China Influence Monitor

Hello, and welcome to China Influence Monitor, a weekly newsletter published by CEPA and Coda Story and edited by me, Edward Lucas. We track the westward footprint of China’s influence operations, and point you towards this week’s best (and worst) coverage. 

In this issue: Huawei’s bumpy week and what role CCP members play in Western businesses. But first to Britain, where China is grabbing decision-makers’ attention

China is rocketing up the agenda in London, with mounting worries ranging from military security to influence operations. China is now a “chronic challenge” according to defence chiefs. Awkwardly this comes just as the country is distracted by Brexit, and waiting to see how hawkish the new US administration will be.    

• The most pressing worry is energy. The China General Nuclear Power Group is considering pulling out of the planned Sizewell C nuclear power station, leaving a huge hole in the country’s energy strategy (due to be outlined on Monday). 
• Then there’s Hong Kong. The crackdown in the ex-colony means 600,000 people may move to Britain under a resettlement program that opens in January, a survey suggests. The mainland authorities are furious about the scheme, saying it breaches previous agreements. Expect more rows. 
• China’s also complaining about Britain’s ban on Huawei and a new security and investment bill, now going through parliament, which aims to stop Chinese firms buying up British high-tech firms.
• A new report by the researcher Adrian Zenz, detailing how hundreds of thousands of Uyghurs and other minorities are forced to pick cotton in the western region of Xinjiang (a label that many regard as pejorative) prompted government condemnation and calls for a boycott. Three big British retailers — Marks and Spencer, Next and Tesco — said their products sourced from China did not use raw cotton from the region. 

Why this matters. All this stokes Britain’s enthusiasm for (and credibility in) the proposed D-10 — a grouping of the world’s top ten democracies. Boris Johnson’s government has invited India, South Korea and Australia to attend the G7 summit next year, “to advance shared interests and tackle common challenges.” Translation: deal with China.

HUAWEI’S BUMPY WEEK

Antoine Griezmann, a soccer star who plays for France and Barcelona, ended his commercial deal with the company, demanding that it denounce the Chinese regime’s facial-recognition programs. These track the presence of Uyghurs and other ethnic minorities in public places. The well-connected tech giant’s comms director in Denmark Tommy Zwicky resigned, allegedly for the same reason. “I am happy to talk once my contract is officially finished on 1st of February,” Zwicky told me. Huawei stirred the pot by claiming Zwicky was only a junior employee. His UK counterpart Edward Brewster also quit, saying he wanted to return to his native New Zealand. 

Anette Dowideit of the Welt am Sonntag newspaper has obtained emails that appear to confirm that employees at Huawei’s Munich research centre were made to conduct industrial espionage.

But the German government agreed to allow Huawei’s involvement in the country’s 5G network in exchange for an acceptance of legal liability and intrusive technical scrutiny. The plan won’t go down well with the Biden administration. Expect more lobbying as parliament considers the bill.

INSIDE THE MACHINE  

Leaked personal details of nearly two million Chinese Communist Party members grabbed headlines this week. The database — dating from 2016 — showed that some of them worked in senior roles in Western companies such as Boeing, Volkswagen and Pfizer,  and even as partners in the Big Four auditing firms. The details come from a database, supposedly obtained by a dissident from a server in Shanghai, and recently passed to the Inter-Parliamentary Alliance on China. 

On the surface, this looks startling. CCP members swear an oath to: 

“Carry out the Party’s decisions, strictly observe Party discipline, guard Party secrets, be loyal to the Party, work hard, fight for communism throughout my life, be ready at all times to sacrifice my all for the Party and the people, and never betray the Party.”

But it shouldn’t be a huge surprise that the Chinese Communist Party runs China or that membership often coincides with professional success. James Palmer in Foreign Policy suggested that news outlets had over-hyped the story. This is not a “state-sponsored spy ring,” he argued, nor is the presence of party members in foreign firms “infiltration.” Most of all this is not new. Any Chinese citizen can be pressurized by the authorities. A Bloomberg editorial assistant, Haze Fan, a Chinese citizen, was arrested on unspecified national security grounds last week.

The real point is that Western employers need to be alert to these vulnerabilities — protecting both their own secrets and their local staff. Foreign diplomatic missions, whose local employees are assigned, and regularly debriefed, by the Chinese authorities, do this routinely. Counter-intelligence needs to be a priority for commercial employers too. 

What we’re reading:

• This long report by Reuters on Taiwan’s military unpreparedness and the mainland’s strategy of psychological attrition (and this NYT piece on the Chinese island state’s vital role in the global chip industry).
• New Zealand’s leading China-watcher, Anne-Marie Brady, has seen off her university’s attempt to muzzle her. Here she looks at New Zealand’s dovish approach to China.
• This New York Times reports on China’s “swaggering” approach to international affairs, fuelled by the belief that the West is skidding downhill. 
•  The NED report on “Commanding Ideas” — how China (and Russia) use think tanks in foreign influence operations.

What we’re laughing at: the scabrous comments posted on Twitter about Huawei’s sickly #StayConnected Christmas ad, and the company’s plaintive “we never spy” responses. 

That’s it for this week. We will be back in your inboxes after the holiday break.

Best regards
Edward