Bond market struggle; PRC views of US election; Stock market; WeRide in the US; Sabina Shoal; Foreign carmakers crash
It is already August 15 in Beijing. The top leadership should start emerging from their Beidaihe break in the next several days.
Summary of today’s Essential Eight:
1. Will PRC bond buyers learn not to fight the PBoC? - The central bank warned again Wednesday of the risks of too much demand for government bonds. A Wednesday commentary in the PBoC’s affiliated newspaper said “Since 2023, long-term bond yields have decreased by 60 basis points, showing a one-sided market trend, attracting a large inflow of funds and even some leveraged trading. Market analysts believe that the unilateral decline in long-term bond yields will accumulate significant financial risks. Once the market turns, rapid liquidation of leveraged positions will exacerbate the market's downward spiral and may even spread to other financial markets, creating systemic risks. The Silicon Valley Bank risk event in the U.S. also provides insights for us”. The problem for the central bank is that confidence in other investment assets appears to be collapsing, so where else do policymakers expect the money to go until they do more to address the issues that have caused the damage to confidence?
2. More crackdowns on securities firms - Caixin reports that the CSRC has stepped up inspections and supervision of securities firms. The scrutiny and punishments are needed, but the regulatory campaign will not likely improve sentiment in the stock market. One thing that is missing from the stepped up crackdowns in the capital markets since Wu Qing took over as head of the CSRC is more latitude for financial media to expose misdeeds by listed firms and market participants. Policymakers once understood the value of some amount of external supervision by financial media like Caijing and Caixin, within limits, but that became impossible in the stifling media environment of the New Era. A functioning and at least somewhat empowered financial press is a key part of a healthy capital markets ecosystem, something market and financial media pioneers like Zhou Xiaochuan, Gao Xiqing and Wang Boming understood long ago. That is why Wang Boming’s retirement yesterday from Caijing felt a bit poignant.
3. PRC preferences in the US election - Wang Jisi, President of the Institute of International and Strategic Studies at Peking University, and two colleagues, Hu Ran, and Zhao Jianwei, published an article in Foreign Affairs in early August arguing that China has no preference in the upcoming US election. I had heard in June that he had been tasked by relevant organs with penning this message and that publication was imminent, but then I think it got delayed with the switch from Biden to Harris. Their main point is that they do not see too much daylight between either Trump or Harris and have no expectation that the relationship will materially improve regardless of who wins the election. The authors classify “U.S. strategists on China” into three broad groups - “New Cold Warriors” such as Matt Pottinger and Mike Gallagher; “Competition Managers” like Jake Sullivan, Kurt Campbell and Rush Doshi, and “Accommodationists” represented by Jessica Chen Weiss and James Steinberg. They conclude by writing "if a rapprochement is out of the question, China and the United States can still maintain stability and avoid catastrophe, whoever is in the Oval Office".
Democratic Vice President candidate Tim Walz has the most China-related experience of any VP candidate since George HW Bush in 1980. His work there as a teacher and his dozens of visits while running an education program have led to all sorts of speculations about how his experiences may impact policies towards the PRC in a possible Harris-Walz administration. As I wrote in a Sinocism Chat Monday “I am skeptical that Walz’s China experiences will have much if any impact on US policy towards china if he becomes VP. Did anyone care what Harris’s views about China were when she ran with Biden in 2020, and does anyone think her views on China had any impact on the Biden administration’s China policies?”.
Top national security personnel would likely be much more important to the shaping of US policy towards the PRC in a Harris Administration than a VP Walz’s views. Philip Gordon, Vice President Harris' National Security Advisor, was one of the signatories of the July 2019 "China is not an enemy" open letter. He is on most short lists for National Security Advisor if VP Harris wins. Knowing what he knows now, after almost fours years of access to US intelligence briefings, does he still agree with the seven propositions in the letter? Would he sign it today if he were outside of government?
4. Jiang Jinquan 江金权 on the Third Plenum - Jiang Jinquan 江金权, director of the very important Central Policy Research Office, has an article in the August 14 People's Daily titled “Closely Focusing on Advancing Chinese Modernization to Further Comprehensively Deepen Reform (Studying and Implementing the Spirit of the Third Plenary Session of the 20th Central Committee of the Communist Party of China). He highlights “‘seven focuses’ in the overall goal of further deepening reform”. The seven are: Building a High-Level Socialist Market Economy System; Developing Whole-Process People's Democracy; Building a Socialist Cultural Power; Improving People's Quality of Life; Building a Beautiful China; Building a Higher Level of Safe China and Improving the Party's Leadership Level and Long-Term Governance Capacity.
5. WeRide files for US IPO - PRC autonomous driving company WeRide filed for a US IPO last week. Today the Global Times reports that the company “has received approval from the US state of California to test its driverless vehicles with passengers”. I am surprised WeRide would want this California testing publicized right before its IPO. The US Congress may be on vacation but this seems like the kind of thing that will draw attention from the Hill, if not also the Biden Administration, just after the embarrassing Pentagon walk back of restrictions on Hesai and reports that the Department of Commerce will soon issue restrictions around PRC connected vehicles.
6. The end of the PRC market for foreign car makers? - Last week Michael Dunne wrote a blistering Substack titled “China Is Done With Global Carmakers: "Thanks For Coming" in which he argued very convincingly that the golden era is over for foriegn carmakers in China and will likely never come back. Earlier this week Bloomberg reported that GM will cut jobs and capacity in China, becoming the latest once super-profitable foreign carmaker to face the reality of the changed market.
7. Sabina Shoal the next Philippines-PRC flashpoint? - Second Thomas Shoal (Ren’ai Jiao) may be calmer but Sabina (Escoda) Shoal (Xianbin Jiao), which is well inside the Philippines' exclusive economic zone, looks to be a new flashpoint in PRC-Philippines relations. The Global Times reports that the “Philippines is planning to send a second coast guard vessel to anchor in the lagoon in China's Xianbin Jiao…in an attempt to construct a forward deployment base in the form of a semi-permanent floating platform.” The Global Times quotes Yang Xiao from the MSS’ CICIR think tank: “China will not allow the Philippines to deploy another large coast guard ship to anchor on the Xianbin Jiao and increase the scale of the floating platform”. So how will the PRC not allow it, if this is the Philippines’ intention?
8. Scamming under the guise of transnational repression - Last week NPR published an amazing story about a “dissident” named Wang Jingyu who created an elaborate fraud leveraging the fears of PRC transnational repression to scam exile Gao Zhi and his family out of their life savings.
Thanks for reading.
The Essential Eight
1. Will PRC bond buyers learn not to fight the PBoC?
China Delivers Another Harsh Verbal Warning to Bond Buyers - Bloomberg
Authorities will crack down on any illegal actions that disrupt the bond market and threaten systemic risk, according to a commentary Wednesday in a newspaper backed by the People’s Bank of China. The article came as traders rushed back into bonds after poor bank loan data fueled pessimism on the economy and yields pared their drop after it was published.
“One-sided declines in long-dated bonds can lead to the creation of significant financial risks,” the Financial News commentary said. “Once the market reverses, quick unwinding of leveraged positions will lead to a spiral of declines which can be contagious and spill over to other financial markets.”
Since the beginning of this year, the bond market has received widespread attention. The central bank has repeatedly warned the market about the risks associated with long-term bond yields, and investors have become more rational.
今年以来，债券市场广受关注，央行多次就长债收益率问题向市场提示风险，投资者也更趋理性。
The continuous healthy development of China's bond market is an important financing channel for the real economy. In recent years, the reform and opening up of China's bond market has achieved remarkable success, with the market-oriented level continuously improving. The scale of the bond market continues to expand. As of the end of June 2024, the balance of the bond market reached 165 trillion yuan, a year-on-year increase of 9.8%, firmly maintaining its position as the second largest in the world. The trading activity in the bond market has increased significantly. In the first half of 2024, the scale of spot trading reached 219 trillion yuan, a year-on-year increase of 34%, with a turnover rate of 1.3 times, up 21% from the same period last year. The bond market's support for the real economy continues to strengthen. In the first half of 2024, the net financing of government bonds and corporate credit bonds reached 4.8 trillion yuan, accounting for 26% of the incremental social financing scale, an increase of 4 percentage points year-on-year. The balance of corporate credit bonds reached 32.5 trillion yuan, making it the second-largest financing channel after credit.
我国债券市场持续健康发展，是实体经济的重要融资渠道。近年来，我国债券市场改革开放取得显著成就，市场化水平不断提升。债券市场规模持续扩大。截至2024年6月末，债券市场余额达165万亿元，同比增长9.8%，稳居全球第二位。债券市场交易活跃度大幅提升。2024年上半年，现券交易规模达219万亿元，同比增长34%，换手率1.3倍，较上年同期增长21%。债券市场支持实体经济力度不断增强。2024年上半年，政府债券和公司信用类债券净融资4.8万亿元，占社会融资规模增量的比重上升至26%，同比提升4个百分点；公司信用类债券余额达32.5万亿元，是仅次于信贷的第二大融资渠道。
The central bank continues to pay attention to and warn about bond market risks from a macro-prudential perspective. China's bond market has experienced some risk events in history. The "Class C account" incident in 2013 exposed the obvious lack of institutional risk internal control systems, and the wave of bank wealth management redemptions in 2022 reflected investors' insufficient awareness of bond market investment risks. Since 2023, long-term bond yields have decreased by 60 basis points, showing a one-sided market trend, attracting a large inflow of funds and even some leveraged trading. Market analysts believe that the unilateral decline in long-term bond yields will accumulate significant financial risks. Once the market turns, rapid liquidation of leveraged positions will exacerbate the market's downward spiral and may even spread to other financial markets, creating systemic risks. The Silicon Valley Bank risk event in the U.S. also provides insights for us. The central bank needs to continuously monitor market operations from a macro-prudential perspective, promptly warn of risks to prevent systemic risks and maintain financial market stability, and block the amplification of risks from one-sided market trends. At the same time, it should strengthen investor education, reminding that the bond market has both ups and downs, and investment carries risks.
央行从宏观审慎角度出发持续关注并提示债券市场风险。我国债券市场历史上曾出现过一些风险事件，2013年的“丙类户”事件暴露了机构风险内控制度明显欠缺，2022年银行理财赎回潮反映出投资者对债券市场投资风险认知不足。2023年以来长债收益率已下行60个基点，呈现单边市场行情，吸引了大量资金流入，还出现了一些杠杆交易。市场分析认为，长债收益率单边下行会积累较大的金融风险，一旦市场转向，杠杆仓位快速平仓会加剧市场螺旋下行，还可能向其他金融市场传染，产生系统性风险。美国硅谷银行风险事件对我们也有启示，央行要从宏观审慎角度出发，持续关注市场运行情况，为防范系统性风险、维护金融市场稳定，及时提示风险，阻断单边行情放大风险；同时，加强投资者教育，提醒债券市场是有涨有跌、投资是存在风险的。
Investors should prudently assess the risks and returns of the bond market. Bond investment should adopt rational and stable investment strategies, avoiding overly short-term investment behaviors, chasing high prices for speculation, and blindly following trends. Some market participants and industry experts point out that there are interest rate risks in the bond market, and bond market investment does not necessarily mean stable expected returns can be achieved. When making independent investment decisions, one should be aware of the principle of buyer beware. Institutional investors, in particular, need to effectively strengthen internal control management, manage the risks of product portfolios, and always be vigilant about maturity and asset-liability mismatch risks.
投资者要审慎评估债券市场风险和收益。债券投资要采取理性稳健的投资策略，避免投资行为过度短期化、追高炒作、盲目跟风。一些市场人士和业内专家指出，债券市场是存在利率风险的，债券市场投资不意味着一定能实现稳定的预期收益，在自主投资决策时，要有买者风险自负的意识。尤其是机构投资者更要切实加强内控管理，管好产品组合的风险，时刻警惕期限和资产负债错配风险。
Resolutely cracking down on illegal activities that disrupt market order in the bond market. Currently, the corporate governance and internal control systems of market institutions still need continuous improvement, and there are still some non-standard phenomena. Recently, some institutions in the bond market have been lending bond trading accounts and quoting prices that significantly deviate from market levels. Financial regulatory departments' crackdown on illegal activities that disrupt market order is conducive to regulating market operations, maintaining good market order, and promoting the long-term stable development of the financial market. The standardization and development of the bond market are mutually promoting and not contradictory. Better sustained and stable development can be achieved through standardization.
坚决打击债券市场扰乱市场秩序违法行为。当前市场机构的公司治理和内控制度仍需不断完善，还存在一些不规范的现象。近期债券市场有部分机构存在出借债券交易账户、报价明显偏离市场水平等现象，金融管理部门打击扰乱市场秩序违法行为，有利于规范市场运行，维护良好市场秩序，促进金融市场长期稳定发展。债券市场规范和发展是互促互进、并不矛盾的，在规范中能够实现更好的持续稳健发展。
The bond market has seen a significant correction recently, with the 10-year government bond yield returning to above 2.2%. Strong regulatory signals have become the biggest confidence booster for short-term bond market bears, while steadfast bulls are waiting for the Federal Reserve's rate cut in September to open up further downward space for interest rates.
债市近期回调显著，10年期国债重回2.2%以上。强烈的监管信号成为短期债市空头最大的信心，而坚定看多者则在等待美联储9月降息打开利率进一步下行空间。
"For the bond market, the core logic of current market game theory may still lie in the central bank's attitude and subsequent changes in the funding environment under its operations. Whether it's large banks selling bonds or the interbank market association warning about violations in government bond trading, under a supportive monetary policy stance, the aim is to stabilize long-term interest rates and create a favorable monetary and financial environment, rather than forming a trend reversal. It more reflects the significance of signals and expectation guidance, trading time for space, waiting for the right moment to coordinate with fiscal policy," Tan Yiming, Chief Fixed Income Analyst at Minsheng Securities, recently stated.
“于债市而言，当前市场博弈的核心逻辑或仍在于央行态度以及后续操作下资金面的变化，不论是大行卖债、交易商协会提示国债交易违规行为，在支持性的货币政策立场之下，旨在稳定长端利率，营造良好的货币金融环境，而非形成趋势性逆转，更多体现信号意义和预期引导，以时间换空间，等待与财政配合的时间点。”民生证券固定收益首席分析师谭逸鸣近期表示。
Several market participants interviewed by China Securities Journal also indicated that in an environment where expectations for loose monetary policy remain clear, the overall strengthening trend of the bond market is likely to continue. In the medium to short term, a Fed rate cut in September has become a high probability event. Against the backdrop of reduced external pressure, bond market bulls may launch a new round of offensive.
多位接受券商中国记者采访的市场人士也表示，在宽货币预期依旧明确的环境下，预计债市整体走强的格局仍然会延续。中短期而言，9月美联储降息成为大概率事件，在外部压力减轻的背景下，债市多头可能发起新一轮的进攻。
21CBH - “After the Bond Market Correction: Financial Product "Negative Feedback 2.0" Has Not Yet Arrived, Multiple Bond Funds Face Large-Scale Redemptions” 债市回调之后：理财“负反馈2.0”暂未至，多只债基遭遇大额赎回 - 21经济网
Due to the National Association of Financial Market Institutional Investors (NAFMII) "calling out" certain institutions and initiating self-disciplinary investigations, the bond market suddenly cooled down, experiencing significant fluctuations.
由于银行间交易商协会“喊话”个别机构启动自律调查，债券市场忽遭降温，出现大幅度波动。
In this situation, the market is concerned about a recurrence of the "negative feedback" in wealth management products seen at the end of 2022. However, from the current perspective, the wealth management market remains relatively calm. Nevertheless, bond funds with a higher proportion of fixed-income asset allocation have shown signs of "injury". Since August alone, four funds have issued announcements to increase their fund precision...
在此情况下，市场担忧2022年末的理财“负反馈”重现，不过从目前来看，理财市场相对平静。然而，固定收益类资产配置比重较高的债券基金则出现“受伤”的情况，仅8月至今就有4只基金发布上调基金精度的公告。
社论丨加快货币政策发力显效，推动债市回归健康运行 - 21财经
An August 14 editorial from the 21st Century Business Herald said the latest bond market turmoil stems from a battle between the Chinese central bank and the markets. The greater the fluctuation, the greater the battle is, the editorial said. Under the current climate, the central bank views the big flow into long-term bonds长期国债做多 as a risk, while the market view is that such bonds are a way for investors to preserve value. The key to closing the gaps between those two views, the editorial said, lies in an improved economy, which could “reverse market expectations” to direct (investors) to plow money into “better asset channels” like stocks or funds.
现阶段我国债市的波动，是央行与市场各方的博弈结果，波动幅度越大，越说明双方的博弈力度在加大。在货币政策的执行角色来看，在当前的逆周期调节过程中，央行将长期国债的做多视作市场风险；而市场将其视作保值的资产渠道。如何将二者对长期国债的分歧转向逐步统一，需要推动国债市场从波动到相对均衡。其中的关键，在于我国宏观经济基本盘的向好趋势，当这种趋势确定，就能逐步扭转市场预期，驱动资金弃债，进而转向更好的资产渠道，例如股市或产业基金，从而彻底扭转今年的债牛行情，提高长期债券收益率，最终化解债牛行情下的期限错配风险、消除债券价格泡沫。
Banks and other fixed-income investors are not buying long-date government bonds out of perversity, in other words, but because the economy is struggling and better alternatives don’t exist. This raises an obvious question: Will the regulators succeed in preventing banks from piling even more into long-dated government bonds and driving yields down further? Another way of asking this question might be to consider how, if they are indeed prevented from buying the long-dated bonds, Chinese banks can manage their deposit inflows and the weak real demand for their funds.
Regulators in China hope to prevent a situation where a low long-bond yield and pessimism about the future state of China’s economy – and in turn expectations for further interest rate cuts – would reinforce each other, resulting in a downward spiral.
The reasonable range for the 10-year government bond yield should be 2.5 to 3 per cent, according to a May report by the Financial News, a newspaper managed by the PBOC.
2. More crackdowns on securities firms
Caixin In Depth: China Amps Up Scrutiny of Freewheeling Securities Firms
The China Securities Regulatory Commission (CSRC) in May revised rules to strengthen the supervision of listed securities firms, stipulating that they should focus on their core businesses while capital-intensive activities should be conducted with caution.
Meanwhile, the commission has been handing out more warnings and penalties for missteps such as lax compliance management and risk oversight, including a recent warning against SDIC Securities Co. Ltd.’s branch in North China’s Hebei province.
“Since Wu Qing took office as the new chairman of the CSRC, its daily inspections and special business checks on securities firms have increased,” a source close to SDIC Securities told Caixin.
SDIC Securities is not alone in regulators’ sights. Caixin calculations based on public information show that as of May, the CSRC and the Shanghai and Shenzhen stock exchanges had issued more than 100 penalties and regulatory measures to over 30 securities firms and their employees since Wu became CSRC chairman in February.
Another slow, down day in the stock markets - A股三大指数集体收跌 成交额连续三天不足5000亿 _ 东方财富网
"The Shanghai Composite Index fell 0.6%, the Shenzhen Component Index dropped 1.17%, and the ChiNext Index declined 1.42%. The trading volume has been below 500 billion yuan for three consecutive days."
执掌《财经》杂志26年后，王波明宣布辞去总编辑职务：已到退休年龄_10%公司_澎湃新闻-The Paper
Wang Boming Resigns as Editor-in-Chief of Caijing Magazine - On August 13, Wang Boming announced in a statement that he has decided to resign from his position as Editor-in-Chief of Caijing Magazine after 26 years, as he has reached the retirement age.
A fun read - The Jordan Belfort of Lujiazui - by
Inspired by Bill Bishop’s memo from a Political Staffer in the Chinese Embassy in DC reporting back to Zhongnanhai on the shitshow of a presidential campaign in the US, I will be reporting on the shitshow in the Chinese Financial Services industry as if I was a Securities Exchange Commission attaché in the US Consulate in Shanghai, in the style of Matt Levine.5
And yes, I woke up and chose violence today.
In 2022 when Shanghai was locked down, Xinhua News and the Shanghai Health Commission had daily updates on the number of infected patients - like many other cities did around the world. A prominent sell side analyst would cryptically message clients with digits that magically matched with the reported number of COVID infectees reported by the Commission a day or two later - showing off his “access”. This same prominent sell side analyst was investigated with nefarious personal conduct (inappropriate venues were selected to entertain clients, to say the least) as well as allegations of operating pump and dump schemes.
Question: Who is this analyst?
What Are the Costs and Benefits of China’s Domestic Stock Market Interventions? by
After a month-long stock market crash in 2015, China’s government bought up stocks equaling 4.3% of the total market value of domestic listed companies to stabilize the market.
Government stock purchases were associated with an estimated 3.45%–5.65% average decrease in stock price volatility.
The government’s stock purchases also reduced price informativeness, causing investors to trade based on government stock purchase behavior rather than underlying firm value.
Such findings suggest that China’s government may favor intervention when prioritizing market stability over other policy objectives, like market efficiency
3. PRC preferences in the US election
August 1 Does China Prefer Harris or Trump? | Foreign Affairs - Wang Jisi, Hu Ran, and Zhao Jianwei
To Chinese observers, rather than offering alternative approaches to their country and the world, the two major U.S. parties both reflect a general approach to China that has emerged in recent years, one that is strongly informed by domestic U.S. political concerns. What is more important than either party’s views are the several gradations of U.S. analysis of China and what they could mean in practice. Most Chinese observers do not expect significant changes in U.S. policy toward China. But they are trying to understand which strands of current thinking in Washington may ultimately dominate...
Observed from afar, U.S. strategists on China can be broadly divided into three schools. The first might be called the New Cold Warriors. People in this group believe that the U.S.-Chinese rivalry is a zero-sum game and that Washington and Beijing are engaged in a cold war that requires even more aggressive tactics from the United States. As former U.S. Deputy National Security Adviser Matt Pottinger and former U.S. Congressman Mike Gallagher argued in Foreign Affairs, the competition with China “must be won, not managed.” In making this argument, they and others have drawn on U.S. President Ronald Reagan’s example of setting the Soviet threat as a top priority, in order to pursue victory in the Cold War.
The second school could be described as the Competition Managers. Contrary to the New Cold Warriors, those in this camp hold the idea that the U.S.-Chinese rivalry is not a zero-sum game and, consequently, that it is essential to have a strategy for coexisting with China. The intellectual origins of this approach can be traced to an article that Kurt Campbell and Jake Sullivan wrote for Foreign Affairs in 2019, before they both joined the Biden administration. As they argued, the contest with China is “a condition to be managed rather than a problem to be solved.” Along with Rush Doshi, who was deputy senior director for China and Taiwan Affairs at the National Security Council from 2021 to early 2024, and others, they suggest that Washington’s best approach to China is leading with competition, followed by offers of cooperation.
The third might be called the Accommodationists. Although they share the other schools’ dislike for China’s political system and its global influence, they tend to be more concerned than their counterparts that competition could devolve into confrontation. As prominent figures in this camp, the international relations scholars Jessica Chen Weiss and James Steinberg are against waging a cold war with China because cold wars are inherently dangerous. In their view, Pottinger and Gallagher offer an illusory appeal to victory, because “U.S. efforts to bring about change through pressure are as likely to consolidate authoritarian rule as to undermine it.” Weiss and Steinberg argue that it is therefore in the interest of both Beijing and Washington to reduce the risk of war and to cooperate on issues of mutual concern, such as climate change and public health...
Despite its declared principle of noninterference, Beijing may not be able to silence sensational, irresponsible, and provocative voices in Chinese-language social media. Some of these are aired outside China and may reflect the specific agendas of particular external Chinese communities and should therefore not be construed as representing China’s official position. [Comment: Nice CYA insertion]
Given the broad similarities of both the Trump and the Biden administrations’ approach to China, Beijing is preparing itself for the outcome of the U.S. elections with great caution and limited hope. In April, Xi restated to U.S. Secretary of State Antony Blinken that “China welcomes a confident, open, prosperous, and thriving United States and hopes the United States will also look at China’s development in a positive light.” Unfortunately, the likelihood that the next U.S. administration will view China’s development positively is low. As China continues to prioritize domestic development and security, it will likely strive to defend its economic and governance models while preserving space for global trade and investment. For a long time to come, U.S.-Chinese relations seem unlikely to return to the deep exchanges and cooperation that occurred at the beginning of the twenty-first century. Yet if a rapprochement is out of the question, China and the United States can still maintain stability and avoid catastrophe, whoever is in the Oval Office
July 2019 Opinion | China is not an enemy - The Washington Post
By M. Taylor Fravel , J. Stapleton Roy , Michael D. Swaine , Susan A. Thornton and Ezra Vogel, just under 100 signatories
We are members of the scholarly, foreign policy, military and business community, overwhelmingly from the United States, including many who have focused on Asia throughout our professional careers. We are deeply concerned about the growing deterioration in U.S. relations with China, which we believe does not serve American or global interests. Although we are very troubled by Beijing’s recent behavior, which requires a strong response, we also believe that many U.S. actions are contributing directly to the downward spiral in relations...
The author of this Substack writes under the pen name Tony Stark. They are a former Hill staffer with years of experience working on China-related issues - How to talk China in 2024 by
There is simply too much we don’t know about his approach to the PRC for people, especially China policy folks, to be making sweeping judgments. We can base some of what a Harris-Walz ticket might think off of the Biden administration, but everyone has been in this admin for too long and mass turnover is likely coming soon (regardless of who is in the White House in 2025). And as Peter Mattis has said, Walz voted and ran policy based entirely upon where he sat. As a teacher in China and after, he cared for the Chinese people and (rightfully) separated them from the evils of the CCP. He married on June 4 to honor those who died at Tiananmen. As a congressman in the 2010s, he voted like the average Democrat on China where he cared about human rights violations but also believed engagement was necessary. As Governor, he prioritized AG sales and commerce with the PRC. I may disagree with that policy, but he wasn’t being dishonest with his constituency as a Midwestern governor. And as Vice-President, might the old artilleryman come out when he gets security briefings and become a hawk just as Pelosi has become? Who knows, you certainly don’t until we get the candidates briefed and talking on China policy. But frankly, what I’ve seen in commentary about the man is absurd. Some are too quick to assume he wouldn’t make tradeoffs between economics and human rights (as many red and blue have before and still do). However, it is also beneath the community to make Manchurian Candidate-esque allegations against a guy who did 20+ years in uniform and has been a vocal critic of CCP human rights abuses just because he is one of the few senior policy makers to have actually lived inside the Main Enemy. It’s all guesswork at best and Red Scare hysteria at worst.
So instead, let’s be smarter. Let’s set the baseline for China discourse and use our expertise to tell the country the right questions to ask of our future potential leaders. I have outlined below some of the questions that you should be asking of the candidates for leader of the free world. And quite frankly, policymakers throughout DC should be asking themselves…
Tim Walz, Harris’s VP pick, has a long history with China - The Washington Post
Shen Dingli, a Shanghai-based scholar of international relations, said Walz’s keen understanding of China may “make him more difficult for the Chinese government to deal with,” in particular citing Walz’s criticism of China’s handling of the democracy movement in Hong Kong.
Walz and China: Harris VP pick's close ties and criticism of Beijing - NBC News
Walz’s stance on China, a country he says he has been to about 30 times, appears to be broadly in line with that of the Biden-Harris administration, which is “managing competition” with the world’s second-largest economy while also looking for opportunities to cooperate on issues of global import such as climate change.
While Walz has been critical of the ruling Communist Party, as well as of China’s trade practices and growing aggression in the South China Sea, he says there are “many areas of cooperation that we can work on.”
“I don’t fall into the category that China necessarily needs to be an adversarial relationship,” he said in a video interview in 2016.
Walz's Long China Record Shows Consistent Views - Foreign Policy
One of the striking elements of Walz’s biography is his unusually deep connections to China. Walz first visited the country in 1989, just months after the Tiananmen Square protests, and returned to the country some 30 times afterward. As an educator and then a small business owner, he facilitated student groups’ trips to China. As a legislator, he served on the Congressional-Executive Commission on China, which monitors human rights and the rule of law in the country, and co-sponsored resolutions urging the release of democratic activist Liu Xiaobo and remembering the Tiananmen Square victims.
Tim Walz’s Long Relationship With China Defies Easy Stereotypes - The New York Times
Jeffrey Ngo, a prominent Hong Kong pro-democracy activist, credited Mr. Walz with being at one point the only House Democrat willing to continue backing the Hong Kong Human Rights and Democracy Act, which would compel the U.S. government to impose sanctions on officials responsible for human rights abuses in Hong Kong.
Mr. Ngo said Mr. Walz’s support helped keep the bill alive at a crucial time until it was eventually passed.
“Walz is perhaps the most solid candidate when it comes to human rights and China on a major-party ticket in recent memory, if not ever,” Mr. Ngo said.