China in Quotes
“We must keep in mind that high-quality development is the absolute principle of the new era, fully implement the new development concept, accelerate the construction of a modern economic system, [and] promote self-reliance and self-reliance in high-level science and technology.”— President Xi Jinping, speaking to Politburo on 31st January, 2024
De/Cypher Data Dive
China’s Climate Story: Temperature anomaly🌡️ and Carbon Emissions 🏭
Beyond The Great Wall
Exploring News About China in Depth
An online dump of Chinese hacking documents offers a rare window into pervasive state surveillance
Hacked documents from a Chinese security firm linked to the government reveal widespread state surveillance. Contracts, presentations, and manuals detailing tools used to spy on Chinese citizens and foreigners, with a focus on dissidents and specific ethnicities, are among the documents leaked. Documents describe activities such as monitoring overseas dissidents, hacking foreign networks, and manipulating social media narratives. Chinese police are looking into the leak from the company I-Soon, also known as Anxun, which is linked to the Ministry of Public Security. An analyst describes the leak as the most significant ever associated with a company suspected of cyber espionage for China’s security services. Read more: AP News
You can access the data leak here.
Russia is procuring tank parts from Japan and Taiwan via China
According to information obtained by Nikkei, a person connected to the government of Belarus, an ally of Russia, set up a company in China after February 2022, when the full-scale invasion began, and the Russian arms maker has continued to import parts via the company. The information reveals that sanctions aimed at Russia’s munitions industry are not functioning effectively, due to trades through a third country. U.S. and British authorities are aware of the situation and are expected to tighten the sanctions. Read more: Nikkei
De/Cypher Analysis: United States Treasury Publishes 2024 National Risk Assessments for Money Laundering, Terrorist Financing, and Proliferation Financing
Earlier this month, the US Department of the Treasury released three reports addressing money laundering and risks related to the growth of financial networks. Notably, two of these reports concentrated heavily on China, highlighting key concerns.
China holds a substantial role in proliferation financing risk and money laundering. In terms of proliferation financing risk, the People’s Republic of China (PRC) aims to build a formidable military to safeguard its territory, assert regional dominance, counterbalance US military strength, and extend global influence. This includes enhancing its “strategic deterrent,” modernizing and diversifying its nuclear forces, and advancing cyber, space, and counter-space capabilities.
To support its military modernization efforts, the PRC and those acting on behalf of PRC governmental entities are assessed to engage in economic espionage and cyber theft. This activity involves attempts to illegally acquire information and technology to advance Chinese military modernization. There have been multiple criminal indictments involving espionage by PRC nationals, U.S. citizens, and permanent resident aliens from the PRC who have sought to acquire information and technology illegally.
Chinese Money Laundering Organizations (CMLOs) are significant players in professionally laundering money, especially in the United States. They specialize in obtaining and trading USD and other foreign currencies through informal value transfer system (IVTS) schemes, targeting Chinese nationals looking to bypass China’s currency controls. CMLOs typically purchase illicit funds in US cities, transfer equivalent foreign currency amounts to drug traffickers’ overseas accounts, and resell the drug proceeds at higher rates to Chinese individuals. These organizations might also partake in minor criminal activities, like utilizing fake IDs or employing insiders to aid in fund transfers.
CMLOs operate in an insular and decentralized manner, making it challenging to penetrate their networks. They rely on interpersonal relationships and various individuals working together to facilitate different aspects of the money laundering cycle. It is noted that many CMLO members have ties to or originate from the Fujian Province in China.
Overall, China’s activities in both proliferation financing risk and money laundering highlight its ambitions and the challenges it poses in terms of global security and financial systems.
Chinese Money Laundering Organizations (CMLOs) are key players in professionally laundering money in the US and globally. They primarily focus on obtaining and trading USD (and other currencies) through informal value transfer system (IVTS) schemes, catering to Chinese individuals seeking to bypass China’s currency controls. These organizations operate through tight-knit interpersonal connections and decentralized structures, making them challenging to infiltrate. CMLOs have been observed purchasing illicit funds in US cities, transferring corresponding amounts of foreign currency to overseas accounts of drug traffickers, and reselling the drug proceeds at higher rates to Chinese nationals. Some members of CMLOs reportedly have links to China’s Fujian Province.
Chinese Money Laundering Organizations (CMLOs) utilize informal value transfer system (IVTS) schemes as part of their money laundering activities. IVTS refers to methods of transferring funds that operate outside of traditional banking channels and formal financial systems. These schemes often involve the movement of funds through multiple individuals and entities using various currencies.
In the context of China, the report indicates that CMLOs exploit China’s “one country, two systems” policy by using the more liberal banking system in Hong Kong to establish USD bank accounts. This suggests that CMLOs may leverage IVTS methods to facilitate the transfer of funds between different currencies and jurisdictions, potentially including China.
However, it is important to note that the knowledge base does not provide extensive details specifically about IVTS activities in China.
The assessments were prepared according to Sections 261 and 262 of the Countering America’s Adversaries through Sanctions Act (P.L. 115-44) as amended by Section 6506 of the Fiscal Year 2022 National Defense Authorization Act (P.L. 117-81).
Read more:
- https://home.treasury.gov/system/files/136/2024-National-Proliferation-Financing-Risk-Assessment.pdf
- https://home.treasury.gov/system/files/136/2024-National-Money-Laundering-Risk-Assessment.pdf
Chinese Companies Revive Mao Zedong-Era Militias
By De/Cypher Team
The Chinese government, the Communist Party of China and the People’s Liberation Army have shared a close nexus in function, vision and mission. This nexus has had an immediate impact on Chinese domestic politics, external affairs and economic stability. The re-emergence of the People’s Armed Forces Departments (PAFDs) in multiple Chinese State-Owned-Enterprises (SOEs) including companies like the Yili Group – a dairy giant and the first company to establish a PAFD, Shanghai Municipal Investment Group, Mengniu, Wuhan Urban Construction Investment Group, PowerChina Equipment Group, Wuhan Metro, Huizhou Water and Huizhou Transport Investment Group and the Haian Urban Construction Development Investment Group.
China appears to be grappling with economic uncertainty as the country sees its lowest economic growth rate at an estimated 4.6% in 2024 by the International Monetary Fund (IMF). Experts warn against seeing this as a preemptive measure against external threats. However, a closer look at the evolution of the Chinese armed forces proves that the PLA has always been reflexive in thinking. It often uses its past to apply learnings in its strategic and operational thought.
Evolution of the People’s Liberation Army
The Evolution of the People’s Liberation Army served multiple purposes under different leaders. The Maoist regime saw the use of the armed forces especially the establishment of the People’s Liberation Army Navy (PLAN) to secure communist interests against the nationalists. The armed forces were driven by mass-man power-based mobilisation and were instrumental in the civil war. This can be seen in direct contrast to how Deng Xiapong viewed the Chinese military, it was used as the forerunner to promote a market economy and as a driver of the four modernisations which included national defence along with industry, agriculture and technology. Xiaping’s immediate successors – Jiang Zemin and Hu Jintao continued with this push for modernisation.
Additional Functions of the People’s Liberation Army
The PLA has been instrumental in creating political, social and strategic legitimacy of the Communist regime in China. While not only responsible for the traditional function of defence against external threats, the PLA has been an active participant in civil affairs as well including offering political support to the Chinese leader, policy making, political interventions, and suppression of political and social unrest. Given its intersecting functioning and close connection with the Communist Party and the government, multiple reasons can be accorded to the establishment of PAFDs in recent times. The two most significant reasons, keeping in mind the PLA’s evolutionary trajectory, can be seen as the following:
- The strengthening of armed forces to help push the Chinese strategy at the South China Sea, as seen in the past with the clear and purposeful establishment of the People’s Liberation Army Navy (PLAN) to suppress nationalists in Taiwan and the other smaller islands during the Maoist regime.
- The slowing of the Chinese economy in recent times could lead to strained internal-social conditions where a disgruntled citizenry could demand answers from the government leading to a more involved role of the PLA which has historically acted in the interest of the government to maintain social order including the suppression of the Tiananmen Square protests.
National Strategic Integration: How China is Building Its Strategic Power
Published in University of California Institute on Global Conflict and Cooperation; Written by Tai Ming Cheung
Summarized by De/Cypher Team
National Strategic Integration represents a key strategic approach by China to establish itself as a global leader in technology and security. Since coming to power in 2012, Xi Jinping has prioritized integrating the Chinese economy, political spheres, society, and defense mechanisms towards bolstering national security. NSI is a bold step beyond the earlier strategy of military-civil fusion initiated in the mid-2010s, seeking a more comprehensive convergence of the highest strategic levels of China’s systems.
The concept of NSI, mentioned by Xi in 2017 and later at the 19th Party Congress, received little initial attention. However, it has since gained traction, particularly after Xi’s address at the 14th National People’s Congress in March 2023 and references in his 20th Party Congress speech. The sudden rise in media mentions, from a previous annual average of fewer than 20 prior to 2022 to 127 between January and September 2023, indicates NSI’s ascent on the policy agenda.
The attention NSI is receiving implies it is transitioning from a slowly emerging concept to operational policy status, even if it ensues without significant public documentation, suggesting China is keeping details of this strategic advance understated to maintain a lower international profile. NSI’s progression reflects China’s ambition to synergize its civilian and military capacities to enhance national security and dominate in technological advancements.
Read the full report here.
Missing in China
President Xi Jinping has still not convened 20th central committee, an economic meeting which should have happened in December 2023. the lunar new year reception hosted by the CCP and State Council on 8th February, did not have the presence of Wei Fenghe, a retired military heavyweight and former defense minister.
China Top Stories
Chinese FM meets with Macron in Paris, concludes Europe trip
French President Emmanuel Macron welcomed Chinese Foreign Minister Wang Yi to Paris and co-chaired a strategic dialogue. Read more: Global Times
China and ‘good friend’ Hungary shore up policing and security ties
China offered to support longtime strategic partner Hungary on public security issues, going beyond trade and investment relations, during a rare meeting with Prime Minister Viktor Orban just as NATO struggles to expand its network in Europe. Read more: SCMP
Turkey detains 6 for allegedly spying on Uyghurs for China
Turkish police detained six people in Istanbul for allegedly spying on Uyghurs, and another is being sought, according to Anadolu Agency. Read more: Nikkei Asia
Head of Beijing office overseeing Hong Kong affairs to visit city on fact-finding mission, gather feedback on Article 23 bill, health of economy
Head of Beijing’s HK and Macau Affairs Office, Xia Baolong, visited Hong Kong on a six-day fact-finding mission. Xia gathered feedback on proposed Article 23 legislation, the economy, and met officials, business representatives, and youth. Read more: SCMP
Former chairman of Bank of China indicted for bribery, illegal loan-issuing
Former Bank of China chairman Liu Liange has been charged with bribery and illegal loan issuance, according to the Supreme People’s Procuratorate. Read more: Xinhua
China warns localities not to use fines for funds, pledges ‘strict’ regulation
Beijing warned local governments against imposing excessive fines and fees, urging them to follow fair and standardized fee collection practices to avoid damaging business confidence. Read more: SCMP
Wu Qing given intractable task of halting stock exchange slide
Wu Qing, China’s new stock exchange regulator, called an emergency meeting during the Chinese New Year festivities. President Xi has ordered him to take urgent measures to stabilise the country’s stock markets. Read more: Intelligence Online
Foreign Direct Investment to China Slumps to 30 Year Low
Data released on Sunday (Feb. 18) by China’s State Administration of Foreign Exchange showed that foreign businesses’ direct investments into the country totaled $33 billion last year, down over 90% from a peak in 2021, and the lowest since 1993. Read more: Bloomberg
China’s Spy Agency Sees Threats Everywhere in Data Security Push
China’s top intelligence agency has renewed its warning against foreign cyber espionage, citing recent data breaches that jeopardize the country’s information security. Read more: Bloomberg
China starts census of data resources
China has launched a nationwide census to assess the production, storage, trade, and security of data resources, which will take place between February 18 and March 5. Read more: China Daily
China debuts latest Z-10ME attack helicopter at Singapore Airshow
China revealed its latest Z-10ME attack helicopter at the Singapore Airshow, presenting an upgraded export model with enhanced firepower and ground support features. Analysts see this as China’s attempt to break into the growing global weapons market by positioning the Z-10ME as a competitor to the US AH-64 Apache. Read more: SCMP
Average cost of childbearing in China among world’s highest: think tank report
The cost of raising a child in China to college graduation reached 680,000 yuan ($94,557), among the world’s highest, per a Yuwa Population Research report. Read more: Global Times
Timeline: News From Asia
Friday
Indonesia’s aspiration to join the Organisation for Economic Co-operation and Development (OECD) has reached a remarkable step, with the group this week formally opening talks for its accession just days after Indonesia held an election to choose its next president. (Nikkei)
Michael Yu Minhong, founder of New Oriental Education & Technology, one of China’s largest private education conglomerates, called on China’s leadership to respect market rules, improve relations with enterprises and safeguard the nation’s business environment – echoing areas of widespread concern as a recovery in the nation’s embattled private sector continues to lag behind that of state-owned peers. (SCMP)
SINGAPORE: American pop star Taylor Swift has yet to arrive but the knock-on effects of her upcoming stop in Singapore are already being felt and are likely to be wide-ranging.Hotels and airlines told CNA that demand for flights and accommodation around the dates of Swift’s concerts has increased up to 30 per cent. (CNA)
Yemen’s Iran-aligned Houthis claimed responsibility for an attack on a UK-owned cargo ship and a drone assault on an American destroyer on Thursday, and they targeted Israel’s port and resort city of Eilat with ballistic missiles and drones. (Arab News)
Thursday
Iran has sent Russia hundreds of powerful surface-to-surface ballistic missiles, including missiles from the Fateh-110 family such as the Zolfaghar, which can strike targets 300 to 700 kilometers away. (Reuters)
The situation in Gaza is dire due to intensified Israeli airstrikes on Rafah, which have killed dozens of Palestinians and brought the total death toll to 29,313 according to the Palestinian enclave’s health ministry. (The Strait Times)
An ethical investment association in Germany is urging sustainable funds to divest from Volkswagen following allegations of forced Uyghur labor in its Xinjiang operations, particularly in a joint venture with SAIC Motor in China. (Nikkei Asia)
The United States has charged Takeshi Ebisawa, a member of the Japanese criminal organization Yakuza, with attempting to sell nuclear material from Myanmar to fund an illegal arms deal. (The Japan Times)
Wednesday
Pakistan’s largest political parties, the Pakistan Peoples Party (PPP) and the Pakistan Muslim League-Nawaz (PML-N), struck a formal deal on Tuesday to form a coalition government following inconclusive national elections. (CNA)
China expressed “strong disappointment” at the United States for vetoing a UN Security Council resolution on the Israel-Hamas war, pushing for an immediate humanitarian ceasefire. (The Strait Times)
Malaysia’s central bank, Bank Negara Malaysia (BNM), has attributed the recent drop of the ringgit to its lowest point since the 1997 Asian financial crisis to a strengthening US dollar and uncertainty in China’s economy, rather than domestic factors. (SCMP)
Hong Kong’s population reached 7.50 million in 2023, up 0.4% from 2022, driven by returning residents and residential schemes post pandemic. (RTHK)
Tuesday
China’s central bank on Tuesday cut its five-year mortgage benchmark, as it aims to boost an economy weighed down by a distressed property sector and weak business confidence. (Nikkei)
Iranian authorities are privately urging the Lebanese Shiite organization Hezbollah and other armed groups not to provoke the United States in order to avoid further escalation of the Middle East conflict, The Washington Post reported, citing Lebanese and Iraqi officials. (TASS)
Israel will restrict some access for Muslim worshippers to Jerusalem’s Al-Aqsa mosque during the upcoming Ramadan holy month according to security needs, Prime Minister Benjamin Netanyahu’s office said on Monday. (Arab News)
The head of Beijing’s top office overseeing Hong Kong affairs Xia Baolong will embark on his second fact-finding mission to the city in a year starting on Thursday and intends to solicit views on proposed domestic national security legislation,Xia Baolong, who heads the revamped Hong Kong and Macau Affairs Office (HKMAO), with one saying he also planned to gather feedback on a number of issues from a range of officials and residents on the ground. (SCMP)
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