Totalitarianism is Complete and Utter Control

"Hong Kong's democratic leadership has been arrested en masse,and recently citizens found they were no longer able to access certain websites."

"Under the National Security Law, the government can force websites to remove any information that could 'endanger national security'."

"Schoolbooks are being edited and teachers' roles circumscribed. It is possible that Hong Kong could see even more repression as the regime uses its tools of surveillance to quash any thought of independence."

"In the ultimate measure of extraterritorial control, the National Security Law provides that any person who speaks out against the Chinese regime anywhere in the world can be extradited and prosecuted in China."

Margaret McCuaig-Johnston, Senior Fellow, Institute of Science, Society and Policy, University of Ottawa

The Chinese Communist Party is increasingly dominated by one man, Xi Jinping, whose power is stronger than any leader since Mao. Lintao Zhang / Staff / Getty Images

 

Beijing recently named two Danish politicians in an extradition request; their crime? aiding a former Hong Kong legislator in his asylum search in Denmark. That Denmark has never signed an extradition agreement with China is fortuitous both for the Danish politicians and for Denmark itself since there are no legal obligations to impel them to respond to China. On the other hand there are many countries which did sign such an extradition agreement never realizing that a complication such as the National Security Law would ever trouble them.

There are, however other avenues that Beijing can take to compel people to bend to its will and in this regard the Chinese diaspora is particularly vulnerable, no matter where they have emigrated to. They can be threatened that harm will come to their relatives still living in China to coerce them from criticizing the regime they left behind. Their relatives become virtual hostages to the diaspora -- Chinese citizens of other countries being forced to act with great circumspection to avoid payback.

Under Xi Jinping, Beijing has turned sharp left from authoritarian to totalitarian with a cult of leader-worship in full display. The Chinese Communist Party no longer indulges in any pretense to appease the sensibilities of the international community that it continues to approach the democritization of its political agenda. China's embrace of capitalism did not, after all, lead it toward a form of Chinese democracy; its growing influence in the international community, its status as a trade and technology giant have given it free rein to remove the facade of moderation as it moved steadily toward dictatorship.

Photo: NICOLAS ASFOURI/AFP/Getty Images

 

According to The Economist's 2019 Democracy Index, the current regression away from any semblance of democracy resulted in a fall of 23 places in ranking in one year. A situation that now places China near the bottom, below Iran at 153 out of 167 countries. It isn't complicated to recognize totalitarian rule; a sole political party ranks as the leading indicator. Added to which is intolerance of varying opinions and the control of its citizens' lives, along with manipulation of the system of justice. 

Citizens are monitored by its Social Credit System through WeChat and Weibo through the use of algorithms identifying those who are bold enough to mention June 4 or May 35, code for the Tiananmen Square massacre or referencing Winnie the Pooh, with a gait similar to President Xi's own. There are subtle identifiers that single out 'social deviants', as simple as late-loan payments, acquiring traffic violations to earn poor social credit scores. As a result of which people can find themselves unemployed or lacking the right to send their offspring to a good school.

 

New Chinese facial recognition technology can identify faces with masks. Source Hauyon's Website CSIS

 

Large demographics cannot gain permission to travel either within the country or abroad as punishment for low social credit scores, and citizens become careful in their exercise of the social weal as it is seen in China, to avoid appearing on the blacklists, becoming skilled in self-censorship. Domestic and foreign companies are compelled to submit to the Corporate Social Credit System, since failure to comply with regulations or speaking ill against government policies will ensure no access to grants, procurement contracts, land, or lower taxes.

Should employees or suppliers themselves gain poor scores, the company itself is punished. These credit systems are set to be further firmed up with party committees in every company prepared to ensure corporate decisions take care with their obligations to advance the interests of the Communist Party. Each citizen is obliged to study on an app that takes note when the users are scrolling too quickly to properly mentally ingest the information through the guiding ideology, Xi Jinping Thought, a three-volume publication.

 

Visitors being filmed by a security camera with facial recognition technology.
Source: Photo by NICOLAS ASFOURI/AFP via Getty Images.

Typically, totalitarian regimes are intolerant of religions; in plain evidence in Tibet and Xinjiang where incarceration for 're-education' purposes to achieve 'harmony' and dampen 'splittism' is the overarching goal of control of people's thoughts, aspirations and loyalties. Voice pattern telephone surveillance, forced labour and mass sterilization are all part of the extensive program of brain-washing to achieve CCP loyalty in the People's Republic of China. 

When Turkic Muslim Uyghurs are released from re-education to return home, a young Han man or woman is assigned to mandatorily live with them to monitor that the family speaks Mandarin exclusively, and does not revert to its former religious practices. In this 'family program' package the Han handlers are also encouraged to marry Uyghurs in a long-term strategy of thinning the genetic stream as well as the cultural-religious landscape. 

Persecution of Chinese Christians continues, with churches seeing their crosses torn down, and where  Xi's photo and Xi Jinping Thought are given prominent place in sanctuaries while senior clerical appointments  must be approved by the Party. Officially unapproved covert House churches, when their presence is discovered are routinely shuttered, their clergy incarcerated.

Those Chinese citizens oblivious or uncaring of the backlash they will incur, speak out on such issues as free speech, environmental degradation, expropriation without compensation at their peril, known to having been subjected to daily interrogations while seated in a metal tiger chair with wrists and ankles in vices in freezing environments. Websites are shut down in their hundreds of thousands in response to 'inappropriate' content, exemplified by criticism of President Xi and his party.

 

While the novel coronavirus was unleashed globally after emerging in Wuhan, China, with the result that the world economy suffered overwhelming losses in 2020, China's economy grew 2.3 percent in that same year even as every other major economy suffered dreadful recessions. China is now on track to supplant the United States as the world's foremost economy, within a decade. When Beijing faces criticism from abroad it takes immediate punishing steps.

Australia had the unmitigated gall to ban Huawei in 2018 from its 5G upgrade, and more recently called for an international inquiry into the origins of the COVID-19 pandemic. In the process by enraging Beijing, trade barriers abruptly appeared and Australia lost roughly $3 billion in commodity sales to China in 2020. Canadian canola shippers too were targeted by Beijing following the house arrest of Meng Wanzhou, CFO of Huawei,  on a U.S. extradition request.

'Practical' business interests are now calling on their governments to avoid unnecessarily alienating the trade giant that China is. At the centre of the most dynamic region in the world, China is a sought-after trade and investment source. The fear is that failure to 'constructively' engage with Beijing on its very own terms will result in long-term harm to other nations' business interests. And so, nations wedded to the concept of protection of human rights are prepared to set those concerns aside for the greater interests of securing prosperity linked to Chinese business opportunities.

The Canadian Mandate for Relations with Beijing

 

Dominic Barton,  (Adrian Wyld/The Canadian Press)

"[I was given a mandate that included an overall objective of restoring relations between Canada and China, one caveat and three key priorities]. First and foremost, secure the release of Michael Kovrig and Michael Spavor and get clemency for Robert Schellenberg. That is core. That's a priority. Second, promote and protect human rights."

"[The third priority is to deepen person-to-person relationships between Chinese and Canadian people at all levels, including government, the arts, business and universities, and caveat is that those efforts must be made in keeping with] international rules and principles that provide predictability and security."

"We're angry. We're very angry because of our people that had been taken. China is very angry as well, furious. We're both furious."  

"The first conversation I had there was probably one of the most unpleasant conversations I've ever had. I mean, the shaking and anger from there, and we were also … It wasn't a conversation." 

"We're never going to be singing from the same hymn book. We did not have any formal communications, it was a lot of informal, we now have very good formal relations. We have real discussions where we can argue and debate."

"We're saying you need to be careful on the Chinese side because we are a high quality, safe food supplier."

"From a financial point of view, I think it was [former Liberal deputy prime minister] John Manley who said, 'This is the stupidest economic decision I could ever make in my life'. [His history of business dealings with China and the suggestions by Democracy Watch and others that those dealings put him in a conflict of interest]. I did it for public service. I want to help. I feel I can help the country."

Canadian Ambassador to China, Dominic Barton  ...
House of Commons committee on Canada-China relations

 

"The military and diplomats were at odds over the People's Liberation Army training program [and diplomats were concerned the decision to cancel the exercise] might aggravate Beijing."

CBC report

 

"Unfortunately, Canada is no stranger to the complex influence game McKinsey plays with China."

"Before becoming Canada's ambassador to China, Dominic Barton went from serving on the advisory board of the China Development Bank to running McKinsey's global operations."

Senator Marco Rubio, chair, Senate intelligence committee, United States 

The Government of Justin Trudeau is as Liberal as it's possible to be. He, and his government are following in the footsteps of Canada's previous Liberal government headed by then-Prime Minister Jean Chretien who, while prime minister primed relations between himself personally and China's business establishment, using his public service office as a springboard to groom personal relations with influential Chinese government officials and business elite. Mr. Chretien led large trade missions to China influencing his future as a private citizen joining a prestigious law firm and using his contacts to enlarge business contacts with China. 

 

It was, after all, Pierre Elliott Trudeau, Justin's father who as Liberal prime minister in the '70s opened relations with China to begin with. It was likely an influence on son Justin who has spoken admiringly of China's 'basic dictatorship' that can turn on a dime. Well yes, dictatorships specialize in such manner. When Dominic Barton was selected last year as Canadian ambassador to China, that choice had a clear agenda for the Liberals; to mend broken fences at any cost, for much depended on it. That 'much' would be enhanced trade opportunities and investment, not strengthening Canada's sovereignty by any means.

 

Hostages Spavor and Kovrig, Xi, Trudeau

This, of course, was in the wake of Canada having arrested Huawei Communications' CFO on an extradition warrant by the U.S. Which launched a dire situation of hostage diplomacy in direct reaction by Beijing, furious at the detention of Meng Wanzhou. And nor did the arbitrary arrests of Canadian citizens Michael Spavor and Michael Kovrig on espionage charges end Beijing's lash-back; three other Canadians were sentenced to death on charges of drug smuggling, and agricultural product shipments to China from Canada were halted.

 

Canada has paid dearly for spiking Beijing's regard for a docile, biddable country that raised no protest over Chinese-Canadian citizens being harassed in Canada and threatened over their support for Hong Kong democracy, nor the infiltration by Chinese espionage agents into every sphere of Canadian life from politics to academia, along with the stealth action of cybertheft and purloining Canadian industrial and scientific formulae. Yet despite all of this, Canada felt it appropriate to invite members of the People's Liberation Army to Canada to be trained in winter warfare. And the more recent revelation that Chinese pilots are training on Canadian aircraft at a closed air force base in Ontario.

It was the head of the Canadian military, General Jonathan Vance who decided to disinvite Chinese troops for cold-weather military training in Ontario. His concern revolved around national security. Much to the displeasure of the Canadian diplomatic corps whose memoranda back and forth to the prime minister's office revealed concerns related to offending Beijing. 

China has and continues to punish Canada for its 'abuse' of international law, as China claims, even while in fact, in detaining Meng the rule of law was upheld through an extradition treaty between Canada and the United States, and due judicial process is ongoing, with Ms.Meng permitted to live in her two Vancouver mansions on bail while awaiting extradition, whereas the Canadian prisoners in China languish in solitary confinement, under harsh duress and constant interrogation, without access to lawyers and limited interventions by Canadian consular staff.

In the House of Commons on November 18, the opposition Conservatives tabled a motion for the Trudeau government to decide finally whether to ban Huawei from Canada's 5G upgrade as other members of the Five Eyes intelligence group (United States, United Kingdom, New Zealand, Australia, Canada) have long since done. They also demanded that the government institute measures to halt China's agents from their intimidation of Canadians both in Canada and in Hong Kong.

Ambassador Barton's assertion that Beijing would be cognizant of the quality and abundance of food crops from Canada and be compelled to reverse its ruinous contract breaches costing Canadian farmers billions of dollars in lost revenues, is out-of-this-world ridiculous; those crops are fungible; Beijing can access them elsewhere in the world, in particular from another nation it is busily harassing, Australia. In the United States a warning was issued to western governments that business with McKinsey is fraught with danger because of its alignment with the Chinese Communist Party ruling elite.

The Liberals ignored Conservative queries regarding the need to have Barton disclose his Chinese client lists in 2019 on his appointment as ambassador to China. Citing McKinsey client confidentiality, the demand was evaded although Barton had to place his investments into a blind trust. That McKinsey conducts business with 22 of China's 100 largest state-owned enterprises was revealed by the New York Times. McKinsey has aided in raising the stature of the CCP regime. As a frontman for the Liberal government and the China-boosters in Canada, Barton was the perfect candidate.

And his supporters are people of huge influence, including former prime minister Jean Chretien, the Desmarais family, Power Corporation (into which Mr. Chretien's daughter married) and the Canada China Business Council chaired by Chretien grandson Olivier Demarais. The connections read like a Liberal-Quebec who's who of business elites because that's what it all is, hungry for business with China at any cost, that cost a sell-out of Canada in exchange for trade and business and investment with China.

Human rights abuses are of no concern to this crowd, their focus is entirely on business and profit. "The weight of the world is shifting and has shifted toward Asia, so we need to do more in China", Ambassador Barton recently stated in a speech he delivered at the China Institute at the University of Alberta, urging government emphasize more robust business with China.

 

Fundamentals in the Best/Worst-Laid Plans of Mice and Men

"This is all part of China's education as a rising power. It has taken a flawed model that appeared to work at home, building large infrastructure projects, and hubristically tried to apply that abroad."

"Historically, most infrastructure booms have gone bust. Whether China can avert that fate may depend on its ability to renegotiate loans with countries now in urgent need of debt relief."

"If China is unable or unwilling to provide sufficient relief to its borrowers, it could find itself at the centre of a debt crisis in developing markets."

Jonathan Hillman, author, The Emperor's New Road

"In domestic Chinese media, the frequency of the topic occurring has come down a lot in the last few years, partly to downplay China's overseas expansion ambitions."

"I expect this retrenchment to continue."

Chen Zhiwu, professor of finance, Hong Kong University

"Volatile Sino-U.S. relations and more restrictive access to overseas markets for Chinese companies have prompted a fundamental rethink of growth drivers by Beijing's top economic planners."

"Naturally, if stste-owned enterprises decide to switch back to the domestic market in order to follow the leadership's wishes, the budgeted financial resources for overseas investments will reduce accordingly."

Yu Jie, senior research fellow on China, Chatham House think tank, United Kingdom

 

"This has to be the time for a rethink. It's been such a priority for Xi Jinping, he's invested so much in it that he's not going to just turn the lights off."

"But they need to seriously implement their own debt sustainability analysis and their own social and environmental impact tools."

Kevin Gallagher, director, Boston University Global Development Policy Center

Workers take down a Belt and Road Forum panel outside the venue of the forum in Beijing. BAKER/AFP via Getty Images

When China initially embarked on its ambitious Belt & Road project, it had plans to link itself to a new 'Silk Road', an enterprise that was meant ultimately to expedite Chinese trade and transport and shipping globally, the trade colossus thinking ahead to the future -- its future -- as the world's major producer and seller of goods. Its plan to finance major infrastructure projects was sold to countries in Africa and the Middle East and Europe convincingly assuring them that this would modernize their countries for the future in new highways and bridges and other forms of infrastructure.

That many of these countries had no basic infrastructure of the type Beijing was describing, or insufficient or outdated ones was because they lacked the financial wherewithal to build them. Beijing obviously reasoned and explained to any governments that were skeptical that the Belt & Road initiative would benefit all concerned; give immediate employment to their nationals in building the projects, and extend employment through operational ties that would ultimately result, enriching both China and the countries it was investing in, so they could pay back the huge loans.

Some economists raised concerns that this would result in massive indebtedness, that some of those countries would never be capable of extracting themselves from. And this was all well before anyone might have thought ahead to a massive economic blow that would strike globally with the introduction from China to the world at large of a global viral pandemic devastating world economies. Long before the Belt & Road initiative rang a bell of opportunity to Beijing it was busy investing in other countries' natural resources.

Security personnel stand guard near a "Golden Bridge on Silk Road" decoration for the Belt and Road Forum outside the China National Convention Center in Beijing earlier this year. (Jason Lee/Reuters)

 

As it did in Venezuela, reaching agreement with Hugo Chavez where between 2007 and 2013 the China Development Bank loaned out to Venezuela close to $40 billion with Venezuela's oil wealth as surety, boosting Hugo Chavez's plan for "a Great Wall" erected to fend off U.S. hegemonic reach. And then Venezuela's oil resources ran into trouble with refining problems because no funding was directed to upgrading its oil infrastructure. After investing to that degree Beijing felt compelled to continue in the face of Venezuelan mismanagement and lent out another $20 billion, and all too soon Venezuela defaulted.

That might have been a lesson in not hedging bets, failing to look ahead to the future when all the signals were already in evidence. But the Belt & Road followed nonetheless. "Chinese foreign policy and policy bank officials entered into their outsized economic and political relationship with [Venezuela] with a combination of hubris, ambition and naivete. [This] has contributed to the region's worst economic, humanitarian, and political crisis in decades", wrote Matt Ferchen of Merics, a think tank based in Berlin.

And that hinted at what is now proceeding with the Belt & Road, where at least 18 processes of debt renegotiation with China have occurred in 2020 -- and yet another dozen countries still in discussions with Beijing, covering $28 billion in Chinese loans as renegotiations have proliferated since the pandemic hammered emerging economies in Africa and elsewhere wherein Beijing saw opportunities for  massive Belt & Road investment.

Originally, when Xi Jinping addressed a hall of heads of state and delegates from over 130 countries in Beijing, he proclaimed "a project of the century". Where he promised that China was prepared to spend a stunning $1 trillion on building infrastructure, mostly in developing countries around the world, financing almost all of it through its own financial institutions. Data published this week indicates that President Xi's script has been revised downward. The world's most ambitious development program is now on hold.

 

 

China is now looking at the unwanted potential of its first overseas debt imbroglio. Chinese financial institutions tasked to drive the Belt & Road in tandem with bilateral support to governments has hit a detour leaving Beijing mired in debt negotiations with a host of countries it had so assiduously wooed. Researchers at Boston University maintain an independent database on China's overseas development finance, and they have found lending by the China Development Bank and the Export-Import Bank of China in free fall, collapsed from a peak of $75 billion in 2015 to last year's $4 billion.

Falling under the direct control of China's state council the two banks function as arms of the state providing the overwhelming bulk of China's overseas development lending. Funds disbursed by the two banks rival in scale the disbursement of the world's largest multilateral lender, the World Bank. Between 2008 and 2019, the two Chinese banks loaned out $462 billion, a tad less than the $467 billion the World Bank extended. 

 

Photo: LAKRUWAN WANNIARACHCHI/AFP/Getty Images

The sharp scale-back  of lending by the Chinese banks represents an economic earthquake and should it persist, an infrastructure funding gap in Asia alone will be exacerbated, a gap that has reached $907 billion at this point. Chinese credit has formed a large portion of infrastructure financing in Africa and Latin America, and the gap between what is needed and what may be available is expected to become wider, as well.

Beijing has regrouped, examined its losses and decided to scale back, retreating from overseas development finance, to shift policy from outside the country to internal investments. "China is consolidating, absorbing and digesting the investments made in the past", advised Wang Huiyao, an adviser to China's state council, president of the Centre for China and Globalization think tank. The politboro  will now place greater emphasis on China's domestic market, and less on commerce with the outside world.

 

The Poor Get Poorer And The Rich Get Richer

"It [amassed public data on economic indicators] showed us very early on that despite lockdowns and despite some economic sectors being clearly disrupted -- such as airlines -- there was life in other sectors."

"[Our clients] did not panic during the sell-down. Instead they used it to build up positions."

"Compared to 2008, 2009, you had a huge stimulus coming into the system straight away. And there was already plenty of liquidity, with very little places for it to go."

"As a result, asset prices across financial markets have held up very well."

Sergio Ermotti, chief executive, UBS Group AG, Zurich

"If you panicked and sold out in February or early March it would have been very difficult to come back because the market recovered so quickly."

"It's been hard emotionally, but the key to performance this year was to remain invested."

Nicole Curti, head, Stanhope Capital wealth adviser Swiss arm

"We were very consistent on that since February. Don't get out. Build hedges."

"Longer term many investors are realizing that [soaring equity prices represent the 'short-term' trade of the crisis] -- even more than in 2007 and 2008, when we started playing with these experimental fiscal economics."

"It is triggering a lot of questions now about what lies in the future -- how inflation might make a comeback."

Frederic Rochat, managing partner, Lombard Odier Group

Joe Cavaretta, South Florida Sun-Sentinel/AP Photos

 Even as the world pivots sideways on its economic axis with country after country making an effort to alleviate the unbearable stress of the financial cost of dealing with COVID-19 lockdowns leading to mass unemployment where administrations borrow money to establish emergency support programs for their hard-hit populations, their national industry base, the countless small-business operations that make the economy run, there are those whose wealth massively increases despite the global pandemic.

Private banks in Switzerland and elsewhere which act as depositories for investors, the truly wealthy of the world, have witnessed assets owned by their clients surge this year of 2020 which has been a financial disaster for everyone else. Zurich-based UBS Group AG reported its best quarterly earnings in a decade, and rival Credit Suisse Group AG is on the cusp of announcing a similar bonanza.

 

Even as the global economy, according to the International Monetary Fund, is expected to contract by 4.4 percent this year, throwing millions more people worldwide into poverty, the world's billionaires have become wealthier in comparison with 2019. This is a trend observed across regions from Brazil and China to the U.S. and Germany, as further indication that the pandemic has become a vehicle to deepen inequalities across the globe.

 

Following the great financial crunch of 2008, was the last time the super-wealthy had such a windfall. These crises have resulted in a windfall of investment opportunities for the wealthy, while posing as a threat to all others and this time the scale of the bonus is infinitely greater given governments' and central banks' swifter reaction to cushion the financial blow to their business sectors and the wider population at large.

 

As examples, the net worth of Amazon.com Inc. chief executive Jeff Bezos rose by $73 billion from mid-March to mid-September, given his holdings in the company according to a report by the Institute for Policy Studies, an American think tank The same period saw Mark Zuckerberg, chief executive at Facebook, and Elon Musk, chief executive at Tesla Inc. and Space Exploration Technologies Corp. each amassing a net worth increase of over $45 billion each.

 

In China, acknowledged as the globe's swiftest-growing nursery for super-wealth, 257 individuals became billionaires this year, reflecting the rising fortunes of China's already-established tycoons. Such as Jack Ma, founder of commerce platform Alibaba Group Holding Ltd. who increased his net worth by 45 percent in the past ten months making him worth $58.8 billion. What inspired many of the wealthy to weather the COVID storm was advice from their bankers immediately the crisis struck: don't sell.

 

Lombard Odier which cares for $316 billion of millionaire and billionaire money from across the globe began informing its clients as early as February they should be looking to putting capital to work in panicked markets. All of its quantitative analysts were tasked in January with a project to collect as much public data on economic indicators as possible: from traffic data in Asian cities to hospital figures in U.S. states.

 

Gold, in particular was recommended by many Swiss bankers and wealth advisers to their clients. In August the precious metal hit a record high of $2,073 an ounce and buying it was the corollary to the huge government stimuli buoying equity markets. The rich benefited from public spending that ensured stock markets valuations were kept stable and they benefited as well from the fear generated by huge government borrowing viewed as necessary to handle the threat of COVID-induced financial collapse. 

 

 

Israel: Unlocking the Entrepreneurial Spirit

"It was the emergence of Israel’s export based high-tech sector in the early 1990s that really put the country’s economy on track, with GDP growth of at least 4% a year. Specializing in computer hardware and software, medical technologies and pharmaceuticals, this sector became world renowned for innovation. Flash drives, cardiac stents, instant messaging and shopping.com are only a few of Israeli-bred innovations that have emerged in the last few decades. High-tech industries represent almost 50% of total industrial exports today, according to OECD data. Between 1995 and 2004, Israel increased its spending on R&D, calculated as a percentage of GDP, from 2.7% to 4.6%, a rate higher than any OECD country."
OECD Observer

"It’s never been more important for both big multinationals and leading wellness companies to study the most innovative start-ups if they want to stay ahead of the game in the fast-growing wellness space."
"And Israel, with so many brilliant new companies, is definitely one of the key places to look at."
"The GWS will not only put Israel’s creative health and wellness solutions on the world stage, it will introduce Israel’s powerful investment landscape to global wellness companies."
Amir Alroy, co-founder, Welltech1, Tel Aviv wellness innovation hub and microfund 

Saul Singer with a copy of “Start-Up Nation” (Photo credit: Nati Shohat/Flash90)

• 600 new start-ups are established every year.
• 500 multinational corporations (including Apple, Amazon, Google, Microsoft, etc.) have set up incubators or venture capital arms there.
• The country ranks #1 in the world for R&D and VC investment as a percentage of GDP and raises venture capital per capita at two-and-a-half times the rate of the US and 30 times that of Europe—with a record $6.5 billion in high-tech start-up funding in 2018.*
• Because so many unicorns (companies with $1 billion+ valuations) are Israeli founded: from Salesforce and SodaStream to GPS navigation system Waze, to real estate tech start-up Compass, to online home design platform Houzz, to home insurance disrupter Lemonade.
• A storm of forces has come together to create this thriving start-up and health/wellness tech ecosystem.
• There is the experience that entrepreneurs acquire during their mandatory army service, the emphasis on learning and world-class academic institutions, widespread immigration, and the Israeli entrepreneurial spirit.



An illustrative image of program developers, startups and innovation (scyther5; iStock by Getty Images)

• In addition to a powerful private funding landscape, the government’s Innovation Authority makes Israel one of the only countries that funds start-ups without taking equity: giving grants to entrepreneurs (from Israel and elsewhere) to develop innovative technology without taking on debt. Israel distributed an estimated $500 million to start-ups in 2018 and recently established Digital Health as a crucial growth engine with its own budget.

Israel began its life as the world's only Jewish state re-establishing its presence in the Middle East on its heritage geography, to become known as an exporters of oranges from a part of the world where desert, not arable land, dominated the arid landscape. At that time, the Jewish state became known for its kibbutzim, socialist-inspired communal farms where swampland was drained, the dedicated, hard work of idealism-inspired proud Israelis resulting in an agricultural economy.

It was a desert-to-agriculture exploit under a Labour government that amazed the world and brought the young-old nation plaudits and recognition from Socialist International. Israel is no longer the darling of the left and hasn't been for quite some time. While its agricultural roots remain intact, it is now better known as the 'Startup Nation', a leader in information and communications technologies. And it was under a succession of Likud governments, characterized as right-wing, that made the transition from farm to science and technology.

Since 1996 when during his first stint as head of government, Israeli Prime Minister Benjamin Netanyahu nursed the country toward excellence in technology, unlocking the entrepreneurial spirit of the Israeli mindset. As science and technology minister he liberalized currency and forged ahead with privatizations and in a decade new ICT companies dotted the urban landscape giving Israel a higher ICT share employment of any OECD country, as ICT exports boomed.

Medicine, biotechnology, materials technology, military technology startups formed at the rate of 500 annually In 2003 when the Likud Party was returned to govern the country during a recession, as minister of finance Netanyahu sliced the corporate tax rate by half, and the top individual tax by a third, while raising the retirement age, lowering welfare dependency, and privatizing banks, refineries, the national airline and shipping. Much of the economy was deregulated.

The result was a soaring of economic growth, plunging unemployment and new highs in foreign investment. Israel now boasts among the highest economic growth rates and lowest unemployment rates among developed countries of the world.  The Jewish state ranks among the world's leaders in patents filed and science Nobel prizes per capita. Over 400 in-country research centres have been established through foreign multinationals like Microsoft, Apple, Intel and Samsung.



John Chambers of Cisco described Israel as "ahead of every other country in innovation", while Google's Eric Schmidt stated: "Israel is the most important high-tech centre in the world after the United States". Israeli start-ups amount to one for every 1,400 of its population. Those searching for explanations to account for the nation's entrepreneurial success, feel that military conscription has the result of teaching young people discipline, leadership and teamwork skills.

In the 1990s, one million Jews emigrated from Russia to Israel, among them many highly skilled in mathematics, engineering and science. The Soviet system wasted those skills but once in Israel they bloomed. In the wake of the 1967 Six-Day War, a French arms embargo led Israel to develop its own military arms design and production, leading to technologies enabling Israel to enter the market of weapons exports.

Behind all of these decades of skills development, scientific enquiry and research and development lay the mind of the muse who led the country to its current status as a world leader in vital areas such as agronomy research, desalination, medical interventions, pharmaceuticals and innovative products, but most of all information and communication technologies; computers and the Internet. Now, it is also exploiting natural energy resources in vital partnerships with like-values nations.

Illustrative image of the end of the year and the past decade (DaLiu iStock by Getty Images)

  

One Belt, One Road for International Harmony

"SOEs form an integral part of China's national strategy for global expansion."
"That is a major reason why China has created monstrous SOEs through internal mergers in the first place."
Duanjie Chen, senior fellow, Macdonald-Laurier Institute

"[Canada is being too] sensitive [about Chinese capital flows into Canada. The national security review represents] looney [behaviour on the part of Canada]."
"We just hope the Canadian side could adopt the same standard for Chinese companies compared with other foreign companies [investing in Canada]."
"Chinese state-owned enterprises — they are not guilty. They have made great contributions to safeguard the welfare of the Chinese people. We feel it is really a pity that we couldn’t make such kind of good deal to happen."
"I think it will definitely send negative signals to the market, especially it will attack the confidence of the Chinese investors who want to invest in Canada."
"My first impression, to tell you the truth, [is] that I think the Canadian media or the Canadian public is too sensitive about the Aecon case because Aecon is just a construction company."
"From your side, you have your rules and regulations on the foreign companies overtaking Canadian companies. I think for the national security issue it is your internal affairs. The Chinese side does not want to interfere [with] it."Chinese Ambassador to Canada Lu Shaye

An Aecon Construction scissor lift operator. CANADIAN PRESS/AP, Tobin Grimshaw

If Canadian authorities react with more caution to Chinese investment in Canada than they would to investment by any other country, there is a good reason for it. China is an omnivorous predator, eager to gobble up wherever and whenever it can, sensitive proprietary technologies to benefit its own industries. It has created state-owned enterprises that act as independent corporations purportedly with no interest other than profit, and while the profit motive is writ large, so is the looting of industrial and governmental intellectual property.

The issue of the China Communications Construction Co., Ltd. financial holding division making a bid to the value of $1.5-billion to buy into Aecon Group Inc. has been fiercely resisted by the opposition in Parliament. Finally, Innovation, Science and Economic Development Minister Navdeep Bains announced Ottawa has committed to blocking the controversial sale. Canada, he stated, is "open to international investment that creates jobs and increases prosperity, but not at the expense of national security".

Ottawa announced a full national security review of the Aecon deal in February.  (David Kawai / THE CANADIAN PRESS)

Opposition Members of Parliament, business groups and domestic construction companies can all now breathe a sigh of relief that their criticism and warning that China would gain access to sensitive Canadian intellectual property and that local construction firms would become less competitive in future project bids, has borne fruit. The simple fact is, Aecon's contracts include the refurbishment and maintenance of nuclear facilities, along with the building and maintenance of sensitive telecommunications lines.

For Canada-China trade talks this represents an awkward juxtaposition of events, at a time when Justin Trudeau is anxious that under his watch an elusive free trade deal with China be gained, at a time when the North American Free Trade deal, encompassing Canadian, Mexican and American industry and trade is on shaky grounds with current revision of the NAFTA talks underway and faltering. On his recent disastrous Beijing trip, Trudeau made the mistake of demanding that China accede to his personal inclusion of social, environmental and gender stipulations.

Chinese authorities and negotiators were sufficiently taken aback to have pushed the Canada-China talks into some obscure cubicle from which it may never emerge, after recommending that Canada adhere to economic, trade-based discussions, rejecting the Trudeauian trade-talk stipulations. Coming hard on the heels of Trudeau's pathetic comic-impersonation shtick in India when similar free trade opportunities were bungled, it seems that Trudeau's inability to interact seriously with other leaders places him as a symbol of arrested juvenile development.

Permitting the Aecon sale to proceed would most certainly have impacted Canada's defence capabilities, and impact on its shared defence relations with the United States whose own sensitive intelligence and defence as well as intellectual properties would be affected. Not that the U.S. doesn't have ample examples on its own soil of American international conglomerates anxious to do business in China signing over delicate trade intelligence for the opportunity to invest in China.

As it is, American officials look with disfavour on Trudeau's approval of Canadian technology companies bought out by Chinese SOEs, as when Norsat International Inc. was acquired by the Chinese firm Hytera Communications Corp., Ltd., in view of the fact that Norsat had contracts with the U.S. Department of Defence, the U.S. Marine Corps, the U.S. Army, aircraft manufacturer Boeing, NATO, Ireland's Department of Defence along with others.

The approval by Trudeau of the takeover of ITF Technologies -- a fibre-laser technology company -- by Hong Kong-based O-Net Communications, reversed a decision by former Prime Minister Stephen Harper to block the deal. Aecon itself possesses contracts to install and maintain telecommunications lines with Bell Canada, with some of those lines traversing the Canada-U.S. border. "We do have shared infrastructure that needs to be looked at", commented Michael Wessell, commissioner of the U.S.-China Economic and Security Review Commission.

A worker passes in front of a truck displaying Aecon Group Inc. signage at a construction site in Toronto, Ontario, Canada, on Monday, Feb. 26, 2018. Photographer: Cole Burston/Bloomberg via Getty Images

 The Trudeau Government: Canada For Sale, China May Apply

Canada's Prime Minister Justin Trudeau met with China's Premier Li Keqiang in December.   Fred Dufour / Associated Press

"Law in China -- despite the term 'rule of law' and the deliberate attraction of expectations about what the rule of law means -- is something quite different altogether, and it really is submission to Party rule."
"What is described in China as the rule of law is more, in fact, the rule by law -- in other words, the use of formal rules, statutes, institutions, and so on to carry out policies."
"[China's rule of law] is nothing more than an instrument for carrying out Party purposes."
Pitman Potter, professor, University of British Columbia A. Allard School of Law

"In that context it seems to me that it's very difficult for the government to approve the Aecon acquisition without incurring significant risk to national security."
"[It would] certainly not be my recommendation [to permit the deal to move forward]."
"It will not make them [proposed Chinese buyer] anything other than an opaque entity operated entirely in accordance with the goals of the state of China."
Ward Elcock, former director, Canadian Security Intelligence Service

"It's not aiming [Chinese take-overs] at profit but market share -- particularly in developed countries."
"We could harm ourselves if we insist on opening our doors wide to a state who does not believe in the private property rights and free market system, but is using its SOEs [state-owned enterprises] in the disguise of commercial entities."
Duanjie Chen, senior fellow, Macdonald-Laurier Institute think tank

China Communications Construction Co. proposed to buy the Canadian construction firm Aecon late in 2017.  Cole Burston/Bloomberg

The Trudeau government seemed fairly unperturbed that China may come into possession of a Canadian construction firm that would most certainly result in sensitive Canadian data being made available to the Chinese state. But there are warning signs everywhere that scream !caution! that the government doesn't seem inclined to notice. They did, months ago, accede to some level of concerns deciding to instigate an investigation to satisfy critics. Which include other Canadian construction companies claiming the takeover of Aecon by the China Communications Construction Co. would imperil locals in bidding on contracts.

The Liberal government of Justin Trudeau is anxious to sign off on a free trade deal with China, cognizant that should the Aecon deal not go in China's favour that elusive free trade deal that Trudeau thought his trade experts in consultation with their Chinese counterparts had all wrapped up and just needed his signature on a trip to China found himself in an embarrassing situation when the Chinese declined to forward that free trade agreement to a conclusion during that trip and Trudeau returned home empty-handed.

Not a very auspicious conclusion to an agreement that was considered to be a wrap, particularly when he had just returned from a high-echelon Trans-Pacific Trade mission when all the other countries concerned were prepared to take the agreement to the signing table and Trudeau decided at the last moment in conversation with Japanese Prime Minister Shinzo Abe, that Canada had second thoughts, which situation enraged his other TPP counterparts.

Prime Minister Trudeau's next huge international success was his visit to India, where among trade discussions he distinguished himself playing Mr. Dress-up with his adorable family posing in Bollywood get-ups, amazing in their garish costuming to Indians who had no doubt thought that the Canadian sunny-ways Prime Minister was a doltish clown. And then matters turned a little more serious when his entourage suddenly entertained a Sikh-Canadian who had once been found guilty of attempted murder of an Indian cabinet minister while visiting Canada.

So, should it be decided that the China Communications Construction Co., aka an arm of the Chinese Communist Party, not be allowed to take over Aecon in a $1.5-billion deal, there would be consequences, with China convinced that it was being treated differently in foreign take-overs in Canada than other countries' industries investing in Canada. Of course, other nations do not view their corporations as being answerable to their governments as China does.

Developed nations of the world of which Canada is one, alongside Australia, the United Kingdom and others have accused China of influence peddling and political bribery. Centrally owned enterprises have of late rapidly developed their itineraries in acquiring overseas assets. In the 1990s those Chinese investments abroad were valued at $79 billion. Currently, their value has swelled to over $900 billion, in service to China's interests in controlling markets.

It is a growth that fits neatly into China's global influence, with its Belt and Road initiative, expanding the means by which the vast nation with its impressively huge manufacturing facilities can deliver products globally, by its expansion of road, rail and sea infrastructure elsewhere in the world, linking to China. China's geopolitical manoeuvring is fairly transparent at this point. Aecon itself has defended the proposed takeover, pointing out that the construction sector in Canada is inundated as it is by foreign conglomerates from Europe, the U.S., South Korea and elsewhere.

Which may be true, but certainly not representative of the whole picture, since none of those countries seek to further their trade futures and geopolitical influence through monopolization of the world order in production and trade as does China. Experts pointing out that Chinese state-owned enterprises' function is to service the Communist Party of China; they are in fact compelled by Chinese law to surrender any idea of autonomy to the Chinese government.

In 2011, CCCC had been barred, as a result of charges of fraudulent practices, from bidding on any World Bank-backed road or bridge projects.

The Will is There, So is the Way

"If American companies have a big market in China, they say to the Ministry of State Security, 'Come in'."
"Everyone fears retaliation. No one wants to lose the China market."
James A. Lewis, vice-president, Center for Strategic and International Studies

"When they first announced the partnership [A.M.D./Sugon] I was shocked."
"You would think intellectual property and joint ventures would belong under Cfius review."
"It should. It's surprising it isn't."
Stacy Rasgon, semiconductor analyst, Sanford Bernstein

"If Made in China 2025 achieves its goals, the U.S. and other countries would likely become just commodity exporters to China -- selling oil, gas, beef and soybeans."
Jeremie Waterman, president, China Center, U.S. Chamber of Commerce

Jen-Hsun Huang, chief executive officer of Nvidia Corp announces cloud and server hardware partnerships. Bloomberg News

Well, that's just it. The world's largest economy may be on the cusp of succumbing to the strenuous efforts of the world's second largest economy's determination to surge ahead and take that status out of the hands of the United States of America. China has, after all, succeeded in persuading the global market that it has the population, the skills, the determination to manufacture anything the world wants, and in the process manufacturers from all nations looked to that production giant for an edge up in profitability and China obliged.

In the process of obliging, China needed energy output on a gigantic scale for the production process, succeeding in polluting its atmosphere, its soil and its water and marginalizing the health of its people. Even the current President of the United States sent his brands overseas for maximum profit in cheaper production. China, while pulling steadily ahead to become the globe's premier producer now also is the globe's topmost investor in other countries' infrastructure.

But China is interested in moving on from there, toward intellectual property rights, held tight by countries that invested in advanced technologies. China foresees a time in the not-too-distant future when it has its fingers grasping cutting edge technologies not through industrial stealth which it has such skill with, but through convincing high tech generators that if they want increased ingress to the vast Chinese market they must surrender trade secrets.

Currently, China is dependent on Western technology sources for its own technology; its own sensitive systems operating government computers, banks and laboratories run on chips from Intel and Qualcomm and Microsoft or Oracle software; a situation that makes China feel vulnerable, not independent. And independence is the target for China's technology future under its Made in China 2025 plan.

That plan is an ambitious one, concerning the domination of technologies such as advanced microchips, artificial intelligence and self-driving vehicles. To achieve that end, China is romancing some of the most influential technology corporations in the world, offering access to the Chinese market in recompense for the unlocking of cutting-edge trade technologies which China could make its own.

Through partnerships or the trade for access of intellectual property, no price too steep for admission to China's huge and growing economy. Unfettered market access to China represents a mouth-watering aspiration for profit-hungry corporations prepared to surrender their property rights to China's profit-blandishments.

UK chip maker Imagination bought for £550m by China-backed tech firm

Imagination Technologies designs the graphics processors used in smartphones and other electronic devices. Photograph: Alamy    

China is skilled in purloining trade secrets through clandestine surveillance and cyber-thievery. It would like to legitimize its goals by having those trade secrets willingly made available through the option of trading and freely approved access to the world's largest population, steadily entering middle-class consumer-status.

Made in China 2025 "is going to have substantial resources and focus devoted to it, especially at the local government level" Kai-Fu Lee, a venture capitalist in Beijing prophesied, not bothering to stick his neck out on a limb to do so. The Chinese government has set aside $45-billion for its companies to loan, another $3-billion to advance manufacturing and more billions in allied financial support, according to a German think tank.

And here's the irony; China has conventionally advanced its interests through accessing by any means trade secrets on which to build its advancing technology and economic strength, and it has done the same with its 2025 plan, emulating a German government plan which was named Industrie 4.0, highlighting a drive toward more automation and "smart factories" performing advanced work with fewer workers.

Foreign auto companies, eager to sell their gas-powered vehicles in the world's largest car market are now being compelled to produce electric cars in China as a trade-off. General Motors, Volkswagen and others of the world's largest vehicle manufacturers are now prepared to form joint ventures with Chinese partners, to enable them to qualify under the Chinese government's new rules of engagement.

China is looking to develop a new generation of supercomputers more powerful than those it already has, but it foresees accomplishing this with their own chips made in China. It formed a partnership with chip manufacturer A.M.D. for $300-million in an agreement to license chip technology in China with its partner, Sugon, bypassing U.S. law in the joint venture through the fiction that A.M.D. controls the joint venture.

The hungry greed of American technology executives, as well as those from other Western sources to access the Chinese market makes them vulnerable to Chinese exploitation, but that vulnerability is not without Western corporations' willingness to accede to Chinese demands of 'sharing' trade secrets. There are no secrets that China cannot access to advance its technology into the future stepping neatly ahead of global competitors.

Too late now, to handle with care.

In July, China’s government issued a sweeping new strategy with a striking aim: draw level with the US in artificial intelligence technology within three years, and become the world leader by 2030. A call for research projects from China’s Ministry of Science and Technology posted online last month fills in some detail on the government’s plans. And it puts Silicon Valley chipmaker Nvidia, the leading supplier of silicon for machine-learning projects, in the cross hairs.  Wired

"More than 85 percent of the key electronic parts in Chinese defense and high-tech equipment are now domestically made, meaning the country has the ability to be self-sufficient in advanced electronic components, officials said on Monday."
"Over the past decade, the technological gap between China and traditional electronic powerhouses like the United States has shortened from 15 years to five years, said Diao Shijing, director of information technology at the Ministry of Industry and Information Technology."
China Daily

Beijing: To Tehran With Love

"China is dominating Iran. Iranian authorities do not see any drawbacks to being dependent on China."
"Together we are moving ahead."
Mehdi Taghavi, economics professor, Allameh Tabataba'i University, Tehran

"Many countries are close by, even Europe. Iran is at the center of everything."
"You can say that I was even more visionary than some of our politicians. I was a pioneer, and they want to hear my experiences."
"I am expecting a 50 percent increase in revenue. Of course, Iran's economy will also grow. China will expand. Its power will grow."
"Life is good in Iran. The future is good."
"We grow our own vegetables and eat Chinese food. Just like home."
Zuoru Lin, Beijing entrepreneur, Neyshabur, Iran

Chinese President Xi Jinping and his Iranian counterpart Hassan Rouhani prepare to shake hands at the conclusion of their joint pres conference at the Saadabad Palace in Tehran. AP

The mammoth business enterprise that China has become with its State-owned giant corporations and its tentacles abroad is smothering the world of manufacturing and natural resource extraction even as China contemplates its way forward to making its dream of world domination in industry, trade and commerce a reality, as well as its increasingly aggressive approach to control of geographic spaces and oceans and the geological mineral and petroleum riches that lie under the seas, from the East China Sea to the South and the northern Pacific to the Arctic heralding its new ambition: "One Belt, One Road".

China has its State-sponsored and private enterprise fingers in all corners of the world, with its massive investments and loans to bring grateful countries into its orbit, delving deep into their infrastructures and promising a shining future of economic gain for their struggling economies. Their indebtedness to China cannot be overstated. From those countries popularly referred to as emerging economies to those in the West whose economies place them among the wealthy, yet delighted to enter the Chinese market, playing by China's rules, and allowing China to enter theirs, playing by China's rules.

China rules. Any nation's corporations that contemplate entry to China must agree to joint ventures, sharing trade secrets, giving China access to closely guarded plans and enterprises that will invariably impact on those countries' security and intelligence agencies alongside control of their industries' formulae and infrastructure, making China's traditional espionage, both industrial and military, outdated; why engage surreptitiously when formerly suspicious administrations now line up to accept China's investment opportunities and those of their national corporations investing in China?

Harmony. One Belt, One Road. And it is China's road, all the way.

Take Iran, a traditional trading hub that linked East and West from antiquity to the present. China has promised over $1-trillion in infrastructure investment to benefit over 60 countries right through Europe, Asia and Africa, and Iran is central to this enterprise. Chinese workers are busy modernizing Iran's major rail routes. They are improving the track bed, standardizing gauge sizes, rebuilding bridges, all with the goal in mind of Turkmenistan and Afghanistan being connected through Tehran.
China is nothing if not methodical.

Chinese President Xi Jinping reviews an honour guard as he is welcomed by his Iranian counterpart Hassan Rouhani. AP

Already Iran's largest trading partner, China's market for Iranian oil links the two quite firmly. Iran needs China's financing of infrastructure projects, counterbalancing the weight that China will have on Iran's independence, dominating the country through the sheer strength of its overarching presence and its plans for the future. Mr. Lin, the happy entrepreneur, as example, has built his empire in Iran with eight factories producing a variety of goods that Iran and neighbouring countries consume.

The 925-kilometer electrified rail line to link Tehran and Mashhad where Mr. Lin's factories take advantage of the trade route was financed with a Chinese loan, enabling eventually Mr. Lin to reach northern Europe, Poland and Russia with his goods. China can't lose. Corporations eager to buy into a piece of the gigantic Chinese marketplace have had to agree to allow vetting authority to internally ensconced Communist Party committees. A joint venture enabling business in China requires the establishment of such committees.

Ask Samsung Electronics and Nokia; they were happy -- or not -- to comply, agreeing to have Communist Party units established within their operations in China. China thrilled the environmental world with its concern over meeting demands for cleaning up its environmental act, by cutting back on its massive use of coal-fired plants throughout the country, as the world's greatest emitter of greenhouse gases. China is going green by cancelling plans to build another 100 coal plants internally.

Instead Chinese companies are planning 700 coal projects but not in China. Mostly in Africa. In Iran, in Pakistan and in Indonesia. Where there's a Chinese will there's always a way. So let's hear it for "One Belt, One Road". And harmony. We must have a harmonious world, agreeable to Chinese aspirations.