Gogra Disengagement - South China Sea - CPEC Changes - Afghanistan - Tech Shake-Up Analysis - Inner-Party Regulations - Covid Propaganda - Xi Thought Series - Taiwan Arms Sales - USCBC Survey
I am pleased to invite you to this upcoming event discussing Mr. Madhav Godbole’s book being hosted by Takshashila.
Date and Time: August 13, 18:00, Indian Standard Time.
Register now: https://bit.ly/BookLounge12
I. Gogra Disengagement, Tibet & South China Sea
The Indian Army issued a statement late this week confirming that at the recent 12th Round of Corps Commander level talks in late July, “both sides agreed on disengagement in the area of Gogra.” Following this, “as per the agreement, both sides have ceased forward deployments in this area in a phased, coordinated and verified manner. The disengagement process was carried out over two days i.e. 04 and 05 August 2021. The troops of both sides are now in their respective permanent bases. All temporary structures and other allied infrastructure created in the area by both sides have been dismantled and mutually verified. The landform in the area has been restored by both sides to pre-stand off period. There’s no statement to this effect from Beijing for the moment.
The Indian Army’s statement added: “With this one more sensitive area of face-off has been resolved. Both sides have expressed commitment to take the talks forward and resolve the remaining issues along the LAC in the Western Sector.” The remaining issues as this Indian Express article tells us are:
“China, however, is yet to pull back its troops from PP15 at Hot Springs. The PLA is also blocking Indian soldiers from accessing patrolling limits in the Depsang Plains, and some ‘so-called civilians’ have pitched tents on the Indian side of the LAC in Demchok.” The piece also tells us that as part of the Gogra disengagement, “there will be a temporary no-patrolling zone on either side of the LAC, which will be strictly adhered to by forces on both sides. The general understanding for such zones, sources said, is between 1.5 km to 2 km on either side.” This is the case with other areas too. For instance, along Pangong Lake and Galwan Valley, buffer zones without any patrolling have been created.
Shishir Gupta reports in the Hindustan Times that the Indian leadership is prepared for the long haul in terms of the situation along the LAC. The piece also talks about the Eastern Sector, referring to Xi’s recent Tibet visit. It says that “the Indian intelligence has alerted the military of increased PLA activity in the Eastern sector…Since May 2020 PLA aggression on Galwan, Gogra-Hot Springs and Pangong Tso, the PLA has also tremendously improved military infrastructure across the Sikkim and Arunachal Pradesh sector with new fortified bunkers and missile systems. The PLA has deployed Russian S-400 missile system at Nyingchi with the second one possibly deployed at Hotan in Xinjiang region. For the past one year, increased communication activity has been noticed all along the 3,488 km LAC with Chumbi Valley activity across Nathu La in Sikkim a matter of serious security concern.” While on the issue of the Eastern Sector, it’s noteworthy that the army announced this week the establishment of a new hotline between the Indian Army in Kongra La, North Sikkim, and China’s People’s Liberation Army at Khamba Dzong in the Tibetan Autonomous Region.
HT reports that this is the sixth hotline for local commanders between the two armies - two in eastern Ladakh, two in Arunachal Pradesh and two in Sikkim. “Such hotlines are used routinely to resolve differences at the local level, including the Ladakh sector where the two armies have been locked in a border row for almost 15 months and negotiations are on to cool tensions. The two hotlines in the Ladakh sector have been activated more than 1,450 times since May 2020 to sort out differences at the ground level.”
While speaking of Tibet, there was a feature piece in improving education in the region in the People’s Daily this week. Some of the interesting points in the piece were about the Party sending people from outside Tibet to the region. For instance, “from 2016 to the first half of 2020, 2,493 cadres and teachers came to Tibet to work.” Also, “In 2018, the 10,000 Teachers Teaching Program was launched, and outstanding teachers were selected and sent to Tibet to teach in batches of one and a half years each.” The entire piece has a tone of others helping Tibet to improve.
Do note this:
“In the process of aiding Tibet through education, patriotism runs through the whole process of school education at all levels, and patriotic seeds are sown in the hearts of every teenager.” It tells us that there was a training course held by China’s Ministry of Education’s Institute of Applied Linguistics in Linzhi. This trained language teachers for 74 districts and counties in Tibet in order to promote “the common national language and script.” Also, China University of Political Science and Law has launched the ‘Soul Casting Project’ to continuously enhance recognition with “the great motherland, the Chinese nation, Chinese culture, the Communist Party of China and socialism with Chinese characteristics.” 教育部语言文字应用研究所在林芝举办语言文字规范标准培训班，为西藏74个区县培训语言文字干部、语文骨干教师、语文教研员等200名，促进推广国家通用语言文字；北京把对口支援工作打造成民族团结工程，创作并组织《藏地彩虹》《家是玉麦，国是中国》等优秀作品进校园，加强民族交往交流交融，筑牢民族团结的思想基础；中国政法大学开展“铸魂工程”，不断增强各族群众对伟大祖国、中华民族、中华文化、中国共产党、中国特色社会主义的认同.
Two more things to note with regard to Tibet. First, this thread by Adil Brar on military training for minors in Nyingchi.
Second, do note this piece about China reportedly opening the world’s largest “plateau human genetic resources biological sample bank” in the Qinghai-Tibet Plateau for medical researchers to study “plateau diseases” and improve the country’s health support capabilities in the region. This would likely aid in the PLA being able to adapt better to the region.
Next, we have a report about India sending a naval task force to the South China Sea later this month to expand security ties with friendly countries. Four ships, including a guided missile destroyer and a missile frigate, will be deployed for a two-month period to southeast Asia, the South China Sea and the western Pacific, the navy said in the statement. “The deployment of the Indian Navy ships seeks to underscore the operational reach, peaceful presence and solidarity with friendly countries towards ensuring good order in the maritime domain...” the navy said. The Indian ships will take part in annual joint war drills involving the United States, Japan and Australia - the group known as Quad along with India - off the coast of Guam.
The Chinese Foreign Ministry said in a statement on Friday that “China hopes that the warships of relevant countries will earnestly abide by international law, respect the sovereignty, rights and interests of countries along the South China Sea and avoid harming regional peace and stability.”
Anyway, there’s a lot of talk about this deployment being a new demonstration of India’s intent or a “stern message,” and this being a response to the Ladakh tensions or the Galwan clashes, etc. But before one gets ahead of oneself, do check this out from David Scott’s 2015 paper:
“The Indian navy has been deploying through the South China since 2000, generally twice a year, which has involved its own unilateral practicing, as well as bilateral port calls and exercises with local actors, particularly Vietnam. Such deployments attract Chinese criticism, as with the so-called INS Shardul incident of July 2011, where the Indian ship was supposedly radioed from nearby Chinese vessels to vacate these ‘Chinese’ waters. India though continues to deploy into such disputed waters, and China continues to warn India about such appearances (Patranobis 2015).”
Also, I spent around 5 minutes on Google and found some other examples of India’s recent presence in the SCS.
September 2011: Incident involving INS Airavat in South China Sea
July 2016: Indian naval ships sail for operational deployment to South China Sea
May 2019:Indian Navy ships sail through South China Sea with 4-nation flotilla
The point of the above is that while the current deployment does indicate that India is willing to continue to back its interests in the region, history isn’t beginning anew and neither is this simply a reaction to what’s happened in Ladakh.
Anyway, PTI also reports that amid all this, the PLA Navy began a five-day drill in the South China Sea on Friday, setting up a vast navigation restriction zone amid the all-domain military exercises being conducted by the US in the Indo-Pacific region along with Britain, Australia and Japan, the first of its kind in more than four decades. The report adds that the coordinates provided in the notice by China’s Maritime Safety Administration show that its exclusion zone stretches from waters off the southeast of Hainan Island to a majority of waters around the Paracel islands.
While on the issue of the South China Sea, here’s Foreign Minister Wang Yi talking about the “four respects” in the SCS during the East Asia Summit. These are:
“We need to respect the historical facts. China is the first to have discovered, named and explored Nanhai Zhudao (the South China Sea islands) and relevant waters.”
“We need to respect laws. According to international law, China has sovereignty over Nansha Qundao and naturally has corresponding maritime rights and interests.”
“We need to respect consensus. Adhering to peaceful settlement of disputes by countries directly concerned through consultation and negotiation is a joint commitment made by China and ASEAN countries in the Declaration on the Conduct of Parties in the South China Sea. All parties should continue to abide by and implement it with concrete actions.”
“We need to respect regional countries…China and ASEAN countries should be keenly aware of the malicious intentions of non-regional forces and firmly say ‘no’ to any action that undermines peace and stability in the South China Sea and that destroys the unity and cooperation of regional countries.”
My take: Such performative nonsense.
Anyway, SCMP also notes that China and the ASEAN nations have agreed on part of the text of the long-waited code of conduct for the South China Sea. This will be interesting to see.
Indian Army troops get American, Swiss rifles on China border
India will follow up with China on Indian students' return to complete studies: EAM Jaishankar
China is investigating circumstances of Indian student’s death in Tianjin, MEA says
‘Stealth investment’: Chinese money finds its way into Indian tech as IPOs boom
II Understanding the Tech Shake-up
A bunch of key developments related to China’s technology sector that are noteworthy this week. First, let’s look at all the regulatory shake-up that’s taking place. WSJ had a really good piece summarising some of the key developments while arguing that we should expect much more turbulence in the future. It tells us that:
“Since November, Chinese regulators have taken more than 50 actual or reported actions spanning antitrust, finance, data security and social equality, a July 29 roundup by Goldman Sachs Group Inc. shows—more than one move a week.”
The piece added: “On Tuesday, a Chinese newspaper affiliated with state news agency Xinhua criticized online gaming as ‘opium for the mind’. The article raised concerns that Tencent’s popular games could be swept up into a broader regulatory crackdown. In a sign of how fragile investor sentiment has become, that was enough to trigger a market selloff. The article later disappeared before re-emerging in a toned-down form, without the ‘opium for the mind’ line. The same day, the Communist Party’s top propaganda department, which has control over what books, movies and games are released, issued a new rule to limit the role of algorithms in content distribution, a move that could rein in the growth of companies such as ByteDance Ltd. and Tencent.” — (I’ll discuss this last bit towards the end of the section.)
Two things that have happened because of the policy measures of the past few weeks is that investors are reportedly focussing on state media more carefully than ever to look for clues with regard to policy direction. Josh Ye reports for SCMP that traders and investors are scouring through state media for signs to identify which sectors will be the next to come under scrutiny. The piece quotes Ming Liao, Beijing-based founder of Prospect Avenue Capital, an investment fund that manages US$500 million of assets, as saying that China’s tech stock investors remain mired in uncertainty. “These kinds of articles (in state media) are always there and it’s for them to cause a stir in the market,’ Liao said. ‘But investors are now completely lost about the direction [of regulations] and deeply confused, so any slight sway of the wind or move in the grass is enough to cause big market moves.”
Another example of the power of state media to force business decisions was Sina Weibo on Friday taking down its online list that ranks celebrities by popularity. The announcement came hours after the People’s Daily published an editorial criticising platforms that prioritize traffic and create celebrities out of “unworthy” individuals, who can draw attention and money from fans.
In addition, investors are also going back to examine Xi Jinping’s old speeches. Bloomberg reported this week that “traders began scouring Xi’s speeches to find clues about which industries might be next after his administration abruptly smashed the country’s $100 billion for-profit education sector, according to several employees at Chinese financial firms who asked not to be identified. Screenshots of key passages made the rounds: Xi denouncing “obscene” online content, education inequality and housing-price speculation in school districts. A government database of more than 11,000 speeches since Xi took power in 2012 became a key resource.”
Quick Thought: Going through Xi’s speeches, official documents and state media articles is really useful to inform one about priorities, ideological predilections and potential policy direction. For instance, check out the piece on China’s Reform and Opening up priorities in the People’s Daily’s mid-year economic review this week. It lists examples of reform, and none of it really talks about market liberalisation. For investors, such information can and should be factored into overall assessments of risks and opportunities, particularly when it comes to long-term decision-making. Also, it’s useful to note that often regulators use state media to send out feelers that can shape the decisions of corporations. But with that said, it’s not like there’s a code hidden in there to tell one about when a certain kind of action can or will be taken. I say this as someone who spends an unhealthy amount of time reading all of this material. Generally, what one has are dispersed bits of information that offer a sense of broad policy trend, and little more.
Anyway, the confusion among investors gets us to the larger point. What’s behind the tech sector shake-up? It’s quite tricky because there isn’t really one single, sweeping rationale that explains all of this. I’ve put together a thread with my thoughts, trying to explain what’s happening. Of course, it really depends on which prism one’s coming at it from - geopolitics, command economy, the resurgence of ideology, bureaucratic actor model, etc.
This episode of The Little Red Podcast with Hong Kong University’s Angela Zhang, University of Leiden’s Rogier Creemers and John Lee from the Mercator Institute of Chinese Studies was really good to understand the different dynamics at play.
There’s also some other really good pieces that I recommend reading too.
For starters, WSJ’s Grep Ip writes:
“To Western investors, China’s regulatory crackdown on superstar companies such as Alibaba Group Holding Ltd. , Tencent Holdings Ltd. and Didi Global Inc. must seem suicidal. How better to undercut growth than to kneecap some of the world’s most successful technology companies? President Xi Jinping would beg to differ. In his estimation, technology comes in two varieties: nice to have, and need to have. Social media, e-commerce and other consumer internet companies are nice to have, but in his view national greatness doesn’t depend on having the world’s finest group chats or ride-sharing. By contrast, Mr. Xi thinks the country needs to have state-of-the-art semiconductors, electric-car batteries, commercial aircraft and telecommunications equipment to retain China’s manufacturing prowess, avoid deindustrialization and achieve autonomy from foreign suppliers. So even as the Chinese Communist Party unleashes a multifront regulatory assault against consumer internet companies, it continues to shower subsidies, protection and “buy-Chinese” mandates on manufacturers.”
Martin Chorzempa, senior fellow at the Peterson Institute for International Economics, writes:
“there are legitimate public policy reasons behind China reining in its tech giants, many of the same ones motivating the U.S. and other democratic countries to take similar actions. Even aggressive states sometimes are right to assert their prerogatives…China's private tech sector is arguably even more powerful than its Western counterparts due to its dominance of finance through a duopoly of super apps. For example, Tencent, the dominant social media company, blocked WeChat users from sending links to its rival Alibaba's e-commerce websites -- the U.S. equivalent would be iMessage and WhatsApp refusing to forward Amazon links. Exclusivity agreements force many merchants or startups into choosing Alibaba or Tencent, as they need distribution through the billion users the giants' super apps boast…Yet, until this shift, Chinese Big Tech companies had faced nearly zero antitrust scrutiny and a loose and unenforced regulatory regime except, of course, for the aggressive Communist Party censoring of content. In part, this is because tech companies and their leaders had immense influence within society and the Party. One senior Chinese regulator even described them to me as ‘our oligarchs’…China's campaign to regulate Big Tech, of course, entails political threats, from silencing business opposition to party overreach, which is lamentable. On the economics, however, what has been implemented thus far is more a useful corrective than a shutdown -- unlike the draconian crackdown in the tutoring sector. None of the new tech antitrust, privacy, or fintech policies in China are as drastic as the ideas currently floating through the U.S. Congress to break up companies such as Google, Facebook and Amazon.”
I found this quote from Dexter Roberts during his Bloomberg interview very interesting:
“Xi sees the inequality and looks at people like Jack Ma making all this money and he doesn’t like it. He has this idea that he can really rein in the private sector and continue to grow the economy while redistributing wealth.”
SCMP columnist Wang Xiangwei laments the manner in which officials and departments have launched a series of actions spooking investors.
“Old habits die hard, and China’s secretive politics and utter failure to publicly and clearly explain policies that impact stock markets worldwide may not only cost investors billions of US dollars in losses, they will more importantly raise doubts about the country’s capital markets and its overall intention of opening up…the stock rout could have been greatly mitigated if Chinese officials were more transparent and better at managing their messages to markets at home and abroad. Instead, they looked clueless and appeared to show little consideration of how their forceful actions would impact stock markets and damage China’s reputation.”
He further talks about the crackdown on the tutoring industry. He says that this wasn’t entirely unexpected. “Chinese President Xi Jinping first revealed his distaste for private education companies at a national conference in 2018…Since then – and at least three times this year – state media has regularly quoted him as calling for better regulation of after-school tutoring companies.” But a lot of this messaging for him was “buried in long, jargon-laden state media reports.” He then adds: “In typically opaque politics, Chinese officials, trying hard to exceed the expectations of the country’s most powerful leader since Mao, had kept the new rules under wraps until they sprung the surprise on global markets on July 24. As rattled international investors started to dump Chinese shares from a variety of sectors, not just after-school tutoring companies, the Chinese officials remained silent and appeared to have been shocked by the market reaction.”
To me, Wang’s primary concern is that Chinese officials have been terrible at communicating the rationale for their actions, and if only they had done this better, things would not be so bad. I guess what Wang’s suggesting would save investors some money, but it doesn’t change the direction that China appears to be heading towards, and that’s the long-term risk that investors need to take into account.
This direction is rather aptly summed up by Jingzhou Tao in this SCMP piece. He writes from the perspective of Beijing’s approach to SoEs, but this logic impinges on tech sector as a whole too:
“China is reshaping its business landscape with a strong Marxist ideological push and an ultranationalist sentiment. The comprehensive control exerted by SOEs across all economic sectors and their special treatment by the government may well undermine fair competition and dampen the entrepreneurial spirit.”
Anyway, Tom Mitchell and Thomas Hale have an interesting piece in the Financial Times, discussing the actions taken with regard to the tutoring and gaming industries. They argue that:
“Rattled by parental angst, the party’s response has been to adopt the tactics of a nanny state, potentially reversing elements of the compact it has established with urban residents over the past four decades to steadily reduce its interference in their private lives…At stake, Xi appears to believe, is the party’s ability to maintain unchallenged political control, which ultimately depends on its capacity to meet what the president has termed ‘the people’s demand for a happier life’.”
The piece also carries this warning: “Over recent weeks, Xi’s administration has demonstrated that it is not too concerned about the collateral damage investors may suffer as the party extends its reach into new areas. ‘Beijing will not hesitate to completely overhaul an entire business environment if it deems it politically necessary,’ says Chen Long at Plenum, a Beijing-based consultancy. “All sectors related to providing public goods traditionally viewed as not-for-profit will face greater risks’.”
Moving away from the created regulatory mess, a couple of other important China tech and economy-related stories.
First, Huawei reported a 38% fall in quarterly revenue on Friday. The drop marks the third straight decline in quarterly revenue for Huawei. Smartphone sales, once a top revenue driver for the company, have fallen dramatically since the Trump administration imposed restrictions last year. Revenue from telecommunications equipment sales have also dropped, although less dramatically, amid a U.S. campaign pressuring allied countries to drop the Chinese company as a supplier of 5G equipment. Second-quarter revenue fell to 168.2 billion yuan, about $26 billion, from 271.8 billion yuan in the same quarter a year ago. The decline marked a sharp acceleration from the 16.5% revenue drop in the first quarter and an 11.2% drop in the fourth quarter of 2020.
Second, Chinese fintech giant Ant Group saw its first-quarter profit drop 37.5% from the previous quarter, according to Caixin’s calculations, as it was required to comply with new rules on once-lucrative microlending and restructure its business. The Jack Ma-backed conglomerate contributed 4.5 billion yuan ($696 million) to e-commerce giant Alibaba Group Holding Ltd.’s profit in the second quarter, according to a Tuesday filing to the Hong Kong bourse. Based on Alibaba’s one-third stake in Ant Group and its accounting methods, that means Ant Group raked in $2.1 billion in profit in the first quarter of this year, up 48% year-on-year.
Third, WSJ reports that China’s antitrust regulator is preparing to impose a roughly $1 billion fine on food-delivery giant Meituan for allegedly abusing its dominant market position to the detriment of merchants and rivals, according to people familiar with the matter. The penalty could be announced in the coming weeks, and Meituan would be required to revamp its operations and end a practice that has been dubbed “er xuan yi”—literally, “choose one out of two,” the people said.
Fourth, SCMP reports that China has launched a new campaign to crack down on “fake news” in Beijing’s latest effort to clean up online content, placing additional pressure on the country’s social media platforms to screen out unsanctioned information, likely impacting citizen journalists. The campaign will target “illegal news activities” by news organisations and staff, internet platforms and public accounts, as well as unaccredited social organisations and individuals, according to a summary of a recent teleconference by the Central Propaganda Department of the Communist Party, which is published on government websites. The campaign is being jointly carried out by 10 government departments: the propaganda authority, the Cyberspace Administration of China, the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration of Taxation, the State Administration for Market Regulation, the State Administration of Radio, Film and Television, and the state-backed All-China Association of Journalists.
Fifth, the Central Propaganda Department of the Communist Party, the Ministry of Culture and Tourism and the State Administration of Radio and Television as well as the China Federation of Literary and Art Circles and Chinese Writers Association have issued new guidelines for better “culture and art reviews” in China partly by limiting the role of algorithms in content distribution. The guidelines are not yet public but SCMP reports that as per a Xinhua summary “all Chinese content creators and distributors are told to ‘adhere to the correct direction, strengthen Marxist literary theory and criticism, and pay attention to the social effects of literary criticism … and not to contribute to the spread of low, vulgar and pandering content or quasi-entertainment content’. The policy document also stressed that China will “improve the standards of literary and art criticism” and “put social value first.” “We can’t become slaves of online traffic or let commercial standards trump artistic ones.”
Finally, Caixin reports that China’s Supreme People’s Court has directed all the debt cases involving Evergrande and its related parties to be moved to the Guangzhou Intermediate People’s Court…In a Thursday note, Global ratings agency S&P Global Ratings Inc. estimated that Evergrande has more than 240 billion yuan ($37.1 billion) of bills and trade payables from contractors to settle over the next 12 months, of which around 100 billion yuan is due this year. The company’s financial report showed that it had 158.8 billion yuan in cash and cash equivalents at the end of last year. Meanwhile, three major global credit ratings agencies have all downgraded Evergrande. On Thursday, S&P again downgraded the conglomerate from B- to CCC, deeper into speculative-grade territory, citing its increasingly strained liquidity and higher nonpayment risk.
Chinese teacher running illegal after-school tutoring business caught in newspaper sting - Terrible consequences of a policy driven by ideology of welfare
ByteDance to lay off staff, close businesses over China tutoring clampdown
Didi in talks with state-backed Westone to hand over data control-sources
Chinese regulators meet with delivery firms, call for stronger labour rights
Tencent will inspect WeChat's 'youth mode' after prosecutors initiate lawsuit
China Education Firms to End Most Classes With Foreign Teachers
China’s Export Machine Still Hums Despite Covid-19, Extreme Weather
Beijing’s education crackdown hits Duolingo, Memrise as language-learning apps are pulled from Chinese app stores
III. Supervising Procuratorial Organs, Evaluating Tech Outputs & Inner-Party Regulations
A bunch of noteworthy official documents were published this week. First, we had the new guidelines on Strengthening the Legal Supervision of Procuratorial Organs in the New Era.
The first paragraphs tells us that the guidelines are needed to strengthen supervision to meet the “new needs of the people in democracy, the rule of law, fairness, justice, security and the environment.” They are also needed in order to “further strengthen the absolute leadership of the Party on the work of the procuratorate, to ensure that the procuratorial organs perform the legal supervision duties conferred by the Constitution and the law in accordance with the law...” 进入新发展阶段，与人民群众在民主、法治、公平、正义、安全、环境等方面的新需求相比，法律执行和实施仍是亟需补齐的短板，检察机关法律监督职能作用发挥还不够充分. 为进一步加强党对检察工作的绝对领导，确保检察机关依法履行宪法法律赋予的法律监督职责，现就加强新时代检察机关法律监督工作提出如下意见.
As has increasingly become the norm, the General Requirements section of the document only refers to the guidance of Xi Jinping Thought. Also it talks about the aim of promoting the revolutionization, regularization, specialization and professionalization (革命化、正规化、专业化和职业化) of procuratorial staff, striving to improve the level of legal supervision ability, and making new contributions to upholding and improving the socialist system with Chinese characteristics and promoting the modernization of national governance system and governance capacity.
The second part of the document talks about the importance of procuratorial organs keeping in mind the overall situation and the overall national security concept in their activities, along with serving the causes of social stability and high-quality socio-economic development. Here are some of the crimes specifically mentioned in the bit on protecting national security:
splitting the country
subverting state power
organizing and carrying out terrorist activities
the fight against gangs
With regard to development, the document calls on procuratorial organs to “participate in the prevention and resolution of financial risks according to law, serve to consolidate and expand the achievements of poverty alleviation and comprehensively promote rural revitalization, and strengthen the judicial protection of ecological civilization.” 依法参与金融风险防范化解工作，服务巩固拓展脱贫攻坚成果和全面推进乡村振兴，加强生态文明司法保护. It also wants them to “safeguard the legitimate rights and interests of enterprises in accordance with the law. Strengthen judicial protection of intellectual property rights, and serve to protect innovation-driven development.” 依法维护企业合法权益。加强知识产权司法保护，服务保障创新驱动发展.
The next bit is about serving the people. In this, it says: “Adhere to and develop the "Fengqiao Experience" in the new era, improve the procuratorial work mechanism for complaints and appeals, improve the system for handling people’s letters and visits, introduce hearings and other means to review and handle difficult cases, and effectively resolve contradictions and disputes.”坚持和发展新时代“枫桥经验”，健全控告申诉检察工作机制，完善办理群众信访制度，引入听证等方式审查办理疑难案件，有效化解矛盾纠纷.
The last paragraph in section two talks about legal awareness in society. It emphasizes the core socialist values.
The third section talks about improving the quality and effectiveness of legal supervision to safeguard judicial justice. This is too detailed to be summarised in brief here, but I’ll share what Xinhua English says, i.e., that the guidelines called for “improvements in mechanisms of information sharing, case notification, and case transfer between people's procuratorates and law enforcement, public security, judicial, and judicial administrative organs. The guideline demanded fine-tuned supervision on filing, investigations, and trials of criminal cases, as well as civil proceedings. Procuratorial organs were also asked to push forward works on public interest litigations, among others.”
The final section in the document talks about strengthening the competence of procuratorial personnel. It’s always useful to see what parameters are used to define competence. I guess this is where we see the prioritisation between being red and expert.
The first parameter is “strengthening the party’s political development is the first priority.” It calls for improving the “political judgment, political understanding, and political execution ability of prosecutors. Carry out in-depth education on the concept of socialist rule of law to ensure that the prosecutors are absolutely loyal, absolutely pure, and absolutely reliable... carry out the education and rectification of the procuratorial team, and promote the solution of stubborn and chronic diseases.” This also emphasises the eight central regulations, supervision over procuratorial power, establishing a clean government and strengthening internal supervision to ensure “accountability of leading cadres who interfere in judicial activities and intervene in the handling of specific cases.” It is only after all this that the document talks about professionalism as the second parameter.
Next, let’s focus on the State Council’s new Opinions on Improving the Evaluation Mechanism of Scientific and Technological Achievements. The key goal here is to “promote closer integration of science and technology and economic and social development, and accelerate the transformation of scientific and technological achievements into real productivity.” 推动科学技术与经济社会发展更紧密结合，加快科技成果向现实生产力转化. The pathway for this is backing the market to play a greater role, while government defines standards.
Anyway, the document tells us that it is important to evaluate the scientific, technical, economic, social and cultural values of scientific and technological achievements. There’s a definition for what each of these values imply. But these are rather broad and vague. For instance, social value draws from providing solutions to matters related to “people’s health, national defense and public security, and the ecological environment.”
Some of the key changes that are talked about:
Establish and improve the intellectual property management process of major projects
Develop market-oriented evaluation of scientific and technological achievements
Set up a national intellectual property and scientific and technological achievements property rights trading center
Give full play to the role of financial investment in the evaluation of scientific and technological achievements
Guide and standardize the third-party evaluation of scientific and technological achievements. As part of this, it calls for encouraging departments, localities, and industries to establish information service platforms for evaluation of scientific and technological achievements and make then public. It also calls for “zero tolerance” for illegal behaviour, such as falsification in evaluations.
It calls for reforming the reward system, including the National Science and Technology Awards.
It also says: “We will comprehensively correct the undesirable tendency of focusing solely on quantitative indicators and neglecting contribution to quality in the evaluation of scientific and technological achievements.” This then talks about focussing beyond papers, titles, academic qualifications, and awards (唯论文、唯职称、唯学历、唯奖项) as markers of achievements.
The Ministry of Science and Technology is asked to lead this. The Ministry of Education, the Chinese Academy of Sciences, the Academy of Engineering, the Chinese Association for Science and Technology and other relevant units should actively coordinate and cooperate.
Finally, we had the Bureau of Laws and Regulations of the General Office of the Central Committee of the Communist Party of China publish a long document on inner-Party regulations. I am doing a short summary here, but you can find more details in my daily People’s Daily Tracker. The document says that:
“As of July 1, 2021, there were 3,615 effective internal party laws and regulations. Among them, there are 211 inner-party regulations formulated by the CPC Central Committee, 163 inner-party regulations formulated by the Central Commission for Discipline Inspection and the working organs of the CPC Central Committee, and 3,241 local inner-party regulations formulated by party committees of provinces, autonomous regions and municipalities directly under the Central Government...Among the current effective party internal laws and regulations, there are 1 Party Constitution, 3 Guidelines, 43 Regulations, 850 Provisions, 2034 Measures, 75 Rules and 609 Detailed Rules.” 党内法规具有强烈政治属性、鲜明价值导向、科学治理逻辑、统一规范功能，高度凝结党的理论创新和实践经验，是党的中央组织，中央纪律检查委员会以及党中央工作机关和省、自治区、直辖市党委制定的体现党的统一意志、规范党的领导和党的建设活动、依靠党的纪律保证实施的专门规章制度。截至2021年7月1日，全党现行有效党内法规共3615部。其中，党中央制定的中央党内法规211部，中央纪律检查委员会以及党中央工作机关制定的部委党内法规163部，省、自治区、直辖市党委制定的地方党内法规3241部。党内法规使用党章、准则、条例、规定、办法、规则、细则7类名称，现行有效党内法规中，党章1部，准则3部，条例43部，规定850部，办法2034部，规则75部，细则609部.
The document tells us that inner-party regulations are developed following theoretical guidance of the guiding ideology. And today, Xi Thought is guiding ideology that “the party and the country must adhere to for a long time.” It is “a scientific action guide to guide the development of the cause of the party and the country in the new era.”
What’s needed going ahead is that:
“We must adhere to the correct political direction and formulate and implement the inner-party laws and regulations, strengthen the ‘four consciousnesses’. strengthen the ‘four self-confidences’, and achieve ‘two maintenance’; We must adhere to the party constitution as the fundamental basis, respect the party constitution, abide by the party constitution, implement the party constitution, and safeguard the party constitution; We must adhere to the principle of democratic centralism and formulate inner-party laws and regulations, and organically combine the full development of inner-party democracy with the maintenance of party centralization and unity; We must adhere to the sound system of serving the overall situation of the party and the state, and provide institutional guarantee for the development of the party's cause and the comprehensive and strict administration of the party…” 要坚持正确政治方向制定和实施党内法规，增强“四个意识”、坚定“四个自信”、做到“两个维护”；要坚持以党章为根本依据建章立制，尊崇党章、遵守党章、贯彻党章、维护党章；要坚持贯彻民主集中制原则制定党内法规，把充分发扬党内民主和维护党的集中统一有机结合起来；要坚持服务党和国家工作大局健全制度，为党的事业发展和全面从严治党提供制度保障；
The document tells us that in February 2018, the Party Central Committee issued the second five-year plan (2018-2022). This is a useful note about central control; I believe this is related to Xi’s era.
Regulations by Central Committee: 147, accounting for 70% of the current effective central party regulations.
The Central Discipline Inspection Commission and the Party’s central working organs introduced 100 party regulations for ministries and commissions, accounting for 61% of the current effective party regulations for ministries and commissions
The Party Committees of provinces, autonomous regions and municipalities directly under the central government have issued 2,184 local Party regulations, accounting for 67% of the current effective local Party regulations.
Going ahead, in order to improve the inner-party regulatory system at the new historic starting point that the Party is at today, the document says that:
“we must adhere to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, translate the requirements of this important thought on the development of the Party and the State into institutional regulations and establish them as systems to follow, and ensure that all the work of the Party and the State is always guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and moves in the right political direction.” 在新的历史起点上完善党内法规体系，必须坚持以习近平新时代中国特色社会主义思想为指导，将这一重要思想对党和国家事业发展的各项要求转化为制度规定、确立为制度遵循，以制度来保证党和国家全部工作始终在习近平新时代中国特色社会主义思想指引下，沿着正确政治方向前进.
IV. Xi Thought Series
As I have done for the past two weeks, again this week, I’ll do a quick summary of the five Q&A pieces published in PD on Xi Thought.
The first one begins by talking about how the historical materialist view of history identifies the people as “the creators of history and the true heroes,” and how Xi has said that “‘our party comes from the people, is born for the people, and thrives because of the people’...Only by always connecting with the people's heart, sharing the same breath and destiny, can the Party be as firm as a rock, stable and progress steadily.” Yet the second part of the piece tells us that it is only the Party that can lead China to national rejuvenation. “The guiding ideology, nature and purpose of the Party determined that the Communist Party of China would inevitably become the historical bearer of the great rejuvenation of the Chinese nation. The guiding ideology is the spiritual banner of a political party, and its nature and purpose reflect the essential characteristics of a political party.” So the underlying message to me was that while the people and public support matter a lot, it’s the Party that is and must be in charge.
The second one tells us that achieving great dreams requires waging great struggles It tells us that “at present, the major changes in the world are accelerating and profoundly evolving; there are an increasing number of sources of turbulence and risk points, and the external environment is complex and severe; China is facing major risks and challenges in the fields of politics, ideology, economy, science and technology, society, and party building.” It warns that the “closer we get to national rejuvenation, the less smooth it will be.” There will be risks, challenges and even stormy waves. It quotes Xi warning of “obstacles and stumbling blocks” on the road ahead and calling for carrying “forward the spirit of struggle,” enhancing “the ability to struggle,” and “continuously win new victories in the great struggle.”
The next question is why achieving Xiaokang is a big step forward for the great rejuvenation of the Chinese nation? The response begins with the developments that Liangjiahe has experienced. The answer then tells us that Xiaokang is linked to the grand idea of the big dream of the Chinese nation as much as it is to the little experiences of everyday life of individuals. Achieving this, the piece says, “means that the Chinese nation has fulfilled its long-cherished wish for thousands of years.” The piece then talks about the prosperity that China has experienced. This is done not just in terms of the macro numbers but also in terms of the little things that people have experienced and material improvements in their individual lives.
“Building a well-off society in an all-round way is not only reflected in the leap in economic strength and comprehensive national power, but also in bringing tangible changes to the lives of every Chinese. From the 1950s to 1970s, bicycles, watches, sewing machines and radios were the ‘four big items that urban families longed for. After reform and opening up, color TV sets, refrigerators, washing machines and tape recorders replaced them to become the new ‘four big items.’ Now, in the new era, the old and new ‘four big items’ have already become history, and even ‘forty big items’ cannot sufficiently tell the story of the good life that the Chinese people are enjoying today.” 全面建成小康社会，不仅体现在经济实力、综合国力的跃升上，更体现在给每一个中国人的生活带来实实在在的变化上。20世纪50年代至70年代，自行车、手表、缝纫机、收音机，这“三转一响”是城市家庭渴望拥有的“四大件”。改革开放后，彩电、冰箱、洗衣机、录音机取代“三转一响”，成为新的“四大件”。进入新时代，新老“四大件”早已成为历史，“四十大件”也说不完中国人今天的美好生活.
The third piece this week focused on poverty alleviation and long-term development. It said:
“Since the 18th National Congress of the Communist Party of China, the CPC Central Committee with Comrade Xi Jinping as the core has adhered to the people-centered development thought, United and led the whole party and the people of all ethnic groups, placed poverty alleviation in a prominent position in governing the country, gave full play to the leadership of the Party and the political advantages of China's socialist system, and adopted many unique and original major initiatives, organized and implemented the largest and strongest fight against poverty in human history, and completed the goal and task of poverty alleviation in the new era on schedule. This great victory has earned admiration from around the world.” 党的十八大以来，以习近平同志为核心的党中央坚持以人民为中心的发展思想，团结带领全党全国各族人民，把脱贫攻坚摆在治国理政突出位置，充分发挥党的领导和我国社会主义制度的政治优势，采取了许多具有原创性、独特性的重大举措，组织实施了人类历史上规模最大、力度最强的脱贫攻坚战，如期完成了新时代脱贫攻坚目标任务，取得了令全世界刮目相看的重大胜利.
The next paragraph is how China’s poverty alleviation drive has contributed towards reducing global poverty, faster movement towards sustainable development goals and has proved “to the world the significant advantages of the leadership of the Communist Party of China and the socialist system with Chinese characteristics.” In addition, China’s campaign has provided opportunities to lend “Chinese wisdom and Chinese solutions for global poverty reduction.” On the new development stage, the piece said that “The new stage of development is the stage of building a modern socialist country in an all-round way and marching towards the second centenary goal. It is the new stage of our party leading the people to a historic leap from standing up and getting rich to becoming strong.” This ends with highlighting the “long-term goal of socialist modernization by 2035.”
The fourth piece talked about how Chinese-style modernization is a great change unprecedented in human history and how China is still in a period of strategic opportunities. It first said that:
“Chinese-style modernization is socialist modernization, which is unique and different from capitalism. Western capitalist modernization is based on the primitive accumulation of bloody plunder by foreign colonization and cruel exploitation of people at home. Marx once said: ‘Capital comes into the world, from head to toe, every pore is dripping with blood and dirty things’.” And then there’s talk of colonialism, slavery, etc. “Chinese-style modernization is a modernization with a huge population, a modernization with common prosperity for all people, a modernization in which material civilization and spiritual civilization are coordinated, a modernization in which man and nature coexist harmoniously, and a modernization that takes the road of peaceful development. Chinese-style modernization breaks the myth that modernization can be realized only by following the capitalist modernization model, overcomes the inherent defects of capitalist modernization, provides a new choice for modernization, and shows the bright future of modernization of human society.” 中国式现代化是社会主义现代化，是独具特色、有别于资本主义的现代化。西方资本主义现代化是建立在对外殖民血腥掠夺、对内残酷剥削人民的原始积累基础上的。马克思曾说过：“资本来到世间，从头到脚，每个毛孔都滴着血和肮脏的东西。”据统计，自15世纪末开始，西方殖民者在300多年间，仅从中南美洲就抢走了250万公斤黄金、1亿公斤白银。英国的“圈地运动”、美国的“西进运动”以及罪恶的奴隶贸易等，都标注了西方资本主义现代化的“原罪”。邓小平同志强调，中国搞现代化，搞的是中国式现代化，只能靠社会主义，不能靠资本主义。中国共产党领导的中国式现代化始终坚持社会主义目标和方向，具有许多重要特征。中国式现代化是人口规模巨大的现代化，是全体人民共同富裕的现代化，是物质文明和精神文明相协调的现代化，是人与自然和谐共生的现代化，是走和平发展道路的现代化。中国式现代化打破了只有遵循资本主义现代化模式才能实现现代化的神话，克服了资本主义现代化所固有的先天性弊端, 提供了现代化的全新选择，展现了人类社会现代化的光明前景.
One of the big things here is also the emphasis that “Chinese-style modernization is the modernization of developing countries, which has opened up a brand-new road for late-developing countries to move toward modernization.”
The next question is about China being in a period of strategic opportunities. Here’s why, as per the author:
“The ability to accurately judge and make good use of strategic opportunities at key historical junctures will have a global, long-term and decisive impact on the future and destiny of a country and nation. Seizing the opportunity, winning the strategic initiative, and taking advantage of the momentum will usher in great development; if you cannot seize or end up missing an opportunity, you may fall into strategic passivity, gradually fall behind, or even miss a whole era.” 能否在关键历史节点准确判断和利用好战略机遇，将对一个国家和民族的前途命运产生全局性、长期性、决定性的影响. 抓住机遇，赢得战略主动，乘势而上，事业将迎来大发展；如果不能抓住或错过一个机会，就可能陷入战略被动，逐渐落后，甚至错过一整个时代.
Then we get an assessment of what the current situation is:
China’s GDP is at RMB 100 trillion
China is in a stage of high-quality development
Instability and uncertainty have increased significantly in the world
Unprecedented changes are taking place
Economic globalisation is under strain, but countries remain intertwined, and globalisation is “irreversible.”
Risk and challenges have increased
“A war between major powers is not only unaffordable for the major powers themselves, but also disastrous for the world, and will certainly be opposed by people all over the world.”
The basic conclusion is that things will be difficult going forward compared to the recent past, but there are still opportunities for China. This is fundamentally because of its strengths:
China’s strengths are identified as:
“Solving various global problems requires strengthening international cooperation, and China has strong capabilities and resources to solve global problems such as international poverty reduction, climate change, major infectious diseases and regional hotspot issues, and its role is irreplaceable.”
China has a key role to play in the emerging technology scenario, in terms of its business environment, and China has the “world’s most complete and largest modern industrial system.”
“There are more than 170 million people with higher education or professional skills, and the abundant human resources contain huge potential and vitality.”
Market size and expanding domestic demand.
The socialist economy system.
The final article talks about the importance of Reform and Opening up. It talks about the reforms that Deng began and then Xi’s comprehensively deepening reforms. It says: “Reform and opening up are the key to determining the destiny of contemporary China, as well as the key to achieving the two centenary goals and the great rejuvenation of the Chinese nation.”
Here’s a useful excerpt:
“From the history of socialism, from its birth to the present, how to govern a brand new society like socialist society has not been solved. Marx and Engels did not experience the practice of fully governing a socialist state, and many of their visions of future societies were predictive. The Soviet Union explored this issue and achieved some success, but it also made serious mistakes and failed to entirely address the problems that arose. This resulted in the collapse of the country and the government. Our Party had been constantly thinking about what kind of national governance system to establish in the future as early as the revolutionary period. After the founding of New China, our Party considered and explored how to build socialism and how to govern China, and although serious twists and turns occurred, we accumulated rich experience and made significant achievements in the national governance system and governance capacity. Since the reform and opening up, our Party has thought about and explored the issue of national governance system and governance capacity from a new perspective, achieving political stability, economic development, social harmony and national unity. It is important to see that our national governance system and governance capacity are generally good and adapted to our national conditions and development requirements. At the same time, in the context of the requirements of China's economic and social development, in the context of the expectations of the people, in the context of the increasingly fierce international competition in today’s world, in the context of achievement long-term national security, we still have many shortcomings in the national governance system and governance capacity. We must make up for the shortcomings, plug the loopholes, strengthen where we have weaknesses, and accelerate the formation of a complete system that is scientific, standardized and effective.” 提出全面深化改革总目标是纵观世界社会主义历史发展得出的深刻结论。从社会主义诞生到现在的历史来看，如何治理社会主义社会这样全新的社会，在以往的世界社会主义实践中没有解决得很好。马克思恩格斯没有经历全面治理一个社会主义国家的实践，他们关于未来社会的设想很多是预测性的。苏联在这个问题上进行了探索，取得了一些成功经验，但也犯下了严重错误，没有解决好这个问题，最后的结局是国亡政息。我们党早在革命时期就不断思考未来建立什么样的国家治理体系问题。新中国成立后，我们党深入思考和探索怎样建设社会主义、怎样治理中国的问题，虽然也发生了严重曲折，但在国家治理体系和治理能力上积累了丰富经验、取得了重大成果。改革开放以来，我们党以全新的角度思考和探索国家治理体系和治理能力问题，实现了政治稳定、经济发展、社会和谐、民族团结。要看到，我们的国家治理体系和治理能力总体上是好的，是适应我国国情和发展要求的。同时，相比我国经济社会发展要求，相比人民群众期待，相比当今世界日趋激烈的国际竞争，相比实现国家长治久安，我们在国家治理体系和治理能力方面还有许多不足。必须抓紧补短板、堵漏洞、强弱项，加快形成系统完备、科学规范、运行有效的制度体系，把制度优势更好转化为治理效能.
V. Region Watch
Pakistan's government appointed Khalid Mansoor to the country's top position responsible for the China-Pakistan Economic Corridor (CPEC). Mansoor, an energy expert who is a favorite of Beijing, replaced retired army general Asim Saleem Bajwa. While some officials claim that Bajwa had developed a good working relationship with Chinese businessmen, the change of Pakistan's CPEC chief is being linked with Beijing's displeasure at the slow progress of CPEC projects in the country. Case in point, the repeated delay of the Joint Coordination Committee (JCC) meeting, the apex body jointly chaired by both countries to make decisions about CPEC projects, since Bajwa assumed office as CPEC chairman in 2019. Interestingly, the change in leadership comes after last month’s bomb attack when nine Chinese engineers were killed on their way to the Dasu Hydropower. With the new blood in the CPEC office the 10th JCC is expected to take place soon. In fact, Chief Minister Balochistan, Jam Kamal held a high-level meeting to review the CPEC Strategy Draft and recommendations to be made in preparation for the 10th JCC. Experts claim that this development is a fine example of Beijing controlling Pakistan’s actions from behind the curtain. Beijing is, of course, not giving in to the theory. Chinese Ambassador to Pakistan tweeted appreciation for Bajwa’s commitment to the growth of the CPEC.
However, certain members of Pakistan's business community are not happy with the replacement of Bajwa. Daroo Khan Achakzai, a former president of the Federation of Pakistan Chambers of Commerce and Industries, told Nikkei Asia:
"Mansoor might serve the interests of the elite business lobby that he represents, but he will not be able to work for the progression of CPEC like Bajwa could have done."
He added that the change was made without taking political or economic considerations.
The Pakistan government, however, maintains that the move is a bid to push the stalled projects forward. Since being launched in April 2015, the CPEC has attracted about $25 billion investment into Pakistan. Given the power imbalance between China and Pakistan and Beijing’s reputation for an unswerving focus on its own national interests, it’s been widely assumed that China was always going to gain the most.
Meanwhile, China has sent a clear message that Beijing will forge its own strategy with Afghanistan. As the deadline for the withdrawal of the United States troops approaches, relations between China and the resurgent group were elevated last month, with Beijing’s assurance that it will back the Taliban’s role in Afghanistan’s security and reconstruction. The Taliban, in return, has pledged not to interfere in China's internal affairs or allow anti-China forces to use Afghan territory. Afghan ambassador to China, Javid Ahmad Qaem, dismissed Taliban’s promises:
‘I don't think even China believes in that,’ the ambassador told Reuters in an interview, adding that the Taliban were pandering to gain local support.
While the Afghan government would prefer that China was fully behind it, ambassador Qaem was quick to appreciate Beijing’s transparency about its engagement with the Taliban. Unlike the how United States (Beijing believes the US policy towards the war-torn country was a failure) and the Soviet Union have in the past, China has adopted an ‘Afghan-led, Afghan-owned’ non-intervention approach.
For an excellent understanding of China’s stakes in and attitudes with regard to Afghanistan, I recommend this podcast with GMF’s Andrew Small.
VI. China-US Ties
Tensions between China and the US continue to rise. This week, there was clearly an upping of PRC propaganda with regard to the US on COVID origins tracing, the US alliance system, Hong Kong and Taiwan. For starters, there had been 16 Zhong Sheng commentaries in the People’s Daily on the issue of the US’ handling of COVID-19 and the Biden administration’s policy with regard to origins tracing. This week, we saw the issue being shifted to the front page of the paper. This, to me, implies an elevation in terms of the importance of the issue. Of course, it’s no coincidence that this comes while China is dealing with the worst outbreak of COVID-19 since the January 2020 shutdown of Wuhan.
So the front page commentaries were there on Thursday, Friday and Saturday. Substantively, they didn’t offer anything new that we haven’t already heard.
The first one said the “the actions of American politicians have become ‘accomplices’ of the virus, and can be called ‘political viruses,’ which are even more harmful. Such actions are neither moral nor popular, and will only end in failure.” 美国政客的所作所为，实际上已成为病毒“帮凶”，堪称危害更烈的“政治病毒”，这种行径既不道德，也不得人心，只会以失败告终.
The piece said that there is evidence of the virus being present in other parts of the world in 2019. It says that US politicians have arrived at conclusions first and are then looking for evidence; the use of intelligence agencies for origins tracing and the presumption of guilt before a probe implies that they are practicing “tracing terrorism.” It says that the US is also engaged in “political manipulation, opposing science, and distorting facts,” and we get a mention of the Iraq war WMD scandal to say that the US is “repeating old tricks.” Of course, from the authors’ perspective, this is all a product of “American hegemonic thinking and bullying behavior.”
The second one lashed out at the US’ approach to the WHO. It said that while COVID-19 cases are rebounding in the US, American politicians are only interested in blaming others, shifting the blame, political manipulation and stigmatisation. It talked about the Fort Detrick biological lab being temporarily closed in July 2019, at a time when there was an outbreak of the e-cigarette or vaping product use-associated lung illness in Wisconsin. And then the piece says why can the WHO not investigate Fort Detrick, if it can go to China for a probe? It ends like this: “We advise American politicians to find their conscience and rationality as soon as possible and stop blaming others as soon as possible. After all, hegemonic thinking cannot stop the virus, and logic of power cannot control the epidemic.” 我们建议美国政客尽快找回自己的良知和理性，尽快停止指责他人。毕竟霸权思维阻挡不了病毒，权力逻辑控制不了疫情.
The third one talks about American politicians committing “blasphemy” against the “scientific spirit.” It says that US politicians “wield political black hands everywhere, and through coercion and pressure, they try to make scientists bow down in front of their hegemony and bullying” to support the laboratory-leak theory. Basically, the point is that the US is using this as a stick to target China while also diverting attention from domestic issues.
While saying all this, Beijing is also pushing the Fort Detrick angle. For instance, here’s CGTN telling us that the online petition to investigate the lab concluded with 25 million signatures.
Moving to the other propaganda blitz. There was this incredibly long two-part article in the People’s Daily this week on the ‘7 Sins’ of the US alliance system. For those interested, or researchers, or masochists, I’ve done a summary of both parts (Part 1 and Part 2.). But this GT graphic helps make it easy to understand what these contain.
In addition to this, there was a list of grievances with regard to the Biden administration’s Hong Kong policy, which was put out by Xinhua. This too was two parts, but I’ve summarised it here. The core point that was being made in this was:
“All in all, some U.S. politicians' concern about Hong Kong's democracy is a sham. Their true intention is to meddle in Hong Kong's politics and China's internal affairs. Their real purpose is to use Hong Kong as a tool to realize their political interests and contain China's development.”
Anyway, with all of this done, let’s look at some of the new developments this week. First, the Biden administration informed Congress this week of a proposed $750 million weapons sale to Taiwan. The package includes 40 self-propelled artillery units, a number of other armoured vehicles, machine guns, and about 1,700 kits to convert standard artillery shells into smart weapons that can steer towards targets. The sale of the self-propelled artillery vehicles, known as howitzers, would “contribute to the modernisation of Taiwan’s howitzer fleet, strengthening its self-defence capabilities to meet current and future threats”, a US State Department representative said. This led to an expected angry response (English report) from the Chinese foreign ministry. It said that Beijing had “lodged solemn representations with the U.S. side” and warned of “legitimate and necessary counter-measures.” The ministry said that the US was interfering in China's internal affairs and undermining China's sovereignty and security interests. It added that the “move runs counter to international law and the basic principles of international relations, and violates the one-China principle and the provisions of the three China-U.S. joint communiques, particularly the August 17 Communique.”
While on Taiwan, Admiral John Aquilino, head of U.S. Indo-Pacific Command, was speaking at the Aspen Security Forum in Colorado this week. He said:
“there is a narrative that we see often in the media that talks about the U.S. and the West in decline…I think what I’d start with is that that narrative is certainly being pushed by our adversaries. I want to be very clear — we have the world’s greatest military on the planet. We are here to continue to operate to ensure peace and prosperity through the region, and we have to be in a position to ensure that status quo remains as it applies to Taiwan.”
Second, Biden on Thursday offered temporary “safe haven” to Hong Kong residents in the United States. The US president directed the Department of Homeland Security to implement a “deferral of removal” for up to 18 months for Hong Kong residents currently in the United States, citing “compelling foreign policy reasons.” “Over the last year, the PRC has continued its assault on Hong Kong's autonomy, undermining its remaining democratic processes and institutions, imposing limits on academic freedom, and cracking down on freedom of the press,” Biden said in the memo. In response, Liu Pengyu, spokesman for the Chinese Embassy in Washington, said the US’ characterisation of the situation in Hong Kong “confounds black and white” and said the national security law had created a safer environment and protected freedoms. “Such moves disregard and distort facts, and grossly interfere in China's internal affairs,” he said.
Third, at the ASEAN Regional Forum this week, Secretary of State Antony Blinken expressed deep concern about China’s growing nuclear arsenal. He called on China to cease “provocative” behavior in the South China Sea and “raised serious concerns about ongoing human rights abuses in Tibet, Hong Kong, and Xinjiang,” the State Department said. “The Secretary also noted deep concern with the rapid growth of the PRC’s nuclear arsenal which highlights how Beijing has sharply deviated from its decades-old nuclear strategy based on minimum deterrence,” the statement added.
Fourth, WSJ’s Bob Davis reports that nearly three dozen of America’s most influential business groups—representing retailers, chip makers, farmers and others—have called on the Biden administration to restart negotiations with China and cut tariffs on imports, saying they are a drag on the U.S. economy. The report says that the “trade groups include some of Washington’s most influential big business associations, including the U.S. Chamber of Commerce, the Business Roundtable, the National Retail Federation, the American Farm Bureau Federation and the Semiconductor Industry Association.”
It says that “the tariffs on electronics, apparel and other Chinese goods, which are paid by U.S. importers, were kept in place in part to ensure that China fulfills its obligations under its 2020 Phase One trade pact with the U.S. In a Thursday letter to U.S. Trade Representative Katherine Tai and Treasury Secretary Janet Yellen, the business groups contend that Beijing had met ‘important benchmarks and commitments’ in the agreement, including opening markets to U.S. financial institutions and reducing some regulatory barriers to U.S. agricultural exports to China.” For instance this week, JP Morgan Chase & Co. said that it was granted permission to take full control of a securities business in China. This was the first for an international firm. With that said, it’s worth remembering that under the Phase 1 deal, China was to buy goods US worth $200 billion. That’s not happened.
Fifth, and I think this is important. Reuters reports that:
“China’s government quietly issued new procurement guidelines in May that require up to 100% local content on hundreds of items including X-ray machines and magnetic resonance imaging equipment, erecting fresh barriers for foreign suppliers, three U.S.-based sources told Reuters. Document 551 was issued on May 14 by the Chinese Ministry of Finance and the Ministry of Industry and Information Technology (MIIT), with the title, ‘Auditing guidelines for government procurement of imported products,’ said one former U.S. government official, who obtained a copy of the previously unreported 70-page catalog and read portions to Reuters, but requested anonymity…Sent to Chinese hospitals, companies and other state-owned buyers, the document sets local content requirements of 25% to 100% for 315 items. They include medical equipment, ground-based radar equipment, testing machinery, optical instruments; items used for animal husbandry; seismic instruments, and marine, geological and geophysical equipment, the former official said.”
At the same time, let’s look at the data from the annual US-China Business Council (USCBC) member survey, which was released on Thursday. It shows that while China remained among top priorities for US companies, it has become a little less important. Craig Allen, president at the USCBC, is quoted by SCMP as saying: “Neither government should take for granted the economic relationship and the stabilising role that business plays in US-China relations.”
Finally, thought this was an interesting observation:
Exclusive: Intel agencies scour reams of genetic data from Wuhan lab in Covid origins hunt
‘Powerful signal’: Biden’s infrastructure bill sends message to China
Container shipping rates between U.S. and China exceed $20,000, hitting a record
China doubles down on baseless 'US origins' Covid conspiracy as Delta outbreak worsens
Singapore’s Lee Urges China, U.S. to Stem Deteriorating Ties
U.S. struggles to unite democratic European allies against China
U.S., Indonesia commit to South China Sea defense in 'strategic dialogue'
VII. The Long & Short of It…
a. COVID-19 outbreak:
This week Vice Premier Sun Chunlan addressed (English report) the State Council joint prevention and control mechanism against COVID-19. She emphasised that epidemic prevention and control to be “the top priority” of local governments. She did so while acknowledging that there have been “multiple outbreaks in different parts of the country, and the development trend remains uncertain.” In general, the daily case count for all of China has been close to 100 or more.
Mi Feng, a spokesperson for the National Health Commission, told a press conference on Wednesday that 144 areas across the country have been classified as medium and high risk, the highest such total since December. He Qinghua, a senior official with the NHC, also said that in the latest wave, 15 provincial-level regions - out of 31 - on the Chinese mainland have reported COVID-19 infections. “As long as local authorities strictly implement various prevention and control measures, I think the epidemic will be largely under control within two to three incubation periods,” He said. Mi Feng also said that the State Council inter-agency task force for COVID-19 response has sent 20 working groups to key port cities across the country to aid anti-virus efforts.
A bunch of steps are being taken to contain the outbreak. These include:
Tightening border controls. There will be a temporary freeze on issuing passports for “non-urgent or unnecessary travel”
Controls at air and seaports have also been stepped up, while airport staff servicing inbound flights are being asked to take nucleic acid tests every other day.
Beijing authorities have banned travellers from areas with recent cases and suspended plane, train and long-haul bus services from those centres. SCMP reports that Beijing’s Covid-19 prevention and control team said anyone from Beijing in those high-risk areas would receive a “yellow code” from the authorities via a mobile phone app, Beijing Youth Daily reported on Saturday. Travellers would only be allowed to return home when their codes turned green, which would happen after that area had “zero new infections” for 14 days”
Tour service providers have been told to not include high and medium-risk areas in their offer. Some 1,152 tourist attractions with A ratings have been temporarily closed to visitors.
Mass testing is being carried out. For instance, everyone in Wuhan is again being tested.
Officials have been punished. Some 20 officials in Zhangjiajie and 15 in Nanjing have faced action ranging from sacking to penalties.
Learn to live with mutating coronavirus, top Chinese virologist says
b. Henan Floods:
Two key reports on this. First, the death toll from last month’s devastating floods has risen to 302 with dozens of people still missing, according to officials, tripling the number of fatalities reported last week. Zhengzhou, the state capital of Henan province, was hardest hit with 292 people dead and 47 missing, the local government said at a news briefing on Monday. Second, the State Council says that it has set up a task force to “carry out a scientific, truthful and comprehensive investigation and review of the disaster response to summarize experiences for the future, give disaster reduction advice and punish any potential dereliction of duty.” Global Times tells us that “investigation reports are expected to cover the entire process of the disaster response, including pre-warning, emergency planning and coping measures, and to cover deaths in underground spaces, the issue of greatest concern to the public.”
China goes back to rationing as authorities in Wuhan introduce ‘housing ticket’ to cool surging property prices
China’s debt reduction like putting the ‘genie back in the bottle’, but can it succeed to aid the economy?
China Moly to spend $2.5 bln to double copper, cobalt output at Congo mine
China Exporting More Sophisticated Products Despite Trade War, Study Says
Germany’s South China Sea adventure exposes divisions in Berlin
Chip Speculators Targeted by Probe on Cost of Scarce Auto Part
Ready, set, fire: China and Russia get back to testing each other’s military tactics
Xi Jinping says China promises 2 billion Covid-19 vaccine doses to other countries in 2021
A tremendously comprehensive and helpful read. Thank you!