Exclusive Insight: The State Council's think tank: where officials with dead-end careers are settled

China Urges End to Ukraine War, Calls for Peace Talks; China Dismisses US Claim Over Possible Weapons Sales to Russia; After Painful Slowdown, a Big Chinese Developer Is Preparing to Buy Land Again

Welcome to today's issue of "The China Brief". China has urged an end to the war in Ukraine, called for peace talks, and denied accusations that it is providing lethal aid to Russia. M&A activity in China may struggle this year, according to a report by PwC, while neutral countries continue to support Russia. Finally, one of China's largest property developers, Country Garden Holdings, is preparing to buy residential land in local government auctions for the first time in over a year.

And here’s today’s exclusive insight:

The State Council's think tank: where officials with dead-end careers are settled

Wang Shouwen, the current First Deputy Minister and a full ministerial level official, is also China's chief international trade negotiator. Earlier in his career, he worked as a translator for Wu Yi, the former Minister of Foreign Trade and Economic Cooperation, and has a wealth of foreign language skills, experience in international trade, and practical negotiation expertise.

During the initial stages of the China-US trade war, negotiator Liu He was not well-versed in how those negotiations worked. Therefore, Wang Shouwen stepped in to assist and enabled China to end the trade war in a relatively respectable manner. In recognition of his contributions, Wang Shouwen received a promotion and was appointed as a full ministerial-level official last year.

Professional officials like Wang Shouwen are expected to have even more significant opportunities in Xi Jinping's new era, avoiding the mistakes of the past, such as those made by Long Yongtu.

Sheng Qiuping, the current Deputy Minister of Commerce, hails from Zhejiang province. He previously served as the head of the Zhejiang Provincial Department of Commerce five years ago and has since been elevated to the position of Deputy Minister of Commerce two years ago.

Ling Ji, another Deputy Minister, is a seasoned veteran of the Ministry of Commerce. During his tenure as Vice Premier of the State Council from 2008 to 2013, Wang Qishan was in charge of the Ministry of Commerce, and it was then that Ling had intersected with him. When Wang Qishan was appointed as the Secretary of the Central Commission for Discipline Inspection in 2016, Ling Ji was transferred to the CCDI system, and he was resolved from the position of Deputy Minister the following year. After the 19th National Congress of the Communist Party of China, Ling Ji returned to the Ministry of Commerce as Deputy Minister and Vice Representative for Trade Negotiations (assistant to Wang Shouwen). However, his future prospects are not very promising.

The Development Research Center of the State Council is a public institution at the ministerial level, although it is not officially a part of the economic cabinet. Nonetheless, given its relevance to economic matters and the presence of some noteworthy individuals, it is of interest.

This center, as the State Council's think tank, offers recommendations on economic issues and lends support in drafting official documents. It is akin to the Hanlin Academy of ancient times, where eminent intellectuals would congregate.

Over the past two decades, the Development Research Center has not only functioned as a modern-day Hanlin Academy, but also as a repository for disgraced departmental-level officials who have yet to face legal consequences.

The current head of the Development Research Center, Lu Hao, was formerly a secretary of the Communist Youth League Central Committee and has held a ministerial-level position since 2008. He had considered himself to be a crown prince, but due to concerns about his personal conduct, he was assigned as the director of the center.

Zhang Laiming, the current Deputy Director, graduated from Peking University Law School and transferred to the Development Research Center a decade ago from the Central Policy Research Office, where he had served as a Deputy Secretary. However, while Wang Huning's career has advanced steadily, Zhang Laiming's has remained stagnant.

It is expected that after the National People's Congress, more unfortunate officials will be dispatched to the Development Research Center, potentially leading to the appointment of a new ministerial-level secretary or deputy director.

(By Lao Zong, special analysis expert for "China Brief")

WSJ: China Urges End to Ukraine War, Calls for Peace Talks

China has issued a 12-point position paper calling for a ceasefire and peace talks to end the war in Ukraine. The paper did not explicitly mention the US or NATO, but criticised the alliance for pursuing its own security at the cost of others’ security, an argument it has used to support Russia’s reasoning for waging war. While the paper marks China as a contributor to any resolution of the conflict, the lack of details puts the onus on other parties to move the ball. China has abstained in five UN votes on Ukraine-related resolutions calling on Russia to cease hostilities.

Bloomberg: China Dismisses US Claim Over Possible Weapons Sales to Russia

China has denied accusations that it is providing lethal aid to Russia in its war in Ukraine, with a foreign ministry spokesman stating that the country “does not offer any arms sales to conflict zones or parties involved in wars.” The denial follows reports from Germany’s Der Spiegel that China is negotiating to send Russia armed drones, and US Secretary of State Antony Blinken’s warning that China’s government probably approved of non-lethal, “dual-use” support for Russia’s war.

Nikkei: China M&A deals set for rocky ride after hitting near decade low: PwC

Mergers and acquisitions (M&A) activity in China may struggle in 2023 after it saw a 20% decline in volume last year, according to a report from PwC. The first half of 2023 is expected to see another drop in the number of transactions, reflecting the weak final six months of 2022. The lag time between when deals are struck and announced will impact M&A activity, though volume is expected to pick up later in 2023 as the post-Covid-19 economy becomes clearer. The drop came as global funds ratcheted down their expectations of China and many private equity firms quietly turned away from the country.

NYT: The West Tried to Isolate Russia. It Didn’t Work

Despite the West's efforts to isolate Russia following its invasion of Ukraine, a significant number of countries remain neutral or supportive of Russia. While the West's core coalition remains solid, many neutral countries are focused on protecting their own interests amid the economic and geopolitical upheaval caused by the invasion, seeing it as a primarily European and American problem. Russia has been able to circumvent economic sanctions by filling the gap with exports from China and Turkey, and acquiring military equipment from North Korea and Iran. Furthermore, a growing number of countries have contracted with Russian mercenaries and bought Russian weapons. As the war passes the one-year mark, Russia's strategy is to wait out the West, hoping that countries will drop their support for sanctions and weapons deliveries. The unity of the West, along with the support of neutral countries, will be crucial in determining the outcome of the conflict.

WSJ: After Painful Slowdown, a Big Chinese Developer Is Preparing to Buy Land Again

Chinese property developer Country Garden Holdings is preparing to buy residential land in local government auctions for the first time in over a year. Last year, the company, one of the largest developers in China by contracted sales, was hit by a slump in the housing sector and the fallout from international bond defaults. Most developers without state backing stopped buying new land in response, shifting focus to selling assets and paying off debt. Chinese authorities recently dialed back a deleveraging campaign that had squeezed many developers and issued measures to boost housing demand and supply.

NYT: Inside Taiwanese Chip Giant, a U.S. Expansion Stokes Tensions

Taiwan Semiconductor Manufacturing Company (TSMC) is facing internal concerns from employees about its $40 billion factory in Arizona, which aims to move the US towards a more self-reliant technological future. TSMC is the largest maker of chips globally and the investment in the US factory is its first major concession to rising global concerns over the geopolitics of chip production, driven partly by fears over China’s hostile posture to Taiwan and over a chip shortage. However, TSMC employees have concerns that the factory could distract from research and development and cultural clashes, and there is immense pressure on the Arizona factory to succeed.

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