The Biden administration maintains that China is the only country with both the intent to reshape the international order and the power to do so. One part of China’s economic statecraft toolkit involves state-directed investments through high profile projects in the Belt and Road Initiative which are funded by loans through Chinese development banks. But the role and impact of Chinese companies that provide equity funding for FDI often receive less attention. Does Chinese foreign direct investment (FDI) have illiberal effects on recipient countries. And is this goal part of China’s economic statecraft and foreign policy strategy.

To address these questions and more, host Bonnie Glaser is joined by Dr. Jan Knoerich. He is the author on a chapter of Chinese FDI on the recent Oxford publication “Rising Power, Limited Influence”, a collection of essays on the effects of Chinese investment in Europe. Dr. Knoerich is a senior lecturer on the Chinese economy for the Lau China Institute at King’s College in London. He is an expert on the Chinese economy, FDI, and international investment law and policy.

Timestamps

[01:38] Evolution of Chinese Foreign Investment Strategies

[04:48] Chinese Firms Undertaking Foreign Direct Investment

[09:16] Impacts of Chinese FDI: Five Dimensions

[18:17] Reasons Why Chinese Firms are Viewed with Suspicion

[21:06] Impacts of Chinese FDI Projects in Europe

[24:59] Evidence of Chinese FDI Exerting Political Influence

When Hong Kong was handed over to China by the United Kingdom 1997, the city was given a mini-Constitution called the “Basic Law.” Article 23 of the Basic Law states that Hong Kong shall enact laws of its own to prohibit various national security offenses. The law did not pass, however, and was scrapped after mass protests in 2003. And in 2020, the Central Government of the People’s Republic of China (PRC) imposed a separate national security law on Hong Kong, citing the city’s delay in acting on Article 23.

This year on March 19th, Article 23 was passed unanimously by the city’s parliament and it came into effect just days later. The law covers five types of crime: treason, insurrection and incitement to mutiny, theft of state secrets, and espionage, sabotage, and external interference. Critics say that Article 23 could lead to even further erosions of civil liberties in Hong Kong.

To discuss Article 23 and its implications, host Bonnie Glaser is joined by Dr. Eric Yan-ho Lai. Dr. Lai is a Research Fellow at the Georgetown Center for Asian Law, an Associate Fellow at the Hong Kong Studies Hub of the University of Surrey, and a member of the Asian Civil Society Research Network.

Timestamps

[01:47] Understanding PRC Definitions Used in Article 23

[03:37] Why was Article 23 passed now?

[05:23] Compressed Timeline for Unanimous Approval

[09:05] Shift in Risk Assessment for Multinational Corporations

[12:03] Precedents for Targeting Diaspora Communities

[14:17] Reactions to Article 23 from the International Community

[15:54] What are some concrete actions that could be taken to signal concern?

[17:55] Do the PRC and Hong Kong care about international perceptions?

[19:36] Implementation of Article 23 Moving Forward

[21:28] Passage of Additional Security Legislature

[22:57] Forecast for the Future of Hong Kong

In the past decade, policy toward China has hardened on both sides of the Atlantic. Governments and publics across Europe and in the United States view Xi Jinping as implementing more repressive policies domestically and more aggressive policies abroad. The US and most capitals in Europe see Beijing as seeking to revise the international order in ways that would be disadvantageous to democracies. They agree on the need for de-risking and to preserve the status quo in the Taiwan Strait.

Yet, despite the alignment in transatlantic assessments, cooperation on China remains limited. A new paper by experts from Chatham House and RUSI, leading think tanks in the United Kingdom, analyzes why transatlantic mechanisms have made slow progress, focusing on three domains: economics; security; and the multilateral system and global norms. The paper also offers ways to strengthen cooperation going forward.

The title of the report is “Transatlantic China Policy: In Search of an Endgame?” Host Bonnie Glaser is joined by one of its authors, Ben Bland who is the director of the Asia-Pacific program at Chatham House. His research focuses on the nexus of politics, economics, and international relations in Southeast Asia, as well as China’s growing role in the broader region and the contours of US–China strategic competition.

Timestamps

[01:46] Why did you pursue this research on transatlantic mechanism?

[03:24] Importance of Agreeing on an Endgame

[06:30] Consensus and Divergence between the US and Europe

[10:10] De-risking: One Word, Many Meanings

[15:00] Transatlantic Discussions on European and Indo-Pacific Security

[18:40] Can a regional division of labor strategy work?

[22:13] China, the Multilateral System, and Global Norms

[27:00] Tensions Between EU Multilateralism and Transatlantic Consensus

[31:10] What are the next steps for Chatham House?