1 US, G7 looking to ‘thaw’ tensions with the PRC?
May 20
1. The leaders of the Group of Seven (G7) issued a communiqué during their annual summit held in Hiroshima from May 19 to May 21.
Ukraine appeared to rank highly among the G7’s priorities. First among the list of “concrete steps” that the G7 pledged to take was “support Ukraine for as long as it takes in the face of Russia’s illegal war of aggression.” Ukraine was also among the first items (number 4) mentioned in the communiqué.
China appeared near the bottom of the list (number 51 and 52 of 66) of items in the G7 communiqué. Noteworthy points under the China section include:
- The G7 is prepared to “build constructive and stable relations with China” while acting in “our national interest.”
- The G7 called on China to engage with them on climate issues.
- The G7 said that their policy approaches are “not designed to harm China nor do we seek to thwart China’s economic progress and development,” while a “growing China that plays by international rules would be of global interest.” The G7 added that it is “not decoupling or turning inwards” but recognizes that “economic resilience requires de-risking and diversifying.” The G7 also called for reducing “excessive dependencies in our critical supply chains.”
- The G7 called for addressing “challenges posed by China’s non-market policies and practices,” countering “malign practices, such as illegitimate technology transfers or data disclosure,” fostering “resilience to economic coercion,” and protecting “certain advanced technologies that could be used to threaten our national security without unduly limiting trade and investment.”
- The G7 expressed serious concerns about “the situation in the East and South China Seas,” and reaffirmed “the importance of peace and stability across the Taiwan Strait as indispensable to security and prosperity in the international community.”
- The G7 expressed concerns about the human rights situation in China, including Tibet, Xinjiang, and Hong Kong.
- The G7 urged China to “act in accordance with its obligations under the Vienna Convention on Diplomatic Relations and the Vienna Convention on Consular Relations.”
- The G7 called on China to “press Russia to stop its military aggression, and immediately, completely and unconditionally withdraw its troops from Ukraine.”
2. The PRC foreign ministry said that it “strongly deplores and firmly opposes” the G7 communiqué and “has made serious démarches to the summit’s host Japan and other parties concerned.”
May 21
1. In a press conference held at the end of the G7 summit, President Joe Biden said that “everything changed in terms of talking to one another” for the U.S. and China after a “silly balloon” carrying spy equipment flew over the United States,” but added that “you’re going to see that begin to thaw very shortly.”
When asked about whether he would lift sanctions on PRC defense minister Li Shangfu, Biden said “that’s under negotiation right now.” According to The Financial Times, Beijing had earlier indicated that there was little chance of a meeting between Li and U.S. defense secretary Lloyd Austin at the Shangri-La Dialogue security forum in Singapore in June.
Biden also said that the U.S. has “made it clear that we don’t expect Taiwan to independently declare independence” but “in the meantime, we’re going to continue to put Taiwan in a position that they can defend themselves.”
2. UK prime minister Rishi Sunak told reporters after the G7 meeting that “China poses the biggest challenge of our age to global security and prosperity. They are increasingly authoritarian at home and assertive abroad.”
Sunak added that Britain and the other G7 countries would take a common approach to reducing challenges posed by China. “This is about de-risking – not decoupling. With the G7, we are taking steps to prevent China from using economic coercion to interfere in the sovereign affairs of others.”
May 22
1. Nationalistic Party mouthpiece Global Times published an editorial slamming the G7 for “descending into an anti-China workshop.” The editorial claimed that “the U.S. is pushing hard to weave an anti-China net in the Western world,” and this “not just a matter of brutal interference in China’s internal affairs and smearing China, but also an undisguised urge for confrontation between the camps.”
The editorial added that “conciliatory statements” in the G7 communiqué like “not to harm China” and “not to decouple” are “essentially still provoking geopolitical confrontation.”
2. In a news analysis, The New York Times noted that it is “far too early” to tell whether Biden’s optimism about a “thaw” in Sino-U.S. relations is based on “quiet signals he has received in behind-the-scenes meetings with the Chinese government in recent weeks.”
The Times added that “Mr. Biden’s own aides see a struggle underway in China between factions that want to restart the economic relationship with the United States and a far more powerful group that aligns with President Xi Jinping’s emphasis on national security over economic growth.”
3. Reuters wrote in an analysis article that the G7’s pledge to “de-risk” without “decoupling” from China “reflected European and Japanese concerns about pushing Beijing too hard,” citing officials and experts.
A Japanese official told Reuters that “there are differences among the G7 nations in terms of issues such as the U.S. investment restrictions on China.” Meanwhile, a French presidential official said that the G7 communiqué’s language was “made a little more balanced” after talks, and “at the heart of the message we wanted to get across at this G7 was the European position that China is a partner, complements us and is a systemic rival, all presented in G7 language.”
May 23
The Washington Post reported that Biden administration officials see recent talks with the PRC as a sign that “more liberal forces at the top of the Chinese Communist Party could be moderating the recent hard line.”
Backdrop
The U.S. and the EU have been raising the idea of “de-risking” from China since the start of the year. EU Commission president Ursula von der Leyen mentioned the concept in a speech to the Mercator Institute for China Studies and the European Policy Center on March 30, and U.S. National Security Advisor Jake Sullivan referred to von der Leyen’s speech in his own speech to the Brookings Institution on April 27.
Historian Niall Ferguson argued in an opinion piece in Bloomberg on May 21 that “de-risking” is Washington’s new word for “détente,” and this strategy could be the right one for the U.S. as “China’s economy slows and its social problems grow.”
Big picture
The G7 leaders’ summit comes amid troubling signs for the Chinese, U.S., and global economies. There are also concerns that the Russia-Ukraine war could become a “frozen conflict” that lasts many years without an official resolution like the Korean War.
Our take
1. The G7’s stance on China per its communiqué appears to be in line with the Biden administration’s approach of “competing, collaborating, and confronting” the PRC where necessary. The idea of “de-risking, not decoupling” is also not new and unlikely signals a radical departure in how the U.S. and its allies intend to deal with China going forward. Europe and Japan, however, appeared to have convinced Washington to temper its approach to the PRC, which tilted towards confrontation in recent months and sparked concern among observers (see here and here).
Meanwhile, the CCP has indicated from its official statements and propaganda pieces that it is still very wary of the U.S. and its allies. Beijing likely firmly believes that “camp confrontation,” decoupling, and efforts to “contain” China are the status quo regardless of how the West repackages its statements, and will base its external policies on this assumption accordingly.
2. It is unclear whether President Biden is serious about a coming “thaw” in Sino-U.S. relations or is merely bluffing. Given the G7’s current stance on Ukraine matters and attitude towards China, it does not seem likely that Beijing would revert to “engagement as usual” with the U.S. unless it has decided to do whatever it takes to de-escalate bilateral tensions, including going along with the political settlement to the Russia-Ukraine war as outlined by the West. And if the Xi leadership does indeed embrace “engagement” to the point of making massive geopolitical concessions, then this indicates that the CCP regime is on the verge of collapse and Beijing has decided to cut its losses by (temporarily) abandoning its global ambitions to focus on stabilizing the situation at home. However, we assess that Xi Jinping is unlikely to make major compromises on external policies. Doing so is tantamount to political suicide for Xi, especially after he had spent so much time consolidating power and rolling out propaganda enshrining his personal importance in securing a better future for China.
The CCP could make some practical policy adjustments or appear more “accommodating” in negotiations (per its “survival-dominance” dynamic) to buy itself some breathing space. For instance, the Xi leadership could approve the resumption of some diplomatic engagement between less senior officials. But Beijing could draw the line on, for instance, Li Shangfu meeting Lloyd Austin as long as the U.S. still maintains sanctions on Li, or Secretary of State Antony Blinken visiting Beijing as long as the Biden administration does not promise never to release the FBI report on the spy balloon or take surprise actions to embarrass China. Renewed diplomatic engagements between the U.S. and China higher up the official ranks could be interpreted as a “thaw” in the bilateral relationship, but only to a small degree.
3. The G7 communiqué, the U.S. and its allies’ unyielding stance on how the Russia-Ukraine conflict should be resolved, and the CCP’s own interests in pursuing its own political resolution to the war in Ukraine set the stage for the continuation of strained relations and even escalation in the “new cold war” between the PRC and the West as opposed to “détente.”
How soon the escalation could take place and how serious it could get likely depends on how the Russia-Ukraine conflict develops. If either Ukraine or Russia appears to gain a clear advantage, the U.S. and its allies would have greater incentive to heap pressure on the PRC to stop it from helping Russia and changing the outcome of the war. But if the “frozen conflict” scenario is the most likely result, then the U.S. and its allies would have a greater interest in engaging China and applying just enough pressure to ensure that Beijing goes along with the West’s ceasefire arrangements. A “freeze” in the Russia-Ukraine conflict that benefits the U.S. and its allies could also see them taking the “détente” route in the “new cold war” with China as opposed to more immediate escalation and confrontation.
4. Per The New York Times analysis piece, it is unclear how President Biden’s aides have determined that there is a struggle “underway in China” between factions that “want to restart the economic relationship with the United States” and the group aligned with Xi Jinping’s “emphasis on national security over economic growth.” Biden administration officials would likely have met with middle to lower-ranking PRC economic officials in their “behind-the-scenes” meetings and those officials would answer to senior economic officials like Li Qiang, Ding Xuexiang, He Lifeng, and Wang Wentao, all of whom are from the Xi camp. Put another way, Biden officials are unlikely to discern a difference in economic and regime priorities in the CCP leadership just by interacting with middle to lower-ranking PRC officials whose superiors are firmly aligned with Xi.
A simple and more probable explanation for why Biden’s aides are seeing factional struggle after weeks of engagement or engagement attempts between U.S. officials and middle to lower-ranking PRC officials is that the U.S. side misread the signals sent from the Chinese side. The Xi leadership is still interested in courting foreign investments to rescue the regime and would naturally be signaling to the U.S. that “China is still open for business. To Biden administration officials, this signal could be misinterpreted as “more liberal forces at the top of the Chinese Communist Party … moderating the recent hard line” of Beijing, as the Washington Post reported.
A less likely explanation is that Biden officials reached their conclusion about factional struggle not from official diplomatic exchanges (“Track One”) but from informal and unofficial engagements (“Track Two”) with PRC officials, former officials, or scholars who are aligned with the remnant Jiang Zemin faction and other “anti-Xi” forces in the Party elite. If this explanation is valid, then it can also be assumed that Xi’s lingering political rivals in the regime are planning to move against his leadership in some way in the near future. Xi’s opponents, however, are likely to be very limited in their options given that Xi now has most of the regime’s key organs and institutions under his control, has greatly strengthened the national security apparatus, and is in the process of enhancing the CCP’s leadership over everything. Still, Xi’s remaining factional rivals could still potentially pull off “perish together” (同歸於盡) moves (high-risk, low-probability of success, highly illegal, regime-threatening etc.) that could have an outsized impact on undermining the Xi leadership, including assassination attempts and biosecurity-related events. We currently assess this scenario to be improbable given Xi’s current level of control over the regime, but cannot be ruled out in considering what Xi Jinping has done so far after the 20th Party Congress that could pave the way for purging the remnant Jiang faction and denouncing Jiang Zemin’s “incorrect political line.”
2 Circulating online article hints at Beijing’s stance on invading Taiwan
Over the past month, an article by a mainland “self-media” outlet about how the People’s Liberation Army could face a “four-front war” if it attempts to “recover Taiwan” was republished by a mainland internet portal. The article was also widely circulated by “self-media” focused on military affairs and on Chinese social media platforms, and has yet to be fully censored at the time of writing.
The article pointed out in its introduction that “without absolute certainty, the PLA will not easily launch the largest amphibious landing operation and air-sea showdown in our military history” to take Taiwan. Otherwise, the PLA is “likely to face the extreme battlefield environment of a ‘four-front war.’” The “four fronts” include the situation in the Taiwan Strait (i.e. the PLA would have to contend with U.S., Japanese, and South Korean joint forces in the Taiwan Strait), the situation on the Korean Peninsula (i.e. joint U.S.-South Korean forces that could threaten the mainland), the blocking of strategic sea routes passing through the Indian Ocean, and a potential Sino-Indian border conflict.
Survey on ‘unification’
On May 14, the Journal of Contemporary China published a survey assessing public support for how the PRC should seek “unification” with Taiwan by academics Adam Y. Liu from the National University of Singapore and Xiaojun Li from NYU Shanghai.
The survey presented the respondents with five potential policy choices at Beijing’s disposal with regard to Taiwan, including a “unification war to take back Taiwan entirely,” military coercion short of an all-out war, economic sanctions alongside using force either full-scale or not, maintaining the status quo in the short term and seeking unification in the long term, and the PRC and Taiwan “keeping separate their political systems, with unification not necessarily being the end game.”
The survey found that:
- A “slim majority” of 55 percent supported the first option of full-scale war, “contrary to conventional wisdom that over the past two years” that “there has been very high public support for using force to resolve the Taiwan Question.”
- The next three policy options were supported by 58 percent (military coercion), 57 percent (economic sanctions), and 55 percent (status quo) of the respondents respectively.
- The “separate political systems” option was “acceptable” for 22 percent of the respondents and “unacceptable” for 71 percent,” with 7 percent being “unsure.” Liu and Li wrote that this option “basically amounts to agreeing to de facto Taiwan independence,” and added that the survey result “challenges the prevailing narrative that getting Taiwan back is the collective will of almost everyone in mainland China.”
- Only 19 out of 1,824 respondents with valid questionnaires, or about one percent of the sample, rejected “all but the most extreme option of armed unification.”
Liu and Li wrote that a majority of the respondents had a college degree, which is “consistent with online samples drawn in China as well as other countries. The survey was conducted in 2020 and 2021 through an online opt-in panel.
Big picture
Western media outlets and politicians from the U.S. and its allies have been calling attention to a potential and imminent (in the lead up to 2027 and beyond) PLA invasion of Taiwan in recent months. U.S. lawmakers have wargamed how an invasion could unfold and urged “arming Taiwan to the teeth” to deter CCP aggression, while the White House has approved sending $500 million worth of weapons to Taiwan using the Presidential Drawdown Authority.
Meanwhile, some observers have been warning about escalating Sino-U.S. tensions and the potential for conflict to break out. Ray Dalio, the founder of Bridgewater Associates, wrote in a LinkedIn post that the “United States and China are on the brink of war” and believes that “politics will probably cause more aggressive brinksmanship over the next 18 months.”
Our take
1. The article on the “four front-war” would have been completely scrubbed from the Chinese internet shortly after it was published if the CCP disagreed with it. Put another way, it is possible that Beijing tacitly “approves” of the article’s arguments and allowed it to be circulated in a controlled way so as to shape public opinion on the mainland and in Chinese-speaking circles regarding Taiwan. The Xi leadership likely wants to tone down nationalistic sentiments in China to avoid being accused of being a “paper tiger” on the issue of Taiwan “unification” in the event that the U.S. and its allies carry out Taiwan-related actions that put the PRC in an uncomfortable position on how to respond appropriately without moving towards aggression.
The Xi leadership allowing the “four front-war” article to circulate is reminiscent of an earlier episode where it sought to calm public sentiment on Taiwan. In May 2020, the pro-China Hong Kong media outlet Bauhinia Magazine published an interview with the former PLA major general and “Unrestricted Warfare” author Qiao Liang where the latter made the case against invading Taiwan. Notably, Qiao criticized popular discussions about taking Taiwan that had emerged in response to U.S. policy at the time, warned the PRC against “dancing to America’s rhythm,” and noted that resolving the Taiwan issue is not a primary objective in accomplishing the “great rejuvenation of the Chinese nation.”
2. Adam Liu and Xiaojun Li’s survey suggest that the appetite for a full-scale invasion of Taiwan on the mainland is nowhere near as strong as indicated in CCP propaganda. If so, then the Xi leadership is unlikely to consider an imminent invasion of Taiwan contrary to current worries; Liu and Li write that “public opinion in China can constrain and influence the government’s domestic and foreign policies,” and the failure of Beijing to “make and implement policies aligned with prevailing public opinion … can lead to an internal backlash against the leaders.”
3. The international community should become more concerned about the prospect of CCP aggression when Beijing strengthens propaganda about forceful “reunification,” strictly censors dovish opinions, and public polls begin to shift more strongly in favor of invasion. Otherwise, the CCP is very likely still pursuing “peaceful reunification” and will not take action on Taiwan that damages regime legitimacy.
The CCP, however, will not hesitate to go for the military option further down the road if it senses that the “West is in decline” and it has the clear upper hand (東升西降). To deter Beijing and guard against that scenario, the international community should step up its support for Taiwan without being overly dramatic about “imminent” CCP aggression or deliberately push Beijing’s “red lines” with regard to Taiwan.
3 CCP faces dilemma as signs of COVID-19 resurgence emerge
Zhong Nanshan, the PRC’s most prominent respiratory disease specialist, said in a presentation at a biotech conference in Guangzhou on May 22 that the XBB strain of COVID-19 is behind a resurgence in cases across China since late April, according to mainland media reports. Zhong noted that China could see 40 million infections a week by the end of May, before peaking at 65 million cases per week in June.
Zhong also noted that the expected cases were based on a model and “may not be accurate.” He added that “the virus changes too fast and people can still be infected after developing antibodies.”
Mainland media noted that the XBB strain of the coronavirus is now the dominant variant in China, accounting for 83.6 percent of all cases in early May and is continuing to grow in proportion.
Signs of fresh outbreaks
The CCP called an end to “zero-COVID” in late 2022 and the World Health Organization declared that COVID-19 is an “established and ongoing health issue and no longer constitutes a public health emergency of international concern” on May 5. However, signs have emerged in China which suggest that the epidemic may not be over:
- State media reports of Xi Jinping’s tour of Xiong’an New Area in Hebei Province on May 10 and visit to Yuncheng Museum in Shanxi Province on May 16 featured photos of officials wearing masks. Meanwhile, the waiters and foreign guests attending the PRC’s Central Asia Summit in Xi’an from May 18 to May 19 were also photographed wearing masks.
- Mainland media reported that the three viruses—COVID-19, influenza A, and respiratory syncytial virus—have been prevalent thus far since the start of the year. However, it can sometimes be difficult to tell who is suffering from which virus as they all present similar symptoms like cough, runny nose, and fever.
- Mainland media reported that residents in Guangzhou, Beijing, Shanghai, and other places have noticed an uptick in people suffering from viruses around and long queues outside fever clinics.
- On May 18, the local authorities of Xinzhou City in Shanxi Province published a notice on the construction of a centralized isolation site in Xinfu District with a total area of 34.49 acres.
Our take
1. The CCP noticeably downplayed news about the COVID-19 pandemic after the lifting of “zero-COVID” restrictions and the promotion of “victory” over the virus in February and March 2023. Mainland media also suggested that other respiratory viruses were responsible for infections. Such developments are consistent with the Xi leadership’s need to safeguard Xi Jinping’s political legacy (“zero-COVID”) and ensure that the CCP regime remains “great, glorious, and correct” in epidemic prevention and control.
Given the above context, Zhong Nanshan’s recent disclosure about a “resurgence” in COVID-19, as well as Xi and other officials donning masks while on inspection tours, suggest that things are far worse than appearances seem with regard to the epidemic situation in China and the CCP is finding it difficult to continue the cover up. Indeed, Zhong’s estimate of 65 million COVID cases per week by the end of June is likely a very conservative figure and current cases could already be at that number or higher.
2. CCP officials will find it doubly difficult to deal with fresh outbreaks now as compared to when “zero-COVID” was in force. For one, both central and local officials cannot publicly acknowledge a serious surge in cases without undermining the CCP’s narrative of having achieved “victory” over the virus and throwing proverbial eggs on Xi Jinping’s face. As such, central and local officials will struggle to respond effectively to rising cases and the various problems that come with it. Local officials struggling with severe financial and debt problems amid the continued deterioration of the Chinese economy also have reduced capacity to carry out epidemic prevention and control.
The Xi leadership is stuck between a rock and a hard place on how to deal with a resurgence of COVID-19. Implementing lockdowns and other strict measures so soon after the declaration of “victory” over the virus would underscore the fact that three years of “zero-COVID” was a total failure and badly undermine Xi Jinping’s “quan wei” (authority and prestige). But if the Chinese people endure much suffering from rising cases and even a fresh wave of mass deaths, then this would rouse even greater resentment towards Xi and the CCP in the populace. Either way, Xi and the CCP will see further erosion of their political legitimacy while social instability steadily rises.
