China ‘Sanction Proofing’ its Economy From US: Expert

By Hannah Ng
Hannah Ng
Hannah Ng
Hannah Ng is a reporter covering U.S. and China news. She holds a master's degree in international and development economics from the University of Applied Science Berlin.
and Tiffany Meier
Tiffany Meier
Tiffany Meier
Tiffany Meier is a New York-based reporter and host of NTD's "China in Focus."
March 14, 2023Updated: March 14, 2023

According to Anders Corr, publisher of the Journal of Political Risk, China is ‘sanction proofing’ its economy from the United States in preparation for the potential invasion of Taiwan.

After the 14th National People’s Congress, the nation’s top legislature, closed its first session on March 13, China’s premier Li Qiang said that China would align with high-standard international economic and trade rules and further expand opening up this year, the state-controlled media, China Daily reported.

“China, which is open and in the constant process of development, welcomes everyone to invest and develop,” Qiang is quoted as saying.

However, Corr said, “What China’s really doing in terms of their so-called opening up is they’re refocusing on their domestic economy, which is really a form of sanction-proofing the economy.”

“We should see it as a risk indicator in terms of they’re attempting to not only sanction proof their economy, but they’re attempting to rocket their technological development in order to make it independent, so that when they do invade Taiwan, which is their stated plan, at some point in the future, if Taiwan doesn’t peacefully ‘reunify,’ the country will be sanction proof, the country will be independent technologically, and so be able to carry on,” Corr said on “China in Focus” on NTD, The Epoch Times’ sister media outlet, on Monday, March 13.

According to Corr, Qiang’s statement does not mean China is opening up, but it aims at “trying to convince countries to invest, to trade, because they know that’s where their money comes from.”

“But at its base, they want to keep growing economically and put that money into their military, which they will then use in their idea to take over Taiwan,” he said.

To prove his point, Corr pointed to Chinese leader Xi Jinping’s vow to modernize China’s military to make it a “Great Wall of Steel” at the National People’s Congress on Monday.

Freeze US Assets in China

The expert further sounded the alarm over the $2 trillion investment U.S. investors have poured into China since 1992.

Given the fact that variable interest enterprises (VIE), a “spider-web of contractual commitments” that essentially do not confer ownership in the Chinese company, and increasingly stringent regulatory scrutiny are the standard for foreigners investing in China stock, Corr called it “a very dangerous investment.”

“It’s a very dangerous investment; they’d be easy for the Chinese Communist Party to take at some point. I mean, it would cause market turmoil in terms of investments in China if they did, but I think that the Chinese Communist Party is very ready to do that. They’re sanction-proofing their economy, they’re ready to take Taiwan, so they’re certainly ready to take your shares if they can,” he said.

He singled out the report in which billionaire investor Mark Mobius recently said that the Chinese regime has taken “very significant” action to prevent him from withdrawing capital from Chinese equities since his HSBC account is in Shanghai.

Corr said that the United States and China would see assets frozen in a time of war.

“So you would see U.S. investors’ assets frozen in China,” he warned.

Economic Rethink of Dealing With China

He raised concerns about Temu, an online marketplace founded in Boston in 2022 by PDD Holdings Inc., which also operates Pinduoduo in China.

Corr compared Temu with the Chinese video-sharing app TikTok that has come under massive scrutiny over national security concerns.

He referred to Temu as “part and parcel of sort of the Tick Tock approach, which is to pretend that an app is somehow an American app, that it’s somehow secure.”

“But what we’re finding out about Tiktok is that it’s not at all secure, that we have whistleblowers coming out of the security of Tiktok-owned security apparatus saying it’s not secure, there are connections to China,” he said.

“We can expect the same to come to light over time with Temu,” he added.

“I just don’t think we ought to be letting these companies from China, which is now an adversary of the United States, [and] is thinking of providing weapons to Russia, to take huge amounts of market share in the United States,” he said.

“And that’s exactly what Tiktok has done, and I think that’s what Temu risks doing to a company like Amazon,” he said.

Corr called for “a complete economic rethink about how we deal with China that involves not letting big China companies into the U.S. market.”

He suggested that the United States and its allies, including Europe, Japan, India, and South Korea, impose stricter sanctions and tariffs on China and Russia, as he said, “these are the main two countries that are causing global instability today.”

“If we can impose those sanctions, we can weaken them and strengthen the interdependence of our own economies with each other. We need to be strengthening each other with trade instead of strengthening our adversary,” Corr said.