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Hi, China Watchers. Today we look at Trump's bid to reduce risky Chinese investments, the administration's latest move to cede global climate policy leadership to Beijing and how Taiwan's opposition is interpreting U.S. policy toward Ukraine.
Let's get to it. — Phelim.
Trump's China investment restrictions may be more bark than bite
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There may be trouble ahead for President Donald Trump's effort to prevent U.S. companies from funding China's military industrial complex.
Trump signed an executive order last week that broadens the scope of a 2023 Biden administration order restricting U.S. investment in the development of China's artificial intelligence, quantum computing and semiconductor industries. The Trump order adds advanced manufacturing and "other areas implicated by the PRC's national Military-Civil Fusion strategy" to the list of sectors of China's economy off-limits to U.S. investors. It also restricts inbound investment by Chinese "affiliated persons" in sectors including agriculture, healthcare "and other strategic sectors."
Trump can wield tools including the International Emergency Economic Powers Act and task the Treasury Department to develop rules to enforce some elements of the order. But durable and comprehensive measures require Congress to create or adjust laws and mechanisms — including the Committee on Foreign Investment in the U.S. — necessary to its success. And legislation to curb outbound investment to strategically sensitive sectors of China's economy has stalled on Capitol Hill for the past year.
"We need a law — we can’t keep bouncing from one executive order to another," House Select Committee on China ranking member Raja Krishnamoorthi (D-Ill.) said during a Brookings Institution event Tuesday.
The White House didn't respond to a request for comment
China sees a threat. The measures constitute "weaponizing economic and trade issues," Chinese Foreign Ministry spokesperson Lin Jian said Monday.
That may be an overreaction. The order may just be "bluster" by Trump "to bring China to the table to engage in some very hard discussions," said Larry Ward, former member of the State Department's Defense Trade Advisory Group under the Obama administration.
If Trump is serious about the order — and if Congress delivers the legislation needed to enforce it — it could embolden bad behavior by Beijing rather than improve it. New U.S. investment restrictions may be celebrated by "Chinese hardliners who actually want to de-Americanize the Chinese economy as quickly as possible,"said Ker Gibbs, a former president of the American Chamber of Commerce in Shanghai.
The restrictions on inbound investment could block efforts by U.S. firms to partner with Chinese companies with expertise in developing technologies the U.S. needs to produce at home, including lithium batteries and drones, said Cameron Johnson, senior partner at Shanghai-based supply chain consultancy Tidalwave Solutions.
"Upsetting one of your largest trading partners that has the tech and the money to pay for it to be built in your backyard is poor policy," Johnson said.
The administration may also face opposition from U.S. companies dependent on Chinese supply chains — think pharmaceuticals and automotive — wary of possible reprisals by Beijing, said Elaine Dezenski, a former member of the Chairman's Council on China Competition at the Export-Import Bank of the United States.
The Trump administration's aim to encourage "allies and partners" to invest in the U.S. economy rather than China and other "foreign adversaries" may also be a hard sell given the administration’s confrontational tact since taking office last month, said Gibbs.
"Given what the Trump administration has done the last few weeks in Europe, I have to wonder what countries he’s referring to. You know it’s not Canada," he explained.
TRUMP YIELDS CLIMATE TALKS CENTER STAGE TO BEIJING
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The Trump administration's decision to boycott this week's meeting of the Intergovernmental Panel on Climate Change in Hangzhou, China could effectively lock out U.S. input into the global climate science agenda.
IPCC meetings convene climate scientists from across the globe to review and summarize the latest science on the trajectory and impacts of climate change and possible mitigation strategies. The Trump administration has barred government scientists from attending, as reported Monday by POLITICO and E&E News' Sara Schonhardt, Zack Colman and Zia Weise. And that compounds the damage to U.S. credibility on addressing the climate crisis inflicted by Trump's decision last month to pull the U.S. out of the Paris climate agreement (again).
The U.S. absence at the meeting tells other countries "that we’re completely ceding leadership on not just climate policy, but climate science to China, which has taken this issue seriously, sent hundreds of scientists to participate in this process, and is even hosting the meeting," said Joanna Lewis, an associate professor at Georgetown University and an expert on China's climate policies.
The State Department declined to comment on U.S. nonattendance at the meeting. But Chinese state media trumpeted Tuesday how China's hosting of the event underscores Beijing's role in "actively responding to climate change" as an essential in "achieving sustainable development."
The administration's decision to snub the meeting also could provide Beijing a fresh data point in its global efforts to supplant U.S. influence in areas of Asia, Africa and Latin America where the effects of climate change have life-and-death consequences for their populations.
China has helped power its diplomatic inroads among Pacific Island countries — where Washington and Beijing are locked in a fierce battle for influence — with a bespoke climate diplomacy aimed to address concerns about rising sea levels. Beijing sealed a strategic partnership deal last week with Cook Islands on the strength of a Chinese development package that includes a provision to bolster the country's "climate resilience."
The Trump administration appears to be gambling that the tradeoff is worth it. The administration may think it's "good politics to appear antagonistic toward anything that sounds like climate policy," said Noah Kaufman, former senior Obama administration official who worked on energy and climate policies.
TRANSLATING WASHINGTON
— FIRST IN CHINA WATCHER — THAILAND TO DEPORT UYGHURS WITHIN 24 HOURS: Thailand is going ahead with its plan to deport dozens of Uyghur Muslims back to China and plans to do so before the end of the day today, according to the office of House Foreign Affairs Committee Chair Brian Mast (R-Fla.), who had been pushing for Thailand to reconsider the move.
Mast's office learned that the deportations are going forward in a State Department briefing Wednesday, according to a senior committee staffer. The staffer was granted anonymity to discuss sensitive internal communications.
The group of 48 Uyghur Muslims are currently in immigration detention in Bangkok, where they went on hunger strike last month to protest their possible deportation.
"The Thai government is sending 48 refugees straight into the hands of the CCP's concentration camps," Mast said in a statement to POLITICO. "The world knows exactly what happens to Uyghurs in China: forced labor, torture, sterilization, and extermination. Thailand has a choice to not be on the side of genocide."
The State Department told POLITICO that it's pushing the Thai government to abort any possible plans to deport the Uyghurs. "We strongly urge the Royal Thai Government to respect the principle of non-refoulement and to uphold its international obligations," to not return foreign nationals to countries where they are at high risk of human rights abuses, said a State Department spokesperson granted anonymity because they weren't authorized to discuss diplomatic discussions on-record. The Thai Embassy in Washington didn't respond to requests for comment.
— RUBIO: CHINA'S 'DELIBERATE' FENTANYL SUPPLY ROLE: Secretary of State Marco Rubio suggested on Wednesday that Beijing is intentionally fueling the U.S. opioid overdose crisis. Rubio said Beijing isn't doing enough to stem the flow of precursor chemicals to Mexico that cartels process into fentanyl that ends up in the U.S. "They could stop it if they wanted to. You have to wonder in some cases — is this a deliberate thing, like are they flooding us with fentanyl?" Rubio said in a Fox News interview. The Chinese embassy dismissed that allegation. "China is firmly opposed to the groundless suspicions and smears made against China by relevant parties on the basis of no facts," said Chinese embassy spokesperson Liu Pengyu.
— LAWMAKERS PROTEST U.K.'S CHINESE 'SUPER EMBASSY': Chair of the House Select Committee on China, John Moolenaar (R-Mich.) and Rep. Chris Smith (R-N.J.), co-chair of the Congressional Executive Commission on China, want the U.K. government to prevent Beijing from building a massive new "super embassy" in London. Local elected officials and police have dropped initial opposition to the construction of the embassy on the grounds of the old Royal Mint property. Opponents of the project now want the United Kingdom's central government to intervene to scuttle the project. Allowing the embassy's construction will be "a counterproductive and unearned reward" that will boost Beijing's efforts to "to intimidate and harass U.K. citizens and dissidents and experts across Europe who oppose or criticize its policies," the lawmakers said in a letter Wednesday to U.K. Ambassador to the U.S. Peter Mandelson. The lawmakers asked Mandelson to "convey our concerns" to U.K. Prime Minister Keir Starmer who arrives today in Washington for meetings with Trump.
— KRISHNAMOORTHI: TRADE DEAL SHOULDN'T SACRIFICE TAIWAN: Ranking member of the House Select Committee on China Krishnamoorthi wants the Trump administration to avoid making Taiwan a bargaining chip in a possible trade deal with China. Beijing "will constantly try to put [Taiwan] on the table —they’ll be like, 'Okay, you want to see us buy more agricultural products from Illinois or Michigan or Ohio or Iowa? Well, let’s talk about Taiwan,'" Krishnamoorthi said at a Brookings Institution event Tuesday. Committee chair Moolenaar put the onus on Taipei to do more to fend off potential Chinese aggression. Trump wants Taiwan to "step up its commitment to its own defense and I think that's an important message for [Taiwan] to hear," Moolenaar said at the same event.
TRANSLATING EUROPE
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GERMANY'S LEADER MULLS CHINA POLICY OPTIONS
Germany's new leader may be looking to overhaul Germany's traditionally trade-focused ties with Beijing. While the Ukraine war is likely to top Merz's foreign policy agenda, Beijing's alignment with Moscow's invasion means that Berlin will likely have to address its relationship with Beijing, according to German policy experts.
"You can’t talk about Russia-Ukraine, without also talking about China and you can’t talk about the economic downturn in Germany without also talking about the economic downturn in China that’s affecting German companies," argued Jacob Gunter, economy analyst at the Berlin-based Mercator Institute for China Studies.
Top of mind for Merz will be the 5,000-odd German firms — starting with automaking giant Volkswagen — with Chinese trade and investment ties. Merz is likely to "double-down on working within the EU to shape a China strategy that contains elements of both derisking but also allows for Germany to continue to have a competitive advantage" in China, said Robin Quinville, former director of the State Department's Office of Western European Affairs in the Obama administration and a former Charge d’Affaires at the U.S. Embassy in Berlin.
German China skeptics hope that Merz can push Germany into embracing a robust EU policy aimed to offset Beijing's economic and strategic threats to the bloc. A German Defense Ministry-commissioned report reviewed by E&E News Wednesday that warned Beijing could blackmail Berlin via its near- monopoly on wind turbine technology could boost those efforts. But a confrontational U.S. policy toward Europe could sabotage them. "If Trump rocks the boat too much on the transatlantic side, especially economically, there will be more pressure for Europe to turn to China" for deeper trade and investment ties, Gunter said.
HOT FROM THE CHINA WATCHERSPHERE
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— CHINESE MILITARY MANEUVERS REAP UPROAR: Beijing chose Wednesday as the perfect day to rattle Taiwan with the deployment of an array of combat aircraft and drones off the island's southern coast. Those forces "blatantly violated international practices by setting up a drill area about 40 miles off the coast of Kaohsiung and Pingtung without warning, and claimed that it would conduct 'shooting training,'" Taiwan's Defense Ministry said in a statement. China's Foreign Ministry declined to comment when asked about the drills.
Those antics came hot on the heels of Chinese naval "live fire" exercises in waters adjacent to Australia and New Zealand over the past week, which sparked uproar in Canberra and Wellington. Chinese Foreign Minister Wang Yi got an earful about that from his visiting New Zealand counterpart Winston Peters on Wednesday. "I think it would be true to say that he took our concerns on board," Peters said after their meeting, per ABC News.
Beijing's not done. Such regional deployments will likely "become more frequent, and some countries should adjust to this trend," the Chinese state media tabloid Global Times reported Tuesday.
— TAIWAN'S COAST GUARD BUSTS CABLE CUTTER: Taiwan's Coast Guard Administration has detained the eight Chinese crew members of a Togolese-flagged freighter implicated in severing a submarine telecom cable in the island's waters Tuesday. The ship "had been loitering near the broken cable at a distance of about 925 meters from the cable since 7 p.m. on Feb. 22," Taiwan state media reported. The suspected sabotage — which ruptured a cable linking Taiwan with its nearby Penghu islands – is the latest in a series of such incidents that Taipei blames on Chinese efforts to test its communications vulnerabilities. China's Foreign Ministry declined to comment.
— HANDBOOK FOR DETAINED FOREIGNERS IN CHINA: There's a new resource for families of foreign citizens who land behind bars in China — or are targets of unlawful exit bans. The Spain-based human rights advocacy group Safeguard Defenders issued a handbook Tuesday that provides guidance for how those family members can assist detained loved ones. The handbook includes tips on "what to expect from China's law enforcement and judicial processes, how to retain a lawyer, how your country and consular services can assist, ways to engage with media," the organization said in the handbook introduction. Chinese Embassy spokesperson Liu Pengyu responded to a question about the handbook by saying that all foreigners in China "must abide by Chinese laws.
HEADLINES
Project Syndicate: Trump's cultural revolution
The Diplomat: The myth of a 'reverse Kissinger': Why aligning with Russia to counter China is a strategic illusion
War on the Rocks: China's ties with North Korea are in a ditch, and therein lies opportunity
ChinaFile: In Taiwan, a growing cohort of 'preppers' readies itself for an uncertain future
THREE MINUTES WITH…
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Alexander Huang is the director of international affairs for Taiwan's opposition KMT party and special adviser to party chair Eric Chu. Huang has been in Washington the past two weeks taking the temperature of the Trump administration's policy toward Taiwan.
Huang spoke with China Watcher about the island's defense challenges and the lessons of U.S. policy toward Ukraine.
Responses have been edited for length and clarity.
Your party controls Taiwan's legislature and has voted to cut defense spending. Aren't you asking for trouble given President Trump's view that the island needs to pay more for defense?
I have been confronted with this question ever since the budget session started. The KMT cannot increase the budget even if we want to. Only the executive branch can increase the budget. Our parliament can only cut or freeze the budget.
So to play our loyal duty as an opposition, the only way we can increase the budget is to persuade the executive branch to raise it.
After this trip, I’m going to organize our own expertise in the KMT and come up with our own proposal of how to increase the budget, what to spend on and what are our priority [defense] systems.
Taiwanese President Lai Ching-te said last week that he will boost Taiwan's spending on defense to 3 percent of the island's annual gross domestic product. Is the KMT on board with that?
With that increased budget, what do you want to do? What's the direction? More asymmetric weapon systems or a legacy force to deal with [China's] gray zone challenges? What do you want to say? Oh, "social resiliency?" Is that part of the defense budget or does that money go to the Ministry of the Interior for the police and fire department?
Yeah, you just say "3 percent" and everybody cheers and no one can say "no" because Donald Trump hates that.
What kind of reception does the opposition KMT get in Washington?
A lot of people in Washington like the [ruling] Democratic Progressive Party better because they don't bring PowerPoint presentations to meetings. They bring an empty notebook and say, "Sir, what should I do? We are all yours. Your interest is my interest."
That's because by winning American support, you at least are halfway to victory in the next presidential election. Voters actually see that as a plus in terms of voting. Taiwan is an overall pro-American society because we have been isolated for so long and are so vulnerable on the international stage. So generations of Taiwanese residents think that without the United States, we will not be able to confront China.
Trump has backpedaled on U.S. support for Ukraine's battle against Russia. How has that gone down in Taiwan?
There's a justified suspicion, but only an undercurrent because nobody wants to talk about it because the United States is our only hope.
You cannot overtly say "I’m scared the Americans cannot be trusted." But I think there would be a lot of private conversations in which they’re talking about this newest lesson learned from Ukraine.
The biggest lesson we've learned is that there won’t be American boots on the ground. I have said for more than eight years now that the United States is not going to fight a foreign war [in Taiwan]. People are not interested in fighting a foreign war and using taxpayers' money without a clear end game.
So I think the biggest challenge for Taiwan, for the DPP government right now, is that they know that should there be an invasion, U.S. forces will be deployed near or in the range of Taiwan or the Chinese coast but will not come on the island to fight with Taiwan.
Thanks to: Heidi Vogt, and digital producers Emma Cordover and Ellen Boonen.
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