Category Archives: defense policy

Investing in the People’s Republic of China

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Foreign direct investment in the PRC has fallen to $20 billion in the first quarter of this year, compared with $100 billion in last year’s first quarter. This is strongly influenced by, if not a direct result of, PRC President Xi Jinping’s “security” policy that explicitly targets foreign investors as likely spies.

A Xi-led campaign this year has hit Western management consultants, auditors, and other firms with a wave of raids, investigations, and detentions. Meanwhile, an expanded anti-espionage law has added to foreign executives’ worry that conducting routine business activities in China, such as market research, could be construed as spying.

There’s this, also:

A senior official in a county of southern Guangdong province, which earlier this year set a goal of attracting nearly $300 billion in investment in the next five years, told a visiting American trade group recently that the county would reward any US corporate “decision maker” investing there 10% of the value of the promised deal, according to people briefed on the matter.
The trade group turned down the county official’s offer, which in the US would constitute an illegal bribe, the people said.

The Guangdong senior official knew his offer would be a bribe under US law, and he made the offer anyway.

There is no investment in anything in the PRC that’s worth the political, or the legal, risk.

More than that, as long as the PRC continues its genocide (in the present time against the Uighurs, but those people have not been the PRC’s only targets), it’s morally impossible to invest in any way, in any thing, in the PRC.

That’s apart from, and in addition to, the national security risk presented by any trade with or within the PRC, given its present control over our supply chains, particularly in critical items such as the rare earths it embargoed from Japan for a time and its current bar of gallium and germanium export to us.

We, and the West at large, have nothing to gain from investing in or trading with this enemy nation, and everything to lose.

Security Guarantees

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In an editorial regarding this week’s NATO summit in Vilnius, Lithuania, The Wall Street Journal‘s editors dropped this line:

A debate is underway over whether Ukraine should benefit from a formal Western security guarantee, or perhaps join NATO.

A Western security guarantee for Ukraine is utterly worthless, as the Budapest Memoranda demonstrate. Marginally better would be NATO membership. Ukraine has some security and government integrity criteria to meet, but it’s working to meet them and would benefit from assistance in that direction.

Better for Ukraine, and the West generally, would be a separate mutual security treaty that would include Ukraine, the Baltics and Poland, and the rest of the Three Seas Initiative nations, along with the US and Great Britain (and, perhaps, Denmark, Sweden, and Norway to strengthen Western control over Russia’s ability to leave the Baltic Sea). For all of the editors’ claimed NATO “improvement,” it still lags heavily in satisfying its own mutual defense obligations, much less doing anything to defend Europe at large.

Along with that, it’s necessary to make clear to Russia that, so long as it insists on playing the barbarian, it will continue to be isolated and contained and that the containment will be rapidly tightened.

Russian paranoia needs also to be corrected. No one in the civilized world has any desire to run over Russia or conquer it. Its vast resources are much more cheaply obtained—to mutual benefit—through free trade than through conquering and occupation. The history of Russian-world relations make such convincing deucedly difficult, but they do not make the convincing impossible.

Ben Franklin and the Republic of China

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The good citizens of the Republic of China are watching the barbarian invasion of Ukraine, the so far successful attempt by the Ukrainians to beat back the barbarian, and the destruction the barbarian is inflicting on Ukrainian cities and its atrocities perpetrated on Ukrainian women, children, civilian men, and prisoners, and some of those RoC citizens are drawing the wrong conclusion.

Others draw the opposite lesson from the images of smoldering Ukrainian cities. Anything is better than war, they say, and Taiwan should do all it can to avoid provoking Beijing’s wrath, even if that means painful compromises.

Those painful compromises would accumulate to nothing other than preemptive surrender. These…compromisers…choose to ignore the lesson of an old dead guy who was part of an earlier generation that, in another part of the world, successfully resisted a conqueror—and that conqueror began the struggle with its army already in place among the colonies. That old dead guy’s lesson:

They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.

More than that, they will have neither, and the RoC compromisers, instead, would exist—not live—under PLA jackboots, and as the citizens of Hong Kong are learning, that existence would be an uncertain one.

The Peoples Republic of China’s goal is the complete erasure of the RoC as a nation, as a polity, even as a people, and the slavery that a successfully conquering PRC would inflict on the citizens of the RoC would be nothing more than a living death.

Of course, the RoC’s ability successfully to resist a PRC invasion would be enormously enhanced if President Joe Biden (D) would get out of the metaphorical White House basement and quickly transfer modern arms to the RoC—beginning, but not stopping, with the weapons systems the RoC already has bought and paid for but are not yet delivered.

Useful, but Insufficient

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The Biden administration is looking to restrict—but not block—Peoples Republic of China companies from accessing American cloud-computing services.

That’s a useful move, to the extent it actually comes to fruition and to any meaningful extent, but it’s not enough by itself, or even against the backdrop of existing restrictions on technology exports to the PRC.

Some are concerned, though, that this could further strain relations between the world’s economic superpowers.

[The Peoples Republic of China] set export restrictions on two minerals the US says are critical to the production of semiconductors, missile systems and solar cells….
The minerals—gallium and germanium—and more than three dozen related metals and other materials will be subject to unspecified export controls starting August 1, Beijing’s Ministry of Commerce said Monday.

The particular PRC response just shows the importance of us moving our supply chains completely out of the PRC, and it emphasizes the shamefulness of American company managers for their slowness in making the necessary adjustments in their businesses.

Beyond that, we need to stop this foolish call and response method of restrictions on technology exports to the PRC. We need to apply the restrictions faster and deeper than they can respond. Simply doing tit-for-tat moves lets the PRC adapt and respond, especially to respond with more pain inflicted on us than would be the case if we stayed solidly inside their Do Loop.

The PRC’s response looks more like escalation than tit-for-tat. They’re already moving to get inside our Do Loop while the Biden administration tiptoes around.

Those concerned need to identify the war—and the PRC is inflicting war on us, even if it’s not, yet, kinetic—in which one side suffers no consequences during the war. Of course friendly-side damage needs to be minimized, but wars are won by inflicting more pain on the other side than that other side is willing to suffer than that other side can inflict on the one compared to the one’s pain tolerance.

Nor is it enough simply to restrict our technology exports/transfers to the PRC to tech that’s our second tier/prior generation technology. Our exports/transfers—to the extent we make any at all—needs to limited to what would constitute the PRC’s second tier/prior generation technology. If our own such tech is ahead of the PRC’s, those exports still would enable the PRC’s catchup and gaining superiority.

It’s What You Ask

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Principal Deputy Press Secretary Olivia Dalton ran last Tuesday’s mid-day-ish presser, and she was asked about polling indicating that President Joe Biden (D) routinely gets low approval ratings regarding his handling of our economy and how a then-upcoming speech would impact those ratings. Dalton replied with this:

Well, what I would say is that the president’s economic policies are incredibly popular. When you ask people what they think about investing in our roads, bridges, and airports, what you—when you ask people what they think about educating and empowering workers, when you ask people about how they feel about reshoring, manufacturing jobs, and investing in America, those things are incredibly popular.

Well, of course they are. What American isn’t enthusiastically in favor of motherhood and apple pie? What us Americans aren’t happy about is Biden’s actual performance in doing anything toward achieving those starry-eyed goals. The President’s men carefully do not ask about Biden’s execution; they ask only about those popular intentions, and then they claim that because everyone loves their mother, everything is hunky dory.

This is the cynicism of the Biden White House.