A recent example of ‘offending China’ involved alleged discrimination against mainlanders by the cabin crew of Hong Kong’s flagship airline, Cathay Pacific. On a Cathay Pacific flight from Chengdu to Hong Kong on 21 May 2023, three flight attendants were accused of mocking a passenger who confused the English words ‘carpet’ and ‘blanket’. ‘If you can’t say “blanket”, you can’t have it,’ one flight attendant said. Another added, ‘Carpet is on the floor.’ The conversation was overheard and recorded by another Chinese passenger, who was sitting near the cabin crew’s rest area. The clip was posted on Xiaohongshu 小紅書 (an Instagram-like social media platform) the next day and went viral.

Making fun of the passenger’s English was misconduct; however, it is not known whether the crew member treated the passenger less favourably when they requested a blanket. Within a day, Cathay Pacific issued three public apologies in simplified Chinese and Mandarin to the passengers involved and to mainland consumers. Chief Executive Officer (CEO) Ronald Lam 林紹波 declared that the airline ‘had a zero-tolerance approach to any serious breach of the company’s policies and code of conduct’ and announced the three flight attendants had been dismissed. He also stressed that passengers with diverse cultural backgrounds must be respected. To prevent similar incidents in the future, the airline would review its flight attendants’ training. As part of this reform, in July, the airline began to recruit flight attendants from mainland China.

Despite prompt action by the airline, the scandal was elevated to a political controversy, unleashing a flood of mainland Chinese grievances against Hongkongers. Political actors and state media took turns condemning the airline. Hong Kong Chief Executive John Lee 李家超 reprimanded Cathay Pacific for the cabin crew’s disrespectful words, claiming they had hurt the feelings of the people of both Hong Kong and mainland China [1] and tarnished Hong Kong’s reputation as a courteous and hospitable place. Other Hong Kong government officials and lawmakers lined up to express anger and disappointment at the airline to ensure that their stance on the incident was communicated to Beijing.

Chinese state media characterised the incident as an exemplar of Hongkongers’ weak national identity and Cathay Pacific’s arrogance. Xinhua warned that consumers would vote with their feet. From a business perspective, the incident cost Cathay not only its reputation, but also one of its markets. China Central Television (CCTV) claimed it was not an isolated incident and criticised Cathay Pacific for neglecting the root of the problem in their governance. An online commentary published by the People’s Daily condemned the airline for worshipping foreigners and looking down on mainland Chinese twenty-five years after the city had returned to the ‘motherland’ and the more recent imposition of the territory’s National Security Law. The commentary also attributed Hong Kong’s prosperity to the Chinese State’s support and Chinese tourists’ spending. It demanded Cathay Pacific ‘take heavy-handed measures to rectify the situation, establish rules and regulations, and fundamentally put an end to this iniquitous corporate culture’. A Global Times commentary accused Hongkongers of having ‘a colonial mentality in their hearts’. It urged the Hong Kong government to develop a strategic plan through education and public communication to achieve decolonialisation of its society.

Cathay Pacific is a subsidiary of British conglomerate Swire Group, but 30 percent of its shares are held by Air China. The airline was one of the MNCs that faced tremendous pressure amid Hong Kong’s political turmoil in 2019, which was sparked by a proposed extradition bill that would have destroyed the legal firewall between Hong Kong and mainland China.[2] A labour and market strike was called for 12 June 2019 — the day the Bill was expected to pass. Working from home was rare before the COVID-19 pandemic, but HSBC, Standard Chartered, Hong Kong’s ‘Big Four’ accounting firms, and other corporations permitted employees to have special work arrangements on the day of the strike, signalling their acquiescence to participation in the protests.

Political tensions escalated over the next few months and another strike was called for 5 August. Some 2,300 staff in the aviation sector, including 1,200 Cathay Pacific employees, joined the strike. At least 200 flights were cancelled. Two days later, the Hong Kong and Macau Affairs Office of the State Council and the Liaison Office of the Central People’s Government Office in Hong Kong jointly organised a closed-door meeting with 500 pro-Beijing members, including business elites, in Shenzhen. In this united-front meeting, Chinese officials asserted the protests had developed ‘colour revolution characteristics’, which sent an unequivocal signal from Beijing that it would intervene in the political chaos in Hong Kong. After attending the meeting, several leading conglomerates that had previously been silent about the protests swiftly displayed their loyalty to Beijing. Hong Kong’s General Chamber of Commerce and the Real Estate Developers Association made statements denouncing the escalating violence in the movement. In the same week, the Civil Aviation Administration of China demanded Cathay Pacific bar any cabin crew who participated in or supported the illegal protests from working on flights to the Mainland. The aviation authorities also ordered the airline to submit crew members’ identification information for their approval before the crew was rostered on to any flights entering China’s airspace. As well as the censure from state media, netizens called for a consumer boycott.

John Slosar, then chairman of Cathay Pacific, initially defended the right to freedom of expression of his staff. Faced with political pressure and financial jeopardy, both Slosar and Cathay Pacific’s CEO Rupert Hogg handed in their resignations. More than thirty employees of Cathay Pacific and its subsidiary Dragon Airline were dismissed due to their political stance on the protests. Among them was union chairwoman Rebecca Sy, who had worked as a flight attendant for seventeen years and was immediately dismissed for lamenting the sacking of the CEO on her private Facebook account. Sy believed the private posts must have been passed on to management by her colleagues. Similarly, several Cathay Pacific employees publicly stated they had been summoned by management and questioned about their private social media posts on the protests before being dismissed. Employees who breach company regulations can expect to be disciplined, but the extent of Cathay Pacific’s intrusion into employees’ private lives was alarming.

Cathay Pacific’s travails, in both 2019 and 2023, present one of many examples of Beijing pressuring companies that operate in China to act as its agents in sanctioning individuals’ political views. The following cases — one of which dates back almost twenty years — indicate how economic coercion, fortified by consumer nationalism, has led MNCs to suppress freedom of expression on behalf of the Chinese state:

Yahoo! (2004): Human rights organisations, including Amnesty International and Human Rights Watch, accused Yahoo! of providing the Chinese government with Hunan-based journalist Shi Tao’s 師濤 email communications with Democracy Forum, a New York–based website. He had sent them censorship directives related to the Tiananmen Incident’s fifteenth anniversary from an anonymous email account. Shi was sentenced to ten years in prison for leaking state secrets.

• Lancôme (2016): The cosmetic company abruptly cancelled a promotional concert featuring Denise Ho 何韻詩, a Hong Kong singer who supported the 2014 Umbrella Movement, after pressure from the Global Times and threats by Chinese consumers on social media of a boycott.
• Cambridge University Press (2017): The press temporarily blocked readers in mainland China from accessing more than 300 China Quarterly articles at the request of China’s General Administration of Press and Publication. The publisher restored the articles after widespread criticism from academia worldwide.
• US National Basketball Association (NBA) (2019): A tweet on 4 October in support of the Hong Kong protests by Houston Rockets executive Daryl Morey led to a broadcast blackout of matches in China. The Chinese Consulate in Houston issued an online statement to condemn Morey’s tweet and demanded the Rockets clarify the team’s stance. Chinese netizens also called for the dismissal of Morey. Morey apologised for his tweet. In NBA’s initial statement, on 6 October, it regretted that Morey’s views ‘deeply offended many of our friends and fans in China’. Two days later, NBA Commissioner Adam Silver defended Morey’s freedom of expression in the wake of pushback from US politicians. CCTV stopped airing NBA games from October 2019 to March 2022, except for one match, in October 2020.
• BNP Paribas (2019): The Global Times denounced Hong Kong–based BNP Paribas lawyer Jason Ng for his Facebook posts supporting the protests in the city and denouncing the police’s management of them. Chinese netizens accused Ng of being a ‘secessionist’ and demanded the bank sack him. The bank apologised for Ng’s comments and emphasised that they ‘did not reflect the view of BNP Paribas’. Ng subsequently resigned.
• HSBC (2023): HSBC terminated the bank accounts of the League of Social Democrats (LSD) without explanation along with the personal accounts of several LSD members. The LSD is the only opposition party that has maintained small-scale street activities in Hong Kong since the introduction of the National Security Law. LSD leaders have been approached by national security police about their protest plans for ‘sensitive dates’, such as the anniversaries of the Tiananmen Incident and Hong Kong’s handover to China, and China’s national day. The homes of some members were raided ahead of those sensitive dates.

Companies must comply with domestic laws where they operate. Doing business in or with China, however, comes with an additional requirement: be careful not to offend the authoritarian state. The above cases show the Chinese state and its consumers not only effectively compel MNCs to play by authoritarian rules and norms while operating in the PRC itself, but also insist that MNCs operating abroad censor the political views of their employees. MNCs may believe that profit justifies their political compliance; however, the effects of such a compromise on the erosion of democratic values and freedom of expression are borne by the liberal world at large. The more dependent a company is on the Chinese market, the more susceptible it is to coercion. Not many MNCs are willing to do anything that will endanger their access to the Chinese market. Google is one of the few exceptions. The tech giant ultimately refused to be complicit in China’s censorship requirements and quit the lucrative market in 2010. Despite an attempt to re-enter the Chinese market with a censored search engine, Dragonfly, the controversial project was dropped in 2019.

China’s spectacular economic growth and rising power have given it more resources to reshape norms and standards in the global order. Many studies have investigated the influence of China’s foreign direct investment and foreign aid on target states.[3] Emerging research pinpoints how the Chinese government weaponises its domestic market to achieve political goals.[4] More work needs to be done to show how the Chinese government coopts and coerces MNCs to enforce its authoritarian values and policies — and the implications of this on the liberal world order. As consumer and shareholder activism for environmental and social justice expands to include human rights — for example, over the use of ‘blood diamonds’ and cotton grown in Xinjiang — it will be interesting to see how companies negotiate the demands of their home markets and those of the world’s largest one.

References

[1] Amy King explains the origin of the foreign policy phrase ‘hurting the feelings of the Chinese people’, which traditionally was often used when Chinese officials believed the country’s status was demeaned on the world stage. See Amy King, ‘Hurting the Feelings of the Chinese People’, Sources and Methods Blog, Washington, DC: Wilson Center, 15 February 2017, online at: https://www.wilsoncenter.org/blog-post/hurting-the-feelings-the-chinese-people.  Recently, the phrase has frequently been used not only by officials but also by any Chinese nationals who feel that China or the Chinese people are perceived in a negative way.

[2] Antony Dapiran, ‘Hong Kong’s National Security Law’, in Jane Golley, Linda Jaivin, and Sharon Strange eds, China Story Yearbook 2020: Crisis, Canberra: ANU Press, 2021, pp.60–65.

[3] See Denghua Zhang and Graeme Smith, ‘China’s Foreign Aid System: Structure, Agencies, and Identities’, Third World Quarterly, vol.38, no.10 (2017): 2330–2346, doi.org/10.1080/01436597.2017.1333419; J. Mohan Malik, ‘Myanmar’s Role in China’s Maritime Silk Road Initiative’, Journal of Contemporary China, vol.27, no.111 (2018): 362–378, doi.org/10.1080/10670564.2018.1410969; Suisheng Zhao, ‘China’s Belt-Road Initiative as the Signature of President Xi Jinping Diplomacy: Easier Said than Done’, Journal of Contemporary China, vol.29, no.123 (2020): 319–335, doi.org/10.1080/10670564.2019.1645483.

[4] For instance, Christina Lai, ‘More than Carrots and Sticks: Economic Statecraft and Coercion in China–Taiwan Relations from 2000 to 2019’, Politics, vol.42, no.3 (2022): 410–425, doi.org/10.1177/0263395720962654; Darren J. Lim, Victor A. Ferguson, and Rosa Bishop, ‘Chinese Outbound Tourism as an Instrument of Economic Statecraft’, Journal of Contemporary China, vol.29, no.126 (2020): 916–933, doi.org/10.1080/10670564.2020.1744390.

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When and Where was the 20^th Party Congress Held?

The 20^th Party Congress took place on 16–22 October 2022 in the Great Hall of the People, Beijing, in the People’s Republic of China (PRC).

One to Twenty

1^st Party Congress: 23 July to 2 August 1921, Shanghai and Jiaxing.

2^nd Party Congress: 16–23 July 1922, Shanghai.

3^rd Party Congress: 12–20 June 1923, Guangzhou.

4^th Party Congress: 11–22 January 1925, Shanghai.

5^th Party Congress: 27 April to 9 May 1927, Wuhan.

6^th Party Congress: 18 June to 11 July 1928, Moscow.

7^th Party Congress: 23 April to 11 June 1945, Yan’an.

8^th Party Congress: 15–27 September 1956, Beijing.

9^th Party Congress: 1–24 April 1969, Beijing.

10^th Party Congress: 24–28 August 1973, Beijing.

11^th Party Congress: 12–18 August 1977, Beijing.

12^th Party Congress: 1–11 September 1982, Beijing.

13^th Party Congress: 25 October to 1 November 1987, Beijing.

14^th Party Congress: 12–18 October 1992, Beijing.

15^th Party Congress: 12–18 September 1997, Beijing.

16^th Party Congress: 8–14 November 2002, Beijing.

17^th Party Congress: 15–21 October 2007, Beijing.

18^th Party Congress: 8–14 November 2012, Beijing.

19^th Party Congress: 18–24 October 2017, Beijing.

20^th Party Congress: 16–22 October 2022, Beijing.

Who Goes, How Are They Chosen, and What Do They Do?

A total of 2,379 people were expected to attend the 20^th Party Congress: 2,296 delegates representing the 96.7 million members of the CPC plus eighty-three special invitees, including retired former leaders. Forty-one people sent apologies, leaving a total of 2,338 attendees.

Thirty-eight ‘electoral units’ 选举单位 choose the delegates in multiple rounds of referrals and reviews overseen by and subject to the approval of party discipline and inspection organs, who screen for such things as loyalty to Xi Jinping and appropriate representation of ethnic minorities. Provinces, municipalities, and regions choose nearly 70 percent of the delegates, or 1,585 delegates in 2022. The People’s Liberation Army and People’s Armed Police chose another 13 percent of the total, and central party organs and state organs about 12 percent. Of the 2,296 delegates, 619 were women, or 27 percent of the total, a slight rise (2.8 percent) from the 19th congress in 2017.

The delegates’ function is largely ceremonial: approving the selection of the new Central Committee and acclaiming official reports and resolutions.

Who Holds the Power?

The delegates formally approve the selection of the CPC Central Committee 中国共产党中央委员会. The 20th Central Committee has 205 members and 171 alternate members, with an average age of 57.2 years. Among those retiring in 2022 were premier Li Keqiang 李克强 and Chinese Political Consultative Conference chairman Wang Yang 汪洋, though neither had reached the official retirement age of sixty-eight. Of the 205 members of the 20^th Central Committee, 135 (66 percent) were new. Only eleven of the full members, or 4.9 percent, are women; another nineteen women are alternate members.

The Central Committee approves the appointments to the Politburo 政治局. The 20^th Politburo has twenty-four members, only four of whom are under the age of sixty (three are fifty-eight and one is fifty-seven). The oldest member is seventy-two-year-old Zhang Youxia 张又侠, who is vice-chairman of the Military Commission.

For the first time in twenty-five years, no woman sits on the Politburo. Historically, there have only ever been six female full members and two alternates. Of those six, three were the wives or widows of top leaders. Mao Zedong’s wife, Jiang Qing 江青, lost her position after her arrest as part of the ‘Gang of Four’ after Mao’s death in 1976; she died in jail in 1991. Lin Biao’s wife, Ye Qun 叶群, lost her position in 1971 when she and her husband — Mao’s erstwhile ‘closest comrade-in-arms’ and chosen successor — died in a plane crash while fleeing China after allegedly trying to assassinate Mao. Deng Yingchao 邓颖超, the widow of popular premier Zhou Enlai 周恩来, joined the Politburo in 1977 as part of the group around Deng Xiaoping that ushered in the Reform Era; she retired in 1985. (See XX, pp. xx)

The Politburo selects the Politburo Standing Committee (PSC)政治局常务委员会. Its members are the most powerful people in China. No woman has ever sat on the PSC. The current PSC has seven ranked members of whom Xi Jinping, as the third-term General Secretary and Chair of the Central Military Commission 中央军事委员会, is the most powerful of all; unlike previous committees, which comprised diverse ‘factions’ or groups — prominently including that which had its origins in the Communist Youth League — the new one is believed to consist entirely of men loyal to Xi personally and to his vision for the country.

No. 1: Xi Jinping 习近平, aged sixty-nine, holds the titles of CPC General Secretary and Chair of the Central Military Commission, among other non-party titles, including that of State Chairman or President.

No. 2: Li Qiang 李强, aged sixty-three, was Xi’s subordinate when Xi was party secretary of Zhejiang province. Promoted to the Politburo in 2017, he was also party secretary of Shanghai, responsible for the strict COVID lockdowns there in 2022. He is new to the PSC.

No. 3: Zhao Leji 赵乐际, aged sixty-five, is considered a member of Xi’s ‘Shaanxi Gang’ 陕西帮. It is said Zhao’s father had a personal relationship with Xi’s father, Xi Zhongxun 习仲勋.

No. 4: Wang Huning 王沪宁, aged sixty-seven, has been the Party’s leading political theorist since the 1990s, including during the administrations of Xi’s predecessors Jiang Zemin and Hu Jintao, and has been a member of the Politburo since 2012. He is one of Xi’s closest advisors. Unlike the others, Wang came to prominence not as a party bureaucrat but because of his work in the Central Policy Research Office 中共中央政策研究室, a major CPC think tank.

No. 5: Cai Qi 蔡奇, aged sixty-seven, is the Party Secretary of the Beijing Municipal Party Committee and First Secretary of the CPC Secretariat. A former subordinate of Xi’s in both Fujian and Zhejiang, he has been known to call Xi ‘Xi Dada’ or ‘Daddy Xi’. He is also said to be a fan of the television series House of Cards and was behind the forced eviction of rural migrants from Beijing beginning in 2017. He is new to the PSC.

No. 6: Ding Xuexiang 丁薛祥, aged sixty, is the youngest member of the PSC and the director of the General Office of the Central Committee. Dubbed Xi’s ‘chief of staff’, he has worked under him for many years, and frequently accompanies Xi on both domestic and foreign trips. He is new to the PSC.

No. 7: Li Xi 李希, aged sixty-six, until recently the party secretary of Guangdong Province, chairs the powerful Central Commission for Discipline Inspection, which prosecutes the anticorruption campaign that is one of Xi’s signature policies. He is said to be a close friend of Xi’s and is new to the PSC.

Reports, Speeches, and Constitutional Amendments

Xi Jinping’s keynote speech was titled ‘Hold High the Great Banner of Socialism with Chinese Characteristics and Strive in Unity to Build a Modern Socialist Country in All Respects’ 高举中国特色社会主义伟大旗帜，为全面建设社会主义现代化国家而团结奋斗—在中国共产党第二十次全国代表大会上的报告. It took about one hour and forty-five minutes for him to read the abridged version of the report, which in full is 31,600 characters and, printed, runs to 72 pages.

The overall message of the report was that China is advancing by leaps and bounds under the leadership of the Communist Party, with Xi at the helm. It reaffirmed that the central task of the CPC is to build a powerful modern socialist country and promote the great rejuvenation of the Chinese nation.

Compared with previous reports, there were many more mentions of security 安全 (in particular, ‘national security’ 国家安全) and references to ‘risks’ and ‘challenges’, and none of the previously popular expression ‘period of strategic opportunity’ 战略机遇期.[1] There were also fewer mentions of the economy (in particular, the market and reforms) — although there were numerous references to the importance of technology.

Among the changes to the party constitution adopted by the congress was the enshrinement of Xi Jinping Thought on Socialism with Chinese Characteristics for the New Era as well as the Two Establishes 两个确立 and Two Safeguards 两个维护. The first establishes Xi as the Party’s ‘core’ and Xi Jinping Thought on Socialism with Chinese Characteristics for the New Era as the Party’s guiding ideology — in essence, putting Xi on par with Mao and above Deng Xiaoping and his other post-Mao predecessors. The ‘safeguards’, meanwhile, maintain that ‘core’ status in the Party and the Party’s authority over the nation.

The line from Xi’s official report that the Party must ‘resolutely oppose and contain Taiwan independence’ was also written into the party constitution.

An Unscripted Moment

After the press had been let into the congress, Xi’s predecessor, Hu Jintao, appeared visibly agitated by something in the red folders on the table before him. When Xi motioned for attendants to lead him away, Hu appeared unwilling to go, and an attendant lifted him from his seat by the armpit. As he left, he said something to Xi and patted the shoulder of Li Keqiang; both men nodded without turning to face him. Hu’s first reappearance in public was at the 6 December memorial service for his own predecessor, Jiang Zemin.

The author wishes to thank M. Su for her contribution to this article

References

[1] See ‘Brief #126: 20^th Party Congress Report: Keywords Analysis’, Neican, 18 October 2022, online at https://www.neican.org/brief-126-20th-party-congress-report-keywords-analysis/?ref=translations-newsletter

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Australia’s federal ministers are back on talking terms with their PRC counterparts, visits to the PRC are resuming from Canberra and by state premiers, our longsuffering ambassador in Beijing, Graham Fletcher, is finally getting to meet appropriate Chinese peers, and some of the commodities that Beijing had barred are starting to reach PRC markets again.

Win.

The PRC’s ambassador Xiao Qian envisions a ‘new frontier’ of productive relations, as Chinese students return to Australian campuses, trade resumes on a broad basis, and Chinese investors succeed in taking over Australian targets.

Win.

At the same time, Canberra has been praised in both Western and regional countries for standing up for Australian and broadly liberal democratic values and interests in the face of PRC pressure, through a range of measures such as denying Huawei access to the 5G roll-out, and the Foreign Influence Transparency Scheme.  The Economist has lauded how ‘Australia has stood up to Chinese bullying and thrived.’

Win.

Such a win-win-win presents a case for this being an especially brilliant hour for Australian foreign policy. But relating to the PRC continues to present unique challenges. And less widely discussed, are concomitant successes for the PRC’s Ministry of Foreign Affairs (MFA).

For instance, it is now more than a decade since Craig Emerson became the last Australian trade minister to visit Taiwan. Yet in the decade to 2002, under Labor and coalition administrations, twelve federal government visits took place—seven at the ministerial level and five at the level of assistant minister or parliamentary secretary. The decline coincides with the ramping-up by Beijing of its efforts to ‘reunify’ with Taiwan.

Australia can do a great deal with Taiwan short of diplomatic recognition, which Taipei – favouring the status quo – doesn’t seek, including building closer cultural and commercial connections. Yet except in Queensland (which has the highest population of Taiwan-born residents), Taiwan’s representatives or businesspeople are rarely granted a meeting with anyone senior in a state government. This is not a party issue – it’s no different in Tasmania, the sole Liberal administration, than in Labor-run states, Queensland excepted. State governments do not discuss openly why this is so. But pressure from Chinese consulates, which maintain substantial, routine contacts with state governments and officials, would be a factor.

Taiwan has recently become Australia’s fourth largest export market, but the only one in the top ten with which Australia lacks a free trade agreement. Tokyo has explicitly welcomed Taiwan’s application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), while Australian Prime Minister Anthony Albanese says: ‘We will deal with applications that are dealt with by consensus for economies applying to join the CPTPP.’

Deakin University Associate Professor Lennon Chang, President of the Australasian Taiwan Studies Association, told the Australian parliamentary inquiry into expanding CPTPP membership that Taiwan, as a leading ICT developer in the Indo-Pacific region, would be a responsible partner, its membership aligning with Australia’s cyber strategy ‘for a safe, secure and prosperous Australia, Indo-Pacific and world, enabled by cyberspace and critical technology’.

The removal of space for Taiwan and Taiwanese companies and individuals to operate internationally is a key goal for PRC diplomats, and they have enjoyed considerable success with it.

Ambassador Xiao wrote in a widely-published commentary that ‘Taiwan is part of China’s territory. Taiwan has belonged to China since ancient times’ – which are both standard and historically disputable claims, the first dynasty to exercise any form of rule over the island being the Qing, in the 17^th century. Again, echoing the Communist Party’s longtime playbook Xiao called Taiwan one of China’s ‘core interests, which brooks no foreign interference and allows no political manipulation.’

In December 1972, within the core diplomatic statement that established formal ties with the PRC, Canberra said it ‘recognises the government of the People’s Republic of China as the sole legal government of China, and acknowledges the position of the Chinese Government that Taiwan is a province of the PRC.’  The Taiwan government has long abandoned any pretence or interest to rule China, while Australia simply ‘acknowledges’ Beijing’s claim to rule Taiwan. These days, Taiwan is a vibrant democracy with a similar sized population to Australia, and a world-leading tech industry. It slid into technical recession in the first quarter of 2023 as global tech demand slowed, with semi-conductors comprising 38 per cent of all Taiwan’s exports. But a rebound into positive growth is widely forecast by analysts for the year as a whole. Most Taiwanese are fed up with being viewed through the lens of China’s ambitions or China-US rivalry. Polling by National Chengchi University’s Election Study Center in 2022 underlined the strength of Taiwanese desire to maintain the status quo. Only 1.3 percent of respondents wanted unification with the mainland ‘as soon as possible’, while just 5.1 percent desired immediate formal independence.

Canberra’s reluctance to pursue closer relations with Taiwan can be seen as a form of collateral damage of its fear of being returned to Beijing’s ‘sin bin’. Yet Benjamin Herscovitch of the ANU’s School of Regulation and Global Governance notes that ‘Beijing claims that the Taiwanese government isn’t entitled to join groupings like the CPTPP because the world shares China’s view that Taiwan is simply part of the PRC.’ He argues that ‘these claims misrepresent the supposed international support for China’s preferred one-China principle, gloss over the diversity of one-China policies, and ignore how commonplace it is for free trade agreements and other groupings to include entities that aren’t recognised as de jure sovereign states.’

Taipei has long requested the exchange of military attaches, but Canberra has not agreed. According to Richard McGregor of the Lowy Institute, ‘Australia won’t have the luxury of keeping its head down on Taiwan indefinitely.’

For Australian politicians to be able to speak to their PRC counterparts, and the slow return of trade affected by the 2020 sanctions, is a relief – but it cannot be perceived as an advance in terms of where the relationship stood only eight years ago, when the Australia-PRC FTA came into force, or before that, when mutual visits by political leaders were common. Xi Jinping, last visited Australia in 2014, when his side-trip to Tasmania completed his travels to every state over the years.

The PRC ambassador to Australia, Xiao Qian, said in March in Brisbane: ‘We have basically stabilised the relationship between the countries… There is not a single area where China and Australia have to confront each other… (China’s) policy towards Australia is a friendly policy.’ He spoke of working together towards a ‘new frontier’ of economic relations and on climate change, and said that ‘we are open to welcome Australia to come back to the Belt and Road (Initiative)’ to which the Victorian government committed itself in 2018, but which the federal coalition government required it to leave under the Foreign Arrangements Scheme of December 2020.

And yet… much remains problematic in the relationship. The straightforward access for Australian goods and some services that was agreed with the signing of an FTA, whose core aim is to shelter commerce from political swings, has yet to be fully restored, although current moves are in the right direction. Trade Minister Senator Don Farrell’s Beijing visit on May 11-12 comprised such a step, but the resulting progress was more rhetorical than practical, except for timber exports. Australians Cheng Lei and Yang Hengjun have been incarcerated since August 2020 and January 2019 respectively, without any public trial or even a clear account of why they were arrested in the first place. So much official pressure was placed on Australian journalists covering China that the last ones left in 2020, so that there is now no direct coverage of events or trends there by Australian media.

Ambassador Xiao readily obtains non-curated access to Australia’s mass media and social media, as well as live audiences, in a way unavailable in China to our ambassador Graham Fletcher – although this has long been the case, and is not unique to Australia. A majority of Chinese Australians regularly use the strictly censored WeChat platform, owned by Chinese giant Tencent.

The European Union, Canada, Britain and the US have applied the Magnitsky Accords, or similar sanctions against those responsible for human rights abuses against Chinese citizens responsible for oppressive actions in Xinjiang. Canberra has held back from following suit. However, greater distance from the PRC is now entrenched in the strategic space, with AUKUS and the Quad becoming core Australian commitments.

Most of the Australian population remains concerned about the PRC. Lowy Institute polling last year found 75 per cent of respondents thought it somewhat likely that China would pose a military threat to Australian in the next twenty years. China was described as more security threat by 63 per cent and 33 per cent as more economic partner. At the same time, a perception has grown among Australian politicians and political analysts, that voters of ethnic Chinese background will penalise parties that are deemed to be ‘anti Chinese.’ The Communist Party of China (CPC), which claims that it represents China’s history, culture and population (including people of Chinese ethnicity living outside China), fosters the perception that to criticise it, or its policies, is racist.

Recent statistics show that although people born in the PRC comprise the second largest group of permanent migrants to Australia, they come only tenth among those groups to have taken the opportunity to become citizens, with just 36 percent doing so. Voting trends among people of Chinese ethnicity remains a complex and little explored issue. But insofar as the perception is becoming entrenched among politicians and their advisors in Canberra and the state capitals that public criticism of the PRC or CPC can provoke electoral pain, this will impact Australian political behaviour.

While priority is given to full restoration of relations with the PRC, the question remains as to whether security and trade can be considered separately. The risk remains, that further – perhaps even inadvertent – political infringements as perceived by Beijing, may see markets again blocked. If Beijing over-extends its ambitions to seize Taiwan, the resulting sanctions would replicate – at least – those that have hit Russia and its commercial partners since the Ukraine invasion. It appears especially important now for corporations and governments – both federal and state – to audit their economic vulnerability.

A related question is whether interests can or should be disconnected from values. For Xi himself, for whom the party encapsulates every corporate virtue and who focuses fully on the ideological landscape, that is impossible: ‘Government, military, civil society, schools, north, south, east, west, and the centre – the party leads all.’

In the immediate term, perhaps the most elevated goal is for Prime Minister Albanese to tread, 50 years on, in the footsteps of his predecessor Gough Whitlam’s ground-breaking visit to the PRC from October 31 to November 4, 1973, presumably with the aim of engaging with Xi in the Great Hall of the People. Kevin Magee, a former representative of Australia in Taiwan, has summarised: ‘In order to get this far with Beijing, the Albanese government has dialled down its rhetoric on China but has also provided concessions on sensitive issue for China such as Taiwan, Magnitsky sanctions, Port of Darwin review etc.’ [1] Visits and meetings are important, though their significance can understandably be over-weighted in the diplomatic world.

What is less clear is the bigger-picture aim, where the relationship with the PRC is ultimately headed. It’s a conundrum, in both policy and rhetoric terms. But might the framework of a ‘new Australia-China accord,’ as China expert John Fitzgerald describes it, be already falling into place, unselfconsciously? [2] One that might be emerging from a ‘Fear of Abandonment’ as the late and much lamented Allan Gyngell’s influential book of foreign policy history and analysis is titled – only not, as originally framed, fear of abandonment by Western partners Britain or the US, but now by the PRC?

An important element in such framing, a core goal of China’s Ministry of Foreign Affairs, is the successful deployment of discourse power.

Much relief has been evinced at the claimed end of ‘wolf warrior’ rhetoric from PRC spokespeople. That’s probably as true for MFA’s many professional diplomats, as for those who had been on the receiving end. But harsh words remain part of the armoury, as demonstrated recently by the PRC ambassadors to the Netherlands and France.

Two years ago the PRC’s Politburo held a study session at which General Secretary Xi emphasised the need ‘to form international discourse power that matches our comprehensive national power and international status,’ creating a favourable ‘external public opinion environment.’

Recent remarks by Paul Keating appear to have given permission for a new wave of criticism of Australia and its Asian friends and Western allies, while taking less note of what is said and done by the PRC/CCP or its leaders. Such debates are natural in transparent societies, and they underline a core difference from the Cold War era, when Soviet engagement with Australia and rhetoric favouring the USSR were negligible. But longer term complexities are mounting as China’s ‘rise’ – perceived formerly as inexorable – instead flatlines as its economy matures and demographic decline comes into play. For prosperity, which was until COVID-19 a sufficient domestic legitimising force for the CCP in itself, is now sublimated beneath security issues by Xi and his team, in both policy and presentational terms.

Australian Labor politicians have rightly been commended for the discipline of their PRC discourse. It is also important, however, to reserve the right to speak up for Australian values and interests as their leadership roles require.

Tone matters. But if the tone adopted by Australia morphs into one which is perceived to defer to PRC discourse power, that will be time for a review before it becomes a habit.

Consul-General Zhou Limin described ‘a correct understanding’ as ‘the prerequisite for the sustainable development of China-Australian relations.’ He is right, of course, about understanding. The problem is that while Australia sustains myriad versions of political correctness, Beijing’s perspective, especially under Xi, is singular.

It’s sad that such reservations are inevitable when grappling with a polity as pervasive and ambitious – and important, of course – as Xi’s CPC. Roll on the day when we can enjoy less conditional, unclouded relationships with our many friends, and their businesses, universities and other organisations in China. That day may come, and Australians will applaud it, but it’s not going to dawn as a result of Canberra’s efforts alone, welcome as they may be.

References

[1] Kevin Magee, Australia China Relations Brief, February 15 2023

[2] Cited with John Fitzgerald’s permission from a post by him on the private Chinapol platform

The post Australia-China Relations Need Re-thinking, Not Re-set appeared first on The China Story.

Innovation in science and technology has become the main battleground of the global strategic contest.[1]

— Xi Jinping, 28 May 2021

Realising the complete reunification of the Motherland is the shared longing of all Chinese sons and daughters and represents the essence of National Rejuvenation.[2]

— Xi Jinping, 13 March 2023

Introduction

At the Two Sessions in March 2023, President of the People’s Republic of China (PRC) Xi Jinping defined complete ‘reunification’[3] with Taiwan as the ‘essence’ of China’s goal of National Rejuvenation, to recover the partly-imagined power, dignity, and territory enjoyed by China’s last imperial dynasty at its apex. However, the ‘Taiwan problem’ in recent years has been complicated by an issue that dominates global headlines: the emergence of Taiwan Semiconductor Manufacturing Company Limited (TSMC) as the global leader in the manufacturing of advanced logic chips. Taiwan now sits at the centre of a global contest for hard power and systemic legitimacy.

A country’s access to — or control over — TSMC’s advanced semiconductor manufacturing capabilities determines its ability to acquire the critical military and economic power enabled by frontier technologies such as artificial intelligence (AI). TSMC’s leading role has complicated both the Chinese and the American strategic calculus on Taiwan. On the one hand, the company’s advance to global prominence has increased both China’s incentive to pursue reunification and the United States’ incentive to prevent it. On the other, the reliance of both countries on TSMC has historically acted as a deterrent to any conflict that would compromise their access to its critical technology. The United States’ move to sever Chinese access to TSMC and reshore its own manufacturing capabilities could decrease the deterrent value of the company to both sides, further destabilising what President Xi in his report to the Twentieth Party Congress described as a ‘turbulent period of transformation’ 动荡变革期 in global affairs.

At a deeper level for the Communist Party of China (CPC), Taiwan’s leadership in a fundamental technology also inflames deep-rooted historical wounds. China was forced to cede Taiwan in 1895 after losing a war against Japan, which had beaten China to the modernisation process and grown strong by adopting Western technology from the Industrial Revolution. Taiwan is therefore a symbol of national humiliation as well as a cautionary tale of the risks of falling behind the global technological frontier. These issues of power, technology, and history are crystallised in US–China competition over TSMC.

The Global Semiconductor Industry

Semiconductors 半导体 — also called chips 芯片 and integrated circuits 集成电路 — fall into three categories. Logic chips act as the processing centre of devices and systems; memory chips store information; and analogue chips typically convert electrical signals into another type of energy, such as sound or movement, which interacts with the real world.

The semiconductor supply chain has three main steps — design, manufacturing, and assembly — that are underpinned by intellectual property, specialised software, equipment, and chemicals. Because of its high capital costs and complexity, the semiconductor supply chain has evolved to become globally distributed and specialised in a small number of countries. These global hubs of specialisation have created mutual dependencies across national borders, but also strategic chokepoints in the supply chain. Through its world-leading corporations, the United States occupies a dominant position in several crucial segments: the industry’s underlying intellectual property (IP), chip design — especially electronic design automation (EDA) software — and manufacturing equipment. Over the past ten to fifteen years, TSMC has become the world’s leading contract manufacturer of advanced logic chips, serving global giants such as Apple and Qualcomm, and conveying a major geopolitical advantage to Taiwan. China, a late starter in the global technology race, has long been uncomfortable with its dependence on foreign, and especially US and Taiwanese, semiconductor technology.

Hard Power

Semiconductors, as a fundamental and enabling technology, go to the core of hard-power considerations in Beijing and Washington. They are the building blocks of the digital world and a prerequisite for any country intending to lead the technologies of the future, including AI, quantum computing, biotechnology, and next-generation weaponry. The State Council’s Outline for Advancing the Development of the Nation’s Integrated Circuit Industry 国家集成电路产业发展推进纲要, published in 2014, offers the following assessment: ‘Accelerating the development of the integrated circuit industry is of major strategic significance to the transformation of the model of economic development, to safeguarding national security, and to increasing comprehensive national power.’

It is advantageous for any nation to have a certain level of self-sufficiency in semiconductor technology. Defensively, it offers secure priority access to the semiconductor technology required for the economic and military applications that underpin national strength. Offensively, it provides leverage over weaker countries, whether deployed as strategic denial through trade restrictions or as offensive cyber-capabilities. It is worth noting that in the wake of the revelations of Edward Snowden in 2013, official Chinese media insinuated — despite a lack of evidence in the public domain — that American semiconductor companies were complicit in the extraterritorial data-collection activities of the US National Security Agency.

Advanced logic chips — the production of which TSMC leads — are especially significant as they are crucial to AI, which the State Council’s 2017 New Generation Artificial Intelligence Development Plan identified as ‘a new focus of international competition’ and ‘a strategic technology that will lead in the future’. AI supports a wide range of Chinese government objectives, such as an ‘intelligent’ 智能化 military, an upgraded industrial base, and ‘smart’ governmen. Given the centrality of AI to the economic and military goals of Beijing, Washington, and other capitals, the stakes for access to TSMC-produced leading-edge logic chips are only rising.

The Historical Stakes for China

In modern history, one of the root causes of China’s backwardness and vulnerability to attack was its backwardness in science and technology.[4]

— Xi Jinping, 9 June 2014

For China, the presence of TSMC in Taiwan is not simply a hard-power consideration. It is inseparable from Beijing’s deeper historical commitment to ‘reunify’ with Taiwan and a present-day incarnation of old anxieties. Central to the narrative of China’s Hundred Years of Humiliation is the decisive role played by advanced technology in determining national power. Recent official accounts trace the Qing dynasty’s (1644–1912 CE) most shameful defeats to its failure to grasp critical inflection points in the global development of technology. According to CPC historiography, the failure of the Qing to engage with the First Industrial Revolution that emerged in the United Kingdom in the 1760s led to China’s vulnerability to attack and exploitation by the British Empire in the Opium Wars. Likewise, the failure of the late-Qing reforms starting in the 1860s — often called the Self-Strengthening Movement 自强运动 or Western Affairs Movement 洋务运动 — saw China miss the Second Industrial Revolution and lose the First Sino-Japanese War (1894–1895) that resulted in Taiwan coming under Japanese control. That is, the loss of Taiwan itself is directly connected to China’s historical failure to, in the Party’s language, ‘occupy the strategic high ground’ in advanced technology.

Since the turn of the twenty-first century, the Party has identified developments in information technology, biotechnology, new materials, and new energy as an emergent technological revolution on the scale of the Industrial Revolution. The opportunity to seize the unfolding technological revolution is ‘fleeting’ and the spoils of history await those who can successfully translate technology into power and prosperity. For Beijing, against the backdrop of China’s history of missed opportunities, US actions to deny its access to TSMC are freighted with a sense of foreboding that likely informed Xi’s prediction of ‘high winds and even stormy seas’ in his report to the Twentieth Party Congress. That is, for China’s leaders, acquiring world-leading capabilities in science and technology is central to the broader goal of ‘recovering’ national strength, dignity, and prosperity — an objective described by Xi as ‘growing strong’ 强起来 and achieving National Rejuvenation. Taiwan, by offering a version of Chinese modernity that differs from Xi’s ‘Chinese-style modernisation’ but has also successfully developed world-leading capabilities in a technology central to the new technological revolution (that is, semiconductors), represents an existential threat to the Party’s claim to being the sole steward of Chinese civilisation. In this respect, power and history converge in the ‘problem’ of TSMC.

Towards Decoupling

The Biden administration’s move on 7 October 2022 to significantly broaden technology export restrictions on Chinese semiconductor firms was the latest major step in an unravelling in relations over a decade or more.

Since at least the issuance of the US White Paper on China in 1949, Beijing has been concerned about American subversion, which evolved into a fear of containment during the Cold War. This translates into a longstanding discomfort with its dependence on foreign, and especially American, technology. This discomfort informed China’s renewed drive for technological self-sufficiency in 2006 with the issuance of its National Medium and Long-Term Plan for the Development of Science and Technology (2006–2020), the techno-nationalist ideas of which took shape in the Made in China 2025 initiative.

Since the release of the State Council’s 2014 Outline, the Chinese State has intensified its campaign to increase self-sufficiency in semiconductor technology. The first major pillar of this effort was the establishment of the two so-called Big Funds, capitalised in 2014 and 2019 with a total of 343 billion yuan. These are state-funded investment vehicles designed to support China’s domestic semiconductor industry. They were complemented by generous tax, land-use, and financing policies. The second pillar was an aggressive international mergers and acquisitions drive, often funded by capital from the Big Funds, to acquire overseas talent and technology. These strategies, combined with China’s willingness to use its increasing economic and military power in ways potentially damaging to American interests, alarmed business, political, and military constituencies in the United States and elsewhere, leading to an American policy response with two dimensions.

The first is a strategy to constrain China’s advanced semiconductor capabilities for the stated reason of safeguarding US national security. Starting in 2019, the United States utilised its dominance of the research and development that underlie the global semiconductor supply chain to target China’s two most important semiconductor companies: the semiconductor design company HiSilicon (a Huawei subsidiary) and foundry player Semiconductor Manufacturing International Corporation (SMIC). Both firms were added to the US Bureau of Industry and Security’s Entity List, which names companies and individuals subject to licence-based trade restrictions. The US Foreign Direct Product Rule (FDPR), meanwhile, restricted HiSilicon’s access to third-nation suppliers that use US technology, including TSMC, for advanced manufacturing.

The United States’ diplomatic strategy to convince allies and partners to constrain China’s advanced semiconductor capabilities has scored key victories. Most recently, Japan announced — without naming China — that it plans to impose export restrictions on twenty-three types of semiconductor manufacturing equipment. Dutch company ASML, the world’s monopoly supplier of extreme ultraviolet (EUV) lithography, has withheld or restricted the sale of key manufacturing equipment to Chinese firms. Without EUV lithography machines, SMIC will be unable to manufacture commercially at leading-edge nodes of five nanometres and below. Logic chips of that complexity — over which TSMC has a near production monopoly — are vital to advanced industrial economies because they enable the most powerful computational capabilities.

The second US policy response is a state-led effort to ensure US leadership in semiconductor technology and the reshoring of production of advanced semiconductors, for which the United States currently depends on Samsung and TSMC. The enactment of the CHIPS and Science Act on 9 August 2022 appropriated US$52.7 billion dollars to this end, of which US$39 billion is for manufacturing incentives.

In an important speech on 16 September 2022, National Security Advisor Jake Sullivan signalled an expansion of US technological containment of China. He discarded the previous approach of maintaining ‘relative’ advantages over competitors in a small subset of critical technologies: ‘Given the foundational nature of certain technologies, such as advanced logic and memory chips, we must maintain as large of a lead as possible.’ He also conceptualised technology export controls as ‘a new strategic asset in the US and allied toolkit to impose costs on adversaries’. On 7 October 2022, the Department of Commerce’s Bureau for Industry and Security issued a set of rules that restrict China’s ability to obtain advanced computing chips, develop and maintain supercomputers, and manufacture advanced semiconductors. At the core of these rules is a broadening of the scope of companies and persons restricted from selling to China and the deployment of the FDPR against a further twenty-eight Chinese advanced computing companies, preventing them from benefiting from US-origin technology that would enable access advanced semiconductors (defined as sixteen nanometres or below) for logic chips.[5]

As the decoupling of American and Chinese supply chains continues, there are implications for TSMC and its function as a deterrent to war.

Declining Deterrent: Taiwan’s ‘Silicon Shield’?

In her article in the November–December 2021 issue of Foreign Affairs, entitled ‘Taiwan and the fight for democracy’, Taiwanese President Tsai Ing-wen referred to her country’s semiconductor industry as ‘a “silicon shield” that allows Taiwan to protect itself and others from aggressive attempts by authoritarian regimes to disrupt global supply chains’. There was a degree of consensus among technologists and those engaged with global trade that TSMC acted as a strong deterrent to a hot war over Taiwan. Before the United States severed China’s access to TSMC’s manufacturing capabilities, both Chinese and American corporations were dependent on TSMC for the production of their leading-edge logic chips. TSMC’s factories operate under specific conditions and depend on uninterrupted sources of materials, water, and energy, as well as the highly trained scientists and professionals that operate them. A hot war would imperil these conditions and prove disastrous for both US and Chinese technological ambitions. But American measures to cut off China from TSMC’s advanced logic-chip manufacturing capabilities reduce the costs to China of any disruption to TSMC caused by war, thereby decreasing the deterrent effect of the ‘silicon shield’.

If technologists approached the question of war over Taiwan in terms of the stabilising role of TSMC, military planners saw the problem in terms of relative military capabilities. While the enormous costs of any war are obvious, some military experts are expressing concern about the deterrent effect of US military capabilities. Oriana Skyler Mastro of Stanford University has written that, in late 2020, her contacts in the Chinese military expressed for the first time the belief that the People’s Liberation Army (PLA) could successfully invade Taiwan. A March 2023 piece by veteran defence intelligence officer Lonnie Henley offered a sobering assessment of US military capabilities to overcome a sustained Chinese blockade of Taiwan. If the Chinese side perceives a favourable military balance or tentative American resolve, it will only further destabilise an already fragile status quo.

The strategic situation surrounding Taiwan is deteriorating, as longstanding and irreconcilable Chinese and American strategic interests with respect to the island move to the surface. The visit to Taiwan of Nancy Pelosi’s delegation on 2 August 2022 precipitated extensive military exercises by the PLA Eastern Theatre Command that effectively blockaded the island and triggered an increase in military activity in the Taiwan Strait. In his report to the Twentieth Party Congress in October, President Xi reaffirmed that unification with Taiwan ‘will certainly be realised, and can certainly be realised’, preferably by peaceful means, but by other means if necessary. Around the same time, US Secretary of State Antony Blinken and Chief of Naval Operations Admiral Mike Gilday both asserted the possibility that China’s timeline for unification with Taiwan had been brought forward.

While the looming danger of American power is a constant in the Party’s collective psyche, at the Two Sessions in March 2023, Xi for the first time squared off against the United States directly. He named the ‘unprecedentedly severe’ threat of American-led containment, foresaw a deteriorating international environment in which ‘the risks and challenges China faces will only become more and more severe’, and used a more decisive formulation to signal that reunification with Taiwan is absolutely integral to the destiny of the Chinese nation. Xi’s carefully chosen words matter, and these rhetorical shifts indicate that Beijing’s strategic posture is hardening against the perceived Western threat. The gravity of such pronouncements should not be underestimated.

Wartime Stories

Amid worsening relations and as the fabric of the globally integrated supply chain in advanced technology continues to fray, both Washington and Beijing are employing wartime metaphors and rhetoric to inspire national efforts for strategic security in semiconductors.

In his remarks delivered on 16 September 2022, Jake Sullivan referred to the CHIPS Act as ‘an investment larger than the real cost of the Manhattan Project’ — the United States’ era-defining acquisition of the atomic bomb, which ended the Pacific War and laid the foundation for the postwar order that China sees as preserving American interests. China’s leaders, state media, and the scientific community have long touted the Two Bombs, One Satellite 两弹一星 achievement of the Mao Zedong era as the model for China’s proven ability to realise technological breakthroughs that dramatically improve its security situation. China’s successful testing of an atomic bomb through the Two Bombs, One Satellite program in 1964 provided an effective deterrent to US encroachment into Asia and attack from the Soviet Union, with which it had severed relations. In a January 2021 interview, the prominent scientist and Fellow of the Chinese Academy of Engineering Li Guojie 李国杰 referred to lithography machines, etching technology, and EDA semiconductor design software as the ‘Two Bombs One Satellite project for the new era’.

Achieving self-sufficiency in core technologies that convey strategic advantage now sits at the centre of China’s economic model. This was reinforced by bureaucratic reforms announced at the Two Sessions that restructured the Ministry of Science and Technology to focus on breaking technological chokepoints. China’s quest for strategic autonomy in a febrile geopolitical context recalls the 1950s and early 1960s: it signifies a broadened role for the Party-State and a likely return to major national technology projects led by scientists who will devote their efforts to the patriotic cause. Mao called such reliable technocrats ‘red and expert’ 又红又专.

Despite SMIC’s reported breakthrough in manufacturing at seven nanometres, the medium-term prospects for China’s advanced semiconductor capabilities are not bright. It is uncertain how the US Department of Commerce’s rules will be implemented, but the stated intention of the Biden administration, building on the strategy of the Trump administration, is to utilise its extraterritorial reach to contain China’s development in advanced semiconductor technology to the greatest possible extent. The wheel of decoupling is now turning with its own internal momentum.

Conclusion

Since the 16th century, the world has gone through several revolutions in science and technology, each of which has profoundly shaped the structure of global power. In a sense, strength in science and technology determines the changes in the balance of political and economic forces in the world, and also determines the future and destiny of all countries and nations.[6]

— Xi Jinping, 9 June 2014

The lessons of history are never far from President Xi’s mind. He gave the above speech in 2014, which he observed was a Jiawu 甲午 year in the traditional Chinese calendar of sixty-year cycles — one of ‘special meaning’. The most famous Jiawu year in modern Chinese history was the disastrous year of 1894 when the Sino-Japanese War broke out, resulting in a humiliating peace treaty that granted sovereignty over Taiwan to the Japanese Empire. Xi’s mention of the Jiawu year freights China’s pursuit of technology with existential significance and indirectly links it to the fate of Taiwan.

From his recent language at the Two Sessions, President Xi appears to perceive that the Party’s protracted struggle against the American-led capitalist West has entered a new and potentially decisive phase. In attempting to deny China the very lifeblood of the new technological revolution — advanced semiconductors — the United States has struck at the heart of both Beijing’s anxieties and its ambitions. For US policy not only threatens China’s ability to rectify its history of missed technological revolutions; in doing so, it also imperils Xi’s vision for a rising Chinese world order that would use control over Taiwan to break through the American postwar ‘island chain’ containment strategy. In the narrow battle for technological primacy and the broader contest of systems between Beijing and Washington, history, power and destiny converge on Taiwan.

References

[1] Author’s own translation. For a bilingual version of this speech, see Wang Zichen, ‘Xi Jinping’s speech on science & tech on May 28, 2021’, Pekingnology, 9 June 2021, online at: https://www.pekingnology.com/p/xi-jinpings-speech-on-science-and?s=r

[2] Xinhuanet, ‘Xi Jinping delivered an important speech at the closing of the Fourteenth National People’s Congress in Beijing 十四届全国人大一次会议在京闭幕 习近平发表重要讲话’, Xinhuanet, 13 March 2023, online at: http://www.news.cn/politics/2023lh/2023-03/13/c_1129430109.htm

[3] This article uses the Party’s translation, ‘reunification’, for the Chinese term 统一, putting it in quotation marks to signify that Taiwan and mainland China have never been unified under the rule of the CPC.

[4] Xinhuanet, ‘Xi Jinping: Control key technology in own hands 习近平: 把关键技术掌握在自己手里’, Xinhuanet, 9 June 2014, online at: http://www.xinhuanet.com/politics/2014-06/09/c_1111056694.htm

[5] Access to advanced NAND and DRAM memory chips is also targeted.

[6] Xinhuanet, ‘Xi Jinping: Control key technology in own hands 习近平: 把关键技术掌握在自己手里’, Xinhuanet, 9 June 2014, online at: http://www.xinhuanet.com/politics/2014-06/09/c_1111056694.htm

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This was not the first time that Kuomintang 國民黨 (KMT, or Nationalist Party) political heavyweights have visited mainland China for the sake of paying respects to their forebears. Lien Chan 連戰, who served in positions ranging from chair of the KMT to premier and is widely viewed as one of the key architects of the ‘1992 Consensus’, the current formula by which Taiwan and China are claimed to be part of the same polity, has visited China a number of times since 2005 on this basis.

Destinations visited by Lien, whose family has been in Taiwan since the Ming dynasty (1368-1644), included his ancestral tomb in Fujian as well as his grandmother’s grave in Xi’an, where he himself was also born. In 2018, Lien Chan met Chinese President Xi Jinping during a trip to China that Lien claimed was for ‘ancestor worship’.

Previously, as a gesture toward local Taiwan identity, Ma himself was in the practice of visiting a village in Taiwan where all the residents were surnamed ‘Ma’. He did this although he had no actual family roots there. The village deliberately courted him for tourism purposes, and Ma would eventually claim that he believed they shared common ancestors.

Visiting ancestral graves can serve as a form of political messaging. Ma visiting China under such auspices was seen as a means of emphasising cultural and historical links between China and Taiwan, whose ethnic Han residents are descended from individuals who originally came from China, many of them in the seventeenth century or other prior waves of migration that predated the KMT’s retreat to Taiwan after the Chinese Civil War (1945-1949). No surprise, then, that Ma would emphasise his view of Taiwanese as Chinese during the trip, stating that ‘We are all Chinese’. Ma’s statement provoked outrage, particularly at a time when the historically independence-leaning Democratic Progressive Party (DPP) is in power, and in which polling shows Chinese identity is on the decline in Taiwan.

A speech given by Ma at his ancestral tomb, delivered in Hunanese, was among the events on Ma’s trip that attracted a great deal of international attention. Yet most of the stops on Ma’s trip had to do with the history of the Republic of China (ROC) on the mainland of  China, where the KMT were in power until the founding of the communist People’s Republic of China (PRC) in 1949. The focus was on the Sino-Japanese War. As such, Ma visited Sun Yat-Sen Mausoleum and the former Presidential Palace in Nanjing, which served as the ROC capital from 1927 to 1937. He also traveled to Changsha, Chongqing, Hunan, Shanghai, and Wuhan, visiting key sites in those cities that had to do with the Sino-Japanese War, such as the Sihang Warehouse in Shanghai, the site of a historic battle, and the Memorial Hall of the Victims in Nanjing Massacre by Japanese Invaders. Ma’s stopover in Wuhan provoked some outrage in Taiwan, after the mainland press reported him visiting an exhibition about the city’s fight against COVID-19 at which he praised China’s efforts against COVID-19.

Ma claimed before the trip that he would not meet with any high-ranking Chinese government officials while in China, and Beijing was not on the itinerary. He did meet, however, with Taiwan Affairs Office director Song Tao 宋涛 during the trip. KMT vice chair Andrew Hsia 夏立言 has similarly claimed no intention to meet with Chinese officials during trips to China after Nancy Pelosi’s visit to Taiwan in August 2022, and yet such meetings still happened.

It’s likely that the current DPP administration of Tsai Ing-wen 蔡英文required Ma, who travelled to China with a group of students and aides, to turn in an itinerary of his intended destinations before the trip. Yet it is possible that Ma did not state that he intended to meet with Chinese officials. The Tsai administration had, in fact, blocked some travel by Ma after the end of his presidency, such as refusing to allow him to travel to Hong Kong shortly after he left office. They cited the security risks of allowing someone who had until recently had access to classified information to travel to China.

The KMT has increasingly leaned into the narrative that the DPP is politically persecuting its opponents, carrying out a ‘Green Terror’ worse than the White Terror, in which the KMT executed tens of thousands in the name of fighting Communism. Even if, quite obviously, there are no mass killings in Taiwan today, it is likely that the Tsai administration wishes to avoid furthering this perception. The KMT has amplified criticisms of the Tsai administration for actions such as not renewing the broadcast license of KMT-leaning television network CtiTV, whose owner Tsai Eng-meng 蔡衍明 has been open about his interest in promoting positive views of China in Taiwan in past years, and which is widely watched among members of KMT and affiliates in the broader pan-Blue camp. This is probably one of the reasons why Ma could meet with Song Tao without any consequences.

In 2015, Ma had been the first Taiwan leader since the Chinese Civil War to meet with his Chinese counterpart, when he met President Xi Jinping in Singapore. Some speculated he would meet Xi again, but this didn’t happen, likely because of the potential damage to the KMT’s 2024 election campaign. Cross-strait issues loom large and the KMT cannot afford to be seen as overly friendly with the CCP leadership, even if it wishes to engender the perception that it can conduct relations with the CCP in a way that the DPP cannot.

The DPP and its political affiliates, known as the pan-Green camp, would have likely been outraged had such a meeting taken place. On the other hand, the pan-Green camp, has pushed the narrative that Ma’s trip involved a number of indignities in which Ma was not treated with the respect that a former head of state should be accorded. For example, his security detail was not allowed to carry firearms on the trip despite no such restrictions on Lien Chan’s entourage.

The pan-Green camp has also framed Ma as himself denigrating the nation. Ma did bring up the name ‘Republic of China’ numerous times during his trip, including claiming to a group of Chinese students that the ROC constitution applied to the Chinese mainland. But the pan-Green camp criticised Ma for the occasions in which he declined to refer to the ROC or the Minguo calendar that counts the number of years since the establishment of the ROC (it is currently Minguo 112). Most of all, they mocked Ma for referring to the historical ROC president Sun Yat-sen and saying ‘I also became “that”’ to avoid specifying his job title and upsetting his hosts, who don’t recognise the legitimacy of the ROC or the office of its President today.

There had also been speculation that Ma might meet with CCP chief ideologist Wang Huning 王沪宁, as Andrew Hsia had done, to hammer out a new cross-strait consensus to supersede the 1992 Consensus. Such speculation also accompanied Hsia’s meeting with Wang in February, though the final result of that meeting had been a doubling down on the 1992 Consensus.

Ma did not meet with Wang, and he also emphasised the importance of the 1992 Consensus after returning to Taiwan. However, it has been noted that during the Ma-Xi meeting in 2015, the two leaders’ ranks far exceeded those of the representatives involved in the 1992 meetings, such that it was possible to speak of a new ‘2015 Consensus’, but no such concept gained traction at the that juncture.

KMT leaders seem to have been cognisant for some time that the 1992 Consensus needs an update. Current chair Eric Chu 朱立倫 and preceding chair Johnny Chiang 江啓臣 both originally suggested dropping the 1992 Consensus after taking office, then quickly reversed course in the face of opposition from party heavyweights such as Ma who had played key roles in cementing it. Either way, Ma’s trip to China demonstrates that the KMT is still leaning into the claim that it is the only party in Taiwan able to conduct stable cross-strait relations with the People’s Republic of China, and communicate with the CCP. The timing of the trip, by design or by coincidence, coincided with a visit to the US by Taiwanese president Tsai Ing-wen, during which she met with US Speaker of the House Kevin McCarthy.

Given that China launched military drills around Taiwan after the Tsai-McCarthy meeting, as it did after Pelosi’s visit to Taiwan, the KMT has claimed that Tsai’s meeting with McCarthy recklessly endangers Taiwan’s future. By contrast, Ma’s trip to China is positioned as an earnest attempt to dial back tensions. With missiles falling just offshore, however, the DPP could easily retort that the KMT’s actions are useless.

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Australia is increasingly concerned about China’s military ambitions. The Defence Strategic Review 2023, released on 24 April 2023, suggests that ‘China’s military build-up is now the largest and most ambitious of any country since the end of the Second world War’. Whether the statement is true or not, it warns that China’s military rise, ‘without transparency or reassurance to the Indo-Pacific region… threatens the global rules-based order…that adversely impacts Australia’s national interests’. According to the Lowy Institute Poll 2022, 75 percent of Australians believe that China is very likely or somewhat likely to become a military threat to Australia in the next twenty years; 88 percent said they were either very or somewhat concerned about China potentially opening a military base in a Pacific Island country.

The governments of the United States (US) and its allies are certainly responding to China’s military rise. The Quadrilateral Security Dialogue (QUAD), a diplomatic and security network consisting of Australia, the US, India and Japan, was revived in 2017 to promote ‘an open, stable and prosperous Indo-Pacific that is inclusive and resilient’. Since 2015, the US Navy has been patrolling in the South China Sea. By 23 March 2023, the US Navy has conducted 43 reported freedom of navigation operations in the area. Particularly, during the Trump administration, it navigated once every two months between 2018 and 2020. Moreover, in September 2021, Australia, the United Kingdom (UK), and the US announced a trilateral security pact, known as AUKUS. On 13 March 2023, the three countries agreed to increase nuclear submarine (SSN) port visits and training in Australia. More significantly, Australia will purchase at least three Virginia-class SSNs from the US in the 2030s and build its first SSN with technical support from the two countries in the 2040s.

Some media outlets have been hyping up the possibility of war with China, suggesting China will invade Taiwan by 2026 or engage in a war with the US over freedom of navigation in the South China Sea. However, many China analysts have argued these claims are exaggerated and ‘devoid of concrete analyses on China’s intention and capability’. So, how much should Australia and its allies fear the PLA? While there are numerous intelligence and defence reports available, mostly from Washington, the public needs more context to understand China’s military rise.

Military Transformation Under Xi Jinping

Amidst China’s economic development, it has steadily increased its defence spending and military capability over the past three decades. According to the Stockholm International Peace Research Institute (SIPRI), China’s military budget has increased by an average of 13 percent annually, with spending around 5 percent of the government’s total budget throughout the last decade.[1] The PLA has developed numerous new types of military equipment, including the J-20 fighters, Jin-class nuclear-powered ballistic missile submarines, Shang-II-class SSNs, aircraft carriers, DF-41 Intercontinental Ballistic Missiles (ICBMs), and other materiel researched, designed, and built in China.[2]

China’s military rise appears to have become more ambitious during the mid-2010s. The country has been in the thrall of the ‘strong army dream’ 强军梦, an integral part of the goal of national rejuvenation. Xi Jinping, who is the Chairman of the Central Military Commission, also made a few speeches on China’s military modernisation. For instance, in 2013, he advocated building armed forces that would ‘obey the Party’s command, that are able to fight and to win, and that maintain excellent conduct’ in order to ‘safeguard national sovereignty, security, and development interests’. In a series of speeches around 2016, he described the goal of PLA modernisation as being to ‘achieve the goal of a strong army’ and ‘build a world-class military’. In 2017, he set out the three milestones for PLA development: basic mechanisation and major progress in ‘informatisation’ 信息化 by 2020, modernisation of national defence by 2035, and building an all-round world-class military by mid-century. As a political rhetoric, the military’s three milestones echo the Party’s ‘Two Centennial Goals’; as military objectives, Chinese commentators and scholars describe the world-class military as having world-class operational theories, personnel, training, weapons and equipment, law-based management, combat power, innovation abilities. Some also use these milestones to address the military’s shortcoming in mechanisation, informatisation, intellectualisation and operation.

The PLA has undergone several significant reforms during this period. In 2015, the People’s Liberation Army Rocket Force (PLARF) was established to coordinate China’s arsenal of land-based ballistic missiles, including nuclear weapons. In 2016, the PLA reorganised its seven theatre commands into five, each designed to counter different security threats: Eastern Theatre Command is responsible for Taiwan, Southern Theatre Command for the South China Sea, Western Theatre Command for the Sino-Indian border, and Northern Theatre Command for North Korea. In 2019, the Central Military Commission adopted a new military strategy for the PLA titled ‘Military Strategic Guidelines for the New Era’ to address the shift of strategic assessment outlined in the 2019 National Defence White Paper aimed at countering growing threats from the US and Taiwan. However, as Joel Wuthnow and M. Taylor Fravel have suggested, this ‘new’ strategy was proposed against the backdrop of Xi’s ideological consolidation and indicated little operational or strategic changes. Concepts from previous military doctrines, such as ‘near sea active defence’, ‘informatisation war’ and ‘integrated joint operations’, are still included in the 2019 military doctrine.

Xi’s speech at the Two Sessions merely summarises China’s continual military development, rather than signifying substantial changes in the timeline of national defence modernisation. The PLA is still gradually addressing its technological and operational limitations. The State Council Institutional Reform Plan 2023 unveiled significant steps to restructure the Ministry of Science and Technology, including the establishment of a Central Commission on Science and Technology 中央科技委员会 to enhance the Party’s leadership over scientific and technological development.

The reform intended to ‘[push] forward the building of a national innovation system and structural scientific and technological reform, [study] and deliberating major strategies, plans and policies for the country’s sci-tech development, and coordinat[e] efforts to resolve major issues of strategic, guiding and fundamental significance in the sci-tech sector’. Although the PLA’s structure is not affected by the reform, the goal of the reform, including to address the limitation of technological self-reliance and promoting integrated research between civil and the military, falls in line with some of the PLA’s objectives in its military modernisation. Defence science and technology has been crucial in China’s technological innovation, so institutional reform in science and technology is relevant to national defence modernisation. Following the State Council reform focused on the sci-tech sector this year, we should see further reforms within the PLA to ground force, logistics and maintenance support, military staff training, and integrated warfare.

Will China Wage a War?

The large-scale military exercises around Taiwan in early April (as a response to President Tsai Ing-wen’s meeting with US Speaker of the House Kevin McCarthy) suggest that the PLA has become more capable in integrated warfare and deployment of aircraft carriers. Nonetheless, military capability building is a gradual process. While the PLA has the budget and resources for research development, personnel training lags behind technological advances. For instance, a report from the US Naval War College suggests that the Chinese navy has ‘faced tremendous pressure to keep pace with the rapid expansion and modernisation of the [naval] surface fleet and its growing mission set’. According to an article published in a Chinese military magazine last year, the PLA Navy needs at least 200 pilots for its aircraft carriers, but it lacks of a fighter trainer specifically designed for carrier-based operations. Therefore, although the PLA Navy built its third aircraft carrier last year, construction of the fourth one was stalled. More importantly, apart from the a border skirmish with Vietnam in 1979 and a minor naval battle at the Johnson South Reef in 1988, also against Vietnam, the PLA has not fought in a war for more than four decades. It still lacks experience in warfare.

Multiple organisations in the US, including the US Air Force and the Centre for a New American Security (CNAS), have already simulated few war games of the PLA pursuing military operation against Taiwan, but with varying results. Some suggest that in a war between China and Taiwan, China would likely win. However, we should factor in US domestic political consideration in the hype of a war scenario. The outcome of those war game simulation needs to be weighed against the fact that there are often intentionally skewed in favour of US forces in order to strive for more resources for national defence.

Whether China has the capability to wage war, and whether China will go to war are two different questions. As the US Director of National Intelligence Avril Haines told the House Intelligence Committee, ‘It is not our assessment that China wants to go to war’. The concept of a world-class military, as Taylor Fravel, an expert in Chinese military strategy, argued, does not ‘illuminate the PLA’s global ambitions or how it envisions using force’. It has limited geopolitical implication of where China would project its military power. Rather, it expresses ‘China’s aspiration to become a leading military power in the world’. It is essential to distinguish the differences between China’s military ambition and policy outcomes.

Launching a war in the Indo-Pacific is complicated. Strategically as well as politically, the PRC would prefer to win Taiwan without fighting. It needs to consider the consequences of sanctions and sea lane supply blockages from the West if there is a war across the Strait.

Will AUKUS Help to Deter China’s Military Rise?

There is no doubt China’s military capability is on the rise. The AUKUS security pact has been described as a ‘demonstration of unity and resolve is as powerful deterrence signal to the region’. To the US, AUKUS indicates its commitment in maintaining its pivotal role in the Indo-Pacific. To Australia, AUKUS suggests Australia is more likely to rely on ‘the US committing to the “integrated deterrence” approach that the Biden administration set out in its 2022 Indo-Pacific strategy’. As Ben Herscovitch suggests, ‘if Australia chooses to deploy its nuclear-powered submarines in support of a US-led effort to defend Taiwan, then AUKUS will have made China’s military goals harder to achieve’.

However, it is important to note that the submarines themselves do not serve as a deterrent. The AUD 368 billion deal is a long-term process, and the first of the new submarines are not expected to be delivered until at least the 2040s. By that time, it is likely that the PLA will have developed sufficient means for countering the AUKUS-class submarines, such as anti-ship missiles, SSNs, and ballistic missile nuclear submarines, which China is currently building. In fact, the US Congress Research Service report suggested in 2022 it is likely China will have a new class of SSN by the mid-2020s. Furthermore, China’s naval development consists of an aspiration to expand its influence globally, beyond the close water of Taiwan, in which a submarine deal is simply incapable to deter.

What, then, is AUKUS for? Since the deal was announced in March 2023, Australian experts have debated its strategic implications.[3] As the Lowy Institute’s Sam Roggeveen submits, there is a bigger question the Albanese government must answer: ‘how exactly will these submarines make Australia safer’? Australia must take China’s military rise seriously, but it is not helpful to assume this will lead to war. Instead, Canberra should approach this comprehensively and cautiously, and develop a clearer understanding of China’s military rise under Xi Jinping as well as its strategic goals and institutional reforms. There also needs to be a wider and more constructive public debate about the best ways to respond to China’s rise and safeguard Australia’s security in the broadest sense of the term.

References

[1] However, the official defence budget in China can sometimes be misleading, as some research and development may fall under the category of science and technology. See: China Power Team, ‘Making sense of China’s government budget’, China Power, 15 March 2023, online at: https://chinapower.csis.org/making-sense-of-chinas-government-budget/

[2] For China’s naval capability building, see: Chan, Edward Sing Yue (2021), China’s Maritime Security Strategy: The Evolution of a Growing Sea Power. Routledge. Congressional Research Service (2022), China Naval Modernization: Implications for U.S. Navy Capabilities—Background and Issues for Congress, RL33153.

[3] See: Rory Medcalf, ‘The AUKUS debate needs clear reasoning, not hot air’, Australian Financial Review, 24 March 2023, online at: https://www.afr.com/policy/foreign-affairs/the-aukus-debate-needs-clear-reasoning-not-hot-air-20230322-p5cugo; Stephen Nagy and Jonathan Ping, ‘The end of the normative middle power ship’, Australian Outlook, 13 March 2023, online at: https://www.internationalaffairs.org.au/australianoutlook/the-end-of-the-normative-middle-power-ship/; Matthew Sussex, ‘Time to grow up: Australia’s national security dilemma demands a mature debate’, The Conversation, 24 March 2023, online at: https://theconversation.com/time-to-grow-up-australias-national-security-dilemma-demands-a-mature-debate-202040; and Sam Roggeveen, ‘What “Utopia” got
wrong about China and defence policy’, The Interpreter, 6 April 2023, online at: https://www.lowyinstitute.org/the-interpreter/what-utopia-got-wrong-about-china-defence-policy

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One of the most fertile grounds for such personalised speculation in recent years has been the regulatory offensive against the platform economy. Why, for instance, did Jack Ma 马云 disappear from public view for three months after the Ant Financial IPO — slated to be the largest in history – was cancelled? Did Xi Jinping personally axe the deal because Jiang Zemin’s grandson, Jiang Zhicheng, was a major investor through Boyu Capital, a private equity firm he co-founded, as one shot in a larger, internecine battle? Did Tencent get into trouble, as an academic colleague attempted to convince me at a conference, because it had been prominently posting information favourable to Li Keqiang in the run-up to the 20^th Party Congress? What happened to Bao Fan 包凡, the rainmaker for big tech investment deals, who resurfaced in early March after being reported as missing by his firm in late February; it was subsequently revealed that he is assisting authorities with an inquiry into Cong Lin the former president of Renaissance Holdings, an investment company he founded.

The standard story presented by foreign news media of what became known in the West as the ‘tech crackdown’ is as follows: Xi Jinping got angry with Jack Ma after the latter gave a speech, in October 2020, to the good and the great in China’s financial sector, at the ‘Bund Summit’ of China Finance 40, a leading economic think tank. Ma belittled regulators and government banks as being behind the times, directly opposing the message of greater regulatory prudence delivered by Wang Qishan at the same meeting, that same morning [1]. Seeing an opportunity not just to take an uppity Ma down a peg, but also to take a swing at the interests of the Jiang family, Xi killed off the Ant Financial IPO and, for good measure, fired off a barrage of rules to constrain other platform companies and ensure absolute Party control over the digital sector. Predictably, this ‘crackdown’ has gone too far. Faced with catastrophic consequences in the platform economy, and economic malaise across the board, the leadership is now seeking ways to roll it back and return to growth.

This common narrative attempts to provide an explanation for something Western observers have found difficult to fathom: why would China inflict so much damage on the most innovative sector of its economy? Moreover, it’s an explanation that confirms our prior assumptions: authoritarian states are going to do authoritarian things, Xi Jinping is the puppet master of the entire Party apparat, Chinese policy decisions are primarily taken in view of top leaders’ personal political interests, and as long as those decisions diverge from the dictates of neoliberal market economics, they are predictably misguided and incompetent.

The problem with that story, however, is that it is highly selective in many instances, and plain incorrect in others. This regulatory wave was not a sudden whim of Xi Jinping’s, but had been in preparation for quite some time. The drafting of the Personal Information Protection Law 个人信息保护法, for instance, started in 2018. In 2019, the State Council published a document outlining the problems and abuses it saw existing within the platform economy, and listing the regulatory tasks intended to be undertaken, as well as the ministries to which those would be assigned. In other words, anyone claiming the regulatory offensive came out of nowhere simply wasn’t paying attention.

The problems identified in this 2019 document and elsewhere are real. For example, the success of platform companies depends on legions of immiserated delivery drivers and gig workers, as well as overworked programmers and software engineers. Third-party merchants, reliant on platform firms for their businesses, suffer from onerous contract obligations and monopolistic practices. Telecommunications fraud, enabled by platform firms’ lax data protection practices, is rife. Poor risk management practices in fintech had already caused the meltdown of the P2P lending industry, evaporating the savings of millions of retail investors.

Those elements are, however, far less dramatic and eye-catching than the disappearance or detention of high-profile CEOs or gossip about palace intrigue. Moreover, to assess them requires consistent engagement with the drudgery of analysing Chinese policy and regulatory documents — a calvary the great Belgian Sinologist Simon Leys (Pierre Ryckmans) memorably described as ‘akin to munching rhinoceros sausage, or to swallowing sawdust by the bucketful’. Doing so reveals a stack of dozens of texts, issued by multiple Party and government organs, which paint a somewhat more complex picture, where there is no single discernible cause or motivation, nor even clear evidence of much interagency coordination. Regulations in fintech, for instance, have evolved nearly in parallel with interventions in the realm of competition, or protection for consumers and workers more generally. Some of the fintech rules resemble market regulation initiatives undertaken elsewhere, most notably in the European Union. The Personal Information Protection Law, for instance reproduces many of the General Data Protection Regulation’s (GDPR) terms, concepts and mechanisms, defining largely similar legal grounds for personal information processing, introducing similar procedures for data transfer abroad and imposing similar levels of punishment for violations. New Chinese regulations on competition in the platform sector contain similar definitions for large-scale ‘gatekeepers’ to Europe’s Digital Markets Act.

Traversing the turgid prose of such documents is time-consuming. Journalists, think tank experts and even academics are rarely able to concentrate on tracing single policy areas across time, beholden as they are to the demands of their editors, to news cycles and the demands of immediate hot takes. The Chinese written language, too, forms a layer of encryption: many non-native readers (myself included) simply process Chinese documents far more slowly than texts in English. In those circumstances, it’s easier to reach for a standard narrative, spice it up with details of the latest scandal, and serve while it’s piping hot. Deep engagement with the matter at hand doesn’t necessarily carry a reward: ‘Chinese Regulators Attempt Incremental Improvement of Working Conditions for Gig Workers’ is a far less attractive headline than ‘Xi Jinping Assaults Jack Ma’s Empire’.

Doing the work requires taking Chinese policy thinking around certain questions seriously, and recognising that it might diverge from Western instincts for reasons other than the wielding of blunt authoritarian power. Consumer-oriented online services may be seen as the pinnacle of innovation in the United States, but policymakers in Beijing disagree somewhat. Beijing recognises that big tech has contributed in no small way to enhancing the convenience of Chinese citizens’ daily lives, but at the same time, does not believe it makes a durable contribution to the fundamental qualities of the Chinese economy. Instead, China’s techno-industrial policy under the Fourteenth Five-Year Plan (2021-2025) focuses on upgrading the efficiency and productivity of the manufacturing industry. Platform firms are expected to support that effort, for instance by providing innovative services in logistics and supply chain management. Cryptocurrencies, in the eyes of Chinese regulators, moreover, are mere vehicles for non-productive speculation and law-breaking, and consume vast amounts of electricity to boot. No wonder they have now been banned completely.

Beijing’s willingness to damage the fintech sector, which has lost over US$ two trillion in market capitalisation, for instance, becomes a lot more explicable when it is recognised that nearly all publicly traded Chinese fintech companies are listed on stock exchanges outside of mainland China. The shareholders receiving a haircut are, therefore, far less Chinese than one might initially think. However, to admit Chinese authorities might have good reasons for acting in the way they do implies that the Western political and economic model is not universally applicable, and undermines an easy dismissal of Chinese policy solutions. The fact is that China acts in many ways similar to, say, the EU, and the bureaucracy in Beijing is beset by the same pathologies that trouble Washington, Brussels, Canberra or any other capital.

A similar problem lies in discussions of the ‘end of the crackdown’. This phrase seems to imply the regulatory campaign was temporary, and the normal order of business will resume. This is incorrect: it is better to understand what happened as a ‘rectification’: the introduction of a new governance paradigm for a sector that Chinese authorities view as highly important and therefore in need of effective and strict regulation. Safety requirements in cars aren’t an effort to stop people driving, but to ensure they are not killed or maimed as often while doing so. Not only are the new rules here to stay, so are the structures designed to enforce them. The State Administration of Market Regulation, China’s relatively new competition regulator, has established a new Anti-Monopoly Bureau and hired scores of new enforcement personnel. Multiple recent policy releases suggest satisfaction with progress thus far, and there is no evidence that any department intends to roll back any of the measures that were introduced. If that results in the sector’s profitability being permanently depressed, so be it: those profits would have come from unsustainable or undesirable practices anyway. One can reasonably disagree with that logic, but we need to recognise why it exists in the first place.

The inability or unwillingness of much Western commentary and analysis to engage with the drudgery of deep policy analysis relate both to our human fondness for a good yarn, as well as a predisposition for making sense of China in ways that are psychologically comfortable to those of us who closely identify with the Western liberal order. However, that comes at a cost: we are less able to make sense of the Communist Party of China’s motivations and actions. This not only impacts our direct engagement with China, but also the broader world with which it is inextricably intertwined.

[1] See, for instance, The Economist, ‘China’s tech crackdown starts to ease’, The Economist, 19 January 2023, online at: https://www.economist.com/business/2023/01/19/chinas-tech-crackdown-starts-to-ease; Giulia Interesse, ‘Is China’s ‘Tech Crackdown’ over? Our 2023 regulatory outlook for the sector’, China Briefing, 22 February 2023, online at: https://www.china-briefing.com/news/is-chinas-tech-crackdown-over-our-2023-regulatory-outlook-for-the-sector/; Coco Liu, Zheping Huang and Sarah Zheng, ‘China’s tech giants lost their swagger and may never get it back’, Bloomberg, 24 June 2022, online at: https://www.bloomberg.com/news/articles/2022-06-23/china-tech-crackdown-eases-but-startups-worry-xi-may-up-regulatory-pressure 

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Women in Elite Politics 

Historically, only thirty-two females have ever held the top positions in the state and Party at the national level 正/副国级, commonly referred to as ‘Party and State Leaders’ 党和国家领导人. Among them, only six women have ever been full members of the Politburo — Ye Qun 叶群 (1969–1971), Jiang Qing 江青 (1969–1976), Deng Yingchao 邓颖超 (1978–1985), Wu Yi 吴仪 (2002–2006), Liu Yandong 刘延东 (2007–2017) and Sun Chunlan 孙春兰 (2012–2022). Two women, Wu Guixian 吴桂贤 (1973–1977) and Chen Muhua 陈慕华 (1977–1987), were alternate members 候补委员.

Unlike her predecessors, Wu Yi was the first female leader who made it to the top political circle in post-Reform China, and the first to do it without having been married to a Party or state leader. The three post-Reform female members of the Politburo have also served as Vice Premiers of the PRC’s State Council respectively in different time; Wu Yi (2003-2007) was in charge of foreign commerce, trade and health affairs, and Liu Yandong (2013-2018) and Sun Chunlan (2018 to present) were overseeing the broad portfolios of health affairs, education, and sports. There has never been a woman on the Politburo Standing Committee (PSC), which is the most powerful governing body of the CPC and has seven members today.

Although there is nothing new about the underrepresentation of women in elite politics, 2022 marks the first time since 2002 that women have been completely absent from the Politburo, which currently has twenty-four members. In the period leading up to the Twentieth Party Congress, Chen Yiqin 谌贻琴, the only current female provincial Party Secretary in China; Shen Yueyue 沈跃跃, President of the All-China Women’s Federation; and Yu Hongqiu 喻红秋, Deputy Secretary of the Central Commission for Discipline Inspection of the CPC, were all spoken of as likely to be promoted to the Politburo. None were, and only Chen made it onto the CPC’s Central Committee, becoming one of only eleven female members among the 205 full members, who make up 5.36 percent of the membership. The only small improvement was in the proportion of female representation in the overall Party Congress: out of 2,296 delegates, 27 percent (621) are women, compared to the Nineteenth Party Congress, which had about 24 percent women delegates.

The lack of explicit institutional quotas means there are no guarantees or protection of women’s representation in CPC politics. There have been no regulations or policies specifically aimed at promoting women cadres at the national level. In the latest Program for the Development of Chinese Women, a five-year plan for women’s development in major aspects, including economic participation, health, education, participation in decision-making processes, and social welfare, strategies related to political participation are vague and general. For example, ‘a certain percentage’ rather than a specific goal is required for proportional representation.

More emphasis is given to promoting women at the local level. The most recent published research on female provincial leaders shows that thirty-one women out of 276  governors and deputy governors, or 11.2 percent, were slected in 2018. Among the 2016/2017 cohort, there were thirty-four (9.1 percent) out of 375 members of provincial CPC standing committees. According to ‘Opinions on further improving the work of training and selecting female cadres and recruiting female Party members’, issued by the CPC in 2001, Party committees, governments, people’s congresses, and people’s political consultative conferences at provincial and prefecture-level jurisdictions should each have ‘more than one female cadre in its leadership’.[1] While the proportion is still considerably low, the gender quota in local governance at least is explicitly regulated in the official documents. Research shows that women’s representation in provincial leadership is not just tokenism; these female leaders have similar qualifications to their male counterparts. Although greater participation by women in elite politics does not necessarily mean that women’s interests are being represented, it is a starting point.

Current scholarship suggests that Chinese political leaders, in both Party and state systems, are selected and promoted based on the criteria of age, education, years of membership in the CPC and relevant career trajectory. While political allegiance continues to be the dominant factor, educational background and working experience have each played an important role in the progress of post-Mao elites in China. However, women are disadvantaged in all these aspects. They have fewer options to advance in politics because even official posts reflect a gendered division of labour, with women typically overseeing ‘soft’ areas such as health care and education while men manage such things as industry and development. This deprives women of the relevant social networks required to achieve higher public positions.[2]

Representing Women’s Interests Within the State

If women have limited access to the core of state power, how likely is it that the Party-State will formulate women-friendly laws and policies? Who represents women’s interests within the Chinese state? Theoretically, the National People’s Congress (NPC) is the highest organ of state power and has the authority to enact laws, amend the constitution, and elect members to the central state organs, and the State Council, chaired by the Premier, functions as the highest administrative body. Women hold less than half of the total seats in the NPC — there are 742 female deputies in the Thirteenth NPC, accounting for only 24.9 percent of the total 2980 seats. There are only nineteen women out of the 175 members of the current Standing Committee of the NPC; of the Standing Committee’s fourteen vice-chairpersons, only one is female. Given that the process of lawmaking in China is a ‘multistage and multi-arena’ process not only involving the NPC and its Standing Committee, but also the CPC and the executive branch of the state,[3] women’s substantive representation in the process is severely constrained.

National organisations for women seem to be the Party-State’s primary forums for demonstrating its commitment to women’s political participation while separating women from the mainstream political domain. There are two official women’s organisations in China: the National Working Committee on Children and Women (NWCCW) 国务院妇女儿童工作委员会, which is a government bureaucracy, and the All-China Women’s Federation (ACWF) 中华全国妇女联合会, a CPC-led  ‘mass organisation’.

The NWCCW, established in 1990, was the first and remains the only state-level government organ dedicated to the rights of women and children in China. Current director Sun Chunlan, who is also the Vice Premier of the State Council, has held the post since 2018. One of the committee’s three deputy directors, Huang Xiaowei 黄晓薇, has also been the vice president of the ACWF since 2018; the other two deputy directors are high-ranking male bureaucrats. The committee oversees China’s National Program for Women’s Development and National Program for Children’s Development.

However, the actual efficacy of the Committee in advancing the position of women is questionable. The Committee itself is not a policymaking institution, nor does it participate in the processes of policymaking by consultation or other visible means. Other than the programs it oversees, it is hard to find any substantial contribution that it has been able to make to women’s advancement. The absence of documentation of the NWCCW’s work could be the result of its relationship with the ACWF, which supervises and guides its work — a ‘mass organisation’ in charge of a government organ.

The ACWF

The ACWF, established by the CPC in 1948, has played an important role in pushing forward laws that advance women’s causes, including equality. The ACWF does not have any policymaking and legislative power, but it has the capacity to influence policy-making and legislative processes. An overlap in personnel also improves the likelihood of the ACWF’s policy advocacy reaching policymakers: the presidents and vice-presidents of federations at all levels simultaneously belong to the Standing Committees of the People’s Congress at the same level. The ability of these ACWF representatives to directly submit bills and proposals to the People’s Congress is convenient for the ACWF, but only to advocate for policies: it does not in any way guarantee that the ACWF’s proposals will be approved. Lobbying from both local federations and the ACWF is essential to persuade policymakers to support their proposed policies. It has directly participated in the drafting and revising of national policies and laws including the Marriage Law, the Law on the Protection of Women’s Rights and Interests, and the Anti-Domestic Violence Law. Because of its privileged relationship to the Party, the ACWF does the work of a national women’s governmental organ without actually being one. As a government official once pointed out, ‘we have no specific governmental department [for women’s advancement] in our country, but the Women’s Federation takes this responsibility and functions as a national institution for the improvement of women’s status’.

Established during the Party’s revolutionary emergence, the ACWF has over the years prioritised Party-directed assessments, inspections, activities, and projects. The ACWF’s work predominantly serves the Party-State’s broader interests and ideological goals. When advancing women’s rights has aligned with bigger plans, the ACWF has been able to leverage Party and state support; when it hasn’t, women’s interests have been subordinated to the needs of the Party-State.

Following Xi Jinping’s emphasis on ‘the unique role of women in the family’, family-centred discourses have become the focus of ACWF’s recent work, including its Family Happiness and Well-being Project 家家幸福安康工程 and the recently adopted Family Education Promotion Law 家庭教育促进法, that both intentionally and unintentionally reinforce the domestic role of women, traditional constructions of masculinity and femininity, and rigid gender roles within a patriarchal family structure.

The Party-State’s Gender Ideology under Xi

The sidelining of women in the PRC’s political sphere reflects the retrogressive gender agenda under Xi Jinping. Xi has particularly highlighted his idea of jia guo tianxia 家国天下, which considers families ‘an essential foundation’ for national development and social harmony. In the name of promoting Chinese traditional culture, the Party-State today draws on the conservative content of Confucianism, such as social harmony, respect for authority, obedience to superiors, devotion to the state, and protection of the family, to regulate people’s behaviour — and women’s behaviour in particular.[4] In his speech to the new leadership of the ACWF in 2018, Xi pointed out that ‘[the Women’s Federation] needs to help women strike a balance between family and work to become women of the new era who can take up social responsibilities while contributing to their families’. The party invokes Confucian values in the domestic sphere in a way that associates traditional ideas about marriage and family, including women’s domestic obligation and their subservience to men, with the preservation of social stability.

The Party-State has accordingly become more interventionist in matters of family and marriage. In 2020, the ACWF and the Ministry of Public Affairs jointly issued the ‘Instruction on Strengthening Educational Work on Coaching in Marriage and Family’ 关于加强新时代婚姻家庭辅导教育工作的指导意见. The document asserts the importance of ‘publicising and carrying forward the excellent traditional Chinese marriage and family culture’ and the necessity of ‘establishing pre-marital education and consultation’ to reduce conflicts within the family.

The Party-States paternalistic agenda includes the now compulsory thirty-day ‘cooling off’ window for couples who want to divorce, the newly adopted Family Education Promotion Law and the three-child policy. The emphasis on ‘women’s unique role in promoting family virtues’ exacerbates the essentialism of women’s domestic role, and along with pressure on young women to marry and ideally have three children, further disadvantages women when it comes to working in the political sphere.

Conclusion

In a nutshell, it is unlikely there will be a significant improvement in women’s status in Chinese politics in the coming years, both in terms of descriptive representation and substantial representation. Under Xi, in 2022, a general deterioration of women’s access to political power can be clearly observed in tandem with the promotion of the ‘traditional family virtues of the Chinese nation’.

References

[1] CPC Central Committee Organization Department, ‘Opinions on further improving the work of training and selecting female cadres and recruiting female Party members’ 关于进一步做好培养选拔女干部发展女党员工作的意见, 2001.

[2] Minglu Chen and Junyi Cai, ‘Women’s Access to Political Power: An Analysis of the Life Trajectory of Wu Yi’, in Cai Shenshen ed., Contemporary Chinese Female Celebrities, London: Palgrave Macmillan, 2019, p.171.

[3] Murray Scot Tanner, The Politics of Lawmaking in Post-Mao China: Institutions, Processes, and Democratic Prospects, Oxford: Clarendon Press, 1999.

[4] Xianlin Song, ‘Reconstructing the Confucian Ideal in 1980s China: the “Cultural Craze” and New Confucianism’, in John Makeham ed., New Confucianism: A critical examination, New York: Palgrave Macmillan, 2003.

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This article takes stock of recent developments in China-Russia strategic alignment from three often neglected angles. One has to do with the consistency of China-Russia cooperation. One is about growing military-technical cooperation. The third deals with the structural shifts in great power politics that drive China-Russia relations. The article also addresses the main weaknesses of China-Russia strategic cooperation as well as the impact of Russia’s invasion of Ukraine on it.

Consistent consolidation of bilateral cooperation

The current relatively high level of China-Russia strategic cooperation is not an ad hoc phenomenon. Nor is it a knee-jerk reaction to the deterioration of US-Russia relations in the aftermath of the Ukraine crisis or recent US-China tensions in Southeast Asia and beyond. It is a continuation of a consistent consolidation of China and Russia’s strategic partnership since the breakup of the Soviet Union. The steady expansion of China and Russia’s comprehensive mechanism of strategic cooperation has proven immune to episodical perturbations, progressing into what in alliance studies is defined as an advanced form of strategic cooperation.

This consistent trend is reflected in official statements, according to which the relationship has progressed from ‘good neighbourliness’ in the early 1990s to ‘constructive cooperation’ in the late 1990s to ‘comprehensive strategic partnership’ in 2001, then further on to ‘comprehensive strategic partnership of coordination’ in 2012 and a ‘comprehensive strategic partnership of equality, mutual trust, mutual support, common prosperity and long-lasting friendship’ in 2019. On 5 June 2019, Xi Jinping and Vladimir Putin upgraded China-Russia relations to ‘a comprehensive strategic partnership of coordination for a new era’. This progression highlights consistent consolidation of the alignment, its immunity to exogenous shocks, and the willingness of both sides to deal together with the challenges of the future.

The consolidation of China-Russia alignment materialised mostly in military-strategic terms, including the introduction of a comprehensive mechanism of military consultations at different levels. The number of joint military exercises, involving Army, Airforce, and Navy, in different parts of the world, as well as regular computer-simulated missile defence drills, significantly increased coordination between the two militaries. The critique and condemnation of US policies in Asia and elsewhere as ‘increasingly threatening’, as well as the proclamation of the intention of China and Russia to jointly resist the growing US threat, became an embedded norm of China-Russia security dialogue. Cooperation across economic and diplomatic dimensions, while not yet as strong, also steadily increased.

There have been ups and downs. Examples include a temporary stagnation in China-Russia military-technical cooperation in the mid-2000s and the occasional suspension of otherwise regular bilateral consultations. However, the overall trend is upward; viewed in its entirety, the relationship shows itself immune to short-term fluctuations. It is in this context that on 4 February 2022 the two leaders announced a ‘no limit partnership’ that ‘surpasses an alliance’ because it has ‘no forbidden areas’.

Then came Russia’s invasion of Ukraine. Beijing has tried to carefully distance itself from Russia with regard to Ukraine to avoid being affected by the global sanctions, which suggests at least one limit to the partnership – an unwillingness to be partners in economic adversity. However, China has procured more energy resources from Russia since the Russian aggression against Ukraine. Russia has become China’s biggest supplier of oil as Moscow sold discounted crude oil to Beijing amid sanctions over the Ukraine war. In May 2022, imports of Russian oil rose by 55 percent from a year earlier, reaching a record level and displacing Saudi Arabia as China’s biggest provider. Moreover, the continuing bilateral military exercises and joint air patrols over the Western Pacific, especially recent incidents of Chinese and Russian warplanes together entering South Korean air defense zone from the Sea of Japan, suggest that China is not distancing itself from Russia when it comes to the strategic aspects of the bilateral cooperation, even though China’s voting decision on Ukraine at the UNSC might suggest more neutrality than support.

Growing military-technical cooperation

Military-technical cooperation (MTC) has to do with the degree of military alignment between China and Russia and is ultimately a question of how technically prepared the two countries are for a hypothetical full-fledged alliance, including united military actions.

China and Russia have travelled a long way in terms of strategic cooperation since the early 1990s. Currently, China and Russia carry out twenty to thirty high-level security-related consultations every year, which is at the level of a functional alliance. This number excludes regional consultations between Chinese and Russian provinces and cities and exchanges between military academies.

Russia’s attitude toward a more comprehensive and interdependent MTC with China has evolved, with Moscow increasingly less wary of relying on China in this area. Political factors that used to constrain Russia in its MTC with China, which included concerns about China’s unlicensed reverse-engineering of weapons and potential competition with the cheaper China-made weapons on international markets, as well as worries about excessive dependence on China, have disappeared and interconnectedness has started to become the dominant tendency. Russia started to rely on China for such things as electronic components for its space programs, composite materials and technologies used in drone construction, and engines for warships, all of which result in closer military-technical interdependence. Russia’s tendency to consider China as not only a target market for its weapons but also a source of critical equipment and technologies has only consolidated in the context of its war in Ukraine. Willingly or not, Russia has reconsidered its previous defence-equipment-for-cash model of cooperation with China. The imposition of global sanctions on Russia, however, has made China more cautious about sending supplies to Russia and has incentivised the use of more complex and less traceable schemes in the bilateral transactions.

China and Russia have undertaken a growing number of joint military exercises in different parts of the world. For example, ‘Joint Sea-2015’ took place in the NATO-dominated Mediterranean, and ‘Joint Sea-2016’ became the first major exercise of its type to include China and a second country in the disputed South China Sea after the Hague-based tribunal overruled China’s claims on the waters under its nine-dash line claim. The increasing operational complexity of these joint exercises has laid the foundation for potential simultaneous joint military actions in multiple theatres of operation. This could enable China and Russia to draw the attention and capabilities of the US and its allies to a specific region, reducing their ability to react to, for example, Chinese actions in the Pacific or Russia’s in western Eurasia. This is one of the reasons why, in the context of Russia’s ongoing war in Ukraine, the US has paid so much attention to China’s potential military invasion of Taiwan. As some recent congressional reports specified, the US might struggle to win a war against China or Russia if forced to fight on two or more fronts simultaneously.

The degree of interoperability between Chinese and Russian forces has increased: recent joint military exercises have involved the creation of temporary joint command centres, tactical groups under a single command, and air groups implementing simulated attacks jointly. China and Russia have also started integrating their satellite navigation systems – China’s Beidou and Russia’s GLONASS. Huawei Technologies Group has also been facilitating China-Russia cyber integration by opening data centres in Moscow, St. Petersburg, Kazan, Novosibirsk, and Nizhny Novgorod.

A new height of military cooperation came with the announcement, by President Putin in October 2019, that Russia was actively helping China to create a missile attack early warning radar system. According to some assessments, the new system will be based on the Russian ‘Tundra’ satellites and ‘Voronezh’ modular ground-based radar stations set up in Chinese territory. The system will provide advance warning on potential incoming missiles’ trajectory, speed, time-to-target and other critical information needed for an effective interception. Missile early warning systems are strategic arms constituting one of the most critical aspects of any country’s defence capability. Potential integration of the two countries’ early warning systems can facilitate the convergence of Russia’s and China’s defence strategies, in which case China-Russia military integration and interdependence would potentially match that of US alliances with such countries as France and the UK.

Structural shifts in great power politics

To understand the third aspect – the structural balance of power – requires looking into the structural shifts in great power politics. There are strong international-systemic factors that drive China-Russia alignment. Historical research on power transition between great powers suggests that out of sixteen power transitions (shifts of the global balance of power in which a rising power catches up with or surpasses the dominant great power in terms of comprehensive capabilities), only four were peaceful.

In the contemporary international system, power transition is happening between China and the US. According to World Bank, in 1991, the US’s total GDP of US$6.158 trillion was more than sixteen times that of China (US$383,373 billion). By 2020, China’s GDP reached almost 70 percent of that of the US (US$14.343 trillion vs. US$21.374 trillion). History shows that an established superpower (the US in this case) represents the greatest threat to states that are on the cusp of becoming superpowers (e.g., China). In this context, China has every reason to develop its strategic alignment with Russia, which, given Russia’s anti-US foreign policy orientation, military and geopolitical characteristics, and the permanent seat in the UN Security Council, presents the most effective counter-balance against US power.

At the same time, the US explicitly identifies China and Russia as major strategic threats, an assessment that drives its defence decisions and allocation of military resources. As the US’s main strategic rival, China is given a primary place in US defence strategy. Russia, in turn, is dubbed as a ‘revitalised malign actor’ that must be contained through comprehensive sanctions (made even more comprehensive since its invasion of Ukraine). A simultaneous focus on both China and Russia by the US contributes to a situation in which the two countries start viewing the US the same way the US views them – as the greatest threat to national security and the primary focus of defence policy.

This tendency was exacerbated on 27 October 2022, when the Biden Administration unveiled a new defence strategy that effectively puts the US military in Cold War mode with both China and Russia. The new strategy details the US’s plan to confront the two nuclear peers and potential adversaries (China and Russia) with a historical multi-year build-up of modernised weaponry, enhanced foreign alliances and a top-to-bottom overhaul of the US’s nuclear arsenal. The issue is complicated by the fact that while the US and Russia have negotiated on nuclear weapons, China has never agreed to any such negotiations. As a result, the power balance within the international system that is conducive to China-Russia alignment is buttressed by China and Russia’s shared perception of external threats: both increasingly feel that the US jeopardises their geopolitical interests, civilisational identities, and domestic political regimes.

The current behaviour of the US suggests a lack of questioning within its strategic establishment if adopting a hostile attitude towards both China and Russia makes strategic sense. According to some assessments, such an approach does not bode well for US long-term strategic interests because it systematically encourages China-Russia alignment. In the context of the evolving power balance, this deterioration generates an external compulsion that removes any remaining political barriers to closer China-Russia alignment.

‘Unfavourable complementarity’ in economic relations

Economic cooperation remains the Achilles heel of China-Russia strategic alignment. The two countries have become more complementary economically and more interdependent in the energy sector. However, as relative shares of China and Russia in each other’s external trade indicate, Russia depends much more on China than China depends on Russia in terms of trade. China ranks as Russia’s top trading partner, but Russia is only China’s fourteenth largest trading partner. Moreover, Russia has ended up in a role in the current China-Russia economic cooperation model that it is reluctant to embrace. The so-called ‘complementarity’ of China’s and Russia’s economic models, allegedly conducive to closer cooperation, also creates unfavourable geopolitical pressures on the relationship.

The rapid growth of China-Russia trade’s total volume – from meagre USD 5.56 billion in 1992 to $153.9 billion in the first 10 months of 2022 – has been accompanied by the emergence of a bilateral trade structure that is too unbalanced to be healthy for the relationship and reflects the degradation and primitivisation of Russia’s economy since the collapse of the Soviet Union. Since then, Russia’s manufacturing sector has all but collapsed, and the country has become a petrostate. Meanwhile, China has become the world’s factory on a gargantuan scale, producing more than 20 percent of global manufacturing output. Between 2001 and 2021, the share of machinery and equipment in China’s export to Russia rose from less than 10 percent to almost 50 percent but drastically dropped in Russia’s exports to China from almost 30 percent to less than 1 percent. Simultaneously, the share of oil and oil products in Russia’s exports to China soared from 10 percent in 2001 to more than 70 percent by 2020. Despite this, China, unlike Europe, does not strongly depend on Russian resources, which represent only 19 percent of its total energy/oil consumption. For some European countries such as Germany, by contrast, Russian resources accounted for more than 50 percent of total energy/oil consumption in 2021. The war in Ukraine and the comprehensive sanctions imposed on Moscow will most likely accelerate the technological degradation of the Russian economy, reducing Russia’s significance to China from being a true economic partner to being little more than just an energy provider.

The deterioration of Russia’s economic standing vis-à-vis China has a range of implications. Except for the Russian military-industrial complex, China perceives Russia less and less as a source of innovation and new technologies and more and more simply as a source of energy resources and a market for finished manufactured products. For Russia, which only twenty years ago was ahead of China on many economic development indicators, this is a disappointing outcome that thins out the otherwise strong foundations of and support for China-Russia strategic cooperation.

On a psychological level, China’s increasing perception of Russia as a net energy exporter discomfits many Russians, including political elites, and make the Russian government need to seem cooler on China than it might otherwise be.

These tendencies consolidated after Russia invaded Ukraine on 24 February 2022. Barred from access to Western technologies by comprehensive economic sanctions that are unlikely to ease in the foreseeable future, Moscow has rushed to extend its energy exports to Asia at discounted prices – a situation that China has naturally taken advantage of. Thus, the pattern of unequal bilateral economic transactions is likely to continue. This in turn will lead to demand within Russia for Moscow to protect Russia’s national markets and producers from Chinese economic expansion, and to prevent Russia from turning into little more than China’s resource appendage.

The test of the Ukraine war

The ongoing war in Ukraine that Russia started in February 2022 is stress-testing China-Russia strategic cooperation. By not distancing itself from Moscow Beijing has incurred serious reputational costs and potentially risks becoming a target of secondary economic sanctions. Yet the war in Ukraine is unlikely to significantly reverse China-Russia strategic alignment. That is due to Beijing’s growing recognition that China and the US are on a long-term collision course.

US policies towards China indicate that Washington has embarked on a strategy of containing China, though its official rhetoric tends to favour the use of the word ‘competition’. On top of a de facto economic containment of China, enforced through such measures as restricting the export of microchip technologies to China and pressuring partners to ban the Chinese companies Huawei and ZTE from getting involved in building their 5G network infrastructure, the US continues to back Taiwan with arms sales and high-profile visits by top US officials. These measures seriously stress China-US relations and make China increasingly reluctant to distance itself from Russia.

Ten days after Russia invaded Ukraine, former US Secretary of State Mike Pompeo travelled to Taipei and urged Washington to ‘take necessary and long-overdue steps to do the right and obvious thing’, by which he meant to recognise ‘free and independent’ Taiwan. Speaker Nancy Pelosi’s visit to Taiwan on 2 August 2022 (five months after Russia’s invasion of Ukraine), despite Beijing’s vehement criticism and the staging of live-fire exercises off Taiwan’s coast, further added fuel to the fire. For Beijing, any proclamation of Taiwan independence is a red line. Washington could have tried to use the Ukraine war to pull China away from Russia, but actions such as those of Pompeo and Pelosi have made this difficult. An argument can be made that neither Pelosi’s visit nor Pompeo’s words represent US policy and that, thanks to the nature of the US’s political system, both are independent actors. However, if it is the case (i.e., Pelosi’s visit is a pursuit of her personal political interest) and the US is interested in minimising tensions with China, Pelosi’s visit should have been criticised by the Biden administration.

Xi has continued to speak directly with Biden, including for three hours in Bali, as the two leaders affirmed their mutual opposition to any use of tactical nuclear weapons in Ukraine. Nonetheless, Beijing remains suspicious that Washington is promoting a new Cold War. These suspicions were exacerbated significantly by, among other things, the recently minted AUKUS initiative that former Australian prime minister Scott Morrison claimed was a way to push back against a China-led ‘arc of autocracy’.

Another factor that contributes to China’s unwillingness to openly criticise Putin’s war in Ukraine is Western hypocrisy in not making much noise about India’s friendship with Russia. Like China, India has never condemned Russia’s invasion of Ukraine, and through its purchases of crude oil from Russia, is supporting Moscow no less than China is. In March 2022, India was preparing a rupee-ruble trade arrangement with Russia that will allow India-Russia trade to continue despite Western sanctions against Russia. Attempts to warn India of the consequences if it tries to circumvent the sanctions have only been mild and delivered with nowhere near as much pressure and hostile rhetoric as those targeted at China.

From Beijing’s perspective, this behaviour would appear to confirm that the US criticism of Beijing is not about the war in Ukraine. Instead, it is about using that war to contain China. In such a hostile context, then, Beijing has been reluctant to condemn Russia over Ukraine and risk undermining their strategic alignment.

Conclusion

China and Russia’s alignment is not a formal military alliance and may not become such. Moreover, it is not impossible for China-Russia military cooperation to unravel. For all its reluctance to condemn it directly, China remains ambivalent towards Russia’s war in Ukraine, and Beijing’s position on the issue of state sovereignty does not fully coincide with Moscow’s. Economic factors may also hinder the further upgrading of China-Russia relations to the level of a fully-fledged alliance. The different economic roles of China and Russia in the global division of labour remains another challenge for bilateral strategic cooperation.

And yet, China-Russia strategic alignment is currently in place and is affected by international systemic trends. It is solid, institutionalised, and comprehensive, and it should be taken seriously. It is also trending incrementally upward. Their shared great power hostility towards American hegemony in world politics suppresses the most likely centrifugal forces that could pull them apart. The simultaneous deterioration of China-US and Russia-US relations after Russia’s invasion of Ukraine prevents the Ukraine war from becoming a factor that might slow down or undermine China-Russia strategic alignment. An alliance is possible, although if it’s in the works, China and Russia may delay an official announcement or not make such an announcement at all.

The post A ‘No Limits’ Partnership? China-Russia Strategic Cooperation appeared first on The China Story.

But is China really on track for the ‘collapse’ that Gordon Chang famously first predicted in his 2001 book, The Coming Collapse of China, one he still thinks is imminent in 2022? Or is Tom Orlik, author of the 2020 book China: the Bubble that Never Pops, more likely to be correct, writing in October in Bloomberg that although the ‘China bubble is losing air’, it’s ‘not going to pop’ – because of the nation’s ‘unparalleled record of surmounting crises’?

The question of whether China can keep rising looms large in the reporting and analysis published in Foreign Affairs. It’s a theme they return to time and again, presenting competing narratives, with no obvious bias. In October 2021, an article by Michael Beckley and Hal Brands, was titled ‘The End of China’s Rise: Beijing is running out of time to remake the world’. The authors begin by asserting that, despite China ‘moving aggressively to forge a Sinocentric Asia and replace Washington atop the global hierarchy,’ there is little for the West to worry about because ‘China’s government is concealing a serious economic slowdown and sliding back into brittle totalitarianism. The country is suffering severe resource scarcity and faces the worst peacetime demographic collapse in history.’ China is, in short, ‘running out of people’ and the ‘economic consequences will be dire.’ This, combined with the government’s ‘force-feeding capital through the economy since 2008,’ leads Beckley and Brands to argue that ‘China is tracing an arc that often ends in tragedy: a dizzying rise followed by the spectre of a hard fall.’

A second article by Jude Blanchette in November 2021 conjures up a very different picture: ‘Xi’s confidence game: Beijing’s actions show determination, not insecurity.’ Blanchette challenges the ‘Collapsing China Syndrome’ head on.  Blanchette argues that, while the ‘doomsayers’ are not entirely wrong in identifying the factors that constrain China’s growth, they fail to weigh these up against Beijing’s potential and actual strengths.

Perhaps Blanchette’s most contentious point is that Beijing’s biggest strength is its ‘effective authoritarianism’: its ability to mobilise and channel resources with ‘remarkable speed.’ The efforts to minimise the economic impacts of COVID in 2020 is one example. While acknowledging that this ‘disregards the rights and freedoms of Chinese citizens,’ he contends that the ‘CCP in 2021 has been stronger, more capable, and in command of more resources than at any other time in its 100-year history’.

This chapter reflects on some of the topics that obsessed the English-language press reports on China in 2022, alongside other topics that perhaps should have received more attention, to identify the key challenges affecting that nation’s economic health. Assessing these challenges based on evidence and fact – rather than fear and fiction – is essential for understanding where the Chinese economy is headed, and what might prevent it from getting there.

‘Running out of people’?

For decades, I travelled around China asking people what they thought the country’s biggest challenge was. Time and again they would say ‘Too many people’. In the 1950s and 1960s, Mao Zedong had pushed the narrative that ‘many people would make China strong.’ This ‘population optimism’ fed into China’s population boom during that time (from just under 544,000 people in 1949 when the People’s Republic was founded to 929,000 in 1976 when Mao died). Chinese demographers had already started to think this was a serious problem, but the fate of economist Ma Yinchu 马寅初, who warned in 1957 of the dangers of overpopulation and was attacked as trying to ‘discredit socialism,’ served as a cautionary tale for those who would say so out loud.

Deng Xiaoping, who oversaw Ma’s political ‘rehabilitation’, including a formal apology to him from the CPC in 1979, adhered to a different narrative. He was ‘population pessimistic’, believing that reducing China’s population growth was key to increasing per capita income. He launched the One-Child Policy in the early 1980s, aiming to bring population growth to zero and quadruple per capita income by the year 2000. He didn’t quite get to zero population growth, but per capita income did quadruple by 1996.

While fertility decline wasn’t the only driving factor, it was a significant one. According to Cai Fang 蔡昉, former Director of the Population Institute at the Chinese Academy of Social Sciences, around one quarter of the increase in China’s per capita income during its ‘growth miracle’ years from 1978 to 2010 can be explained by declining fertility. There is a simple logic behind this demographic dividend: a reduction in fertility leads to a reduction in youth dependency and a surge in the working age population, and because there are now relatively more workers and fewer dependents in the population, output or income per person increases.

Fast forward to the introduction of the two-child policy in 2016, and the three-child policy written into law in 2021. Cai Fang strongly advocated for this policy relaxation and I, too, on non-economic terms support it. But in purely economic terms, if reducing fertility was so important for raising per capita income, how could increasing fertility also be a good thing? Would it be catastrophic if – as looks likely to be the case – China is headed for a ‘low-fertility trap’ as, despite the freedom to have more, many Chinese couples now choose to have one child only?

I argue it wouldn’t be. China’s working-age population is projected to decline by 18 percent between 2020 and 2050. If labour force participation rates don’t change, its workforce will also decline by the same amount. Yet, taking into account labour’s contribution to aggregate output (currently around 60 percent), in terms of the impact on average annual GDP growth, that amounts to a reduction of just 0.35 percentage points per year through to 2050.

Having more babies now won’t change these figures much at all, because those babies won’t join the workforce for about twenty years. Investments in education are one obvious way to boost productivity in the long run. But other policy changes could produce a faster, positive boost to GDP growth and per capita income gains. One is raising the retirement age. Back in 2015, there was talk of new policies that would gradually raise the ages from sixty for men, and fifty and fifty-five for white- and blue-collar women respectively. These changes were touted to begin in 2022, and true to its planning word, this year the State Council announced a gradual extension of retirement ages to be achieved by 2025 – although the details on how high they’ll go are scant, apart from noting that it will vary with age. Equalising the retirement age for women – the gender with universally higher life expectancies – with their male peers could readily extend China’s workforce with the stroke of a pen. (Political leaders are expected to retire at 68, but the rules don’t seem to apply to Xi Jinping, who is 69 and about to begin his third five-year term in office.)

Another policy to offset population ageing would be to increase labour force participation rates, especially among women. The record on this is even less positive, with just 62 percent of women over the age of fifteen engaged in the labour force in 2021. While high by developing-country standards, this is a three-decade low for China, and on a declining trend, having fallen steadily from 73 percent in 1990. With China’s global gender gap ranking at 102 this year – a sharp decline since its peak rank of 5 in 2008 – and the number of women on the previously 25-person (now 24-man) strong Politburo Standing Committee falling from just one to zero, there is little reason to think Xi will act to boost the number of women workers more generally. Indeed, given the high youth jobless rate, due to a record number of university graduates seeking limited jobs in an economy beset by COVID uncertainties, Xi may continue to undermine the female workforce, focusing on raising participation among young men instead. Either way, under- and unemployment among youth and women counter the argument that China is ‘running out of people’. They do, however, reveal other challenges for China’s long-term growth prospects.

Returning to Mao and Deng, I think they were both at least partially right. High fertility rates in the Maoist era did help China become powerful, because in power terms, size matters. Lower fertility then made Chinese people richer. It is true that China is ageing more rapidly than other countries of comparable levels of development, and that comes with problems. But fertility decline also leaves its citizens much better off, on average at least.

 ‘Common Prosperity’: Rhetoric or reality?  

In 1985, in pursuit of his goal of quadrupling per capita GDP, Deng Xiaoping famously said that some regions and people could become prosperous before others, and that would help others gradually achieve common prosperity. He insisted that there must ultimately be ‘no polarisation of rich and poor’ because ‘that’s what socialism means’. Those waiting patiently for some of China’s immense wealth to trickle their way have been doing so for four decades. In 2021, disposable income per capita in rural households was just 40 percent of their urban counterparts – an improvement from 32 percent a decade earlier, but still a substantial income gap. By 2022, China’s 539 billionaires were collectively worth nearly US$2 trillion, while the World Inequality Lab reported that the top 10 percent of its population earned 14 times more than the bottom 50 percent. Despite official claims that poverty was completely eradicated in 2020, studies since then have revealed a new pandemic-induced poverty wave, taking the poorest Chinese people further backwards. Could Xi Jinping’s latest solution finally give those people reason to hope?  Since 2021, ‘Common Prosperity’ 共同富裕, has become a signature policy goal in Xi’s ‘Socialism with Chinese characteristics for a New Era’.  Yuen Yuen Ang has written in Foreign Affairs that ‘common prosperity’ is not just rhetoric but ‘a set of instructions for government officials who are tasked with implementing Xi’s vision.’ This vision ‘is not a call for egalitarianism’: it is instead a commitment to ‘encouraging wealth creation through diligence and innovation.’ Among other things it involves ‘proactively leveraging the important role of the state-owned economy in advancing common prosperity’ and calling on those who ‘got rich first to voluntarily share their wealth.’

Yet, for all the billionaires rushing to prove that they were listening by donating money to various charities, philanthropy cannot solve rural-urban inequality in China today, which stems from gross underinvestment in health and education in the countryside. In their 2020 book Invisible China: How the Urban-Rural Divide Threatens China’s Rise, Scott Rozelle and Natalie Hell write that to address these inequalities, which relate to ‘structural issues within China’s political system,’ China first needs to reform the hukou system (of residence permits), which has ‘maintained and reinforced inequality through law’. Secondly, it must recentralise the fiscal system so that poor areas are able to fund better education and health outcomes; and shift the focus from short- to long-term growth, to prepare for the future. Should the Chinese government carry out these three reforms, Rozelle and Hell contend the country can escape the ‘middle-income trap’ (when countries develop to a certain point but then growth plateaus) and deliver sustainable, inclusive growth for decades to come. If it doesn’t, in the worst-case scenario, the results would be ‘catastrophic.’

China’s track record offers little cause for optimism. For example, reform of the hukou system has been ongoing for several decades now, and has stepped up in recent years, especially in small- and medium-sized cities. Yet, by October 2022, just one ‘megacity’ – Zhengzhou, the capital of Henan province, with a population of twelve million – has plans in place to abolish all restrictions. In June, Shanghai announced a relaxation of its regulations: its coveted hukou would now be granted to ‘non-locals who’ve graduated from the world’s top 50 universities and work in the city’. This smacks of a fragmented and elitist authoritarianism – as opposed to Blanchette’s ‘effective’ kind – in which wealthier provinces and cities implement policies that counteract Beijing’s equalising ambitions, ensuring that wealth continues to trickle up, not down. The impacts on China’s long-term growth prospects could be profound.

Chains of debt

China’s overseas and internal debt ‘crises’ were an ever-present topic in Western media throughout 2022. The former is invariably linked to accusations of ‘debt-trap diplomacy,’ a phrase ubiquitous in Western discourse about the Chinese government’s Belt and Road Initiative and other global investments. Deborah Brautigam, a scholar of China-Africa relations, has described how within twelve months of the first appearance of the phrase ‘debt-trap diplomacy’ in 2017, nearly two million search results could be found on Google. The concept, she says, somehow began ‘to solidify into a deep historical truth’. Yet Brautigam draws on a database of more than 1000 Chinese loans to Africa to argue that she ‘has not seen any examples where … the Chinese deliberately entangled another country in debt, and then used that debt to extract unfair or strategic advantages.’ Other scholars support this finding, including in the oft-cited case of Sri Lanka, as in Shahar Hameiri and Lee Jones’ report on ‘Debunking the Myth of China’s debt-trap diplomacy’ in which they, like Brautigam, conclude that the debt-trap narrative is ‘simply incorrect.’

This isn’t to say that the Chinese government is innocently and only pursuing ‘win-win’ development in its global economic engagements. Of course, it is pursuing power and influence as well. And some of its multinational companies – state-owned and otherwise – behave badly in the process. Again, this is indicative of a less-than-entirely effective authoritarianism: not all domestic actors behave in accordance with the wishes of the centre. It is also true that countries across the globe have taken on substantial Chinese (and other foreign) loans that could cause them – and their Chinese lenders – significant problems in the future. The full facts in this particularly complex zone, where geopolitics, economics and grand strategies intertwine, can be impossible to ascertain. But we should at least rule out the fictions.

This is harder to do when talking about China’s internal debt challenges, including in the real estate sector. According to one narrative, the Evergrande crisis that began in August 2020 (when it was revealed that the country’s second largest property developer was over $300 billion in debt) has now spilled over to the industry to the point where there is ‘a total collapse in confidence, and only [more] government intervention can save the day’. A Financial Times report in October characterised China’s ‘property crash’ as a ‘slow-motion financial crisis’.

In the same month, writing in Bloomberg, Tom Orlik pointed out that: ‘For more than a decade, analysts have warned that excesses in borrowing and building have pushed China’s property sector onto an unsustainable trajectory.’ And yet when policymakers ‘get ahead of the problem by cutting off sources of financing to overleveraged developers,’ it is those same analysts that cry out for more intervention, not less. Orlik sees it differently, describing the history of China’s real estate sector as a ‘series of exuberant booms and near-disastrous busts. Every time it appears the end is nigh, policymakers have tweaked the dials on down-payment requirements, mortgage rates, and financing for developers to get things back on track. They’re doing so again, though this time their goal isn’t engineering another boom, but moderating the pace of decline.’

Crises are, by definition, unpredictable events and economists are notorious for mis-predicting them. Simply put, the risks are high and rising, and there’s contention over how well the Chinese government can mitigate them.

Conclusion

Tom Orlik has used the term ‘Sinophrenia’ to describe a ‘condition of modern commentary that combines the belief that China will imminently collapse with the belief that it is taking over the world.’ The article by Beckley and Brands above falls into this category. In contrast, Jude Blanchette’s article might seem ‘Sinophoric,’ although placed in the broader context of his writings, this would be inaccurate. He had previously described how Xi’s gamble on consolidating power in his own hands has set him on a ‘current course [that] threatens to undo the great progress China has made over the past four decades.’ In October 2022, he observed that ‘authoritarian systems and authoritarian leaders always appear solid on the outside—until suddenly, they don’t.’

No-one doubts that the lockdowns in response to Xi’s zero-COVID policy have made 2022 a very rough year for China’s economy (and its people). With the Russia-Ukraine war, rising tensions in the Taiwan Strait and the ever-escalating rivalry between the US and China, the geopolitical headwinds are getting stronger. Add to these the economic headwinds identified here, and it is certainly possible to construct a narrative of crisis or collapse. But it is also possible that the Chinese government will demonstrate more flexibility than it has in recent times, adopting effective policies that not only stave off crisis, but also set the country on the path for long-run, sustainable and inclusive growth.

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