History @6th Plenum - Afghanistan Meetings - Don't Expect LAC De-escalation - Border Villages - New Ambassador to China? - US-China Thaw ahead of Biden-Xi Summit - China's Economic Churn - COP26
I. Xi Scripts History
The 6th Plenum was the big story of the week from China. It ended with a Resolution on the Major Achievements and Historical Experience of the Party over the Past Century. I’ve done a detailed breakdown of the Plenum’s communique in my daily tracker, which I encourage you to read through. My brief assessment of the communique is as follows:
There are three broad takeaways from the communique, with none of it being unexpected.
First, the document tells us that the resolution isn’t about addressing moments of turbulence and friction in the past or engaging in any sort of reflection. Instead, it is about establishing a glorious narrative around the Party’s 100-year journey to the present. In setting this narrative. In doing so, the Party is being placed at the heart of all life in China. In this sense, the Party, led by its chief representatives, is the key protagonist. At the same time, the role of these chief representatives is critical. These men have thought, acted, innovated and steered the Party, State, economy and society towards goals motivated and derived from the original aspiration. In this narrative of history, the Party even squeezes out the people. The narrative not only legitimises a greater role for the Party in the future, it also implies the necessity of such an approach to achieve national rejuvenation.
Second, from my viewpoint, the paragraphs on chief representatives of the past in the communique do not suggest that the narrative is driven by the objective of rehabilitating some legacies or undermining others. Rather, these are instrumental to the larger purpose of setting the stage for the new era. There is a linear, albeit occasionally bumpy, progression of history under each that the narrative carves out. The purpose appears to be to project Xi Jinping as not just an inheritor but also an innovator, cementing his authority and legacy. He is positioned as a man of unique intellect, acumen and leadership skills, who has “solved many tough problems that were long on the agenda but never resolved and accomplished many things that were wanted but never got done.” And it is his effort in making these achievements that has “prompted historic achievements and historic shifts in the cause of the Party and the country.” From this, flows the argument of persisting with Xi at the helm, particularly given the profound changes that the world and China are currently undergoing.
Third, the communique offers a whole-hearted endorsement of Xi’s policies across the board since the 18th Party Congress. It also endorses the policy trajectory across domains. In that sense, it suggests more continuity than any dramatic change. But there’s no insight into specific policy measures that we can expect.
The day after the communique, the People’s Daily published an editorial on the Plenum’s outcomes.
The editorial says that reviewing Party history at this juncture, at the intersection of the two centenary goals, is important to ensure that the whole party is “united in its thinking, will and actions.” And it is important in order to “unite and lead the people of all ethnic groups in the country to win new great victories for socialism with Chinese characteristics in the new era.” 对推动全党进一步统一思想、统一意志、统一行动，团结带领全国各族人民夺取新时代中国特色社会主义新的伟大胜利，具有重大现实意义和深远历史意义.
It says that the decision to summarise the Party’s history at this juncture was a “solemn, historic and strategic” decision, which reflects the Party’s strong will and firm determination to keep in mind the original mission and maintain vitality forever; its sense of historical initiative and mission; and its ability to grasp laws of historical development. It also reflects the “Party’s vision and foresight as it focuses on summing up and applying historical experience, while basing itself in the present and looking towards the future.” 充分体现党立足当下、着眼未来、注重总结和运用历史经验的高瞻远瞩和深谋远虑.
The next paragraph praises the history resolution that has been passed as adhering to “the methodology of dialectical materialism and historical materialism” and “upholding the correct view of Party history.” We are told that the resolution “summarises the major achievements and historical experiences of the Party’s century of struggle,” and “highlights the main aspects of the new era of socialism with Chinese characteristics.” We are told that this is a “glorious Marxist programmatic document”; “a political declaration by the Chinese Communists in the new era to uphold and develop socialism with Chinese characteristics and keep in mind the original mission”; and “an action guide to take history as a mirror and learn from it, create the future and realise the great rejuvenation of the Chinese nation.” 全会通过的《中共中央关于党的百年奋斗重大成就和历史经验的决议》，坚持辩证唯物主义和历史唯物主义的方法论，坚持正确党史观、树立大历史观，聚焦总结党的百年奋斗重大成就和历史经验，突出中国特色社会主义新时代这个重点，对重大事件、重要会议、重要人物的评价注重同党中央已有结论相衔接，体现了党中央对党的百年奋斗的新认识，是一篇光辉的马克思主义纲领性文献，是新时代中国共产党人牢记初心使命、坚持和发展中国特色社会主义的政治宣言，是以史为鉴、开创未来、实现中华民族伟大复兴的行动指南.
We are then told that the most distinctive features of the resolution are “seeking truth from facts” and “respecting history.” The resolution reflects the original aspiration and mission, is in line with the two previous historical resolutions, keeps pace with the times, and provides an anchor for future endeavours. -- The bit of being in line with earlier resolutions is important. It tells us that this isn’t a repudiation of the outcomes of previous resolutions. So the 1981 resolution’s conclusions and criticisms are not dismissed. 《中共中央关于党的百年奋斗重大成就和历史经验的决议》最鲜明的特点是实事求是、尊重历史，反映了党的百年奋斗的初心使命，同党的前两个历史决议既一脉相承又与时俱进，必将激励全党锚定既定奋斗目标、意气风发走向未来。
The editorial then heaps praise on the Central Committee with Xi as the core. It says that they have, since the 18th Party Congress, taken great historical initiative, demonstrated great political courage and strong sense of responsibility, and engaged in great struggles, projects, undertakings, making historic achievements and changes in the cause of the Party and the country, thereby demonstrating the great vitality of socialism with Chinese characteristics. The Party, the army and the people have rallied and are inspired as never before. And in doing so, they have provided a better institutional guarantee, a more solid material foundation, and a stronger spiritual force for realising the great rejuvenation of the Chinese nation. 特别是党的十八大以来，以习近平同志为核心的党中央统筹把握中华民族伟大复兴战略全局和世界百年未有之大变局，以伟大的历史主动精神、巨大的政治勇气、强烈的责任担当，统揽伟大斗争、伟大工程、伟大事业、伟大梦想，推动党和国家事业取得历史性成就、发生历史性变革，彰显了中国特色社会主义的强大生机活力，党心军心民心空前凝聚振奋，为实现中华民族伟大复兴提供了更为完善的制度保证、更为坚实的物质基础、更为主动的精神力量，中华民族迎来了从站起来、富起来到强起来的伟大飞跃.
It then talks about staying true to the four consciousnesses, four self-confidence, two safeguards; pursue self-revolution and stay true to historical materialism. It is important, the piece says, to “have a clear understanding of why we succeeded in the past and how we can continue to succeed in the future.”
The next paragraph says that over the past 100 years, the Party has “fundamentally transformed the future and destiny of the Chinese people, opened up the right path for achieving the great rejuvenation of the Chinese nation, demonstrated the strong vitality of Marxism, profoundly influenced the world’s historical process, and forged the Party a forerunner of the times. Or more succinctly, the document tells us about the “historic contribution made by the Party to the Chinese people, the Chinese nation, Marxism, the cause of human progress and the construction of Marxist political parties.” The resolution, we are told, informs us about “the relationship between the CPC and Marxism, world socialism and the development of human society, and penetrates the historical, theoretical and practical logic of the CPC’s century-long struggle.” 体现了中国共产党和马克思主义、世界社会主义、人类社会发展的关系，贯通了中国共产党百年奋斗的历史逻辑、理论逻辑、实践逻辑.
We are then told that the world is “undergoing profound changes unseen in a century and the great rejuvenation of the Chinese nation has entered a critical period.” And while China is “more confident” and “capable,” it is important to keep in mind that the great rejuvenation will not come easy. There will be “predictable and unpredictable risks and challenges.” In this context, the editorial talks about focusing on the principal contradiction, following the four comprehensives, or the four-pronged comprehensive strategy, adhering to the new development concept and building a new development pattern to promote high-quality development, pursue people-centered development and maintain close ties with the people.
The last paragraph talks about uniting more closely around the Central Committee with Xi as the core, maintaining the four consciousnesses, four self-confidence, and ensuring the two safeguards, not forgetting the hardships of the past as one marches to the great dream of future, and calls for moving forward with determination with the aim of welcoming the 20th CPC National Congress “with outstanding achievements” and striving unremittingly to achieve the second centenary goal and national rejuvenation. 让我们更加紧密地团结在以习近平同志为核心的党中央周围，全面贯彻习近平新时代中国特色社会主义思想，增强“四个意识”、坚定“四个自信”、做到“两个维护”，大力弘扬伟大建党精神，勿忘昨天的苦难辉煌，无愧今天的使命担当，不负明天的伟大梦想，以史为鉴、开创未来，埋头苦干、勇毅前行，以优异成绩迎接党的二十大召开，为实现第二个百年奋斗目标、实现中华民族伟大复兴的中国梦而不懈奋斗.-- Thought it was interesting that the call to unite more closely and the 20th Congress was in the same paragraph.
There was another noteworthy piece in Friday’s People’s Daily. The PD reporter interviewed 15 comrades involved in the Plenum’s discussions. “Some of them work in ministries, some are in charge of governments, and some are from fields and laboratories.” They saw the plenary as a “milestone in the history of the Party” and said that the resolution was a “Marxist programmatic document.” 全会期间，记者采访了15位与会同志。他们有的任职部委，有的主政一方，也有的来自田间地头和实验室。同志们评价，党的十九届六中全会是我们党的历史上的一座里程碑，决议是一篇马克思主义的纲领性文献，是我们党百年奋斗的皇皇巨著.
The report talks about the establishment of Xi’s position as the core and Xi Jinping Thought on socialism with Chinese characteristics in the new era in the guiding position “reflects the common will of the Party, the armed forces, and the Chinese people of all ethnic groups.”
The document receives more praise and so does Xi. The comrades praised the unity and cohesion within the Party and said that this is because the Central Committee with Xi at its core has been able to bring everyone together, and that has allowed forging ahead to great endeavours. “No force can stop the pace of progress” 任何力量都无法阻挡前进的步伐.
Some of the leading comrades quoted are; and they are all very upbeat on Xi, of course.
Yin Li, Secretary of the Fujian Provincial Party Committee
Yuan Jiajun, Secretary of the Zhejiang Provincial Party Committee; he’s quite emphatic in talking about consolidating the scenario wherein “the Party has a core and one mind.”
Li Ganjie, Party Secretary of Shandong, says the excellent results that have been achieved are because of Xi’s core position and the Party’s core position being maintained. He wants “four consciousnesses, four self-confidences, two safeguards” to be adhered to.
Zhang Qingwei, Party Secretary of Hunan, praises the practical power of Xi Thought. He says the “leadership of the Party is the foundation and lifeblood of the Party and the country” and the key to the success for the great ship that is China is the CPC Central Committee with Comrade Xi Jinping at the core at the helm.党的领导是党和国家的根本所在、命脉所在，中国号巨轮之所以能够行稳致远、勇往直前，关键是有以习近平同志为核心的党中央举旗掌舵.
Ying Yong, Hubei Party Secretary, says that the fight against COVID-19 proves that “the CPC Central Committee with Comrade Xi Jinping as the core is the most reliable backbone” when storms and troubles abound. 疫情防控的武汉保卫战、湖北保卫战，充分证明以习近平同志为核心的党中央是风雨来袭、泰山压顶时最可靠的主心骨.”
Yu Zhongfu, PLAAF political commissar, talks about the PLA following and obeying the Party.
Wang Zhigang, Minister of Science and Technology, says that Xi’s leadership has been crucial for science and tech development. He adds that it is important to “arm the mind with Xi Jinping Thought on socialism with Chinese characteristics in the new era.”
ILD chief Song Tao praises Xi’s leadership in helping China maintain “strategic determination” in foreign affairs. He also talks about how he has heard “foreign leaders praising Xi’s “world-class leadership style.” He says that Xi “is a great leader of the times who led the Communist Party of China and the people of the whole country to a century of glory, create miracles and enjoy high international prestige.”习近平总书记是带领中国共产党和全国人民赓续百年辉煌、创造奇迹并享有崇高国际威望的伟大时代领航人.
Zhang Guoqing, Liaoning Party Secretary, says that “it is necessary to resolutely safeguard Xi Jinping’s position as the core of the CPC Central Committee and the entire Party, and firmly safeguard the authority and centralized, unified leadership of the CPC Central Committee.” 张国清说，要坚持党的全面领导，就要坚决维护习近平总书记党中央的核心、全党的核心地位，坚决维护党中央权威和集中统一领导.
He Ping, Eastern Theatre Command political commissar, talks about Party leadership, safeguarding sovereignty and opposing “Taiwan independence”
Liu Lei, political commissar of the PLA, talks about maintaining Party leadership over the forces, maintaining the “red blood,” but also advancing preparations for military struggle, and the PLA becoming stronger and a more reliable force in defending national sovereignty, security, and development interests. He also talks about eradicating discipline problems.
Lou Yangsheng, Henan Party Secretary, says that since the 18th Party Congress, with General Secretary Xi Jinping as the main representative, the Chinese Communists have established Xi Jinping’s new era of socialism with Chinese characteristics which has “extraordinary political wisdom, broad international vision and rich experience in governing the country.”
Shen Xiaoming, Hainan Party Secretary, talks about how having Xi at the core is the key to China’s new journey.新的征程，同样关键在党，关键在以习近平同志为核心的党中央的伟大领航.
Also on Friday, there was a press conference discussing the Plenum’s outcomes. You can watch the whole thing below.
China’s Communist Party hails ‘helmsman’ Xi after ‘historic’ plenum
China’s Xi Jinping Remakes the Communist Party’s History in His Image
II. Don’t Expect De-escalation in Ladakh
It’s been quite the week in the India-China dynamic too. First, the Chinese side chose to skip the meeting arranged in Delhi to discuss the Afghanistan situation. The Indian side had invited NSAs from Russia, Iran and five Central Asian countries. China’s foreign ministry said on Tuesday that “China is not able to attend the meeting due to scheduling reasons and has notified the Indian side in reply.” But later in the week, a Chinese representative did participate in talks with representatives from Russia, the US and Pakistan in Islamabad. A joint statement was issued after the meeting. One interesting point from the statement is this:
They “acknowledged international humanitarian actors’ concerns regarding the country’s serious liquidity challenges and committed to continue focusing on measures to ease access to legitimate banking services.”
I point this out because it was part of the pitch from Islamabad after the meeting too.
In comments after the meetings, the Chinese foreign ministry confirmed that:
“The four representatives also had a group meeting with Acting Foreign Minister Amir Khan Muttaqi of the Afghan interim government. The Afghan side shared measures and progress in building an inclusive government, protecting women and children's rights and counterterrorism. Representatives from the four countries expressed their readiness to continue emergency humanitarian assistance to Afghanistan and strengthen counterterrorism and security cooperation with Afghanistan.
While on Afghanistan, it is worth noting that the United States and Qatar have signed an accord for Qatar to represent US diplomatic interests in Afghanistan. Secretary of State Antony Blinken said that “Qatar will establish a US interest section within its embassy in Afghanistan to provide certain consular services and monitor the condition and security of US diplomatic facilities in Afghanistan.”
Moving away from Afghanistan, there’s a fair amount of legitimate angst within India after the US DoD report talked about China building “large 100-home civilian village inside disputed territory between’ between the Tibet Autonomous Region and Arunachal Pradesh.” This India Today report or this report in The Hindu captures the controversy between the comments from India’s CDS and MEA.
CDS Bipin Rawat reportedly said at a media event:
“They are building this infrastructure and these so-called villages well within their side of the LAC [Line of Actual Control]. They have not transgressed anywhere in our perception of the LAC. There are different perceptions. We are very clear where the LAC lies because we have been told that this is your alignment of the LAC and this is the territory you are expected to defend,” he said. “The Chinese have a perception which in some areas we know and in some areas, we don’t because they have never really explained where the LAC lies according to their perception. As far as we are concerned, no such village development has taken place on our side of the LAC,” he added.
The MEA said on Thursday had said:
Look as regard the US report, it was the US Department of Defence report to the US Congress as far as we understand, we have taken note of the US Department of Defence report to the US Congress, which inter alia also makes reference to construction activities by the Chinese side along the India China border areas, particularly in the Eastern sector. Reports have also appeared in the media earlier this year on this issue. As we had stated then, China has undertaken construction activities in the past several years along the border areas, including in the areas that it has illegally occupied over decades. India has neither accepted such illegal occupation of our territory, nor has it accepted the unjustified Chinese claims. Government has always conveyed its strong protest to such activities through diplomatic means, and will continue to do so in the future.
I also recommend seeing this thread by NDTV’s Vishnu Som.
To me, Indian policymakers should obviously be concerned about Chinese asset-development in the border areas. This is part of creating facts on the ground, which not only has near-term security implications but also impacts long-term dispute settlement. But the media coverage in India about differences in what Rawat and the MEA are saying aren’t really on the mark. To me, this bit is not even a storm in a tea cup. I don’t see a divergence in what either is saying. The key to understanding why that is the case lies is understanding what the LAC is supposed to be. It’s not the line of one’s territorial claim. It’s the line of actual control. So it is a fair argument that the villages are being built in Indian territory, but that territory may not necessarily have been in Indian control for decades; thereby not necessarily falling within the Indian perception of the LAC.
Anyway, CDS Bipin Rawat also termed China as India’s biggest security threat, which prompted this response from the Global Times’ Hu Xijin on Twitter.
This comment from Rawat is also important to note: “Disengagement is likely and will happen. But de-escalation appears to be far-fetched because of the kind of infrastructure the Chinese have developed…it will take a long time.”
Moving on, a couple of interesting reports to note. First, Shishir Gupta reports for HT that “China expert and former head of the East Asia division in the ministry of external affairs (MEA), Pradeep Kumar Rawat, an Indian Foreign Service (IFS) officer of the 1990 batch, is expected to take over as India’s new envoy to Beijing with the incumbent Vikram Misri returning to New Delhi as a secretary. Rawat is the envoy to the Netherlands since January 2021. Fluent in Mandarin Chinese, Rawat has spent the majority of his diplomatic career either in China or handling Beijing from Delhi and was the joint secretary (East Asia) from 2014 to 2017. He was posted to Indonesia as an ambassador from 2017 to 2020.”
Second, India-China trade crossed the $100-billion mark in October this year, according to the data released by China’s General Administration of Customs (GAC) last Sunday. Registering an increase of 22.2 per cent as compared with the same period last year, the GAC data showed overall trade volume between India and China was $102.29 billion, with the balance of trade heavily tilted in favour of Beijing. China’s exports to India stood at $78.33 billion, while India exported goods worth $23.96 billion to China. — Quick thought: I think it’s good that trade is strong. But structural issues in the trade basket persist and that’s a problem.
Third, India and China did work together at COP26 to make changes to the final output. Financial Times reports that “a last-minute intervention from India and China weakened the effort to end coal power and fossil fuel subsidies in the Glasgow Climate Pact in the closing stages of the UN COP26 summit. Countries agreed to ‘phase down’ rather than ‘phase out’ coal, wording that was watered down several times in the course of the week. In the hour before the closing plenary session, there was frantic last-minute wrangling among ministers. The final change, proposed by India and China jointly, was the only amendment made to the deal text.”
This is not the space for me to go into the politics of these negotiations and neither do I claim any expertise in talking about climate change. But the term “weakened” in the text above does derive from a developed-world narrative — as does this BBC reporting of The Sunday Times’ headline that says that India and China “thwart” the climate deal in Glasgow. From the developing world’s perspective, this headline captures its concerns: “‘Carbon colonialism’: India, China among nations to reject first draft,” or you can also look at this report: ‘Lacks balance’: India criticises fossil fuel language in COP26 draft deal.
For a deeper dive, this report in the Indian Express is a good place to go to: “Countries adopt Glasgow Climate Pact after India, China force amendment on coal reference”
Finally, some interesting comments from the Dalai Lama this week. Reuters quoted him as appreciating the ideas of Marxism and Communism, but adding that they “don’t understand the variety of different cultures” and tend to indulge in too much control by the main Han ethnic group. The report also says:
Though the Dalai Lama said he had no plan to meet China’s leader, Xi Jinping, he said he would like to visit again to see old friends since “I am growing older” - but would avoid Taiwan since relations between it and China are “quite delicate”. “I prefer to remain here in India, peacefully," he said, praising it as a centre of religious harmony - despite complaints from Muslims in recent years.”
The Chinese foreign ministry wasn’t thrilled with this interview:
China says Indian ‘govt-backed’ group Evil Flower is attacking it, shuts down airlines data
Eye on India: China builds, delivers biggest stealth warship to Pakistan
India excludes China, Hong Kong, Macau, UK, and Canada from availing e-Tourist Visa
China’s military holds high-altitude drills near border with India
China has made huge build-up in Tibet region, Army need broader roads: Centre to SC
China’s Land Border Law is more sinister than it lets on. India needs a course correction
III. Biden-Xi Summit
The first bilateral summit meeting, via video link, between the US and Chinese presidents will be held on Monday. Ahead of that, there’s been a lot that’s taken place between the US and China. First, we both and Xi and Biden addressed (English report) the National Committee on U.S.-China Relations’ 2021 Gala Dinner through letters
As per Xinhua, Xi:
“expressed his appreciation and recognition to the Committee and its members.”
said that “the China-U.S. relationship is among the most important bilateral relationships in the world today.” Whether our two countries can handle their relations well bears on the fundamental interests of the two countries and peoples, and matters to the future of the world.
said that ties were at a “critical historical juncture. Both countries will gain from cooperation and lose from confrontation. Cooperation is the only right choice. President Xi stressed that following the principles of mutual respect, peaceful coexistence and win-win cooperation, China stands ready to work with the United States to enhance exchanges and cooperation across the board, jointly address regional and international issues as well as global challenges and, in the meantime, properly manage differences, so as to bring China-U.S. relations back to the right track of sound and steady development.”
Useful to note that while Xi spoke about the principles of “mutual respect, peaceful coexistence and win-win cooperation,” there was no blaming the other here.
Qin said that Xi’s letter “reflects China’s positive attitude and position on developing China-U.S. relations.” He said that China’s US policy is “highly consistent and stable” and that it views bilateral ties “from a strategic and long-term perspective.”
He added: Some people say that the China-U.S. relationship cannot go back to the past. But is it the reason why people can take it lightly, or even damage it as they wish? We reject this view. We look forward to working with the American government and visionary people, in the spirit of the phone call between our Presidents, to strengthen dialogue, manage differences, focus on cooperation, and make unremitting efforts to take China-U.S. relations back to the right track.” --
Quick take: I guess implicit in Qin’s remarks is the expectation that even Beijing would not like ties to go back to the past. It’s an oversimplification, but I read the past in this context as some sort of a subordinate role for China in the relationship. That structure and approach will no longer work. This is, after all, China in a new era. There will have to be a new dynamic that suits this new era.
Anyway, as per Xinhua, Biden said: “Today, our world is at an inflection point in history. From tackling the COVID-19 pandemic to addressing the existential threat of the climate crisis, the relationship between the United States and China has global significance. Solving these challenges and seizing opportunities will require the broader international community to come together as we each do our part to build a safe, peaceful, and resilient future.”
Also China and the United States on Wednesday released the China-U.S. Joint Glasgow Declaration on Enhancing Climate Action in the 2020s during COP26. Xinhua reported that the two sides had “agreed to establish a working group on enhancing climate action in the 2020s to promote cooperation on climate change between the two countries and the multilateral processes.”
Some excerpts from the document.
The two sides “declare their intention to work individually, jointly, and with other countries during this decisive decade, in accordance with different national circumstances, to strengthen and accelerate climate action and cooperation aimed at closing the gap, including accelerating the green and low-carbon transition and climate technology innovation.”
“The two sides intend to cooperate on:
regulatory frameworks and environmental standards related to reducing emissions of greenhouse gases in the 2020s;
maximizing the societal benefits of the clean energy transition;
policies to encourage decarbonization and electrification of end-use sectors;
key areas related to the circular economy, such as green design and renewable resource utilization; and
deployment and application of technology such as CCUS and direct air capture.”
It adds that “both countries consider increased action to control and reduce such emissions to be a matter of necessity in the 2020s.”
On CO2 emissions, “the two countries intend to cooperate on:
Policies that support the effective integration of high shares of low-cost intermittent renewable energy;
Transmission policies that encourage efficient balancing of electricity supply and demand across broad geographies;
Distributed generation policies that encourage integration of solar, storage, and other clean power solutions closer to electricity users; and
Energy efficiency policies and standards to reduce electricity waste.
The United States has set a goal to reach 100% carbon pollution-free electricity by 2035. China will phase down coal consumption during the 15th Five Year Plan and make best efforts to accelerate this work.”
Also, both countries intend to communicate 2035 NDCs in 2025.
WSJ reports that the push for this bilateral climate deal came “after both President Biden and Chinese President Xi Jinping encouraged their delegates to find common ground ahead of a virtual summit Biden and Xi.” The report adds:
“Both men have made addressing climate change a policy priority and they have staked their credibility as international leaders on their ability to offer fixes to global challenges. But at home, Mr. Biden has struggled to push his ambitious climate agenda through Congress, and his administration is now wrestling with how to curb rising gas prices without backing down from its commitment to transition away from fossil fuels. Mr. Xi wants a less volatile relationship with Washington as he focuses on domestic politics—specifically, claiming an unprecedented third term at a party conclave set for late next year. The climate agreement was, to many observers, uninspiring, but is the latest sign of a thaw in U.S. China relations. It followed a resumption of high-level trade talks between the two nations and a recent deal by the U.S. Justice Department that led to the release of Huawei Technologies Co. finance chief Meng Wanzhou, who had been detained in Canada.”
Then later in the week, we had US NSA Jake Sullivan’s comments at the Lowy Institute. Prior to that, Sullivan was on CNN, where he spoke about “co-existence” with China.
At the Lowy Institute, he said that:
all of this talk of the United States and China going into a new Cold War, or that we're on our way to conflict, or the Thucydides Trap. We have the choice not to do that. We have the choice, instead, to move forward with what President Biden has called stiff competition. Where we are going to compete vigorously across multiple dimensions, including economics and technology. Where we're going to stand up for our values. But where we also recognize that China is going to be a factor in the international system for the foreseeable future - it's not going anywhere. And the United States is not going anywhere, and we're not going anywhere in the Indo-Pacific either. And so we're going to have to learn how to deal with that reality. But, in a competition, you want to deal with that reality in a way that works maximally to the advantage of the vision that you see as being the right vision for the people of your country, and countries everywhere. And that, boiled down to a few words, is a free and open Indo-Pacific. That is what we want to produce. And we believe there's nothing inconsistent with that. And with recognizing we're going to have to manage a relationship with China, and work with China on certain issues. But unapologetically to say, we would like the rules of the road on all of the issues that affect our citizens to fundamentally advance our interests, and to the maximum extent possible to reflect our values. China has a different value system. It has different interests. And that's part of what the ongoing competition will be about. But there's no reason that that competition has to turn into conflict or confrontation. And that is what responsibly and collectively we need to manage as we work in the years to come.
In addition, Sullivan sort of acknowledged that US economic diplomacy in the Indo-Pacific is lacking, and there doesn’t appear to be too much clarity for the moment. He said:
“Well, what I can say is that we have been working hard in the past few months and will continue to through the end of this year and into early next year. To put together what we see as being a vision for America's economic engagement in the region, with a framework that addresses the kinds of modern challenges that COVID-19 exposed, and that we are all dealing with. Whether it's in the realm of supply chains, or the intersection of climate and trade, or digital, or investment screening and export controls. Across a number of areas that have not traditionally been part of trade agreements. We believe that there is the possibility of putting together a comprehensive vision and getting a whole bunch of countries aligned around that. And so in the months ahead, we will be coming forward with that effort.”
Then we had confirmation of the Biden-Xi summit towards the end of the week, with Blinken and Foreign Minister Wang Yi having chat. The State Department said that:
the meeting presents an opportunity for the two leaders to discuss how to responsibly manage competition between the United States and the PRC while working together in areas where interests align. The Secretary emphasized longstanding U.S. interest in peace and stability across the Taiwan Strait and expressed concern regarding the PRC’s continued military, diplomatic, and economic pressure against Taiwan. He urged Beijing to engage in meaningful dialogue to resolve cross-Strait issues peacefully and in a manner consistent with the wishes and best interests of the people on Taiwan. The Secretary also stressed the importance of taking measures to ensure global energy supply and price volatility do not imperil global economic recovery.
Wang Yi reportedly said that “the two sides should meet each other halfway to ensure a smooth and successful meeting, to bring China-US relations back on track and aim for sound and stable development.”
Also note this bit:
Wang expressed China’s opposition to US’ recent wrong words and actions on the Taiwan question in the phone talk, reaffirming China’s solemn position on the issue related to national sovereignty. Wang said history and reality have fully proved that ‘Taiwan independence’ is the biggest threat to peace and stability in the Taiwan Straits, and any connivance and support for separatists’ forces is a breach of peace in the Straits and will eventually bear the consequences of its own actions. If the US really wants to safeguard peace across the Taiwan Straits, it should firmly and unequivocally oppose any separatist act, honor its solemn commitment made in the three China-US Joint Communiqués, implement the one-China policy, and stop sending wrong signals to secessionist forces, Wang stressed.
I thought this bit from Chen Dingding was a really nice summary of what one can expect from the summit.
Anyway, amid all this, two developments to note. First, WSJ’s Kate O’Keeffe, Heather Somerville and Yang Jie report that:
“U.S. venture-capital firms, chip-industry giants and other private investors participated in 58 investment deals in China’s semiconductor industry from 2017 through 2020, more than double the number from the prior four years, according to an analysis of deals data by New York-based research firm Rhodium Group done at the Journal’s request. Major chip company Intel Corp. is among the active investors, backing a Chinese company now called Primarius Technologies Co., which specializes in chip-design tools that U.S. companies currently lead in making, a separate Journal review of data from analytics firm PitchBook Data Inc. shows. Beyond that, the China-based affiliates of Silicon Valley venture firms Sequoia Capital, Lightspeed Venture Partners, Matrix Partners and Redpoint Ventures have made at least 67 investments in Chinese chip-sector companies since the start of 2020, the Journal found.”
On this, do check out my colleague Pranay Kotasthane’s brief assessment:
Finally, US-China Econ & Security Review Commission is scheduled to release a new report next week. This will contain “recommendations on how to address economic, political and military challenges posed by CCP policies.”
I highlight this to note that China is a key aspect of discussions among US lawmakers, and Beijing has been trying to push back. Reuters reported this week that:
“China has been pushing U.S. executives, companies and business groups in recent weeks to fight against China-related bills in the U.S. Congress, four sources familiar with the initiative told Reuters, in letters to and meetings with a wide range of actors in the business community. Letters from China's embassy in Washington have pressed executives to urge members of Congress to alter or drop specific bills that seek to enhance U.S. competitiveness, according to the sources and the text of a letter sent by the embassy's economic and commercial office seen by Reuters. Chinese officials warned companies they would risk losing market share or revenue in China if the legislation becomes law, according to the text of the letter. The Chinese embassy and the head of its economic and commercial office did not return separate requests for comment.”
IV. China’s Economic Churn & Pentagon’s China Report
Finally, in this section, I’d like to just highlight two pieces this week. First, I did a long article for The Quint, talking about the economic churn underway in China. Here’s my core argument
There has been much discussion of late about the challenges facing the Chinese economy. Some believe that the declining GDP growth rate and the sustained challenges related to debt are indicative of long-standing fragility that is now coming to the fore. Others have argued that the barrage of regulatory actions taken over the past year indicate that the Party under Xi Jinping is turning sharply left, expanding control and suffocating the private sector. Such assessments, unfortunately, miss the woods for the trees. The current upheaval is not a fallout of the inherent weaknesses of the Chinese economic model. Rather, it is a product of a fundamental restructuring that is being engineered by the leadership to address the model’s limitations and stimulate new drivers to achieve high-quality growth. Understanding this direction is critical for foreign investors and policymakers.
Second, if you are interested in a thorough breakdown of the Department of Defense’s annual China Military Power Report, I recommend my colleague Suyash Desai’s Takshashila PLA Insight newsletter from this week.
Frontline media need to be trusted to carry on mission - Hu Xijin’s piece on journalism in China
'Inconceivable' Australia would not join U.S. to defend Taiwan - Australian defence minister/ U.S. and allies would 'take action' if Taiwan attacked - Blinken
Ma Jiantang on Common Prosperity's Policy Implications/ An Uncommon Theory for Common Prosperity
China-US relations: Xi and his inner circle foil American spy efforts, say intelligence insiders
Evergrande dodges default again; property sector debt concerns linger/ China’s Plan to Manage Evergrande: Take It Apart, Slowly
As Distrust of China Grows, Europe May Inch Closer to Taiwan
Chinese property bonds dive as contagion kicks in/ Goldman ventures where others fear to tread, snapping up Chinese developers’ high-yield bonds, side stepping contagion risk
China’s Army Furnishes Foreign Militaries With Covid-19 Vaccines - Do Read
China has ‘long way to go’ to meet ecological goals - State Council