Category Archives: defense policy

Reducing Investments

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The Federal government is leading by example in withdrawing taxpayer dollars from People’s Republic of China businesses.

National Economic Council Director Larry Kudlow and National Security Adviser Robert O’Brien have sent a letter (which was up on Scribd, but which has since been removed) to Labor Secretary Eugene Scalia instructing him to not allow Federal retirement funds—taxpayer dollars—to be invested in shares of stock in PRC businesses.

Scalia then relayed those instructions to Michael Kennedy, Federal Retirement Thrift Investment Board Chairman. Scalia instructed Kennedy to reverse the board’s decision to move the TSP’s International Stock Index Investment Fund investments to match an international index that would explicitly include PRC companies in the mix.

Scalia noted a prior bipartisan group of Senators’ request that the management board not move to invest in entities that

include those involved in military activities, espionage, and human rights abuses by the Chinese government.

However, in response to the Senators’ request,

the Board declined to reverse the decision.

Scalia also noted the additional concerns carried in the O’Brien/Kudlow letter to him:

…risks to investors resulting from inadequate investor disclosures and protections under Chinese law…this investment risk is augmented by the Chinese government’s concealment of critical information concerning the novel coronavirus, which exacerbated the COVID-19 pandemic and, they note, materially increases the risk that Chinese companies will be subject to sanctions or boycotts.

And he emphasized the concerns provided in Scalia’s to him:

Several of the companies listed on the [new index] arm the People’s Liberation Army, provide equipment that is used to oppress China’s religious minorities, and have violated US sanctions by engaging in economic activity with Iran and North Korea.

It’s about time, too.

Control of the Internet

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ICANN (Internet Corporation for Assigned Names and Numbers) is the American manager of Internet domains and Domain Name Service under contract to the Internet Assigned Numbers Authority, the globally agreed agency responsible for the global Internet. It had been about to sell the Internet domain .org to a private enterprise.

The .org registry is a database of more than ten million websites managed since 2003 by the nonprofit Internet Society. The group decided .org could be better served by a company that could invest returns back into the service.

The sale would have been for $1.1 billion, which ICANN could have put to good use, too.

No more.

California Attorney General Xavier Becerra instructed ICANN just two and a half weeks ago that it “must” refuse the sale. ICANN’s acceptance of Bacerra’s diktat was prompt.

As the WSJ put it,

Some readers may remember when Senator Ted Cruz [R, TX] in 2016 warned that ICANN would come under the influence of authoritarian countries once it became independent of the US government.

With its abject surrender, ICANN has placed itself under the influence of [the] authoritarian California Attorney General. The authority consciously ceded to this far left Attorney General sends an ugly message to other companies headquartered, or otherwise operating, in California. Look for further bullying of those companies whose business imperatives clash with Bacerra’s whims. Such businesses might want to think again about their locations.

Biden is Tough on the PRC

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Progressive-Democratic Party Presidential candidate Joe Biden says so. And he’s actually going to run on that thesis.

However.

Leaving aside Hunter’s profiteering on Daddy’s coattails in the People’s Republic of China—that’s just the scummy topping on the gruel—Biden’s track record in dealing with the PRC as Senator and as Vice President is one of failure after failure to get, even to try to get, balanced trade deals and even-handed treatment of American companies wanting to do business inside the PRC.

It was, for instance, during the time frames about which Biden brags that the PRC successfully began demanding US companies to take on PRC company partners as a prerequisite to doing business there, to “share” company and American technologies and company proprietary materials and intellectual properties with those partners, and to allow PRC government backdoor access to US companies’ critical software.

All of this was done without Biden objecting, which he could have done, forcefully, whether or not he could have brought those administrations along with him.

Biden chose to be silent on all of these. Every single one of them.

A Post-Wuhan Virus Situation Supply Chain Environment

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The South China Morning Post, a Hong Kong-based news outlet, has a five-part series in progress regarding outcomes potentially stemming from the current situation. My comments here concern remarks from the SCMP‘s third part.

Consensus is growing in Beijing that the coronavirus pandemic is set to make the world more hostile towards China, undermining the accommodating international environment that underpinned the country’s spectacular rise from a closed communist backwater into a global economic powerhouse.

With considerable justification, given the PRC’s steady drumbeat of coverup, lies, and subsequent shipment of dangerously shoddy masks and Wuhan Virus testing kits.

Aside from that, the PRC’s “spectacular rise” more accurately has been from a closed communist backwater into a closed communist global economic powerhouse.

There’s this, too:

Beijing’s pledge that China will remain investor-friendly and open its market further to foreign businesses.

This pledge is another broken commitment. The PRC has never been investor friendly.

The PRC government continues to require foreign businesses to take domestic companies as partners, for all that the domestics’ “participation” is no longer required to be a controlling interest. Such partnerships remain required, and the foreign company remains required to share critical technologies and intellectual properties with those partners. Given that PRC law requires all domestic businesses to cooperate with the government’s intelligence collecting agencies, that means those foreign companies still will be…sharing…their technologies and intellectual properties with the PRC government.

In the end, the necessary realignment of the world’s value chains needs to be an alteration of those chains to remove the PRC from any participation in any step that leaves other nations dependent on PRC production for their own national or economic (which is national) security. It may, or may not, be useful to include, to an extent, PRC production or communications facilities in those chains. However, with the lack of reliability and quality of output that the folks manning the nation’s government have chosen to ship in their response to the global crisis Beijing has unleashed, such an inclusion must necessarily be sufficiently constrained that a PRC disruption cannot threaten the security or weal of other nations.

Keep in mind, too, that PRC has long history of choosing to export dangerously bad products: powdered milk adulterated with melamine, baby food preparations with…impurities, poisoned pet food, sheets of plywood made with formaldehyde that outgasses into homes to poison the occupants.

Another Reason

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…to move our supply chains out of the People’s Republic of China, a reason the rest of the world ought to take seriously, also. The PRC government has been lying about its African swine fever epidemic, after the disease has killed 120 million of the PRC’s hogs. That’s a bit over 1/6 of the PRC’s hogs.

As China has largely brought the coronavirus pandemic under control within its borders, another highly contagious disease—one affecting livestock [African swine fever]—is reappearing and raising questions about the accuracy of the country’s reporting.
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Since mid-March, China’s Ministry of Agricultural and Rural Affairs has reported a spate of new cases across the country, supporting what some independent veterinary and farming consultants have been saying since late 2019: the disease is still rife.

Maybe the PRC has its Wuhan Virus epidemic under control.  More and more evidence is coming up that indicates the situation there is far worse than that government has been reporting.

Regarding the African swine fever, here’s the USDA on the PRC’s livestock in general, per its April report:

Underreporting is rampant as government agencies at all levels face serious challenges in collecting and reporting outbreak information from swine farms. Some farms are reluctant to report outbreaks for fear of economic losses, while others report being actively discouraged [from disclosing cases of African swine fever].

There are a couple of problems with this. One is that while the African swine fever isn’t a threat to humans, it’s 100% fatal to pigs. What happens if some number—even small—of PRC hogs get shipped to other nations and spread the effects? The world’s hog farms and pork food supply would be put at risk.

The other problem is, given the PRC’s lies about these two viruses, what else are the nation’s government and its Communist Party of China lying about that puts the world at risk, but that we haven’t discovered yet?

It’s…difficult…to do business with a nation whose government lies and coverups are such evident and serious threats to the security of other nations.

It’s impossible to be dependent, through supply chain dependency, on such a nation and maintain one’s own national security at the same time.