“Xi Jinping gambles on economic tumult to cement his legacy”, “The Undoing of China’s Economic Miracle” and “China’s Unstable Political Economy” are just some of the headlines that have graced the Financial Times, The Atlantic and the Wall Street Journal in recent months.
Some of this anxiety among economists relates to property developer China Evergrande, which has been teetering on the brink of collapse due to high debt that led it to suspend the construction of multiple projects over the summer.
The group missed an $83.5m interest payment in September, but eventually paid bondholders in mid-October. The government never gave any indication it would support the company and the People’s Bank of China went as far as claiming that any impact on the financial system would be controllable.
The government’s willingness to potentially let the country’s second-largest property developer collapse is indicative of moves to reign back in a private sector that had been growing in influence over the past several years.
A year ago, financial services provider Ant Financial had its $37bn initial public offering suspended after unguarded comments by Jack Ma, although the official line was that this happened due to Ant’s credit business that had grown too large and unregulated.
In another recent move, the central government took a wrecking ball to the country’s booming edtech sector, enacting regulations designed to make these businesses unviable. New Oriental Education and Technology, by way of an example, has seen its shares crash from a high of nearly $20 to less than $2.40, slashing its market cap to just $4bn.
It all fits into larger moves by president Xi to centralise power back in Beijing, away both from private industry and Hong Kong which had enjoyed relatively high amounts of freedom. Lest we forget, this also includes the Xinjiang concentration camps – described by Foreign Policy as “the world’s most technologically sophisticated genocide”.
Some moves can appear relatively harmless at first.
The Belt and Road Initiative is a large-scale programme to finance construction projects in more than 60 countries – it has sought out particularly those nations that have been left behind by the Western world but is really a way of building influence.
Confucius Institute is a global network of outposts on university campuses whose stated aim is to promote language teaching and facilitate exchanges. One may think of this as China’s version of the Goethe-Institut or the British Council, but non-governmental agency Human Rights Watch is among several that have been warning for years that Confucius Institute poses a threat to academic freedom.
Drew Pavlou, then a philosophy student at University of Queensland, ended up on the wrong side of China in 2019 when he organised a small protest calling for democracy in Hong Kong and criticising Chinese influence on campus. A significantly larger group of Chinese students gathered around the protest and Pavlou was attacked. The university ended up suspending Pavlou after an investigation that found he had made unsavoury statements about China. Pavlou claimed it was an effort to silence him so the university could “avoid offending its Chinese allies” and the university’s chancellor admitted he was personally concerned about the severity of the disciplinary panel’s decision.
China’s impact on academia goes far beyond student protests, however. The majority of the top 25 universities in the UK have some form of research or sponsorship agreement with a Chinese military-linked organisation, according to education think tank Civitas’ Radomir Tylecote, director of the defence and security for democracy unit.
Charles Lieber, former chairman of Harvard University’s Chemistry and Chemical Biology Department, was indicted on false statement charges in June 2020 because he allegedly withheld information on research support, potential financial conflicts of interest and foreign collaboration – he is said to have signed a $50,000 a month contract to establish a research lab at Wuhan University of Technology that also included a $1.5m grant and up to $158,000 in living expenses.
Legal proceedings are ongoing, and while some similar cases have ended up being ruled in the defendant’s favour, several other scientists have wound up in prison, such as Meyya Meyyappan, a former senior nanotechnologist at Nasa, and Song Guo Zheng, a rheumatology researcher at Oregon State University.
Lieber fell victim to the Thousand Talents Plan, a Chinese government programme to recruit international experts in an effort to gain access to advanced technologies.
This is where it becomes critical for tech transfer offices: Lieber himself had founded two Harvard spinouts – Nanosys and Vista Therapeutics. Although both of these seemingly predated his ties to China – they were both launched in the noughties – there is a danger that undisclosed contracts could, at best, make spinouts potentially commercially unviable because a foreign power already has access to the information.
And that is before we get to Chinese investments in these companies. In the UK alone, a recent BBC documentary estimated that a total of £134bn have already been ploughed into British businesses ranging from pubs to utility companies.
And eight out of 10 industrial espionage cases in the US now reportedly involve China.
All of this knowledge acquired from overseas experts will be used for military innovation. Remember that when it was revealed in mid-October that China had tested hypersonic missiles – weapons that travel at five times the speed of sound – over the summer, the US had to admit that it had no idea how they achieved this.
This is also before we get to the issue of cyberwarfare. With spinouts increasingly commercialising deep tech that often involves large troves of customer data or sophisticated algorithms, it will become more and more important to protect these assets from nation-states who have a keen interest in accessing such information.
Consider for a moment that TikTok was the subject of much debate over its ownership – and that was “only” a video-based social media app. Imagine the power an adversary would have if it gained access to the healthcare information of a large part of the population.
None of this is to say we stock nuclear bunkers and prepare for World War 3. But we have to be conscious of the fact that there is a new arms race going on and if the West is not careful, China will win it both through overt military power and by turning academic researchers against their own countries without them even realising it.
