LAC's New Normal - Pak Attack & Conspiracy - Ideological Work - Qiushi on Xi's Speech - GDP Data - Didi Review - Digital Yuan - Lavrov & Wang on Ties - US on SCS, Taiwan, HK & Xinjiang
I. LAC’s New Normal
A bunch of reports with regard to the situation along the LAC in Eastern Ladakh this week tell us that Beijing sees the current status quo there as the new normal, and it wants New Delhi to understand that this is as good as it will get.
The Indian and Chinese foreign ministers met in Dushanbe this week to talk about the situation in Ladakh. India’s MEA’s readout said that they “had a detailed exchange of views on the current situation along the Line of Actual Control (LAC) in Eastern Ladakh and also on other issues related to the overall India-China relations.” It adds:
“EAM pointed out to State Councilor that the successful disengagement in the Pangong Lake Area earlier this year had created conditions for resolving the remaining issues. It was expected that the Chinese side would work with us towards this objective. EAM noted however that the situation in remaining areas is still unresolved. EAM recalled that both sides had agreed that a prolongation of the existing situation was not in the interest of either side. It was visibly impacting the relationship in a negative manner.”
They both agreed to hold the 12th round of Corps Commander-level talks. No dates yet, however.
The Chinese readout says that Wang told Jaishankar (English version) that after the Galwan Valley and Pangong Tso disengagement, “the overall situation in the border area was de-escalated.” He recognized the issues in the bilateral relationship, adding that “strategic assessment of China-India relations has not changed. China and India pose no threat but offer development opportunities to each other. The two countries are partners rather than rivals or enemies.” He said that the key “principles” underpinning Sino-Indian relations “should still be mutual respect for sovereignty and territorial integrity, mutual non-aggression, non-interference in each other's internal affairs and mutual respect for each other’s core interests.”
In saying all this, he reiterated that the responsibility for the events that unfolded along the LAC last year “does not lie with the Chinese side.”
The two sides must place the border issue in an appropriate position in bilateral relations, expand the positive momentum of bilateral cooperation and create favorable conditions for resolving differences through negotiation. We must consolidate the results of disengagement that have been achieved, strictly abide by the agreement and common understanding of the two sides, and refrain from taking unilateral actions in sensitive and controversial areas, in order to avoid any recurrence of tensions due to misunderstanding and miscalculation. We must take a long-term perspective and gradually move from emergency response toward regular management and control, to avoid unnecessary interruptions of border-related issues to China-India relations.
My thoughts: None of this sounds encouraging from a disengagement point of view. It seems to me that the PLA is not going back and rather Beijing wants to talk about protocols to maintain stability, cementing the new reality on the ground. What’s more, Wang’s comments suggest that the Chinese side is telling India that restoring normalcy in other areas of the relationship is now a prerequisite to addressing issues on the LAC.
Staying with the LAC issue, Defense Minister Rajnath Singh met with former defence ministers AK Antony and Sharad Pawar, briefing them about the LAC situation. TOI says that they received a briefing from CDS Bipin Rawat and Army chief General Manoj Mukund Naravane. Expect the LAC issue, and rightfully so, to become a big discussion point in Parliament during the Monsoon Session, if news reports about the Congress Party’s strategy are to be believed.
Meanwhile, Amrita Nayak Dutta reports for ThePrint that the Defence Ministry has granted yet another extension of the emergency powers, which were accorded to the Indian Army, Navy and Air Force last year, for emergent revenue procurements and works. The report says that as per top defence sources, the emergency powers for revenue procurements —through the fast track procedure —have been extended till 31 August. This bit below is useful:
Capital procurement powers pertain to the acquisition of capital assets, weapons/weapon systems and other operationally critical equipment which leads to permanent enhancement of operational capabilities of the defence forces. Video Player is loading. VDO.AI Revenue procurement powers relate to the procurement of critical spares and ammunition required to sustain or maintain these assets. “Invoking of emergency powers for both revenue and capital procurement indicates the government’s intent to enhance our fighting and engaging capabilities to the next level and also sustain them through the long term, a source in the government said.”
On the Chinese side, India Today’s Manjeet Negi reports, citing Indian government sources, that the PLA has “started building permanent concrete structures for troops which will facilitate their quick movement of the border in a short span of time…One such camp has been spotted barely a few kilometres from the Naku La area in North Sikkim, sources added. Similar buildings have been built in areas close to Indian territories opposite eastern Ladakh as well as Arunachal Pradesh, the sources said.”
The Telegraph reports, citing Indian sources, that the PLA has erected concrete watchtowers with CCTV cameras atop them inside India-claimed lines in Ladakh to monitor Indian troop deployment. The Indian Army, the report says, has in a “tit for tat” effort put up wooden poles fitted with digital cameras to watch Chinese movements. Another noteworthy report along the border areas was the July 6 ingress of PLA soldiers and civilians in Demchok to protest against villagers celebrating the Dalai Lama’s birthday. They apparently came in holding banners in protest.
The final bit I have on the LAC issue is this long Xinhua feature piece published this week about Chen Hongjun, one of the PLA soldiers killed in the Galwan Valley clash. Chen was the commander of a motorized infantry battalion under a border defense regiment. This is in line with Chen being honoured on July 1 and the notion that he should serve as a role model. The piece tells us that:
“In the struggle to counter the foreign troops’ serious violation of the agreement between the two countries and deliberately provoke trouble, our border officers and soldiers resolutely responded to the violent acts and won a major victory, effectively defending national sovereignty and territorial integrity.” 在那场回击有关外军严重违反两国协定协议、蓄意挑起事端的斗争中,我边防官兵在忍无可忍的情况下,对暴力行径予以坚决回击,取得重大胜利,有效捍卫了国家主权和领土完整.
The description of the clash in the piece is of Chen racing ahead to meet Indian soldiers, who were armed with an array of sticks/clubs (棒状阵列), and amid a rain of stones (石雨). This is not new, of course. Earlier, the PLA Daily has painted a similar narrative of Indian soldiers being the aggressors and having used “steel bars, clubs and rocks.” The piece also tells us that after the clash “calmness was restored” in the Galwan Valley and the “river flowed slowly, and the mountains were quiet and solemn.” 恢复了平静的加勒万河谷,河水缓缓流淌,群山沉静肃穆.
The piece carries an image of soldiers from the border defense regiment retaking the Party oath, with the rock in front reading “大好河山寸土不让” dàhǎo héshān cùntǔ bù ràng - Great rivers and mountains, never yield an inch of territory. In general, there’s a lot of defending-the-borders talk in the piece, and how being at that altitude and performing one’s duty is a test of ideas and beliefs.
The reason to highlight the article is that this narrative building with regard to India has not faded, which basically tells us that things are going to remain difficult.
Anyway, from Dushanbe, Foreign Minister S. Jaishankar went to Tashkent, where among the many things he did, he criticised BRI. Here’s the key part of his comments at a “Central and South Asia: Connectivity” session, which, without naming, was clearly a reference to CPEC and BRI.
“at the end of the day, building connectivity is an act of trust and must, at the minimum, conform to international law. Respecting sovereignty and territorial integrity are the most basic principles of international relations. 8. Connectivity efforts must be based on economic viability and financial responsibility. They should promote economic activity and not create debt burdens. Ecological and environmental standards, as also skill and technology transfers, are musts. Connectivity must be consultative, transparent and participatory.”
Moving away from all of this, the Chinese General Administration of Customs put out trade data this week. It informed that India-China bilateral trade in the first half of the year totalled $57.48 billion, up 62.7 percent year on year. PTI reports (also see GT’s report) that as per GAC data, India’s exports to China reached $14.724 billion, up 69.6 percent year on year in the first six months and India’s imports from China amounted to $42.755 billion, up 60.4 percent. So total trade is around 57.48 billion so far in H1. Last year’s total for the entire year was $77.67 billion. Useful to note that Indian iron ore exports to China have still remained really strong.
What’s clearly lost momentum is Chinese tech investments in India. Benjamin Parkin and Mercedes Ruehl’s Financial Times report tells us that Chinese investment in India’s technology sector declined last year. The report says that “Indian start-ups raised a record $7.2bn across 336 funding rounds in the quarter ended June, according to data provider Tracxn. Of those, Chinese investors participated in only 10 rounds, worth a total $745m. US investors, by contrast, participated in more than 100 rounds worth $5.7bn.” As the graphic shows below, things have picked up in 2021 compared to 2020.
The FT report adds that “India introduced rules last year that required all foreign direct investment from China to receive government approval. Lawyers and venture capitalists said that while some equity deals have been approved, the process can take more than six months…More adventurous Chinese investors are finding ways to circumvent the FDI restrictions, however, such as through debt financing.” That said, I’d be surprised if we get back to the highs of 2019 given the regulatory shake-up of China’s technology sector that’s underway at home. In fact, here’s Krishna Kumar Karwa, managing director of Emkay Global Financial Services Ltd, telling Bloomberg that China’s tech crackdown could see investors preferring India. Karwa says that while India is also sparring with big tech companies, firms investing in India know that the legal system “can be a bit slow” but is impartial. Important that the Indian political class appreciates these values and ensures that these are upheld.
Another story that’s developing is this on about the Enforcement Directorate’s investigations into media portal Newsclick and its promoters. This is wading waist deep into domestic political issues in India, which is not the scope of this newsletter. The China angle in all of this, and it’s incredibly fuzzy, in a nutshell, is that the ED is reportedly investigating Newsclick and its promoters’ financial dealings with a businessman named Neville Roy Singham, and they allege that Singham is somehow connected to the CCP, with the money lent being used to create a favorable media narrative for the Party. The TOI report says that Singham “was associated with the propaganda arm of the Communist Party of China” without identifying which agency is being discussed. It also talks about “regular exchanges of emails in connection with the Communist Party of China.” And then it says this:
“ED sources said the payments to Newsclick were linked to ‘specific jobs’ like sprucing up China’s role in Africa, where it has attracted charges of high-handedness and predatory capitalism, and defending the Communist regime’s crackdown on Jack Ma, the promoter of online commerce giant Alibaba.” The promoters of Newsclick have denied all of the charges.
Finally, two interesting bits of reportage in Chinese media about India. The first one is about the terror attack in Pakistan, which killed 9 Chinese citizens. And the other is about the repetition of Pakistani media reports regarding India sending arms to the Afghan government.
The terror attack has been among the top stories in Chinese media. Here’s Guancha’s and Global Times’ home pages today.
Shibani will have more on the details on the events in the Region Watch section of the newsletter. But for now, I’d like to just highlight that the narrative around this incident quickly went from accident to terror attack, to conspiracy, and comments about the probability of Chinese force deployments. It’s amazing that at one point of time the Pakistani Foreign Minister was on record, categorically calling this an accident when meeting his Chinese counterpart; and in 48 hours, fingers are being pointed towards India. For instance, here’s Qian Feng, director of the research department at the National Strategy Institute at Tsinghua University, speculating on many, many things. Among them, he casually says:
“Qian pointed out that since there is no terrorist group come to claim the responsibility, it is possible the attack was committed by a third-party force - intelligence agency from a third country. Evidence has been seized on a third-country trying to mess up with the China-Pakistan Economic Corridor.”
Also, here’s Liu Zongyi from the Shanghai Institute of International Studies basically saying that India has been funnelling funds to the Pakistani Taliban and that R&AW is linked to groups in Balochistan and Khyber Pakhtunkhwa. Liu also talks about reports in the Pakistani press about India sending arms to the Afghan government. But he does the courtesy of saying that “we don’t know whether this news is true or not.” Other news stories mentioning this (for instance, here and here) bit have not added that caveat even.
Of course, amid all this, the SCO foreign ministers also issued a joint statement on Afghanistan. It said:
“We condemn the violence and terror attacks that continue in Afghanistan, killing civilians and representatives of government bodies and call for their cessation as soon as possible. We note that the activities of international terrorist organisations remain one of the key factors of instability in that country. We express our deep concern over the escalation of tensions in the northern provinces of Afghanistan as a result of a sharp increase in the concentration of various terrorist, separatist and extremist groups. We consider it important for the SCO member states to enhance their joint efforts in order to counteract terrorism, separatism and extremism. We urge all parties involved in the conflict in Afghanistan to refrain from the use of force and actions that may lead to destabilisation and unpredictable consequences near the Afghan borders with the SCO states...We believe that reaching an early settlement in Afghanistan is a major factor in maintaining and strengthening security and stability in the SCO space. In this context, we emphasise the need for the Government and people of the Islamic Republic of Afghanistan to intensify their efforts to restore peace, promote national economic development and counter terrorism, extremism and drug-related crime. We confirm the position of the SCO members that the conflict in Afghanistan can only be settled by political dialogue and an inclusive peace process conducted and led by the Afghans themselves.”
Of course, all of this was said amid Afghan vice president Amrullah Saleh on Thursday accusing the Pakistan Air Force of warning Afghan security forces that it would retaliate against any move to dislodge Taliban fighters in the strategic border region of Spin Boldak. Also, we had Suhail Shaheen, the Taliban’s Political Office Spokesman for International Media based in Qatar, saying that India is welcome to continue its aid and reconstruction work in Afghanistan after a government of the Taliban comes to power. But New Delhi should remain neutral and not give the current Kabul administration any military support. This came amid the above reports of arms deliveries that I mentioned and as Foreign Minister Jaishankar met with Afghan President Ashraf Ghani in Tashkent.
Also Read:
‘Misinformation’: Army on reports of collapse of border talks with China
India plans 4 airports, 37 helipads for boosting Ladakh connectivity
Flush with unicorns, India's tech moment to overtake China arrives
India Grabs Share From China As Textile Exports To U.S. Jump During Pandemic
In competing with China and Vietnam, Indian exporters confront half-baked incentive schemes
II. Grassroots Governance & Ideological and Political Work
Two important documents were issued by the Central Committee and State Council this week. The first one talked about Strengthening the Modernization of the Grassroots Governance System and Governance Ability (Short English Report). The first bit to note here is that the Guiding Ideology section, which offers the conceptual framework for these documents doesn’t mention other leaders’ thoughts and theories. It says
“Guided by Xi Jinping’s socialism with Chinese characteristics in the new era, we should uphold and strengthen the party’s overall leadership, adhere to the people as the center, take improving people’s well-being as the starting point and anchor point, strengthen the construction of grassroots party organizations, enhance their political functions and organizational strength as the key, focus on strengthening grassroots political power construction and improving grass-roots mass autonomy system, and focus on reform, innovation, system construction and capacity building, establish and improve grassroots governance system and mechanism, promote the benign interaction between government governance and social regulation and residents’ autonomy, and improve the level of socialization, rule of law, intelligence and professionalization of grassroots governance.” 以习近平新时代中国特色社会主义思想为指导,坚持和加强党的全面领导,坚持以人民为中心,以增进人民福祉为出发点和落脚点,以加强基层党组织建设、增强基层党组织政治功能和组织力为关键,以加强基层政权建设和健全基层群众自治制度为重点,以改革创新和制度建设、能力建设为抓手,建立健全基层治理体制机制,推动政府治理同社会调节、居民自治良性互动,提高基层治理社会化、法治化、智能化、专业化水平.
The key goals are “establishing in about five years a primary-level governance system led by the Party organizations, with law-based duty performance by the government, cooperation from various kinds of organizations, and participation from the public. The governance model should combine self-governance, rule of law, and rule of virtue. By another 10 years, modernization of the system and capacity for primary-level governance should be basically achieved, and the benefits of primary-level governance system with Chinese characteristics should be fully demonstrated, the plan says.”
This is also useful to note:
“It is important to pay attention to the outstanding candidates recommended by the party organization to emerge as the heads of various organizations through certain procedures, and ensure that the relevant requirements of Party leadership and Party building are written into the articles of association of various organizations according to law.” 注重把党组织推荐的优秀人选通过一定程序明确为各类组织负责人,确保依法把党的领导和党的建设有关要求写入各类组织章程.
There are also clear guidelines on the kind of people that should be inducted into the Party and the kind that should be excluded:
“We should strengthen the role of the leadership of the Party organization in guarding the door, standardize the general election of village (neighborhood) committees…” This then outlines some parameters through which people should be excluded:
fully implement the joint examination mechanism for the membership of the ‘two committees’ in the village (community),
resolutely prevent the political two-faced people, or
people who have faced criminal punishment, or
people who are associated with ‘village tyrants’, or
people who are associated with ‘black and evil’ clan-related forces, or
people who are associated with other areas like being illegal religion and cult organizers, implementers, participants, etc.
强化党组织领导把关作用,规范村(居)民委员会换届选举,全面落实村(社区)“两委”班子成员资格联审机制,坚决防止政治上的两面人,受过刑事处罚、存在“村霸”和涉黑涉恶及涉及宗族恶势力等问题人员,非法宗教与邪教的组织者、实施者、参与者等进入村(社区)“两委”班子.
A more detailed breakdown can be found here.
The other document talks about Strengthening and Improving Ideological and Political Work in the New Era. The report says that “ideological and political work is the Party’s fine tradition, a distinctive feature and outstanding political advantage of the Party, and is the lifeline of all work.” It adds that “strengthening and improving ideological and political work is related to the future and destiny of the Party and the long-term stability of the country and national cohesion…” 《意见》指出,思想政治工作是党的优良传统、鲜明特色和突出政治优势,是一切工作的生命线。加强和改进思想政治工作,事关党的前途命运、国家长治久安、民族凝聚力和向心力.
The report says that since the 18th Party Congress, the “ideological unity of the entire party and society has been consolidated and the situation in China’s ideological field has undergone a global and fundamental transformation.” 《意见》指出,党的十八大以来,以习近平同志为核心的党中央高度重视思想政治工作,采取一系列重大举措切实加以推进,思想政治工作有效发挥了统一思想、凝聚共识、鼓舞斗志、团结奋斗的重要作用,全党全社会思想上的团结统一更加巩固,我国意识形态领域形势发生了全局性、根本性的转变.
It adds that the party must:
“adhere to the general tone of seeking progress while striving for stability, focus on the fundamental task of consolidating the guiding position of Marxism in the ideological field and consolidating the common ideological foundation of the whole party and the people of the whole country to unite and struggle, consciously undertake the duties and missions of raising the banner, gathering people’s hearts, educating newcomers, and invigorating culture. displaying the image, taking ideological and political work as an important way to govern the party and the country, focusing on strengthening the foundation, promoting the advantages, filling the shortcomings…Fully mobilize all positive factors, broadly unite all forces that can be united, serve the people, serve the Communist Party of China’s governance of the country, serve the consolidation and development of the socialist system with Chinese characteristics, and serve the reform, opening up and socialist modernization.” 《意见》明确,新时代加强和改进思想政治工作的指导思想是:以习近平新时代中国特色社会主义思想为指导,全面贯彻党的十九大和十九届二中、三中、四中、五中全会精神,增强“四个意识”、坚定“四个自信”、做到“两个维护”,紧紧围绕统筹推进“五位一体”总体布局和协调推进“四个全面”战略布局,坚持稳中求进工作总基调,围绕巩固马克思主义在意识形态领域的指导地位、巩固全党全国人民团结奋斗的共同思想基础这一根本任务,自觉承担起举旗帜、聚民心、育新人、兴文化、展形象的职责使命,把思想政治工作作为治党治国的重要方式,着力固根基、扬优势、补短板、强弱项,提高科学化规范化制度化水平,充分调动一切积极因素,广泛团结一切可以团结的力量,为人民服务,为中国共产党治国理政服务,为巩固和发展中国特色社会主义制度服务,为改革开放和社会主义现代化建设服务.
Here are the “principles of strengthening and improving ideological and political work in the new era”:
upholding and strengthening the overall leadership of the party and integrating ideological and political work through all aspects of party building and state governance…
Adhere to the people as the center, practice the party’s mass line, take the people's longing for a better life as the goal…
fully implement the Party's basic theory, basic line and basic strategy, adhere to the system concept, combine ideological and political work with economic construction and all other work, and provide strong political and ideological support for the central work of the Party and the State.
It then says that “ideological and political work should be regarded as an important way to govern the party and the country.” It adds that Party committees at all levels must “establish a sound ideological and political work responsibility system, formulate a list of ideological and political work responsibilities, and clarify implementation measures…” 《意见》指出,要把思想政治工作作为治党治国的重要方式. 强化党委(党组)主体责任,各级党委(党组)要切实负起政治责任和领导责任,建立健全思想政治工作责任制, 制定思想政治工作责任清单,明确落实措施和推进步骤.
Here’s more:
“Adhere to arming the whole party and educating the people with Xi Jinping Thought on Socialism with Chinese characteristics in the New Era, improve the working system of arming the whole party and educating the people with the Party’s innovative theory, and enhance the political, ideological, theoretical and emotional identification with Xi Jinping Thought on socialism with Chinese characteristics in the new era.” 坚持用习近平新时代中国特色社会主义思想武装全党、教育人民,健全用党的创新理论武装全党、教育人民工作体系,增进对习近平新时代中国特色社会主义思想的政治认同、思想认同、理论认同、情感认同.
It also calls for extensive publicity work, with the aim to “carry forward the national spirit and the spirit of the times, strengthen education on patriotism, collectivism and socialism, and strengthen education on Marxist materialism and atheism.” 弘扬民族精神和时代精神,加强爱国主义、集体主义、社会主义教育,加强马克思主义唯物主义、无神论教育.
Other key points mentioned in this context are:
“cultivate and practice socialist core values”;
strengthening Party history education in order to “guide party members, cadres, and the masses to oppose historical nihilism with a clear-cut stand;
“strengthen socialist education in the rule of law and in-depth study and publicity of Xi Jinping’s thought on the rule of law”;
“strengthen the awareness of danger, carry forward the spirit of struggle, extensively carry out publicity and education on prevention and resolution of major risks.”
The report specifically says that the “the quality and level of grassroots ideological and political work should be improved.” It adds: “We should strengthen ideological and political work in rural areas, strengthen spiritual civilization and ideological and moral construction in rural areas...resist the erosion of corrupt and backward culture, and cultivate new-age farmers with ideals, morals, culture and discipline.” 加强农村思想政治工作,加强农村精神文明和思想道德建设,开展弘扬时代新风和移风易俗行动,抵制腐朽落后文化侵蚀,培养有理想、有道德、有文化、有纪律的新时代农民.
The rest of the report talks about strengthening ideological and political work and then about publicity and propaganda. It calls to “integrate ideological and political work into theme propaganda, situation propaganda, policy propaganda, achievement propaganda and typical propaganda, and implement it in all kinds of media at all levels…” 巩固壮大主流思想舆论,坚持正确政治方向、舆论导向、价值取向,把思想政治工作融入到主题宣传、形势宣传、政策宣传、成就宣传、典型宣传中,落实到党报党刊、电台电视台、都市类报刊和新媒体等各级各类媒体,不断提高新闻舆论传播力、引导力、影响力、公信力.
There’s also much here about etiquette, morality, civilisation and behaviour - it’s fascinating because it tells us about the significance of moral construction as a Party’s governance objective. There is, in fact, a certain kind of behaviour that is seen as desirable for the new era. 深化拓展群众性主题实践,充分利用重要传统节日、重大节庆日纪念日,发挥礼仪制度的教化作用,丰富道德实践活动,推动形成适应新时代要求的思想观念、精神面貌、文明风尚、行为规范. One of the instruments to be deployed for this is the use of role models.
III. Xiplomacy & Qiushi
Let’s begin with the most recent developments first. So, Xi Jinping spoke at theAPEC Informal Economic Leaders’ Retreat on Friday. The first point he made was about dealing with the COVID-19 pandemic and economic recovery.
“China has been calling for closer international cooperation on vaccines to ensure that they are accessible and affordable in developing countries and that they become a global public good. Overcoming the challenges of its own mass vaccination program, China has provided more than 500 million doses of vaccines to other developing countries, and will provide another 3 billion US dollars in international aid over the next three years to support COVID-19 response and economic and social recovery in other developing countries. China supports waiving intellectual property rights on COVID-19 vaccines, and will work with other parties to push for an early decision by the World Trade Organization (WTO) and other international institutions.”
Now with this said, do keep in mind that earlier in the week Sinopharm and Sinovac signed agreements to supply millions of vaccine doses to international NGOs on behalf of the COVAX facility. There had previously been some friction with regard to this. CGTN tells us that (GAVI’s official statement) Sinopharm has signed a longer-term agreement with UNICEF to provide up to 120 million doses of its vaccine by the end of 2021 for participating countries and territories in the COVAX program, as well as self-financing participants…Gavi, the Vaccine Alliance (GAVI) announced on the same day it had signed two advance purchase agreements with Sinopharm and Sinovac to provide up to 550 million COVID-19 vaccines to the COVAX program. The new deals include up to 170 million doses of the Sinopharm shot and up to 380 million shots of the Sinovac vaccine, through to the middle of 2022.”
And with this in mind, check out Josh Rogin’s new piece in WAPO, where he basically “‘The United States is deeply disappointed that the [People’s Republic of China] has provided no financial support to Covax for vaccinations in low and middle-income countries, and has chosen to sell its vaccines to Covax rather than contribute to Covax financially,’ a senior administration official told me. Translation: Biden officials know it’s bad, but there’s nothing they can do about it now.”
Anyway, back to Xi’s APEC speech. The next point he made was:
“It is important that we promote the liberalization and facilitation of trade and investment and uphold the multilateral trading system with the WTO at its core. We must remove barriers, not erect walls. We must open up, not close off. We must seek integration, not decoupling.”
He then spoke about climate change and sustainable development, before adding that “the global digital economy is an open and close-knit entity. Win-win cooperation is the only right way forward, while a closed-door policy, exclusion, confrontation and division would only lead to a dead end.”
Also on Friday, Xi visited an exhibition of diplomatic gifts exchanged between Chinese Party and state leaders and their foreign counterparts. The Xinhua report on this tells us that he called for “called for deepened friendships and exchanges with people across the world.” He added that the Party “will uphold peace, development, cooperation, and mutual benefit and use China's new development achievements to provide the world with new opportunities.” At the same time, we had the Party’s journal Qiushi reminded us of the 10 principles of Xi’s diplomatic thought. These were first outlined at the 2018 Foreign Affairs Work Conference.
Moving on, earlier in the week, Xi spoke to Ukrainian President Volodymyr Zelensky. Interesting timing for this chat. Actually the past few weeks have seen some curious developments between Beijing and Kyiv. Most recently we had Putin publish an article calling Russians and Ukrainians as “one people.”
Here’s an excerpt from AP’s report on this:
“I am convinced that the true sovereignty of Ukraine is possible only in partnership with Russia,” the article posted on the Kremlin’s website states. “Our spiritual, human and civilizational ties have formed for centuries and have been rooted in the same sources, they have been hardened by common trials, achievements and victories.” In televised remarks on Tuesday night, Putin said he had pondered the article for several months, but now was the time to release it. “It looks like active work on the project ‘anti-Russia’ has begun, and this, of course, elicits certain concerns,” he said. Putin spokesman Dmitry Peskov refrained from commenting Tuesday when asked if Russia could move to incorporate rebel-controlled areas of Ukraine’s industrial heartland, Donbas. “I would leave that question unanswered,” Peskov said during a conference call with reporters.
Second, recall the whole fiasco in late June of Ukraine withdrawing from a UNHRC statement led by Western powers was critical of Beijing’s Xinjiang policies. The report then was that Beijing had used its vaccine clout to get Kyiv to withdraw. In early July, we got a report about an agreement between China and Ukraine encouraging companies and financial institutions from both countries to “actively cooperate” on roads, bridges and railways projects. SCMP reported that the agreement was signed on June 30.
In this week’s chat, as per Xinhua English, Xi told Zelensky that “the Chinese side is ready to work together with Ukraine to carry forward the traditional friendship, deepen mutual understanding, strengthen practical cooperation, and take the 30th anniversary of the establishment of bilateral ties next year as an opportunity to actively push forward China-Ukraine relations, and help the two countries better achieve their respective development goals.” He also spoke about pandemic-related cooperation and infrastructure, China-Europe freight trains and BRI. Zelensky thanked China for its support and said that Ukraine firmly adheres to the one-China policy.
Next, Xi also spoke to Turkey’s Erdogan (English report). Xi’s priorities were to “respect each other’s core concerns and enhance strategic mutual trust,” “cooperation with Turkey in anti-terrorism, security,” and “promote synergy between” BRI and the Middle Corridor project of Turkey. He added that “China supports Turkey in safeguarding national sovereignty, independence and territorial integrity, and in taking a development path in line with its own national conditions…”
Erdogan, as per Xinhua, said that “Turkey also supports China in safeguarding its independence, sovereignty and territorial integrity, and in combating terrorism, he said, adding that his country does not allow anyone to use Turkish territory to engage in separatist activities that endanger China's sovereignty.”
Reuters quoted a statement from the Turkish presidency, saying that “Erdogan pointed out that it was important for Turkey that Uyghur Turks live in prosperity and peace as equal citizens of China. He voiced Turkey’s respect for China’s sovereignty and territorial integrity.”
Next, Xi spoke to Barbadian Prime Minister Mia Mottley (English report). Xi spoke about BRI, pandemic cooperation, “exchanges of experience in national governance” and “practical cooperation in infrastructure and other fields.” In addition, Xi said that “the two sides should reinforce coordination and cooperation in international affairs and safeguard the common interests of developing countries.”
Finally, let’s turn back to Qiushi. The 14th edition of the journal this year published Xi’s July 1 speech and an editorial department article on it. This article terms Xi’s speech as a “glorious Marxist programmatic document.” It describes Xi’s speech as a “scientific guide and action program to lead the whole Party and the whole nation to a new starting point and a new journey.” 是引领全党全国人民立足新起点、接力新征程的科学指南和行动纲领. It adds that Xi’s speech was based on the outlook of “dialectical materialism and historical materialism,” putting forward “a series of new major ideas, major viewpoints and major theories,” which enriched Xi Thought and “embodies the latest theoretical achievements of contemporary Chinese Marxism and Marxism in the 21st century.”
If you are interested, you can find my detailed breakdown of the Qiushu article here.
IV. GDP, Trade, Didi & Digital Yuan
Let’s begin with economic data from China. I am using reports from PD, more here, and pooling information from Xinhua, Caixin and WSJ. The National Bureau of Statistics said this week that China’s GDP expanded 12.7 percent year on year for 2021 H1. In the second quarter, GDP grew 7.9 percent year on year. That’s strong but obviously way slower than the incredible 18.3% year-on-year growth rate during 2021 Q1. Caixin says that the Q2 GDP number was below expectations of 8.2%. Importantly, on a quarterly basis, the economy expanded 1.3 percent in Q2.
Also, the service sector accounted for 53% of GDP and manufacturing accounted for 27.9% of GDP. The contribution rate of final consumption expenditure to economic growth reached 61.7%.
The total value of imports and exports of goods was 18,065.1 billion yuan, a year-on-year increase of 27.1%. The scale of imports and exports hit the best level in the same period in history, an increase of 22.8% compared with the same period in 2019. Monthly imports and exports achieved positive year-on-year growth for 13 consecutive months, the NBS said.
Other key data points:
industrial output for H1 2021 grew 15.9 percent year-on-year. Value-added industrial output — which measures production by factories, mines and utilities — rose 8.3% year-on-year in June, above the median estimate of 7.8% in the Caixin survey, though slower than 8.8% in May.
retail sales for H1 2021 were up 23% year-on-year; the quarter-on-quarter increase was 13.9%. The June year-on-year figure was 12.1%, which was above the median estimate of 11% growth by Caixin’s pool of economists.
fixed-asset investment grew 12.6% year-on-year in the first half, decelerating from a 15.4% rise in the January-to-May period. The rate of expansion also beat the median expectation of 12.1% growth.
Caixin reports that “infrastructure investment — which includes spending on road and railway construction and is generally led by the government — rose 7.8% year-on-year in the first six months, slower than the 11.8% growth in the first five months. The slowdown was caused by China’s crackdown on local government debt, said economists at Macquarie Group Ltd.”
property development investment grew 15% year-on-year in June, slower than the 18.3% growth in the first five months.
investment in high-tech industries increased by an average of 14.6% in H1
surveyed urban unemployment rate stood at 5% in June. A total of 6.98 million new urban jobs, or 63.5% of the annual target, were created in H1.
per capita disposable income increased 12.6 percent year on year in nominal terms to 17,642 yuan ($2,731)
consumer prices rose by 0.5% year-on-year
China’s manufacturing PMI for June was 50.9%
Service industry business activity index was 52.3%
Next, there were details this week (English version) about China’s foreign trade for the first half of the year. Here’s a snapshot of the data:
Total trade in H1 is 18.07 trillion yuan (June accounted for 3.29 trillion yuan)
exports were 9.85 trillion yuan,
imports were 8.22 trillion yuan
Note that private enterprises’ imports and exports were 8.64 trillion yuan - so less than half of the total figure.
Cross-border e-commerce was at 886.7 billion yuan
exports were 603.6 billion yuan
imports were 283.1 billion yuan
ASEAN, EU and the US were the top three trading partners for China. Trade with BRI partners was at 5.35 trillion yuan. That’s around 27.5% of China’s total trade. Computers, household appliances, furniture and other ‘home economy’ products to BRI countries were at 187.3 billion yuan, exports of steel products amounted to 127.87 billion yuan, exports of automobiles and parts were 105.02 billion yuan, the export of medical materials and drugs was 42.56 billion yuan.
GAC spokesperson Li Kuiwen did say that for the second half of the year, China’s foreign trade growth may slow down due to a high base last year; but he added that the foreign trade for the whole year is still expected to maintain rapid growth.” Also note that exports in dollar terms rose 32.2% in June from a year earlier, compared with 27.9% growth in May. This beat expectations, particularly amid the Covid-19 related closures in Guangdong. Imports have fallen, however.
Third, the State Council’s weekly meeting (English version) focussed on fixing problems discovered in audits on central budget implementation, and other financial revenues and expenditures. The readout after the meeting said that when problems are found in the audit, relevant localities and departments should pay close attention to forming rectification ledgers, strictly implement responsibilities, and carry out solid rectification. 会议要求, 一是对审计查出问题, 有关地方和部门要抓紧制定整改台账, 严格落实责任, 扎实整改到位.
In addition, it called for:
“Governments at all levels should continue to tighten their belts...efforts should not be relaxed on reducing spending on official overseas visits, government-procured vehicles, and official receptions...More work should be done to fully implement policies and measures benefiting businesses and the people, such as cutting taxes and fees, stabilizing jobs, expanding employment, and providing financial support to the real economy, especially micro and small businesses. The meeting also urged proper management and use of funds for elderly care, education, medical care, and housing and strictly prevent embezzlement.”
Moving on to the ongoing upheaval in China’s tech sector. There were more than a few noteworthy developments this week. First, WSJ reported that Alibaba and Tencent’s platforms are “gradually open up their services to one another…Initial steps from Alibaba could include introducing Tencent’s WeChat Pay to Alibaba’s e-commerce marketplaces, Taobao and Tmall, some of the people said. Tencent could make it easier to share Alibaba e-commerce listings on its WeChat messaging app, or allow selected Alibaba services to access WeChat users via so-called mini-programs, some of the people said. Mini-programs are light apps embedded in the main WeChat app.” This, of course, will be a big change, if it does take place. And it likely will keep anti-trust regulators away.
Second, Friday saw a bunch of Chinese officials landing at Didi’s offices as part of the ongoing probe. WSJ reports that “regulators from government units including the Ministry of Public Security, the Ministry of State Security, the Cyberspace Administration of China, the Ministry of Transport and Ministry of Natural Resources will be stationed at Didi starting Friday for the investigation, the cyberspace administration said in an online statement.” The report adds that “the Ministry of Public Security is in charge of China’s domestic security, while the Ministry of State Security oversees the country’s civilian arm for intelligence gathering and counterespionage. Lawyers and analysts say the two ministries are part of an agency overseeing cybersecurity reviews. Still, their participation signals the potentially serious nature of the investigation. Potential outcomes include financial penalties, suspensions of business licenses and criminal charges.”
Amid all this, Didi’s rivals are looking to chip into the company’s market share. CNBC reports that food delivery company Meituan re-launched a standalone ride-hailing app that was previously taken off app stores in 2019. Another rival called T3 plans to expand into 15 cities, according to an internal memo cited by local media…Meanwhile, Cao Cao, a ride-hailing service run by carmaker Geely, is offering hefty discounts for new users on its service. Didi, on the other hand, has been pushing back against rumours at home that its services will be suspended from July 20.
Finally, this week we had a new PBOC paper on the development of China’s digital currency. Here’s a snapshot of some key points:
“The right to issue e-CNY belongs to the state. The PBOC lies at the center of the e-CNY operational system. It issues e-CNY to authorized operators which are commercial banks, and manages e-CNY through its whole life cycle. Meanwhile, it is the authorized operators and other commercial institutions that exchange and circulate e-CNY to the public.”
“Commercial banks and licensed non-bank payment institutions that meet compliance requirements (including anti-money laundering and countering terrorist financing requirements) and regulatory requirements regarding risk management on a comprehensive and on-going basis may participate in the e-CNY payment system as per recognition and support of the central bank.
As of June 30, 2021, e-CNY has been applied in over 1.32 million scenarios, covering utility payment, catering service, transportation, shopping, and government services. More than 20.87 million personal wallets and over 3.51 million corporate wallets had been opened, with transaction volume totaling 70.75 million and transaction value approximating RMB34.5 billion.
An e-CNY system will make financial services more accessible, providing fiat money for a large population in various scenarios. Those without bank accounts can enjoy basic financial services provided via e-CNY wallet, and foreign residents temporarily travelling in China can open an e-CNY wallet to meet daily payment needs without opening a domestic bank account.
“though technically ready for cross-border use, e-CNY is still designed mainly for domestic retail payments at present. Looking ahead, the PBOC will actively respond to initiatives of G20 and other international organizations on improving cross-border payments, and explore the applicability of CBDC in cross-border scenarios. Based on experiences of domestic trials and international demand, and preconditioned on mutual respect to monetary sovereignty and compliance, the PBOC will explore pilot cross-border payment programs and will work with relevant central banks and monetary authorities to set up exchange arrangements and regulatory cooperation mechanisms on digital fiat currency in line with the principle of ‘no detriment,’ ‘compliance,’ and ‘interconnectivity’.”
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V. Region Watch
Tom Hussain writing in the SCMP called it, “the worst accident so far to befall Chinese nationals working on various infrastructure projects that are part of the China-Pakistan Economic Corridor (CPEC)...” A bus ferrying workers to a Chinese-funded dam construction site at the Dasu hydroelectric project in Khyber Pakhtunkhwa province fell into a valley after a blast triggered an engine fire. Killing nine Chinese and four Pakistani nationals, the blast has left several more injured.
The incident occurred while Chinese Foreign Minister Wang Yi and his Pakistani counterpart Shah Mahmood Qureshi were in Tajikistan, meeting at the sidelines of the Shanghai Cooperation Organisation. Pakistan, at first, said a mechanical failure in the bus had caused the blast. But on Thursday, after traces of explosives were found on the bus, Islamabad announced it could not rule out a terrorist attack.
Source: Official Twitter feed of Chaudhry Fawad Hussain, Pakistan’s Minister for Information and Broadcasting
“If this is a terrorist attack, the perpetrators must be arrested immediately and be severely punished.”
Chinese Foreign Minister Wang Yi said, expressing shock and concern. Work at the site has been suspended.
Ministry of Foreign Affairs spokesman, Zhao Lijian in a media briefing, said that the Ministry and the Embassy in Islamabad had initiated the emergency response mechanism and authorities were in close contact with the Pakistani side in both Beijing and Islamabad. China will send an interdepartmental team to Pakistan to assist in the investigation into the attack.
While the spokesman reiterated strong bilateral ties between China and Pakistan, Beijing has simultaneously asserted that Islamabad needed to step up. In a phone call with Prime Minister Imran Khan on Friday, Chinese Premier Li Keqiang urged Pakistan to bring the perpetrators to justice. Yesterday, Chinese Public Security Minister Zhao Kezhi spoke to Pakistani Interior Minister Sheikh Rasheed Ahmad and demanded a risk assessment of all Chinese citizens, companies and projects in Pakistan.
Attacks on Chinese targets complicate Prime Minister Khan’s efforts to overcome an economic crisis with Chinese aid. With the CPEC at the core, concerns are mounting on either side. Major General Asim Bajwa, the head of the CPEC and former spokesperson of the Pakistan Army, in a tweet informed that the much-awaited Joint Coordination Committee (JCC) meeting on the CPEC had been rescheduled from July 16 to after Eid.
Apart from Khyber Pakhtunkhwa province, violent opposition to Chinese presence is seen in the Balochistan province as well. Chinese authorities remain concerned over increasing Baloch Liberation Army (BLA) activities and the possible revival of the Sindh Revolution Army. To ensure the safety of Chinese projects, Prime Minister Khan has initiated peace talks with separatist rebels in its southwestern Balochistan province, home to the Chinese-run deepwater port of Gwadar. Beijing has maintained that it would negotiate with any regional groups and stakeholders.
Staying with the Belt and Road Initiative (BRI) in the region, President Xi Jinping said China is ready to take BRI cooperation further with the Maldives. In a phone call with Maldivian President Ibrahim Mohamed Solih, President Xi said the BRI would bring more benefits to the people of both countries. Next year will mark the 50th anniversary of diplomatic ties between the two countries. Meanwhile, in Bangladesh, a series of investments in the country’s energy and transport sectors under the BRI is boosting Bangladesh’s image as an economic partner. Kevin Green, head of wholesale banking for HSBC in Bangladesh, told the Dhaka Tribune that Bangladesh’s economy is benefiting from a new wave of Chinese investment that displays stability and is likely to attract more foreign capital.
The government, he believes, is motivated. By setting up SEZs, Dhaka is making an effort to make it easier for overseas investors to get started. China was the largest investor in Bangladesh in 2018 and 2019, with significant investment in the energy infrastructure and construction sectors. China is currently developing a 750-acre industrial park near Chittagong which will largely be used by Chinese manufacturing firms.
The Maldives and Bangladesh, both attended the international ‘Central and South Asia: Regional Connectivity, Challenges and Opportunities’ conference in Tashkent last week where Foreign Minister Wang Yi made a four-point proposal. The Minister made the following points,
Countries in the region should not indulge in geopolitical games in the name of connectivity and assured the group that China is willing to follow the principles of extensive consultation, joint contribution, and shared benefits, to create a bright future of integrated development with all parties.
China backs the building of a corridor connecting Central and South Asia, helping countries in the region transform from "land-locked" to "land-connected" nations.
China called on the World Bank, the Asian Infrastructure Investment Bank, the Asian Development Bank, and the Silk Road Fund to invest in connectivity projects, broaden diverse financing channels.
China will continue to work with the international community, especially Afghanistan's neighboring countries, to facilitate peace talks and give full play to the role of the Shanghai Cooperation Organization and other mechanisms.
While Pakistan tries to untangle a heavily knotted geopolitical thread, there are questions to be asked, will China get cold feet? Or does the strategic advantage from the BRI, CPEC outweigh the security costs? And how does China intend to pursue connectivity partnership and cooperation under the BRI in other parts of the region?
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VI. Core Interests & US: Taiwan, SCS, Xinjiang & HK
Let’s begin with the report of a US military jet landing in Taiwan briefly after taking off from Okinawa. I am not sure about the purpose of the mission, but it certainly irked Beijing. The Chinese Defense Ministry’s responded angrily, as per Xinhua’s report:
“Wu Qian, spokesperson for the Ministry of National Defense, said Taiwan is an inalienable part of the Chinese territory. ‘Landing of any foreign military aircraft on China's territory can be made only with permission from the government of the People's Republic of China. Trespass by foreign ships or planes into China's airspace will cause serious consequences,’ he said. ‘We solemnly warn the United States not to play with fire and immediately stop its risky and provocative actions, not to send a wrong signal to 'Taiwan independence' separatist forces and avoid exacerbating tensions in the Taiwan Strait,’ said the spokesperson. ‘We warn (Taiwan's) Democratic Progressive Party authority not to misjudge the situation and invite trouble to the island. Making provocations and seeking 'independence' by colluding with external forces will only lead Taiwan into a dangerous situation,’ he said.”
A Zhong Sheng commentary in PD on this called the landing an “adventurous and provocative act” by the US. It added that, “any political calculations on the Taiwan issue are self-deceiving and will not only not shake China's strong determination to defend national sovereignty and territorial integrity…”
“For some time, the United States has repeatedly violated the one-China principle and the provisions of the three Sino-US joint communiques on the Taiwan issue, and tried to win over other countries to speculate on the Taiwan issue. Fundamentally, the United States frequently plays the ‘Taiwan card’ because it embraces the Cold War and zero-sum mentality, and continuously escalates its confrontational pressure on China in an attempt to contain China's development.” 一段时间以来,美国在台湾问题上屡屡违反一个中国原则和中美三个联合公报规定,还企图拉拢他国一起炒作台湾问题。美方频频打“台湾牌”,从根本上看,是因为其抱持冷战和零和思维,不断升级对华对抗施压,企图遏制中国发展.
The piece also quoted recent comments by Kurt Campbell, but only selectively. So his comment that “We do not support Taiwan independence,” and “We fully recognise and understand the sensitivities involved here” are quoted without referencing this bit below. “We do believe that Taiwan has a right to live in peace. We want to see its international role, particularly in areas like vaccines and issues associated with the pandemic, they should have a role to play here, they should not be shunned in the international community.”
Moving on, it’s noteworthy that there had been some talk of preparatory work being done behind the scenes for a Biden-Xi meeting. That’s also not happening anytime soon apparently. Financial Times reported that
“Beijing has snubbed the US by refusing to grant Wendy Sherman, deputy secretary of state, a meeting with her counterpart during a proposed visit to China that would have been the first top-level engagement since acrimonious talks in Alaska. The US halted plans for Sherman to travel to Tianjin after China refused to agree to a meeting with Le Yucheng, her counterpart, according to four people familiar with the decision. China offered a meeting with Xie Feng, the number five foreign ministry official who is responsible for US affairs ... While the state department had not said Sherman would travel to China, she had planned to visit after a trip to Japan, South Korea and Mongolia. The Chinese snub follows a similar stand-off between the two countries’ militaries.”
But later in the week, we learned that Sherman might still visit China. Reuters says that Sherman will visit Japan, South Korea and Mongolia next week, with a State Department official saying that there was room in Sherman’s schedule to go to China and that if the additional stop would be added, it would come at the end of her Asia trip.
In the meantime, tensions between the two sides continue to simmer. First, let’s look at the South China Sea. Secretary of State Antony Blinken’s statement on the Anniversary of the Arbitral Tribunal Ruling said the following:
The United States reaffirms its July 13, 2020 policy regarding maritime claims in the South China Sea. We also reaffirm that an armed attack on Philippine armed forces, public vessels, or aircraft in the South China Sea would invoke U.S. mutual defense commitments under Article IV of the 1951 U.S.-Philippines Mutual Defense Treaty. We call on the PRC to abide by its obligations under international law, cease its provocative behavior, and take steps to reassure the international community that it is committed to the rules-based maritime order that respects the rights of all countries, big and small.
In contrast, China’s MoFA said that the US statement “deliberately stokes disputes on territorial sovereignty and maritime rights and interests, sows discord among regional countries and undermines regional peace and stability.” Zhao Lijian said that the “arbitration violated the principle of state consent and the arbitral tribunal exercised its jurisdiction ultra vires and rendered an award in disregard of law.” He added that China
“treats our South China Sea neighbors as equals and exercises maximum restraint when safeguarding our sovereignty, rights and interests in the South China Sea. On the opposite, the US willfully sends large-scale advanced vessels and aircraft to the South China Sea for military reconnaissance and drills and illegally intruded into China's territorial waters and space and water and air space adjacent to islands and reefs. Since the beginning of this year, the US side has conducted close-in reconnaissance for nearly 2,000 times and over 20 large-scale military drills on the sea targeting China. What's more, the US abuses bilateral military agreements that smack of the Cold War to threaten to use force on China. This exposes its power politics logic and hegemonic practices. It is self-evident who is seeking coercion and intimidation and threatening freedom and security of navigation.”
Do read this NYT report on the treatment with regard to the Philippines. Anyway, what’s also interesting is that Zhao’s take is somewhat different from a piece under the byline Zong Haiping on the South China Sea arbitration award anniversary that was published in PD this week. It said that:
“Facts have proved that the South China Sea arbitration case has been a political farce under the guise of the law from beginning to end. It is a political conspiracy by the United States and the West to contain and discredit China by using so-called ‘international rules’ and surrounding maritime issues.” 事实证明,南海仲裁案由始至终是一场披着法律外衣的政治闹剧,是美西方利用所谓“国际规则”和周边涉海问题对中国进行牵制遏制和抹黑施压的政治阴谋.
“Safeguarding national sovereignty and territorial integrity is a major challenge that must be correctly addressed in the historical process of realizing the great rejuvenation of the Chinese nation, and it is also an important responsibility shouldered by the Communist Party of China.” 维护国家主权和领土完整,是实现中华民族伟大复兴历史进程中必须正确应对的重大挑战,也是中国共产党肩负的重要责任.
The author writes that the Party “insisted on firmly holding the leading power of territorial and maritime jurisdiction in our own hands, established the basic position of dealing with arbitration cases in the South China Sea in accordance with international law, and made the decision of "not accepting, not participating in" arbitration cases and “not accepting, not recognizing” illegal awards, which effectively safeguarded the country’s territorial sovereignty and maritime rights and interests from infringement.” 在党中央坚强领导下,我们从维护国家主权、安全和发展利益出发,本着对国家和人民高度负责的态度,坚持把领土和海洋管辖权的主导权牢牢掌握在自己手里,依据国际法确立了应对南海仲裁案的基本立场,作出“不接受、不参与”仲裁案、“不接受、不承认”非法裁决的决定,有力维护了国家领土主权和海洋权益不受侵犯.
It adds that through this effort, China has “won strategic initiative and moral high ground...China’s policy stance on the South China Sea arbitration case has won wide understanding and recognition from the international community. More than 120 countries and organizations and 240 different political parties have expressed their understanding and support for China, thus thwarting the attempt of the United States and the West to suppress and isolate China through arbitration.” 中国应对南海仲裁案的政策立场赢得国际社会广泛理解与认可, 120多个国家和组织以及240多个不同国家的政党表示理解支持我,挫败了美西方妄图借仲裁打压孤立中国的图谋.
From the SCS to Xinjiang, let’s look at the joint U.S. Department of State, U.S. Department of the Treasury, U.S. Department of Commerce, U.S. Department of Homeland Security, Office of the U.S. Trade Representative, and U.S. Department of Labor’s Xinjiang Supply Chain Business Advisory. It talks about “state-sponsored forced labor and intrusive surveillance, forced population control measures and separation of children from families, mass detention, and other human rights abuses amidst ongoing genocide and crimes against humanity.” In this context, “given the severity and extent of these abuses, businesses and individuals that do not exit supply chains, ventures, and/or investments connected to Xinjiang could run a high risk of violating U.S. law.” This come soon after the European Commission published a Guidance on due diligence to help EU companies to address the risk of forced labour in their operations and supply chains. The EU document doesn’t mention Xinjiang or China, but I guess it doesn’t need to.
In response, Zhao Lijian engaged in some whataboutery before saying: “no matter how hard it tries to fabricate lies on Xinjiang, their sinister plot of containing China by using Xinjiang as an excuse is doomed to fail.”
Moving on, we have the State Department’s Hong Kong Business Advisory, which says that there are now “clear operational, financial, legal, and reputational risks for multinational firms” in HK. It says that PRC and HK government policies “undermine the legal and regulatory environment that is critical for individuals and businesses to operate freely and with legal certainty in Hong Kong. Businesses should be aware that the risks faced in mainland China are now increasingly present in Hong Kong. The National Security Law and actions taken by PRC and Hong Kong authorities may negatively affect their staff, finances, legal compliance, reputation, and operations.”
Interestingly, SCMP reported the American Chamber of Commerce in Hong Kong (AmCham) has just bought an office in the heart of the city. Chamber president Tara Joseph told the paper on Saturday that the property was located on the 22nd floor of the Hong Kong Diamond Exchange Building on Duddell Street in Central. The chamber will move into the space in 2022. “It is a long-term commitment,” she said. “We intend to navigate the challenges, as we believe Hong Kong is a critical global business hub.”
Anyway, the US Treasury added seven people added to its “specially designated nationals” list. These are deputy directors at the HK liaison office. The individuals are Chen Dong, He Jing, Lu Xinning, Qiu Hong, Tan Tienui, Yang Jianping, and Yin Zonghua. Blinken said in a statement that the Chinese officials over the past year had “systematically undermined” Hong Kong’s democratic institutions, delayed elections, disqualified elected lawmakers from office, and arrested thousands for disagreeing with government policies. “In the face of Beijing's decisions over the past year that have stifled the democratic aspirations of people in Hong Kong, we are taking action. Today we send a clear message that the United States resolutely stands with Hong Kongers,” Blinken said in a statement. The Chinese MoFA hit back saying that these were “extremely rude” and “extremely unreasonable” bullying acts with “despicable intention.” The Liaison Office said that “the successive sanctions imposed on us by the US have no meaning, other than to fuel our contempt towards US politicians and to arouse our strong will to fight for our national interests.” Carrie Lam said that Blinken’s comments represented utter trampling on the rule of law and once again and the double standards of the U.S. administration.
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VII. The Long & Short of It…
a. Beijing’s Security Directives for HK: Hong Kong top-level officials including Lam, Chief Secretary John Lee, China Liaison Office director Luo Huining as well as other pro-Beijing figures attended a national security law seminar organised by the Chinese Association of Hong Kong and Macao Studies on Friday to commemorate its first anniversary. They were addressed by the director of China’s Hong Kong and Macau Affairs Office Xia Baolong via video link. Xia told them all to focus on 5 key areas of work:
Deepen NSL implementation
“do a proper job” in national security cases and bring people suspected of violating the security law to justice
improve the legal system to safeguard national security
increase government “guidance and management” of schools, universities, social organisations, social media and the media
“do a good job” in the three upcoming elections for the election committee, legislature and the next chief executive.
This SCMP report tells us about the new national security education trials that are about to begin in HK schools. The report says that “children as young as six are supposed to learn about the four main offences under the law – secession, subversion, terrorism and collusion with foreign forces – while schools have to inject national security elements into subjects including physics, chemistry and information technology.” A school principal quoted in the report says “pupils were taught that ‘Hong Kong has been part of China since the unification by the Qin emperor’ (259-210 BC), and also learned about the history of the Basic Law, the city’s mini constitution. The school would continue to strengthen elements of national security in teaching... Over the summer holidays, it will also review its library collection to weed out items that might breach the law.”
b. China-Russia Anniversary: China and Russia marked the 20th anniversary of the signing of the Treaty of Good-Neighbourliness, Friendship and Cooperation, with the foreign ministers of both countries writing a commentary on bilateral ties. Wang Yi’s article in PD spoke about mutual respect, mutual support, high-level engagement and win-win cooperation. I know this sounds like vacuous cliches, but read the detailed breakdown here to understand what each of these implies.
He added: “At present, the world is in a special historical period. The global governance system has undergone unprecedented profound adjustments, and international peace and security are facing complex and severe challenges. Countries are interrelated, interdependent and have a closer influence on each other. It has increasingly become the common choice of the international community to unite rather than split, open rather than close, and cooperate rather than confront. Good-neighborliness and friendship between China and Russia, and the success of strategic cooperation between China and Russia are increasingly of exemplary significance.” 当前,世界正处在一个特殊的历史时期. 全球治理体系经历前所未有的深刻调整,国际和平安全正面临复杂严峻的挑战. 各国相互联系、相互依存、相互影响更加密切,要团结不要分裂、要开放不要封闭、要合作不要对抗日益成为国际社会的共同选择. 中俄睦邻友好、中俄战略协作的成功愈发具有示范意义.
But going forward, Wang wants:
The two sides to “adhere to the principles of non-alignment, non-confrontation and non-targeting of third countries, and at the same time, carry forward the pioneering spirit of cooperation having no limits and no forbidden areas, and develop a new type of international relations that transcends civilizational differences and ideologies. 双方要牢牢把握中俄关系的前进方向,坚持不结盟、不对抗、不针对第三国原则,同时发扬没有止境、不设禁区的开拓精神,发展超越文明差异、超越意识形态的新型国际关系.
The two sides should become “reliable” “priority” partners, particularly when it comes to “strategic” projects.
The two sides should “intensify people-to-people exchanges.”
Sergei Lavrov said that ties have reached “an all-time high,” but from my perspective, what he details is an interest-based partnership given the strategic environment that both sides face. He argued that China-Russia engagement “meets the fundamental national interests of the two countries and aspirations of their peoples, is playing an important role in promoting a multipolar world order and ensuring international and regional security and stability.”
Here’s more: “relations between Moscow and Beijing are not hampered by any ideological restrictions, are based on equality, are not directed against third countries, and are resistant to the influence of external factors. Our partnership is self-sufficient and is noted for its high level of coordination, including on strategic matters.”
And before going into some specifics Lavrov says:
“Russian-Chinese foreign policy cooperation is an example of both great powers’ responsible behaviour on the international scene. This is facilitated by our countries’ coinciding or highly similar opinions on the global situation and their positions on topical contemporary problems.”
Two more bits on China and Russia. First, do check out this interview of Andrey Denisov, Russia’s Ambassador to China. Also this thread below by Igor Denisov is a great read:
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