Axios China

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February 14, 2023

Welcome back to Axios China. Today, Axios space reporter Miriam Kramer joins me in comparing spy balloons and spy satellites. (Subscribe to her newsletter, Axios Space, here!)

  • Axios World fellow Han Chen also stops in for a look at the Xinjiang governor's expected trip to Europe, and Axios Pro's Jael Holzman writes about a looming China funding fight on Capitol Hill.

💥 1 Big Thing: Axios is hosting our second annual What’s Next Summit on March 29 in Washington, D.C., spotlighting the innovations, trends and people that are breaking boundaries and shaping our world. Check out our speaker lineup and register to livestream the event here.

Today's newsletter is 1,761 words, a 7-minute read.

1 big thing: Why China has both spy balloons and spy satellites

Illustration of eyes floating in the clouds looking from side to side

Illustration: Natalie Peeples/Axios

Balloons have some advantages over satellites when it comes to surveillance, but also carry different risks — as Beijing recently learned when the U.S. shot down a spy balloon launched from China that flew in U.S. airspace earlier this month, Miriam and I report.

Why it matters: The U.S. and China are now embroiled in a deepening dispute over high-altitude balloons that is threatening to further derail the bilateral relationship.

Driving the news: China's Foreign Ministry on Monday accused the U.S. of sending high-altitude balloons "illegally" into Chinese airspace more than 10 times since last year.

  • U.S. officials deny this. "Any claim that the U.S. government operates surveillance balloons over the PRC (People's Republic of China) is false," National Security Council spokesperson Adrienne Watson said.

Between the lines: The paths of high-altitude balloons are largely governed by winds. As they climb through the troposphere — where most weather occurs — they're buffeted by west-to-east prevailing winds.

  • Those winds make it relatively easy for China to launch balloons that would fly above the U.S., but much harder for the U.S. to fly balloons over China.
  • "Where are you launching them from? That gets left out of this a lot," James Lewis of the Center for Strategic and International Studies tells Axios.
  • "Taiwan? Winds don't blow that way. Korea? Winds don't blow that way. Japan? You could do it if you didn't mind a bunch of them going off-course. You could do it, but I think the Chinese are either confused or making this up."

How it works: U.S. spy satellites were developed after high-altitude balloons and aircraft began to be targeted in enemy airspace.

  • Satellites can provide exquisite imagery and collect signals — from communications systems and other technology — but they are relatively easy to track, even by amateurs on the ground.
  • High-altitude balloons, however, can gather high-resolution images and signals, and fly in a part of airspace that makes them relatively difficult to track. Balloons are also able to stay over one area for a longer time than a satellite.

Yes, but: The norms that govern spying in space and airspace, where high-altitude balloons fly, are different.

  • The difference between orbit and airspace was established after the Soviet Union launched Sputnik in 1957.
  • Sputnik "goes up and goes around and nobody objects — including the United States — to that overflight," the Secure World Foundation's Brian Weeden tells Axios. "That establishes precedent that satellites can go round and round and they have this freedom of overflight — that space is legally different than airspace."
  • That means shooting down unknown foreign objects in a nation's airspace is tolerated today, whereas blowing up a spy satellite would likely be considered a huge escalation.

The U.S. and China have different strategies for their spy satellite networks.

  • The U.S. has historically used a relatively small number of expensive, technically advanced satellites that take incredibly detailed images of Earth.
  • China, meanwhile, has a more distributed network of spy satellites that aren't quite so exquisite in their imagery but it's a "good enough approach," Weeden says.
  • The U.S. is interested in moving toward a more distributed spy satellite network, making it more resilient to attack and making the military less reliant on a small number of expensive satellites that could be appealing targets for jamming, dazzling and other interference.

The intrigue: The high-altitude balloon dispute may also call into question China's spy satellite capabilities, Lewis says.

  • If the balloon shot down on Feb. 4 was collecting signals intelligence, it may mean China's spy satellites are limited in what information they can gather, he says.

What to watch: A big question looms over 21st-century space-based defense about defining where airspace ends and space begins.

  • Currently, there isn't a legal, accepted definition of where space begins and airspace ends internationally.
  • Some nations "want to be able to exploit this gray zone between air and space," Weeden said, adding that's because these countries are conducting activities in that gray zone they don't want them to fall into either airspace or space.

2. Europe-Xinjiang trade ties on shaky ground

Uyghurs rallied outside the Chinese Embassy on Human Rights Day in London last December. Photo: Wiktor Szymanowicz/Anadolu Agency via Getty Images

Uyghurs rallied outside the Chinese Embassy on Human Rights Day in London last December. Photo: Wiktor Szymanowicz/Anadolu Agency via Getty Images

Beijing is sending China's top diplomat, and a delegation of Xinjiang officials, to Brussels in what human rights advocates are warning is a "charm offensive." The outreach comes as the EU considers a proposed ban that could see European companies delinking their supply chains from one of China's key export regions, Han and I write.

The big picture: Close trade ties between China and Europe once guaranteed warm relations. But those economic links are now facing scrutiny as Europe's view on Beijing has soured.

  • EU-China relations plummeted after China sanctioned more than a dozen EU individuals and entities for their comments on Xinjiang in 2021.
  • Economic ties between Europe and Xinjiang — and by extension, a good chunk of China's exports — may be on the chopping block as well.

Driving the news: In what would be a rare overseas trip for a Chinese official sanctioned by the U.S., Xinjiang Governor Erkin Tuniyaz is expected to visit London and Brussels later this month, multiple media outlets have reported.

  • Tuniyaz, an ethnic Uyghur who is also the deputy party secretary in Xinjiang, was sanctioned by the U.S. in 2021, along with three other Chinese officials. They were accused of participating in the arbitrary detention of Uyghurs and members of other ethnic minorities in Xinjiang. He has not been sanctioned by the U.K. or EU.
  • China's top diplomat, Wang Yi, also plans to visit EU headquarters in Brussels and attend the Munich Security Conference later this week.

Background: In September 2022, the European Commission revealed a proposal to ban the import of goods made through forced labor, which if implemented would derail Xinjiang-linked supply chains.

  • In May 2022, the German government ended benefit programs for German companies investing in Xinjiang.
  • German carmaker Volkswagen is facing growing scrutiny over its factory outside Urumqi, the regional capital of Xinjiang.

What they're saying: Tuniyaz's potential visit has already drawn fierce backlash from lawmakers and activists.

  • "The place to deal with these individuals is in a tribunal or a court of law, not in the quiet office of a foreign office official," British MP Iain Duncan Smith, who has been sanctioned by China for speaking out about Xinjiang, told lawmakers last week.

Read the full story.

3. Catch up quick

1. Secretary of State Antony Blinken may meet his counterpart Wang Yi later this week at the Munich Security Conference, Reuters reports.

  • If the meeting between the two top diplomats happens, it would be their first in-person discussion since the balloon controversy began.

2. The U.S. backed the Philippines after Manila accused a Chinese Coast Guard ship of using a "military-grade" laser to temporarily blind a Filipino Coast Guard crew in the South China Sea. Go deeper.

  • The Philippines alleges the Chinese vessel "illuminated the green laser light twice" and "made dangerous maneuvers,” blocking its fleet from delivering supplies to another ship on Feb. 6.

3. The U.S. blacklisted six entities in China that it says are linked to aerospace programs, including balloons, used by the military for intelligence. Go deeper.

4. Sen. Tim Kaine (D-Va.) emphasized the importance of maintaining a "thorough and robust" line of communication between the U.S. and China. during periods of high tension. Go deeper.

  • Kaine said "one of the most disturbing pieces of news I heard this week" was that when Defense Secretary Lloyd Austin attempted to call his Chinese counterpart about the suspected surveillance balloon, his call went unanswered.

4. The right's China funding fight

Illustration of a 3D star with multiple padlocks fastened to it.

Illustration: Aïda Amer/Axios

Prominent conservatives are pushing House Republicans to draw a fresh red line: no federal funding for companies with close Chinese relationships, Axios Pro's Jael Holzman reports.

Why it matters: If the advocates get traction, House Republicans could take up proposals to short-circuit government subsidies for U.S. companies based on China business ties.

  • Such a proposal, if enacted, could be enormously disruptive to the U.S. and China alike.
  • It would have a pronounced impact on U.S. firms currently pivoting to using more fossil-free products (some of which are primarily made in China).
  • This pattern coincides with state action: Virginia Gov. Glenn Youngkin last month vetoed a large Ford battery plant over its Chinese project partner.

Driving the news: The Heritage Foundation called on Congress in a commentary to require companies seeking federal contracts and subsidies to “divest Chinese entanglements” and require agencies to “certify that no recipients of grants or subsidies have any ties” to the People’s Republic of China.

  • Heritage’s op-ed focused on Microvast, a Texas-based battery tech firm with some operations in China and revenues from business done in the country.
  • Microvast received Energy Department funding only to be turned into an anti-China bogeyman by conservative Republicans — and Senate Energy and Natural Resources Chairman Joe Manchin.

Between the lines: The Heritage commentary fits with where the GOP is moving.

  • Take freshman Rep. Anna Paulina Luna, a right-wing media darling, who told Axios last week “if she had the influence” she would ask American companies to “completely remove” their entanglements with Chinese businesses.
  • Veteran GOP members are also open to some restrictions. Rep. Bill Johnson, chair of the Energy and Commerce subcommittee on Environment, Manufacturing, & Critical Materials, said he’ll “take it on a case-by-case basis.”
  • “You have to look at [the] national security and the economic implications, but I think everything regarding China is suspect right now,” Johnson said.

Flashback: The Republican Study Committee in 2021 released the “Countering Communist China Act” — an energy security messaging bill that proposed making firms prove they aren’t expanding operations in China to win federal subsidies.

  • Speaker Kevin McCarthy has also said the select China panel will develop policies to ban state and local pension funds “from investing in China.”

Read the full story.

5. What I'm reading

Look up: China’s top airship scientist promoted program to watch the world from above (New York Times)

  • "Chinese strategists see near space as an arena of deepening great-power rivalry, where China must master the new materials and technologies needed to establish a firm presence, or risk being edged out."
  • "The Biden administration now says that China has sent [balloons] over more than 40 countries and that the United States was only able to detect the flights by reviewing stored data. Now, the U.S. military is adjusting its radars to try to spot more incursions. Over the weekend, U.S. fighter jets shot down three unidentified flying objects over Alaska, Canada and Michigan."

6. 1 photo to go: A different kind of balloon

A heart-shaped decoration formed by balloons hangs at a shopping mall on Valentine's Day on February 14, 2023 in Hohhot, Inner Mongolia

A heart-shaped decoration formed by balloons hangs at a shopping mall on Valentine's Day in Hohhot, Inner Mongolian Autonomous Region of China. Photo: Liu Wenhua/China News Service/VCG via Getty Images.

Valentine's Day has become just as much of a consumer fest in China as it is in the U.S.

  • This shopping mall in China's Inner Mongolia region is decked out with red balloons to celebrate the holiday.

A big thank you to Alison Snyder for edits, Bill Kole for copy edits, Natalie Peeples for visuals, and Miriam Kramer, Han Chen, and Jael Holzman for contributing.