Sanctioned Singaporean firm a "warning shot" for China, War in Ukraine “setback” for President Xi’s BRI & Goodbye Carrie Lam, Hello new HK totalitarian -- China Boss News 4.11.22
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Sanctioned Singaporean firm a "warning shot" for China, but companies can probably evade enforcement, experts say
Last week’s U.S. sanctions on a Singaporean-based telecom electronics wholesaler for its Russian transactions were "a warning shot to Chinese businesses with exposure to the market," the South China Morning Post said.
SCMP:
The US Treasury Department on Thursday imposed fresh sanctions on 21 entities and 13 people, including Joint Stock Company Mikron, Russia’s largest chip maker, and Alexsong Pte Ltd, a Singapore-based telecoms electronics wholesaler that allegedly facilitated transactions that helped Russia evade sanctions.
“We will continue to target Putin’s war machine with sanctions from every angle until this senseless war of choice is over,” Secretary of the Treasury Janet Yellen said in a statement on Thursday.
The sanctions freeze all US assets of the targeted entities and individuals, and generally ban American companies from trading with them.
The inclusion of Alexsong on the U.S. Treasury Department's sanctions list reflects the risk of secondary sanctions that Chinese companies "are trying to manage," SCMP said. Still, experts caution, enforcing sanctions in China is likely to be difficult, and “[t]he US needs to rely on fear to ensure self-enforcement by Chinese firms afraid of the ‘big hammer’ that falls if they are caught in the end,” they said.
In a recent interview with Inside U.S. Trade, Nazak Nikakhtar, former assistant secretary for industry and analysis at the U.S. Commerce's International Trade Administration, also stressed that the "effectiveness of the export controls is incumbent on U.S. exporters and allies ‘following the rules to the tee’” and “making sure the U.S. has ‘viable ways to check exports to Russia, exports from maybe China to Russia, to make sure the rules are being adhered to.’”
Inside U.S. Trade:
Without the necessary end-use checks in place, Nikakhtar says the U.S. needs to consider how to either improve that ability or reconfigure licensing policies. China has a long history of violating U.S. export controls, she said, “There’s ample evidence of that.”
“Good luck” trying to monitor the transactions of “China’s 4,762 little giants,” Bloomberg’s Shuli Ren adds, referring to the small and medium-sized companies that Beijing has “nurtured” to bolster home-grown talent and supply chains.
Ren, Bloomberg:
As of 2021, China has recognized 4,762 little giants, with 74% in manufacturing and another 20% in scientific research and technology services, according to data compiled by HSBC Holdings Plc. It plans to spot 3,000 more this year.
Although the "little giants" can't hold a candle to national champs Alibaba or Tencent Holdings Ltd. "whose businesses span from social media, cloud computing to e-commerce," they "burrow deep in the global supply chain" and officials may balk at sanctioning them if there’s a risk of disruption for essential supplies that power the American economy, Ren said.
Ren, Bloomberg:
Even when it comes to Putin’s Russia. While the Treasury sanctioned oligarch Alisher Usmanov, detaining his yachts and private jets, they exempted his businesses, many of which are important inputs to manufacturing. His companies supply half of the world’s merchant hot briquetted iron, a raw material for steel production. Officials worry that acting against Usmanov could drive up metals prices, the Wall Street Journal reported. After all, inflation already hit 7.9%, the highest since the 1970’s OPEC oil embargo.
By the same token, will the Treasury want to sanction a Chinese firm that is an essential supplier to American businesses such as Apple Inc.? Sanctions are meant to inflict damage on your adversary, not on yourself. While behind on semiconductors and aerospace, Chinese firms are already leading forces in electric-vehicle batteries, machine tools and robotics, according to Gavekal Dragonomics, a research firm.
For the rest of SCMP’s report, Chinese tech firms see warning shot from US sanctions on Singaporean firm, click here. For Ren’s opinion piece in Bloomberg, Good Luck Trying to Sanction China’s 4,762 Little Giants, click here.
Law and International Xi
U.S. officials rush to Solomon Islands to lobby against security pact with China
The U.S. has rushed two top Asia officials to the Solomon Islands "in a rare high-level visit that underscores alarm in Washington over the Pacific nation’s security pact with China," Financial Times has reported.
FT:
Kurt Campbell will fly to the Solomon Islands this month, according to four people familiar with the plan. He is expected to travel with Daniel Kritenbrink, the top state department Asia official. Their visit comes as the small Pacific nation emerges as a strategic battleground between the US and China.
Beijing and the Solomon Islands last week signed "a draft security pact" that "paves the way for China to deploy troops and police on the islands,” and “says Chinese security personnel would guard any Chinese navy vessels that dock” there, FT analysts added. Officials told reporters that the U.S. is concerned the agreement will permit PRC security and military forces "to be introduced into the region in a non-transparent, non-co-operative, [and] non-collaborative manner.”
American diplomats say past warnings that China might fill a geostrategic hole left by the U.S. had fallen on deaf ears. A former U.S. ambassador told FT that locals “had for years asked the U.S. to be more engaged, but Washington was juggling many priorities and Australia was doing a good job managing relations with Honiara.”
Now, it seems that Washington is hurrying to make amends.
FT:
“When I started my role as ambassador in the region there was zero interest in Washington in opening a new embassy, but we continued to make the case and as China’s influence continued to grow . . . there was a quick reversal,” said Ebert-Gray, now education director at the University of Colorado.
She also pointed to the Peace Corps decision to start a program in the Solomons after two decades. In February, Antony Blinken, secretary of state, visited Fiji, where the US is also vying with China for influence, and pledged more regional help on climate change and Covid-19 for the region.
The state department official said the US donated more than 52,000 doses of Covid vaccines to the Solomons this week, following a donation of 100,000 doses late last year. He said the US was also helping clear unexploded weapons from the second world war, while the US coast guard was tackling illegal fishing.
For the rest of FT’s report, US to send officials to Solomon Islands due to tensions over China security pact, click here.
Call between senior Chinese and Ukrainian diplomats signals meeting between Xi and Zelensky, Bloomberg
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