“From a Chinese perspective, they are in an information war with the United States right now. Their authoritative writings and speeches declare it to be so…” – Paul Becker
OODA CTO Bob Gourley describes China as “large, complex, ambiguous, dangerous, and of critical importance to business decision-making. From a political perspective, China remains a closed society where challenges to party rule are met with harsh, crushing responses. The daily life of its citizens is set under an environment of continually-expanding surveillance. Economically, China’s decades of tremendous growth have made it a powerhouse, but one with weaknesses and uncertain foundations.” Consider that:
- Just three days ago, Anti-Xi protests broke out in Beijing, Chinese internet users lost access to WeChat, and many users “were suspended from [the app] and face ‘digital death”; (1)
- Runs on Chinese village banks continue to have the potential to cause a “dangerous contagion and spread into a serious crisis?”;
- Over ten years ago, Xi Jinping made a decision to double down on a construction-based economy – even though there were already signs that the strategy was not working. And that is now coming home to roost, as Chinese citizens are refusing to pay their mortgages, an internal economic crisis that Xi and the party were anxious to erase from existence; and
- Domestically, the economic, cultural, and political failure that is China’s Zero Covid-19 policy, along with an inferior state-produced vaccine and an unwillingness to purchase better vaccinations from the global market; and
- Since August (and throughout the Summer of 2022), “‘There is nothing in world climatic history which is even minimally comparable to what is happening in China,’ weather historian Maximiliano Herrera told New Scientist. ‘This combines the most extreme intensity with the most extreme length with an incredibly huge area all at the same time.’ It’s the most extreme heat event ever recorded in world history. For more than 70 days, the intense heat has blasted China’s population, factories, and fields. Lakes and rivers have dried up. Crops have been killed. Factories have been closed More than 900 million people across 17 Chinese provinces are subjected to record-breaking conditions.” (3)
Emperor Xi Jinping?
Xi Jinping has managed to navigate this unrest and uncertainty during the recent “selection season” – which was the months in the lead-up to the Communist National Party Congress (where Xi will be vying for a third presidential term after, like President Vladimir Putin in Russia, removing term limits for the presidency). He has survived (even with a fair amount of palace intrigue aligned against him) through:
- A brutal return to purist Stalinist doctrine;
- Best-in-class 21st surveillance technology directed at its citizens (which enables the control mechanisms necessary for a centralized authority to enforce its power – at scale);
- A crackdown on the Chinese billionaire class and western-influenced popular culture;
- A further stranglehold on Hong Kong’s slowly dying democracy and global financial leadership;
- A strategically ruthless, rigorously documented, and disciplined war footing against the West for competitive advantage in the technologies of the future.
- State and non-state actors launching cyber attacks, 24/7 at exponential scale – across the world: according to 60 Minutes, some 40 million a day are directed at Taiwan (and most likely some small percentage of the 40 million cyber-attacks a month are directed at the Port of Los Angeles; and
- Finally, a “fake it ’til you make it” political, kinetic, and cyber signaling and messaging that the Chinese annexation of Taiwan is not a question of if, but when.
Yesterday (Sunday, October 16th), the Communist Party of China (CPC) convened the abovementioned, highly anticipated 20th National Congress of the Chinese Communist Party, where Xi will be appointed for a third term as President, or what some are calling a “21st Century Chinese Emperor” (not far behind the 21st-century Russian Tsarist construct emerging in Russia):
“On Sunday, 2,296 of the Chinese Communist Party’s 96.7 million members will assemble for a week-long party congress in Beijing, the outcome of which is all but certain: a third consecutive five-year term for Xi Jinping as ruler of 1.4 billion Chinese. In ratifying an extension of Mr. Xi’s time as the political figure who controls more people, with fewer constraints, than any other in the world, the Chinese party would confirm that national aggrandizement and dictatorship, not global cooperation and human rights, are its lodestars.” (6)
Nevertheless, the strategic question remains: Does Emperor Xi Jinping have no clothes?
“…attacking the Ports of Long Beach and Los Angeles is like the Chinese attacking themselves…a huge percentage of the import traffic at the port is from China…” – John Sullivan
- The Competition is Real and Strategic in Nature: OODA CTO Bob Gourley notes that “several countries have the capability to inflict harm on U.S. interests. However, The People’s Republic of China (PRC) is the only one that has declared an intent to challenge the U.S. for global supremacy. The US Intelligence Community has long regarded China as the most active strategic competitor across multiple domains including espionage and cyber espionage. Business leaders have long seen China as a place where partnering for business, especially manufacturing, is of critical importance. But over the last decade businesses have seen reasons to relocate many operations from China due to increased risk. This has accelerated over the last few years due to supply chain issues with Covid shutdowns.”
- Last Wednesday, the White House released the 2022 National Security Strategy (NSS) which echoes Bob’s analysis and “appropriately brands China ‘the only [U.S.] competitor with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military, and technological power to do it.’ Yet the document holds out the prospect that China and the United States can ‘work together, for the good of our people and for the good of the world on issues such as climate or pandemics.'” (6) Some editorial boards and China watchers consider this sentiment expressed in the NSS more than a bit Pollyanna.
- US Chip Sanctions ‘Kneecap’ China’s Tech Industry: “The ‘ toughest export restrictions yet cut off AI hardware and chipmaking tools crucial to China’s commercial and military ambitions. Last month, the Chinese e-commerce giant Alibaba revealed a powerful new cloud computing system designed for artificial intelligence projects. It is used by Alibaba’s cloud customers to train algorithms for tasks like chatbot dialogue and video analysis and was built using hundreds of chips from US companies Intel and Nvidia. Last week, the US announced new export restrictions that will make future projects like that unlikely. The Biden administration’s rules forbid companies from exporting advanced chips needed to train or run the most powerful AI algorithms to China. The sweeping new controls are designed to keep the country’s AI industry stuck in the dark ages while the US and other Western countries advance. The restrictions also block the export of chipmaking equipment and design software, and ban the world’s leading silicon fabs, including Taiwan’s TSMC and South Korea’s Samsung, from manufacturing advanced chips for Chinese companies.” (7)
- China’s Communist Party Congress: What It Means for Business: “The opening speech by Xi Jinping, the country’s top leader, could provide clues to policies with broad economic and financial implications.”
- OODA Network Member Dr. Lisa Porter reinforced via an online post that “this is a very important point”: Is Our Competitor ‘China’ or the Chinese Communist Party?: “We should carefully choose the words we use when discussing our strategic competitor. Words, chosen deliberately, can strengthen or weaken nations. Too often, we conflate “China” and the “Chinese Communist Party,” bolstering the authoritarian regime at the expense of our own strategic goals. The CCP has long aimed to eradicate [the] distinction between country and party. Current leader Xi Jinping, even more than his predecessors, has striven to condition the people of China to view themselves not as members of the ancient Chinese civilization, but as cogs in the CCP machine. As explained by BBC’s Shanghai correspondent, ‘the Communist Party strategy has been to try to morph the Party and the machinery of government and the perception of the nation of China into one.’ Using the correct words to distinguish between the CCP regime and the Chinese people and their ancient civilization is one way to slow Xi’s march toward his goals—and protect the American people both strategically and at home. Defense leaders and writers should take note.” (9)
- Xi’s and the CPC’s failure is actually more of a risk variable to the U.S. than China’s success: “Given these issues, and party control of the media, Mr. Xi’s true popularity is impossible to gauge. But he is likely testing his people’s patience. On Thursday, a courageous protester unfurled banners in Beijing, one calling for Mr. Xi’s ouster and another reading, in part, ‘We Want Freedom, Not Lockdowns . … We Want Votes, Not Leaders.’ When their economies stagnate and discontent increases, autocrats sometimes try to distract their people with adventures abroad. This is reason to worry that Mr. Xi might act on his ambition to seize Taiwan, sooner rather than later. So far, it is Mr. Xi’s success that has created risk for the United States and its allies. They must prepare for the possibility that his failures will create even more.'”
- Finally, as we continue to track the unintended consequences of the convergence of exponential disruption and advanced technologies: China’s heat wave is also creating havoc for electric vehicle drivers: “The country is a leader in EV adoption, but extreme weather is exposing weaknesses in its charging infrastructure.” (4)
Further OODA Loop Resources
Updated China Threat Brief for Executive Decision Makers: This OODA special report investigates the capabilities and intent of the People’s Republic of China, with a special focus on factors relevant to business decision-makers. Our objective: To provide insights that are actionable for business leaders seeking to mitigate risks through informed decisions. This report is based on highly regarded primary sources including the US Intelligence Community’s Annual Threat Assessment, reporting from the National Counterintelligence and Security Center, our own research, and reporting and input from executives and business leaders with direct first-hand experience doing business with China.
Will the United States Ever Accept that Cyber Espionage Is Vital for China’s National Security?: China’s national security interests revolve around three core issues: its national sovereignty, the security of its sovereign interests, and its economic growth. Current President Xi Jinping has repeatedly used the word “national security” in speeches before the Chinese Communist Party to underscore its importance to China’s continued rise as a global leader. According to a recent study, Xi added five new areas to its national security interest to the original 11 announced in 2011.
CSET on China’s Advanced AI Research and the China AI “Watchboard” Pilot Program: We have integrated Center for Security and Emerging Technology (CSET) research into our OODA Loop research and analysis on topics ranging from artificial intelligence, dis- misinformation, and information disorder (what we characterize as a crucial strategic need for National Cognitive Infrastructure Protection), technology talent retention, and the CHIPS Act. The recent CSET report “China’s Advanced AI Research: Monitoring China’s Paths to ‘General’ Artificial Intelligence “examines what paths to general AI are available in principle, as a prelude to describing work underway in China to realize that capability. The report authors also “preview a pilot program…as a starting point for China-focused indications and a warning watchboard…that will track China’s progress and provide timely alerts.”
Will China Replicate Russia’s Cyber Offensives in a Taiwan Reunification?: The current situation in Ukraine has garnered the world’s attention with stakeholders watching attentively as the crisis unfolds. Such regional hotspots have the potential of spilling over into neighboring countries and pulling in governments from all over the world in some capacity. The threat of armed conflict escalating into a major global engagement is always a possibility. China and Taiwan are eagerly watching the crisis as well, but largely for different reasons. While Taiwan is interested to see how friendly governments come to Ukraine’s aid, China is observing how Russia may go about reclaiming territory of the former Soviet Union, in an attempt of gaining insight into how such an act can be accomplished successfully, should Moscow do just that.
Strategically, is the PRC up Against the Ropes?: In a recent Op-Ed by Bill Stanton over at the Taiwan News with the headline “A PRC in decline: A multitude of difficult challenges,” Stanton itemizes the difficulties facing the “Great Power” nation: “Given the international enthusiasm the PRC often generated in the past and from which it has profited, chiefly because of its impressive economic growth rates, it is notable how more recent 2022 assessments of China have significantly soured.” Stanton goes on to provide an analysis of “three issues that may be the most serious for the future of the PRC: a decline in economic growth, demographic failure, and growing international distrust and opprobrium.”
What the C-Suite Needs to Know about the Potential Political Instability of Xi Jinping, the CPC, and the PLA: The Sunday Morning Herald reports that Xi Jinping and his loyalists have experienced a plot against their power; have deployed subsequent purges of power based on these challenges, and question the loyalty of their top military brass in China. Details of these events are reviewed here.
Richer and Becker on Domestic Terrorism, Cyber, China, Iran, Russia, and Decision-Making: These conversations with Becker and Richer cover topics such as domestic terrorism, cyber threats, China, Russia, and decision-making.
What Exactly is the PRC up to in the Artic?: China considers the Arctic a critical link in its One Belt One Road initiative and is building polar-capable cargo vessels, liquefied natural gas tankers, and nuclear-powered icebreakers. Both China and Russia have increased their military activity in the region and have made numerous attempts to alter the existing Arctic governance. The recently released “Exploring the Relationship between China’s Investment in the Arctic and Its National Strategy” by CNA provides a federally mandated update on Chinese activities in the arctic and the “Chinese Dream.”
Cyber Espionage Likely Supporting China’s Arctic Aspirations: It is increasingly evident that China believes the timing is right for it to aggressively push its national interests. One area that often gets overlooked when looking at China’s expansionism is its interest in the Arctic. China’s interest in the area is not a secret, as it has promoted itself as a legitimate “Arctic State” as early as its 2011 Twelfth Five-Year Plan, and in its 2018 Arctic Policy.
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