The China Report February 6, 2023 #3 - High Anxiety

posted by Lyric Hughes Hale on February 7, 2023 - 10:33am

This weekend I expected to be writing about the results of Secretary of State Anthony Blinken’s trip to China and prospects for the reopening of China’s post-Covid economy. Instead, Americans have been mesmerized by the week-long journey of a Chinese balloon, and I have been bombarded with questions about what it means. A symbol of both China’s rise and presence in the US, a white balloon galvanized the media in a way that a diplomatic visit would never have equaled.

The Biden Administration held no press conferences on the subject and had evidently been trying to keep the entire saga on the “down low” for days in order to prevent cancellation of Blinken’s trip, in my opinion a worthy goal. Absent local media in Montana, it is highly possible we would never have known about the balloon, and indeed it seems that this type of incursion has happened before and in other countries without any defensive action in response.

I believe Chinese statements about the incident have been widely misinterpreted. This morning’s Financial Times carries the front page headline “Beijing slams US for downing balloon in further strain on frayed relations”. If you read the Chinese statement, that simply does not track as I explain in detail below.

My reading is that the Chinese reaction was as measured as could have been mustered. This was not an episode either side could have desired. I also don’t buy the theory that the Chinese military floated a balloon across the US in order to prevent Blinken’s trip. In fact, the non-escalatory way this was handled is proof of decent communications between both governments at high levels. They avoided being swept along by the Westerlies of public opinion.

The first Chinese announcement was an apology which appeared in People’s Daily immediately after news reports surfaced:

A Chinese airship used for meteorological purposes accidentally entered US airspace due to the Westerlies and its limited self-steering capability, the Chinese Foreign Ministry said. China regrets the unintended entry and will properly handle this unexpected situation caused by force majeure.

The second announcement immediately after the balloon was burst also denied any intention to violate US airspace and claimed that the balloon was civilian not military, but this critical point was largely ignored. A sensational cultural phenomenon, the downing of the balloon was broadcast live and Twitter was ablaze with theories about an imminent invasion. Between the parties that mattered it does not appear that the threat ever rose to the level of a direct military confrontation. Intentional or not however, a balloon hovering over our skies became a perfect metaphor for rising fears about data being gathered by Chinese companies such as TikTok and Zoom.

Context matters. This incident occurred after America’s three-year state of anxiety due to Covid and the war in Ukraine. As we go back to business as usual, subconsciously we are waiting for that other shoe to drop. Our trust in the world order shaken, we are always asking “What’s next?” Military action against Taiwan is high on that list.

In the end, the US will likely gain intelligence from the both the path of the balloon and its remnants, which could alter our response and my interpretation. Today we learned that it was capable of destroying itself but did not. Fueled by the media, the psychological impact was likely out of proportion to the immediate danger it posed. But it was an irresistible moment, a perfect visual hook for American anxieties surrounding China’s rise.

Intentions matter too, and as mentioned, numerous commentators have got it wrong, including Rep. Mike Gallagher (R Wis) who is the head of the new China Select Committee. In interviews this weekend he said "This is not the last such incident we're going to see from the Chinese Communist Party. They're testing us, they're mocking us, and of course, they're trying to collect as much sensitive information from us as possible."

Of course China is trying to collect information. We (and others) are doing the same thing. But I do not believe that this highly visible episode was meant to humiliate or provoke the United States as Gallagher claims. At the White House and in Zhongnanhai, both governments were probably wishing all of this would go away.

There is no doubt that the balloon was a gift to the China hawks in Congress and to US intelligence. That could not have been the goal of China’s government, nor the Biden Administration. However both governments underestimated its impact. The future of US-China relations could depend upon their realization of its broader implications and the need to deal directly with unresolved issues.

The stealthiness of the balloon’s approach echoed the entry of Covid into this country from China, which was of course enormously consequential. If only Covid could have been shot down so cleanly and quickly! Perhaps now there will be a collective sigh of relief. We know that news cycles have limits. Based on the reactions of US politicians, it appears they will use this saga to redouble their efforts to isolate China as a new election cycle looms. What they don’t realize is the enormity of challenges that Beijing now faces. The policy choices China has made over the last ten years have done their work for them.

It is easy to see from numerous public statements that China is ready to pivot on a multitude of these missteps. At its core, the problem is that the line carefully drawn by Deng Xiaoping over forty years ago separating private from public enterprise was allowed to fade away. The signal I am watching for is for Chinese entrepreneurs, believing they will be able to operate freely once again, to return from Singapore and other safe havens. I’ll expand on this in my next China Report.

My conclusion is that the likeliest scenario to explain a renegade balloon is that the right hand did not know what the left hand was doing, as is common in many large enterprises. Collusion and deception require far more intelligence than this outcome has produced; ineptitude is a far more common than conspiracy.

I doubt that the Chinese Foreign Ministry that issued these statements was aware of or is responsible for spy balloons being sent around the world. That kind of activity is usually conducted by the military, in this case the PLA.

In China, the military is present in many commercial enterprises and the government has a hand in virtually all large companies, with multiple lines of control that connect them to the CCP. As I keep having to remind people, China is a communist country with an entirely different state ownership structure.

What was extremely telling to me, and missed by most commentators who focused on the literal translation, was the specific language of the apology before the balloon was burst, and the statement afterwards. In both cases the claim was made that the balloon was private, not public property. The rest was boilerplate. This is key because it means officials were trying to express that there was no intent to initiate military aggression against the US. Here is the statement after the balloon was downed:

China strongly disapproves of and protests against the US attack on a civilian unmanned airship by force. The Chinese side has, after verification, repeatedly informed the US side of the civilian nature of the airship and conveyed that its entry into the US due to force majeure was totally unexpected. The Chinese side has clearly asked the US side to properly handle the matter in a calm, professional and restrained manner. The spokesperson of the US Department of Defense also noted that the balloon does not present a military or physical threat to people on the ground. Under such circumstances, the US use of force is a clear overreaction and a serious violation of international practice. China will resolutely safeguard the legitimate rights and interests of the company concerned, and reserves the right to make further responses if necessary.

This statement is a trip down the road to de-escalation by downgrading the target. China is not claiming that the shooting down of the balloon was an attack against military assets, but private commercial property and that it was a weather balloon. To bolster this scenario, the head of the China Meteorological Administration (CMA) which has dominion over balloons, was removed from his post on Friday.

Sometimes when things go awry and when someone gets blamed, it can illuminate how things work within the CCP. Having responsibility is not the same thing as having authority. For example, the person who was blamed for China not having fair warning of the Russian invasion of Ukraine was demoted two levels instead of being appointed to Minister of Foreign Affairs. Qin Gang, the recent Chinese Ambassador to the US was given this job instead, a move that surprised many. This might have been unfair; the military should have been the first line of intelligence gathering. The same applies to the State Department and the Pentagon.

It appears from a tour of the CMA website that they conduct a range of activities including international research. They also sell data and have a customer support function. My guess is that there are companies that have been created by the CMA as pubic-private subsidiaries, and that other organizations such as agricultural producers have a continuous need for their research. The former head is missing from the About Us page and failed to make a high-level meeting with the president of the UN General Assembly Csaba Kőrösi on Friday, which was taken instead by his deputy.

The CMA have a press conference scheduled for today. What I would ask is which company is MOFA referring to in their statement? Is it Chinese, or international? State-owned or PLA controlled? The manufacturer of the balloon, China Zhuzhou Rubber Research & Design Institute is a state-owned enterprise with ties to both the CMA and the military.

We are all aware of the concept of dual use. Of course these balloons are used to gather data and intelligence, also collected by satellite and many other means by China, the US and other nation states. Although there is a recent report they have been used to test missile effectiveness, neither balloons nor satellites are primarily intended for use as weapons. My conclusion is that China was not trying to be deliberately provocative, based upon both their actions and statements.

Although the US government has also tried to downplay the incident, in a world of already fragile US-China relations it is undoubtedly a setback because popular opinion about China and its intentions is largely negative. In the rest of the world, including Japan and Latin America, there are reports of other balloons. None of those players, including Canada last week, were moved to shoot them down in previous flyovers. So it seems that was required by American public opinion, not military defense.

The geopolitical environment has changed profoundly since 2019. After Covid and Russia’s surprising aggression, we have been sensitized to feel that disaster is just around the corner. It is up to leaders on both sides to reassure the public, and in this case I believe that they did the right thing. The media should be less incendiary and more investigative.

All this being said, no one outside a tight leadership circle can be sure of where Chinese intentions are heading. The forensics on the balloon wreck could prove alarming, or show that this episode was just a gigantic false alarm, fueled by much larger fears.