China Is Most Likely Spared from a Second Cultural Revolution | Zooming In China

Hello, everyone. Welcome to Zooming In China Tea Time. I’m Simone Gao.

Last week, the Sixth Plenary Session of the 19th Central Committee of the Communist Party of China formally adopted the Party’s third historical resolution. It is a landmark document that the CCP is using to project the “great glories and victories” of China in the past and to come and most importantly, Xi Jinping is using it as a launchpad for his third term in office. 

What this 27,000-word document doesn’t cover is notable. As the Taipei Times mentioned in their November 21st coverage of this resolution, “While a crisis at China Evergrande Group—which many call the bedrock of the Chinese economy—affects millions of Chinese invested in and dependent on the company, the sixth plenary session…declared in a landmark resolution…that these very people are enjoying the best years of their lives.

Meanwhile, the coal industry that once powered the country has dwindled in capacity, leading to widespread power outages…None of these major domestic issues that affect ordinary Chinese—not to speak of the sheer number of international issues the country is facing—are mentioned in the resolution. The CCP under Chinese President Xi Jinping seems oblivious to the things that directly affect the people it governs.”

Given that glaring oversight of anything that seems deeply relevant to the Chinese people, it would be easy to assume that this was a document to glorify Xi Jinping, one simply rubber-stamped by the Party. While this document does praise Xi exceedingly, it is not a full win for the dictator. A close reading of this resolution proves that it is a compromise reached between Xi Jinping and the Central Committee, with Xi gaining what he most wanted while still allowing for some compromises to influential Party members. 

Clearly, the core purpose of Xi Jinping’s third historical resolution is to lay the foundation for his third term in office. As I previously reported, in March of 2018, the National People’s Congress passed a constitutional amendment removing presidential term limits. While this removed constitutional barriers to Xi remaining in office for life, social barriers still exist. To continue his reign, Xi must convince Party leadership, and the Chinese people, that his is the vision that will carry them into a prosperous future. That he is the leader who will keep them from harm. To do so, Xi Jinping sets himself not just side-by-side with but above other storied Chinese leaders, including Mao Zedong and Deng Xiaoping. 

This resolution divides the history of the CCP into three major stages. The first stage contains the “new democratic revolution” before the establishment of the People’s Republic of China as well as the socialist revolution and construction stage after the PRC’s founding, both overseen by Mao Zedong. The second stage is one of so-called reform and opening up, a stage of socialist modernization that is overseen by leaders Deng Xiaoping, Jiang Zemin, and Hu Jintao. In marking the second stage as one involving three distinct leaders, this resolution weakens the position of Deng Xiaoping and leaves only Xi Jinping standing on par with Mao Zedong. 

The third stage features Xi’s self-described new era of socialism with Chinese characteristics. The intent of this section is to enhance the status of Xi Jinping and position him alongside Mao Zedong, each leading a critical stage of Chinese history alone. 

It is important to note that the plenary communique shared just after the Sixth Plenary Session of the Central Committee had five stages, not three. In that earlier draft, each of these leaders was highlighted as an equally important figure in a key historical moment. It is only in the post-session revisions that Deng Xiaoping, Jiang Zemin, and Hu Jintao are condensed in importance and Xi Jinping is raised to be an equal to Mao Zedong. 

But even a status equal to Mao is not enough for Xi. While the resolution highlights each as overseeing a core historical moment in China, the description of Mao over two historical periods contained only 5600 words. Xi’s self-proclaimed political achievements, on the other hand, included a 13-item list that totaled 19, 382 words.  All three of the other leaders accounted for only 4142 words. 

In essence, then, this new resolution has lifted Xi Jinping to a status higher than Mao Zedong, leaving the sense that his re-election is a done deal. Who among the CCP leadership would dare vote against a leader envisioned as greater than Mao?

However, not everyone in China agrees with the role Xi Jinping carved for himself in this resolution. A side note offered in state-run People’s Daily makes clear that there were fierce disputes and even quarrels at the Sixth Plenary Session, saying “For three full days, there were heated and contentious debates between the 348 people at the top of the Chinese power pyramid about this resolution, and they refused to give in. Before one had finished speaking, the others were standing up and preparing to talk. Even at the conclusion of the meeting, the participants were walking in twos and threes to discuss this in more depth. What was the focus of their debate?

The People’s Daily report claimed that the debates arose because of the difficulty in defining a party history, and the range of issues within it, for a full century. Of key importance, though, was the question of how to properly handle the relationship between the new historical resolution and the prior two historical resolutions, an issue of great concern to the leaders attending the meeting. Many strongly opposed the idea that the first two resolutions should be negated.

It is only the second historical resolution that deals with current policies in China. That resolution denied the Cultural Revolution, banned the cult of personality, had a seven-thirds evaluation of Mao Zedong, established a policy of reform and opening up and, importantly, abolished the lifelong system of leadership.

According to the rules of the Communist Party, when a resolution is voted on, it must be passed by all. Should anyone dare to vote against it, his political career would end immediately. However, knowing there may be some dissent and wanting to avoid antagonizing a large part of the Party leadership, Xi left space for a three-day discussion period before the vote. This is an internal discussion, protected by security guards at the Jingxi Hotel in order to ensure that none of the discussions are disclosed. 

This is different from the National People’s Congress and CPPCC meetings. Many deputies to the National People’s Congress and members of the CPPCC are simply figureheads whose opinions have no weight. But the Central Committee is the core of China’s power. They are princes from all sides, and no opinion they share is trivial. That does not necessarily make them free to express them at will or free from the consequences of doing so. 

Despite being princes from all sides, they are not necessarily protected from a purge by Xi Jinping after the meeting. It’s just like Stalin purging a group of members every time he held a meeting of the Central Committee. If that risk still exists, then, why would these committee members be willing to strongly speak out on or challenge this resolution? Because Xi Jinping has spent many years breaking the unspoken rules of the Communist Party’s game, namely the rules that give the leadership enormous privilege. If he is re-elected for a third term, they will lose these privileges and have to play a new game dictated by Xi Jinping. 

Recently, it came to my attention that the sons and daughters of CCP officials who have gone abroad have sought to stay in the United States. Before, CCP officials used the United States as a spare tire but kept their base in China. Now, they see that China is faltering and are seeking to stay in the U.S. permanently. They know that with Xi Jinping in charge, their property, privileges, and even personal safety are at stake. 

In the end, Xi got what he cared most about. He confirmed his supremacy in the Party and his position on par with Mao Zedong, laying the foundation for his third political term. This is a victory for him.

Meanwhile, he did make concessions on the direction the Communist Party will go in the future. 

His first concession was a denial of any positive outcomes from the Cultural Revolution. The resolution declared that Mao Zedong and the Party made a huge mistake that resulted in Ten years of civil turmoil which caused the party, country, and people to suffer the most serious setbacks and losses since the founding of New China, and the lessons were extremely painful. 

By doing so, the road that Xi Jinping wanted to build toward a second Cultural Revolution will now be left unfinished. I believe this is a manifestation of the will of a large number of people in the party, including the political elders, such as Hu Jintao, Wen Jiabao, and those in power, such as Li Keqiang, Wang Yang, and others who are firmly opposed to the Cultural Revolution. 

Xi’s second concession was to continue to adhere to reform and opening up. A couple of paragraphs pulled from different sections of the resolution help to showcase this concession.

One of them is Article 4 of Xi Jinping’s 13 major achievements in power, which is called the comprehensive deepening of reform and opening up. There, he stressed that reform and opening up represented a great awakening for the Party and a great revolution in the history of the Chinese nation’s development, and he called for continued efforts to see this process through.” 

He kept on saying: “Reform can only be carried out and not completed. There is no way out for stagnation and retreat. It must be advanced with greater political courage and wisdom. 

“The Party Central Committee is deeply aware that opening up brings progress, and closure will inevitably lag behind; if my country’s development is to gain advantages, win initiative, and win the future, it must conform to economic globalization, rely on my country’s ultra-large-scale market advantages, and implement a more proactive opening strategy.”

One thing is worth noting. The communiqué issued at the end of the Sixth Plenary Session of the Central Committee did not mention the need to continue the reform and opening up, leaving the impression that Xi Jinping was about to end that practice. However, the resolution issued five days later clearly stated that the reform and opening up should continue. Is this just the difference between the summary and the full text? Or was it added after the days-long game between the various factions of the Chinese Communist Party? I think the second possibility cannot be ruled out, because it says in the explanation of the resolution that more than 500 amendments were made from the draft to the final version, and the amendments are very large. That also shows the intensity of the debate about this resolution, in spite of potential backlash the participants may have faced.

The resolution also addresses Taiwan, though in a way that is neither too prominent nor too sensational. It repeats the wording we have been hearing from the party for years: “peaceful reunification” and “one country, two systems.” There are mentions of the 1992 consensus and an ongoing opposition to Taiwan’s independence. The most powerful sentence is this: “Solving the Taiwan issue and realizing the complete reunification of the motherland are the unswerving historical tasks of the party, the common aspiration of all Chinese sons and daughters, and the inevitable requirement for the great rejuvenation of the Chinese nation.” The resolution also states that they “firmly grasp the dominance and initiative in cross-strait relations meaning it is the party who decides when and how to complete reunification of the country.”

That sentiment was emphasized by Xi Jinping again in his comment to President Biden at their recent virtual meeting. He said they are patient and willing to use their utmost sincerity and do their utmost to strive for the prospect of peaceful reunification. “But if the ‘Taiwan independence’ separatist forces break through the red line, we will have to take decisive measures.”

This clearly indicates that if Taiwan dares to seek independence, China is prepared to rule them by force. 

Why is Xi Jinping so persistent on the Taiwan issue? I will offer a detailed explanation in the documentary I am making. That documentary will be published by the end of the year. For now, what is most important to know is that the Taiwan issue is what Xi Jinping truly believes is his greatest political legacy. His so-called great achievements in the third historical resolution are exaggerated, and he knows it. But were he to win Taiwan, it would establish his unshakable historical position in the Party. Then, re-election or tenure would not be in question. So, to solidify his own political power and role, he must win the battle over Taiwan. This is a critical fact that the U.S. and Taiwanese governments must understand.

That’s all for today.  Please like, share, subscribe and donate to this program if you like my content. Thanks again and I will see you next time.

China’s “Subprime Mortgage Crisis” Avoided? Downscaling Real Estate Tax Might Have Saved China

Hello, everyone. Welcome to Zooming In China. I’m Simone Gao.

There is always a great deal to talk about in China, but perhaps the biggest topic right now is the real estate tax that Xi Jinping wants to implement and the resistance to it.  The topic is not new. Neither is the resistance. Since 2003, well before Xi Jinping’s rule, the Chinese government has been considering this tax. In 2011, they implemented pilot programs in Shanghai and Chongqing, but those programs taxed only higher-end apartments and second homes, at rates between 0.4% and 1.2%. 

Now, a decade later, the State Council, the top decision-making body of the Chinese government, has announced it will roll out a pilot of a broader real estate tax in some regions. They declined to name the regions or to provide more public details about the properties that would be taxed or the amount of the tax, but many experts expect real estate hot spots Zhejiang, Shenzhen and Hainan to be targeted. The pilot program is expected to last for five years before the government determines whether or not to roll the program out to the entire country.

This smaller-scale rollout is a far cry from the original desire of Xi Jinping and the Communist Party government to create a tax that some experts say would lead to one of the most profound changes to the country’s real estate policies in a generation. So, why would Xi trim down a country-defining change when he has the power to implement and enforce it? Might the timing of this change show a compromise meant to appease Communist leadership ahead of the Sixth Plenary Session in which Xi will likely be granted a level footing with Mao Zedong and Deng Xiaoping, the party’s widely recognized supreme leaders?

I do not believe this compromise is related to the Sixth Plenary Session. The battles for that session have already been fought and won by Xi Jinping, as we have seen with the October 18th announcement published on the official website of the Chinese government. In that report, they announce that the Political Bureau of the Communist Party of China Central committee held a meeting to discuss the resolution to be submitted for the Sixth Plenary Session and the result was the resolution was approved. 

The resolution says that the Chinese Communist leaders, with Mao Zedong, Deng Xiaoping, Jiang Zemin and Hu Jintao as the main representatives, had led the Chinese people to great achievements, but Xi Jinping led the country to new achievements and to new valuable experiences, providing a system to guarantee a great rejuvenation of the Chinese nation. 

The feeling in this passage is that although prior leaders had some major achievements, the new, more complete, more reliable power for China is in Xi Jinping’s hands.

The resolution continues by saying that China has ushered in a great leap from standing up, getting rich and getting stronger. Standing up, getting rich, and getting stronger represents three people: Mao Zedong made China stand up, Deng Xiaoping made China rich, and Xi Jinping made China strong. This statement makes Xi Jinping stand shoulder-to-shoulder with Mao Zedong and Deng Xiaoping.

Another goal of this historical resolution is to reshape and unify the ideas of the top elites of the Chinese Communist Party, that is, to “pinch Mao and Deng together.”

In the Mao era, China was governed by communist fundamental principles. Those were expanded in Deng’s era to combine the market economy with the communist one-party political system. In the era of Xi Jinping, the Communist Party once again began to monopolize and control all parts of the country, including the market economy. The market economy is allowed to exist, but only under the strict control of the government. You can develop only as the government allows you to develop. There will be no more disorderly expansions like the big ecommerce platforms such as Alibaba.  And those who have benefited most from the market economy are now under the tightest scrutiny.

That scrutiny has now extended to the real estate market in China, especially after the near collapse of Evergrande and the end of a market built on the notion of growing big by borrowing big. That Xi Jinping is reigniting a conversation that had been put on hold for a decade, then, is not surprising at a time of clear power-grabs by Xi and his leadership team. What is surprising is his willingness to compromise and scale back that tax. 

The Wall Street Journal says that, according to people familiar with the matter and with internal discussions, most of the feedback Xi received about his real estate tax plan was negative, from not only regular Party members but also the Party elites. 

There are many reasons for the antagonism toward the new tax. One reason comes from older Party members who benefitted from real estate purchases at a time when prices were low and favorable to Party members but who now say they cannot afford the additional taxes. Many of those Party members own multiple properties and so may face a substantial tax bill. Who are the people likely to own multiple properties and so be most affected by this real estate tax? CCP officials and wealthy citizens. CCP officials gained multiple properties as a perk of the power they held. The wealthy purchase homes as an investment. 

Speculation about the original tax plan indicated that a 0.7% rate was possible, a rate that would have yielded 1.8 trillion yuan (or $281 billion) of tax revenue in 2020 and that could generate revenue equal to roughly 75% of land sales revenues, money that could be re-invested into the public services and infrastructure that are desperately needed to boost the Chinese economy and ensure the safety of its citizens. Over time, the tax could help local governments reduce their reliance on those land sales.

But, according to CNBC writer Evelyn Chang, “A nationwide property tax would likely require disclosures of business and government leaders’ real estate holdings, which means such a policy could meet resistance even as the country has been cracking down on corruption.” Revealing just how deeply the Party elite have benefitted from those positions may be a problem not just for them but for Xi Jinping as well.

In addition to pressure from the Party elite, and his own personal interests, Xi must also consider the catastrophic consequences that a sudden increase in real estate taxes could bring to the economy. These consequences stem from a core reason for the real estate tax, one Xi announced in August when he said that pursuing “common prosperity” in China would mean reducing “excessive” income and encouraging the wealthy to give back. 

The intent of “common prosperity,” is “to recreate a lot of new middle-class people who have affordable housing and affordable health care and affordable education. And in order to do this you need to make sure that housing is for living—that is, not speculation or for investment.” 

Theoretically, China’s real estate bubble will reduce once a real estate tax is imposed, because people will no longer hold houses for investments, instead allocating funds to other investments, such as capital market investments. According to China’s central bank, Chinese citizens currently have nearly 60% of their urban household assets held in real estate with only 20.4% allocated to financial assets like stocks and bonds. U.S. households have, on average, over 40% of their wealth in financial assets. 

But if common prosperity and the real estate bubble were the only concerns, real estate taxes would not have been placed on hold for a decade. This topic would have been addressed at the height of China’s real estate bubble, not as the bubble began to burst. 

Instead, Xi Jinping is levying real estate taxes in order to solve financial difficulties. The central government has no money, and its reliance on land sales cannot continue indefinitely. Then came the Evergrande disaster with secret dealings that led to their loans being paid on time—a situation that strongly suggests some level of government bailout—and billions being funneled into Chinese banks to prevent a collapse of the market. The government is out of money and quickly running out of options. 

But while the addition of real estate taxes may curb real estate speculation and drive prices down, if housing prices fall too sharply, many residents’ mortgages will default. The logic is simple. When house prices fall many people will not be able to afford a mortgage because real estate is their biggest asset, especially if they use one house to pay for another house. For others, they will simply walk away from a devalued house. For example, if you borrowed $5 million on a 30-year loan but, two years later, found that the home was now valued at just $3 million, would you continue to pay on the loan and take the $2 million loss? Or would you default and walk away? Many will walk away, leaving the banks in possession of billions in bad debt and a number of houses that are not worth the money that was lent.

Up to 80% of some Chinese households’ wealth is tied to real estate; when real estate depreciates, people’s core assets will shrink and their spending power will drop sharply, driving the entire economy into a sharp decline. This is the rhythm of economic collapse. Xi Jinping is nicknamed Chief Accelerator of China meaning he is pushing China over the cliff in an accelerated way. But, this time, even the chief accelerator saw the cliff just ahead of him.

That’s all for today. Thanks for watching Zooming In China. Please like, share, subscribe and donate to this program if you like my content. Thanks again and see you next time.

A Fusion Between Mao and Capitalism: Xi Jinping Is Setting China on an Unprecedented Path

Hello, everyone. Welcome to Zooming In China Tea Time.  I’m Simone Gao.

Two days before the publication of his much-anticipated memoir Red Roulette: An Insider s Story of Wealth, Power, Corruption, and Vengeance in Today s China, author Desmond Shum received a phone call from his former wife, Whitney Duan. Duan is the central figure in Red Roulette and had been missing since 2017, with no word from the Chinese government about her condition, whereabouts or alleged crimes.

Shum said in an interview with The Australian Financial Review, Whitney told me that she’s on temporary release and could be re-detained at any time. She asked me to cancel the book’s publication.

Shum later added that It was a ridiculous request which could only be dreamed up by some bureaucrat in Beijing, where they can disappear a book off all the shelves in China overnight. But this is the rest of the world. The book was already on the way to the bookstores,  contracts have been signed. I can’t disappear the book even if I wish to.

It is clear that the Chinese government is deeply concerned about the revelations in Shum’s story at a time of growing crisis within its borders. With the recent string of crackdowns on Chinese entertainment and corporate celebrities, IPO debacles locally and internationally, and questions from George Soros about the security of Chinese markets, the CCP was already under a glaring spotlight.

Now comes word that China is teetering on the edge of a financial crash, due in part to the potential failure of the country’s second largest property developer, Evergrande Group. While Evergrande said in a public filing that they had resolved issues related to their yuan-denominated bonds due on September 23rd, It is not clear what the company would do with the $83.5 million interest payments on their dollar-denominated bonds due that same day. The Chinese government has ordered Evergrande to do anything they can to avoid defaulting on these bonds. The conventional wisdom is that Beijing normally would prioritize paying off foreign debt due to the need to maintain a good image on the international capital market.

So the company is left with three options: a rapid collapse with impacts that may be felt worldwide, a managed dismantling of the company, or a bailout by Beijing. We will see which one will turn out to be the Party’s choice in the coming days.

The way Xi Jinping deals with Evergrande’s crisis will, to certain extent, reveal his plan for the Chinese economy. Recently, some conflicting opinions have surfaced on China’s state-owned media. One article by Maoist activist Li Guangman claimed that China is experiencing a profound reform or revolution in all aspects: economic, financial, cultural and political. Analysts believe the article was alluding to the possibility that China would launch another great cultural revolution. Days later, Hu Xijin, chief editor of the Party’s mouthpiece Global Times, rebutted Li by saying that his article was a profound misunderstanding of the central government’s political direction.

Who is right? What is really on Xi Jinping’s mind? To understand Xi s plan, we must first understand the great shift in America s China policy since the Trump administration. It is no coincidence that Xi began to target and reform the domestic platform economy at the same time he began efforts to partially close the country. Xi believed both were necessary to redirect China to a different path, one that would differ dramatically from the one China has travelled smoothly for decades towards economic and political supremacy.

That path had been forged through state subsidies, state-supported intellectual property theft, and state-supported forced technology transfer carried out in a globalized market and largely ignored by Western powers who believed China would become a free country after it became a free economy.

Under those conditions, China’s economy and national power had grown rapidly. But Trump’s trade war and the coronavirus pandemic fundamentally changed Western thoughts on Communist China. Xi realized that their seat at the grand feast of globalization, the access that had empowered Communist China, had been removed.

For some leaders, that might have been a fatal blow to their regime. But for Xi Jinping, it was the excuse he needed to redirect China onto the path he had envisioned long ago, a path very different from his predecessors. In Red Roulette. Shum paints the eras of Jiang Zemin and Hu Jintao as a time of forward momentum, a time when capitalists like himself and his then-wife, Whitney Duan, could see the critical role they played in China’s modernization. They were creating the new jobs China needed to become a world leader. They were creating, and enjoying, the wealth that comes along with it. Things were improving. Today was better than yesterday, and this year better than last year.

It was not only the political or economic elite that felt that way. All of China seemed to be taken up with the same optimism. Citizens throughout the country felt that China was moving toward a more open and free society, a path most supported, even within the Communist Party. While Mao Zedong had once put capitalists at the bottom of Chinese society, his successor Deng Xiaoping improved their status. And on July 1, 2001, then-General Secretary of the Communist Party of China, Jiang Zemin, delivered a speech welcoming everyone, including capitalists, to join the Party, allowing them to enter the margins of political power.

But capitalists would not be willing to stay at the margins of that power for long. Shum points out that, at the top of the Party, elites had been preparing for this change. In private conversations, top-level officials like vice premier Wang Qishan shared their views that at a certain point, the Party would be forced to accept large-scale privatization and that Party elites and their inner circles should set aside capital so that they were prepared to invest when that time came.

Wang Qishan had been at the center of China’s reforms for decades. In 1993, China’s economy was in crisis due, in part, to $1.4 trillion yuan ($217 billion US) in non-performing loan debt between the four state-owned banks. China’s state-owned banks and state-owned enterprises were in urgent need of funds. Wang stepped in, working with Goldman Sachs on a deal that allowed China Telecom, a massive state-owned enterprise, to go public on the New York Stock Exchange in 1996, providing critical financial relief through international investments.

But what felt to Goldman Sachs and American investors like a mutually beneficial arrangement that could lead to the privatization of China’s economy was nothing more than an effort to save state-owned enterprises, allowing them to secure the Communist Party’s rule.

This was a realization that would only come many years later, during the Trump era. America had finally opened its eyes to the understanding that they had not changed China’s political system through their economic efforts.They realized that China remains a totalitarian Communist regime despite its booming economy.

Though Western leaders may have felt this as a victory for the Communist Party, even those inside of China, including reform-minded Party leaders, began to express concern. On March 14, 2012, at the last press conference of his State Council, Premier Wen Jiabao spoke from the heart for the final time in his tenure. In response to a reporter’s question, Wen said If China does not carry out political reforms, the achievements of China’s economic reforms so far will be in vain, and China is likely to repeat the mistakes of the great turmoil of the Cultural Revolution .

These are very heavy words, and they touched a nerve for the CCP. Political reform is a sensitive idea in China, one that carries connotations of moving toward freedom and democracy while demolishing the one-party dictatorship. Wen Jiabao did not specify the type of political reforms needed, but Chinese citizens had enough experience with global markets and capitalism to know what he likely meant. He added that if political reforms were not carried out, the achievements of China’s economic reforms would be in vain.

There is a fundamental contradiction between the market economy and the ideology of communism. A functioning market economy requires political systems that guarantee individual freedoms and rights. The right to hold, and be able to protect, private property. The assurance of fundamental human rights. The knowledge that an independent judiciary will protect those rights. The empowerment of knowing that truly democratic elections will ensure that the people will choose those who oversee the preservation of these rights. That system is vastly different from the rule of the Communist Party.

Without real reform, then, the contradiction between the political regime and the economy will fracture China and, because the CCP wants to protect its political system, it will destroy the market economy. Wen concluded by saying that, should that happen, China is likely to repeat the mistakes of the great turmoil of the “Cultural Revolution.” Wen recognized that China was moving toward more openness and more freedoms, and he realized that if the market economy continued to develop, the contradictions between communism and free market enterprise would restrain what China truly could become. Faced with that situation, he wanted to change the political system, not the economy.

The political reform Wen talked about was never carried out. That’s why, at the start of the Trump administration, the clock had finally run out for the Party. Trump demanded a change. I agree, for the most part, with the claim that the engagement policy has not made China a free country. However, that claim makes it seem like there has been no change in China’s political system at all, and that is not true. Yes, China remains an authoritarian state, but big changes have happened, including how the Chinese people view the legitimacy of the Party’s rule.

In the Mao era, the Party was believed to have heaven’s mandate. The legitimacy of the Party’s rule was unshakable and so was the Communist ideology. Though the Party’s policy had caused the deaths of tens of millions of people, the Party remained in power and unchallenged.

That natural legitimacy has gradually eroded since the reforms that opened China. During the Jiang Zemin and Hu Jintao eras, the Party’s legitimacy shifted. It is now based solely on its capability of bringing economic prosperity. The Communist Party knows that if the economy sharply declines, unemployment rates rise, and the bureaucracy stops working for the people due to the lack of corruption money, their ability to rule will be reduced or lost altogether. On top of that, Chinese people are losing their faith in the Communist ideology itself.

That reality is precisely what Xi Jinping refuses to accept. He has a new plan for China which we will explain in our future programs.

That’s all for today. Thanks for watching Zooming In China Tea Time. Please like, share, subscribe and donate to this program if you like my content. Also, head over to my new membership site at zoomingin.tv. You can get video/audio formats of my shows, full transcripts, and in-depth reports available only to members. I will also do live Q & A shows with members on the website. Just $5 a month or $50 a year. Please check it out. Thanks for watching and

I will see you next time.

Xi Jinping Controls Private Industry in China | Zooming In China

Simone Gao: Hello, everyone. Welcome to Zooming In China Teatime. I’m Simone Gao.

Billionaire investor, main proponent of globalism,  and a frequent critic of Xi Jinping’s regime, George Soros, spoke out again on Monday. In an opinion piece for the Wall Street Journal, Soros targeted BlackRock, the world’s largest asset manager, for their “major initiative” in China, including their launch of mutual funds and other investment products for Chinese consumers and their direct recommendation offered weeks earlier to US clients to “triple their allocations in Chinese assets.”

Soros’ major charge against BlackRock is that they “misunderstand President Xi Jinping’s China” and so “have taken the statements of Mr. Xi’s regime at face value.” In doing so, they assume there truly is a distinction between state-owned and privately owned companies. This mistake, notes Soros, is a “tragic” one that “is likely to lose money for BlackRock’s clients and, more importantly, will damage the national security interests of the US and other democracies.”

As I mentioned at the very beginning of the program, George Soros is the main promoter and beneficiary of Globalism. He had a good relationship with previous CCP leaders such as Deng Xiaoping and Jiang Zemin who opened up China and engaged China in globalism. Soros’ motive to criticize Xi, as much as opposing Authoritarianism and protecting American investors interests, is to rid a real threat to globalism, Xi Jinping. This explains his sudden barrage of attacks against Xi while he kept silent over the years when Wall Street Invested in China. The globalists saw Donald Trump as a major enemy in the past four years. Now Trump is gone, but there comes a Xi Jinping who is worse than Trump. He is going to shut the door of China. This can not be tolerated. Nevertheless, I agree with his critique of Xi Jinping.  Let’s go back to Black Rock.

BlackRock responded on Wednesday, arguing that “The United States and China have a large and complex economic relationship… Through our investment activity, US-based asset managers and other financial institutions contribute to the economic interconnectedness of the world’s two largest economies.”

And if it is interconnectedness they are after, BlackRock is in deep. They are the only foreign-owned business the Chinese government has approved to operate a wholly owned company in China’s mutual fund industry, that approval being granted in June of this year. Their first fund in China launched after they raised $1.03 billion from more than 111,000 investors. All in a time of increasing distrust between these two economic superpowers.

We might be able to view that as a bridge between nations if not for BlackRock’s other investment activities. After the Vanguard Group returned $21 billion dollars in assets they managed for Chinese government clients, including $10 billion each for China’s State Administration of Foreign Exchange and the China Investment Corp. sovereign wealth fund and $1 billion for the national pension fund, the bulk of those investments were expected to be transferred to BlackRock. For an American company to have this kind of access not just to Chinese citizens’ investments but also to Chinese state-owned assets is not just interconnected. It is unprecedented.

In their focus on interconnection between the companies, BlackRock doesn’t dispel Soros’ point. They prove it. To suggest that a mutually beneficial relationship can be built within Xi Jinping’s China is to assume his regime operates in ways similar to his predecessors. And that misunderstands Xi Jinping, a man Soros argued last month in another piece for the Wall Street Journal was “the most dangerous enemy of open societies in the world.” It also ignores Xi’s vision for his leadership and legacy, a vision that requires a direct march towards dictatorship.

The threat posed by China is not a result of the Chinese people themselves, nor is it a direct threat by all members of the CCP. As a recent publication by the Atlantic Council noted, “China, under all 5 of its post-Mao leaders prior to Xi, was able to work with the U.S.” The threat is Xi Jinping and his inner circle, strengthened and protected by their personal military, the PLA. And that threat is a threat to all, both outside and inside of China.

In the mind of Xi, the prior regimes were weak, too willing to pander to the ways of the Western world, ways that—in his thinking—would lead to a loss of legitimacy for their one-party rule system. To Xi, this shift was inexcusable, especially in the leadership of Deng Xiaoping, the man who had banished Xi’s father from his position as Vice Premier for disloyalty, leading to a time of social castigation for the Xi family and eventually a 7-year reform for Xi Jinping himself, much of which was spent in doing farm labor and living in a cave in the Shaanxi region, at one point going months without meat for nourishment. What Xi took from those years was an aversion to any sign of weakness, an extremist view of the need for nationalism, and a mission to undo what Deng had designed.

Deng saw opportunities to work with the more developed Western world. Rather than being staunchly opposed to Western systems, Deng believed China could rise within them and then surpass them. Because of that belief, Deng ushered in membership for China in the World Trade Organization in 2001, leading to the unprecedented growth Xi would later inherit.

With that growth, Xi inherited a people accustomed to it. Wealth was flourishing, as was fame and influence. Chinese citizens became comfortable living under one-party rule while keeping a toe in the Western capitalistic system. So, the likelihood that Chinese citizens, and especially the economically elite, would fall in line with Xi’s proposal to undo Deng’s social and business structures, and thus his gains, was slim, a fact Xi was aware of when he came to power in 2012. Knowing his mission would be met with resistance, especially from those who had benefitted from Deng’s systems, he knew he would need more than the two five-year terms allotted him under the current system. He knew he would need the power and the permanence of a dictatorship.

And that is exactly the path Xi is pursuing. In perhaps his most poignant point, George Soros argues that “Mr. Xi realized that he needs to remain the undisputed leader to accomplish what he considers his life’s mission…. He intends to overstep the term limits established by Deng, which governed the succession of Mr. Xi’s two predecessors, Hu Jintao and Jiang Zemin.” And “because many of the political class and business elites are liable to oppose Mr. Xi, he must prevent them from uniting against him. Thus, his first task is to bring to heel anyone who is rich enough to exercise independent power.”

We have seen that strategy play out with increasing fervor as the threat of 2022 draws nearer. Where a hallmark of Deng Xiaoping’s leadership was the opportunity for China’s communist system to incorporate a market orientation where state-owned companies could exist alongside private enterprise, Xi has recognized the power and influence of public companies and wealthy investors, the kind of influence that could dismantle his regime and destroy his mission.

To be fair, Xi does not intend to get rid of the market economy altogether. He needs the livelihood of capitalism to keep the Chinese economy going. Only, he is putting the market economy under a structure the Party designs and dominates.

So, Xi attacked first and, for a while, the world failed to notice. Until he cancelled the IPO for Ant Group, a subsidiary of Alibaba, and its founder, Jack Ma, briefly went missing. Though Ma has resurfaced, his ongoing silence and his removal from the top spot at Alibaba have garnered international attention and concern. Then came Didi’s disastrous IPO followed by additional crackdowns, first on other US-listed Chinese companies then on China’s tech giants. The Wall Street Journal reported four leading companies, including Alibaba, Kuaishou Technology, Meituan, and Tencent lost about 20% of their market capitalization in July because of these crackdowns. And also in July, China’s Ministry of Industry and Information Technology announced a new six-month campaign specifically to regulate internet companies.

Alongside crackdowns on market offerings have come landmark fines, stripping these companies of the wealth they could otherwise use to challenge the regime. Alibaba was fined a record $2.8 billion in April for alleged anti-monopoly violations. The Chinese government is considering a $1.54 billion fine against Tencent for failing to properly report past acquisitions and investments. And they are currently considering “unprecedented penalties” against Didi that reportedly may exceed even the Alibaba fine. But the tech giants are not alone in these fines. Billionaire Sun Dawn was recently “persuaded” by government officials to donate the bulk of his wealth to charity as he began an 18-year prison sentence, stripping wealth his family might have used to oppose Xi’s regime in his absence. The same fate has awaited many of the wealthiest Chinese citizens.

But money is not the only thing being seized by Xi. Entire companies are being stripped from founders and are now controlled by the Chinese government. In the case of Wu Xiaohui, who married a granddaughter of Deng Xiaoping, his Anbang Insurance Group was seized by the government in 2018, as Wu began his own 18-year prison sentence. And Xiao Jianhua had nine subsidiaries under his umbrella company Tomorrow Group seized in July of 2020. Those companies are said to be worth hundreds of billions of dollars.

There is no word on where the money from these, and other, fines and seizures has gone or what it may be used for. There is also no word on the whereabouts of many of the wealthy elite founders associated with these companies. Xiao Jianhua was taken from a luxury hotel in Hong Kong by 12 men in the early hours of January 27, 2017, and while reports have said he is now under house arrest on the mainland, there is no evidence to his whereabouts and no verifiable activity by Xiao. The list of China’s wealthy elite who have disappeared is rapidly expanding as Xi Jinping tightens his grip on the Chinese Communist Party.

And no sector is safe. Alongside the crackdowns on tech giants over the summer leading to more than $1 trillion loss for Chinese tech stocks came a ban on for-profit tutoring in the country that wiped out the private education industry virtually overnight. “This is clearly not a sector-by-sector rectification; this is an entire economic, industry and structural rectification.”

There is more to come. Michael Shou, general manager of an on-demand English tutoring platform, said “I do believe we are seeing a profound transformation of society, especially given that the government has implemented definitive and strict regulatory measures in such a short amount of time and in so many different industries.”

Now the question is if Xi Jinping is contested domestically? I believe he is, and in big ways. The way Chinese society works is that you won’t see different political views get presented and argued in newspapers or tv programs usually. Everything is done behind the closed doors.  When different views are presented and criticized, the fighting is already over.

The Sixth Plenary Session of the 19th Central Committee of the Communist Party of China will be held in Beijing in November this year. The rumor has it that the conference will launch the third historical resolution in the party’s history which will likely endorse the Xi Jinping route that dictates how Chinese society progresses in all aspects. Before that happens, the fighting will continue. George Soros’ barrage of attacks against Xi is not unrelated to the whole picture. After all, Xi is a common enemy of most elites on this planet.

That’s all for today. Thanks for watching Zooming In China Tea Time. Please like, share, subscribe and donate to this channel if you like our production. Also, head over to my new membership site at zoomingin.tv. You can get video/audio formats of my shows, full transcripts, and in-depth reports available only to members. I will also do Q & A with members on the website. Just $5 a month or $50 a year. Please check it out.

The Real Reason Xi Jinping Is Going after Chinese Stars | Zooming In China

Welcome to Zooming In China Tea Time. I’m Simone Gao.

Last week, Zhao Wei, the name of one of China’s most famous and influential actresses, was erased from the Internet by Chinese government officials. The order came without warning from the state-run regulator for entertainment, the National Radio and Television Administration, and included all social media sites, fan pages and posts on platforms like Weibo as well as all content featuring her—including movies, TV shows, chat show appearances and more.

While the order was clear, the reason was not. And because no official reason was given for the order, the rumor mill ran wild. State-run news source Global Times hinted that it may have something to do with the financial scandals she was embroiled in over the years but gave just one example.

Other online sources suggest that there may be an issue of tax evasion, like her fellow My Fair Princess co-star Fan Bingbing, China’s highest-paid actress, who disappeared from public view in 2018. Beginning in July of that year, Fan’s social media pages went idle, paparazzi couldn’t locate her, and friends and family couldn’t say where she was. It wasn’t until she resurfaced in October that the world learned of Fan’s true fate: she had been detained while Chinese authorities investigated her for tax evasion. She was ultimately released but fined $127 million dollars. 

Still others believe it may be because of her connections to high-level corporate and political figures. Zhao Wei and her husband are close friends with Jack Ma, the Alibaba founder who has been under deep scrutiny by the Chinese government, and were early investors in his Alibaba Pictures Group, buying a $400 million stake in 2015. 

There are many unknowns that circle Zhao Wei’s public erasure, and her whereabouts is one of them. But after photos were published suggesting she had fled with her husband to France, Zhao finally spoke up. She posted a photo of a childhood toy on her Instagram account, saying “The best season to chat with mom and dad. It’s like I’ve never grown up before, so good.”  However, within hours, that post, too, was removed.

This issue does not impact Zhao Wei alone. Zhao Wei was removed from social media and streaming services. Zhang Zhehan was blacklisted. Zheng Shuang was fined $46 million for tax evasion. Ruby Lin and her husband Jianhua Huo have closed their studios in China. Zhao Wei’s friends in the celebrity circle urgently deleted all Weibo posts related to Zhao Wei. It is clear how scared they are. What crime did each of these people commit? 

Chinese leadership claims the series of crackdowns on China’s celebrities are an effort to control the “Fans culture” of celebrity worship and restore moral behavior to the youth of the country. They said that celebrities need to become “positive energy idols” and need to assume responsibility for guiding the mainstream values of young people in China.

I think the real reason for CCP leaders to launch these attacks goes beyond the idea of punishing financial wrongs or curbing errant youth morality. I think this turmoil in the entertainment industry is part of Xi Jinping’s long-term plan for CCP’s dominance in all aspects of Chinese society. Xi Jinping requires that his way of thinking be the core around which the Chinese economy and society function. We see that in his Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, policies pulled from his writings and speeches and now published widely and formally taught in schools of all levels. Simply put, he is trying to comprehensively transform China toward that thought, and he sees the remediation of the entertainment industry as a prerequisite to that goal.

To talk about Xi Jinping’s transformation of China, we must first start with a phenomenon: the rise of “Little Pink,” a group of nationalistic and technologically savvy youth that have become a forceful presence on social media. The term, as it is now used, was coined by Weibo blogger Daguguguji. In the summer of 2015, he began using the phrase “your country” to separate himself from the party-state mentality in China. That term sparked outrage from many other users, including a group of young women who were members of the popular Jinjiang Literature City site, called “little pink” because of its pink background. Daguguguji began using that nickname as an insult to their nationalistic ideals. That term exploded in popularity in January 2016 after the Di Ba Expedition where Chinese users, this time male and female, flooded Taiwanese social media with attacks on Taiwan’s presidential election.

 Liberal Chinese author Wang Wusi suggests that one factor in this group’s aggressive nationalism may be found in their class status, saying “It can be analyzed that most of the little pinks came from third- and fourth-tier cities, or followed by their parents to work in first- and second cities, and belong to the middle and lower classes of society.” He also cited psychologist Tang Yinghong’s perspective that strong patriotic feelings “usually appear in the middle and lower social economy, because ‘patriotism’ will enhance their sense of self-esteem.

I would add that the large number of small pinks is related to the timeline of the changes in Chinese people’s thinking. In the Hu Jingtao and Wen Jiabao era, before Xi Jinping came to power,  there were the offline antagonists called the “angry youth” and the “50 Cent Army” paid by the Communist Party to post pro-Party comments. Those groups were spurred by the Communist Party itself. But the 

In the Hu and Wen eras, there were voices from people publicly questioning the legitimacy of the CCP’s governance. But after Xi Jinping came to power in 2012, China began to see a lot of little pinks. Over the years, fewer and fewer voices were heard questioning the CCP. Today there are almost none.

That silence is evidence that the Chinese people’s thinking has changed in recent years. In the thinking of many Chinese people, especially those in second- and third-tier cities and villages, the Communist Party has become the savior of corruption, a process that began with the anti-corruption campaigns launched by Xi Jinping after he took office. To a large extent, this also helped the Communist Party re-establish its ruling legitimacy. It gave Chinese citizens the false impression that the difficult circumstances happening in the country were created by a handful of corrupt officials and that once the Party brought those corrupt officials to justice, it would prove itself to be great and glorious and correct.

This technique has been tried repeatedly in the history of the Chinese Communist Party. Every time they face a crisis, they find a scapegoat. In the end, as the public message goes, the Party is always great and glorious and correct.

The changes in Chinese thinking in recent years are of great significance to Xi Jinping. Xi’s thoughts have always been relatively coherent. He wants to make Marxism the mainstream ideology in China again and re-establish the government controlled economy. This is the big game he has been playing since taking office, and it is still underway. It is his plan to transform China. He also believes that by accomplishing these two points, the legitimacy of the Chinese Communist Party can be secured.

Xi Jinping’s signature political philosophy is the Confidence Doctrine calling for Party members, government officials, and the Chinese people to be “confident in our chosen path, confident in our guiding theories, confident in our political system, and confident in our culture.” He wants to prove to the world that the set of things he insists on is superior to the set of Western constitutional democracy. He believes that if the Chinese people follow this path, they will not only survive but also surpass the United States and even rule the world. To accomplish this, though, all of China must know, believe and follow his path, his guiding theories, his political system and his version of their culture. 

To do so, to gain that buy-in from Chinese citizens, Xi Jinping believes it is necessary to crush the traffic-based model of making celebrities and celebrities’ influence on the public. It is incompatible with the party system, as celebrities compete with the Party for the devotion of the masses. Celebrities, when combined with commercial and political power, divide Xi Jinping’s power and become a very real political threat. 

Xi Jinping wants all traffic to belong to the Party and all influence to come from state-controlled media. On Toutiao, a Chinese news and information platform, the most popular account is state-sponsored media giant People’s Daily. And that is how Xi Jinping needs it to be. If the central government screams, he wants the whole country to respond enthusiastically. Only this method will support his efforts to close the country to the outside world, re-install a planned economy and engage in a full confrontation with the West. Just like a train, all the wheels must be on the track so the train can run effectively. 

They also greatly limit celebrity endorsements of products and ban any activities that “affect the normal study and rest of minors” or that enable them to “carry out various online gatherings.”

What this trend shows is the Chinese government’s interest in not only controlling the entertainment industry itself but also the fans’ voices. Ways that fans view and value celebrity, what makes a person worthy of celebrating, are being forcibly taken and replaced by the CCP’s notion of what values are worthy of being upheld and under what conditions. It is not enough for Xi Jinping to control virtually all media within the country. It is not enough for him to control the leaders of industry and innovation. So long as the citizens have an ability to access other ways of thinking, and in doing so, to potentially choose a line of thought that does not align with his, they are viewed as a threat. And as the CCP demonstrated again this week with Zhao Wei, those deemed as a threat will be erased, without warning and without explanation.

That’s all for today. Thanks for watching Zooming In China Tea Time. Please like, share, subscribe and donate to this program if you like my content. Also, head over to my new membership website at zoomingin.tv. You can get video/audio formats of my shows, full transcripts, and in-depth reports available only to members. I will also do live Q & A  with members on the website. Just $5 a month or $50 a year. Please check it out. Thanks again and see you next time.

Stronger than Article 5 of the NATO Agreement, U.S. Will Defend Taiwan for TSMC Chips?

Hello everyone. Welcome to Zooming In China Tea Time. I’m Simone Gao. 

In an interview with ABC News on August 19th, President Biden suggested that the U.S. would intervene if the CCP invaded Taiwan. Arguing that the situation in Taiwan was “not comparable” to the one in Afghanistan, Biden said that “We have made, kept every commitment. We made a sacred commitment to Article 5 that if, in fact, anyone were to invade or take action against our NATO allies, we would respond. Same with Japan, same with South Korea, same with Taiwan.” 

But there is a problem with Biden’s claim. The agreement between the U.S. and Taiwan is different from the agreements with South Korea, or Japan, or NATO. Under Article 5 in the NATO agreement, an attack on one NATO member is an attack on all. In that context, the U.S. is sworn to stand and defend all other NATO nations. Article 5 does not extend to non-NATO nations, so it does not automatically apply to either South Korea or Japan or Taiwan.

The agreement between the United States and South Korea is the U.S.-Korea Mutual Defense Treaty signed in 1953. Under this treaty, if either South Korea or the United States is attacked in the Asia-Pacific region, the other will provide military assistance. In the nearly 70 years since the signing of that treaty, South Korea has sent military support to assist in most of the major wars America has been involved in. During the Vietnam War, South Korea sent 320,000 troops to assist the U.S. military. For its part, the United States stations nearly 30,000 troops in South Korea as a deterrent to their hostile neighbor to the north.

There is also the Treaty of Mutual Cooperation and Security between the United States and Japan that permits the presence of U.S. military bases on Japanese soil and commits the two nations to defend each other if one or the other is attacked.

In the case of Taiwan, though, the defense commitments offered in the Taiwan Relations Act of 1979 are much weaker. The Act mentions only that “the United States will make available to Taiwan such defense articles and defense services in such quantity as may be necessary to enable Taiwan to maintain a sufficient self-defense capability.” 

While the Act does say that the U.S. will consider “any effort to determine the future of Taiwan by other than peaceful means…a threat to the peace and security of the Western Pacific area and of grave concern to the United States,” grave concern does not necessarily equal a willingness to go to battle. But while the U.S. is not obligated to send troops in support of Taiwan, there has recently been a very public show of America’s support for Taiwan in the face of mounting pressure from China. 

And there is a good reason for that support. Though little talked about in the press, Taiwan is the epicenter of technology manufacturing, especially the hi-tech semiconductor chips that power most of our modern devices. From computers, cell phones and cars to household devices like washing machines and refrigerators, most of today’s devices function through semiconductor chip technology. And most of these chips are produced in Taiwan by the Taiwan Semiconductor Manufacturing Company, or TSMC.

Although TSMC is not the only semiconductor foundry in the world, it is by far the largest. TSMC has a market share of 56% in the global semiconductor foundry market. It manufactures 80% of the world’s most advanced semiconductors.

TSMC is also the go-to producer for the silicon powering companies like Apple, Nvidia and AMD. Intel will be contracting through TSMC in 2022 as well, once their 3nm process is fully functional. And because of advances in technology, including 5G technologies, demand has outpaced their ability to produce the needed components, leading to their current two-year backlog on production. TSMC’s manufacturing capacity for all of 2021 and 2022 is already fully scheduled. 

To catch up to the climbing demand in the industry they dominate, TSMC has outlined a $100 billion investment plan over the next three years. That plan includes a $12 billion semiconductor wafer production plant in Arizona with the possibility of as many as six new factories in that location over the next 10-15 years. But while production has already begun on the facility, the wafer plant is not expected to be fully operational until 2024.

The U.S. government has come to realize the critical importance of technology pipelines, tying them directly to national security interests. To secure those interests, encouraging manufacturing and production companies to bring their resources to America was critical. And while the first TSMC plant will account for just a small part of their current total production capacity, the U.S.’s $54 billion subsidies are drawing interest from Intel, Samsung and others as well.

Even if these other manufacturers could replace TSMC, even if they had similar technologies, and it would not be possible to immediately transfer production capacity from TSMC to other manufacturers. Each company has unique processes that are incompatible with those of others. It would take years for new manufacturers to complete the redesign necessary to produce TSMC chips.

But TSMC’s top-notch technology is not something that could be replaced by other manufacturers. Many original chip manufacturers were replaced by TSMC because they could not develop these top-notch technologies. In 2018, AMD transferred its chip manufacturing to TSMC in order to be more competitive in the chip market. One of the key reasons AMD has now surpassed Intel is that Intel has been unable to catch up with the 7-nanometer chips produced by TSMC. So, this is more than a question of funding and time. It is also a question of technological ability. And for now, technological breakthrough rests largely in the hands of TSMC.

It is clear that the U.S. needs TSMC, but this is not a one-sided relationship. While TSMC has developed the ability to manufacture these chips, the designs and patents for the chips come from the United States. If the U.S. withdrew their permission to use their technology, TSMC’s business would be paralyzed. We saw an example of this when the U.S. imposed an export ban on China, preventing any chips with American technology from being sold to China which led to substantial losses for Chinese companies, including Huawei.

As we move forward in the fast-paced world of emerging technologies, The U.S. and Taiwan need one another. The U.S. does not have the manufacturing capacity to replace that of TSMC. Taiwanese companies cannot afford to lose access to the technologies of the U.S. This kind of reliance on one another is not any weaker than the bonding force of Article 5 from the NATO agreement.

When I interviewed Keith Krach, former U.S. Under Secretary of State, I asked him if the U.S. intended  to establish diplomatic relations with Taiwan in the later period of the Trump administration. He said that while he could not share the specifics, they had a strategy, which was to encourage the rest of the world to invest in Taiwan and set up factories. In this way, the security of Taiwan would be directly related to the commercial interests of these countries, and they would be more willing to maintain peace in the Taiwan Strait and restrain the CCP.

This pattern was formed because of the existence and relevance of TSMC. Taiwan is not only tied to China and the United States but also has a very important stake in the rest of the world. A loss of TSMC to the control of the Chinese government would mean global economic and communications disruptions. Because the impacts are global, the protections offered to Taiwan need to be global as well. In this way, TSMC can be the sacred mountain for protecting their homeland that Taiwanese people have long claimed it to be. 

That’s all for today. Thanks for watching Zooming In China Tea Time. Please like, share, subscribe and donate to this production if you like our content. Also, head over to my new membership site at zoomingin.tv. You can get video/audio formats of my shows, full transcripts, and in-depth reports only available to members. I will also do live Q & A shows with members on the site. Just $5 a month or $50 a year, cancel anytime. Please check it out. Thanks for watching and I will see you next time.

Will Uyghers Become a Source of Terror or a Subject of Persecution Following the Afghan Debacle?

Welcome to Zooming In China Tea Time. I am Simone Gao. 

In the unfolding stories about Afghanistan, one story has often been missed or misrepresented: the story of the impact of these events on the Uyghur populations living in Afghanistan and China. 

To resist, to rise, requires that first you are free, and for the roughly 1.8 million Uyghur and Turkic people forcibly taken to China’s concentration camps in Xinjiang since 2017, there is no freedom. There is no freedom for the 13 million Turkic Muslims now are under constant surveillance by the Chinese government through the IJOP policing program. That program collects mounds of data from every avenue of their lives and flags citizens believed to be threatening, even when the activities in question are legal and reasonable.

The persecution of the Uyghurs is an ongoing objective for the CCP, and the narrative surrounding who and what they are is the centerpiece of their strategy. In a recent analysis published on Brookings, Ryan Hass, Senior Fellow in Foreign Policy at the Center for East Asia Policy Studies, says that while “Chinese leaders are not enthusiastic about the Taliban taking over Afghanistan,” they will recognize Taliban leadership and “will encourage the Taliban to deny safe haven to Uyghur fighters and other groups that could destabilize Central Asia or harm Chinese interests in the region or at home.”  

In doing so, Hess buys into the CCP story that the Uyghurs are a terrorist threat to China and the region. The Washington, D.C.-based Uyghur Human Rights Project suggests that that kind of analysis or reporting “takes at face value China’s claim that it is conducting counterterrorism.” They also caution that China has a pattern of using global events as a “pretext for the repression of Uyghurs,” and the more we believe the notion of a terroristic threat, the more justified the CCP feels in their genocidal policies.

We have only to look at China’s mining activity in Afghanistan to see that practice in place. As the Taliban took control of Kabul, commentators shared concerns that China may be after Afghanistan’s estimated $3 trillion worth of rare earth metals including veins of aluminum, gold, silver, zinc, mercury and lithium. 

These metals are used in many items including electronics, electric vehicles, satellites and aircraft, and China has made major advances in each of those sectors. That they will attempt economic inroads with the new Taliban government is likely, and mining is sure to be one part of that effort to build not only economic ties but goodwill as well. 

That process began long ago with the Afghan government, with the inking of a $2.83 billion lease on Afghanistan’s Mes Aynak copper mine in 2007. It seems both sides had high hopes for the mine, with Afghan leaders believing that this could be a big step forward in lowering their dependency on international aid. Currently, 40% of their domestic product comes from that aid, but they are expected to reduce that by half by the year 2030, so there is an urgent push for economic development. In this case, that leaves Afghanistan at the mercy of their economic ties with China. But halfway through that 30-year contract, China has done little to develop the mine.

Just months before the Taliban takeover, the Afghan government was pressuring China to take action on that contract. Afghan media reported in 2020 that inactivity at the time had resulted in $2 billion dollars of lost revenue for Afghanistan at a time when Taliban insurgents were making hundreds of millions of dollars on illegal mining activity each year. 

Haroon Chakhansuri, the Minister of Mines and Petroleum, told Foreign Policy that the Afghan government had issued an ultimatum to either renegotiate the contract in “mutually agreed terms” or it would be given to another country.

Afghanistan’s government had the leverage it needed to take such a demand of their much larger and more powerful neighbor after officials arrested an alleged Chinese spy ring operating in Kabul in December 2020. That ring had been operating for six or seven years and was there to track down Uyghur Muslims with the help of the Haqqani network, a terrorist network linked to the Taliban. 

Though the Afghan government had, at times, cooperated with China on detaining and deporting Uyghurs suspected of terrorist activities, they were “shocked at China’s duplicity.” Until then, they had believed China was operating out of goodwill, but after this arrest, one Afghan leader asked, “Is this the behavior of a friend?”

That notion of goodwill between countries looking out for one another’s interests was built with Pakistan in 1950 when they became one of the first nations to formally recognize the People’s Republic of China government on the mainland. Since then, they have remained close allies as China has continued to provide economic, military and technical help. 

They are also deeply coupled economically, with China investing heavily in Pakistani infrastructure and with a bilateral trade volume crossing the $20 billion mark for the first time in 2017.

For a country that is deeply coupled with China, favors will be expected, and in this case, the favor is Pakistan’s active participation in the arrest, detainment and extradition of Uyghurs, something they have been doing since 1997.

That was made clear recently, as Pakistani citizens who are married to Uyghurs now imprisoned in concentration camps begged their government to take action. In response, Pakistani Prime Minister Imran Khan said, “As far as the Uyghurs, look—China has helped us. China came to help our government when we were at rock bottom.” 

Help from China is not without cost, and their ties with the Taliban are remarkably deep. As one senior Afghan official reminded Chinese officials during negotiations about the Mes Aynak mine, China has “surprisingly strong back-channel contacts with the Taliban” and they could have smoothed out a way to develop the mine but chose not to.

Those deep ties now leave Afghanistan’s sizeable Uyghur community at risk, especially as the Taliban looks for opportunities to negotiate Belt and Road Initiative projects with China. 

In late July, after the U.S. had begun the process of removing troops from Afghanistan, Chinese Foreign Minister Wang Yi met with representatives from the Afghan Taliban in Tianjin. This was an important meeting, because it placed the Taliban as a major force on the international stage, something democratic countries were unwilling to do because of the Taliban’s known history of human atrocities. 

China’s Ministry of Foreign Affairs spokesperson Zhao Lijian justified the meeting by saying that “the Pakistani Taliban and the Afghanistan Taliban are not the same…. The Afghan Taliban claims to be a political and military organization and publicly prohibits any organization or individual from using Afghan territory to threaten other countries.” 

In almost identical wording, at the first press conference after the takeover, Taliban spokesperson Zabihullah Mujahid said, “We would like to assure our neighbors, regional countries, we are not going to allow our territory to be used against anybody, any country in the world. So, the whole global community should be assured that we are committed to these pledges that you will not be harmed in any way from our soil.” 

But their territory will be used against the Uyghur population. For several months leading up to the withdrawal of American troops, Uyghurs in Afghanistan and across the globe began sharing their fear that China and the Taliban were growing too cozy with one another. Now, with the Taliban at least temporarily in a governing role in Afghanistan, Uyghurs face an even greater risk of persecution or extradition to concentration camps. 

As outlined in a report by Human Rights Watch, Uyghurs face “massive arbitrary detention, torture, enforced disappearances, mass surveillance, cultural and religious erasure, separation of families, forced returns to China, forced labor, and sexual violence and violations of reproductive rights.”

With the Taliban in charge of Afghanistan, the Uyghur people are left with nowhere to go. They have not been safe in China or Pakistan. They will not be safe in Afghanistan. And little has been done on the international stage to combat the concentration camps, the reach of the Chinese government in extracting Uyghurs from other countries, or the attempts by Chinese Government to couch this in language that makes innocent Uyghurs responsible for the devastation of their human rights.

As we watch the events unfold in Afghanistan and as we think about ways to help bring peace and stability to the region, we must not forget the millions of Uyghur and Turkic people at risk not only in the borders of Afghanistan but in the entire region and at the mercy of the CCP.

That’s all for today. Thanks for watching Zooming In China Tea Time. Please like, share, subscribe and donate to this program if you like my content. Also, head over to my new membership site at zoomingin.tv. You can get video/audio formats of my shows, full transcripts, and in-depth reports available only to members. I will also do live Q & A on the website. The membership fee is $5 a month, or $50 a year. So be sure to check it out. Thanks for watching, and I see you next time.

China’s Zero Tolerance on Coronavirus Backfires | Zooming In China

Welcome to Zooming In China. I’m Simone Gao.

As China enters its fourth week dealing with a second outbreak of the Coronavirus within its borders, the CCP has reverted to its prior tactics of shutdowns and silence. Official reports show 583 new cases last week, an 85% increase over the prior week’s total. The increase is due to the highly transmittable nature of the Delta variant, a challenge multiple countries are now navigating, including the U.S. But China remains in the spotlight with this outbreak, in large part because of their own secrecy and their own deception.

The numbers are not likely to be true. As CNN reported during the early days of the pandemic, based on leaked health data, thousands of daily new cases were not reported by Chinese health officials. 

On just one day—February 10, 2020—officials reported only 2,478 cases when the total privately recorded was 5,918. 

Later evidence shows even that was an underestimated number. We can be sure that the numbers being released by the CCP on this second round of infection are underreported, too.

What we do know is that the majority of the new Coronavirus cases in China are among those who have been vaccinated. One cause of that may be the quality of Chinese vaccines. As has been reported, Chinese vaccines continue to be a concern to the international community, because they have not been shown to be as effective as those produced by other nations. Still, those who have been vaccinated are showing less serious symptoms and having better outcomes than those who are not. 

Despite those better outcomes, the Chinese government has returned to the strategies used during the early outbreak in dealing with this second round. The Delta variant has now been found in more than a dozen cities since it was first identified in Nanjing in late July. But their “zero tolerance” 

tactics have drawn criticism. Xi Chen, a health economist at the Yale School of Public Health, told the Associated Press that “I don’t think ‘zero tolerance’ can be sustained. Even if you lock down all the regions in China, people might still die, and more might die due to hunger or loss of jobs.”

The worries he shares have been seen by university students in Yangzhou. One of those students, Zhou Xiaoxiao, told press sources that food items like eggs and other necessities were difficult to find once shoppers stocked up to prepare for the lockdown they knew would come. She also noted that the price of vegetables has risen and, while it is not a problem for her, she said “to the kind of family whose life isn’t very good and who have no income, it’s very troublesome.”

To offset the real risk of vulnerable Chinese citizens starving during these lockdowns, Xi Chen says that China needs to learn how to “allow the virus to exist” in areas with high vaccination rates and stronger health care. The Chinese leadership disagrees. Responding to the suggestion that they allow the virus to exist, former health minister Gao Qiang said that “we not only cannot relax epidemic control but have to further strengthen weak links, plug loopholes, and resolutely monitor the epidemic situation and issue early warning. This is not to ‘coexist with the virus’ but to engage in long-term struggle to eradicate the virus.”

And that is the approach they are taking. On Tuesday of last week, the Zhangjiajie government announcing that no one would be allowed to leave the city, mimicking the approach in Wuhan and other cities last year. For those who want to leave the province of Jiangsu, they must provide a negative coronavirus test taken within the last 48 hours. Flights to Nanjing and Yangzhou were cancelled. Domestic flights are allowed to leave some cities with reported cases, except Nanjing, Yangzhou and Zhangjiajie, but flights and trains coming into Beijing from areas with reported cases are forbidden. 93 highway checkpoints have been established in Jiangsu province to test drivers for Covid. 

Those are just the actions that have been made public. Citizens within China are telling a far bleaker story. On a site for CCP-banned news, one author says that they are timid and afraid to resist and now the “country is closed, and I can’t leave” offering readers the advice that they should “prepare for winter and think about how to live in a black-market environment.”

Officials in Beijing have taken even more oppressive measures for those they believed helped to spread the virus, issuing warnings, fines and even imprisoning some. While the government at first said that the earliest cases of this second outbreak came from those who passed through Nanjing’s airport, and that employees may have been infected from improper handling of trash, that was later corrected to show that the virus had come from a Russian airliner that arrived on July 10th.  Employees involved in the cleaning of that plane, who later gathered in improper ways in an employee-designated area, have been punished. One traveler, a 64-year-old woman suspected to carrying the Delta variant from Nanjing to Yangzhou, has been arrested on charges of hindering disease prevention. And 47 officials across China, including heads of local governments, health commissions, hospitals and airports, have been punished for negligence.

The U.S. has played no part in this second round of coronavirus transmission in China, just as it played no part in the first. Yet, instead of using the press to calm and inform their citizens, the CCP has used it to attack America, its favorite scapegoat. As the U.S. and the rest of the world seek to find the origin of the virus and the CCP’s responsibility in covering up the pandemic, Beijing  launched a media and diplomatic campaign to accuse America as the maker and spreader of the virus, a familiar tactic by the CCP. 

We know the truth that the coronavirus began in the city of Wuhan sometime in 2019. That it began in that region is not in question. How it started has remained a source of debate. The international community believes that the virus emerged either through transmission from animal to human in that region or from a leak from the Wuhan Institute of Virology. China, however, is claiming that American soldiers attending a military sports games in Wuhan, China in october 2019 brought the disease with them from Fort Detrick, the original location of the U.S.’s biological weapons program prior to the dissolution of that program in 1969. This is a baseless claim. The U.S., as a member of NATO, does not have a biological weapons program. No NATO member country does. What we have is a biological weapons DEFENSE program to guard citizens of this country and of the world from a potential bioterrorism attack.

China is battling the highly contagious Delta variant of Covid-19, as is most of the world. They are struggling to find a way to control the outbreak, just like many other nations. They are attempting to find a balance between controlling the spread through quarantine and keeping a stable economy by allowing work and socializing to continue, with proper precautions. So are the United States and our allies. So why, in the midst of a struggle common to all countries and economies, is China pointing fingers and placing blame? And why is that blame centered on a biological weapons argument? 

Because the Wuhan Institute of Virology is far more than a benign research facility studying bats. It is an institute connected to the Chinese military where they are studying biological elements for use in bioweapon programs. That is the reason that several researchers at the lab became ill prior to the first identified case of the outbreak with symptoms “consistent with both Covid-19 and common seasonal illnesses,” according to the State Department. That is the reason for the rush to destroy records as news of the virus outbreak began. It is the reason for the resistance to any investigation, by the World Health Organization or others, into the activities there around the time of the earliest cases. And it is the reason they have tightly guarded all research from that facility.

Until now. On August 5th, CNN reported that U.S. intelligence agencies had obtained and were sorting through “a treasure trove of genetic data” that they had extracted from China’s Wuhan Institute of Virology. That data includes genetic blueprints of virus samples from bats and rats being studied at the lab.

There is a lot to talk about regarding this database, including the Biden administration’s approach of searching for origins of the virus based on science instead of intelligence findings. Why take an approach like that? What could it mean? We will analyze this in our next episode.

That’s it for today. As many of you may have known, we released a documentary movie on the Clean Network this week, it is part 2 of the documentary series “The American Dream Takes on China Inc”, that tells the story of a group of Silicon Valley veterans beating the CCP in the economic battlefield. We first published it on our membership website, now it is available on our YouTube Channel Zooming In with Simone Gao and Zooming In China. Be sure to check it out. And if you like our production, please sign up for our membership website or donate to me. Our website is zoomingin.tv. Thanks for watching, I am Simone Gao and I will see you next time.

How China’s Nationalism Turned the Olympics Into a Battlefield for Chinese Supremacy

Simone Gao: Hello, everyone. Welcome to Zooming In China. I’m Simone Gao.
 
The Olympics have a storied history, running first from the 8th to 4th century B.C. in Athens, Greece, before beginning again in 1896. 241 athletes from 14 different nations competed in 43 different events during that first revival of Olympic competition. In this year’s 2020 Tokyo Olympics we are witness to 205 nations with more than 11,000 athletes competing in 339 events. But it is not the numbers that tell the story.
 
The story of the Olympics is meant to be one of spirit and of heart. Of solidarity among athletes who have spent the better part of their lives focused on this one dream, this one moment, where they might rise to be recognized as the greatest in the world. While the athletes represent their countries, and there is pride in that, at its core, the Olympics is meant to unite the world under one common purpose: to bear witness to the pinnacle of human athletic achievement and to celebrate greatness, no matter its source. 
 
Could that be a problem? 
 
On the bright side, people would want to believe that no team may more fully represent what the Olympic spirit might look like in practice than the Refugee Olympic Team, the plus one to the 205-nation total. Since the introduction of this team at the 2016 Rio de Janeiro Games, the Olympic Solidarity project has provided more than $2 million in scholarships allowing these talented but displaced athletes to “train for the Games while continuing their sporting career and building for the future.” In Tokyo, 29 athletes from 11 countries are competing on this truly international, truly unified team.
 
But in reality, the Olympics can not and has not lived up to this ideal. The International Olympic Committee says that “we oppose any form of discrimination against a country or individual on the basis of race, religion, politics, gender or other reasons. With the broad minds of global citizens, we will tolerate, respect, appreciate and learn from other cultures, learn from each other’s strengths, and make progress together.”
 
Those are values that cannot be fully realized in a single athletic competition, even one the size and length of the Olympics. Those are values that, to be upheld, must extend to the life each athlete is able to live in their home country, to the ways those countries treat their citizens and to the behavior of each country as a member of the global community. 
 
We have borne witness to a world where there have been genocide Olympics repeatedly. In 1936, the Olympics were allowed to be held in the host city of Berlin, Germany, granting Hitler an opportunity to showcase himself as an honorable leader and his country as a prosperous one. In truth, Hitler had begun his concentration camp system three years earlier with the creation of Dachau on March 22, 1933. And in 2008, the world willingly overlooked China’s role in the Darfur genocide, overlooked China’s severe human rights violations within its borders against the Christians, Falun Gong, the Uighurs, the Tibetans, the Mongolians and any political dissidents. World leaders, including U.S. president George W. Bush, chose to participate in the Beijing Olympics and settled for small protests at the event. Can we uphold the so-called Olympic spirit if those Olympics are being hosted by a country engaged in unspeakable crimes against humanity?
 
The failures of the Olympic spirit run far deeper than large-scale human rights violations. They run into the individual lives of athletes chosen to represent their country and to the tensions those countries carry with one another. 
 
China’s approach to the Olympic games is one of winning at all costs, even the cost of its athletes. Their Olympic program, built after the Soviet model and refined through Chinese efficiency, is duplicated year-after-year in their 2000 government-run sports schools spread across the country. Children, hand-picked by State scouts, usually in their pre-teen years are removed from their families and required to focus exclusively on training for six grueling days a week, year-round, with few visits home and no real education. They are denied a childhood in the name of winning gold for their country. And for the tens of thousands who fall short of Olympic selection, they will carry the weight of lifelong hardships in their home country. With little education, damaged bodies and no career training, they will be left without options and without support from their government. 
 
For those who are selected for Olympic competition, they will carry the weight of expectation. In the case of China, that means an expectation of gold. Silver and bronze are seen as failures. Just before the beginning of the 2020 Tokyo Olympics Games, Gou Zhongwen, head of the Chinese Olympic Committee, said that “we must resolutely ensure we are first in gold medals.” 
 
That attitude has now been taken up by the Chinese nationalists attacking their own athletes and rival countries on social media. “To these people, Olympic medal tables are real-time trackers of national prowess and, by extension, of national dignity. In that context someone who fails at a competition against foreigners has let down or even betrayed the nation,” said Dr Florien Schneider, director of the Netherlands’ Leiden Asia Center.
 
We see the cost in the tears and apologies of Chinese athletes who, in the eyes of their country, have failed in the expectation to put nation above self. China’s table tennis mixed doubles team Xu Xin and Liu Shiwen, heavily favored to win, came up just short in a 3-4 loss to Japan’s Jun Mizutani and Mima Ito. 
 
Instead of celebrating the incredible accomplishment of being second in the world at the Olympic Games, the pair tearfully apologized and said that the Chinese team as a whole “cannot accept this result.” 
 
They did not, neither did their fans. The social media pages of the two Japanese players were so bombarded with verbal harassment and threats from angry Chinese people that they had to turn off the commentary function of their accounts.  
 
This kind of response is bred from a nationalistic approach to competitive sports. The Chinese government’s obsession with gold began with the founding of the People’s Republic of China in 1949 and from the earliest essay of Chairman Mao Zedong who wrote of China’s need to overcome the “sick man of Asia” perception and develop its strength. In the eyes of the CCP, only gold showcases that international strength, that defeat of other nations. Only gold is good enough.
 
Especially in a match against host country Japan. These two geographic neighbors have a complicated history fractured by Japan’s invasion and occupation of Manchuria, in northern China, in 1931 followed by the Second Sino-Japanese War from 1937 to 1945. Despite 76 years of distance from the end of the war, Chinese nationalists still saw the table tennis mixed doubles match not as an athletic event but, instead, “a standoff between China and Japan.”  
 
But not all Chinese citizens support this kind of nationalistic view of sports performance. One Weibo user replied that the mixed doubles match “was brilliant. Both sides were very strong and were very humble and respectful toward others.” Even State-run Xinhua news agency posted that, “I hope that all of us in front of the screen will establish a rational view of gold medals, and of victory and defeat to enjoy the Olympic spirit.”
 
But to say it is not necessarily to live it.  Dr. Jonathan Hassid, political science expert at Iowa State University, noted that “the CCP tries to exploit online nationalism for its own purposes, but events like this show that once Chinese citizens get riled up, the state has great difficulty in controlling those feelings.” Once a country stifles dissent of any kind and requires strict allegiance and obedience to anything believed by its leaders, it breeds a nationalism that bleeds into the ideal of the Olympics. The kind of nationalism that promotes country over citizen. The kind that promotes the grandeur of the Games over the travesty of human rights violations. 
 
We made the mistake of overlooking early concentration camps in Germany in favor of the 1936 Olympics being held on schedule in Berlin. We mistakenly thought that small protests at the 2008 Beijing Olympics would impact the genocide without disrupting competition in the Games. We were wrong, and we failed not just Olympic values but humanity because of it. Countless lives were lost.
 
In response to the question of whether the U.S. should boycott next year’s Beijing Olympics, an unnamed former senior Treasury official told CNBC that, “It’s better to go there and dominate.” I disagree. It is better for the United States to stand in solidarity with the people, the human beings held in the Xinjiang internment camps and refuse to support a nation that would inflict that kind of extended torture on its people. It is better to uphold the values that underlie humanity than to disregard them in the hunt for athletic supremacy.
 
Genocide olympics can not be tolerated. 
 
That’s it for today. Again, we will release a documentary movie on the Clean Network today, it is part 2 of the documentary series “The American Dream Takes on China Inc”, that tells the story of a group of Silicon Valley veterans beating the CCP in the economic battlefield. We will publish on the membership website today and premiere it on Youtube two days later, on Sunday. For future documentary movies that are not part of this series we will put the full length movies on the membership website only. So if you would like to watch this movie earlier and to support me, please sign up for our membership website zoomingin.tv.
 
Thanks for watching. I am Simone Gao and I’ll see you next time.
 
Oh, before I leave, enjoy the trailer of the documentary movie The American Dream Takes on China Inc part 2: The Clean Network.

China and India Heading to War Over Water? China to Build Huge Hydropower Station on Border

Hello, everyone. Welcome to Zooming In China, I’m Simone Gao.

A new report from Bloomberg on August 3rd seemed to bring hope to a darkening border dispute between China and India. China and India have mutually agreed to pull back troops from the site of a deadly dispute in June 2020 where 20 Indian and 4 Chinese soldiers were killed. After more than a year of both sides protecting that border, it will now be replaced with a demilitarized zone neither side will patrol in order to prevent a repeat of that conflict. Similar zones exist throughout their disputed 2,170-mile border.

The photos coming from the area capture a different story for the rest of that border. They show heavily armed vehicles traversing dangerous terrain, carrying more soldiers and heavy weaponry to a battle the international community sees coming but seems powerless to stop. Both sides have sent troops to the area over the past year, China increasing their troops from 15,000 to over 50,000 and India keeping pace with tens of thousands of their own. The deployments on both sides have reached the highest level in decades, and what the August 3rd announcement does not show is a willingness to remove those troops altogether.

The propaganda coming from China’s People’s Liberation Army has increased in tempo, too, most recently with a video posted online by the Henan provincial military district. In the video, a graphic clip of the June 2020 battle shows troops, who had been denied guns to reduce skirmishes, wading through waist-deep water while throwing stones and waving bayonets at one another. The video was shown during an interview with the family of one of the four Chinese soldiers killed in that dispute. Clearly this is an attempt to fuel anger and a desire for justice among the Chinese people to gain their support for a coming war. A war between two nuclear-armed countries.

The preparations are already in place. Both China and India have been at work building infrastructures that will support a lasting presence in the area, including insulated cabins and huts for use by the soldiers during the long Himalayan winter. China has built underground bunkers and tunnels, power structures including hydroelectric power stations and solar panels, and helipads and field hospitals. They have also moved heavy artillery to the area, including advanced surface-to-air missiles.  

India is deep in preparations as well, building their own roads and tunnels as well as housing for around 18,000 troops. Previously, they had housing for only 5,000. And along with their own heavy artillery, they have sent a squadron of 18 fighter jets to the surrounding regions, prepared to engage if necessary. A second squadron is being readied.

It would be easy to cast this as a simple border dispute, an argument over land that was only vaguely defined following the last China-India war in 1962. An official border was never determined after that war, the land instead being drawn by a demarcation line, or what is known as the Line of Actual Control. India draws that line at the location where Chinese troops withdrew in 1962. China draws it in the location they held before the war, in 1959. One area China continues to try to claim is an area where India has established a full state: Arunachal Pradesh.

If this were just a battle over an ill-defined border, it would be easier to believe that there is daylight coming, a reversal of the march toward what may become a nuclear incident. But there is more at stake. There is a reason this land is so hotly contested and so important to each side. And that reason is water. 

The international water at the heart of this conflict is the Yarlung Zangbo River that runs through China’s territory in Tibet. It then flows into India, known there as the Brahmaputra River, and through Bangladesh as the Jamuna River until it finally flows into the Indian Ocean. This is a river that matters. It matters to the identity of the Tibetan people, to the economy of the Chinese people and to the very lives of citizens in India and Bangladesh. The fighting, then, is not about the land itself. It is about the survival of people, countries, and identities.

During the disastrous floods in China’s Henan Province, rather than staying in the area to help his people through the crisis, General Secretary Xi Jinping traveled instead to Tibet. He went to survey the area surrounding Linzhi, part of the land contested between these two countries, and to the Niyang River Hydropower Station. Both sites important to China’s intention to “implement hydropower development in the lower reaches of the Yarlung Zangbo River” outlined in the country’s 14th Five-Year Plan and their 2035 Vision.  It is scheduled to begin construction between 2030 and 2035 with an estimated completion date of 2045. It will be three times the size of the Three Gorges Dam.

This new project, called the Mo Dehydration Power Station, comes from a country that has exhausted its ability to build dams in many other areas. Chinese water conservancy expert Wang Weiluo reports that “The hydropower resources in other provinces except Tibet are almost exhausted. The only thing left is the Tibet Autonomous Region, and the hydropower resources of the Tibet Autonomous Region are concentrated in the lower reaches of the Yarlung Zangbo River.” With so many hydroelectric projects scattered throughout China, why risk a war with India to build a new one on contested lands in international waters? 

Money is a big part. This is a project estimated to bring in a total of 3.6 trillion yuan for China, with 22.19 billion yuan slated for Tibet. While that might seem like a needed boost for the Tibetan people, it is meant as a benefit to the Chinese government. Tibet’s total fiscal revenue for 2019 was just 22.19 billion yuan, which was then subsidized by the Chinese government who added another 190.12 billion yuan. This power station, then, does little more than offset part of what the Chinese government was subsidizing to the region. It does not improve the lives of the Tibetan people who live there.

But controlling the water is bigger than money. Constructing the Mo Dehydration Power Station will give China the complete strategic control over the water resource of the Yarlung Zangbo River. This will be China’s most powerful move against an ever hostile and dangerous rival: India. Likewise, handing the security of these powers over to the CCP would mean a loss of control and survival, not just in this contested area but in their entire country. And it means putting the lives of 1.37 billion people in India and 163 million people in Bangladesh at the mercy of the CCP. 

For India and Bangladesh, this is about life itself. The Brahmaputra River is the most significant source of water in both countries, and any diversion of that water would be disastrous for both countries. 130 million people in India and Bangladesh live along the Brahmaputra delta with another 600,000 living on the river’s islands. These people rely on the river’s yearly flooding for the moisture and sediment it brings to the soil. That flooding brings the nutrients needed for their agriculture and marine farming that are key to their food production and their economies. The fish caught on the river’s floodplains and ponds are the primary source of protein for people in the area, and two of their three seasonal rice varieties cannot survive without the floodwater. Already facing serious climate refugee challenges due to rural lands being lost under the rising seas, a loss of the Brahmaputra’s river natural flooding would ravage both countries. 

The Tibetans won’t be happy either. As Weiluo also makes clear, “In the hearts of the Tibetans, the Yarlung Zangbo River Grand Canyon is the place where gods live. It is the mother river of the Tibetans and the cradle of the Tibetan culture.” Chinese author Han Xuemei adds that “among the primitive Tibetan religion Bon, the sacred concept of awe of nature and ecology has the deepest impact on Tibetans. They believe that the Qinghai-Tibet Plateau is a holy land, and the sacred mountain and lake are the ancestors and protectors of their nation. Not only would this project be destroying their sacred areas and cultural spaces that are critical to their identity as a people, the Tibetan people do not economically benefit from the project. Tibetans are not employed in dam construction projects because the Chinese government is worried that they will destroy the engineering facilities, according to Weiluo.

How will the Mo Dehydration Power Station project unfold? We will keep you updated. 

That’s it for today. As some of you may have already seen, we are about to release a documentary movie on the Clean Network. It is part two of a documentary series “The American Dream Takes on China Inc.” that tells the story of a group of silicon valley veterans beating the CCP in the economic battlefield. We will publish it on the membership website first on Friday and premiere it on YouTube two days later on Sunday. 

For future documentary movies that are not part of this series, we may put them on the membership website only. So if you would like to watch this movie earlier and to support us, please sign up for our membership website: zoomingin.tv. Thanks for watching. I am Simone Gao and I will see you next time. Oh, before I leave, enjoy the trailer of the documentary movie, the clean network.