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China's Lessons from Ukraine; US-China Diplomacy; US vs. China Diplomatic Blitz
What China has Learned from the Ukraine War - Foreign Affairs
Vermilion: China is deeply studying the economic warfare used against Russia. While the Chinese economy is more “sanction proof” than Russia, the CCP is now critically aware that they need to harden their economy. Sanctions won’t deter them from invading Taiwan, but it will force the CCP to create and implement a national economic resilience strategy.
When Russia invaded Ukraine in February 2022, China’s leaders attempted to balance two fundamentally irreconcilable interests. First, they aimed to bolster China’s entente with Russia to counterbalance American power and alleviate growing strategic pressure from the West. Second, although they backed Moscow, they sought to avoid unilateral and coordinated sanctions aimed at China’s government, companies, and financial institutions.
For a year, China has been performing the “Beijing straddle,” tacking uncomfortably between these competing objectives under the white-hot light of international scrutiny. China has generally refused to sell arms to Russia and to circumvent sanctions on Moscow’s behalf because preserving global market access is more important to Beijing than any economic link to Russia. Simply put, China has no interest in being Russia’s proxy. But Beijing has also tried to have its cake and eat it, too, by endorsing Russia’s rationales for the conflict, coordinating with Moscow diplomatically while it cautiously abstains in United Nations votes, taking full advantage of discounted Russian oil, and enhancing economic linkages to Russia that do not violate Western sanctions. Indeed, China-Russia trade rose by a staggering 34.3 percent in 2022 to a record $190 billion.
Beijing has also learned important lessons even as it struggles to maintain this balance. Specifically, it has closely studied the Western-led sanctions campaign. And it knows that, if tensions with the West continue to intensify, these same economic weapons may well be turned against China. Over the last 20 years, China’s leaders have watched as Washington honed and more frequently deployed economic weaponry, including sanctions, export controls, investment restrictions, and tariffs. But the major Western sanctions campaigns have generally not applied to China because they targeted second-tier economies, such as Iran and Iraq, or more often, marginal economies such as Cuba, North Korea, and Sudan. The current Ukraine conflict has, at long last, given Beijing an opportunity to study the strategy, tactics, and capabilities of a Western sanctions coalition as it works to cripple one of the world’s largest economies.
China condemns other countries' unilateral sanctions, but has been using them against its own political adversaries. However, public health or environmental excuses are often employed as a thin veil.
In the last 3 years China is now mimicking U.S. Treasury and State Department sanctions.
“Perhaps Beijing’s most sweeping response came in its anti–foreign sanctions law, passed in June 2021. This law allows the Chinese government to apply countermeasures to companies and individuals for a broad range of vaguely defined actions. Article 15 empowers Chinese officials to impose sanctions on any foreign individuals or companies that “implement, assist, or support actions” that “may be deemed to endanger China’s sovereignty, security or development interests.” The law also borrows from Canadian and EU blocking laws, making it a crime to implement foreign (typically, Western) sanctions on Chinese soil.”
China cannot use the Renminbi as a safer reserve like Russia because reserves need to be in a foreign currency
Vermilion: Secretary of Treasury Yellen’s visit is part of a laundry list of high-visibility diplomatic exchanges scheduled between China and the United States. While SecState Blinken canceled his visit to China in the wake of the spy balloon controversy, continued bilateral interest for Secretary Yellen’s visit signifies mutual recognition of the importance of the trade relationship. Despite heightened tensions, trade between the United States and China grew in 2022.
Yellen had said on Wednesday that she still hoped to visit China to discuss economic issues with her Chinese counterparts, after US Secretary of State Antony Blinken cancelled his planned trip this month following Beijing’s acknowledgement that a suspected surveillance balloon detected over the US was from China.
The incident triggered a diplomatic row and further strained already frayed tensions between the countries. Yellen did not offer further details about the potential trip. “It is very important for both sides to maintain normal communication. China welcomes a trip by Secretary Yellen,” ministry spokeswoman Shu Jueting said at a regular weekly press conference in Beijing.
Blinken had planned to visit Beijing on February 5 as both sides were looking to abate the spiraling tensions, but the two ended up exchanging barbs after the US shot down the suspected spy balloon. China contended that it was merely an errant civilian airship used mainly for meteorological research, and that it had drifted off course.
Shu’s remarks, however, stood in contrast to those by a senior Chinese diplomat who suggested this week that a visit by Blinken would be pointless, given Washington’s provocation of Beijing in regard to core issues.
“In my opinion, the so-called visit is inappropriate, because the US has recently carried out many anti-China activities, including in military planning, technology, the Taiwan question and other aspects,” said Lu Shaye, China’s ambassador to France, according to an interview transcript released by the Chinese embassy on Wednesday.
The US has been maneuvering to cut China off from the hi-tech supply chain. And a pact between the US, Japan and the Netherlands is expected to further restrict China’s access to high-end chip-manufacturing equipment and technologies.
The Ministry of Commerce on Thursday also accused Washington of threatening the global supply chain by abusing export controls and national security concerns.
“China strongly opposes the US coercion that threatens the stability of the global industrial chain,” Shu said. “We hope concerned countries [the Netherlands and Japan] abide by international trade rules to maintain normal trade. China is ready to maintain the stability of the supply chain with all sides and will firmly defend the legitimate rights of Chinese companies.”
Foreign companies operating in China have also been on the lookout for any business impact from the deepening decoupling trend.
“European companies operating in China need to closely monitor the situation, evaluate the risk that US-China technology competition poses to their supply chains, and make contingency plans accordingly,” the European Union Chamber of Commerce in China said in a statement to the Post.
The chamber said geopolitical tensions and the coronavirus pandemic have shone a spotlight on the fragility of global supply chains, including their susceptibility to chip shortages.
“This move would potentially add to these pressures,” it said.
Defying the worsening diplomatic tensions and decoupling moves, bilateral trade between China and the US hit a record high of US$690.6 billion last year, according to official US data released this week.
In Zurich last month, Vice-Premier Liu He and Yellen held their first in-person meeting in three years, pledging to manage conflicts and step up policy coordination to deal with shared economic issues.
Business communities have long warned of the ramifications on jobs and the economy if the world’s largest economies decouple, and business groups continue to call for more engagement to get bilateral relations back on track.
Vermilion: China and Iran have been driven closer together not only by their souring relations with the West but also their mutual support of Russia’s war effort. After the United States left the JCPOA, China has long advocated for the West to restart Iran nuclear negotiations. China is potentially preparing to make the case that the United States is not fit to arbitrate diplomatic missions and must be replaced by Beijing.
BEIJING, Feb 14 (Reuters) - China's President Xi Jinping on Tuesday called for the early and proper resolution of the Iran nuclear issue while expressing his support for the Islamic Republic in safeguarding its rights and interests, according to Chinese state media.
China will continue to "participate constructively" in talks to resume negotiations on implementing the Iran nuclear agreement, Xi told Iran's President Ebrahim Raisi in talks in Beijing.
A 2015 nuclear agreement limited Iran's uranium enrichment programme to make it harder for Tehran to develop nuclear arms, in return for lifting international sanctions. Iran says it was further developing nuclear energy for peaceful reasons.
But in 2018 then-U.S. President Donald Trump ditched the deal, saying it had not done enough to curb Tehran's nuclear activities, and reimposed sanctions. China has criticised Washington for withdrawing from the deal and insists that the United States should make the first move in reviving the pact.
In September, the United States imposed new sanctions on companies involved in Iran oil exports, including five based in China. Washington said it would continue enforcing sanctions on Iran's oil and petrochemical sales so long as Tehran continues to accelerate its nuclear program.
Ahead of his three-day visit that started on Tuesday, Raisi wrote an editorial in China's state-controlled People's Daily in which he said both countries believe that unilateralism and "violent" measures such as the imposition of "unjust" sanctions are the main causes of crises and insecurity in the world.
In the editorial, Raisi described China as an "old friend", and said Iran's efforts to strengthen relations would be unaffected by regional and international situations.
"No matter how the international and regional situation changes, China will unwaveringly develop friendly cooperation with Iran and promote the continuous development of the China-Iran comprehensive strategic partnership," Xi said.
China said it is willing to deepen cooperation with Iran in trade, agriculture, industry and infrastructure as well as to import more high-quality Iranian agricultural products.
Xi and Raisi pledged to forge a stronger alliance when they last met in person on the sidelines of the Shanghai Cooperation Organisation summit in the Uzbek city of Samarkand in September.
Last year, Iran and China also began the implementation phase of a 25-year cooperation accord under which China is to invest billions of dollars in Iran's petroleum sector in exchange for the supply of oil and petrochemical products. China is already Iran's biggest trading partner. The pact was originally proposed by Xi on his visit to Iran in 2016.
Easing tensions, mending ties – China’s top diplomat has long to-do list for Europe-Russia trip - SCMP
Vermilion: Around the anniversary of the invasion of Ukraine (24 Feb), the PLA will participate in joint drills with Russia off the coast of South Africa while China’s top diplomat, Wang Yi will head to Moscow for talks likely with Sergei Lavrov, Wang’s opposite number. Beijing is balancing its relations with both Europe and Russia by traveling to France, Italy, and Hungary on this trip as well. Stay tuned for a Vermilion article on China’s diplomatic balancing and the anniversary of the war in Ukraine.
China’s top diplomat Wang Yi will seek to mend relationships with European countries while stepping up efforts to mediate in the Ukraine war during his visits to Europe and Russia.
Wang’s trip from February 14 to 22 will take him to France, Hungary, Italy and Russia.
The timing of the journey has drawn attention as it lands just before the first anniversary of Russia’s invasion of Ukraine on February 24.
Wang will also attend the annual Munich Security Conference in Germany on Friday, the first senior Chinese official to do so in person since the start of the coronavirus pandemic.
Analysts said Wang’s trip came at an opportune time for China to mend relationships with European countries, which have soured in general.
“For countries who are not [always aligned with] NATO, like Hungary and Italy, their relations with China have also been worsening in the past two years. Some economic relationships with central and eastern European countries, like those in the 16+1 trade group, have also been tense,” said Zhang Xin, associate professor of international relations at Shanghai East China Normal University.
The 16+1 trade group, formed a decade ago, is a forum intended for increasing Chinese trade and investment in central and eastern Europe. The group, which had 17 European members at its peak, saw Lithuania, Latvia and Estonia leave the agreement over the last two years due to tensions with Beijing. “Part of the purpose of this trip is to ease tensions with these countries, so they feel less hostility towards China,” Zhang said.
Andrew Korybko, a political analyst based in Moscow, said Wang would have to work hard to reassure the European Union of China’s peaceful rise during his trip.
“This is to dissuade them [from] complying with the US pressure to decouple themselves from China in the event that there’s a pretext, like the Taiwan conflict, for Washington to advance that agenda,” he said.
Korybko said that while exploring ways to improve ties with Russia, Wang must also manage China’s relations with the US, as tensions simmer over alleged spy balloons. According to China’s foreign ministry, Wang will address the controversy and explain Beijing’s position on other international issues at the security conference. In Russia, Wang intends to discuss bilateral relations “on international and regional issues of common concern”.
However, analysts do not expect China to take an aggressive stand on Ukraine with Russia, and to instead maintain the status quo. “China can offer to mediate talks between Russia and the region. But as to whether China will actively promote conversation or persuade either side, I don’t think that is the case,” Zhang said.
“China doesn’t have the ability or resources to resolve this conflict, and their stance on this matter will not change. All they can do is offer their opinion.” Korybko agreed, adding that even constructive criticism from China would not likely be well received by Russia.
However, he said China would seek to boost economic ties with Russia, and discuss closer joint military cooperation, especially through regular annual drills. Chinese President Xi Jinping had previously told Russian President Vladimir Putin that China was willing to play a constructive role in resolving the conflict. Beijing has not condemned Moscow for the war. It declared a “no-limits” partnership with Russia early last year, causing tensions to flare between China and the European Union.
Analysts agreed that Wang’s visit to Russia might pave the way for a meeting between Putin and Xi later this spring.
“The unexpected challenge, however, is how President Xi will manage the Western and especially US optics of him meeting President Putin soon after the balloon incident. One possibility is to expand the Chinese leader’s schedule abroad to visit other countries too, perhaps some European ones, so that Beijing can preemptively manage these potential Western optics of his planned trip to Russia,” he said.
“I do not say that a smaller, technologically superior fleet could never defeat a much larger fleet, I only say that — with the possible the exception of three cases in the past 1,200 years — none has.”
Sums it up pretty well.
China will have 400 maned ships by 2025 (not including civilian vessels)
US is hoping to have 350 maned ships by 2045
US cannot keep up with Chinese ammunition stocks. Missile for missile nor vessel for vessel. The war of attrition looks bad.
Vermilion: US secures deal to access 4 more bases in the Philippines, for quicker emergency response time and humanitarian purposes. It is believed 3 of them will be on Luzon, the major island closest to Taiwan, while 1 will be on Palawan, which flanks the South China Sea.
Additional Context: Popular sentiment is that Philippine President Marcos is balancing US-China relations. However Marcos appears to be losing patience with Chinese vessels harassing the Philippine Coast Guard and civilian fishing vehicles, and has increased US base access to locations nearest Taiwan.
Vermilion: Pacific Island leaders are seeking the best deal from China and the United States. This follows the opening of a new American Embassy in the Solomon Islands and their new security agreement with Beijing. These five Micronesian islands are looking for the full support of the United States under the shadow of Beijing.
The leaders of the Pacific's five Micronesian nations, Kiribati, Palau, Nauru, Marshall Islands and Federated States of Micronesia (FSM), met on Monday and issued a communique on Tuesday saying they had discussed the "value of a visit by U.S. President Joseph R. Biden Jr to the Pacific sometime in the near future".
"Presidents welcomed President Biden's planned visit for the Leaders Summit in the Pacific Region and expressed their full support and cooperation to ensure the success of this visit," they said in a statement.
Leaders of the Pacific Island Forum, a regional bloc of 18 countries, will meet in Fiji on Feb. 24 and any invitation for a Biden visit would likely be agreed on and issued by the forum.
The United States last year stepped up its diplomacy and aid to the strategically important Pacific region after China struck a security deal with the Solomon Islands, and China attempted but failed to forge a wider security and trade pact with 10 island nations.
FSM president David Panuelo said in a statement a U.S.-Pacific Islands summit hosted by Biden at the White House in September was "an unambiguous success".
"It will be of instrumental importance for the Pacific to ensure the United States continues to re-engage, as thoroughly as possible, with our Blue Pacific Continent," he said.
Biden is expected to travel to Australia this year to attend a meeting of the so-called Quad group of the United States, India, Australia and Japan.
Vermilion: Research still appears limited, but China is actively pursuing child birth rate increasing measures. There is a small chance that these measures could significantly boost the Chinese population. 2024 may be the key year to witness. Many Chinese families hold out on giving birth till the year of the Dragon, which will be 2024. The year of the Dragon, paired with increased child benefits may lead to a baby boom. This generation will be too young to contribute to the economy or war efforts within the “Davidson window of opportunity”, but could marginally help China’s ailing demographics.
China is beginning to implement more drastic measures to increase childbirth rates.
Some provinces (at least Sichuan) are paying sperm donors, allowing single women to register births, giving unmarried couples access to child raising benefits, and even removing family child birth limitations.
Not Enough Time in the Day Links:
Industrial Espionage: Various methods and cases of Chinese industrial and technological espionage as well as domestic coercion of foreign based companies for the handing over of tech.
US China Trade: Hitting Record Highs.