The China Thread

[Valmy]

If China just straight up invades Taiwan all you fuckers better not stay neutral. What is the plan for Canada and company if China kicks our ass?

[Jacob]

If China just straight up invades Taiwan all you fuckers better not stay neutral. What is the plan for Canada and company if China kicks our ass?

Agreed.

I think Canada will always support the US actions, one way or the other. That's how the bread is buttered. If China straight up invades Taiwan, I'll personally be all on board for supporting the US in defending Taiwan so I'm with you there as well. I think European NATO allies should be there as well, as far as I'm concerned.

I mean, I think (but am not sure) that technically that neither Canada nor the Western European nations are obligated to fight even defensive wars in Asia? Are they/ we signatories to treaties to that effect? But I agree, in the case of an all up invasion of Taiwan for no reason other than "it's ours and now we take it", Canada and the European NATO members should contribute to stopping China. And I would hope they/ we would do so vigorously.

[Berkut]

I think a knock down, drag out war over Taiwan could be very intense, and wuold have a nearly zero percent chance of involving any WMDs of any kind.

[mongers]

If China just straight up invades Taiwan all you fuckers better not stay neutral. What is the plan for Canada and company if China kicks our ass?

I can't see this happening, the US military and naval forces have banked decades worth of huge 'investments' in weapon systems and all the necessary training that goes with it.  It's the reverse of May 1940- Dec 1941 when highly trained and somewhat better equipped Axis forces routed Western democracies for a while.

No doubt Chinese forces could do US regional forces and allies significant damage, but the US navy is still by far the pre-eminent world naval power and the Chinese naval/coastal defence forces aren't comparable to the Japanese imperial navy of 1941.
My guess is within a month or so of a wide ranging Chinese attack to invade Taiwan, the US and allies would have gained the strategic initiate and would be able to mount devastating conventional attacks on remaining naval, air and strategic targets in China's East coastal provinces.

Additionally nearly all of China's commercial shipping not in home ports will have been accounted for. And would China's financial system be robust enough to survive the crisis?

[DGuller]

I think China's relative lack of nuclear capability will serve to avoid the nuclear exchange, because there won't be a threat of first strike.  If US were to duke it out with Russia, however, then all bets are off.

[Berkut]

I think China's relative lack of nuclear capability will serve to avoid the nuclear exchange, because there won't be a threat of first strike.  If US were to duke it out with Russia, however, then all bets are off.

Indeed. The dangers with Russia are radically greater for a couple different reasons.

[Eddie Teach]

Chiefly, that Russians are fucking crazy.

[Berkut]

Chiefly, that Russians are fucking crazy.

Indeed. That is one of the factors.

The other is that both sides have credible (or at least imagine themselves to have credible) first strike capabilities. That makes actual shooty shooty wars really damn scary.

[Monoriu]

Chiefly, that Russians are fucking crazy.

But Soviet tanks never crossed the borders with the West.  Maybe they are not that crazy after all? 

[Sheilbh]

Wasn't it concluded in the early to mid 90s when it looked like liberal capitalism had triumphed and "history was over"? I have zero knowledge on the particulars of the agreement or its reception, but based on the general view of the world order back then could imagine an optimism that did not foresee the current stronger authoritarian nationalism in China.

It was agreed in 1984. The UK's lease of large chunks of Hong Kong lasted for 99 years and would run out in 1997 - Thatcher wanted to renew the lease. My understanding is that was absolutely unacceptable to Deng, who made clear China intended to re-assert sovereignty in full over all of Hong Kong (possibly like India and Goa).

But it's worth remembering that Hong Kong was very much a colony of the British. It had a Governor. It had very limited democratic institutions (MacMilllan had considered democratising Hong Kong as a dominion, like Singapore, but was told by Zhou Enlai that China would consider that a "very unfriendly act"). The legislative council had some electoral element but was largely appointed by the Governor. That was what was being handed over.

What changed, in the 90s, was Chris Patten became Governor (Fat Pang) and I think he felt very strongly that the UK owed something more to Hong Kongers. So he forced through electoral legislation - over very strong opposition from Beijing who wanted a hand over of the purely colonial administration and broad indifference from London. He also pushed for offfering all Hong Kongers British passports - which London rejected. I think his approach was if he could build some democratic and liberal instituions they might survive at least for the 50 years of One Country, Two Systems and, if they didn't, he'd try to give everyone in Hong Kong a way out. Neither fully happened.

Does China actually have any "friends" internationally which are not just partners of convenience due to Chinese money?

Yeah, I think so. I think in the developing world  - especially Africa and some Latin American countries the money helps but also China is seen as a model for development/as a country who can help them grow rich as China did under Deng. I think Russia's move into the Chinese sphere is sincere/not just based on money too. Plus Pakistan.

[Tonitrus]

If it goes to a conventional shooting war between the US and China, it's hard not to see that rapidly approaching WW3.

That is hyperbole.

I can't see how it could possibly approach anything like a World War. Who would be joining China in this war against the world?

North Korea? 

But seriously...the next World War...no matter where it is, will likely stand out in more stark terms of highlighting those who refuse to take a side, than those who choose to fight.

For example, Russia would not get involved...but would almost certainly say that China is within its rights to enforce their control over Taiwan.

Can you define "World War" then? Because I don't think it means what you think it means. Or maybe it doesn't mean what I think it means....

I would hope enough of our allies would be involved that it would meet that (very arbitrary) threshold...or I would be rather disappointed. 

The RotW may not be direct belligerents...but bet your ass the entire world would feel, and likely be involved in nearly every aspect of the political and economic fallouts.

But I think we both know, that seriously arguing about the definition of "world war" isn't very useful (and I would grant, even used by me with a bit a dramatic exagerration), as the definition is ultimately a matter of opinion, be that either individual or public (or academic, if you like).

[Sheilbh]

Incidentally on Hong Kong - it's stories like this that make me think if you want to do business in China with certain risks, you'd be as well setting up in Shanghai; if you want somewhere with rule of law and less risk, Singapore is probably the better option. So it's not clear what Hong Kong's pitch is anymore:

EXCLUSIVE Hong Kong threatens Lai's bankers with jail if they deal in his accounts
Greg TorodeJames PomfretSumeet Chatterjee
7 minute read

Hong Kong's security chief sent letters to media tycoon Jimmy Lai and branches of HSBC and Citibank this month threatening up to seven years' jail for any dealings with the billionaire's accounts in the city, according to documents seen by Reuters.

The letters, signed by Secretary for Security John Lee, were sent to Lai after the Hong Kong authorities announced the freezing of his majority stake in publisher Next Digital (0282.HK) and local accounts of three companies owned by him under a sweeping new national security law.

One of Lai's financial advisers said that while the amount of funds in the accounts was relatively small, they represented the Hong Kong management end of a global network of banking relationships covering his private wealth.

Three senior private bankers and three corporate lawyers - independent from Lai's accounts - said the action extended the tightening national security apparatus into elite tiers of the banking system for the first time, exposing risks for clients and top financial managers in Hong Kong.

The advisers are seeking guidance from bankers and lawyers on how to challenge the freeze, and its impact on offshore holdings and banking relationships managed through Hong Kong until now.

The action by the security secretary is also fuelling concern about the broader investment climate in the city given the potential reach of the security law, imposed on the former British colony last June by China's parliament, lawyers, bankers and diplomats say.

The moves could imperil any attempt by the democracy activist to move offshore assets back home to prop up Next's troubled Apple Daily tabloid, a staunch government critic, the financial adviser said.

Shares in Next Digital rose as much as 330% as they resumed trading on Thursday after authorities last week froze Lai's 71.26% stake, then worth $45 million.

Lai has emerged as one of the highest profile targets of the new law and is facing three national security charges including allegedly colluding with a foreign country.

The letter to Lai, sent to him at the city's high-security Stanley Prison, threatens up to seven years' jail and an unspecified fine for any dealing in the named assets, including disposal or conversion, using them as collateral or transferring them in or out of Hong Kong.

The letter to Lai lists seven Hong Kong accounts that are linked to three companies registered in the British Virgin Islands (BVI).

Lai could not be reached for comment.

Described as "Notice No. 1", the letter states that the action is taken under the "implementation rules" of Article 43 of the law, which allows for the seizure or freezing of property "used or intended to be used" for the commission of an offence.

The letters also acknowledge the right of Lai and the banks to challenge the notice, which expires in May 2023, in court.

The same language was used in letters to HSBC (HSBA.L) and Citibank (C.N), according to the documents seen by Reuters.

A Security Bureau spokesman said as judicial proceedings were going on "it is not appropriate for us to disclose operational details".

"Suffice to say, endangering national security is a very serious crime."

Banking regulator, the Hong Kong Monetary Authority (HKMA), said banks had to cooperate with law enforcement agencies in criminal investigations, including freezing of assets under relevant laws, which includes the national security law.

"The HKMA has no role in criminal investigations and we are not in a position to comment," it said.

'WAKE-UP CALL'

The letter to Lai specified that he would be held liable if he dealt with the assets "except under the authority of a licence" granted by Security Secretary Lee.

The letters to the two banks did not make clear which employees in the bank would be held liable.

A Hong Kong-based spokesperson for Citibank said the bank did not comment on individual client accounts. "Citi is required to comply with all applicable laws and regulations in markets where we operate," the spokesperson said. A spokeswoman at HSBC in Hong Kong declined to comment.

An account in OCBC Wing Hang Bank is also listed in the letter sent to Lai but it is not known if that bank received a similar notice. OCBC Wing Hang declined to comment.

Lai told Reuters last May that, given the pressure building on him, the bulk of his personal wealth was off-shore.

His advisers say this is spread across Asia and North America, including property in Taiwan, hotels in Canada and tens of millions in U.S. stocks.

"We are certain they are determined to choke Apple, and even without trying to seize assets offshore, they are making it difficult to move that money back into Hong Kong," one adviser told Reuters.

"We can now see that any banking relationship you have centred on Hong Kong makes you vulnerable under the national security law – that is going to be a big wake-up call for the wealth management industry here, and their rich clients," the adviser said.

"In trying to nail Jimmy Lai and Apple to the wall, they might well be nailing that industry too."

Lai's advisers fear the uncertainty surrounding his offshore assets stems from the fact that they are held in offshore accounts set up and managed through Hong Kong.

Bankers and lawyers say regulators and banks in other jurisdictions are not obliged to respond to demands related to individual accounts from another country, especially if those requests are not linked to terrorism or money laundering charges.

One senior private banker in Hong Kong said it was a common practice for Hong Kong-based private bankers to set up overseas accounts for clients - operating under a key assumption that such offshoring of wealth would be legally firewalled.

"It doesn't matter if the accounts are set up in Hong Kong. The money is somewhere else, and falls under another jurisdiction," the banker told Reuters. "It's secure."

If, however, confidence in this arrangement were undermined by the national security law and discretionary curbs on monetary outflows, it could hurt the industry.

"A lot of clients have already been spreading their eggs," said the banker who declined to be named given the sensitivity of the issue. "The No. 1 one destination is Singapore."

The 73-year-old Lai is serving a 14-month prison sentence for taking part in unauthorised assemblies during anti-government protests that rocked Hong Kong in 2019.

As those protests built, Lai's representatives moved assets offshore via Hong Kong bank branches to seek protection against a proposed extradition bill that fuelled the demonstrations.

While the government later shelved the bill, its key features - including the ability to render Hong Kong suspects for trial in mainland Chinese courts and broader asset seizure regulations - were included in the security law imposed by China's highest legislative body.

Lee, the security secretary, said last week that the move against Lai was meant to prevent further crimes and wasn't aimed at media work.

Hong Kong's leader Carrie Lam said the action would hopefully reinforce the city's status as a financial hub "so that no-one can use our financial system to carry out acts endangering national security".

Next Digital said in a statement on Wednesday it had enough working capital to operate for at least 18 months from April 1 without new loans or cash injections from Lai.

[Monoriu]

Hong Kong's main draw is the listing of Chinese companies.  They won't list in Singapore.  If you want to speculate Chinese stocks, you have to do it in Hong Kong.

Most investors won't run a newspaper that calls for open revolt.  So I am not concerned.  It is highly unlikely they will consider that Jimmy Lai's case applies to them. 

[Sheilbh]

Most investors won't run a newspaper that calls for open revolt.  So I am not concerned.  It is highly unlikely they will consider that Jimmy Lai's case applies to them.

The bit I think is chilling isn't Jimmy Lai - it's the orders on the banks and lawyers.

[Josquius]

I think China's relative lack of nuclear capability will serve to avoid the nuclear exchange, because there won't be a threat of first strike.  If US were to duke it out with Russia, however, then all bets are off.

I'm not so confident on this. You frequently see reports from on the surface quite decent sources about China actually having far more than is reported.
And why wouldn't it. It has the resources and expertise and can't be blind to this as a weakness.