Tag Archive for: China

Australia must take Southeast Asian reactions to AUKUS seriously

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When Australia announced the AUKUS pact together with the United States and United Kingdom, it knew that China would be hostile and France would be disappointed. Predicting the reaction in Southeast Asia would have been more difficult: views vary. From Australia’s perspective, its relations in the region have generally been good in recent years. So much so, that Jakarta even welcomed Canberra’s 2020 defence strategic update, though it foreshadowed Australia playing precisely the more regionally ambitious role that it is now pursuing.

While some countries, notably the Philippines and Singapore, were positive about the AUKUS announcement, statements from Jakarta and Kuala Lumpur reflected concerns that the AUKUS arrangement would contribute to a regional military build-up, raising tensions and making conflict more likely.

These perspectives don’t accord with Canberra’s strategic world view, so the temptation to dismiss them in various ways will be strong.

Most fundamentally, some will see Indonesia and Malaysia as strategically naive: China is launching new ships and submarines much faster than the US, let alone Australia. And a move like AUKUS that signals a strong US commitment to the region should help prevent China from dominating it, something every country is worried about. They’ll take comfort from the fact that the Philippines, one of the key claimant states in the South China Sea, is much more supportive, and that Vietnam is likely to be too.

Some will try to airbrush Southeast Asia out of the ‘Indo-Pacific’ entirely, pointing out that Japan and India, the two most consequential regional powers, are supportive of AUKUS.

And some will argue that the Indonesian reaction was ‘avoidable anxiety’—in other words, something that could have been prevented with better Australian diplomacy.

Others will say that private reactions, especially in the region’s defence ministries, which work closely with Australia and the US, are probably more positive than what’s being said publicly. They’ll point out that practical defence cooperation remains strong; actions speak louder than words.

Canberra must resist the solace of these approaches and take regional reactions to AUKUS seriously.

Regional views matter, because Canberra’s own defence strategic planning describes Australia’s cooperative defence activities with regional countries as ‘fundamental to our ability to shape our strategic environment’. It notes the importance of our defence forces maintaining operational access in the region, and of our being able to lead coalition operations when it is in the interests of the region that we do so.

In short, our ability to respond to plausible China-related contingencies in Southeast Asia depends on regional countries seeing that our interests align with theirs. Euan Graham’s account of the 2020 West Capella incident, involving the US, Australia and Malaysia, neatly illustrates this point. A US Navy strike group sailed close to the area where a Malaysian drillship, the West Capella, was being intimidated by a Chinese maritime force. Though the US intended a strong message of reassurance, Malaysia had mixed feelings about the intervention, fearing that the presence of any warships and vessels could increase tensions and raise the risk of conflict.

At the heart of these differing perceptions is this: Australians by and large see the US as a benign and moral actor, upholding the regional security order. By definition, its actions don’t destabilise the region. Some of our neighbours are more ambivalent, seeing both the US and China as contributing to a more tense and unstable region. These concerns were eloquently expressed by Singapore’s Prime Minister Lee Hsien Loong in his 2019 Shangri-La Dialogue address. That speech drew the ire of some Americans, who argued it was wrong to see the US and China as morally equivalent.

Taking this sense of moral equivalence seriously is not the same as agreeing with it. Australia should not resile from AUKUS or the idea that the full range of our security cooperation with the US is beneficial for the region. But because not all countries automatically agree, these benefits must be demonstrated, not merely asserted. This is why it’s so important for the US to participate in mutually beneficial regional economic arrangements, like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and continue to provide public goods, like vaccines.

A second, related opinion across the region is that AUKUS indicates an intention by outside powers to determine the future of the region, adding to fears that ASEAN’s influence and coherence are being eroded. This perception arose not because of the substance of AUKUS—an agreement to share defence technology—but because of its form, a loudly announced Anglosphere security partnership. That cannot be undone, but it has lessons for the way Australia talks about the extensive deepening of the US defence relationship envisaged in last week’s AUSMIN statement.

We shouldn’t exaggerate the degree of negative opinion in the region about AUKUS. But if there’s any uncertainty, the prudent course of action would be to assume that concerns are real and deeply held, not to blithely hope that ultimately Southeast Asia will come around to our way of seeing the world.

Can Xi end China’s gilded age?

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Within the span of a generation, a new super-rich class emerges from a society in which millions of rural migrants toiled away in factories for a pittance. Bribery becomes the most common mode of influence in politics. Opportunists speculate recklessly in land and real estate. Financial risks simmer as local governments borrow to finance railways and other large infrastructure projects. And all of this is happening in the world’s most promising emerging market and rising global power.

No, this is not a description of contemporary China, but rather of the United States during the gilded age of roughly 1870 to 1900. This formative period of American capitalism is remembered as ‘gilded’, rather than ‘golden’, because beneath the veneer of rapid industrialisation and economic growth, many problems festered.

Public backlashes against the gilded age triggered wide-ranging economic and social reforms that ushered in the progressive era that ran approximately from the 1890s to the 1920s. This domestic revolution, along with imperial acquisitions abroad, paved the way for America’s rise as the superpower of the 20th century.

China is currently passing through a similar—though certainly not identical—phase. After coming to power in 2012 during China’s own gilded age, President Xi Jinping now presides over a country that is far wealthier than the one ruled by his predecessors. But Xi also must confront a host of problems that come with a middle-income, crony-capitalist economy, not least corruption. As he warned in his maiden speech to the Politburo in 2012, corruption ‘will inevitably doom the party and the state’.

Over the past few decades, China’s economy has soared alongside a particular type of venality: elite exchanges of power and wealth, or what I term ‘access money’. Beginning in the 2000s, the incidence of embezzlement and petty extortion fell as the government built up its monitoring capacity and enthusiastically welcomed investors. But high-stakes graft exploded as politically connected capitalists plied politicians with lavish bribes in exchange for lucrative privileges.

Along with cronyism came rising inequality. Since the 1980s, income inequality has risen faster in China than in the US. China’s Gini coefficient (a standard measure of income inequality) exceeded America’s in 2012. And Chinese wealth inequality is even wider than income inequality, because those who accumulated assets during the early growth stages realised enormous gains.

A third problem is systemic financial risks. In 2020, the finance ministry warned that local government debt was approaching 100% of all revenues combined. If local governments default, the banks and financial institutions that loaned them massive sums will be exposed, potentially setting off a chain reaction. And it is not just government finances that are in trouble. China’s second-largest property developer, Evergrande, is US$300 billion in debt and nearing insolvency.

These simmering crises should not be viewed in isolation; rather, they are interconnected parts of China’s gilded age. Corruption in the form of access money spurred government officials to promote construction and investment aggressively, regardless of whether it was sustainable. Luxury properties that enriched colluding state and business elites have mushroomed across the country, while affordable housing remains in short supply. Those with political connections and wealth have easily reaped outsize profits through speculative investment.

Likewise, in the digital economy, what was once a free-for-all arena has consolidated around a few titans that can easily crush smaller players. Factory workers are being replaced by gig workers who toil long hours with scant labour protections. Fed up with excessive materialism and the rat race in society, young people are protesting by ‘lying flat‘ (ceasing to strive).

The decadence of China’s gilded age poses multiple threats for Xi. Corruption, inequality and financial meltdowns can trigger social unrest and erode the legitimacy of the Chinese Communist Party, given its promise of equality and justice. These problems—particularly elite corruption, which enriches rival factions—all undermine Xi’s personal hold on power.

Thus, Xi is determined to take China out of its gilded age, both to save the CCP and to cement his own legacy as the leader who will deliver the party’s ‘original mission’. Whereas Deng Xiaoping aspired to make China rich, Xi says he wants to make China clean and fair as well.

In the last two months, Western investors have abruptly awoken to Xi’s calls for ‘common prosperity’. But Xi’s socialist mission actually began in 2012, when he vowed to eliminate rural poverty and simultaneously launched the largest anti-corruption drive in the CCP’s history. Xi has maintained these campaigns despite the pandemic, and he proudly proclaimed in 2020 that his poverty alleviation targets were achieved on schedule.

More recently, these campaigns have extended into a wave of regulatory crackdowns on big tech companies, bans on private tutoring, caps on house prices, and a clampdown on rich celebrities. To top it off, Xi has personally exhorted the rich to share their wealth with society.

America’s gilded age provides a historical lens for making sense of Xi’s actions. All crony-capitalist economies, no matter how fast-growing, eventually run into limits. If American history is any guide, the problems facing China today do not necessarily spell doom. Much depends on what policymakers do next. If the problems are tackled appropriately, China, too, can move from risky, unbalanced growth to higher-quality development.

But whereas the American progressive era relied on democratic measures to fight crony capitalism—for example, through political activism and a ‘muckraking’ free press that exposed corruption—Xi is attempting to summon China’s own progressive era through command and control. The world has yet to witness a government successfully overcome the side-effects of capitalism by decree.

Decades earlier, Mao Zedong tried to command rapid industrialisation and failed disastrously. The lesson is that because top-down orders can and do backfire, they must not be relied upon as the solution to all problems. If excessively and arbitrarily applied, bans and edicts will diminish investor confidence in Chinese leaders’ commitment to rules-based markets.

Progressivism in America laid the domestic foundation for the country’s international primacy in the 20th century. Whether Xi can order China out of the gilded age will determine the continuity of China’s rise in the 21st.

From the bookshelf: ‘China coup: the great leap to freedom’

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Could Xi Jinping be toppled by a coup d’état? In China coup, Roger Garside describes precisely such a scenario—a coup mounted by Xi’s rivals to push him into retirement prior to the November 2022 national congress of the Chinese Communist Party at which he expects to be extended for another five years as general secretary, or perhaps even anointed as chairman for life.

Garside has had an illustrious career in the financial sector and as a diplomat, including two stints at the British embassy in Beijing. In China coup he applies his extensive experience to map out a plausible scenario for Xi’s ouster.

The coup is led by Xi’s rivals in the top leadership, Premier Li Keqiang and Politburo Standing Committee member Wang Yang, respectively the second- and fourth-ranking members of the CCP. They are supported by Vice President Wang Qishan and several top generals. The coup leaders strongly rebuke Xi for his misguided policies, force him to take immediate retirement and nominate Li to replace him. Significantly, they also initiate political reforms to put China on the path to democratisation.

China seeks to portray itself as a political monolith whose leadership enjoys unquestioning support. In reality, its political divisions run deep. To put Garside’s coup scenario in context, one needs to go back to the 2007 party congress, which decided who would take over from party secretary Hu Jintao in 2012. At the start of the congress, Li Keqiang, a reform-minded member of the Communist Youth League faction, was the frontrunner, strongly supported by Hu. The number two slot of premier was intended for Xi. Following much infighting, however, Li lost out to Xi, who at the time was backed by Hu’s predecessor Jiang Zemin.

Once Xi rose to power in 2012, he reduced the membership of China’s key decision-making body, the Politburo Standing Committee, from nine to seven and loaded it with his own supporters. As a result, Li and Wang Yang are the only committee members who belong to the reformist ‘opposition’. During his nine years in power, Xi has made every effort to marginalise Li, even stripping him of the finance portfolio traditionally held by the premier. He has also limited the role of ‘opposition’ institutions, in particular Hu’s and Li’s power base, the Communist Youth League.

Xi’s subsequent moves to bolster his own position and build a personality cult have aggravated party elders and regular Chinese alike. A recent essay by retired premier Wen Jiabao that was seen as indirectly critical of Xi faced widespread viewing restrictions, while the recent introduction of ‘Xi Jinping thought’ in the school curriculum has caused consternation among Chinese parents.

Xi’s campaign to weed out corruption—and political opponents—has gained him many enemies, as have moves to reshape China’s business, political and cultural landscape. China’s regulators have recently imposed strict conditions on large companies in the tech, online education and video gaming sectors, in the process wiping out a significant portion of their market value. New restrictions on ‘socially harmful behaviour’ have also proved unpopular.

The events in the first and last chapters of Garside’s book are fictitious, although the characters are real. The rest of the book discusses China’s myriad problems and Xi’s shortcomings. Significantly, Garside notes that Xi has moved China from authoritarianism to the brink of outright totalitarianism.

The coup described in the book is triggered by the threat of a financial war with the United States that would play havoc with China’s economy. But Xi’s ouster is intended to address a long list of grievances, bring about leadership change and usher in political reform.

Garside draws two important historical parallels. First, he reminds us of the disaster wrought on China by Mao Zedong through the 1958–1962 Great Leap Forward and 1966–1976 Cultural Revolution, suggesting that Xi’s increasingly hard-line state-driven policies could take China towards another disaster.

Second, Garside reminds us of the power struggle surrounding Mao’s death, and its relevance to the present day. When Zhou Enlai died in early 1976, eight months before Mao, widespread demonstrations in support of the popular premier were suppressed. The heir apparent, Deng Xiaoping, was then ousted, followed, after Mao’s death, by the arrest of the widely disliked Gang of Four, the short-lived reign of Mao’s chosen successor Hua Guofeng, and Deng’s comeback.

By further centralising power with himself, and without a clear heir, Xi could be setting China up for a repeat of Mao’s chaotic succession.

It is widely assumed that next year’s party congress will either extend Xi for a third five-year term as general secretary or, better still from Xi’s point of view, elevate him to his desired position as party chairman. The title has not been used since the days of Mao and is closely associated with his dictatorship.

Garside’s book serves as a timely reminder that there are deep divisions within the CCP, that many of Xi’s policies are vastly unpopular, and that he has powerful enemies among the party’s top leaders. Most importantly, Garside reminds us that the outcome of the 2022 party congress is not a done deal.

Military coup could cruel China’s plans for mining in Guinea

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On 5 September, Guinea’s special forces took control of the country, detaining the president, Alpha Conde, and suspending the constitution. Citing endemic corruption, human rights abuses and poverty, coup leader Lieutenant Colonel Mamady Doumbouya announced the next day that a new administration of ‘national union’ would be formed in the coming weeks.

During a scheduled press conference that day, a Chinese foreign ministry spokesperson said that Beijing was closely following developments and that it opposed the military unit’s actions and called for the president’s ‘immediate release’. What’s striking is Beijing’s break with its posture of ‘non-interference’, issuing such strong statements on a country’s domestic politics. In Guinea’s particular case, however, there are good reasons for China to pay close attention to political developments there.

The first is the extent to which Guinea’s coup impacts China’s long-term strategy to diversify its iron ore suppliers. Part of that strategy has involved turning to Africa. With two of Beijing’s top 15 suppliers—South Africa and Mauritania—already in Africa, Chinese companies are currently studying reserves in Algeria, Cameroon, Republic of Congo, Liberia, Senegal, Sierra Leone, Gabon, Nigeria and Madagascar.

However, Guinea is unique. A mineral-rich country, its 100-kilometre-long Simandou mountain range holds an estimated 8.6 billion tonnes of iron ore graded at more than 65.5%, seen to be one of the world’s last untapped high-grade reserves. The Guinean government had leveraged Simandou’s potential for Chinese investment in a major 650-kilometre railway project, a deep-water port and related facilities as part of China’s Belt and Road Initiative.

Thus far, Beijing has been reluctant to bring Australian iron ore imports into its campaign of economic coercion against Australia, in which the beef, barley, lobsters and wine industries have been badly hit. While some analysts say Guinea represents ‘one of the best medium- to long-term solutions to reduce dependency’ on Australian iron ore and others caution it’s not big enough to free China from its reliance on Australian supply, Guinea’s reserves carry the potential to give Beijing some leverage.

Guinea’s potential still depends on a few factors. For one, it’s not clear that the coup leaders and interim administration will honour agreements signed with Chinese companies under the previous government. One such agreement, signed between the Conde administration and the SMB-Winning consortium in June last year, allows the Chinese–Singaporean–Guinean group to acquire the mining rights to two blocks in the north of Simandou worth roughly $19 billion.

Plans to develop Simandou have stalled over the past two decades due to corruption and fluctuating levels of interest, despite the involvement of a number of mining companies and investors (Rio Tinto was the first foreign investor given a licence to explore in 1997). If China is prepared to double down on Simandou, it will have to pay up to $20 billion over the next five years to develop the infrastructure and mine. As one analyst noted, ‘in these tenuous times China appears ready to make that investment’.

Domestic factors in China like cuts to steel production, restrictions on pollution and the precarious financial situation of large property developers will also shape Chinese purchases of Australian iron ore. The coup adds greater uncertainty for now to Beijing’s plans.

In addition to iron ore, China is also worrying about disruption to its supply of aluminium. As the world’s second largest supplier of bauxite, Guinea meets 55% of China’s demand for it. With fears that the political turmoil could disrupt supply, the price of aluminium hit a 10-year high on the day after the coup. For now, mining companies are exempt from Guinea’s nationwide curfew; however, the status of operations on the ground remains unclear. Some operators said it was business as usual, while other companies did not confirm. If that situation changes, Canberra and Jakarta could benefit. Together with Guinea, Australia and Indonesia comprise 99% of China’s bauxite purchases.

With those key commodities in mind, there are legitimate concerns in China about Guinea’s future economic and political stability. While there has so far been no resistance from other army units, including the presidential guard, risks remain. A Chinese official with the economic and commercial office of the Chinese embassy in Guinea warned of several factors including a general economic slowdown. While Conde’s removal has been celebrated by some Guineans, if coup leaders are unable to satisfy both his supporters and opposition camps, the risk of public unrest remains. Violence erupted and 21 people were killed after last year’s presidential election in October. Shops were closed, and internet and telephone networks severely disrupted or shut down for a few days.

China has called for the president’s release, but that would do little to address the waning public confidence in Guinea’s political system. The country’s democracy was already under siege before the coup. Last year’s legislative election and constitutional referendum were postponed for two weeks after ​​the Organisation internationale de la Francophonie, an organisation of French-speaking governments, raised concerns about 2.49 million ‘problematic’ entries on the electoral roll.

But Guinean public support for the ousting of the president should not be thought of as support for military rule. Memories of brutal periods of military intervention run deep. In September 2009, soldiers killed 157 unarmed coup protesters in a stadium, leaving 1,253 wounded, with 109 women raped or sexually abused.

Chinese state media network CGTN aired the statement of a Guinean government spokesperson who was ‘worried’ about bilateral ties with China, calling on ‘everybody to work together to save this cooperation’, particularly on current and future projects. And yet, despite its massive and concerted investment in infrastructure, emerging markets and even peacekeeping across the African continent, it seems there are few levers Beijing can pull in order to substantially influence political and military actors on the ground. Despite being ‘all in’ on Conde as a means of guaranteeing access to commodities, Beijing will have to invest anew in keeping Guinea’s new powerbrokers on side.

Australia must prepare as China’s coercive capabilities draw closer

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In a recent Lowy Institute paper, the Center for New American Security’s Thomas Shugart warns that China is building up its military capacity to coerce Australia directly, particularly in the event of US strategic retrenchment from the Indo-Pacific region.

He suggests a scenario in which China is successful in taking Taiwan; Japan and South Korea, sensing the waning of US power, then choose to be ‘Finlandised’ under Beijing. With the US ejected from East Asia, China can then wield an implied threat or actual use of force to coerce others, including Australia, to accept Chinese hegemony.

This scenario is open to challenge. It seems unlikely that Japan would quickly accommodate an aggressive China and nor is South Korea likely to accept becoming a mere tributary state. It’s more likely that key US allies in the Indo-Pacific, including Australia, would work to strengthen their defence and security relationships with Washington through greater burden-sharing, including through multilateral groups such as the Quad. It’s not in the US’s interests—or those of its allies—to cede a large strategic space to a rising China, because, as Shugart notes, further demands will soon follow.

Shugart’s analysis is solid on the military challenges that China presents to Australia, especially in the event that the US isn’t able or willing to maintain a forward presence in the region. He correctly observes that the People’s Liberation Army’s conventional missile capabilities, particularly the PLA Rocket Force’s DF-26 and emerging air-launched systems including air-launched ballistic missiles (ALBMs), can target key military facilities across Australia’s north and northwest. The PLA’s naval capabilities and the growth in China’s maritime militia and coastguard, Shugart notes, are increasing the risk that Beijing could apply indirect military pressure on Australia by blockading key sea lines of communication if the US withdraws from the Indo-Pacific over the next two decades.

Australian defence planners need to start thinking about these two military challenges more seriously. Considering the missile threat first, our key defence facilities across the north and northwest are largely undefended and vulnerable to long-range Chinese missile systems. As Shugart argues, if China were to deploy the DF-26 onto Hainan island, it could reach Western Australia’s North West Cape, the Darwin and Tindal regions in the Northern Territory, and Royal Australian Air Force Base Scherger in Queensland. The PLA Air Force’s H-6N bomber, carrying the CH-AS-X-13 ALBM, could extend that threat envelope south to cover other major Australian defence facilities including Woomera in South Australia, Fleet Base West near Perth, and HMAS Cairns and RAAF Base Townsville in Queensland. Add in future growth of China’s naval capabilities, including more advanced submarines equipped with land-attack cruise missiles, and the missile threat to Australia looks set to become more acute.

Defence projects AIR 6500 Phase 2 and LAND 19 Phase 7B are considering medium-range missile capabilities suited for defending expeditionary joint forces rather than a continent. There are currently no plans for a dedicated ballistic missile defence capability against longer range, higher speed threats such as the DF-26 or ALBMs.

There are risks in considering more expansive ballistic missile defence, given its patchy success in carefully managed tests and the huge costs associated with developing such a capability. Creating a true national missile defence network is likely beyond Australia’s ability. But a more focused defence of critical facilities in our north and west against long-range threats is worth considering. That might involve building a network of land- and sea-based interceptor missiles, exploring the option of acquiring Aegis Ashore, and extending our anti-access and area-denial capability using forward-deployed interceptors. Those capabilities would need to be matched by enhancements now underway to the Jindalee over-the-horizon radar network, and that in turn could be complemented by a space-based multinational missile early warning system to boost defences against hypersonic weapons.

The goal would be a more potent, longer range defence of critical military facilities in our north and northwest, as well as essential facilities such as Pine Gap and Fleet Base West. Such a system should be developed in partnership with the US and Japan and be designed for growth in numbers of interceptors and integration of new technologies.

At the same time, it makes sense to harden our northern military facilities and start thinking about how we might employ dispersed military forces more effectively to complicate an adversary’s planning. In spite of the fact that $1.6 billion is being invested to upgrade RAAF Base Tindal, the infrastructure there won’t include any true hardened aircraft shelters. Planners also might want to think about how to better defend Jindalee’s sensors from missile strikes.

Shugart’s suggestion that China might use a naval blockade ironically represents a far larger problem for Australia because Beijing could interdict critical maritime commerce at much greater distances from our shores, well within its anti-access and area-denial envelope. China could bring the full weight of its maritime forces to bear against Australian commercial shipping—though most of the vessels would be foreign-flagged—quickly cutting off vital supply chains including essential fuel supplies. The most effective way to achieve this would be to seek to control chokepoints in maritime Southeast Asia from forward bases in the region, using a combination of grey-hulled PLA Navy and white-hulled China Coast Guard vessels.

Australia would find such a blockade virtually impossible to break given the small size of its navy. While boosting the size of the navy would be a welcome move, our fleet could never match China’s ship for ship. The solution to counter any Chinese intimidation lies in part with building better multilateral maritime and defence cooperation with key partners in the region, notably, Japan, India and the countries of Southeast Asia. At the same time, Australia should reduce its dependency on overseas supply chains, including for fuel and energy.

Underpinning all these steps must be moves to strengthen ties with the US and reinforce Washington’s commitment to the Indo-Pacific region. As long as the US remains an Indo-Pacific power, China’s power to coerce will be constrained.

Time for less rhetoric and more substance from Australia–South Korea ministerial talks

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There’s been a strong focus on the upcoming AUSMIN talks between Australia’s defence and foreign ministers and their US counterparts and calls for Australia to press the US robustly to deliver more substantive Indo-Pacific and defence exports policies.

That has to some extent overshadowed important meetings with Indonesia, India and South Korea that are about to take place and which approach the same issues from a different direction.

Next week’s meeting of Australian and South Korean foreign and defence ministers, the fifth in a series, provides an opportunity to lend more content to the process. That’s made easier because both are capable US allies, both belong to the Indo-Pacific and are substantial trade partners, and both face some similar geostrategic challenges. In the wake of the poorly planned and executed US departure from Afghanistan, calls among NATO partners in Europe, and allies in Asia and Australia, for greater self-reliance and regional coalition-building have grown. The Australia–Korea 2+2 meeting is an opportunity to give this some substance.

When a less capable South Korea faced the continuing North Korean threat, it couldn’t have been expected to focus much beyond the peninsula. But that has changed, and South Korea today has the capability, if not always the intent, to undertake wider missions supporting stability in the Indo-Pacific and elsewhere. It’s become a significant participant in UN peacekeeping and US-led counter-piracy operations in the northern Indian Ocean.

But as a RAND Corporation study argued in 2019, ‘South Korea’s defence cooperation is often seen as more piecemeal than as part of a consistent strategic approach to foreign policy aimed at binding the Indo-Pacific together; expanding the ROK’s [Republic of Korea’s] influence; and reinforcing shared norms, values and intents.’

There are two parts to this problem. Each new Korean administration seems to find it politically necessary to ditch foreign policy initiatives of its predecessor and to embark on new ones. Hence, in 2017 the Moon Jae-In administration’s ‘New Southern Policy’ replaced its predecessor’s ‘Northeast Asia Peace and Cooperation Initiative’. A consistent strategic approach is a casualty of Seoul’s sharply divided left–right politics, lessening its influence and, in the case of the NSP, is more about trade competition and diversification than about Korea pulling its strategic weight with its like-minded partners.

The other part is the imperative Korea feels to be seen to ‘balance’ between China, its biggest trade partner and near neighbour, and its longstanding ally the United States.

Like Australia, Korea has felt the harsh impact of Chinese economic coercion, with far-reaching measures imposed following its 2016 agreement to host a US THAAD anti-missile battery. And Seoul, correctly, considers Beijing to be critical in managing the ever-present North Korean threat.

But Korea’s balancing act can minimise the importance of its other regional interests, including the critical sea lines of communication through the South China Sea, along which much of the country’s highly trade-dependent imports and exports flow.

Its inability to heal historical rifts with Japan also inhibits the development of cooperation with Japan, the US and others which might serve to better monitor and balance China’s assertive policies in North and Southeast Asia.

More of South Korea’s friends are stepping up in East Asia to respond to the challenge of China. Australia, France, Germany, the Netherlands and the UK have all recently sent naval units to the region.

Pressure is mounting on Korea, not least from the US, to play a more supportive role in ensuring a free and open Indo-Pacific. Moon’s reluctant preparedness to associate with the non-military elements of the Quad responded to this pressure. Korea’s ambassador to Australia recently acknowledged that the Quad is an ‘important anchor for stability’, but Korea remains wary of military arrangements with others that could provoke further Chinese anger.

All four previous Australia–Korea 2+2 meetings have been marked by lengthy joint statements of shared views on a wide range of contemporary issues and wordy, generalised commitments ‘to strengthen cooperation to address current and evolving security in an increasingly uncertain strategic environment’, to ’work to address challenges’ and to ‘continue identifying opportunities for further collaboration in areas of mutual interest’.

Strategic dialogues and service-to-service talks seem at times to be a substitute for real work on interoperability and common purpose. It’s difficult to discern from the biennial blizzard of diplomatic speak whether much progress has in fact materialised from these earnest declarations over the past eight years.

A memorandum of understanding on defence research, development, testing and evaluation was signed in 2019, with potential work on maritime robotics identified. Korea participated, at a very modest level, in Australia’s Exercise Talisman Sabre this year. Both are certainly small steps forward. The biennial naval anti-submarine warfare exercise Haedoli Wallaby continues to be the centrepiece of bilateral defence exercising. But there hasn’t been much interest on either side in expanding the scope or frequency of exercises or service-to service collaboration outside of the separate UN Command annual exercises.

Meanwhile, Australia has committed to purchasing 30 Korean self-propelled howitzers, and Korea’s Hanwha is one of two companies bidding for Australia’s next generation of armoured personnel carriers. But as the RAND study noted, Korea’s defence exports are not coordinated or promoted as part of a broader strategic policy. A serious promotional effort might include proposals to lift the level of ambition in the defence relationship.

As in Australia, Korean public opinion has turned decisively against China, running well ahead of government policy. A conservative administration in Korea after next year’s presidential election could be more receptive to expanded defence relationships, even if formal accession to the Quad may still be considered a step too far and likely to further provoke China.

Australia has yet to take South Korea more seriously as an important element in our declared intention to build our regional defence relationships. The rapidity of strategic change both countries face in the region suggests now might be the time for them to seed substance into the 2+2. Another year of pious declarations of ‘identifying opportunities’ or ‘seeking to enhance training and exercises’ without real content devalues the currency and raises questions about commitment on both sides.

After Afghanistan: time for the Quad to take centre stage

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The defiant words of that old rabble-rouser Thomas Paine provide a fitting rallying cry for Western leaders after the US-led retreat from Afghanistan and the return to power of the Taliban.

The West now faces a witches’ brew of complex and daunting strategic problems crowding in on it, magnifying and deepening Western anxieties. So leaders might take comfort from Paine’s famous ‘Common sense’ pamphlet addressed to the continental army fighting for American independence in 1776.

‘These are the times that try men’s souls,’ Paine wrote. ‘The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country; but he that stands by it now deserves the love and thanks of men and women. Tyranny, like hell, is not easily conquered, yet we have this consolation with us, that the harder the conflict, the more glorious the triumph’.

Certainly US President Joe Biden, UK Prime Minister Boris Johnson, Australian PM Scott Morrison and those of their ilk have faced times that have tried their strategic souls. They have faced a devastating pandemic and accelerating climate change while fighting the Taliban in vain for the future of Afghanistan. At the same time, violent Islamist terrorism has been an ongoing, often bloody, threat.

And throughout it all the United States, leader of the liberal democratic West, has been increasingly mired in deep political divisions that brought the country close to violent insurrection and political gridlock in the dying hours of the appalling Donald Trump presidency.

At the same time, China’s coercive military, political, diplomatic and economic policies have complicated the democratic will. While resisting China’s efforts to dislodge US-led power in the Indo-Pacific region, Western leaders and their Asian allies have struggled to manage other challenges clearly beyond the capabilities of summer soldiers and sunshine patriots.

For Australia, and others, threats posed by Chinese aggression and by America’s domestic difficulties are the gravest of these challenges. But the cumulative effect of the challenges, and their tendency to act on each other with unexpected consequences, makes the current global environment especially perturbing. A question arises: how many such crises can modern nations, with all of their political, diplomatic, economic and military resources, handle simultaneously before a fatal miscalculation occurs?

Among other things, largely futile international efforts to trace the origins of the Covid-19 virus from Wuhan in China have increased tensions between Beijing and Western powers. Now the US retreat from Afghanistan, and US dysfunctional domestic politics, have inevitably raised doubts about the future value of Australia’s alliance with the US. The international push to cut carbon emissions has intensified the effects of China’s economic bullying of Australia, notably its trade sanctions against Australian coal exports.

At the same time, a surge in Islamist terror attacks worldwide is being widely predicted following the US retreat from Afghanistan. Whatever the incoming Taliban regime says about ruling peacefully, it is a vicious movement with a record of shameless oppression and violence;. The Taliban respects no human rights and will do nothing to oppose Islamist terror that is not directed at themselves.

Tyranny, as Paine said, is not easily conquered. So how might democracies and their allies most effectively resist and contain the threat from bullies and extremists now strutting the global stage? In fact, the democracies are well placed to push back if they can muster the will to expand embryonic institutions that are already in place and (most importantly) if they can gain the active engagement of the US after the Afghanistan debacle and Trump’s dangerous post-election lies.

Buoyed by its rising power, China rejected the authority of liberal international forums when it dismissed the 2016 ruling by the Hague-based Permanent Court of Arbitration that Beijing’s claims to most of the South China Sea lacked any basis in international law.

Since then, there has been an international tendency especially by timid Indo-Pacific states to appease China by maintaining silence about the 2016 judgement. The alternative (provided that the US and its allies and friends are prepared to be more than sunshine patriots) is to balance China’s power by creating an alliance so formidable that Beijing will realise that its interests will be better served by moderating its attacks on the rules-based global order, the liberal trading system and freedom of navigation through the Indo-Pacific region.

Such an alliance, happily, exists already in embryo. The Quadrilateral Security Dialogue between the US, Japan, Australia and India is an initiative created to balance Chinese aggression, but it needs to be larger, stronger and more focused. First proposed in 2007 by Japan’s prime minister, Shinzo Abe, the Quad has conducted joint military exercises and held meetings with New Zealand, South Korea and Vietnam. Its creation and doubtless its potential military strength prompted China to declare that it ‘openly incites discord’.

Yet enlargement of the Quad is an entirely reasonable response to China’s predatory and threatening attitude towards powers including the US, Australia, Canada, New Zealand, the Philippines, Malaysia, Taiwan and Vietnam. The time for appeasement and ambivalence is past. The complex global environment—including the evolving China–Russia axis—now requires an expanded Quad to balance the activities of authoritarian powers.

Perhaps significantly, the Quad has already cautiously started to consider wider challenges by pledging this year to respond to the Covid-19 pandemic. It also has obvious interests in building cooperation on addressing global warming, terrorism and other issues haunting the international order.

Forging an expanded Quad will be difficult given China’s predictable coercive responses. But in Paine’s words, this is no time for liberal powers to shrink from service to country and (he might add) to human rights. Nor may Western powers seek the love and triumph evoked in ‘Common sense’, but the loss of Afghanistan magnifies the need for a free and open Indo-Pacific and a rules-based maritime order in a chaotic world.

International security relations have always been anarchic terrain. There is no Leviathan to keep order, but now, post-Afghanistan, an expanded Quad could help modify, perhaps ameliorate, the multiple threats that are trying people’s souls in a troubled world.

Helmsman Xi takes China back to the future

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The general secretary of the Chinese Communist Party, Xi Jinping, has been inspired by his own scrupulously scripted celebrations of the party’s centenary in July to drive China back towards the future.

He has moved swiftly as the party’s second century starts, intensifying the core programs already underway to rein in the private sector and especially its most successful entrepreneurs. Xi is also reconstructing school and university curricula to focus on CCP dogma and ‘Xi Jinping thought’, and has striven to build support in the ‘masses’ beyond the party to return China to Mao-era party verities.

Thus, Xi anticipates, an unstoppable demand from inside and outside the CCP will insist on his reappointment for a further five-year term and effectively for another decade, at the 2022 party congress, which will also fully endorse his top priority: to ‘stay true to the Party’s founding mission’.

The politburo has announced that the sixth plenum of the 19th party congress will meet in November, because, ‘A review of the major achievements made and the historical experience accumulated during the Party’s 100 years of endeavor is needed for the new course of fully building a modern socialist country … and for upholding General Secretary Xi Jinping’s core position at the CPC Central Committee and in the whole Party, as well as the authority of the Party’s Central Committee and its centralized, unified leadership.’

So, ‘reviewing’, especially of history, is to be entrenched as a core priority.

The new economic and social goal is to build ‘common prosperity’ as ‘the essential requirement of socialism,’ Xi said in August. ‘Unreasonable incomes’ are to be ‘rectified’. A swathe of China’s leading-edge industries, including information technology, ride-sharing, e-commerce and education provision, have been hit by new state-imposed constraints, and Chinese equities have lost a trillion dollars in value.

The politburo announced that ‘the Party’s leadership’ in all educational institutions would be strengthened. As an early outcome of this, school-age children are to be banned from playing video games during weekdays, and allowed an hour a day on Fridays and weekends, by official order.

A WeChat post by Li Guangman that was republished, highly significantly, in all major official media channels, including the People’s Daily and Xinhua, said that while the new party campaign wouldn’t ‘kill the rich to help the poor’, the government needed to ‘combat the chaos of big capital’.

Li wrote: ‘Each of us can feel that a profound social change has begun … It is necessary not only to destroy the decadent forces but also to scrape the bones and heal the wounds. A profound change or revolution is taking place in the economic, financial, cultural and political fields. This is a return from the capital clique to the masses, and a change from capital-centred to people-centred. All those who block this people-centred change will be abandoned. This profound change is also a return, a return to the Party’s initial aspirations … to the essence of socialism.’

He said: ‘This change will wash away all the dust: capital markets will no longer be a paradise for capitalists to get rich overnight, cultural markets will no longer be a paradise for ‘sissy’ stars … We need to build a lively, healthy, masculine, tough and people-oriented culture.’

This is a swift, natural elaboration on the manner in which Xi drove the party’s centenary. He didn’t stint on adjectives in his hour-long celebratory speech to the 70,000 invitees to Tiananmen Square to mark the event: Great. Glorious. Tenacious. Magnificent. Dauntless. Brave. Unstoppable. Of course, historic.

These are the attributes of a person, or an institution, that has now reached the top. But if we’re already witnessing peak party, what follows?

The CCP doesn’t seem in great need of such praise. It stands alone. There’s no organisation in China that doesn’t defer to it. Almost all social groups and businesses contain party branches. It controls the way history is understood, the way China itself is perceived, the way the world’s swirling trends are explained to the Chinese people. The mighty People’s Liberation Army is the party’s own army.

At the end of the spectacular The Great Journey show at Beijing’s Bird’s Nest stadium, Xi led all in standing to sing: ‘Without the Communist Party, there would be no new China.’ The CCP’s jealousy of any other source of morality, validation or history, and its fear of the broader Chinese people, have driven it to seek to consume China itself.

The picture that Xi painted in his crucial, intensely workshopped but also bloviated Tiananmen speech, as the party pivots from its tumultuous first century, is of a body also aptly described with other adjectives: Self-obsessed. Anxious. Domineering. Ritualised. Demanding.

The key question that the show, and Xi’s speech, failed to answer is, has the party anything new in its agenda or program, apart from Xi’s semi-protectionist ‘dual circulation’ aim to produce at home almost everything China’s economy needs?

Xi said in his speech about ‘the journey ahead’, his roadmap for China’s future, ‘We must uphold the firm leadership of the Party … work ceaselessly for a better life … rely closely on the people to create history … continue to uphold Marxism-Leninism, Mao Zedong Thought …’, through of course to his own ‘New Era’ thought:

We will … continue to develop the Marxism of contemporary China … We must follow our own path … adhere to the Party’s basic theory, line, and policy … accelerate the modernisation of national defence and the armed forces … promote the building of a human community with a shared future … strengthen the great unity of the Chinese people … keep firmly in mind the old adage that it takes a good blacksmith to make good steel [he did not add: and high-class Australian iron ore and metallurgical coal].

This all amounts to a pledge simply to keep on keeping on—with fresh energy injected, since the centenary events, into that core goal of restoring the primacy of socialism, especially in the economy and in educational institutions.

The party, Xi boasted, ‘is still in its prime’. His concluding toast in Tiananmen was: ‘Long live our great, glorious, and correct Party! Long live our great, glorious and heroic people!’—in that order.

The point of vulnerability is clear, in the somewhat strange, to outsiders, use of ‘correct’. Earlier, Xi had stressed: ‘We will not accept sanctimonious preaching from those who feel they have the right to lecture us.’ When the obverse of such a statement would clearly be considerably more surprising, that raises the question of why it was included—and indicates an area of anxiety.

That’s surprising, given the extent of the CCP’s controls over all forms of communication, offline and online, in China today. But it’s also suggestive of underlying vulnerability concerning the party’s insistence on monopolising the ‘correctness’ or not of every Chinese person’s view of the world, way of life and understanding of China’s story. Xi clearly views preaching or lecturing by non-CCP elements as potentially very attractive to Chinese people—some of whom may take a different view on what is ‘sanctimonious’—and thus especially perilous for the party. How long can the party keep this lid on?

‘The Party has no special interests of its own,’ Xi averred. ‘It has never represented any individual interest group, power group, or privileged stratum.’ Apparently the proletariat—now very much a minority among the CCP’s 95 million members—has been simply forgotten. It is the party that is now its own sole ‘special interest’, ‘power group’ and ‘privileged stratum.’

However assiduous, ubiquitous and popular the anti-corruption purge—now institutionalised—that brought Xi to power and that is keeping him there, and whatever the debt that many Chinese people feel they owe the party for providing the stability helping them to prosper, all acknowledge that the party is China’s ruling class, holder of all power and privilege. And Xi insists that the chief qualification for leadership, or even membership of the party, is to possess—as does he, the son of a Long Marcher—‘red genes’.

In Qiushi, the party’s ideological journal, Xi urged party members, ahead of the centenary, to ‘inherit red genes and pass on the red country from generation to generation’. The legitimacy of China’s rulers is thus to be derived from previous generations’ rule. We seem to have been here before in Chinese history.

The only references to reform in the speech were to acknowledge in passing its role in the previous Deng Xiaoping-inspired era.

The 2008 Beijing Olympics—also under the supervision of Xi, as vice president assigned that role—was the party’s party to celebrate its success in opening to the world.

But the 2021 centenary was marked by an entirely inward-focused series of events, slogans and speeches. In vast numbers of new TV series, special showings of party-venerating movies required twice weekly at cinemas, endless propaganda sessions at schools and universities, the Chinese population was reminded of the party’s glory. The members were involved most of all, including repeating their admission vows with fists raised, along with General Secretary Xi’s, at The Great Journey show.

Cai Xia, a former professor at the Central Party School in Beijing, has said that, under Xi, the party’s members are now reduced to being ‘slaves of his will’.

The great strides made under Xi to tighten, to the point of inseparability, the Party and China, and the Party and the Chinese people, make any challenge to the party or its history, ideology or leadership—as intended—appear to be a rebuke, threat or insult to China itself.

The very redness of China in 2021 makes any change seem impossible. But societies rarely stand still for long. Pressures build. Especially on bodies that parade their own peakness.

Most of the Xi generation, who were born in the People’s Republic and whose lives were turned upside down by the Cultural Revolution, have worked tirelessly to rebuild their families’ fortunes. They have focused fully on ensuring their own children—mainly, a single child—received the full education they were in many cased denied. They and those children have worked and saved hard, achieving a great and deserved surge in living standards.

But they, their children, and especially their grandchildren, aren’t going to want to keep this pace up forever. It’s inevitable that even some party members let alone members of China’s broader public—whose underlying culture is individualistic, and whose educative experience over recent decades has reinforced their natural curiosity about others’ lifestyles—start to feel exhausted by Xi’s constant exhortations, as in his centenary speech, to ‘ceaseless work’, to ‘great struggle’.

One of China’s 2021 online phenomena has been tang ping, which translates as ‘lie flat’. Young people have posted that they’re tired of the demands made on them. Another common Chinese meme is ‘996’—working from 9 am to 9 pm, six days a week—especially in the tech sector. They say they just want to chill, to enjoy the fruit of their family’s, and perhaps also their own, labour.

Their world is a million kilometres from that of party leader Xi, whose speech was punctuated in the original Chinese version by 49 exclamation marks. The official English translation permitted only three, providing a rather different sense of the tone.

Xi is girding the party up for one more big push—achieving per capita prosperity matching China’s east Asian neighbours, cementing global respect for it and for the PRC, and annexing Taiwan. China’s national income and the determination of its leadership indicate that some of these ambitions might be within their grasp.

But the PRC remains, as Chinese strategic academic Zhu Feng has described it, ‘a lonely rising power’. Without a successor in sight, Xi’s leadership will become an increasingly distracting issue now that he has centralised and personalised power so profoundly. And how can the party bridge the gap between Xi’s olde-worlde ideological focus and the tang ping generation?

Much work still lies ahead for the CCP as it enters its second century. This party that claims omnipotence and omniscience must fear any single failure all the more.

The domestic and international consequences of Xi’s political philosophy

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To understand the wave of ‘little pink’ ultra-nationalism washing across the People’s Republic of China, it’s instructive to examine ‘Xi Jinping thought on socialism with Chinese characteristics for a new era’.

Incorporated into the Chinese Communist Party constitution at its 19th congress in October 2017 and commonly termed ‘Xi Jinping thought’, Xi’s full report stated: ‘China must hold high the banner of socialism with Chinese characteristics for the new era … and work tirelessly to realise the Chinese Dream of national rejuvenation.’

‘Xi Jinping thought’ has significant implications for China’s domestic policy, its growing and strident nationalism, and for the global community. But why has Xi unleashed ultra-nationalist forces in China and what does this unleashing mean?

Xi’s report to the congress identifies China’s primary policy objectives: to ‘ensure and improve living standards through sustainable development’ to condone market ‘reform and opening’ and to encourage Chinese enterprises to ‘go out’, especially along the ‘Silk Road Economic Belt’ and the ‘21st Century Maritime Silk Road’. They are known together as the Belt and Road Initiative, which projects Xi’s philosophy globally.

Xi’s goal to build a ‘moderately prosperous’ society requires China to transition further from a command economy towards a socialist market economy by ‘innovation-driven development, rural vitalisation, coordinated regional and the military-civilian integration strategy’.

His report highlighted challenges including the creation of a modern public finance system, a fiscal relationship between central and local governments built upon clearly defined powers and responsibilities, deepening reform of the taxation system, institutional reform in the financial sector, and ‘building the military’. In fact, China’s military is already larger than those of Japan, South Korea, Taiwan and the countries of Southeast Asia combined, and challenges United States dominance in some areas. With its economic and military power, China seeks to forcefully influence international financial, legal and trade systems.

Under Xi’s leadership, the socialist rule of law with Chinese characteristics is the foundation for all legal reforms. From the CCP’s 2014 plenum, five general principles guiding law-reform processes were upheld: the leadership of the party, the dominant position of the people, equality before the law, the combination of the rule of law with the rule of virtue and the need for China to chart its own path.

The 19th party congress in 2017 then guaranteed the absolute leadership of the CCP through the official justification of the party constitution over the PRC state constitution. Socialist rule of law with Chinese characteristics can be interpreted as an instrument of the CCP leadership with the party said to reflect the will of the people.

Concerned about clear gulfs in theory and practice under Xi, Cai Xia, a former professor at the Central Party School of the CCP in Beijing, writes extensively about the course of Xi’s tenure, arguing:

The regime has degenerated further into a political oligarchy bent on holding on to power through brutality and ruthlessness. It has grown ever more repressive and dictatorial. A personality cult now surrounds Xi, who has tightened the party’s grip on ideology and eliminated what little space there was for political speech and civil society.

‘Xi Jinping thought’ attempts to unify economic and legal reforms, party discipline and the ‘Chinese dream’ of national rejuvenation. The dream extends to exerting global leadership and shaping international institutions to better reflect China’s great-power status. Beijing is explicitly interested in propagating China’s conception of law and legal practice internationally, establishing new legal standards and enforcing its interests through its own version of law.

The outbreak of the Covid-19 pandemic has seen China’s overseas diplomatic methods harden, with ‘wolf warrior’ diplomats becoming overtly aggressive and sometimes using coercive tactics to pursue CCP goals.

‘Little pink’ (or ‘xiao fenhong’) ultra-nationalists have been allowed free reign to support this approach. Such examples illustrate why some European nations, Indonesia, India and others are turning away from China’s sphere of influence. That said, the economic reach and allure of the PRC’s huge consumer market will persuade many nations to acquiesce to China’s advances.

Despite heavy surveillance and built-in disincentives to protest any perceived injustice, such as the social credit system, China’s civil society continues to mobilise where possible. As French philosopher Michel Foucault declared, as soon as there is a power relationship there is always the possibility of resistance.

The CCP is pursuing its domestic and international goals with increasing vigour. Following Xi’s July  speech marking the centenary of the CCP, it’s clear the party will not swallow anything that undermines its interests as it ‘marches toward the second centenary goal of building China into a great modern socialist country in all respects’.

With this march there are worrying signs. There’s a rising wave of ultra-nationalism geared to unquestioningly supporting Xi’s power as supreme head of the party. China’s rise is deeply impacting global financial, trade and legal regimes. It has befriended illiberal governments such as North Korea, Iran and Belarus, and it openly courts the Taliban.

Meanwhile, the skilful management of international relationships through negotiation and diplomacy in multilateral forums is becoming less likely as global organisations such as the United Nations, World Health Organization and World Trade Organization have themselves become highly contested spaces.

Any consensus about what constitutes ‘rule of law’ is breaking down. China is enabling the emergence of more illiberal political, security and economic alternatives to those traditional global organisations. And where its international-level clout has not yet changed things in its favour, China’s sway is evident at regional and sub-regional levels where politicians can be more easily influenced and there’s even less transparency.

The unfortunate potential exists in these tensions, at least in the short- to medium-term, for the US and its allies and China to engage in a zero-sum game. This bleak ‘grey-zone’ is rapidly unfolding.

China’s vulnerability disclosure regulations put state security first

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On 1 September, new regulations will come into effect in China that tighten the requirements for reporting security vulnerabilities in network products (pertaining to ‘weaknesses or flaws’ in ‘software, hardware, or organizational processes’) to the government. When they were first published in July, the Regulations on the Management of Network Product Security Vulnerabilities incited a flurry of commentary about Beijing’s intentions. For example, some posited that the regulations would enable the government to ‘stockpile zero-days’, while others said the party-state might seek to ‘weaponize any discovered security vulnerabilities’.

The regulations do create space for opportunistic offensive action, but they also have a defensive intent that has been largely overlooked. Understanding the multiple purposes the regulation can serve helps us better understand the implications for entities that are subject to the law, including potential conflicts of interest for businesses with operations in China and elsewhere.

President Xi Jinping and China’s leadership espouse the view that ‘without network security there is no state security’. The internet has become central to all facets of national development, including politics, economics and military affairs. In this context, the new regulations are directed at ensuring that vulnerabilities are identified and fixed quickly to prevent a situation that, as one People’s Daily Online commentary put it, ‘threatens state security’, including through the leakage overseas of ‘public data and information’.

Network vulnerabilities are seen as strategic resources that can be used by foreign adversaries against China. The regulations emphasise preventing malicious activities that target Chinese networks; articles 3 and 4 specifically prohibit actions that enable activities harmful to network security and other internet-based crimes. The scope of such activities is left intentionally vague; named concerns include fraud and extortion, but foreign espionage was almost certainly on the minds of the regulation’s creators, and they also understood that activities ‘harming network security’ can be political in nature.

In 2019—the year the first draft of the vulnerability regulations was issued—China’s principal civilian intelligence service, the Ministry of State Security, asserted that just one out of nearly 100 advanced persistent threat groups targeting China initiated almost 4,000 attacks, including on major political events such as the ‘two sessions’, the Belt and Road Forum, and the 70th anniversary of the founding of the People’s Republic of China. Chinese cybersecurity firm Qihoo 360 alleged that a group affiliated with the US Central Intelligence Agency conducted a years-long cyber campaign against Chinese government agencies and critical sectors from 2008 through 2019.

In the years prior to the draft regulation being put forward, China’s cybersecurity was generally weak. In 2015, Qihoo 360 found that 43.9% of more than two million websites had vulnerabilities, 13% of which were high threat. More worrisome, the fix rate was just 4.7% after notification—‘more than 95% of website vulnerabilities went unrepaired for a long time’. The situation appears to have improved some since, based on a much smaller sample taken in 2019. Yet market research that year suggested that investment in network security as a proportion of all informatisation expenditure was still lagging (1% compared with 15% in the United States). As of 2020, China’s National Computer Network Emergency Response Technical Team reported that China’s cybersecurity apparatus continued to face increasing threats.

The regulations are also a part of an expanding Chinese legal framework governing network security, ranging from the 2016 cybersecurity law to the new data security law, which also takes effect on 1 September. Both lay the groundwork for enhancing state security by addressing perceived weaknesses. Article 23 of the new data security law is particularly relevant. It calls for the state to establish an emergency response mechanism for data security incidents that requires relevant departments to activate emergency response plans to prevent further harm and security gaps as well as, where required, warn the public.

The new vulnerability regulations are in line with the data security law and appear to create a framework for implementing a data security emergency response mechanism when a network vulnerability is discovered. It places a number of obligations on network product vendors (this term is not defined in the regulation; it likely refers to any developer of network hardware or software, including servers, web applications and websites) that operate in China, and on other parties in China that discover vulnerabilities. These obligations include reporting vulnerabilities to China’s Ministry of Industry and Information Technology within two days. Vendors now also have a legal obligation to fix known vulnerabilities.

Despite addressing real security concerns, the state security environment created by the Chinese government gives rise to unique political risks for any entity subject to the law. China’s state security interests are explicitly defended before the interests of any other affected party. The vulnerability regulations apply to all relevant actors operating within China, including Chinese companies that have a global footprint and international companies with operations in China. Any vulnerability in their products would likely affect systems and users beyond China, yet Article 9 states that vulnerabilities cannot be disclosed publicly until Chinese authorities have undertaken assessments. Article 9 also explicitly prohibits sharing vulnerability information with anyone overseas, unless the vendor itself is overseas. The Chinese government, therefore, is to be given access to information on vulnerabilities before any other interested party.

There’s also a real likelihood that the regulations will facilitate China’s cyber espionage efforts opportunistically in the gaps between reporting, patching and disclosure. Research by cybersecurity company Recorded Future has shown that network vulnerabilities known to the government are very likely evaluated for espionage utility.

The Ministry of State Security’s vulnerability database, which is separate from Ministry of Industry and Information Technology’s vulnerability database, typically publishes vulnerabilities in an average of 13 days. Yet ‘high threat’ vulnerabilities are consistently published much later. In one instance, Chinese hackers actively exploited one of these high-threat vulnerabilities during the delay period. In another example, the winning hack from China’s 2018 Tianfu Cup—the first major domestic hacking competition since Chinese white hats were banned from international competitions—was reported to the vendor as is convention, but was used for espionage almost from the moment of discovery until Apple issued a fix.

The new vulnerability regulations, coupled with all of the government’s other cybersecurity-related legislation in recent years, is partly meant to ensure China is capable of withstanding a major adversarial confrontation from abroad. China-headquartered technology companies with global operations are increasingly put in a difficult position.

Global companies with a footprint in China will also be challenged by the tightening restrictions. It is becoming increasingly difficult for a company to navigate the regulatory requirements of operating in China while not undermining the national security of other countries in which it may have business operations. Under Xi, the state security apparatus has more explicitly placed responsibility on everyone to maintain and guarantee China’s state security, which prioritises the party’s power over all else.