driving the day
1. Northern Implosure
Well, that didn’t go well.
China’s top diplomat, Yang Jiechi, along with Foreign Minister Wang Yi, touched down in Alaska on Thursday for a two-day meeting with US Secretary of State Anthony Blinken and National Security Advisor Jake Sullivan.
- It’s the first meeting between top officials from the two countries since the US Biden Administration came to power two months ago.
Going into the meeting expectations were low.
But nobody thought it would be this bad.
The meeting started with strong statements from Blinken and Sullivan.
- Blinken called out China on cyber attacks, Hong Kong, Xinjiang, and Taiwan and said that China’s actions threatened global stability.
Then Yang Jiechi went off.
- Yang went on a nearly 15-minute tirade, where he called out the US for racism at home and warmongering abroad.
- Yang’s diatribe violated an agreement between the two sides that they would limit opening remarks to two minutes.
Blinken was not impressed.
- Blinken then broke protocol himself, and repeated what Biden had said to Xi Jinping in 2011, that “It’s never a good bet to bet against America.”
It didn’t end there.
- Desperate to have the last word, Yang spoke again, calling the US side “condescending.”
Get smart: It’s really hard to imagine a more acrimonious start to these talks.
The big question: Now that the two sides have made clear their beefs, can they figure out a new modus vivendi?
2. Business environmentalists
On Thursday, the Ministry of Commerce (MofCom) held a presser on the outlook for foreign investment in China.
In a nutshell: Things are set to get more complicated for foreign companies.
Some context: The National Development and Reform Commission’s 2021 work plan – released during the Two Sessions – said China would begin conducting national security reviews of foreign investments in certain areas in 2021.
MofCom officials reassured foreign firms that this isn’t a big deal (MofCom):
- “[National security reviews] are conducive to the better development of foreign-funded enterprises in China and will not add unnecessary burden to normal foreign investors and enterprises.”
- “[Their introduction]…will make China’s business environment more sound and investment cooperation more standardized.”
They also stressed reviews would be conducted impartially:
- “[National security reviews] are an international practice, not aimed at any specific country.”
Get smart: In recent years, China has opened vast new sectors to foreign participation and sought to level the playing field between foreign and Chinese companies.
- In some ways, its market is more inviting than ever.
Get smarter: Despite assurances from MofCom, security reviews do expose companies to significant risk.
- And China is certainly not afraid to use economic measures in response to geopolitical disputes. Just ask firms from Australia. Or South Korea. Or Canada. Or Japan. Or Taiwan.
3. SMIC announces new Shenzhen plant
On Thursday, Semiconductor Manufacturing International Corporation (SMIC) announced that it had teamed up with the Shenzhen government to build a new chips plant in the city.
Some context: SMIC is China’s largest semiconductor manufacturer and is partially state-owned.
- The company is one of the national champions at the forefront of Beijing’s drive to develop a strong indigenous chip making industry.
The new plant is a big deal: It is the first major project announced since China initiated a new push to become self-reliant in semiconductors last year (see September 4 Tip Sheet).
It’s a huge project:
- SMIC and an investment fund backed by the Shenzhen government plans to invest a total of USD 2.35 billion into the plant.
Here’s some more deets (SCMP):
- “SMIC Shenzhen will focus on mature chipmaking technologies of 28-nanometer and above, with the aim of producing 40,000 12-inch wafers per month.”
- “Production at the new factory is expected to begin in 2022.”
Get smart: Government support for the chip industry will definitely lead to more domestic production. But it will also likely lead to a lot of overinvestment, overcapacity, and uncompetitive firms.
4. Fake it ‘til…the relevant authorities tell you not to
Have you been enjoying the videos of Jiang Zemin singing the Numa Numa song recently doing the rounds on social media?
- If so, you’re part of the problem.
On Thursday, the Cyberspace Administration of China (CAC) summoned 11 internet companies to discuss deepfakes.
Some context: Deepfakes use artificial intelligence to create highly realistic fake videos, in which a subject appears to say and do things that they did not.
Attendees of CAC’s sit-down included Alibaba, Tencent, and ByteDance.
The regulator told the assembled tech companies that they need to be on the look-out for potentially dangerous new tech trends (Reuters):
- “[CAC] told the companies to ‘conduct security assessments on their own’ and flag new functions or services that ‘have the ability to mobilize society’.”
More context: Last month, regulators scrambled to block the newly popular Clubhouse app, which netizens joined en masse to discuss sensitive political topics.
Get smart: China, like many governments worldwide, is trying to formulate a coherent strategy for dealing with potentially destabilizing new technologies.
Get smarter: Regulators can’t be everywhere at once. Beijing is dragooning its tech giants into watching the frontiers of cyberspace on its behalf.
5. Prevent that fire
The only thing that should be burning this season is your passion for fire safety and prevention.
That was Premier Li Keqiang’s message to attendees of a a national teleconference on forest and grassland fire prevention and control on Thursday.
Some context: Following a couple of deadly forest fires in Sichuan over the past two years, where several firefighters lost their lives, fire prevention and control has increasingly become a public concern.
- Over the past five years, 70 percent of major wildfires in China happened during spring.
Li told cadres to take the issue seriously (Xinhua 2):
- “Authorities at all levels should take their due responsibilities and give full play to the respective advantages of emergency management and forestry and grassland departments.”
He said ensuring public safety is a top priority:
- “Efforts should go into curbing forest and grassland fires and guaranteeing people’s safety and property.”
And urged more efforts be put into fire prevention work:
- “He also called for accelerated construction of fire-control facilities and strengthened systems of contingency plans.”
Get smart: Although rarely covered in foreign media, it is domestic issues like public health and safety – not foreign relations – that are top of mind for Chinese officials on a day-to-day basis.