China must conquer SpaceX to challenge the world order, Plus US sanctions firms for manufacturing attack drones in China -- China Boss News 10.18.24
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What happened
China launched eighteen satellites into orbit last week on its Long March 6A rocket from the Taiyuan launch center in Shanxi province.
The mission was Shanghai Spacecom Satellite Technology's (SSST) second launch. SSST is a state-owned communication satellite manufacturer that has raised nearly a billion dollars for its massive mega constellation project.
The first group of 18 satellites was launched on August 6, with China's Aerospace Science and Technology Corporation (CASC) announcing success a few hours later.
According to the South China Morning Post (SCMP), the project, also known as 'Spacesail' or 'Qianfan' ('Ten Thousand Sails,' in English), aims to provide global broadband network coverage and move towards 6G connectivity to rival Starlink, a private space company Elon Musk developed with SpaceX to provide internet to remote areas.
SSST statements say the company aims to launch 108 satellites this year and 648 next year to achieve regional network coverage. By 2027, the goal is to have 1,296 satellites in orbit to provide global coverage.
News of the launch barely made global headlines, however.
It was drummed out by the steady coverage of SpaceX's dramatic test flight of its Super Heavy Starship rocket, in which a giant robotic arm was used to catch the rocket's descending first stage.
Why it matters
'Thousand Sails'
Although Chinese companies have excelled globally in industries like electric cars, drones, and solar panels, they are trailing Elon Musk's SpaceX at a snail's pace in the space sector.
While SpaceX has over 6,000 Starlink satellites in orbit providing global broadband, China has only managed a few dozen, even with last week's launch.
SpaceX's reusable rocket technology has allowed it to dominate the market, with around 100 launches in 2023 compared to less than 10 by Chinese startups.
Not to be outdone in such a strategic tech field, however, Chinese leader Xi Jinping has accelerated state support for the sector, "calling for accelerated progress" and "emphasiz[ing] China's determination "to lead in space exploration."
China's "Thousand Sails" program, Qianfan in Chinese, but officially referred to as the "Spacesail Constellation" and, sometimes, as "G60 Starlink" - there seems to be no standard usage between officials and the media - began in 2023 with the "Shanghai Action Plan to Promote Commercial Aerospace Development and Create a Space Information Industry Highland," and initial funding of 6. 7 billion Chinese Yuan ($943 million).
The system is expected to provide data security and potentially be used by the People's Liberation Army for military purposes, similar to Starlink's utility during the conflict between Ukraine and Russia.
And that's, of course, where things heat up.
As The Guardian's Taiwan-based Helen Davidson also reported in May, the escalating rivalry between the US and China has recently transitioned from Earthly confrontations to the expansive space arena.
"Beijing has made no secret over its ambitions, and a spate of recent successful space missions has shown that the government's rhetoric is backed by technological advances," she said.
The rapid progress of China's space initiatives has raised significant concerns in the US, which sees China's activities as possibly linked to geopolitical intentions amid what NASA administrator Bill Nelson first referred to in January 2023 as a new "space race."
US officials especially worry about China's development of anti-satellite weapons, including missiles capable of targeting satellites and spacecraft that can disrupt satellite orbits.
In April, Nelson warned members of Congress that although Beijing says the country's space program is civilian, "they are very, very secretive."
"We believe that a lot of their so-called civilian space program is a military program. And I think, in effect, we are in a race," Nelson said.
General Stephen Whiting of the US Space Command has also underscored the seriousness of China's advancements, saying that the country has tripled its spy satellites in orbit over the past six years and warning that China is moving "breathtakingly fast."
Starlink vs The People’s Liberation Army
A recent overhaul of the Chinese military to focus on "space ops" would seem to back up Nelson's and Whiting's statements.
Earlier this year, China suddenly reorganized its military to establish the new Aerospace Force, which is responsible for overseeing military space operations and launches.
According to Namrata Goswami, who writes on space policy for The Diplomat, the restructuring shifted focus to equip the People's Liberation Army (PLA) with advanced technologies like AI, robotics, cyber, hypersonic, and space capabilities to create a leaner and more effective force that might one day hold its own with the US.
As Reuters staff noted in August, China's concern about Starlink's potential impact on battlefield communications and the PLA-affiliated media's hyperfocus on the US' "space hegemony" drive its effort to win control over low earth orbit (LEO) satellites.
The PLA began intensifying its warnings of the dangers of Starlink after the system was deployed to aid Ukraine during its war efforts.
When Starlink was extended to Ukraine following Russia's invasion, the army's newspaper denounced it as an "accomplice" of the "hegemony-obsessed US" even though Ukraine had requested SpaceX's assistance.
Starlink has played a crucial role in Ukraine's war efforts, enabling soldiers to communicate, identify targets, and share videos.
The system is difficult to disrupt, and granting Taiwan access to Starlink could seriously complicate Beijing's "inevitable reunification" plans.
Still, beyond the ruling elite's dreams of slurping noodle soup in Taipei, China also wants to fill the internet's power vacuum.
When China began its "Digital Silk Road" project in 2015, which followed its extensive Belt and Road Initiative two years prior, Beijing said the aim was to improve and expand the availability of global digital infrastructure.
But human rights groups have more recently cautioned that China is using companies like Huawei, ZTE, and Alibaba to spread its digital authoritarianism model to neighboring countries Cambodia, Malaysia, and Vietnam.
Harvard lecturers Edoardo Campanella and John Haigh say governance of the decentralized internet has become a crucial battleground for future regulations and standards, given its heavy reliance on shared standards to ensure compatibility across platforms.
Last year, Campanella and Haigh wrote in Foreign Policy that authoritarian regimes like China are pushing for a more centralized approach with their "New IP" proposal.
"Think about someone chatting on Facebook or watching a YouTube video. Communications take place at that level and, if the layer is centrally controlled, governments could limit freedom of expression and thought while violating the privacy of an individual and targeting specific groups," they wrote.
This Week's China News
The Big Story in China Business
CHINESE INDUSTRY GROUP CALLS FOR SECURITY REVIEW OF INTEL: Reuters has reported that China's Cybersecurity Association is calling for a security review of Intel products sold in China, alleging harm to national security.
While not a government body, the association's close ties to the state could prompt action from the Cyberspace Administration of China.
The accusations claim Intel has major security flaws and poses a risk to critical information infrastructure due to potential backdoors created by US intelligence.
A potential ban on Intel products is a two-edged sword, however, as it could significantly impact China's AI chip supply, which is already under pressure due to US export bans on Nvidia products.
Nonetheless, with a quarter of its revenue coming from China, Intel may face revenue disruptions if a security review occurs. It could also ripple across the semiconductor industry, potentially leading to a more volatile market and supply chain shifts.
Déjà vu?: Last year, Beijing prohibited domestic operators from buying products from Micron Technology after a failed security review.
That ban was widely seen as a retaliatory move against the US for curbing China's access to advanced semiconductor technologies.
Since then, the Biden administration has managed to more fully "multilateralize" semiconductor export controls, with South Korea recently joining Japan and the Netherlands in mirroring US measures.
In other words, if China's targeting of Micron was also aimed at intimidating Seoul, it failed.
Of greater significance, however, is that earlier this year, China introduced guidelines to phase out US processors like Intel and AMD from government computers and servers.
Chinese government agencies at and above the township level must now purchase "safe and reliable" Chinese alternatives.
"Made in China 2025": Ultimately, the move against foreign - and, especially, American tech is part and parcel of Xi Jinping's state-led industrial policy, "Made in China 2025."
In 2015, China embarked on the ambitious 10-year initiative to attain self-sufficiency, foster innovation, and enhance the manufacturing industry within a decade.
However, the economy and volatile geopolitical situation may have hampered those plans, and reviews are mixed about how much success has been achieved thus far.
Earlier this year, I wrote about Beijing's measures to block Intel and others in a popular newsletter post: "Huawei's revenge: China blocks Intel, Microsoft, AMD from government computers."
Law and International Xi
FIRMS SANCTIONED FOR MANUFACTURING ATTACK DRONES IN CHINA: The United States last week imposed sanctions on two Chinese companies and a Russian affiliate involved in producing and shipping attack drones for the war effort in Ukraine.
According to Reuters, the sanctions targeted Xiamen Limbach Aircraft Engine Co Ltd, which makes engines for Russia's drones, and Redlepus Vector Industry Shenzhen Co Ltd for their role in shipping the drones.
Most notably, it’s the first time the US has sanctioned Chinese entities directly involved in developing weapons systems with Russian firms.
In a press statement, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) said the drones are developed in China and transferred to Russia for deployment.
The sanctions extend to critical players in the development and production chain, including companies like Joint Stock Company Izhevsk Electromechanical Plant Kupol, Xiamen Limbach Aircraft Engine Co., Ltd., and Redlepus Vector Industry Shenzhen Co Ltd, as well as Russian individual Artem Mikhailovich Yamshchikov.
Forecasted: In September, I told you that European intelligence sources had revealed a Russian weapons program in China and that - if confirmed - China could face sanctions for providing "material support" to Moscow.
Moreover, China's involvement in supporting the Russian military could significantly impact how the international community views it.
The sanctioned Russian state-owned weapons company in China reportedly designed a new drone model, Garpiya-3 (G3), capable of traveling about 2,000 km with a payload of 50 kg (110 lbs).
Geopolitics
CHINA CONDUCTS LARGE-SCALE DRILLS, ENCIRCLING TAIWAN: China conducted large-scale military drills in the waters and skies surrounding Taiwan last week as a show of force, testing the ability of its armed forces to fight alongside each other, state media said.
Taiwan reported that China flew a record 125 aircraft toward the island on Monday and tracked 17 Chinese naval vessels and 17 coast guard ships.
“Scores of Chinese aircraft and dozens of ships surrounded Taiwan after President Lai Ching-te rejected Beijing's claim over the island” in remarks leading up to Taiwan’s National Day celebrations, New York Times staff said.
China reiterated on Wednesday that it will not give up the option of using force against Taiwan following recent military exercises and a visit by President Xi Jinping to the site of a historic defeat for Taiwan.
President Xi visited Dongshan Island in Fujian Province, facing Taiwan, “to promote cross-strait cultural exchanges, and ‘enhance the ethnic, cultural and national identity of Taiwan compatriots,’" Chinese state media said.
China's military drills were condemned by Taiwan as irrational and provocative, leading Taiwan to dispatch troops in response.
The exercises risk escalating tensions with the United States. Secretary of State Antony J. Blinken expressed grave concern over China's military drills near Taiwan, calling them “unwarranted.”
As I reported last week, new drills were anticipated to follow up on PLA exercises conducted in May after Lai’s inauguration speech. Those were named “Joint Sword-2024A,” and these—you guessed it—“Joint Sword-2024B.” 🙄
Best Reads
Scale of Chinese Spying Overwhelms Western Governments (Max Colchester and Daniel Michaels, Wall Street Journal): China's increased efforts to gather intelligence to strengthen Xi Jinping's control over the country are increasingly concerning to Western officials.
Costly Conflict: Here’s How China’s Military Options for Taiwan Backfire (Peter Wonacott, United States Institute of Peace): An invasion of Taiwan would result in Beijing losing access to foreign capital, essential technology, and tax revenue, while a blockade by sea and air would also be harsh on China's economy.
Websites blocked in Hong Kong—when, how, and why? (Hong Kong Free Press): Hong Kong's business environment once set it apart from mainland China due to its unrestricted and open internet access, but an increasing number of websites are now inaccessible, with some alleging police interference.
Middle Kingdom Surreal
WHAT YOU DON’T KNOW IN XI’S CHINA CAN KEEP YOU OUT OF JAIL: William Zheng at the South China Morning Post said there has been a noticeable uptick in the punishment of lower-level officials for reading “an illegal publication containing contents that undermined the unity and solidarity of the Party.”
A dozen cases this year included accusations of reading banned materials, signaling a crackdown, and cases could potentially lead to criminal charges.
Accusations of reading politically sensitive or forbidden publications are becoming especially common among disgraced Chinese officials who also face corruption charges.
Zheng said the recent increase in naming and shaming individuals for reading unauthorized materials coincides with an amendment to party disciplinary regulations that broadened the scope of prohibited activities.
The banned publications cover sensitive topics such as the Chinese Civil War, the Cultural Revolution, and the Tiananmen crackdown.
Customs regulations in China prohibit the entry and exit of printed materials, films, and other media deemed harmful to politics, economy, culture, and morality.
Those found to be reading such materials can face warnings, removal from party positions, and even criminal prosecution.
Despite the restrictions, the circulation of sensitive materials within the party has reportedly been a common practice for years, even during Mao Zedong's leadership.
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It’s the chestnut season in Portugal! Enjoy your weekend.
Hi Shannon, do you see China falling under sanctions for assisting Russia with the war in Ukraine? I believe China's role in this conflict is clear to the world, but the West's reliance on China does not allow for a decoupling at this point. What are your thoughts on this?