and Alexandre Sheldon Duplaix. ``Blue
China: Navigating the Maritime Silk Road to Europe.'' Policy Brief,
European Council on Foreign Relations, Apr. 2018, p. 3, https://bit.ly/
354Elzk.
\500\ As quoted in Sbragia, Chad. ``Statement.'' Hearing on China's
Maritime Silk Road Initiative, U.S. House Committee on Transportation
and Infrastructure Subcommittee On Coast Guard And Maritime
Transportation, 17 Oct. 2019, p. 4, https://bit.ly/3eGFMYc.
---------------------------------------------------------------------------
China's definition of a ``strong maritime country''
includes a ``powerful navy,'' and the desired posture for its
navy has also evolved significantly in the last decade.\501\
While it formerly emphasized a focus on ``offshore defense,''
it has now expanded to stress the importance of ``far seas
protection,'' in part to safeguard China's overseas
interests.\502\ As China's 2019 defense white paper states,
China is ``build[ing] far seas forces,'' ``develop[ing]
overseas logistical facilities,'' ``conduct[ing] vessel
protection operations,'' and ``maintain[ing] the security of
strategic SLOCs [sea lines of communication],'' among other
tasks.\503\ Various PRC publications, including the 2013
Science of Military Strategy, note the importance of
``strategic strong points,'' a term that has been used to mean
construction of overseas ports in strategic locations or places
that can support military bases.\504\
---------------------------------------------------------------------------
\501\ Duchatel , Mathieu and Alexandre Sheldon Duplaix. ``Blue
China: Navigating the Maritime Silk Road to Europe.'' Policy Brief,
European Council on Foreign Relations, Apr. 2018, p. 8, https://bit.ly/
354Elzk.
\502\ Ibid, p. 28.
\503\ Erickson, Andrew S. Full Text of 2019 Defense White Paper:
`China's National Defense in the New Era'. The State Council
Information Office of the People's Republic of China, 24 Jul. 2019,
www.andrewerickson.com/2019/07/full-text-of-defense-white-paper-chinas-
national-defense-in-the-new-era-english-chinese-versions.
\504\ Kennedy, Conor. ``Strategic Strong Points and Chinese Naval
Strategy.'' China Brief, vol. 19, no. 6, 22 Mar. 2019. Jamestown
Foundation, https://jamestown.org/program/strategic-strong-points-and-
chinese-naval-strategy.
---------------------------------------------------------------------------
The need for a greater naval presence to defend overseas
interests--and to construct logistics and support nodes for the
military--is a noticeable theme in the writings of Chinese
security researchers.\505\ As researchers from Institut
Montaigne--referring to China's new military base in Djibouti--
note, ``Since Djibouti, the Chinese strategic community takes
for granted that the People's Liberation Army (PLA)--and
especially the navy--is building a logistical support network
to ensure the success of future operations to protect Chinese
overseas interests.'' \506\ For example, they cite PRC scholars
who, concerned by growing U.S.-India ties, recommend ``the
construction of multi-level shipping supply bases along the
Indian Ocean coast'' to protect overseas interests, including
supplying a navy to undertake operations further afield.\507\
---------------------------------------------------------------------------
\505\ Xue, Guifang (Julia). ``The Potential Dual Use of Support
Facilities in the Belt and Road Initiative.'' Securing the Belt and
Road Initiative: China's Evolving Military Engagement Along the Silk
Roads, special report no. 80, National Bureau of Asian Research, Sep.
2019, p. 54, https://www.nbr.org/product/special-report-no-80-securing-
the-belt-and-road-initiative-chinas-evolving-military-engagement-along-
the-silk-roads/.
\506\ Duchatel, Mathieu. ``Introduction.'' China's Port Investment:
The Flag Behind the Trade, China Trends, Institut Montaigne, Jun. 2019,
p. 1, https://bit.ly/2GBkPBb. See also: Kennedy, Conor. ``Strategic
Strong Points and Chinese Naval Strategy.'' China Brief, vol. 19, no.
6, 22 Mar. 2019. Jamestown Foundation, https://jamestown.org/program/
strategic-strong-points-and-chinese-naval-strategy.
\507\ Stanzel, Angela. ``China's String of Ports in the Indian
Ocean.'' China's Port Investment: The Flag Behind the Trade, China
Trends, Institut Montaigne, Jun. 2019, p. 4, https://
www.institutmontaigne.org/documents/china-trends/China-trends-2-print-
web.pdf.
---------------------------------------------------------------------------
China is likely to pursue a mix of overseas bases and dual-
use support facilities, with commercial ports serving as a key
enabler for the latter. Rather than military-only facilities,
Shanghai-based scholar Xue Guifang notes that China ``favors
the commercial model (the development of ports purely for
commercial use) and the dual-use model (the development of
commercial ports with the potential to serve military
functions).'' \508\ In particular, ``where it enjoys close ties
to the host country, China may gradually select some overseas
commercial ports for dual use to project power.'' \509\ A new
report co-authored by former U.S. Assistant Secretary of State
Daniel Russel cautions that ``Beijing appears to seek ports
with terminals capable of supporting various types of PLA
military operations. This includes high-standard Ro-Ro [roll-
on/roll-off] features to unload heavier than normal cargo (e.g.
armored vehicles), berth depths that are at least 10 meters (to
accommodate warships), cold storage facilities, assembly sites,
and heavy-duty reinforced access roads.'' \510\
---------------------------------------------------------------------------
\508\ Xue, Guifang (Julia). ``The Potential Dual Use of Support
Facilities in the Belt and Road Initiative.'' Securing the Belt and
Road Initiative: China's Evolving Military Engagement Along the Silk
Roads, special report no. 80, National Bureau of Asian Research, Sep.
2019, p. 53-54, https://www.nbr.org/product/special-report-no-80-
securing-the-belt-and-road-initiative-chinas-evolving-military-
engagement-along-the-silk-roads/.
\509\ Ibid, p. 54.
\510\ Russel, Daniel R., and Blake H. Berger. Weaponizing the Belt
and Road Initiative. Asia Society Policy Institute, Sep. 2020, p. 19,
https://bit.ly/2I2tUE3.
---------------------------------------------------------------------------
The same PRC SOEs involved in port operation and shipping
already provide logistics support to the PLA. That role could
grow as China's overseas interests increase and the PLA expands
its operations further afield. COSCO, CMPort, and their
subsidiaries have supported the PLA in recent years through
transport missions, underway fuel replenishment, and
participation in exercises to move entire combat units (both
troops and equipment).\511\
---------------------------------------------------------------------------
\511\ Kennedy, Conor. ``Civil Transport in PLA Power Projection.''
China Maritime Report, no. 4, U.S. Naval War College, p. 9, 11, 12,
https://bit.ly/32mFb94. And Peltier, Chad. ``China's Logistics
Capabilities for Expeditionary Operations.'' Jane's, 2019, p. 51,
https://bit.ly/3p9Fqy8.
---------------------------------------------------------------------------
This support is in fact required by law. China's 2010
National Defense Mobilization Law calls for ``combining
peacetime production with wartime production'' and mandates
that ``any organization or individual has the obligation to
accept the expropriation of civil resources in accordance with
the law.'' \512\ Key objectives of the 2017 Law of the People's
Republic of China on National Defense Transportation include
``promoting the development of military and civilian
integration in the transportation field'' and ``guaranteeing
smooth progress for national defense activities.'' \513\ It
allows the PRC government to ``expropriate'' civilian transport
resources for national purposes.\514\ China also instituted
``Technical Standards for New Civilian Ships to Implement
National Defense Requirements'' in 2015, for vessels to ``serve
national defense needs if they are mobilized.'' \515\
---------------------------------------------------------------------------
\512\ ``Zhonghua renmin gongheguo guofang dongyuan fa: yu di shiyi
jie quanguo renmin daibiao dahui changwu weiyuanhui di shisan ci huiyi
tongguo'' [The National Defense Mobilization Law of the People's
Republic of China: Adopted at the 13th Meeting of the Standing
Committee of the 11th National People's Congress],'' 26 Feb. 2010
https://bit.ly/36h5Vc1, as quoted in: Russel, Daniel R., and Blake H.
Berger. Weaponizing the Belt and Road Initiative. Asia Society Policy
Institute, Sep. 2020, p. 18, https://bit.ly/2I2tUE3.
\513\ Law of the Peoples Republic of China on National Defense
Transportation. Panyue, Huang, editor, Chinese Ministry of National
Defense, 03 Mar. 2017, https://bit.ly/3kadiXM.
\514\ Ibid.
\515\ Thorne, Devin and Ben Spevack. Harbored Ambitions: How
China's Port Investments are Strategically Reshaping the Indo-Pacific.
C4ADS, 2018, p. 23, https://bit.ly/3p5svNG. And Zhao Lei. ``New rules
mean ships can be used by military.'' China Daily, 18 Jun. 2015,
https://bit.ly/3mXf7Jq.
---------------------------------------------------------------------------
The extent to which China can leverage its port investments
and its global shipping assets for military purposes depends on
several factors. First is China's relationship with the host
government, and the extent to which China has leverage over
that government. In this context, China's port investments in
the Indo-Pacific and Africa are of far greater concern than its
European investments. Second, the degree of operational control
over a given port is also important. As military analyst Isaac
Kardon puts it, ``Majority or sole ownership of the port
operator is the condition that best positions a firm to
guarantee logistical support for naval operations.'' \516\
Where PRC firms do hold operational control in Europe, this
could present a more immediate risk to core transatlantic
interests than ports in other regions. Third are potential
logistical impediments to the ability of the PLA to use ports,
such as commercial firms not yet properly trained and equipped
to support the PLA effectively, ports not being built to
military specifications despite existing regulations, and
difficulties for commercial ports to procure materials the PLA
might need.\517\
---------------------------------------------------------------------------
\516\ Kardon, Isaac B. ``Panel II: China's Development of
Expeditionary Capabilities: ``Bases and Access Points.'' Chinese
Military Power Projection and U.S. National Interests, U.S.-China
Economic and Security Review Commission, 20 Feb. 2020, p. 3, https://
bit.ly/38wC1DJ.
\517\ Ibid, p. 7-8.
---------------------------------------------------------------------------
Implications for the United States and Europe
The United States and Europe should be concerned about
China's port investments for several reasons. First, ports
where PRC companies have ownership, a managerial role, or
physical presence could be exploited by the PRC government to
conduct intelligence gathering activities. Access to data
tracking movement of goods and ships could provide immense
commercial advantages, and ports can become a platform for
observing the U.S. and other militaries.\518\ In particular,
the PRC's development of `smart ports' is ushering in the use
of untrusted vendors for the technological components of port
operation, which present cyber and data security risks.\519\ As
one example, PRC company Nuctech increasingly supplies critical
equipment necessary for efficient port operations, such as
cargo scanners and data integration tools. Nuctech technology
is also present in airports across Europe and is used by
customs and police around the world.\520\ Nuctech has grabbed
large chunks of market share in Europe through unfair economic
practices. According to research in a new edited volume by Didi
Kirsten Tatlow and William D. Hannas, the company's success is
underpinned by a state-supported effort to acquire cargo
container screening technologies from European companies in
1980s and 1990s. After the project was prioritized in China's
8th Five Year Plan, Tsinghua University was tasked with
conducting the necessary research to copy the technology.\521\
Today, Nuctech underbids its competitors across Europe and
donates products to key OBOR countries, including in Eastern
Europe.\522\
---------------------------------------------------------------------------
\518\ Russel, Daniel R., and Blake H. Berger. Weaponizing the Belt
and Road Initiative. Asia Society Policy Institute, Sep. 2020, p. 35,
https://bit.ly/38jH5Lu.
\519\ Ibid.
\520\ Cerulus, Laruens. ``Meet the Huawei of airport security.''
Politico Europe, 11 Feb. 2020, https://www.politico.eu/article/beijing-
scanners-europe-nuctech/. And Ren Xiaojin. ``China's 'Silicon Valley'
applies tech prowess to Belt and Road.'' China Daily, 17 May 2017,
https://bit.ly/32lUKhd
\521\ Tatlow, Didi Kirsten, Hinnerk Feldwisch-Drentrup and Ryan
Fedasiuk. ``Europe: A technology transfer mosaic.'' China's Quest for
Foreign Technology: Beyond Espionage, Hannas, William D. and Didi
Kirsten Tatlow, editors, Routledge, 2020, p. 213-214, https://bit.ly/
32m8qsr.
\522\ ``Zhongguo yuanzhu a'er baniya haiguan jiance shebei jiaojie
yishi zai du la si gangkou juxing'' [``Handover ceremony of China-
bought Albanian customs monitoring equipment held at Port of Durres''].
Embassy of the People's Republic of China in the Republic of Albania,
15 Apr. 2008, http://al.china-embassy.org/chn/zagx/zajw/t514030.htm.
And ``Belarus' Customs gets technical aid from China.'' Belarusian
Telegraph Agency, 16 May 2019, https://bit.ly/38jmpTN.
---------------------------------------------------------------------------
Nuctech's parent company Tsinghua Tongfang has ties to the
PLA. Company documents tout Tsinghua Tongfang's role in
advancing ``the national strategy of military-civil fusion,
encircling both the military and civilian markets,'' and its
other portfolio holdings include a company that supplies
command and control systems to the PLA.\523\ Tsinghua Tongfang
itself is owned by state-owned China National Nuclear
Corporation--a defense conglomerate also with significant ties
to the PLA.\524\ Member of European Parliament Axel Voss has
sounded the alarm on Nuctech's presence in European airports,
and maritime ports should receive similar attention given U.S.
and European economic dependence on maritime trade.\525\
---------------------------------------------------------------------------
\523\ Tongfang report. 2018, http://pdf.dfcfw.com/pdf/H2--
AN201904251322616010--1.PDF, as cited in Tatlow, Didi Kirsten, Hinnerk
Feldwisch-Drentrup and Ryan Fedasiuk. ``Europe: A technology transfer
mosaic.'' China's Quest for Foreign Technology: Beyond Espionage,
Hannas, William D. and Didi Kirsten Tatlow, editors, Routledge, 2020, p
212, 215, https://bit.ly/32m8qsr.
\524\ ``DOD Releases List of Additional Companies, in Accordance
with Section 1237 of FY99 NDAA.'' U.S. Department of Defense, 28 Aug.
2020, https://bit.ly/36rqwe7.
\525\ Cerulus, Laurens. ``Meet the Huawei of airport security.''
Politico Europe, 11 Feb. 2020, https://www.politico.eu/article/beijing-
scanners-europe-nuctech/.
---------------------------------------------------------------------------
Second, ports operated by PRC companies could lead to
greater PLA access and facilitate the PLAN's power projection
capabilities further afield. The Pentagon has noted that these
ports could allow the PLA to ``pre-position the necessary
logistics support to sustain naval deployments in waters as
distant as the Indian Ocean, Mediterranean Sea, and Atlantic
Ocean to protect its growing interests.'' \526\ As discussed
above, the tight links between commercial shipping companies
and the PLAN could provide the latter with access to onshore or
open water refueling, resupply, and other forms of
support.\527\ Greater PLA presence in and access to these
waterways certainly concern the United States given its
military presence in the Indo-Pacific region. However, European
nations' growing interest in protecting freedom of navigation
shows that these developments could have a more direct impact
on European economic and security interests as well.\528\
---------------------------------------------------------------------------
\526\ Military and Security Developments Involving the People's
Republic of China 2020: Annual Report to Congress. Department of
Defense, Sep. 2020, p. 128-129, https://bit.ly/3lajH6x.
\527\ Russel, Daniel R., and Blake H. Berger. Weaponizing the Belt
and Road Initiative. Asia Society Policy Institute, Sep. 2020, p. 23,
https://bit.ly/2GLh8sU.
\528\ French Strategy in the Indo-Pacific: ``For An Inclusive Indo-
Pacific'' Republic of France Ministry of Foreign Affairs, Aug. 2019, p.
1, https://bit.ly/3n0WvbB. And Policy guidelines for the Indo-Pacific
region: Germany--Europe--Asia: shaping the 21st century together. The
Federal Government of Germany Federal Foreign Office, Sep. 2020, p. 8,
https://bit.ly/35c2eW1. And ``Partnership Interoperability
Initiative.'' North Atlantic Treaty Organization, 12 Jun. 2020, https:/
/bit.ly/2U5PdH5.
---------------------------------------------------------------------------
A third and related concern is the potential thwarting or
denial of U.S. or allied access to ports where PRC companies
have operational control. Even absent an explicit denial, the
United States and its allies could perceive that espionage or
other risks are too high to utilize a specific port. Further,
increasingly limited safe options for port access will
complicate military planning and operations.\529\
---------------------------------------------------------------------------
\529\ For further discussion, see Russel, Daniel R., and Blake H.
Berger. Weaponizing the Belt and Road Initiative. Asia Society Policy
Institute, Sep. 2020, p. 38-40, https://bit.ly/36em7uF.
---------------------------------------------------------------------------
The transatlantic alliance via NATO and the European Union
must work together to encourage significant caution surrounding
PRC port investments, and seek to limit these investments
(particularly at strategic locations) and evaluate the security
implications of current PRC presence, especially where that
confers operational and managerial control. NATO can start by
identifying and prioritizing PRC presence in European ports
that could increase operational risks and complicate military
planning, as well as by conducting a deep assessment of the
implications of untrusted technologies in ports. The latter
issue will also require significant outreach to the private
sector.
The United States and European partners like the United
Kingdom and France should also focus on PRC port investment in
the Indo-Pacific and Africa, and its implications for deeper
transatlantic engagement and security cooperation in both of
these regions. U.S. scholars have pointed to numerous port
projects in the Indo-Pacific--from Gwadar in Pakistan to Koh
Kong in Cambodia--which could support the PLA's power
projection in the Indo-Pacific and assist it in overcoming key
military challenges like being boxed in by strategic
chokepoints such as the Strait of Malacca.\530\ In the longer-
term, the United States and Europe should be watchful of the
PRC establishing a more overt military presence in both of
these regions. The U.S. Department of Defense assesses that the
PLA has considered basing in a variety of African and Indo-
Pacific nations in which the U.S. and European nations have a
strong interest, including Thailand, Singapore, Indonesia, Sri
Lanka, Kenya, Seychelles, and Angola.\531\
---------------------------------------------------------------------------
\530\ Thorne, Devin and Ben Spevack. Harbored Ambitions: How
China's Port Investments are Strategically Reshaping the Indo-Pacific.
C4ADS, 2018, https://bit.ly/32oYDlC.
\531\ Military and Security Developments Involving the People's
Republic of China 2020. Department of Defense, Sep. 2020, p. 129,
bit.ly/3lajH6x.
---------------------------------------------------------------------------
Undersea Cables
Overview
Undersea fiber optic cables are a crucial and irreplaceable
form of critical digital infrastructure. These cables carry $10
trillion in global business transactions per day, and at least
95 percent of total digital communications.\532\ With ever-
greater demand for more bandwidth-intensive online activities
like video streaming, and the advent of cloud computing and the
Internet of Things, the imperative for a reliable and redundant
system of undersea cables will only continue to increase.\533\
In today's market, PRC company Hengtong Group is becoming a
stronger competitor to traditional players, especially through
its subsidiary Huawei Marine. A more dominant market position
could create dependency on PRC-built undersea cables, posing a
significant cyber and data security threat. In the longer-term,
China could use these cables to advance undersea sensors and
acoustic networks to track submarines and other targets. It is
imperative that the United States and Europe--particularly
through NATO--begin to focus on the implications of PRC
investment in this critical technology.
---------------------------------------------------------------------------
\532\ Sanger, David E. and Eric Schmitt. ``Russian Ships Near Data
Cables Are Too Close for U.S. Comfort.'' New York Times, 25 Oct. 2015,
https://nyti.ms/3p7R5xl. And Strategic Importance of, and dependence
on, undersea cables. NATO Cooperative Cyber Defense Center of
Excellence, Nov. 2019, https://bit.ly/38rPpbZ. And Knapp, Brandon.
``How exposed deep-sea cables could leave the economy vulnerable to a
Russian attack.'' DefenseNews, 01 Feb. 2018, https://bit.ly/356iUhw.
And Birnbaum, Michael. ``Russian submarines are prowling around vital
undersea cables. It's making NATO nervous.'' The Washington Post, 22
Dec. 2017, https://wapo.st/3mztAeA.
\533\ Dean, Benjamin C. Transatlantic Cyber-Insecurity and
Cybercrime: Economic Impact and Future Prospects. European
Parliamentary Research Service, Dec. 2017, p. 36, https://bit.ly/
35eGDwd.
---------------------------------------------------------------------------
Undersea Cables and the Digital Silk Road
Undersea cables are a core focus of the PRC's Digital Silk
Road (DSR), which aims to advance ``China-centric'' digital
transformation globally and facilitate the PRC's emergence as
the global leader in information and communications technology
by constructing and investing in digital infrastructure abroad,
as well as promoting greater reliance on PRC technology
companies.\534\ PRC strategic acquisitions and investments
abroad will in turn help it to develop advanced technologies
for its own global economic and military power--not only
undersea cables, but also satellite-navigation systems,
artificial intelligence, and quantum computing.\535\ Undersea
cables--followed by construction of a data center and cloud
infrastructure--are a vital first step for DSR implementation
because they allow for greater ``interconnection and
intercommunication with the national network infrastructures
along OBOR.'' \536\
---------------------------------------------------------------------------
\534\ The Digital Silk Road Initiative: Wiring Global IT and
Telecommunications to Advance Beijing's Global Ambitions. Pointe Bello,
Jan. 2019, p. 7-8, https://bit.ly/2TVa6o7 And Dekker, Brigitte, et al.
Unpacking China's Digital Silk Road. Clingendael, 2020, https://bit.ly/
2IcKGQc. And Cheney, Clayton. ``China's Digital Silk Road: Strategic
Technological Competition and Exporting Political Illiberalism.'' Net
Politics. Council on Foreign Relations, 26 Sep. 2019, https://
on.cfr.org/3evKkjT
\535\ Cheney, Clayton. ``China's Digital Silk Road: Strategic
Technological Competition and Exporting Political Illiberalism.'' Net
Politics, Council on Foreign Relations, 26 Sep. 2019, https://
www.cfr.org/blog/chinas-digital-silk-road-strategic-technological-
competition-and-exporting-political.
\536\ ``Create `Online Silk Road' and Promote the Development of
`One Belt, One Road'--Part Four of the Interpretation of `The National
Informatization Plan of the 13th Five-Year Plan' '' Website of the
China Academy of Information and Communications Technology (CAICT),
Ministry of Industry and Information Technology (MIIT), 05 Jan. 2017,
http://www.caict.ac.cn/kxyj/caictgd/201804/t20180428--159428.htm as
quoted in The Digital Silk Road Initiative: Wiring Global IT and
Telecommunications to Advance Beijing's Global Ambitions. Pointe Bello,
2019, p. 19, https://a.storyblok.com/f/58650/x/0c5c298009/pointe-bello-
digital-silk-road-2019.pdf.
---------------------------------------------------------------------------
State-owned telecommunications firms China Mobile, China
Telecom, and China Unicom are major investors in fiber-optic
cable consortiums.\537\ However, the bigger shift is that PRC
firms are playing a greater role in the construction,
ownership, and operation of subsea cables, gaining on the
market's three established players: SubCom (U.S.), Alcatel
Submarine Networks (EU), and NEC (Japan). The key PRC player is
Hengtong Group and its subsidiaries, including Huawei Marine
(purchased from Huawei last year) and Hengtong Marine.\538\ A
minor player only a decade ago, Huawei Marine's market share
was projected to grow to 20 percent by the end of 2019 (up from
7 percent during 2012-2015).\539\ Its growth is further
evidenced by its move into more complex and geographically
disbursed cable projects. Competitors claim that this
increasingly global reach is abetted by substantial subsidies
from the PRC government.\540\ The European Commission in
September 2020 opened an anti-dumping investigation into
optical fiber cables from China, of which Hengtong is a major
supplier.\541\
---------------------------------------------------------------------------
\537\ The Digital Silk Road Initiative: Wiring Global IT and
Telecommunications to Advance Beijing's Global Ambitions, Pointe Bello,
2019, p. 22-23, https://a.storyblok.com/f/58650/x/0c5c298009/pointe-
bello-digital-silk-road-2019.pdf.
\538\ ``Profile.'' Smart Ocean System, https://bit.ly/3l242WN.
\539\ Huang, Eli. ``China's Cable Strategy: Exploring Global
Undersea Dominance.'' RealClearDefense, 04 Dec. 2017, https://bit.ly/
34ZhqWc.
\540\ Stavridis, James. ``China's Next Naval Target Is the
Internet's Underwater Cables.'' Bloomberg, 08 Apr. 2019, https://
www.bloomberg.com/opinion/articles/2019-04-09/china-spying-the-
internet-s-underwater-cables-are-next.
\541\ ``EU launches investigation into Chinese optical fibre cable
imports.'' Reuters, 24 Sep. 2020, https://www.reuters.com/article/eu-
china-digital/eu-launches-investigation-into-chinese-optical-fibre-
cable-imports-idUSKCN26F2AB.
---------------------------------------------------------------------------
PRC Cable Projects
When it comes to the integrity of undersea cables, the
United States and Europe have traditionally been far more
focused on the threat posed by Russia. Throughout the Cold War,
and even in recent years, the United States and Europe have
been alert to the risk of Russia's large submarine fleet
tapping these cables, or seeking to locate vulnerable and hard-
to-reach stretches of cable to cut in the event of conflict.
Russia remains a significant threat: in 2015, the New York
Times reported sightings of a Russian surveillance ship
equipped with deep water vehicles near a known cable route off
the U.S. East Coast.\542\
---------------------------------------------------------------------------
\542\ Sanger, David E. and Eric Schmitt. ``Russian Ships Near Data
Cables Are Too Close for U.S. Comfort.'' New York Times, 25 Oct. 2015,
https://nyti.ms/3l2N4b0.
---------------------------------------------------------------------------
Russia has undertaken such operations for years. In
reference to the Russian threat, former U.K. Chief of Defence
Staff General Lord Nicholas Houghton said, ``[W]e should not
fall victim of our own lack of imagination when assessing this
threat.'' \543\ The United States and Europe should also not
make this mistake when it comes to China. It is important that
the transatlantic community get ahead of this issue, especially
as Hengtong Group gains ground in the market. Rather than the
threat of military sabotage familiar to NATO, this threat is
driven by a potentially serious commercial competitor that--in
gaining a greater market position--could impact the security of
sensitive data and assist the PLA. This is a new challenge for
NATO in the area of undersea cables.
---------------------------------------------------------------------------
\543\ See the back cover of the following report: Sunak, Rishi.
Undersea Cables: Indispensable, insecure. Policy Exchange, 2017,
https://policyexchange.org.uk/wp-content/uploads/2017/11/Undersea-
Cables.pdf.
---------------------------------------------------------------------------
Huawei Marine is exploring several major projects with
touchpoints in Europe.\544\ However, none cover the geographic
distance and number of important landing points of the Pakistan
East Africa Connecting Europe (PEACE) Cable currently under
construction. The PEACE Cable starts in Gwadar and Karachi,
Pakistan, and transits through various sites in Africa to land
in Marseilles, France.\545\ PEACE Cable International, owned by
Hengtong Group, is leading the consortium for this cable, with
Hengtong Marine and Huawei Marine supplying the cable's
infrastructure. The cable is explicitly tied to OBOR. Sun
Xiaohua, the Chief Operating Officer of PEACE Cable
International said the project is intended ``to serve Chinese
enterprises along on the ``One Belt, One Road'' initiative
corridor as large scale Chinese investment in Africa, such as
Djibouti [sic].'' \546\
---------------------------------------------------------------------------
\544\ PEACE Cable, described in this chapter, is the most
significant. One proposed project is Arctic Connect, spearheaded by
Cinia, a state-owned Finnish cable owner and operator, with
construction by Huawei Marine. Arctic Connect would link Northern
Europe first to Russia and Asia via the Northern Sea Route, and aligns
with China's interest in advancing a greater presence in the Arctic.
For an overview of this case study, see: Juris, Frank. ``Handing over
infrastructure for China's strategic objectives: `Arctic Connect' and
the Digital Silk Road in the Arctic.'' Sinopsis, 03 Jul. 2020, https://
sinopsis.cz/en/arctic-digital-silk-road/.
\545\ ``Projects.'' Smart Ocean System, http://
www.hengtongmarine.com/index.php/cases/cases.html.
\546\ ``PEACE Cable, The Carrier's Cable.'' PEACE, 29 Nov. 2018,
http://www.peacecable.net/news/Detail/16600.
HengTong Marine
An overland cable from the PRC to Gwadar and Karachi in
Pakistan--where PEACE Cable starts--became operational in July
2020.\547\ This combination of land- and sea-based cables could
provide direct connections for China to places like Gwadar
(home to a PRC-owned port of potential dual-use) and Djibouti
(which hosts its only overseas military base). Such connections
could be useful to the PRC government even if the cable is not
commercially successful.\548\ This cable also marks a huge
transition for Hengtong and its subsidiaries into becoming
truly global players. As Sun puts it, ``We see the PEACE
project as a strategic pivot for the HENGTONG Group to further
expand as a subsea cable investor and we look forward to
identifying new investment opportunities in this market.''
\549\
---------------------------------------------------------------------------
\547\ ``Pak-China fiber optic cable becomes operational: CEN.'' The
Nation, 19 Jul. 2020, https://nation.com.pk/19-Jul-2020/pak-china-
fiber-optic-cable-becomes-operational-cen.
\548\ Hillman, Jonathan. The Emperor's New Road: China and the
Project of the Century, Yale University Press, 2020, p 175.
\549\ ``PEACE heads to the south of Africa.'' PEACE, 22 Jan. 2020,
http://peace-cable.com/News/Detail/16618.
---------------------------------------------------------------------------
As with Huawei and 5G networks, the growing presence of PRC
firms in undersea cables presents risks that the United States
and Europe--particularly NATO allies--should not ignore. An
immediate risk is to data and cybersecurity, and the use of
cables for intelligence gathering. Cables can be tapped in
order to monitor and intercept data, deny service, and other
actions. U.S. and European intelligence services have engaged
in these practices, such as a multi-year cable tapping
operation by the United States targeting Soviet cables.\550\ In
that case, the United States installed tapping equipment at sea
with U.S. Navy divers, a very difficult undertaking.\551\
However, the role of PRC companies in cable construction and
operation provides an opportunity to install equipment during
the manufacturing or installation process that do not require
later insertions.\552\ Though some industry experts have
questioned the feasibility of gleaning data undetected, the
U.S. Director of National Intelligence assesses that ``a well
designed fiber network can experience a wide variety of
anomalies with no data loss or network warnings detected in the
network monitoring system.'' \553\
---------------------------------------------------------------------------
\550\ Juris, Frank. ``Handing over infrastructure for China's
strategic objectives: `Arctic Connect' and the Digital Silk Road in the
Arctic.'' Sinopsis, AcaMedia z.--., 03 Jul. 2020, p. 8, https://
sinopsis.cz/en/arctic-digital-silk-road/.
\551\ Ibid, 8.
\552\ Schadlow and Helwig. And Page, Jeremy and Kate O'Keeffe.
``America's Undersea Battle With China for Control of the Global
Internet Grid.'' Wall Street Journal, 12 Mar. 2019, https://
www.wsj.com/articles/u-s-takes-on-chinas-huawei-in-undersea-battle-
over-the-global-internet-grid-11552407466.
\553\ Page and O'Keeffe. And Threats to Undersea Cable
Communications. Office of the Director of National Intelligence, 28
Sept. 2017, p. 22, https://www.dni.gov/files/PE/Documents/1---2017-AEP-
Threats-to-Undersea-Cable-Communications.pdf. This same DNI report did
note that cable system operators interviewed had ``not knowingly
experienced cable system disruptions due to vendor selection,
international supply chain issues, or cyber-related incidents.''
However, the industry participants all acknowledged ``the changes
occurring in the industry and the potential for new and increasing
threats.'' (p. 16)
---------------------------------------------------------------------------
Indeed, Hengtong will have access to the entire cable
network through its joint venture with Lighthash, which
describes itself as a network and data center operator as well
as a manager of cable spectrum and capacity services.\554\ As
U.K. Parliamentarian Rishi Sunak (currently serving as the
Chancellor of the Exchequer) writes, the ``network management
systems (NMS) employed by cable operators'' is a key
cybersecurity concern because it ``provide[s] centralised
control over the physical components of cable networks.'' \555\
As the cable operator, Lighthash will oversee the physical and
security management of the network, and is in a position to
manage and redirect data flows traveling through the cable. In
most cable projects, the owner and operator sells capacity to
businesses that need it, such as data center operators or cloud
providers. In this case, however, Lighthash itself is a data
center operator and cloud service provider, making Hengtong not
just the builder and operator, but also a key customer.\556\
This model is somewhat unique in the cable market. This
arrangement begs the question of whether the cable will be
commercially successful in the absence of other investors--and
if not, what its purpose will be. Europe earlier confronted the
geopolitically-motivated construction of gas pipelines with no
market justification. We may now be entering a similar
geopolitical dynamic with undersea cables.
---------------------------------------------------------------------------
\554\ ``HENGTONG LightHash.'' LinkedIn, https://bit.ly/369vFHu.
\555\ Sunak, Rishi, ``Undersea Cables: Indispensible, insecure.''
Policy Exchange, 2017, p. 26, https://policyexchange.org.uk/wp-content/
uploads/2017/11/Undersea-Cables.pdf.
\556\ ``HENGTONG LightHash.'' LinkedIn, https://bit.ly/369vFHu. And
``PEACE Cable System, Pakistan * East Africa Connecting Europe.''
HENGTONG LightHash, https://bit.ly/34Ymev5.
---------------------------------------------------------------------------
While Hengtong Group does not dominate today's market for
undersea cables, the company has made significant strides over
the last decade to become the fourth largest player. If PEACE
Cable indeed becomes a gateway to a global role for Hengtong
and subsidiary Huawei Marine, the United States, Europe, and
other allies could find themselves increasingly dependent on
the company's undersea cables for transmitting valuable and
sensitive data of all kinds. For the United States and Europe,
the implications of PRC-built and operated cables landing in
the territories of NATO allies should be an immediate focus. In
the longer-term, and if Hengtong makes headway in places like
Africa and Southeast Asia, the reliance of other security
partners on PRC-built technology could have an impact on U.S.
and European security.
Another long-term concern is the potential use of undersea
cables to deploy a network of underwater sensors and other
observation devices for use by the PRC government and the PLA.
Though these technologies have civilian purposes like
environmental surveying and scientific research, they can also
be used for military purposes--particularly for tracking and
detection of targets like submarines. The PRC recognizes this,
as it began deploying undersea acoustics systems near its own
coastline in 2010 and at its nuclear submarine base.\557\ A
2015 article published by the PRC's State Oceanic
Administration articulated China's ambition to deploy undersea
observation systems in ``the near seas, the depths of the far
seas, and around islands bordering the far seas, as well as in
strategic passages and such areas.'' \558\ State-owned
enterprises like China State Shipbuilding Corporation (CSSC)
and China Electronics Technology Corporation are involved in
major initiatives to build these technologies.\559\ CSSC is
reportedly spearheading a project known among analysts as the
Great Undersea Wall--a constellation of subsea sensors,
unmanned surface vehicles, unmanned underwater vehicles, and
other components to detect and track underwater targets.\560\
---------------------------------------------------------------------------
\557\ Goldstein, Lyle J. ``China Is Building a ``Undersea Great
Wall'' To Take on America in a War.'' The National Interest, 27 Oct.
2019, https://nationalinterest.org/blog/buzz/china- building-undersea-
great-wall-take-america-war-90601.
\558\ Quoted in Goldstein, Lyle J. ``China Is Building a ``Undersea
Great Wall'' To Take on America in a War.'' The National Interest, 27
Oct. 2019, https://nationalinterest.org/blog/buzz/china-building -
undersea-great-wall-take-america-war-90601.
\559\ Dahm, J. Michael. ``Exploring China's Unmanned Ocean
Network.'' Asia Maritime Transparency Initiative,Center for Strategic &
International Studies, 16 Jun. 2020, https://amti.csis.org/exploring-
chinas-unmanned-ocean-network/.
\560\ Nurkin, Tate, et al. ``China's Advanced Weapons Systems.''
Jane's, IHS Markit, 2020, p. 175-176, https://bit.ly/2TUsRrU.
---------------------------------------------------------------------------
Hengtong Group has demonstrable ties to the Chinese
government and the PLA, and is involved in this type of
research. Hengtong's founder and current chairman of the board
served in the PLA, and since 2013 has served as a deputy to the
National People's Congress.\561\ In 2016, Hengtong--along with
the PLA Naval University of Engineering, Zhongtian Technology
Submarine Cable Co., Ltd. (ZTT), and Beijing University of
Posts and Telecommunications--formed the Underwater Optical
Network Joint Laboratory to conduct research on undersea
optical fibers and improve their domestic production.\562\ The
PRC government has reportedly lauded Hengtong as an embodiment
of ``civil-military integration,'' and partner ZTT is also
active in advancing ``military-civil fusion.'' \563\ Multiple
Hengtong subsidiaries have research initiatives with Tongji
University in Shanghai on applying undersea observation
networks to civilian and military uses.\564\ The U.S.
Department of Commerce added Tongji University to its
Unverified List in 2019 when it was unable to conduct end use
controls for commercial exports.\565\
---------------------------------------------------------------------------
\561\ Hillman, Jonathan. ``Sale of Huawei's underseas cables could
leave risks unaddressed.'' Axios, 04 June 2020, https://www.axios.com/
sale-of-huaweis-underseas-cables-could-leave-risks-unaddressed-
388845c5-efa8-413d-95d2-06fe93de9c06.html. And ``Deputies interviewed
before closing meeting of 2nd session of 13th NPC.'' Xinhua, 15 Mar.
2019, http://english.www.gov.cn/news/photos/2019/03/15/content--
281476563391760.htm. And ``Functions and Powers of the NPC.'' The
National People's Congress of the People's Republic of China, http://
www.npc.gov.cn/englishnpc/c2846/201903/
b149298c33b24f1e8aaa7b8b0e45fa77.shtml.
\562\ 562 Hillman, Jonathan. ``Sale of Huawei's underseas cables
could leave risks unaddressed.'' Axios, 04 June 2020, https://bit.ly/
3p0NH7n. And ``Beijing University of Posts and Telecommunications.''
China Defense Universities Tracker, Australian Strategic Policy
Institute, 17 Nov. 2019, https://unitracker.aspi.org.au/universities/
beijing-university-of-posts-and-telecommunications/. And ``BRIEF-
Hengtong Optic-Electric unit to jointly set up underwater optical
network joint laboratory.'' Reuters, 01 Nov. 2016, https://reut.rs/
32gUK1M.
\563\ Hillman, Jonathan. ``Sale of Huawei's underseas cables could
leave risks unaddressed.'' Axios, 04 June 2020, https://bit.ly/2ImNAlv.
And The Digital Silk Road Initiative: Wiring Global IT and
Telecommunications to Advance Beijing's Global Ambitions. Point Bello,
2019, p. 23-25, https://bit.ly/3ld3620.
\564\ Juris, Frank. ``Handing over infrastructure for China's
strategic objectives: `Arctic Connect' and the Digital Silk Road in the
Arctic.'' Sinopsis, AcaMedia z.--., 03 Jul. 2020, p. 15, https://
sinopsis.cz/en/arctic-digital-silk-road/.
\565\ Ibid. And ``Revisions to the Unverified List (UVL).'' Federal
Register, 11 Apr. 2019, https://www.federalregister.gov/documents/2019/
04/11/2019-07211/revisions-to-the-unverified-list-uvl.
---------------------------------------------------------------------------
Fellow democracies Australia and Japan share these
concerns. Australia will not allow cables built by untrusted
vendors to land on its shores. It intervened several years ago
to prevent Huawei Marine from supplying an undersea cable from
the Solomon Islands to Australia, and supplied an
alternative.\566\ In another example, the United States, Japan,
and Australia made a counteroffer to convince Papua New Guinea
to abandon an ongoing cable project with Huawei Marine, but
Papua New Guinea turned it down.\567\ India is reportedly
looking to phase Huawei out of its 5G networks following
China's aggressive actions on the Sino-Indian border, and it
likely is similarly unenthusiastic about Huawei Marine-supplied
cables landing on its shores.\568\
---------------------------------------------------------------------------
\566\ ``Solomon Islands drops Chinese tech giant Huawei for
billion-dollar undersea cable, signs Australia.'' South China Morning
Post, 12 Jun. 2018, https://bit.ly/3euPigG. And Packham, Colin.
``Ousting Huawei, Australia finishes laying undersea internet cable for
Pacific allies.'' Reuters, 27 Aug. 2019, https://www.reuters.com/
article/us-australia-pacific-cable/ousting-huawei-australia-finishes-
laying-undersea-internet-cable-for-pacific-allies-idUSKCN1VI08H.
\567\ ``PNG resists pressure, sticks with Huawei.'' RNZ, 28 Nov.
2018, https://bit.ly/32evLwo.
\568\ Chen, Celia. ``India to slowly phase out Huawei and other
Chinese vendors from its telecoms network, FT reports.'' South China
Morning Post, 25 Aug. 2020, https://bit.ly/3p3DCX9.
---------------------------------------------------------------------------
The United States and Europe should initiate discussions on
undersea cables, including through NATO. These discussions
should identify any existing vulnerabilities for NATO with
respect to undersea cables (especially cables supplied by PRC
firms) and discuss how to improve information and intelligence
sharing on PRC involvement in undersea cables.\569\ NATO should
conduct exercises on issues such as testing its preparedness to
operate in an environment where an adversary has access to its
vital data and determine the efficacy of mitigations.\570\
Finally, the United States, Europe, and other democratic allies
(e.g. Australia, Japan, India) should start discussing ways to
contend with potential security challenges arising from PRC
cable builders and operators' growing presence in the market.
---------------------------------------------------------------------------
\569\ Sunak, Rishi. Undersea Cables Indispensible, Insecure, Policy
Exchange, 2017, p. 8, https://policyexchange.org.uk/wp-content/uploads/
2017/11/Undersea-Cables.pdf.
\570\ Ibid, p. 8.
---------------------------------------------------------------------------
Conclusion
To build upon recent steps to safeguard critical
infrastructure and technologies, the United States, the
European Union, and the United Kingdom should continue to work
together on priority sectors and technologies where dependency
or vulnerability on the PRC would have potentially far-reaching
and long-term implications. Power grids and other forms of
energy infrastructure, ports, and undersea cables are three of
these, but other sectors of concern must also be examined.
Coordination should aim to eliminate, limit, or mitigate the
impacts of shared vulnerabilities. Already tighter U.S.-Europe
linkages between agencies focused on investment screening can
be leveraged to focus on these broader challenges. Lastly, NATO
should play a primary role as it increases its attention on
China.
CHAPTER SIX--THE TRANSATLANTIC
ALLIANCE AND AFRICA
----------
We believe that every human being--African, European,
American, you name it--wants similar things. We want
basic security for our families. We want opportunity
and reward for the hard work that we invest in. And we
want the freedom to do whatever we want to do with our
own lives.\571\
---------------------------------------------------------------------------
\571\ Pompeo, Michael R. ``Liberating Africa's Entrepreneurs.''
U.S. Department of State, 19 Feb. 2020, https://www.state.gov/
liberating-africas-entrepreneurs/.
--Michael R. Pompeo, U.S. Secretary of State
Introduction
At times, policymakers on both sides of the Atlantic have a
tendency to view the transatlantic alliance in a narrow
bilateral sense. However, the tectonic demographic, political,
and economic shifts underway across the African continent mean
that our alliance needs to think more broadly. This new reality
has not escaped the attention of malign actors who seek to
undermine Africa's fragile democracies, sow seeds of discord,
and exploit markets to the detriment of the African people and
the national security interests of the alliance. Though the
United States and Europe may have vastly different histories,
priorities, and strategies for engagement on the African
continent, it is imperative that we work in close collaboration
with African partners to help manage these tectonic shifts,
counter malign influence, and promote the growth of healthier,
more stable, democratic societies that share our values and
interests.
Africa Matters
While Asia's growth, in both demographic and economic
terms, has dominated the first part of this century, the second
half will be Africa's to claim.\572\ Over the next two decades,
it is projected that Africa will account for nearly half of
global population growth and, by mid-century, will be home to a
quarter of the world's population.'' \573\ Sixty percent of
Africa's population is currently under the age of 25 with an
overall median age of 20, which stands in stark contrast with
the Organisation for Economic Cooperation and Development's
median age of 42 years.\574\ In 2019, six of the 10 fastest-
growing economies in the world were on the continent.\575\ This
growth is expected to be further bolstered by a young and
rapidly expanding workforce, which will be larger than that of
China and India by 2034 \576\ and will surpass the rest of the
world by 2050.\577\ It may further be driven by rapid
urbanization which, if effectively managed, could deliver high
concentrations of consumers and workers supporting key sectors
and boosting the living standards for tens of millions of
people.\578\
---------------------------------------------------------------------------
\572\ ``Africa is changing so rapidly, it is becoming hard to
ignore.'' The Economist, 26 Mar. 2020, https://www.economist.com/
special-report/2020/03/26/africa-is-changing-so-rapidly-it-is-becoming-
hard-to-ignore.
\573\ Bello-Schunemann, Julia. ``Africa's population boom: burden
or opportunity?'' ISS Today, Institute for Security Studies, https://
issafrica.org/amp/iss-today/africas-population-boom-burden-or-
opportunity.
\574\ Dews, Fred. ``Charts of the Week: Africa's changing
demographics.'' Brookings Now, Brookings Institution, 18 Jan. 2019,
https://www.brookings.edu/blog/brookings-now/2019/01/18/charts-of-the-
week-africas-changing-demographics/amp.
\575\ Signe, Landry, et al. ``Six of the world's 10 fastest-growing
economies are in Africa,'' World Economic Forum, 06 Aug. 2019. https://
bit.ly/365tMLX.
\576\ Leke, Acha, et al. ``These 6 Sectors of Africa's Economy Are
Poised for Growth.'' Harvard Business Review, Harvard Business
Publishing, 20 Sep. 2016, https://bit.ly/3esNqVZ.
\577\ Altenburg, Tilman, et al. ``Foresight Africa: Top Priorities
for the continent in 2019.'' Africa Growth Initiative, Brookings
Institution, 11 Jan. 2019, https://www.brookings.edu/multi-chapter-
report/foresight-africa-top-priorities-for-the-continent-in-2019/.
\578\ By 2050, the continent is expected to have 1.5 billion urban
dwellers--nearly triple its current levels--though it will still be one
of the world's least urbanized geographic regions. By contrast, Europe
is expected to have the largest reduction in urban population, from 13
percent in 2018 to nine percent by 2050. See ``World Urbanization
Prospects: The 2018 Revision.'' United Nations Department of Economic
and Social Affairs Population Division, 2019, https://bit.ly/32ht5xO.
---------------------------------------------------------------------------
By all accounts, Africa's potential for continued and
expanding economic growth is incredible but largely dependent
upon its ability to harness the power of its growing population
and young workforce. Despite decades of progress in reducing
poverty rates, Africa's demographic shifts have increased the
absolute number of people living in extreme poverty and placed
enormous pressure upon African governments struggling to keep
up with rising demand for social services, including for
health, education and skills training, and to create jobs.\579\
An estimated one million Africans enter the job market each
month, but many lack necessary skills and education to compete
for the jobs that are available.\580\ Failure to foster
inclusive economic growth and opportunity in Africa will likely
serve as a catalyst for economic migration--a matter of
particularly high consequence for EU member states.
---------------------------------------------------------------------------
\579\ According to World Bank economist Luc Christiaensen,
``Overall, the proportion of people in Africa living in monetary
poverty has clearly declined, from 54% in 1990 to 41% in 2015.'' A
quoted in: Wilhelm, Jan. ``Africa: More poverty despite economic
growth.'' Deutsche Welle, 19 Mar. 2020, https://www.dw.com/en/africa-
more-poverty-despite-economic-growth/a-52840817. See also Hamel,
Kristofer, et al. ``Poverty in Africa is Falling--But Not Fast
Enough.'' 28 Mar. 2019, Brookings Institution.
\580\ ``Africa is changing so rapidly, it is becoming hard to
ignore.'' The Economist, 26 Mar. 2020, https://www.economist.com/
special-report/2020/03/26/africa-is-changing-so-rapidly-it-is-becoming-
hard-to-ignore.
---------------------------------------------------------------------------
At the same time, realizing Africa's full potential will
also be dependent upon its ability to resolve conflict and
respond to crises--both natural and man-made--which, left
unchecked, will continue to impose a shocking humanitarian toll
and undermine peace, security, and growth throughout the
region. The combination of poverty, hunger, and desperation has
toppled governments, left Africa's young population more
vulnerable to extremism, trafficking, and migration, given rise
to exponentially increased demands for U.S. and European
humanitarian assistance, and challenged the common values and
interests upon which our international system was built.
African nations will continue to become vital determinants
of the world's economic, political, and security developments
well into this century. It is imperative that the United States
and Europe recognize this, reinvigorate their focus on the
continent, and understand that China is already competing
against us.
The China Factor
As Africa undergoes its dramatic transformation, China has
already begun investing in and becoming tied to Africa's
destiny. While contemporary Sino-African relations date to the
late 1950s, trade volumes between China and Africa expanded by
700 percent in the 1990s.\581\ Chinese engagement has only
continued its rapid acceleration. Between 2005 and 2018, China
invested $300 billion on the continent, including $60 billion
pledged by General Secretary Xi Jinping at the 2018 Forum on
China-Africa Co-Operation (FOCAC) Summit.
---------------------------------------------------------------------------
\581\ Antwi-Boateng, Osman. ``New World Order Neo-Colonialism: A
Contextual Comparison of Contemporary China and European Colonization
in Africa.'' Journal of Pan African Studies, vol. 10, no. 2, Apr. 2017.
---------------------------------------------------------------------------
The 2018 FOCAC Summit in Beijing, attended by
representatives from all but one of Africa's 54 countries,\582\
highlighted the depth and breadth of the Sino-African
relationship. It also served as a wake-up call for the United
States and Europe: Chinese engagement on the continent extends
well beyond the corrupt deals and debt-traps upon which much
attention has been focused. China demonstrated that it is ready
to strengthen relationships and deepen its engagement across a
host of economic and development areas in Africa, to an extent
and scale that neither the United States nor Europe has offered
in decades, and has cast itself as a non-interventionist
power.\583\
---------------------------------------------------------------------------
\582\ Sun, Yun. ``China's 2018 financial commitments to Africa:
Adjustment and recalibration.'' Africa in Focus, Brookings Institution,
05 Sep. 2018, https://www.brookings.edu/blog/africa-in-focus/2018/09/
05/chinas-2018-financial-commitments-to-africa-adjustment-and-
recalibration/.
\583\ The ``five-no'' approach touted by President Xi Jinping at
the Focac 2018 Summit in Beijing were: no interference in the
development paths of individual countries; no interference in their
internal affairs; no imposition of China's will; no attachment of
political strings regarding assistance; and no seeking of selfish
political gains in investment and financing cooperation. See: ``China's
`five-no' approach demonstrates real friendship toward Africa: Kenyan
analyst.'' Xinhua, 05 Sep. 2018, https://bit.ly/3excOJW.
---------------------------------------------------------------------------
At the same time, it is important not to oversell Western
and Chinese media portrayals of China's `dominant' presence in
Africa. According to David Dollar at the Brookings Institution,
``Chinese direct investment in Africa was $32 billion at the
end of 2014 . . . representing less than 5 percent of the total
stock of foreign investment on the continent.'' \584\ Further,
the assumption that Africa is saturated with Chinese investment
in infrastructure is ``overblown,'' with the misconception
partly due to ``big but vague deals announced in the press.''
\585\ China will, however, continue to pursue expanded
partnerships in infrastructure development and further support
Africa's nascent industrialization, both of which fortify
Beijing's ever-expanding ``One Belt, One Road'' (OBOR)
initiative. The future of global manufacturing points toward
Africa, with its large, low-wage workforce and increasing
interest in pivoting away from traditional commodity export-
driven economic models. Manufacturing capacity, however, will
require a significant boost in Africa's infrastructure
spending. The People's Republic of China (PRC) and Chinese
companies already are investing heavily in this area, and
reportedly accounted for 62 percent of the market share of
infrastructure construction in 2018.\586\
---------------------------------------------------------------------------
\584\ Dollar, David. China's Engagement with Africa: From Natural
Resources to Human Resources. Brookings Institution John L. Thornton
China Center, 2016, https://brook.gs/3l2390D.
\585\ Dollar, David. China's Engagement with Africa: From Natural
Resources to Human Resources. Brookings Institution John L. Thornton
China Center, 2016, https://brook.gs/3l2390D.
\586\ Moore, W. Gyude. ``A new Cold War is coming, Africa should
not pick sides.'' Mail & Guardian (South Africa), 21 Aug. 2020, https:/
/bit.ly/353f2xU.
---------------------------------------------------------------------------
Reports of China's volume of direct investment in Africa
may be overblown, but the negative effects of its lending model
are not. Under its `tied financing model,' the China
Development Bank, or China Exim Bank, offers loan for
infrastructure projects contingent upon agreement that
construction will be done by pre-selected Chinese firms. This
generally eliminates competitive procurement processes, limits
the ability of U.S., European, or African firms to bid,
undermines transparency, and denies job opportunities for
African engineers and laborers.\587\ Further, because many
Chinese firms working in Africa are state-owned enterprises
(SOEs) or private firms over which the Chinese Communist Party
(CCP) wields significant influence, it is highly likely that
``Beijing directs, encourages, or tolerates their corrupt
behavior, thereby perpetuating a system of corruption in Africa
that harms ordinary Africans.'' \588\
---------------------------------------------------------------------------
\587\ Morris, Scott. ``China in Africa.'' Hearing on China's
Strategic Aims in Africa, U.S.-China Economic and Security Review
Commission, 08 May 2020, https://bit.ly/350UZA0.
\588\ Meservey, Joshua. ``Chinese Corruption in Africa Undermines
Beijing's Rhetoric about Friendship with the Continent.'' Issue Brief,
no. 4895, The Heritage Foundation, 08 Aug. 2018, https://
www.heritage.org/global-politics/report/chinese-corruption-africa-
undermines-beijings-rhetoric-about-friendship-the.
---------------------------------------------------------------------------
PRC-financed and constructed infrastructure projects are
not limited to bridges, roads, and railway systems. They also
include sensitive government buildings, information technology
networks, and systems critical to national security. ``China
has constructed or renovated nearly 200 government buildings,
gifted batches of computers to African governments, and built
``secure'' telecommunications networks that give Beijing the
opportunity for unprecedented surveillance on the continent.''
\589\ A report by the Heritage Foundation in May 2020 provided
further insight into the breadth of China's potential
surveillance reach, including through construction of sensitive
infrastructure and technology systems in 40 of 54 African
countries, arguing that this could pose a threat to the United
States and other democratic countries. The nearly 200 African
government buildings constructed or renovated by Chinese
companies mentioned in the report included 24 presidential or
prime ministerial buildings, 26 legislatures, 19 foreign
ministry buildings, and 32 military or police buildings.\590\
Also of note was the construction of the African Union's (AU)
headquarters in Ethiopia by state-owned China State
Construction Engineering Corporation, followed by the 2018
revelation that China had surveilled and hacked the AU
building's data systems daily for five years.\591\ In addition
to Chinese-built or gifted sensitive telecommunications
networks and equipment to African governments, more than two-
thirds of the 4G networks on which these and wider commercial
systems operate were developed by Chinese telecommunications
giant Huawei.\592\
---------------------------------------------------------------------------
\589\ Gramer, Robbie, et al. ``China's Building Projects in Africa
Are a Spymaster's Dream.'' Foreign Policy, 21 May 2020, https://bit.ly/
2Icc5SI.
\590\ Meservey, Joshua. ``Government Buildings in Africa Are a
Likely Vector for Chinese Spying.'' Backgrounder, no. 3476, The
Heritage Foundation Douglas and Sarah Allison Center for Foreign
Policy, 20 May 2020, https://www.heritage.org/asia/report/government-
buildings-africa-are-likely-vector-chinese-spying.
\591\ Aglionby, John, et al. ``African Union Accuses China of
Hacking Headquarters.'' Financial Times,, 29 Jan. 2018, https://
www.ft.com/content/c26a9214-04f2-11e8-9650-9c0ad2d7c5b5.
\592\ Gramer, Robbie, et al. ``China's Building Projects in Africa
Are a Spymaster's Dream.'' Foreign Policy, 21 May 2020, https://bit.ly/
2Icc5SI.
---------------------------------------------------------------------------
PRC penetration into Africa's sensitive government,
information, and communications technology infrastructure poses
direct threats to both U.S. and European interests. It enables
the CCP to launch influence operations; recruit intelligence
assets at senior levels of African governments; gain insights
into U.S. and European diplomatic strategies, counterterrorism
operations, or joint military exercises; and disadvantage U.S.
and European companies competing for economic opportunities in
Africa.\593\
---------------------------------------------------------------------------
\593\ Meservey, Joshua. ``Government Buildings in Africa Are a
Likely Vector for Chinese Spying.'' Backgrounder, no. 3476, The
Heritage Foundation Douglas and Sarah Allison Center for Foreign
Policy, 20 May 2020, https://www.heritage.org/asia/report/government-
buildings-africa-are-likely-vector-chinese-spying.
---------------------------------------------------------------------------
In addition to threats against U.S. and European interests,
Chinese technology is actively being used by some African
governments to surveil their own citizens and stifle dissent.
In March 2018, for example, the government of Zimbabwe
partnered with CloudWalk Technology to ``begin a large-scale
facial recognition program throughout the country'' that will
be ``primarily used in security and law enforcement.'' The
program is backed by the OBOR initiative.\594\ Technicians from
Huawei ``have in at least two cases, personally helped African
governments spy on their political opponents, including
intercepting their encrypted communications and social media,
and using cell data to track their whereabouts.'' \595\ While
there was no direct evidence linking the Chinese government to
the actions of Huawei employees in these instances, there is
evidence that the Chinese technology giant's personnel made the
surveillance possible. In at least one instance, a government
security official ``said the operation would have been
impossible without the skills of Huawei's technicians'' and
that ``Huawei employees played a direct role in government
efforts to intercept the private communications of opponents.''
\596\
---------------------------------------------------------------------------
\594\ Chutel, Lynsey. ``China is Exporting Facial Recognition
Software to Africa, Expanding its Vast Database.'' Quartz Africa, 25
May 2018, https://qz.com/africa/1287675/china-is-exporting-facial-
recognition-to-africa-ensuring-ai-dominance-through-diversity.
\595\ Parkinson, Joe, et al. ``Huawei Technicians Helped African
Governments Spy on Political Opponents.'' Wall Street Journal, 15 Aug.
2019, https://www.wsj.com/articles/huawei-technicians-helped-african-
governments-spy-on-political-opponents-11565793017.
\596\ Ibid.
---------------------------------------------------------------------------
Chinese government officials have played a pivotal role in
facilitating deals with Huawei by ``attending meetings and
escorting African intelligence officials to the company's
headquarters in Shenzhen.'' \597\ Beyond the obvious commercial
interests at stake, PRC officials recognize the longer-term
benefit of moving African governments closer toward their norms
of governance, in which unfettered electronic surveillance of
citizens is legal and pervasive. For Africa's autocratic
leaders, and even democrats facing emboldened opponents, these
tools are being deployed at an alarming rate.
---------------------------------------------------------------------------
\597\ Parkinson, Joe, et al. ``Huawei Technicians Helped African
Governments Spy on Political Opponents.'' Wall Street Journal, 15 Aug.
2019, https://www.wsj.com/articles/huawei-technicians-helped-african-
governments-spy-on-political-opponents-11565793017.
---------------------------------------------------------------------------
Transatlantic Cooperation in Sub-Saharan Africa \598\
---------------------------------------------------------------------------
\598\ For the purposes of the remainder of this chapter, the use of
``Africa'' refers to Sub-Saharan Africa only.
---------------------------------------------------------------------------
During his opening remarks at a joint Europe-Africa
investment forum in 2018, then-European Commission President
Jean-Claude Juncker astutely noted that ``Africa's future is
also our [European] future.'' \599\ Though U.S. and European
relations with countries in Africa reflect a long and
complicated history, this statement demonstrates notable
progress in the much-needed reorientation of U.S. and European
policy--away from paternalism and toward mutually-advantageous
partnerships, including in areas of trade, development, and
security. Moving forward, it is important that we continue to
recognize Africans as essential partners in their own right,
and to invest in the development of strong institutions that
operate in accordance with the rule of law, accountability and
transparency, and respect for individual freedoms and human
rights.
---------------------------------------------------------------------------
\599\ ``Jean-Claude Juncker: Africa's future will shape Europe's.''
Deutsche Welle, 18 Dec. 2018, https://www.dw.com/en/jean-claude-
juncker-africas-future-will-shape-europes/a-46788746.
---------------------------------------------------------------------------
In December 2018, in recognition of the increasing
importance Africa plays on the world stage, then-National
Security Advisor John Bolton put forward the Trump
Administration's Africa Strategy.\600\ Ambassador Bolton's
presentation highlighted ``three core U.S interests on the
continent'': the advancement of mutually-beneficial trade and
commercial ties based on the principle of reciprocity,
countering threats to security posed by conflict and violent
extremist organizations, and the use of targeted aid to advance
U.S. interests and support African countries on their ``journey
to self-reliance,'' a goal central to the U.S. Agency for
International Development's policy framework.\601\ While the
strategy lays specific markers for the U.S. approach to
engagement with Africa, its implementation is, in effect, a
combination of new bilateral and regional initiatives with the
continuation of decades-old programs.
---------------------------------------------------------------------------
\600\ ``Remarks by National Security Advisor Ambassador John R.
Bolton on the Trump Administration's New Africa Strategy.'' The White
House National Security Council, 13 Dec. 2018, https://
www.whitehouse.gov/briefings-statements/remarks-national-security-
advisor-ambassador-john-r-bolton-trump-administrations-new-africa-
strategy/.
\601\ ``The Journey to Self-Reliance.'' U.S. Agency for
International Development, https://www.usaid.gov/selfreliance.
---------------------------------------------------------------------------
For the past 20 years in Europe, the Cotonou Agreement
\602\ has framed the relationship between the European Union
and Africa. In March 2020, the European Union issued a
communication, ``Towards a Comprehensive Strategy with
Africa,'' to frame a post-Cotonou partnership with Africa,
focused on five areas: access to energy, digital
transformation, sustainable growth and jobs, peace and
governance, and migration and mobility.\603\ The EU
communication has come under scrutiny however, for not
adequately incorporating African priorities or joint AU-EU
recommendations articulated previously through, for example,
the 2017 Abidjan Declaration. Also at play is the manner in
which the African Continental Free Trade Area will factor in
discussions about trade between Africa and Europe, and how
Europe will support intra-African trade. The new partnership
will be the basis for discussion in the next EU-AU Summit.
---------------------------------------------------------------------------
\602\ South Sudan, Africa's newest country, did not sign the
Cotonou Agreement following its independence from Sudan in 2011, and is
the only country that is not a signatory in Sub-Saharan Africa.
\603\ ``Joint Communication to the European Parliament and the
Council Towards a comprehensive strategy with Africa.'' European
Commission High Representative of the Union for Foreign Affairs and
Security Policy, 03 Sep. 2020, https://bit.ly/3l27xwp.
---------------------------------------------------------------------------
Trade, Jobs, and Growth
Both the U.S. and EU strategies prioritize advancing trade
with Africa and using trade as a means to create jobs and
stability on the continent. For example, a new U.S. initiative,
Prosper Africa, is meant to complement and potentially outlive
the African Growth and Opportunity Act (AGOA) as the core U.S.
economic policy toward Africa. AGOA, authorized by Congress in
2005, provides eligible countries duty-free access to U.S.
markets for thousands of products.\604\ Participation in AGOA
has effectively incentivized stronger adherence to the rules-
based system--to include respect for the rule of law and free
market principles--that has helped lift hundreds of millions of
people out of poverty over the past three decades. As the
United States and Europe, through initiatives such as the EU's
World Trade Organization-compatible Economic Partnership
Agreements, pursue next generation trade deals and investment
with African partners, it will be critical to uphold these
principles, provide a counter-balance to China, and view each
other as partners, rather than competitors.
---------------------------------------------------------------------------
\604\ ``African Growth and Opportunity Act (AGOA).'' U.S. Trade
Representative, https://bit.ly/2I5Idan.
---------------------------------------------------------------------------
Security
The United States and Europe have built a strong foundation
for security cooperation in Africa. Today, U.S. and European
partners work with African nations across the continent on
everything from anti-piracy missions in Djibouti \605\ to
combatting violent extremism in Niger, and training security
forces in Kenya.\606\ Additional, sometimes coordinated,
efforts by the United States and Europe in Africa include
support to local security capacity building, and counter-
narcotics and maritime security cooperation. Further, the
United States and Europe provide financial support for and
high-level United Nations (UN) Security Council engagement on
the seven UN peacekeeping missions active in Sub-Saharan
Africa. Africa's growth and development will be dependent on
managing the terror threat and resolving new and long-running
armed conflicts. As the United States, Europe, and African
partners bolster cooperation to combat growing threats, they
must also address the conditions that enable China's predatory
behavior in Africa and how China's increasing engagement in
protection and security-focused activities should be channeled
in a way that supports collective goals.
---------------------------------------------------------------------------
\605\ Melvin, Neil. ``The Foreign Military Presence In the Horn of
Africa Region.'' SIPRI Background Paper, Stockholm International Peace
Research Institute, Apr. 2019, https://bit.ly/350vbUu.
\606\ ``Deployments Africa: The British Army in Africa.'' The
British Army, 2019, https://www.army.mod.uk/deployments/africa/.
---------------------------------------------------------------------------
U.S. and European activities in this area provide short-
term security benefits, but should also be viewed with a long-
term perspective. As Africa rapidly grows in population and
importance, it will be ever more critical that the United
States and Europe invest in new and continuing partnerships. It
is also important that we further provide security assistance
to support our African partners in their ongoing efforts to
combat extremism and manage conflict with professionalism and a
respect for human rights. This is important for our
relationship with our African counterparts. If we fail to do
so, actors like China will be ``unencumbered by international
norms and professional military standards,'' and ``leverage
speed of action and access to economic and security arenas in
many parts of the continent.'' Left unchecked, ``their coercive
and exploitative activities undermine and threaten many African
countries' stability.'' \607\
---------------------------------------------------------------------------
\607\ Townsend, Stephen. ``A secure and stable Africa is an
enduring American interest.'' Hearing to receive testimony on United
States Africa Command and United States Southern Command in review of
the Defense Authorization request for Fiscal Year 2021 and the Future
Years Defense Program, U.S. Senate Committee on Armed Services, 30 Jan.
2020, https://www.africom.mil/document/32925/2020-posture-statement-to-
congress.
---------------------------------------------------------------------------
Development and Civil Society
Both the United States and Europe have recognized the
importance of tackling the challenge of illicit financial flows
and trafficking in humans, weapons, and natural resources to
address even greater threats, such as terrorism, transnational
crime, and rampant corruption. Capacity building and other
support to African law enforcement and financial and justice
sectors is vital. However, neither existing cooperative efforts
nor bilateral actions from the United States and the nations of
Europe are sufficient to address the threats that take
advantage of conflict, weak governance and corrupt systems,
which exist in pockets across Africa. Additionally,
``geopolitical competitors are deploying corruption as a hybrid
weapon: China seeks to win influence in Africa and other parts
of the world dealing with weak governance ... Globally,
corruption-riddled governance drives . . . migration . . . and
drug trafficking, while hindering the ability of . . . border
officials . . . to enforce the law.'' \608\
---------------------------------------------------------------------------
\608\ Bellows, Abigail. Regaining U.S. Global Leadership on
Anticorruption. Carnegie Endowment for International Peace, 01 Jul.
2020, https://carnegieendowment.org/2020/07/01/regaining-u.s.-global-
leadership-on-anticorruption-pub-82170.
---------------------------------------------------------------------------
On development assistance, the European Union boasts that
``together, the European Union and its member states are the
biggest donor to the African continent,'' and the United States
takes pride in being the single largest bilateral donor.\609\
While our rationales and strategies for providing assistance
may come from different perspectives, the economic, social, and
political development of Africa has been a centerpiece of U.S.
and European relations with the continent.
---------------------------------------------------------------------------
\609\ ``Overall European Union support to Africa.'' African Union/
European Union, https://africa-eu-partnership.org/en/about-us/
financing-partnership#.
---------------------------------------------------------------------------
Democracy assistance has long been a pillar of U.S. foreign
policy and foreign assistance. Today, the United States,
alongside our European partners, continues to support the
growth of strong, democratic institutions across the African
continent. Examples include supporting democratic transitions
in Ethiopia and Sudan, working with civil society to engage
citizens ahead of elections in Nigeria, Uganda and Zambia,
providing technical assistance to parliamentary and
constitutional processes in the Gambia and Somalia, and
supporting anti-corruption institutions in the Democratic
Republic of the Congo and independent media in the Central
African Republic.
However, despite shared dedication to the ideals of
democracy, levels of democracy and governance assistance from
both the United States and Europe to Africa have fluctuated
over the last two decades. This is due in part to changing
priorities across administrations and the focus on addressing
more pressing challenges, including those posed by terrorism or
migration.\610\ The focus on addressing the symptoms of these
challenges rather than structural and causal conditions only
limits the development of political and economic systems
conducive to strong and close relations among the United
States, Europe, and our African counterparts. In the words of
one observer, ``If the United States and the other major
bilateral and multilateral donors were to move together toward
a comprehensive strategy that affirms the close linkage between
democracy, good governance, and sound economic management, they
would generate powerful new pressures for countries to deliver
on development as well as democratic freedoms.'' \611\ Such an
effort would provide a solid counterweight to the consistent
external challenges to the development of democracy in Africa,
many perpetuated by malign actors like China and Russia.
---------------------------------------------------------------------------
\610\ Godfrey, Ken and Richard Youngs. Toward a New EU Democracy
Strategy. Carnegie Europe, 17 Sep. 2019, https://carnegieeurope.eu/
2019/09/17/toward-new-eu-democracy-strategy-pub-79844. Working paper.
\611\ Ofusu Debrah, Isaac. ``Why Democracy Promoters Must Pay Close
Attention to Ghana and Africa's Other Growing Democracies.'' The
Southern Voices Network, no. 4, Wilson Center Africa Program, Nov.
2015, https://bit.ly/3l3jhz1.
---------------------------------------------------------------------------
Conclusion
The effects of how the transatlantic community works
together has far reaching implications for the rest of the
world. This is particularly true in Africa, where China is
aggressively working to undermine the principles of democracy,
the rule of law, free trade, open competition, and human
rights. It is in the economic, security and humanitarian
interests of the United States and Europe to provide a
counterbalance to China's malign activities in Africa as our
partners work to manage the tectonic changes that confront
them. There are numerous opportunities to deepen existing
partnerships and open new areas for cooperation, including in
the areas of trade, economic growth, security cooperation, and
democracy and good governance. If the transatlantic alliance is
committed to upholding the foundational principles upon which
we built the international system, we must recognize that
Africa truly does matter.
CHAPTER SEVEN--THE TRANSATLANTIC
ALLIANCE AND THE INDO-PACIFIC
----------
Allies such as the United Kingdom, France, and Canada
play a critical role in maintaining a free and open
Indo-Pacific.\612\
---------------------------------------------------------------------------
\612\ --Indo-Pacific Strategy Report: Preparedness, Partnerships,
and Promoting A Networked Region. U.S. Department of Defense, 01 June
2019, p. 42, https://bit.ly/38eHrTv
_Indo-Pacific Strategy Report, U.S. Department of
Defense, June 2019
Introduction
Over the last 40 years, the Indo-Pacific has become the
world's economic center of gravity. It is home to the two of
the three largest economies (China and Japan), some of the
world's fastest growing economies (especially in Southeast
Asia), more than half the world's population, and some of the
world's most crucial global supply and trade routes.\613\ The
United States conducted $1.8 trillion in two-way trade with the
region in 2018--more than it did with any other region in the
world.\614\ For the European Union, the Association of
Southeast Asian Nations (ASEAN) is its third largest trading
partner outside of Europe, and U.K.-ASEAN trade flows are
growing by double digits.\615\ This region is also home to
advanced democracies like Japan, Australia, New Zealand,
Taiwan, and India that will figure decisively in upholding a
free, open, and rules-based international system. The Indo-
Pacific also features acute security challenges, particularly
China's assertive and coercive actions to seek hegemony in the
region. The degree to which China can dominate the Indo-Pacific
will have a direct impact on its ability to project power
globally.
---------------------------------------------------------------------------
\613\ Brophy, Caitlin and Ferland, Colby. Asia Matters for America
Matters for Asia. East West Center, 2018, https://bit.ly/351dwML.
\614\ Ibid.
\615\ Sotullo, Jorge. ``Fact Sheets on the European Union.''
European Parliament, Nov. 2019, https://www.europarl.europa.eu/
factsheets/en/sheet/183/southeast-asia. And ``UK-ASEAN Factsheet.''
Government of the United Kingdom Foreign, Commonwealth, and Development
Office, 06 Jan. 2020, https://bit.ly/3euS4m6.
---------------------------------------------------------------------------
As a result of the region's growing economic and political
weight, the opportunities presented by robust alliances and
partnerships, and China's more assertive and coercive regional
posture, the United States has determined that the Indo-Pacific
is a top foreign policy priority.
Over the last few years, Europeans too have realized that
political, economic, and security developments in the Indo-
Pacific will have an increasingly greater bearing on their own
interests and have more clearly defined their priorities in the
region.
In 2018, the European Union published a robust strategy for
fostering principles-based economic connectivity between Europe
and Asia, and followed that up with a new partnership on
sustainable connectivity and quality infrastructure with
Japan.\616\ In 2019, France published its own Indo-Pacific
strategy, calling the region ``crucial for global peace and
security, multilateralism, the preservation of global public
goods, and world economic development and trade.'' \617\ With
the publication of Germany's new Indo-Pacific strategy in
September 2020, Foreign Minister Heiko Maas said, ``We are
sending a clear message today: The Indo-Pacific is a priority
of German foreign policy.'' \618\ The U.K.'s forthcoming
Integrated Review on security, defense, development, and
foreign policy is likely to focus significantly on the Indo-
Pacific as the country repositions itself post-Brexit. Other
important European players, including Spain and Sweden, have
also published their own regional strategies for the Asia-
Pacific.\619\
---------------------------------------------------------------------------
\616\ ``Joint Communication to the European Parliament, the
Council, and the European Economic and Social Committee, the Committee
of the Regions and the European Investment Bank: Connecting Europe and
Asia - Building blocks for an EU Strategy.'' European Commission High
Representative of the Union for Foreign Affairs and Security Policy, 19
Sep. 2018, https://bit.ly/3k1ORvF.And ``The Partnership on Sustainable
Connectivity and Quality Infrastructure between Japan and the European
Union.'' Japan Ministry of Foreign Affairs, 2018, https://
www.mofa.go.jp/files/000521432.pdf.
\617\ French Strategy in the Indo-Pacific: ``For An Inclusive Indo-
Pacific,'' Republic of France Ministry of Foreign Affairs, Aug. 2019,
p. 1, https://www.diplomatie.gouv.fr/en/country-files/asia-and-oceania/
the-indo-pacific-region-a-priority-for-france/
#::text=In%20an%20international%20context%20marked,the%20heart%20of%20th
is%20strategy.
\618\ Riedel, Norbert. ``Why Germany is opening a new chapter in
its tie with the Indo-Pacific.'' Straits Times, 19 Sep. 2020, https://
www.straitstimes.com/opinion/why-germany-is-opening-new-chapter-in-its-
ties-with-the-indo-pacific.
\619\ Strategy for Sweden's regional development cooperation in
Asia and the Pacific region, 2016-2021. Government of Sweden Ministry
for Foreign Affairs. https://www.government.se/4a6b76/contentassets/
4be274e3951b4c269553956c442214db/strategy-for-swedens-regional-
development-cooperation-in-asia-and-the-pacific-region-20162021.pdf.
And A Strategic Vision for Spain in Asia, 2018-2022. Government of
Spain Ministry for Foreign Affairs, European Union, and Cooperation,
Feb. 2018, https://bit.ly/3k18uUF.
---------------------------------------------------------------------------
The United States welcomes Europe's greater focus on the
Indo-Pacific, and views Europe as a partner in upholding a free
and open system based on clear and transparent rules. Key
regional actors like Japan, Australia, India, and ASEAN have
also demonstrated their interest in a larger European role and
increasingly hope for, and even expect, greater European
contributions to prosperity, security, and good governance in
the Indo-Pacific.\620\
---------------------------------------------------------------------------
\620\ For a useful discussion of this, see Mohan, Garima. A
European Approach to the Indo-Pacific. Global Public Policy Institute,
Dec. 2019, https://www.gppi.net/media/Mohan--2019--A--European--
Approach--To--The--Indo--Pacific--final.pdf.
---------------------------------------------------------------------------
As both the United States and Europe increasingly
prioritize the Indo-Pacific, transatlantic cooperation is
forming in the region, though much more nascent than in Africa.
Currently, the United States and Europe coordinate diplomatic
messaging, discuss the Indo-Pacific in various policy
dialogues, participate in the region's key institutions, take
separate but mutually supportive actions on important regional
challenges (such as providing humanitarian assistance for
Rohingya refugee camps in Bangladesh), and occasionally conduct
joint military actions. Just one example of this would be the
U.S.-U.K. freedom of navigation operation in the South China
Sea.\621\
---------------------------------------------------------------------------
\621\ Reuters Staff, ``U.S., Britain conduct first joint drills in
contested South China Sea,'' Reuters, 16 Jan. 2019, https://
www.reuters.com/article/us-usa-britain-southchinasea/u-s-britain-
conduct-first-joint-drills-in-contested-south-china-sea-idUSKCN1PA0PV
---------------------------------------------------------------------------
Increased coordination is especially important given the
growing dominance of the People's Republic of China (PRC) in
the Indo-Pacific. Whether through economic coercion and trade
retaliation, encroachment on sources of vitality through
illegal fishing in the South China Sea and damming of the
Mekong River, excessive and illegal maritime claims, the
People's Liberation Army's power projection within and beyond
the First Island Chain, and influence operations to advance
Chinese Communist Party (CCP) narratives in other countries,
China's reach and malign influence is felt acutely by its Indo-
Pacific neighbors. As the PRC aims to reshape the Indo-Pacific
into a region that is deferential to the CCP, coordinated
American and European engagement and cooperation will become
all the more important.
There is clear alignment between our shared principles and
the areas of emphasis in the American and European strategies
and approaches to the region. This foundation could provide a
basis for increasing cooperation on advancing economic growth
and connectivity, upholding regional security, promoting good
governance, and addressing environmental challenges. To do so,
the United States and European nations will have to decide at
the political level at what extent to leverage the
transatlantic relationship to advance a free, open, inclusive,
and rules-based Indo-Pacific region.\622\ At a minimum, the
alliance should ensure it does not duplicate efforts or create
direct conflicts between our goals and actions. This demands a
higher degree of collaboration and cooperation than our
countries have been accustomed to, but as the Indo-Pacific
region experiences dramatic shifts, it is critical that we do
so.
---------------------------------------------------------------------------
\622\ ``Free, open, inclusive, and rules-based'' combines all the
terms described in the United States, French, and German strategies for
the Indo-Pacific.
---------------------------------------------------------------------------
Areas of Potential Cooperation
Private Sector-Led Investment
As Indo-Pacific countries develop, the United States and
Europe share an interest in fostering private sector
investments in emerging markets, including through high-
standard infrastructure projects. Both the United States and
Europe have called for partnerships with other nations on--as
the EU's strategy puts it--``connectivity based on commonly
agreed rules and standards enabling a better governance of
flows of goods, people, capital and services.'' \623\ Both want
to meet demands in emerging markets by ``crowding in'' more
private investment, and both recognize the necessity of
providing technical assistance and support to emerging markets
in areas such as public procurement and protection of
intellectual property rights, generally.\624\ Finally, both the
United States and the European Union call for a particular
focus on energy, transport infrastructure, and the digital
economy.
---------------------------------------------------------------------------
\623\ ``Joint Communication to the European Parliament, the
Council, and the European Economic and Social Committee, the Committee
of the Regions and the European Investment Bank: Connecting Europe and
Asia - Building blocks for an EU Strategy.'' European Commission High
Representative of the Union for Foreign Affairs and Security Policy, 19
Sep. 2018, p. 3, https://bit.ly/3k1ORvF.
\624\ Ibid, p. 10, 12. And A Free and Open Indo-Pacific, U.S.
Department of State, 04 Nov. 2019, p. 16, https://www.state.gov/wp-
content/uploads/2019/11/Free-and- Open-Indo-Pacific-4Nov2019.pdf.
---------------------------------------------------------------------------
Alignment on some of these principles and priorities
already has turned into agreements among development finance
institutions (DFIs), such as the agreement among the U.S.
Development Finance Corporation (DFC), FinDev Canada, and the
European Development Finance Institutions (called the DFI
Alliance) to enhance coordination on ``shared development
objectives,'' the EU's quality infrastructure agreement with
Japan, and the U.S.-Japan-Australia memorandum of understanding
on providing market-based alternatives to state-directed
financing for emerging markets.\625\
---------------------------------------------------------------------------
\625\ ``OPIC Signs MOU Establishing DFI Alliance with key allies.''
U.S. International Development Finance Corporation, 11 Apr. 2019,
https://www.dfc.gov/media/opic-press-releases/opic-signs- mou-
establishing-dfi-alliance-key-allies. And ``US, Japan, Australia Sign
First Trilateral Agreement on Development Finance Collaboration.'' U.S.
International Development Finance Corporation, 12 Nov. 2018, https://
www.dfc.gov/media/opic-press-releases/us-japan- australia-sign-first-
trilateral-agreement-development-finance.
---------------------------------------------------------------------------
The next step is to transform these agreements into
concrete cooperation among U.S., European, and Indo-Pacific
partners to demonstrate the value of private sector-led
investment that is ``sustainable, comprehensive, and rules-
based.'' \626\ \627\ The United States and Europe share this
key goal in the Indo-Pacific, and have the opportunity to
combine and synchronize investments ``into a force
multiplier,'' offering a better chance to demonstrate the
visibility and credibility of private sector-led investment.
This is in stark contrast to the state-directed and often
opaque investments offered by the PRC.\628\
---------------------------------------------------------------------------
\626\ ``Joint Communication to the European Parliament, the
Council, and the European Economic and Social Committee, the Committee
of the Regions and the European Investment Bank: Connecting Europe and
Asia - Building blocks for an EU Strategy.'' European Commission High
Representative of the Union for Foreign Affairs and Security Policy, 19
Sep. 2018, p. 2-3, https://bit.ly/3k1ORvF. And ``Acting OPIC President
and CEO David Bohigian Leads Delegation to Meet with Key Allies.'' U.S.
International Development Finance Corporation, 08 Mar. 2019,https://
www.dfc.gov/media/opic-press-releases/acting-opic- president-and-ceo-
david-bohigian-leads-delegation-meet-key.
\627\ For an overview of bilateral and multilateral development
finance institutions, see: Development Finance Institutions and Private
Sector Development. Organization for Economic Co-operation and
Development, https://www.oecd.org/development/development-finance-
institutions-private-sector-development.htm. OPIC has since been
replaced by the International Development Finance Corporation.
\628\ Mohan, Garima. A European Approach to the Indo-Pacific.
Global Public Policy Institute, Dec. 2019, p. 24, https://bit.ly/
2I9Dbdd. And Runde, Daniel F. and et al. ``Strategic Directions for the
United States International Development Finance Corporation (DFC)
Supporting Development and National Security.'' Center for Strategic
and International Studies, Sep. 2019, p. 24, 32, https://bit.ly/352FqHS
190923--RundeBanduraMurphy--USDFC--WEB.pdf. And Ingram, George, and
Robert A. Mosbacher Jr. ``Development finance: Filling today's funding
gap.'' Blum Roundtable on Global Politics, Brookings Institution, 31
Jul. 2018, https://brook.gs/3p1rHcw.
---------------------------------------------------------------------------
Strengthening the DFI Alliance should be a top priority for
the United States, Europe, and Canada. The DFI Alliance
provides a framework for cooperation on transactions,
operations, policy processes, and public engagements on the
value of DFIs to fostering economic growth.\629\ Key lines of
effort could include policy dialogues that define and scope the
types of projects most ripe for joint financing or cooperation,
improving alignment on standards (using the G-20 standards
agreed to in Japan in 2018 as a starting point), solidifying
data and information sharing, and setting up processes for de-
conflicting investments.\630\ The DFI Alliance should also
advance technical level discussions to address and streamline
obstacles to effective and efficient cooperation, such as
separate due diligence processes and differing documentation
for project applicants to complete.\631\ A 2019 paper by the
Center for Strategic and International Studies offers an
extensive list of cooperative initiatives the DFI Alliance
could pursue, including establishing joint project preparation
facilities, co-financing or co-guarantees, joint technical
assistance, and harmonizing tools and measures to assess
development impact.\632\
---------------------------------------------------------------------------
\629\ ``Memorandum of Understanding on Cooperation Between Overseas
Private Investment Corporation/DFC, European Development Finance
Institutions, And Development Finance Institute Canada (DFIC)
Inc.(``FinDev Canada'').'' U.S. International Development Finance
Corporation, 11 Apr. 2019, p. 2-3, https://bit.ly/38hhx1A.
\630\ ``G20 Principles for Quality Infrastructure Investment,''
Ministry of Foreign Affairs Japan, 2018, https://bit.ly/3p0Rq4R. And
``Memorandum of Understanding on Cooperation Between Overseas Private
Investment Corporation/DFC, European Development Finance Institutions,
And Development Finance Institute Canada (DFIC) Inc.(``FinDev
Canada'').'' U.S. International Development Finance Corporation, 11
Apr. 2019, p. 3, https://bit.ly/38hhx1A. And Runde, Daniel F. and et
al. ``Strategic Directions for the United States International
Development Finance Corporation (DFC) Supporting Development and
National Security. Center for Strategic and International Studies, Sep.
2019, p. 33, https://bit.ly/352FqHS.
\631\ Runde, Daniel F. and et al. ``Strategic Directions for the
United States International Development Finance Corporation (DFC)
Supporting Development and National Security.'' Center for Strategic
and International Studies, Sep. 2019, p. 33, https://bit.ly/352FqHS.
And Ingram, George, and Robert A. Mosbacher Jr. ``Development finance:
Filling today's funding gap.'' Blum Roundtable on Global Politics,
Brookings Institution, 31 Jul. 2018, https://www.brookings.edu/
research/development-finance-filling-todays-funding-gap/.
\632\ Runde, Daniel F. and et al. ``Strategic Directions for the
United States International Development Finance Corporation (DFC)
Supporting Development and National Security.'' Center for Strategic
and International Studies, Sep. 2019, p. 33, https://bit.ly/352FqHS.
---------------------------------------------------------------------------
Disagreements over environmental standards may present a
significant barrier to further cooperation, as European nations
claim U.S. environmental standards are insufficient, a position
the United States disputes. Reconciling these differences will
require sustained transatlantic dialogue. Again, the Osaka G20
principles on infrastructure could provide a starting point.
The United Kingdom, the European Union, and European states
should remain open to joining the Blue Dot Network, an
initiative spearheaded by the United States, Japan, and
Australia that establishes shared standards for infrastructure
development. The United States will continue to invest in
fossil fuel projects given continued demand, but it is also
making significant global investments in renewable energy. Of
the DFC's total active financial commitments to energy
projects, 64 percent of those are for renewable energy, with 36
percent going to fossil fuel projects.\633\ Many developing
country energy plans call for clean and renewable energy built
onto a strong grid baseload reinforced by traditional energy
sources. The United States and Europe are well positioned to
assist these countries in developing such energy sources in an
efficient and environmentally responsible manner, and there
remains ample opportunity for cooperation with European DFIs
that have exited fossil fuels.
---------------------------------------------------------------------------
\633\ U.S. International Development Finance Corporation, as of 30
Jun. 2020.
---------------------------------------------------------------------------
The United States' Indo-Pacific strategy and the EU
connectivity strategy also both emphasize investing in and
strengthening connections among people.\634\ Within the goal of
advancing private sector-led development, the United States and
Europe could consider coordinating certain training for
officials on project development and preparation, open
procurement and tendering processes, developing and managing
project pipelines, and effectively managing key sectors like
energy, transport infrastructure, and digital economy.\635\
This could also include, for example, embedding expert advisors
(at the invitation of host governments) in ministries of
important Indo-Pacific partners. This line of effort should
focus on areas where the United States and Europe can agree on
standards and policy processes, so as to increase fair,
competitive opportunities for private sector actors on both
sides.
---------------------------------------------------------------------------
\634\ ``Joint Communication To The European Parliament, The
Council, The European Economic And Social Committee, The Committee Of
The Regions And The European Investment Bank: Connecting Europe and
Asia--Building blocks for an EU Strategy.'' European Commission High
Representative of the Union for Foreign Affairs and Security Policy, 19
Sep. 2018, p. 6, https://bit.ly/3k1ORvF. And A Free and Open Indo-
Pacific, U.S. Department of State, 04 Nov. 2019, p. 25-28, https://
bit.ly/3p0rmH4.
\635\ Runde, Daniel F. and et al. ``Strategic Directions for the
United States International Development Finance Corporation (DFC)
Supporting Development and National Security.'' Center for Strategic
and International Studies, Sep. 2019, p. 33, https://bit.ly/352FqHS.
---------------------------------------------------------------------------
Legislatures on both sides of the Atlantic must bolster
these efforts, including by demonstrating support for
cooperation among U.S. and European DFIs and highlighting such
cooperation publicly. Legislatures can also signal political
support for DFIs to pursue more creative and challenging
investments in unconventional or ignored developing country
markets. This is important to enable increased visibility and
credibility of U.S. and European private sector-led options,
and counter state-directed options that might present
unacceptable risks to developing countries. Legislatures should
support U.S. and European aid agencies prioritization of
funding for relevant technical assistance programs. In
addition, lawmakers should support preserving the flexibility
of DFIs to make investments according to development and
foreign policy goals that are also consistent with free market
principles and trade obligations.
Maritime Security
The connectivity and open trade that our economies rely
upon is underpinned by security and the preservation of public
goods in the region. Among the greatest challenges to
connectivity and global trade is the PRC's aggressive pursuit
of greater control of critical land routes, sea lanes, and air
space in the Indo-Pacific in the hopes of eventually exercising
greater influence beyond the region. The South China Sea, the
Indian Ocean, and other maritime areas witnessing greater PRC
presence are crucial to commercial activity, energy
exploration, transport, and the exercise of security operations
in areas permitted under international law. Without referencing
China's recent actions specifically, European nations have
increasingly stated their clear interest in maintaining open
sea lanes, trade routes, and supply chains, and their desire to
expand their roles beyond being ``passive trading partners.''
\636\ In its strategy, for example, France seeks to play a
stronger role in mediating disputes in the Indo-Pacific
region.\637\ Germany warns of ``disruption to these maritime
trade routes'' in the region.\638\ Both France and the United
Kingdom have recently stepped up their engagement by
establishing additional defense partnerships and deepening
security cooperation.\639\
---------------------------------------------------------------------------
\636\ Lee Jeong-ho and Keegan Elmer. ``European nations `determined
to stay relevant' in Asia-Pacific, South China Sea.'' South China
Morning Post, 15 Sep. 2019, https://bit.ly/3l3sY0m.
\637\ French Strategy in the Indo-Pacific: ``For An Inclusive Indo-
Pacific'' Republic of France Ministry of Foreign Affairs, Aug. 2019, p.
35, https://bit.ly/2IaW5A1.
\638\ Policy guidelines for the Indo-Pacific region: Germany--
Europe--Asia: shaping the 21st century together. The Federal Government
of Germany Federal Foreign Office, Sep. 2020, p. 9, https://bit.ly/
2U1gPgg.
\639\ For some examples, please see: ``Indo-Pacific Strategies of
U.S. Allies and Partners: Issues for Congress.'' EveryCRSReport, Demand
Progress/Congressional Data Coalition, 30 Jan. 2020, https://
www.everycrsreport.com/reports/R46217.html#--Toc31982453. And Odgaard,
Liselotte. ``European Engagement in the Indo-Pacific: The Interplay
between Institutional and State-Level Naval Diplomacy.'' Asia Policy,
vol. 14, no. 4, The National Bureau of Asian Research, 30 Oct. 2019,
https://bit.ly/32khqP0.
---------------------------------------------------------------------------
Upholding internationally recognized freedom of navigation
rights and promoting maritime security provide a strong
starting point for greater transatlantic cooperation, alongside
other partners like Japan, Australia, and ASEAN member states.
Cooperation and coordination on freedom of navigation and
maritime security training, capacity-building, and exercises
would serve as strong examples of the multilateral engagement
emphasized in European strategies and central to the U.S. Indo-
Pacific strategy.\640\ Providing capabilities and training to
enhance maritime domain awareness, improve information sharing,
exercise sovereignty over one's exclusive economic zones,
increase interoperability in the maritime domain, and other
areas will continue to be a top priority for U.S. security
assistance to the region. Further integrating transatlantic
cooperation into the growing web of partnerships and regional
security could help build a ``flexible, resilient network of
like-minded security partners to address common challenges.''
\641\ Europe's interest in working within multilateral security
forums presents opportunities to partner with ASEAN member
states in concert with the United States, Japan, and Australia.
In addition, as the North Atlantic Treaty Organization (NATO)
examines its response to Chinese actions, building on existing
partnerships between NATO and Indo-Pacific countries should be
a key focus--something Germany's strategy calls for.\642\
---------------------------------------------------------------------------
\640\ A Free and Open Indo-Pacific, U.S. Department of State, 04
Nov. 2019, p. 7-8, https://www.state.gov/wp-content/uploads/2019/11/
Free-and-Open-Indo-Pacific-4Nov2019.pdf.
\641\ Ibid, p. 22.
\642\T3APolicy guidelines for the Indo-Pacific region:
Germany--Europe--Asia: shaping the 21st century together. The Federal
Government of Germany Federal Foreign Office, Sep. 2020, p. 16, 29,
https://bit.ly/2U1gPgg. And ``Partnership Interoperability
Initiative.'' North Atlantic Treaty Organization, 12 Jun. 2020, https:/
/bit.ly/32gP4Fi. And ``Relations with Australia.'' North Atlantic
Treaty Organization, 15 Jun. 2020, https://bit.ly/3ez3zcj. And
``Relations with Japan.'' North Atlantic Treaty Organization, 12 Sep.
2018, https://bit.ly/2TXdHCj.
---------------------------------------------------------------------------
The United Kingdom, France, and Germany each demonstrate
strong and consistent support for international law principles
generally and freedom of navigation rights in the South China
Sea specifically.\643\ The trio recently advocated for freedom
of navigation and maritime claims rooted in international law
at the United Nations (UN), and the French and U.K. navies have
conducted several freedom of navigation operations.\644\ France
also conducts periodic transits of the Taiwan Strait.\645\
Germany's Indo-Pacific strategy emphasizes upholding
international maritime law and ``expanding security and defence
cooperation.'' \646\
---------------------------------------------------------------------------
\643\ ``Joint Statement by France, Germany and the United Kingdom
on the situation in the South China sea today'', Federal Foreign
Office, 29 Aug. 2019. https://bit.ly/3p3HWWn; And: Roy Chaudhury,
Dipanjan. ``France, Germany and UK joins India on safeguarding Freedom
of Navigation in South China Sea'', The Economic Times, 30 Aug. 2019.
https://economictimes.indiatimes.com/news/defence/france-germany-uk-
joins-india-on-safeguarding-freedom-of-navigation-in-south-china-sea/
articleshow/70910429.cms?from=mdr;
\644\ ``Note Verbale'', UK Mission to the UN, 16 Sept. 2020.https:/
/bit.ly/3l0XXdu.; And: ``South China Sea: France and Britain join the
US to oppose China'', Deutsche Welle, 27 June 2018. https://www.dw.com/
en/south-china-sea-france-and-britain-join-the-us-to-oppose-china/a-
44422935.
\645\ ``China accuses France of illegally sailing warship in Taiwan
Strait'', Financial Times,, 25 Apr. 2019.https://www.ft.com/content/
12f4ff22-674d-11e9-9adc-98bf1d35a056.; And Ali, Idrees and Stewart,
Phil. ``Exclusive: In rare move, French warship passes through Taiwan
Strait'', Reuters, 12 Mar. 2018. https://www.reuters.com/article/us-
taiwan-france-warship-exclusive/exclusive-in-rare-move-french-warship-
passes-through-taiwan-strait-idUSKCN1S027E.
\646\ Policy guidelines for the Indo-Pacific region: Germany--
Europe--Asia: shaping the 21st century together. The Federal Government
of Germany Federal Foreign Office, Sep. 2020, p. 8, https://
www.auswaertiges-amt.de/blob/2380514/f9784f7e3b3fa1bd7c5446d274a4169e/
200901-indo-pazifik-leitlinien--1--data.pdf.
---------------------------------------------------------------------------
Good Governance and Human Rights
At the 2019 UN General Assembly, the United States, Canada,
the United Kingdom, Germany, and the Netherlands hosted an
event on Xinjiang, attended by 31 other nations representing
the European Union and the Organization of Islamic
Cooperation.\647\ Legislatures on both sides of the Atlantic
have since pushed through legislation and resolutions on the
horrific human rights abuses being perpetrated by the Chinese
government against Uyghurs and other Muslim minorities, and
American and European leaders continue to call for unfettered
UN access to the province.\648\
---------------------------------------------------------------------------
\647\ Churchill, Owen. ``US calls for UN to demand unfettered
access to China's XinJiang region'', South China Morning Post,, 25
Sept. 2019. https://bit.ly/3eu1ZIN.
\648\ ``France's Macron urges U.N. mission to visit China's
Xinjiang region'', Reuters, 21 Sep. 2020. https://www.reuters.com/
article/us-un-assembly-france-china/frances-macron-urges-u-n-mission-
to-visit-chinas-xinjiang-region-idUSKCN26D2SO.
---------------------------------------------------------------------------
As the Indo-Pacific region figures more prominently in the
transatlantic relationship, the United States and Europe should
identify further opportunities to promote the rule of law,
democratic freedoms, human rights, and good governance in the
region. Shared priorities include: promoting freedom of speech,
assembly, religion, and association; supporting freedom of the
press, including through training for reporters and
investigative journalists; advancing transparency,
accountability, and citizen-responsive governance; combatting
corruption; countering disinformation; promoting human rights
and gender equality; supporting human rights defenders;
building civil society organizations and partnerships among
them; and fostering inclusive economic growth under a rules-
based system.\649\
---------------------------------------------------------------------------
\649\ ``A Free and Open Indo-Pacific,'' U.S. Department of State,
04 Nov. 2019, https://www.state.gov/wp-content/uploads/2019/11/Free-
and-Open-Indo-Pacific-4Nov2019.pdf. And ``EU Annual Report on Human
Rights and Democracy in the World 2019.'' Council of the European
Union, 15 Jun. 2020, https://www.consilium.europa.eu/media/44432/
st08580-en20.pdf.
---------------------------------------------------------------------------
The United States and Europe should use international
organizations and other high-impact forums to highlight
important human rights challenges. U.S. and European embassies
and development organizations could also hold joint events more
regularly in China and other countries. On-the-ground dialogue
and cooperation with each other, including the sharing of best
practices and coordinating or de-conflicting programs, may
become more important if Europe acts to increase its good
governance initiatives in the region. Legislatures should also
strengthen cooperation in this area through hosting joint
events and conducting exchanges and dialogues with regional
counterparts.
Environment
Finally, the Indo-Pacific provides an opportunity for the
United States and Europe to work together on environmental
issues. The United States and Europe may not fully align on
some environmental matters, but can nevertheless agree on
certain specific issues, such as the importance of assisting
developing nations in mitigating against the effects of natural
disasters, increasing responsible management and stewardship of
natural resources, and advancing sustainable forms of energy.
There has been severe environmental degradation by PRC actors
in the region especially over the past few years, through
dredging to construct illegal islands in the South China Sea,
rampant illegal fishing, harmful use of the Mekong River, and
construction of coal-fired power plants across the region,
among other issues.
Both the French and German Indo-Pacific strategies
prioritize climate change and environmental issues, as does
Sweden's 2016 regional development strategy. For France,
``climate, environment and biodiversity'' is one of the three
pillars outlined in its strategy.\650\ Germany's strategy
emphasizes the importance of economic growth in the Indo-
Pacific being ``environmentally friendly and socially
compatible'' and states that ``natural resources must be
managed sustainably.'' \651\
---------------------------------------------------------------------------
\650\ French Strategy in the Indo-Pacific: ``For An Inclusive Indo-
Pacific,'' Republic of France Ministry of Foreign Affairs, Aug. 2019,
p. 5, https://www.diplomatie.gouv.fr/en/country-files/asia-and-oceania/
the-indo-pacific-region-a-priority-for-france/
#::text=In%20an%20international%20context%20marked,the%20heart%20of%20th
is%20strategy.
\651\ Policy guidelines for the Indo-Pacific region: Germany--
Europe--Asia: shaping the 21st century together. The Federal Government
of Germany Federal Foreign Office, Sep. 2020, p. 10, https://
www.auswaertiges-amt.de/blob/2380514/f9784f7e3b3fa1bd7c5446d274a4169e/
200901-indo-pazifik-leitlinien--1--data.pdf.
---------------------------------------------------------------------------
The United States also emphasizes environmental issues in
its Indo-Pacific strategy. The State Department's
Infrastructure Transaction and Assistance Network provides
assistance to help countries evaluate potential infrastructure
projects, including for environmental sustainability.\652\ The
United States engages in capacity building for security forces
to address environmental challenges, an issue that is becoming
more acute given China's environmental degradation in the South
China Sea and along the Mekong River.\653\ The United States
Agency for International Development (USAID) also operates
multiple programs to improve resource management and build
resilience to environmental shocks and stresses throughout the
region. These efforts include: the SEVIR-Mekong program; the
Green Invest Asia initiative; the Green Power Asia initiative;
a broader development portfolio focused on improving energy and
water security; combatting illegal fishing, logging, and
wildlife trafficking; and enhancing forest protection and
management.\654\
---------------------------------------------------------------------------
\652\ A Free and Open Indo-Pacific, U.S. Department of State, 04
Nov. 2019, p. 15, https://www.state.gov/wp-content/uploads/2019/11/
Free-and-Open-Indo-Pacific-4Nov2019.pdf.
\653\ Ibid, p. 22.
\654\ ``Indo-Pacific Region: Improving Natural Resource
Management.'' U.S. Agency for International Development, 28 Aug. 2020,
https://www.usaid.gov/indo-pacific-vision/nrm.
---------------------------------------------------------------------------
To advance their cooperation in this region, the United
States and Europe could coalesce around several concrete areas.
First, the United States and European partners can continue to
invest in energy development in the Indo-Pacific. The DFC is
investing significantly in renewable energy projects in
India.\655\ U.S. assistance provided under the U.S. Department
of State's Asia Enhancing Development and Growth Through Energy
program has mobilized $806 million in public and private sector
financing for 11 renewable energy programs in Indonesia.\656\
The United States also recently established a partnership with
Mekong River countries that will focus, in part, on energy and
water security, and the European Union has provided assistance
to Mekong countries on natural resource management and other
issues over the years.\657\ France is active in providing
energy-related development assistance across Southeast
Asia.\658\ The U.S., U.K., and German governments have come
together to support large-scale grid integration in India.\659\
---------------------------------------------------------------------------
\655\ ``DFC Approves $3.6 Billion of New Investments in Global
Development in Largest Quarter Ever.'' U.S. International Development
Finance Corporation, 09 Sep. 2020, https://bit.ly/2GCH1Lq. And ``OPIC
Board Approves More than $1.3 Billion to Development Projects in
Africa, Indo-Pacific, and Latin America.'' U.S. International
Development Finance Corporation, 13 Dec. 2018, https://www.dfc.gov/
media/opic-press-releases/opic-board-approves-more-13-billion-
development-projects-africa-indo.
\656\ A Free and Open Indo-Pacific, U.S. Department of State, 04
Nov. 2019, p. 17, https://www.state.gov/wp-content/uploads/2019/11/
Free-and-Open-Indo-Pacific-4Nov2019.pdf.
\657\ Pompeo, Michael R. ``The Mekong-U.S. Partnership: The Mekong
Region Deserves Good Partners.'' U.S. Department of State, 14 Sep.
2020, https://bit.ly/3p4ALgW. And Soutullo, Jorge. The Mekong River:
geopolitics over development, hydropower and the environment. European
Parliament Policy Department for External Relations, Nov. 2019, https:/
/bit.ly/32gRMKJ.
\658\ ``Southeast Asia - Activity Report.'' Agence Francaise de
Developpment, Nov. 2019,https://www.afd.fr/en/ressources/southeast-
asia-activity-report?origin=/en/rechercher?query=southeast+asia.
\559\ ``U.S., Germany & U.K. Bolster Support for India's Large-
Scale Grid Integration of Renewable Energy.'' U.S. Agency for
International Development, 04 Sep. 2019, https://bit.ly/368MD8L.
---------------------------------------------------------------------------
A second area could include fostering resilience to
environmental challenges in the Pacific Islands. Germany
specifically highlights this aim in its strategy, and the
United Kingdom and France are also active on this topic.\660\
In May 2019, a joint statement by the United States and the
leaders of the three Federated American States emphasized
cooperation on ``supporting the resiliency of the Pacific
Islands environment.'' \661\ Since then, the United States has
provided further assistance as part of its Pacific Pledge
program for ``disaster resilience, weather forecasting, and to
address environmental challenges.'' \662\ We have a mutual
interest in protecting these islands and all parties should
look for opportunities to work together to tackle these
challenges.
---------------------------------------------------------------------------
\660\ Policy guidelines for the Indo-Pacific region: Germany--
Europe--Asia: shaping the 21st century together. The Federal Government
of Germany Federal Foreign Office, Sep. 2020, p. 7, https://
www.auswaertiges-amt.de/blob/2380514/f9784f7e3b3fa1bd7c5446d274a4169e/
200901-indo-pazifik-leitlinien--1--data.pdf. And: Field, Mark. ``UK
support for Pacific Islands on climate change.'' Pacific Island Forum
in Nauru on `Climate Change--A Key Security Risk', United Kingdom
Foreign & Commonwealth Office, 05 Sep. 2018, p. 7, https://bit.ly/
2JJCYy9.
\661\ ``Joint Statement from the President of the United States and
the Presidents of the Freely Associated States.'' The White House, 21
May 2019, https://bit.ly/3lfKi2p.
\662\ ``U.S. Engagement in the Pacific Islands: UN General Assembly
Update.'' U.S. Department of State, 03 Oct. 2019, https://
www.state.gov/u-s-engagement-in-the-pacific-islands-un-general-
assembly-update/.
---------------------------------------------------------------------------
Third and finally, combatting poaching; illegal wildlife
trade and trafficking; and illegal, underreported, and
unregulated fishing are priorities for both the United States
and Europe. Germany lists some of these areas as priorities in
its strategy, and USAID has existing efforts.\663\ While this
challenge affects countries throughout the region, China is the
largest market for trafficked wildlife goods.\664\ Thus, ending
destructive wildlife trafficking presents an area where the
United States and European countries should work together to
press China to stem demand for these products, address
prevalence of trafficking in captive-bred wildlife products,
and raise public awareness and other avenues of
cooperation.\665\
---------------------------------------------------------------------------
\663\ ``USAID Wildlife Asia.'' U.S. Agency for International
Development, 03 Sep. 2020, https://www.usaid.gov/asia-regional/fact-
sheets/usaid-wildlife-asia-activity.
\664\ Stephens, Suzanna and Matthew Southerland. China's Role in
Wildlife Trafficking and the Chinese Government's Response, U.S.-China
Economic and Security Review Commission, 06 Dec. 2018, https://bit.ly/
3exiwvm.
\665\ De Gabriel, Grace. ``Will China Say No to Wildlife Trade?''
UN Chronicle, United Nations, https://www.un.org/en/chronicle/article/
will-china-say-no-wildlife-trade. And United States, Congress, Senate,
Risch, James E. STRATEGIC Act. Congress.gov, 116th Congress, 2nd
Session, Senate Bill 4272, introduced 22 Jul. 2020, https://
www.congress.gov/bill/116th-congress/senate-bill/4272?s=1&r=5.
---------------------------------------------------------------------------
Conclusion
The United States and European nations are making decisive
shifts towards the Indo-Pacific in their respective foreign
policies. The next steps are to build upon the existing
political will to cooperate in the region and to decide where
to focus and what cooperation means in practice. For the United
States and the European Union, these are a perfect set of
topics to explore in the context of the dialogue on China. The
United States and the United Kingdom should begin to have
similar conversations after the latter's Integrated Review is
published. Discussions with EU member states who already have a
significant regional footprint, like France, should also be
emphasized.
Launching these discussions should be encouraged because
the extent of Europe's interest in a concrete partnership with
the United States in the region is not yet clear. The French
and German regional strategies rarely mention the United
States, and there is no mention of any political desire to
partner with the United States in the region, other than broad
references to working through NATO and regional organizations.
In addition, neither France nor Germany acknowledges the
central role that U.S. alliances with Japan, Australia, and
others play in upholding regional peace and stability. Some
have also pointed out that American strategy documents on the
Indo-Pacific barely mention Europe.\666\ This is not to suggest
that European nations should center their strategies on the
United States, or is not intended to ignore the private
discussions on the region that have increased over the past
several years. However, U.S. involvement in the Indo-Pacific
today is much deeper than Europe's; the scant public discussion
by European governments on cooperation with the United States
has caused some European commentators to argue that the Indo-
Pacific strategies reflect Europe's desire to position itself
equidistantly between the United States and China, and that it
does not view the United States' approach to China as positive
for the region.\667\
---------------------------------------------------------------------------
\666\ The Department of Defense's Indo-Pacific Strategy Report does
mention UK and French contributions to the region. The State
Department's strategy document mentions the European Union only once.
See: Samaranayake, Nilanthi. ``Future US-France Cooperation: Think
Indo-Pacific,'' The Diplomat, 03 Feb. 2020, https://thediplomat.com/
2020/02/future-us-france-cooperation-think-indo-pacific/. And Indo-
Pacific Strategy Report: Preparedness, Partnerships, and Promoting A
Networked Region. U.S. Department of Defense, 01 June 2019, p. 42-43,
https://media.defense.gov/2019/Jul/01/2002152311/-1/-1/1/DEPARTMENT-OF-
DEFENSE-INDO-PACIFIC-STRATEGY-REPORT-2019.PDF. And A Free and Open
Indo-Pacific, U.S. Department of State, 04 Nov. 2019, p. 16, https://
www.state.gov/wp-content/uploads/2019/11/Free-and-Open-Indo-Pacific-
4Nov2019.pdf.
\667\ Fulda, Andreas. ``Germany's New Policy Paper for the Indo-
Pacific: Some Change in Tone, Little in Substance.'' Royal United
Services Institute, 11 Sep. 2020, https://bit.ly/36blBxo; And Xu,
Yixiang. ``A Stronger Germany in the Indo-Pacific?'' American Institute
for Contemporary German Studies, 17 Sep. 2020, https://www.aicgs.org/
2020/09/a-stronger-germany-in-the-indo-pacific/.
---------------------------------------------------------------------------
While the potential avenues for cooperation are numerous,
it will require political will and interest on both sides of
the Atlantic to identify concrete opportunities to align and,
to the greatest extent practicable, integrate distinct lines of
effort. If the European Union opts to publish a pan-European
Indo-Pacific strategy, a more overt acknowledgement of the
utility of transatlantic cooperation would be a useful signal
and starting point. The United States Government--both the
executive and the legislative branches--should incorporate the
need for cooperation with Europe more explicitly in its
diplomatic messaging on the Indo-Pacific. There already is
ample evidence of significant overlap in interests, such that
the United States, the European Union (especially France and
Germany), and the United Kingdom should begin identifying areas
for cooperation sooner rather than later. Indo-Pacific partners
seek a strong presence from the United States in the region,
and they are hopeful for greater European engagement as well.
Taking initial steps to ramp up cooperation in fostering
private sector-led development, strengthening maritime
security, promoting good governance and human rights, and
safeguarding the environment hold great promise for advancing
shared interests and reaping mutually-advantageous gains for
the transatlantic alliance and Indo-Pacific partners.
CONCLUSION AND RECOMMENDATIONS
----------
The United States and Europe on the one hand, and China on
the other, have very different visions of what the world should
look like. This competition of ideas and of systems touches on
our political and cultural values, our economic prosperity, and
our security. Led by the transatlantic community, much of the
world has created an open system of rules, norms, and
institutions that upholds individual rights and freedoms,
advances market-based economic prosperity, and safeguards the
security interests of everyone. Yet China is attempting to
fundamentally alter the foundation upon which shared prosperity
and security are built.
Despite some differences, the transatlantic alliance has
enjoyed enormous success in fostering and advancing that
system. The United States and Europe must decide how we will
ensure the international system maintains its commitment to its
values, even in the face of China's unfair trading practices,
murky and corrupt investment, and political interference to
advance its authoritarian ends. The United States and Europe
will have stronger answers if we stand together.
Neither side of the Atlantic can respond to the challenges
China poses alone. The only way forward is to work together.
Transatlantic security and prosperity requires that we renew
our commitment to each other and pledge to use all of our
combined tools to succeed. The recommendations below are a
starting point to build upon the shared assessments of both
sides about the challenges the People's Republic of China (PRC)
poses and begin to address the issues that will define the
years and decades to come.\668\
---------------------------------------------------------------------------
\668\ The three above paragraphs are drawn from a speech given in
November 2019 by Senator James Risch on the importance of transatlantic
cooperation on China. United States, Congress, Senate, Committee on
Foreign Relations, ``Risch: U.S. and Europe Must Compete with China,''
12 Nov. 2019, https://bit.ly/32eAYEs.
---------------------------------------------------------------------------
Safeguarding Our Open Societies
Collaborate on university and think tank codes of conducts
designed to forestall undue foreign influence by
authoritarian countries like the PRC.\669\ These codes
of conduct should advocate standards and mechanisms for
transparency in donations and contracts, mutual support
in the event of PRC pressure, adequate protection for
students, institutional reciprocity with the PRC, and
academic independence. The European Commission's
concept note on foreign interference in higher
education proposes the creation of guidelines by member
states and stakeholders, as well as the co-creation of
a shared code of conduct between European universities
and research institutions.\670\ This could be expanded
to include universities in the United States and in
other democratic allies.
---------------------------------------------------------------------------
\669\ Diamond, Larry and Orville Schell. Chinese Influence and
American Interests Promoting Constructive Vigilance. The Hoover
Institution, 24 Oct. 2018, https://hvr.co/2TX8TwH.
\670\ ``Concept Note on Tackling Foreign Interference in Higher
Education Institutions and Research Organizations.'' European
Commission, 20 Feb. 2020, https://s3.eu-central-1.amazonaws.com/euobs-
media/3ef6dc3d60ee27a2df16f62d47e93fdc.pdf.
Share standards and best practices for increasing
transparency of the lobbying industry. Governments
should update their regulations to ensure they address
specific and emerging challenges posed by the PRC.\671\
U.S. and European transparency regimes should determine
requirements for the United Front Work Department and
its sub-entities to report their activities.\672\
Democracies could consider a particular designation for
lobbying by governments that pose particularly acute
national security concerns, re-examine scholastic and
academic registration exemptions from countries
designated national security concerns, and consider
limitations on former government officials representing
the governments of such countries.\673\
---------------------------------------------------------------------------
\671\ And Benner, Thorsten, et al. Authoritarian Advance:
Responding to China's Growing Political Influence in Europe. Global
Public Policy Institute/Mercator Institute for China Studies, Feb.
2018, https://bit.ly/32jHY2C.
\672\ Diamond, Larry and Orville Schell. Chinese Influence and
American Interests Promoting Constructive Vigilance. The Hoover
Institution, 24 Oct. 2018, https://www.hoover.org/sites/default/files/
research/docs/chineseinfluence--americaninterests--fullreport--web.pdf.
\673\ United States, Congress, Senate, Risch, James E. STRATEGIC
Act. Congress.gov, 116th Congress, 2nd Session, Senate Bill 4272,
introduced 22 Jul. 2020, https://bit.ly/2I5jAuD.
Hold gatherings among government officials in the United
States, Europe, and other democratic partners to
discuss PRC authoritarian influence within their
countries and ways to effectively push back. The U.K.
Parliament, the U.S. Congress, the European Parliament,
and other democratic legislatures are already at the
forefront of their nations' and organization's
responses to the PRC's authoritarianism. The recent
creation of the Inter-Parliamentary Alliance on China
is a great place to start and could be further
institutionalized.\674\ The North Atlantic Treaty
Organization (NATO) Parliamentary Assembly could
provide a successful model for this type of
cooperation.\675\
---------------------------------------------------------------------------
\674\ Inter-Parliamentary Alliance on China. https://ipac.global/.
\675\ NATO Parliamentary Assembly. https://bit.ly/3mUr2Yv.
Continue to enhance collaboration on countering
disinformation to ensure coordinated counter-messaging.
Government organizations tasked with combatting
disinformation, such as the U.S. Global Engagement
Center, the European External Action Service Strategic
Communications Task Force, the Group of Seven Rapid
Response Mechanism, and NATO, should strengthen their
relationships and ensure their jurisdiction and
expertise includes countering malign influence from the
---------------------------------------------------------------------------
PRC.
Continue to invest in and prioritize the development of
independent China expertise.\676\ The creation of the
European Think-Tank Network on China to deepen European
expertise is a positive development.\677\ A well-
developed cohort of independent China experts will
greatly improve transatlantic capacity to understand
and counter the PRC's malign influence. The U.S.
government has pledged to increase funding for the
study of Mandarin Chinese, and European nations should
do likewise. The Government of Sweden proposed a
national knowledge center on China,\678\ and other
democracies should follow suit.
---------------------------------------------------------------------------
\676\ Conversation with European researcher. And Benner, Thorsten,
et al. Authoritarian Advance: Responding to China's Growing Political
Influence in Europe. Global Public Policy Institute/Mercator Institute
for China Studies, Feb. 2018, https://bit.ly/32jHY2C.
\677\ ``European Think-tank Network on China.'' Mercator Institute
for China Studies, https://merics.org/en/european-think-tank-network-
china.
\678\ Lofven, Stefan. ``Approach to matters relating to China.''
The Government of Sweden Ministry for Foreign Affairs, 26 Sep. 2019,
https://bit.ly/3mTLPeM.
Conduct effective outreach to Chinese diaspora communities
to help them protect themselves from efforts by the PRC
government to target them.\679\ This could include
efforts to build awareness, creation of reporting and
early warning mechanisms, training on legal rights and
protections, and proactive law enforcement engagement,
such as briefings and trainings for local police.\680\
In conducting such outreach, the United States and
European governments should ensure they do not
stigmatize members of Chinese diaspora communities, and
consult with these communities to understand how to
best support them.
---------------------------------------------------------------------------
\679\ Staff conversation with Europe-based academic researchers.
And Benner, Thorsten, et al. Authoritarian Advance: Responding to
China's Growing Political Influence in Europe. Global Public Policy
Institute/Mercator Institute for China Studies, Feb. 2018, https://
bit.ly/32jHY2C.
\680\ Staff conversation with academic researcher. And Benner,
Thorsten, et al. Authoritarian Advance: Responding to China's Growing
Political Influence in Europe. Global Public Policy Institute/Mercator
Institute for China Studies, Feb. 2018, https://bit.ly/32jHY2C. And
Diamond, Larry and Orville Schell. Chinese Influence and American
Interests Promoting Constructive Vigilance. The Hoover Institution, 24
Oct. 2018, https://hvr.co/2TX8TwH.
---------------------------------------------------------------------------
Protecting the Integrity of International Organizations
Adopt a ``whole of United Nations (UN)-system'' approach in
addressing policy issues at the UN. The UN system is
large and missions are often siloed. In addition to
closer coordination within particular UN agencies, this
approach should involve more information sharing,
message coordination, and other efforts among U.S. and
European representation at UN missions globally, such
as in New York, Geneva, Rome, Paris, and other
locations. The United States and Europe should not take
the traditional approach of only discussing human
rights issues in Geneva or UN Security Council issues
in New York. Instead, they should be reaching out in
capitals and at other UN missions to align priorities
and raise awareness of challenges to UN principles.
Work together to promote good governance in international
organizations by coordinating on the election of
candidates to top UN positions. This should include
avoiding situations in which an ``American'' candidate
and ``European'' candidate both run, thereby splitting
votes. Instead the United States and Europe should seek
to coalesce around a highly qualified consensus
candidate who is committed to impartiality and
transparency.
Increase the number of citizens employed in UN positions
and Junior Professional Officer (JPO) programs. The UN
maintains a list of countries that are ``under-
represented'' in the UN system. In the latest report
for 2018, the United States remains under-represented,
as are some European countries.\681\ The United States
and those European countries that are under-represented
should increase efforts to have nationals apply to open
UN jobs. Both the United States and Europe should
increase their support for JPOs across the UN system.
Supporting JPOs from the United States and European
partners provides long-term pathways within the UN
system to protect shared values and mutual security
interest.
---------------------------------------------------------------------------
\681\ UN Secretary-General. ``Composition of the Secretariat :
staff demographics : report of the Secretary-General'', United Nations
Digital Library, 2019, https://digitallibrary.un.org/record/
3809594?ln=en.
Continue to defend international human rights standards at
the UN. The UN has many tools to protect and promote
human rights, even outside the UN Human Rights Council.
At every opportunity, the transatlantic alliance should
defend these rights and stymie efforts to water down UN
resolutions and other relevant documents to shield
countries from criticism of their human rights
violations.
Defending the International Trading System
Advance shared objectives at the World Trade Organization
(WTO). Despite the difficulties of reforming the WTO's
25-year-old rules, the United States and Europe share
two key priorities that can provide a starting point
for reinvigorated collaboration on international trade
issues. First, we must advocate for revocation of
China's developing country status. China, the world's
second largest economy, is taking advantage of this
status to the detriment of other market players as well
as truly developing nations. Second, we should further
advance efforts by the European Union, Japan, and the
United States to ``strengthen existing WTO rules on
industrial subsidies''--one of the most blatant ways in
which China violates the rules.\682\ Finding agreement
among like-minded partners, building a majority, and
only then incorporating China into the discussion, may
be the only way to overcome the current deadlock at the
WTO. In addition, some parochial differences should be
set aside so additional trade agreements can be
advanced that help lower income countries develop
faster.
---------------------------------------------------------------------------
\682\ ``Joint Statement of the Trilateral Meeting of the Trade
Ministers of Japan, the United States and the European Union.'' U.S.
Trade Representative, 14 Jan. 2020, https://bit.ly/38edz9V.
Broaden and deepen existing trilateral trade discussions
among the United States, the European Union, and the
United Kingdom. During the now-suspended Transatlantic
Trade and Investment Partnership discussions, the
United States and the European Union discovered the
significant gains to be made in searching for
convergence on rules and regulations. While such
discussions can be quite difficult, they are worth
exploring and strengthening, given the tremendous
economic gains that could be achieved. Small but
positive steps have recently been taken to reduce
reciprocal U.S. and EU tariffs.\683\ We must build on
this progress. A United States and Europe more united
on these economic and regulatory issues would present
an irresistible force in promoting our shared values
and hopes for economic outcomes against China's
mercantilist worldview.
---------------------------------------------------------------------------
\683\ ``Joint Statement of the United States and the European Union
on a Tariff Agreement.'' U.S. Trade Representative, 21 Aug. 2020,
https://bit.ly/38fsOzl.
Fix the reparable issues in our own trading relationship so
we can focus on the real challenge: China. A prime
example is the ongoing dispute between Boeing and
Airbus. Governments on both sides of the Atlantic
should engage in discussions to prevent future
disputes. Governments should also encourage discussions
within industry to focus the combined energies of
Boeing and Airbus to address the larger, emerging
problem--a Commercial Aircraft Corporation of China
replete with stolen technology and fully backed and
---------------------------------------------------------------------------
financed by the Chinese government.
Undertake a more coordinated approach to export controls
with respect to China. This is key to protecting shared
security interests and the future competitiveness of
U.S. and European companies in certain industries.
Recent U.S. export controls protect dual-use items and
safeguard key technologies from military end users in
China. These are necessary choices, but difficult in
that they can put U.S. companies at a disadvantage vice
their competitors in other advanced economies. Forging
a community of advanced democracies around critical
technology issues has strong support in the United
States, in the U.K. government, and in the European and
Japanese expert communities.\684\ Coordinating and
harmonizing export controls should be at the top of the
agenda. This has become more urgent as China looks to
``implement a unified export control system'' in
legislation currently under consideration by the
People's Congress.\685\
---------------------------------------------------------------------------
\684\ ``The Clean Network.'' U.S. Department of State, https://
bit.ly/3mXz5Up. And United States, Congress, Senate, Risch, James E.
STRATEGIC Act. Congress.gov, 116th Congress, 2nd Session, Senate Bill
4272, introduced 22 Jul. 2020, https://bit.ly/2I5jAuD. And Fishman,
Edward and Siddharth Mohandas. ``A Council of Democracies Can Save
Multilateralism: Boris Johnson's ``D-10'' Is the Club the World
Desperately Needs'', Foreign Affairs, 03 Aug. 2020, https://fam.ag/
3ewNV1m. And ``UK seeks alliance to avoid reliance on Chinese tech: The
Times.'' Reuters, 14 Apr. 2020, https://www.reuters.com/article/us-
britain-tech-coalition/uk-seeks-alliance-to-avoid-reliance-on-chinese-
tech-the-times-idUSKBN2343JW. And Ebrahimian, Bethany Allen. ``Report:
How democracies can push back on China's growing tech dominance.''
Axios, 15 Sep. 2020, https://www.axios.com/china-tech-dominance-
democracies-d60a4e60-53c7-46a6-85c6-8979ef0225cf.html. And Jain, Ash,
et al. D-10 Strategy Forum. Atlantic Council, 16 Mar. 2017, https://
www.atlanticcouncil.org/programs/scowcroft-center-for-strategy-and-
security/global-strategy-initiative/democratic-order-initiative/d-10-
strategy-forum/.
\685\ ``Export Control Law of the People's Republic of China
(Draft) (Second Version).'' Translated by Etcetera Language Group,
People's Republic of China National People's Congress, 28 Jun. 2020,
https://cset.georgetown.edu/research/export-control-law-of-the-peoples-
republic-of-china-draft-second-version/.
Consider working together to diversify some key supply
chains away from China as a hedge against future trade
disruptions, whether politically, economically, or
naturally instigated. COVID-19 has caused companies and
governments to rethink the extent of their reliance on
China-based supply chains. Earlier, to help guard their
industries against political retaliation, South Korean
multinationals began to relocate their factories,\686\
and Japan introduced financial incentives to help
companies relocate.\687\ Now, the transatlantic
community should work together to agree upon the
sectors most disadvantaged and endangered by over-
concentration in China, and when appropriate, exploit
each other's comparative economic advantages when
diversifying the location of manufacturing resources.
We could also consider jointly working to support the
creation of free trade and manufacturing zones in
Africa and Southeast Asia.
---------------------------------------------------------------------------
\686\ Bermingham, Finbarr and Lee Jeong-ho. ``How the trade war led
to Samsung and other South Korean companies' exodus from China.'' South
China Morning Post, 04 Jul. 2019, https://www.scmp.com/economy/china-
economy/article/3017110/samsung-and-other-south-korean-firms-exodus-
china-example.
\687\ ``Japan sets aside 243.5 billion to help firms shift
production out of China.'' Japan Times, 09 Apr. 2020, https://bit.ly/
368OgDp. And Jin Yiqian qibai jia zai hua ri qi shenqing banqian butie
riben chanye lian cheli zhongguo.'' Asia Pacific Report, Radio Free
Asia, 14 Sep. 2020, https://www.rfa.org/mandarin/yataibaodao/jingmao/
ql2-09142020062444.html/.
---------------------------------------------------------------------------
Shaping the Future of Technology
Form a community of advanced democracies that promotes
cooperation on critical technology. Cooperation should
focus on developing norms, standards, and regulations
on the development and application of new and emerging
technologies; coordinate basic and pre-competitive
research and development initiatives; and engage other
activities related to harnessing the combined
technological prowess of advanced democracies.
Coordination on export controls and investment
screening as it relates to key technologies should also
top the agenda. This proposal has bipartisan support in
the United States, the U.K. government, and in the
American, European, and Japanese expert
communities.\688\ The community should also facilitate
discussions among other stakeholders, such as executive
branch members, legislators, and private sector
industry professionals on these issues.
---------------------------------------------------------------------------
\688\ ``The Clean Network.'' U.S. Department of State, https://
www.state.gov/the-clean-network/ And United States, Congress, Senate,
Risch, James E. STRATEGIC Act. Congress.gov, 116th Congress, 2nd
Session, Senate Bill 4272, introduced 22 Jul. 2020, https://bit.ly/
2I5jAuD. And Fishman, Edward and Siddharth Mohandas. ``A Council of
Democracies Can Save Multilateralism: Boris Johnson's ``D-10'' Is the
Club the World Desperately Needs'', Foreign Affairs, 03 Aug. 2020,
https://fam.ag/3ewNV1m. And ``UK seeks alliance to avoid reliance on
Chinese tech: The Times.'' Reuters, 14 Apr. 2020, https://reut.rs/
36nzmtl. And Ebrahimian, Bethany Allen. ``Report: How democracies can
push back on China's growing tech dominance.'' Axios, 15 Sep. 2020,
https://bit.ly/2HZAsDq. And Jain, Ash, et al. D-10 Strategy Forum.
Atlantic Council, 16 Mar. 2017, https://www.atlanticcouncil.org/
programs/scowcroft-center-for-strategy-and-security/global-strategy-
initiative/democratic-order-initiative/d-10-strategy-forum/.
Initiate regulatory dialogues between partner agencies. A
series of dialogues comprised of U.S. and EU experts
that will examine topics relevant to boosting emerging
technology development. The dialogues should start by
1) identifying technology sectors where there are
little to no regulatory barriers to cooperation; 2)
identifying niche areas in which there are no standards
and would benefit from uniform standardization at the
development-level; 3) setting priorities for greater
regulatory harmonization and alignment of regulatory
practices; and 4) examining spheres in which both sides
are facing difficulties in competing with Chinese
companies or Chinese-government led initiatives to
capture technological market share.\689\
---------------------------------------------------------------------------
\689\ United States, Congress, Senate, Risch, James E. STRATEGIC
Act. Congress.gov, 116th Congress, 2nd Session, Senate Bill 4272,
introduced 22 Jul. 2020, https://bit.ly/2I5jAuD.
Identify ways and implement incentives to encourage greater
private sector and academic collaboration in niche
technology areas that address disadvantages on both
sides of the Atlantic in competing with China. Two
potential examples include (1) artificial intelligence
software and manufacturing development and (2)
---------------------------------------------------------------------------
renewable energy.
Address issues with global patent enforcement through
multilateral international intellectual property
organizations. This is particularly important as PRC
companies demand compensation for standard-essential
patents while failing to pay for using products that
have parts which use U.S. and European patents.
Work with advanced democracies such as Japan, Australia,
India, Canada and New Zealand, on aligning science and
technology agreements and explore further opportunities
for plurilateral cooperation on technology development
and associated regulation. This alignment would help
set baseline standards for technology infrastructure
and development, as well as values that should be
upheld in the usage of emerging technologies. It would
also help leverage economies of scale when competing
with PRC technologies and international standards-
setting.
Addressing the Implications of China's Strategic Investments
Focus investment screening cooperation on the implications
of state-directed acquisitions and investments by
China. Recent alignment on investment screening--and
the requirement under U.S. law for more cooperation
with allies and partners--is an opportunity to bring
together the U.S. federal agencies and relevant
European counterparts to prioritize addressing the
implications of state-directed PRC investment and
acquisition in certain sectors. Through appropriate
forums and dialogues, the United States and Europe
should identify and focus on areas of current or future
strategic dependency or vulnerability vis-a-vis the
PRC. Power grids, ports, and undersea cables certainly
all fit into this category, but other emerging areas of
concern should be constantly explored. These
discussions and information sharing should be further
expanded to include other non-EU nations with good
screening mechanisms, as well as like-minded nations
like Canada, Japan, and Australia.
Examine the security of our power grids and establish fail-
safe measures to protect our increasingly connected
grids. The United States and Europe can use existing
legislative and regulatory regimes to accomplish this.
The two sides of the Atlantic should also consider the
establishment of exchange programs between our energy-
specialized institutes and departments that will focus
on the development of improved security protocols for
the new and advanced forms of energy generation and
transmission.
Work together to hold the PRC to account on its
environmental mismanagement. While the PRC makes a lot
of promises about its intent to improve its green
credentials, and has made some improvements within the
PRC itself, its energy-related actions outside of China
continue to degrade the environment. The United States
and Europe, together with our democratic partners,
should examine various means of holding China to its
promises on environmental issues. Germany has held up
the ratification of an EU-wide trade deal with South
America over Brazil's deforestation of the Amazon--
similar tactics could be considered for use with the
PRC.\690\
---------------------------------------------------------------------------
\690\ Stuenkel, Oliver. ``Why the EU-Mercosur Deal Hinges on
Germany's Reaction to Bolsonaro''. America's Quarterly, Americas
Society/Council of the Americas, 09 Sep. 2020. https://bit.ly/3evX0Y1.
Conduct U.S.-Europe port mapping exercises and identify
risk mitigations. The United States and NATO countries
should conduct independent exercises to identify ports
that are strategically significant and are currently
operated or controlled by PRC state-owned enterprises
or vulnerable to future acquisition or investment. In
the United States, for example, the National Security
Council should lead an effort that takes a broad view,
while each regional combatant command within the U.S.
military identifies those ports that are ``essential to
United States joint forces in carrying out assigned
missions in their areas of responsibility.'' \691\ NATO
allies should use independent assessments as a basis
for comparison, prioritization, and identification of
measures to mitigate risks, focusing primarily on ports
in Europe. The United States and individual security
partners that are active in Africa and the Indo-Pacific
(e.g. France, the United Kingdom) should conduct a
similar exercise looking at those two regions.
---------------------------------------------------------------------------
\691\ Kardon, Isaac B. ``Panel II: China's Development of
Expeditionary Capabilities: `Bases and Access Points.' '' Chinese
Military Power Projection and U.S. National Interests, U.S.-China
Economic and Security Review Commission, 20 Feb. 2020, p. 14, https://
bit.ly/2U48kkB.
Address cyber and data security issues in ports. The United
States and Europe should conduct a fulsome review--in
coordination with industry--of cyber and data security
vulnerabilities, including potential security
vulnerabilities in Nuctech equipment. Transatlantic
partners should ensure that scanning and other
equipment from untrusted vendors are not used in
embassies, at military bases, or in any NATO
facility.\692\
---------------------------------------------------------------------------
\692\ Cooper, Sam, and Andrew Russell. ``Canadian minister promises
review after security contracts awarded to Chinese-state tech
company.'' Global News, 17 Jul. 2020, https://bit.ly/2Ic5FTE.
Initiate NATO discussions on undersea cables and conduct
exercises that test NATO preparedness for severe
compromise of undersea cable systems. These discussions
should identify any existing vulnerabilities for NATO
with respect to undersea cables (especially with
respect to cables supplied by PRC firms). Upon
identifying vulnerabilities, NATO countries must limit
or eliminate the presence of undersea cables that land
in NATO countries or on which NATO countries rely.
Furthermore, NATO countries should improve information
and intelligence sharing on trends in PRC investment in
undersea cables and the use of cables for intelligence
collection. The United States, Europe, and other
partners should also increase general attention on the
security challenges associated with growing of PRC
firms in the cable market. NATO should assess the
necessity and potential for deploying more ``dark
cables'' for redundancy.\693\ Exercises should consider
security and economic ramifications.\694\ NATO should
also evaluate its preparedness to operate in an
environment where an adversary has access to its vital
data and determine the efficacy of mitigations (such as
shifting traffic to other systems).
---------------------------------------------------------------------------
\693\ Sunak, Rishi. Undersea Cables Indispensible, Insecure, Policy
Exchange, 2017, p. 8, https://policyexchange.org.uk/wp-content/uploads/
2017/11/Undersea-Cables.pdf.
\694\ Ibid, p. 8.
---------------------------------------------------------------------------
Growing U.S.-Europe Cooperation in Africa
and the Indo-Pacific
Both Regions
Highlight transatlantic cooperation in diplomatic
messaging. U.S. and European administrations and
legislatures should highlight joint transatlantic
efforts in both the Indo-Pacific and Africa in
diplomatic and public messaging.
Prioritize full implementation of the Development Finance
Institution Alliance. Efforts should prioritize
defining and scoping the types of projects most ripe
for joint financing or cooperation, improving alignment
on standards (using the G-20 standards agreed to in
Japan as a starting point), solidifying data and
information sharing, setting up processes to de-
conflict investments, addressing technical barriers,
and addressing differences on environmental issues.
Both sides of the Atlantic should focus on shared
goals, such as bringing cleaner power online faster for
developing countries. European countries should remain
open to joining the Blue Dot Network. Legislators on
both sides of the Atlantic should continually
demonstrate support for initiatives to spur private
sector investment, including by signaling support for
exploring investments in strategic but heretofore
underexplored markets.
Hold regular and high-impact events on human rights, good
governance, development, and other issues. This builds
on the already strong cooperation demonstrated during
the joint Xinjiang event at the 2019 UN General
Assembly. Legislatures should strengthen cooperation in
this area as well.
Africa
Reframe the ``Transatlantic Relationship'' to include
African partners. In the next century, countries like
Nigeria, South Africa, Ghana and Senegal will only grow
as centers of economic and political power, and it is
critical that the United States and Europe begin
treating them as such. The United States, Europe, and
Africa should establish a dialogue on trade, security,
development, and environmental issues of mutual
interest. This initial gathering would be an important
step toward showing our African counterparts that we
view them as important partners and neighbors, and
start conversations that are long overdue.
Codify into law the Prosper Africa initiative while also
considering an inter-continental Prosper Africa
initiative to provide an attractive alternative to
China that speaks to our principles. The United States
and Europe must look at Sub-Saharan African countries
as principal economic, political and security partners
in their own right, not just through the lens of
competing with China. While the U.S. Congress should
codify the Prosper Africa initiative and authorize
consistent funding to ensure its future success, the
United States and the European Union should also
examine the establishment of an intercontinental
Prosper Africa initiative. This means the United States
and Europe need to work together to ensure that we are
providing our African partners with attractive and
mutually-beneficial opportunities. There is no shortage
of stories about how the United States and Europe are
preferred partners for African governments, but that we
often do not show up at the table or that our
bureaucratic processes impede collaboration. An inter-
continental Prosper Africa initiative could help
achieve better collaboration (for example, by creating
a framework to align our trade and investment
facilities) while limiting barriers and challenges
faced by African countries in working with us.
Expand assistance programs that build democratic
institutions, fight corruption, increase government
accountability, grow American and European investment
in Africa, and push back on corrupt practices by PRC
firms. Investing in these areas are important to the
enabling environment for the expanded and mutually-
beneficial trade with Africa that both the United
States and Europe seek. In addition to trade, the
institutionalization of democratic norms and
institutions in Africa will also further our security
and diplomatic interests. Improving legal regimes that
provide accountability for corrupt activities and
improve fiscal transparency and encourage competition
(particularly on large state contracts) should also be
a major focus.
Come to consensus on how to engage China in sub-Saharan
Africa. While the United States views PRC activity in
Sub-Saharan Africa as predatory, self-serving and
extractive, Europe's perspective allows for some
cooperation based on respective priorities. China's
presence is unlikely to diminish and both sides of the
Atlantic will need to remain present and involved. In
this context, the United States and Europe must be on
the same page as allies on how to engage China in
Africa, as daylight between us will only provide
opportunities for China to exploit.
Continue supporting African partners to combat the threat
posed by violent extremist groups and armed conflict.
On counterterrorism, the international community must
work with our African partners to identify a single
venue for coordination located within each region that
prioritizes the inclusion of African partner voices.
The United States and Europe must also expand
cooperation with each other and African partners on
counter trafficking and transnational crime, such as
intelligence sharing and capacity building to
investigate and prosecute criminal activity, including
money laundering and other financial crimes. This also
has the benefit of highlighting criminal activity on
the continent that is being supported by Chinese
interests.
Indo-Pacific
Put the Indo-Pacific front and center in transatlantic
dialogues. The Indo-Pacific region should be
prioritized as a central topic in the U.S.-EU dialogue
on China, and a U.S.-U.K. dialogue should be initiated
after the latter's Integrated Review is published.
Align efforts under U.S. Indo-Pacific economic strategy and
the EU-Asia connectivity initiative. The European Union
should move full speed ahead with implementing its Asia
connectivity strategy. The United States and the
European Union should identify commonalities in their
approaches and start to identify concrete projects or
initiatives to pursue together, such as potential
coordination to build human capital in areas that helps
foster open markets more hospitable to private sector-
led investment and growth. This could also include de-
conflicting and coordinating technical assistance and
training to government official and private sector
representatives in procurement practices, management of
key economic sectors, and other areas.
Increase coordination and cooperation on maritime security
and freedom of navigation. Areas of focus can include
joint freedom of navigation operations, increased
multilateral training exercises, providing capabilities
and training to Indo-Pacific partners, aligning efforts
in regional security forums, and strengthening NATO
cooperation with Japan, Australia, and other interested
Indo-Pacific partners.
Cooperate on environmental and natural resource challenges
in the Indo-Pacific. Initial areas could include
renewable energy, resilience in the Pacific Islands,
and illegal and unregulated fishing. On wildlife
trafficking, the United States and Europe should team
up to jointly press China for greater transparency,
accountability, and cooperation.
ABBREVIATIONS AND ACRONYMS
----------
AGOA--African Growth and Opportunity Act
AI--Artificial Intelligence
ASEAN--Association of Southeast Asian Nations
AU--African Union
BRI--Belt and Road Initiative
CAPDTC--China Association for Preservation and Development of
Tibetan Culture
CCP--Chinese Communist Party
CFR--Council on Foreign Relations
CGNPC--China General Nuclear Power Corporation
CGTN--China Global Television Network
COMAC--Commercial Aircraft Corporation of China
COSCO--COSCO SHIPPING Corporation Limited
CMPort--China Merchants Port Holdings Co.
CSSA--Chinese Students and Scholars Associations
CSSC--China State Shipbuilding Corporation
DFC--U.S. Development Finance Corporation
DFI Alliance--An alliance of development finance institutions
that includes U.S., Canadian and European development
finance institutions
DFIs--Development Finance Institutions
DESA--UN's Department of Economic and Social Affairs
DSR--Digital Silk Road
ECFR--European Council on Foreign Relations
ECOSOC--The UN's Economic and Social Council
EU--European Union
FAO--Food and Agriculture Organization, a UN specialized agency
FBI--Federal Bureau of Investigation (U.S.)
FOCAC--Forum on China-Africa Co-Operation Summit
G7--Group of Seven
GATT--General Agreement on Tariffs and Trade
GDP--Gross Domestic Product
GDPR--General Data Protection Regulation
GPOI--U.S. Department of State's Global Peace Operations
Initiative
ICAO--International Civil Aviation Organization, a UN
specialized agency
ICT--Information and Communications Technology
IDAR--Introducing, Digesting, Absorbing, and Reinnovating
foreign intellectual property and technology
ID-CPC--International Department of the Communist Party of
China
IEC--International Electrotechnical Commission
IO--International Organization
IP--Intellectual Property
IT--Information Technology
ITIF--Information Technology & Innovation Foundation
ITU--International Telecommunication Union, a UN specialized
agency
JPO--The UN's Junior Professional Officer program
MOU--Memorandum of Understanding
NATO--North Atlantic Treaty Organization
OBOR--One Belt, One Road
PEACE Cable--The Pakistan East Africa Connecting Europe
undersea cable
PLA--People's Liberation Army (China)
PLAN--People's Liberation Army Navy (China)
PRC--People's Republic of China
R&D--Research and Development
SASAC--State-Owned Assets Supervision and Administration
Commission of the State Council
SOE--State-Owned Enterprise
State Grid--State Grid Corporation of China
TCC--Troop-Contributing Country
UHV--Ultra-High Voltage
U.K.--United Kingdom
UN--United Nations
UNGA--UN General Assembly
UNHRC--UN Human Rights Council
UNSC--UN Security Council
U.S.--United States
USAID--United States Agency for International Development
UCSF--University of California at San Francisco
WHO--World Health Organization
WIPO--World Intellectual Property Organization, a UN
specialized agency
WTO--World Trade Organization
ZTT--T1Zhongtian Technology Submarine Cable Co., Ltd.
[all]