When Xi Jinping issued his Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era at Chinese Communist Party’s 19th National Congress in 2017, I said it meant China could say no. The developments after the Congress have proved what I said.
Now nearly four years has passed, it turns out China is able not only to say no but also to retaliate.
What has indicated that?
China has rushed its anti-sanction law through its National Congress Standing Committee on June 10 to make it come into force immediately right before G7 summit where the US wants to rally its G7 allies around it to confront China.
US’s EU allies have suspended the ramification of their investment deal with China as a threat for China to withdraw its counter actions in response to EU’s sanctions on alleged use of forced labor in China’s Xinjiang.
China’s hasty adoption of its anti-action law tells G7 China is able to and will retaliate against foreign sanctions. The counter sanctions against EU sanctions are legitimate in Chinese law!
If EU wants to break the deal, China will smash it. That’s what China’s adoption of the law means.
There is a Chinese saying: “破罐破摔” (literally translated as “smash to pieces the pot that has been made cracked.”) It is to some extent equivalent to the English saying “He that hopes not for good fears not evil.” If G7 members join the US in confronting China, China will retaliate with no fear. That is what the hasty adoption of the law means.
After all EU is much better benefited by the deal than China. If EU does not want better access to China’ vast growing market, let it. With that mindset, China has adopted the law in a hurry.
Article by Chan Kai Yee
Yew Lun Tian June 10, 2021 10:50 PM HKT
China passed a law on Thursday to counter foreign sanctions, as it strives to resist U.S. and EU pressure over trade, technology, Hong Kong and Xinjiang.
Individuals or entities involved in making or implementing discriminatory measures against Chinese citizens or entities could be put on an anti-sanctions list by a “relevant department” in the Chinese government.
Those on the list may be denied entry into China or be expelled from China. Their assets within China may be seized or frozen. They could be restricted from doing business with entities or people within China.
The new law is China’s latest and most wide-ranging legal tool to retaliate against foreign sanctions and is intended to give Chinese retaliatory measures more legitimacy and predictability, according to local experts.
Foreign companies, however, worry about the dampening impact it might have on foreign investment.
China’s top legislature, the National People’s Congress (NPC) standing committee passed the law on Thursday, according to state television CCTV.
All 14 vice-chairpersons of the committee are under U.S. sanctions for passing the National Security Law last year that critics say has crippled political freedoms in Hong Kong. Beijing says it was needed to restore stability in the city.
President Xi Jinping called last November for the ruling Communist Party to use legal means to defend China’s sovereignty, security and interests against foreign parties.
The NPC said in its annual work report in March that it wants to “upgrade our legal toolbox” to address the risks from foreign sanctions and interference.
In January, the commerce ministry announced mechanisms to assess if foreign restrictions on Chinese trade and business activities were justified, and for Chinese individuals or companies to sue for compensation in a Chinese court.
The United States and its allies have increasingly sanctioned Chinese officials to express concern about how China treats its Muslim Uyghur minority in Xinjiang and pro-democracy activities in Hong Kong, triggering counter-sanctions by China on U.S. and EU policitians and officials.
Washington has also targeted Chinese companies such as Huawei and ZTE for violating U.S. sanctions on Iran or North Korea, an act China called “long-arm jurisdiction”.
The bill underwent a secret first reading in April, and was passed on Thursday, barely two days after NPC announced that it was doing a second reading of the bill. It skipped a third reading normally needed for other bills.
The European Union Chamber of Commerce said its members are alarmed at the lack of transparency about the passing of the bill.
“China seems to be in a hurry. Such action is not conducive to attracting foreign investment or reassuring companies that increasingly feel that they will be used as sacrificial pawns in a game of political chess,” Joerg Wuttke, the Chamber’s president, told Reuters.
Foreign companies looking to do business in China may find themselves up against increasing scrutiny from Chinese regulatory authorities in relation to their operations both locally and abroad, said Shaun Wu, a partner at law firm Paul Hastings.
Chinese experts say Beijing is simply taking a page from the playbooks of the United States and European Union, which in recent years have passed various acts to serve as a legal basis for their engagement with China.
“China previously had neither the economic power nor the political will to use legal means to retaliate against U.S. sanctions. It now has both,” said Wang Jiangyu, a law professor at City University of Hong Kong.
“Cooperation is the best option but the U.S. doesn’t want it. So retaliation, such as with this new law, is the second best option. Sucking it up is the worst,” he said.
Source: Reuters “China passes law to counter foreign sanctions”
Note: This is Reuters’ report I post here for readers’ information. It does not mean whether I agree or disagree with the report’s views.
Due to globalization, China imports lots of instead of making itself lots of semiconductor chips. Perhaps, imports are better cost effective. Now, US restriction of chips supply may cause great troubles to China. For example, US sanctions to deprive Huawei the supply of chips it needs for its mobile phones and equipment may kill Huawei if Huawei does not have huge Chinese market.
The troubles are even greater for Chinese military as it uses the best chips in its weapons and equipment. Most of the chips Chinese military uses are civilian chips adapted for military use. Even those specialized for weapons and military equipment are mostly designed by the military but made by civilian foundries. Often, the foundries do not care what the chips it is contracted to make are used for. Therefore, China’s Semiconductor Manufacturing International Corp (SMIC). certainly may have made and been making and will make chips for Chinese military though it has no links to Chinese military according to Associated Press’ article “Chinese chipmaker denies military ties as US steps up feud” yesterday (https://news.yahoo.com/chinese-chipmaker-denies-military-ties-042525048.html).
However, this blogger believes that due to high requirements for the chips Chinese military needs and SMIC’s low technology, Chinese military has to source its chips abroad, perhaps from TSMC, Qualcomm, etc. Therefore, US restriction of chip supplies makes China really suffer.
If there is a real war instead of trade and tech war between China and the US, US restriction of chip supply may greatly weaken Chinese military. Fortunately, there is but a trade and tech war.
China has to learn a lesson from the trouble. It has to make great efforts to reduce its reliance on the supply of vital goods not only semiconductor chips so that it will not suffer when there is a real crisis.
As for retaliation with the restriction of supply of vital goods such as rare earth elements, this blogger believes it is not a good idea. On the contrary, China has to aggravate US reliance to be able to cause bigger trouble to the US when there is a real crisis.
Article by Chan Kai Yee.
Stella Qiu, Dominique Patton May 31, 2019
BEIJING (Reuters) – China threatened on Friday to unveil an unprecedented hit-list of “unreliable” foreign firms, groups and individuals that harm the interests of Chinese companies, as a slate of retaliatory tariffs on imported U.S. goods was set to kick in at midnight.
The commerce ministry did not single out any country or company, but the threat could further heighten tensions after Washington this month put Huawei on a blacklist that effectively blocks U.S. firms from doing business with the Chinese telecoms equipment giant.
Beijing’s “unreliable entities list” would apply to those who violate market rules and the spirit of contracts, block supplies to Chinese companies for non-commercial reasons, “seriously damage the legitimate rights and interests” of Chinese companies and harm China’s national security, the ministry said.
A deluge of sharply worded commentaries, criticism and warnings from China in the last two weeks has intensified a battle of words with the United States that could complicate the run-up to any meeting between their respective leaders next month.
Earlier this month, Washington slapped additional tariffs of up to 25% on $200 billion of Chinese goods, accusing Beijing of reneging on its previous promises to make structural changes to its economic practices. That prompted Beijing to hit back with additional levies on the majority of U.S. imports on a $60 billion target list – due to take effect on Saturday.
U.S. President Donald Trump has said he plans to meet his counterpart, Xi Jinping, during the G20 summit, set for June 28-29 in Osaka, though China has not formally confirmed this.
Xi and Trump are likely to find it “difficult” to make major progress toward ending the trade war, a former top Chinese official said.
The U.S. approach to trade talks had been “bullying and America First”, whereas the principles of China’s approach to negotiations were equality and cooperation, said Dai Xianglong, who headed the People’s Bank of China from 1995-2002 and remains an influential figure in China.
“I expect that at next month’s meeting of the leaders in Japan it will be difficult to achieve major progress,” Dai said, later adding that he was not confirming that the meeting would take place, but that he hoped it would.
Dai also said he did not rule out stronger retaliation by China. He said heavy sales of U.S. Treasuries by China were a less likely option for retaliation as they would hurt China’s own interests.
PUBLIC RELATIONS BATTLE
Since the latest round of U.S. tariffs, which caught Beijing by surprise, Chinese state media has gone on the offensive.
The People’s Daily, the ruling Communist Party’s flagship newspaper, warned that China was ready to use its dominance of rare earths, crucial minerals used in electronics, to strike back in the trade war.
Speaking at a separate briefing, Chinese Foreign Ministry spokesman Geng Shuang took umbrage at Trump comments on Thursday that China was becoming a “very weakened nation” due to companies leaving China because of the tariffs.
“This is neither the first nor second time the U.S. side has said these lies,” Geng said. “But the U.S. side seems to be very persistent, even obsessed with it, and is still repeating these lies.”
At the Beijing seminar on Friday, former Chinese vice commerce minister Wei Jianguo said initiating a trade war with China might be the biggest strategic mistake made by the United States since World War II or even its founding.
There was a need to prepare for the likelihood for the trade war to ratchet up tensions to geopolitical areas including the South China Sea, said Wei, adding that the trade conflict might last for 30 years or even half a century.
He suggested that China had many countermeasures it could take, including rare earths and against Boeing Co. or U.S. software.
“There are lots of Chinese countermeasures, and, speaking honestly, we hope not to use them, because we always negotiate with the United States with sincerity and hope to achieve results,” Wei said.
Dong Yang, a former executive director at the China Association of Automotive Manufacturers, said at the seminar that U.S. auto parts suppliers could also be hit.
“U.S. car components companies have presence in China, and set China as a global manufacturing base. The escalation of the trade war between China and the United States will seriously affect their development in China and the world,” Dong said.
Other parts suppliers from countries such as Germany, Japan, South Korea and France could also provide strong substitutes for U.S. components, he said.
All those who spoke at the seminar were former, albeit senior, officials. The government has not organized media appearances for top leaders or trade negotiators to answer questions on the trade talks. Chinese officials rarely take questions from foreign media.
Reporting by Stella Qiu, Cheng Leng, Yilei Sun and Dominique Patton; additional reporting by Cate Cadell; Writing by Ryan Woo and Ben Blanchard; Editing by Paul Tait, Simon Cameron-Moore and Nick Macfie
Source: Reuters “China threatens corporate hit-list on eve of new tariffs on U.S. imports”
Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.