Apr 1, 2020

Axios China

Welcome back to Axios China. Today we've got medical diplomacy in Europe, a crack in D.C.'s China consensus and a whole lot more.

  • We're now under a stay-at-home order here in the Beltway. Hopefully, all of you are staying safe and healthy out there.
  • Today's newsletter is 1,658 words, a 6-minute read.
1 big thing: China's medical diplomacy is empowering euroskeptics

Illustration: Aïda Amer/Axios

The Chinese government has embarked on a highly publicized campaign to provide vital medical supplies to European countries as they fight coronavirus outbreaks within their borders.

Why it matters: Those efforts — and the perception that the European Union has done little to help — are providing fodder for politicians who are eager to hail China and criticize the EU. Leaders in the EU may now have to worry about both Chinese and Russian overtures that weaken European unity.

What's happening: Chinese companies and charitable organizations are providing supplies and donations to Italy, Spain, the Netherlands, the Czech Republic, Serbia, Hungary, France and elsewhere.

Some politicians have used the opportunity to criticize the EU for a perceived lack of similar support.

  • Serbian President Aleksandar Vucic kissed the Chinese flag after a plane full of donated items arrived in Serbia. He called European solidarity a "fairytale" and said only China could help.
  • Hungarian Prime Minister Viktor Orbán said, "We’re not going to the EU for them to give us anything, or help or anything like that, because that doesn’t work."
  • Italian Foreign Minister Luigi Di Maio invoked Chinese medical assistance to defend his support for Italy's 2019 participation in the China-led Belt and Road Initiative, widely seen as Beijing's bid for geopolitical influence. "Those who mocked us on the Silk Road must now admit that investing in this friendship has allowed us to save lives in Italy," he said.

Reality check: Germany and France have sent approximately equivalent shipments of medical supplies to Italy, Hungary and the Czech Republic, and the EU provides significant support to Serbia's hospitals and has included it in its emergency stockpile of medical equipment.

What they're saying: "Euroskeptic populist leaders are very happy to play along with Chinese propaganda, to say only China is helping us, to promote the idea of the lack of EU solidarity," said Lucrezia Poggetti, an analyst at the Mercator Institute for China Studies in Berlin.

  • "Di Maio only held a media conference when help arrived from China, not from any other countries," said Poggetti.

Between the lines: China's bid for influence in Europe only works when it can play to existing vulnerabilities, said Janka Oertel, the director of the Asia program at the European Council on Foreign Relations.

  • Right now, that vulnerability is the appeal of strongman leaders who question European unity and need visual proof to show their populace their approach is working.

What to watch: Even very pro-EU countries might see a rise in pro-China euroskeptics if the coronavirus crisis continues to spiral out of control.

  • Spain has long aligned closely with the EU and the U.S. in its attitudes toward China. But like Italy, it is now seeing hundreds of coronavirus deaths a day, and Germany's initial export ban on medical supplies soured many attitudes.
2. D.C.'s bipartisan China consensus may be unraveling

Illustration: Aïda Amer/Axios

For more than two years, Republicans and Democrats have more or less agreed the U.S. needs a China policy that acknowledges Beijing's hard authoritarian turn and the serious challenge China's growing power presents to U.S. interests.

But the coronavirus crisis is threatening that consensus. The wedge driving Democrats and Republicans apart is concern about racism.

  • Republicans believe China is to blame for the global pandemic, and they worry that Beijing's propaganda campaign aims to erase the truth about China's early cover-up.
  • But Democrats say that emphasizing the coronavirus' links to China inflames racism against Asian Americans and that it's a cover for the Trump administration's own mishandling of the epidemic.

What's happening: Furor over a bipartisan resolution in the House last week demonstrated the growing divide.

  • The resolution, spearheaded by Rep. Jim Banks (R-Ind.), demanded that leaders in Beijing "publicly state that there's no evidence that COVID–19 originated anywhere else but China" — a reference to a disinformation campaign led by Chinese diplomats alleging the U.S. military created the virus.
  • The resolution avoided controversial phrases such as "Chinese virus" or "Wuhan virus." It also condemned the expulsion of American journalists from China and its mass internment of Muslim ethnic minorities.
  • Seth Moulton (D-Mass.), the lone Democratic signatory on the resolution, retracted his support after coming under heavy criticism from primary challengers and Rep. Judy Chu (D-Calif.).

What they're saying:

  • Chu: "During a pandemic like this, people are afraid and angry, and directing that anger towards China puts [Asian American and Pacific Islanders] at risk, as we have already seen with the insults and assaults against them."
  • Moulton: "The resolution has caused division, the substance overshadowed by President Trump's divisive, xenophobic attempts to deflect from his administration's abysmal response to this virus. ... I apologize for that, and I am withdrawing my support for the resolution."

The big picture: That Democrats strongly opposed a resolution condemning well-known Chinese government missteps and human rights violations suggests that China is swiftly becoming a partisan issue.

  • Yes, but: The bipartisan status quo might return after the intense pressure of the coronavirus crisis has passed.
3. China's V-shaped coronavirus recovery looks too good to be true
Data: Investing.com; Chart: Axios Visuals

Official statistics out of China suggest it is bouncing back from the coronavirus outbreak that shuttered the country for much of the first quarter, but there is growing speculation that data is being massaged to paper over a bevy of nagging issues, writes Axios' Dion Rabouin.

Driving the news: China said manufacturing activity returned to expansion in March, with its official metric rising to 52.0. Economists had expected a reading of 45.0 after hitting a record low of 35.7 in February.

  • Official reports also showed 95% of factories had reopened by mid-March, the Institute of International Finance notes, cautioning that anecdotal evidence suggests "utilization rates are still low due to the lack of orders and workers."

What we're hearing: The services sector numbers, in particular, are worth watching, says Matthew P. Goodman, senior adviser for Asian economics at the Center for Strategic and International Studies.

  • "It’s still pretty dubious that there’s been a substantial bounce back yet, and the authorities may be exaggerating those numbers to make people feel a little better about this than has been quite warranted yet," he said during a conference call Monday hosted by the Council on Foreign Relations.

Others were less kind. "The China COVID numbers are fake and the China PMI number is also fake," Alan Cole, senior economist at the U.S. Congress Joint Economic Committee, said on Twitter.

On the other side: Unofficial numbers tell a different story. "Overdue credit-card debt swelled last month by about 50% from a year earlier," Bloomberg reported, citing unnamed executives at two banks.

Why it matters: "These issues in China are a preview of what we should expect throughout the world," Martin Chorzempa, a research fellow at the Peterson Institute for International Economics, told Bloomberg.

Go deeper: Coronavirus could force the world into an unprecedented depression

4. Bots boost Chinese propaganda hashtags in Italy

A passenger boards a bus with a message supporting Italy in their efforts against the COVID-19 coronavirus in Hangzhou, China, March 24. Photo: STR /AFP/China OUT via Getty Images

Between March 11 and 23, as China was delivering much-needed medical supplies to Italy, bots pushed two pro-China, Italian-language hashtags, according to a March 30 investigation published by Italian news outlet Formiche.

  • 46.3% of tweets using the peppy-sounding hashtag #forzaCinaeItalia, which means "come on China and Italy," were bots, according to an analysis performed by Alkemy in partnership with Formiche.
  • The other hashtag was #grazieCina, which means "Thank you China." 37.1% of tweets using this hashtag were bots.
  • Chinese diplomatic Twitter accounts, including the account belonging to the Chinese Embassy in Italy, used these hashtags.

Why it matters: China's medical donations to countries fighting the coronavirus have been accompanied by a massive propaganda campaign aimed at improving China's image in recipient countries.

  • It's not just Italy. A March 26 investigation by ProPublica revealed more than thousands of suspect Twitter accounts have pushed Chinese government narratives about the coronavirus in recent months.

What they're saying: "Maybe the public opinion is not really aware in Italy that these kinds of operations are directed and have people behind them," Francesco Bechis, one of the journalists who worked on the Formiche story, told Axios.

  • "We’ve been through a moment of great despair and fear," said Bechis. "It’s not a coincidence that the Chinese diplomatic machine would try to explore this moment to gain ground."
5. Faulty testing kits

Illustration: Sarah Grillo/Axios

A growing number of countries are rejecting coronavirus test kits they had sourced from China, claiming the tests don't work properly.

  • Turkey is the latest country to say some tests it had bought from a Chinese company were not viable, though a Turkish government official did state that a batch of tests sourced from a different Chinese company worked just fine.
  • Last week, Spain returned 9,000 tests it had purchased from a Chinese company.
  • The Czech Republic has also stated a significant portion of a batch of 150,000 tests from China did not provide reliable results.

The Chinese government has announced it is investigating Shenzhen Bioeasy, the company that sold tests to Spain.

6. What I'm reading

Taipei to the rescue: Taiwan to donate 10 million masks to Europe and the US (Financial Times)

  • "Taiwan has pledged to donate 10m face masks to countries hit hardest by the coronavirus pandemic including EU member states and the US, in a move that will probably anger China and highlights the geopolitical dimension of the pandemic," writes the FT.
  • China promised 2 million masks to the European Union on March 18 but has yet to send them.

Dangers of decoupling: Trump’s break with China has deadly consequences (The Atlantic)

  • "The lesson of this plague isn’t that America should stop cooperating with China. It’s that America must rebuild the public-health cooperation that the Trump administration helped destroy," writes The Atlantic's Peter Beinart.

Fallout in the U.K.: China will face 'a reckoning' over virus, Britain warns (Sydney Morning Herald)

  • British conservatives believe China is to blame for the global pandemic, and they doubt the coronavirus case numbers that China is reporting.
  • "Tom Tugendhat, the Tory chairman of the foreign affairs select committee, said: 'It's quite clear that the relationship with China has got to change. The idea that we can import cheap goods and not import the consequences of slave labour, of silencing opposition and government repression, including of the truth about pandemic outbreaks, is clearly not true.'"
7. 1 game thing

Screenshot: Shanghai Fire Department Weibo video

As millions of people faced lockdown in China during the coronavirus, a growing number of housebound gamers turned to Animal Crossing: New Horizons to pass the time, according to China-based news outlet Sixth Tone.

  • The new Nintendo Switch game, the latest in a series of Animal Crossing games, puts players in a virtual world of islands, where they can fish, build and island-hop.

It's so popular that the Shanghai fire department's official account on Weibo, a platform similar to Twitter, posted a video from the game in a public service announcement reminding people to stay out of fire lanes, Sixth Tone reports.