In-Depth

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Xi Jinping: Today, video games. Tomorrow, well ... just be good.

Today's issue is a heads up on what may be Xi Jinping's efforts to reshape Chinese society.

CHINADebate

CHINADebate

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Malcolm Riddell
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Founder of CHINADebate

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The Taliban: 'China's Perfect Partner'?

Breaking through the blow-by-blow reporting that started when the Taliban began its sweep to victory are the geopolitical analyses of who gains and who loses in Afghanistan.

CHINADebate

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Malcolm Riddell
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Founder of CHINADebate

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China's Tech Crackdown
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China's Tech Crackdown: 'Nobody Saw It Coming.' — Huh?

‘Carnage in China's financial markets signals the beginning of a new era as the government puts socialism before shareholders, and regulatory changes rip apart the old playbook,’ writes Reuters’ Tom Westbrook.

CHINADebate

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Malcolm Riddell
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Founder of CHINADebate

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Andrew Browne | Bloomberg
China's Tech Crackdown
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'Why China Is Cracking Down on Its Technology Giants'

‘Why, you may ask, is China crushing some of its most innovative unicorns? We’re in a new era led by President Xi Jinping, and politics are in command.’

Bloomberg

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Andrew Browne | Bloomberg
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Shuli Ren | Bloomberg
China's Tech Crackdown
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'Xi's Four Pillars of Regulation'

‘Broadly, Beijing is concerned about four pillars of stability: banking, anti-trust regulation, data security and social equality. All of Beijing’s major interventions reflect these concerns.’

Bloomberg

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Shuli Ren | Bloomberg
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Shuli Ren | Bloomberg
China's Tech Crackdown
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'Stock Market: China Doesn’t Care How Much Money Investors Lose'

‘Does Beijing not care how much money foreign investors have lost? Does the government really want to close China Inc.’s access to the deep pool of global capital? The short answer is, no, the government doesn’t care.

Bloomberg

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Shuli Ren | Bloomberg
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Tom Westbrook | Reuters
China's Tech Crackdown
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'The most significant philosophical shift since Deng'

‘Carnage in China's financial markets signals the beginning of a new era as the government puts socialism before shareholders and regulatory changes rip apart the old playbook. According to some analysts, it is the most significant philosophical shift since former leader Deng Xiaoping set development as the ultimate priority 40 years ago.’

Reuters

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Tom Westbrook | Reuters
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Didi: Xi Surprises Us Again

Beijing shocked the financial world when it pulled the rug out from under Didi days after its IPO on the New York Stock Exchange and also announced new regulations reigning in overseas IPOs and Chinese companies already listed.

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CHINADebate

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Malcolm Riddell
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Founder of CHINADebate

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What the West Gets Wrong About China
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‘Why do business and political leaders in the West persist in getting China so wrong?’

From that I suggested that to invest successfully in China, you have to understand – and be aware of - what those differences are.

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CHINADebate

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Malcolm Riddell
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Founder of CHINADebate

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Rana Mitter | Oxford
What the West Gets Wrong About China
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Part 1 | ‘Why do business and political leaders in the West persist in getting China so wrong?’

‘Why do business and political leaders in the West persist in getting China so wrong?’

Harvard Business Review

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Rana Mitter | Oxford
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Elsbeth Johnson | MIT Sloan School of Management
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Rana Mitter | Oxford
What the West Gets Wrong About China
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Part 2 | ‘Myth 1: Economics and Democracy Are Two Sides of the Same Coin'

‘The truth, then, is that China is not an authoritarian state seeking to become more liberal but an authoritarian state seeking to become more successful—politically as well as economically.’

Harvard Business Review

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Rana Mitter | Oxford
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Elsbeth Johnson | MIT Sloan School of Management
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Rana Mitter | Oxford
What the West Gets Wrong About China
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Part 3 | ‘Myth 2: Authoritarian Political Systems Can’t Be Legitimate’

‘A Marxist-Leninist system is concerned not only with economic outcomes but also with gaining and maintaining control over the system itself.’ ‘That has huge implications for people seeking to do business in China.’

Harvard Business Review

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Rana Mitter | Oxford
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Elsbeth Johnson | MIT Sloan School of Management
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Rana Mitter | Oxford
What the West Gets Wrong About China
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Part 4 | ‘Myth 3: The Chinese Live, Work, and Invest Like Westerners’

‘For much of its turbulent modern history, China has been under threat from foreign powers, both within Asia (notably Japan) and outside it (the UK and France in the mid 19th century).’ ‘China’s rulers, therefore, see foreign engagement as a source less of opportunity than of threat, uncertainty, and even humiliation.’

Harvard Business Review

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Rana Mitter | Oxford
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Elsbeth Johnson | MIT Sloan School of Management
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Jack Nicas, Raymond Zhong, & Daisuke Wakabayashi | The New York Times
Apple in China
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‘Censorship, Surveillance and Profits: A Hard Bargain for Apple in China’

‘Apple built the world’s most valuable business on top of China. Now it has to answer to the Chinese government.’

The New York Times

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Jack Nicas, Raymond Zhong, & Daisuke Wakabayashi | The New York Times
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Apple in China
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'Tim Cook and Apple Bet Everything on China.'

‘For Apple, a clean break with China is impossible.’

Wall Street Journal

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Jack Nicas, Raymond Zhong, & Daisuke Wakabayashi | The New York Times
Apple in China
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'Apple in China: No Plan B'

“This business model only really fits and works in China. But then you’re married to China.” ‘The Chinese government was starting to pass laws that gave the country greater leverage over Apple, and Mr. Xi would soon start seeking concessions. Apple had no Plan B.’

The New York Times

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Jack Nicas, Raymond Zhong, & Daisuke Wakabayashi | The New York Times
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Apple in China
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'Apple Reaches $2 Trillion'

“This business model only really fits and works in China. But then you’re married to China.” ‘The Chinese government was starting to pass laws that gave the country greater leverage over Apple, and Mr. Xi would soon start seeking concessions. Apple had no Plan B.’

The New York Times

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Apple in China
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Apple in China

‘But just as Mr. Cook figured out how to make China work for Apple, China is making Apple work for the Chinese government.’ ‘Behind the scenes, Apple has constructed a bureaucracy that has become a powerful tool in China’s vast censorship operation.’

CHINADebate

CHINADebate

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Malcolm Riddell
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Founder of CHINADebate

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Apple in China
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'Apple held hostage by its Chinese puzzle'

"The massive and complete supply chain ecosystem in China is key to the iPhone maker's success, but it has also created a gigantic organism that would struggle to move somewhere else."

Nikkei Asian Review

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The most dangerous place on Earth
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'Another China-Related Risk for Investors & Corporations: Taiwan'

"Taiwan poses the biggest geopolitical risk in Asia and is likely to only increase, a reason it has to be built into investors’ [and corporates' models]" according to Arthur Kroeber, head of research at Gavekal.

Barron’s

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Richard Bush | Brookings (retired)
The most dangerous place on Earth
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'Don't Help China By Hyping Risk Of War Over Taiwan'

‘China is marshaling its full range of capabilities to intensify pressure on Taiwan below the threshold of conflict.’ ‘Beijing's goal is to constantly remind Taiwan's people of its growing power, induce pessimism about Taiwan's future, deepen splits within the island's political system and show that outside powers are impotent to counter its flexes.' ‘Its approach is guided by the Chinese aphorism, "Once ripe, the melon will drop from its stem [瓜熟蒂落]," ’‘This strategy may require more time than war, but it would come at less cost and risk to Beijing.’

NPR

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Richard Bush | Brookings (retired)
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Bonnie Glaser | German Marshall Fund in America & Ryan Hass | Brookings Institution
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The most dangerous place on Earth
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'The Most Dangerous Place on Earth'

‘China's top priority now and in the foreseeable future is to deter Taiwan independence rather than compel unification,’ note Richard Bush (Brookings (retired)), Bonnie Glaser (German Marshall Fund in America), and Ryan Hass (Brookings Institution)

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CHINADebate

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Malcolm Riddell
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Founder of CHINADebate

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Ian Bremmer | Eurasia Group
The most dangerous place on Earth
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'Would China really invade Taiwan?'

‘Is Taiwan really "the most dangerous place on earth?" No. Or at least, not right now.’

GZERO

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Ian Bremmer | Eurasia Group
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The most dangerous place on Earth
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'China Threat: A "perception gap" between the U.S. and Taiwan'

‘While the U.S. talks up the medium-term military threat, the democratic island sees the moves as part of a bigger, more immediate problem: "gray zone" warfare from Beijing that is meant to wear down the morale of not just the Taiwanese military, but also the island's people.’

NBCNews

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The most dangerous place on Earth
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'The most dangerous place on Earth'

‘Taiwan is an arena for the rivalry between China and America.’ ‘Although the United States is not treaty-bound to defend Taiwan, a Chinese assault would be a test of America’s military might and its diplomatic and political resolve.’

The Economist

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The Belt & Road in the Post-Pandemic World

In this issue of China Macro Commentary, I have focused just on the ‘Digital Silk Road’ and how it supports the business expansion of Chinese tech companies, and on BRI ‘connectivity’ projects: ports (China is involved in 93 around the world) and on the growing China-Europe freight trains traffic (This wasn't covered sufficiently in the Report, so I included a recent article from the Wall Street Journal), plus on the U.S.'s failure to meet the BRI challenge.

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CHINADebate

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Malcolm Riddell
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Founder of CHINADebate

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In Battle With U.S. for Global Sway, China Showers Money on Europe’s Neglected Areas

‘The number of freight trains running between China and Europe topped 12,400 last year, 50% higher than in 2019 and seven times that of 2016, according to Chinese authorities.’

The Wall Street Journal

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Robert D. Atkinson | president of the Information Technology and Innovation Foundation

China: 'Power Trader'

‘The theory of power trade better explains China’s economic and trade policies than does the theory of free trade or protectionism,’

The International Economy

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Robert D. Atkinson | president of the Information Technology and Innovation Foundation
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'Consumer boycotts warn of trouble ahead for Western firms in China'

‘Western executives in China cannot shake an unsettling fear that this time is different.’‘Their lucrative Chinese operations are at rising risk of tumbling into the political chasm that has opened between the West and China.’

The Economist

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Chinese Boycotts are the Least of Your Worries

‘For chief executives [and boards] around the world, watching the Chinese government go after Swedish clothier Hennes & Mauritz AB is excruciating — facing the evaporation of your hard-won China business over political issues largely out of your control,’ writes Michael Schuman in Bloomberg.’ ‘But it could be the new normal.’ ‘As relations between China and the U.S. and its allies deteriorate, Western businesses could increasingly get dragged into the fray.’

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CHINADebate

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Malcolm Riddell
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Founder of CHINADebate

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Task Force Report on China’s Belt & Road

'China Owns, Partially Owns, or Operates 93 Ports'

‘Chinese firms own, partially own, or operate at least ninety-three ports across the globe.’

Council on Foreign Relations

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Task Force Report on China’s Belt & Road
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Task Force Report on China’s Belt & Road

'How the Pandemic is Changing the Belt & Road Initiative'

‘The building of roads, railways, ports, and power plants is giving way to a BRI centered on technology—primarily telecommunications, connectivity, health care, and financial services.’

Council on Foreign Relations

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Task Force Report on China’s Belt & Road
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Task Force Report on China’s Belt & Road

'Dominating the Digital Silk Road'

‘China’s Belt and Road Portal reports the Digital Silk Road has enabled six thousand Chinese internet companies and more than ten thousand Chinese technology products to enter foreign markets.’

Council on Foreign Relations

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Task Force Report on China’s Belt & Road
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'The Threat the U.S. Isn't Answering'

‘If BRI meets little competition or resistance, Beijing could become the hub of global trade, set important technical standards that would disadvantage non-Chinese companies, lock countries into carbon-intensive power generation, have greater influence over countries’ political decisions, and acquire more power-projection capabilities for its military.’

Council on Foreign Relations

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George Magnus | University of Oxford

'Profit or principle is the hard choice for foreign companies in China' George Magnus

‘Business risks for foreign companies in China are increasing after the recent exchange of sanctions between Beijing and western governments.’‘For foreign companies in China, the options seem delicately balanced. If they stand up for principles, they may put revenues at risk and will incur extra costs as they develop new supply chains. Yet if they prioritise their China profits, they could do irretrievable damage to their brands at home and in other markets, falling foul of shareholders and changing governance requirements.’‘It is an invidious choice but the latter is likely to be far more damaging to longer term performance and earnings, and corrosive of trust in the brand.’

Financial Times

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George Magnus | University of Oxford
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John Pomfret

'How China keeps stumbling on the global stage' John Pomfret

‘Across the globe, Xi’s diplomatic representatives in Europe, Beijing, Hong Kong, Canada, Australia and elsewhere, are lifting up rocks and smashing their own feet.’‘The moves are befuddling — with a buoyant economy and a practically covid-free country, China is poised to see its influence rise if it plays it smart. But it’s not; instead, it’s alienating individuals and nations across the world.’‘I’ve been studying China for my entire adult life and I have to admit to being bewildered by China’s performance.’‘But I’m in good company. Thirty-one years ago, the great political scientist Lucian Pye wrote, “Just when all appears to be going well, Chinese officials create problems for seemingly unaccountable reasons.” ’

The Washington Post

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John Pomfret
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Matt Pottinger | former Deputy National Security Advisor
Beijing Targets American Business
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Beijing Targets American Business-1

‘Beijing’s message is unmistakable: You must choose.’‘If you want to do business in China, it must be at the expense of American values. ‘‘You will meticulously ignore the genocide of ethnic and religious minorities inside China’s borders; you must disregard that Beijing has reneged on its major promises—including the international treaty guaranteeing a “high degree of autonomy” for Hong Kong; and you must stop engaging with security-minded officials in your own capital unless it’s to lobby them on Beijing’s behalf.’

The Wall Street Journal

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Matt Pottinger | former Deputy National Security Advisor
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Matt Pottinger | former Deputy National Security Advisor
Beijing Targets American Business
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Beijing Targets American Business-2

'American businessmen, wishing for simple, lucrative commercial ties, have long resisted viewing U.S.-China relations as an ideological struggle. But strategic guidance issued by the leaders of both countries make clear the matter is settled: The ideological dimension of the competition is inescapable, even central.'

The Wall Street Journal

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Matt Pottinger | former Deputy National Security Advisor
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'H&M, Nike Pay With China Boycotts on Xinjiang Human Rights Stance'

‘While both Western and Asian companies have frequently been targets of Chinese nationalism over the years, the latest flurry signals a shift in strategy by President Xi Jinping’s government as it confronts a more unified approach from the U.S. and its allies.’

Bloomberg

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U.S. - EU Coalitions
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3 | China explains why it is going all 'Wolf Warrior' on the EU

China has found that bullying works a lot of the time, Why is China engaging in "Wolf Warrior" diplomacy

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CHINADebate

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Malcolm Riddell
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Founder of CHINADebate

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How to Meet the China Challenge

How the Biden administration characterizes the China – strategic competitor, rival, enemy, and the like – and how it develops strategies – containment, confrontation, competition, cooperation, or some combination of these - will have an impact, to a greater or lesser degree, on most every industry and every market.

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CHINADebate

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Malcolm Riddell
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Founder of CHINADebate

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NSCAI: Final Report
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China, Ai, & the Coming U.S. Industrial Policy

‘The government will have to orchestrate policies to promote innovation; protect industries and sectors critical to national security; recruit and train talent; incentivize domestic research, development, and production across a range of technologies deemed essential for national security and economic prosperity; and marshal coalitions of allies and partners to support democratic norms.'

The National Security Commission on Artificial Intelligence

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NSCAI: Final Report
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Artificial Intelligence: How to Beat China

‘China is organized, resourced, and determined to win the technology competition. AI is central to China’s global expansion, economic and military power, and domestic stability.’

The National Security Commission on Artificial Intelligence

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NSCAI: Final Report
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Then There are Semiconductors

‘While American companies pioneered semiconductors and still dominate chip design, many have outsourced the actual fabrication of chips, mostly to Asia.’

The National Security Commission on Artificial Intelligence

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NSCAI: Final Report
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For Industrial Policy: National Security Advisor, Jake Sullivan

‘While American companies pioneered semiconductors and still dominate chip design, many have outsourced the actual fabrication of chips, mostly to Asia.’

The National Security Commission on Artificial Intelligence

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China & the U.S.: Getting Each Other Wrong

China and the U.S. seem to be in the process of reassessing their views of each other’s strengths and weaknesses. Xi Jinping appears to be seeking some balance in his assessment of the U.S. And analysts in the U.S. have reversed a trend of opinion that ‘China is inexorably rising and on the verge of overtaking a faltering United States.' They argue instead ‘the United States has good reason to be confident about its ability to compete with China.’

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CHINADebate

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Malcolm Riddell
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Founder of CHINADebate

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Andrew Batson | Gavekal Dragonomics

'Is China experiencing an advance of the state sector?'

‘The value-added produced by state-owned enterprises has usually been in the range of 25-30% of China’s GDP. And what’s really striking about those numbers is that they just haven’t changed very much over the past 25 years. The share of China’s economic output being produced by SOEs today, under Xi Jinping, is not significantly different than it was under Hu Jintao, or even in the later years of Jiang Zemin.’

Andrew Batson's Blog

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Andrew Batson | Gavekal Dragonomics
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'The Biden Team Wants to Transform the Economy. Really.'

‘Biden and his more activist advisers hope to modernize key industries and counter an economic threat from China, swiftly emerging as the world’s other superpower. “The package that they put together is the closest thing we’ve had to a broad industrial policy for generations, really,” says Scott Paul, the president of the Alliance for American Manufacturing.’

The New York Times

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CHINADebate

Malcolm Riddell
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CHINADebate

The Taliban: 'China's Perfect Partner'?

Breaking through the blow-by-blow reporting that started when the Taliban began its sweep to victory are the geopolitical analyses of who gains and who loses in Afghanistan.
8/28/2021

CHINADebate

Malcolm Riddell
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CHINADebate

'Are you tired of losing yet, America?'

As I write this, Taliban forces have entered Kabul and are reportedly occupying the Presidential Palace.
8/15/2021

Bloomberg

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'China Signals More Regulation for Businesses in Coming Years'

‘The State Council’s statement provides a guiding context to interpret current regulatory thrusts. The blueprint as an attempt by Chinese authorities to help investors understand the motives behind the regulatory push.’
8/15/2021

The Wall Street Journal

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George Soros
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George Soros

'Xi’s Dictatorship Threatens the Chinese State'

‘Mr. Xi is determined to bring the creators of wealth under the control of the one-party state.’
8/15/2021

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Malcolm Riddell
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CHINADebate

Don't Say Xi Jinping Didn't Warn You

‘Global investors are shocked to have discovered that China is run by Communists.’
8/5/2021

Bloomberg

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Matthew Brooker | Bloomberg
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Matthew Brooker | Bloomberg

‘Global investors shocked to have discovered that China is run by Communists.’

‘Global investors are shocked to have discovered that China is run by Communists.’
8/5/2021

Bloomberg

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'Shocked Investors Scour Xi’s Old Speeches to Find Next Target'

‘While China’s policy moves can feel ad hoc particularly to foreign investors, the changes are quite targeted on certain sectors.’
8/5/2021