Hello from Seoul, where Koreans have just returned from their Chuseok holidays and an autumnal change beckons.
Since China’s shock bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, trade has been high on the agenda here in Asia. Taiwan’s quick-fire bid to also join, just days after Beijing, has further complicated the outlook for the CPTPP.
But in an unrelenting news cycle of late, we had more big headlines as Canada released Meng Wanzhou, the Huawei executive and daughter of the Chinese group’s founder, and Beijing set free the two Canadians held in retaliation.
Today’s Trade Secrets unpacks the immediate lessons from a tense three-year stand-off between the US, China and Canada.
Charted waters looks at how US exports in natural gas have (bar the pandemic) risen in recent years.
‘Michaels’ are free, but not without costs for China
In December 2018, Michael Spavor was on his way to Seoul from his home in Dandong, north-east China, with immediate plans to catch up with mates for beers.
Spavor, then 43, was already a legend among his colourful crew of North Korean watchers.
The intrepid Canadian, known for a mix of charm, wits and chutzpah, had become a rare western interlocutor with Kim Jong Un. Among his escapades was partying with the North Korean dictator and Dennis Rodman when the American basketball star travelled into the hermit kingdom.
But Spavor’s planned trip to the South Korean capital was not to be. Instead he, along with countryman and former diplomat Michael Kovrig, were detained in China.
Until just days ago “the Michaels” were held almost entirely incommunicado, tragic pawns in a diplomatic stand-off between Washington and Beijing.
Their detention was Beijing’s retaliation for Canada’s arrest of Meng Wanzhou, a Huawei executive and daughter of the Chinese group’s founder. Until she flew back to China days ago, Meng had spent nearly three years in her Vancouver mansion, under house arrest, while she fought an extradition to the US over fraud charges involving UK bank HSBC and linked to Iran.
During the saga the Chinese foreign ministry insisted that Meng’s case was “entirely different from that of the cases of the two Canadians”, describing the pair as “endangering China’s national security” while Meng’s case was a “serious political incident”. The trio’s simultaneous release — essentially a prisoner swap — has indisputably elucidated the fallacy of those earlier comments.
Blame will no doubt be flung between Beijing and Ottawa and Washington for years to come. Questions will be debated. Did, for instance, the troubles ultimately start with Trump, Pompeo and the US targeting of Huawei? Were fears over the telecoms group’s global reach and links to the People’s Liberation Army misguided or justified? Why did it take the Biden administration so long to orchestrate the deferred prosecution agreement which let Meng walk free? Did Trudeau ever have any say in the matter?
But in the immediate aftermath, at least one point is clear to Trade Secrets: hostage diplomacy worked.
For some businesspeople, diplomats, academics and even journalists engaging with China the Michaels case will forever send chills down their spines. Many won’t travel to China again.
The full story of the Michaels experience surviving China’s ghoulish security system and the no-doubt dramatic tale of diplomatic wrangling to arrange their freedom is still to be told. However, observers should not lose sight of the fact that had the US not been willing to let Meng walk, Spavor and Kovrig may well have languished behind bars in China for many more years.
For governments and companies dealing with China, Beijing has sounded a clear warning over what Xi Jinping’s increasingly authoritarian government will do in future disputes.
The differences in the treatment of Meng and the Michaels, and their countries’ legal systems, was perhaps best summed up by an Economist reporter on Twitter who drily noted: “If Meng Wanzhou is required to quarantine alone in a hotel room for 14 days on arrival in China, per standard procedure, it will be the strictest confinement she has faced over the past 1,000-plus days”.
Importantly also, while the Canadians were able to garner intentional media and diplomatic attention, many other less well-known cases remain unresolved.
Recall, for instance, Cheng Lei, a Chinese-born Australian CGTN business news anchor and mother of two who was arrested in the middle of last year. Another Australian citizen, Yang Hengjun, a former Chinese state employee turned pro-democracy blogger, has been held in China for nearly three years on espionage charges. And there is also Chinese-born Swedish man Gui Minhai, who was abducted in Thailand six years ago and sentenced to 10 years on similarly spurious charges to those used against the Michaels.
Equally urgent, and even less reported on, are the cases of the more than 125 local Chinese journalists currently detained — many of whom are in life-threatening conditions, according to Reporters Without Borders, an advocacy group. Indeed, these cases underscore that the Chinese Communist party’s hostage diplomacy is even more ruthlessly applied to its own population.
In time, observers may well draw another lesson: who stood in solidarity at the Canadian embassy in Beijing in July as Spavor was sentenced to 11 years for spying? Diplomats from only 25 governments braved the backlash from Xi’s government. South Korea, whose key policy of engagement with North Korea is deeply aligned with the Canadian’s own efforts, was among those notably absent.
On Saturday morning, as the news broke in Seoul that the Michaels were aboard a Canadian military plane, flying home, Spavor’s friends — who have been waiting more than 1,000 days for that beer — were elated. While he has been behind bars, Spavor’s family and friends have raised tens of thousands of dollars to get his life back on track. “I’m very emotional right now. I’m stunned”, one texted Trade Secrets. “Can hardly believe it! . . . Time to rejoice”, said another.
For Kovrig’s family and friends his release was no less sweet: he had never held his young daughter who was born after his arrest.
Hostage diplomacy is not without costs for China. For many in the west, the damage done to the Beijing’s reputation may be irreparable. But the real unanswered question for Trade Secrets: does the Chinese leadership care about that?
Charted waters
As the FT reported on Friday, US producers are planning to make the most of Europe’s supply shortages by exporting more natural gas, with the announcement of several infrastructure projects expected.
While this represents a swift about-turn for producers that saw demand plunge during the early days of the pandemic, as the chart below shows, exports from the US have shot up over the past decade. Claire Jones
Trade links
The head of Mitsui OSK Lines has told the FT that government intervention may be needed to ease strains in global shipping. Nikkei reports ($) that Beijing’s tighter energy consumption policy is the newest hitch in global supply chains, causing several suppliers for Apple and Tesla to halt production this week.
The EU’s ad campaign for a common charger for the common market has received some, er, mixed reviews.
Rana Foroohar explains why the US and EU need to talk competition if they’re to combat China.
The Economist gives its verdict ($) on China’s move to join the CPTPP. Rival applications from China and Taiwan risk (Nikkei, $) dividing the 11 countries in CPTPP, with Japan on one side and Singapore and Malaysia on the other. Claire Jones and Francesca Regalado
Source: Economy - ft.com
