Tensions over Taiwan; EU corruption probe of Huawei; OpenAI rattled by DeepSeek; CK Hutchison deal with BlackRock slammed for "spineless kowtowing"

I will not be surprised if the PRC launches another round of exercises/rehearsals around Taiwan in response to President Lai Ching-te’s comments today.

Summary of today’s top items:

1. Taiwan President Lai calls PRC a “foreign hostile force” - On March 13, President Lai Ching-te convened a high-level national security meeting and later outlined 17 key strategies to counter five major threats from China. These threats include challenges to Taiwan’s sovereignty, espionage targeting its military, efforts to obscure national identity, societal infiltration through cross-strait exchanges, and economic inducements to attract Taiwanese businesspeople and youth. President Lai stressed the government’s commitment to safeguarding national sovereignty and called for unity among citizens to resist division. He urged the public to strengthen media literacy, engage in civic education, and expose foreign influence. He also labeled China a "foreign hostile force" under the Anti-Infiltration Act, justifying the need for stronger preventive measures.

Chen Binhua, Spokesperson for the Taiwan Affairs Office of the State Council, responded by saying in part that

Lai Ching-te...once again propagated the separatist fallacy of so-called "mutual non-subordination" across the Taiwan Strait. He recklessly claimed that "Taiwan is a sovereign and independent democratic country", exaggerated the so-called "Mainland threat", defined the Mainland as an "external hostile force," and put forward "17 strategies" under the guise of responding to "five types of threats." Lai Ching-te’s stubborn commitment to "Taiwan independence", coupled with his provocative confrontational stance, once again proves that he is an outright "destroyer of cross-strait peace" and a "creator of crises in the Taiwan Strait."..

His tactics aim to divert attention from internal conflicts and alleviate his governance crisis. This fully exposes his selfishness and his willingness to destabilize Taiwan's society. He ties the people of Taiwan to the chariot of "Taiwan independence", pushing Taiwan towards a perilous situation of war and conflict—which reveals his evil nature.

The PRC response has a strong "you have not learned your lesson" tone to it.

2. No serious talks about a Xi-Trump Summit - Demetri Sevastopulo of the Financial Times reports on a request by Senator Steve Daines to have Trump designate him as a “special envoy to China to help secure a meeting with Xi Jinping that could pave the way for a summit between the leaders” that “People familiar with discussions between Washington and Beijing since Trump took office said the two sides had not engaged in serious talks about a possible summit between the two presidents”. So I would not be making plans for a Xi-Trump April meeting.

3. Huawei in middle of European Parliament corruption probe - A massive corruption probe centered around Huawei is underway in the EU. Follow the Money, one of the publications that broke the story, reports that the code name for the investigation is “Operation Generation” and that “Investigators suspect the lobbyists may have committed crimes by bribing lawmakers with items including expensive football tickets, lavish gifts, luxurious trips to China and even cash in exchange for advocating for Huawei in the European Parliament.”

4. BlackRock’s Panama Canal deal may be in trouble - I wrote last week about the BlackRock deal to buy control of ports on either side of the Panama Canal, as well as 43 other ports outside of the PRC and Hong Kong, that it is not clear whether Li or his company gave Beijing a heads up about the transaction, or had to get permission.

Now Beijing may be having a say. Ta Kung Pao, a Hong Kong paper closely tied to the government, published a commentary titled “Don’t Be Naïve, Don’t Be Confused” that blasted the deal:

If the Panama Canal becomes "Americanized" and "politicized", the U.S. will undoubtedly use it for political purposes, implementing policies that restrict Chinese trade. If the U.S. imposes selective passage restrictions, political surcharges, or other barriers, China’s logistics costs and supply chain stability could face severe risks. Additionally, by acquiring this massive port network, BlackRock will control approximately 10.4% of the world's container terminal throughput, making it one of the top three global port operators. This gives BlackRock leverage to cooperate with the U.S. in restricting Chinese shipping operations, raising costs for Chinese cargo ships, and squeezing China out of the global maritime trade. Moreover, this deal would create significant gaps in the port network built by Chinese companies over many years, allowing U.S. interests to eat away at China’s overseas economic foothold…

many netizens have strongly criticized both this deal and CK Hutchison Holdings, regarding this as spineless kowtowing [腰骨的跪低], solely pursuing profit and forgetting righteousness, disregarding national interests and greater national principles, betraying and selling out all Chinese people. These emotional expressions from internet users are completely understandable.

In the face of such a significant geopolitical and economic issue, the companies involved must think carefully. They must understand the true nature of this deal, its underlying implications, and where they stand on this critical matter.

In a signal that this commentary has the full backing of the central government, the Hong Kong and Macao Work Office of the CPC Central Committee reprinted the commentary in full on its website.

5. ByteDance pushing hard for Project Texas TikTok deal - The Information reports that Oracle has emerged as the leading contender to help run TikTok as part of a deal orchestrated by President Trump and that ByteDance wants to maintain operational influence over TikTok, even if U.S. companies acquire a stake in TikTok U.S. They are pushing hard on reviving Project Texas, even though it does not comply with current law. Oracle needs the revenue, it is already a big vendor to ByteDance, and according to The Information “ByteDance is one of the largest renters of Nvidia graphics processing units at Oracle, and it is set to receive some of the first Blackwell chips that go to the cloud provider in coming weeks”.

6. OpenAI’s DeepSeek worries - DeepSeek clearly has OpenAI rattled, and the company is using it as a pretext to get support and protection from The US government. OpenAI, in a letter to the White House Office of Science and Technology Policy with proposals for the AI Action Plan under consideration writes:

As with Huawei, there is significant risk in building on top of DeepSeek models in critical infrastructure and other high-risk use cases given the potential that DeepSeek could be compelled by the CCP to manipulate its models to cause harm. And because DeepSeek is simultaneously state-subsidized, state-controlled, and freely available, the cost to its users is their privacy and security, as DeepSeek faces requirements under Chinese law to comply with demands for user data and uses it to train more capable systems for the CCP’s use. Their models also more willingly generate how-to’s for illicit and harmful activities such as identity fraud and intellectual property theft, a reflection of how the CCP views violations of American IP rights as a feature, not a flaw.