Politburo Meeting - China-Philippine Vessel Collision - Wang-Sullivan Meeting Preview - India Okays Chinese Investments
Hi folks,
Instead of covering reports from the paper today — a lot of which I did not find interesting — I am highlighting some key stories over the past few days.
First, there was a Politburo meeting on Friday. This was covered in the paper on Saturday. Xinhua has a detailed report on this. It says:
The meeting reviewed “policies and measures to open up a new vista in the large-scale development of China's western region.”
“It is imperative to thoroughly understand the strategic intent of the CPC Central Committee, accurately grasp the positioning and mission of the large-scale development of the western region in promoting Chinese modernization, maintain strategic resolve, consistently implement relevant measures, focus on well-coordinated environmental conservation, large-scale opening-up, and high-quality development, and move faster to create a new pattern of development to elevate overall regional strength and sustainable development capacity.”
“The region must take into account the functional positioning and industrial foundation, to develop distinctive and competitive industries that leverage local strengths, enhance scientific and technological innovation capabilities, and promote the transformation and upgrading of traditional industries. Work must be done to promote high-level environmental conservation, build a beautiful western region, coordinate the integrated conservation and systematic management of mountains, rivers, forests, farmlands, lakes, grasslands and deserts, thoroughly carry out pollution prevention and control, and advance green and low-carbon development.”
“The meeting urged the western region to increase the internal driving force for development, enhance the openness of the economy, enhance capacity building for security in key areas, strengthen the guarantee capacity of energy and resources, and promote the construction of clean energy bases.”
“It is necessary to advance the new urbanization in accordance with local conditions, make solid efforts to promote rural revitalization across the board, consolidate and expand the poverty alleviation achievements, and make sure that there will be no falling or relapsing into poverty on a large scale in rural areas.”
“The meeting also noted that a strong sense of community for the Chinese nation should be forged to safeguard ethnic unity and stability in border areas.
The report adds that “some other issues” were also discussed at the meeting.
Second, there’s a preview of the upcoming visit by Jake Sullivan from August 27 to 29. The briefing provided by MoFA outlines the following points:
“Since the Xi-Biden meeting in San Francisco in November 2022, “Director Wang Yi and NSA Sullivan have held three rounds of strategic communication in Vienna, Malta and Bangkok respectively, all of which were substantive and constructive, and produced good results. Both sides agreed to continue making good use of this channel of strategic communication. The upcoming visit will also be the first visit to China by a National Security Advisor to the U.S. President after eight years, and the first visit to China by NSA Sullivan.”
“After San Francisco, the diplomatic, financial, law enforcement and climate teams and the militaries of the two sides have maintained communication, and the exchanges between the two peoples have increased. Meanwhile, the United States has kept containing and suppressing China. And China has taken resolute countermeasures. The China-U.S. relationship is still at a critical juncture of being stabilized.”
“Director Wang Yi will have an in-depth exchange of views with NSA Sullivan on China-U.S. relations, sensitive issues, and major international and regional hotspots. The two sides will jointly take stock of the progress made by the two countries in implementing the common understandings of the two presidents in San Francisco, give full play to the 20-plus dialogue and communication mechanisms that have been established or resumed, and continue to discuss the issue of strategic perception and the boundary between national security and economic activities. The Chinese side will focus on raising serious concerns, articulating its position and laying out serious demands on issues related to the Taiwan question, the right to development and China’s strategic security. The Taiwan question is the first and foremost red line that must not be crossed in China-U.S. relations, and ‘Taiwan independence’ is the biggest risk to peace and stability in the Taiwan Strait. The U.S. side must abide by the one-China principle and the provisions of the three China-U.S. joint communiques, and honor its commitment of not supporting ‘Taiwan independence.’ The U.S. side’s continuous arbitrary measures against China in the areas of tariffs, export control, investment review and unilateral sanctions seriously undermine China's legitimate rights and interests. China demands that the U.S. side stop turning economic and trade issues into political and security issues. As the foundation of the China-U.S. relationship lies in grassroots connections, the United States should work in the same direction with China and take more measures to facilitate the flow of people between the two countries. China will also urge the United States to fulfill its responsibilities as a permanent member of the U.N. Security Council and play a constructive role for the political settlement of major, salient international and regional issues, not the contrary.”
The official adds:
China’s U.S. policy is consistent, which is underpinned by the three principles of mutual respect, peaceful coexistence and win-win cooperation put forward by China. These principles are the lessons learned from the 50-plus years of China-U.S. relations as well as the conflicts between major countries in history. China and the United States should put in a lot of efforts to follow them. China has all along believed that major-country competition is not the solution to the problems facing the United States or the world.
On the Ukraine war, the official said: “The United States should stop abusing unilateral sanctions and long-arm jurisdiction, and stop smearing, framing, pressuring and blackmailing China. China will continue to take strong and resolute measures to safeguard its major interests and legitimate rights.”
On the South China Sea, the official said: “China’s territorial sovereignty and maritime rights and interests in the region have sufficient historical and legal basis, and that countries in the region have full confidence, wisdom and capability to properly handle the issue. Countries outside the region should not do things that provoke confrontation or increase tensions.”
On the Middle East issue, he called for the US to adopt a “responsible position”.
The official ended by saying that “China does not follow the old path of Western colonization and plundering, nor the wrong path of seeking hegemony with growing strength. Nor does it seek to export its ideology. China is committed to peaceful development and win-win cooperation, and is a firm defender of the U.N.-Centered international system and international order”.
Let’s also look at the press briefing by the White House before the visit. Some key points:
Each time the two (Sullivan and Wang) have met, they have typically spent about 10 to 12 hours over two days covering bilateral issues, global regional issues, and cross-Strait issues. We expect to follow the same format in Beijing next week…As I mentioned earlier, I expect these meetings will cover roughly the same format as we have in previous rounds, discussing key issues in the U.S.-China bilateral relationship and advancing counternarcotics cooperation, military-to-military communication, and AI safety and risk discussions — all outcomes of the Woodside summit. I expect we will also spend some time on areas of difference, as we always do. Mr. Sullivan will raise U.S. concerns about China’s support for Russia’s defense industrial base, the South China Sea, and various other issues. I expect the two will also exchange views on other global issues, like DPRK, Middle East, and Burma. And I expect they will also discuss cross-Strait issues.”
The official talked about pressing Beijing on theater command-level communications and “ensuring the resilience” of military-to-military communications. On counternarcotics, the official said that “we’ve seen some good action in that space over the last couple of months, including the scheduling for the first time in quite some time of three fentanyl precursors. But there’s always more we can do.”
On the Middle East: “I think there are some shared concerns about instability, but I think it’s fair to say the two sides, U.S. and China, approach the issue very differently. We’ll be looking to hear from them, of course, their assessment of what’s going on, the role they have been playing, or some of the talks that have happened in China on this issue set. But again, I think we’re approaching it fundamentally from some different directions. And I think you’ve seen that play out in the press as well, with the position or their lack of condemnation on the October 7th attack.”
On Biden’s China policy: “I think what has been so successful in this administration is our China policy is not about changing China at its core, right? It’s about positioning the United States to make the investments, build the alliances we need to succeed and grow stronger. And that really is the focus here. Part of that, then, is also ensuring we’ve got open channels of communication and high-level diplomacy to manage the risks of competition.”
On Taiwan: “we’re going to raise concern about the PRC’s increased military, diplomatic, and economic pressure against Taiwan. These activities are destabilizing and risk escalation. And we’re going to continue to urge Beijing to engage in meaningful dialogue with Taipei. I think, look, everything that we have seen come out of Taipei indicates that the current leadership remains committed to maintaining status quo and peace and stability. They’ve emphasized that in their public statements. So I will leave it at that and refer you to Taipei for any additional questions on travel, et cetera.”
Finally, do note that on Friday, the US tightened its export controls to “further restrict the supply of both U.S.-origin and ‘U.S. branded’ items to Russia and Belarus for the Kremlin’s illegal war on Ukraine.” A total of 123 entities were added to the list, including 42 located in China, 63 from Russia and 14 in Türkiye, Iran, and Cyprus.
Beijing reacted angrily “The move is a typical act of unilateral sanctions and long-arm jurisdiction … It undermines the international trade order and rules, impedes normal international economic and trade exchanges, and affects the security and stability of the global industrial and supply chains … The U.S. side should immediately stop its wrong actions, said the spokesperson, adding that China will take necessary measures to firmly safeguard the legitimate rights and interests of Chinese enterprises.”
Third, SCMP reports that a PLA delegation led by Ground Force Commander Li Qiaoming arrived in Moscow for talks on Thursday, as Chinese Premier Li Qiang left for Belarus.
“According to a Russian defence ministry statement cited by state news agency Sputnik: ‘A protocol meeting was held between the Deputy Minister of Defence of the Russian Federation, Colonel General Alexander Fomin, and the Commander of the Ground Forces of the People’s Liberation Army of China, Colonel General Li Qiaoming.’ Li Qiaoming was in Moscow on a working visit at the invitation of commander-in-chief of the Russian ground forces, Army General Oleg Salyukov, the statement added. Sputnik News said the two sides discussed topical issues of mutual interest on military cooperation, but did not elaborate. There has so far been no official announcement from the Chinese side about the visit.”
Fourth, there’s an interesting report in Caixin that Chinese banks have committed 1.4 trillion yuan ($196 billion) in loans to support a total of 5,391 projects, which have been selected by local authorities under the whitelist system. The report says:
“The whitelists cover two types of project: those operating smoothly and where additional financing will speed up completion, and those that are struggling but where funding support can secure delivery of finished homes. Since the whitelist’s inception, domestic banks have been reviewing projects selected by local authorities and handing out loans. In April, the NFRA, MHURD and the central bank set up a task group to push forward the policy. By May 16, commercial banks had approved 935 billion yuan in loans to whitelisted projects. Authorities are now gathering information on property projects that have been sold but not yet delivered to ensure they can access funding support. Lenders are also being encouraged to help projects that don’t qualify meet the criteria for inclusion in the whitelist, according to Liao. ‘The task force is focusing not only on how much financing support banks provide to compliant projects but also on the rectification of problematic ones. Through collaborative efforts, these projects can be fixed, meet the whitelist criteria, and become eligible for financing support,’ she said. From January to July, commercial banks issued 3.1 trillion yuan in new personal housing loans. The outstanding loan to property development increased more than 400 billion yuan from the beginning of the year, according to Liao.”
Fifth, the Economic Times has an interesting report on the Indian government green-lighting some Chinese investments. The report says:
“An inter-ministerial panel has cleared five-six investment proposals in the electronics manufacturing sector, which include some pure-play Chinese companies and others with connections to the neighbouring country, people familiar with the matter said. The development is significant as these are among the first such approvals in recent times given border tensions and the scrutiny that investments from China have been attracting in India. Prominent names that have recently got approval include Chinese electronics major Luxshare, which is also a vendor for Apple, and a joint venture (JV) between Bhagwati Products (Micromax) and Huaqin Technology, in which the Chinese company will own a minority stake. Other proposals cleared include some Taiwan-based firms listed in Hong Kong or having investments from there.”
The report says that this shift has come amid pressure from the industry. As per the report, the electronics industry told the government that the blocking of Chinese investment “cost local manufacturers $15 billion in production losses as well as 100,000 jobs in the past four years.” “In submissions to various ministries, the electronics manufacturing industry had also said that India had lost out on export opportunities worth $10 billion as well as $2 billion in value addition.”
It adds:
“Last month, ET reported that the government told industry it planned an inter-ministerial panel to expedite the approval of investment proposals by Chinese firms to operate in India or tie up with Indian companies if they meet certain criteria. That plan has been implemented and two rounds of meetings have been held… ‘The inter-ministerial panel is meeting every six-seven weeks to take stock of the situation and grant approvals after doing thorough checks,’ an official said.”
“The conditions included clarifying that the investment and technology were critical to develop the local manufacturing supply chain in areas such as high-tech components. Also, no Chinese nationals could occupy key executive roles in any JV or foreign company operating in India. Besides this, the Chinese company could only hold a minority stake in a partnership with Indian firms as well as in foreign companies operating in the country.”
Sixth, there was another collision between a Chinese and Philippine vessel in the South China Sea. SCMP reports:
“A Philippine ship ‘refused to accept control’ by a Chinese coastguard vessel and ‘deliberately collided’ with it on Sunday, China Coast Guard spokesman Gan Yu said. According to Gan, the ship delivered supplies to a Philippine coastguard vessel anchored at Sabina Shoal ‘despite repeated persuasion and warnings from China’s coastguard’. ‘Filipino crew members who had fallen into the water’ as a result of the collision were ‘immediately rescued on humanitarian grounds’ by the Chinese coastguard, Gan added, saying Manila should take ‘full responsibility’ for the incident.”
“However, the Philippines rejected this version of events, accusing the Chinese vessels instead of taking ‘aggressive and dangerous’ action, including ramming and using water cannons on what it said was a fisheries bureau ship on a ‘humanitarian mission’. According to Manila, the BRP Datu Sanday, a Bureau of Fisheries and Aquatic Resources ship, was targeted by eight Chinese vessels, including one from the navy. The Chinese vessels tried to ‘encircle and block’ the Datu Sanday, the National Task Force for the West Philippine Sea said. It made ‘close perilous manoeuvres’ that resulted in engine failure on the Philippine ship, forcing an early termination of the mission to supply Filipino fishermen with fuel, food and medical supplies. ‘Claims suggesting that our personnel fell overboard and were subsequently rescued by the Chinese coastguard are completely unfounded,’ the task force said. China expelled the same vessel in February from Scarborough Shoal, another disputed South China Sea feature known in China as Huangyan Island and Panatag Shoal in the Philippines. Sunday’s was the second such confrontation in a week near the Sabina Shoal, after two Philippine coastguard ships were damaged in collisions with Chinese vessels early on Monday.”