“Deglobalization” has entered the narrative zeitgeist. But what’s happening on the ground? This weekly series seeks to answer that question with a round-up of deglobalization developments from the week that’s done.
1. Risk advisory firms are leaving Hong Kong as Chinese authorities crack down on corporate intelligence businesses on the mainland, the Wall Street Journal reports. US-based Nardello and Britain’s Risk Advisory Group are both winding down their operations in the city, while New York-based investigations firm Mintz reportedly closed its Hong Kong office following a raid of its Beijing office in March. The Mintz homepage no longer lists a Hong Kong office, even though it did as recently as June. Reuters had reported in May that Hong Kong-based Mintz executives left the city following the mainland raid.
2. Relatedly: a Japanese businessman who was detained in China in March on suspicion of espionage was formally arrested on espionage charges this week. The arrest comes on the heels of Beijing’s amended counterespionage law that vastly expands the definition of espionage.
3. India is reluctant to pay for Russian oil with yuan, resulting in at least seven cargoes of the fuel being held up by Russian firms like Rosneft, Reuters reports. Citing two finance ministry officials, Reuters notes that India has grown uncomfortable using the Chinese currency for settlement. Not everyone share the same concern, however: China’s CNOOC and France’s Engie completed a yuan-settled LNG trade through the Shanghai Petroleum and Natural Gas Exchange this week.
4. China is further tightens travel for civil servants and SOE employees. Exiting restrictions have been widened since 2021 to include bans on overseas travel, tighter limits on trips’ frequency and duration, onerous approval processes, and pre-departure confidentiality training, Reuters reports. The actions reflect Beijing’s growing fears about the threat of espionage, and underlines Xi’s laser focus on national security.
5. Meanwhile, the UK is confronting Chinese espionage on an “epic scale,” the head of MI5 said this week. Ken McCallum was speaking at a forum hosted at Stanford University, and took the stage with the heads of US, Australian, Canadian and New Zealand security agencies. He noted that over 20,000 people in Britain have been approached covertly by Chinese spies over networking sites like Linkedin.
6. The US Select Committee on the Chinese Communist Party is probing Sequoia Capital’s investments in China. In a letter, the committee asked for information about the venture capital giant’s investments in AI, quantum computing, and semiconductors. It also asked whether HongShan, Sequoia’s erstwhile China unit that was spun off earlier this year, could not be empowered to intensify investments into US companies without screening or oversight by its US counterpart.
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