GOOD MORNING FROM LONDON
24 JUNE 2024. ISSUE
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#1 CHINESE MADE DRONES PURCHASED BY US SECURITY COMPANIES
#2 CHINA’S ECONOMY STILL BURDENED BY STRUGGLING PROPERTY SECTOR
#3 UK PURSUES SPYING ALLEGATIONS AGAINST CHINA – SMOKE NOT FIRE?
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#1 CHINESE MADE DRONES BOUGHT BY US SECURITY COMPANIES
NIKKEI ASIA
“The first drone that Kentucky’s Hardin County sheriffs used was a DJI Matrice 300. A local agriculture cooperative donated the Chinese-made device in 2021 to help officers track down teenagers who destroyed crops on a farm covering hundreds of acres. While officers on foot were always just a few steps behind, the drone was able to find and capture images of the culprits in minutes.
Sgt. Travis Cook told Nikkei Asia that drones quickly became an indispensable tool for the sheriff’s department, which later established a fleet of five DJI craft. They have been used to scout for potentially poisonous materials in a derailed train and even saved officers’ lives during a hostage situation, he said.
The irony is that while police officers, firefighters and rescue workers across the country embrace Chinese drones, Washington is warning that the technology poses a material risk to the U.S. This has opened up a heated debate over local safety versus national security, complicating Washington’s efforts to establish a hawkish yet pragmatic China policy.
Lawmakers in Washington introduced the Countering CCP Drones Act in March and the Drones for First Responders (DFR) Act in May to ban DJI and hike tariffs on Chinese drones in general. Revenue from those tariffs would be used to fund purchases of American drones for public safety departments.
The U.S. House of Representatives Armed Services Committee has included the Countering CCP Drones Act in its draft of the 2025 financial year National Defense Authorization Act (NDAA), a significant defense policy bill. The NDAA is being reviewed by the committee this week and is expected to advance to the House floor.
DJI denied allegations that the Chinese government has backdoor access to its data or the company is unfairly subsidized. “The DFR Act’s proposal to increase taxes and eventually ban drones manufactured in China is xenophobia wrapped inside a national security cover,” the company said in a statement.
Public safety agencies are already barred from using federal grants to buy Chinese drones, but a number of them, including in Kentucky, New Jersey and Connecticut, have made purchases using their own budgets. Many say they would buy them even with higher tariffs
Several officers and drone dealers told Nikkei Asia that U.S. drones cost three to four times more than Chinese models without offering even the same level of technology.
“Would you rather drive a Cadillac Escalade that has all the comforts and tools you need to make your job a lot easier? Or would you rather pay more money and drive a Ford Escort that has no options at all?” said Cook, the Kentucky sergeant. “It is what it is.”
The Association for Uncrewed Vehicle Systems International (AUVSI), which represents U.S. drone manufacturers, acknowledges the technological gap but blames it on DJI’s dominance of the U.S. market and Chinese government subsidies.
DJI has denied it has an unfair advantage. “Despite claims of subsidization from our critics, in reality, DJI is able to offer its products in more than 100 countries at competitive prices because we manufacture at scale,” it said in its statement.
DJI did not disclose how much revenue it generates in the U.S., but said the country is still one of its largest markets outside China.
Seattle-based BRINC, America’s second-largest drone manufacturer, said labor costs, scale of production and the cost of custom chipsets were the main roadblocks to lower prices for U.S. players.
“[Drones] are generally built by hand in the States, whereas in China, they’re built in very automated ways,” said Blake Resnick, founder and CEO of BRINC.
As a former intern at DJI, Resnick said the Chinese drone giant has the money to invest in developing its own chip for custom radios, which allows video encoding, encryption, transmission and other functions to perform well. BRINC, he said, had to buy more expensive, off-the-shelf chips.
A flashpoint in the debate — and a potential sign of things to come — came when Florida banned its public safety agencies from using Chinese drones last year, drawing criticism from first responders and some lawmakers.
“I’m not going to let one officer risk his or her life because somebody thinks that these things talk to China,” Florida senator and former K-9 officer Tom Wright said during a Senate committee hearing last year before the ban took effect. “I cannot imagine what China would really want to see when we pull over a DUI (driving under the influence), when we stop a speeding car, when we arrest somebody for an outstanding warrant.
Sgt. Cook of Kentucky says he is also skeptical about the risks that Congress has raised over Chinese drones. “Even if they were trying to do something like that, there’s nothing the drone sees that you and I can’t see with Google Earth,” he added. “That argument didn’t have a lot of weight with me.”
Connecticut tried to introduce a similar ban on Chinese drones as Florida, but the state legislature didn’t pass it.
GRAHAM PERRY COMMENTS;-
This is a quite revealing news item and a sign of things to come. China is out-performing the US on a number of fronts and this is causing consternation in Washington. Put simply; China-made drones out-perform US-made drones and US States – Kentucky, New Jersey and Connecticut – have disregarded warnings from Washington and purchased drones from China. Why? – because they are better and cheaper. These states are persuaded – the China made drone is a better deal than the US drone. Serjeant Cook from Kentucky makes the point with colour and common sense – ‘a Cadillac Escalade with modern comforts and technology is a better purchase than a Ford Fiesta without either the comforts or the technology. The customer knows best.’
The reaction in Washington is a throwback to the Cold War of the mid 1950’s – Reds Under the Beds. China spies – all day, every week, every month. The drone made in China, it is alleged, is sending key, sensitive and strategic information back to Beijing twenty four hours a day where it is downloaded, analysed and sent to the Ministry of Security to assist in the policy of subverting, undermining and penetrating the US economy. In this way, says Washington, China is set to “rule the world”.
As Florida senator and former K-9 officer Tom Wright said during a Senate committee hearing last year “I cannot imagine what China would really want to see when we pull over a DUI (driving under the influence), when we stop a speeding car, when we arrest somebody for an outstanding warrant.”
The “Reds Under The Beds” argument attempts to persuade Americans that China is sinister and threatening. There is an element of racism in the US position and there is precedent. A key development in 19th Century America was the construction of the Coast-to-Coast railway and there was a moment in time when the Railway line from East to West linked up with the track being laid on the West to East line – rather like the UK and France meeting up in the middle of the Channel Tunnel. The point here is that overwhelmingly the labour that was used to lay the US track came from China but when it came to taking a celebratory photograph of the East Coast-West Coast link up the newspaper photographer received instructions from his Editor – No Chinese in the Photo. This was revealed in the PBS series on the Making of America.
The US is torn between those people in high places who want to work with China – people who recognise the momentum of history and development and want to find ways to work in partnership with China for mutual benefit. They come up against those who view China as a straightforward, uncomplicated ruthless threat to the supremacy of the US that must be undermined, opposed and defeated. These are the two conflicting attitudes to China that drive the tensions that are shaping the future of the world.
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#2 CHINA ECONOMY STILL BURDENED BY NON-PERFORMING PROPERTY SECTOR
SOUTH CHINA MORNING POST
China’s property fall overshadows spending rebound in May, challenging Beijing’s economic targets.
The performance of China’s economy was mixed in May, with property investment contracting further but consumer spending slightly more than the same time a year ago.
A raft of data released on Monday by the National Bureau of Statistics (NBS) presented fresh challenges for the world’s second-largest economy, whose leaders have vowed to meet its 2024 growth target of around 5 per cent during a protracted post-pandemic recovery.
The government data also showed that overall fixed-asset investment, which includes properties, manufacturing investment and transport construction, rose by 4 per cent in the first five months of 2024 compared with a 4.2 per cent gain in the January-April period.
Property investment fell by 10.1 per cent, year on year, in the first five months of 2024, worsening from a 9.8 per cent drop from January through April and a 9.5 per cent drop in the first quarter.
“We must acknowledge that it will take some time for the effects of policy measures to be shown” said Liu Aihua, NBS spokeswoman
Floor space of new homes sold fell by 20.3 per cent in the first five months of the year compared with the same period of 2023. The total sales value of new homes plunged 27.9 per cent, year on year. Last month, Beijing announced a slew of measures to rescue its staggering property sector, including 300 billion yuan (US$41.4 billion) worth of funding to help clear excess housing inventory.
“We must acknowledge that it will take some time for the effects of policy measures to be shown, and that the real estate market is still in the process of adjustment,” NBS spokeswoman Liu Aihua said during a press conference on Monday. “The overall performance of the national economy was stable.
“However, we should be aware that the external environment is complex and severe, effective demands remain insufficient at home, and a sustained economic recovery is still confronted with multiple difficulties and challenges.”
GRAHAM PERRY COMMENTS;-
THE RELEVANT WORDS ARE SPOKEN BY MADAME LIU AIHUA, THE SPOKESWOMAN FOR CHINA’S NATIONAL BUREAU OF STATISTICS “WE MUST ACKNOWLEDGE THAT IT WILL TAKE SOME TIME FOR THE EFFECTS OF POLICY MEASURES TO BE SHOWN.”
CHINA HAS A PROBLEM. BIG LOSSES IN THE PROPERTY SECTOR ARE RESTRAINING THE PROGRESS OF THE CHINESE ECONOMY. AS MUCH AS PEOPLE WANT TO HEAR GOOD NEWS – THEY WILL HAVE TO WAIT. IT IS GOING TO TAKE TIME FOR CHINA TO OVERCOME THE CONSEQUENCES OF THE ERRORS AND MISTAKES BY EVERGRANDE, COUNTY GARDEN AND OTHER BIG PROPERTY COMPANIES.
CHINA ALWAYS REVIEWS ERRORS, MISTAKES AND SHORTCOMINGS BUT – FRUSTRATINGLY FOR ENTHUSIASTS – IT IS CONDUCTED BEHIND CLOSED DOORS. THE PARTY AND THE GOVERNMENT WILL BE POURING OVER THE EVIDENCE OF WHAT WENT WRONG AND THERE WILL BE DIFFERENT OPINIONS FROM THE ORGANISATIONS INVOLVED IN THE PROPERTY SECTOR AT GOVERNMENT AND PROVINCIAL LEVELS.
SOME WILL WANT TO CRACK DOWN ON THE PROPERTY COMPANIES AND BRING THEM INTO LINE. OTHERS WILL SEEK TO ATTACK THE BILLIONAIRES AND THEIR ROLE IN THE ECONOMY . THESE CRITICS WILL PRESS FOR A RETURN REVERT TO A MORE CENTRALISED SYSTEM OF ECONOMIC MANAGEMENT.
THE LOSSES ARE LARGE AND THE DISCUSSION WILL BE INTENSE. THE PARTY LEADERSHIP WILL BE UNDER CRITICISM AND THE ORGANS OF ECONOMIC POWER – THE PEOPLE’S BANK OF CHINA FOR EXAMPLE – WILL BE UNDER SCRUTINY.
BUT NONE OF THIS WILL REACH THE MEDIA. EVENTUALLY IT WILL BUT THE CHINESE STYLE IS NOT TO GO PUBLIC WITH CONCLUSIONS AND CHANGES UNTIL THE PROCESS IS COMPLETE. AND THIS LEADS TO CRITICISM IN THE WESTERN MEDIA THAT CHINA IS TOO SECRETIVE AND STARVES ITS PUBLIC OF INFORMATION TO WHICH THEY ARE ENTITLED. IT RATCHETS UP THE CONCLUSION THAT CHINA IS A DICTATORSHIP THAT OPPRESSES ITS OWN PEOPLE.
CHINA’S FIRST RESPONSIBILITY IS TO ITS OWN PEOPLE – NOT TO THE FOREIGN MEDIA. SOME OF THE PEOPLE WILL BE ANGRY, CRITICAL AND WORRIED. THAT IS NATURAL WHEN BIG THINGS GO WRONG – IN CHINA OR IN THE UK. BUT THE CHINESE SYSTEM WORKS FOR THE CHINESE PEOPLE. THEIR LOT HAS IMPROVED SIGNIFICANTLY UNDER A SYSTEM OF GOVERNANCE FAR REMOVED FROM THE ONE MAN ONE VOTE SYSTEM OF THE WEST WITH REGULAR ELECTIONS – NATIONAL AND LOCAL. ANNUALLY THE EDELMAN INDEX THAT MEASURES THE POPULARITY OF GOVERNMENTS WITH THE PEOPLES THAT THEY GOVERN AND ALWAYS RECORDS THAT CHINA IS FIRST IN THE LIST OF CONTENTED
POPULACES.
TWO OTHER OBSERVATIONS; – FIRST, CHINA INTENSIVELY HAS EXAMINED WHAT WENT WRONG DURING THE CULTURAL REVOLUTION BETWEEN 1966 AND 1976. WHY DID THE PARTY CHANGE DIRECTION AND BRING ABOUT CHAOS AND VIOLENCE THAT BLEW CHINA OFF COURSE? SIMILARLY CHINA WILL HAVE REVIEWED THE TIANANMIN INCIDENT WHICH BRIEFLY THREATENED THE STABILITY OF THE NATION IN 1989. HOW WAS IT ALLOWED TO HAPPEN? WAS THE PARTY AT FAULT FOR NOT CRACKING DOWN ON CORRUPTION IN HIGH PLACES THAT ACCOMPANIED THE TURNAROUND IN THE ECONOMY AFTER THE FALL OF THE GANG OF FOUR?
THE FRUSTRATION FOR WESTERN OBSERVERS BROUGHT UP ON THE WATERGATE HEARINGS IN THE US IN 1973 AND THE UK SUB-POSTMASTERS COMMISSION OF INQUIRY IN THE UK IN 2024 IS THAT THE INVESTIGATIONS IN CHINA TAKE PLACE WITHOUT THE GLARE OF TV CAMERAS. THESE MATTERS ARE DISCUSSED INTENSIVELY WITHIN THE PARTY AND GOVERNMENT BUT ARE NOT REPORTED – AT THE TIME – IN THE MEDIA.
CHINA HAS A PROCESS OF REVIEW ON ALL ITS ACTIVITIES. THE GOVERNMENT IS POPULAR WITH ITS PEOPLE DESPITE THE DETEERMINED EFFORTS OF CRITICS TO TELL US OTHERWISE. REMEMBER JEREMY PAXMAN’S ASTONISHMENT WHEN IN RECORDED CONVERSATION WITH FOUR FEMALE BUSINESS EXECUTIVES DURING THE 2008 OLYMPIC GAMES HE OBSERVED THAT “YOU CANNOT VOTE YOUR GOVERNMENT OUT OF POWER”. THE REPLY CAME BACK – “WHY WOULD WE WANT TO”.
THIS RAISES QUESTIONS IN THE WEST AS TO WHETHER THE PROCESS OF REVIEW AND RE-EXAMINATION IS FAIR AND THOROUGH. DOES THE SECRECY OF THE PROCESS LEAD TO A COVER-UP? DOES THE PARTY PROTECT THE PARTY? THESE QUESTIONS ARE INEVITABLE AND IN THE ABSENCE OF PUBLIC ACCOUNTABILITY THEY WILL PERSIST.
BUT IS THE CHINESE SYSTEM OF REVIEW FUNDAMENTALLY FLAWED? THE EVIDENCE SUGGESTS THAT THE ANSWER IS ‘NO’ AND THE EVIDENCE IS IN THE PROGRESS CHINA HAS MADE. IT IS NOT POSSIBLE TO LIFT ONE BILLION PEOPLE OUT OF POVERTY WITHOUT HAVING IN PLACE A SYSTEM OF CONSTANT REVIEW AND CORRECTION. CHINA CANNOT ACHIEVE ITS REMARKABLE SUCCESS IN PRODUCING MORE STEM GRADUATES (SCIENCE, TECHNOLOGY, ENGINEERING AND MATHEMATICS) THAN ANY OTHER COUNTRY WITHOUT FREEDOM TO CHOOSE THEIR CAREERS AND PLACES OF RESIDENCE AND THE FREEDOM TO TRAVEL OUTSIDE CHINA
IN THE LAST YEAR BEFORE COVID 137 MILLION CHINESE CITIZENS TRAVELLED OVERSEAS WITHOUT EVEN ONE REPORTED INCIDENT OF ASYLUM APPLICATION. ALL THE TOURISTS RETURNED HOME – UNLIKELY IF THE GOVERNMENT WAS TREATING ITS PEOPLE IN AN OPPRESSIVE OR DICTATORIAL MANNER. THAT SAID, CHINA’S REPUTATION IN THE WEST WOULD BENEFIT FROM MORE OPENNESS AND DISCLOSURE OF THE PROCEDURES FOR DEALING WITH SETBACKS AND MISTAKES. BUT CHINA’S PRIMARY RESPONSIBILITY IS TO ITS PEOPLE AND NOT TO ITS FOREIGN CRITICS
THE COMMENTS OF MME LIU AIHUA THAT A “SUSTAINED ECONOMIC RECOVERY IS STILL CONFRONTED WITH MULTIPLE DIFFICULTIES AND CHALLENGES” MAKE CLEAR THAT IT WLL TAKE TIME TO RECOVER FROM THE PROPERTY SECTOR SETBACKS. SUCH CANDOUR IS WELCOMED.
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#3 CHRISTINE LEE SUES THE UK SECURITY SERVICE
Christine Lee , centre is suing the UK security service, arguing that her life was ‘destroyed’ after it named her publicly as the subject of a foreign interference alert in 2022
She claimed that Sinophobia was on the rise and that she had been used as a “political football”
Christine Lee, the alleged Chinese spy, has said that she is the victim of a McCarthyite witch-hunt, insisting that meeting President Xi and liaising with the Communist Party did not make her a traitor.
Lee said that anyone doing business in China would have meetings with state officials and denounced the allegations against her as a smear campaign.
She claimed she had never heard of the United Front Work Department, a branch of the Chinese Communist Party (CCP), until MI5 accused her of working for it. Lee, 60, a solicitor, acknowledged she had criticised pro-democracy campaigners in Hong Kong but said she was personally concerned about violence there rather than acting as a voice for XXXXX
She is suing MI5 in the Investigatory Powers Tribunal, which oversees the activities of the intelligence services, seeking unspecified damages. She argues that her life was destroyed when it issued a foreign interference alert about her in January 2022.
MI5 is standing by its allegations that Lee, who had close contacts in both Labour and the Conservatives, carried out “political interference activities” on behalf of the United Front Work Department (UFWD). She denies claims she funnelled funds from the Chinese state, telling the tribunal that political donations were overwhelmingly from the profits of her law firm.
Lee donated £500,000 to Barry Gardiner, who is standing for re-election as the Labour candidate for Brent West, which funded his staff for nearly five years up to mid 2020. She said they had a close relationship but she had never sought to target a politician or influence their views.
Lee’s witness statement claimed she had been used as a “political football” and claimed MI5 also acted to deflect criticism against the Conservative government when Owen Paterson was accused of breaking lobbying rules. MI5 is required by law to be impartial.
Lee, who set up an immigration consultancy firm in 1994, said she had lobbied MPs on behalf of British-Chinese people and to build trade links. Her aim was to promote the voice of the Chinese community in the UK, she said.
She detailed how she travelled to China to meet wealthy clients sending their children to school in Britain or investing in Britain. She admitted dealing with Communist Party officials but said there was no other way of conducting business in China. When she met Xi it was as a representative of the British-Chinese community, she said. “There were always hundreds of people in attendance and my exchanges with him were only ever limited to a handshake and there was never any conversation.”
Lee claimed that sinophobia was on the rise and that MI5’s accusations were “emblematic of a McCarthyism taking hold in the UK”, adding that the security service were “looking for espionage where it does not exist”.
The hearing before Lord Justice Singh, Lord Boyd and Judge Rupert Jones concluded on June 18, with a judgment expected in writing at a later date.”
GRAHAM PERRY COMMENTS;-
IN RECENT MONTHS THE UK HAS HEIGHTENED ITS ALLEGATIONS THAT CHINA IS ENGAGED IN A FULL FRONTAL ASSAULT ON UK SECURITY. READERS WILL RECALL A JOINT MEDIA CONFERENCE WITH THE UK HEAD OF MI5 AND MI6 WHEN THE HEADS OF BOTH ORGANISATIONS RAISED THE SPECTRE OF A UK “REDS UNDER THE BEDS” ATTACK BY CHINA DESIGNED TO SERIOUSLY UNDERMINE THE STABILITY OF THE UK.
AT THIS JOINT EVENT THE TWO TOP UK SECURITY ORGANISATIONS STATED THAT THEY WERE PURSUING INVESTIGATIONS INTO CHINA’S ALLEGED PENETRATION OF THE UK POLITICAL AND MILITARY STRUCTURE. THEY WERE SUPPORTED WITH THE ACTIVE PARTICIPATION OF THE US CENTRAL INTELLIGENCE AGENCY. STRONG WORDS.
BUT IS IT TALK OR IS IT ACTION? IS IT JUST SMOKE OR IS IT FIRE?
WHERE IS THE BEEF?
THE ATTACHED REPORT FOCUSES ON ONE OF THE TWO CASES MENTIONED IN THE UK MEDIA AND READING IT ONE IS LEFT WITH THE DISTINCT IMPRESSION THAT IT IS ALL QUITE LIGHTWEIGHT – LACKING IN DETAIL TO JUSTIFY THE JOINT ATTENTION OF MI5 AND MI6 AND THE UNITED STATES CENTRAL INTELLIGENCE AGENCY. MAYBE THE UK HAS FURTHER CASES/INCIDENTS TO BRING INTO THE PUBLIC ARENA BUT SO FAR THE DETAIL IS VERY INSUBSTANTIAL.
GRAHAM PERRY
