PHRASE OF THE MONTH:
Gāoshān liúshuǐ (en. “The High Mountain and Flowing Water”) — a Chinese idiom that means cherished friendship — a reference to the Chinese story of two great friends Bo Ya and Zhong Ziqi.
DOMESTIC POLITICS & FOREIGN AFFAIRS
1. European High-Level Visits to China
On 5–7 April, French President Emmanuel Macron, accompanied by European Commission President Ursula von der Leyen, embarked on a visit to China. Two topics dominated the three-day visit: the war in Ukraine and EU–China relations. There was no concrete breakthrough on either of these issues, but the visit can be seen as a necessary attempt to re-engage with China in the post-COVID era.
What caught most of the foreign media’s attention is how skilfully China attempted to use fractures within the EU and to use the trip, which was initially hailed as a display of a united European front, for its own interests. And this was perfectly reflected in how both leaders were received in Beijing. The contrast is striking. While the French President was welcomed by China’s Foreign Minister upon arrival and given red-carpet treatment with a lavish banquet and canons, the EC’s President von der Leyen was greeted by the Minister of Ecology at the airport’s regular passenger exit. As noted by Politico, a similar cold reception continued throughout the whole trip and, in contrast to the positive reporting of China–France relations, the EC and its President were rather vilified in Chinese domestic media.
The cold reception for von der Leyen, also evident in the minimal reporting in the domestic media, can be attributed to some extent to her speech ahead of the China trip. On 30 March, the President gave a speech on EU–China relations, during which she called on Europe to be bolder on China and argued that China is “more repressive at home and more assertive abroad”. In regards to the frozen China–EU Comprehensive Agreement on Investment (CAI), von der Leyen emphasized a “need to reassess the CAI in light of our wider China strategy”, which is the first time that the EC President hinted at a potential end to this agreement. This speech was perceived negatively by Chinese diplomats; Fu Cong, Chinese ambassador to the EU, stated that “that speech contained a lot of misrepresentation and misinterpretation of Chinese policies and the Chinese positions” and that he was “a little bit disappointed”.
A week later, Germany’s Foreign Minister Annalena Baerbock also visited China and met with Chinese top diplomat Wang Yi. Baerbock, together with Chinese Foreign Minister Qin Gang co-chaired the sixth round of the China–Germany Strategic Dialogue on Diplomacy and Security. While several issues and spheres of cooperation were discussed, a large part of the official Chinese readout of the Wang–Baerbock meeting instead focused on the Taiwan question and highlighted Baerbock’s remarks that Germany “stays committed to one China policy”.
After her trip, while addressing the Bundestag, Baerbock stated that parts of the trip were “more than shocking” without giving any details. Foreign Minister also noted that China is increasingly becoming a systemic rival and that Germany should avoid repeating the past mistakes of its previous “change through trade” policy approach.
2. Zelensky Invites China’s Leader Xi Jinping to Visit Ukraine
On 29 March, in an interview with the Associated Press, Ukrainian President Volodymyr Zelensky stated that he is inviting Chinese President Xi Jinping to visit Ukraine. The timing is significant: Zelensky extended his invitation only a week after Xi’s state visit to Russia. Diplomatically, this is an awkward moment for China, which increasingly positions itself as a peace broker in the Russia–Ukraine War, not to visit or communicate with either side of the conflict. It is not the first time the Ukrainian leader is signalling his willingness to speak with the Chinese counterpart, but there are no indications that Xi might be planning to talk with Zelensky. However, upon her return from China, EC President von der Leyen noted that Xi expressed his willingness to talk with the Ukrainian President when the “conditions and time are right”. In the meantime, Ukraine’s reserved hopes that China could influence Russia to end the war might be gradually fading away; on 16 April, Chinese Defence Minister Li Shangfu visited Moscow. During this trip, he met with his Russian counterpart as well as the President — a sign of a strengthening of military cooperation.
3. Honduras Says Adiós Taiwan, Hola China
Honduras formally established diplomatic ties with China and severed those with Taiwan, leaving Taiwan recognized by only thirteen countries. Guatemala, where Taiwanese President Tsai Ing-wen recently completed a tour, is now the only country left in Central America without formal ties with China. All related countries responded by issuing statements:
China: “Honduras’s establishment of diplomatic ties with China brings the total number of countries having diplomatic ties with China to 182, which shows that the one-China principle has the overwhelming support of the international community and represents the trend of the world <…> We hope that Latin American and Caribbean (LAC) countries can see the trend clearly, handle issues related to Taiwan in a prudent manner and join the family of China-LAC friendly cooperation at an early date.”
Taiwan: “With deep regret, we announce the termination of diplomatic relations with Honduras. 82 years of friendship & cooperation bringing real benefit to the people were dismissed by the Castro government. Taiwan remains unbowed & continues to work as a force for good in the world.”
Honduras: “Taiwan is an inalienable part of Chinese territory, and as of this date, the Government of Honduras has communicated the rupture of diplomatic relations, pledging not to have any official link or contact with Taiwan.”
Chinese media hailed this achievement; however, it mirrors broader mainstream Chinese media discourse, where almost every major world event is framed squarely within the context of the competition with the U.S. As stated by the Global Times: “Honduras announced to ‘sever diplomatic ties’ with the Taiwan island and establish diplomatic relations with Beijing, further highlighting the weakness of the US’ power to control China-related situation.”
4. Taiwanese President Tsai Ing-wen Met the US House Speaker in California
On 29 March, Taiwanese President Tsai Ing-wen embarked on a 10-day Central America trip to visit Taiwan’s remaining diplomatic allies Guatemala and Belize. However, most of the attention was focused on the President’s transit stops in New York and Los Angeles during which, it was rumoured and later confirmed, she would be meeting Kevin McCarthy, the Speaker of the US House of Representatives. The meeting, which occurred on 6 April, was hailed as a diplomatic “milestone” and highly significant as it is only the third time a Taiwanese president met with the US House Speaker since 1979. After the meeting, the Foreign Affairs Committee of China’s National People’s Congress released a statement that contained rather typical rhetoric. However, despite the harsh tone, China’s response to the meeting was rather mild: shortly after the talks, China announced sanctions on individuals and US organizations including the Ronald Reagan Presidential Library, but more sweeping economic measures were not taken.
Soon afterwards, the Chinese military announced that it was launching a 3-day security patrol and military exercise encircling Taiwan Island. Throughout the exercises, as reported by Taiwan’s Defence Ministry, 45 Chinese warplanes crossed the median line between China and Taiwan. Perhaps one of the newest shows of force was Fujian’s (a brand-new Chinese aircraft carrier) movements a few hundred miles off the Taiwanese coast. The Taiwanese MOFA has condemned the recent intensification of Chinese military posturing, stating that “China’s provocative actions have already posed a challenge to the international order and disrupted peace and stability across the Taiwan Strait and in the region”.
5. China is Rolling Up its Sleeves to Deal with the Israeli–Palestinian Conflict
On 17–18 April, Chinese Foreign Minister Qin Gang held calls with his Israeli and Palestinian counterparts, during which Qin stated that China is ready for the broker peace talks between Israel and Palestine. It comes as a new initiative for China which is actively positioning itself as a global peacemaker. However, Beijing’s ability to bring significant results is limited; according to Bill Figueroa, Research Associate at the University of Cambridge Centre for Geopolitics, “the prospects are very low, despite the recent Saudi-Iran deal success, for one simple reason: Iran and Saudi were pursuing peace and invited China in. Israel has no interest in inviting China, and Palestine has no leverage”.
THE INDO-PACIFIC DIPLOMACY
1. A Full Display of Vietnam’s “Bamboo Diplomacy”
Antony Blinken paid a visit to Vietnam, his first visit as Secretary of State, to try and persuade the Vietnamese leadership to upgrade Hanoi’s ties with Washington from their decade-old comprehensive partnership to the same level of strategic partnership that Vietnam now maintains with China. However, amid fears of unnecessarily antagonizing China, Vietnam’s foreign policy is like “bamboo” — never breaking to the point where it fully will align with one side over the other.
The change of the partnership from comprehensive to strategic would strengthen the U.S. position in the Indo-Pacific region vis-a-vis China’s growing assertiveness in the South China Sea, where China undermines the rule of law, particularly the Law of the Sea Convention and the freedom of navigation. However, Hanoi has long been wary of getting dragged into the increasingly intense Sino-US competition in the region.
2. Ma’s China Trip Reflects Division Among Taiwanese
Former Taiwanese President Ma Ying-jeou’s China visit was widely reported in the international media, but most of the attention was given in Taiwan. While the official purpose of Ma’s visit was to pay respects to his ancestors in the Hunan province, the trip did not go without political meetings. On 13 April, the survey by the Taiwanese Public Opinion Foundation (TPOF) found that 39.2% approved Ma’s trip whereas 43.7% expressed negative views. The division is hugely prominent across party lines: 79% of Kuomintang supporters (Ma’s party) approved the trip whereas 81% of the Democratic Progressive Party’s supporters (the current ruling party) opposed.
3. Undiplomatic Chinese Ambassador’s Remarks in the Philippines
A diplomatic scandal between China and the Philippines, which further strains the already complex relations between the two countries, has broken out. At the 8th Manila Forum for China–Philippines relations on 16 April, Chinese ambassador to the country Huang Xilian delivered remarks that clearly reflected Beijing’s frustration over the recent US–Philippines military cooperation agreement. The focus of Huang’s speech was on Taiwan (the name itself was repeated 14 times). However, the main source of Manila’s frustration came after the Ambassador’s advice to the Philippines government with a veiled warning: “The Philippines is advised to unequivocally oppose “Taiwan independence” rather than stoking the fire by offering the US access to the military bases near the Taiwan Strait if you care genuinely about the 150,000 OFWs [Overseas Filipino Worker].”
The Chinese Embassy in Manila soon began its efforts to defuse the scandal that quickly made headlines throughout the region. On its official Facebook account, the Embassy stated that Huang’s remarks were “misquoted or misinterpreted” as well as “taken out of context”.
Senator Risa Hontiveros was the most vocal in this issue, calling on the President to demand Beijing to recall its envoy. In her reaction posted on Facebook, she called Ambassador Huang’s statement “truly disgraceful” and snapped at him “how dare he threaten us”. Meanwhile, the Taiwanese MOFA responded by condemning the Chinese ambassador’s remarks, saying that they were made to “manipulate the Taiwan issue, create panic, and attempt to disguise the fact that it is China which is undermining regional peace and stability”.
BUSINESS & TECHNOLOGY
1. Pushing for De-Dollarization? China’s Enthusiasm to Promote the Yuan
Russia, Saudi Arabia, Brazil, Bangladesh and even France are beginning to use the Chinese currency yuan for international deals.
Russia: The bilateral trade between China and Russia has surged to 38.7% in the first three months of 2023 to reach $53.85 billion, and with that, China’s yuan has replaced the U.S. dollar as the most traded currency in Russia.
Saudi Arabia: Ever since Xi Jinping’s trip to attend the Gulf summit in Saudi Arabia in late 2022, there have been active talks with Beijing to price some of Saudi Arabia’s oil sales to China in yuan. Saudi Arabia is China’s biggest supplier of crude, and China is the biggest destination of Saudi oil exports.
Brazil: In February 2023, The People’s Bank of China (PBOC) signed a memorandum of cooperation with the Central Bank of Brazil to establish renminbi (yuan) clearing arrangements.
Bangladesh: For the first time, Bangladesh is going to use Chinese yuan for a $300 million payment to Russia for building a new nuclear plant near Dhaka.
France: Chinese and French energy companies finalized the first-ever deal on liquified natural gas (LNG) in China settled in the renminbi currency. The trade involves 65,000 tons of LNG imported from the United Arab Emirates.
The efforts to push the Chinese currency yuan for international deals signal not only China’s ambition to establish its currency internationally and weaken the U.S. dollar’s grip on world trade, but also highlight the growing demand in developing countries to diversify currency settlements beyond the U.S. However, as much of China’s cup of enthusiasm for yuan is filled, the dollar’s dominance continues unwaveringly as the US Dollar is close to record highs against most other currencies.
2. Getting the New Year off to a Good Economic Start
According to data released by the National Bureau of Statistics of China, China’s GDP grew by 4.5% in the first quarter year-on-year, 1.6% points higher than the previous quarter. This growth reflects that “market confidence picked up significantly, consumption and investment bounced back stronger, and employment and prices remained stable overall”, as said Foreign Ministry Spokesperson Wang Wenbin.
The boost in economic growth is a good signal for China’s economic recovery after the three years of COVID-zero curbs. Moreover, the IMF’s latest World Economic Outlook estimates that the Chinese economy will contribute more than a third of global growth this year, injecting a new impetus into the world economy.
3. Huānyíng Huílái (en. “Welcome Back”) Jack Ma!
Jack Ma (马云 Mǎ Yún), billionaire and the founder of China’s e-commerce giant Alibaba, made a rare public appearance in Mainland China. His return follows two years of the wholesale assault of the tech sector in which Jack Ma himself got caught up following his speech criticizing China’s financial watchdog in 2020.
Mr. Ma’s appearance could serve as a part of China’s government’s broader strategy to restore private businesses’ confidence and get the tech sector back in harness by “encouraging and supporting the private sector and private businesses in growing and expanding”, the statement outlined in the report on the work of the Chinese government in the year 2023.
4. China’s Socialist Artificial Intelligence (AI)
On 11 April, the Chinese Cyberspace Administration of China published a draft of “Measures for Generative Artificial Intelligence Services” that would regulate AI-related services to be provided to the Chinese public. While drafted requirements cover usual issues including non-discrimination and data protection, the proposed measures also indicate serious concerns in the Chinese government with regard to content moderation, algorithmic transparency, and the need for companies to complete a full security assessment before introducing new technologies. Most importantly, new AI tools must ensure that content created by AI is consistent with “social order and embody fundamental socialist values”. It is highly likely that such stringent regulations of the fast-developing AI technology sector might greatly affect Chinese companies’ ability to keep up with their Western counterparts.
5. China’s Cheapest City – a Cold, Sleepy Mining Town Called Hegang
The affordability crisis in China has made Hegang, a city in China’s far north with almost 900,000 inhabitants, where winter temperatures plunge to −20 °C, an appealing place to live. In Hegang, buying a sizable flat cost as little as 46,000 yuan (6,000 EUR), making property 40 times cheaper than in Shenzhen, a high-tech southern metropolis.
Over the last generation, the affordability of China has become four times worse. In the biggest cities like Beijing, it would take twenty years of saving disposable income to afford a flat. Nonetheless, it is not only a matter of having a place to live, but also a matter of the bare minimum, captured in the Chinese saying yǒu chē yǒu fáng (en. “Have a house and a car”), to become an established adult.
Recommendations of the Month:
Video Documentary Series: “Assignment China” by Mike Chinoy — the legendary award-winning TV newsman who helmed CNN in Beijing for many critical years.
Book: U.S.-Taiwan Relations: Will China’s Challenge Lead to a Crisis? by Brookings Senior Fellows Richard Bush and Ryan Hass, and managing director of GMF’s Indo-Pacific program Bonnie Glaser. In the context of China’s challenge, they argue that tensions between the PRC and Taiwan can only be resolved with the assent of Taiwan’s people. They also explain that Taiwan’s presidential election result in 2024 will also affect how much pressure Beijing applies to cross-Strait relations.