Chinese Officials Warned Not to Hide assets or Business Ties; Exclusive Insight: Wang Huning Retains Control of Reforms Committee, He Lifeng Expected to Assume Key Responsibilities
Chinese ambassador questions the sovereignty of ex-Soviet states, provoking anger; ING sues China’s ICBC for copper deal losses, seeks US$170 million
Welcome to this issue of The China Brief. Today is April 23, 2023. Here at The China Brief, we bring you the latest news on China's politics, economy, and society from global media sources, along with exclusive expert analysis. If you find our content helpful, please subscribe to our newsletter.
And here’s today’s exclusive insight:
Exclusive Insight: Wang Huning Retains Control of Reforms, He Lifeng Expected to Assume Key Responsibilities
Decoding the First Meeting of the 20th Central Comprehensive Deepening Reform Committee
On April 21st, the first meeting of the 20th Central Comprehensive Deepening Reform Committee took place, revealing the new leadership of the committee.
During the last two terms, the convention was for Xi Jinping to serve as director, with the Premier, the top-ranked secretary of the Central Secretariat, and the top-ranked deputy prime minister as deputy directors. In this term, Xi Jinping, Premier Li Qiang, and the top-ranked secretary of the Secretariat, Cai Qi, maintain their respective roles as director and deputy directors, adhering to convention.
However, the current deviation from convention is the appointment of Wang Huning, Chairman of the CPPCC, as another deputy director instead of the top-ranked deputy prime minister, Ding Xuexiang.
It is widely known that the Deepening Reform Committee is formally considered the "top-level design and decision-making coordination body of the CPC Central Committee for comprehensively deepening reform in various fields of the Party and the country." The office in charge of the committee's affairs, the Deepening Reform Office, is affiliated with the Central Policy Research Office, and the majority of its internal staff are from this same research office.
Prior to the 20th CPC Congress, the leadership of these two departments was held by Wang Huning, the director of the Central Policy Research Office. Possibly due to the unrealized potential of the Deepening Reform Committee, Han Zheng, then secretary of the Shanghai Municipal Committee (currently the Vice President of the country), once politely declined Xi Jinping's proposal to serve as a full-time deputy director of the Deepening Reform Committee shortly after the 18th CPC Congress.
Several documents were adopted at the meeting, including those related to the Deepening Reform Committee itself: the "Working Rules of the Central Comprehensive Deepening Reform Committee," "Working Rules of the Central Comprehensive Deepening Reform Committee's Special Groups," and "Detailed Rules for the Office Work of the Central Comprehensive Deepening Reform Committee."
These documents suggest that the Deepening Reform Committee is on the verge of becoming more substantial and influential, serving as the central hub for China's next phase of comprehensive deepening reform. The committee's office will progressively separate from the Central Policy Research Office, which is mainly responsible for drafting documents. China's reforms will move beyond the document drafting and dissemination stage that characterized the past decade, making way for substantial progress.
Personnel in any new CPC organization will be adjusted, transferred from existing organizations, and new members will be introduced to reinforce the organization. While the Deepening Reform Committee holds a high rank, its actual power resides with the director of its office, the Deepening Reform Office.
Wang Huning, who has concurrently served as the director of the Deepening Reform Office for the past decade, now occupies the position of deputy director of the Deepening Reform Committee. This is likely a transitional arrangement, with the possibility of further personnel adjustments in the future. It is my personal estimation that He Lifeng, a member of the Politburo of the CPC Central Committee and Vice Premier of the State Council, could be the director of the Deepening Reform Office, an appointment not disclosed in the press release. In the future, many members of He Lifeng's team from the National Development and Reform Commission will be relocated to the Deepening Reform Office to bolster and solidify its operations.
(Authored by Liu Zhengyue, a contributing analyst for The China Brief.)
Chinese ambassador questions the sovereignty of ex-Soviet states, provoking anger
The Sydney Morning Herald
Beijing’s attempts to broker peace between Ukraine and Russia have been placed under question by comments from China’s ambassador to France, Lu Shaye, who claimed that ex-Soviet states have no effective status as sovereign nations. When asked about the status of Crimea, which was annexed by Russia in 2014, Shaye stated it was “first Russian” but then questioned the international status of ex-USSR countries. The comments have been met with anger across Europe, with Latvia demanding a retraction and the French Foreign Ministry saying it was “dismayed” by Shaye’s statement.
Chinese Censorship Is Quietly Rewriting the Covid-19 Story
NY Times
China's censorship campaign has targeted international journals and scientific databases, damaging shared scientific knowledge, according to a recent investigation by the New York Times. Chinese authorities silenced scientists, censored online discussions and hindered international investigations into the Covid-19 pandemic, giving rise to mistrust of Chinese science. Western journal editors enabled these efforts by agreeing to edits or withdrawing papers for murky reasons. Amid this censorship, several retractions of papers have taken place, including a scientific review of early infection cases and a letter published in The Lancet Global Health by two nurses describing the conditions that they worked in during the pandemic. Beijing controls and shapes information as a matter of course, particularly in moments of crisis, although the motives for censorship are unclear; the censorship of the Covid-19 pandemic also hindered early attempts to determine its origins.
China lodges complaint over S Korean president’s Taiwan comments
Al Jazeera
Chinese Vice Foreign Minister Sun Weidong has met South Korea’s ambassador in Beijing to complain about remarks made by the South Korean president over Taiwan. Sun said the comments made by President Yoon Suk-yeol in an interview with Reuters were “totally unacceptable”. During the interview, Yoon said tensions over Taiwan were due to attempts to change its status by force, and that the dispute was global in nature. “The Taiwan issue is not simply an issue between China and Taiwan, but like the issue of North Korea, it is a global issue”, Yoon told Reuters. China rejected any comparison between North Korea and Taiwan. Under the One China policy, China insists that Taiwan is part of its own territory, a position rejected by Taiwan, which demands that countries with which it has ties must recognize it as a sovereign state.
US, France evacuates citizens from Sudan amid conflict
DW
The US evacuated embassy staff from Sudan after violence broke out between the Sudanese army and Rapid Support Forces paramilitary. President Joe Biden thanked Djibouti, Ethiopia, and Saudi Arabia for their help. The RSF claimed it had coordinated with the six US aircraft involved in Sunday's operation to evacuate fewer than 100 people. French citizens, including foreign ministry staff, were also started to be removed from Sudan on Sunday. About 16,000 US citizens were registered at the embassy but officials said the number is likely to be more as citizens are not required to register their presence.
ING sues China’s ICBC for copper deal losses, seeks US$170 million: report
South China Morning Post
Netherlands-based ING is taking China’s Industrial and Commercial Bank to Hong Kong's High Court over alleged serious breaches of trading rules in copper deals. ICBC released copper export details without tthe market entry fee and payment that was required by the agreement. ING is seeking $170m in damages, following losses it incurred on inbound metals sold to Maike Metals International by Triway International, a Maike unit in Hong Kong. Maike has already had to apply to a Chinese court for preliminary restructuring, following a liquidity crisis experienced when it was forced to delay payments for imported copper.
Three nuclear superpowers, rather than two, usher in a new strategic era
Japan Times
The Pentagon has reportedly concluded that China has doubled its current nuclear arsenal to at least 410 nuclear warheads and is on track to have 1,000 such weapons by 2030, with some estimates as high as 1,500 by 2035. The assessments come as China is preparing to begin the operation of nuclear reactors that the US is said to have described as capable of delivering fuel to support China’s nuclear weapons program. Though China and Russia insist that their use of breeder reactors is for civilian purposes only, John F. Plumb at the Pentagon recently noted: “There’s no getting around the fact that breeder reactors are plutonium, and plutonium is for weapons.” The nuclear material required for the Chinese reactors is being supplied by Russia, which has just delivered 25 tons of highly enriched uranium.
The United States is now facing questions over how to manage a three-way nuclear rivalry with two countries seeking to have greater atomic arsenals than the US. “By the 2030s the United States will, for the first time in its history, face two major nuclear powers as strategic competitors and potential adversaries,” the Pentagon said last fall in a policy document, adding: “This will create new stresses on stability and new challenges for deterrence, assurance, arms control, and risk reduction.”
Japan order to shoot down North Korean rocket dramatic, but intercept unlikely
Japan Times
The Japanese Defense Ministry has ordered the Self-Defense Forces to be able to intercept any object that might threaten the country, such as North Korea's new military spy satellite which could potentially pass over Okinawa. The original statements prompted concerns from the public however, the situation seems unlikely, with the order simply aimed at reassuring nervous locals.
Luxury brands reap windfall in China from pandemic investments in digital
South China Morning Post
Luxury brands are reaping benefits from their investments in digital strategy in China. The success of the online strategies is generating higher sales and winning over younger consumers for brands like Gucci and Coach during the COVID-19 pandemic. Data from the Ministry of Commerce showed that online retail sales in China grew 8.6% to 3.29tn yuan ($477bn) in Q1 2022. The numbers are expected to rise further in the coming years. The differences between the Chinese and global luxury markets will continue to grow, particularly around the areas of digitalization and cultural references, says Bain.
Unprepared for long war, US Army under gun to make more ammo
Associated Press
The US military is confronting a shortage of fighter jet and drone pilots, reducing the ability of the air force to support those in ground combat, according to a report by the Center for a New American Security. The document recommends the US military partner with industry to develop new training programs and rethink how it trains and identifies fighter pilots, who are in high demand in the commercial sector. The report also argues that drone pilots should be given more opportunities to fly actual aircraft to develop more skills, and that the air force provides more incentives to attract commercial pilots.
Central banks load up on gold in response to rising geopolitical tensions
Financial Times
Many central banks are making plans to increase their gold reserves in their investment strategies, according to a survey of 83 banks. Most respondents viewed geopolitical risks to be their second biggest concern behind high inflation, with over 40% listing tensions such as Russia's invasion of Ukraine as a risk factor. More than two-thirds of respondents believed central banks would increase their gold holdings in the next two years. Gold is often considered a safe haven asset that performs well in times of economic uncertainty. Central banks own approximately 16% of the world's gold.
Allies keep close watch on British plans to reshape armed forces
Financial Times
A reformist mood is gripping the UK military in the wake of Russia’s full-scale assault on Ukraine, which has revealed valuable lessons about modern warfare but also exposed the thinness of Britain’s armed forces, described as “hollowed out” by defense secretary Ben Wallace. Exactly how Britain plans to reshape its armed forces and meet strategic challenges with the defense budget constrained, is being closely watched by its allies in the North Atlantic Treaty Organisation (NATO), where the UK had long been the second biggest military power, albeit some distance behind the US. MoD’s defense and foreign policy review identified Russia as the most acute threat, but also flagged China and its increasingly aggressive stance towards Taiwan as an “epoch-defining challenge”. Current and former officials identify three broad areas the MoD needs to address; the need to restock the weapon and ammunition supplies, the current procurement system, and the role of the army, which has become the poor cousin of the three armed services following the end of counter-insurgency operations in the Middle East.
France’s struggle to deliver a second nuclear era
Financial Times
France's bid to reverse climate change by reducing its net emission to zero over the next three decades may be stymied by a shortfall of nuclear industry workers, a legislative report has warned. The French parliament has voiced concerns over the country's ability to meet the enormous task of hiring 100,000 nuclear specialists ranging from electricians to engineers to boilermakers over the coming six years to build six new reactors. State-controlled EDF is racing against time, says the report, where experts in nuclear grading must be painstaking, with slight defects delaying projects costing millions.
Chinese officials warned not to hide assets or business ties
South China Morning Post
China’s Communist Party has subjected thousands of officials to checks on their business dealings and assets as part of an ongoing drive against corruption. Reporting procedures introduced in 2010, requiring officials to volunteer information on their travel, personal income and other details, are to be toughened under new guidelines. Officials concealing information deemed to be material may risk being denied promotion.
The Dollar’s Demise May Come Gradually, But Not Suddenly
Bloomberg
Brazil’s leader, Luiz Inácio Lula da Silva, recently criticized the US dollar’s status as the world’s trade currency, echoing similar comments made by former French President Charles de Gaulle in 1965. While such remarks are regularly made, more recent rumblings about the greenback are being heard with increasing regularity. A reason behind this trend may be the Trump-era sanctions aimed at isolating trading partners from the dollar-based global financial system; China, for example, is solidifying currency agreements with other countries like Brazil and Russia in response. Nevertheless, despite losing some share of the forex reserve market, the dollar’s overall advantage remains significant with 80-90% share of global transactions remaining relatively stable since 1989. Critics have noted that the lack of capital controls over the renminbi disincentivizes global investors from adding the Chinese currency to their currency reserves, undoing much of China's efforts to increase the renminbi’s share.
Shifting production from China is impossible, says shipping boss
Financial Times
Companies are expanding production outside of China to reduce the risk from rising geopolitical tensions, but the country’s dominance in world trade makes cutting it out of global supply chains impossible, warns shipping group Orient Overseas Container Line's Michael Fitzgerald. “The scale and the weight of China means it is easy to overexaggerate the impact of ‘China plus one’,” he said. Fitzgerald said the trend of shifting or expanding production outside of China would happen incrementally rather than everyone packing and leaving.
G7 to seek quality investment for economic security
Japan Times
The G7 nations are said to be contemplating working together to promote quality direct investment in emerging and developing economies, to help create jobs as well as to economically secure the nations. The countries hope that foreign direct investment will empower sustainable economic growth as opposed to loans that need to be repaid. The discussions around this topic are said to take place in the city of Niigata for three days from May 11. The plan would prevent countries from becoming stuck in “debt traps” where they struggle to repay massive debts leaving their infrastructure placed under control of lenders.
Philippines and China to open more communication lines to resolve maritime dispute
Japan Times
China and the Philippines have agreed to establish "more lines of communication” to resolve immediately future disputes over the West Philippine Sea, President Ferdinand Marcos Jr. said. The leaders' talks are to promote peace and stability in Asia and deepen relations. China needs to bolster its ties with Manila due to the Philippines granting the US access to more military sites near Taiwan and the South China Sea, two potential flashpoints in the region. Philippine Defense Secretary Carlito Galvez in a statement said the US pledged $100m in assistance for the acquisition of medium-lift helicopters.
US embassy evacuated from Sudan; China, UK planning to airlift nationals out
South China Morning Post
Sudan's Rapid Support Forces has said it coordinated with US troops to evacuate diplomats and their families from the American embassy in the country amid fighting between the Sudanese Army and the paramilitary group. Over 150 people from various nations have been evacuated to Saudi Arabia in the first announced evacuations of civilians. Foreign countries are preparing for the potential evacuation of thousands more of their nationals, even though Sudan’s main airport remains closed. “The Rapid Support Forces Command has coordinated with the US Forces Mission consisting of six aircraft, for evacuating diplomats and their families on Sunday morning,” said a tweet by the heavily armed paramilitary group. The RSF has previously said it was ready to “partially” open “all airports” in Sudan to evacuate foreign citizens. Fighting has left hundreds dead and thousands wounded, while civilians cope with shortages of electricity and food.
As Chinese firms move supply chains out of China, India and Southeast Asia benefit
South China Morning Post
Chinese manufacturers are being lured by a combination of geopolitical risks and rising costs to look for alternatives to production on the mainland. While predictions at the start of 2020 that manufacturers would be leaving China in droves have yet to fully match reality, the supply chains that underpin many of the country's transnational operations have undergone significant disruption. Neighboring Southeast Asian nations have been some of the main beneficiaries of China's pivot. For instance, in Thailand and Vietnam, major Chinese firms have relocated parts of their supply chains, while on the subcontinent India and Bangladesh are also becoming popular options as alternatives to mainland China. Companies looking to service North American consumers have also shown an interest in Mexico, where the Hofusan Industrial Park has been a prime location for Chinese firms to relocate to. Meanwhile, Poland is attracting firms wanting to export to Europe as China's electric vehicle makers push into that market.
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