A weekly bulletin offering news and analysis related to the Middle Kingdom. This week, Trump escalates, as opportunities open up for India and Australia.
1. Trump’s New Escalation
This week, the US-China relationship hit a new low with Donald Trump accusing China of seeking to meddle in the November Midterm elections. Trump said: “China has been attempting to interfere in our upcoming 2018 election, coming up in November. Against my administration.” The charge was immediately rebuffed by Foreign Minister Wang Yi, with his instinctive shrug going viral. Reuters reports that Vice President Mike Pence is likely to offer more details on this in a speech next week. Trump later went on to talk about his friendship with Xi Jinping, saying “He may not be a friend of mine any more, but I think he probably respects me.”
With this latest spat, Sincism’s Bill Bishop writes that the “fundamental assumptions around the US-China relationship look to have been irreparably shattered.” Think of this in the context of Wang Yi’s remarks to the US-China Business Council and the National Committee, where he talked about Washington’s policies threatening the “total destruction” of gains made in Sino-US ties over 40 years. Bloomberg’s assessment argues that in addition to all this, Trump’s remarks at the UNGA attacking socialism and communism indicate accelerating great power rivalry. Matt Spetalnick and David Brunnstrom, writing for Reuters, report that this is part of a broad-based US campaign to push against China, with “further sharp U.S. rhetoric and unspecified policy actions in coming weeks.” There’s also an important domestic component to this for Trump, which Ryan Hass highlights in this timely piece for Brookings. He eventually concludes, stating that “The U.S.-China relationship may be approaching an inflection point. The choices that leaders in Washington and Beijing make in the coming weeks may have a lasting effect on whether each side sees in the other a challenger and competitor with whom it remains possible to maintain generally stable relations, or an implacable foe that needs to be undermined.”
Some of the major Sino-US frictions that were evident this week:
- Taiwan: The Pentagon notified Congress on Monday of a $330 million arms package of Taiwan. VOA reports that Taiwan’s Ministry of National Defense thanked Washington for the deal, which still needs Congressional approval. Beijing reacted angrily, with the Chinese foreign ministry calling on the US to “immediately cancel this deal and cut off military ties with Taiwan.” But the VOA piece above has this interesting bit from Liu Yih-jiun, professor of public affairs at Fo Guang University in Taiwan: “As long as they don’t sell Taiwan some kinds of F-35s and some kinds of most advanced equipment, then that could be a kind of (Sino-U.S. understanding).”
- Military: Last Thursday, the US announced sanctions against the People’s Liberation Army’s Equipment Development Department for the procurement of 10 Sukhoi fighter aircraft and a batch of S-400 surface-to-air missile systems or related equipment from Russia. This, it said, violated Countering America’s Adversaries Through Sanctions Act, which came into effect in January 2018. China reacted angrily, calling it “a flagrant breach of basic rules of international relations” and “a stark show of hegemonism.” Beijing’s also pulled back from dialogue, recalling Vice Admiral Shen Jinlong and putting off the second meeting of a communication mechanism for the joint staff departments of China and the US. In addition, the Chinese government denied USS Wasp, an amphibious assault ship, a port call in Hong Kong. The US, meanwhile, had B-52 bombers fly in the vicinity of the South China Sea. China’s foreign ministry reacted by arguing that it “firmly opposes the relevant country impairing the sovereignty and security of the littoral countries and disrupting regional peace and stability.” Despite all this, Defence Secretary James Mattis was rather sanguine about bilateral military ties -“We certainly maintain the military-to-military relationship and the level of participation and collaboration may go up and down at times, but there is a strategic relationship there that I think both sides recognize the need for.” China Daily appeared far less sanguine, arguing that the US was threatening to cross a “red line.”
- Espionage: US Director of National Intelligence Dan Coats has termed China’s cyber activities “unprecedented in scale.” He argued that Beijing’s efforts to conduct influence operations were “more methodical” than those being implemented by Russia. In addition this week, US army reservist Ji Chaoquan was arrested on charges of spying for China. NPR reports that according to the Department of Justice, Ji “allegedly worked at the direction of a high-level intelligence officer within the Jiangsu Province Ministry of State Security, a provincial department of China’s Ministry of State Security.” He was “tasked with providing the intelligence officer with biographical information on eight individuals for possible recruitment by the JSSD.”
- Trade: The new round of bilateral tariffs announced recently kicked in on September 24. The same day, Beijing put out a white paper this week outlining its view of the Sino-US trade war. You can access the full English language version here. The document essentially accuses the US of “trade bullyism,” arguing that the US had also benefited from deepening trade with China but now is “attempting to impose its own interests on China through extreme pressure.” It acknowledges that owing to differences in the economic systems of China and the US, some friction is inevitable. But it then lashes out at the Trump administration had “brazenly preached unilateralism, protectionism and economic hegemony, making false accusations against many countries and regions, particularly China.” Vice Commerce Minister Wang Shouwen was far more dramatic in his comments on Tuesday, when he claimed that the US was putting “a knife to China’s neck.” Yen Nee Lee’s CNBC piece analyses the events to argue that China wants to maintain the moral high ground in the trade war, while also pointing to its global impact. A part of building this narrative involves greater bilateral engagement with key players while preserving the multilateral order. For instance, China’s ministry of commerce this week termed the WTO as the “epitome” of the multilateral trading order, arguing that “reforms must not lead to the creation of a new organization.” Another key component is emphasizing China’s commitment to reform and opening up. Premier Li Keqiang this week announced plans to further open the country’s financial sector, while the State Council announced tariff reductions on over 1500 items, including machinery, textiles and construction materials.
2. Xi on Economy & Media
China marked the mid-Autumn festival this week, and soon after the break, President Xi Jinping headed to the country’s northeast for inspection visits to Heilongjiang, Jilin and Liaoning. These regions form the heart of China’s industrial rust-belt and have been struggling to sustain growth. Xi’s visit saw him visit factories and farms, while delivering a two-pronged message. First, amid growing unilateralism and protectionism, China must become more self-reliant. SCMP reports that “Xi said China was a big country which must ‘depend on itself for food supply, depend on itself for economic development, and depend on itself for manufacturing.’ Second, the Chinese economy will grow with “public ownership playing a dominant role.” That message, however, was neatly obscured by state media, which reported this story leading with Xi’s remarks that China will “unsverwingly support the private sector.” Speaking about SOEs, Xi said: “Our SOEs should continue to become stronger, better and larger…All statements and arguments saying we don’t need SOEs any more or we should diminish SOEs are wrong and one-sided…Any thoughts or comments that doubt or bad-mouth SOEs are wrong.”
Beyond the economy, marking the 60th anniversary of China Central Television, Xinhua reports that Xi sent a letter to China Media Group – the new parent body that encompases CCTV, China National Radio and China Radio International. The really interesting bits from his comments are as follows:
- “Xi said he hopes that CMG and television workers across the country can uphold Party leadership, take a people-centered approach and faithfully fulfill their responsibilities and missions.” This is fairly self-explanatory in terms of the media being subservient to the Party entirely.
- “Xi also called on those workers to integrate radio and television, domestic publicity and international communication, and traditional and new media, as well as improve their international communication capabilities.” This is telling in that it calls for coordinated linkage between “domestic publicity and international communication.” So when you think of Chinese media inserts in Western or Indian press or television coverage and social media posts by Chinese media, consider the domestic objectives that these are aimed to meet. This also puts into context why the US recently asked Xinhua and CGTN to register as foreign agents.
A part of the media control is an attempt to cultivate an atmosphere of “positive energy.” This campaign leads to actions like banning of international news outlets and censuring of critical reportage. A great example of the former is the Cyberspace Administration of China shutting down Phoenix New Media’s news portal Ifeng.com this week, calling upon it to carry out a “thorough and in-depth rectification.” SCMP reports, citing an unidentified source, that the decision is a product of the need to manage financial and economic news coverage in order to “stabilise confidence in China’s economy amid an escalating trade war with the United States.”
3. Trade & Peace with India
Indian Finance Minister Arun Jaitley believes that the Sino-US trade war is opening up new opportunities for India. In an address to the PHD Chamber of Commerce, Jaitley said: “The trade war initially created instability, but eventually may open up greater markets. They will open up India as a bigger trading and manufacturing base and, therefore, we must closely watch the situation as to when the challenge turns into an opportunity.”
Easing of bilateral ties post the Wuhan meeting, which happened in the backdrop of a looming Sino-US trade war, has led to some trading gains. On Friday, India is shipping its first consignment of 100 tonnes of common grade rice to China. There also exists an opportunity for India to expand soybean exports to China, with this report suggesting that there is a potential for India to supply 2 million tonnes of soybean to China. “China’s market is huge. It is likely to open for India in the next two-three months,” says Davish Jain, chairman of the Soybean Processors Association of India (SOPA), while speaking to Reuters. The report also adds that “last week, New Delhi also urged China to drop a ban on its rapeseed meal imports at a meeting with government officials and feedmakers in a meeting held at India’s embassy in Beijing.” In addition to trade gains, India is also emerging as a destination for Chinese manufacturers. For instance, reports suggest that Sunra, China’s leading electric vehicle company is mulling a factory most likely in Bengaluru.
Moving from trade to the security front, a new report claims that PLA incursions along the 3,488-km Line of Actual Control between India and China have fallen significantly. There were 137 PLA incursions this year till September 20 this year. This is nearly 20% less than 170 incursions recorded till the same date in 2017. Meanwhile, representatives of the Indian and Chinese forces held talks under the Working Mechanism for Consultation and Coordination on India-China Border Affairs (WMCC) framework were held in Chengdu. The Indian side says that it “emphasised that peace and tranquillity in the India-China border areas is an important prerequisite for smooth development of their bilateral relations.”
Finally, PTI reports that China’s Minister of Public Security Zhao Kezhi is likely to visit India next month, with an agreement on internal security cooperation between the two countries expected to be inked. The deal is expected to cover intelligence sharing, sharing of best practices, disaster mitigation cooperation among other things.
Two related pieces to note:
- India Is Still Losing to China in the Border Infrastructure War
- How India and China are reshaping their neighborhood
3. Maldives & the Rohingyas
After months of turmoil, Maldives’ presidential election led to the surprise victory of opposition candidate Ibrahim Mohamed Solih. If you want to understand why all of this is so surprising, my colleague at Takshashila Shibani Mehta has an excellent piece detailing the Maldives’ descent into authoritarian rule under Abdulla Yameen and the hope for democracy that his defeat represents.
There have been some reports since the election on Sunday that the ruling party might move court to annul the election results. However, the High Court has denied that any such appeal has been made. The country’s Election Commission legally has seven days after the polls to announce the final result. So far it says that it will stick to that timeline. In addition, the police and army say they will act to guarantee the result of the presidential election is honoured.
The Indian government was quick to react to the election. The MEA put out a statement on September 24, saying that the election “marks not only the triumph of democratic forces in the Maldives, but also reflects the firm commitment to the values of democracy and the rule of law.” China, which has been Yameen’s principal benefactor, reacted a day later. Foreign Ministry spokesperson Geng Shuang said that “We respect the choice made by the people in the Maldives and hope that the Maldives can maintain stability and development.” A day later, Geng lashed out at former Maldivian president Mohamed Nasheed for his “irresponsible remarks” aimed at China.
In general, the message from official quarters in Beijing is of the need for continuity and stability. In state media, however, there was some angst with coverage of Yameen’s loss as a vote for a “pro-India” government. This Global Times’ piece acknowledges that “Maldives’ China policy became a major subject during the nation’s presidential election.” But it warns that “if Solih wants to protect Maldives’ national interest, he needs to evaluate the consequences (of pro-India policies). He needs to evaluate whether unilateral and pro-India policies are in accord with Maldives’ interest.”
Moving away from the Maldives, to the UN, where the Human Rights Council has voted to set up a body to prepare evidence of human rights abuses in Myanmar, including possible genocide. China voted against the move, arguing that it wasn’t in favor of “internationalising” a bilateral issue between Myanmar and Bangladesh. State media reports that Wang Yi also met with Myanmar’s Minister for the Office of the State Counsellor U Kyaw Tint Swe and Bangladesh’s Foreign Minister Abul Hassan Mahmood Ali at the sidelines of the UNGA.
The Chinese foreign ministry says that Myanmar and Bangladesh have reached three points of agreements: “First, they agreed to settle the refugee issue through dialogue and consultation. Second, Bangladesh is ready to send the first batch of refugees back to Myanmar and Myanmar is ready to retake those people. Third, the two countries agreed to meet to work on the details of repatriation and to start the repatriation as soon as possible.”
5. The Australia Reset
Wang Yi has had a hectic week of meetings, leading the diplomatic effort at the United Nations General Assembly. Among the important interactions has been Wang’s meeting with Australia’s new Foreign Affairs Minister Marise Payne. Going through the Chinese Foreign Ministry’s readouts, it’s clear that the tone and substance of this meeting was far different from Wang’s August conversation with Payne’s predecessor Julie Bishop.
The new Australian Prime Minister Scott Morrison reportedly described this as a “very excellent meeting.” This Kirsty Needham report in the Sydney Morning Herald captures the sentiment of the Australian strategic community, i.e., Trump’s trade war is leading to new dynamics and a mending of fences. From Canberra’s perspective, Jonathan Pearlman explains, this makes sense amid the uncertainty of the China-US trade war. The piece cites a KPMG report, stating that “even a limited trade war, restricted to currently announced tariffs, would cause Australia’s gross domestic product to decrease by 0.3 per cent after five years. Total losses over this period would be A$36 billion.” Do note that Sino-Australian trade in 2016-17 was estimated at $125 billion, dwarfing trade with Japan ($49.5 billion) and the US ($48 billion).
In this context, this attempt at a fresh start between Wang and Payne has led to discussions regarding an expansion of LNG supplies from Australia to China and working in tandem in the South Pacific. While the former is more likely, the latter is fraught with deep suspicion, competing interests and the roles of other actors. For instance, reports suggest that the Australia and Papua New Guinea are set to finalize a deal on a naval base on Manus Island before the APEC summit in November. The Global Times calls this a “paranoid” move aimed at “countering China’s presence in the Pacific region.” Add to this, the recent banning of Huawei and ZTE from Australia’s 5G space and US Charge d’Affaires in Canberra James Caruso’s remarks that an offer to counter Huawei’s bid to build internet infrastructure in PNG was in the works.
6. A Chorus of Criticism
A new WSJ piece this week details the growing chorus of criticism that China is facing with regard to its policies of repression in Xinjiang. The piece discusses protests in India and Bangladesh, grumblings in Kazakhstan, statements from Hizb ut-Tahrir — an Islamist group that claims a million members in 40 countries — reactions in the US and Europe, along with recent reports of critical comments by a Pakistani minister and Malaysia’s Anwar Ibrahim.
Let’s take these one at a time. In Pakistan, there’s clearly a brewing issue with regard to civil society. Much of this has to do with Uighur wives (Chinese citizens) of Pakistani traders. This week a video posted on social media by two Pakistani men claiming that their wives had been taken away by Chinese authorities brought this fissure to the fore. The men said that they’d met the Pakistani ambassador in Beijing, but nothing had come out of the conversations. The video further culminates with a warning: “This is China’s big mistake. Before people did not know how they treated Muslims. Now, everyone knows.” However, at a government level, it was unsurprising that both Islamabad and Beijing denied that there had been any conversation between Pakistani minister Pir Noorul Haq Qadri and Chinese Ambassador Yao Jing on Xinjiang.
In the US, the Congress Foreign Affairs Committee held a hearing this week on the Chinese Communist Party’s policies in Xinjiang. You can access all the details Watch here.) Secretary of State Mike Pompeo last week hit out at China’s policies, saying that “Hundreds of thousands and possibly millions of Uygurs are held against their will in so-called re-education camps where they’re forced to endure severe political indoctrination and other awful abuses.” Swedish authorities, meanwhile, have reportedly decided to halt the deportation of Uighurs to China. In doing so, it is following Germany’s lead.
It’s such criticism that’s requiring Chinese authorities to respond in different ways. One of these was this guest piece in the Jakarta Post by Xiao Qian, China’s ambassador to Indonesia, where he blames the West and seeks to argue that the “re-education” camps are actually “vocational training” centres.
Note: While you are at it, do read this excellent Peter Martin piece on Chen Quanguo – the man behind the Xinjiang crackdown.
7. One Faith, Two Systems
After months of speculation, China and the Vatican inked a provisional deal, signed in Beijing, on the appointment of bishops. While details of the deal are still unclear, WSJ reports that it allows the Pope to veto new nominees for bishops proposed by the Chinese government. This has been a key bone of contention, given that Beijing’s policy towards religion is governed by the principle of independence and self-management. That basically implies a rejection of the notion of universality and external interference in Chinese religious affairs.
As the first step of the provisional deal, DW reports that Pope Francis on Saturday endorsed the legitimacy of seven Chinese bishops, appointed by Beijing without the Vatican’s approval. In addition, the report claims that “two Vatican-aligned Chinese bishops, recognized by the pope, have been asked by a top Vatican diplomat to resign in favor of state-sanctioned prelates.”
Wang Meixiu, a researcher at the Chinese Academy of Social Sciences, told SCMP that the deal “epoch making,” arguing that this is the first time the Chinese government has recognised the status of the Pope within the Chinese church.” NPR’s Sylvia Poggioli, however, reports that the deal could “anger many Chinese Catholics as a sellout to the Communist government.” In an attempt to address such criticism Pope Francis has argued that “It’s not (that the government) names them (the bishops). It is a dialogue. But the pope will appoint them. Let that be clear.”
In addition, the deal could have implications for Taiwan, which enjoys formal diplomatic relations with the Vatican. This Economist piece explains the entire dynamics of the deal and potential fallouts rather well.
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- China Claims More Patents Than Any Country—Most Are Worthless
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