I’m with Boaz.
The US/China fallout will not end with a trade deal.
I think the US/China conversation is only just beginning.
I’m going to look at two things, today and tomorrow, which highlight why the trade war is merely the opening salvo of a wider and more protracted period of Sino-American aggression.
The Western, developed world had hoped that increased trade and interaction with China would make it wealthier, and that it would become freer and more open as a result.
The “free market economics leads to democracy” argument is compelling, because we know no other way. Capitalism and the right to vote and protest and say what you like seem almost like part of the same thing to us.
Not in China though.
The Communist Party in China is just the latest iteration of 7,000 years of dynastic rule. Authoritarian, and absolute.
And it is strengthening its authority as the country’s economy grows, rather than democratising.
Tomorrow, I’ll look at Hong Kong, how serious the financial fallout is so far, and what effect it might have on China politically and economically.
But today, I’m going to outline something that’s going on in China that hasn’t received nearly enough coverage. It’s been in the news, yes, but given what some people think is happening there, I’m surprised it hasn’t caught the public’s attention more. Maybe you have read about it already, maybe not, but I think it’s important for everyone to know.
It concerns the province of Xinjiang, in North Western China.
China is so vast, that some of its eastern territories have more in common with the central Asian countries than with Beijing or Shanghai. China isn’t happy about this, as it wants to promote racial and cultural unity.
What’s going on there, if it’s as bad as some people fear, tells me that the trade war is by no means the end of the Western detachment from China. Investors should take not, and tread very carefully.
1984
A lot of fearful prognostications by doomsayers suggest that on our current path, society as we know it will spiral into an Orwellian nightmare, as envisioned by the great author in his work, 1984. Think V for Vendetta if you haven’t read much Orwell before.
The fear is that an authoritarian government would now have unprecedented tools at its disposal for surveillance and control of a population.
But doomsayers they may no longer be, as it seems that Orwell’s dystopia exists in real life – in Xinjiang, China.
The province is largely populated by Uighurs, or Uyghurs.
Using some separatist and student violence as a pretext, a huge operation has been taken to assert state control over every aspect of life in Xinjiang.
And if what some people are saying is true, it goes far beyond Orwell’s worst nightmare.
It was brought to Western attention in bits and pieces, as journalists have been denied access to all but the most controlled, prepared events or interviewees.
Surveillance of Uighur Muslims in Xinjiang has been ratcheted up to extreme levels, justified by China as a measure to counter terrorist, extremist and separatist movements in the area.
For example, the practice of religion is all but banned in the region. This carries echoes of the persecution of the “Falun Gong” religion that grew rapidly in China, before being violently crushed by the state.
Those three threats have been used to justify entirely disproportionate responses.
As the Guardian puts it: “Chinese authorities have split up families, targeted the Uighur language and culture for suppression, razed cultural and historic sites and criticised even mild expression of Muslim identity, micromanaging everything from beard length to babies’ names.”
Certain astonishing lengths have been taken to achieve this. Han Chinese workers have been placed in Uighur homes as uninvited guests, to monitor their behaviour, actions and conversations. Phone owners are forced to download apps that monitor every bit of data passing through the device.
Biometric data is collected, from fingerprints to facial recognition scans, so that Uighurs can be kept from travelling or going to certain places, as the surveillance network of cameras uses artificial intelligence (AI) to track millions of live streams to stop “dangerous” individuals moving around.
But the most extreme response is the detention camps, or “re-education” centres that have sprung up over the region. Upwards of 1 million Uighur Muslims have been confined in these facilities, often for months or years at a time.
This has led to widespread separation of parents from their children, which go to orphanages.
The mass internment programme has left many minority children without their parents; the authorities have built a network of de facto orphanages and boarding schools that can bring the children up in Han Chinese environments.
China says that the adult Uighurs volunteer for re-education, so that they can learn the national Han Chinese language, some skills for jobs, and loyalty to the Communist Party.
Chinese diplomats and officials vigorously defend the camps and lengthy stays as necessary to combat terrorism and extremism.
But the consensus among most in the West is that the enrolment process is anything but voluntary.
What China calls “re-education”, many here call brainwashing.
And it seems that the re-education centres are for more prison-like than their name suggests.
Personal testimonies from escapees suggests that brainwashing, beating, denial of medical treatment and worse go on in the camp.
On 24 November, the International Consortium of Investigative Journalists (ICIJ) published a 2017 classified directive issued by Zhu Hailun, the head of the leading security administration of the Xinjiang Uyghur Autonomous Region.
Zhu notes that camp workers “must never allow escapes, never allow trouble, never allow attacks on staff, never allow abnormal deaths.”
The leaked documents also outline what officials should say to students who return from school or university to find empty homes [translated by fairplanet.org]:
“Did they commit a crime?” a student might ask. “Will they be convicted?”
The directed response has to be: “They haven’t committed a crime and won’t be convicted. It is just that their thinking has been infected by unhealthy thoughts, and if they don’t quickly receive education and correction, they’ll become a major active threat to society and to your family. It’s very hard to totally eradicate viruses in thinking in just a short time.”
Essentially, reports generally conclude that over a million members of the Uighur ethnic minority are having their identities forcefully reshaped, against their will.
Pretty amazing stuff so far, and a scary example of what an authoritarian leadership can do with modern technology. But it’s possible that it gets worse.
The organ issue
The waiting time for organ transplant surgery in the UK or the US is usually upwards of a year.
In China, it’s in the weeks or sometimes even days.
So stark is the difference that “organ tourism” has become common, with desperate patients travelling to China to receive transplants. Agencies have been set up to facilitate this for foreigners.
The organ tourism trade now amounts to a $1 billion industry for China.
But how are they doing it? How can they have a turnaround so high that it’s even possible to schedule organ transplants in advance of the organ becoming available.
The fear is that organs are being harvested from the inhabitants of the camps, from the so-called “prisoners of conscience”.
China has previously admitted to harvesting organs from executed criminals but claims to have halted this particular practice in 2015. What is being suggested now is far more horrific.
All “prisoners of conscience”/voluntary students at the camps are subjected to multiple medical tests – for facial recognition, blood type, and all report having full body organ scans.
The China Tribunal
The China Tribunal is an independent investigatory committee set up to investigate whether organs are indeed being harvested, and it has come to some disturbing conclusions.
Chaired by Sir Geoffrey Nice QC, a British barrister, it examined thousands of pages of submissions, including previous investigations and academic papers, internal Chinese medical records, and reports from Amnesty International, independent watchdog group Freedom House and the United Nations Committee Against Torture.
It reviewed undercover video footage taken inside Chinese hospitals, covert telephone recordings with Chinese transplant surgeons, and heard from 50 witnesses, some of whom appeared in person and others via video link, from France, Canada, the US, Japan, Australia, Turkey and Korea.
It concluded that illicit organ transplants have become a lucrative industry in China, directed by the state, and enabled by the military.
Prisoners of conscience, both Uighur and Falun Gong, are the organ bank of the industry.
Geoffrey Nice and the panel effectively accused the People’s Republic of China of having committed mass murder, and warned that governments or any other bodies that engaged with it in any substantial way “should now recognise that they are interacting with a criminal state”.
A senior lawyer from the tribunal, Hamid Sabi, said this, “victim for victim and death for death, cutting out the hearts and other organs from living, blameless, harmless peaceable people constitutes one of the worst mass atrocities of this century.”
As it was a legal investigation, it is saying that it is satisfied beyond reasonable doubt that the practice of harvesting organs for transplants from detained Uighurs and religious prisoners is continuing in the camps in Xinjiang today.
Geoffrey Nice told the UN that the international community “can no longer avoid what is inconvenient for them to admit”.
It’s terrifying to think that this could be going on, and genuinely hard to believe.
Remember, China openly admits to building and operating the re-education camps for the Uighur population, defending it, and what they say goes on inside them as justifiable counter-terrorism measures.
At the UN, 54 countries (incl Russia, Saudi Arabia, and Belarus) chose to praise China’s actions in the region and defending human rights while successfully countering terrorism, despite the verdict given by the China Tribunal.
What is the world doing about this?
Well this is the thing: at the moment it’s pretty hard to prove, as access is very limited and China denies the more extreme accusations and defends the increased surveillance and re-education of Uighurs as a justifiable response to the threat of terrorist extremism in the region.
But over the last year, international recognition of what’s going on has resulted in increased concerns being raised.
This time last year, over 270 scholars from 26 countries published a statement condemning the “mass human rights abuses and deliberate attacks on indigenous cultures” in China.
The World Trade Organisation, which had in 2015 given a $50 million grant for “education” to the province of Xinjiang has since announced that given concerns about what’s happening in the region, it’s scaling back its involvement and lending programme there.
Just last week, the Senate in the US overwhelmingly approved a bill (the Uighur Act of 2019) requiring the Donald Trump administration to toughen its stance on the issue. It passed by 407 votes to 1.
In October 2019, the UN issued a document signed by 22 nations (including the UK, Australia, France, Germany and Japan) which called on the Chinese government to “uphold its national laws and international obligations and commitments to respect human rights, including freedom of religion or belief, in Xinjiang and across China.”
All this is incredibly scary. The evidence from the UN, the US Senate, and the China Tribunal adds up to a damning case of both the detainment and likely organ harvesting from over a million Uighur Muslim and other religious minorities in Xinjiang.
Bearing in mind all this, as well as Mike Pompeo and Mike Pence’s aggressive stance towards China, can we really say that the US/China conversation will end when Trump puts pen to paper on a trade deal?
As of last week, he has been instructed by the senate to toughen his stance on this precise issue, with the house demanding sanctions against high-ranking party officials in China who are involved.
Tomorrow I’ll be looking at Hong Kong, the threat of democracy to the Chinese takeover of the region and the economic fallout that has followed swiftly behind.
Combined, these two major issues convince me that the global conversation will be shaped by an increasing divide between the two world powers. China is on a path of reshaping the world order in its own image, rather than joining the US-Anglophone hegemony that’s existed since WWII.
The Xinjiang issue may well be the first major wake-up call to the end of cordial relations between East and West.
Invest carefully – all the best,
Kit Winder
Investment Research Analyst, Southbank Investment Research
PS This cartoon went viral, and I suggest giving it a read, as personal testimony is more powerful than any third party article or news can be. China has obviously refuted all claims made.
Category: Market updates