Tsai Ying-wen’s party loses in local elections; India benefits from the China decoupling; Chinese university students express rage against COVID restrictions
And Beijing meets with party leaders in the Middle East.
Dear China watchers, welcome to this week’s edition of the MiddlePowers. This week, endurance is the theme in Europe. We see Germany hanging on as its business community resists plans to branch away from China. The Netherlands remains independent from the U.S. influence on chip bans. Zooming in on Asia, we look at the recent defeat of the ruling party of Taiwan and what it means for China watchers. Meanwhile, South Korea-China relations are taking a step forward, with Beijing reopening to K-cultural content. As businesses look beyond the Chinese market, India is establishing itself as the next emerging hub for trade and manufacturing. Last but not least, we note how Beijing is carefully maneuvering the complex rivalry in the Middle East while trying to advance its lofty ambition in the region. Of course, we also care about the World Cup (That’s a lie. Only one of us does) and how China plays into it. Under the Mandarin section, we included some tweets in Chinese and as always, articles from People’s Daily.
We are excited to start our weekly world review of China’s increasing influence in the middle powers with you but first, one piece of world news to set the stage.
The backdrop: China turns to back-channel diplomacy to secure ties with the U.S.
A Chinese delegation flew to New York a few days before the Xi-Biden summit to participate in a meeting set up by long-time pro-China lobbyist and businessman Maurice “Hank” Greenberg. The high-level meeting is signalling Xi Jinping’s intention to mend relations with Washington.
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Politics
Germany
The clash between Berlin and the business sector continues over ties with China.
Sino-German relations are all over the news this week. It all began with an article from Reuters which revealed more about Germany's partly-reported business strategy for China. According to a confidential draft obtained by the news outlet, the foreign ministry said it would tighten the rules for companies with activities in China. The proposed rules would require companies to disclose “relevant China-related developments and figures”. The leaked draft also mentioned “unwanted tech transfer, environmental impact and forced labour.” It even goes as far as implementing a stress test to evaluate the China-associated risks at an early stage before nipping them in the bud.
One industry lobby group responded swiftly and critically to the report. On Tuesday, the Association of German Chambers of Industry and Commerce called for more support for diversifying trade beyond China. A spokesperson for the group said the strategy was “extremely defensive” and hoped the government would adopt a policy “benefiting the people of both nations”.
Chancellor Olaf Scholz, however, didn’t budge on the subject, doubling down on his stance on China to the media the following days. He told reporters Germany will not repeat its mistakes with Russia in China and said Berlin plans to end its “one-sided dependence” on the two countries for energy and trade. Economy Minister Robert Habeck who has always been hawkish towards Beijing backed the chancellor's stance saying the PRC’s investments in critical sectors must be examined closely.
South Korea
The Chinese streaming ban on South Korean cultural content has possibly seen its end
The Korean presidential office announced the lifting of the six-year restriction on Tuesday (In our imagination, China’s huge K-pop and K-drama fan base collectively let out a sigh of relief.) A spokesperson for the South Korean government labelled the move as “a sign of Beijing’s readiness to improve ties” and linked it to last week’s summit between South Korean President Yoon Suk-yeol and Chinese President Xi Jinping where Yoon stressed the need to promote people-to-people ties between the two countries.
Speaking at a press conference on Wednesday, Chinese Foreign Ministry spokesperson Zhao Lijian refuted allegations of the existence of a "restriction" policy on South Korean entertainment and said that China is ready to work with the neighbouring country to deepen bilateral ties.
China has been warming up to a full-on removal since the start of 2022. A 2019 film by South Korean director Hong Sang-Soo called “Hotel by the River” has reportedly been streaming on the Chinese platform Tencent since earlier this month. Over 10 South Korean TV dramas have appeared on other video platforms including Youku since the first half of 2022, according to Chinese state media.
An industry insider told The Korea Herald that although Korean companies no longer rely heavily on the Chinese market, the news has many in the industry feeling optimistic.
Also this week, Seoul has reportedly approached Beijing and Moscow ahead of a U.N. Security Council meeting, seeking their cooperation to restrain North Korea from conducting further missile tests and facilitate dialogue with Pyongyang.
At last week’s Xi-Yoon summit, the Chinese leader also said Beijing will speed up bilateral free trade agreement negotiations with Seoul and deepen cooperation in areas including high-tech manufacturing, big data, and green economy.
China first curbed trade and cultural imports six years ago amid tensions over the THAAD U.S. missile defence system stationed in South Korea, which Beijing said it saw as a threat.
The thawing of Beijing-Seoul relations comes as a surprise as they were expected to further deteriorate under the Yoon administration. During his election campaign, the South Korean President promised to “rebuild” the country’s alliance with the U.S. and suggested he would seek the installment of a second anti-ballistic missile system.
Arab nations
The Chinese Communist Party has been busy engaging in some party politics across the Arab world on the heels of the 20th party congress.
Beijing’s representatives met this week with leaders of the Progressive Socialist Party in Lebanon and the Kurdistan Democratic Party (KDP) in Iraq amid ongoing political turmoil in both countries. The parties of choice are very interesting since both have taken an anti-Iran stance in the proxy war between Saudi Arabia and China’s ally Iran—though both parties have flip-flopped on the issue in the past.
In Lebanon, two CCP officials met with Walid Jumblatt, a prominent Lebanese political figure and leader of the Progressive Socialist Party, which has 9 out of 128 seats in the Lebanese Parliament. In a tweet, Jumblatt shared photos with Qian Hongshan, assistant foreign affairs minister, and the Chinese ambassador to Lebanon, Qian Minjian. Jumblatt said the three had a “friendly” meeting and they made sure to exchange presents.
As if trying to show how far back the CCP and the party go, Jumblatt posted a photo of his father and former leader of the socialist party, Kamal, during his visit to China likely in the 1960s.
Does meeting with Jumblatt mean that China has abandoned Iran? Certainly not. But it’s always good to look at the bigger picture. Jumblatt’s political affiliations within the Arab world have changed many times throughout his long career. Once a close friend of the Syrian regime and tolerant of Syria’s ally Iran, he’s now become one of their biggest critics while seemingly conceding to Saudi Arabia’s agenda in Lebanon versus Iran’s. Nevertheless, Jumblatt remains an influential player in Lebanese politics, and seems to be cultivating closer connections with the Asian superpower.
The meeting spun out of a thank-you letter from the Chinese government to several party leaders in the Arab region, some of whom don’t have official government positions. Worth noting that exchanging “cables of thanks” is more customary between serving politicians. Here’s some of the party leaders who received letters from the CCP in return for congratulating Xi Jinping on his third term: the Yemeni Congregation for Reform, the Palestinian Popular Struggle Front and the Egyptian Social Democratic Party. Jumblatt seems to be the only one who got a visit to go along with the letter. Jumblatt, being a hyperactive Twitter user, publicized the visit through a tweet.
Beijing’s interests in the Middle East so far have required a careful, balancing act in maneuvering relations with Saudi Arabia, China’s rising strategic partner, and Iran, its long-time ally. Many wonder whether Beijing will forego the balancing act in the region as it inches close to the Arab kingdom.
Tehran is probably too busy keeping up with its internal unrest to pay attention to low-level meetings. It’s also hardly the first time that China has engaged the two parties. But the conversations could be significant under China’s expanding presence in the region. Beijing has been floundering in its competing interests in the Middle East. For example, its cooperation with Saudi Arabia sparked discomfort in Iran earlier this year. The meetings from this week indicate that Beijing will continue knocking on all doors without regard to Tehran’s agenda in the region.
In Iraq, the Chinese envoy, Cui Wei praised, during his meeting with the KDP leader and ex-government official Masoud Barzani, Kurdish efforts towards “developing bilateral ties and promoting trade and investment between the Kurdistan Region and China.” A tweet from the Chinese embassy said the ambassador emphasized the importance of strengthening CCP-KDP ties. The KDP is one of the most powerful political parties in the Kurdistan Region of Iraq.
The Iraqi-Kurds are seen as a threat by Tehran and have been the target of Iran’s military attacks over the past few years. The minority group seeking independence has been supported by Iran and the U.S. at different times throughout history. Both digressed from that support as the politics in the region progressed (at the end of the Iran-Iraq war for Iran and when ISIS’s activities diminished for the U.S..) Time will tell if Kurdish-Sino relations will go down a similar road. Here’s a thorough review of how the partnership is progressing from the Washington Institute of Near East Policy.
Earlier this month, China held the third session of the CCP-Arab Party conference, which, according to Chinese state media, brought together leaders of more than 80 political parties and organizations from 17 Arab countries and diplomatic envoys from some countries. The forum discussed the “parties’ responsibility in building a China-Arab community with a shared future.” However, beyond press releases written by a few of the political parties in attendance, the meeting was largely snubbed by the Arab press.
China’s continued engagement with political parties with different ideologies in the Arab world is another warning sign for the west, especially the U.S., that any vacuum in the region can be easily exploited by the Chinese regime.
Taiwan
China’s interference is a wild card to play in politics, even in Taiwan
“Your vote, determines how the world will view Taiwan,” said President Tsai Ying-wen at an event to rally support for candidates from the Democratic Progressive Party (DPP) in the local elections this week. She’s right. The municipal elections are the first vote since tensions in the Taiwan Strait escalated and are often considered an early indication of the presidential race in 2024. Yet, the ruling party lost, tragically, securing only seven out of 22 seats across the island. Following the defeat, Tsai resigned from her role as the party leader.
The DPP put Beijing’s interference in Taiwan at the centre of its campaign but their defeat indicates that issues such as soaring housing prices and public safety take precedence for Taiwanese voters. The most alarming result from this election might be in the Taipei (Taiwan’s capital) riding, where the DPP candidate Chen Shih-Chung lost his mayoral seat to KMT’s Chiang Wan-an, who considers the win as a stepping stone to the coming presidential election. Why does it matter for China watchers? Well, contrary to DDP, the KMT is known for favouring a closer relationship with the PRC and has steered clear of discussing Beijing’s threats during its campaign. A KMT president will likely lead to a pro-Beijing stance on the issue of the so-called unification.
Business
India
An Italian-U.S. carmaker is looking to India as a manufacturing market to cut costs.
Remember we noted in September that Chinese electric vehicles (EV) have gained a foothold in the European market by prioritizing sales volume over profit margin? Well, Stellantis, parent of brands such as Fiat, Peugeot and Chrysler, is finding other ways to reduce prices and attract customers. The Italian company is eying India as the next manufacturing powerhouse that could potentially bring down production costs.
Like many businesses and governments that are looking to reduce their dependence on China, the automaker has identified India as a rising pillar. CEO Carlos Tavares said the rising tension between China and the west has led to consequences in the business world. “The power that is best placed to leverage this opportunity is obviously India," said Tavares.
Meanwhile, the Australian parliament passed a new free trade agreement with India on Tuesday, sending a clear message that the two countries will become much closer economic and geopolitical partners in the coming years.
Here’s a full description of the India-Australia deal if you are curious. It’s worth noting that the bilateral deal would remove tariffs on a range of Australian exports to India including coal, wool, and rare earth minerals. Australian businesses, especially wine merchants and seafood sellers, have been struggling to find replacements for Chinese consumers. The agreement with India is another way for the small yet open economy to find new opportunities in the Indo-Pacific region and away from the Asian superpower.
Qatar
China-Qatar relations are taking centre stage this week, and the spotlight is not only on the world cup.
The two countries signed a $60 billion agreement on Monday, whereby Beijing will buy 4 million tons of liquefied natural gas from Qatar starting in 2026. The deal will last for 27 years, making it China’s longest LNG supply agreement to date, according to data from BloombergNEF. It’s also one of the country’s biggest in terms of volume.
As for the talk of the hour, the 2022 World Cup, Chinese diplomats in Qatar, Pakistan and the ASEAN didn’t miss the chance to gloat over their country’s contributions to the world cup.
Chinese companies are indeed making a strong appearance. The country’s biggest stadium, Lusail was built by the China Railway International Group, which, as noted in our previous edition, built a camp used to detain Uyghurs in Xinjiang. Chinese brands are the biggest sponsors of the competition, spending $1.395B as opposed to $1.1B coughed up by U.S. companies. Zhengzhou-based bus manufacturer Yutong delivered 741 e-buses in July to be used during the event. The company also signed an agreement to establish a bus factory in Qatar’s free trade zone.
“Chinese companies hope an association with the beautiful game may help them shed negative perceptions about the ‘made in China tag,” reported Qatari news organization AlJazeera, citing Paul Temporal, a branding expert at Oxford University’s Saïd Business School.
The Chinese ambassador to Saudi Arabia threw in, for good measure, some regret over the Chinese national soccer team’s absence—they made their only appearance in 2002 but have plans to become a soccer superpower by 2050. Here’s a fascinating read from Foreign Policy on how that’s going (hint: not great.)
“I was pleased to watch the world cup opening ceremony events happening in Qatar, our friend-state, and I was proud to feel China’s presence through technological contributions, event planning, and the beloved panda. I support Al-Akhdhar [the Saudi Arabian team] and I wish all the luck to Salem Al-Dosari [A Saudi player on the team] and his friends. I hope our national team will participate in the world cup, just like Al-Akhdhar, in the future.”
Qatar, on the other hand, was criticized recently for indulging “Panda diplomacy” after accepting two pandas—the first in the Middle East—as gifts from China. The pandas, Suhail and Thuraya (both words mean star in Arabic by the way) seem to be enjoying star status among world cup viewers despite everything. For example, a video taken from BeIn Sports and shared by Msheireb showing one of the pandas predicting the results of a soccer match had over 400 likes on Instagram and was widely circulated among Arab Instagram-ers this week.
Germany
Volkswagen lowers sales target in China as COVID-Zero policy returns
Beijing’s on-and-off COVID-Zero policy has caused a ripple effect on the German automaker. The company was optimistic about its target in July but now plans to sell 3.3 million cars in China, roughly 14 per cent less than previously expected as China once again reinstates its stringent COVID policy. The carmaker said the updated expected sales are still on par with the previous year’s results.
Despite the downturn in sales and all the criticism of dependency, board member Ralf Brandstätter pledged more investment in the Chinese market in an interview with the Handelsblatt newspaper.
Volkswagen, along with global competitors Mercedes and Tesla, is feeling the pressure to compete with local EV brands in China which received hefty financial support from the state. Stellantis’s Jeep joint venture with Guangzhou Automobile Group, for example, filed for bankruptcy last month. According to the China Passenger Car Association, domestic car makers accounted for almost 80 per cent of EV sales in the first seven months of 2022.
The Netherlands
Dutch government draws a line in following U.S. sanctions on China
Foreign Trade Minister Liesje Schreinemacher told Parliamentarians on Tuesday that the Netherlands will make its own decision regarding chip sales to China. As we noted in an earlier edition, the U.S. has been trying to convince its European ally to further restrict its semiconductor export to China.
Schreinemacher told lawmakers that it is important for the country to guard its national safety and its economic interests at the same time. Moreover, the minister said that the Netherlands would be worse off if the country bundled up with the E.U. in negotiating with the U.S. and “[gave] away deep ultraviolet lithography machines to the U.S..”
The Dutch company that will be most affected by this decision is ASML. It is one of the world's most important semiconductor tool makers and has a virtual monopoly on a type of machine needed to make the most advanced chips. ASML remained relatively unfazed by the U.S. pressure, banning only its most advanced products and was seen attending the fifth China International Import Expo earlier this month.
The U.S. has been struggling to rally allies behind its sweeping export controls. Leaders of the Netherlands, France and Germany have called on fellow European countries to push back on pressure from Washington.
At a meeting during the G20 Bali summit, Xi urged Dutch Prime Minister Mark Rutte to avoid “decoupling” and demanded the two sides “oppose the politicization of economic and trade issues.” Meanwhile, American officials have been threatening to restrict sales of chip equipment that contains even the smallest amount of U.S. technology if allies do not comply with its rules.
The E.U.’s attempt to maintain China-Europe trade relations while addressing security concerns will likely be on the agenda when European Council President Charles Michel gets an audience with Xi in Beijing next month. If you remember, Michel was supposed to give a keynote at the trade expo, but his pre-recorded speech was removed by Chinese authorities.
People’s Daily
Headlines from the International News section of Chinese state media:
Monday
欧洲多国积极推动城市转型振兴（国际视点）| Editorial: European countries are actively promoting urbanization
“波兰卡托维兹——能源城市“华丽转身”文化创意城市”
自19世纪以来，卡托维兹就是欧洲煤炭产业的心脏之一，产煤量占波兰总产量的90%以上，被称为“波兰煤都”......卡托维兹地处边境地区，波兰、德国、捷克等国的文化在此碰撞交流，加上这座城市的基础设施比较完善，且拥有良好的文化产业基础，市政府于是将发展文化创意产业作为振兴城市和推动可持续发展的大方向。
“Katowice, Poland——Energy City morphed into Cultural & Innovative City”
Since the 19th century, Katowice has been one of Europe’s coal industry centres. The city’s coal production accounts for more than 90% of Poland's total output. It is known as the "Polish Coal Capital"... Katowice is located in the border area, where the cultures of Poland, Germany, the Czech Republic and other countries collide. In addition, the city has solid infrastructure and a good cultural industry.
“法国诺让勒罗特鲁—— ‘城市中心行动”计划的受益者’”
近年来，由于种种原因，像诺让勒罗特鲁这样的中小城市逐渐丧失商业活力，失去对民众的吸引力，加之住房条件不佳等，城市发展面临困境。法国中央政府于2017年12月启动“城市中心行动”计划，加强同中小城市政府合作，通过提供资金支持、专业指导等方式，协助当地推进住房改造、拓展商业区域、完善公共服务设施建设、加强历史遗产保护等，努力促进城市振兴。
“Nogent-le-Rotrou, France——Beneficiaries of the ‘City Center Action’ program”
In recent years, due to various reasons, small and medium-sized cities like Nogent-le-Rotrou have gradually lost their commercial and residential appeal, coupled with poor housing conditions. The city’s development is facing difficulties. The French federal government launched the "City Center Action" plan in December 2017 to strengthen collaborations among small and medium-sized city governments. The program provides government subsidies for housing renovation and expansion of commercial buildings and infrastructure.
“德国魏玛——利用历史文化底蕴发展’大学城市’”
德国联邦政府十分看重魏玛的文化特色，将其列入德国的城市振兴计划，确定魏玛的8个区域为优先发展区域，重点将建筑和文化遗产更好融入城市景观，开发休闲和自然区域等。。。不少艺术家、企业家、自由职业者等人群定居魏玛。截至2011年，旅游业每年为魏玛提供8000万欧元收入。2001年至2009年，当地人口增加了13%。魏玛注重发展“大学城市”概念，魏玛包豪斯大学和李斯特音乐学院两大文化机构为该市提供了最多的工作岗位。
“Weimar, Germany——Leverages historical and cultural heritage to develop ‘university city’”
The German federal government attaches great importance to the cultural value of Weimar, folding the city into the German urbanization plan. The government identified eight key areas in Weimar’s development and integrated architectural and cultural heritage into its urban landscape…Many artists, entrepreneurs, freelancers and other groups settled in Weimar. As of 2011, tourism provided Weimar with an annual income of 80 million euros. Between 2001 and 2009, the local population increased by 13%. The concept of a “University Town” is emphasized as part of the city’s economic development. The Weimar Bauhaus University and Liszt Academy of Music provided the most jobs in the city.
Chinese Social Media Roundup
Twitter is a haven for Chinese dissidents, especially those inside the Great Firewall. When used correctly, it can be a great platform to disseminate news from within China’s borders. Many mainlanders DM Twitter accounts with a big following and ask the owner to publish messages or screenshots without identifying who they are. While there’s no way to verify the information coming from these people, they do offer on-the-ground information about what’s happening inside China, especially as Beijing tightens its grip on the internet.
This is a new section where we translate some of the most trending posts in the Chinese Twitter space.
Students across the country are protesting this week. Peking University, Sichuan International Studies University and Sun Yat-sen University are all on the list. Looking at the videos where students are demanding freedom brings flashbacks of what happened at Tiananmen Square on June 4, 1989. But we doubt this would culminate in a large, organized protest near the Forbidden City.
2. The Chinese social media posts from these two separate Twitter accounts talk about the same event allegedly happening at a mobile cabin hospital in northern China where students from Hebei Normal University are being coerced into signing informed consent forms to participate in clinical trials for COVID pills that are not available in the market. The bottles are oddly not labelled with any instructions other than the name of the medication and the number of pills.
3. A Chinese market regulator proposed to revise the competition law, making it easier for the government to impose legal obligations on tech firms.
China's SAMR just made a significant move by proposing to revise the Anti-Unfair Competition Law, adding many new provisions specifically targeting tech firms, while increasing the maximum fine to up to five percent of the firm's revenue!
4. The news about the disappearance of a dozen teenagers in Southern China within the past month has gone viral on the Chinese internet. Some have linked this to a recent change in China’s organ transplant bill.
If you somehow missed the Foxconn protest, here’s a Twitter thread on it. On the Mandarin side, several employees have reported that they were promised 8000 Yuan, a little more than $1,100, if they leave the protest and another 2000 Yuan, about $300, when they arrive home.
YouTube has become a popular way for Taiwanese politicians to rally support and for the people to consume news. 志祺七七 X 圖文不符 is one of the most liked accounts with 1.18M followers on the platform. The account has interviewed a sleuth of politicians and commentators including President Tsai Ying-Wen. According to this short video, the organization recently launched a Tiktok account and posted content related to the 20th Congress of the CCP. The video was then deleted by Tiktok, citing nudity even though the video doesn’t contain any. The Taiwanese media outlet appealed the decision but then the platform changed the cause to sexual exploitation. https://youtube.com/shorts/YEEh-huTHog?feature=share
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