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Mexican electricity reform set to raise trade tensions with US



Mexico has proposed a sweeping overhaul of its electricity market to favour its state-owned utility, in a move that would deal a blow to the use of renewable energy in the country and raise trade tensions with the US and Canada.

A fast-track bill introduced in Congress would change the order in which electricity is dispatched into the national grid, sending private investors to the back of the queue behind power from CFE, the state utility.

Renewables producers, currently dispatched first because they are the cheapest, would lose that premier place.

The bill — the boldest overhaul in months of attempts to change rules in the sector — is expected to pass in Congress, where the Mexican government has a majority in both houses. It said it sought to end “years of sacking” by the private sector.

“It’s open war,” said Carlos Ramírez at Integralia, a consultancy, who saw the move as a step forward in President Andrés Manuel López Obrador’s desire to overturn a landmark 2013 law deregulating the energy industry. “It’s a sign the government is becoming more radical.”

One former energy sector official said some $41bn in private sector investments in electricity generation could be at risk and experts forecast it would trigger lawsuits, including under the USMCA free-trade treaty with the US and Canada.

Pablo Zárate, managing director at FTI Consulting, said that “although this bill does not mention expropriation or nationalisation, it does seem like the kind of action that could be considered to have expropriatory effects”.

Only last month the US warned Mexico that private investment under the USMCA as well as “hundreds of millions of dollars” in development aid co-operation was at risk from attempts to favour state energy companies. “We are obligated to insist that Mexico lives up to its USMCA obligations,” the US wrote in a letter signed by the former secretary of state Mike Pompeo and his energy and commerce counterparts.

Among other provisions, the new bill would scrap the use of long-term auctions for power purchases, calling such auctions “a perverse machination dreamt up with the sole aim of guaranteeing profitability to investments by private generators to the detriment of the CFE”. The bill also sought to scrap so-called self-supply contracts, which allow companies to generate electricity for their own use.

Ramses Pech, an energy consultant, said scrapping auctions “left the door open to corruption, since it would just be up to CFE who they contracted”. Dispatching power from high-cost CFE plants into the grid first would push up costs, he said.

The new bill also contains provisions to enable CFE’s ageing hydropower plants to obtain clean energy certificates, a move the industry says is a disincentive to investment in green power.

Jeremy Martin, energy vice-president at the Institute of the Americas, said the bill made clear climate commitments were “irrelevant”.

Mr López Obrador, a fossil fuel champion, said Mexico’s energy laws had left CFE “in ruins”, making moves to prioritise CFE a strategic imperative. CFE posted a $3bn loss in the first nine months of 2020, slipping into the red versus the same period in 2019. It has struggled with ageing infrastrcture and high pension costs.

Although self-supply contracts have been in force since 1992, the bill said Mexico’s 2013 energy reform enabled supply to third-parties, constituting “a fraud on the law”.

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Western powers reignite Beijing anger after G7 and Nato warnings




For more than six weeks, Taiwanese military officers wondered where the Chinese fighter jets had gone.

During May, only four entered the island’s air defence identification zone. In the first half of this month, there were incursions on only four days and a stretch of nine days without any activity at all. This compared to a previous pattern of as many as 20 incursions a month.

But on June 15, a day after US president Joe Biden and other Nato leaders issued a statement condemning China’s “stated ambitions and assertive behaviour”, 20 PLA fighter jets, four nuclear-capable bombers and four additional military aircraft entered Taiwan’s ADIZ. It was the largest number of planes ever dispatched by the People’s Liberation Army into the zone, with some of them also skirting around the southern tip and east coast of the island before turning back

One senior Taiwanese government official said Beijing could not restrain itself after the Nato communique — and a G7 summit statement issued just days earlier — criticised Beijing’s activities in the Taiwan Strait and its crackdown on Hong Kong’s pro-democracy movement.

“Beijing wanted to prove wrong those in the west whom they accuse of hyping a China threat theory,” the official said, referring to the reduced military activity in May and early June. “But of course they could not keep it up. Once Taiwan gets a little support, they have to react.”

Chinese analysts said Beijing had no choice but to show its resolve after the Biden administration accelerated its efforts to build a “united front” against China at the G7 and Nato summits — something President Xi Jinping’s administration had long feared but that never materialised when Donald Trump was US president.

“The G7 and Nato have been distorted into anti-China platforms,” said Victor Gao, a former Chinese diplomat now at the Center for China and Globalisation, a Beijing-backed think-tank. “There are increasingly large forces in China that believe if the US wants to single out China as its fundamental enemy, then let the US have an enemy.”

Beijing also responded to the G7’s criticism of its policies in Hong Kong with a show of force in the territory, where it recently snuffed out the only public commemoration of the 1989 Tiananmen Square massacre on Chinese soil. In the early hours of Thursday, police arrested senior staff at the pro-democracy Apple Daily newspaper for alleged “collusion with a foreign country or with external elements to endanger national security”.

A senior officer with the Hong Kong police force’s national security division later said the arrests were related in part to more than 30 articles published in the newspaper.

Beijing’s actions around Taiwan and in Hong Kong were matched by scathing rhetoric. Zhao Lijian, a foreign ministry spokesperson and one of China’s most outspoken diplomats, said the G7 communique “exposed the bad intentions of the US and a few other countries to create antagonism and widen differences with China”.

“The US is sick,” Zhao added. “The G7 should take its pulse and prescribe medicine for it.”

Such comments appeared to contradict recent instructions from Xi, who said last month that official propaganda should “set the right tone, be open and confident but also modest, humble and strive to create a credible, loveable and respectable image of China”.

Xi, however, also noted that China was involved in a “public opinion struggle” internationally. “Powerful anti-China forces in western society want to attack and discredit China,” Lu Shaye, China’s ambassador in Paris, said last week in a state media interview. “We must fight back to safeguard our own interests. Our sovereign security and development interests are inviolable.”

Yun Sun, a China foreign policy expert at the Stimson Center in Washington, said such rhetoric reflected growing alarm in Xi’s administration. “There is a real concern in Beijing that a united front is forming [and] includes many elements that China does not wish to see such as Taiwan, maritime security and human rights,” Sun said. “That’s why we are seeing some unusually harsh responses from Beijing on G7 and Nato.”

Hong Kong police blow out candles lit by activists to mark the 1989 Tiananmen Square massacre. Beijing responded to G7 criticism of its policies in Hong Kong with a show of force in the territory © AP

“Germany, France and other EU countries are hesitant to confront China as [openly as] the US,” added Shi Yinhong, a professor at Renmin University in Beijing, who advises the State Council on foreign policy issues. “But they are now closer to the US when it comes to dealing with China.”

Some Chinese officials and analysts argue that while Beijing will continue to respond forcefully when criticised over Taiwan, Hong Kong or other “core interests”, this does not preclude co-operation with the US on other issues such as climate change or global tax reform.

Fu Ying, a former Chinese ambassador to the UK, said at a recent seminar that the Biden administration wanted to “prevent China from moving forward to replace the US”. But, she added, “we hope [technological and economic] competition can be managed to ensure it is on a positive track, pushing each other to seek joint development and improvement”.

Beijing “should stand firm on matters of principle but not be too distracted by anti-China hostility”, Gao said. “In the long term China will have a larger economy than the US — no one can change that. Time is on China’s side.”

Additional reporting by Xinning Liu in Beijing

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Behind the scenes at China TV: soft power and state propaganda




The primetime English-language news show by China’s state broadcaster was about to go on air when a copy editor in Beijing was handed a script that needed an urgent last-minute polish.

Gary Anglebrandt’s job at China Global Television Network was to check for errors in grammar and spelling before passing the text to the on-duty laoshi — teacher in Mandarin — who controls all copy for political correctness before anything goes on air.

When his colleague approached him with the “sheepish look” of a person carrying something “abhorrent”, he realised something was wrong. It turned out to be the pre-trial confession of Simon Cheng, a former employee of the UK consulate in Hong Kong, who has since claimed he was tortured by police and forced to admit to the crimes that warranted his detention.

“I knew there was no point in going to the producer and saying ‘we’re not going to run this,’” says Anglebrandt, who worked for the broadcaster between 2016 and 2019 and has provided a rare insight into its operations. “They will say ‘it came from upstairs, we have to run it.’”

Gary Anglebrandt (photographed this month in Michigan) resigned from CGTN because of its coverage of the pro-democracy protests in Hong Kong © Steve Koss/FT

Anglebrandt, who had at the time already handed in his resignation as he did not feel comfortable with CGTN’s coverage of the pro-democracy protests in Hong Kong, adds: “If you say no, you are essentially going against the entire Chinese system.”

This pressure from “upstairs” that Anglebrandt describes is one of the main reasons the channel has clashed with media regulators in some of the western countries it has targeted.

His testimony also gets to the heart of the dilemma that China has faced over the past decade as it has tried to use massive investments in foreign-language media to improve its international image.

The international expansion of CGTN has been a major part of a Chinese soft power push that began in earnest with the Beijing Olympics in 2008. The channel launched well-funded broadcasting hubs in Washington and Nairobi in 2011 and then in London in 2019.

For China, the channel is part of a geopolitical battle for the hearts and minds of the world. Angered by what it views as the bias of the international media against the ruling Communist party, Beijing has thrown considerable resources behind its own media groups in a bid to spread “a Chinese perspective” around the world. It has been looking to develop tools that will rival the global reach of the BBC in the media sector or Hollywood in entertainment. And in some parts of the world, CGTN has won a large viewership.

But it is precisely the role played by the Chinese Communist party in CGTN that has hampered its ability to find a broader audience. Authorities in both the US and UK have taken steps to limit its reach after investigations concluded that CGTN is not merely funded by the state but takes its cues directly from the party.

The most public and humiliating reverse was the decision in February by Ofcom, the UK regulator, to revoke its British broadcasting licence — a decision that was likely influenced by CGTN’s broadcast of forced confessions.

In a political and media environment as tightly controlled as that in China, CGTN has struggled to draw a credible distinction between its “Chinese perspective” on the world and state propaganda.

Sarah Cook, a researcher at the US-funded democracy group Freedom House, says that judging by the number of countries in which CGTN programmes are available on television sets and social media platforms, the network has been “pretty effective”.

However many people, she says, especially in the West are “rightly sceptical of content that they know is coming from Chinese state media”.

Masked protesters demonstrate in Hong Kong following the detention of former UK consulate worker Simon Cheng in 2019
A protest in Hong Kong following the detention of former UK consulate worker Simon Cheng in 2019 © Nicola Asfouri/AFP via Getty Images

Stricter control

A decade after its big expansion began, little is known about the inner workings of CGTN’s newsrooms — even though during that time it has grown to reach just over 200m households outside of China, according to estimates by Ampere Analysis.

Beijing insists that CGTN is no different to any state-backed broadcaster and is committed to principles of “objectivity, rationality and balance”. 

Former CGTN journalists and executives dispute this image, arguing that while the foreign hubs were free to produce legitimate journalistic work on some issues, reporters and editors were blocked from approaching stories that exposed China to criticism.

Out of the 12 former employees who spoke to the Financial Times, most have asked to remain anonymous. Several cite fear of retaliation, especially following the arrest of former CGTN news anchor Cheng Lei. The Australian national was charged in February with leaking state secrets overseas and scrubbed off the network.

CGTN declined to comment for this article.

CGTN anchor Cheng Lei in the studio. She was charged with leaking state secrets and dropped from the network
In February CGTN anchor Cheng Lei was charged with leaking state secrets and dropped from the network © David Fitzgerald/Sportsfile for Web Summit via Getty Images

One former senior editor in Washington, who joined after being assured the newsroom would operate much like its western equivalents, says he soon realised the executives transplanted from Beijing had “much stricter control of the product”.

“Nothing was allowed to appear in script or anchor pages that reflected anything bad about China,” he says, recounting a story that was quietly dropped as it questioned the behaviour of a Chinese subcontractor operating in Europe.

But CGTN’s implied editorial rules did at times lead to confrontational situations, one of which came during a 2012 visit to Washington by Xi Jinping, then vice-president of China. His visit to the White House drew protests against China’s policies towards Tibet, Taiwan and the spiritual movement Falun Gong, prompting debates in the newsroom about how their presence should be explained.

An early script that mentioned the protest ended up with “red marks all over”, but when former White House Correspondent Jessica Stone did her live segment, the protesters were so loud she had to mention them.

“There was panic in the newsroom, all the bosses huddled over and began yelling,” one former editor says, adding that several people involved with the broadcast were made to promise in private meetings that such transgressions would never be repeated.

A cyclist passes CGTN’s Beijing headquarters
CGTN’s Beijing headquarters, where most of the channel’s 24-hour programming is produced © Nicolas Asfouri/AFP via Getty Images

‘Wolf warrior’ diplomacy

Still, the foreign hubs enjoy greater independence than the Beijing headquarters, which produces the majority of the programmes that run on CGTN’s 24-hour broadcasts.

In Beijing, “the face of censorship in the newsroom is the laoshi,” says Anglebrandt, a view confirmed by another former producer and a news anchor. “There are always two or three in the broadcast newsroom and all scripts go from the Chinese writers to the foreign copy editors who make [the English] sound more natural, and then to the laoshi who checks it for political correctness,” he adds.

The bosses in charge of CGTN’s foreign newsrooms knew they would have to be different from that in Beijing. Alan Adair, who set up the Washington hub’s technical operations in 2011 after five years at Al Jazeera, says it tried to “break away from Beijing” in terms of the channel’s look but added there were still “no-go areas”.

Adair says Ma Jing, the executive in charge of the operation at the time, was keen to poach staff from Qatari-funded Al Jazeera, which won notoriety when it aired video messages from former al-Qaeda leader Osama bin Laden.

“They liked what they had done with Al Jazeera, transforming what was known as bin Laden’s channel to something that was being watched in the White House,” says one former CGTN executive.

Pro-Tibet protesters carry flags in London during Xi Jinping’s visit to Washington in 2012
Pro-Tibet protests during then vice-president Xi Jinping’s visit to Washington in 2012 prompted debate in the CGTN newsroom about how the demonstrations should be reported © Karen Bleier/AFP via Getty Images

The network also turned to WPP-owned advertising agency Ogilvy, which won a contract with the network after it offered to help recruit “credible” experts to sign opinion pieces for its website promoting “the need for a voice that understands what is really going on in Asia”.

Christopher Graves, the former chief executive of Ogilvy Public Relations who met with senior CGTN executives, says that “back in 2011, things felt more optimistic than today, and there was great hope for a US-China engagement going forward, and hope for a changing China”.

Cook, the researcher, argues that growing international scrutiny of the Chinese government’s conduct, especially its treatment of Uyghurs in the northwestern province of Xinjiang, where as many as 1m people have been detained, has unleashed a more “aggressive kind of reporting, the wolf warrior diplomacy stuff”, on CGTN’s channels.

Stone, the Washington correspondent who left CGTN in 2019 after nearly eight years at the network, says she is “grateful” for her time there and the insights she garnered into “the Chinese mindset” but she eventually left due to editorial concerns.

She too argues that CGTN was a different organisation a decade ago. It had been an “experiment” under previous president Hu Jintao but edicts became stricter, she adds, when Xi took over the leadership of China in 2013. “I did see a lot of change from the beginning to the end,” she says.

The mood in Washington also became much more critical of China, especially during the Trump administration.

“Then Xinjiang happened,” Stone says. “I was seeing a lot of pressure over Xinjiang and words put into people’s mouths and I was not interested in having any part of that.”

Different propaganda

The Chinese government’s ruminations on how best to communicate with the outside world began decades ago. But it was not until the 2008 Beijing Olympics, when foreign media outlets turned their attention to China’s relationship with Tibet, rampant air pollution and various claims of human rights violations, that the CCP decided it needed to urgently take charge of its image abroad.

Hoping to build international influence in line with “China’s economic and social development as well as its global status”, as a 2009 document put it, the central government set out to learn from experts in the field.

One former senior editor at CGTN’s Washington office recounts when one of his bosses sent from Beijing to run the network explained how they had been instructed to find out more about soft power from the Americans.

“Mickey Mouse laughing in the happiest place of the world puts a good face on the US globally,” he remembers the executive saying over an after-work martini. “The Chinese are just beginning to learn how to do that, and that is one of the reasons we are here.”

A screen shows a CGTN programme titled ‘How Xi Jinping Pursues Happiness for People’
A CGTN programme promoting Xi Jinping’s leadership: ‘Nothing was allowed to appear in script or anchor pages that reflected anything bad about China,’ says a former editor © Leon Neal/Getty Images

The network, which used the name of its domestic parent group CCTV until concern over the awkward namesake with the camera surveillance system prompted a rebrand in foreign markets, was in its first years relatively successful and even won multiple awards, including an Emmy for a short documentary.

But by 2019, when CGTN opened its state of the art European hub in London, regulators in the US had forced several Chinese media outlets to register as foreign agents, later requiring staff to comply with the same rules that govern foreign embassies.

“It became personal because the US government is now able to pull all your records, and I’m not a lobbyist, I’m a journalist,” says Stone, who now works for outlets such as Fox News.

The Trump administration’s hostile stance towards Beijing fuelled its push to limit the influence of CGTN, but so did a little-advertised restructure of Chinese media assets that was designed to strengthen the Communist party’s control over state broadcasters. In 2018, China’s Central Propaganda Department usurped a more liberal body and became the main watchdog of China Media Group, a conglomerate formed the same year that includes CGTN.

An adviser to the State Council, China’s chief administrative authority, says the reform greatly impacted how the country’s foreign propaganda operates. Unlike the former regulatory body, which was staffed by officials with international experience and expertise, the propaganda department has traditionally focused on China’s domestic media and lacks skills needed to translate edicts from the top into something that can be digested abroad.

“The Central Propaganda Department is treating foreign and domestic propaganda as the same thing even though the two are very different,” the adviser says.

Cook connects “more demonising content . . . flowing into the area of disinformation”, such as Chinese reports that the Covid-19 pandemic originated in the US, directly with the move to bring state media channels under control of the country’s propaganda department.

“Are they accessing much larger global audiences than they used to do? Yes,” says Cook. However, she argues that the success of China’s attempts at becoming the global superpower is not easy to assess.

Pew Research surveys show that the proportion of people with a “favourable” view of China has largely gone down in the past decade, particularly in countries where CGTN has established a presence.

It is, however, difficult to draw straight conclusions from trends in other countries. In Brazil, China’s most important economic partner in South America, attitudes have remained fairly steady and they have improved in Israel, a strategic ally in the Middle East.

“The only area where CGTN can point to great success is in Africa,” says one former adviser to the network. America, he says, has been “pretty much a disaster”.

A 2008 protest in Hong Kong against remarks made about the Chinese by a CNN commentator. Part of CGTN’s mission is to correct misleading perceptions of China overseas
A 2008 protest in Hong Kong against remarks made about the Chinese by a CNN commentator. Part of CGTN’s mission is to correct misleading perceptions of China overseas © Bobby Yip/Reuters

Online push

The most stinging rebuke CGTN has received was the decision in February by Ofcom, the UK regulator, to revoke its British broadcasting licence. But since then, CGTN has quietly regained its right to air in several European countries including the UK by moving under French jurisdiction.

CGTN is putting much more emphasis on online platforms rather than television, whose audience is declining. One reason for this shift is the growing scrutiny from foreign regulators. “They have realised it is much more difficult [for foreign authorities] to control what comes out over the internet,” a former executive says.

A digital strategy does, however, come with its own challenges. Tweets by CGTN are labelled “state-affiliated” by Twitter. Google-owned YouTube warns CGTN viewers that it is funded by the Chinese government — in contrast to the BBC’s World Service, which is independent from the government and simply labelled a public service broadcaster.

Still, online rules are significantly less stringent than those that govern traditional broadcasting. CGTN’s broadcasts of allegedly forced confessions, which in March contributed to a £225,000 fine in the UK, are still available on YouTube, which told the FT the video of Cheng’s pre-trial confession did not violate its guidelines.

In the EU, countries are increasingly worried over alleged Chinese influence-buying and propaganda. The European Commission has acknowledged “growing concern over Chinese state media engagement in Europe”, with state-affiliated media representatives making “extensive use” of the 27-member EU’s openness to promote Beijing’s official positions.

According to a report published in April by the EU’s diplomatic service, state media outlets such as CGTN have “intensively” promoted Chinese Covid-19 vaccines and attempted to “undermine trust in western-made vaccines, EU institutions and western/European vaccination strategies”.

Other aspects of Beijing’s influence-building have come in the shape of coronavirus assistance programmes and the subsequent media reports about them. “It is not direct propaganda, but it is the same thing,” says the former senior editor at CGTN’s Washington office. “‘Hello, I’m from China, I’m here to save you’ — if they can figure out how to manufacture a Chinese Mickey Mouse, they will do it.”

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Worst drought in a century hits Brazil as it fights to overcome Covid




The worst drought in almost a century has left millions of Brazilians facing water shortages and the risk of power blackouts, complicating the country’s efforts to recover from the devastating impact of the coronavirus pandemic.

The agricultural centres in São Paulo state and Mato Grosso do Sul have been worse affected, after the November-March rainy season produced the lowest level of rainfall in 20 years.

Water levels in the Cantareira system of reservoirs, which serves about 7.5m people in São Paulo city, dropped to below one-tenth of its capacity this year. Brazil’s mines and energy ministry has called it country’s worst drought in 91 years.

“Lately we’ve been without water every other day, but it was usually at night. But on Thursday we had no water all day,” said Nilza Maria Silva Duarte from São Paulo’s working class east zone.

José Francisco Goncalves, an ecology professor at the University of Brasília, said the drought was having a devastating effect on the important farming industry, which accounts for about 30 per cent of gross domestic product.

“The lack of water in the rivers and reservoirs means farmers won’t be able to irrigate their lands, which will lead to a fall in agricultural production,” he said.

A farmworker stands beside the dry banks of the Jacarei River © Jonne Roriz/Bloomberg

He predicted the drought would “fuel inflation and commodity prices on a global scale, and decrease Brazilian GDP. It has direct repercussions.”

Jose Odilon, a farmer from Ribeirão Preto, a booming agricultural hub in the interior of São Paulo state, said his sugarcane crop had been badly affected.

His vast plantation is dotted with heavy farming equipment — much of it automated — to strip the cane of its leaves, harvest the stalk and then dump it into an awaiting fleet of Mercedes lorries for transport to the local mills.

“We’re going to suffer more due to the lack of moisture in the soil,” he explained. “This is really hindering development.”

Odilon blamed an inversion of the La Nina weather pattern, which has meant more rain falling on the Amazon basin and less in the country’s south.

Map showing extreme drought in southern Brazil

Marcelo Laterman, a climate campaigner from Greenpeace Brazil, said the drought was “directly connected” to deforestation in the Amazon, which last year surged to its highest level in more than a decade. The forest’s water recycling system plays a vital role in distributing rainfall across South America.

As hydroelectric power accounts for about 65 per cent of Brazil’s electricity mix, the drought has also curtailed electricity production. This has forced a switch to the more expensive thermal power, pushing electricity prices for businesses and consumers up to 40 per cent higher this year, according to estimates.

“Our current model based on hydroelectric and thermal energy is not sustainable,” Laterman said. “The increase in droughts puts pressure on the reservoirs of hydroelectric plants and the answer we have is the activation of thermoelectric plants — which, in addition to being expensive, increases greenhouse gas emissions and worsens the problem.”

Brazil’s government has issues warnings of possible blackouts, stoking fears that energy use will be rationed. Local media have reported that the government was preparing a decree on rationing to control electricity use in times of shortages. The ministry of mines and energy said it was discussing energy rationing with “large consumers and industry for times of greater energy demand.”

Low water levels in the Jacarei River can be seen at the Jaguari Reservoir near Joanopolis, Sao Paulo state © Jonne Roriz/Bloomberg

Silva Duarte said: “Our electricity bill is definitely more expensive, and I don’t know how we’re going to manage because our salary hasn’t increased. They said prices will increase further. Where will it stop?”

The drought comes as Brazil grapples with the economic and social effects of the pandemic. Almost half a million Brazilians have died from Covid-19, the second worst of any country after the US, and the death rate remains above 2,000 per day.

The country’s vaccine rollout has also lagged and is only starting to gather pace. Just over a quarter of Brazil’s 212m people have now received a first shot.

With consumer prices increasing more than 8 per cent in the year to May, inflation has combined with high levels of unemployment to hit the nation’s poorest citizens.

Less than half of Brazilians now have access to adequate food all the time, with 19m people, or 9 per cent of its inhabitants, facing hunger, according to a the Brazilian Research Network on Food and Nutritional Sovereignty and Security.

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