Tibet Drills - BRICS - 'Profound Revolution' - Xi Calls for Struggle - Ethnic Affairs Conference - Conditional Climate Talks - EU Discusses China - Japan's Taiwan Policy - Afghanistan - 6th Plenum
Before we get into today’s newsletter, I want to recommend reading through two of the pieces from the Xi Thought Q&A series from the People’s Daily that I covered in my weekday tracker. I am not summarising them here because the newsletter’s anyway become far too long. But do check these out:
The first one’s on the role of Marxism as guiding ideology and development of the next generation.
The second one is about why China should be saying no to “universal values.”
Also, before you proceed, please do consider taking part in Takshashila’s first-ever India’s Global Outlook Survey. This is an effort to bridge the knowledge gap around how Indian policymakers, the strategic affairs community and Indian citizens view the world and India’s role in it.
I. Naval Drills, Tibet, BRICS & Myanmar Link
With events in Afghanistan evolving rapidly, there’s really been very little bilateral development between India and China that’s been reported. But there are some interesting things, of course, taking place. For instance, we’ve had Indian navy vessels deployed East of the Malacca, we’ve had some developments related to the BRICS, China’s new connectivity link via Myanmar and so on. So let’s get to it.
Let’s begin in the seas. PTI reports that the 28th edition of the Singapore-India Maritime Bilateral Exercise took place this week. Earlier towards the end of August, we had the Malabar drills off Guam. While these are useful to keep in mind, there have been two significant announcements from Beijing too. First, a week ago, Chinese authorities announced that from September 1, they will require a range of vessels “to report their information” when passing through what China sees as its “territorial waters.” Ananth Krishnan reports, citing Global Times, that “operators of submersibles, nuclear vessels, ships carrying radioactive materials and ships carrying bulk oil, chemicals, liquefied gas and other toxic and harmful substances are required to report their detailed information upon their visits to Chinese territorial waters.”
The report adds that as per the notice, in addition to the above, “any vessel deemed to ‘endanger the maritime traffic safety of China’ will also be required to report its information, which would include their name, call sign, current position next port of call, and estimated time of arrival...The Global Times noted the Maritime Safety Administration ‘has the power to dispel or reject a vessel’s entry to Chinese waters if the vessel is found to pose threat to China’s national security’.” As Ananth rightly points out in the story, it remains to be seen how this is implemented. I recommend reading Manoj Joshi’s piece on this. He makes the point that this is obviously an effort that is “part of an ongoing Chinese project to establish its jurisdiction over the South China Sea by using Chinese laws and regulation.” And he argues that this use of lawfare or long-arm jurisdiction isn’t particularly unique to China.
Second, in late August, Chinese forces also held live ammunition training near the southern province of Guangdong in the South China Sea, and off the northeast coast near Liaoning in the Yellow Sea and Bohai Strait. China’s Maritime Safety Administration issued notices warning against entry to the waters. A Global Times report informs that the PLA has held “at least 120 military exercises in the Bohai Sea, the Yellow Sea, the East China Sea, the Taiwan Straits and the South China Sea over the past three months.” The report also quotes Wei Dongxu, a Beijing-based military expert, as saying that the drills indicate that the “PLA has established a strategic maritime defense perimeter off the coastlines.”
Moving on, three developments related to the BRICS grouping. First, the 11th BRICS trade ministers meeting took place on Friday. A bunch of documents were subsequently released. The overall statement talks about a number of domains, such as e-commerce, supply chain resilience, the role of the WTO, a possible dialogue on services trade (the language on this is so weak!), customs cooperation, the role of the NDB, intellectual property rights, and so on. However, these are not really goal-oriented documents.
Anyway, they backed the WTO having “a central role in rule-making for global trade and in promoting predictability, stability and certainty in the international trade.” They also urged “all the WTO members to work proactively towards the early conclusion of text-based discussions of the TRIPS waiver proposal which is based on the balance between the interests of manufacturers of the pharmaceutical products and public health as it is stipulated in WTO Doha Declaration on TRIPS Agreement and Public health. We also call on comprehensive outcomes aimed at improving transparency and monitoring, advancing facilitation and enhancing collaboration and cooperation on COVID-19.”
Second, we have the 13th BRICS summit this week on Friday. Developments in Afghanistan will be part of the discussions. Do recall that security officials of the BRICS nations on August 24 adopted an action plan to boost practical cooperation in combating terrorism and terror financing on August 24. Third, the BRICS NDB has announced membership expansion to formally include UAE, Uruguay and Bangladesh.
Moving on, a new China-Myanmar sea-road-rail transport link opened this week. SCMP reports that “last month saw the first trial of the China-Myanmar corridor, which saw a cargo of around 60 containers being sent by road from Yangon, a major Indian Ocean shipping hub, to Chin Shwe Haw on the border with China. It was sent on to Lincang in Yunnan province, from where it went by rail to Chengdu, the capital of Sichuan and a major trade hub in western China.” The report added: “However, given the poor domestic transport network and the turmoil in Myanmar, it might take some time before the trade route opened for business, said Yun Sun, an analyst of China-Myanmar relations at the Washington-based Stimson Centre. ‘Myanmar doesn’t have the best transport system, so the portion from Yangon to Yunnan is going to be the challenge,” she said. “Given the political turmoil and the Covid situation in Myanmar, the trade route would inevitably be affected even if it is launched.’ Citing industry insiders, Chinese news portal Yicai.com reported that two further trials would be held soon and regular operations could start as early as next year.”
Next, in Tibet, we saw the PLA carry out extensive drills. SCMP’s Minnie Chan has a really good report summarizing how CCTV reported on the drills. She writes that the Tibet Military Command “mobilised several brigades and divided them into two teams: the PLA and a rival ‘blue army’. Combat units joining the drill included an elite regiment from the military district, alpine troops, forces with tanks and military vehicles, artillery personnel, missile forces, drones, intelligence personnel, army aviation teams, and airborne troops...they carried out a shell raid by an artillery force, electromagnetic attack, observation and espionage...Coordinate data relating to the blue army outpost was sent to the command centre in real time, allowing precision strikes by the artillery and howitzer forces at the front line. The drill also saw the anti-aircraft artillery troop shoot down drone aircraft, aided by an intelligence reconnaissance brigade, which also sent electromagnetic interference to confuse and mislead the enemy.” You could also check out my colleague Suyash’s analysis of the recent developments related to the PLA in Tibet.
Finally, the Economist’s David Rennie has a really good piece on the introduction of Xi Thought in schools. While I recommend reading the piece for that itself, there’s this useful data point with regard to India:
“Alongside images of Mr Xi with members of the Young Pioneers, a party organisation for children aged between six and 14, it informs pupils: ‘As paramount leader of the party and state, Grandpa Xi Jinping has always cared for us, and wishes for us to strive to grow into worthy builders and inheritors of socialism.’ In practice, teachers of politics and ideology—who form a highly trained elite, and a pool for future school heads—are encouraged to leaven this stodge with singing contests or lessons in patriotism based on news stories. Teachers say that instructive recent events include last year’s border clash between Chinese and Indian troops, and the American export bans on components needed by Huawei, a Chinese electronics giant.”
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Indian military under target by Chinese origin surveillance systems
II. China & Afghanistan
I had a couple of pieces over the past week on China’s engagement in Afghanistan. Here’s the latest one, if you are interested.
But let’s look at what’s happened this week. Before I get to that, let me point to this post from the Chinese embassy in India. It’s a useful compilation of Wang Yi’s engagement on the Afghan issue from August 18 on ward. First, there was a call between Wang Yi and Antony Blinken. I am going to only focus on the discussion around Afghanistan.
Xinhua reported that:
“Blinken said that at a critical moment when the U.S. military withdrawal and evacuation from Afghanistan is nearing the end, Washington believes that the United Nations Security Council (UNSC) should speak in a clear and unified voice to show that the international community expects the Taliban to ensure the safe evacuation of foreign citizens and the Afghan people’s access to humanitarian assistance, and to guarantee that Afghan territory cannot become a hotbed of terrorist attacks or a safe haven for terrorism.”
On the UNSC issue, here’s what Wang reportedly said: “The U.S. side clearly knows the causes of the current chaotic situation in Afghanistan, Wang noted, adding that any action to be taken by the UNSC should contribute to easing tensions instead of intensifying them, and contribute to a smooth transition of the situation in Afghanistan rather than a return to turmoil.” — Read the bit below and it makes clear that what he wants is some degree of acknowledgement of the Taliban.
Here’s more of what Wang said:
“the situation in Afghanistan has undergone fundamental changes, and it is necessary for all parties to make contact with the Taliban and guide it actively. The United States, in particular, needs to work with the international community to provide Afghanistan with urgently-needed economic, livelihood and humanitarian assistance, help the new Afghan political structure maintain normal operation of government institutions, maintain social security and stability, curb currency depreciation and inflation, and embark on the journey of peaceful reconstruction at an early date, he said.” — This sounds a lot like Wang wants the US to remain deeply engaged, and not just that, but he wants Washington to continue engaging in state-building.
Wang also added:
the hasty withdrawal of the U.S. and NATO troops is likely to offer an opportunity to various terrorist groups in Afghanistan to resurge.
he wants the US “to take concrete actions to help Afghanistan combat terrorism and violence, instead of practicing double standards or fighting terrorism selectively.”
The US readout said just this: “Secretary of State Antony J. Blinken spoke today with PRC State Councilor and Foreign Minister Wang Yi about the importance of the international community holding the Taliban accountable for the public commitments they have made regarding the safe passage and freedom to travel for Afghans and foreign nationals.”
Then we had the UNSC pass a resolution on Afghanistan, with China and Russia abstaining. Here’s Beijing’s explanation for the decision.
“The recent chaos in Afghanistan is directly related to the hasty and disorderly withdrawal of foreign troops. We hope that relevant countries will realize the fact that withdrawal is not the end of responsibility, but the beginning of reflection and correction. Relevant countries should learn from the lessons, truly respect the sovereignty, independence and territorial integrity of Afghanistan, and genuinely respect the rights of the Afghan people to determine their own future. It is hoped that relevant countries will effectively change the wrong practice of imposing their own models on others, and change the hegemonic practice of imposing sanctions or even using force at every turn. These countries should be responsible for what they have done in the past 20 years, and fulfill their commitments towards the peaceful rebuilding of Afghanistan. They cannot claim to care about Afghan people's welfare, while imposing unilateral sanctions, or claim to support Afghanistan's acceleration of economic and social development, while seizing and freezing Afghanistan’s overseas assets. They have left behind in the country huge catastrophe they have created but shifted the responsibility to Afghanistan’s neighboring countries and the Security Council. The actions of foreign troops in Afghanistan in the past 20 years, including the criminal activities carried out by the United States and Australian forces for the indiscriminate killing of civilians must not be wiped out, and must continue to be investigated. The United States’ recent retaliatory attack on the Islamic State have caused casualties of innocent civilians. We call on the United States to refrain from indiscriminately bombing the civilian populated areas in Afghanistan.”
“The hasty withdrawal of foreign troops is likely to have provided opportunities for various terrorist organizations to make a comeback. We hope that the security of Kabul airport can be guaranteed, the evacuation of relevant personnel can proceed smoothly, and all parties concerned can strengthen coordination to jointly prevent new terrorist attacks. Afghanistan must never again become the birthplace for terrorism or the base for terrorists. This is the bottom line that Afghanistan must adhere to in any future political settlement. It is hoped that the Taliban will honestly fulfill their commitments and completely cut off ties with all terrorist organizations. Countries should follow international laws and Security Council resolutions, and resolutely combat international terrorist organizations such as the Islamic State, Al Qaeda and the ETIM, so as to prevent any chaos caused by terrorists by gathering in Afghanistan. On the issue of counter-terrorism, there must not be any double standard or selective approach.”
Later in the week, Wang spoke to Emmanuel Bonne, diplomatic counselor to French President Emmanuel Macron, and Iranian Foreign Minister Hossein Amir-Abdollahian. Wang told Bonne:
Wang said there are three lessons worth learning from the situation in Afghanistan:
Firstly, it is unacceptable to claim hegemony, and no matter how strong a country is, it should respect other countries, as well as fairness and justice.
Secondly, military intervention is unacceptable, and political solutions to hot issues should be upheld.
Thirdly, wishful thinking of ‘democratic transformation’ is unacceptable, and each country's development path, which is suited to its national conditions, should be respected.
“The United States suddenly withdrew its troops from Afghanistan, but it cannot shirk its responsibility...What is pressing now is to provide urgently needed economic, livelihood and humanitarian assistance to Afghanistan, so as to make up for the huge damages done to Afghan national development and people’s well-being...effective measures should be taken to help Afghanistan achieve a smooth transition and avoid a wave of refugees and migrants that will bring bitter consequences to neighboring and European countries. It is also necessary to get rid of the old habit of unilateral sanctions...it is unwise and hardly effective to freeze Afghanistan's foreign exchange reserves in the United States and exert pressure on Afghanistan at every turn.”
In the call with his Iranian counterpart, Wang said that “China has noticed that the Afghan Taliban might announce the formation of a new government in the coming days. He hopes that the new government will be open and inclusive, make a clean break with terrorist organizations, and establish and develop good relations with other countries, especially neighboring countries.” He wants China and Iran to “play a constructive role in achieving a smooth transition and peaceful reconstruction of Afghanistan.” They were both very critical of the US, with Wang saying: “the claim of the United States that the withdrawal from Afghanistan allows it to shift its focus to China and Russia not only serves as an excuse for its own failure, but also reveals the nature of its pushing for power politics in the world.”
Finally, we have another report about China’s direct engagement with the Taliban. Abdul Salam Hanafi, the deputy head of the Taliban political office in Qatar, held a telephonic conversation with Wu Jianghao, Deputy Foreign Minister of China this week.
In general, the signals from the Taliban have been stressing the importance of China as a partner. For instance, Hanafi reportedly spoke about BRI. Another Taliban spokesperson Zabiullah Mujahid, in an interview with Italian newspaper la Repubblica on Thursday, said that “‘China is our most important partner and represents a fundamental and extraordinary opportunity for us, because it is ready to invest [in] and rebuild our country’…The Taliban “care a lot about the belt and road project…We own rich copper mines, which, thanks to the Chinese, will be modernised. Finally, China represents our ticket to the markets around the world.”
The Chinese foreign ministry’s Wang Wenbin confirmed on Friday that the embassy in Kabul “is in normal operation.” On the point of BRI in Afghanistan, the ministry’s spokesperson said:
“We've noticed that the Afghan Taliban has stated its commitment to fostering an enabling environment for foreign investors. It also believes that the BRI can contribute to national and regional development and prosperity, and hopes to continue to support and participate in it. We hope there will be a steady transition in Afghanistan to deliver enduring peace and stability, which is the premise for external cooperation, and foreign investment and business presence in the country.”
When Wang was asked about recognising the Taliban government, he said: “The new Afghan government is not formed yet, which we are following closely.”
Wang was also asked this question earlier in the week by Russian media; here’s the exchange:
RIA Novosti: After the final withdrawal of US troops from Afghanistan, is China ready to recognize the Taliban as the legitimate authority in the country?
Wang Wenbin: China’s position on the Afghan issue is clear and consistent. We hope Afghanistan can form an open, inclusive and broadly-based government, uphold moderate and prudent domestic and foreign policies, resolutely combat terrorist forces in all forms, coexist friendly with all countries, and respond to the shared aspiration of the Afghan people and the international community.
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III. Xi’s Call to Struggle
Xi Jinping addressed the opening of a training session for young and middle-aged officials at the Party School. Xinhua English has a pretty detailed story on the speech too. Ding Xuexiang, Huang Kunming and Chen Xi were present, PD reported.
Xi told cadres that they “are born and live in a great era” and that they are a critical force for the cause of the Party and the people. Xi then said that the CPC has always been a Party of “lofty ideals and indomitable conviction...the ideals and conviction refer to the belief in Marxism, the great ideal of Communism and a shared ideal of socialism with Chinese characteristics.” To him, “ideas and beliefs are the spiritual pillar and political soul” of the Party and the “ideological basis for maintaining unity.”
He then emphasised to the cadres that this process of strengthening ideals and beliefs is a lifelong task that they must engage in, without which they will be unable to stand the tests of time. So how does one firm up ideals and beliefs? Xi told them that “staying loyal to the Party is the best demonstration” of this, adding that “such loyalty has a clear gauge in peaceful times - upholding the Party’s leadership and resolutely safeguarding the authority as well as the centralized and unified leadership of the CPC Central Committee.”
But it’s not just that. Xi also talked about:
implementing without compromising, the Party’s theory, line, principles and policies and the decisions of the Central Committee
strict adherence to “political discipline and political rules” and being honest
implementing organizational decisions and obeying organizational arrangements
He wants young cadres to “strive for the honour of being stationed in harsh and remote places.” “Knives must be sharpened on stones,” he said, and people learn from practice and experience. “Success rarely comes without arduousness and rich experience.” 刀要在石上磨、人要在事上练,不经风雨、不见世面是难以成大器的.
The next bit of the report talks about Xi stressing the importance of understanding reality and proceeding from there. He wants cadres to cultivate skills of “investigation and research,” work on the “front lines” to learn about development; he wants them to absorb the praise and criticism they receive and learn from working at the grassroots to understand reality. He added: “insisting on proceeding from reality and seeking truth from facts is not only a question of ideological methods, but also a question of whether the party spirit is strong or not.” 习近平指出,坚持从实际出发、实事求是,不只是思想方法问题,也是党性强不强问题. In this regard, he wants cadres to be honest in “words, deeds and personality” while also being “good at independent thinking, and persist in seeking truth and being pragmatic.” 年轻干部要坚持以党性立身做事,把说老实话、办老实事、做老实人作为党性修养和锻炼的重要内容,敢于坚持真理,善于独立思考,坚持求真务实.
All of this encouragement came with a bit of a warning too: The Party places cadres in various posts with the goal that they act as officers, and not to become office holders enjoying comforts. 党把干部放在各种岗位上,让每个人都当军官,而不是当官享受幸福. In this context, he emphasised doing things and taking responsibility. “There are always risks in doing things. It is precisely because there are risks that we need to take responsibility. Whatever is beneficial to the Party and the people, we must do it boldly and resolutely without taking refuge or shirking our responsibilities.”做事总是有风险的。正因为有风险,才需要担当. 凡是有利于党和人民的事,我们就要事不避难、义不逃责,大胆地干、坚决地干.
Xi then railed against the idea of being “Mr. Nice Guy” 好好先生; such people according to Xi don’t necessarily have public interest at heart, lack integrity and are fundamentally selfish. For the Communists, he said, what matters is struggle. He wants cadres to remain unwavering on matters of principle; one must “never be vague or give in” on these matters of principles. He added that “all Party officials should be fair and just in performing duties and leave no place for personal favour in their work.”
Then we get to some interesting stuff, which tells us that being a “loveable” power is not really the desire. So, Xi talked about the “major changes unseen in a century” that are accelerating, with China’s national rejuvenation entering a “critical period.” He said that “the risks and challenges we face have increased significantly. It is unrealistic to expect a peaceful life without struggle. We must discard illusions, have the courage to struggle, and make no concessions on matters of principle. We must uphold China's sovereignty, security and development interests with unprecedented determination. Communists should have character, integrity, and courage so that we'll never be taken in by fallacies, never tremble in the face of danger, and never be spineless cowards.” 习近平强调,当前,世界百年未有之大变局加速演进,中华民族伟大复兴进入关键时期,我们面临的风险挑战明显增多,总想过太平日子、不想斗争是不切实际的。要丢掉幻想、勇于斗争,在原则问题上寸步不让、寸土不让,以前所未有的意志品质维护国家主权、安全、发展利益. 共产党人任何时候都要有不信邪、不怕鬼、不当软骨头的风骨、气节、胆魄.
This is followed by a call for cadres to “respect the rules and abide by the bottom line”. He said that cadres must have “reverence for the party, reverence for the people, and reverence for laws and regulations,” and “exercise strict self-discipline.” He wants cadres to work on their worldview, and outlook on life and values, in order to raise “ideological consciousness and spiritual level;” and it is only in such a situation that they move from not daring to be corrupt to never wanting to be corrupt.
He then spoke about the importance of knowledge, studying, research and practice. “We are in an era of unprecedented change and are engaged in a great cause that no one has ever done before”; this demands nurturing vision and capability, for Xi. 习近平强调,我们处在前所未有的变革时代,干着前无古人的伟大事业,如果知识不够、眼界不宽、能力不强,就会耽误事. Therefore, he wants cadres to study and think more, and one of the things that he wants them to study is Marxist theory, “especially the innovative theory of the party in the new era” (i.e., Xi Thought) and Party history. He further added: “real knowledge comes from practice and talent grows from practice.”
IV. Ethnic Affairs Conference
A week ago, the Party leadership met for the Central Conference on Ethnic Affairs. This came following a series of commentaries and pieces about Xi Jinping’s approach to ethnic affairs. You can check those out in my People’s Daily tracker. Following the conference, Xinhua English reported that:
Casting a firm sense of Chinese national community is the main line of the Party’s ethnic work. But there are other elements too: “build a common spiritual home for the Chinese nation, promote exchanges and exchanges among all ethnic groups, promote the pace of modernization in ethnic areas, improve the level of legalization of ethnic affairs governance, prevent and resolve potential risks in ethnic areas.”
“Forging the sense of community for the Chinese nation must be the focus of CPC's ethnic work in the new era, Xi said, adding that the right perspective of the Chinese nation’s history must be upheld, and the sense of national identity and pride must be boosted.”
Why is this important for Xi? Xinhua tells us that:
“Only through fostering a strong sense of community for the Chinese nation and all ethnic groups jointly safeguarding national security and social stability, can the infiltration and subversion of extremist and separatist thoughts be resisted and the aspiration of the people of all ethnic groups for a better life be fulfilled. Only in doing so can powerful ideological guarantees be provided for the prosperity and enduring stability of the Party and the country, he said, urging efforts to forge a community with a shared future for the Chinese nation with a higher sense of national identity and a stronger bond of attachment among the people. All ethnic groups should be guided to always place the interests of the Chinese nation above anything else, with their consciousness of different ethnic groups serving the sense of community for the Chinese nation as a whole, Xi said.”
He added: “Neither Han chauvinism nor local ethnic chauvinism is conducive to the development of a community for the Chinese nation…Xi called for promoting the use of standard spoken and written Chinese, protecting the spoken and written languages of all ethnic groups, and respecting and protecting the learning and use of spoken and written languages of ethnic minorities. Xi underscored the need to facilitate the march of all ethnic groups toward socialist modernization.” - The last bit tells us about the persisting paternalistic attitude and the sense that minorities need to be brought into modernity; and the preceding sentence on languages tells us that this modernity is a homogenised, Han-dominated vision that the Party is pursuing.
“All ethnic groups must be equal; the banner of the unity of the Chinese nation must be held high.” This implies erosion of preferential policies in ethnic minority/autonomous areas.
“The sense of belonging for the Chinese nation must be established; extensive exchanges, communication and integration of various ethnic groups must be promoted. Ethnic affairs must be governed in accordance with the law; national sovereignty, security and development interests must be resolutely safeguarded. The CPC's leadership over ethnic work must be upheld.”
The 12 key points highlighted in the People’s Daily report after the conference were:
1. “grasp ethnic work from the strategic perspective of national rejuvenation.”
2. push for “common struggle” among all groups for “socialist modernization”
3. “casting a firm sense of the Chinese national community as the main line, promoting all ethnic groups to firmly identify with the great motherland, the Chinese nation, Chinese culture, the Communist Party of China and socialism with Chinese characteristics, and continuously promoting the building of the Chinese national community.”
4. “we must adhere to the correct view of the history of the Chinese nation and enhance the sense of identity and pride in the Chinese nation.”
5. “we must uphold the equality of all ethnic groups, ensure that all ethnic groups are masters of their own affairs and participate in the management of state affairs, and safeguard the legitimate rights and interests of all ethnic groups.” — I guess the greater the emphasis on equality, the lesser the scope for preferential/different policies with regard to ethnic minorities.
6. “we must hold high the banner of unity of the Chinese nation, and promote all ethnic groups to come together as members of the Chinese nation’s family, like pomegranate seeds clinging together.”
7. “we must adhere to and improve the system of regional ethnic autonomy in order to ensure the smooth implementation of directives issued by the Party Central Committee, to ensure the implementation of national laws and regulations, to support the economic development of all ethnic groups, improve people's livelihood, and achieve common development and common prosperity.” -- Fascinating how upholding and improving autonomy actually is defined as more effective central control.
8. build a common spiritual home for the Chinese people
9. promote interactions and exchanges among ethnic groups to promote unity in ideals, beliefs and cultural identity.
10. adhere to governance according to law
11. we must resolutely safeguard national sovereignty, security and development interests, educate and guide all ethnic groups to inherit and carry forward the patriotic tradition, and consciously safeguard the motherland's reunification, national security and social stability. - Expect more policies to assimilate - so tighter control over religion, much more work on historical narrative, restrictions on public expression, push for patriotic education and common language education, tighter governance over cyberspace, stricter control over cultural expressions in terms of clothes, food, lifestyles, etc, I guess.
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V. Profound Revolution?
In a truly fascinating turn of events, a commentary by Li Guangman, a retired newspaper editor and active blogger known in China’s ultra-leftist circles, wrote an article last Friday, which was later shared and posted by all major Chinese Party-state media outlets. China Digital Times has very helpfully put out a full translation of the essay. Li talks about recent celebrity scandals, tax evasion reports, regulatory changes, the tech sector crackdown, fan club crackdowns, push for common prosperity, issues related to education, medical care, and housing, etc., to argue that:
What these events tell us is that a monumental change is taking place in China, and that the economic, financial, cultural, and political spheres are undergoing a profound transformation—or, one could say, a profound revolution. It marks a return from “capitalist cliques” to the People, a shift from “capital-centered” to “people-centered.” It is, therefore, a political transformation in which the People will once again be front and center, and all those who obstruct this people-centered transformation will be left behind. This profound transformation also marks a return to the original intent of the Chinese Communist Party, a return to a people-centered approach, and a return to the essence of socialism. This transformation will wash away all the dust: capital markets will no longer be paradise for get-rich-quick capitalists, cultural markets will no longer be heaven for sissy-boy stars, and news and public opinion will no longer be in the position of worshipping western culture. It is a return to the revolutionary spirit, a return to heroism, a return to courage and righteousness. We need to bring all forms of cultural chaos under control and build a vibrant, healthy, virile, intrepid, and people-oriented culture.
China faces an increasingly fraught and complex international landscape as the United States menaces China with worsening military threats, economic and technological blockades, attacks on our financial system, and attempts at political and diplomatic isolation. The U.S. is waging biological warfare, cyber warfare, space warfare and public opinion battles against China, and is ramping up efforts to foment a “color revolution” by mobilizing a fifth column within China. If we rely on the barons of capitalism to battle the forces of imperialism and hegemony, if we continue our obeisance to American “tittytainment” tactics, if we allow this generation of young people to lose their mettle and masculinity, then who needs an enemy—we will have brought destruction upon ourselves, much like the Soviet Union back in the day, when it allowed the nation to disintegrate, its wealth to be looted, and its population to sink into calamity. The profound transformations now taking place in China are a direct response to an increasingly fraught and complex international landscape, and a direct response to the savage and violent attacks that the U.S. has already begun to launch against China.
With the piece being covered in media around the world, we had a report of the Global Times’ Hu Xijin pushing back against Li’s argument. SCMP reports that in a blog, Hu wrote that: “I think the article has offered inaccurate descriptions of the situation, used some exaggerated language, deviating from the country’s key policies, and has misled people. It’s as if the country is bidding goodbye to the reform and opening up policy and abandoned the basic policies adopted since the 18th Communist Party Congress (in 2012) and has brought about a kind of subversion to the current order, as if there is a real ‘revolution’…It is a serious misjudgment and is misleading.”
The SCMP report adds: “Both Li’s and Hu’s articles are currently still searchable on China’s internet, but Weibo restricted the circulation of Hu’s piece on Friday, indicating that the propagandists wanted to put a lid on the controversy before it spiralled out of control. According to a Beijing-based media source, verbal instructions from press regulators have been passed on to Chinese media operators about Li’s article, acknowledging that it had created greater impact than expected, asking them to balance it with ‘milder content’.”
Yawei Liu has an excellent piece examining these developments. There are so many unknowns; so one shouldn’t really jump to conclusions.
“In both its message and propagation by state media networks, Li Guangman’s blog can be compared to the first dazibao that was posted to a Peking University wall in the early summer of 1966. What we do not know is who is behind the effort to amplify Li’s voice? What is even more intriguing are the circumstances of Hu Xijin’s daring critique of Li Guangman. Hu is an insider with strong knowledge of how the Chinese government approaches propaganda. Either his own conscience has dictated his behavior, or he was encouraged by someone inside the government to challenge Li Guangman— perhaps someone wants him to speak up and test the limitations of acceptable discourse before they speak up themselves? Or, perhaps, insiders want to test the waters of public opinion before another government decision is made? There is one thing for certain: this debate indicates there is raging debate inside the CCP on the merits of reform and opening up, on where China is today in terms of social and political stability, and about what kind of nation China wants to become.”
Watching discourse, personnel changes and policies are all critical as one tries to piece together some sort of an understanding of the churn within the country. In terms of policies, what we are seeing is a tougher crackdown on online discourse and the entertainment sector.
For instance, the Central Propaganda Department issued a notice with regard to the entertainment sector (Caixin English report) on Thursday. Before you get to this, my thread below has links to stories of some recent scandals:
The Propaganda Department notice talked about promoting “the healthy development of the film and television industry.” It says that steps have been taken to strengthen supervision of network content, crack down on the “sky-high remuneration of stars,” deal with “yin-yang contracts”, which essentially conceal the actual value of transactions, crack down on tax evasion, etc.
However, the report says that some of these issues have made a resurgence; it specifically mentions 饭圈 - Fàn quān - fan circles in this context. The argument is that illegal and immoral actions within this perspective, “have a negative impact on society, especially young people, and seriously pollutes the social atmosphere.” 违法失德言行时有发生,对社会特别是青少年产生不良影响, 严重污染社会风气,人民群众反映强烈. With all this in mind, the notice:
Emphasises the “guidance of socialist core values” with the aim of addressing
“both symptoms and root causes” in order to effectively curb “bad trends in the industry.”Emphasises corporate social responsibility and encourages “benign interaction between capital and industry.” The aim is to “curb unhealthy capital gains, resist sky-high remuneration, rationally allocate the proportion of costs, severely investigate and deal with tax evasion, and effectively maintain market order.”
In order to maintain a “good ecology” the notice pushes against I guess what seems to be clickbait culture or a culture of focussing on views/eyeballs/traffic. 打击流量至上,维护行业良好生态. In this context, it talks about regulating recommendation algorithms and fan groups, while warning of penalties for non compliance by websites.
The next bit is about supervision and rules regarding variety shows, promising a “special rectification.” The participation of minors in variety shows is strictly prohibited. It talks about auditing gaming content and enhancing the cultural connotation of gaming; it also talks about real-name verification and anti-addiction work.
The notice promises strengthening of the entertainment industry from the perspective of celebrity endorsements, penalties for “artists who violate the law and lose virtue.” This bit is sort of like state-mandated cancel culture for artists who find themselves on the wrong side of the Party’s aims and objectives. And it’s not just about individuals but agents and studios are also going to face the heat.
The next bit says: “Enrich the means of education and training for employees, strengthen ideological and political guidance, and make clear the red line and bottom line. We will strengthen ideological and moral education among young people, and encourage schools, families and society to work together to foster correct values. Minors in compulsory education are prohibited from participating in fan groups and offline assistance activities.”
Then this: “Strengthen positive publicity and guide employees to respect morality and art. We will strengthen supervision by public opinion and create a favorable environment. Give full play to the role of literary criticism and guide correct aesthetics.”
The next bit talks about “incorporating the comprehensive governance of the cultural and entertainment field into the ideological work responsibility system” of the Party.
Also on Thursday, the National Radio and Television Administration released a plan. SCMP has helpfully put down the 8 points of this plan.
Then look at the Cyberspace Administration of China’s Illegal and Unhealthy Information Reporting Center, the China Civilisation Network and the China Internet Development Foundation have jointly put out a proposal on “resisting internet rumours and building a network civilisation.” 新华社北京9月1日电 (记者王思北)为倡导全社会共管共治网络谣言,共建共享网络文明,中央网信办违法和不良信息举报中心、中国文明网、中国互联网发展基金会和中国互联网联合辟谣平台1日联合发布《“抵制网络谣言 共建网络文明”倡议书》.
The report talks about online rumours in the context of COVID-19, saying that “rectifying online rumors and chaos, purifying the network ecology, and maintaining social harmony and stability have become the common aspirations of all segments of society.” It then talks about four key points, which entail strictly observing communication order, improving the pattern of rumour control, eliminating online rumours and building a network civilisation. 严守传播秩序、完善治谣格局、辟除网络谣言、共建网络文明.
Some of the tasks in this context are emphasising platform responsibility, creating media literacy, enhancing awareness of the rule of law, and carrying forward the core socialist values.
Next, consider the story of Chinese state investors looking to possibly take an ownership stake in ride-hailing giant Didi Global. WSJ reported that “the municipal government in Beijing is coordinating a proposed investment by a consortium of state-backed companies that includes a competing ride-hailing service, a person familiar with the matter said. The state investors are seeking voting rights in Didi, a second person said, because that would give the government significant influence over matters like data and other major corporate decisions. The deal could be structured like last year’s investment by state entities to a Chinese unit of NIO Inc., the U.S.-listed electric vehicle company, this person added.” Bloomberg reported that “under the preliminary proposal, Shouqi Group -- part of the influential Beijing Tourism Group -- and other firms based in the capital would acquire a stake in Didi, the people said, asking not to be identified discussing private information. Scenarios under consideration include the consortium taking a so-called ‘golden share’ with veto power and a board seat, they added.” Didi has officially termed the reports “untrue.” But this wouldn’t be unprecedented; earlier this year the government did take a seat on ByteDance’s board.
Also note this Reuters report about Didi and JD setting up workers unions. The report says that “Didi's union, announced on an internal forum last month, will be initially managed by employees at its Beijing headquarters and will be guided by the government-backed All China Federation of Trade Unions (ACTFU), said two people familiar with matter…JD.com established a trade union this week, a newspaper affiliated with the Beijing Federation of Trade Unions said, publishing pictures of the ceremony which was attended by a number of government officials.”
Next, do check out this report by WSJ’s Keith Zhai, which says that the Chinese government “plans to propose new rules that would ban companies with large amounts of sensitive consumer data from going public in the U.S…The new rules have yet to be finalized. The CSRC plans to implement them around the fourth quarter, and have asked some companies to hold off on overseas IPOs until then, the people said.” In this context, CNBC’s Yun Li reports that “Earlier this week, China’s cybersecurity regulator laid out two aspects of regulation that companies wanting to go public must comply with — one is the national laws and regulations, and the other is ensuring the security of the national network, “critical information infrastructure” and personal data. These industries with critical data include public communication and information services, energy, transportation, waterworks, finance and public services…”
Do also check out this Bloomberg report about the China Securities Regulatory Commission saying that it will curb private equity and venture capital funds, stop public offerings disguised as private placements and fight embezzlement of assets. CSRC Chairman Yi Huiman said that”private equity funds must return to the defined role of being private and supporting innovation and startups”…The regulator will impose targeted policies, support genuine private funds and “resolutely eliminate fake ones to promote an orderly market order and industry eco-system.”
Finally, do note:
Also Read:
Chinese Essayist Revives Worries About a New Cultural Revolution
China Seeks to Cap Rising Home Rents in Latest Equality Move
China risks ‘common poverty’ if Beijing excessively intervenes in market, economist warns
Alibaba Jumps on ‘Common Prosperity’ Bandwagon With $15.5 Billion Pledge
Shanghai Suspends Key Approval on Route to Offshore Listings
VI. History in Focus at Sixth Plenary & Expect Tougher Anti-Monopoly Actions
This week we saw the 21st meeting of the central committee for deepening overall reform. Xinhua tells us that the meeting reviewed and approved a series of guidelines, including those on:
strengthening anti-monopoly regulation and promoting fair competition
improving the reserve system for materials of strategic importance or for emergency use
fighting pollution
giving better play to the supervisory role of statistical work
The story quotes Xi Jinping as saying that improving “anti-monopoly regulations and policies promoting fair competition is an intrinsic requirement for improving the socialist market economic system.” In addition, he called for “efforts to foster a level playing field, create broad development space for all types of market entities and better protect the rights and interests of consumers in accordance with the strategic vision of fostering a new development paradigm, and promoting high-quality development and common prosperity.”
Some of the other key points from the statement:
First, the statement talks about regulation having “achieved initial results” in preventing the disorderly expansion of capital and promoting fair competition. This also talks about anti-monopoly supervision and regulation of platform enterprises engaged in monopoly and unfair competition. 针对一些平台企业存在野蛮生长、无序扩张等突出问题,我们加大反垄断监管力度,依法查处有关平台企业垄断和不正当竞争行为,防止资本无序扩张初见成效,市场公平竞争秩序稳步向好.
The policy objective highlighted in the context is also “balancing development and security, efficiency and equality, vitality and order.” “Measures should be taken to guide enterprises to serve the overall interests of economic and social development under the leadership of the CPC.”
The meeting underlined the importance of moving faster to improve the market-access system, the fair competition review mechanism, the fair competition regulation system on the digital economy, and the system for preventing and restraining the abuse of administrative power to exclude and restrict competition.
It talks about adhering to the “two unwavering” and coordinated development of large, medium and small enterprises.
It talked about promoting “high-level opening-up, protecting property rights and intellectual property rights, and making policies more transparent and predictable.” The last one gave me such a chuckle, given what’s been happening for the past few months.
It talks about strengthening “supervision and law enforcement” in areas such as platform economy, scientific and technological innovation, information security, and people’s livelihood security. The anti-monopoly mechanism should be improved and the anti-monopoly supervision force should be strengthened.
In terms of the strategic reserves, it says that “state reserves and emergency response capacity should match its status as a major country.” It also talked about developing a “unified system for providing strategic and emergency response supplies.”
Following this, the Politburo met on Tuesday to confirm that the sixth plenary will be held in November. The PB will present its work report to the plenary session, which will study the issue of comprehensively reviewing the major achievements made and the historical experiences accumulated during the Party's 100 years of endeavours.
The People’s Daily’s report on this foreshadows what we can expect from the PB’s work report in November in the sense that it repeats the Party’s historical narrative that we have heard through the year. So it tells us that the meeting held that the CCP since its formation made working for the “happiness of the Chinese people and the rejuvenation of the Chinese nation” as “its original mission.” It tells us that the Party has “always adhered to the ideals of communism and socialism, and united and led the people of all nationalities to fight unremittingly for national independence and liberation of the people and to achieve national prosperity and people’s happiness.” It tells us that the Party has led the people in fighting “bloody battles” and “persevering” in order to create the “great achievements,” and after a hundred years of struggle, the Party and the people have written the most magnificent epic in the history of the Chinese nation for thousands of years.” 会议认为,中国共产党自1921年成立以来,始终把为中国人民谋幸福、为中华民族谋复兴作为自己的初心使命,始终坚持共产主义理想和社会主义信念,团结带领全国各族人民为争取民族独立、人民解放和实现国家富强、人民幸福而不懈奋斗,已经走过一百年光辉历程。一百年来,党领导人民浴血奋战、百折不挠,创造了新民主主义革命的伟大成就;自力更生、发愤图强,创造了社会主义革命和建设的伟大成就;解放思想、锐意进取,创造了改革开放和社会主义现代化建设的伟大成就;自信自强、守正创新,创造了新时代中国特色社会主义的伟大成就。党和人民百年奋斗,书写了中华民族几千年历史上最恢宏的史诗.
The report also tells us that summarising historical experience is critical on the road to the new journey. It is also an important task in order to “enhance political awareness, overall situation awareness, core awareness and sense of conformity” along with strengthening the four self-confidences, and “resolutely safeguarding General Secretary Xi Jinping’s position as the core of CPC Central Committee and the whole party” and “resolutely safeguarding the authority of the centralised and unified leadership of the CPC Central Committee”...so that the Party advances in self-revolution and the Party’s ability to struggle and cope with risks and challenges is enhanced, its vitality is maintained… “The whole party should adhere to historical materialism and the correct view of Party history, understand why we succeeded in the past and draw lessons from the Party’s 100-year struggle to learn how we can continue to succeed in the future…” 会议指出,以史为鉴,可以知兴替。总结党的百年奋斗的重大成就和历史经验,是在建党百年历史条件下开启全面建设社会主义现代化国家新征程、在新时代坚持和发展中国特色社会主义的需要,是增强政治意识、大局意识、核心意识、看齐意识,坚定道路自信、理论自信、制度自信、文化自信,做到坚决维护习近平总书记党中央的核心、全党的核心地位,坚决维护党中央权威和集中统一领导,确保全党步调一致向前进的需要,是推进党的自我革命、提高全党斗争本领和应对风险挑战能力、永葆党的生机活力、团结带领全国各族人民为实现中华民族伟大复兴的中国梦而继续奋斗的需要。全党要坚持唯物史观和正确党史观,从党的百年奋斗中看清楚过去我们为什么能够成功、弄明白未来我们怎样才能继续成功,从而更加坚定、更加自觉地践行初心使命,在新时代更好坚持和发展中国特色社会主义.
The next bit talks about meeting the test of the times in the new era.
Apart from this, the report tells us that the PB deliberated on a report on the seventh round of the disciplinary inspection launched by the 19th CPC Central Committee. Then we come to talking about education. CGTN’s English report is useful.
“The meeting said that the CPC Central Committee, with General Secretary Xi at the core, attaches great importance to educational development and significant progress and changes have been made in educational reform and development. Acknowledging the Party officials’ achievements in school running, and serving economic and social development, the meeting pointed out that there are still shortcomings in strengthening grassroots Party building.”
PD says:
“There are still some shortcomings in strengthening Party building, implementing the fundamental task of cultivating morality and educating people, implementing the principal responsibility system under the leadership of the party Committee, strictly managing the party and strengthening the team and grassroots party organizations.” 在加强党的建设、落实立德树人根本任务、落实党委领导下的校长负责制、从严治党、加强队伍和基层党组织建设等方面还存在一些不足. The meeting called for improving supervision and strengthening the role of inspection tours to promote the high-quality development of higher education in the new era.
The last paragraph is interesting too:
“The meeting stressed that it is necessary to continue to thoroughly study and implement Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the Party's educational policy, consciously arm the mind with the Party's innovative theory, guide practice and promote work, improve political judgment, political understanding and political execution, keep in mind the ‘国之大者’ (matters of great significance to the state/national priorities), adhere to the socialist direction of running schools, and educate people for the Party and the country. It is necessary to take moral education as the fundamental task, strengthen ideological and political work and the construction of teachers’ morality, school spirit and study style, and focus on cultivating socialist builders and successors with a comprehensive moral, intellectual, physical and aesthetic grounding and a hardworking spirit...It is necessary to further promote the comprehensive and strict administration of the party in colleges and universities, conscientiously implement the party committee’s main responsibility, the first secretary’s responsibility and the discipline inspection commission supervision responsibility, transfer the pressure at all levels, strengthen the strict atmosphere, strengthen supervision and constraints on the exercise of power, investigate and deal with corruption strictly, form a strong deterrent, effectively prevent integrity risks, and promote integrated anti-corruption work so that one cannot, dare not and will not engage in corruption…” 会议强调,要持续深入学习贯彻习近平新时代中国特色社会主义思想,全面贯彻党的教育方针,自觉用党的创新理论武装头脑、指导实践、推动工作,提高政治判断力、政治领悟力、政治执行力,牢记“国之大者”,坚持社会主义办学方向,为党育人、为国育才。要把立德树人作为根本任务,加强思想政治工作和师德师风、校风学风建设,着力培养德智体美劳全面发展的社会主义建设者和接班人。要落实教育改革部署,加强高校治理体系和治理能力建设,实现内涵式高质量发展。要主动适应新时代要求,立足新发展阶段,完整、准确、全面贯彻新发展理念,服务和融入新发展格局。要深入推进高校全面从严治党,认真落实党委主体责任、书记第一责任人责任和纪委监督责任,层层传导压力,强化严的氛围,加强权力运行监督制约,严肃查处腐败问题,形成有力震慑,切实防范廉洁风险,一体推进不敢腐、不能腐、不想腐.
VII. The Climate’s Not Getting Better
Let’s begin with President Biden’s speech on the US withdrawal from Afghanistan. Among the many things he said, do note this:
“And here’s a critical thing to understand: The world is changing. We’re engaged in a serious competition with China. We’re dealing with the challenges on multiple fronts with Russia. We’re confronted with cyberattacks and nuclear proliferation. We have to shore up America’s competitive[ness] to meet these new challenges in the competition for the 21st century. And we can do both: fight terrorism and take on new threats that are here now and will continue to be here in the future. And there’s nothing China or Russia would rather have, would want more in this competition than the United States to be bogged down another decade in Afghanistan.”
With that, let’s go back to the Wang Yi-Blinken call I referenced in the section on Afghanistan. Do note that during the call, Wang told the US Secretary of State that
“the Chinese side will consider how to engage with the United States based on its attitude towards China.”
US “should stop blindly smearing and attacking China, and stop undermining China's sovereignty, security and development interests.”
US “should take seriously the two lists China has put forward to the United States during the talks in Tianjin, as well as the three basic demands as bottom lines that China firmly upholds.”
“China resolutely opposes the so-called investigation report on COVID-19 origins produced by the U.S. intelligence community recently.” He wants the Biden administration to “unload” the burden of the origins issue that’s “left by the former U.S. government.” — The COVID-19 origins issue has been a huge part of domestic propaganda and diplomacy all through the week. I recommend following my People’s Daily Tracker for more.
Wang also met with U.S. Special Presidential Envoy for Climate John Kerry, who visited Tianjin this week. Wang said that China-US cooperation on climate change serves the interests of both sides…“but such cooperation cannot sustain without an improved bilateral relationship.”
Anyway, Wang recalled the good old days of China-US cooperation to then say that:
A “major strategic miscalculation by the United States has resulted in the sudden deterioration of bilateral relations in recent years, Wang said, adding the ball now is in the U.S. court. He urged the U.S. side to stop viewing China as a threat and rival, cease containing and suppressing China all over the world, and take concrete steps to improve ties. Wang also said the United States should conduct coordination and cooperation on bilateral, regional and global levels, in accordance with the principle of mutual respect and equality for win-win results.” Then Wang got even more poetic, calling climate cooperation an “oasis” in bilateral ties. He then said, “if the oasis is all surrounded by deserts, then sooner or later the ‘oasis’ will be desertified.”
So, I guess the message is that if Washington is not nice to Beijing, to hell with the planet.
John Kerry also later spoke to PSC member Han Zheng, who said that China has always kept its words and deeds on the climate issue. Han said that China-US cooperation on climate change “must be based on trust.” He “hoped that the United States will create a good atmosphere for bilateral cooperation on climate change in accordance with the spirit of the telephone conversation between the two heads of state.” Han spoke about the Paris Accord being the “foundation” for such cooperation and both sides working to implement the “China-U.S. Joint Statement Addressing the Climate Crisis.” Xinhua tells us that Kerry wants both sides to “maintain constructive contacts and jointly deal with global challenges.”
Then he spoke to Yang Jiechi, who urged the United States to adopt rational and pragmatic China policies to work with China in bringing ties back on track as soon as possible. Yang said, as per Xinhua, that, for some time China-U.S. relations have faced severe difficulties due to a series of erroneous acts by the United States to interfere in China’s internal affairs and undermine China’s interests. “China is strongly opposed to and even more resolute in countering such practices.” Yang talked about climate change, COVID-19, and economic cooperation, saying that “such cooperation must be two-way and mutually beneficial.” He also added that China respects other countries' rights to development and choice, and the rights to development and choice of China must be respected as well.
This week, we also had comments from Qin Gang, China’s new ambassador to the US. He said:
The China-US relationship has come to another historical juncture, and it faces a very severe situation. The extreme China policy of the previous US administration has caused serious damage to our relations, and such a situation has not changed. It is even continuing. It goes against the fundamental interests of Chinese and American people and the wishes of the international community.
Some people believe that China is betting against America, and China's goal is to challenge and displace America. This is a serious misjudgment of China's strategic intention.
Some people believe that America needs to deal with China from a position of strength. They think America can win the new ‘Cold War’ against China, just as it defeated the Soviet Union. This reflects a serious ignorance of history and China…Is any country willing to take sides between China and America? I have never heard any country say so. To the contrary, many countries are reluctant or concerned about being forced by the US to pick sides. I hope American politicians would seriously consider: Does suppressing China really serve their purpose?
The then called for the two sides to be “clear about each other’s bottom lines and show mutual respect,” “maintain dialogue and manage differences” and “remove disturbances and focus on cooperation.”
But within his comments, there’s a snippet of how this is really very difficult. “A little more than six months into this Congress, there have already been more than 260 bills with negative content on China, out of no knowledge, misunderstanding and disinformation of China, particularly the Innovation and Competition Act of 2021 and the EAGLES Act. They underestimate the common interests between the two countries. If they become laws, they will hijack China-US relations and gravely damage America's own interests,” Qin said.
Let’s turn to some news developments in the context of the relationship. First, the US Treasury Department has raised an alarm over the possible acquisition of Magnachip Semiconductor Corp by a Chinese private equity firm Wise Road Capital, saying that it poses “risks to national security.” Reuters reports that in March, Wise Road Capital agreed to acquire Magnachip in a deal valued at $1.4 billion. Since then, regulatory authorities in United States and South Korea have been reviewing the deal. Magnachip, which produces display and power chips, has production and R&D facilities based in South Korea. Magnachip said in a SEC filing on Monday the U.S. Department of Treasury, in a letter to the company's legal counsel last Friday, said the acquisition posed “risks to the national security of the United States,” and expects to seek President Joe Biden's decision on the matter.
Second, SCMP reported that the American Chamber of Commerce in southwestern China has abruptly suspended operations. In a message to its members, the group said it would stop operations from Monday and “no longer carry out any activities” under its name, AmCham Southwest, “in accordance with the relevant laws and regulations of the People’s Republic of China”. Benjamin Wang, chairman of AmCham Southwest, said in a message to the South China Morning Post on Tuesday that the group was “still working with the local government to resolve the issue”, without elaborating. The Chengdu-based non-profit organisation, which represents over 300 member companies, was established in 1996 and covers a region including Yunnan, Guizhou, Sichuan, Chongqing and Tibet. Its website was no longer available on Tuesday, and the page bore a message saying that it was undergoing some work and would “be back shortly”.
Finally, do check out this thread:
Also Read:
U.S. funding tapped for Pacific undersea cable after China rebuffed
Corporate America fights uphill battle against anti-China push
VIII. China-EU Ties Strained
Speaking to Emmanuel Bonne earlier in the week, Foreign Minister Wang Yi had noted that “under the strategic guidance of the two countries’ heads of state, China-France relations have been developing healthily and steadily in general.”
“China is happy to see the European Union (EU) grow stronger, said Wang, stressing that China and Europe are partners rather than rivals, and their common interests far outweigh differences. Strengthening dialogue between China and Europe is beneficial to both sides and the world at large, he added. Noting that France is a major country with independent tradition and strategic thinking, Wang expressed hope that with a focus on the common long-term interests of China and Europe, France will take the opportunity of holding the rotating presidency of the EU to push China-EU relations to eliminate interference, overcome difficulties, rise steadily and regain vitality.”
He had lashed out at the US IC community’s COVID-19 origins report, calling it “an obvious anti-science act and a typical example of politicizing the origins tracing.” He wants the international community to “resist and oppose the U.S. approach.” Xinhua reported that Bonne said, as France assumes the EU presidency, it will take the “opportunity to promote cooperation between Europe and China in the fields of public health, environment, climate and trade.” It adds that as per Bonne, “France believes that the origins tracing should be conducted scientifically to avoid the recurrence of another pandemic.”
Then there was friction through the latter half of the week. First, a report by the European Parliament’s Committee on Foreign Affairs, discussing EU-Taiwan political relations and cooperation left Beijing fuming. The report hails “Taiwan as a key EU partner and democratic ally in the Indo-Pacific that contributes to maintaining a rules-based order in the midst of an intensifying rivalry between the great powers in the region.” The report talks about preparing for a Bilateral Investment Treaty with Taiwan and expresses “grave concern over China’s continued military belligerence, pressure, assault exercises, airspace violations and disinformation campaigns against Taiwan. It urges the EU to do more to address these tensions and to protect Taiwan’s democracy and the island’s status as an important EU partner.”
Here is the reaction from China:
NPC Foreign Affairs Committee: The scope of cooperation seriously violates the one-China principle and undermines China-EU mutual trust and cooperation...The statement emphasized that the Taiwan issue is China's internal affair and involves China’s core interests. The determination of the Chinese people to realize the reunification of the motherland is unshakable. We urge the European Parliament to fully understand the high sensitivity of the Taiwan issue and be cautious in its words and deeds on Taiwan-related issues to avoid affecting the political foundation of China-EU relations and mutual trust between the two sides.
State Council’s Taiwan Affairs Office: Spokesperson Zhu Fenglian said that the one-China principle is the universally recognized norm of international relations and the universal consensus of the international community. Relevant committees and members of the European Parliament should abide by the one-China principle and correct the wrong words and deeds.
China’s EU Mission: It stressed the one-China principle and added that “these moves exceed far beyond the scope of normal nonofficial economic and trade cooperation and cultural exchanges between the EU, its member states and Taiwan, constitute serious violations of the one-China principle and undercut mutual trust and cooperation between China and the EU...We urge the relevant committee and relevant members of the European Parliament to appreciate the sensitivity of the Taiwan issue, immediately correct their wrong words and actions, and play a positive and constructive role in upholding the political foundation of China-EU relations.”
CPPCC Foreign Affairs Committee: Similar points as above; again emphasises “one-China principle.”
Finally towards the end of the week, EU foreign ministers met in Slovenia to talk about many issues, including Afghanistan and China. This is a good background story if you are interested in understanding the challenges in the relationship this year. The talks come amid intensified tensions between Lithuania and China over the former’s engagement with Taiwan. The Lithuanian ambassador left Beijing this week, with EU partners displaying solidarity.
Here’s EU High Representative Josep Borrell’s comments after the talks are worth noting. He said that “we need a pragmatic, realistic and coherent approach with China and that we need unity and a shared sense of responsibility. Also, we have to engage with China about Afghanistan. Competition, but also cooperation in trade and economic issues, are an important part of our relations with China.”
Also during the presser, the Slovenian Foreign Minister was asked about India replacing China in the EU’s broader vision. And this was the response:
“On India taking the place of China, well, no. They are different countries. India is an Indo-Pacific country and China is an Asian country. They play different roles from many different points of view. India will not take the place of China because China and India are different countries with different economic structures and different trade relations with Europe, but we want to strengthen our relationship with India.”
The formal statement from the Slovenian presidency
said:
“The second day of the meeting featured a discussion on the EU-China relations. The ministers agreed that unity between and a coordinated approach of all EU member states towards China was of the utmost importance. The EU’s possible renewed engagement must be gradual, ordered and coordinated.”
The thread below is useful to note too.
IX. The Long & Short of It…
a. Employment Plan:
There was a report in the People’s Daily this week drawing from a press conference which in turn drew on the State Council’s new plan on boosting employment for the 14th Five-Year Plan period. The goal is to add over 55 million new urban jobs in the next five years. These were the three officials speaking Li Zhong, vice minister of human resources and social security, Gao Gao, deputy secretary general of the National Development and Reform Commission, and Zhang Ying, director of the Department of Employment Promotion of the Ministry of Human Resources and Social Security. The report tells us that the “structural employment contradiction will become the main contradiction when it comes to issues of employment in China.” What is meant by this is that there are structural problems that need to be addressed going forward, which will be the key component of employment policies. These, for instance, refer to issues like education and training not being in line with market demand for talents, or an aging workforce struggling to adapt to industrial upgrading. They also talked about some action areas going forward:
optimizing the employment and entrepreneurship environment
stabilizing employment for key groups
raising labor remuneration
improving employment services
protecting labor rights and interests
They also talk about the plan focussing on long-term issues, such as workforce aging and deployment of AI tools.
Some useful data points:
The total number of skilled personnel in the country is less than 30%, and the total number of skilled personnel in Germany, Japan and other manufacturing powerhouses is 70% to 80%. 全国技能人才总量占比不足30%,德国、日本等制造业强国的技能人才总量占比在70%到80%.
Employment pressure will persist with around 10 million people being added to the workforce each year going ahead, and there will still be a considerable number of rural surplus labor force too as industrialisation and urbanisation progresses. 同时,在工业化和城市化进程中,仍会有相当数量的农村剩余劳动力需要转移就业.
In the first seven months of this year, 8.22 million new jobs were created in cities and towns in China, and the average unemployment rate in cities and towns was controlled at 5.2%, which was 0.6 percentage points lower than that in the same period last year.
They talked about the service sector as a potential “reservoir to absorb employment” (这是吸纳就业的蓄水池); private enterprises, especially small and medium-sized private enterprises and individual entrepreneurs, providing more than 80% of jobs and more than 90% of new jobs, is the main force to absorb employment. 民营企业,特别是中小民营企业和个体工商户,提供了我国80%以上的就业岗位和90%以上的新增就业岗位,是吸纳就业的主力军.
b. Gaming Restrictions & Bottom Lines:
A really interesting piece by Shen Lu on the potential impact of the new restrictions on China’s gaming companies. She writes that “the new limits aim primarily at free-to-play mobile games whose monetization strategies are based mostly on in-game microtransactions. But in-game spending by players under 18 only comprises a tiny fraction of gaming company revenue in China.”
The piece informs that “Tencent, the world's largest gaming company by revenue, has revealed in its earnings reports that during the second quarter of 2021, gamers under age 16 contributed just 2.6% to Tencent's in-game revenue (down from 3.2% in Q4 2020), and players under 12 accounted for just 0.3%. NetEase, China's second-largest gaming company, sees less than 1% of its revenue from gamers under 18, CEO and founder William Ding revealed in the company's quarterly earnings call on Tuesday. Across the market, spending by underage gamers only makes up between 1% and 5% of Chinese gaming companies' in-game purchases, according to Daniel Ahmad, senior analyst at Niko Partners, a gaming consultancy focused on Asia.”
In general, the piece says that the impact isn’t anywhere close to significant for any of these folks in the near term. What’s been hurt are esports clubs, which “have already stopped underage players from entering professional competitions.”
c. Japan’s Taiwan Policy:
In late August, representatives from the ruling parties of Japan and Taiwan held bilateral talks for the first time, discussing defense, trade and chip supply chain cooperation. The landmark dialogue entailed discussions over the possibility of military exchanges.
The talks involved two senior lawmakers from each party. SCMP reported that Tsai Shih-ying, a legislator from the independence-leaning DPP who sits on the defence affairs committee of Taiwan’s parliament, said that “during the 1½-hour meeting the two sides discussed defence and security issues in depth, including the military activities of the People’s Liberation Army in the Taiwan Strait and waters close to Japan. The LDP representatives said Japan needed to increase its military budget to ensure its air and sea supremacy, while the Taiwanese side said it would do the same in strengthening its defences in eastern and northeastern Taiwan, according to Tsai.”
The report talks about the two sides reaching a “high degree of consensus” over bilateral coastguard exchanges, including joint maritime disaster and humanitarian assistance drills. The agreement is being referred up the respective party commands. Another area of dialogue was the planned investment in Japan and future collaboration on the chip supply chain, reported Nikkei Asian Review. The report adds that another key focus is on Taiwan's desire to participate in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The Japanese representatives voiced their support and said they would help Taiwan join the 11-nation regional trade agreement.
Amid all this, Japan’s heading for another leadership change with PM Yoshihide Suga exiting the scene. In this situation, one of the leading contenders for Suga’s post, former Japanese Foreign Minister Fumio Kishida told Bloomberg that:
“Taiwan is at the frontline of the standoff between the U.S. and China…Looking at the situation with Hong Kong and the Uyghurs, I have a strong feeling that the Taiwan Strait will be the next big problem.”
d. BRI FDI Data
And finally, a useful datapoint on BRI investments (not including loans):
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