A question of passports

Canadian passport

Christopher Balding (“Not China Naive Balding”) explains why it matters, a lot, whether the arrested Huawei CFO Wanzhou Meng entered Canada on a Canadian passport, as has been rumored:

@BaldingsWorld

Here is what people don’t know about the dual passport situation with regards to Chinese citizens. You may ask, why would the CFO of Huawei enter Canada under a Canadian passport? There are very clear reasons and I absolute no doubt about it guarantee every Chinese 1/n

citizen with two passports knows what I am about to tell you. The simplest answer is that if you enter another country using a non-Chinese passport it is a lot easier, typically you don’t need a visa. That may be part of it but that isn’t the primary reason. 2/n

The primary reason, and let me reiterate, every Chinese I have ever met with two passports knows this, when you enter a country, which ever country passport you enter the country is what nationality the accepting country recognizes. In other words, when she entered Canada 3/n

with a Canadian passport, if that is in fact what she did, she is recognized as a Canadian citizen. If she enters France/Japan/China with a Canadian passport, she is recognized as a Canadian citizen by international law. Why does that matter you ask? If you ever get 4/n

into trouble, the only country the host country allows you to get consular or other access to is your country of citizenship. Most “Chinese” with second passports enter China using Canadian/US/Australian passports even if they have Chinese passports for this exact reason. 5/n

When Chinese with second passports travel abroad, they use the second passport not just because of the visa ease issue, but because they prefer being represented by actual humane governments. So when she entered Canada on a Canadian passport, if she did, 6/n

She was telling you, and I absolutely guarantee she knew what I’m telling you, she would rather be represented by Canada than by China. She could get a visa no problem and enter with her Chinese passport. Let me put it another way, Chinese with means are making clear 7/n

And conscious choice who they want representing them if they get jammed up, and it is rarely China. In her case, that may not be the best choice. However, I absolutely guarantee you every Chinese with two passports knows this and chooses this way. Done

1:32 AM – 7 Dec 2018

And a BBC reporter comments:

@StephenMcDonell

to @BaldingsWorld

We did ask the #China Foreign Ministry yesterday if Meng Wanzhou had entered #Canada on a Chinese or Canadian passport but no response.

1:30 AM – 7 Dec 2018

Balding again:

@BaldingsWorld

High probability: Huawei CFO not arrested directly for Huawei activities but for running transactions through closely held separate independent Cayman SPV which she runs that channeled FX transactions and profits through NYC. If that is the case, she is screwed

3:19 AM – 7 Dec 2018

This is also interesting:

China has said it will immediately implement measures agreed under a trade war “truce” with the US.

The commerce ministry’s remarks came days after Donald Trump and his Chinese counterpart, Xi Jinping, agreed to give negotiators 90 days to resolve their trade spat.

Few details have been made public about what the two sides will negotiate, a lack of clarity that has unsettled stock markets.

“China will immediately implement the consensus both sides already reached on agricultural products, energy, autos and other specific items,” a commerce ministry spokesman, Gao Feng, said at a regular press briefing. […]

Gao’s briefing came hours after the trade detente risked being rattled by the arrest in Canada of a top executive from the Chinese telecom giant Huawei at the request of the US.

Hmmm. Clearly, there is a *lot* more going on here than meets the eye. As usual, it’s stupid to rush to judgment before the facts are revealed (a thing I am definitely guilty of).

The plot thickens!

Huawei CEO Meng Wanzhou

The internet is abuzz with more news and speculation related to the stunning arrest of Huawei CFO Wanzhou Meng:

• I previously noted that “This is about as dumb as the US trying to arrest Julian Assange, but with far nastier geopolitical implications.” For what it’s worth, here’s Wikileaks weighing in:

@wikileaks

Editorial comment: The U.S. extradition of Huawei CFO Meng Wanzhou from Canada, for actions performed in China, is the same extra-territorial invasion through lawfare, that the U.S. government is applying to the UK, by extraditing Assange from the UK, for publishing in the UK.

4:26 PM – 6 Dec 2018

• Comrade Balding, an academic formerly based in Shenzhen, has some very interesting thoughts, among them:

@BaldingsWorld

There’s more coming on Huawei. I just don’t know when it’s going public

8:58 AM – 6 Dec 2018

===

Fact: timing of Huawei arrest is a great big political F+*#?!U

Fact: everyone in China knew she broke the US laws. Obama admin knew Huawei broke the law. Trump admin knew Huawei broke the law.

It’s only political if you think she should get away with it

8:48 AM – 6 Dec 2018

===

FWIW, I’ve know for a few months that there is more coming down the road with Huawei. Have confirmation from multiple unrelated people

2:08 AM – 6 Dec 2018

• The Alibaba-owned South China Morning Post ran this piece Thursday on how Meng told Huawei employees “in an internal talk on compliance that there are scenarios where the company can weigh the costs and accept the risks of not adhering to the rules.” Is China planning to throw Meng under the bus?

• Reuters correspondent “SJ” writes:

@SijiaJ

What happened on December 1? Xi & Trump met, Huawei founders’ daughter got arrested, Danhua Capital founder committed suicide

10:11 PM – 5 Dec 2018

• Wait, who committed suicide? From SCMP reporter Zheping Huang:

@pingroma

Prominent Stanford physics professor and blockchain venture capitalist Zhang Shoucheng died at age 55 on Dec 1 in the US after fighting depression, according to a family statement. Story TK

“Danhua lists 113 U.S. companies in its portfolio, and most of those companies fall within emerging sectors and technologies (such as biotechnology and AI) that the Chinese government has identified as strategic priorities,” the USTR name-checked Zhang’s VC in its Nov. 20 report

10:48 PM – 5 Dec 2018

Odd timing on that. “The family of Stanford professor Zhang Shoucheng, a world-renowned physicist and venture capitalist, denied speculation on Chinese social media that his death was connected to tensions in US-China relations or the arrest of Huawei’s CFO in Canada on Saturday.” (SCMP)

• An intriguing piece of gossip:

@maggiexiao

Replying to @BaldingsWorld

Rumor says Meng entered Canada with a Canadian passport. China recently strengthened its no-dual citizenships policy . So that means she voluntarily gave up her Chinese citizenship. If true, does China still have the rights to claim her back?

6:24 PM – 5 Dec 2018

• David Goldman comments:

First, never before has the United States attempted the extraterritorial rendition of a foreign citizen – Meng is a Chinese national – in connection with sanctions violations. It has imposed travel and banking restrictions, but seeking an arrest warrant for this is entirely without precedent. […]

The question is: Who ordered the arrest, and why?

It is possible that President Trump knew about it and sanctioned the arrest, to be sure. But it is unlikely that the president would escalate the conflict with China with the arrest of a senior executive of China’s flagship high-tech manufacturer on the same day that he sought to de-escalate the trade war.

If Trump did not initiate the arrest, who did? There are two alternative possibilities.

The first is that the order came from administration officials who believe that the United States must provoke a confrontation with Beijing now, before China becomes too powerful to intimidate. Some parts of the permanent bureaucracy and the intelligence community believe that China’s economy is fragile and that an economic war would produce an economic crisis and political instability, perhaps even toppling Xi Jinping.

That view may seem fanciful, but it is argued seriously, for example by some former senior officials of the Trump administration.

The second possibility is that Trump’s enemies in the permanent bureaucracy simply want to prevent the president from negotiating a deal with China that would enhance his image and remove risks to economic growth.

Goldman notes that the only American politician to comment publicly on the matter has been Senator Marco Rubio, who earlier this year tried to torpedo Trump’s agreement with Xi regarding ZTE. He “celebrated the arrest” in an email to Axios. Hmm.

• Huawei is in deep trouble and not only in the US. From Reuters: “Japan plans to ban government purchases of equipment from China’s Huawei Technologies Co Ltd and ZTE Corp to beef up its defenses against intelligence leaks and cyber attacks, sources told Reuters.”

• …And: “Australia and New Zealand have already blocked Huawei from building 5G networks.”

• …And: “Britain’s BT Group said on Wednesday it was removing Huawei’s equipment from the core of its existing 3G and 4G mobile operations and would not use the company in central parts of the next network.”

• I’ll close with Professor Balding again – somewhat off-topic, but it caught my eye:

I think what most people who haven’t spent a lot of time in China don’t get is how abnormal the business, economic, financial, and negotiation climate is. People see the shiny tall glass office buildings and the Ritz and they make the assumption they get it. That’s wrong 1/n

The stories that get out in public are wild. The stories that never make it into the public are at least 10x crazier. The IP theft and theft stories you hear about in public are low hanging fruit where someone falls out of favor in Beijing. I know first hand accounts of 2/n

Flat out 10 ten digit USD thefts. Companies who have valid contracts telling a foreign partner they’re ignoring a contract and they will have them abducted or jailed if they even think about trying to enforce a contract with again 10 digit USD values. You DC/NYC debutantes 3/n

simply do not understand what you are dealing with.The rules are different. You think fentanyl doesn’t get various levels of state protection? Get real. You think this IP theft and gangsterism isn’t quasi official policy? Get real. You need to be realistic about your counterparty

6:14 AM – 6 Dec 2018

US kidnaps daughter of Huawei founder

Wanzhou-Meng

Ok, I don’t think this is the trade war people signed up for:

Canada has arrested the chief financial officer of China’s Huawei Technologies who is facing extradition to the United States on suspicion she violated U.S. trade sanctions against Iran.

Wanzhou Meng, who is also the deputy chair of Huawei’s board and the daughter of company founder Ren Zhengfei, was arrested in Vancouver at the request of U.S. authorities.

“Wanzhou Meng was arrested in Vancouver on December 1. She is sought for extradition by the United States, and a bail hearing has been set for Friday,” Justice department spokesperson Ian McLeod said in a statement to The Globe and Mail. “As there is a publication ban in effect, we cannot provide any further detail at this time. The ban was sought by Ms. Meng.

A Canadian source with knowledge of the arrest said U.S. law enforcement authorities are alleging that Ms. Meng tried to evade the U.S. trade embargo against Iran but provided no further details.

She is being sought by federal prosecutors based in New York:

Huawei released a statement saying its CFO was arrested while changing planes in Vancouver and is facing charges in “the Eastern District of New York.”

“The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng. The company believes the Canadian and U.S. legal systems will ultimately reach a just conclusion,” the statement said.

How is this even remotely legit? Has Meng even been to the US? I don’t see how the US has jurisdiction here.

We’ll find out more soon, but at first glance this strikes me as extremely dubious, both legally and politically. This is about as dumb as the US trying to arrest Julian Assange, but with far nastier geopolitical implications.

UPDATE: China responds:

Remarks of the Spokesperson of the Chinese Embassy in Canada on the issue of a Chinese citizen arrested by the Canadian side

2018/12/06

At the request of the US side, the Canadian side arrested a Chinese citizen not violating any American or Canadian law. The Chinese side firmly opposes and strongly protests over such kind of actions which seriously harmed the human rights of the victim. The Chinese side has lodged stern representations with the US and Canadian side, and urged them to immediately correct the wrongdoing and restore the personal freedom of Ms. Meng Wanzhou. We will closely follow the development of the issue and take all measures to resolutely protect the legitimate rights and interests of Chinese citizens.

UPDATE: Bloomberg has a good rundown of the situation.

Analysts said it’s more likely the case proceeded separately from the trade talks as part of Trump’s efforts to step up prosecutions against Chinese companies that conduct economic espionage and violate sanctions. In October, the U.S. said Belgium extradited a Chinese intelligence official accused of stealing trade secrets from U.S. companies — an unprecedented development.

Either way, China is almost certain to view Meng’s arrest as a major escalation in the trade war that will foment fears of a wider Cold War between the world’s biggest economies. As part of trade talks, Trump has insisted that China stop providing government support to strategic sectors including artificial intelligence and robotics as part of its “Made in China 2025” policy.

This is misguided. Why would China stop providing government support for strategic sectors? Those sectors are key to China’s future competitiveness in manufacturing and technology. In effect, the US is badgering China to radically change its growth plans out of deference to its chief global rival. China will never do that, even if it agrees to do so on paper. The smart play for US would be to drop its free-trade fantasies and pursue its own industrial policy.

Tiankai’s tariff terror

Chinese ambassador Cui Tiankai

Cui Tiankai

The Chinese ambassador to the US offers a stern but misguided warning about the alleged dangers of tariffs:

Speaking to Reuters before heading to join Chinese President Xi Jinping’s delegation at the Group of 20 summit in Buenos Aires, Cui Tiankai said China and the United States had a shared responsibility to cooperate in the interests of the global economy.

Asked whether he thought hardliners in the White House were seeking to separate the closely linked U.S. and Chinese economies, Cui said he did not think it was possible or helpful to do so, adding: “I don’t know if people really realize the possible consequences – the impact, the negative impact – if there is such a decoupling.”

He drew parallels to the tariff wars of the 1930s among industrial countries, which contributed to a collapse of global trade and heightened tensions in the years before World War Two.

“The lessons of history are still there. In the last century, we had two world wars, and in between them, the Great Depression. I don’t think anybody should really try to have a repetition of history. These things should never happen again, so people have to act in a responsible way.”

The problem is that protectionism did not cause the Great Depression. Like the idea that the Great Wall is visible from space (which was told to me by a certified tour guide in Beijing), this is a myth that just won’t die.

Allow economist Ian Fletcher to explain:

Let’s start by reminding ourselves of a basic fact: the Depression’s cause was monetary. The Federal Reserve had allowed the money supply to balloon excessively during the late 1920s, piling up in the stock market as a bubble. The Fed then panicked, miscalculated, and let the money supply collapse by a third by 1933, depriving the economy of the liquidity it needed to breathe. Trade had nothing to do with it.

The Smoot-Hawley tariff was simply too small a policy change to have so large an effect as triggering a Depression. For a start, it only applied to about one-third of America’s trade: about 1.3 percent of our GDP. One point three percent! America’s average tariff on goods subject to tariff went from 44.6 to 53.2 percent—not a very big jump at all. America’s tariffs were higher in almost every year from 1821 to 1914. Our tariffs went up in 1861, 1864, 1890, and 1922 without producing global depressions, and the great recessions of 1873 and 1893 spread worldwide without needing the help of any tariff increases. […]

World trade did indeed decline, but this was due to the Depression itself, not higher American tariffs. This is no surprise, as declines in the values of the currencies of America’s major trading partners wiped away much of the effect of the tariff anyway.

Fletcher quotes economic historian William Bernstein as follows:

Between 1929 and 1932, real GDP fell 17 percent worldwide, and by 26 percent in the United States, but most economic historians now believe that only a miniscule part of that huge loss of both world GDP and the United States’ GDP can be ascribed to the tariff wars. .. At the time of Smoot-Hawley’s passage, trade volume accounted for only about 9 percent of world economic output. Had all international trade been eliminated, and had no domestic use for the previously exported goods been found, world GDP would have fallen by the same amount — 9 percent. Between 1930 and 1933, worldwide trade volume fell off by one-third to one-half. Depending on how the falloff is measured, this computes to 3 to 5 percent of world GDP, and these losses were partially made up by more expensive domestic goods. Thus, the damage done could not possibly have exceeded 1 or 2 percent of world GDP — nowhere near the 17 percent falloff seen during the Great Depression…

Bill Kristol yearns for war

The prominent neoconservative has a fever, and the only cure is more regime change:

Bill Kristol China tweet

As if setting the entire Middle East on fire wasn’t enough, now Kristol proposes to overthrow the government of the world’s largest nation. The fact that people like Kristol have been running US foreign policy for the better part of two decades explains a lot.

Let’s just be clear about what Kristol is calling for here. Despite his later obfuscatory verbiage, he is calling for war. There is no realistic way to remove the Communist Party from power – especially not within the next couple of decades! – without a foreign invasion or civil war. Kristol is not stupid. Presumably, he understands that “regime change” by 2038 means large-scale, violent upheaval.

The Communist Party of China (CPC) has over 89 million members, more than the population of Germany, and is deeply entrenched in every aspect of Chinese society. It is not going to give up power willingly. There is no force or group of people that is remotely capable of dislodging the CPC from power, or of governing the country in its wake, now and for the foreseeable future.

It is appropriate that Kristol got “ratioed” for his bloodthirsty tweet, with a ratio of 3.4 thousand comments to 641 retweets. Now Twitter should apply its rules consistently and ban the influential pundit for promoting violence and inciting harm towards others.

Networked Confucianism

Masonic Eye of Providence

John Robb describes China’s now-infamous social credit system as the world’s first “networked tyranny.” Allow me to coin the term “networked Confucianism” to describe the same system.

Combine Confucian ethics with modern surveillance technology and social networking, and this is what you get:

China’s plan to judge each of its 1.3 billion people based on their social behavior is moving a step closer to reality, with Beijing set to adopt a lifelong points program by 2021 that assigns personalized ratings for each resident.

The capital city will pool data from several departments to reward and punish some 22 million citizens based on their actions and reputations by the end of 2020, according to a plan posted on the Beijing municipal government’s website on Monday. Those with better so-called social credit will get “green channel” benefits while those who violate laws will find life more difficult.

The Beijing project will improve blacklist systems so that those deemed untrustworthy will be “unable to move even a single step,” according to the government’s plan. Xinhua reported on the proposal Tuesday, while the report posted on the municipal government’s website is dated July 18.

According to the Party, the overall social credit system will “allow the trustworthy to roam freely under heaven while making it hard for the discredited to take a single step.”

China’s greatest philosopher might have approved:

When Confucius was asked 2,500 years ago what a ruler needed to govern a country, he said 信credit, faith, or sincerity; food 食; and an army 兵. But if he could only have one, it would be the first 信. The Chinese character we translate as “credit” has thus long been a core concept of Chinese governance. […]

At first glance, the official goal of the SCS appears to have little to do with financial credit. It is “construction of sincerity in government affairs, commercial sincerity, social sincerity, and judicial credibility” (State Council 2014), which is more a call to embrace traditional Confucian moral virtues than a vision for high-tech governance. The plan document cites a laundry list of social ills that stem from the lack of trust and trustworthiness at all levels of a fragmented Chinese society. These include tax evasion, factory accidents, food and drug safety scares, fraud, academic dishonesty, and rampant counterfeiting of goods.

Hope he has a good security detail

Steve Bannon Guo Wengui

Idea for a buddy cop film (Bannon and Guo)

Steve Bannon teams up with Guo Wengui to throw down the gauntlet… against the Chinese government:

Former chief strategist for US President Donald Trump, Steve Bannon, has lent his support to exiled Chinese billionaire Guo Wengui in a campaign to investigate China’s ruling elite, the two announced at a press conference in New York on Tuesday.

Bannon introduced the “Rule of Law Fund” which aims to investigate wrongdoing, including the alleged involvement of Chinese officials in the death and disappearance of Chinese individuals. Bannon said he would chair and oversee operations of the initiative. […]

Guo gave a presentation alongside Bannon, and has pledged to back the fund with US$100 million and formally request that the FBI and relevant law enforcement authorities review “voluminous investigative material.”

I can only assume that Bannon understands what he is up against here. Guo, the fugitive real estate tycoon who was visited in his Manhattan penthouse by Chinese security agents last year, has a bit more experience facing off against Beijing.

Among the cases that Guo/Bannon plan to investigate is the death of HNA Group co-founder Wang Jian in France after apparently falling from a wall.

Bannon Guo Wengui fund

The greatness of gait

Ministry of Silly Walks Monty Python

People have been interested in gait since the time of Aristotle. I think it’s one of the most vivid aspects of human individuality. Like snowflakes, no two gaits are alike.

Some people stride from point A to point B. Others trudge. You can also amble, bimble, bounce, clump, falter, gimp, glide, hike, hobble, limp, lumber, lurch, march, mince, mosey, nip, pace, parade, perambulate, peregrinate, plod, pound, power walk, prance, promenade, pussyfoot, ramble, roam, sashay, saunter, scuff, shamble, shuffle, stagger, stalk, step, stomp, stroll, strut, stumble, stump, swagger, tiptoe, toddle, totter, traipse, tramp, trample, traverse, tread, trip, tromp, troop, trot, waddle, and wander. And these are just categories of walking. Each individual has a unique locomotive signature, which is always more complex and distinctive than any of the above words can capture.

Gait should be recognized as a seamless part of one’s personality. For example, I am constantly told that I walk too fast. Criticism is important to me, so I considered this carefully for many years. Finally, I came to the conclusion that the rest of the world walks too slow.

Forensic gait analysis is used by law enforcement to identify criminals on surveillance videos when their faces are obscured. If only the government had the technology to accurately record and identify each person’s gait, then it would be much easier to track everyone.

Wait, did someone say “track everyone”?

China’s on it:

Chinese authorities have begun deploying a new surveillance tool: “gait recognition” software that uses people’s body shapes and how they walk to identify them, even when their faces are hidden from cameras.

Already used by police on the streets of Beijing and Shanghai, “gait recognition” is part of a push across China to develop artificial-intelligence and data-driven surveillance that is raising concern about how far the technology will go.

Huang Yongzhen, the CEO of Watrix, said that its system can identify people from up to 50 meters (165 feet) away, even with their back turned or face covered. This can fill a gap in facial recognition, which needs close-up, high-resolution images of a person’s face to work.

“You don’t need people’s cooperation for us to be able to recognize their identity,” Huang said in an interview in his Beijing office. “Gait analysis can’t be fooled by simply limping, walking with splayed feet or hunching over, because we’re analyzing all the features of an entire body.”

How to lose a war without firing a shot

I’m a little rusty on my Sun Tzu and Clausewitz, so I don’t recall what those great military theorists had to say about the bold strategy of allowing your most sensitive defense technology to be sold to your chief geopolitical rival:

China has obtained the big screen software used by Nato and the United States for war room mapping, putting its forces on an equal organisational footing with some of the West’s elite military operations.

Luciad, a defence contractor based in Leuven, Belgium, is selling the Chinese government high performance software used for situational awareness by the military commands of the North Atlantic Treaty Organisation, according to information from Chinese government contractors verified by the South China Morning Post.

The package includes LuciadLightspeed, a program that can process real-time data, including that from fast-moving objects, with speed and accuracy. […]

The same software is used by the United States Special Operations Command at MacDill Air Force Base in Tampa, Florida, where covert missions for the US government – including the raid that assassinated al-Qaeda leader Osama bin Laden in Pakistan in 2011, originated. […]

“Luciad is the Ferrari of GIS software. It comes to the right place at the right time,” said a geospatial information engineer from an aerospace company in Beijing.

Truly, this is a level of cunning strategery that makes Alexander the Great look like Sergeant Klinger! But seriously, what’s the point of having NATO if a Belgian company is blithely selling off crucial military technology to the People’s Liberation Army? Why bother even having a military at all? Wouldn’t it be easier and more profitable to disband NATO, dismantle all the Western armed forces and auction off our technology and weaponry to the highest bidder?

Has the US weighed in on this reported sale?

China’s global development empire

China development AidData

China’s global development footprint, mapped according to commitment size (Source: AidData)

The College of William & Mary has put together a handy map of China’s global Marshall Plan:

This online web map by AidData, a research lab at William & Mary in the United States, pinpoints the location of thousands of Chinese-funded development projects across the globe using data from AidData’s Geocoded Global Chinese Official Finance Dataset released September 11, 2018.

With more than 3,485 Chinese Government-financed projects in 138 countries and territories, this dataset is the most comprehensive source of public information ever assembled on the locations and attributes of Chinese development projects worldwide.

Those 3,485 projects implemented between 2000-2014 are worth a total of $273.6 billion in official financing. By way of comparison, the actual Marshall Plan in Europe totaled $12 billion (or $100 billion in 2016 dollars).

On a possibly related note:

In 2011, for example, delegates to the annual session of China’s parliament debated a proposal to seek employment for as many as 100 million Chinese on the African continent. One champion of this idea, Zhao Zhihai, a delegate and researcher at Zhangjiakou Academy of Agricultural Sciences at Hebei province, said: “In the current economic climate, with so many of our people unemployed, China can benefit from finding jobs for them and Africa can benefit from our expertise in developing any type of land and crop.”

–Howard French, China’s Second Continent: How a Million Migrants Are Building a New Empire in Africa