History Resolution - WMCC Talks - New Provincial Party Chiefs - Steel Cracks between Iron Brothers - Property Tax - Private Sector & Anti-Monopoly Actions - Biden on Taiwan - Japan-China Friction
I. India-China Ties
Let’s begin with the boundary issue. It was, of course, this week in 1962 that hostilities broke out between India and China.
Shishir Gupta reports for HT that India and China have agreed to hold another meeting of Working Mechanism for Consultation and Coordination (WMCC) on border affairs this month to resolve the deadlock arising out of the 13th round of senior commanders meeting on October 10. Both sides have agreed to hold the meeting, but the dates are still to be finalised. It’s a short story, with some interesting bits. For instance, Gupta writes that the PLA agreed to step back from Hot Springs, but not to “move back to (its) permanent base as has been stipulated in the past meetings of India-China leadership.” The report also says that the Indian side “is also in no hurry with its formations matching the PLA build-up across the LAC.”
That’s the perfect segue to note that some of the most prominent Indian defense journalists that I follow were in Arunachal this week. So Dinakar Peri reports for The Hindu that “India’s military posture in the Tawang sector of Arunachal Pradesh has added an offensive punch with the Army deploying Pinaka and Smerch long range, multi-barrel rocket launch systems as well as BrahMos supersonic cruise missiles in the region.”
Manu Pubby reports for ET that:
“Eastern Army Commander Lt. Gen. Manoj Pande said several new systems were being inducted along the LAC, which included all-terrain vehicles for enhanced mobility, drone and counter drone systems, precision guided ammunition, night vision capability and modern surveillance radars. Among the new equipment being brought into the sector are the air transportable M 777 Ultra Light Howitzers, which officers describe as a significant capability enhancement. Located at forward positions near the LAC, these guns have been able to achieve accurate firing capabilities to a range of almost 40 km, thanks to high altitude conditions...Infantry troops posted at locations upwards of 14,000 feet have been equipped with new Sig Sauer 716 assault rifles besides a range of force multipliers like tactical drones and battlefield surveillance radars that can track the movement of PLA troops close to the LAC. A key enhancement has been the recent deployment of upgraded L 70 air defence guns at forward locations in the sector.”
Do note that while Indian media was reporting these deployments, Chinese media and analysts were telling us about China’s deployments. So, one unidentified source told SCMP’s Minnie Chan that the “PLA has deployed more than 100 PCL-181 light, truck-mounted howitzers along borders with India. The firing range of this Chinese-developed launcher is double that of the M777.” The report also quotes Beijing-based military expert Zhou Chenming as saying that the PLA’s Western Theatre Command had increased grain storage in frontline observation posts along the LAC for the winter. The Global Times, on the other hand, is annoyed that Indian soldiers are learning Tibetology. For GT, this is proof of the intention to station troops in the disputed border area in the long term.
In the Indian Express, meanwhile, Lt. General Pande was quoted talking about PLA patrolling.
“In terms of (the) number of patrols coming close to the LAC from the other side, there has been only a marginal increase in activity vis-a-vis (the) last couple of years...Both sides are attempting to develop infrastructure closer to the LAC,” which, he said, “again leads to certain issues at times...Since this infrastructure has come up close to the LAC, there has been a marginal increase in border defence troops,” on China’s side. He, however, said that “some reserve formations that were mobilised, continue to remain in the training areas, but that again is in the depth”. Across the Eastern Command, Pande said that in “their traditional training areas, their exercises have been happening”, however, “this year the scale has maybe increased and they’re going in for a longer duration”. Asked about the border villages being built by China, he said “for us, it is a concern how it will have dual civil and military use”.
Amid all this, there was a comment from CDS Bipin Rawat on the boundary tensions, saying that “in 2020, we had a little bit of a problem. And issues are now being resolved through talks that are happening at the military level, the foreign affairs level and at the political level...This is not the first time this has happened...Since there is suspicion between the two countries, they (issues) take time to resolve…” Later in the week, speaking in Bangalore, Rawat said that among India’s new security challenges, the “most worrisome are China’s technological advances in the spheres of cyber and space domain, which often transcend beyond the military, to include critical national infrastructure as well.”
Moving on, last week, I covered India-China trade data. This week, we had comments from the Indian Foreign Secretary and Ambassador to China. Harsh Vardhan Shringla spoke about the trade imbalance and the impact of boundary tensions, while Amb. Vikram Misri spoke about the possibility of expanding access to the Chinese market for Indian firms, particularly those in the pharmaceutical sector.
Finally, let’s look at some of the discussion around the China-Bhutan border talks. Manish Tewari writes
“India would need to be very hawk-eyed in the Sino-Bhutanese negotiations about is how the play develops in the region around and abounding China’s Chumbi Valley that lies north of the Doklam plateau. Both the Chumbi valley and the Siliguri Corridor in West Bengal that is situated to the south of Doklam, are key tactical chokepoints. They constitute both a criticality and vulnerability for both the nations.”
He also mulls over the reasons for India-China boundary negotiations failing to produce a resolution.
“Why have the Sino-Indian border talks not made progress despite myriad rounds of talks between the special representatives of both sides and why are the border talks currently stalemated? Is it a lack of flexibility and cussedness on both sides or does China consider it a convenient lever to keep India off-balance? In either case, India should revisit its China strategy with a fresh pair of eyes.”
Chinese media have hailed the MoU, using it as a rhetorical stick. CGTN, for instance, carried this opinion piece:
“At a time when India is pursuing hegemony by coercion over its neighbors, the MoU is a victory for the region. It demonstrates that respectable, bilateral diplomacy has triumphed over New Delhi's attempts to dominate, control and bully its neighbours, showing India has little ability to regionally isolate China.”
But this is rhetoric, which one shouldn’t be surprised by. Here’s a different view by Zhang Jiadong, professor at the Center for American Studies of Fudan University. He told the Global Times, there should not be an over-optimistic view on the progress in China-Bhutan relations considering the numerous challenges that lie ahead.
He further added:
“India's infiltration into Bhutan is very strong. It would be impossible for India not to know about such a major progress [the MoU] and it is also unreal for Bhutan to hide from India or even challenge it,” Zhang Jiadong said, noting that, “although India could control and infiltrate Bhutan, Bhutan is an independent country and India does not want to be seen as a bully in the world.”
Also Read:
Neither MoD nor MHA can resolve the unacceptable state of affairs on Indo-Tibetan Border
China may push Bhutan for ‘definitive response’ on border dispute: Ex-envoy Nambiar on MoU
II. Sixth Plenum, History Resolution & New Provincial Party Chiefs
The sixth plenary session of the 19th Central Committee will be held in Beijing from Nov. 8 to 11. At the session, the Party will be clearing a history resolution, titled Resolution on the Major Achievements and Historical Experience of the Party’s Century of Struggle. The report tells us that the Politburo met on Monday to discuss the resolution. It listened to a report on soliciting opinions for drafting the resolution and decided to submit the draft, after revisions, to the plenary session for deliberation.
The report also tells us that Xi Jinping “presided over a symposium for non-Party members to listen to the views of central committees of the democratic parties, heads of the All-China Federation of Industry and Commerce, and individuals with no party affiliation. All regions, departments, sectors and deputies to the 19th National Congress of the Communist Party of China fully affirmed the draft resolution, unanimously endorsed its framework, structure and main content, and held that the draft is realistic, respects history, has a clear theme, and summarises comprehensively. At the same time, many good comments and suggestions were put forward. The draft resolution has absorbed the opinions and suggestions of all regions, departments and sectors.” 会议认为,这次征求意见发扬民主、集思广益,广泛听取了党内外各方面意见和建议。习近平总书记主持召开党外人士座谈会,当面听取各民主党派中央、全国工商联负责人和无党派人士代表的意见。各地区各部门各方面和党的十九大代表对决议稿给予充分肯定,一致赞成决议稿的框架结构和主要内容,认为决议稿实事求是、尊重历史、主题鲜明、总结全面,同时提出许多很好的意见和建议。决议稿吸收了各地区各部门各方面意见和建议.
The statement issued after the Politburo meeting also pointed that “over the past 100 years, the Communist Party of China has faithfully fulfilled his original mission, united and led the people of all nationalities to paint a magnificent portrait in the history of human development on the vast land of China, which has enabled the Chinese people who have been enslaved and bullied for more than a century in modern times to stand up. It has enabled the Chinese nation, with a civilization history of more than 5,000 years, to move towards comprehensive modernization. The Party has enabled the socialist ideology, with a history of more than 500 years, to blaze a trail of success in the world’s most populous country and enabled China to catch up with the times through great strides, opening up bright prospects for the great rejuvenation of the Chinese nation.” 会议指出,一百年来,中国共产党忠实践行初心使命,团结带领全国各族人民在中国这片广袤的土地上绘就了人类发展史上波澜壮阔的壮美画卷,使近代一百多年饱受奴役和欺凌的中国人民站立起来,使具有五千多年文明历史的中华民族全面迈向现代化,使具有五百多年历史的社会主义思想在世界上人口最多的国家开辟出成功道路,使新中国大踏步赶上时代,中华民族伟大复兴展现出光明前景.
Xinhua English has nicely detailed the next bit: “It added that Chinese Communists, with Mao Zedong, Deng Xiaoping, Jiang Zemin, and Hu Jintao as chief representatives, led the whole Party and people of all ethnic groups in achieving vital progress in the revolution, construction and reform, with precious experience accumulated. Since the 18th CPC National Congress, the CPC Central Committee with Xi Jinping at the core has led the whole Party and people of all ethnic groups in making new notable achievements and accumulating new precious experience. Socialism with Chinese characteristics has demonstrated its strong vitality. The Party, the military, and the public became united as never before. China’s international status has further consolidated, the statement said. All these factors provide more refined institutional guarantees, firmer material foundations, and more spiritual power for achieving national rejuvenation, the statement said.”
Then it says:
“The CPC and the Chinese people have solemnly declared to the world through heroic and tenacious struggle that the Chinese nation has ushered in a great leap from standing up, becoming rich to becoming strong, and the realisation of the great rejuvenation of the Chinese nation has become a historical inevitability.” 中国共产党和中国人民以英勇顽强的奋斗向世界庄严宣告,中华民族迎来了从站起来、富起来到强起来的伟大飞跃,实现中华民族伟大复兴进入了不可逆转的历史进程.
The last paragraph talks about how the Party thrives in adversity and that it must be vigilant and prepared for potential dangers, even in peace times, and the importance of maintaining flesh-and-blood ties with the masses.
I find myself in agreement with this assessment below:
Finally, there were some big personnel changes this week, with new Party chiefs being announced for the provinces of Heilongjiang, Jiangsu, Jiangxi and Hunan, Yunnan and the Tibet Autonomous Region and Guangxi Zhuang Autonomous Region
Xu Qin has been appointed as secretary of the CPC Heilongjiang Provincial Committee, according to the decision.
Wu Zhenglong has been appointed as secretary of the CPC Jiangsu Provincial Committee, replacing Lou Qinjian.
Yi Lianhong has been appointed as secretary of the CPC Jiangxi Provincial Committee, replacing Liu Qi.
Zhang Qingwei has been appointed as secretary of the CPC Hunan Provincial Committee to replace Xu Dazhe, and Zhang no longer serves as secretary of the CPC Heilongjiang Provincial Committee.
Wang Junzheng has been appointed as secretary of the CPC Tibet Autonomous Regional Committee, replacing Wu Yingjie
Liu Ning has been appointed as secretary of the Guangxi Zhuang Autonomous Regional Committee of the CPC, replacing Lu Xinshe.
Wang Ning has been appointed as secretary of the Yunnan Provincial Committee of the CPC, replacing Ruan Chengfa.
Do check out this thread in this regard:
Do note that Wang Junzheng, TAR’s new Party chief, was earlier the deputy secretary of the CPC committee of Xinjiang Uighur Autonomous Region and political commissar of the Xinjiang Production and Construction Corps. Wang has been sanctioned by the US, EU, UK and Canada for his role in human rights violations in Xinjiang.
Also Read:
Xizang’s new Party chief meets press as region invites world to visit – with unbiased views - GT has been insistent on using Xizang for Tibet, while other official media outlets in China haven’t.
III. Region Watch
Every good friendship reaches a stage where one needs a little separation from their partner. You enjoy learning and growing together but there comes a point when you realise you would like your own space. So while the friendship is mutually beneficial, it can also get suffocating (harmful even) when it takes over all aspects of your life. In international politics, the demand for a breather in a bilateral relationship usually comes from lobbies and civil society groups when they ask their government to protect domestic interests.
In its appeal to the Prime Minister, the Pakistan Association of Large Steel Producers (PALSP) sought a ban on Chinese steel imports being used in the China-Pakistan Economic Corridor (CPEC).
According to news reports, Pakistan is contractually bound to use only Chinese products on various CPEC projects, resulting in the duty-free import of construction materials.
In 2016, the State Bank of Pakistan had reported that steel usage would be extensive in CPEC-related projects, predicting demand could run in millions of tons over subsequent years – a prediction that has come to realisation despite the delays on several projects due to security concerns and bureaucratic hurdles.
In the face of significant losses, the PALSP has argued that steel imported from China is no better than that which is locally produced. It would be foolish to ignore Pakistan’s domestic politics as critical to the CPEC’s success. However, to the displeasure of the lobby group, it is doubtful that their grievance will make a difference in the construction of the already sluggish CPEC. The understanding that the corridor will enhance the well-being of people throughout the country and bring long-term prosperity and stability, is a key motivator for Islamabad to oblige all of Beijing's demands.
Pakistan and China view the CPEC as a source of possible synergy between their respective national development strategies, which may help the two countries translate their close political cooperation into multifaceted economic cooperation, and achieve win-win outcomes. China, for its part, has shown both strategic patience, and caution in the development of its ambitious project. So even as domestic producers insist cheap imports are pushing the local Pakistan industry to a breaking point, Meng Wei, a spokesperson for the National Development and Reform Commission (NDRC), said that the CPEC has made significant progress. Separation between these friends? I’d say is highly improbable.
Also Read:
IV. Economic Data, Backing Private Sector, Property Tax & New Laws
Let’s begin with the story about Q3 GDP data.
NBS data show that China’ Q3 GDP grew at 4.9%.
For the first nine months of the year, China’s GDP expanded 9.8% compared with a year earlier
Industrial output rose 3.1% in September from a year earlier, slowing from August’s 5.3%.
Fixed-asset investment grew 7.3% in the first three quarters of the year, down from the 8.9% growth pace in the January-to-August period.
Retail sales rose 4.4% in September from a year earlier, rebounding from August’s 2.5% year-over-year increase.
Urban unemployment rate in September was 4.9%. The rate for those aged 16 to 24 was 14.6%.
We also got data on FDI into China for the January to September period. Foreign direct investment into the Chinese mainland, in actual use, rose 19.6 percent year on year in the first nine months of the year, the Ministry of Commerce said on Wednesday. During the Jan.-Sept. period, non-financial FDI into the country totalled 859.5 billion yuan. In U.S. dollar terms, FDI into the Chinese mainland totalled 129.3 billion U.S. dollars, up 25.2 percent year on year.
Next, earlier in the week, we had the 34th collective study session of the Politburo, which focussed on the digital economy. You can read my full breakdown of the meeting in my daily tracker. But here are some key points that Xi spoke about:
Digital transformation is key to establish new national competitive advantages
China needs to work hard on key and core technologies, achieve high-level self-reliance and self-improvement as soon as possible, and keep the autonomy of developing the digital economy firmly in its own hands
Xi talked about the need to grasp the direction of digitalization, networking and intelligentization, promote the digitalization of manufacturing, service and agriculture, and transform traditional industries with the aim of improving total factor productivity - So basically, real economy must be emphasised over consumer Internet.
We will correct and standardise behaviours and practices that harm people’s interests and impede fair competition in the course of development, prevent platform monopoly and disorderly expansion of capital, and investigate and punish monopolies and unfair competition in accordance with the law.
Moving on, we had comments from Li Keqiang and Liu He, promising support for the private sector and entrepreneurs, while cracking down on unfair competition and monopolies. Li addressed the 2021 National Mass Innovation and Entrepreneurship Week in Beijing. Li said that China needs to “promote mass entrepreneurship and innovation to a new level, foster more market players, and expand the space for economic development.” He promised “tax incentives and inclusive finance policies for small and micro businesses;” he talked about “opposing monopolies and unfair competition,” and maintaining a “fair and just market order”; focussing entrepreneurship to deal with “key and core technologies” related issues.
Liu’s comments, meanwhile, were about the financial system. He argued that:
the financial system going forward should “better serve the real economy”
it is important to promote high-level opening-up, create a fair market environment, and protect the legitimate rights and interests of foreign companies operating in China
it is important to “coordinate the prevention and control of financial risks”
real estate sector risks are generally under control, reasonable capital needs are being met
We also had comments from Guo Shuqing, Chairman of the China Banking and Insurance Regulatory Commission, on the financial sector this week. He too suggested that we should expect more anti-monopoly and unfair business practices crackdown. But he also argued that the private sector remains important:
“By the end of August, the balance of loans to private enterprises reached 52.5 trillion yuan, an increase of 4.42 trillion yuan over the beginning of the year, an increase of 11.5%. This year, more than 70 million private enterprises have been issued loans, the number of loan households increased by 30%. In the first eight months, 53% of new corporate-type loans issued by banking institutions were granted to private enterprises, which matches its share in the national economy. By the end of the third quarter, the balance of loans for inclusive small and micro enterprises was 18.6 trillion yuan, up 27.4% year-on-year. Currently, China's loan coverage rate for small and micro enterprises is roughly 30%…
Data is telling us that Beijing’s regulatory actions are not really aimed at snuffing out the private sector. There’s, in fact, more regulatory innovation underway to try and direct capital towards small enterprises. This SCMP story on Guo’s comments captures some of these moves.
Private firms, which often do not have enough collateral, can find it difficult to secure bank loans. This has forced the central bank to use policy tools such as special relending quotas, and in some cases administrative orders, to accomplish the government’s goals. “For the next step, we’ll try to create a better financial environment for the private economy,” Guo said. “We’ll fully tap the potential of securities markets, private equity capital and angel funds to expand their financing channels in the private economy.” China has already announced the establishment of the Beijing Stock Exchange, the mainland’s third exchange after Shanghai and Shenzhen, and it has been designated as a key platform to raise funds for private firms, including small and medium-sized businesses. Additionally, Guo encouraged the sharing of business information such as utility bill payments, registration information and taxes so banks can more easily evaluate private firms’ creditworthiness.
Anyway, with regard to the last of Liu He’s comments about the property sector risks, there were a few important developments this week that are worth noting.
First, Bloomberg reports that embattled property giant Evergrande pulled back from the brink of default by paying a bond coupon before Saturday’s deadline...The $83.5 million payment to international bondholders surprised some China watchers who had expected Evergrande to prioritise local creditors, suppliers and disgruntled homebuyers -- many of whom are waiting for the company to make good on overdue obligations. The payment came at the tail end of a 30-day grace period, and marks. Senior Chinese policy makers have tried to reassure investors in recent days that risks from Evergrande are contained, even as they signal a reluctance to bail the company out.
Second, earlier this week, WSJ’s Lingling Wei reported that Xi’s efforts to push ahead with a property tax, something that he mentioned in his speech during the Central Committee for Financial and Economic Affairs on Common Prosperity in August has been facing pushback.
The report said that:”
“in internal debates, the feedback to his property-tax plan from both the party’s elites and its rank-and-file members has been overwhelmingly negative, say the people familiar with the deliberations. Arguments against the tax, which would be levied annually on the value of a property, have flooded in since the ministries of finance, housing and taxation started to seek feedback to the tax proposal in the spring. Many officials contend that such a levy could crush housing prices, cause consumer spending to plunge and severely harm the overall economy…The pushback on the tax is one sign that taking on a sector that perhaps more than any other defines modern China carries risks for Mr. Xi—of both alienating Chinese households and sowing dissent within the party. More than 90% of urban Chinese families own their homes, and property-related industries account for nearly a third of the country’s output. Meanwhile, up to 80% of China’s household wealth is tied up in real estate; a drop in property values could make homeowners feel poorer and less willing to spend…Some retired senior party members also petitioned against imposing the new tax, saying they themselves couldn’t afford to pay any additional taxes…Citing fears of the broader fallout, Mr. Han, the vice premier tasked with the rollout, has recommended to Mr. Xi against imposing the levy too widely for now, say the people familiar with the deliberations. An initial proposal to test-run the tax in some 30 cities has been scaled back to just around 10. Officials are still haggling over how to set the tax rate for the pilot initiative and whether to offer discounts and exemption areas. A new law aimed at advancing the tax across the country likely won’t be finalized until around 2025, the last year of the current five-year development plan, the people said.”
And it appears that she was completely on the money with this report. On Saturday, the NPC Standing Committee adopted a decision authorising the State Council to carry out property tax pilots in selected, as yet unspecified, regions, for at least five years. NPC Observer has a translation of the decision. It says:
taxation objects of the property tax in the pilot regions are all types of residential, non-residential, and other real estate, not including lawfully held rural house sites and the residences thereon. Holders of the land use right and owners of buildings are the taxpayers of the property tax.
State Council is to determine the pilot regions in accordance with the principles of being active and prudent, and by holistically considering such circumstances as deepening the pilots and enacting uniform legislation, as well as promoting the stable and healthy development of the real estate market
The period of the pilots authorized by this Decision is five years, starting on the date of issuance of the State Council’s pilot measures.
Moving on, the 13th NPCSC concluded its 31st session on Saturday, clearing a bunch of laws. Two of these are particularly noteworthy, for me. First, it cleared a new law on family education promotion. Xinhua says that the law:
stipulates that parents or other guardians of minors shall be responsible for family education, while the state, schools and society provide guidance, support and services for family education. In response to the country’s drive to ease academic workload of young students, the law requires local governments at or above the county level to take steps to reduce the burden of excessive homework and off-campus tutoring in compulsory education. The law bans parents from placing an excessive academic burden on their children, stating the guardians of minors should appropriately organize children’s time for study, rest, recreation and physical exercise. Parents are also required to play their part in preventing their children from being addicted to the internet.
The other is the new land borders law. Xinhua says that the law, which goes into effect in January, says:
the sovereignty and territorial integrity of the People’s Republic of China are sacred and inviolable. The state shall take measures to safeguard territorial integrity and land boundaries and guard against and combat any act that undermines territorial sovereignty and land boundaries, it says. The law also stipulates that the state shall take measures to strengthen border defense, support economic and social development as well as opening-up in border areas, improve public services and infrastructure in such areas, encourage and support people’s life and work there, and promote coordination between border defense and social, economic development in border areas. — This, as of now, sounds like it is providing a legal architecture for the work being done in border areas. But I would like to learn more about why it was felt necessary to pass this law. What impediments does it ease for Beijing? And does it make territorial concessions more difficult now?
Also Read:
China drops Caixin Media from list of official publications; WeChat, Weibo added/ China Updates Rules on News Reposting
China to accelerate US$224 billion of local bond issuance to support slowing economy
China’s Guangdong Scraps Fixed Electricity Prices for Industrial Users
Chinese Cities Move to Support Housing Market as Prices Drop
China needs new growth engines as property drags down economy, says analyst
V. China-US Ties
First, we had the confirmation hearing this week of Nicholas Burns, who will be the new US ambassador to China. Here’s what he said:
“The PRC seeks to become the most powerful military, economic, and political actor in the Indo-Pacific. We must stand with our allies and partners to uphold a free and open Indo-Pacific— including by maintaining America’s commercial and military superiority in 21st century technologies. We also must hold the PRC accountable for failing to play by the rules on trade and investment, including its thefts of intellectual property, use of state subsidies, dumping of goods, and unfair labor practices. These actions harm American workers and businesses. Beijing has been an aggressor against India along their Himalayan border; against Vietnam, the Philippines, and others in the South China Sea; against Japan in the East China Sea; and has launched an intimidation campaign against Australia and Lithuania. The PRC’s genocide in Xinjiang and abuses in Tibet, its smothering of Hong Kong’s autonomy and freedoms, and its bullying of Taiwan are unjust, and must stop. Beijing’s recent actions against Taiwan are especially objectionable. The United States is right to continue to adhere to its one-China policy. We are also right to support the peaceful resolution of disputes, and to oppose unilateral actions that undermine the status quo and stability in the Indo-Pacific. The Administration and Congress should help Taiwan “to maintain a sufficient self-defense capability,” as the Taiwan Relations Act clearly states. The Biden Administration is right to seek effective channels of communication with Beijing to manage our competition responsibly, to diminish the risk of an accidental conflict and, above all, to maintain peace.
But this is also noteworthy: “Finally, it is important to keep our rivalry with Beijing in perspective. The PRC is not an Olympian power. While the PRC has many strengths, it also faces substantial demographic, economic, and political challenges.”
Here’s China’s Foreign Ministry’s reaction to Burns’ comments:
“the remarks of Mr. Burns smack of Cold War zero-sum mentality and run counter to facts. China firmly rejects them…We advise Mr. Burns to be keenly aware of the overall trend of world development and people's aspiration, learn the real situations of China objectively, view China and China-US ties in an rational manner and avoid underestimating the strong resolve, determination and capability of the Chinese people to defend their rights. We hope he will speak and act in a more constructive manner, and play a constructive part in promoting China-US relations and the friendship between the two peoples.”
Here’s GT’s edit on Burns’ comments:
“It cannot be ruled out that Burns deliberately picked tough words to pass the Senate hearing. It is very likely that after arriving in China, Burns will describe how important China-US relations are. But there is absolutely no need for Chinese people to try to figure out what is in Washington's mind from his words. After nine months, we have seen clearly how the Biden administration is going to deal with China.”
Second, we had WSJ’s Kate O’Keeffe reporting that data show that the US Commerce Department issued more than $100 billion worth of export licenses for semiconductors and other products to suppliers of Huawei Technologies Co. and another blacklisted Chinese tech company, as a global chip shortage started to bite. The Commerce data, released Thursday by a Republican member of Congress, shows the department granted 113 export licenses worth about $61 billion for suppliers of telecom giant Huawei and 188 licenses valued at $42 billion for suppliers of Semiconductor Manufacturing International Corp., China’s largest chip maker, from Nov. 9, 2020, through April 20 this year. Many of the licenses were for semiconductors and the equipment to manufacture them. The data, which covers the final months of the Trump administration and the start of the Biden administration, did not identify any specific suppliers…industry experts said, the data shows that the suppliers continued to have access to U.S. technology despite Huawei and SMIC having been blacklisted for national security reasons. They said it also points to stockpiling by companies that likely contributed to the global shortage of semiconductors that has hit the auto, electronics and other industries.
Third, we had President Joe Biden’s comments on Taiwan, and then a bit of a walk back by the administration. Asked at a recent CNN town hall event whether the US would come to Taiwan’s defence in the event of an attack by China, Biden replied: “Yes, we have a commitment to do that.” Later, White House Press Secretary Jen Psaki told the press that there was “no change” US policy on Taiwan. I think Ryan Hass below has a good thread, which explains things well.
That said, I do think this debate on US policy being strategic ambiguity or shifting towards strategic clarity, or whatever one may call this churn in Washington about its Taiwan policy, offers a good lesson. At the end of the day, implications of domestic messaging is not just domestic. There is a broader impact. Second, one’s messaging can only be effective if the target audience actually understands what is being conveyed. I am not sure how Beijing’s reading what’s happening in DC; will it read resolve in this messaging?
Anyway, if you are interested in the Taiwan issue, I do recommend this conversation with GMF’s Bonnie Glaser.
Also Read:
VI. The Long & Short if It…
a. Pushback against EU on Taiwan
This week the Chinese foreign ministry and other departments pushed back against the European parliament’s adopting a new report on ties with Taiwan. China’s MoFA said:
“The one-China principle is a universally-recognized norm of international relations and consensus of the international community. It is also the political foundation of China-EU relations. The European Parliament’s adoption of the above-mentioned report gravely violates the basic norm governing international relations, the one-China principle and the EU's public commitment on the Taiwan question. It is vile in nature and has an egregious impact. China strongly condemns and rejects this move. The European Parliament should immediately stop rhetoric and behavior that undermine China’s sovereignty and territorial integrity and stop seeking provocation and confrontation.”
MoFA’s Wang Wenbin also lashed out at Czech Republic and Slovakia for the planned visits of their diplomats to Taiwan.
“We deplore and firmly oppose relevant countries' connivance at these visits, and urge them not to risk universal condemnation, maliciously challenge the one-China principle and undermine the political foundation of bilateral relations and the atmosphere of cooperation. We would also admonish the Taiwan authorities that any attempt to solicit foreign support and seek political manipulation is doomed to fail.”
b. China-Japan Friction
Last week Japan’s new Prime Minister Fumio Kishida sent a ritual offering to the controversial Yasukuni Shrine. South Korea expressed “disappointment” and China too responded with anger saying that “the negative moves of some Japanese political figures on the issue of the Yasukuni Shrine once again reflect Japan’s wrong attitude toward its history of aggression…The Japanese side should earnestly honor its statement and commitment of facing up to and reflecting on its history of aggression, talk and act with prudence on historical issues such as the Yasukuni Shrine, make a clean break with militarism, and win the trust of its Asian neighbors and the international community through concrete actions.”
Then Chinese Ambassador to Japan Kong Xuanyou proposed four directions for efforts over the bilateral ties. These are about political trust, win-win cooperation, public opinion exchange and multilateral cooperation. But he added:
Japan should “act on the political consensus that China and Japan are partners and not enemies, properly handle major and sensitive issues, constructively manage differences, and strive to maintain the political foundation of our relations, the ambassador added. We also hope that Japan can maintain strategic independence in its foreign relations, properly handle its relations with China and other countries in a balanced way, and refrain from following the wrong actions of certain countries to avoid damaging the overall interests of China-Japan relations, Kong stressed.” — Sounds like the exact same thing that we in India hear all the time.
Amid all this, of course, a Chinese-Russian joint naval flotilla has been sailing around Japan. Global Times says that the flotilla almost made a circle around the island country, in a move Chinese experts said “can bring balance to regional stability at a time when the US, Japan and other Western forces have been colluding to destabilise the Asia-Pacific region. From the east of Japan, China and Russia could reach the US Navy base in Yokosuka, headquarters of the US Seventh Fleet, from which the US and its allies have been making many provocative moves in places like the Taiwan Straits and the South China Sea, observers said.”
Finally, we have data from the annual China-Japan Joint Opinion Survey. Around 1,000 Japanese and 1,547 Chinese responded were interviewed between August and September. In all, 90.9% of those in Japan said their impression of China was “not good”, a slight rise from last year’s 89.7%, and the fourth-worst level since the poll was launched in 2005. Meanwhile in China, about two-thirds of respondents said they had a negative perception of Japan, up from 52.9% last year. Those with a “good” impression of Japan fell sharply to 32% from last year’s 45.2%, reports SCMP.