China Reform Monitor No. 1515

Related Categories: Democracy and Governance; Human Rights and Humanitarian Issues; International Economics and Trade; China

U.S. TIGHTENS GRIP ON EXPORTS OF CHIPMAKING GEAR TO CHINA
Over the past few weeks, U.S. manufacturers of chip making equipment have received letters from the Department of Commerce instructing them not to sell equipment for making chips at 14 nanometers or below to Chinese buyers. The Department had banned the sale of gear for fabricating 10 nanometer chips or below to China's chip leader, Semiconductor Manufacturing International Corp., but expanded that prohibition to all chipmakers in China and to equipment that can make anything below 14 nm. In chip manufacturing, the lower number of nanometers, the more advanced the product; meaning the new rules cover a broader range of semiconductor making equipment. "The Biden Administration is focused on impairing PRC efforts to manufacture advanced semiconductors to address significant national security risks to the U.S.," the Department said in a statement. (Bloomberg, July 29, 2022)

CHINA TARGETED FED TO BUILD INFORMANT NETWORK
Since 2013, China has been trying to build a network of informants inside the U.S. Federal Reserve, according to a report from the Senate's Committee on Homeland Security and Governmental Affairs. Fed employees were offered contracts with Chinese talent-recruitment programs, offered cash payments and asked to provide information on the U.S. economy, interest-rate changes and policies. In one incident in 2019, Chinese officials detained and threatened to imprison a Fed economist in Shanghai and tried to coerce him to share data and information on U.S. government policies, including tariffs, Fed oversight of the U.S. financial system, and interest-rate policy. The report does not say whether any sensitive information was compromised. (Wall Street Journal, July 26, 2022)

FBI: CHINESE TELECOM EQUIPMENT COULD DISRUPT U.S. MILITARY COMMUNICATIONS
Since at least 2017, there has been a dramatic rise in Chinese espionage activity on U.S. soil. Federal agents have investigated suspicious land purchases near critical infrastructure, closed the Chinese consulate in Houston, which was a hotbed of spies, and obstructed efforts to plant listening devices near military and government facilities. The FBI uncovered the latter scheme, which planned to use Huawei equipment on cell towers near U.S. military bases in the Midwest to capture and disrupt highly restricted Defense Department communications, including those from U.S. Strategic Command, which oversees nuclear weapons. In July, the U.S. National Counterintelligence and Security Center warned American businesses and local and state governments about China's efforts to use them to influence U.S. policy. (CNN, July 25, 2022)

JEEP FACTORY PULLS OUT OF CHINA OVER GOVERNMENT MEDDLING
The last Jeep factory in China has been shuttered and a 12-year manufacturing partnership with state-owned Guangzhou Automobile Group has been terminated because local politicians are meddling in the business, said Stellantis CEO Carlos Tavares. The world's sixth largest carmaker made the decision due to concerns about rising political tensions between China and the West. "We have been seeing over the last few years more and more political interference in the world of business in China. We don't want to be a victim of cross-sanctions as has been the case for other companies," Tavares said. The factory had produced the Jeep Cherokee, Compass, and Grand Commander models for the local market. (Bloomberg, July 30, 2022)

CHINA FORCIBLY RELOCATING TIBETANS TO DISPUTED BORDERS
Under the "Very High-altitude Ecological Relocation Plan," China is forcibly relocating as many as 130,000 Tibetans from Shigatse, Nagchu and Ngari into 624 "Border Defense Villages" in areas along the disputed Himalayan border that India, Bhutan and Nepal also claim. The strategy of constructing new villages in disputed border areas, which is intended to consolidate Beijing's control over those areas, is being called "Poverty Alleviation." Over 100,000 of the 130,000 Tibetans in question will be re-settled along the Yarlung Tsangpo River, with plans to develop an industrial corridor along the river. The plan will displace about two million Tibetan nomads, who will lose their livelihood. (New Indian Express, July 30, 2022)