By Godfree Roberts from his newsletter
This week’s selection from Godfree’s excellent China newsbrief includes the status of Dollar trade, Huawei, Technology and the much maligned (in the West) Social Credit system.
Economy and Finance
After years of talking about abandoning the US dollar, Russia and China are doing it for real. In the first quarter of 2020, the share of the dollar in trade between the countries fell below 50 percent for the first time. Four years ago the greenback accounted for over 90 percent of their currency settlements.[MORE]
The PBOC says China should switch from SWIFT to a domestic financial network and consider dropping the greenback as the anchor currency for its foreign exchange controls. It also recommended developing legislation similar to the European Union’s Blocking Statute, which allowed the EU to sustain trade and economic relations with Iran despite US sanctions.[MORE]
Science and Tech
The annual ranking of articles published in peer-reviewed science journals worldwide is now available from Scimago. Frans Vandenbosch kindly distilled it into the chart you see below. Chinese scientists are widening their lead over US scientists every year, as we would expect, since the PRC invests four times more money in R&D than the US.[MORE]
More Tech
Globally, 137 countries have already signed cooperation agreements with BeiDou satellite navigation systems.
After a month in orbit, BeiDou’s last satellite passed its final test by locating a plane in flight while the tracking and monitoring an air terminal. By the end of 2023, all civil aviation aircraft will have BeiDou-based positioning and tracking capabilities. Myanmar’s Ministry of Fisheries has purchased 1,000 BeiDou shipboard terminals for vessel position information and tracking and 137 countries have signed cooperation agreements with BeiDou.100% of BeiDou’s core components are made in China.[MORE]
The fight against Huawei and the ‘kidnapping’ of its CFO
(Editorial comment – also refer to Kidnapping as a tool of imperial statecraft? by The Saker as well as the US clear theft of TikTok to give it as a gift to Microsoft. Kidnapping, businessnapping and theft are the favorite tools of empire now.)
The Truth About Social Credit – a different way to create social cohesion and harmonization of a very large society
The most authoritive Government release on Social Credit in some time is available for public comment through August 20th., and seeks to clarify critical concepts and concerns in building China’s Social Credit System such as
- What data can be collected or used as ‘Credit Information’？
- When information can be shared or made public and how？
- What penalties are allowed, and what procedures are to be used?
- How negative ‘credit’ can be restored?
The overall goal is to make sure that the system is part of the legal system, not something beyond it or parallel to it.
The backstory.
If you aren’t living in or studying China, you may well believe that the Social Credit System is an algorithmic reputation scoring mechanism based on “real-time monitoring through big data tools” to generate a score “controlling virtually every facet of human life” that “dictates one’s place in society“. The reality is both more complicated and far less exciting.
People would likely have a more accurate understanding of the system if China had said they were crafting a “Law on the Collection and Use of Administrative and Regulatory Data” instead of a ‘social credit system’. The ‘social credit’ name isn’t only evocative in English but also reflects the misguided attempt to include diverse topics such as financial credit reporting, administrative regulation, and public morality propaganda under the same project name, even though these pieces remained fairly discrete in practice.
It’s probably safe to say that the primary function of ‘social credit’ is one of administrative regulation, operating through industry-specific blacklists. Regulatory agencies were all tasked with generating rules for what violations of the laws under their authority would justify blacklisting. Blacklisting is important, not only because it creates a negative public record, but also because various agencies have signed inter-agency MOUs to take limited enforcement action against those blacklisted by another agency. Blacklisting by the food and drug administration, then, might result in consequences when applying for permits from an unrelated agency. This tool lets you explore the full range of cross-departmental punishments under this system.
Updating the Blacklists.
The new draft rules revisit the drafting of industry blacklisting standards and procedures to require both a serious violation of law AND:
- A threat to health or safety,
- disruption of the marketplace,
- violations of judicial or administrative orders, OR
- refusals to perform national defense duties.
The third category is about increasing the enforceability of court judgments and refers to the court system’s blacklist for ‘judgment defaulters’- those who have an active judgment against them and the ability to satisfy that judgment, but who refuse to do so. This one blacklist is overwhelmingly driving most of the exotic penalties connected with social credit, such as the no fly list and limits on spending. Interestingly, it is described as necessary to increase the ‘credibility’ of the courts.
The new draft rules also require that industry blacklisting standards now include express mechanisms for being removed from the list or correcting information. More importantly, the standards must be released for a period of at least 30 days for public commenting before they are enacted, and their implementation must be periodically evaluated by a third party after enactment.
Blacklisting Procedures
Before being blacklisted, parties must be given notice of the reason and the legal basis and have a chance to object. If blacklisted, they must be given a clear written decision indicating the reasons, rules for removal, and so forth. Blacklisting decisions should generally not be made below the county-level and are reviewed at the provincial level.
Punishments
All credit punishments must be listed in a national catalog of penalties drafted in conjunction with experts and other concerned parties. The draft rules make clear that punishments methods cannot require 3rd parties like banks and businesses to take action against blacklistees.
An explicit legal basis must be provided for all possible punishments.
This has actually been done in the past for inter-agency punishments authorized in cross-departmental MOUs mentioned above, although some have found that the scope of the cited authority may have been exceeded. Generally, however, the need for a legal basis has already limited cross-departmental action to areas where an agency has discretion to consider a broad range of factors- such as in permitting and licensing, with punishments generally been limited to：
- Higher scrutiny or restrictions in authorizing necessary permits, credentials, or approvals,
- Higher scrutiny or restrictions on participation in government contract bidding or authorization of use of government resources,
- Restrictions on receiving/ revocation of awards and honors.
- Increased routine regulatory oversight
- limits on receiving government benefits.
One of the greatest fears about the social credit system is that the ‘credit consequences’ for a violation could become a way of covertly increasing the violations’ statutory penalty. Meaning that since ‘untrustworthy conduct’ refers to violations of laws and legal obligations, there shouldn’t be any collateral consequences that increase the punishment beyond what the relevant law authorizes. A parallel might be the lasting impact of a criminal record long after a sentence has been served.
The new rules are at pains to say that this can’t be tolerated. There must be a legal basis for penalties and that if the law doesn’t allow for sufficient penalties, the correct approach is to lobby to amend the law, not use social credit, not only requiring a legal basis for penalties but also adding that if the law doesn’t allow for sufficient penalties, the correct approach is to lobby to amend the law, not use social credit.
Credit Information
A global concern today is the collection of personal information and the new rules attempt to regulate what information should be collected and used as ‘credit information’. The inclusion of ‘Public Credit Information’-the information collected or generated by government agencies in the course of their duties- in social credit is to be limited to the types of information in a national uniform catalog created by the inter-agency committee for establishing social credit with the input of legal experts, scholars, affected businesses, industry associations, and others. Local public credit information catalogs have been available for some time, but a national catalog will limit local discretion and help standardize the system.
The purpose of collecting or using information is also required to be indicated- and consent must be given for the collection of information that isn’t authorized by law. To try and ensure that consent is voluntarily given, the rules say that it must not be coerced or gamed through methods like demanding blanket consent. This follows recent moves on privacy in the commercial sector.
If something is to be considered negative credit information- it must be based on judicial rulings, arbitration documents, administrative decisions and rulings, or other effective legal documents. Again, social credit is concerned with recording and publicizing violations of laws and legal obligations.
Conclusion
The draft rules are open for public comment until August. As written, they would require that industry blacklist and social credit rules comply with them by the end of 2021 or be invalidated. Much of what they say is positive, but not groundbreaking in that they largely restate principles that were always in place or were emerging in practice over the past several years. Moreover, the draft, like much national level authority is quite vague, leaving room for future problems. The required national catalog of public credit information or punishment lists, for example, are yet to be seen, nor are specific mechanisms and procedures for credit restoration and corrections. The requirements that all standards and rules for punishments be made public may ultimately be among the most concrete improvements- allowing monitoring and analysis of the systems’ evolution.
Most critically, the main purpose of the draft is to harmonize social credit with China’s existing legal system, and while ‘legality’ should be a minimum requirement, it is no panacea. Many laws creating obligations or prohibiting conduct in China are unclear or easily abused. Others, that criminalize speech such as mockery of the national anthem are simply unjust. Limiting social credit to the enforcement of such laws, can’t improve those underlying laws.
Thank you for the article.
A multipolar world requires strong nation states that work in the interests of their people first, be it economic, social, health, spiritual or environment.
So a strong China and strong Chinese alternatives to western options is great. And a hopefully in years to come we will once more see a strong global presence for Russia, hopefully with good Slavic orthodox values.
If Xi does what some suspect and restores tradtional Chinese values, that would be great. Just as Trump id pushing for the team to restore traditional western values, real values, not political science thought control. As Russia has been doing under Putin.
Beneath the rhetoric, let us hope all these countries and others as well progress for the benefit of their people.
Regarding TikTok:
If the Central Government allows TikTok USA to be sold or if all of TikTok outside China is sold, and it will be sold under the conditions Trump has set, at bargain discounted price—Some say $5 billion for a $50 billion dollar market value—it is a punch in the face of President Xi and Chinese Technology Sector.
I think that this “smash and grab” thievery is almost as face-losing as the pending recognition of Taiwan by the US (and many other nations to follow) as an independent nation.
The Chinese cannot allow this “sale” to go forward. It’s not about the financial extortion. It is about access to US market for any Chinese business. It is the lock on the gateway door to the US market for Chinese products, services and capital.
If the US wants to shut the door, let them do it in one act. Slam it closed. And perish, isolated from the Chinese and Eurasian markets, talent base and coming technologies that Chinese minds will produce.
It is Chinese financial capital that has enriched America’s economy. Donald Trump’s wealth is based partially, and significantly, with Chinese tenants and condo purchasers throughout his Trump Properties. The Bank of China is a tenant of Trump Tower.
China is the winner of decoupling. It has already found many substitutes for the food imported from America.
It is shut off from high tech purchases and licensing.
What does it lose from decoupling? It’s citizens can’t come and spend money at high end malls, pay a premium for everything they buy or send their children to Liberal Universities where family values are attacked and deviant behavior is encouraged.
China is being attacked (at war levels) in a hybrid array of full global dominance (“maximum pressure”). The technology war is the US’s last hope of stopping China’s rise.
Draw the line at TikTok. Let Trump shut it down.
The result before the election is 85,000,000 American TikTok users will turn against Trump and his re-election. It just might result in the end of Trump, Pompeo, Navarro and the virulent Sinophobia virus.
Giving in feeds the beast. Never surrender. Trump and the USA are at their weakest. Beat them with their own cudgel.
Larchmonter,
I’m not so sure that the end of Trump will mean the end of Sinophobia. I think the ‘phobias come from a much deeper, permanent part of the government. Until the entrenched warmongers are exposed and expunged, the warmongering will continue.
If Trump loses, I expect a resurgence of globalist ambition and ‘diplomacy’. Not that it will achieve anything, but at the very least, it will let all the old-school war criminals off the hook.
If Trump wins, I don’t expect any real swamp-draining, but I do expect him to continue to expose the mongers, whether deliberately or accidentally.
I had hoped people would think about the topic, the punch in the face, decoupling being the essence.
To deal with the sidebar of Sinophobia, I specifically wrote “virulent Sinophobia”. That is the visceral spew from Bannon, Navarro,Fox News, and the other bandwagon voices. It is irrational but purposeful. They are correct in one aspect—China is outpacing the US and will eventually in 10-20 years surpass it as #1 in Economic power and Technology.
Now, to military warmongering. This is mostly from US Naval Intel and PACCOM (now INDOPACCOM) brass who would love a grand Coral Sea 2.0 battle to destroy PLAN vessel on the seas. However, no one, except some Marine 4 stars want any land war. The Marines think they can defeat the PLA on some islands. That kind of warfare is in the movies. China is a missile-based military. This means the US Navy has to standoff 1000 km from the Chinese naval forces or missiles from the mainland will decimate the carrier task forces within that range.
There won’t be any war in SE Asia or East Asia. This area now has a circuit breaker, Russia. Russia is building a naval presence, expanding its aerospace arm, has basing rights in the zone in Vietnam and has long range radars that cover a lot of the zones, and submarines the US is having issues tracking.
The signals from China and Russia to the US military is very clear. You can walk and talk like the Hegemon but the days of regional hegemony are over. ASEAN nations are not accepting it. All these nations want prosperity not hegemony and military destruction.
This is why the hybrid war of sanctions, trade war, Infowar, cyberwar, proxies in Central Asia (ISIS and AQ), color revolution attempts in Hong Kong, hysterics about Tibet and Xinjiang and Inner Mongolia are on the front burner. Military action is a losing proposition for the US. They simply cannot win anything anywhere in the Asia Pacific.
China simply has to do what Russia does and tell the US to pound sand.
The Chinese government is far more free handed when it comes to private companies. Tiktok/bytedance is private. The Govt is unlikely to interfere. In this case, the owner, Mr Zhang, is one of those “western educated” idiots. As soon as Trump says jump, he says how high. He has no backbone, no guts, to go to the courts. He is just one of those super elites who got rich too easily. Fact is what Trump is doing is illegal, Zhang should have the resources to hire big time lawyers to fight this. Time is not on Trump side. Zhang does not seem to even have the slightest trust in the US legal system, despite his starry eyed admiration of the US. Sorry to say, he has money, but neither guts nor brains, so his fortune is sure to disappear. Everyone that he cones into Contact with from now on will know he is plain weak.
Taiwan is a Red Line for Beijing
I would love to see which “other nations” are stupid enough to recognize Taiwan as an independent country.
Taiwan is a red line issue for which Beijing is prepared to go to war, so if the US misculates in its provocations against China vis-a-vis Taiwan it will get a war.
And the US should know that if Beijing is forced to initiate military action in relation to Taiwan, it is a war that China is fully prepared for and will not lose and reunification will be assured.
This very issue about Taiwan might just be the catalyst that serves as America’s Suez “Canal Moment” – not unlike what happened to Britain in 1956, when the tottering British Empire overreached itself and graphically confirmed to the world that its days of unlimited power projection were over.
Are Americans really prepared to go to war with China over Taiwan?
Are US allies prepared to be dragged into a military confrontation with China to the detriment of their economies – or worst – on account of reckless US provocations against China?
Which country will go to war to back an international hooligan?
America is in irreversible decline and China’s rise is unstoppable. Therefore, no amount of sanctions, tarrifs, thefts or kidnappings by the US will stop what is inevitable.
The US still has time to decide to decline gracefully and adjust to the new geo-political realities, i.e. a multi-polar world or it can continue along its present path of provocation, chaos, hooliganism, banditry and destruction.
“Failure to bend will lead to breakage” – Ps, thats not an old Chinese proverb, I just made it up.
Selah
Well put, S-400. A few thoughts of mine;
”I would love to see which ’other nations’ are stupid enough to recognize Taiwan as an independent country.”
Most ominously, Japan and South Korea spring to mind here. The ”solidarity” to be offered by other US lackey regimes around the globe is just a frill.
”This very issue about Taiwan might just be the catalyst that serves as America’s ’Suez Canal Moment’ ”
This could very well be the case, especially since all the colour revolution stunts in Beijing and HongKong ended up being resoundingly defeated. A similar misadventure involving the US Navy proper and a neighbouring region such as Taiwan will certainly ”call for consequences” but, again, US imperialism has two significant vassal states in the region, and that might cause serious trouble.
”Are Americans really prepared to go to war with China over Taiwan?”
Hell yes, they are. Or, rather: Taiwan is absolutely none of their concerns whatsoever (if they even know there is such a place called Taiwan to begin with). As always, the moronic US population thinks of its own well-being at the expense of the world’s peoples and the planet’s environment. So, as is always the case, the Pindos dearly yearn for all the repression, chauvinism, violence, and lawlessness they vote for and more. Militant parasites being riled up for all-out confrontation with China (and, really, the world).
”Which country will go to war to back an international hooligan?”
In addition to Japan and South Korea, I can imagine some real intellectual strongholds such as Poland, Ukraine, Georgia.
”America is in irreversible decline and China’s rise is unstoppable. Therefore, no amount of sanctions, tarrifs, thefts or kidnappings by the US will stop what is inevitable.”
It’s just not irreversible decline — it’s irreversible rot and decomposition. That is the reason the US has no other ”winning” option than ending human civilization altogether.
Here, the very best one of the included parts was the presentation by Nathan Rich about the case against Huawei’s CFO Meng Wanzhou. As usual, it’s plain judicial murder along the lines of explicitly political Western kangaroo courts and their ludicrous ’Trump:ed’-up charges. Moreover, the US neocons seem to have a compelling urge to beef up their hate-driven violent insanity with equally manifest physical ugliness; William Barr proves the case superbly.
What we are witnessing are the final spectacularly nauseating spasms of a dying parasite. The neocons are the perfect ideological expression of this terminal degeneracy.