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The Outsourcing Of America’s Food

They used to grow apples in Iowa; now the apple juice comes from China and it's just corn and soy as far as the eye can see.

By Austin FrerickThe American Conservative

(By Cody Farris/Shutterstock)

When I was a child, my parents used to pile me and my siblings into my dad’s Oldsmobile Bravada every Sunday night and drive us to my grandparents’ house, just outside of town. In my home state of Iowa, the food economy is painted into the background, and we passed by a number of farms on the way. But at that time, you didn’t just see corn. We drove by a series of apple orchards and fields full of cows out to pasture.

Iowa once had a diversified farm economy. A 1935 guide commissioned by the Federal Writers’ Project described the variety of produce grown within the state, and the regional specialties that flourished. The area around Davenport, near the border with Illinois, was known for its onions, while Northern Iowa specialized in sugar beets. Grapes grew out west near Council Bluffs and Omaha. Peaches were concentrated in the south along the Missouri border. Muscatine, in the southeastern corner of the state, was famous for its melons.

Today, the apple orchards near my grandparents’ house have been replaced by endless rows of corn and soy. In fact, my county lost 88 percent of its apple orchards between 1992 and 2017. Farmers are growing more and more of a few heavily subsidized crops in place of pretty much everything else. The peaches and onions and other crops that used to be grown within the state are now sourced from well beyond its borders.

The transformation in Iowa of a diverse agricultural economy into one narrowly focused on a pair of commodity crops is the product of a bigger trend that is taking place throughout our country. A new set of incentives imposed on farmers has mixed with an embrace of unrestricted free trade with countries like China and Mexico to create a dangerous situation: the outsourcing of the American food system.

This trend has its roots in the latter half of the 20th century, when allies of Wall Street and agribusiness corporations like Ezra Taft Benson and Earl Butz used their positions as secretary of the U.S. Department of Agriculture to reward their benefactors. Instead of promoting balance in the food system, they attacked family farmers and admonished them to “get big, or get out.” Butz, in particular, encouraged farmers to plant commodity crops “from fencerow to fencerow.”

They were one-upped by President Bill Clinton, who was able to do what Benson and Butz could not: pass the Farm Bill that multinational agribusiness corporations wanted. The Federal Agriculture Improvement and Reform Act of 1996—or the Wall Street Farm Bill, as I like to call it—pays farmers to overproduce certain commodities like corn and soy, putting downward pressure on their prices.

Cheap corn means cheap feed for slaughterhouses, which is why companies like Smithfield saw record profits in the years following passage of the law. It also means lower input costs for food processors like PepsiCo that transform commodity crops into high fructose corn syrup and other byproducts that are used to make everything from ketchup to pop to potato chips to dog food. The relative cost of commodity-derived products fell sharply between 1982 and 2008: 10 percent for fats and oils, 15 percent for sugars and sweets, and 34 percent for carbonated beverages. Over the same period, the price of fresh fruits and vegetablesincreased by 50 percent.

But as American agriculture has turned to growing more and more commodities for processing, fruits and vegetables are increasingly imported from other countries. Around the time he passed the Wall Street Farm Bill, Clinton also signed the North American Free Trade Agreement, which encouraged the outsourcing of food items that require more than a minimal amount of labor. Instead of paying Americans a fair wage, companies can import food from countries with minimal environmental and labor protections.

Farmworkers in Mexico, just over the border, earn in a day what their counterparts in California earn in an hour. The model mirrors how clothing companies such as Nike benefit from the unethical practices of overseas subcontractors. Recent investigations have even uncovered the use of child workers in the production of tomatoes in Mexico bound for America. More than half of all tomatoes sold in America are now brought in from Mexico.

Taken together, these laws explain why the apple orchards near my hometown disappeared. Nearly 60 percent of the apple juice sold in the United States comes from China, even though most of America has a climate conducive to apple production. The problem is so bad that salmon caught in the United States is shipped to China for processing and then shipped back to the United States for consumption.

The design of this framework benefits only the largest farmers who have the resources to produce these commodities at scale. For family farmers, the impact has been devastating. The share of each dollar spent on food that winds up in the hands of farmers has fallen from 53 cents in 1946 to 14 cents today, the lowest level ever recorded. Diversified family farms raising a variety of crops and livestock have been replaced by large industrial operations exclusively growing commodities like corn and soy at scale.

This grimness has caused countless family farms to throw in the towel. Since 1980, America has lost 50 percent of its cattle farms, 80 percent of its dairies, and 90 percent of its hog farms. As Benson and Butz threatened, farmers were forced to choose between getting big or getting out. The average size of a farm nearly doubled from 650 acres in 1987 to 1,201 acres in 2012. Many people are familiar with the infamous farm crisis of the 1980s, which pushed thousands of farmers into bankruptcy. But the reality is that America’s Heartland has been in a perpetual state of crisis for the past few decades.

As farms consolidate, more and more of the wealth leaves rural communities. Most land in Iowa is not even farmed by the owner any more. The loss has choked the vibrant local economies that developed around agriculture. Towns hollow out and desperation seeps in. This system has also exacerbated climate change. The further that food travels to get to your plate, the more carbon is put into the atmosphere via a fossil fuel intensive transportation system.

We have an opportunity to turn the corner and to build a better economy that puts family farmers, local businesses, and communities at its center. We can start by ending the outsourcing of the American food system. Apple juice served in Iowa schools should come from Iowa farmers, not from a country on the other side of the globe. This isn’t a utopian vision, nor does it require radical change. In fact, what we have now—where the largest owner of pigs in America is a Chinese state-linked company and where drug cartels are involved in farming the avocados we eat—is what’s truly radical.


Biden’s Electric Vehicle Plan Without Mining Expansion Is A Big Win For Beijing

President Joe Biden wants half of all cars sold in the U.S. to be electric within 10 years. Without new mines, China will maintain grip on battery supply.

By Tristan JusticeThe Federalist

Biden’s Electric Vehicle Plan Without Mining Expansion Is A Big Win For Beijing
Photo ABC News / YouTube

President Joe Biden announced plans Thursday to push auto sales to be 50 percent electric by 2030 with new regulations, as part of the administration’s effort to promote cleaner energy.

“There [is] a vision of the future that is now beginning to happen,” Biden said at the White House. “A future of the automobile industry that is electric. Battery electric, plug-in, hybrid electric, fuel cell electric, it’s electric and there’s no turning back.”

That future however, may also feature swelling American reliance on one of its greatest overseas adversaries: China.

Less than five percent of all new cars on the U.S. market were purely electric vehicles and less than four percent were plug-in hybrids as of June, according to the Energy Department’s Argonne National Laboratory. Not only will the government-manufactured shift to up that number by 12 times require massive state subsidies for a slow-growing industry, as Biden promised, but it will exacerbate American dependence on Chinese mineral production to make the car batteries needed.

According to the New York Times, China makes “70 to 80 percent of the world’s battery chemicals, battery anodes and battery cells,” and dominates the market for electric motor magnets.

“China controls the cards in the battery supply chain,” Vivas Kumar, the former Tesla manager of battery materials, told the paper in February.

Meanwhile, the Unites States lags behind when it comes to even mining its own minerals such as lithium and cobalt, let alone processing them at home. While both are more common components of electric cars, the Chinese also remain dominant in the extraction and refinement of the 17 rare earth minerals, some of which are in the batteries too.

“The Middle East has oil, and China has rare earth,” said former Chinese Communist Party Leader Deng Xiaoping in 1992, as Beijing ramped up production to play the long game — which is now bearing fruit. Since then, China has outpaced the United States as the world’s largest producer of rare minerals, raising production by 500 percent, according to the Wyoming Mining Association.

“The [electric vehicle] industry can’t exist without China, and there is no plan to displace China as the supplier of these minerals,” former Trump administration EPA transition team member and founder of “JunkScience” Steve Milloy told The Federalist, adding that Biden’s latest initiative orders more dependency on Chinese imports.

Milloy is skeptical the electric vehicle industry will even take off with a 50 percent share of the car market altogether. He argues their high price and inefficiency will lead consumers to embrace their use far more slowly than the 2030 timeline suggests, if not reject them entirely.

The Biden administration is not blind to the dominance of Chinese mining. At his electric vehicle announcement Thursday, the president acknowledged the United States was in competition with China and its stranglehold on the world’s battery supply.

“Right now, China’s leading the race,” Biden said. The electric car market has also grownfar more and far faster in China than in the U.S., according to the Pew Research Center.

“And here’s the deal,” the president continued, “our national labs in America, our universities, our automakers, led in the development of this technology. We lead in developing this technology, and there’s no reason why we can’t reclaim that leadership and lead again.”

Biden said nothing about mining however, as the administration fills with radical environmental leftists who aim to lock up natural resources on federal land. The dramatic increase in battery demand that would accompany making 50 percent of new cars electric is a big win for Beijing.

The United States could reclaim its mineral dominance if it tapped into its own vast riches, unreachable by the cascade of burdensome regulation standing in the way of development. The short 6-minute video from Kite & Key Media sums up the entire debacle below:

Even if the lower 48 are kept off limits, Alaskan minerals could be mined to erase American dependence on Chinese supply, with lawmakers in the Republican state welcoming development.

“Experts predict a nearly 500 percent increase in mineral demand created by the push to decarbonize the world. Alaska is the place to find a responsible way to meet this demand,” wrote Alaskan Republican Gov. Mike Dunleavy in the Wall Street Journal three months ago. “No major mining accident has occurred in Alaska, yet the U.S. continues to sources its minerals from the Congo, South Africa and China while Washington regulators deny permits to projects on state of Alaska lands designed for mining.”

China, meanwhile, has made no secret of its plans to exploit American dependence on its mineral operations. The Wall Street Journal reported on a 2019 Beijing-funded report on rare-earth policy, which wrote, “China will not rule out using rare earth exports as leverage to deal with” a U.S.-China trade war.

With other nations, China already has weaponized its supply-chain power. In 2010, the country blocked rare-earth mineral exports to Japan, a developed but resource-poor country which relied heavily on the Chinese products.

Federalist Senior Contributor Helen Raleigh, an author and expert on Chinese affairs, chronicled the Japanese response, in which the government sought to diversify its source of minerals and drive innovation to encourage entrepreneurs to find substitute material.

In an interview, Raleigh emphasized that, while China is the world’s supplier of rare-earth minerals, it is not home to the most reserves, and the United States could find alternative production with an open look inward at its own supply which is mined far more cleanly and safely.

“Chinese dominance is in production and processing, not the world’s largest deposits,” Raleigh said.

While the Biden administration began to take steps in April to secure domestic supply for rare-earth minerals, Raleigh said the plans so far lacked “teeth” because “they focus on short-term optics,” such as initiatives to make 50 percent of the U.S. auto fleet electric within 10 years.

“We shouldn’t be so short-sighted,” Raleigh said, considering the Chinese plotted their dominance in the mineral arena decades ago.

In May, Reuters reported Biden was looking to Brazil, Canada, and Australia as potential sources for rare-earth minerals, as opposed to expanding America’s own mines to tap into its own reserves with its own labor.

Milloy said the issue with that proposal, aside from generating jobs abroad which could be available at home, is that neither country is a known host to resources as vast as those in the United States.

“We can’t just demand that Australia, Canada, [and] Brazil produce these for us,” Milloy said.


Will America Defend Taiwan? Here’s What History Says

By Ian EastonHoover Institution

In December 1949, Chiang Kai-shek moved the capitol of the Republic of China (ROC) to Taipei. He intended the relocation to be temporary. He had already moved his government multiple times: when the Empire of Japan invaded China, when World War II ended, and again when Mao Zedong’s Communist insurgents took the upper hand in the Chinese Civil War.

To Chiang’s eyes, Taiwan was the perfect place to refit his tattered forces and prepare them for the long struggle ahead to defeat the Communists. The main island was protected by dozens of tiny island citadels, many just off the mainland coast, and surrounded by famously rough waters. While Chiang’s army had sustained crushing battlefield defeats and mass defections, he believed his superior navy and air force would make Taiwan an impregnable fortress.

The events that followed presented successive U.S. presidents with some of the most consequential foreign policy questions ever confronted by America’s leaders. During the decades since 1949, there have been several incidents that tested whether or not Washington was willing to confront the Chinese Communist Party (CCP) and support Taiwan. If past is prologue, how the United States responded to previous crises might say something important about what it will do in the future. So, what does the historical record say? What might we expect to see if China attacks Taiwan in the 2020s or beyond?

The Korean War

On January 12, 1950, U.S. Secretary of State Dean Acheson gave a speech in which he suggested that America no longer intended to defend its erstwhile allies the Republic of Korea (South Korea) and the Republic of China (Taiwan). According to Acheson, those governments were outside of America’s defensive perimeter in Asia. His speech encouraged the newly established People’s Republic of China (PRC) to accelerate plans to invade Taiwan. But before Mao Zedong and his generals could act, their North Korean ally Kim Il-sung launched an invasion of South Korea.

On learning of the attack, President Harry Truman decided that the U.S. would defend both Korea and Taiwan, and ordered the U.S. Navy to forestall the CCP from attacking the ROC’s last redoubt. On June 29, 1950, an American aircraft carrier, heavy cruiser, and eight destroyers sailed into the Taiwan Strait to conduct a show of force within visual range of Communist forces arrayed along the mainland coast. Soon thereafter, armed American seaplanes were stationed on the Penghu Islands and began to search for any hostile movements toward Taiwan.

To further enhance its early-warning picture, the U.S. sent submarines to monitor Chinese ports across from Taiwan, areas where enemy vessels were expected to marshal if an invasion was imminent. In addition, four American destroyers were stationed in Taiwan. Their mission was to patrol near the coast of China, with at least two warships watching around the clock for signs of a pending amphibious assault. The Taiwan Patrol Force, as the mini-surveillance fleet became known, operated continuously for nearly three decades to come.

Soon thereafter, the U.S. established a defense command in Taipei and sent a Military Assistance Advisory Group (MAAG) to Taiwan under the command of a two-star general. This organization was tasked with providing training, logistics, and weapons to the ROC military in order to develop it into a modern fighting force. By 1955, there were tens of thousands of American troops stationed in Taiwan, including over two thousand military advisors, making MAAG the largest of the U.S. advisory groups then deployed around the world. In the following years, MAAG transformed the ROC military into one of Asia’s most capable fighting forces.

The 1954–1955 Taiwan Strait Crisis

In August 1954, the Chinese Communists launched a string of operations against ROC forces along the mainland coast. Mao and his top lieutenants judged that by attacking the offshore islands they could drive Washington and Taipei apart and set the stage for a final invasion of Taiwan. They began by shelling Kinmen and Matsu, island groups located just off the coast of Fujian Province. Not long after, the People’s Liberation Army (PLA) launched air and sea raids on the Dachens, a group of islands 200 miles north of Taiwan, near Taizhou in China’s Zhejiang Province.

In November 1954, the PLA encircled Yijiangshan, a ROC island base located at the extreme northern flank of the Dachens. Using modern equipment and tactics from the Soviet Union, the PLA carried out a successful invasion operation, taking the island on January 18, 1955. In response, the U.S. Navy steamed into the area with 70 ships, including seven aircraft carriers. The Americans then launched Operation King Kong, the evacuation of the Dachens. U.S. Marines assisted ROC forces to safely move some 15,000 civilians, 11,000 troops, 125 vehicles, and 165 artillery pieces back to Taiwan with no casualties.

On March 3, 1955, Washington formally cemented a mutual defense treaty with Taipei. President Dwight Eisenhower also received permission from Congress to exercise special powers in the defense of Taiwan, granted by the Formosa Resolution. In May 1955, the PLA stopped shelling Kinmen, and, three months later, the CCP released 11 captured American airmen. The 1954-1955 Taiwan Strait Crisis was over, but the standoff continued.

The 1958 Taiwan Strait Crisis

On August 23, 1958, the PLA launched a surprise attack on Kinmen, showering the island group with tens of thousands of shells as a prelude to planned amphibious landings. Beijing sought to test the resolve of the Americans, seeing if the seizure of Kinmen and the threat of war could break the U.S.–ROC alliance apart and demoralize Taiwan. The plan failed almost immediately. ROC military engineers had tunneled deep into Kinmen’s granite, carving out subterranean bunkers and strongholds that allowed the defenders to weather the shelling with few casualties. The PLA made an amphibious assault on the nearby island of Tung Ting and was repulsed. To the north, Communist units launched artillery strikes against the Matsu Islands. But those were just as ineffectual.

The U.S. sent in four aircraft carriers, along with a large number of cruisers, destroyers, submarines, and amphibious ships. The American fleet was equipped with low-yield atom bombs, designed to stop a potential human-wave assault on the islands, a PLA tactic previously seen in Korea. After torpedo boats and artillery began to target ROC Navy ships resupplying Kinmen, the U.S. Navy began escorting the convoys from Taiwan with cruisers and destroyers. On September 18, 1958, American artillery guns were rolled ashore Kinmen, which were capable of firing tactical nuclear shells that could incinerate any invader (the shells were kept aboard U.S. Navy ships located nearby). The colossal guns also fired conventional rounds that increased the garrison’s firepower and morale.

During the crisis, ROC Air Force pilots used new Super Sabre jets and Sidewinder missiles to engage PLA MiG-17s in air-to-air combat. The results were decisive: ROCAF pilots achieved 33 enemy kills in return for the loss of four of their own. On October 6, Beijing announced a cease-fire under pressure from its Soviet allies, who feared the fighting could escalate and go nuclear. The 1958 Crisis was over and Taiwan’s offshore island bases remained undefeated.

The 1995–1996 Taiwan Strait Crisis

In the early 1990s, Taiwan began peacefully transitioning to a democracy. With the Cold War over, it seemed hopeful that the U.S. and other nations would recognize Taiwan as a legitimate, independent country. Taiwan’s president, Lee Teng-hui, publicly signaled that, in his view, the Chinese Civil War was over; Taiwan was now the ROC, the ROC was Taiwan, and his country would no longer claim sovereignty over territory controlled by the authorities in Beijing.

In June 1995, President Lee returned to his alma mater, Cornell University, to announce Taiwan’s plans to hold free and fair elections. The CCP responded by conducting a series of ballistic missile tests, firing rockets into the waters north of Taiwan. In August, the PLA moved a large number of troops to known invasion staging areas, conducted naval exercises, and carried out further missile firings. That November, the Chinese military staged an amphibious assault drill. In March 1996, just before the elections, the PLA fired more ballistic missiles into waters directly off Taiwan’s two largest ports, and implicitly threatened to turn a planned exercise into a real invasion operation.

The U.S. played an important role throughout the crisis. President Bill Clinton responded to Beijing’s provocations by sending two carrier battle groups to waters near Taiwan. The American demonstration succeeded: China backed down, and Taiwan’s elections went ahead as planned. President Lee won the elections with a decisive margin, and the 1995–1996 Taiwan Strait Crisis ended on a positive note. Nonetheless, Taiwan remained diplomatically isolated and has slowly become more vulnerable over time, a trend that continues unabated to present day.

Implications for the Future

While all historical analogies are imperfect, precedents previously set could provide American leaders with a guide in subsequent similar circumstances. The record of past policy decisions made by Washington demonstrates that, when tested, American presidents have always viewed it in their nation’s interest to come to Taiwan’s defense, even amid situations that could have escalated to the level of nuclear warfare. In 1958, for example, Washington was resolved to defend Taiwan against invasion even if that required the use of battlefield atomic weapons—and even if such usage invited nuclear retaliation from the Soviet Union, which was then closely aligned with Beijing.

Perhaps even more notable were those American leadership decisions undertaken in the 1995–1996 Taiwan Strait Crisis. In that instance, the U.S. deployed aircraft carrier battle groups to waters near Taiwan in spite of the fact that the CCP had recently detonated two nuclear warheads at a test site; had carried out multiple tests of nuclear-capable ballistic missiles; and, in backchannel conversations, had implicitly threatened Los Angeles with nuclear attack. The resolve displayed by Washington in 1996 might be considered particularly remarkable given that the U.S. no longer diplomatically recognized Taiwan’s government at the time.

To date, there is no known case in which an American president failed to send forces to support the defense of Taiwan in response to a credible CCP threat. If this track record is indicative of future performance, the years ahead are likely to see the U.S. government continually improve its operational readiness to defend Taiwan in accordance with the evolving threat picture. In times of crisis, American leaders will likely send overwhelming national resources to the Taiwan Strait area and make their commitments to Taiwan’s defense more explicit in hopes of convincing the PRC to deescalate tensions.

Even barring a major political-military crisis, it seems probable that the years ahead will see the U.S. government improve its early-warning intelligence via regular ship, submarine, and aircraft patrols of the Taiwan Strait; more frequent overhead passes of space and near-space platforms; and expanded intelligence sharing arrangements with the Taiwanese security services. It also seems probable that the U.S. will make significant enhancements to its diplomatic, trade, intelligence, and military presence in Taiwan.

It remains an open question whether a Taiwan Patrol Force and MAAG-like organization will be reestablished—let alone an official country-to-country relationship and defensive alliance. But each could be considered past examples of political and military initiatives that, when combined, were successful in helping to deter CCP aggression. Herein we might find positive lessons for the future.


China’s Attacks on Tech Are a Losing Strategy in Cold War II

Forcing DiDi and Alibaba to toe the Communist Party line may help Xi build a police state but will stall the nation’s dynamic industry.

By Niall FergusonBloomberg

Fiddle Didi.
Fiddle Didi. Source: AFP/Getty Images

“Investors have to rethink the entire China structure,” David Kotok of Cumberland Advisers said last week. For Hong Kong, the One Country, Two Systems principle was “dead.”  As for the crackdown on some of the nation’s tech giants, the Beijing government’s treatment of Alibaba “is not a one-off. Neither is DiDi. Everything China touches must be viewed with suspicion.”

Wait, you’re saying that investing in the other side in the early phase of Cold War II might have been a bad idea? You’re telling me that “long totalitarianism” was not a smart trade?

For the past three years, I have been trying to persuade anyone who would listen that “Chimerica” — the symbiotic economic relationship between the People’s Republic of China and the United States of America, which I first wrote about in 2007 — is dead. The experience has taught me how hard it can be for an author to kill one of his own ideas and replace it with a new one. The facts change, but people’s minds — not so much.

Chimerica was the dominant feature of the global economic landscape from China’s accession to the World Trade Organization in 2001 to the global financial crisis that began in 2008. (I never expected the relationship to last, which was why I and my co-author Moritz Schularick came up with the word: Chimerica was a pun on “chimera.”)  At some point after that, as I have argued in Bloomberg Opinionpreviously, Cold War II began.

Unlike with a “hot” war, it is hard to say exactly when a cold war breaks out. But I think Cold War II was already underway — at least as far as the Chinese leader Xi Jinping was concerned — even before former President Donald Trump started imposing tariffs on Chinese imports in 2018. By the end of that year, the U.S. and China were butting heads over so many issues that cold war began to look like a relatively good outcome, if the most likely alternative was hot war.

Ideological division? Check, as Xi Jinping explicitly prohibited Western ideas in Chinese education and reasserted the relevance of Marxism-Leninism. Economic competition? Check, as China’s high growth rate continued to narrow the gap between Chinese and U.S. gross domestic product.  A technological race? Check, as China systematically purloined intellectual property to challenge the U.S. in strategic areas such as artificial intelligence. Geopolitical rivalry? Check, as China brazenly built airbases and other military infrastructure in the South China Sea. Rewriting history? Check, as the new Chinese Academy of History ensures that the party’s official narrative appears everywhere from textbooks to museums to social media. Espionage? Check. Propaganda? Check. Arms race? Check.

A classic expression of the cold war atmosphere was provided on July 1 by Xi’s speech to mark the centenary of the Chinese Communist Party: The Chinese people “will never allow any foreign force to bully, oppress, or enslave us,” he told a large crowd in Beijing’s Tiananmen Square. “Anyone who tries to do so shall be battered and bloodied from colliding with a great wall of steel forged by more than 1.4 billion Chinese people using flesh and blood.” This is language the like of which we haven’t heard from a Chinese leader since Mao Zedong.

Most Americans could see this — public sentiment turned sharply negative, with three quarters of people expressing an unfavorable view of China in recent surveys. Many politicians saw it — containing China became just about the only bipartisan issue in Washington, with candidate Joe Biden seeking to present himself to voters as tougher on China than Trump. Yet somehow the very obvious trend toward cold war was ignored in the place that had most to lose from myopia. I am talking about Wall Street. Even as China was ground zero for a global pandemic, crushed political freedom in Hong Kong and incarcerated hundreds of thousands of its own citizens in Xinjiang, the money kept flowing from New York to Beijing, Hangzhou, Shanghai and Shenzhen.

According to the Rhodium Group, China’s gross flows of foreign domestic investment to the U.S. in 2019 totaled $4.8 billion. But gross U.S. FDI flows to China were $13.3 billion. The pandemic did not stop the influx of American money into China. Last November, JPMorgan Chase & Co. spent $1 billion buying full ownership of its Chinese joint venture. Goldman Sachs Group Inc. and Morgan Stanley became controlling owners of their Chinese securities ventures. Just about every major name in American finance did some kind of China deal last year.

And it wasn’t only Wall Street. PepsiCo Inc. spent $705 million on a Chinese snack brand. Tesla Inc. ramped up its Chinese production. There were also massive flows of U.S. capital into Chinese onshore bonds. Chinese equities, too, found American buyers. “From an AI chip designer whose founders worked at the Chinese Academy of Sciences, to Jack Ma’s fast-growing and highly lucrative fintech unicorn Ant Group and cash cow mineral-water bottler Nongfu Spring Co., President Xi Jinping’s China has plenty to offer global investors,” my  Bloomberg opinion colleague Shuli Ren wrote last September.

Recent months have brought a painful reality check. On July 2, Chinese regulators announced an investigation into data security concerns at DiDi Global Inc., a ride-hailing group, just two days after its initial public offering. DiDi had raised $4.4 billion in the biggest Chinese IPO in the U.S. since Alibaba Group Holding Ltd.’s in 2014. No sooner had investors snapped up the stock than the Chinese internet regulator, the Cyberspace Administration of China, said the company was suspected of “serious violations of laws and regulations in collecting and using personal information.”

The cyberspace agency then revealed that it was also investigating two other U.S.-listed Chinese companies: hiring app BossZhipin, which listed in New York as Kanzhun Ltd. on June 11, and Yunmanman and Huochebang, two logistics and truck-booking apps run by Full Truck Alliance Co., which listed on June 22. Inevitably, this nasty news triggered a selloff in Chinese tech stocks. It also led several other Chinese tech companies abruptly to abandon their plans for U.S. IPOs, including fitness app Keep, China’s biggest podcasting platform, Ximalaya, and the medical data company LinkDoc Technology Ltd.

To add to the maelstrom, on Thursday Senators Bill Hagerty, a Tennessee Republican,  and Chris Van Hollen, Democrat of Maryland, called on the Securities and Exchange Commission to investigate whether DiDi had misled U.S. investors ahead of its IPO. Also last week, U.S. tech companies such as Facebook, Twitter and Google came under increased pressure from Hong Kong and mainland officials over doxxing, the practice of publishing private or identifying information about an individual online.

For several years, I have been told by numerous supposed experts on U.S.-China relations a) that a cold war is impossible when two economies are as intertwined as China’s and America’s and b) that decoupling is not going to happen because it is in nobody’s interest. But strategic decoupling has been China’s official policy for some time now. Last year’s crackdown on financial technology firms, which led to the sudden shelving of the Ant Group Co. IPO, was just one of many harbingers of last week’s carnage. 

The proximate consequences are clear. U.S.-listed Chinese firms will face growing regulatory pressure from Beijing’s new rules on variable interest entities as well as from U.S. delisting rules.

The VIE structure has long been used by almost all China’s major tech companies to bypass China’s foreign investment restrictions. However, on Feb. 7, the State Council’s Anti-Monopoly Committee issued new guidelines covering variable interest entities for the first time. Recognizing them as legal entities subject to domestic anti-monopoly laws has allowed regulators to impose anticompetition penalties on major VIEs, including Alibaba, Tencent Holdings Ltd. and Meituan. This new framework substantially increases risks to foreign investors holding American deposit receipts in the tech companies’ wholly foreign-owned enterprises. For example, Beijing could conceivably force VIEs to breach their contracts with their foreign-owned entities. In one scenario, subsidiaries of a Chinese variable interest entity that are deemed by Beijing to be involved in processing and storing critical data could be spun out from the VIE — just as Alibaba was reportedly forced to spin out payments subsidiary Alipay in 2010.

The stakes are high. There are currently 244 U.S.-listed Chinese firms with a total market capitalization of around $1.8 trillion, equivalent to almost 4% of the capitalization of the U.S. stock market.


China-Backed Confucius Institute Turns Its Attention to K-12 Classrooms

State Department in 2020 declared the group a 'propaganda' arm of CCP

By Alex Nester and Jack BeyrerThe Washington Free Beacon

Getty Images

Several American universities maintained relationships with China after shuttering their Confucius Institute chapters, shifting resources to affiliate K-12 programs and fostering sister relationships with Chinese schools.

Rather than fully cut ties with the Confucius Institute, many universities shifted their resources to affiliate programs aimed at K-12 classrooms. The Confucius Classrooms program offers an array of Chinese language and culture programs to elementary, middle, and high school students across the United States. Often linked to Confucius Institutes at nearby colleges, Confucius Classrooms are funded and run by the Hanban, a division of China’s Ministry of Education.

The shift reveals the extent to which the Chinese Communist Party is ingrained in American educational institutions. American security officials have recently warned about Beijing’s efforts to cultivate links with educational institutions in order to change American perceptions of the Communist regime.

Over a dozen universities closed their Confucius Institute chapters after the State Department declared the organization a Chinese propaganda arm. According to Rachelle Peterson, a China expert at the National Association of Scholars, the Communist regime was ready for the fallout.

“The Chinese government has developed a nuanced and sophisticated network of tools,” Peterson told the Washington Free Beacon. “In the case of Confucius Institutes, the Chinese Communist Party is aware that they are falling out of favor in the U.S., and they’re preparing alternative ways of engaging with the United States—many of which are equally problematic.”

Confucius Classrooms are just some of those “problematic” alternatives. The National Association of Scholars estimates that, at its height, there were upward of 500 Confucius Classrooms in operation—significantly more than the 41 active Confucius Institute chapters. And because most federal oversight is directed at higher education, China has been able to covertly entrench itself in the K-12 education space.

Rep. Chris Stewart (R., Utah) told the Free Beacon that he is concerned Confucius Classrooms operating in his district teach an inaccurate view of the Chinese Communist Party to children.

“The Confucius Classrooms are a little bit different and a little bit harder [than Confucius Institutes] because they’re not as obvious,” Stewart said. “The thing we’re trying to do now is to show that they’re not using it for intelligence access, computer access, or to propagandize adults, but they are using it to soften children.”

The Confucius Classrooms operating in Stewart’s district are just a few such outposts that grew out of shuttered Confucius Institute chapters across the country.

A consortium of Confucius Classrooms serving nearly 1,200 K-12 students in Ohio continues to operate more than a year after Miami University in Ohio announced it shuttered its Confucius Institute. In western Kentucky, a coalition of more than 30 staffers led by Simpson County public schools has taken up the mantle of the Western Kentucky University Confucius Institute, which closed in 2019.

When Michigan State University’s Confucius Institute closes this year, the school plans to transfer the program’s resources “to other areas within the university” so as to “benefit K-12 students and teachers who would not otherwise have these learning options available in their schools,” a spokeswoman told the Free Beacon.

In addition to shifting resources from universities to elementary and high school classrooms, China has found ways to maintain a foothold at universities that have closed their Confucius Institutes. Several universities have sought out partnerships with Chinese “sister schools” to replace their Confucius Institutes.

Middle Tennessee State University closed its Confucius Institute in August 2020, after receiving criticism from Sen. Marsha Blackburn (R., Tenn.). But the school continues to foster ties with sister universities in China. The University of Nebraska said it remains “deeply committed” to its connections with Chinese universities after its Confucius Institute closed in December 2020.

In a statement to the Free Beacon, Tufts University—which plans to close its Confucius Institute chapter in September—said the school will “focus on expanding and deepening” its ties with Beijing Normal University. Similarly, the College of William and Mary closed its Confucius Institute at the end of June, but will continue to offer China-related programs “through university-to-university agreements,” a spokeswoman told the Free Beacon.

In at least one case, China has continued to donate to a university in order to bolster ties. Peterson uncovered Education Department documents that show the University of Michigan received a $300,000 gift from China after the school closed its Confucius Institute in 2019.

“All the signs are that there are replacements for Confucius Institutes,” Peterson said. “Alternative forms of engagement are popping up—many in ways that are going to have the same problems as the Confucius Institutes.”


Viktor Orban’s Harum-Scarum China Gambit

By Dr. Miklos K. RadvanyiFrontiers of Freedom

On July 5, 2021, Nathan Law, a pro-democracy activist and politician of Hong Kong, published a Letter to Orban from his London exile in Politico.  In his Letter’s opening paragraph, Mr. Law states that “It’s difficult to imagine how somebody who battled against the brutal repression of a communist party at a young age could later become a staunch supporter of another.”  Then, he continues thus:  “Since assuming power in 2010, your growing intimacy with the Chinese government has made it difficult for the EU to put pressure on Beijing when it comes to human rights violations.  Hungary was the first EU country to join China’s Belt and Road Initiative in 2012, paving the way for Beijing to export its authoritarian model to the world.  And in the years since, your country has served as China’s biggest defender in the EU.”

Nathan Law is absolutely correct.  The second son of an unskilled laborer who became the Communist party secretary at the local gravel mine, Viktor Orban used his personal hatred toward his cruel father to rebel against the Soviet occupation and the resulting one-party dictatorship.  Having entered public life on June 16, 1989, the day of the symbolic reburial of Imre Nagy the failed leader of the 1956 Revolution, Viktor Orban called at Budapest’s Heroes’ Square for free elections and the removal of the Soviet military from Hungarian soil.  

From there on, his journey in the discombobulated terrain of Hungarian politics has been marked by self-induced narcissistic turns in opposition, through leading between 1998 and 2002 an utterly inexperienced as well as woefully incompetent government that failed miserably within four years, to reestablishing the one-party dictatorship of the pre-1990 Hungary in its barely disguised oppression and all-encompassing corruption in his second reincarnation as Prime Minister.  As proof of his sickening egomania, Viktor Orban has repeatedly claimed that his 1989 speech was the reason for the Soviet Union to remove its military from Hungary.  Notwithstanding Viktor Orban’s laughable as well as baseless assertion, the decision about the retreat of the Soviet military was made years before his speech and the actual withdrawal of several military units was already ongoing or partially completed. 

Viktor Orban’s destructive transformation of Hungary from a developing democratic state to a neo-Communist fiefdom has come with a heavy price.  Viktor Orban has become politically a fatally wounded non-entity and personally a persona non grata within the European Union.  His Minister of Foreign Affairs and Trade Peter Szijjarto has only exacerbated Viktor Orban’s international misery.  Having proved himself more as a pompous amateur, Mr. Szijjarto has made Hungary with his grossly undiplomatic statements about President Biden and the Democrat Party in the United States of America unwelcome too.  As a result, the Viktor Orban-led Hungary has become a pariah in Washington, D.C. as well as in Brussels.

Thus, Viktor Orban’s epiphany from a young firebrand against Communist oppression to an egomaniacal monster has had its roots in his primitive communist upbringing and the related worshipping of power and money by persons who only knew hardships and destitutions in their miserable youth.  Naturally, so-called scholars like Dorit Gerva are talking and writing about “Orbanism” as a new ideology.  They are all badly mistaken.  For Viktor Orban ideology has always meant an interchangeable and disposable semi-intellectual garbage whose sole purpose has been to conceal his insatiable appetite for power and money.  Moreover, for people with Viktor Orban’s mentality, countries or individuals do not count as supreme political and humanistic values.  Consequently, for Viktor Orban democracy with its glorification of individual rights and its protection of personal freedoms is meaningless platitudes that must be continuously attacked and decisively rejected.  For these reasons, the combination of his ostracism by the leaders of  NATO and the European Union and his personal inclination toward authoritarianism, moving closer to China  has been an obvious solution.

 Domestically, Viktor Orban and his propaganda machine has tried to sell his “Eastern Opening” as hugely beneficial for Hungary.  However, the facts have belied his promises of large investments, preferential loans and new markets concerning China, Russia and many other Asian countries.  Specifically, Hungary’s exports to China in 2020 were $2.04 billion.  On the other hand, Hungary’s imports from China in 2020 have reached $8.72 billion.  This means a trade deficit of more than $6 billion.  Thus, while being up in arms against any foreign interference in domestic affairs, Viktor Orban is quietly and surreptitiously turning Hungary into an economic “Canton” of the People’s Republic of China.  

The Chinese-built Budapest-Belgrade railway’s Hungarian section, a highly ballyhood accomplishment of the Chinese Belt and Road Initiative, is costing about $3 billion.  Of this amount, 85 percent is financed with Chinese loans, with interest between $500 and $800 million.  This means that the entire project’s cost around $3.7 billion.  Thus, this railway project is wholly financed by the Hungarian taxpayers.  Again, the project is much more beneficial to China than for Hungary.  First, the new railway does not connect Hungarian towns.   Second, tourism from the Balkan region has never been significant. Third, the railway is constructed mostly by Chinese companies.  Fourth, the railway is designed to carry freight more than passengers.  Fifth, the strategic penetration of the European Union’s infrastructure markets will become much easier for Chinese state-owned companies.  Notwithstanding these negative aspects, the railway is being built and the entire project with all the documents connected to the bilateral deal were declared a national strategic matter, and thus top secret.  

Similarly, fighting the coronavirus pandemic, Viktor Orban has never criticized China.  On the contrary, he and his cabinet members have only had the kindest words for Beijing’s efforts to fight the pandemic and its willingness to supply Hungary and the rest of the world with vaccines, masks as well as badly needed medical equipment.  Accordingly, the Hungarian government bought at the beginning of 2021 five million doses of Chinese Sinopharm vaccines for $36 (30 Euros) each.  In comparison, the European Union paid only 15,50 Euros per dose for the Pfizer-BioNTech vaccine.  For a dose of AstraZeneca, the European Union paid $2.15, according to Belgium’s budget secretary.  

Even more suspicious is the way the Hungarian government acquired the five million medically absolutely useless doses of the Chinese Sinopharm vaccines.  The intermediary company from which the Hungarian government purchased the vaccines was an offshore company with a registered capital of $10,700 (9,000 Euros).  The net value of the bilateral contract was $179 million (150 million Euros).  Such arrangements clearly raise red flags for anti-corruption watchdogs, as The New York Times article on March 12, 2021, rightly stipulated.  

The Chinese vaccine was aggressively promoted by Viktor Orban himself.  Claiming that he got the Sinopharm vaccine, he encouraged Hungarians of all ages to do the same.  Yet, while promoting and using the vaccine, it lacked full approval even by the competent Hungarian authorities until January 2021.  Adding insult to injury, the European Union and the American FDA have never approved the Sinopharm vaccine for use on humans.  To prove the uselessness of the Sinopharm vaccines, Hungarians who were vaccinated with Sinopharm have never developed antibodies in their bodies. 

The background story of the Shanghai-based Fudan University is equally strange, or more precisely, typical Orbanesque.  This story has started with the forced expulsion of the George Soros-established Central European University from Budapest, Hungary.  This University was accredited in both the United States of America and Hungary.  In addition, it ranked in quality way above any indigenous school of higher education. The ensuing saga of the very personal feud between George Soros and Viktor Orban has been portrayed and analyzed exhaustively by the media in Hungary as well as across Europe and the United States.  

To summarize it, the Central European University rejected government control.  The University’s argument was that in a democracy institutions of higher education must be independent of political influence.  Moreover, the President of the Central European University Michael Ignatieff argued that the Orban government destroyed the independence and the high quality of Hungarian university education by politically as well as professionally crushing their independence, while simultaneously liquidating the free-thinking intelligentsia.  Yet, utilizing his artificially created two-thirds majority in the unicameral Parliament, Viktor Orban’s party adapted a law that made the functioning of the Central European University in Hungary impossible.  The Central European University departed to Vienna, Austria, leaving Viktor Orban and his battered educational system enjoying in their miserable isolation their pyrrhic victory.

This self-congratulatory gloating about the triumph of Viktor Orban’s “illiberal democracy” over the “Leftist liberalism of George Soros” has culminated in the Hungarian government’s sudden announcement about rolling out the red carpet for the Shanghai-based Fudan University.  Preemptively declaring that the Chinese university’s mission would be strictly educational, the ensuing nation-wide protest against the “Trojan Horse” of Communist influence and potential spying expressed the real opinions as well as the anti-Chinese feelings of the Hungarian people.  

Clearly, the pivoting towards China, defined vaingloriously by Viktor Orban as “Eastern Opening,” is extremely unpopular among all Hungarians.  Adding fuel to the already existing popular discontent is the cost and the size of the Fudan University project.  Planned to spread over twenty six acres, with an additional forty acres accounting for the surrounding park, and estimated to cost a whopping $1.687 billion, it would exceed the total cost the Hungarian government spends on the annual operation of its over two dozen state-run public universities.  No wonder that the suspicion of another gigantic government corruption has again raised its ugly head throughout the country and beyond.  

To top this monstrous political and financial ploy, the construction of the campus is carried out exclusively by Chinese banks and Chinese companies, involving only Chinese workers.  More specifically, the Hungarian government agreed that the Chinese only involvement also means that the job must be done by the China State Construction Engineering Corporation (CSCEC), the world’s largest construction company.  Again, bribery and corruption suspicions are justified by the tarnished reputation of the Chinese company that has been involved across the globe in numerous scandals and foul plays.  To prove this point, the Chinese company’s financing offer that would cover all expenses only amounts to $1.06 billion.  The difference between the published figure of $1.687 billion by the Hungarian government and the Chinese estimate speaks for itself.  Even more glaring is the Chinese financing proposal of $1,81 billion that is supposed to cover only 80% of the construction costs.  This unprecedented and unjustified overfinancing of the Fudan University project potentially could be another proof of the long-suspected high-level corruption in state-funded construction business deals.

The secrecy surrounding the Fudan University project thickens by its legal construct.  While in the case of the Budapest-Belgrade railway reconstruction an international agreement was executed, the relevant contracts of the Fudan University deal were designed to exclude public procurements and open biddings even in the management of the campus.  The obvious sleaziness of these arrangements was crowned by the establishment of a consortium of two Chinese and a single Hungarian company, in which the latter is wholly owned by Viktor Orban’s childhood friend and straw man, Lorinc Meszaros.

Finally, leaked documents suggest that the Fudan University deal was in the offing for years but assiduously kept away from the Hungarian and the European public.  During his 2019 visit to Hungary, the Chinese foreign minister Wang Yi spoke of the Budapest campus of the Fudan University as a done deal, negotiated carefully for some time before.  Designating it a “priority project,” he emphasized the strategic importance of the Fudan University’s presence in the geographic middle of the European continent for Beijing.  Like in the case of the Budapest-Belgrade railway project, the Hungarian government classified the Fudan University deal as a “national security” matter.  The expropriation and even usurpation of great construction projects affecting the entire country by a single yes-men party, namely the FIDESZ, are another proof that Hungary is not a democracy.  Even more unsettling is the state of democracy in Hungary when the one-party legislature and executive do not govern by consensus but political improvisation and greed. 

Demonstrations against the establishment of the Fudan University have been held across Hungary.  The Mayor of Budapest Gergely Karacsony and the opposition called for a nationwide referendum and already proceeded to rename streets around the planned campus “Dalai Lama Street,” “Free Hong Kong Road,” etc.  The Chinese regime that regularly launches vigorous protests against “interference in Chinese internal affairs” has gone ballistic over the free expression of “anti-Chinese” sentiments in Hungary.  Global Times, one of the many subservient mouthpieces of the Chinese Communist Party, called in an editorial Gergely Karacsony “an enemy of China.”  The Press Secretary of the Chinese Embassy in Budapest released a statement voicing his outrage thus:  “As a diplomat of the Embassy of the People’s Republic of China in Hungary, I have been working in Hungary for nearly a decade and witnessed the deepening friendship between the Chinese and the Hungarian peoples.  Recently, Hungary has gradually overcome the COVID-19, and people’s daily life is beginning to return to normal.  People on the streets are full of joy and laughter again.  As someone who works and lives in Budapest, I am also delighted by this.”  Clearly, such an idyllic description of the general mood in a country is more reminiscent of the Chinese propaganda lies concerning their own country than the reality in Hungary.   

Referring again to the Mayor of Budapest, his long winded nonsense continued with the following hypocritical sentence:  “In broad daylight, it is unseemly to criticize the internal affairs of another country.”  However, in the same breath he goes on wadding into the internal affairs of Hungary:  “The Mayor’s speech was a serious interference in China’s internal affairs and a deliberate attempt to undermine the friendly and mutually beneficial cooperation between the two nation, which is incompatible with the trend of the era of mutually beneficial cooperation.  We firmly protest, resolutely oppose and strongly condemn it.”

To better understand the real Chinese strategic intentions, one should not search farther than the recent spring visit of the Chinese State Councilor and Minister of Defense Wei Fenghe to Budapest.  Praising Hungary as a “good brother” and “partner,” Wei stated that China is ready to strengthen cooperation with Hungary in various fields.  He grew agitated about the sanction imposed by the United States of America and the European Union against his country for the treatment of the Uyghurs in Xinjiang, calling them lies and false accusations made by the West.  Then, turning to the President of Hungary, Janos Ader, he thanked him for Hungary’s firm support of China on Xinjiang and other issues concerning China’s core interests.  Janos Ader, on his part, praised China’s vaccine support, claiming that this support has brought hope to Hungary’s fight against the pandemic.  He also called for a “comprehensive strategic partnership” and the strengthening of cooperation in the economy, trade, tourism and military matters.

In line with these essentially anti-NATO and anti-European Union declarations and actions by Chinese grandees, leading Hungarian politicians have given a slew of irresponsible and derogatory statements about both organizations, in which they have claimed to be loyal members.  Just very recently, exactly on July 11, 2021, the Speaker of the Hungarian Parliament Laszlo Kover said on Radio Kossuth that, if a referendum would be held today about Hungary’s joining the European Union, he would definitely vote against it.  And on July 8, 2021, in another interview that he gave to Mandiner, he opined that Hungary will stay a member of the European Union until it collapses.  

Viktor Orban’s dislike for the European Union has been well documented throughout the last nine years as Prime Minister.  Equating any criticism of his government and the Hungarian Parliament that he rules through Laszlo Kover as a condemnation of the Hungarian nation, he has repeatedly insinuated that leaving the organization could be an option.  On September 25, 2020, Reuters reported that he praised Britain’s decision to leave the European Union as a “brave one” and demonstration of “greatness” that Hungary should not follow.  However, signaling his real feelings, he went on to criticize Brussels for its treatment of Great Britain and opined that the 2016 referendum was an act to safeguard the “good reputation” of the British people:  “Brexit is a brave decision of the British people about their own lives…we consider it as evidence of the greatness of the British.”

After years of cutthroat hostility with the overwhelming majority of the European Union’s other member states Hungary’s new legislation that couples pedophilia and anti-LGBT behaviors is the newest bone of contention.  Without descending into the dirty swamp of Hungarian politics, it suffices to state that the values that the Viktor Orban-led government has espoused for the last nine years and the values that the European Union views as compatible with Western civilization have been distinctly different in most of the cases.  While Brussels defends values in general, the Orban government protects its parochial and thus narrow political and financial interests.  For this reason, an ultimate rupture could occur at any time in the future.                

Where does all this leave the Orban regime and Hungary?  It leaves both in an ever widening vacuum full of lies, deceptions, existential corruption, moral depravity and hopelessness concerning the future of the individual as well as the Hungarian nation.  It leaves Hungary hovering between Europe and Asia.  It leaves Hungary in a state of permanent paralysis politically, economically, financially, culturally, morally and existentially.  It leaves Hungary with a government that prioritizes the interests of the privileged one percent to the detriment of ninety nine percent of the nation.  It leaves Hungary with a government that is despotic and inimical to the country’s real interests.  Finally and tragically, it leaves Hungary in a state of utter despondency.

Historically, whenever Hungary has turned away from the West and has attempted to seek its future in the East, stagnation and even backsliding were the results.  Today, when confronted with the uncomfortable facts of his “Eastern Opening,” Viktor Orban’s and his party’s responses rest on two parts.  First, they try to conceal, deny and obfuscate.  Second, when such brazenly authoritarian and shamefully immoral political campaigns fail, they attack with ruthless aggression the motives of their domestic as well as foreign critics.  

Clearly, the worldwide criticism of Hungary has reached a dangerous stage.  Led by Hungary’s incompetent foreign minister, its diplomats call such criticism a shameless plot to slander the country and thwart its progress.  The government controlled media spew ad hominem falsehoods at scholars who analyze Hungarian government statements and documents, as well as open-source materials, describing them as CIA agents or anti-Hungarian fanatics.  Regrettably, such fallacious assertions have had an impact domestically.  It has not been very difficult to meet Hungarians from every walk of life who treat even the mildest criticism of their country as a hostile attack directed against them personally.  

Yet, facts are stubborn things.  Since his election victory in 2010, Viktor Orban has governed Hungary as an elected despot.  The safeguards of democracy have been eliminated gradually.  With his “Eastern Opening,” Viktor Orban is preparing to tear up all pretence of democracy and develop his “illiberal democracy” into a full fledged dictatorship.  The obvious question is why?  The answer is almost self-evident.  Viktor Orban and his associates fear defeat in the upcoming elections in the spring of 2022.  As Nathan Law stated, Viktor Orban and his FIDESZ party has betrayed its democratic past for a semi-Feudal and arch-Communist regime, combined with nepotism and dynastic pretensions.  While capturing total control over the legislative, judicial and executive branches as well as vertically the local councils, he has courted the rural population with monies that the European Union has given to Hungary.  Simultaneously, the pliant media are selling in unison Viktor Orban’s “illiberal democracy” as identical with the desires of the whole nation. 

To add political insult to existential injury, the declared election alliance of the thus far fragmented opposition parties might not be enough to stop another triumph at the ballot boxes for Viktor Orban and his FIDESZ party.  While the 2018 elections were laden with irregularities, suspicions are rife throughout the country that the upcoming poll might be fraught with more shenanigans.  As in the past, the most contentious issue  will be the voting rights of Hungarians living abroad without registered Hungarian addresses, mainly in the neighboring states of Slovakia, Ukraine, Romania and Serbia.  The emotional manipulation, financial bribery, voting by mail without proper verification, practically ensures that the overwhelming majority of these ethnic Hungarians, estimated to be close to ninety percent, will cast their ballots for FIDESZ.  To illustrate the shocking political nature of courting the ethnic Hungarian votes, the Fuggetlen Nemzet (Independent Nation) revealed that ethnic Hungarians with barely any elementary school education claimed to have been directors of large Ukrainian companies with outlandishly high salaries, collect huge retirement pays from the Hungarian Pension Disbursement Office.  

Such an electoral system clearly distorts the will of all Hungarians who live within the international borders of Hungary.  Leaders of the opposition parties and foreign observers have claimed in 2018 that the voting laws installed by FIDESZ enabled electoral fraud through uncontrollable manipulation of the mail-in ballots.  Hungarian humor has it that being buried in one of the neighboring states as a Hungarian guarantees the dead person’s resurrection and a second life in Hungary proper through elections.

In stark contrast to this extremely liberal treatment of ethnic Hungarians, Hungarians who live in Hungary proper but work or live abroad with real Hungarian residency must be registered on the electoral roll a maximum of fifteen days before election day.  Moreover, on election day they must go to a Hungarian consulate or embassy to cast their votes in person.  Registration has been slow and laden with bureaucratic obstructions.  Consulates and embassies have posed additional hurdles to Hungarians suspected of not voting for Viktor Orban’s party.  The nefarious political intent is clear.  Those Hungarians who live outside the country are alleged of not always agreeing with the domestic situation.  Thus, they must be prevented from voting by dictatorial bureaucratic fiat.  Those who have been bribed by the Hungarian government abroad must cast their votes without any bureaucratic difficulties, because they are presumed to be loyal to Viktor Orban and his regime.  This is ethnic discrimination by voting, plain and simple.     

In these and similar manners, Hungary’s march away from Western values and democracy toward Socialism/Communism with Chinese characteristics is in full swing.  As for the leaders of the Chinese Communist Party, creating enemies and demonizing opponents have been the order of political culture for Viktor Orban and his FIDESZ party.   Meanwhile, Hungary proper has been torn by deep hatred, unbridgeable divisions and the danger of civil war.  Moreover, the country lacks a large middle class and is divided into the miniscule group of the very rich and the vast majority of destitute survivors as well as hopeless Have-nots.  

Yet, the greatest threat to Hungary’s future is the fatalistic complacency of its people.  To overcome this deadly cultural disease, the Hungarian people must take back their past, present and future.  In doing so, they should be able to rely on the active and decisive assistance of all the member states of NATO and the European Union.  Conversely, the latter should start to take democracy as well as political, economic and cultural morality seriously – meaning that they must enforce the values of both alliances more rigorously.  Otherwise, NATO and the European Union will cease to be multilateral bodies of free nations.  Even worse, they will continue to nurture internal enemies within their ranks that ultimately will destroy both alliances.  Clearly, it is high time to put a stop to the destructive madness of the current Hungarian government by calling it to full account.  In closing, Hungary must be made to understand that membership in both organizations comes with rights and obligations that are inextricably linked.  Joining both organizations was voluntary.  No one forced the competent Hungarian government to join.  However, once Hungary joined, it must fulfill its obligations fully.  Claiming that Hungary has only rights but only selective obligations is unrealistic.  Comparing Washington, D.C. and Brussels to the Kremlin of the 1940s, 1950s, 1960s, 1970s, 1980s, is wrong and self-defeating. Such comparison is simply idiotic.  Yet, Hungarian politicians, with Viktor Orban in the lead, have played the victimhood card often and shamelessly in the last eleven years.  Enough is enough.  Either the Hungarian government will start to play fairly or it must be asked to leave both organizations.  The future effectiveness and unity of NATO and the European Union are at stake.  Time is of the essence.  Before the Orbanesque cancer could metastasize, it must be stopped peremptorily. 


Yes, It’s Ungrateful to Turn Your Back on the National Anthem

By Ben ShapiroRealClear Politics

This week, heretofore nearly anonymous hammer thrower Gwen Berry made international headlines when, during the podium ceremony for winning bronze in an Olympic trial, she turned away from the United States flag as the national anthem played. The anthem wasn’t played for her, or for the other competitors in the hammer throw; every day during the trials, a pre-scheduled anthem went out over the sound system.

Berry turned 90 degrees from the flag, stood with her hand on her hip, and glared directly into the camera. It was a deliberate provocation and a deliberate attempt to raise her own profile. “I feel like it was a setup,” she later complained, “and they did it on purpose.”

Actually, Berry just saw an opportunity to maximize her profile, and she seized it with alacrity. In the United States, there’s far more money to be made and fame to be achieved by spurning the American flag and the national anthem than by embracing it: Colin Kaepernick makes millions because he failed as a quarterback but succeeded as a self-aggrandizing symbol of supposed racial bravery. Meanwhile, the thousands of athletes with track records superior to either Kaepernick’s or Berry’s who stand for the national anthem remain anonymous.

That’s because America currently rewards an entitled sense of grievance. Most Americans know little about foreign countries; they somehow believe that the United States is inferior, or that the prosperity, health and free lifestyle to which they have become accustomed is the global and historic norm.

It most assuredly is not.

While Berry was protesting the national anthem, the Chinese government was busy arresting the editor of the pro-democracy Hong Kong newspaper Apple Daily. That arrest came on the heels of the arrest of one of Apple Daily’s columnists for “conspiring to collude with foreign countries or foreign forces to endanger national security.” While Berry was protesting the national anthem, the Taliban was busy spreading like a metastasizing cancer over Afghanistan, preparing its new subjects for the tender mercies of brutal Islamist rule. While Berry was protesting the national anthem during an event at which she threw heavy objects for sport, billions of people were living in absolute privation the world over.

None of this means that the shortcomings of America should be ignored. But to protest the flag or the national anthem as particular symbols of grievance is to demonstrate full-scale your own ignorance and ingratitude. “I’m here to represent those who died due to systemic racism,” Berry said. But she herself is an excellent indicator of just how much promise America holds for its citizens. She grew up in the home of her grandmother, with 13 people in the house; she had a baby out of wedlock at 15 and then earned a college scholarship. She got two jobs and helped support her extended family. Now, she’s going to the Olympics. And presumably, there, she will turn her back on the flag and the national anthem if she makes it to the podium.

In doing so, she’ll become a hero to millions. She’ll get richer; she’ll get more famous. Perhaps, like pseudo-Marxist Patrisse Cullors of Black Lives Matter, she’ll buy herself a few houses; maybe, like Kaepernick, she’ll make the cover of Sports Illustrated. Like self-declared Marxist Cullors, who currently owns three separate houses worth over $1.5 million each, Berry is in it for the attention and the profit. Yesterday, nobody had heard of her. Today, everybody has. It’s that simple.

One thing is certain, however: Those who spend their days championing their own ingratitude at a society that gives them extraordinary opportunities — opportunities unavailable to nearly all humans for nearly all of human history, and unavailable to most people on the planet right now — aren’t likely to live happier lives. And they’re unlikely to make their nations better, either.


How to Make China Pay

Engage Taiwan, boycott the 2022 Olympics, and impose a carbon tariff

By Matthew ContinettiThe Washington Free Beacon

Xi Jinping
Xi Jinping / Getty Images

The debate over the origins of the coronavirus—did it come from a wet market in Wuhan or from the virology lab nearby—has exposed the bias of media and technology companies and the potential danger of so-called gain of function research. But it also has led to something of an intellectual cul-de-sac. Barring a high-level defection from the Chinese Communist Party, we are unlikely ever to learn the answer. And even if we did have conclusive evidence one way or another, we still would have to decide what to do about it. The real question isn’t whether the pandemic is China’s fault. It’s whether China will pay a price for the catastrophic damage it caused the world.

Wherever the virus came from, we know that the Chinese government lied about it for weeks. Dr. Ai Fen shared information about a novel coronavirus with her colleagues on December 30, 2019. The next day, as Lawrence Wright recounts in The Plague Year, China removed social media posts that mentioned “unknown Wuhan pneumonia” or “Wuhan Seafood Market.” Dr. Li Wenliang, who warned the public that the virus could be transmitted from human to human, was arrested and forced to deliver a televised confession. He died of COVID-19 on February 6, 2020.

Beijing prevaricated for a month while the deadly pandemic spread. China did not allow the World Health Organization to visit Wuhan until January 20, 2020. The same day, one of China’s top doctors finally admitted the obvious: COVID-19 is a communicable disease. By the time the Communist leadership took action, it was too late. On January 21, the U.S. Centers for Disease Control confirmed the first case of coronavirus in America. China did not quarantine Wuhan until January 22. “By that time,” according to Wright, “nearly half the population of Wuhan had already left the city for Chinese New Year.”

The dishonesty and incompetence of the Chinese Communist Party turned a national crisis into a global one. A March 2020 study estimated that cases might have been reduced by anywhere from 66 percent to 95 percent if Chinese authorities had acted earlier. Why was Beijing slow to move? Because bureaucratic collectivist societies such as Communist China are especially prone to delays and coverups as underlings attempt to avoid punishment from above. The same powers of draconian coercion that China used to lock down its population inspired fear among the midlevel and regional officials who allowed the virus to leave China in the first place. The problem wasn’t scientific. It was political. And punishment is deserved.

What to do? Writing in the Washington Post, Mike Pompeo and Scooter Libby call on the “leading democracies” to “act together,” leveraging “their great economic power” to “persuade China to curb its dangerous viral research activities, cooperate with the investigation of the coronavirus’s origins, and, over time, pay some measure of the pandemic’s damages to other nations.” It’s a worthy strategy with a potentially fatal flaw: The other democracies might put economics ahead of accountability.

Another proposal in Congress would strip China of its sovereign immunity and make it liable for damages in U.S. courts. That plan would also leave American foreign policy dependent on outside actors—in this case, judges. And millions of potential claimants attempting to seize Chinese assets in the United States could make for a mess.

China never will volunteer to open its labs. Nor will it compensate either nations or individuals for the havoc it unleashed. Costs must be imposed that Beijing cannot avoid.

I have three suggestions. Each is more controversial than the last. But all of them would ensure that China paid some price for its lax hygiene and sanitation standards, loosey-goosey research protocols, and reckless attitude toward human freedom and human life.

Engage Taiwan. To its credit, the Biden administration has continued the stepped-up engagement with Taiwan that began under President Trump. In April, Biden sent an unofficial delegation to the island that included his close friend Chris Dodd. Most recently, U.S. Trade Representative Katherine Tai raised the prospect of new trade talks in a conversation with her Taiwanese counterpart. This pattern of contacts bothers mainland China to no end.

Keep it up. But also do more to train and equip Taiwanese military forces, as my American Enterprise Institute colleagues Gary Schmitt and Michael Mazza suggested last year in The Dispatch. Taiwan is a reminder that Chinese people can be free and that open societies can deal effectively with pandemics. The very existence of Chinese democracy in Taiwan is a threat to the legitimacy of Communist rule in the mainland. It’s an obstacle to Beijing’s ambitions in the Pacific. Taiwan’s defense is imperative.

Boycott the Olympics. One day before he left office, Secretary of State Mike Pompeo announced that the Chinese Communist Party “has committed genocide against the predominantly Muslim Uighurs and other ethnic and religious minority groups in Xinjiang.” Here, too, the Biden administration has not deviated from its predecessor’s course. The United States openly accuses its arch-rival of crimes against humanity. This is a pretty big deal, is it not?

Well, start acting like it. Why the participation of U.S. officials in the Beijing Olympics next year is even up for debate is a mystery. The White House has said that it is not exploring a boycott. That needs to change. On June 7 a bipartisan resolution was introduced in Congress demanding that the International Olympic Committee explore other venues. A declaration that no U.S. government personnel will participate because of China’s actions at home and abroad would embarrass Beijing. It would encourage other democracies to do the same. China deserves neither the honor of nor the revenue from the participation of U.S. officials. Let the athletes compete. But cheer them on from home.

Impose a carbon tariff. President Biden has also maintained the tariffs that President Trump levied against Chinese goods. Economist Irwin Stelzer of the Hudson Institute has a better plan. He would replace these tariffs with a border tax on the carbon content of Chinese exports. The strategy has appeal for environmentalists and China hawks alike. Everyone knows that China is the world’s largest emitter. Everyone knows that China’s promise of greenhouse gas reduction is worthless. Beijing won’t do anything that jeopardizes the economic growth on which it bases its claim to rule.

“In effect,” writes Stelzer, “by selling us ‘dirty’ products, China is adding to the competitive advantage it has from selling us stuff made by slave and other laborers paid wages with which we cannot decently compete, around $2 per hour in Beijing.” The EU already is at work on what it calls a “Carbon Border Adjustment Mechanism” on Chinese exports. By pushing for a carbon tariff of its own, the Biden administration would please not only hawks and greens, but also the European allies whose opinion it values so highly.

The problem with a “carbon border adjustment mechanism,” of course, is that the process of calculating a good’s carbon content might turn out to be overly complicated, bureaucratic, and subject to politicization. I’m not in the habit of taking economic advice from Brussels. But these problems must be weighed against the justice and potential benefits of such a tax. And the additional cost could be rebated to low-income U.S. consumers along the lines that Senator Tom Cotton proposed in a slightly different context in 2019.

In the end, whether or not the United States adopts a tax on Chinese carbon is less important than moving the debate from the pandemic’s origins to the pandemic’s endgame. The despotic regime whose malign indifference killed so many and cost so much cannot be allowed to pretend that nothing happened. We can hold China responsible. And we can make China pay.


The ‘Endless Frontier Act’ Is Not Merely a Wasteful Boondoggle, It Will Likely Slow High Tech Innovation

By George LandrithTownhall

The ‘Endless Frontier Act’ Is Not Merely a Wasteful Boondoggle, It Will Likely Slow High Tech Innovation
Source: Yao Dawei/Xinhua via AP

The advertised purpose of the “Endless Frontier Act” is to increase high tech competition with China.  This, of course, is a goal that every American should be able to get behind.  However, the advertised purpose of the bill, as laudable as it may be, is not actually what the bill will do.  In other words, the “Endless Frontier Act” was sold under false pretenses and using fabricated promises. 

If the Senate were serious about helping America win the high tech competition with China, it would do a number of important things, including, but not limited to:  (1) protect our nation’s intellectual property from theft and abuse by the Chinese; (2) make our tax code more competitive; (3) allow research and development costs to be deducted more easily thus encouraging capital investment in high tech solutions; (4) review and reform our regulatory regime that in many cases is outdated and hindering the development of new technologies and making us less competitive. 

But the Senate isn’t considering any of that.  Instead, their so-called plan is to spend about $110 billion in taxpayer dollars via government grants to promote new technologies to be administered by the National Science Foundation.  In other words, a government agency with a horrific record of waste, fraud and abuse is going to decide what technologies look most promising and then hand out taxpayer dollars to give them a boost. This sounds like the Solyndra scandal on steroids. 

So in an era when our national debt has been rapidly increasing at unsustainable rates, we are going to borrow even more money from China and become even more indebted to China — all for the purpose of being more competitive with China. Let that sink in.

But the problem doesn’t end there. The truth is the National Science Foundation (NSF) has a horrible record of waste.  The NSF has funded a project to develop a robot that could fold a towel in 25 minutes. A child could fold a whole load of towels in 25 minutes, but for this stupidity you paid $1.5 million. They’ve funded studies of shrimp running on a miniature treadmill. That wasted $500,000 of your hard earned dollars.  They’ve spent millions studying what motivates individuals to make political donations.  They’ve spent millions studying if athlete’s perception that the basketball rim is as large as a hula-hoop, or that a baseball is as large as a grapefruit, or a golf hole appeared as big as a manhole cover impacts the athlete’s performance.

As Senator Rand Paul (R-KY) highlighted on the floor of the Senate,  the NSF spent $700,000 that had been allotted to study autism to listen to a tape of Neil Armstrong’s first moon walk. They wanted to determine if he said “one small step for man …” or “one small step for a man …” It took them a year and $700,000 of your money to determine that they couldn’t tell.  And that was money that was supposed to be spent on autism.  The NSF also spent half a million dollars developing a climate change themed video game to help children feel more alarmed. 

Government is inherently wasteful.  For example, our government spent over $40 million building a natural gas station to refuel cars that run on natural gas in Afghanistan to help them reduce their carbon footprint. Yet Afghanistan is a nation where the annual income is about $800 and often cook their food on open fires, and few drive any sort of car, much less a natural gas powered car.  Any high schooler could have told you that building a natural gas station in a nation that doesn’t have many cars is a dumb idea. 

Government has funded studying whether you and I are more or less likely to eat food that has been sneezed or coughed on by someone else. You and I could answer that question for free. We’d prefer food that hasn’t been sneezed on — even before the pandemic.  But government bureaucrats spent $2 million to get the same answer.  

So now we are going to rely on these same government bureaucrats to make sure we compete in the high tech arena with the Chinese and we will borrow the money that these bureaucrats decide to spend from the Chinese.  What could possibly go wrong?! 

I have grown to expect liberals to gladly fund such utter foolishness from our paychecks.  But it isn’t just them, there were 19 Republicans who voted for this insanity:  Blunt (MO), Capito (WV), Collins (ME), Cornyn (TX), Crapo (ID), Daines (MT), Graham (SC), Grassley (IA), McConnell (KY), Murkowski (AL), Portman (OH), Risch (ID), Romney (UT), Rounds (SD), Sasse (NE), Sullivan (AK), Tillis (NC), Wicker (MS), and Young (IN).

Those who voted for this bill will undoubtedly defend their vote telling you that they want America to compete and win against China in the high tech arena.  We all would like that!  But let’s try something novel. Let’s do things that would actually help our innovators innovate; and help our businesses and industries compete and win. Also let’s not put a wasteful and often silly government agency in charge of the program.  Instead, let’s unleash America’s entrepreneurial and innovative spirit. And let’s not borrow the money from the very nation we claim to be trying to out compete. 


The ‘Endless Frontier Act’ Is Not Merely a Wasteful Boondoggle, It Will Likely Slow High Tech Innovation

By George LandrithTownhall

The ‘Endless Frontier Act’ Is Not Merely a Wasteful Boondoggle, It Will Likely Slow High Tech Innovation
Source: Yao Dawei/Xinhua via AP

The advertised purpose of the “Endless Frontier Act” is to increase high tech competition with China.  This, of course, is a goal that every American should be able to get behind.  However, the advertised purpose of the bill, as laudable as it may be, is not actually what the bill will do.  In other words, the “Endless Frontier Act” was sold under false pretenses and using fabricated promises. 

If the Senate were serious about helping America win the high tech competition with China, it would do a number of important things, including, but not limited to:  (1) protect our nation’s intellectual property from theft and abuse by the Chinese; (2) make our tax code more competitive; (3) allow research and development costs to be deducted more easily thus encouraging capital investment in high tech solutions; (4) review and reform our regulatory regime that in many cases is outdated and hindering the development of new technologies and making us less competitive. 

But the Senate isn’t considering any of that.  Instead, their so-called plan is to spend about $110 billion in taxpayer dollars via government grants to promote new technologies to be administered by the National Science Foundation.  In other words, a government agency with a horrific record of waste, fraud and abuse is going to decide what technologies look most promising and then hand out taxpayer dollars to give them a boost. This sounds like the Solyndra scandal on steroids. 

So in an era when our national debt has been rapidly increasing at unsustainable rates, we are going to borrow even more money from China and become even more indebted to China — all for the purpose of being more competitive with China. Let that sink in.

But the problem doesn’t end there. The truth is the National Science Foundation (NSF) has a horrible record of waste.  The NSF has funded a project to develop a robot that could fold a towel in 25 minutes. A child could fold a whole load of towels in 25 minutes, but for this stupidity you paid $1.5 million. They’ve funded studies of shrimp running on a miniature treadmill. That wasted $500,000 of your hard earned dollars.  They’ve spent millions studying what motivates individuals to make political donations.  They’ve spent millions studying if athlete’s perception that the basketball rim is as large as a hula-hoop, or that a baseball is as large as a grapefruit, or a golf hole appeared as big as a manhole cover impacts the athlete’s performance.

As Senator Rand Paul (R-KY) highlighted on the floor of the Senate,  the NSF spent $700,000 that had been allotted to study autism to listen to a tape of Neil Armstrong’s first moon walk. They wanted to determine if he said “one small step for man …” or “one small step for a man …” It took them a year and $700,000 of your money to determine that they couldn’t tell.  And that was money that was supposed to be spent on autism.  The NSF also spent half a million dollars developing a climate change themed video game to help children feel more alarmed. 

Government is inherently wasteful.  For example, our government spent over $40 million building a natural gas station to refuel cars that run on natural gas in Afghanistan to help them reduce their carbon footprint. Yet Afghanistan is a nation where the annual income is about $800 and often cook their food on open fires, and few drive any sort of car, much less a natural gas powered car.  Any high schooler could have told you that building a natural gas station in a nation that doesn’t have many cars is a dumb idea. 

Government has funded studying whether you and I are more or less likely to eat food that has been sneezed or coughed on by someone else. You and I could answer that question for free. We’d prefer food that hasn’t been sneezed on — even before the pandemic.  But government bureaucrats spent $2 million to get the same answer.  

So now we are going to rely on these same government bureaucrats to make sure we compete in the high tech arena with the Chinese and we will borrow the money that these bureaucrats decide to spend from the Chinese.  What could possibly go wrong?! 

I have grown to expect liberals to gladly fund such utter foolishness from our paychecks.  But it isn’t just them, there were 19 Republicans who voted for this insanity:  Blunt (MO), Capito (WV), Collins (ME), Cornyn (TX), Crapo (ID), Daines (MT), Graham (SC), Grassley (IA), McConnell (KY), Murkowski (AL), Portman (OH), Risch (ID), Romney (UT), Rounds (SD), Sasse (NE), Sullivan (AK), Tillis (NC), Wicker (MS), and Young (IN).

Those who voted for this bill will undoubtedly defend their vote telling you that they want America to compete and win against China in the high tech arena.  We all would like that!  But let’s try something novel. Let’s do things that would actually help our innovators innovate; and help our businesses and industries compete and win. Also let’s not put a wasteful and often silly government agency in charge of the program.  Instead, let’s unleash America’s entrepreneurial and innovative spirit. And let’s not borrow the money from the very nation we claim to be trying to out compete. 


China Is A Menacing Threat And Overtly Hostile

By George LandrithNewslooks

China

The People’s Republic of China (PRC) has been ramping up its military spending to meet its stated goal of replacing the United States as the world’s preeminent superpower.  Many who seek to minimize the risk compare actual dollars spent on defense in hopes of proving the risk that China poses is minimal.  But the truth is, once you adjust for the cost of things, China is approaching parity with the U.S. For example, the pay for military personnel in the U.S. is 16 times higher than in China.*  Yet, China’s armed forces are approximately 2.2 million, whereas the US armed forces are only 1.4 million — roughly equal with North Korea in terms of manpower. 

Moreover, China has long been engaged in high-tech espionage and steals a great deal of the latest and greatest technology from the US. We have foolishly allowed their spies — posing as students or business and cultural exchanges to gain access to our technology. So we spend billions developing new technology and the Chinese regime spends comparative chump change to steal it. These cost savings allow China to spend less, while building up its military more. This is one of the reasons China now has the worlds’ largest navy with over 360 ships — dwarfing the U.S. fleet of 297 ships.  

China is also clearly seeking to exploit for its advantage the recent change in administrations.  President Joe Biden has long been comparatively conciliatory toward the communist regime and has often downplayed the risks China poses. Moreover,  Biden’s son, Hunter, has highly lucrative business dealings with major Chinese firms with strong ties to the Chinese Communist Party — that’s how business works in China. Even if there is nothing illegal about Hunter’s business dealings, it creates a troubling conflict of interest for the White House.

It is clearly not in the interests of the U.S. to downplay the risks and pretend that China’s threat isn’t real.  And China isn’t just a threat to the U.S., they are a threat to the entire world. They don’t intend to simply be a major economic and military power. They mean to rule and dominate the world with an iron fist. 

If you don’t believe me, look at how China deals with those it perceives to be dissidents. Look at how it treats Hong Kong. Look at how Chinese health officials who warned of the COVID-19 virus were punished or mysteriously disappeared. Look at the death camps and “re-education camps” and how China tortures, murders and rapes the Uyghurs and other “dissidents.” If China achieves its stated goal of control and domination, it will be a brutal reign of terror and oppression. 

It Is Not the Backward, Developing Nation It Once Was

Beyond raw military power, China also seeks economic supremacy. World shipping is an interesting case study where China seeks to dominate and is well on its way.  The global trade fleet is about 41,000 ships. China builds about 1,300 new ships each year. The U.S. builds only 8. China is now the dominant player in ship building and in owning and operating and controlling ports around the globe. 

The good news is that China does not, and cannot, dominate U.S. domestic shipping because the Jones Act stands in their way by requiring that ships used to transport goods between two or more American ports, must be American ships with American crews.

The Jones Act was passed shortly after World War I to ensure that the U.S. had sufficient shipping capacity, trained mariners, and a ship building and ship repairing capability necessary for our national security needs. But in the 21st Century, the Jones Act turns out to be a big help in stopping China’s attempts to dominate U.S. domestic shipping. 

Imagine if there were no Jones Act, and China could simply underbid the competition and gain an economic stranglehold on the U.S. and even world shipping markets. Also imagine Chinese ships sailing up and down the 25,000 miles of inland water ways in America with spies and high tech spy equipment intercepting communications at will. 

After being caught unprepared for WWI, the Jones Act seemed pretty necessary in 1920. But 101 years later in 2021, the Jones Act is even more necessary as one of many important ways America must stand up to the PRC and say, “Your oppression, aggression, and brutal domination are not welcome here!”  The Jones Act may not have been written with China in mind, but it is exactly what we need to prevent their expansionism into America’s inland waterways.


Is China Weakening US Intellectual Property Protection?

By George LandrithNewslooks

Is China weakening US intellectual property protection?

There is a global effort afoot to get the United States to suspend intellectual property rights (IP) for any and all COVID-19 medical innovations. Interestingly, China is a big backer of this global effort and has been using the World Trade Organization (WTO) to put pressure on the US. The Biden Administration fairly predictably is now backing the China backed pressure campaign. The communist Chinese state-controlled media has praised President Biden for giving into “global pressure.” 

The US can provide humanitarian help without wearing IP protections

The US can certainly help the rest of the world deal with the COVID virus. Humanitarian efforts are about helping save lives, not giving the Chinese regime billions in intellectual property.  The US now has a surplus of vaccines and we have the supply chain and the manufacturing set up to continue pumping out the vaccine for the rest of the world. If China and others wanted access to the vaccine as quickly as possible, that’s already available to them — all they need to do is ask. 

FILE – In this Dec. 14, 2020, file photo, a vial of the Pfizer vaccine for COVID-19 sits on a table at Hartford Hospital in Hartford, Conn. Many parents and educators are excited over the news that the Food and Drug Administration is expected to authorize Pfizer’s COVID-19 vaccine soon for youngsters ages 12 to 15. (AP Photo/Jessica Hill, File)

But stealing the IP of those who invested billions in developing it won’t help the rest of the world because it would take them a year, or two, or more to set up the manufacturing process and organize the supply chains to replicate what the US is currently is able to do.  If nations need help to deal with the virus, it isn’t in a year or two — it is now. So what the WTO and China are pushing for won’t help them solve any immediate problem or save lives.  But it will help the communist Chinese regime access billions in research and development which they can use to undercut American jobs and innovation for decades to come. 

Weakening IP Rights Will Slow Innovation, Weaken our Economy, and Compromise National Security 

So that’s how you know the global effort isn’t about helping vaccinate the world.  It is about stealing the IP rights of American innovators.  China has made a living stealing American IP and it has not only harmed us economically, but it has also endangered our national security.  And one thing that the Chinese regime is very good at is using every tool at its disposal to weaken America and seek its own long-term advantage. If we don’t wake up to this, we will live to regret it. 

If people are interested in helping those around the globe get vaccinated, let’s do that. But why is stealing IP part of that discussion?  Especially, since it won’t provide any vaccinations for a year or more from now. But will be used by hostile regimes to undermine American innovation and American jobs. 

The bottom line is that suspending intellectual property rights is bad policy.  It does nothing to help those around the globe who need a vaccine right away. And it also undermines American medical innovation, and American jobs. Plus, under our Constitution, the government may not unilaterally take the property of its citizens without just compensation. The Constitution specially provides for the protection of intellectual property. And that is why America has been the world’s greatest engine of innovation. Let’s not kill the goose that lays golden eggs. 

IP Rights Are the Reason We Obtained Needed Vaccines

The very reason American pharmaceutical companies were able to provide vaccines so quickly to deal with the COVID-19 virus is because our system of intellectual property told them that investing billions of dollars in finding a cure was a good idea.  If we remove that, future innovations and future discoveries will be far less likely.  If we hope to continue to find new earth-breaking cures for cancer, Alzheimer’s, diabetes, etc, and new vaccines for the next horrible disease, we had better keep our intellectual property protections strong. 

The US Shouldn’t Stop Being an Innovative Force

There is a why the United States leads the world in innovation — we’ve historically had the most robust intellectual property protections.  As we’ve allowed those protections to slide, we’ve seen our innovation advantage start to slide as well. So rather than abrogating IP rights, we should be strengthening and reinvigorating them. 

This global initiative to pressure the US into voluntarily destroying its system of intellectual property protections would be very costly — not only the US, but to the entire world because our innovation ultimately benefits the entire globe.  Let’s hope Congress puts a stop to this foolishness.  The Biden Administration has already caved in and signaled its willingness to compromise American law and American strength. Sure, America can, and should help the rest of the world.  No one is suggesting that we hide the vaccine or prevent it from other nations or peoples. But using the pandemic as an excuse to kill off American IP protections and violate US law is akin to a beggar demanding access to your home equity loan when asking for help to buy dinner.  You offer him a nice meal, and he says, “No, I want your home equity loan! Don’t you want to help a guy down on his luck?!” Beware, it’s a scam!


Wall Street Must Stop Enabling Communist China

America’s financial elite is helping to finance America’s prime strategic adversary.

By Senator Marco RubioThe American Prospect

Rubio-China 052621.jpg
After the Trump administration called for the delisting of Chinese companies tied to Beijing’s military last fall, Wall Street went to bat to ensure that three Chinese telecommunications firms, including China Telecom, were spared.

As a new, more skeptical consensus about America’s economic relationship with Beijing emerges in Washington, Wall Street is growing more tightly integrated with China than ever before. The disconnect highlights one of our nation’s biggest vulnerabilities in our confrontation with China over who will determine the course of the 21st century.

American capital markets are the most open, liquid, and valuable in the world. They are also increasingly a source of funds for China’s most strategically important companies. Chinese companies that produce surveillance technology and weapons of war that could one day kill Americans finance their investments with Wall Street capital.

Historically, both Republicans and Democrats have been weak when it comes to identifying and correcting these kinds of problems. Politicians in my own party have too often been reluctant to intervene over concerns about the “free market.” But things are changing. Faced with the catastrophic impacts of deindustrialization, which has choked opportunity for the American working class, and a growing reliance on an authoritarian regime, more of my colleagues in the GOP have awakened to the dangers of economic policymaking that prizes short-term economic efficiency over all else.

American capital markets are increasingly a source of funds for China’s most strategically important companies.

But just as many Republicans have grown more skeptical of big business’s cozy relationship with Beijing, large swaths of America’s financial and corporate sectors are making a play for a new base of political support—this time complete with deep-blue, progressive social stances on hot-button issues in our politics.

It’s the height of hypocrisy. U.S. corporations with lucrative business ties to the Chinese Communist Party will boycott states here over anti-abortion laws, while Beijing systematically sterilizes Uyghur women. They routinely inflame divisive race issues within the U.S. while marginalizing African American actors or erasing Tibetan characters to keep Chinese audiences happy.

And in instances when the U.S. government has acted, our financial sector, fearful of losing out on a lucrative investment opportunity, often intervenes to protect state-tied Chinese firms. For example, after the Trump administration called for the delisting of Chinese companies tied to Beijing’s military from the stock market last fall, it was Wall Street that initially went to bat to ensure that three Chinese telecommunications firms complicit in state censorship, China Telecom, China Mobile, and China Unicom, were spared. (After several reversals and a failed appeal process, the three ended up recently delisted.) And just this month, the Biden administration allowed one of China’s biggest companies, Xiaomi, to relist on U.S. exchanges.

Democrats should be skeptical of the opportunistic progressive social stances in our finance and tech sectors. The presence of a diversity and inclusion czar does nothing if a company is profiting off of slave labor in Xinjiang.

More fundamentally, Wall Street advances the goals of the CCP with its investment in China, which needs American capital to grow its economy. As China has evolved from an export-driven economy to one reliant on state-led investment, it needs foreign investment to help pay for its debts. Investing in China funds the Chinese companies powering Beijing’s economic strategy and industrial policy.

In 2019, the United States became a net investor in China for the first time in history. How did this happen? The answer lies with the fund managers. As China has “opened” its market to American financial companies and sought the listing of its businesses on American stock exchanges, the portfolios of American investors have been increasingly invested in Chinese companies. Many well-meaning Americans may inadvertently be propping up a genocidal regime because Wall Street does it for them.

Furthermore, Chinese firms listed on U.S. securities exchanges are widely shielded by their government from the full oversight of American financial regulators, putting teachers’ pensions and retirees at risk.

Thankfully, there are legislative solutions that both Republicans and Democrats should be able to support. First of all, we should ban any U.S. investments in Communist Chinese military companies. This is part of the reason why I first introduced my Taxpayers and Savers Protection (TSP) Act in 2019—to ensure the retirement savings accounts of federal workers and service members didn’t end up invested in Chinese companies tied to the People’s Liberation Army or engaged in human rights abuses.

In instances when the U.S. government has acted, our finan-cial sector often intervenes to protect state-tied Chinese firms.

Similarly, no Chinese company on the U.S. Department of Commerce Entity List or the U.S. Department of Defense list of Communist Chinese military companies should be allowed to access U.S. capital markets—a move that could simply be accomplished by passing my American Financial Markets Integrity and Security Act.

We can also require increased scrutiny of activist investors in companies tied to national-security work or supply chains—particularly ones related to China—through my Shareholder National Security Awareness Act. Finally, we must ensure that Chinese companies, the only ones in the world that routinely skirt U.S. regulatory oversight, are no longer welcome to publicly list on U.S. stock exchanges.

Americans from across the political spectrum should feel emboldened by the growing bipartisan awakening to the threat that the CCP poses to American workers, families, and communities. As we deploy legislative solutions to tackle this challenge, Democrats must not allow our corporate and financial sectors’ leftward shift on social issues to blind them to the enormity of China as a geo-economic threat.


Welcome to the Party, Dr. Fauci

By The EditorsNational Review

Dr. Anthony Fauci testifies about the on-going federal response to COVID-19 at the U.S. Capitol in Washington, D.C., May 11, 2021. (Jim Lo Scalzo/Pool via Reuters)

Dr. Anthony Fauci is going to get a lot of grief about his seeming about-face on whether it is possible that the COVID-19 pandemic can be traced back to an accident at a Chinese laboratory. But it is much better that America’s most famous doctor — the face of the nation’s pandemic response — is keeping an open mind rather than, as he was previously, prematurely ruling out a realistic possibility.

A little more than a year ago, Fauci gave an interview to National Geographic where he said, “If you look at the evolution of the virus in bats and what’s out there now, [the scientific evidence] is very, very strongly leaning toward this could not have been artificially or deliberately manipulated. . . . Everything about the stepwise evolution over time strongly indicates that [this virus] evolved in nature and then jumped species.” The article noted that Fauci “also doesn’t entertain an alternate theory — that someone found the coronavirus in the wild, brought it to a lab, and then it accidentally escaped.”

Since the lab-leak theory arose, there’s been a frustratingly persistent pattern of conflating “created in a lab,” the more remote possibility, and “accidentally released from a lab.” It is worth keeping in mind that certain types of gain-of-function research do not necessarily involve human-driven alteration of the genetic code of a virus. One form of this research, “serial passaging,” consists of taking a pathogen, exposing it to substances or cell hosts, finding the minority of viruses that can survive that threat, taking that tougher and hardier minority, and then repeating the process over and over again to isolate the mutations that make the pathogen most hardy, virulent, contagious, etc. Serial passaging amounts to speeding up the evolutionary process. Laboratory efforts like this would not necessarily “leave fingerprints,” and scientists have noted with concern that, compared with previous viruses such as SARS and MERS, this virus is nearly optimized for infecting the human respiratory tract.

At an event earlier this month, PolitiFact’s Katie Sanders noted that there is still “a lot of cloudiness around the origins of COVID-19” and asked Fauci whether he is “still confident that it developed naturally.” He answered,

No, actually, I am not convinced about that. I think we should continue to investigate what went on in China until we continue to find out to the best of our ability what happened. . . . Certainly, the people who investigated it say it likely was the emergence from an animal reservoir that then infected individuals, but it could have been something else, and we need to find that out. So, you know, that’s the reason why I said I’m perfectly in favor of any investigation that looks into the origin of the virus.

Recent weeks have brought a sudden and spectacular public reconsideration of the plausibility of a lab leak from the scientific and journalistic establishment. “More investigation is still needed to determine the origin of the pandemic. Theories of accidental release from a lab and zoonotic spillover both remain viable,” 18 reputable scientists wrote to Science magazine. The editorial board of the Washington Post concluded, “If the laboratory leak theory is wrong, China could easily clarify the situation by being more open and transparent. Instead, it acts as if there is something to hide.” Donald G. McNeil Jr., the prize-winning but now “canceled” former science reporter for the New York Times, concluded that “the argument that [SARS-CoV-2] could have leaked out of the Wuhan Institute of Virology or a sister lab in Wuhan has become considerably stronger than it was a year ago, when the screaming was so loud that it drowned out serious discussion.” This comes a few months after the previous director of the U.S. Centers for Disease Control and Prevention, Dr. Robert Redfield, told CNN’s Sanjay Gupta, “I am of the point of view that I still think the most likely etiology of this pathogen in Wuhan was from a laboratory, escaped.”

Welcome to the party, everyone.

It is good that the lab-leak theory is no longer being reflexively dismissed as a conspiracy theory, paranoid nuttiness, or ipso facto evidence of an anti-Asian bias. But this reconsideration is belated. Yes, some evidence has accumulated in the past year — the U.S. State Department memos warning about a lack of trained personnel at the Wuhan Institute of Virology (WIV), the claim that cellphone use in part of the WIV stopped for three weeks in October 17, and the World Health Organization investigation concluding that some WIV staffers got sick with flu-like symptoms in autumn of 2019. When the WHO team went to Wuhan, Chinese medical authorities refused to hand over raw data about the earliest patients. But little of that represents a game-changer in the facts on the ground. From the beginning, the world has been confronting a novel coronavirus closest to those found in bats that first emerged in a city that housed not one but two state-run labs researching novel coronaviruses found in bats.

Nicholson Baker’s lengthy cover piece in New York magazine contended that the lab-leak theory became a culture-war football, and scientists feared that discussing the plausibility of the theory could end up benefiting a president they detested:

Everyone took sides; everyone thought of the new disease as one more episode in an ongoing partisan struggle. Think of Mike Pompeo, that landmass of Cold War truculence; think of Donald Trump himself. They stood at their microphones saying, in a winking, I-know-something-you-don’t-know sort of way, that this disease escaped from a Chinese laboratory. Whatever they were saying must be wrong. It became impermissible, almost taboo, to admit that, of course, SARS-2 could have come from a lab accident. “The administration’s claim that the virus spread from a Wuhan lab has made the notion politically toxic, even among scientists who say it could have happened,” wrote science journalist Mara Hvistendahl in the Intercept.

Obviously, the evidence regarding such an important matter shouldn’t be evaluated differently based on who is president of the United States. “TRUST THE SCIENCE” has been a simplistic and not-all-that-illuminating slogan for much of this pandemic. This is another case where many of the same people who used that slogan most readily haven’t hewed to it themselves. There should be a reckoning over this rank failure, and instead of relying on WHO, which is compromised in important respects, U.S. authorities should investigate the origins of the virus to the extent possible.

Now that the rigid conventional wisdom on this issue is finally giving way, we should seek the truth without fear, favor, or politically motivated preconceptions.


TRADING ONE DEPENDENCY FOR ANOTHER

By Nadia SchadlowWar on the Rocks

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Image: Xinhua

Several of the Biden administration’s key climate goals — particularly steps to reduce U.S. greenhouse gas emissions in the power and transportation sectors — are likely to be held hostage by China. A shift away from fossil fuels to renewables to produce electricity, and the deployment of more electrical vehicles on America’s roadways, depends upon batteries. Since China currently controls the entire life cycle of battery development, the Biden administration needs a strategy to mitigate China’s dominant position. While the president’s special envoy for climate, John Kerry, hopes to approach climate as a “critical standalone issue,” the fact is that geopolitics will shape the choices President Joe Biden will have to make. The Biden administration will not be able to “compartmentalize” its climate policies from the overall U.S.-Chinese relationship. China’s strength in the new green industries presents a strategic challenge.

Energy storage has been called the “glue” of a low-carbon economy, enabling the greater use of intermittent power sources such as wind and solar. The World Economic Forum argues that batteries are a critical factor in reaching the Paris Agreement goal of limiting rising temperatures to 2 degrees Celsius. By 2030, it stated, batteries could enable 30 percent of the required reductions in carbon emissions in the transport and power sectors.

Batteries and Bottlenecks

The battery supply chain is complex, but it can be reduced to four key elements: mining the critical minerals, processing them, assembling the battery parts, and recycling.

Under its “Go Out” investment strategy, China has spent the last two decades solidifying control over the main critical minerals for battery cells — lithium, cobalt, and graphite. Beijing now controls some 70 percent of the world’s lithium supplies, much of which is located in South America. More than two-thirds of the world’s cobalt reserves are found in the Democratic Republic of the Congo, and China has secured control over 10 of the country’s 18 major mining operations, or more than half its production. Beijing is also the world’s largest consumer of cobalt, with more than 80 percent of its consumption being used by the rechargeable battery industry. Graphite is the largest component by volume in advanced batteries, but spherical graphite, the kind that makes up the anode in electrical vehicle batteries, must be refined from naturally occurring flake graphite. And China produces 100 percent of the world’s spherical graphite.BECOME A MEMBER

Second, China has developed the largest minerals processing industry in the world. After these critical minerals are mined from the earth, they must be separated, processed, refined, and combined. This process is dirty and environmentally unfriendly. Lithium-ion batteries contain hazardous chemicals, such as toxic lithium salts and transition metals, that can damage the environment and leach into water sources. This is likely a key reason why few processing facilities are located in North America. The critical minerals the United States does mine are often shipped back to China for refining.

According to Benchmark Mineral Intelligence, Beijing also controls 59 percent of global lithium processing, 65 percent of nickel processing, and 82 percent of cobalt processing. And an important aside is that China produces roughly 90 percent of the magnets needed for the motors of electrical vehicles.

As early as 2008, China announced billions of dollars in infrastructure investments in the Democratic Republic of the Congo, by far the world’s largest cobalt producer, in exchange for mining rights. The partnership continues to flourish. In January of this year, the Democratic Republic of the Congo formally joined China’s “One Belt One Road” initiative. The Chinese mining company Tianqi Lithium has acquired stakes in major mines in Chile and Australia, giving it effective control over nearly half the current global production of lithium. China controls even more market share in the refining and processing parts of the mineral supply chain. Together, these state-backed investments have given Chinese battery makers like Contemporary Amperex Technology Co. Limited (CATL) an advantage over Japanese and American competitors.

Third, once these minerals are processed, they are packed into battery cells, which are combined into modules and which, in turn, are wrapped into battery packs. This process takes place in dedicated battery factories called “gigafactories.” Like the rest of the battery supply chain, very few of these specialized factories are located in North America. About 136 of the 181 lithium-ion battery gigafactorieseither planned or under construction worldwide are, or will be, located in China. Just 10 are planned for the United States. An important step in the right direction is General Motor’s consideration of building a second battery factory in the United States — it already has a new facility online in Ohio — but the United States needs to do more.

Finally, once batteries have reached the end of their life cycle, the critical minerals in each cell can be reused. But China dominates the battery recycling industry as well. This is partially because China has built infrastructure to recycle lithium-ion batteries for consumer electronics. In 2019, around 70 percent of lithium-ion batteries were recycled in China and South Korea. And because China is by far the world’s largest electric vehicle market, it will remain a key contributor to lithium battery waste — thus allowing Beijing to recycle at scale.

China has been strategic about building up its recycling capabilities, requiring manufacturers of electric vehicles to be responsible for setting up facilities to collect and recycle spent batteries. As a part of this initiative, automakers were required to establish a maintenance service network to allow consumers to repair or exchange old batteries.Going forward, recycling will only become more important. By 2030, 11 million metric tons of lithium-ion batteries are expected to reach the end of their service lives. Eventually, a robust recycling process could offer a way for countries to mitigate some Chinese-controlled bottlenecks in the supply chain. But taking advantage of this will require environmentally friendly recycling facilities in the United States.

Commanding Heights: Technology and Leverage

China’s dominance across this supply chain should come as no surprise. As in other key economic and technology sectors such as flexible manufacturing, solar panels, and wind turbines, China has achieved dominance by careful planning and investments — as well as unfair practices such as those that led to the dominance of China’s solar panel manufacturing industry. (And it’s worth noting that this issue became one of the most contentious issues between the European Union and China as well.) In addition, many pointed to China’s massive intellectual property theft as a key contributor to its dominance in these key sectors.

Because China takes a strategic national approach, it has been particularly good at identifying key foundational sectors or platforms to grow or control, thereby increasing its economic and geostrategic power. For example, it has used its dominance in financial technologies across Asia to increase the power of its surveillance state by collecting the data associated with payments. It has prioritized 5G, and, with state financing and other forms of support, it has built out its network and is far ahead of the United States in land stations. Notably, this 5G infrastructure will have direct relevance to China’s ability to develop autonomous vehicles, since self-driving vehicles and other platforms, like drones, depend upon the fast connectivity 5G networks provide. (And autonomous vehicles are closely related to the electrical vehicle industry.)

Beijing’s “Made in China 2025 plan,” announced some six years ago, called for major advances in semiconductor fabrication and provided more than $150 billion to support that goal. Some recent reports suggest that China aims to produce some 70 percent of its domestic chip needs within China by 2025 and to reach parity with international technologies five years later. As Jonathan Ward has pointed out, “the mastery of advanced technologies and the creation of a powerful industrial base for civilian and military purposes” are essential pieces of China’s global strategy and activities. While the United States now increasingly recognizes this reality — with legislation such as the Creating Helpful Incentives to Produce Semiconductors for America Act (CHIPS for America Act), as well as executive branch attention by both Presidents Donald Trump and Joe Biden — there remains a far gap between strategy development, desired outcomes, and actual implementation.

Advanced energy is another key platform. Thus, it is not surprising that the “Made in China 2025” plan also included “new energy vehicles” and “new energy” as one of its 10 areas of focus. Beijing considers advanced batteries and electric vehicles a key strategic sector worthy of extensive industrial planning. One report noted that, in the science and technology sector alone, the Chinese Communist Party has issued as many as 100 plans. Several of these, including its 2011 strategic emerging industries plan, focused on key strategic sectors, including the “new energy automobile industry.” In 2017, General Secretary Xi Jinping released an Outline of the National Strategy for Innovation-Driven Development that includes differentiated strategies to produce “modern energy technologies.” And China is using its “One Belt One Road” framework to make strategic investments around the world and vertically integrate its supply chain for battery production.

The Chinese Communist Party has recognized that pressure to address climate change will prompt a shift toward renewable energy around the world. With a regulatory push across Europe, some expertsanticipate that, by 2040, about 70 percent of all vehicles sold in Europe across different segments will be electric. Others believe that the global electric vehicle market — about $250 billion today — will grow to almost $1 trillion by 2027.

China has positioned itself well for this transition. On the one hand, China will have the benefit of cheap fossil fuels. China will not even begin to reduce its own carbon emissions for another 40 years, until 2060. It continues to build coal plants around the world. (In 2016 alone, Chinese development banks invested $6.5 billion in coal infrastructure overseas, mostly in neighboring developing countries). On the other hand, the Chinese Communist Party has positioned itself at the center of a global energy revolution.

If anyone has doubts about the determination with which this might unfold, China’s automobile market was virtually nonexistent until the early 1990s but surpassed the United States in 2009 to become the world’s largest.

Rewiring the global energy economy around China would provide Beijing with massive economic benefits. Experts have pointed out that China’s focus on energy security and technological self-reliance are key factors informing Beijing’s aim to reach carbon neutrality by 2060. Chinese ministries have estimated that achieving this goal could lead to over RMB 100 trillion ($14.7 trillion) in investments over the next 30 years.

As a result, China has made significant advances in energy storage, leading Europe’s top automakers to move most of their research and development operations to China. Since 2018, the largest European carmakers (BMW, Daimler, FCA, Groupe PSA, Renault, Volkswagen, and Chinese-owned Volvo) have chosen Chinese partners for 41 cooperation projects. And European carmakers have also directly invested in their own research and development centers in China, establishing nine such centers since 2018.

Whatever the real intentions behind General Secretary Xi’s effort to put China at the center of an “an ecological civilization,” it is shortsighted and ahistorical to think that China will not use this leverage. It has done so in the past. In 2010, a Chinese fishing boat rammed two Japanese coast guard vessels in the contested waters of the East China Sea. When Tokyo arrested the fishing boat’s captain, the Chinese Communist Party retaliated by placing an embargo on rare earth sales to Japan.

More recently, in June 2019, Chinese state-controlled media threatened disruption of rare earth supplies to the United States — this time targeting U.S. defense contractors. The threat noted that “military equipment firms in the United States will likely have their supply of Chinese rare earths restricted.” This past February, China threatened to use export controls to cut off U.S. access to the equipment used for processing rare earths, a ban that would be as devastating as cutting off production of rare earths themselves. And Australia is feeling such pressure as China has restricted imports of Aussie beef, wine, and barley — and reduced the flow of Chinese students to Aussie universities — unless Australia submits to a list of 14 politicaldemands by Beijing.

This behavior is consistent with China’s use of “sharp power” — diplomatic, economic, or technological coercion — to pursue its policy objectives. This fall, China passed its first unified export control law, allowing the Chinese Communist Party to control the export of items including very broadly defined “dual-use goods” to specific foreign entities. As the Merics institute has pointed out, any exports that fall under “overall national security” — and the law appears intentionally vague — could be prevented, thus allowing Beijing to retaliate against countries or companies for policy disagreements or geopolitical reasons. Given Beijing’s designation of the electric vehicle and battery sectors as strategic industries, the Chinese Communist Party could potentially weaponize key bottlenecks in the supply chain against the United States.

Biden’s Challenge

For much of 21st century, the United States was dependent upon the Middle East for oil. As the Biden administration seeks to shift to renewables and reduce carbon emissions through the deployment of more electric vehicles, it should not trade one dependency for another. As one expert group put it, the modern-day arms race revolves around super-sized lithium-ion battery cell manufacturing facilities and the mineral supply chains to support them.

Any successful effort to “position America to be the global leader in the manufacture of electric vehicles and their input materials,” as Biden has stated, cannot be based on a dependency on the United States’ most serious competitor. Rather, the United States should understand that American efforts will be contested — even if they are intended to help the “global good” of reduced carbon emissions. It is highly unlikely that Beijing, which has been working for years to “seize the commanding heights” in critical technologies such as batteries, will easily watch as its advantages melt away. In the eyes of the Chinese Communist Party, the battery race means that China and the United States are locked in a battle over market share and access to scarce resources.

Chinese Foreign Ministry spokesman Zhao Lijian has already reminded U.S. leaders that U.S.-Chinese cooperation in specific areas is interrelated and subject to the overall U.S.-Chinese relationship. Maintaining dominance in battery production — particularly as the world increasingly relies on batteries — provides Beijing with valuable geopolitical leverage. While the Biden administration would like to compartmentalize climate change and geopolitics, the likelihood of China not doing so is high.

Moreover, as Biden seeks to build technology alliances with Europe and other allies to counter China, China’s efforts will constrain his leverage. With European electric vehicle manufacturers dependent upon China, it is hard to imagine that the Chinese Communist Party will not use these dependencies to ask for concessions in other domains.

To avoid a potentially debilitating dependence on China, then, the United States should treat clean energy technologies as a competitive space.

The Biden administration cannot afford to start from scratch and should build on the work of its predecessor. As it begins its new supply chain review, of which advanced batteries are one part, it should keep in mind the lessons of the Obama era battery initiative. In 2009, the Obama administration announced $2.4 billion in funding to produce next-generation hybrid electric vehicles and advanced battery components. One goal at the time, was to “end our addiction to foreign oil” through a plan that “positions American manufacturers on the cutting edge of innovation and solving our energy challenges.” As part of this, the Department of Energy offered up to $1.5 billion in grants to U.S.-based manufacturers to produce these batteries and their components. So what happened to these efforts and others like it over the past decade? Without setting forth what went right and what went wrong, it is hard to see how new initiatives can make progress.

How will Biden’s current efforts to use green technology to stimulate the economy differ from past failed efforts? Despite a string of incentives in the stimulus act in 2009, the solar supply chain largely moved to China after that country’s government invested heavily in the industry.

In addition to specifying lessons learned from past efforts, any future policy initiatives  should take advantage of existing recent efforts. For example, Ellen Lord, the former undersecretary of defense for acquisition and sustainment, devoted significant time to identifying investment priorities, including the battery network. Since it takes five to seven years from the start of planning a battery-manufacturing plant and setting up a pilot production line to reach full operational capacity of a gigawatt factory that can produce several gigawatt-hours per year, the administration needs to concentrate some of its efforts on existing facilities, while encouraging new investments by U.S.- and foreign-owned suppliers.

The Biden team will also need to make choices, and fight for them internally. If the United States is to increase its processing of minerals for batteries in the United States, it will need to overcome the fact that such processing facilities are environmentally challenging. That tradeoff is worth it.

The new administration can make progress on its climate goals, but doing so will require a serious dose of climate realism, as well as a concomitant commitment to competitive policies to achieve U.S. independence from China in battery technology and manufacturing.


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