Pandemic Narratives, Xi's Development Strategy, Population Data, Employment Worries, Chip Nationalism, Data Privacy, Warning Dhaka, Central Asian Diplomacy & Afghan Quandary
Dear Subscribers,
Before we begin, a quick event note. I’d like to invite you to join us tomorrow, Monday, 17 May 2021 at 18:00 IST for an event launching Ambassador Shivshankar Menon’s new book, “India and Asian Geopolitics: The Past, Present.” You can sign up for the session here.
Warmly,
Manoj Kewalramani
I. Pandemic Opportunities & Narratives
The week began with a report last Sunday about Chinese Ambassador Sun Weidong sharing details of the Chinese Red Cross providing 100 oxygen concentrators, 40 ventilators, other supplies and $1 million in cash assistance to the Indian Red Cross Society through the International Federation of Red Cross and Red Crescent Societies.
Anyway, soon after this, India’s Consul General in Hong Kong Priyanka Chauhan raised the issue of the need to keep supply chains open and stability in key product prices. “Even if there is a little bit of supply demand pressure, there has to be some stability and predictability to product prices. And there has to be a sense of governmental level support and efforts. I don’t have the information as to how much influence the Chinese government can have in this matter but if they can, then it would be welcome,” she said. This comes amid reports of a massive spike in prices of goods like oxygen concentrators. Beyond oxygen concentrators, Indian pharma associations have also reportedly highlighted the massive spike in APIs imported from China used in the manufacturing of medicines such as paracetamol, ivermectin and antibiotics.
Responding to this, MoFA’s Hua Chunying listed the details of China’s emergency supplies exports to India. She then added: “We agree with the remarks by the Indian Consul General in Hong Kong that supply chains should remain open and stable. We hope all parties can take concrete actions to ensure that the global industrial and supply chains are stable and open. No one should intentionally disrupt and undermine the openness and stability of the global supply chains out of political agenda.”
On the price issue, she said that “it is a market factor determined by supply and demand.” She said that “increase in demand affected global supply chains. Besides, due to shortage of raw materials which need to be imported from Europe, production capacity is affected. What's more, Indian buyers usually make the same demand through various channels and sometimes buy products through different channels. This has overly inflated demand, which has to some extent affected market order and pushed up prices.” Do also note this PTI report which informs that Sichuan Airlines is yet to restore cargo flights to India. It is likely to do so from tomorrow. So the reports of it having reconsidered the 15-day suspension of flights really meant nothing in practical terms. In addition, Caixin reports that several Chinese airlines are considering suspending cargo flights to India, with at least two state-owned airlines having reduced the number of flights already. The report talks about logistics, payment and quarantine challenges along with rising freight rates. It adds:
“According to flight tracking platform VariFlight, 36 cargo flights departed from China to India between May 1 and 13, with 31 flights going the other direction. Logistics companies including SF Express, YTO Express and FedEx were the main operators of the flights.”
Linked to all of this is this India Today report, which clearly annoyed Global Times’ Hu Xijin; or perhaps this is Hu repairing his damaged nationalistic credentials after recent scuffles on social media at home. I’ll get into that a bit later but first, the report talks about how Chinese companies have “not only jacked up prices but also altered specifications and components used in making the oxygen concentrators for India, compromising on the quality and life cycle of the machine.” The report does lend a narrative of price gouging, opportunism and callous disregard for the health of Indians, which I don’t buy into. But honestly, if one reads through it, there’s enough sensible economics in there in the comments of traders and buyers to explain why prices have risen and quality has dipped. For instance, buyers are quoted as saying that prices have risen “not due to the increasing cost of raw materials but because of limited supply.” Others say that there was a sudden rise in demand in April as the second wave hit India, and the manufacturing industry in China was not ready for this. Anyway, all of this reminds me of the conversations around sub-standard Chinese exports in March-April last year. While being incredibly defensive at that time, the Chinese government had also cracked down on counterfeit goods and changed certification requirements for some pandemic-related exports to tighten quality controls. Let’s see if there are any lessons learned from last year’s experience that are evident this time around. I say this because there’s clearly another wave hitting not just India but also South and Southeast Asia now. There will likely be greater demand for emergency supplies from China; and complaints about profiteering and poor quality and price of life-saving products will only further damage China’s image.
Anyway, Hu Xijin responded to the story in India Today with an angry editorial (Chinese language version) “I have to say that this report is extremely unprofessional and the malicious incitement in this report is shameless. The editors of India Today probably have got their conscience eaten by a dog,” he writes. Of course, Hu’s platform also has this report about how Chinese manufacturers have “exported oxygen making items to India at below-market prices by working extra shifts for timely delivery,” and are disappointed and angered by middlemen in India engaging in price gouging. One of them even says this:
“The black market is the norm in India. It is an Indian thing and there is nothing that Chinese companies can do about it. We are actively providing anti-virus materials to India for humanitarian reasons, and we do our best to provide whatever they want, but when the products are delivered, we can't control at what price or to whom they are sold.” I wonder what’s nibbled away at Hu’s conscience and editorial skills to publish such racist drivel.
Anyway, staying on with Chinese media coverage of the situation in India, there are reports about the continuing cases, reports about the use of ivermectin in India “ignoring experts’ warnings,” and coverage of the story of bodies found floating in the Ganges. There’s also this piece by Song Luzheng from Fudan University. The headline and reference to the farmer and snake fable is terribly distasteful, but the arguments he makes are interesting. He talks about how it is in China’s interest to support India in dealing with the pandemic; and Beijing should not expect this to alter the strategic challenges that exist between the two countries. He outlines the following reasons for China to support India:
The pandemic’s a global concern
India’s partnership with the US is driven primarily by Indian interests
International relations are not static; things change as balance of power shifts
Look at supporting India in the context of Sino-US competition
There’s commercial gains in terms of trade and vaccine supplies for China
Big country diplomacy requires this
Moving on from all of this, provisional estimates from the Indian Ministry of Commerce and Industry show that India imported goods worth $65.21 billion from China in 2020-21. That’s basically steady from the year before. Exports from India to China climbed 27.5 percent from a year ago to $21.19 billion. At the same time, India’s import bill for 2020-21 fell 17.1 percent to $393.60 billion and exports declined by 7.2 percent to $290.81 billion. As a result, China’s share in India’s import bill rose to 16.6 percent from 13.7 percent a year ago and the share in exports grew to 7.3 percent from 5.3 percent.
Finally, 53-year-old Penpa Tsering, the former speaker of Tibet's parliament-in-exile, has been elected the new president of the exile government. He will succeed Lobsang Sangay. Associated Press reports that around 64,000 Tibetans living in exile in India, Nepal, North America, Europe, Australia and elsewhere voted in the election, which was held in two rounds in January and April. This was the third direct election of the Tibetan exile leadership since the Dalai Lama withdrew from any political role in the running of the exile government in 2011. Hindustan Times reports Tsering talking about the Dalai Lama’s succession soon after his electoral win.
“The successor to the Dalai Lama is chosen through a Tibetan Buddhist concept and it’s a deeply religious matter, and the Dalai Lama alone is responsible for his reincarnation. If the Chinese Communist leaders are so interested in this issue, then they should learn Buddhism first. Only then they can involve themselves in this matter. If they don’t even believe in religion, how can they get involved in religious matters?”
Also Read:
The China border crisis one year on: What a live LAC means for India's two-front challenge - The Hindu In Focus Podcast with Ananth Krishnan and Sushant Singh
II. Interpreting Xi’s Development Strategy
There was a series of commentaries in the People’s Daily this week, interpreting Xi Jinping’s thought on China’s development going ahead. These articles were under the byline Ren Lixuan 任理轩. I’ve done a detailed breakdown of each of these pieces in my weekday People’s Daily tracker. You can access them here. But I also thought it is worthwhile doing a consolidated version here.
The theme for each of the piece is as follows:
New development stage
New development concept
New development pattern, i.e., dual circulation
New journey
The essential argument is that Xi’s development philosophy and approach is based on a strategic consideration of China’s history, national conditions, current development stage, governance structure and systems, practical experience and external environment.
“The decision on entering the new stage of development is based on the strategic judgments made by the Party Central Committee with Comrade Xi Jinping at the core by scientifically analyzing the basic characteristics of the primary stage of socialism and profoundly grasping the general trend of domestic and international development.”
The first article talks about the significance of Marxist methodology in arriving at this strategic understanding. It emphasises that “human society is bound to move toward communism, but realizing this lofty goal must go through several historical stages. In the practice of solving China’s practical problems with the basic principles of Marxism, our party has gradually realized that socialist development is not only a long-term historical process, but also a process that needs to be divided into different historical stages. In the process of opening up the road of socialism with Chinese characteristics, our party proposed that our country is and will be in the primary stage of socialism for a long time.”
The author then quotes Xi as saying that: “The primary stage of socialism is not a static, unchanging, stagnant stage, nor is it a spontaneous, passive stage that can be crossed naturally without much effort. Rather it is dynamic, positive and always full of vigor and vitality. It is a process of gradual progress, continuous development and progress, and a process of quantitative accumulation and development and change that is getting closer to a qualitative leap.”
The next article talks about the new development concept of innovation, coordination, greenness, openness, and sharing. The argument is that this development concept has been thought through keeping in mind domestic requirements and the international environment. So the author writes that the concept “directly points to the outstanding problems, bottlenecks and shortcomings in building a well-off society in an all-round way, and leads us to make breakthrough progress in optimising structure, enhancing kinetic energy, resolving contradictions and filling shortcomings, thus promoting a more balanced, coordinated and sustainable development.” What all this means is that the goal for China economically is to focus on ensuring the Party’s commanding position, push ahead with innovation, upgrade industrial scale, address challenges of inequality and unbalanced development, focus on environmental protection, livelihood issues and governance efficiency.
At the same time, in terms of the external environment, the assessment is that there is a shift in geopolitical and geo-economic power from the West towards emerging economies. This is accompanied by a trend towards multipolarity but also protectionism, unilateralism and hegemonism. And with this, there is “a new round of scientific and technological revolution and industrial transformation” that is taking place. All this creates dangers and opportunities. The author then says that the new development concept “is a powerful ideological weapon for us to take advantage of the big changes, seize opportunities, resist winds and waves, gain advantages, win initiative, and win the future.”
The third piece talked about the new development pattern. This is referred to as a “strategic choice” that has been made in response to the opportunities and challenges of the new development stage and in implementing the new development concept. The author quotes Xi as saying that leading cadres must keep two conditions in mind as the starting point of their planning work. The first is the “strategic overall situation for the great rejuvenation of the Chinese nation, and the other is the major changes in the world unseen in a century.” In other words, keep in mind the domestic situation, i.e., unbalanced and uneven development, technological deficiencies, desire for high-quality growth, etc, along with the trend of technological advancements, challenges to globalisation with unilateralism and protectionism on the rise, and the weakening of the “traditional international cycle.”
“Under the conditions of changes in the factor endowments of my country’s development, under the external environment of unilateralism and protectionism in some countries, as well as the downturn in the world economy and shrinking global markets, it is a strategic choice to speed up the construction of a new development pattern and make production, distribution, circulation and consumption rely more on the domestic market.”
The author then adds:
“Constructing a new development pattern, accelerating the cultivation of a complete domestic demand system and improving people's quality of life will not only solve the problem of insufficient domestic development imbalance and meet the challenge of weakening the traditional international economic cycle, but also create new space and provide new opportunities for development.”
Here’s more:
“China’s manufacturing is deeply integrated into the global industrial chain and supply chain, and its position in the international cycle has become increasingly prominent. Building a new development pattern does not mean a decline in the status of opening to the outside world. Instead, it is necessary to further open the door to opening up and realize the mutual promotion of domestic and international double circulation.”
What this means is later explained as:
“we should promote the construction of a strong domestic market and trade power, form a strong gravitational field for global resource factors, promote the coordinated development of domestic and external demand, imports and exports, introduction of foreign investment and outward investment, better connect the domestic and international markets, strengthen the leading role of the domestic circulation, and enhance the efficiency and level of the domestic circulation with the international circulation, so as to open up space for China's economic development, promote mutual benefit and win-win development with other countries, and add momentum to the recovery and growth of the world economy.”
Essentially, dual circulation is not about isolation but rather building interlinkages and attracting high-quality investment and spending abroad for technological advancement, with the aim to expand global engagement and leverage, while boosting domestic development.
Finally, the fourth piece talked about China’s new journey. The author talks about China being in a “critical period of realizing the great rejuvenation” and the “major changes unseen in a century” that are taking place in the world are intertwined. “Today, we are closer, more confident and able to achieve the goal of the great rejuvenation of the Chinese nation than at any time in history. However, the great rejuvenation of the Chinese nation can never be achieved easily, and we must carry out great struggles with many new historical characteristics.”
He adds: “We should have two general situations in mind, keep calm in times of crisis, seek opportunities in times of crisis, forge ahead and open up new opportunities.” The roadmap that the author provides is to use the changes that are taken place in the world to further China’s national rejuvenation while also using China’s rejuvenation to shape the changes that are taking place in the world.
The author then talks about how China’s economic strength, scientific and technological strength, comprehensive national strength and improvements in people’s living standards along with achievement in building a well-off society are indicative of the strength of the Party-led governance system. The author argues that China’s “significant institutional advantages, solid material foundation, abundant human resources, complete industrial system, strong scientific and technological strength, broad market space, and strong development resilience” create “favorable conditions and solid foundation for starting a new journey” towards socialist modernisation.
He then concludes that doing this well requires:
maintaining and strengthening Party’s leadership with Xi at its core
meeting people’s developmental needs, i.e., “people-centered” development thinking. This covers issues like inequality, livelihood issues, sustainable development, unbalanced growth, etc.
modernising governance system and capabilities; this emphasises the Party's leadership over economic, political, cultural, social, ecological, military and foreign affairs domains.
“On the new journey, we must strengthen institutional self-confidence, maintain strategic determination, and further adhere to and improve the socialist system with Chinese characteristics around the directions, goals and paths determined in the ‘Planning Outline’, so as to give our country a significant advantage in many aspects of the national system and governance system.” Finally, the piece ends with a focus on the need to “insist on innovation” and “carry forward the spirit of struggle.”
III. Covid, Population, Employment & Tech
Let’s begin with with a brief report about fresh COVID-19 cases in China. On Sunday, China’s National Health Commission reported 18 new cases of confirmed infections (14 imported). A day earlier this number was 14 new cases, and on Friday, it was 7. In fact, on Friday, the NHC had reported China’s first local transmissions in over three weeks. Xinhua’s report underscores how seriously these infections are being taken. It informs that more than 100,000 people who were given nucleic acid tests in Feixi County in east China’s Anhui Province on Saturday. The countywide nucleic acid tests took place after one more locally-transmitted COVID-19 case was reported on Friday. It was the second case in Feixi and the third in Anhui since Thursday. Likewise, some 500,000 people are being tested across Bayuquan District, Yingkou City, in northeast China’s Liaoning Province. The report adds that “nine residential communities and villages in Yingkou have been upgraded to medium-risk areas for COVID-19 and put under closed-off management, the city government said. The city government has ordered to cap visitor flow under 50 percent of the designed capacity in public places such as shopping malls, supermarkets, theaters, museums and restaurants.”
Moving on, this week we had the government release the much anticipated census data from China. The National Bureau of Statistics reported this week that as of November 1, 2020, “the total population of the country was 1,41.78 million, which was compared with the total of 1,339.72 million in the sixth census in 2010. This implies an increase of 72.06 million people, an increase of 5.38%, and an average annual growth rate of 0.53%.” NBS chief Ning Jizhe said that while growth has slowed down, it remains steady.
Geographic Spread of Population:
Eastern region: 39.93%, up by 2.15% from 2010
Central region: 25.83%, down by 0.79% from 2010
Western region: 27.12%, up by 0.22% from 2010
Northeast region: 6.98%, down by 1.2% from 2010
“The gender structure of the population continues to improve. The male population is 723.34 million, accounting for 51.24%; the female population is 688.44 million, accounting for 48.76%. The sex ratio of the total population (100 women and the ratio of men to women) is 105.07, which is basically the same as in 2010, but slightly lower...The sex ratio at birth in China was 111.3, a decrease of 6.8 from 2010.”
Age-wise Population:
0 and 14 is 253.38 million, accounting for 17.95%; up by 1.35% from 2010
15 and 59 is 894.38 million, accounting for 63.35%; down by 6.79% from 2010
60 and over is 264.02 million, accounting for 18.70%; up by 5.44% from 2010
Also note this data point: there were 12 million births last year, which represents an 18% drop from the 14.65 million the year before. The trend line is clearly problematic for China.
According to data, the size of families is shrinking. There are 494.16 million households nationwide...The average population of each household is 2.62 persons, 0.48 persons less than the 3.1 persons in 2010. Also note this from Caixin’s report:
“‘China’s aging process is accelerating,’ Ning said, adding that the elderly population has multiple characteristics. The Chinese mainland has 31 provinces and regions, 16 of which have more than 5 million elderly residents, and six with 10 million, Ning said. He also said there are obvious differences in the level of aging between rural and urban areas, with more elderly residents living in rural areas. In 2020, the proportion of people aged over 60 and over 65 years old in rural areas was 23.8% and 17.7%, respectively, higher than in cities and towns. Currently, China has a working-age population of 880 million, which means labor resources are still abundant, Ning said. “The average age of the population is 38.8 years, still young and strong on the whole,” he said, adding that it’s nearly the same as the U.S.’ population.”
Anyway, on the urban-rural divide, “the population living in cities and towns is 901.99 million, accounting for 63.89%; the population living in rural areas is 509.79 million, accounting for 36.11%.”
In terms of the Ethnic Divide:
“The population of Han nationality is 1,286.31 million, accounting for 91.11%; the population of ethnic minorities is 124.47 million, accounting for 8.89%. Compared with 2010, the Han population increased by 4.93%, the population of various ethnic minorities increased by 10.26%, and the proportion of ethnic minorities increased by 0.40%.”
In terms of Education:
“The population with university education is 218.36 million. Compared with 2010, the number of people with university education per 100,000 people rose from 8,930 to 15,467; the average years of education of the population aged 15 and above increased from 9.08 to 9.91, and the illiteracy rate dropped from 4.08% to 2.67%.”
Next, looking at some key economic stories. First, China’s Ministry of Commerce estimates that FDI inflows through Q1 of the year were at 397.07 billion yuan (about $61.45 billion). That figure is a jump of 38.6 percent year on year and 30.1 percent from 2019. The data show:
FDI into the service sector was 312.94 billion yuan, up by 46.8%
Inflow into the high-tech industry grew by 29.1%
FDI from BRI countries was up by 62.8%
From ASEAN was up by 65.2%
FDI from the EU was up by 9.2%
Second, at Premier Li Keqiang spoke about extending “pro-employment” policies during the weekly State Council meeting. PD’s report (Xinhua English & State Council’s website) says that “the employment pressure is still high. We must continue to give priority to employment and maintain policy support for market entities, especially small, medium and micro enterprises, and employment for key groups.” Consequently, the “government will continue to refund unemployment insurance premiums to employers and increase policy support for market-based employment to help college graduates find jobs or start new businesses.” The report adds that “in regions whose balance of the unemployment insurance funds in the previous year can cover such refunds for at least one year, a maximum of 30 percent of the unemployment insurance contributions paid in the previous year will be refunded to eligible large enterprises this year, and 60 percent to micro, small and medium-sized enterprises.” Also, policies “subsidizing professional training and college graduates’ internships, and supporting college graduates to seek grassroots jobs, will be extended until the end of this year.”
Some 200 million Chinese citizens are currently working through flexible employment; there will be more measures to support them; these include support in terms of occupational injury and liberalization of household registration restrictions for flexible employees to participate in social security in the place of employment. There will also be more support for enterprises impacted by the pandemic in sectors such as civil aviation, tourism, etc. There’s also emphasis on micro loans. The PD report says that the meeting called for ensuring that “inclusive small and micro loans of the five large state-owned commercial banks increase by more than 30%.”
Also this week, official data show (English report) that new yuan-denominated loans totalled 1.47 trillion yuan ($228.77 billion) in April, down 229.3 billion yuan year on year. In addition, China’s newly added social financing, a measurement of funds the real economy receives from the financial system, came in at 1.85 trillion yuan in April, down 1.25 trillion yuan year on year. Also, yuan-denominated loans to the real economy increased by 1.28 trillion yuan, down by 339.9 billion yuan from a year ago. By the end of April, total social financing reached 296.16 trillion yuan, up by 11.7 percent year on year.
From loans to tech, upheavals in China’s technology sector continue. But before I get to that, the big achievement for China this week was the successful landing of a spacecraft along the Utopia Planitia site on Mars on Saturday. China is now just the second country to have landed a rover on Mars. The Chinese rover Zhurong, which means God of Fire, was carried to Mars on the Tianwen-1 orbiter, which arrived above the planet in February. Following a complex landing exercise, the rover took more than 17 minutes to unfold its solar panels and antenna and send signals to ground controllers more than 320 million kilometres away. People’s Daily’s front page on Sunday led with this, predominantly highlighting Xi’s letter praising the mission. He wrote that this represented “an important step in China’s interstellar exploration journey, realizing the leap from the Earth-Moon system to the interplanetary system, and leaving the mark of the Chinese on Mars for the first time.”
Alas, things don’t look as good for Chinese food delivery giant Meituan. The company’s shares in Chinese fell sharply after Wang Xing reportedly shared a 1,000-year-old poem on social media. BBC reports that the Book Burning Pit by Zhang Jie was posted, then deleted, by the firm's billionaire CEO. The Tang dynasty poem was interpreted as a veiled criticism of President Xi Jinping's government. Bloomberg informs that Meituan lost $26 billion in market value over two days, evaporating several billion dollars of Wang’s own wealth. The report adds that Wang quickly denied any political intent, but then this is quintessential China in terms of how political and business battles tend to be waged through literary allusion.
Next, amid Tesla’s continuing challenges in China, the Cyberspace Administration of China unveiled on Wednesday a draft regulation on managing data related to automobiles. China Daily reports that the draft applies to operators that design, produce, sell, maintain the service of and manage automobiles on the mainland, when they collect, analyze, store, transmit, inquire about, use and delete personal information and key data. It stipulates that individuals must agree to the collection of their personal data, and personal information or key data should be stored on the Chinese mainland. Data that is to be provided offshore must receive and pass data exit safety assessments by cyberspace authorities. When operators offer personal information or key data abroad, they will need to take effective measures to clarify and supervise that receivers’ use of the data is in accordance with the purpose, scope and manner agreed to by the two sides, in order to ensure data security.
While we are talking about data security, the regulator in China pulled up 36 security apps, including those developed by Tencent, Baidu and Qihoo 360, for illegally obtaining data without users’ consent, collecting more information than they need to operate, and demanding excessive numbers of permissions. A notice published on Monday singled out a further 48 online lending apps for similar violations, including those developed by the personal finance arms of ride-hailing giant Didi Chuxing, Taobao, Ping An Insurance Group and several national banks.
Meanwhile, on the all important issue of semiconductors, SCMP reports that in a sign that Beijing is trying to temper nationalist sentiment, Xinhua published an op-ed pushing back against the rising tide of discontent on the country’s social media against plans by Taiwan Semiconductor Manufacturing Co (TSMC) to invest almost $3 billion to expand production at its Nanjing fab. Xinhua’s op-ed, titled “There is no quick pill to save chips” and played up by other state media outlets including the People’s Daily, warned against chip nationalism and called for patience in developing China’s self-sufficiency in semiconductor manufacturing.
“The one-sided thinking that only emphasises internal circulation, the short-sighted behaviour of pursuing big and quick work, and the exaggeration that always leads the way are not conducive to the long-term development of the chip industry,” the op-ed said. “The more complicated the global situation is, the more the Chinese semiconductor industry needs to completely blend into the global supply chain such that nobody can easily escape [one another].”
Finally, Li Keqiang spoke at an event in Beijing about China’s talent incentive systems. He said that the incentives should be focussed on providing more support for basic research that might bring no fame and research that demands a long-term commitment. He also called for more international exchanges and cooperation and wants more outstanding young researchers to be encouraged to play leading roles in major scientific research projects.
Also Read:
China Bets on Productivity Over Population to Drive Its Economy
Taiwan’s TSMC joins American chip coalition in another blow to China’s self-sufficiency drive
China wants to boost disruptive semiconductor technologies as Moore’s Law moves towards its limit
Drop in Xinjiang birthrate largest in recent history: report
IV. Region Watch
China’s envoy in Dhaka, Li Jiming, provoked a sharp response after warning Bangladesh to not consider joining the Quad. The ambassador said doing so would “damage” relations,
"Obviously it will not be a good idea for Bangladesh to participate in this small club of four because it will substantially damage our bilateral relationship,” he said at a meeting organised by the Diplomatic Correspondents Association on Monday.
Bangladesh Foreign Minister A.K. Abdul Momen reacted by saying,
"as a sovereign country, Bangladesh will determine the course of its foreign policy in the interest of its people” and "urged foreign envoys in Dhaka to maintain decency and decorum while speaking in public."
Chinese foreign ministry spokesperson Hua Chunying denied any attempts to interfere, during a regular press briefing and explained that comments about the Quad were aimed at opposing political cliques. Beyond the spat over remarks, Bangladesh and China have been intensifying their cooperation including on COVID-19. A day after the Bangladesh Foreign Ministry’s statement on the Chinese envoy’s remarks, it expressed its thanks to China for “gifting 500,000 vaccines” adding that a “regular supply of Chinese vaccines to Bangladesh is underway”. The Ministry shared a photo of the Foreign Minister receiving a package of Sinopharm vaccines from Ambassador Li.
Furthering its anti-pandemic cooperation, Chinese foreign ministry spokesperson Wang Wenbin told local media that supplies were also being sent to Nepal to assist in managing the overwhelming number of COVID-19 cases. The Himalayan nation was last week, preparing to airlift oxygen cylinders from China. Separately, according to Chinese state media, China will set up a "line of separation" on one side of Mount Everest's peak. The measure, it is believed, is needed to keep Nepal's COVID-19 outbreak from crossing the border and is part of China's "zero contact strategy" to keep climbers from the Chinese and Nepalese sides of Everest from mixing if they reach the summit on the same day. In Pakistan, the first batch of China's CanSino vaccines arrived earlier this month. The vaccines arrived just days after Special Assistant to the Pakistani Prime Minister on Health Faisal Sultan said that the local production of the single-dose CanSino COVID-19 vaccine is about to commence in the country to facilitate its vaccination drive. Islamabad believes that local production of the vaccine will make Pakistan largely self-sufficient in reaching its COVID-19 vaccine needs.
Debris from China’s Long March 5B rocket fell into the waters of the Indian Ocean, west of the Maldives last Sunday. The Maldives National Defence Force said the Coastguard Squadron “is active after receiving reports of rocket debris fallen in Maldivian waters”. Fatalities were avoided, but China is criticised for failing to plan a ‘targeted re-entry’ to determine where debris would land. NASA Administrator Bill Nelson said in a statement:
“It is clear that China is failing to meet responsible standards regarding their space debris,” he said.
In China’s defence, Foreign Ministry spokesperson Hua Chunying complained that Beijing was being unfairly criticised. Stating the reaction to debris from a rocket launched by SpaceX that fell to Earth in Washington and on the Oregon coast in March, she said:
“American media used romantic rhetoric like ‘shooting stars lighting up the night sky,’” she said. “But when it comes to the Chinese side, it’s a completely different approach.”
There’s positive news from Sri Lanka. With the help of Chinese funding, Sri Lankan government debt is leading gains in Asian dollar bonds as investors bet that the nation will avoid defaulting on its short-term notes. Last year, S&P Global Ratings cited the nation’s worsening fiscal position as a risk to its ability to service debt. As it struggled with COVID-19 and a slump in the tourism industry, the island nation signed a currency swap agreement with China in March, which was highly criticised. A Bloomberg Barclays index now shows that the Sri Lankan notes are the best performance for any Asian nation’s U.S. currency debt in 2021.
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V. Central Asia, Afghanistan & West Asia
Wang Yi met (English report) with Central Asian foreign ministers this week. The discussions were wide ranging and covered a number of different areas. Xinhua tells us that Wang spoke about the need to:
persist in uniting to fight the epidemic and build a community of health; here he spoke about cooperation on development and the joint production of vaccines.
persist in pioneering and innovating, and building the Silk Road Economic Belt - this covers markets, products, rules and funding.
adhere to openness and connectivity, building a link between Asia and Europe.
persist in working together on regional security and stability; this covered organised crime, drug trafficking, issues of sovereignty and foreign intervention and also security in Afghanistan
jointly draw up a new blueprint for high-quality development
The meeting led to three joint statements. The first speaks about pandemic cooperation; the second is on local cooperation; the third is regarding Afghanistan.
The pandemic joint statement praises China’s epidemic control and its cooperation; it talks about opposing politicization, stigma, discrimination, racism and xenophobia, etc; it talks about pandemic cooperation among the countries; boosting scientific and pragmatic cooperation mechanism for medical institutions; it backs China’s efforts on the traceability issue; opposes ‘vaccine nationalism’ and the creation of an ‘immune gap’; and says parties are willing to study the issue of mutual recognition of health codes.
The Afghanistan joint statement says that:
“the sovereignty, independence and territorial integrity of Afghanistan must be respected, and the right of the Afghan people to independently control their own destiny must be respected.”
They want an “orderly and responsible” withdrawal of foreign forces “to ensure the long-term stability of Afghanistan and avoid a resurgence of terrorist forces. All parties welcome relevant countries to continue to fulfill their commitments and help Afghanistan advance its economic and social reconstruction.”
“The peace and reconciliation process in Afghanistan is at a critical stage and should be firmly advanced. It is hoped that the parties involved in the Afghan peace talks will base themselves on the long-term interests of the country and the people and reach a future national arrangement acceptable to all parties as soon as possible.”
The statement talks up the SCO-Afghanistan Liaison Group and the OECD-Afghan Liaison Group.
“All parties reiterated their firm support for the Afghan government to combat all forms of terrorism, extremism and separatism. The territory of Afghanistan should not be used by destructive forces to threaten or attack any other country. All parties are willing to continue to promote cooperation in law enforcement, security and counter-terrorism with Afghanistan through bilateral and multilateral channels, and jointly combat the ‘three evils’, drug smuggling and human trafficking and other transnational criminal activities.”
Just to stay with Afghanistan for a bit: WSJ is reporting that “U.S. military commanders want bases for troops, drones, bombers and artillery to shore up the Afghan government, keep the Taliban insurgency in check and monitor other extremists. Options being assessed range from nearby countries to more distant Arab Gulf emirates and Navy ships at sea, U.S. government and military officials said Preferable, according to some military and Biden administration officials, would be Uzbekistan and Tajikistan, which border Afghanistan and would allow for quick access. But Russia’s large military footprint in the region, China’s growing one and tensions between them and Washington complicate plans for Central Asian bases, the officials said.” The report adds that Zalmay Khalilzad, the U.S. special representative for Afghanistan, traveled to Uzbekistan and Tajikistan this past week, but no formal requests for bases in Central Asia have been made to date, with the Pentagon still weighing the pros and cons.
I also recommend this piece by Yun Sun on China’s calculations in Afghanistan. She argues that:
“For the past 20 years, China has demonstrated a contradictory attitude toward the U.S. presence in Afghanistan. On the one hand, China has seen America’s war, presence, and ‘manipulation’ or ‘distortion’ of Afghan politics as the cause of instability. In Beijing’s view, the war has long deviated from its original goal of counter-terrorism and morphed into a plan to control the heart of Eurasia and China’s backyard. Therefore, across the board, the U.S. military presence in Afghanistan has been portrayed in a highly negative light and as a source of regional instability and concern. Ironically enough, China holds an equally if not more critical attitude toward the U.S. troop withdrawal. Just as it did with the Foreign Ministry’s statement after the bombing on May 8, China causally attributes the deterioration of Afghanistan’s security to the U.S.-announced plan of troop withdrawal and blames Washington for its ‘irresponsible’ behavior. China rarely misses an opportunity to blame the United States for the deteriorating situation in Afghanistan — especially in its urban areas — and the potential explosion of a civil war. The contradictory attitude of China toward the U.S. military presence in Afghanistan demonstrates Beijing’s multifaceted calculations. China would like to see the U.S. bogged down and bled out in ‘the longest war in American history’ as the war erodes U.S. national wealth and moral superiority in the region and across the globe. Indeed, China has consistently seen the U.S. wars in Afghanistan and Iraq as godsends that blessed China with a golden ‘window of strategic opportunity’ to develop its strength without alarming the United States after 2001. Thus, the U.S. war in Afghanistan is viewed with both negativity and schadenfreude in China.”
She concludes that Beijing’s not too optimistic about the US’ planned withdrawal because it anticipates chaos and instability in Afghanistan while seeing the US as not necessarily retreating from the region. Rather, it sees this as the US rebalancing and reorienting to challenge China further.
Finally, with violence escalating between Israel and Palestine, Wang Yi spoke about China’s position. This is important given that China is also the current chair of the UNSC and a discussion is expected later today. Xinhua reports that Wang Yi clarified China’s views in a chat with Pakistani Foreign Minister Shah Mahmood Qureshi. Wang called for a “just solution” for the Palestinian issue. Xinhua reports him as saying that in recent years “the Middle East peace process has deviated from its original track, the UN Security Council resolutions have not been earnestly implemented and, in particular, the Palestinian right to build an independent state has been continuously violated, adding to the plight of the Palestinian people, which has led to the intensification of the Palestinian-Israeli confrontation and repeated conflicts.”
He added that the Security Council must act to seek “ceasefire and cessation of violence.” He said that China in May has pushed the Council to hold two emergency consultations on the Palestine-Israel conflict, and has drafted a press statement to guide the UNSC, but “regrettably, the Council has so far failed to reach an agreement, with the United States standing on the opposite side of international justice.” Wang added China wants the UNSC to “reconfirm the two-state solution and urge Palestine and Israel to resume peace talks on the basis of the two-state solution.”
VI. China-US Ties
I covered Penpa Tsering’s election victory as CTA chief in the first section, but what’s also noteworthy is that the US government has been quick to congratulate him. We look forward to working with him and the CTA to support the Tibetan diaspora,” wrote the State Department’s Ned Price on Twitter. So this is likely to evoke an angry response tomorrow from whoever is at the Ministry of Foreign Affair’s press briefing.
Anyway, Gao Feng, spokesperson for China’s Commerce Ministry, responded this week to remarks made by U.S. Trade Representative Katherine Tai about potentially meeting Vice Premier Liu He “in the near term.” Gao spoke about the need for “dialogue and consultation on the basis of mutual respect and equal treatment” and added that “China's stance on tariff issues is very clear. Imposing additional tariff measures unilaterally is not beneficial to China, the United States or the whole world.”
Interestingly, Lingling Wei and Bob Davis reported for WSJ that Tai might not really end up meeting Liu He. They report that Liu might be replaced by Hu Chunhua, a younger vice premier who made his mark overseeing the restive Tibet region and running the trade-reliant coastal province of Guangdong but who has little experience in U.S.-China relations. They add that “the deliberation is part of a wider personnel shuffle as China recalibrates its approach to the new U.S. administration.” Note that Liu is soon to hit 70. Hu, meanwhile, is 58; he oversees the commerce ministry; and is a candidate to get into the PSC in 2022. Beijing’s denied that this is happening. “The report is not true,” Commerce Ministry spokesman Gao Feng told reporters at a news briefing Thursday.
Anyway, another bit that Gao Feng spoke about this week was the US Defense Department’s decision to remove Xiaomi from a blacklist banning US investment in the Chinese tech giant. This came two months after Xiaomi won a key victory in a federal lawsuit challenging the listing. The judge then put a halt to the DoD’s actions. Gao said “removing sanctions and restrictions and stopping suppression of Chinese companies will benefit China, the United States, and the world.”
In addition to this, Demetri Sevastopulo of the Financial Times reports that “the Pentagon has failed to give Congress a legally required report on Chinese companies with military ties, as US president Joe Biden neared a decision on whether Americans could invest in such groups. Congress required the Department of Defense in January to produce a report by April 15. But the Pentagon told lawmakers it has missed the deadline, according to two people familiar with the report. The delay came as the Biden administration decides whether to maintain an executive order signed by Donald Trump, the former president, that banned Americans from investing in Chinese companies named in a previous Pentagon blacklist.”
Regardless, the Biden administration has extended Trump’s executive order restricting use of Chinese telecommunications equipment. Hua Chunying was asked about this and she said that:
“the US makes incessant denigration and smearing against Huawei and other Chinese telecommunications companies without providing any solid proof that they constitute security threat to the US and other countries. National security is used as a clumsy excuse by the US to practice ‘state hegemony’ targeting Chinese hi-tech companies. It is a dirty trick of a thief crying ‘stop the thief’. As is known to all, there are revelations every once in a while on the tapping scandals of the US targeting even its allies, such as ‘PRISM’ and ‘Irritant Horn’. That makes the US the true empire of hacking and theft of secrets. It is neither reliable nor trustworthy.”
Next, China and the US are continuing to spar over the fate of journalists and students. These were two areas that one expected would see improvements after the Anchorage talks. But it doesn’t seem like this is happening. Despite visas for students being opened again by the US, this week SCMP reports that a Chinese student was denied visa because his father is a “low-level” police officer. The report says that the letter informing the student of the refusal said visa issuance for senior Chinese officials employed by four intelligence and law enforcement departments, as well as their spouses and children, had been suspended. Responding to the report, Hua Chunying said it was “good proof” that the United States had disrupted normal personnel exchanges between the two countries for political reasons, which was not conducive to good China-US relations. “In accordance with the US logic, should China deny visas to US intelligence and law enforcement personnel and their families?” Hua said on Thursday, adding that China hoped the US would recognise its mistakes and help allow normal personnel exchanges.
Als this week, Hua gave Bloomberg’s journalists a bit of an earful in regard to US visa policies. On Thursday, she spoke about US policy with regard to Chinese journalists. She talked about delays in visa renewal, and the 90-day-limit of stay, which makes things all the more complicated. All of this, she said, led to a Xinhua reporter to return on May 1. She said that diplomacy was about reciprocity, warning that so far, “we have not taken countermeasures against the US side's decision to reduce the validity of visas for all Chinese journalists in the US to less than three months.” The next day, another Bloomberg journalist spoke about delays in renewing the press card in China and Hua’s asked the reporter to compare their situation with “the situation of Chinese journalists in the US.” She added, “If you put yourselves in their shoes, you will probably congratulate yourselves on your good fortune of being in China and feel for the Chinese journalists in the US.” And then said that China had shown “goodwill, sincerity, tolerance and patience. What the next moves will be is up to the US. The ball is in the court of the US government. If they insist on imposing blatant political repression of Chinese journalists, we will have to take formal and reciprocal countermeasures.”
Next, another fault-line which grew wider this week is around Xinjiang. While China has been showcasing positive stories by international reporters on a junket in the region in domestic media, UN envoys of US, Germany, Britain and other key Western powers met this week demanding a probe into China’s policies there. SCMP reports that in a virtual hearing called by Britain, Germany and the United States and backed by 15 other mostly Western UN member states, China was accused by a procession of ambassadors, rights groups and academics of “systematic” persecution of minorities in the far western region. China was also accused of using its status as a permanent member of the UN Security Council – as well as its growing economic heft – of blocking efforts to investigate events in Xinjiang. “We appeal to China to respect the Universal Declaration of Human Rights, and we ask China to tear down the detention camps. If you have nothing to hide, why do you not finally grant unimpeded access to the commissioner for human rights?” Christoph Heusgen, the German ambassador to the UN, asked. The report further adds that “Reuters reported last week that China‘s UN delegation had urged members not to attend the hearing, saying: ‘We request your mission NOT to participate in this anti-China event.’ But China was greatly outnumbered at the hearing, after diplomats from nations including Australia, Denmark, France and Slovakia all made statements condemning Beijing‘s actions in Xinjiang and calling for an independent inspection of the situation.”
The Chinese foreign ministry was annoyed. Hua said: “The conference was awash with outrageous lies and disinformation. It was another despicable shoddy show and sheer political farces put together by a handful of countries including the US. In fact, it was firmly rejected by the vast UN membership.” She ended with this:
“A Chinese poem reads that amid monkeys’ howl along the riverbanks, my skiff has travelled a thousand miles. China's growth and Xinjiang's stability and development will never be shaken by the clumsy show of these countries and individuals.”
Finally, as things get tougher in Hong Kong, American businesses are looking to move away it seems. A new AmCham survey has found that around 42% of members surveyed are planning or considering leaving Hong Kong. Of those planning to leave, around 62.3% cited discomfort with the national security law as a reason. In its annual white paper on China, AmCham said that American firms in the mainland continue to face structural restrictions when it comes to market access. Industries in which US companies operate at a disadvantage in China include health care, movies and cloud computing.
When ties worsen, U.S. firms see poorer implementation of regulations promising equal treatment for foreign business, affecting investment project approvals and market access, said Greg Gilligan, chairman of AmCham China. But also the white paper did show, as per this Global Times report, that “nearly 60 percent of US-based enterprises which are members of AmCham China, aim to increase their investment in China, and more than 85 percent of the US companies said that they are not considering moving out of China.” The report quotes the white paper as saying “Nearly two-thirds of members report they are planning to increase investment in China in 2021, with the majority expecting to increase investment by between 1 and 10 percent.”
Also Read:
‘US Will Not Leave Australia Alone’ Against China: US Secretary Of State - Hua’s response: “I wonder what Secretary Blinken means by making the above-mentioned remarks? Does he believe Australia's interests are more important and come before US interests? If that's the case, I wonder since when has the US policy shifted from ‘America First’ to ‘Australia First’?
US to spend $110 bn in technology for basic research to counter China
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University Researcher Sentenced to Prison for Lying on Grant Applications to Develop Scientific Expertise for China - Song Guo Zheng “pleaded guilty last November and admitted he lied on applications in order to use approximately $4.1 million in grants from NIH to develop China’s expertise in the areas of rheumatology and immunology.”
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