Hotznplotzn

cross-posted from: https://lemmy.sdf.org/post/47847537

Archived

China’s manipulation of the Interpol Red Notice system has reached a level of sophistication that poses a far-reaching danger to international law enforcement. Russia often remains the focus for many, as it is viewed as being the most prolific abuser of the system. But China is fast emerging as the more insidious threat.

As our readers will know, Red Notices are requests for provisional arrest pending extradition, circulated among police forces worldwide. The system works: thousands of dangerous fugitives are apprehended each year as a result. But authoritarian regimes have weaponised it. By issuing Red Notices through Interpol, states with poor human rights records can harness the police forces of democracies to pursue their opponents abroad.

China’s approach is different from Russia’s. Rather than relying primarily on extradition, Chinese authorities use Red Notices as one tool in a broader campaign of transnational repression. The notice locates the target. Then the pressure begins: threats against family members back home, asset freezes, surveillance, and relentless calls urging “voluntary” return. The so-called “persuasion to return” programme is profoundly misleadingly named.

The pretexts are revealing. Financial crime is the charge of choice – allegations of fraud, embezzlement, or money laundering that are difficult to verify and easy to fabricate. As one expert put it: if someone accuses you of murder, there needs to be a body; if someone accuses you of financial crimes, it is ones and zeros in the wrong ledger somewhere. China has used these charges to pursue businesspeople who have “Westernised,” political dissidents, Uyghur activists, followers of Falun Gong, and anyone else deemed a threat to the Chinese Communist Party.

[...]

The UK government’s recent overtures to Beijing make vigilance more pressing. Despite China’s well-documented human rights abuses – the persecution of Uyghurs, the crackdown in Hong Kong, the targeting of dissidents abroad – economic interests continue to drive policy. Those targeted by Chinese Red Notices often discover that economic relationships between states provide little protection when they find themselves detained at an airport or frozen out of the banking system.

Interpol has taken steps to address abuse. The Notices and Diffusion Task Force screens Red Notice requests before publication. But its review is limited – it cannot investigate the merits of every case, and as a result politically motivated requests can slip through.

[...]

China is not currently subject to Interpol’s corrective measures – enhanced scrutiny or suspension from the network – despite mounting evidence of systematic abuse. This makes vigilance all the more important. Those who find themselves in the crosshairs of a Chinese Red Notice must understand that the system offers them limited protection – and that experienced legal representation is essential from the outset.

[...]

Targeted by China Through Interpol? Your Options Explained -- (archived)

Red Notices are just one tool in a broader strategy of transnational repression that includes surveillance, asset freezes, and intense pressure on family members back home. If you find yourself in Beijing’s crosshairs, understanding the full picture is essential.

cross-posted from: https://lemmy.sdf.org/post/47847537

Archived

China’s manipulation of the Interpol Red Notice system has reached a level of sophistication that poses a far-reaching danger to international law enforcement. Russia often remains the focus for many, as it is viewed as being the most prolific abuser of the system. But China is fast emerging as the more insidious threat.

As our readers will know, Red Notices are requests for provisional arrest pending extradition, circulated among police forces worldwide. The system works: thousands of dangerous fugitives are apprehended each year as a result. But authoritarian regimes have weaponised it. By issuing Red Notices through Interpol, states with poor human rights records can harness the police forces of democracies to pursue their opponents abroad.

China’s approach is different from Russia’s. Rather than relying primarily on extradition, Chinese authorities use Red Notices as one tool in a broader campaign of transnational repression. The notice locates the target. Then the pressure begins: threats against family members back home, asset freezes, surveillance, and relentless calls urging “voluntary” return. The so-called “persuasion to return” programme is profoundly misleadingly named.

The pretexts are revealing. Financial crime is the charge of choice – allegations of fraud, embezzlement, or money laundering that are difficult to verify and easy to fabricate. As one expert put it: if someone accuses you of murder, there needs to be a body; if someone accuses you of financial crimes, it is ones and zeros in the wrong ledger somewhere. China has used these charges to pursue businesspeople who have “Westernised,” political dissidents, Uyghur activists, followers of Falun Gong, and anyone else deemed a threat to the Chinese Communist Party.

[...]

The UK government’s recent overtures to Beijing make vigilance more pressing. Despite China’s well-documented human rights abuses – the persecution of Uyghurs, the crackdown in Hong Kong, the targeting of dissidents abroad – economic interests continue to drive policy. Those targeted by Chinese Red Notices often discover that economic relationships between states provide little protection when they find themselves detained at an airport or frozen out of the banking system.

Interpol has taken steps to address abuse. The Notices and Diffusion Task Force screens Red Notice requests before publication. But its review is limited – it cannot investigate the merits of every case, and as a result politically motivated requests can slip through.

[...]

China is not currently subject to Interpol’s corrective measures – enhanced scrutiny or suspension from the network – despite mounting evidence of systematic abuse. This makes vigilance all the more important. Those who find themselves in the crosshairs of a Chinese Red Notice must understand that the system offers them limited protection – and that experienced legal representation is essential from the outset.

[...]

Targeted by China Through Interpol? Your Options Explained -- (archived)

Red Notices are just one tool in a broader strategy of transnational repression that includes surveillance, asset freezes, and intense pressure on family members back home. If you find yourself in Beijing’s crosshairs, understanding the full picture is essential.

cross-posted from: https://lemmy.sdf.org/post/47847537

Archived

China’s manipulation of the Interpol Red Notice system has reached a level of sophistication that poses a far-reaching danger to international law enforcement. Russia often remains the focus for many, as it is viewed as being the most prolific abuser of the system. But China is fast emerging as the more insidious threat.

As our readers will know, Red Notices are requests for provisional arrest pending extradition, circulated among police forces worldwide. The system works: thousands of dangerous fugitives are apprehended each year as a result. But authoritarian regimes have weaponised it. By issuing Red Notices through Interpol, states with poor human rights records can harness the police forces of democracies to pursue their opponents abroad.

China’s approach is different from Russia’s. Rather than relying primarily on extradition, Chinese authorities use Red Notices as one tool in a broader campaign of transnational repression. The notice locates the target. Then the pressure begins: threats against family members back home, asset freezes, surveillance, and relentless calls urging “voluntary” return. The so-called “persuasion to return” programme is profoundly misleadingly named.

The pretexts are revealing. Financial crime is the charge of choice – allegations of fraud, embezzlement, or money laundering that are difficult to verify and easy to fabricate. As one expert put it: if someone accuses you of murder, there needs to be a body; if someone accuses you of financial crimes, it is ones and zeros in the wrong ledger somewhere. China has used these charges to pursue businesspeople who have “Westernised,” political dissidents, Uyghur activists, followers of Falun Gong, and anyone else deemed a threat to the Chinese Communist Party.

[...]

The UK government’s recent overtures to Beijing make vigilance more pressing. Despite China’s well-documented human rights abuses – the persecution of Uyghurs, the crackdown in Hong Kong, the targeting of dissidents abroad – economic interests continue to drive policy. Those targeted by Chinese Red Notices often discover that economic relationships between states provide little protection when they find themselves detained at an airport or frozen out of the banking system.

Interpol has taken steps to address abuse. The Notices and Diffusion Task Force screens Red Notice requests before publication. But its review is limited – it cannot investigate the merits of every case, and as a result politically motivated requests can slip through.

[...]

China is not currently subject to Interpol’s corrective measures – enhanced scrutiny or suspension from the network – despite mounting evidence of systematic abuse. This makes vigilance all the more important. Those who find themselves in the crosshairs of a Chinese Red Notice must understand that the system offers them limited protection – and that experienced legal representation is essential from the outset.

[...]

Targeted by China Through Interpol? Your Options Explained -- (archived)

Red Notices are just one tool in a broader strategy of transnational repression that includes surveillance, asset freezes, and intense pressure on family members back home. If you find yourself in Beijing’s crosshairs, understanding the full picture is essential.

Archived

China’s manipulation of the Interpol Red Notice system has reached a level of sophistication that poses a far-reaching danger to international law enforcement. Russia often remains the focus for many, as it is viewed as being the most prolific abuser of the system. But China is fast emerging as the more insidious threat.

As our readers will know, Red Notices are requests for provisional arrest pending extradition, circulated among police forces worldwide. The system works: thousands of dangerous fugitives are apprehended each year as a result. But authoritarian regimes have weaponised it. By issuing Red Notices through Interpol, states with poor human rights records can harness the police forces of democracies to pursue their opponents abroad.

China’s approach is different from Russia’s. Rather than relying primarily on extradition, Chinese authorities use Red Notices as one tool in a broader campaign of transnational repression. The notice locates the target. Then the pressure begins: threats against family members back home, asset freezes, surveillance, and relentless calls urging “voluntary” return. The so-called “persuasion to return” programme is profoundly misleadingly named.

The pretexts are revealing. Financial crime is the charge of choice – allegations of fraud, embezzlement, or money laundering that are difficult to verify and easy to fabricate. As one expert put it: if someone accuses you of murder, there needs to be a body; if someone accuses you of financial crimes, it is ones and zeros in the wrong ledger somewhere. China has used these charges to pursue businesspeople who have “Westernised,” political dissidents, Uyghur activists, followers of Falun Gong, and anyone else deemed a threat to the Chinese Communist Party.

[...]

The UK government’s recent overtures to Beijing make vigilance more pressing. Despite China’s well-documented human rights abuses – the persecution of Uyghurs, the crackdown in Hong Kong, the targeting of dissidents abroad – economic interests continue to drive policy. Those targeted by Chinese Red Notices often discover that economic relationships between states provide little protection when they find themselves detained at an airport or frozen out of the banking system.

Interpol has taken steps to address abuse. The Notices and Diffusion Task Force screens Red Notice requests before publication. But its review is limited – it cannot investigate the merits of every case, and as a result politically motivated requests can slip through.

[...]

China is not currently subject to Interpol’s corrective measures – enhanced scrutiny or suspension from the network – despite mounting evidence of systematic abuse. This makes vigilance all the more important. Those who find themselves in the crosshairs of a Chinese Red Notice must understand that the system offers them limited protection – and that experienced legal representation is essential from the outset.

[...]

Targeted by China Through Interpol? Your Options Explained -- (archived)

Red Notices are just one tool in a broader strategy of transnational repression that includes surveillance, asset freezes, and intense pressure on family members back home. If you find yourself in Beijing’s crosshairs, understanding the full picture is essential.

cross-posted from: https://lemmy.sdf.org/post/47846828

Archived

Japanese lawmakers are flocking to Taiwan, a trend that could hamper efforts to repair Tokyo-Beijing relations that have deteriorated after remarks by Prime Minister Sanae Takaichi.

A high-ranking member of the ruling Liberal Democratic Party visited Taiwan from Sunday and met with President Lai Ching-te for about an hour on Monday.

"Taiwan is an important partner and friend for Japan with whom we share universal values and have close economic ties and people-to-people exchanges," said Koichi Hagiuda, who currently serves as the LDP's acting secretary-general.

Other Japanese lawmakers including former Justice Minister Keisuke Suzuki and Akihisa Nagashima, a former adviser to the prime minister, met with Lai and former Taiwanese President Tsai Ing-wen on Tuesday.

Japan lacks formal diplomatic relations with Taiwan at the government level, instead using the bipartisan Japan-ROC Diet Members' Consultative Council and LDP youth groups as channels for building relations. ROC refers to Republic of China, Taiwan's official name.

[...]

Taiwan's Foreign Ministry said about 30 Japanese parliament members would visit Taiwan during the New Year's period. Takaichi's government is notable for its many pro-Taiwan members.

The Japan-ROC group's executives include Hagiuda, LDP Election Strategy Committee Chairman Keiji Furuya and Chief Cabinet Secretary Minoru Kihara. Takaichi herself visited Taiwan in April before becoming prime minister, accompanied by other party officials.

Furuya also met with Lai in Taiwan in October, coinciding with Taiwan's National Day.

While Tokyo's relations with Taipei stand at a high point, Japan-China relations face an uncertain future.

[...]

cross-posted from: https://lemmy.sdf.org/post/47846828

Archived

Japanese lawmakers are flocking to Taiwan, a trend that could hamper efforts to repair Tokyo-Beijing relations that have deteriorated after remarks by Prime Minister Sanae Takaichi.

A high-ranking member of the ruling Liberal Democratic Party visited Taiwan from Sunday and met with President Lai Ching-te for about an hour on Monday.

"Taiwan is an important partner and friend for Japan with whom we share universal values and have close economic ties and people-to-people exchanges," said Koichi Hagiuda, who currently serves as the LDP's acting secretary-general.

Other Japanese lawmakers including former Justice Minister Keisuke Suzuki and Akihisa Nagashima, a former adviser to the prime minister, met with Lai and former Taiwanese President Tsai Ing-wen on Tuesday.

Japan lacks formal diplomatic relations with Taiwan at the government level, instead using the bipartisan Japan-ROC Diet Members' Consultative Council and LDP youth groups as channels for building relations. ROC refers to Republic of China, Taiwan's official name.

[...]

Taiwan's Foreign Ministry said about 30 Japanese parliament members would visit Taiwan during the New Year's period. Takaichi's government is notable for its many pro-Taiwan members.

The Japan-ROC group's executives include Hagiuda, LDP Election Strategy Committee Chairman Keiji Furuya and Chief Cabinet Secretary Minoru Kihara. Takaichi herself visited Taiwan in April before becoming prime minister, accompanied by other party officials.

Furuya also met with Lai in Taiwan in October, coinciding with Taiwan's National Day.

While Tokyo's relations with Taipei stand at a high point, Japan-China relations face an uncertain future.

[...]

Archived

Japanese lawmakers are flocking to Taiwan, a trend that could hamper efforts to repair Tokyo-Beijing relations that have deteriorated after remarks by Prime Minister Sanae Takaichi.

A high-ranking member of the ruling Liberal Democratic Party visited Taiwan from Sunday and met with President Lai Ching-te for about an hour on Monday.

"Taiwan is an important partner and friend for Japan with whom we share universal values and have close economic ties and people-to-people exchanges," said Koichi Hagiuda, who currently serves as the LDP's acting secretary-general.

Other Japanese lawmakers including former Justice Minister Keisuke Suzuki and Akihisa Nagashima, a former adviser to the prime minister, met with Lai and former Taiwanese President Tsai Ing-wen on Tuesday.

Japan lacks formal diplomatic relations with Taiwan at the government level, instead using the bipartisan Japan-ROC Diet Members' Consultative Council and LDP youth groups as channels for building relations. ROC refers to Republic of China, Taiwan's official name.

[...]

Taiwan's Foreign Ministry said about 30 Japanese parliament members would visit Taiwan during the New Year's period. Takaichi's government is notable for its many pro-Taiwan members.

The Japan-ROC group's executives include Hagiuda, LDP Election Strategy Committee Chairman Keiji Furuya and Chief Cabinet Secretary Minoru Kihara. Takaichi herself visited Taiwan in April before becoming prime minister, accompanied by other party officials.

Furuya also met with Lai in Taiwan in October, coinciding with Taiwan's National Day.

While Tokyo's relations with Taipei stand at a high point, Japan-China relations face an uncertain future.

[...]

cross-posted from: https://lemmy.sdf.org/post/47813631

[Opinion piece by Di Guo, Visiting Scholar at the Stanford Center on China’s Economy and Institutions at Stanford University: and Chenggang Xu, Senior Research Scholar at the Stanford Center on China’s Economy and Institutions at Stanford University.]

Archived

...

No industrial revolution has ever emerged outside advanced democratic capitalism. This is no accident. Like its predecessors, the AI-driven industrial revolution requires robust institutions to ensure secure property rights, enforceable contracts, the ability to attract and empower talent, efficient allocation of resources, and — crucially — sustained demand.

...

The People’s Republic was founded on the principle that the Communist Party of China “leads everything.” That remains true today: The CPC controls courts, markets, banks, universities, and the media, and even commands private firms. Under such powerful party-state rule, the regime can mobilize massive resources and produce shining stars like DeepSeek (or Sputnik, in the Soviet case). An industrial revolution, however, depends on more than isolated breakthroughs; there must be a series of disruptive innovations in technology, business models, and institutions that build on one another. The Soviet experience makes this clear. The USSR and its satellites in Eastern Europe could not keep up with the West during the third industrial revolution, and this failure eventually contributed to the collapse of their communist regimes.

...

China’s economy has been trapped in a vicious cycle of weak demand, overcapacity, high unemployment, and persistent deflation, which is fundamentally incompatible with any industrial revolution. AI-led automation offers no remedy for such problems, which are rooted in the country’s institutional foundations. The massive government borrowing used to finance China’s bid for AI and chip dominance has only deepened concerns about its already severe debt burden and chronic soft budget constraints — problems reminiscent of what the Soviet Union faced during the Cold War arms race.

...

Sustained innovation requires free institutions and robust demand. Breakthroughs come when entrepreneurs and scientists are empowered by independent courts, supported by risk-taking private investors, and tested through open debate and market competition. In CPC-controlled China, demand is suppressed because the state controls key resources that limit household income and entrepreneurial initiative, and capital is funneled into state-directed projects rather than open-ended discovery and innovation. While a “DeepSeek moment” may capture our attention, achieving long-term competitiveness and fostering a genuine industrial revolution is another matter entirely. After all, AI is not a remedy for deflation – and deflation itself is fundamentally incompatible with any industrial revolution.

cross-posted from: https://lemmy.sdf.org/post/47814652

Ein Unternehmensberater und ein Unternehmer-Ehepaar sind wegen der illegalen Ausfuhr von Speziallasern nach China verurteilt worden. Das OLG Düsseldorf verhängte drei Jahre Haft gegen den Unternehmensberater aus Hessen und jeweils zwei Jahre auf Bewährung gegen das Unternehmer-Paar aus Viersen in Nordrhein-Westfalen.

Die 69-Jährige und ihr 73-jähriger Ehemann hatten in Düsseldorf eine Beraterfirma mit Büros in London und Shanghai betrieben. Der Vorwurf der Spionage zugunsten Chinas war bereits während des Prozesses fallen gelassen worden. Das Gericht sprach die drei Angeklagten aber wegen gewerbs- und bandenmäßigen Verstoßes gegen das Außenwirtschaftsgesetz schuldig.

Die sogenannten Quantenkaskaden-Laser durften ohne Genehmigung nicht nach China geliefert werden. Ihr Geschäftspartner, der Leiter einer internationalen Akademie der Wissenschaften in Peking, habe die Laser dennoch angefordert und dabei auch deutlich gemacht, dass der Bestimmungsort China geheim bleiben müsse.

Dafür, dass die Laser auch militärisch genutzt werden können, habe das Gericht keine belastbaren Anhaltspunkte gefunden. Die Angeklagten hatten Geständnisse abgelegt. Zudem hatten die Ermittler belastende Kommunikation gefunden.

[...]

Konspirativ beschafft und verschickt

Der erste Laser sei über einen Strohmann beschafft worden. Dann sei eine sogenannte Endverbleibserklärung unterzeichnet worden, wonach der Laser für England bestimmt sei. Stattdessen sei er von dem Unternehmensberater aus Bad Homburg in ein altes Mobiltelefon eingebaut und nach China geschickt worden, schilderte der Vorsitzende Richter. Noch vor seiner Ankunft seien zwei weitere Laser bestellt worden.

Die Angeklagten hätten auf lukrative Folgeaufträge gehofft. Das Unternehmer-Paar muss nun jeweils 40.000 Euro Geldauflage an den Staat zahlen. Sie hätten eine Firma betrieben, die sich um den Technologietransfer von Deutschland nach China gekümmert habe. Heute lebten beide von Sozialleistungen. Das Urteil ist noch nicht rechtskräftig.

[Edit zur Tippfehlerkorrektur.]

Ein Unternehmensberater und ein Unternehmer-Ehepaar sind wegen der illegalen Ausfuhr von Speziallasern nach China verurteilt worden. Das OLG Düsseldorf verhängte drei Jahre Haft gegen den Unternehmensberater aus Hessen und jeweils zwei Jahre auf Bewährung gegen das Unternehmer-Paar aus Viersen in Nordrhein-Westfalen.

Die 69-Jährige und ihr 73-jähriger Ehemann hatten in Düsseldorf eine Beraterfirma mit Büros in London und Shanghai betrieben. Der Vorwurf der Spionage zugunsten Chinas war bereits während des Prozesses fallen gelassen worden. Das Gericht sprach die drei Angeklagten aber wegen gewerbs- und bandenmäßigen Verstoßes gegen das Außenwirtschaftsgesetz schuldig.

Die sogenannten Quantenkaskaden-Laser durften ohne Genehmigung nicht nach China geliefert werden. Ihr Geschäftspartner, der Leiter einer internationalen Akademie der Wissenschaften in Peking, habe die Laser dennoch angefordert und dabei auch deutlich gemacht, dass der Bestimmungsort China geheim bleiben müsse.

Dafür, dass die Laser auch militärisch genutzt werden können, habe das Gericht keine belastbaren Anhaltspunkte gefunden. Die Angeklagten hatten Geständnisse abgelegt. Zudem hatten die Ermittler belastende Kommunikation gefunden.

[...]

Konspirativ beschafft und verschickt

Der erste Laser sei über einen Strohmann beschafft worden. Dann sei eine sogenannte Endverbleibserklärung unterzeichnet worden, wonach der Laser für England bestimmt sei. Stattdessen sei er von dem Unternehmensberater aus Bad Homburg in ein altes Mobiltelefon eingebaut und nach China geschickt worden, schilderte der Vorsitzende Richter. Noch vor seiner Ankunft seien zwei weitere Laser bestellt worden.

Die Angeklagten hätten auf lukrative Folgeaufträge gehofft. Das Unternehmer-Paar muss nun jeweils 40.000 Euro Geldauflage an den Staat zahlen. Sie hätten eine Firma betrieben, die sich um den Technologietransfer von Deutschland nach China gekümmert habe. Heute lebten beide von Sozialleistungen. Das Urteil ist noch nicht rechtskräftig.

[Edit zur Tippfehlerkorrektur.]

cross-posted from: https://lemmy.sdf.org/post/47813631

[Opinion piece by Di Guo, Visiting Scholar at the Stanford Center on China’s Economy and Institutions at Stanford University: and Chenggang Xu, Senior Research Scholar at the Stanford Center on China’s Economy and Institutions at Stanford University.]

Archived

...

No industrial revolution has ever emerged outside advanced democratic capitalism. This is no accident. Like its predecessors, the AI-driven industrial revolution requires robust institutions to ensure secure property rights, enforceable contracts, the ability to attract and empower talent, efficient allocation of resources, and — crucially — sustained demand.

...

The People’s Republic was founded on the principle that the Communist Party of China “leads everything.” That remains true today: The CPC controls courts, markets, banks, universities, and the media, and even commands private firms. Under such powerful party-state rule, the regime can mobilize massive resources and produce shining stars like DeepSeek (or Sputnik, in the Soviet case). An industrial revolution, however, depends on more than isolated breakthroughs; there must be a series of disruptive innovations in technology, business models, and institutions that build on one another. The Soviet experience makes this clear. The USSR and its satellites in Eastern Europe could not keep up with the West during the third industrial revolution, and this failure eventually contributed to the collapse of their communist regimes.

...

China’s economy has been trapped in a vicious cycle of weak demand, overcapacity, high unemployment, and persistent deflation, which is fundamentally incompatible with any industrial revolution. AI-led automation offers no remedy for such problems, which are rooted in the country’s institutional foundations. The massive government borrowing used to finance China’s bid for AI and chip dominance has only deepened concerns about its already severe debt burden and chronic soft budget constraints — problems reminiscent of what the Soviet Union faced during the Cold War arms race.

...

Sustained innovation requires free institutions and robust demand. Breakthroughs come when entrepreneurs and scientists are empowered by independent courts, supported by risk-taking private investors, and tested through open debate and market competition. In CPC-controlled China, demand is suppressed because the state controls key resources that limit household income and entrepreneurial initiative, and capital is funneled into state-directed projects rather than open-ended discovery and innovation. While a “DeepSeek moment” may capture our attention, achieving long-term competitiveness and fostering a genuine industrial revolution is another matter entirely. After all, AI is not a remedy for deflation – and deflation itself is fundamentally incompatible with any industrial revolution.

cross-posted from: https://lemmy.sdf.org/post/47813631

[Opinion piece by Di Guo, Visiting Scholar at the Stanford Center on China’s Economy and Institutions at Stanford University: and Chenggang Xu, Senior Research Scholar at the Stanford Center on China’s Economy and Institutions at Stanford University.]

Archived

...

No industrial revolution has ever emerged outside advanced democratic capitalism. This is no accident. Like its predecessors, the AI-driven industrial revolution requires robust institutions to ensure secure property rights, enforceable contracts, the ability to attract and empower talent, efficient allocation of resources, and — crucially — sustained demand.

...

The People’s Republic was founded on the principle that the Communist Party of China “leads everything.” That remains true today: The CPC controls courts, markets, banks, universities, and the media, and even commands private firms. Under such powerful party-state rule, the regime can mobilize massive resources and produce shining stars like DeepSeek (or Sputnik, in the Soviet case). An industrial revolution, however, depends on more than isolated breakthroughs; there must be a series of disruptive innovations in technology, business models, and institutions that build on one another. The Soviet experience makes this clear. The USSR and its satellites in Eastern Europe could not keep up with the West during the third industrial revolution, and this failure eventually contributed to the collapse of their communist regimes.

...

China’s economy has been trapped in a vicious cycle of weak demand, overcapacity, high unemployment, and persistent deflation, which is fundamentally incompatible with any industrial revolution. AI-led automation offers no remedy for such problems, which are rooted in the country’s institutional foundations. The massive government borrowing used to finance China’s bid for AI and chip dominance has only deepened concerns about its already severe debt burden and chronic soft budget constraints — problems reminiscent of what the Soviet Union faced during the Cold War arms race.

...

Sustained innovation requires free institutions and robust demand. Breakthroughs come when entrepreneurs and scientists are empowered by independent courts, supported by risk-taking private investors, and tested through open debate and market competition. In CPC-controlled China, demand is suppressed because the state controls key resources that limit household income and entrepreneurial initiative, and capital is funneled into state-directed projects rather than open-ended discovery and innovation. While a “DeepSeek moment” may capture our attention, achieving long-term competitiveness and fostering a genuine industrial revolution is another matter entirely. After all, AI is not a remedy for deflation – and deflation itself is fundamentally incompatible with any industrial revolution.