1 What the CCP’s engagement with Taiwan’s opposition parties says about its desire for aggression
CCP focuses on influencing opposition parties in Taiwan
April 27
Wang Huning, the chairman of the National Committee of the Chinese People’s Political Consultative Conference, met with Kuomintang legislative caucus leader Fu Kun-chi and 16 other KMT lawmakers in Beijing.
According to state mouthpiece Xinhua, Wang Huning said that he would earnestly implement the spirit of Xi Jinping’s speeches, adhere to the “one-China principle” and the “1992 Consensus,” and firmly oppose “Taiwan independence” separatist activities and external interference. Wang also hoped that the KMT representatives would play an active role in promoting the development of cross-strait relations, and expressed the hope that compatriots on both sides of the strait, and especially the younger generation, would participate in more cross-strait exchanges.
Xinhua had Fu Kun-chi saying that compatriots on both sides of the strait share the same culture, blood, and ancestry; belong to the Chinese nation; and are one family. Fu hoped to promote cross-strait exchanges and cooperation, people-to-people interactions, and jointly maintain peace in the Taiwan Strait on the basis of the common political foundation of the KMT and the CCP.
April 28
1. Fu Kun-chi and the KMT delegation visited the PRC Ministry of Culture and Tourism and the General Administration of Customs for talks.
PRC state media reported that Rao Quan, the vice minister of culture and tourism, told Fu’s group that the PRC would first resume tourism for residents of Fujian Province to the ROC island of Matsu, and group tours from Fujian to Taiwan would be restored if Taiwan agreed to resume direct sea passenger routes from Pingtan County in Fujian to Taiwan.
Zhao Zenglian, the deputy director-general of the General Administration of Customs, expressed willingness — on the basis of adhering to the “1992 Consensus” and opposing “Taiwan independence” — to strengthen communication with the KMT and relevant parties in Taiwan on the resumption of imports of Taiwanese agricultural and fishery products like pomelos.
2. The Fujian provincial government announced 13 “Taiwan-friendly” measures to “facilitate exchanges, work, and life for Taiwanese in Fujian,” “support the development of Taiwanese-funded enterprises,” and “encourage Taiwanese compatriots to work, start businesses, and receive training and internships in Fujian.”
May 1
China Times, a pro-PRC Taiwanese media outlet, reported that the KMT delegation led by Fu Kun-chi asked PRC officials when they were on the mainland about the differences between Li Qiang’s government work reports in 2023 and 2024. In particular, the KMT delegation noted that the word “peaceful” (和平) in “peaceful reunification” was removed in the 2024 government work report, and that this had led scholars on both sides of the strait to be concerned about whether the PRC had changed its Taiwan policy. Wang Huning reportedly replied by emphasizing that the fundamental principle of resolving cross-strait issues through peaceful means remains unchanged, nobody wants war, and everyone prefers constructive exchanges.
China Times also reported that both the KMT and CCP did not exchange much political rhetoric during their meetings in Beijing. Additionally, Wang Huning’s remarks revolved around the “1992 Consensus,” Xi Jinping’s remarks on Taiwan, and the promotion of “peaceful reunification”; for instance, Wang reiterated that the PRC did not have a timetable to “invade Taiwan” by 2027 or 2035 as claimed by some U.S. military personnel or think-tanks.
China Times said that Xi Jinping told former ROC leader Ma Ying-jeou during their meeting on April 10 that “compatriots on both sides of the strait should firmly safeguard the common homeland of the Chinese nation and jointly pursue the beautiful future of peaceful reunification.”
May 3
The Chinese-language edition of Voice of America reported that Democratic Progressive Party legislator Wang Ting-yu accused the PRC of orchestrating visits of Taiwanese opposition party groups to mainland China in an effort to “exploit Taiwan’s democracy to destroy Taiwan’s democracy.”
Wang said that the CCP’s subversion of Taiwan is not new, and that it had previously focused on groups such as small and medium-sized enterprises, temple organizations, and the youth. However, Wang said that the PRC had found “new points of emphasis” in its united front effort against Taiwan given the current composition of the ROC legislature, including opposition parties holding the majority of seats and the KMT party whip (Fu Kun-chi), secretary-general (Justin Huang), and others being pro-PRC individuals. Wang warned that Taiwan now faces risks unprecedented in the past 20 years, with dangers surpassing even those during the presidency of Ma Ying-jeou.
VOA also reported that there have been recent rumors that KMT chairman Eric Chu (Chu Li-luan) could lead a group of KMT legislators to mainland China in June , while Legislative Yuan Speaker Han Kuo-yu could lead a delegation to China during the Legislative Yuan recess in August. Further, KMT vice chairman Sean Lien (Lien Sheng-wen) is expected to attend the annual “Straits Forum” in Fujian in June, and the PRC is actively inviting Taiwanese opposition party legislators to participate in the event.
A Taiwan national security official told VOA that there is increasing evidence suggesting that the exchanges between opposition party legislators and the CCP are not mere visits but rather the PRC’s ongoing efforts to exert political influence over Taiwan’s internal affairs through key figures in the ROC legislature, starting from the Legislative Yuan Speaker downwards.
PRC tests third aircraft carrier
May 1
Xinhua announced that the “Fujian,” the PRC’s third aircraft carrier after the “Liaoning” and “Shandong,” had embarked on its maiden sea trial. The trial will “primarily test the reliability and stability of the aircraft carrier’s propulsion and electrical systems.”
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The “Fujian” is the largest vessel in the People’s Liberation Army Navy and the first to adopt a full-length, flat flight deck with an advanced catapult-launch system.
A January report by the U.S. Congressional Research Service described the PLAN as the largest navy in the world and added that the PLAN was projected to grow to 435 ships by 2030, citing the Pentagon.
2. Tsai Ming-Yen, director-general of Taiwan’s National Security Bureau, said in an interview with the media at the Legislative Yuan that the PRC is scheduled to carry out routine military exercises from June to November, or after the ROC presidential inauguration on May 20. Tsai added, “whether the CCP will use excuses to conduct some military exercises to exert further pressure on Taiwan is currently the focus of the National Security Bureau.”
China’s gold-buying sparks Western concerns
Data from the World Gold Council showed that the PRC’s gold reserves reached a record high of 2,262 tonnes after the People’s Bank of China bought 27 tonnes of gold in the first three months of 2024. With gold trading at around $2,300, this means Beijing’s stockpile is worth about $170 billion. The PRC has been steadily buying gold since October 2022, and the 17-month streak is Beijing’s longest build-up of gold since at least 2000.
Some observers believe that the PRC is stockpiling gold because it is preparing to engage in drastic action such as a major devaluation of the renminbi to help exports or prepare for an invasion of Taiwan (see here, here, and here). According to some economists, China is buying up gold to diversify assets amid geopolitical tensions with the United States. For instance, Cornell University professor Eswar Prasad told Newsweek, “Official gold purchases reflect a desire to diversify foreign exchange reserves away from the dollar and other Western currencies.” Prasad also said that the private sector’s increased holdings of gold bullion and jewelry are likely “driven by domestic policy risk, as a way of moving capital out of the Chinese financial system.
Our take
1. The CCP is deploying united front tactics in courting legislators from Taiwanese opposition parties. The likely goal of such tactics is the exploitation of Taiwan’s democratic system to ensure that the DPP is hindered in potential efforts to advance “Taiwan independence” in the short term (whether or not this is what the DPP actually wants is another matter) and to advance its “peaceful reunification” agenda in the long term. If the opposition party-majority in Taiwan’s Legislative Yuan becomes increasingly pro-Beijing, then the DPP will find it hard to pass bills over the next four years that worsen cross-strait relations or force the PRC to go the kinetic route on the “reunification” matter before it is ready. The CCP could even potentially sway the opposition party-majority into passing legislation that is conducive to its penetration and subversion of Taiwan.
Beijing’s reliance on united front tactics suggests that it currently still finds “peaceful” measures preferable to invasion in achieving its “reunification” with Taiwan. We assess that Xi Jinping and the CCP will continue to “delay and wait for change” and pursue “peaceful reunification” for as long as it is viable. For one, the Chinese economy is in too poor of a condition to allow the PRC to militarily attack Taiwan and bear the enormous costs of war, international sanctions, and the blow to the global economy that would result. Further, while it has seen the addition of new ships and advanced equipment, the PLA is presently being subjected to deepening purges and is very likely years away from possessing the organizational or technical capability of mounting a successful invasion. Xi and the CCP will likely only seriously contemplate an invasion regardless of whether it is economically or militarily capable of doing so if the PRC’s “red lines” on Taiwan are crossed and the regime weighs that it has few good options for saving face on the matter.
The CCP’s likely preference for “peaceful reunification,” however, does not preclude its continued or escalated use of military exercises and maneuvers in the Taiwan Strait and the South China Sea to intimidate Taiwan. We believe that the PLA could ramp up military activities around Taiwan during the ROC presidential inauguration period (May 20) and after as it wields both the carrot and stick to “persuade” Taiwan to choose its “reunification” plan.
2. We believe that the PRC’s stockpiling of gold has less to do with the regime preparing to take drastic action and more as a hedge against growing geopolitical pressures. Beijing is undoubtedly aware that its support for Moscow after Russia’s invasion of Ukraine in February 2022 puts it on a collision course with the U.S. and its allies. Therefore, the CCP regime would naturally look to make itself more resilient to sanctions and other external shocks by buying up gold. Having more gold also allows the PRC to acquire more commodities during uncertain times. Craig Shapiro, macro adviser to LaDucTrading, told Newsweek that “China’s ability to buy commodities in RMB and settle excess trade balances in gold with countries like Russia, and those in OPEC, suggests that the gold buys more commodities in China than it does in the West.”
Speculation that the PRC is preparing a major devaluation of the yuan to facilitate exports does not hold water. Beijing has long been propping up the value of the RMB to ensure financial stability at home and avoid driving up tensions with the U.S. and the PRC’s other major trade partners. A sharp devaluation of the yuan could spark a currency war, escalate trade tensions, and prompt countries to move more quickly to deal with China’s export of overcapacity. Investor confidence could also be shaken by a major devaluation, worsening the selloff in stock and outflows, as well as raising the cost for local companies to finance foreign-currency debt. We believe that Beijing will likely prevent the RMB from depreciating substantially (not above 7.35 to the dollar) than allow a shock devaluation that would almost certainly worsen the PRC’s relations with many countries and compound the CCP regime’s crises.
We explained in point one why Xi and the CCP are not likely to have plans for the imminent invasion of Taiwan. There are also no recent signs of worrisome troop movement, PRC dumping of U.S. Treasury bonds, or other suspicious activities that would suggest that the PRC’s gold-buying is potentially linked to impending PLA aggression against Taiwan.
