PHRASE OF THE MONTH:
“Ecological civilization” (kin. 生态文明shēngtài wénmíng)
Context: As China recorded its highest ever temperature of 52° Celsius in Xinjiang’s Turpan Depression on July 16th, President Xi Jinping made a speech at the National Ecological and Environmental Protection Conference on the construction of an “ecological civilization”. “Ecological civilization” is what Beijing intriguingly describes as the environmental sustainability, which, according to Xi, is a “fundamental plan related to the sustainable development of the Chinese nation.” Nevertheless, the implementation of such a plan may take a back seat considering China’s galvanized efforts to revitalize its faltering economy and its continued dependence on coal. As hydropower capacity across the country dropped by about a third due to prolonged droughts, there has been ongoing news about reopening coal mines and approving new coal power plants in the name of energy security. While pledging to build an “ecological civilization” which means reducing carbon emissions, it seems that Beijing does not shy away from its reliance on coal. Thus, for Beijing it might be a real headache how to strike a balance between its dependence on coal coupled with fostering its struggling economy and environmental sustainability.
DOMESTIC POLITICS & FOREIGN AFFAIRS
1. Opening the Door to Diplomacy but Unwilling to Walk Through
The door seems to be finally opened for high-level engagement between the US and China as there has been a string of recent visits from the top US officials, including Secretary of State Antony Blinken, Treasury Secretary Janet Yellen, and US climate envoy John Kerry in a bid to mend ties between the two nations. All three US officials had extensive sets of “candid”, “constructive” and “substantive” talks with their Chinese counterparts, which can be perceived as a small win for the stabilization of the US–China relationship. Nevertheless, they have come back home with only more promises of future follow-up meetings rather than responsibly stepping through the diplomatic doors by advancing on the hot issues, from restoring the mil-to-mil cooperation to inking a joint statement on climate change. As regards the latter, Chinese President Xi Jinping said that “China’s commitments are unswerving, but the paths towards the goals <…> should and must be determined by the country itself, rather than swayed by others.” With that being said, it seems that China is unwilling to concede to any outside foreign influence and, thus, it might take more efforts to build a new foundation for the US–China relationship.
2. Bright or Dark Clouds Loom Over China’s Economy?
On July 17th, China released its economic data for the first half of 2023. According to the statistics, gross domestic product (GDP) grew by 6.3% in the second quarter from a year ago, and 5.5% over the first half of the year. The Chinese state media has welcomed the figures enthusiastically and confidentially, stating “Chinese economy on track for strong, high-quality growth” and “prospects look bright”. Nevertheless, the foreign media reaction was somewhat less enthusiastic and critical, saying that “China’s economy loses momentum in second quarter” and thus poses “a challenge for global growth”. In a similar vein, US Treasury Secretary Janet Yellen warned on China’s economic slowdown, stating that “many countries do depend on strong Chinese growth to promote growth in their own economies, particularly countries in Asia, and slow growth in China can have some negative spillovers for the United States.”
Nevertheless, the good news has been that the reality of the missed market expectations has stirred up China as the Central Committee of the Communist Party of China (CPC) and the State Council have published a 31-point action plan, dedicated to promoting the development and expansion of China’s private economy, which for more than two years has been choked off. According to the Pekingnology newsletter, in China’s political system, a document jointly issued by the two top organs is the highest-level official document possible. Therefore, it seems that the report by China’s National Bureau of Statistics of less-than-expected statistics has indeed moved Chinese officials to juice the visibly faltering economy, even though the state media has been trying to curb the negative portrayals of the economy.
3. The Promulgation of China’s New Foreign Relations Law
China’s top legislature passed the Foreign Relations Law, which took effect on July 1st, concurrently celebrating the 102nd anniversary of the founding of the Chinese Communist Party. It is the first significant and comprehensive foreign relations law that formalizes the Chinese Communist Party leadership in all foreign policy matters. The new law has been widely interpreted by the state media as China’s retaliation against “external interference in its internal affairs under the Western hegemony with unilateral sanctions and long-arm jurisdiction”. Indeed, given the strained US–China relations and China’s ambition of a global rise at the centre of its engagement with the world, the law underlines two basic trends: Chinese increasing global outreach and its increasing willingness to embed this outreach within the legal framework. Thus, it comes to no surprise that by the Western media the law was received as Xi Jinping’s bid to extend his “combative stance on asserting Beijing on the world stage”.
4. A Shifting Tide in Germany’s Stance Towards China
After months of lengthy negotiations, Germany published its first, surprisingly tough, China strategy. Indeed, the expectations for the document were low, with minimal prospects to witness the shift in Germany’s consensus on China considering that Chancellor Olaf Scholz and his Social Democrats have a history of putting business über alles (en. “above everything else”) when dealing with authoritarian states such as China and Russia. However, now a shift appeared in Germany’s stance towards China as the document includes clear-cut rhetoric: “The further China moves away from the norms and rules of the rulesbased international order, the more critical dependencies on the Chinese market, also on the part of individual sectors or companies, can prove to be a problem” and “de-risking is urgently needed”.
Such tough wording might initially give the impression that Germany is turning its back on China. However, considering Germany’s current economic atmosphere, it is surely not. According to Noah Barkin, a senior advisor at the Rhodium Group and visiting senior fellow at the German Marshall Fund of the United States, “Scholz and his team are deeply concerned about the state of the Germany economy, which entered a recession in the first quarter of the year.” What is more, “an abrupt stop to cheap Russian gas has hit energy-intensive industries across the country.” Within this context, it might be interpreted that Germany will be unwilling to crumble the economic cooperation completely, so it remains to be observed whether Germany is really prepared to deliver on the plans laid out in its China strategy.
5. Removing Foreign Minister from His Post, but not Raising the Curtain on His Disappearance
On July 25th, a month after his disappearance, Beijing has removed Foreign Minister Qin Gang from his post, and replaced him with CCP’s most senior foreign affairs official and Qin’s predecessor Wang Yi. The decision was announced at the 4th meeting of the 14th National People’s Congress Standing Committee that took place on July 25th. The Chinese government has offered no explanation for the disappearance and abrupt removal of Foreign Minister. However, As Neil Thomas, fellow on Chinese Politics at Asia Society, observes, evidence has started to emerge that it is indeed a political purge (perhaps due to being guilty of discipline violations or corruption) as the Ministry of Foreign Affairs is gradually deleting Qin Gang‘s past activities from „Ministry Leadership Activities“ section of its website.
International media is still on a search for information regarding the now-State Councillor Qin Gang, a close ally of Xi Jinping. Qin was already absent from several high-level engagements including the 56th ASEAN Foreign Ministers’ Meeting and Philippines President Rodrigo Duterte’s visit to China due to “health reasons”.
When it comes to the official Chinese Foreign Ministry’s reaction, the mystery surrounding Qin Gang’s absence has deepened even more. During several of the ministry’s daily press briefings, foreign journalists were relentless in questioning about Qin’s disappearance. However, the spokesperson’s remarks were empty and clear-cut. On July 17th, a journalist from the Financial Times asked spokesperson Mao Ning about where Qin Gang is and when he is going back to his duties, but Mao’s answer was straightforward: “With regards to this question, I have no information to provide”. Interestingly, this and several other Qin-related episodes were completely omitted from the official transcripts.
In China’s highly secretive political landscape, an abrupt disappearance of a high-ranking official is not uncommon, but it often is a sign of trouble especially since Xi started its anti-corruption drive. In many cases, those officials would later surface along with the announcement of a criminal investigation. But, at the same time, there are instances (with Xi himself included) where politicians re-appear without any explanation.
6. China and Solomon Islands: Policing Deal and an Upgrade to “Comprehensive Strategic Partnership”
Since Solomon Islands switched diplomatic ties from Taiwan to China in 2019, their relations with China have grown swiftly. In July 10th, Prime Minister of Solomon Islands Manasseh Sogavare arrived to Beijing on an official visit where he met with high-ranking officials and Xi Jinping. Both countries signed numerous far-reaching agreements and elevated their diplomatic ties to a “comprehensive strategic partnership”. Moreover, both parties also reached an agreement to boost cooperation on “law enforcement and security” – a move that would raise concern to the country’s traditional partners Australia and New Zealand. In a joint statement, the Chinese side agreed to “continue to provide support and help to Solomon Islands as needed in strengthening Solomon Islands’ police law enforcement capacity” and “to step up protection of the safety and lawful rights and interests of each other’s nationals and institutions in their countries.”
On July 11th, Solomon Islands opened their embassy in Beijing. The ceremony was attended by Wang Yi, Director of the CCP’s Central Commission for Foreign Affairs, a sign of high importance. Last year, due to China’s increasing foothold in Solomon Islands, the US also stepped up its competition for influence in the country: in February 2023, it opened a US embassy in the Solomon Islands, 2,5 years after China.
7. India’s SCO Summit: Low-key is the Key to its “Non-alignment” Strategy?
On July 4th, the annual summit of the Shanghai Cooperation Organisation (SCO) was held virtually with India as its host. It was attended by members’ leaders including Russia’s Putin and China’s Xi. In this meeting that once again shows the broadening of the bloc’s reach and scope of cooperation. Iran has formally become the newest member of the bloc whereas Belarus has signed the Memorandum of Obligation that is the road towards SCO membership next year.
However, in contrast to the in-person 2022 Samarkand Summit, this year the Summit was low-key and lasted only around 3 hours. It culminated with the New Delhi Declaration which was 5,000 words shorter than the 2022 Samarkand Declaration. Also, unlike last year, there were no bilateral meetings or group photos – a sign that several countries wanted to maintain a low-key appearance. However, this setting may have served several countries’ interests: for India, it served its balancing game between the West and East, and for China, not meeting Russia’s President and thus maintaining its self-portrayal as the peacemaker in Ukraine. For Russia, it was also an acceptable choice given the pressure and criticisms from the members during last year’s summit. Moreover, Putin also used the platform to send a message of defiance to the West, saying that “Russia counters all these external sanctions, pressures and provocations and continues to develop as never before”.
BUSINESS & TECHNOLOGY
1. Sticking a Red Tape on Critical Minerals
China’s Ministry of Commerce announced that China will impose export restrictions on two key metals: gallium and germanium. Gallium is used in the production of compound semiconductors, whereas germanium is used in fibre and infrared optics, night-vision goggles, PET plastics, and space exploration. According to a 2023 study on critical raw materials by the European Union (EU), China is the top global supplier for the two metals, with about 94% of gallium and 83% of germanium.
China did not mention specific reasons for the new export restrictions: “the Chinese government’s export control on relevant items in accordance with law is a common international practice, and it does not target any specific country,” Chinese Foreign Ministry spokesperson Mao Ning said on July 4th. However, technology export curbs seem to be as a retaliation against the Netherlands’ announced set of controls that will limit the sale of high-end semiconductor equipment abroad, thus expanding the US’ heavy hand to suppress China’s chip-making industry.
Both gallium and germanium have been listed on the 2022 US Critical Minerals List and the 2023 EU List of Strategic Raw Materials as minerals that are essential to their economy and national security. Within this context, China’s curbs on the two metals will surely prompt countries to explore supply-chain diversification to secure their national interests.
SOCIETY & CULTURE
1. China’s Youth Unemployment Rate Further Exacerbates Current Economic Malaise
Youth unemployment in China hit a new record high, with the jobless rate of 16- to 24-year-olds in urban areas rising to 21.3% in June. However, according to Peking University professor Zhang Dandan, this number might have hit close to 50% if 16 million non-students “lying flat” (a movement about doing nothing) at home or relying on their parents were included.
These economically and socially corrosive numbers have a lot to do with the growing inequality in China’s labour market. According to China’s government statistical system, informal urban employment is growing and today accounts for almost 60% compared to 40% a decade or two ago. This is precisely where well-educated graduated young people are left at a disadvantage and especially vulnerable. Informal urban employment requires lower skills than graduates have and, in general, graduates usually expect to rather enter a formal sector with better jobs and higher incomes. Therefore, as the informal economy is increasing while the formal one is falling, it comes to no surprise that the well-educated youth cannot find a job.
