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China, Part VII - Second Tier Geopolitical and Economic Goals (cont’d)
Stu Cvrk 6/11/2021 5:01 AM


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Part VI of this multi-part series discussed the first increment of the second tier geopolitical and economic goals and objectives of the Chinese Communist Party. This part summarizes a second increment of those goals and objectives

Introduction

The ChiComs seek to become a technologically-advanced leading manufacturing power by the centennial celebration of the founding of Communist China that will be held in 2049. In order to achieve that objective, the Chinese Communist Party has been pursuing a number of intertwined goals aimed at world economic dominance in all spheres: trade, policy, legal, technology, etc. And with economic dominance comes geopolitical and military dominance. 

Secondary Goals of the Spider Dragon

To achieve these goals, the ChiComs developed an interlocking and mutually supporting mosaic of policy initiatives under the umbrellas of the Belt-Road Initiative (see Part III and Part IV) and Made in China 2025 (see Part V). Here is a continuation of the list that was begun in Part VI:

Implement the Double First-Class University Plan. The goal here is to evolve 100 of China’s best universities into world-class institutions by 2049 (the 100th anniversary of founding of the People’s Republic of China). Announced in 2015, the plan is “an ambitious and broad policy for China to develop a number of world-class universities and disciplines by 2020, to have some universities and disciplines among the best in the world by 2030 and to have China’s overall higher education system considered among the world’s best by 2050.” A key element of the plan is to promote international professor and student exchanges, intertwined yet again with the Thousand Talents program (aimed at attracting foreign scientists, engineers, and instructors), which are exploited by the Ministry of Education and Ministry of State Security for espionage purposes.

The implementation measures call for improvements in student exchange, credit transfer and qualifications recognition with world class foreign universities, and encourage deeper academic exchange and scientific cooperation with foreign institutions. China is seeking to become more involved in setting international standards and regulations around academic and student mobility, as part of its goal to play a more influential global role in education (China and Australia are the only two countries to have ratified the Asia-Pacific Regional Convention on the Recognition of Qualifications in Higher Education (the Tokyo convention)).

Promote military-civil fusion to enhance PLA capabilities. An interlocking policy aligned with the previous goal involves leveraging those 100 “world-class universities” for the development of dual-use and military technologies for the PLA. The ChiComs have developed and implemented a strategy of “maximizing linkages between the military and the civilian sector to build China’s economic and military strength”:

The policy was promoted by President Hu Jintao in 2007 but has been elevated to a national strategy by President Xi Jinping, who personally oversees the Central Commission for the Development of Military–Civil Fusion.

An important subset of Chinese universities are the so-called “Seven Sons of National Defense:”

[This is] a group of leading universities with deep roots in the military and defense industry. They’re all subordinate to the Ministry of Industry and Information Technology, which oversees China’s defense industry.

Each year, more than 10,000 graduates from the Seven Sons join the defense research sector—just under 30% of their employed graduates. PhD graduates from these universities are particularly sought after, and as many as half of them go into the defense sector. State-owned defense conglomerates specializing in aircraft, missiles, warships, armaments and military electronics are among their top employers, alongside high-tech companies such as Huawei and ZTE.

Erase the undersea warfare technology deficit. This is but one example of how the military-civil fusion initiative is being exploited to achieve another key objective. A key and decisive military advantage enjoyed by the US is submarine technology, including acoustic sensors and communications systems, torpedo guidance, and unmanned undersea vehicles. To make up that deficit, the ChiComs have employed the Seven Sons to steal advanced technology from the US, as reported on Tuesday:

Massachusetts-based businessman Qin Shuren became the latest person to plead guilty in the Justice Department’s crackdown on the illegal export of strategic technologies. Qin’s company, LinkOcean Technologies, falsified documentation to send a Chinese military-affiliated university some $100,000 worth of equipment, including hydrophones, sonobuoys, side-scan sonars, and even an autonomous underwater vehicle (AUV). 

Mr. Qin was working at the direction of Northwestern Polytechnical University, in the northwest Chinese city of Xi’an. NWPU is one of the “Seven Sons of National Defense,” a group of universities known for particularly close ties to the People’s Liberation Army and which contribute a high proportion of China’s defense workforce and research.

The same illegal tech transfer mechanisms are being applied to 5G, image recognition, chip manufacturing, artificial intelligence, robotics, and other advanced technologies.

Promote global use of the yuan. The goal is to challenge the US dollar as the key international currency underlying the world trade system and eventually supplant the dollar with the Chinese yuan as the world’s primary reserve currency. The yuan has already achieved official reserve-currency status from the International Monetary Fund, but “the yuan’s share in global payments and central bank reserves remains low, at about 2%.” Furthermore,

To accelerate reaching a par with counterparts such as the yen or euro, China would need to pull down its capital controls, which were tightened in the wake of a messy devaluation in 2015. But that would raise the risk of destabilizing outflows. China could alternatively expand imports and run persistent current-account deficits -- as the U.S. does -- to generate a pool of yuan balances overseas.

The key to displacing the dollar is convertibility of the yuan. If/when the ChiComs achieve full convertibility, then Chinese overseas investments under the BRI can be flexibly implemented, and the ChiComs can nudge other countries away from the dollar and toward the yuan.

Lead the world in digital currency implementation. This objective is synergistic with the preceding goal. Convertibility of the yuan and an accompanying digital exchange and payment capability with the Chinese central bank would enable the ChiComs to extend their financial empire worldwide. The aim is to decouple Western companies and banks from global capital markets and money flows, making it easier for the yuan to prevail. Last year, the ChiComs implemented a digital currency pilot project:

China’s central bank has introduced a homegrown digital currency across four cities as part of a pilot program, marking a milestone on the path toward the first electronic payment system by a major central bank.

Internal tests of the digital currency are being conducted in four large cities around China—Shenzhen, Suzhou, Chengdu and Xiong’an, a satellite city of Beijing—to improve the currency’s functionality, the digital currency research institute under the People’s Bank of China confirmed.

China is ahead of many other countries in preparing the launch of an official digital currency. In recent years, the use of traditional paper bills and cash has declined sharply, and smartphone payments have become so ubiquitous that many Chinese people, particularly younger urban dwellers, no longer carry their wallets or cash for shopping. Instead, they use Tencent Holdings Ltd. ’s WeChat Pay and Alipay, operated by Ant Financial Services Group, an affiliate of Alibaba Group Holding Ltd.

China’s central bank has said that shifting to a government-run digital payment system will help combat money laundering, gambling and terror financing. It has also hailed digital currencies as a way to improve the efficiency of transactions in its financial system.

What PBOC left unsaid is that digital transactions make it much easier for the ChiComs to surveil, monitor, and control their population through a social credit system – and those foreigners who adopt the Chinese digital currency system and the supporting technology infrastructure.

Implement the Blockchain-based Services Network (BSN). A blockchain is a type of database that stores information in “blocks” that are “chained together.” Key advantages include reliability, security, decentralization, and transparency, as excerpted from this excellent blockchain tutorial:

A database structures its data into tables whereas a blockchain, like its name implies, structures its data into chunks (blocks) that are chained together. This makes it so that all blockchains are databases but not all databases are blockchains. This system also inherently makes an irreversible timeline of data when implemented in a decentralized nature. When a block is filled it is set in stone and becomes a part of this timeline. Each block in the chain is given an exact timestamp when it is added to the chain.

Because of the decentralized nature of [blockchains], all transactions [could] be transparently viewed by either having a personal node or by using blockchain explorers that allow anyone to see transactions occurring live.

[N]ew blocks are always stored linearly and chronologically. After a block has been added to the end of the blockchain, it is very difficult to go back and alter the contents of the block unless the majority reached a consensus to do so. That’s because each block contains its own hash, along with the hash of the block before it, as well as the previously mentioned time stamp. Hash codes are created by a math function that turns digital information into a string of numbers and letters. If that information is edited in any way, the hash code changes as well. 

The implications of China’s BSN are YUUUUGE. BSN will enable the ChiComs to monitor and control all economic/trade transactions of users around the world, as described here:

BSN will be the backbone infrastructure technology for massive interconnectivity throughout the mainland, from city governments, to companies and individuals alike. The network will also form the backbone to the Digital Silk Road to provide interconnectivity to all of China's trade partners around the globe. The BSN will be a new internet protocol to allow a more efficient way to share data, value and digital assets in a completely transparent and trusted way between anyone who wants to be a node on the network.

The Chinese central government sees blockchain as the critical next-generation IT infrastructure to build future smart cities, connecting cryptographically secure databases linked by 5G to scalable cloud and data management infrastructure such that big data/AI analytics can efficiently run on top. 

Joining BSN might be a future condition to trading with the ChiComs! And that will mean accepting their surveillance, monitoring, and, ultimately, control. BSN and its supporting tech base could well be a principal reason for bipartisan Senate passage on Tuesday of the U.S. Innovation and Competition Act targeted at countering the ChiComs’ technology onslaught. 

Fully implement the ChiCom social credit system. In 2014, the ChiComs posted a plan for implementing a social credit system for public comment. The goal is to “harmonize Chinese society” – or rather, to monitor and control every aspect of Chinese behavior – by regulating the behavior of Chinese citizens based on a point system. A good title for the plan might be “George Orwell’s 1984Comes to China.” Here is what the ChiComs’ State Council announced in 2014:

A social credit system is an important component part of the Socialist market economy system and the social governance system. It is founded on laws, regulations, standards and charters, it is based on a complete network covering the credit records of members of society and credit infrastructure, it is supported by the lawful application of credit information and a credit services system, its inherent requirements are establishing the idea of an sincerity culture, and carrying forward sincerity and traditional virtues, it uses encouragement to keep trust and constraints against breaking trust as incentive mechanisms, and its objective is raising the honest mentality and credit levels of the entire society.

Accelerating the construction of a social credit system is an important basis for comprehensively implementing the scientific development view and building a harmonious Socialist society, it is an important method to perfect the Socialist market economy system, accelerating and innovating social governance, and it has an important significance for strengthening the sincerity consciousness of the members of society, forging a desirable credit environment, raising the overall competitiveness of the country and stimulating the development of society and the progress of civilization.

Buried in the announcement was the euphemism “commend sincerity and punish insincerity.” As noted here, “examples of infractions include bad driving, smoking in non-smoking zones, buying too many video games, and posting fake news online, specifically about terrorist attacks or airport security.” With US and multinational tech companies like Google and IBM helping the ChiComs implement the system, how long before those political leaders in the West who admire ChiCom authoritarian methods adopt social credit systems based on ChiCom experience? The Chinese would only be too happy to sell that capability to the world.

Extend the jurisdiction of the National Security Law. Communist China passed a new National Security Law last June as the first step in establishing a legal framework to control overseas Chinese (and eventually everybody else). This law is being “tested” first in Hong Kong:

The law, passed in China's Standing Committee of the National People's Congress (NPCSC), includes 66 articles and covers four areas of criminal activity: secession, subversion, terrorism and collusion with foreign or external forces. Those convicted of such crimes face maximum sentences of life imprisonment.

The law grants mainland China more powers to insert itself in the affairs of Hong Kong. 

The law allows the ChiComs to pursue anyone deemed subversive, including overseas Chinese and even foreigners

[The law] boils down to Beijing granting itself the power to intervene in Hong Kong in any matter that China’s government deems relevant to national security — a concept that under China’s communist rule means whatever the party overlords want it to mean. …

The law includes provisions criminalizing “offences” committed not only in Hong Kong, but by anyone, anywhere around the globe. According to a December report submitted to Congress by the U.S.-China Economic and Security Review Commission, “Left unchecked, the law could grant the Chinese government broad power to censor global discourse.”

This is the ChiComs’ legal template for extending their authoritarian control around the world. Taiwan will be next after Hong Kong has been totally “pacified” under the National Security Law.

Exploit access to China’s economy to achieve geopolitical goals. The primary goal is to the US’s system of treaties and alliances with a global network of “Chinese partnerships.” To achieve that goal, coercion through controlling access to China’s economy enables the ChiComs to pressure foreign governments, international institutions, foreign media, and overseas Chinese. Five examples of that coercion are listed here:

  1. Weaponizing China’s economy: Party leaders generate political compliance in foreign societies by communicating the benefits of cooperation, alongside the costs that Beijing can impose upon countries, companies, or individuals who step out of line.
  2. Asserting narrative dominance: In the global conversation on China, the party manipulates and controls information to downplay and crowd out adversarial narratives and advance those that serve its interests.
  3. Relying on elite intermediaries: The party relies on intermediaries abroad to shape foreign perceptions of China, often adopting many of the same ambiguous, opaque, and misleading methods that it utilizes to co-opt elites at home.
  4. Instrumentalizing the Chinese diaspora: The party identifies valuable diaspora members and groups in an effort to penetrate and co-opt Chinese diaspora communities.
  5. Embedding authoritarian control: The party’s way of doing business, and its efforts to demonstrate a viable alternative to liberal democracy, both strengthen authoritarian norms beyond China’s borders.

We have seen a lot of that coercion practiced in the past, but it is entirely possible that the ChiComs have overplayed their hand especially now that there are serious questions about the origination of the ChiCom virus. In fact, the EU parliament recently pushed back on Xi Jinping’s hardline diplomacy by freezing an EU-China investment plan that had been seven years in the making.

Conclusion

The ChiComs have woven an intricate web of secondary geopolitical and economic goals under the BRI and Made in China 2025 initiative: civ-mil integration, technology theft via university exchanges, next-generation financial services technology innovations, social credit authoritarian controls, legal framework for controlling overseas Chinese and others, and the diplomatic coercion to achieve key objectives and minimize criticism of ChiCom authoritarian methods.

The end.

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Stu Cvrk
Stu Cvrk retired as a Captain after serving 30 years in the US Navy in a variety of active and reserve capacities, with considerable operational experience in the Middle East and the Western Pacific. Through education and experience, an oceanographer and systems analyst, Stu is a graduate of the US Naval Academy, where he received a classical liberal education, which serves as the key foundation for his political commentary.




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