Eye on China (25 February 2023)
Contents : Section A: India-China Relations; Section B: Chinese Domestic Politics; Section C: Economy and Tech; Section D: Foreign Policy Watch; E: Military Development
Section A: India-China Relations
This section is brought to you by Manoj Kewalramani
There have been some very interesting developments over the past few days, which are worth capturing in this week’s section.
After three years, on 22 February 2023, Indian and Chinese officials held in-person talks in Beijing on the standoff along the Line of Actual Control.
The meeting of the Working Mechanism for Consultation & Coordination on India-China Border Affairs saw MEA’s Joint Secretary (East Asia) meeting with the Director-General of China’s Department of Boundary and Ocean Affairs. This is the department to which Zhao Lijian was transferred, as a deputy. Anyway, the MEA’s statement said:
“The two sides reviewed the situation along the Line of Actual Control (LAC) in the Western Sector of India-China border areas and discussed proposals for disengagement in the remaining areas in an open and constructive manner, which would help in restoration of peace and tranquillity along the LAC in Western Sector and create conditions for restoration of normalcy in bilateral relations. To achieve this objective in accordance with the existing bilateral agreements and protocols, they agreed to hold the next (18th) round of the Senior Commanders meeting at an early date. The two sides agreed to continue discussions through military and diplomatic channels.”
The Hindu reports: “A statement from the Chinese side said both sides ‘reviewed the positive progress’ and outcomes of disengagement in Galwan Valley and four other friction areas, while exchanging views on the next stage of talks. It said both sides ‘agreed to move forward on the basis of the consensus previously reached, accelerate the resolution of issues related to the western section of the Sino-Indian border, and reach a mutually acceptable solution at an early date’. The statement said both sides had discussed other measures to ease the situation in border areas and to return the border to normalised control.”
HT’s report on the meeting carries this from Hu Shisheng, of the China Institutes of Contemporary International Relations: He “described the meeting as a positive sign.”
‘It is quite abnormal for two big neighbours not to have this kind of interaction in the past more than three years. So, of course, this means a lot. It’s not only due to the fact that this year India will host several diplomatic events but also due to the fact that bilateral relations cannot afford to be aloof from each other for such a long time,’ Hu said.
It further added from Hu: ‘No interactions mean there will be no possibility to accumulate common grounds and mutual understandings, which are the basic foundations to build mutual trust. I sincerely hope such a meeting is just the beginning of a new round of emerging interactions between these two nations’.”
Meanwhile, India’s External Affairs Minister S. Jaishankar caused a bit of a stir back home with his comments in an interview with ANI. You can watch the full interview below.
Some of the remarks about the power asymmetry between India and China and harking back to history led to political wrangling domestically. The Congress party called him a “failed” minister, alleging that his remarks on the China issue have “demeaned” the valour of India's armed forces.
Moving on, the Sunday Guardian reports that Indian officials are concerned about the Russia, South Africa and China joint naval drills in the Indian Ocean. Brazil has been invited as an observer for this exercise.
So this is BRICS without the I. The newspaper reports that “a high-level meeting of diplomatic and security officials took place wherein a comprehensive analysis of this exercise from the perspective of China factor was carried out.”
The Mint’s report on FDI into India, quotes an unidentified Chinese diplomat as saying that a number of Chinese proposals are “waiting for the approval of the Indian government.” The report is very limited; there’s no specific data on how many such proposals are pending.
Next, a delegation of US Senators visited India this week.
“We need nations such as India, the world’s largest democracy, to work with us to strengthen democracies in Asia and around the globe," Senator Chuck Shumer said following his hour-long meeting with Prime Minister Modi in New Delhi. “In our meeting with Prime Minister Modi, we stressed that close ties between our two countries would be a crucial counterweight to outcompete China and respond to its authoritarianism,” he said. India is one of the ‘leading powers’ of the world and a strong US-India relationship is a must for democracy, technology advancement, and a strong world economy, he said…“It was a substantive and productive conversation about strengthening ties on our shared strategic interests including outcompeting China, combating climate change, increasing trade, and deepening bonds between our two countries,” he said. “We stressed that close cooperation between the US and India in areas such as AI, green hydrogen, and advanced tech manufacturing will give our two countries the advantage for decades to come. I strongly believe the continued and strengthened US-India relationship will be the great story that will define the 21st century,” he said.
Finally, someone called James Smith has done a piece for the Global Times talking about how appropriate it was for the Indian government to crackdown on the BBC. This is the kind of thing that India should be avoiding. Such actions provide ammunition to Beijing’s narrative agenda of driving wedges between India and its partners.
“From a Chinese perspective, these developments feel very familiar, as the BBC has also actively interfered in the country's internal affairs to push goals which were likewise ideological and geopolitical, with the broadcaster also taking a self-righteous position in response to criticism … more important to the point, is the fact that these revelations show that India cannot trust the West as a long-term partner, especially if India's development pathway and national interests contravene their vision for what India should become. In recent years, India is sometimes praised by Western commentators for being ‘The world's largest democracy’, which has attached an ideological character to Western countries' relationships with India, especially as a proposed alternative to China. But this does not mean Western countries treat India as an ‘equal,’ so to speak. The West once held a similar attitude toward China.”
To read more on linked developments, please refer to :
India, China abstain from UN vote demanding Russia to 'immediately' withdraw from Ukraine
India foreign trade crosses $1tn in 2022. Record $100bn imports from China widen deficit
Chinese Tech Giant Xiaomi To Shut Its Short-Video Platform Zili In India
Section B: Chinese Domestic Politics
This section is brought to you by Anushka Saxena (with inputs on the GSI Concept Paper by Kingshuk Saha)
For this week, the following news items caught my attention in China’s domestic politics:
China released a Concept Paper for the Global Security Initiative
On 21 February, China released "The Global Security Initiative (GSI) Concept Paper (GSI)." The document provides a Chinese blueprint for tackling regional and global challenges through a comprehensive and sustainable security concept using Chinese wisdom in tackling challenges in traditional and non-traditional security areas.
GSI was first mooted by President Xi Jinping at the opening ceremony of the Boao Forum for Asia Annual Conference 2022 in Hainan province.
Xu Bu, president of the China Institute of International Studies and secretary-general of the Xi Jinping Thought on Diplomacy Studies Centre said “President Xi first proposed a new vision for security, which goes beyond traditional security ideas and power politics in the West.
It transcends the long-term practice of Western countries of building their own security on the basis of jeopardizing the security of other countries.
Core concepts and principles highlighted:
Stay committed to the vision of common, comprehensive, cooperative and sustainable security
Stay committed to respecting the sovereignty and territorial integrity of all countries
Stay committed to abiding by the purposes and principles of the UN Charter
Stay committed to taking the legitimate security concerns of all countries seriously
Stay committed to peacefully resolving differences and disputes between countries through dialogue and consultation
Stay committed to maintaining security in both traditional and non-traditional domains
The GSI Concept Paper’s full text is available here, if it interests you: https://www.fmprc.gov.cn/mfa_eng/wjbxw/202302/t20230221_11028348.html
Readers may also be interested to know that in January 2023, the Chairperson of the Takshashila Indo-Pacific Studies Programme, Manoj Kewalramani, published a Discussion document, titled “China’s Global Security Initiative: Undermining US Alliances or Quest for a New Security Architecture?”. He has now articulated his views on the Concept Paper as it being nothing more than a “nothing-burger.” Do read his paper in light of this development.
On 21 February, China conducted a Politburo meeting to conclude the dates for the second plenum of the 20th CPC Central Committee as 26 to 28 February, 2023. The meeting also featured a discussion on the various proposals to be deliberated upon during the second plenum - the work report of the government, the ‘Party and State Institutions Reform Plan’, and recommendations for candidates to lead various national bodies.
The dates announced for the second Plenum this year are in line with the February timeline that has been followed since the 15th Central Committee (1997-2002), with the exception of 2018, when the second plenum during the 19th Central Committee was held in January, following which, the third plenum was held in February.
The draft work report of the government was discussed at the Politburo meeting. The final report is to be submitted by the State Council and presented by Premier-to-be Li Qiang at the 14th National People’s Congress, expectedly in March. The draft has some insights on what we can expect government functioning and narrative to focus on in the months to come:
Victory over COVID: “The past five years have been extremely unusual and extraordinary. We have effectively responded to various difficulties, risks and challenges, effectively coordinated epidemic prevention and control and economic and social development, won the battle against poverty, and completed the building of a moderately prosperous society in all respects as scheduled. China's economic and social development has made remarkable achievements.”
Achieving the vision and mission of the 20th CPC Congress: “To do a good job under the strong leadership of the Party Central Committee with Comrade Xi Jinping at the core and the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, it is important to… comprehensively deepen reform and opening up, vigorously boost market confidence, organically combine the implementation of the strategy of expanding domestic demand with deepening supply-side structural reform, focus on stabilising growth, employment and prices, effectively prevent and resolve major risks, promote the overall improvement of economic operation, achieve effective improvement in quality and reasonable growth in quantity, continuously improve people’s livelihood, maintain overall social stability, and make a good start for building a modern socialist modern in an all-round way.”
Realigning economic policy with the agenda for growth: “It is necessary to implement a proactive fiscal policy and a prudent monetary policy, strengthen coordination of various policies, and form a joint force to promote high-quality development. Efforts should be made to expand domestic demand, accelerate the construction of a modern industrial system, earnestly implement the ‘Two Unwaverings’, make greater efforts to attract and utilise foreign capital, effectively prevent and resolve major economic and financial risks, stabilize grain production and promote rural revitalization, promote the green transformation of development, safeguard basic people's livelihood and develop social undertakings, and strive to accomplish the objectives and tasks of economic and social development this year.”
A list of potential candidates to lead top state institutions such as the National People’s Congress, the National Committee of the Chinese People’s Political Consultative Conference, and the State Council. Once the Central Committee approves the list of candidates, it will make “recommendations” to the National People’s Congress and the CPPCC NC. The two institutions will then elect or confirm top leadership positions at their Two Sessions in March.
This “recommendation” process is one of several ways the Party controls personnel appointments in nominally non-Party institutions in the Chinese political system.
On 22 February itself, Xi also presided over the Third Study Session of the Politburo for the year 2023. The session overwhelmingly focused on expanding the ambit of science and technology as the main engine of Chinese growth and modernization in the years to come.
Xi’s big statement at the meeting was that “strengthening basic research is an urgent requirement for achieving greater self-reliance and strength in science and technology, and it is the only way for building [China into] a world leader in science and technology”.
Subsequently, emphasis was laid on funding efforts and endeavours toward research in science and tech. Xi laid out that “Fiscal investment in basic research should be steadily increased, enterprises should be motivated to invest more through measures such as tax incentives, input from social forces should be encouraged, and the efficiency of the national natural science fund and its joint funds should be improved.”
Equally important was the push for talent. Xinhua’s English report highlights: “Xi urged support for various basic research talent programs to be strengthened, adding that strategic scientists should be trained and used, young sci-tech talent should be supported to play a key role, and leading sci-tech and innovative talent teams should be continuously expanded.”
The motivation for the overall push on this agenda can be gauged through a remark Xi made at the study session: “To cope with international scientific and technological competition, achieve high-level self-reliance and self-improvement, promote the construction of a new development pattern, and achieve high-quality development, it is urgent for us to strengthen basic research and solve key technical problems from the source and the bottom.”
During one of the previous study sessions of the Politburo, Xi had similarly argued that the US and the West are imposing a “stranglehold” on Chinese economic and scientific advancement by restricting its access to critical high-technology components and resources. Hence, it is likely that the push to advance in the field will continue internally, especially if China is to circumvent the US’s increasing emphasis on decoupling with China in high-tech.
On the topic of the US-China semiconductor competition, my colleague Amit Kumar and I have recently recorded a podcast for The Takshashila Institution’s daily podcast, All Things Policy. Do tune in if it interests you:
Moving forward, on 23 February, Xi Jinping and Politburo Standing Committee member Cai Qi gave speeches at a Symposium in Beijing to commemorate the 60th-anniversary celebrations of the “Lei Feng spirit,” based after Lei Feng, a soldier of the People’s Liberation Army under Mao Zedong.
Xinhua reports that during his speech, “Xi underlined the importance of earnestly grasping the contemporary connotations of the Lei Feng spirit, and of giving full play to the exemplary role of Party members and officials,” while Cai Qi commented on these contemporary connotations by saying that “the importance of studying in depth Xi's important expositions on carrying forward the Lei Feng spirit to guide Party members, officials and the general public to pursue lofty ideals, practice core socialist values, and consciously integrate their personal aims into hard work for the cause of the Party and the people.”
On 5 March 1963, People's Daily published an article by Chairman Mao Zedong titled “Learn from Comrade Lei Feng.” It was a tribute to the young PLA soldier who died in an accident in 1962 at the age of 22. Since Mao's tribute, March 5 has been observed as Lei Feng Day, which is marked by various voluntary acts of serving others.
Lei Feng has also come to be a “household icon” among Chinese citizens, due to his “selflessness” and his massive contributions to the cause of communism and revolution under Mao.
Finally, on 24 February 2023, China released a position paper on the ‘Political Settlement of the Ukraine Crisis’. It provides a 12-point coverage of what China views are priorities in the “peaceful resolution” of the conflict in Ukraine.
The paper is a very non-nuanced reiteration of pretty much everything that has already been mentioned in prevalent discourse, by China or anyone else. From “Respecting the sovereignty of all countries” in tandem with the provisions of the UN Charter, to “resuming peace talks,” “resolving the humanitarian crisis,” and “promoting post-war reconstruction,” most of the talking points of the Paper sound like a UN brief on acknowledging and minimizing the impacts of war.
However, three points vaguely stand out:
“Relevant countries should stop abusing unilateral sanctions and "long-arm jurisdiction" against other countries, so as to do their share in deescalating the Ukraine crisis and create conditions for developing countries to grow their economies and better the lives of their people.”
“All parties need to implement the Black Sea Grain Initiative signed by Russia, Türkiye, Ukraine and the UN fully and effectively in a balanced manner, and support the UN in playing an important role in this regard. The cooperation initiative on global food security proposed by China provides a feasible solution to the global food crisis.”
“All parties should earnestly maintain the existing world economic system and oppose using the world economy as a tool or weapon for political purposes.”
The first point regarding opposing unilateral sanctions, though not new in the Chinese discourse on the Ukraine issue, is an important reiteration indicating that China deeply worries about the impacts of such sanctions on its own economy, as well on that of Russia’s, given the strategic nature of relations it shares with the latter. A defeated or economically depraved Russia will be a liability for China, and it therefore opposes any such sanctions with all its wherewithal.
The second point regarding food security is one place China finds some role for itself in mitigating the crisis. The ‘Cooperation Initiative on Global Food Security’ by Wang Yi at the Foreign Ministers’ G20 Summit at Bali in Indonesia last year. Wang, in the usual Chinese diplomatic style, made an 8-point proposal on global cooperation for food security. Interestingly, one of the points listed therein was also, that the world should “offer convenience to the smooth entry of Russian, Ukrainian and Belarusian agricultural products into the international market.” In a foretelling manner, even here, China acts neutrally in both Russia and Ukraine’s interests.
In the third point, it’s almost as if China is taking a dig on itself!
What is also interesting, though again not new, is that one of the points in the Paper urges the international community to “Abandon the Cold War Mentality.” It says:
The security of a country should not be pursued at the expense of others. The security of a region should not be achieved by strengthening or expanding military blocs. The legitimate security interests and concerns of all countries must be taken seriously and addressed properly. There is no simple solution to a complex issue.
All parties should, following the vision of common, comprehensive, cooperative and sustainable security and bearing in mind the long-term peace and stability of the world, help forge a balanced, effective and sustainable European security architecture. All parties should oppose the pursuit of one's own security at the cost of others' security, prevent bloc confrontation, and work together for peace and stability on the Eurasian Continent.
Section C: Economy and Tech
This section is brought to you by Amit Kumar
The following pieces of news are of significance from the past week:
China-Iraq trade to be settled in yuan
The Iraqi Central Bank has allowed a part of the China-Iraq trade to be settled in Chinese currency, the yuan. The move comes amidst China’s plan to internationalize the usage of the yuan in conducting trade. The SCMP however reports that this arrangement would not be applicable to the oil trade between the two countries. The report says that “the Iraqi central bank said it will allow for private sector imports to be paid off in yuan, and the bank will provide the Chinese currency to Iraqi lenders to pay their Chinese counterparts.”
At the China-Arab Summit in December last year, Xi Jinping proposed that “the oil and gas trade among the six Gulf Cooperation Council states to be settled in the yuan within three to five years.”
However, the report adds that the impact of the decision wouldn’t be significant given the dollar continues to be the ‘vehicle currency’ - the currency of the oil. US’ open capital market and deep financial market make the dollar far more appealing in international trade.
Secondly, trade with Iraq constitutes a relatively small portion of China’s overall trade basket. And therefore, to enhance the yuan’s appeal as an alternative and reserve currency, major countries need to join Beijing’s push for the internationalization of its currency.
Korean automobile and smartphone sales in China see a dip
Sales of the South Korean automobile and smartphone have plunged in the wake of rising competition from Chinese players in this segment and rising anti-Korean sentiment in the mainland, the SCMP reports.
Both Hyundai and Samsung have seen their market share drop significantly in the past few years. Hyundai’s sales have decreased from 1.79 million cars in China in 2016 to 259,000 in 2021. Hyundai’s factories are operating at 25% of its production capacity lately and have already sold its Beijing factory to Chinese electric vehicle maker Lixiang, in 2021.
It plans to close another of its factory in Changzhou. The drop in sales is in sharp contrast to Hundai’s sales in other parts of the world, including South Korea, the US, and India where it witnessed double-digit growth in sales.
Similarly, Samsung which once occupied 20% of the Chinese market, has seen its market share drop below 1%, the report adds.
The report further states: “The South Korean government has been increasingly vigilant of public opinion online in China, as unfavourable views towards Korea often translate into real economic and political costs.”
In light of these developments, “Korean conglomerates have increasingly been tilting their focus to countries, including India, that have comparable market potential.” It adds: “Samsung is also putting more emphasis on the Indian market. The company announced recently that it would be producing 100 percent of its Indian stock for its latest smartphone model, the Galaxy S23, in India. The company’s goal for 2023 is to occupy the biggest market share of smartphone sales in India.”
Goldman Sachs predicts a ‘low single-digit’ growth in China’s exports in 2023
“China’s export growth percentage is estimated to remain in the “low single digits” this year, with the possibility of a pickup in the second half, according to an outlook by Goldman Sachs,” reports SCMP.
The report said: “After a resilient performance in the first half of 2022, global trade deteriorated in the second half of last year and is likely to remain muted in 2023.” It further says: “In light of the dwindling global demand amid sustained inflation is set to persist throughout this year, and trade growth will remain mild.”
China’s exports fell by 9.9% in December 2022, year-on-year
Overall trade in 2022, however, rose by 7%
China’s debt-to-GDP ratio set to grow slowly in 2023: Economic Daily
Economic Daily, a newspaper affiliated with the Chinese State Council, has stated that China’s debt-to-GDP ratio which stood at 273.2% as of December 2022, will rise at a slower pace in 2023, the SCMP reports.
China’s macro leverage ratio or the total debt-to-GDP ratio rose from 262.8% in 2021 to 273.2 % in 2022. Citing a report by a government-backed thinktank, Economic Daily said that if the economy is able to sustain a 5.5% growth this year, the macro leverage ratio would grow by 5.5% this year - half of the increase witnessed in the last year.
The Economic Daily added that China’s debt ratio is basically stable, and that financial risks are “generally under control,” the SCMP added.
China’s debt situation has always been a talking point in its economy. The country has one of the highest leverage ratio in the world. Consequently, China had initiated a develeraging campaign in 2016 to curb the burgeoning debt in the economy. But the outbreak of pandemic, push for infrastructure, and efforts to stimulate the economy amidst slowdown has led to rise in government debt lately.
Among the three components, the government debt seems to be driving the increase in total debt lately. The corporate and household debts have either increased much slowly or remained roughly stable impeded by lack of market confidence and slump in the housing market respectively.
China’s population decline, aging population and increasing dependency ratio are expected to further raise the financial burden owing to increased social security expenditure.
China’s slowing exports lead to long queues of trucks at Guangdong’s container terminal
Idle container trucks and empty containers have become a widespread sight at Guangdong’s Yantian International Container Terminal - one of the biggest Chinese container ports for foreign trade, owing to the dwindling global demand and fall in orders for Chinese imports including electronic products, the SCMP reports.
It says: “several trucks with no containers on their long trailers can be seen parked on the roadside, part of a static convoy that stretches nearly a kilometer (0.62 miles)”.
It adds that these constitute only a small fraction of the total container trucks that remain idly parked in the nearby city of Dongguan. Of more than 15000 registered truck drivers, only around 2000 have worked, a driver in a statement to the SCMP said.
The report further states: “the sluggish scene at Yantian is in stark contrast to the situation two years ago. In 2021, an empty shipping container was very hard to get, as there was so much cargo to send. But now, containers are gathering dust as they occupy every available space around the port.”
The ports authorities, in its official statement last November acknowledged that “the volume of empty containers stored there had reached the highest level since March 2020, and it would soon reach the highest level since the port opened 29 years ago.”
Taking note of the impact on Container leasing and their prices, the report observes that “the rate for shipping a 40-foot container from Asia to the west coast of the US has fallen by 92 % from last year” while “the rate from Asia to the east coast of the US has dropped by 86% year on year, and the rate for shipping from Asia to northern Europe has fallen by 80%.”
China’s oppressive work culture may hinder the government’s plan to lure overseas tech talent
Mass lay-offs within the tech industry have led many Chinese tech labourers to return back home. The government is eying to retain a major chunk of this tech talent amidst the ensuing US-China tech war.
However, an SCMP report informs that “toxic work culture” and “poor work-life balance” are expected to act as deterrents in this regard and that Chinese workers may be more inclined to look for opportunities abroad.
The report highlights some interesting facts and figures to compare China’s work culture with that of the US:
Chinese labour law stipulates that statutory working time is eight hours per day and 40 hours a week, but few employers adhere to it.
The average working week for Chinese employees was 47.9 hours as of December, according to the National Bureau of Statistics.
By comparison, in January 2023, the average working week for all employees on private nonfarm payrolls in the United States was at 34.7 hours, the US Bureau of Labour Statistics said.
Chinese companies are well known for their hardcore work values, epitomized by the tech sector’s 996 culture, which refers to working from 9 am to 9 pm, six days a week.
While some tech companies have reduced their hours in the past two years amid fierce backlash on social media, 40 hours per week is still a distant dream for many tech workers, who – at the same time – are considered old as soon as they reach the age of 35 and risk being deemed “redundant”.
Office politics, lack of freedom, and less value for talent have been cited as other drawbacks of Chinese work culture.
Retaining overseas Chinese talent has become a key priority for the Chinese leadership lately and the tech industry, in particular, has rolled out lucrative offers and pay packages to lure engineers back home.
China’s Local Government Financing Vehicles (LGFV) face default risks
According to a report in SCMP, analysts have warned: “China’s weaker local government financing vehicles (LGFVs) are facing higher risks of default and missed payments amid rising financing costs, a wave of maturities and a property crisis that is taking a toll on local authorities’ balance sheets.”
“LGFVs are platforms used by the local governments to borrow off-budget capital and facilitate local infrastructure and public projects, which would otherwise be unable to make ends meet.”
“The outstanding balance of LGFVs’ offshore debt is around US$84.2 billion, of which 84 per cent will mature between this year and 2025, Lianxin said at a briefing on Thursday.”
Because local jurisdictions were hit hard by the high costs of Covid-19 control measures, a slump in revenue from land sales and an economic slowdown, LGFVs are finding it harder to service their debt. Zunyi Road and Bridge Construction Group in Guizhou province, for example, recently rolled over 20-year-old loans worth 15.6 billion yuan (US$2.27 billion).
China Lianxin Credit Rating Global (Lianxin) warned that LGFVs will face increasing repayment pressure amid tighter refinancing conditions as the US Federal Reserve expects to continue raising interest rates.
Moody’s, Martin Petch, and S&P Global have all highlighted the default risk and its fallout on the bond market - offshore and onshore.
Lianxin informs: “Issuers with no credit rating accounted for 67 per cent of those in the offshore market in the first 10 months of last year, up from 45 per cent in 2020.”
“The proportion of lower-prefecture, district and county level issuers in the segment shot up to 50 per cent of the total offshore LGFV issuers in the first 10 months of last year, from 26 per cent in 2021, and 17 per cent in 2020.”
China’s record international trade figures in 2022 crushes decoupling theory, reports Xinhua
Xinhua has carried the news that cites China’s record trade figures to counter the narrative on decoupling efforts. The following country/ region-wise trade data by Xinhua is worth reading:
USA
U.S. official data showed that trade between the United States and China hit a record 690.6 billion U.S. dollars in 2022.
EU
Total trade volume between the EU and China has grown about 23 percent from 2021, hitting 856.3 billion euros (912.6 billion dollars), another new high, according to statistics released by the Eurostat on Feb. 15
Germany
In 2022, the total trade volume between China and Germany grew 20.9 percent year on year to 297.9 billion euros (318.8 billion dollars), according to the Federal Statistical Office (Destatis). China has been Germany's most important trading partner for seven years in a row.
Africa, ASEAN and Latin America
China's total trade volume with Africa, the Association of Southeast Asian Nations and Latin America in 2022 reached 282.0 billion dollars, 975.3 billion dollars and 485.8 billion dollars, representing year-on-year increases of 11.1 percent, 11.2 percent and 7.7 percent, respectively. All shattered previous records.
Mexico
Automobiles have been a highlight in bilateral trade between Mexico and China over the past year. According to data from the National Institute of Geography and Statistics of Mexico, Chinese cars accounted for nearly a quarter of Mexico's imported cars in 2022. China has surpassed the United States, Japan and other countries to become the main source of imported cars in Mexico.
Argentina
For Argentina, China has become the country's second-largest export destination and largest source of imports in 2022. Compared with 2021, Argentina's imports from and exports to China in 2022 increased by 29.4 percent and 27.4 percent respectively, according to the latest data from the Argentine National Institute of Statistics and Census.
Indonesia
In 2022, the bilateral trade volume between Indonesia and China increased by nearly 20 percent compared with the previous year. China remained Indonesia's largest trading partner and largest export market.
Chile
Chilean customs statistics show that in 2022, Chilean exports to China amounted to 38.11 billion dollars, accounting for 38.9 percent of the country's total exports. China has been Chile's largest trading partner since 2009, with nearly 90 percent of Chile's cherry exports going to the Chinese market.
Brazil
In 2022, China has been Brazil's largest trading partner for the 14th consecutive year. Last year, Brazilian exports to China amounted to 89.43 billion dollars, accounting for 26.8 percent of the country's total, according to official Brazilian figures.
Britain
China is Britain's second-largest trading partner in imports and fifth-largest in exports in 2022, according to data released by the Office for National Statistics earlier this month.
On 17 February, top bosses from big corporates in China’s IT and tech industry met with officials from the Ministry of Industry and Information Technology (MIIT), to discuss ways to push forward the “high-quality development of the internet sector”.
SCMP reports that “the symposium… was attended by MIIT deputy head Zhang Yunming, Tencent Holdings founder and CEO Pony Ma Huateng, Baidu co-founder and CEO Robin Li Yanhong, Xiaomi founder and CEO Lei Jun, and NetEase founder and CEO William Ding Lei.”
It adds that “Cheng Wei, founder and CEO of ride-hailing giant Didi Chuxing, was also present at the round table – his first appearance at the annual event since a government task force initiated a cybersecurity investigation into the company in July 2021, just two days after its blockbuster initial public offering on the New York Stock Exchange.”
Reportedly, participants agreed that accelerating the growth of the digital economy, and further integrating it with the “real economy” – goals that were set out by the Communist Party’s top leadership during the 20th national congress in October – will be the fundamental principles guiding the development of the internet sector.
Section D: Foreign Policy Watch
This section is brought to you by Kingshuk Saha
There have been some very interesting developments over the past few days, which are worth capturing in this week’s section.
Wang Yi's talks with Vladimir Putin
Wang Yi, Director of the Office of the Chinese Central Foreign Affairs Commission met with Russian President Vladimir Putin at the Kremlin in Moscow on 22 February 2023.
During his meeting with Putin, he said “Against the backdrop of a very complex and volatile international situation, Sino-Russian relations have withstood pressure from the international community and are developing very steadily.”
The two sides also reaffirmed the China-Russia comprehensive strategic partnership. Putin reportedly said, “Russian-Chinese relations are developing as we planned in previous years. Everything is moving forward and developing.”
Wang’s visit is significant as it is on the eve of the one-year anniversary of Russia’s invasion of Ukraine. It is in solidarity with Russia, against its isolation by the ‘West’. This is especially considering the fact that Russia is now becoming more dependent on China due to a slew of western sanctions.
Alexander Gabuev, a senior fellow at the Carnegie Endowment for International Peace, said “China is increasingly becoming a lifeline that keeps the regime afloat and prevents it from turning into a giant North Korea with an overly militarised industry and total destruction of normal life.”
Wang's visit to Russia seems more like a rebalancing act as during his engagements in Europe he said the war in Ukraine can only be resolved through peaceful negotiation, but in Moscow, he reaffirmed strong support for Russia.
Qin Gang visited Indonesia
Chinese Foreign Minister Qin Gang visited Indonesia from February 21 to 23 at the invitation of Minister for Foreign Affairs of Indonesia Retno Marsudi.
Jakarta is the first stop of Qin's Southeast Asia tour since his appointment as foreign minister in December 2022.
Qin arrived in Jakarta on Tuesday and met Indonesian President Joko Widodo. During the meeting, both sides agreed to deepen the relationship and work jointly to maintain regional peace and security.
Widodo said “practical cooperation between Indonesia and China has yielded fruitful outcomes, bilateral trade and investment enjoyed a rapid increase, and China has become the second-largest source of foreign investment in Indonesia. The two sides should accelerate the key projects such as the Jakarta-Bandung High-Speed Railway, the North Kalimantan Industrial Park, and the development of Indonesia's new capital, and expand cooperation in industrial chains and new energy, among others.”
On the other hand, Qin reiterated China’s long-standing position of allowing South Asian states their autonomy to “choose or not to choose”: “The countries of the region should not be forced to pick sides. We believe that Indonesia and ASEAN will make their judgments and choices independently and autonomously in the spirit of the fundamental force of the region's stability, development and prosperity in the region.”
On Wednesday, Minister Retno and Minister Qin also met for the 4th Joint Commission for Bilateral Cooperation (JCBC) conference between Indonesia and China.
China is Indonesia's largest trading partner and in 2022, bilateral trade between the two countries reached a new record of USD 133.65 billion.
In the same light, it is also interesting that recently, an Indian submarine has, for the first time ever, docked in Indonesia, which is among the countries locked in a maritime dispute with China in the contentious South China Sea, as part of the continuing overall diplomatic-military outreach to Asean countries.
How China reacts to this development remains to be seen, but one can expect some condemnation (if at all) against India, for contributing to the militarization of the region.
At the UNSC, China calls for an investigation into the Nordstream pipeline explosion
Zhang Jun, China's permanent representative to the United Nations on Tuesday urged for an impartial and professional investigation of the Nord Stream natural gas pipeline explosion in September 2022.
Jun said “Recently, we have come across a lot of details and relevant information concerning the Nord Stream incident, which are alarming, faced with such detailed materials and comprehensive evidence, a simple statement of 'utterly false and complete fiction' is obviously not enough to answer the many questions and concerns raised around the world. Finding a way to dodge today's meeting does not mean that truth can be concealed.”
Since the explosion at Nordstream pipeline in September 2022, there have been talks of sabotage and inquiries into the incident without a conclusive answer leading to numerous conspiracy theories.
Seymour Hersh, an American investigative journalist and Pulitzer Prize winner on February 8, published his investigation of the incident claiming the sabotage was done by US Navy divers aided by Norwegian operatives.
The United States strongly refuted the report of Seymour Hersh. John Kirby US National Security Council spokesperson said “It’s a completely false story. There is no truth it,” while the Chinese media gleefully highlighted the report.
This brought the incident again into the limelight with China and Russia wanting to extract political mileage in the battle of perception by highlighting the American and European duplicity and unlawful act.
European Commission bans TikTok from staff official devices
The European Union’s (EU) executive branch ordered its staff to remove TikTok app from official mobile phones and work devices.
Tik Tok, owned by the Chinese company Byte Dance, has been accused of data harvesting for the Chinese government.
Sonya Gospodinova, EU spokeswoman, said “The measure aims to protect the Commission against cybersecurity threats and actions which may be exploited for cyberattacks against the corporate environment of the commission.”
On the other hand, Caroline Greer, Tik Tok director of public policy and government relations in Brussels, said “The European Commission’s suspension of TikTok on corporate devices is misguided and based on fundamental misconceptions.”
The ban by the EU shows its willingness to confront China in the technology domain and it would be interesting how China hit back.
Similarly, trends observed in US universities also indicate that TikTok may be banned for usage inside University campuses, and subsequent data localization steps are being undertaken by TikTok CEO in the US, under a reported ‘Project Texas’.
Section E: Military Developments in China
This section is brought to you by Anushka Saxena
This week, the following developments concerning the Chinese military and police force, have grabbed my attention :
On 20 February 2022, the Chinese Ministry of Defense published an article discussing the feats of the H-6K Bomber and its pilot for the 14th China Airshow held in December 2022, Captain Chen Jiale.
The bomber, which flew over 5000 km during its reported 7-hour test flight, conducted sorties over the contested Spratly/ Nansha islands in the South China Sea. H-6K also possesses nuclear-load capabilties, and has the wherewithal to attack US carrier battle groups in the Pacific.
In the article, Chen Jiale was quoted as saying, "In combination with fighter jets, early-warning aircraft and other equipment, we have jointly carried out live-fire drills in subjects like long-range raid, fast maneuver, and systematic strike, and explored many new ways to fight systematically and win.”
SCMP reports that Timothy Heath, a senior international defence researcher at the US think tank Rand Corporation, said the report revealed how China was using the artificial islands it built in the South China Sea to perform combat duties.
On 22 February 2022, an article appearing in the PLA Daily discussed details of an exercise conducted by a brigade of the 73rd Group Army, on the subject of ‘paired training’ and ‘coupling of combat training’, in early February.
What is interesting about this exercise was that it focused more on simulating actual on-ground combat and confrontation instead of just running equipment checks or conducting isolated training.
The article recognized the lack of hands-on experience in the joint fighting capacity as a “shortcoming” and “weakness” the PLA itself was “unclear about.”
What is also interesting is the division of work in the newly constructed brigade-battalion structure in the PLA. Apparently, in one part of this particular exercise, a ‘radar reconnaissance company’ and an ‘electronic countermeasures company’ from the brigade competed - while the latter was instructed to send out regular electronic interferences as a deception tactic, the former was supposed to lock-in on the target by clearing the “electromagnetic fog.” The exercise was deemed a failure because of the long time it took.
‘Practice battles’ is becoming an important trend to observe for those interested in studying the effectiveness of PLA reforms and joint operations.
As per the statement of Tan Kefei, the Chinese Defense Ministry Spokesperson on 23 February 2023, the Chinese military has dispatched a contingent to participate in the humanitarian assistance and disaster relief exercise of the Cobra Gold 2023 multinational exercise in Thailand.
The contingent, selected from the Southern Theater Command of the People's Liberation Army, will participate in the exercise in Thailand from Feb 9 to March 10.
Tan’s statement also said that “the exercise this year includes engineering assistance, the tabletop exercise of humanitarian assistance, disaster relief, and live drills under the scenarios of buildings collapsing, hazardous substances leakage, first aid, and fire rescue, among others.”
China has been invited to participate in the Cobra Gold exercise consecutively for the past ten years, since 2014.
It has also been reported that the US will send its largest contingent of troops in ten years to the exercise in 2023.
The Diplomat’s South Asia Editor reports: As is customary, seven nations – Thailand, the U.S., Singapore, Japan, Indonesia, South Korea, and Malaysia – will participate in the main war exercises, while three others – China, Australia, and India – will take part in humanitarian aid exercises. The remainder will merely take part as observers.
In Brief: as per a government press release dated 18 February, Chinese central authorities such as the Ministry of Veteran Affairs have released a set of guidelines on helping ex-servicemen gain employment.
The guideline states that China will further enhance the support for ex-service personnel facing employment difficulties.
It acknowledges that “Military veterans are important human resources and helping them secure employment is of great significance to improving their lives.”
As part of the process, relevant government departments are required to provide career guidance, job recommendations and vocational training to ex-service personnel to help them secure jobs.
Tax incentives and entrepreneurship subsidies will be introduced to help them start up businesses and engage in flexible employment as well.
To read more on developments concerning Chinese military forces, please refer to :
Spacebattles (a more informal channel for public discussions)
Eye on China is a weekly newsletter curated by the Indo-Pacific Studies Programme at The Takshashila Institution, a public policy think-tank based out of Bengaluru, India.
Contributors :
India-China Relations: Manoj Kewalramani
Chinese Domestic Politics: Anushka Saxena
Economy and Tech: Amit Kumar
Foreign Policy Watch: Kingshuk Saha
Military Developments in China: Anushka Saxena
