ExclusiveUS Coast Guard Deployed Near China; China’s Q2 Economic Growth Misses Forecasts | China in Focus

Welcome to China In Focus, I'm Tiki Meyer, our top story. The U.S. Coast Guard has deployed forces near China as Washington seeks to counter Beijing's maritime pressure in the region. No fees on cargo ships passing through the Strait of Hormuz and the Iran blockade on oil shipments. What impact will these U.S. moves have on China? China fired a nuclear capable missile into the Pacific Ocean, landing near U.S. ally Australia. What message is Beijing sending to the world? This is really like a dog marking its territory. David versus Goliath. U.K. residents take China's mega embassy plan to court, warning of national security risks. And China's economic growth figures for April to June are out. What broader economic trends do they reveal? A new front is opening in the Pacific. The U.S. Coast Guard is moving ships closer to China as Washington works to push back against the Six fast-response cutters that previously operated in the Middle East are now being deployed in Asia, including Singapore and the Philippines. The move on Tuesday is aimed at deterring Beijing from using force around Taiwan and disputed waters in the South China Sea. The U.S. cutters are part of a new Coast Guard squadron designed for global deployments. This marks the first time the smaller vessels are operating from Subic Bay, a strategic location near the South China Sea. The ships are expected to remain in the region through at least September, supporting U.S. Pacific operations. Beijing has expanded its Coast Guard presence in disputed waters, where its vessels have harassed ships from neighboring countries. Chinese vessels have confronted Philippine ships using water cannons and other aggressive tactics. U.S. officials say the cutters can conduct patrols, law enforcement missions, and maritime security operations with regional allies. The deployment comes as the U.S. Navy has shifted some resources to support operations in the Middle East, but the Coast Guard faces its own challenges, including aging ships and the need for more resources. A roughly $25 billion investment approved by Congress will help fund new Coast Guard ships and aircraft. The move comes as Washington competes with Beijing for influence across the Pacific. President Trump is backing away from fees on cargo ships passing through the Strait of Hormuz. At the same time, the Iran blockade began on Tuesday, targeting the country's entire coastline. It's blocking ports, oil terminals, and all ships transporting Iranian oil, regardless of their flag. How big of an impact will it have? Yesterday on Tiffany Mark Tonight, I spoke with John C. DeLittis, a geopolitical strategist at Trilogy Advisors. He's also a senior fellow for Global Risks at the Center for the National Interest. Listen. Now, President Trump's now saying he's foregoing the 20% tax of goods through the Strait of Hormuz, and instead, Gulf nations will make big investments in American manufacturing. Why do you think President Trump is taking a different direction on this? Probably because he had to. I don't know if that was an off-the-cuff remark when he spoke about imposing a 20% tax on all cargo. And we have to be mindful here, Tiffany. It's not just oil that comes out of the Persian Gulf, but also liquefied natural gas, but also petrochemicals and fertilizers upon which the entire world is dependent. And so putting a 20% cargo tax on fertilizers that feed billions of people around the world, on hundreds if not thousands of petrochemical and refined products that we in the U.S. and all of our allies use for everyday uses, commercial, industrial, and personal, as well as oil and liquefied natural gas, would have been disastrous for the global economy. But beyond that, let's keep in mind that free and open shipping through international waterways is absolutely foundational to the global economy. That imposing any tolls or fees, as Secretary of State Rubio and Vice President Vance reminded us in recent weeks, is a violation of international maritime law. And it would also set a very, very dangerous precedent, not only for Iran that's seeking to impose a toll in the Persian Gulf or the Strait of Hormuz, but even, say, for communist China that might want to impose a future toll on shipping through the South China Sea or the Taiwan Strait. So I'm glad President Trump seriously reconsidered that, what I hope to be a tactical error, an off-the-cuff remark, and now we're back to a more solid foundation for how to proceed with Hormuz, as well as for free and open shipping worldwide. And while the fees are off the blockade begins today, how big of an impact do you think this will have? I think it'll have a very significant impact because the Iranian government, or whatever comprises the Iranian government, is quickly running out of cash. They were given a brief reprieve under what I call the memorandum of misunderstanding between the U.S. and Iran for several weeks, under which they were allowed to export oil and generate, what is it, $430 to $450 million a day in oil revenue to prop up what is a completely catastrophized economy now. But they don't understand that that was an opening to them to try to come to the negotiating table in good faith. Instead, President Trump seems to indicate that they lied, they cheated at every single opportunity, they agreed to one thing behind closed doors, said completely the opposite on the other side in the public media sphere. And now we see that it seems the Trump administration believes that there's no way other than to squeeze the Iranian government's revenues, and also, of course, to take out whatever remaining ability they have to either attack shipping or to attack Gulf neighbors in the Arabian region. And digging into that, the Treasury also just seized $130 million in digital assets that was tied to the Central Bank of Iran. What impact do you think this will have? It'll have additional impacts. I think right now the initial sum is about $130 million in cryptocurrency. That was part of an illegal smuggling network to be able to sell Iranian oil, especially to the Chinese teapot companies, the refineries, where the Chinese government looked the other way. These smaller companies were able to purchase the oil that was sanctioned internationally for years, and really allowed the Communist Chinese Party to provide a lifeline to the Iranian government for years, providing tens of billions of dollars, especially into the prior administration, the Biden administration, the Trump administration looked to put an end to that. Again, they didn't take every single sanction that was available to them. But I think right now, it's not only a military hammer on the IRGC and the Supreme Leader and his minions, but also an economic and financial hammer to whatever is left of what we call an Iranian government. China's influence campaign on U.S. campuses. A U.S. senator is sounding the alarm, saying China is exploiting American universities to gain access to sensitive technology. Here's what Senator Jim Banks had to say. I was alarmed when I got to the House and better understanding how the CCP, the United Front operates on college campuses. And back then we were talking about Huawei grants to major public universities. And the more that they were reported for really the first time on Trump's watch, the more astonished I was at how much money was being poured by the CCP into our colleges. And then we took a look at what previously was seen as innocuous outfits like Confucius Institutes. You better understood why the CCP sets up, why the United Front sets up Confucius Institutes on our college campuses. Banks says Congress has pushed for more transparency around foreign funding, research partnerships and programs linked to China. He points to efforts to shut down Confucius Institutes and sever university ties with Chinese entities as examples of progress. But Senator warns Beijing continues to find new ways to build relationships and access American tech research. Banks says protecting university innovation is critical to keeping advanced technology out of the hands of China's military. Earlier this month, China test fired a nuclear capable ballistic missile from a submarine. It traveled nearly 4,000 miles before landing southeast of Nauru, a Pacific Island nation. The launch demonstrated China's capability to strike Australia. To discuss it further, we spoke with retired Marine Colonel Grant Newsham. He's the author of When China Attacks and a senior fellow at the Center for Security Policy. How are you reading this underwater missile test and what message China is trying to send to the region? Well, this was apparently the first one they've done like this since about 1982. So it's been a long time. This is really like a dog marking its territory. And that is what the Chinese are saying is, you know, we're coming and you better listen to us or what are you going to do about it? And there's nothing sort of normal about this. It isn't just testing the systems, but rather there are clear messages that they're sending, not least to the Pacific Island nations. And the Chinese are angry that particularly the top leaders of the Pacific Island forum met recently in Fiji and did not knuckle under to China's demands that Taiwan not be allowed to participate in the full meeting, which comes up in a month or two. And as you've noted, they're also angry about the deals that Australia has cut with most recently with Fiji, but shortly before that with Vanuatu and now in the Solomon Islands. You've got a new administration in power that is not quite so, is not slavishly pro-China like the previous ones have been. So China is very angry and they are really telling people that you better back off and listen to us. So keep in mind that analogy of a dog marking his territory. They're telling us exactly what they intend to do. With the Vanuatu, Fiji and now Solomon Islands kind of changing its alliances, if you will, how do you see that maybe weakening China's influence across the Pacific or is it? Well, at face value, these agreements do sort of diminish China's influence to a degree. But you have to ask yourself, of course, how many ships are there in the Australian Navy to actually protect these countries that they're promising to protect? When you've only got 11 warships in your Navy, which realistically that means maybe five or six that you can deploy. Well, the Chinese have a whole lot more ships. So it's not clear that Australia can actually protect these countries. Also, when the Australians make these deals, they do them at the very top levels. There's no referendums in the nations to approve them and referendums are better because you have more popular support. In fact, the sort of leader to leader kind of deal is something that the Chinese do. So the next time they cut a deal, they're going to say, well, you did the same thing. Also, the deals the Australians have signed, they have largely a security component to them. And it's actually the economic and the commercial influence, which is as important. And that's where the Chinese have a presence in each of these places that they use to great effect. And the Australians aren't backing this up with, as I say, with a commercial economic component to it. So it isn't quite the great victory for Australia and the West and the great loss for the Chinese, as one might imagine. It's a little more ambivalent than that. A legal fight is underway in London over plans to build what would become China's largest embassy in Europe. Residents living next to the proposed site are asking the UK's high court to overturn government approval. They're arguing the project poses major security and safety risks. The challenge on Tuesday targets the UK government's decision in January to approve a new Chinese embassy at the former Royal Mint site. Beijing purchased the historic property in 2018 and plans to build a roughly 215,000 square foot complex on the site. Local council rejected the proposal twice citing various reasons, including national security concerns. Officials also warned the embassy could be used for espionage or transnational repression. Despite those concerns, UK Prime Minister Keir Starmer approved the embassy ahead of his trip to China. Residents' lawyers pointed to the 2022 incident at the Chinese consulate in Manchester, where a protester was dragged inside the consulate's grounds during a demonstration. And critics argue the embassy is in a sensitive location next to major telecommunications cables serving the UK government and London's financial district. The lawsuit further claims the government approved the project without enough transparency, saying Beijing's key planning documents were heavily redacted. China responded saying it does not intend to take part in the court proceedings. Coming up, China's economic growth figures for April to June are out. What broader economic trends do they reveal? More on that after the break here on China In Focus. Welcome back to China In Focus. Tiffany Meyer, China's second quarter growth figures are out. While China's official figures are often questioned because of the communist regime's lack of transparency and possible data manipulation, they can still reveal broader economic trends. Take a look. Chinese growth took a tumble in the second quarter. GDP rose just 4.3 percent from a year earlier, missing analyst forecasts and the government's which is still set at up to 5 percent. Reuters senior China economic correspondent Kevin Yao was crunching the numbers. In other words, China's factories are humming, boosted by strong AI-related exports. Other data for June showed industrial output expanding at its quickest pace in three months. But it's a different story on the consumption side of the balance sheet. Though retail spending did return to growth in June, investment of all kinds, even that by the state, tumbled. The country's long property slump is among the negatives there, with investment in property cratering by almost a fifth on the year in the first half. So what is Beijing doing in response? A new five-year plan rolled out this week focuses on consumption and aims to boost retail sales. Encouraging residents to spend more has been a major challenge for China for years, especially after the pandemic. Weak consumer confidence and a property downturn have weighed on household spending. A race in the western hemisphere, the U.S. and China are competing, with the focus shifting from economics to national security. NTD's White House correspondent Iris Tao was joined by Rick de la Torre, founder of Tower Strategy, and a retired CIA senior operations officer to discuss the latest developments. On Tuesday, the Senate Foreign Relations Committee heard testimony from the State Department on U.S. priorities in the western hemisphere. Lawmakers questioned officials about Panama's efforts to reduce China's influence over the Panama Canal. Take a look at the response. China then attempted to intimidate them by doing inspections and detaining of their Panama flag vessels and their ports and so on. And Panama needed a little bit of a backup and got it from the countries in the region, the countries that joined the Shield of the Americas. So in addition to intelligence sharing that you pointed to just now, what other ways do you think the U.S. can step up cooperation within the western hemisphere with other allies to counter the CCP's threats? Well, look, I think for too long, Washington treated Latin America as a secondary diplomatic portfolio. Meanwhile, China, cartels built around transnational, you know, narco trafficking, they started to acquire very strategic influence. Iran established networks, Russia expanded security and information operations and uncontrolled migration then started to place enormous pressure on the United States. So I think the Trump administration strategy rejects the idea that these are all separate problems. Drugs, migration, hostile foreign influence, critical infrastructure, the energy ports, they're all linked together. So the administration is therefore returning to the center of the national security planning. And what that means is that there's really no place for the adversarial CCP to be continuing to support either political institutions or efforts that undermine U.S. security. And that's, I think, what you're going to see, such as Shield of the Americas and the current efforts regarding our national security posture in Latin America. And like you mentioned, the CCP truly do explores every possible avenue to try to get the upper hand on the U.S. Here's another example from the hearing today, watch. The Chinese try to move in, deal with, for example, in some places they'll go directly to a university and say, oh, we'll donate a telescope to you so you can do high level research and so on. And it turns out the telescope is really designed to spy on American satellites and other things like that. Do you think there needs to be higher awareness? Yes, go ahead. No, no, I was going to say, I was just recalling Michael Kozak's comments. He is spot on. China is central to all of this. Beijing has spent years building influence through not just universities like he was commenting on, but on ports, telecommunications systems, power infrastructure, mining, critical minerals, energy projects, surveillance technology. The list just goes on and on. So these investments are frequently presented as just ordinary commerce, and some are. But the Chinese Communist Party does not maintain a clean separation between commercial activity and national strategy. Chinese companies can be compelled to support state intelligence requirements. Infrastructure creates access for the CCP, debt creates leverage for the CCP, and technology creates data for the CCP. So now you have this dependence on the CCP, and that then turns into political influence and control. So a port can be a commercial asset today and a logistical advantage tomorrow. Telecommunication networks can provide inexpensive service while also creating espionage and cybersecurity risk. So control over critical minerals can become coercive leverage during a confrontation over Taiwan or another major crisis. So the administration is telling the regional governments to examine not only the immediate price of Chinese investment, but also the strategic cost that comes along with that. Chief capital can become very expensive when it compromises sovereignty. Well, definitely a long way to go to reduce our dependence on China, but definitely necessary. Rick De La Torre, thank you so much for sharing your insights with us tonight. We appreciate it. That's all for today's China In Focus. I'm Tiffany Meyer. If you have any feedback on the show, or have something you'd like to see us cover, send us an email at ChinainFocus at NTD.com. We'd love to hear from you. For on the clock original news coverage, visit us at NTD.com or download our NTD app. Thanks for watching. See you tomorrow.