Table of Contents
China in Quotes
“Over the last six years they (China) have tripled the number of intelligence, surveillance, and reconnaissance satellites on orbit, and they (China) have used their space capabilities to improve the lethality, the precision, and the range of their terrestrial forces that obviously is a cause for concern, and something that we are watching very, very closely.”
– Gen. Stephen N. Whiting, Commander of the United States Space Command
De/Cypher Data Dive📈
Asia View
Xi is going all in on the military top brass, but it could be a strategic misstep
Written by Amogh Rai, Research Director, ASIA
Xi Jinping's latest military reforms and the dissolution of China's Strategic Support Force (SSF) is a development that has to be tracked. This is not a knee jerk reaction but a return to 2015 China, where these changes heralded major shake up in the military. The question is does PRC have the capability to shake up the brass? We refer to Katsuji Nakazawa's analysis published in The Nikkei.
1. Dissolution of the Strategic Support Force: Established in December 2015, the SSF was intended to enhance China's capabilities in cyber, space, and electronic warfare. However, as of April 2024, the SSF has been disbanded and replaced by three new units: the Information Support Force, the Aerospace Force, and the Cyberspace Force.
2. Reasons Behind the Reorganization: The dissolution of the SSF and the establishment of new forces appear to be part of Xi Jinping's broader strategy to maintain tight control over the military and ensure its loyalty. This reorganization follows a pattern observed in previous military reforms under Xi, where restructuring often coincides with efforts to consolidate power and address corruption within the ranks.
3. New Military Units and Their Roles:
- Information Support Force: Directly commanded by the Central Military Commission, this unit focuses on command and control, information security, and intelligence dissemination.
- Aerospace Force: Takes over the responsibilities of the SSF's Space Systems Department, managing space operations and launches.
- Cyberspace Force: Inherits the SSF's Network Systems Department's roles, focusing on cyber defense and offense.
4. Strategic Implications: The reorganization is seen as a strategic move to adapt to modern warfare demands, particularly in the domains of information and cyber warfare. The creation of specialized forces underscores the importance of these areas in future military conflicts and aligns with global military trends towards specialization and technological adaptation.
5. Political Context: These reforms are also politically motivated, aimed at reinforcing Xi Jinping's authority over the military and the Chinese Communist Party. By listing these reforms as achievements, Xi may be paving the way for extending his leadership beyond traditional term limits.
6. International Relations: The restructuring occurs amidst growing tensions between China and other global powers, particularly the United States. The focus on cyber and space capabilities is likely a response to perceived threats and the need for enhanced defensive and offensive capabilities in these areas.
7. Corruption and Purges: The reorganization follows a series of purges targeting high-ranking military officials, which suggests ongoing concerns about corruption within the military. These moves are part of Xi's broader anti-corruption campaign, which has been a hallmark of his administration.
These insights highlight the dual nature of the military reforms under Xi Jinping—aimed at both enhancing China's military capabilities in key strategic domains and consolidating political power to ensure the military's loyalty and effectiveness.
Quick China: Six Unmissable Stories 📜
The much lamented Chinese Middle Class is Shrinking
A survey by Wu Xiaobo shows how complicated things have become for China’s middle class: More than 43% of the urban residents surveyed saw their wealth decline in 2023, compared to 31% in 2022 and 8% in 2021. As a result, people have become more cautious with their spending. However, they are optimistic about the future, but 70% of new middle-class households are optimistic about future income expectations. The only high-tech industry that may benefit is the EV market: More than 41% of Chinese consumers want an entirely electric vehicle as their next car, partly because of savings on gas. This is a survey which has been going on since 2016, and currently has over 500,000 respondents. (Weixin)
The Chinese Prime Minister Wants Better Capital Markets
Liu Qiao, Dean of the Guanghua School of Management at Peking University, delivered a lecture. Vice Premier Ding Xuexiang, Liu Guozhong, and State Councilor Wang Xiaohong gave speeches, and Vice Premier He Lifeng submitted a written statement in a study session on Capital Markets.
After listening to the lecture and the speeches, Li Qiang pointed out that the capital market is an important part of the modern financial system. Since the 18th National Congress of the Communist Party of China, China's capital market has developed rapidly and played a significant role in optimizing resource allocation, supporting technological innovation, and promoting economic and social development. Handling capital market affairs not only requires comprehensive and holistic approaches but also demands strong professionalism. It is necessary to understand the basic laws of capital market operation with a systemic perspective and professional thinking, to grasp the stage characteristics of China's capital market with historical and developmental insights, to learn from international experiences, and to always insist on adapting measures to local conditions and timing. More emphasis should be placed on using market concepts to design rules and formulate policies, and to continuously deepen capital market reforms. Li Qiang emphasized that promoting the stable and healthy development of the capital market is an important reflection of economic development and governance capabilities. (China News/Sinocism)
The Chinese Government Contributed US$ 2 Million Above Its Regular Contribution to WADA Before 23 Chinese Swimmers Were Given Clean Chit
In the two years before the World Anti-Doping Agency signed off on clearing 23 Chinese swimmers of intentionally taking performance enhancers, that country's government contributed nearly $2 million above its yearly requirements to WADA programs, including one designed to strengthen the agency's investigations and intelligence unit.
The Associated Press obtained confidential minutes from meetings of the WADA executive committee that lists China as having given $993,000 in 2018 and $992,000 in 2019, two years that led to one of its Olympians being elected as one of the agency's vice presidents.
The Chinese contributions were part of a pattern that illustrates the country's growing influence on the drug-fighting agency at about the same time WADA's relationship with its biggest contributor, the United States, was fraying.
There is no indication from the documents AP reviewed that China donated the money in expectation of a quid pro quo to gloss over positive drug tests. In fact, WADA didn't hide the extra funding; it put out a little-noticed news release in December 2020 announcing China's $992,000 donation.
"All this was done in total transparency," WADA director general Olivier Niggli said Monday during a news conference to discuss the case. "And frankly, the (question) has absolutely nothing to do with what we are discussing today. So, the optics is a question (I appreciate), but I have absolutely no problem with the relationship we have with China." (AP/ESPN)
ICBC, a bank sets up a People's Armed Forces Department (PAFD) in Qinghai
On April 23, the unveiling ceremony of the People's Armed Forces Department of the Industrial and Commercial Bank of China Qinghai Branch was recently held in Xining, marking the official establishment of the first central enterprise grassroots armed department in Xining City.
Liu Xiang, the commander of the Xining Garrison, stated, "Establishing People's Armed Departments in state-owned enterprises is an objective requirement for implementing the militia system according to the law, fulfilling national defense obligations, and strengthening national defense construction." The People's Armed Department of the Industrial and Commercial Bank of China Qinghai Branch is the first grassroots armed department in national financial institutions. It marks the phased success in the establishment of grassroots armed departments in Xining's first batch of universities and key enterprises and institutions. It also serves as a model and guiding example for the establishment of grassroots armed organizations in key enterprises and institutions throughout the city. (Sinocism)
Chinese Steel hit by low prices, and supply glut
Chinese steel producers are facing a “sharp decline” in business performance due to falling prices alongside high raw material and fuel costs, according to the deputy head of the China Iron and Steel Industry Association.
“Due to the significant decline in steel prices while raw material and fuel prices remain high, the operating performance of Chinese steel enterprises has seen a sharp decline since the start of this year, resulting in cash flow strain for some,” Jiang Wei said in a keynote speech at the 20th Iron and Steel Industry Development Strategy Conference that ended on April 21.
Official data published last month back that up. In the first two months of the year, the country’s iron and steel industry racked up its biggest loss in the past 25 years. At CNY14.6 billion (USD2 billion), the loss was CNY4.5 billion (USD621 million) bigger than a year earlier, according to figures released by the National Bureau of Statistics. (Yicai)
How Will Byte-Dance Divest Tik-Tok?
Early Thursday The Information reported that ByteDance had started exploring scenarios for selling TikTok with the algorithm. ByteDance issued a statement saying that “media reports about ByteDance exploring the sale of TikTok were false. ByteDance has no plans to sell TikTok”. Later in the day Reuters reported that “ByteDance would prefer shutting down its loss-making app rather than sell it if the Chinese company exhausts all legal options to fight legislation…The algorithms TikTok relies on for its operations are deemed core to ByteDance overall operations, which would make a sale of the app with algorithms highly unlikely”. (Sinocism/The Information)
Beyond The Great Wall 🧱
Exploring News About China in Depth
Internal Politics 🏛️
Shenzhou-18 successfully launched, sending three taikonauts, fish to Chinese space station
The Shenzhou-18 manned spacecraft successfully launched from Northwest China's Jiuquan Satellite Launch Center, transporting three taikonauts and nearly 100 experimental projects to the Tiangong space station. This mission, which includes the implementation of radial docking, aims to advance China's space rendezvous and docking technology. Notably, the use of zebrafish in an ecological research project demonstrates China's efforts to investigate new ecosystems in space. Additionally, the mission includes stem cell research, space debris impact prevention, and lunar exploration plans, demonstrating China's ambitious space exploration goals. Read more: Global Times
Record-breaking floods hit China’s Guangdong, killing 4 and displacing more than 110,000
Record-breaking floods in Guangdong province, China, claim the lives of at least four people and displace over 110,000 residents. The Bei River, a tributary of the Pearl River, experiences water levels surpassing 50-year highs, prompting extensive rescue efforts and evacuations. The situation remains critical as heavy rainfall continues to affect the region, disrupting transportation and causing widespread damage. Read more: SCMP
China to revise statistics law to fight data fraud
China is set to revise its statistics law to combat data fraud, addressing concerns about the reliability of economic data. The amended law aims to strengthen statistical supervision, hold authorities accountable, and impose stricter penalties on firms and institutions that fail to report data accurately and in a timely manner. This move reflects efforts to enhance the quality and integrity of statistical work in the country. Read more: Reuters
China leads improvements in fossil fuel engine efficiency to fill electric gap
Chinese manufacturers, notably Weichai Power, have achieved a significant milestone in fossil fuel engine efficiency, unveiling the world's most efficient commercial diesel engine with a thermal efficiency exceeding 53%. This breakthrough comes amidst a shift towards electrification in the automotive industry, with estimates suggesting significant fuel savings and carbon emissions reduction. While some carmakers are abandoning internal combustion engine research in favor of electric vehicles, others, like Weichai Power, are pushing the boundaries of traditional engine technology. Read more: SCMP
Government-linked hackers in China target exiled Tibetan leaders
A new report by cybersecurity analysts reveals that hackers with links to the Chinese government have been targeting exiled Tibetan leaders. The hackers have been using cyber espionage tactics to target members of the Tibetan government-in-exile and the office of the Tibetan spiritual leader, the Dalai Lama. In response to the report's findings, the Chinese Embassy in Washington stated that Beijing has always opposed and cracked down on all forms of cyber hacking according to the law. Read more: VOA
China And The World🌐
Blinken Raises US Concerns on Unfair Trade Practices in China
During his visit to China, Secretary of State Antony Blinken expressed concern about unfair trade practices there. He emphasised the importance of a level playing field for US firms and spoke about "non-market economic practices" in China. The visit comes amid rising tensions between the United States and China, with the threat of US sanctions against Beijing for its support of Russia. Blinken will also seek to maintain relations with China while addressing issues such as territorial claims, aggression in the South China Sea, and trade that supports Russia's defence industry. Read more: Bloomberg
Tibetan govt-in-exile holds back-channel dialogue with China
The Tibetan government-in-exile and China have held back-channel talks, indicating a willingness to resume formal dialogue after more than a decade of stalemate due to protests in Tibet and Beijing's tough stance. Penpa Tsering, the political head of Tibet's government-in-exile, confirmed the informal discussions, emphasizing their duration and informality. These talks aim to revive dialogue, which is viewed as the only solution to the Tibetan issue, amidst strained Sino-Indian relations, with Tsering urging India to increase its support for Tibet. Read more: The Arunachal Times
Russia's Putin says he plans to visit China in May
Russian President Vladimir Putin announced plans to visit China in May, marking his first overseas trip of his new six-year term. This visit follows his last trip to China in October 2023 and comes amidst strengthened diplomatic and trade ties between Russia and China. The "no limits" partnership agreement signed by Putin and Chinese President Xi Jinping in February 2022 underscores the significance of their relationship, especially amid Western sanctions imposed on Russia due to the Ukraine conflict. Read more: Nikkei
Landslide victory of Maldives ruling party injects more certainty into China-Maldives ties
China hailed the overwhelming victory of Maldives President Mohamed Muizzu's People's National Congress (PNC), emphasizing its positive impact on domestic and foreign policies. The election outcome, with PNC securing more than two-thirds of parliamentary seats, signifies public support for Muizzu's agenda focused on economic development over geopolitical conflicts. Muizzu's strengthened mandate is expected to foster smoother implementation of policies and enhance Maldives-China relations. Read more: Global Times
Will the dance partners US & EU come up with a better move on China?
The deep and enduring divisions between Europe and the United States over how best to handle China are on full display once again. U.S. Secretary State Antony Blinken is scheduled to land in China on April 24. Prior to touching down, he threatened tough measures unless Beijing stopped supporting Russia in its war against Ukraine through sending weapons-linked technologies to the Kremlin. German Chancellor Olaf Scholz, by contrast, just wrapped up a China trip that was far more conciliatory in both tone and substance—an approach that leaves Germany, and by extension Europe, at risk of looking alarmingly naïve in the face of the economic and security challenges posed by China. Read more: Foreign Policy
Is Serbia joining BRICS?
Serbia potentially joining the BRICS could allow Chinese President Xi Jinping to return to the bloc's original enlargement plan, focused on Europe rather than the Middle East. (IO)Will the United States ban LNG exports to China?
The White House and DOE announced on Jan. 26, 2024, a “temporary pause” in reviewing applications to export liquefied natural gas (LNG) to countries with which the U.S. does not have a free trade agreement (“non-FTA countries”). The Natural Gas Act (NGA) requires the DOE to approve applications for the export of LNG to non-FTA countries unless the DOE finds that the export would “not be consistent with the public interest.” (FP)Ray Zimmerman, mining financier wants to have a word on US-China Standoff.
Working on African and Chinese markets, Ray Zimmerman wants to lobby on behalf of his own company regarding American political issues with China. Read more: IO
German far-right AfD staffer arrested on China spy charges
German authorities have arrested a staff member of the far-right Alternative for Germany (AfD) party on charges of espionage for China. The individual, Jian G, allegedly passed on information about European Parliament negotiations and spied on Chinese opposition figures in Germany. The accused, an assistant to AfD's top candidate for the European Parliament elections, was apprehended by Saxony State Police. The incident underscores concern about foreign influence and highlights tensions between Germany and China amid recent diplomatic engagements. Read more: DW
U.K. police charge 2 men with spying for China
British police have charged two men under the Official Secrets Act for allegedly spying for China. The individuals, aged 32 and 29, are accused of providing prejudicial information to China and will appear in court on Friday. The charges come amid growing concerns over Chinese espionage activities in the UK, following previous incidents involving alleged spying for China targeting British officials in sensitive positions across politics, defense, and business. Read more: Nikkei
Academics in Japan shun events in China amid fears over professor’s disappearance in Shanghai
Academics in Japan are deeply concerned about the disappearance of Chinese professor Fan Yuntao in Shanghai, fearing a similar fate if they were to travel to China due to opaque laws and lack of confidence in Tokyo's intervention. Fan, an expert in international law teaching in Tokyo, went missing after returning to Shanghai in February 2023, reportedly to accompany Chinese officials for questioning. This incident adds to a series of disappearances involving Chinese academics based in Japan, raising concerns about academic freedom and bilateral relations between the two countries. Despite the risks, some academics express willingness to travel to China for events, while others remain cautious, citing concerns about potential detainment and Tokyo's perceived inertia in addressing such incidents. Read more: SCMP
Ericsson Lays Off More Than 200 Employees in China
Ericsson, the Swedish telecommunications-equipment company, has recently laid off more than 200 employees in China as part of a restructuring effort. The layoffs primarily affected the company's core network R&D division in China. This move is part of Ericsson's broader plan to diversify its research and development footprint and better align it with its global sales. The company has been facing challenges in China's 5G market due to increased competition from local players like Huawei and geopolitical tensions. Ericsson's market share in China has been dwindling, and the company has warned that further escalation of trade tensions between the U.S. and China could impact its operations in the country. Read more: WSJ
Charting the Course: Geopolitical Shifts and Strategic Maneuvering in the South China Sea🌊
Written By De/Cypher Team
The South China Sea, a vital geopolitical area, faces sovereignty disputes and militarization, with China asserting dominance through its 'nine-dash line.' The US supports allies like the Philippines with military aid, opposing China's coercive actions. India's involvement adds complexity, while China's territorial claims and military presence pose challenges to regional stability and energy security. A cooperative approach is crucial to avoid escalation and resolve tensions in the region.
Backdrop
The South China Sea (SCS) is one of Asia's most complex and highly securitised geopolitical spaces. It is a disputed area comprising three major archipelagos - the Paracel, the Spartley and the Pratas. The SCS is a semi-enclosed sea bordered by the Association of South East Asian Nations (ASEAN) and China as declared by the 1982 Law of Sea Convention (LOSC) under Article 122.
SCS's security concerns regional and non-regional actors alike. The area has high economic and strategic importance. Its oil and hydrocarbon reserves along with other natural resources add to its allure. It sees about $3.37 million worth of global trade push through its sea lanes as last reported in 2016 and is located close to East Asia. The regional players who have asserted their stake in the SCS area include China, Taiwan, the Philippines, Indonesia, Brunei and Malaysia while America, Australia, India, Japan and Russia have become deeply embroiled in the region as well. Initially a site for maritime territorial disputes, it has emerged as a playing field for US-Chinese competition in the Western Pacific region. The region is subject to the international jurisdiction of the United Nations Convention of the Law of Seas (UNCLOS) that came into effect in 1994 and is governed by multiple conventions - both environmental and strategic. These include COLREGS (1972), MARPOL (1973), the SOLAS (1974), SAR (19789), the SUA (1988 and 2005), the OPRC (1990), and the OPRC-HNS Protocol (2000).
The attention to the South China Sea (SCS) region is a fairly new turn of events. “The mapping and demarcation of South China Sea features only began in the latter half of the 19th century, and no country laid a serious claim to any of the features until the early 20th century.” No country viewed the area in terms of claimancy but rather saw the area majorly as a trade route.
Read the full article here.
News From Asia 🌏
Friday
- Former Malaysian Prime Minister Mahathir Mohamad is under investigation in connection with a graft probe involving his sons, according to Malaysia's Anti-Corruption Commission. The investigation, initiated in January, concerns offshore financial and business records. Read more: The Strait Times
- Vietnam has delayed the launch of its new stock trading system, originally set for May 2, due to regulatory issues and unpreparedness to connect with securities firms. Provided by the Korea Exchange (KRX), the system aims to expedite transaction settlements and boost trading efficiency, potentially upgrading Vietnam's market status. Read more: CNA
- South Korea's medical reform committee began operations despite doctor boycotts over the expansion of medical student quotas. Led by Noh Yun-hong, the committee aims to address issues like improving junior doctors' conditions and essential medicine compensation. While the Korean Medical Association and others boycotted, the committee includes experts and government officials to foster dialogue for healthcare reform. Read more: ANN
- Toyota Motor will invest $1.4 billion to launch electric vehicle production at its Indiana plant in 2026, creating up to 340 new jobs. This move marks Toyota's second EV plant in the U.S. and aims to broaden its EV lineup. Additionally, the company plans to start lithium-ion battery production in North Carolina next year as part of its electrification efforts in the U.S. Read more: Nikkei
Thursday
- Israeli warplanes have launched a fierce assault on the northern Gaza strip. Israel is moving forward with plans for an all-out assault on Rafah in the south, and an Israeli official has stated that 40,000 tents have been bought for the evacuation of civilians in preparation for the attack. Read more: SCMP
- The yen weakened past 155 per dollar for the first time in over 30 years, raising intervention concerns by Japan. Despite a rate hike in March, the yen has dropped 9% this year, becoming the weakest among G-10 currencies. Traders watch the Bank of Japan and Federal Reserve meetings for currency impact. Japan intervened thrice in 2022, spending over $58 billion. However, current challenges include US-Japan yield gaps. Read more: Bloomberg
- South Korea's GDP grew by 1.3% in the first quarter, surpassing expectations, driven by increased construction and private spending, according to the Bank of Korea. The growth figure more than doubled economists' predictions, highlighting the economy's resilience. Read more: Nikkei
- Nobel Peace Prize laureate Malala Yousafzai has recently condemned Israel and reaffirmed her support for Palestinians in Gaza. This comes after a backlash in her native Pakistan over a Broadway musical she co-produced with former US Secretary of State Hillary Clinton. Read more: Arab News
Wednesday
- Former Japanese Prime Minister Taro Aso met with former U.S. President Donald Trump in New York to discuss security and economic matters, emphasizing the enduring importance of the U.S.-Japan alliance. Read more: The Japan Times
- A North Korean delegation, led by the cabinet minister for international trade, is visiting Iran, as reported by North Korea's official media. This public exchange is notable due to the longstanding suspicion of military cooperation between the two countries, particularly regarding ballistic missile programs. Read more: Nikkei
- Karen National Union (KNU), a Myanmar rebel group, has withdrawn its troops from the town of Myawaddy on the Thai border. This withdrawal follows a counteroffensive by soldiers of the ruling junta, who regained control of the strategic area. Read more: CNA
- The South Korean military is considering banning iPhones from its facilities due to concerns about potential security breaches. iPhones are singled out because they don't fully comply with security restrictions, unlike Android-based smartphones. Read more: The Korea Herald
Tuesday
- During a navy parade rehearsal in Malaysia, two military helicopters collided mid-air, resulting in the deaths of ten personnel. The incident occurred around half an hour after takeoff, with all victims confirmed dead on the scene. Read more: CNA
- Taiwan was struck by a series of earthquakes, with the strongest reaching a magnitude of 6.3 in eastern Hualien. The tremors, including a magnitude 5.5 on April 22, caused damage to buildings, with no reported casualties as of April 23. Read more: The Strait Times
- Indonesia's top court upheld Prabowo Subianto's presidential win, rejecting fraud claims from rivals. Despite dissenting opinions, the 5-3 decision solidified Prabowo's victory, with no further challenges possible. Read more: SCMP
- North Korean leader Kim Jong Un oversaw the country's first "nuclear trigger" drills, simulating a nuclear counterattack, amid tensions with the US and South Korea. The drills showcased North Korea's nuclear weapons management system, following short-range ballistic missile tests. Read more: Yahoo News
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