Eye on China

Breaking New Ground

A weekly bulletin offering news and analysis related to the Middle Kingdom. This week, the diplomatic reset was the only news that people could talk about.

  1. All Set for Reset

Indian Prime Minister Narendra Modi arrived in Wuhan on Thursday for an informal meeting with Chinese President Xi Jinping over the next two days. The Chinese side has described the meeting as potentially transformational while  commentators in India have termed it as a reset.

China’s vice foreign minister Kong Xuanyou says that the two leaders will engage in “strategic communication on the most profound and unprecedented changes the world has seen in a century.” Although there is no formal agenda or specific statements expected, Kong says Modi and Xi will “thoroughly exchange views on the overall, long-term, and strategic issues of China-India relations.” The goal, from a Chinese perspective is to devise an “overarching long-term vision for the next 100 years to deepen bilateral cooperation and properly handle differences to bring both countries to a new starting point.” Amidst all this, Tanvi Madan’s nuanced assessment of ties heading into Wuhan and this Suhasini Haidar piece on the mixed record of grand summitry are worth reading.

This narrative of positivity from officials in Beijing has seeped into editorials and opinion pieces in the Chinese media. For instance, this Global Times piece compares the Modi-Xi meeting to Rajiv Gandhi’s 1988 visit, while this one calls it a “new chapter” in ties. This Hindustan Times piece also notes the optimism among Chinese scholars, who believe that such a meeting is critical to alter perceptions and manage the simultaneous rise of the two countries. However, amidst all this positivity, this Shen Dingli interview in The Wire offers a timely warning for New Delhi. “I would only say if I were Indian, I would not soften my position,” Shen is quoted as saying.

In explaining the thaw, the narrative in the Chinese press is that India’s actions are a product of power asymmetry, economic needs and the unreliability of the US. It’s a similar argument made by CPC party school scholar Yang Xiaoping. However, read between the lines and China’s concerns and vulnerabilities are apparent. This, according to a Nikkei Asian Review piece, is also reflected in China’s recent thaw with Japan. In addition, the Hindu reports that China might be looking to soften its position on the boundary dispute, eyeing a possible settlement. Meanwhile, reports in Australian media suggest that the Australian navy will not be participating in the 2018 Malabar drills owing to reset.

Earlier this week, Indian foreign minister Sushma Swaraj and defense minister Nirmala Sitharaman also visited Beijing for SCO meetings. Modi’s visit was confirmed after a meeting between Swaraj and her Chinese counterpart Wang Yi. Following the talks, Swaraj called for tough action on terrorism. The topic also featured prominently in talks among SCO defense ministers. In addition, India will be participating in SCO drills in September along with Pakistan, and will also be resuming the bilateral “Hand-in-Hand” military exercises with China in a few months. Materially, too, it appears that China has not been able acquire India’s formal acceptance of the Belt and Road Initiative during Swaraj’s meetings, although she did talk about India’s interest in boosting connectivity in the region.

  1. Trade Talks with US

US Treasury Secretary Steven Mnuchin is preparing for a visit to China for substantive talks to resolve differences over trade. Announcing the decision on Tuesday, President Donald Trump said “I think we’ve got a very good chance of making a deal.” Mnuchin had met with new People’s Bank of China Governor Yi Gang in Washington this week to discuss the possibility of a visit. Early analysis of outcomes of the visit range from pessimism to cautious optimism. Officially, China says that it is ready to hit back by curbing investments in case of any specific US steps.

Meanwhile, the FBI has reportedly opened an investigation into Huawei, China’s largest maker of telecommunications equipment. The probe is along the lines of the one against ZTE, i.e., examining Huawei’s transactions with Iran and North Korea, which led to stringent punitive action. Following the ban on ZTE last week, a leaked SASAC document indicated that authorities in Beijing were furious with the company. However, the more substantive component of the document is the discussion over the need to enhance domestic capacity and focus on self reliance in core technologies like semiconductors and chips  to ensure smooth development of high-tech industries. It’s a sentiment that has been publicly stated by Xi this week and echoed in media editorials too.

Earlier this year, the Chinese government identified and began to take steps to raise $31.5 billion to invest in domestic chip companies. Bloomberg reports that China’s semiconductor imports are estimated at around $200 billion annually, and given the threats of a technology backlash from the West, it is now seeking to quicken the pace of its domestic development. Considering the CPC’s desire to reorient the Chinese economy towards high-tech industries under the Made in China 2025 program, this is viewed not just as an economic but a national security priority.

Also this week both China and the US traded barbs on the issue of human rights. This is an important normative discourse that has gained steam after the first South-South Human Rights Forum’s declaration last year. Last Friday, the US clubbed China with Russia, Iran and North Korea as “forces of instability” in the State Department’s annual global human rights report. The report hits out at China on issues like freedoms of speech and assembly and violence against religious and ethnic groups, along with arbitrary detentions, executions without due process and coerced confessions of prisoners.

In response, Beijing released its report on the status of human rights in the US, touching on gun violence, racial discrimination, women’s rights, inequality, poverty, surveillance and digital freedom, healthcare access and even foreign policy excesses.

  1. Cyberspace, Marx and the Economy

It’s been a busy week for Xi, which began with a national conference on cybersecurity and informatization. Xi’s remarks at the conference laid out a framework for China’s cyberspace governance and underscored its importance in the broad scheme of China’s development. Xi reportedly said that “without web security there’s no national security” and then outlined key focus areas:

  • Improving the governance capacity in cyberspace and developing a governing network led by the Party.
  • Internet media should spread positive information, uphold the correct political direction, and guide public opinion and values towards the right direction.
  • China will fiercely crack down on criminal offenses including hacking, telecom fraud, and violation of citizens’ privacy.
  • More resources for research, industrial development, and policy making.
  • Enhanced military-civilian integration in cybersecurity and informatization.
  • Cyberspace governance under the framework of the United Nations should be advanced and non-state entities should play a better role.

Despite this, there are concerns over what appear to be unfair practices by Chinese tech giants. This is important given the recent troubles that American vendors have experienced with Alibaba. China’s online shopping market is estimated at $610 billion. AP reports that US firms are frustrated with Alibaba leveraging its dominant position to coerce them into exclusive partnerships failing which, Tmall took surreptitious punitive actions against them.

Also this week, Xi presided over a study group of the Politburo to discuss the Communist Manifesto, terming the CPC as a loyal inheritor of the spirit of document. Xi apparently wants party members to make “more efforts to develop Marxism in the 21st century…and write a new chapter of adapting Marxism to the Chinese context.” NYT’s Chris Buckley observes that Xi’s remarks made no reference to the “proletariat,” “workers,” “class,” “capitalism,” or “bourgeoisie.” However, this public return to the Communist Manifesto is intriguing, in that does it indicate a deeper desire to export the Chinese model?

Meanwhile the CPC Politburo also met to discuss the challenges in meeting economic targets. Interestingly, the statement released after the meeting acknowledged that “hard work is needed to meet this year’s economic targets amid an increasingly complicated geopolitical situation.” Clearly, Trump’s trade war is having an impact. Bloomberg reports that the Politburo statement stressed the need to boost domestic demand, and dropped a reference to deleveraging. This is apparently being interpreted as a signal that the government may ease off tightening measures if warranted.

Meanwhile, Reuters reports that Beijing is also moving to expand money supply and support local industries. Recently, the PBOC cut the reserve requirement ratio. China has also announced a slew of tax cuts, such as reduced VAT rates for businesses in select sectors and cuts to drive innovation and entrepreneurship.

Also during the meeting, the Politburo called on the government to speed up the release of indicators, policies and standards to revise performance evaluation methods for local governments and departments. This is critical bureaucracy reform for China to systemically shift from high growth to high-quality growth.

  1. The City of the Future

The master plan for the Xiongan (magnificent peace) New Area was released this week. This is a mega developmental project, located roughly 100 km from Beijing, that is closely tied to Xi’s legacy, and should be seen in the context of similar developmental efforts in Shenzhen through the 1980s onwards and Shanghai-Pudong area from the 1990s onwards.

Xinhua reports that Xi has personally been involved in the planning and decision-making process, “devoting painstaking efforts.” The first plan for the Xiongan New Area was announced in April 2017, detailing seven broad tasks. XNA is initially envisioned as a 100 sqkm area, covering three counties Hebei Province. It will eventually be expanded to cover 2000 sqkm and is critical to the coordinated development of the Beijing-Tianjin-Hebei belt. Eventually, Beijing’s all non-capital operations will be migrated to XNA.

The area is positioned as the city of the future, which is a “significant national event” that will have “lasting importance for the millennium to come.” The focus is to build a green, futuristic city – with deep application of AI for governance, relying on modern transport systems and housing and using clean energy – that is a haven for high-tech sectors and free trade.

Here are some key points to note:

  • The new area aims to be pedestrian-friendly with a goal that 90% of local transport means will be buses, bikes and walking.
  • Strategic cooperation agreements with Chinese Internet giants such as Tencent, Alibaba and Baidu have already been inked.
  • Restrictions on foreign investment will be dramatically lifted or eased.
  • The Chinese government says that the city’s entire electricity supply will be based on clean fuels.
  • Questions, however, remain over the future of the locals and farmers in the area, along with the impact that XNA will have on the already heavily polluted Baiyang Lake.
  • Morgan Stanley estimates that nearly $380 billion would be invested in this mega city over 15 years.
  • All housing in the new area is expected to be state owned, with strict bans on speculation.
  1. The Long Red Line

A curious map was released this week by Chinese researchers studying the South China Sea. The map saw the famed nine-dash line replaced by a continuous red line. SCMP quotes one of the scientists, without identifying him, as saying “The new boundary will help to define more clearly China’s claims in the contested region, but it is not clear whether or when it will be officially adopted by Beijing.” Analysts, however, believe that Beijing is unlikely to formally alter the nine-dash line, given the potential for backlash.

Meanwhile, the People’s Liberation Army Daily reported this week that it had constructed a monument on the Fiery Cross Reef on the Spratly Islands. The monument, which marks Chinese construction activities, is apparently meant to send a message about China’s determination to protect its territory and maritime rights.

This tough position has been reinforced via recent encounters between Chinese and Australian vessels, reported this week. ABC reported that three Australian warships were challenged by the Chinese military as they travelled through the disputed South China Sea earlier this month. While Australian Prime Minister Malcolm Turnbull defended his country’s right to conduct freedom of navigation exercises, the Chinese defense ministry acknowledged the encounter saying: “The Chinese side’s ships used professional language to communicate with the Australian side, and their operations were lawful, in compliance, professional and safe.”

In another sign that contests along the waters of the South China Sea are only going to increase, the incoming chief of the US Pacific Command is taking a tough line on the issue. Admiral Philip Davidson’s written testimony to the the Senate Armed Services Committee warns of China’s increasing control over the area. Also, the G7 foreign ministers this week issued a rather strong statement, criticizing Chinese activities in the South China Sea. MOFA’s Lu Kang termed that statement “irresponsible.” Similar criticism was reserved by Beijing for a Canadian Senate motion, which criticized China’s activities in the South China Sea.

  1. China’s MeToo Movement

A 20-year-old alleged rape case has returned to haunt the academic establishment in China over the last few weeks. Recent events are part of a nascent MeToo movement that has been building across academic institutions over a couple of months. In 1998, PKU student Gao Yan had committed suicide. Now her former classmates have come forward claiming that she had been raped by her professor, Shen Yang, who has now encountered some professional problems. Shen, however, has denied the charges. Guardian reports that the case has become a rallying cry among students at PKU and other universities. The students are calling for more accountability over sexual assault on campuses.

Washington Post reports that Yue Xin, along with seven other current students, had formally requested PKU to disclose its actions in the investigation of sexual misconduct by Shen. In response, she has faced harassment and pressure, actions that she has documented in an open letter. Other students have also reportedly faced pressure. SCMP reports that three posters was also put up anonymously on PKU’s bulletin board, criticising the university for trying to silence Yue. While they were removed soon, a picture of these has gone viral, despite strict censorship. Protest posters have a special significance in modern Chinese activism, considering that they were an important tool during the late 1970s and 1989 movements.

The People’s Daily, meanwhile, has weighed in on the issue, with a rather conciliatory online commentary. The article, as per my rough translation, says that youth today have a strong sense of rights, the concept of the rule of law and a strong sense of social responsibility and it is important to act to fundamentally resolve emotions of confrontation.

While that might be achieved through negotiation, countering broad sexist attitudes in society is going to be tougher, as this NYT report shows. A start in that direction was, however, made this week, with China’s leading tech firms pledging to address gender discrimination in job advertisements after a critical Human Rights Watch report. HRW claims that tech firms and government agencies often publish “male only” ads. Moreover, often specific desirable physical attributes are specified in ads for women applicants.

  1. Deep Space Designs

China is planning four deep space exploration missions before 2030, according to state media. This includes sending probes to the Moon (2019), Mars (2020 and 2028), certain asteroids (2022) and to Jupiter (2029). Plans are also underway for a manned lunar mission, with reports suggesting that Beijing is planning on building a base on the lunar surface, which would aid further exploration. The earliest time frame for such a mission is estimated as 2030, although that does appear rather ambitious.

Asia Times reports that authorities have invited public submissions for innovative design ideas for the lunar outpost, which initially is likely to be a robotic one before expanding to house humans. China became the third country to send a man into space in 2003. In 2011, it launched its space laboratory, the Tiangong 1, followed by Tiangong 2 in 2016. In 2013, China became the third country to make a soft landing on the moon, with its robotic lander Chang’e 3.

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About the author

Manoj Kewalramani

Manoj Kewalramani is a multimedia journalist based in New Delhi. Over the past 11 years, he has worked with prominent news networks in India and China. His news and editorial work includes field reporting, commissioning and managing assignments and producing shows and documentaries along with formulating and executing digital news strategies. Manoj is an alumnus of Takshashila’s Graduate Certificate in Public Policy. At Takshashila, he curates a weekly brief, Eye on China, which tracks developments in China from an Indian perspective.