All politics is local, especially when tracking China’s long international reach

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In Houston, Texas, a Chinese diplomat warned the governor of Mississippi that Chinese investments would be withdrawn if he travelled to Taiwan. In Weimar, Germany, when a human rights prize was awarded to a Uyghur activist, a university partnership was terminated. And in the Philippines, lucrative investments in Mindanao and Luzon have made local authorities increasingly reliant on Chinese funding.

China’s web of influence has expanded around the world, drawing local councils, state governments and regional authorities – stretching from Wagga Wagga to Hamburg – into a subnational campaign that promotes Beijing’s global goals while challenging the foreign policy of national governments.

China is looking for new friends.Credit: Marija Ercegovac

Western Australia Premier Mark McGowan will this week become the second Australian leader to travel to Beijing in a month, after Victorian Premier Daniel Andrews. China is resetting its international relationships after three damaging years of COVID-19 restrictions, hoping to spur investment in its sputtering economy and drive its long-term strategic objectives.

The Chinese Communist Party’s goals are like those of any other government abroad: it is pursuing diplomatic and economic deals that are in its own interest. But few run campaigns that are as co-ordinated, well-resourced and targeted below the national level.

Viewed individually, the deals with local authorities are incremental, but taken together they create thousands of channels for China to assert its strategic interests around the world.

“I think we’re completely underestimating how China uses subnational relations as a tool for geopolitical influence,” says Roderick Kefferpuetz, a senior fellow at the Atlantic Council.

“It’s a salami-slicing tactic. You slice a little piece until you have the entire sausage.”

Chinese President Xi Jinping speaking at the China-US governors forum in Seattle in 2015. Credit: AP

In 2015, Xi Jinping made his first trip to the United States as China’s president. His first stop was not the White House but the China-US Governors Forum in Seattle, a gathering that included the leaders of Iowa, Oregon and Michigan.

“Provinces and states are closest to the people. Without successful cooperation at the sub-national level, it would be very difficult to achieve practical results for cooperation at the national level,” Xi said.

“I know as governors, you are most concerned about employment. Co-operation in the above-mentioned areas will promote growth and create jobs, thus bringing benefits to our peoples.”

Xi’s comments followed a familiar pattern: stronger ties would lead to better economic outcomes. But the network that the subnational conference provided would prove just as useful for Chinese operatives.

One of the organisers of the inaugural conference in Utah in 2011 was Ron Hansen, a former US Army officer with a background in signals intelligence who speaks fluent Chinese and Russian.

A year before Xi spoke at the third conference, Chinese intelligence agencies had recruited Hansen.

By 2016 he was supplying them with classified information including documents related to “US military readiness in a particular region”. He was paid hundreds of thousands of dollars for the information. Hansen would act as a source for Chinese operatives for the next two years, before being arrested while preparing to board a flight from Seattle while in possession of US military information, according to the US Department of Justice. Hansen pleaded guilty to espionage in March 2019.

“These cases show the breadth of the Chinese government’s espionage efforts and the threat they pose to our national security,” said former US assistant attorney-general of national security John Demers.

Australian leaders at both the national and regional levels have been more alert to subversive attempts by Beijing since the Turnbull government passed foreign interference laws in 2018 after former senator Sam Dastyari contradicted Labor policy on the South China Sea and offered counter-surveillance advice to Chinese political donor Huang Xiangmo.

But influential figures with links to China’s United Front influence network remain in some key positions, including in Western Australia where two pro-Beijing community leaders, Edward Zhang and Ting Chen, were the only two Chinese community representatives appointed to a paid multicultural policy advisory body in 2021.

Zhang, who has since left the advisory body, described “overseas Chinese as the first line of defence for our motherland”. Ting was the Western Australia Chung Wah Association’s secretary when it signed a statement defending China’s actions in the South China Sea. “If anyone plots wrongdoing, we will fully support the motherland in a just struggle,” the statement said.

McGowan and Andrews, the first two state premiers to visit China since it reopened its borders, were strident in their criticism of the former Coalition government’s approach to Beijing when it hit Australia with $20 billion in trade strikes and froze diplomatic relations for almost three years. Andrews, who took no media with him on his week-long trip, described it as a “very successful visit”. He did not raise one of Australia’s key disputes – the arbitrary detention of Australians Cheng Lei or Yang Hengjun – while he was in Beijing.

Western Australian Premier Mark McGowan, centre, with former Chinese consul-general Dong Zhihua, second from right. Australian Chinese Times owner Edward Zhang and Chung Wah president Ting Chen standing behind him.Credit: Chinese Consulate in Perth

A spokesman for McGowan said the premier would not raise specific foreign policy matters and did not respond to questions about the multicultural advisory body.

“A key focus of this mission will be opening up new opportunities – both economic and cultural,” the spokesman said.

The federal Labor government has welcomed the return of the premiers to Beijing to push their economic interests, but experts and officials have warned that China’s co-ordinated subnational approach, turbocharged by its emergence out of COVID and a more complicated geopolitical reality requires a co-ordinated response.

“Beijing follows a ‘divide and rule’ policy towards subnational actors. China knows how to use the federal system,” says Kefferpuetz.

In a study for the Mercator Institute for China Studies, Kefferpuetz spoke to 50 state and local political officials about China’s subnational push in Germany.

“If everyone does their own thing, we have no insight into what is happening at all,” one state official told him.

In some cases, gentle approaches for stronger cultural and business ties at the local council level have had real diplomatic and strategic consequences at the national level.

Cosco has made a bid for an ownership stake in Germany’s Port of Hamburg. Credit: Getty Images

“We’ve seen it in the Port of Hamburg where the Chinese company Cosco has been wanting to buy a stake in one of the terminals. And there you had a split, where parts of the government and security service and intelligence services were against it, but the regional government was very much in favour,” he said.

Olaf Scholz, the German Chancellor and former mayor of Hamburg, was also in favour of the deal. In October, Cosco was given the green light to acquire a 24.9 per cent stake in the third-largest port in Europe. On Thursday, Germany’s Federal Office for Information Security announced it was reviewing that decision.

“Ports are critical infrastructure,” says Kefferpuetz. “If you just look at Hamburg, and you’re like, well, they want to take 25 per cent – that’s not that much. But if you then suddenly notice they have done not only Hamburg but then also Antwerp and other places, then suddenly, a picture starts to emerge that might be more worrisome.”

The shipping company also has a minority stake in the nearby Belgian ports of Antwerp and Zeebrugge which processes 10,000 ships a year.

In each case, Beijing’s foreign policy and investment push has been coupled with a targeted campaign at the subnational level. Often, the regional leaders dealing with the lobbying blitz are out-resourced by their regional counterparts which are co-ordinated by one national body, the Chinese People’s Association for Friendship with Foreign Countries.

According to figures reported by the OECD, China spends 90 per cent of all of its public expenditure through local provinces and councils, compared with 50 per cent in Australia, where the federal government also spends widely on infrastructure and other services. This enables cashed-up subnational officials to spend big on international diplomacy.

The German city of Frankfurt employs nine people for international city diplomacy; 100 officials work in the same area for its twin city of Guangzhou.

The resourcing and population disparity is even wider in Australia, where Geelong, population 253,000 has a sister city relationship with Lianyungang, population 4.6 million, and Wagga Wagga, population 57,000 has a sister city relationship with Kunming, population 6.6 million. McGowan is expected to visit Perth’s sister city of Chengdu this week. Every other Australian capital has been linked with a Chinese city.

The sister city does not just get a name on a highway, it links friendship groups, business associations and local leaders who may one day rise to national prominence, including Xi – who started his meteoric rise in Hebei province, northern China. Hebei’s Zhengding county is now a sister city with Muscatine, Iowa, population of 23,000, where Xi spent two formative days in the United States in 1985 and whose former governor Terry Branstad is an old friend of Xi’s. Branstad would go on to become the US ambassador to China under Donald Trump.

“Most municipal governments lack even a rudimentary understanding of the CCP’s political goals in these arrangements,” Clive Hamilton, a professor of public ethics at Charles Sturt University and a critic of the Chinese government told an Australian parliamentary inquiry in 2018.

Kefferpuetz says Beijing has “weaponised” sister-city relationships.

“These twinning relationships used to be acts of solidarity,” he says.

“Suddenly, we see that with Chinese subnational diplomacy, there’s no civil society co-operation. It’s mostly a business high-tech cooperation, and political co-operation. And maybe some cultural cooperation as well, where the cultural cooperation is just designed to improve China’s image abroad.”

Researchers Emily de La Bruyère and Nathan Picarsic said Beijing sees subnational relationships as a means to influence economic, technological, and narrative environments.

“In the short term, subnational governments can exert pressure on the federal government,” they said in a research paper for the Foundation for the Defence of Democracies, a conservative think-tank based in Washington. “In the longer term, Beijing views subnational officials as future national leaders to be cultivated, so they become favourably predisposed toward China.”

China is not unique in pursuing these goals and the relationships create opportunities for dialogue, investment and exchange. But they also provide a window for influence at the local level that may contradict foreign policy settings established by experts at the national level. Clauses inserted into sister agreements make references to the One-China principle preventing those cities from engaging with Taiwan, which Beijing views as a renegade province of the mainland.

Other agreements have been used for public relations purposes. “Sister cities in the West a bulwark for China against worsening US ties,” The South China Morning Post reported in 2018.

Victorian Premier Daniel Andrews with Li Xikui, the vice president of the Chinese People’s Association for Friendship with Foreign Countries in Beijing. Credit: Chinese People’s Association for Friendship with Foreign Countries

In Utah, the US state which has formed one of the closest relationships with Beijing, school students at the height of tensions between the US and China in 2020, wrote to Xi to wish “Grandpa Xi a happy new year”. “I want to write to you because I think you are cool,” said one student. ”Grandpa Xi” has been used by Beijing as a nickname to develop a cult of personality around Xi among Chinese children.

Most of the incidents at the subnational level – reprisals against human rights activists, warnings about Taiwan, and incremental economic consequences – are not significant enough to trigger widespread international blowback.

“It’s below the threshold, but I think that’s the danger,” says Kefferpuetz. “And that’s why they can get away with it.”

At its most extreme, the treatment of Taiwan has extended all the way to the United Nations, where Taiwanese nationals including students, tourists and officials, are forbidden from entering the UN headquarters in New York.

The vice president of the Chinese People’s Association for Friendship with Foreign Countries, Li Xikui, has called for the Chinese government to accelerate its subnational push as the country faces growing international headwinds. Li met with Andrews in Beijing in March.

“Facing the new situation of major power diplomacy in the new era, it is necessary to shift the centre of gravity downward and do both high-level work and grassroots work,” he said in 2020.

Local outreach is becoming more important as the Chinese government attempts to overturn perceptions that it is an aggressive international player. The use of economic coercion and diplomatic arbitrage against Japan, South Korea, Canada, Australia and Lithuania have mostly failed to achieve its goals and damaged China’s image in the West.

“China in some cases is able to achieve its short-term tactical objectives through its economic coercion, but in most cases, its economic coercion carries a long-term strategic cost for China,” says Matt Reynolds from the Centre for Strategic and International Studies.

“If you look at Canada and Australia, they persisted in the policies that China wanted them to desist from, despite the threat of increased economic coercion. Now it seems like Beijing is looking for a face-saving way out of its coercion campaign against Australia.”

China’s main target is now the developing world as it attempts to reorientate international relations away from the US towards its “vision for a community with a shared future”.

Last year it provided economic assistance to local networks in Sri Lanka through subnational channels as the country grappled with its most serious economic crisis in decades. In Argentina’s remote Jujuy province, China is building Latin America’s largest solar plant through a deal with local officials.

In 2017, Jia Zhongzheng of the Chinese Academy of Social Sciences wrote a paper quoted in de La Bruyère and Picarsic’s research: “New Changes in Sino-US Economic and Trade Relations and China’s Countermeasures.”

“There is a saying in American politics,” he said. “All politics is local.”

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