China in Quotes
“The first obstacle to understanding China and North Korea relations is that the archives are not open to society and scholars. The second is ideological restrictions, especially on textbooks and the findings of academics. There are certain views that have been formed that just cannot be changed. That does not work. As science develops and historical archives continue to be opened, people’s interpretations of history will certainly change.”
-Shen Zhihua is China’s leading expert on Cold War history. Shen Zhihua is a tenured history professor at Shanghai’s East China Normal University and heads China’s only Cold War history research centre.
De/Cypher Data Dive📈
Approximately one-third of China’s provincial-level jurisdictions are running pension deficits. The state-run Chinese Academy of Sciences estimates that the state pension system will run out of money by 2035.
Asia View
The 1950 Map Could Hold The Future Of Sino-US Relations in The Future
Written by Katsuji Nakazawa, Nikkei senior staff writer
As the world prepares for the Joint Sword 2024B, to follow in the steps of the exercise A that happened a few days ago, we have to appreciate a fact of history that Katsuji Nakazawa, a senior staff writer based in Tokyo has brought to the fore. He makes an interesting argument that the lines that are drawn today are not new and have been around since the 1950’s, and there are lessons to be drawn from the Korean war that will have a larger impact on the future of Indo-Pacific. We quote from his Nikkei article he has written.
Tensions along the Taiwan Strait are expected to heighten in the coming years, with China and the U.S. as the main geopolitical players. From the perspective of history, however, little has changed. This can be seen by looking at an old map.
The map, with Taiwan at its center, is headlined “Pacific Key.” It appeared in 1950 in Time, the once-venerable U.S. magazine, and clearly depicts the East Asia strategy the U.S. was pursuing almost 75 years ago.
Today, the map can be seen as showing there has been no significant change to Washington’s East Asia strategy in the intervening decades.
Some readers might also have realized that the U.S. Strategic Frontier in Time’s map partially overlaps with another line that we see more frequently nowadays, the First Island Chain, which China often uses in talking about its U.S. strategy.
The concept reflects Beijing’s thinly veiled desire to gradually beef up its naval and air forces, gain supremacy in the western Pacific and push the American “frontier” and Chinese “chain” eastward.
Perhaps the desire is not so veiled. Soon after assuming China’s presidency in March 2013, Xi Jinping appeared to have attempted to persuade the U.S. to join him in drawing another line. Visiting the U.S. in June that year as China’s top leader for the first time, he told then-U.S. President Barack Obama that “the vast Pacific Ocean has enough space for the two large countries of China and the U.S.”
The note of caution that we have to take from this is simple, the two large powers in this region of the world will not reorient their strategy and they have to keep the dialogue open. The conflict, and the looming trade war, with sobering economic reality in China the world has to be cautious.
Quick China: Unmissable Stories 📜
Dmitri Alperovitch pitches for an Economic Nato to counter China
Critical to any global strategy to counter China is building and securing the series of bilateral relationships and multilateral institutions and alliances that helped the West win Cold War I. We have to make it easy for our allies—and desired potential allies—to say yes to such alliances. China is surrounded by many relatively small and weak countries that need real reassurances, both security and economic, that if they side with the United States in a regional coalition they won’t be out in the cold.
Even countries like South Korea, Japan, and Australia that are G-20 countries with advanced economies and trillion-dollar-plus GDPs are small compared to the behemoths like China and the United States, especially if they’re left geopolitically isolated. (Dmitri Alperovitch from FP)
China plans leading role in global AI race on standards and computing power push
China launched a three-year action plan on Wednesday to spearhead its work on setting standards in artificial intelligence and strengthening national computing power, as well as cement its presence in the global tech race. The plan aims to strengthen research and develop standards on advanced chips, AI, quantum technology applications, brain-computer interfaces and computing power infrastructure, as well as step up China’s participation in global organisations.
Work on “general, foundational, ethical, security and privacy standards” in large models and generative AI will also be intensified, according to a document released by the office of Central Cyberspace Affairs Commission, along with the Ministry of Industry and Information Technology and State Administration for Market Regulation. (SCMP)
Chinese Yuan falls to six month low on dollar strength, two largest of the economies have diverging monetary policies
The Chinese yuan traded on the mainland hit a six-month low against the dollar of 7.2488, highlighting the divergent monetary policies of the world’s two biggest economies.
High U.S. interest rates and efforts to stimulate the domestic economy pose a continuing challenge to the yuan despite the onshore exchange market trading within a band fixed by China’s central bank. (Nikkei)
China and South Asia must solve regional tensions to fight terrorism: Wang Yi
During the recent Shanghai Cooperation Organisation (SCO) foreign ministers’ meeting in Kazakhstan, Chinese Foreign Minister Wang Yi urged member states to increase cooperation against terrorism. Citing terrorist attacks in Russia and Pakistan, China’s top diplomat urged SCO members to intensify efforts in uplifting security and coordination, especially in terms of intelligence sharing and joint operations. Highlighting the existence of various terrorist forces, and given China’s border with most the SCO countries, Wang also called on member states to maintain continuous engagement with Afghanistan. (SCMP)
Chinese foreign vice-minister Ma Zhaoxu to visit US in latest exchange
Chinese foreign vice-minister Ma Zhaoxu will visit the United States for four days from Thursday, the latest in a string of exchanges between the two sides in recent months.
Ma, who oversees US-China relations, will meet US deputy secretary of state Kurt Campbell and representatives of “various sectors” during the trip, Chinese foreign ministry spokeswoman Mao Ning told reporters in Beijing on Wednesday.
The meeting between Ma and Campbell follows a phone call between the two senior officials in March, when they discussed a range of regional and global issues as part of efforts to maintain communication and cooperation. (SCMP)
Xi Jinping wants public security officials to modernise and stay loyal
Chinese President Xi Jinping has urged the police force to promote the modernization of the country’s public security work. Xi, also general secretary of the Communist Party of China (CPC) Central Committee and chairman of the Central Military Commission, made the remarks on Tuesday while meeting with police personnel attending a national conference on public security work in Beijing. Li Qiang, Cai Qi, Ding Xuexiang, and Li Xi, all members of the Standing Committee of the Political Bureau of the CPC Central Committee, were present. Addressing the conference on Wednesday, senior CPC official Chen Wenqing urged the police force to stay loyal, clean, and ready to rise to duty. He called on them to spare no efforts in preventing risks and ensuring security and stability, enhance the quality, efficiency, and credibility of law enforcement, and strengthen the police force through reform. (Xinhua)
Beijing asks Tencent to lower WeChat’s mobile payment market share
Tencent Holdings has been instructed by Chinese regulators to reduce its WeChat app’s mobile payment market share, particularly in-person payments via QR codes. This move aims to challenge WeChat’s dominance in China’s mobile payments landscape, which also includes Ant Group’s Alipay. WeChat, with approximately 1.36 billion monthly active users, is under pressure to mitigate the risks associated with its market dominance. Regulatory scrutiny in China’s lucrative mobile payments sector has increased, with recent efforts focusing on preventing monopolistic practices rather than specifying defined criteria. Despite challenges, Tencent continues to diversify its revenue streams, leveraging WeChat features such as Channels to drive growth. Read more: Nikkei
Beyond The Great Wall 🧱
Exploring News About China in Depth
Economy
China’s Third Chip Fund Gets $47 Billion to Boost Output
China has launched a third state-backed investment fund to boost semiconductor production, with a registered capital of 344 billion yuan ($47.5 billion). This fund, known as the “Big Fund,” seeks to increase chip manufacturing self-sufficiency in the face of rising US export controls. It is the largest of the three phases, following earlier funds established in 2014 and 2019. China’s finance ministry and five major Chinese banks are among the largest investors, with a focus on chip manufacturing equipment and related technologies. Read more: Asia Financial
China’s Fosun to sell German private bank to ABN Amro for $730m
Chinese conglomerate Fosun International has agreed to sell Hauck Aufhauser Lampe, a German private bank, to Dutch bank ABN Amro for €672 million ($730.4 million). This sale is part of Fosun’s strategy to reduce debt by selling noncore assets during difficult economic times. The move is consistent with Fosun’s goal of maximizing shareholder value through a streamlined, asset-light operating model. Read more: Nikkei
Is China going to devalue the yuan?
China is likely to devalue the yuan in response to a variety of economic challenges, including shrinking current account surpluses and growing resistance to Chinese exports as a result of protectionist policies. The People’s Bank of China recently set the yuan’s daily reference rate to its lowest level since January, indicating a move toward a weaker currency. This devaluation strategy aims to make Chinese exports more competitive, but it could exacerbate global trade tensions and increase capital flight from the country. Despite its apparent strength, the yuan is vulnerable due to geopolitical and economic factors, as well as China’s non-market approach. Read more: Hinrich Foundation
Chinese Mega Cities Loosen Homebuying Rules as Aid Spreads
To revive the property market, Shanghai, Shenzhen, and Guangzhou have eased homebuying rules by lowering downpayment requirements and allowing for cheaper loans. This move, part of a larger central government effort, aims to increase sales and stabilize prices in the face of falling home values and economic concerns. Analysts predict that Beijing will follow suit, despite mixed results in sales and buyer confidence in these cities so far. Read more: Bloomberg
China Weighs Record Fine for PwC Over Evergrande Auditing Work
China is preparing to impose a record fine of at least 1 billion yuan ($138 million) on PricewaterhouseCoopers (PwC) for its auditing work for China Evergrande Group, one of the country’s largest financial fraud cases. In addition to the fine, the Ministry of Finance may suspend PwC’s local operations. This comes as President Xi Jinping steps up efforts to combat financial crimes and stabilize the economy. PwC, which recently lost several Chinese clients, audited Evergrande’s main unit, which overstated revenue by 564 billion yuan between 2019 and 2020. Read more: Bloomberg
Taiwan’s Strong GDP Growth Belies Erosion of Household Earnings
Taiwan’s economy is growing at its fastest rate in nearly three years, with a 6.5% increase in first-quarter GDP driven by global demand for artificial intelligence technology. However, this growth obscures the fact that inflation has outpaced wage growth, reducing real household incomes. President Lai Ching-te, who is facing widespread public frustration with rising living costs, has promised to raise wages and support small and medium-sized businesses in order to ensure a more equitable distribution of economic benefits. Read more: Bloomberg
Internal Politics 🏛️
China’s Xi Jinping cautions against energy investment overload at meeting
At a meeting with business leaders and economists, President Xi Jinping warned against overinvestment in the new energy sector, emphasizing that support for electric vehicles, lithium-ion batteries, and solar panels should be balanced and tailored to local conditions. Xi emphasized the importance of fair competition and promised that China would maintain a level playing field for both foreign and domestic companies. Read more: SCMP
Chinese Foreign Ministry Promotes Long-Time Spokesperson to Vice Minister
Hua Chunying, the outspoken head of the Chinese foreign ministry’s press department, has been promoted to vice-minister, making her the youngest and only woman among the five foreign vice-ministers. Hua, who joined the foreign ministry in 1992, is known for her “Wolf Warrior” diplomacy, especially during the Covid-19 pandemic and in response to US policies. She has actively used social media to promote China’s narrative and criticize Western actions. Hua’s promotion reflects her significant role in shaping China’s assertive diplomatic stance. Read more: Caixin
Former deputy chief of State Tobacco Monopoly Administration sentenced to death with reprieve for taking bribes
He Zehua, former deputy chief of China’s State Tobacco Monopoly Administration, has been sentenced to death with a two-year reprieve for taking bribes amounting to over 943 million yuan (approximately 132.6 million USD). The Intermediate People’s Court of Dalian ruled that after the reprieve, his sentence will be commuted to life imprisonment without the possibility of parole or further commutation. He was also deprived of his political rights for life, and all his personal property was confiscated. The court considered his cooperation and the full recovery of the illegal gains in its sentencing. Read more: Xinhua
China And The World🌐
Xi Lays Out Vision for Greater Cooperation With Arab States
Chinese President Xi Jinping has outlined a vision for increased cooperation with Arab states, focusing on collaboration in technology, finance, and green technology. Speaking at the China-Arab States Cooperation Forum in Beijing, Xi reaffirmed China’s support for Palestinian UN membership and called for a peace conference to resolve the Gaza crisis. This initiative is part of China’s broader strategy to increase its influence in the Middle East and strengthen political ties with Arab nations amidst its global rivalry with the United States. Read more: Bloomberg
China hotels barred from refusing foreign guests as government strives for ‘first-class business environment’
Chinese authorities have issued a directive prohibiting hotels from refusing foreign guests, following complaints from travelers who were turned away. The notice, jointly issued by several government bodies, aims to improve the reception of foreign travelers and enhance service standards in the hospitality industry. Despite past confusion, all hotels in China are mandated to accept foreign guests and adhere to registration requirements outlined in the law. Failure to comply may result in fines for both hotels and travelers, underscoring the importance of proper adherence to regulations. Read more: CNA
Chinese envoy: WHO’s rejection proves ‘Taiwan independence’ a dead end
According to a Chinese envoy to the United Nations, the World Health Organization’s exclusion of Taiwan from its annual assembly confirms that pursuing “Taiwan independence” is futile. The decision, which is consistent with previous rejections, emphasizes adherence to the one-China principle supported by international resolutions. Despite Taiwan’s separatist stance, the Chinese government promotes its participation in global health affairs under the one-China principle. Read more: CGTN
China, U.S. hold 2nd round of consultations on maritime affairs
China and the United States recently conducted their second round of consultations on maritime affairs, affirming their commitment to ongoing dialogue and communication. China conveyed its serious concerns to the U.S. regarding perceived infringements and provocations in waters surrounding China, emphasizing the importance of respecting China’s territorial sovereignty and maritime rights to uphold regional peace and stability. Read more: CGTN
US, China defence chiefs to hold rare talks in Singapore
The defense chiefs of the US and China will hold rare face-to-face talks in Singapore, marking the first substantive meeting in 18 months. This dialogue, set to take place at the Shangri-La Dialogue, offers hope for increased military communication aimed at managing potential conflicts. Read more: CNA
Chinese national arrested in Singapore for allegedly running international cybercrime botnet
Wang Yunhe, a Chinese national, was arrested in Singapore for allegedly operating the “911 S5” botnet, one of the world’s largest networks of malware-infected computers. This botnet was used for identity theft, financial fraud, and child exploitation, resulting in millions in profits. The multinational operation involved law enforcement from the United States, Singapore, Thailand, and Germany, resulting in Wang’s arrest and ongoing extradition proceedings to the United States. Read more: CNA
China, Japan agree to restart ruling party talks after six-year hiatus
China and Japan have agreed to restart regular talks between their ruling parties after a six-year hiatus, aiming to improve strained relations. This decision follows Chinese Premier Li Qiang’s positive remarks on rejuvenating ties with Japan and South Korea after a recent trilateral summit. Toshimitsu Motegi, Japan’s ruling party secretary-general, and Liu Jianchao, head of China’s Communist Party unit managing foreign political party relations, reached the agreement during Liu’s visit to Tokyo. The talks, previously held annually, ceased in 2018. Read more: CNA
Benin Open to Resume Niger Oil Exports to Save Chinese Interests
Despite an ongoing diplomatic row, Benin has agreed to resume Nigerien crude oil exports to protect Chinese investments. The exports were halted due to a border dispute, but a shipment was permitted on May 17 after Chinese intervention. Benin’s President, Patrice Talon, stated that shipments could resume if Niger lifted its land border blockade, which is required to keep crude oil flowing through a 1,930-kilometer pipeline operated by China National Petroleum Corporation. Read more: Bloomberg
Trilateral Relations between Russia, North Korea and China
Written By Priyanka Garodia, Geopolitical Research Analyst – South Asia
The growing friendship between Russia and North Korea has resulted in uneasiness and uncertainty in the international community. China stands to either win or gain from this relationship, depending on how it balances its own pragmatic needs against the needs of its allies.
Historic Connection
In the 1950s, North Korea, Russia and China, deemed the Northern Triangle, developed a close relationship when their geostrategic needs aligned. The three countries were opposing the forces of imperialism and their operations were centred around Eastern Europe, the Taiwan Strait and the Korean Peninsula. The ‘anti-imperial agenda’ that cemented their relationship was code for being ‘anti-west’. However, this tripartite nexus soon gave way to the Sino-Soviet split and North Korea’s increasing pariah status in the world.
Present Times
Russia and North Korea observe an increasing closeness. Moscow has assisted North Korea with food, missiles, fighter jets, armoured trucks and raw materials for ballistic missile production, along with technological knowledge, whereas North Korea has been providing Russia with low-tech and long range missiles, which has given it a strategic edge in the war against Ukraine. This growing military connection between the two countries has Beijing worried about regional stability for very selfish reasons.
China’s Need
As revisionist powers, both Beijing and Moscow, have different understandings of what an ally brings to the table, China is worried that Russia seeks to disrupt the regional order in Asia and will use North Korea as a pawn to do so. Putin’s actions in the Caucasus, Chechnya, Belarus, and Ukraine suggest that he wants to rebuild the Russian empire. This could be a potential security threat for Beijing, which would want to balance relations in the region. The Chinese have adopted the official “non-alignment, non-confrontation and non-targeting of third parties“
policy and have not actively supported the Russians in the war against Ukraine. The limited support for Russia and a renewed sense of friendship towards North Korea are proof that China is being a sensible player who has specific needs from its allies that it wants met.
Amid coup concerns in Philippines, Marcos Jnr sacks pro-Duterte police officers
Summarized by De/Cypher Team, Published in South China Morning Post
In response to concerns about a coup attempt, Philippine President Ferdinand Marcos Jr. has fired several police officers allied with former President Rodrigo Duterte, including Davao City police chief Police Colonel Richard Bad-ang. This decision comes after 34 other officers were suspended and investigated for their involvement in the deaths of seven suspected drug dealers. Former Senator Antonio Trillanes IV suggested that this is a pre-emptive action in anticipation of Duterte’s arrest warrant from the ICC. The Duterte family, which has a history of close ties with the police, is said to be plotting to destabilize the government and replace Marcos Jr. with Vice President Sara Duterte. Read more: SCMP
Iran in Mourning Is Still a Nuclear Headache
Summarized By De/Cypher Team, Published in Bloomberg
Despite political turmoil, Iran’s nuclear program persists, as IAEA data reveals a 39-kilogram increase in 20% enriched uranium over the past quarter. The country’s growing capacity to fuel warheads deepens international anxiety about its nuclear aims. Amidst mounting pressure to resolve long-standing nuclear uncertainties, the international community awaits the IAEA’s June 3 board meeting where the US and European nations will confront Iran’s rising inventory and lack of cooperation. Read more: Bloomberg
News From Asia
Friday
- World defense officials are meeting in Singapore for the Shangri-La Dialogue as tensions between the United States and China rise, particularly over the South China Sea and Taiwan. The conference comes shortly after China conducted significant military exercises around Taiwan. Read more: Arab News
- In Hong Kong’s largest national security case, 14 pro-democracy activists were convicted of conspiring to commit subversion by holding an unofficial primary election with the goal of challenging government authority and potentially sparking a constitutional crisis. Read more: AP
- North Korea launched 18 short-range ballistic missiles as a show of force against South Korea’s “gangsters’ regime,” with Kim Jong-un in charge of the exercise. Pyongyang’s missiles, which struck a target 365 kilometers away, demonstrated its readiness for a pre-emptive strike. Read more: SCMP
- Japan’s Kashiwazaki Kariwa Nuclear Power Plant, the world’s largest nuclear facility, remains idle since the 2011 Fukushima disaster. As Japan faces high costs from imported fuels and aims to address climate change, there is a growing debate on whether to restart the plant, despite political and safety challenges. Read more: Bloomberg
Thursday
- North Korea fired around 10 suspected short-range ballistic missiles into its eastern waters, just days after a failed satellite launch. Read more: AP News
- A U.N. Human Rights Council group issued a report highlighting human rights issues in Japan, including discrimination against minorities, poor working conditions, and inadequate responses to sexual abuse allegations at Johnny & Associates. Read more: AP News
- Vietnam’s inflation rate rose to 4.44% in May, the highest in 16 months, driven by increased pork and electricity prices. Read more: Bloomberg
- Google is investing $2 billion to establish its first data center and Google Cloud region in Malaysia, located in Selangor’s Elmina Business Park. Read more: CNA
Wednesday
- Algeria plans to present a draft resolution at the United Nations to halt the violence in Rafah, where Israeli strikes have targeted Hamas fighters amid a densely populated area. Read more: Arab News
- Malaysia aims to secure over US$100 billion in semiconductor industry investments to focus on integrated circuit design, advanced packaging, and manufacturing equipment for semiconductor chips. Read more: CNA
- The UAE President Mohamed bin Zayed Al Nahyan arrived in Seoul for a two-day state visit to discuss expanding cooperation in the defense and energy sectors. Read more: Joong Ang Daily
- North Korea has escalated tensions with South Korea by sending balloons filled with animal waste and garbage, which were found in various locations, including Seoul. Read more: VOA
Tuesday
- Israel is facing significant international backlash following a strike in Rafah, Gaza, that killed 45 people and caused a destructive fire in a displaced Palestinian camp. Read more: Euro News
- South Korea condemned North Korea’s failed spy satellite launch, describing it as a “provocative act” that destabilizes the region. The rocket carrying the “Malligyong-1-1” satellite exploded shortly after launch due to an engine issue. Read more: CNA
- South Korea is aiming to become a major player in the space industry by significantly increasing its space budget and establishing a new space agency, the Korea AeroSpace Administration (KASA), modeled after NASA. Read more: Japan Times
- Russia and Uzbekistan agreed to build Central Asia’s first nuclear power plant in Uzbekistan, which will have six reactors with a combined capacity of 330 megawatts. Read more: AP
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