PHRASE OF THE MONTH:
“A millennial strategy with lasting importance and a matter of concern for the whole nation.”
Context: On 10 May, Chinese President Xi Jinping made his third visit to the “Xiong’an New Area”. The city represents a fusion of nature, high technology and culture, to show that high-tech developments can be reconciled with environmental protection, and that China can be innovative on its own terms. Notably, Xiong’an is also a part of the CCP’s political legitimacy and Xi Jinping’s legacy in the context of “high-quality development”, as an embodiment of “Xi Jinping’s thoughts on socialism with Chinese characteristics for a new era”, declared at the 19th Party Congress in 2017. Therefore, it comes to no surprise that in the readout on the visit, Xi emphasised that the city is a “millennial strategy with lasting importance and a matter of concern for the whole nation.”
DOMESTIC POLITICS & FOREIGN AFFAIRS
1. A Long-Anticipated Phone Call
For the first time since the start of Russia’s war in Ukraine, China’s President Xi Jinping and Ukraine’s President Volodymyr Zelenskyy, who has repeatedly appealed to Beijing, spoke on the phone on 26 April. The conversation merely an expression of moral support for Ukraine, as Xi gave no signs that China’s tacit support of Putin would change:
China. According to the official Chinese readout, Xi thanked the Ukraine side for its strong assistance in evacuating Chinese citizens in 2022. The Chinese leader also reiterated that mutual respect for sovereignty and territorial integrity is the political basis of Chinese and Ukrainian relations. Most notably, China announced that it will send Li Hui, the Special Representative for Eurasian Affairs, to Ukraine and to other countries for in depth-communication with all related parties on the political settlement of the “Ukraine crisis”.
Ukraine. Zelenskyy’s first reaction was positive. “I had a long and meaningful phone call with [Chinese] President Xi Jinping,” Zelenskyy said on Twitter. “I believe that this call, as well as the appointment of Ukraine’s ambassador to China, will give a powerful impetus to the development of our bilateral relations.”
Russia. Kremlin Spokesman Dmitry Peskov also commented on the phone conversation, noting: “We are ready to welcome anything that could help bring an end to the conflict in Ukraine closer, and would also help Russia achieve all of its goals. We are ready to welcome such an outcome. As for the issue of their communication, it is a sovereign matter for each of the two counties that pertains exclusively to their bilateral dialogue.”
Outcome of the Call. Three weeks after the call, Li Hui, China’s former ambassador to Russia for 10 years (2009-2019), who was awarded the “Order of Friendship” by the Russian president in 2019, paid a visit to Ukraine. According to some analysts, the two-day visit marked the first working-level dialogue between Ukraine and China since the war started. As Ukraine has visibly strived to open the communication channels, Li Hui was received by Head of the President’s, Office Yermak, as well as Vice Prime Minister Kubrakov and Foreign Minister Kuleba. However, divergences quickly appeared. Li Hui repeated China’s main talking points on a solution to the “Ukraine crisis”, highlighting the need find a common solution, and promising “China’s involvement in achieving a ceasefire as soon as possible”; whereas the Ukraine FM readout clearly stated that Kyiv will “not accept any solutions involving a loss of territories or freezing of the conflict.” The key quote came from Yermak: “Ukraine is interested in involving China into the Ukrainian peace talks” and Ukraine is to achieve this through the planned counter offensive, not an “immediate ceasefire”. Therefore, Ukraine is eager to have a dialogue on peace with Beijing, but only on its own terms.
2. China-Central Asia Summit: A New Sheriff in Town?
On 19-20 May, China hosted an inaugural China-Central Asia summit that was held in a highly symbolic location – the ancient Silk Road City of Xi’an. The presidents of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan were all present at the summit. In the state media, the event was portrayed as a triumph of China’s regional diplomacy, with the summit coverage appearing on the front pages. The timing (on the eve of the G7 summit) was also of importance, as the display of solidarity and China’s regional leadership was an attempt to tone down the negative image of Beijing portrayed at the Hiroshima meeting. In his keynote speech, the Chinese president urged the region to strive for a “community with a shared future, mutual assistance, common development, universal security and everlasting friendship”.
3. G7 Hiroshima Summit and its China-Focused Agenda
From 19 to 21 May, Japan hosted the 49th G7 summit. The broader agenda of this year’s summit was reflected in a number of guests (9) present, who included the leaders of India, Vietnam and Ukraine. Ahead of the summit, the international media was certain that the Ukraine and the China-Taiwan issues would be the core topics of the meeting. At the press conference ahead of her departure for Japan, the President of the European Commission, von der Leyen, stated that the main goal was to discuss “how to manage the relationship with a changing China”, and how to form an “approach to an economic relationship with China” that would be led “by de-risking, not decoupling”. China’s coercion towards Lithuania was also mentioned in von der Leyen’s speech that emphasised the need to address vulnerabilities and build resilience. Economic coercion, in particular, was given significant attention as the G7 leaders agreed on a Statement on Economic Resilience and Economic Security, which was undoubtedly an attempt to address the recent Chinese activities against Lithuania and other countries; however, the country was not specifically mentioned in the text.
Soon after the summit, the Chinese Ministry of Foreign Affairs lashed out at the G7 and its anti-Chinese rhetoric by stating that “what it does is hindering international peace, undermining regional stability and curbing other countries’ development” and that “China strongly deplores and firmly opposes this, and has made serious démarches to the summit’s host Japan and other parties concerned.” Beijing also summoned the Japanese ambassador to China, to lodge a diplomatic protest against creating “hype around China-related issues”. Meanwhile, the Chinese embassy to the UK also hit out at British Prime Minister Rishi Sunak’s remarks during the summit which, according to the official statement, “constituted malicious slander in disregard of the facts”. On the same day, the Chinese regulatory body announced that the US memory chip maker Micron Technology poses a national security risk and is therefore banned from participating in key infrastructure projects.
4. Hungary’s FM Befriends with China
Hungary continues to further nurture its relationship with China, as Hungary’s FM Szijjártó has visited Beijing and signed a deal in collaboration with Huawei. While a slew of EU countries considers Huawei as a cybersecurity risk, and are thus stopping habit of using Chinese technology for their 5G telecoms networks, Hungary conversely perceives Huawei as playing a significant role in the continuous development of its 5G network. By 2050, Hungary’s goal is to raise the technological level of the economy and ensure that over 90% of Hungarian households have internet access, with Huawei’s assistance.
5. Sino-Vietnamese Standoff in the South China Sea
On 14 May, the South China Morning Post reported a new stand-off between Vietnamese and Chinese ships in the South China Sea, over Hanoi’s plans to expand its oil extraction activities in the sea. The last major confrontation between these two countries at this location (Vanguard Bank) took place in July 2019 when the Chinese survey ship Haiyang Dizhi 8 entered the area, beginning a two-month-long face-off that involved at least four Chinese coastguard vessels and two Vietnamese ships. In 2014, a confrontation over a Chinese oil rig’s exploration work near the Paracel Islands (in China – Xisha) triggered massive anti-Chinese protests and violence in Vietnam.
China’s aggressive stance in the sea is pushing other parties closer together. On 15-16 May, the 10th meeting of the Philippines-Vietnam Joint Permanent Working Group on Maritime and Ocean Concerns (JPWG-MOC) took place. During the meeting, both countries agreed to “strengthen their coordination on maritime issues in regional and multilateral bodies” to uphold and protect their rights under the UN Convention on the Law of the Sea (UNCLOS), and to work towards the conclusion of a Code of Conduct for the South China Sea.
SECURITY & DEFENCE
1. Cloud of National Security Paranoia Looming Over the CCP
As was reported by the Chinese media, China has recently begun a series of nation-wide investigations into foreign consultancy firms on national security grounds. In early May, it was reported that the offices of the US consultancy firm Capvision were raided by Chinese police. In recent months, such cases involving US companies in China have been on the rise. At the end of March, it was reported that the office of the US company Mintz Group Beijing was raided and five local employees were detained after the office was closed. In April, the US consultancy firm Bain & Company confirmed that the Chinese police visited its office in Shanghai and questioned its staff.
To a certain extent, this crackdown is related to the recent amendments to China’s Counter-Espionage Law that was published on 26 April (it will come into full force on 1 July). It is far from clear where Beijing will finally draw the line, but it is likely to further dissuade foreign business from operating/expanding their presence in China. As a result of the updated law, the flow of foreign people and businesses operating in China has been under greater scrutiny by the authorities this year. In May, China sentenced a 78-year-old American citizen to life in prison for spying. In the same month, the South Korean football player San Jun-ho was detained in China on suspicion of taking bribes. Furthermore, in March, a Japanese Employee from Astellas Pharma was detained on espionage suspicions.
While the Chinese market remains attractive and prioritised, the worsening political environment is exerting pressure on foreign businesses. A survey conducted by the American Chamber of Commerce in China has revealed that the US businesses operating in China are increasingly pessimistic about their future prospects in China, with two-thirds of the respondents indicating rising US-China tensions as the top challenge for those wishing to do business in the country.
BUSINESS & TECHNOLOGY
1. Downfall of LinkedIn’s InCareer platform in China
On 8 May, Ryan Roslansky, CEO of LinkedIn, published a letter announcing big changes in the company’s China strategy that would result in 716 job cuts and the phasing out of InCareer, its local app in China. Instead, the company is planning to focus on “assisting companies in China to hire, market and train abroad”. This decision indicates that the company moving towards a cessation of its operations in China. In 2021, LinkedIn ceased the operations of its localised version of LinkedIn that, according to Senior Vice-President Mohak Shroff, was due to a “significantly more challenging operating environment and greater compliance requirements in China”. He explained that continuing to “operating a localised version of LinkedIn in China would mean adherence to the requirements of the Chinese government on internet platforms”.
LinkedIn, which is the last major Western social media operating locally in China, will join a group of other platforms such as Facebook, YouTube, Google, and Twitter that no longer operate there.
2. An Alternative to the Dollar: Introducing BRICS as a Common Currency?
The recent developments in the BRICS countries (Brazil, Russia, India, China and South Africa), which are a mixture of unsteady democracies and outright autocracies, each with its own distinctive economic structure, suggests new realms where they can actually cooperate. Members have been talking of a “de-dollarisation” trade with the prospect of a new shared BRICS currency (the feasibility of a joint currency will be discussed at an upcoming summit to be held in Johannesburg in August), thus building its own financial muscle and challenging Western-led institutions in a “bric by bric” manner. Most prominently, the US sanctions targeting dollar transactions have led Russia to embrace Chinese yuan-based transactions. From March 2022 to March 2023, Russian exporters increased their monthly transactions conducted in yuan from $0.5 bln to $6.9 bln, while the importer transactions increased from $1.4 bln to $7.7 bln. However, the limited convertibility of the yuan presents a big obstacle to replacing the dollar and becoming a joint BRICS currency anytime soon.
SOCIETY & CULTURE
1. Shrinking Space for Civil Society: Closure of the Beijing LGBT Centre
“I hope one day we will meet again to share each other’s pride,” was the depressing statement of one Chinese netizen on Weibo after the shocking announcement of the shutdown of the Beijing LGBT Centre due to force majeure circumstances. The centre, which celebrated its 15th anniversary in February, has been one of the largest and last-standing organisations for sexual and gender minorities in the country, which organized educational programmes geared towards trans healthcare, set up speed dating events for queer people and compiled information on LGBTQ-friendly clinics. However, given China’s increasing animus toward LGBT activism, this blow to the community comes to no surprise and it is likely that the winds of societal inclusivity will continue to further blow away from China.
