DPG China Monitor

Vol.III, Issue.8

Date: September 01, 2020
China-India relations remained tense during the month, as various round of talks, both at the military and political level, failed to break the LAC impasse and secure effective disengagement and de-escalation. While China claimed that the disengagement process has been completed, India strongly contested such claims.

Chinese media took particular note of PM Modi’s Independence Day speech, commenting that his firm position on China has cast a shadow over the future course of China-India relations. China also noted with concern India’s External Affairs Minister S. Jaishankar’s comment that bilateral relations between India and China cannot be separated from the border dispute and India will stand its ground vis-à-vis China. Furthermore, China showed its displeasure over the decision to put the Confucius Institutes in India under comprehensive review, urging Indian policymakers not to “politicise regular cooperation.”  Meanwhile, Beijing’s permanent representative to the United Nations claimed that India had “unilaterally changed the status quo of Kashmir” and warned that there was “a risk of further escalation in the situation.”

The month also witnessed the continuation of the China - US battle of sanctions and aggressive posturing. In an escalation of the US-China technological dispute, President Trump issued an executive order calling for the ban of Chinese app TikTok unless it is acquired by an American company, citing the threat posed by the app’s supply of user information to the Chinese Communist Party (CCP). Further, on August 17 the US Department of Commerce imposed new sanctions on Huawei and its affiliates, restricting their access to American technology, while US Secretary of State Michael Pompeo called for a “Clean Network Program”, which seeks to safeguard sensitive information and the privacy of citizens and companies from “aggressive intrusions by malign actors, such as the CCP.” Responding to these actions, Chinese Foreign Minister, Wang Yi, claimed in an interview that the US was in no position to build a coalition of clean countries as it is “dirty all over.”  He also called for a rejection of the “new cold-war” mentality and encouraged cooperation between China and the US, blaming “some American politicians who are biased and hostile to China” for the breakdown in relations.

Hong Kong and Taiwan once again were the frontier for US-China tussle. On August 7, the US Department of Treasury imposed sanctions on 11 individuals, including Chief Executive Carrie Lam, “for undermining Hong Kong’s autonomy and restricting the freedom of expression or assembly of the citizens of Hong Kong.”  In retaliation, the Chinese Foreign Ministry sanctioned 11 American officials for “egregious records on Hong Kong affairs.” In a related development, the US Department of State announced that the US would treat Hong Kong as “one country, one system” and suspended three bilateral treaties with Hong Kong regarding “surrender of fugitive offenders, the transfer of sentenced persons, and reciprocal tax exemptions on income derived from the international operation of ships.”  On the other hand, US Health and Human Services Secretary Alex Azar led a delegation to Taiwan on August 9, in what was the highest level of official interaction between Washington and Taipei since 1979. Opposing the visit, the spokesperson of the Chinese Foreign Ministry maintained that Taipei was one of China’s ‘core interests’.
Amidst ongoing tensions between the two countries, US Secretary of Defence Mark Esper and Chinese State Councillor Wei Fenghe held talks on August 6 where the two discussed military exchanges and dialogue to ease the strained ties. The talks yielded no concrete results or plans to repair the frayed bilateral relations.  Further, there were reports of China and the US holding talks to conduct a six month review of the trade deal signed in January, 2020.

Meanwhile, the Sino-Pakistan relationship saw reaffirmation and growth with a number of ministerial level interactions during the month. The two countries held the second round of the China-Pakistan Foreign Ministers’ Strategic Dialogue on August 20-21. The Chinese Foreign Ministry’s statement detailing the talks labelled the two countries as “closest friends” whose relationship is “based on unparalleled mutual trust, understanding, and commonality of interests.” The strategic dialogue resulted in a joint statement which touched upon various issues, including Jammu and Kashmir, regarding which China opposed “any unilateral actions that complicate the situation.”  New Delhi rejected these comments, calling Jammu and Kashmir an “integral and inalienable part of India” and called on both the parties to not “interfere in matters that are internal affairs of India.”  India also reiterated its stand opposing the CPEC’s extension into “the Indian territory illegally occupied by Pakistan.”  Again on August 21, in a verbal message to Pakistani President Arif Alvi, President Xi expressed the importance of the CPEC to the Belt and Road Initiative (BRI).

In the realm of internal security, the expulsion of former Central Party School professor Cai Xia from the Chinese Communist Party for her scathing criticism of the CCP and Chinese President Xi Jinping made international headlines. She called Chinese President Xi Jinping “a mafia boss” and accused him of “killing a party and the nation” and “turning China into an enemy of the world”. She further cited Chinese aggression in Galwan as an example of Xi Jinping’s “ways to divert the attention of the Chinese public”. The Party controlled media in China called Cai “a traitor” and asked the Party School’s other faculty members to draw “profound lessons” from the case of Cai Xia and to strictly observe party discipline.

Although economic data released in July had indicated that China’s economic growth rate has turned from negative to positive with major economic indicators showing signs of strong rebound, Chinese strategists maintained cautious optimism for the second half of the year, focusing particularly on certain key areas: first, ensuring employment, especially for college students and migrant workers, so as to spur domestic demand; second, paying more attention to small and medium-sized and labour-intensive enterprises, so as to improve the stability and competitiveness of China’s industrial supply chain; third, promoting consumption as the key driver of the Chinese economy through consumer vouchers, cash subsidies and other measures; and fourth, price stabilisation. Due to the impact of the epidemic, China’s CPI has reportedly risen by more than 5% in the first quarter, and the overall CPI rose by 3.8% in the first half of the year. The recent floods in Southern China have further complicated matters; pork and vegetable prices have risen sharply, raising concerns about the country’s food security. Stabilising the production of autumn grain, and keeping the prices stable are now seen as top priorities. In this backdrop, President Xi Jinping has given public instructions to stop food wastage, following which an aggressive campaign supporting food conservation has been launched.

There were also much discussions this month within Chinese strategic circles about the upcoming 14th Five Year Plan when China is expected to embark on “a new journey as a modernised country towards its second centenary goal of becoming a strong, democratic, civilised, harmonious, and modern socialist country." Entering this new stage of development, Chinese leaders have proposed a new development pattern, with “domestic cycle as the main body and the domestic and international dual cycles mutually promoting each other.”

There has been some concern that this new strategy will lead to China’s retreat, or further decoupling from the outside world.  Addressing such concerns, China’s state media argued that the idea behind the latest strategy is to reduce dependence on specific countries in the future, and expand China’s product, technology, and service output through self-reliance or in cooperation with an expanded foreign trade "friends circle". In other words, the very essence of the policy is to use the expansion of domestic demand to drive imports, attract foreign investment, and promote international collaboration. On the other hand, through the “Belt and Road” initiative China will actively develop diversified international markets conducive for Chinese exports, or for the “going out” of Chinese companies. 

In what can be interpreted as a reaction to Washington’s recent onslaught on the Chinese Communist Party, various articles in the Chinese media emphasised that “the Chinese Communist Party has no special interests of its own other than the interests of the Chinese people” and that the “leadership of the Chinese Communist Party is not self-proclaimed but the right choice made by history and the Chinese people”. These articles further urged the Chinese populace “to deeply understand and appreciate the noble pursuit and mission of the Chinese Communists, which is to seek happiness for the people, rejuvenation for the nation, and China’s union with the world,” and thereby proclaiming that with the "two overall situations" facing China - first, the strategic challenges towards the great rejuvenation of the Chinese nation and second, major global changes unseen in a century - the CCP will continue to pursue its goals and will not give up its historical responsibility despite severe risks and challenges coming its way.