Assessing the People’s Liberation Army

Dear Access member,

Today, at the top we present a summary of the U.S. Department of Defense’s annual report to Congress on China’s military, and our daily trade war roundup.

Have a great weekend, and as always, send me feedback by email or in our Slack channel.

All the best,

Jeremy

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1. Assessing the People’s Liberation Army

The U.S. Department of Defense has issued the 2018 edition of its annual report on military and security developments involving the People’s Republic of China. It’s an interesting read covering a range of topics from China’s approach to North Korea and Xi Jinping’s “innovation-driven development strategy” to hard numbers on troops and weapons.

Adam Ni 倪凌超, visiting fellow at the Strategic and Defence Studies Centre at Australian National University, put together a helpful Twitter thread summarizing some key points, which I have taken the liberty of abridging further below.

• China seeks to use its growing economic, diplomatic, and military clout to establish regional preeminence and expand the country’s international influence. A prominent example is the Belt and Road Initiative.

• China uses military and other coercive measures to handle regional disputes (in the South and East China Seas, and with India at Doklam measures), but as part of “a comprehensive approach” that aims to minimize risks to regional stability and economic growth.

• The People’s Liberation Army (PLA) is rapidly upgrading “a growing emphasis on the importance of the maritime and information domains, offensive air operations, long-distance mobility operations, and space and cyber operations.”

• The ability to conduct complex joint operations is a key aim of the PLA’s ongoing restructuring as it “targets capabilities with the potential to degrade core U.S. operational and technological advantages.”

• Streamlining the previously bloated military bureaucracy is another aim of the restructuring.

• The PLA is going global. Power projection and protecting China’s growing overseas interests are increasingly part of the PLA’s mission.

• Taiwan remains in the crosshairs: “China’s overall strategy continues to incorporate elements of both persuasion and coercion to hinder the development of political attitudes in Taiwan favoring independence.”

• Military exercises and readiness for battle have become a high priority for the PLA, especially since the start of 2018 when Xi Jinping began urging the PLA is to prepare “for real combat” and be ready “to fight and win wars.”  

• China’s foreign military engagement and cooperation continue to grow, including through UN peacekeeping contributions.  

• Arms exports are growing. From 2012 to 2016, China was the world’s fifth largest arms supplier, with more than $20 billion in sales. Of this, “military equipment worth $8 billion went to the Indo-Pacific, primarily Pakistan.”

• The Marine Corp of the PLA Navy (PLAN) will triple in size by 2020 to consist of 30,000 marines in 7 brigades which “highlights the priority placed upon expeditionary capability.”

• The PLA Air Force (PLAAF) is “closing the gap with the U.S. Air Force across a spectrum of capabilities, gradually eroding longstanding U.S. technical advantages.”

• China’s rocket force is “enhancing its strategic deterrence capability by introducing new conventional and nuclear-capable land-based missile systems.”

• Space, cyber, and electronic warfare are the department of the PLA Strategic Support Force, established in late 2015. This organization’s prominence “has been growing given the importance of its mission.”

• China’s military strategy aims to fight and win “informatized local wars” that may use “coercive tactics short of armed conflict to advance China’s interests.”

• The PLA has shifted its focus from land to ocean: “China’s military strategy and ongoing PLA reform reflect the abandonment of its historically land-centric mentality.”

Also today, and illustrating the mindset that many readers of the Department of Defense report will bring to it, an interesting Twitter thread from Beltway denizen Charles Morrison:

Over the past two decades, as the United States has been focused on the Middle East, the balance of power in East Asia has swung wildly in an unfavorable and dangerous direction. Here’s what the region looked like in 1999.

Flash forward to today, and things start to get dicey. Sure, the US forces depicted are only those actually in the region. We have reinforcements! But they are thousands of miles and many days away.

Here’s the real ballgame: between now and 2025, under current trends, PLA capability may stretch to the second island chain. Are we comfortable our forward deployed forces can deter aggression? Would China really try something?

The thread goes on to theorize that China sees a preemptive strike against an unsuspecting U.S. to be “a realistic enough planning scenario that the PLA is investing serious resources to train for it.” Morrison concludes: “Winter is coming.”

—Jeremy Goldkorn

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2. Trade war, day 43: Negotiators buckle down as supply chains shift

Yesterday (day 42), it was reported that a lower level Chinese delegation, led by Vice Commerce Minister Wang Shouwen, would visit the U.S. to meet with Treasury undersecretary David Malpass in late August.

Today we have more details on the lead up to those negotiations, courtesy of the Wall Street Journal (paywall):

• The meetings will take place August 22-23, and “could lead to more rounds of talks” with an eye on finding a deal by November, when Donald Trump and Xi Jinping are expected to meet twice: at the Asia-Pacific Economic Cooperation forum in mid-November, and the Group of 20 leaders’ summit in Buenos Aires at the end of November.

• Donald Trump is undecided on whether to go forward with more tariffs than just the $16 billion already promised to take effect on August 23, but U.S. Trade Representative Robert Lighthizer continues to argue that more tariffs will give the American side more negotiating power. Chinese officials are wary of negotiating directly with Lighthizer because of his “old concept” of trade theory, a Chinese official told the Journal.

• Larry Kudlow, Donald Trump’s chief economic advisor, seems to think that the U.S. side already has enough negotiating power, because China’s economy is “terrible.” CNBC reports that this isn’t exactly true.

• “The Treasury and Mr. Kudlow’s National Economic Council, which are more sympathetic to Wall Street and the U.S. business community, have put together a pared-down list of requests to China that they think could be a basis for a deal,” the Journal reports.

• The Treasury is pushing for these demands: “reduction of subsidies, elimination of overcapacity in steel, aluminum and other industries, cessation of pressure on U.S. companies to transfer technology, additional purchases of U.S. goods and services and strengthening of the yuan.”

The Journal notes that “U.S. officials say that Mr. Lighthizer believes pressure on Beijing would force U.S. and other foreign companies to relocate operations outside of China, weakening Beijing’s ability to develop new technologies.” Bloomberg reports (porous paywall) that this is already happening in a big way, especially for Taiwanese companies:

• “The manufacturing powerhouses behind much of the world’s electronics are preparing to move chunks of production away from China and toward such locales as Eastern Europe, Mexico and Southeast Asia.”

• Foxconn “started the ball rolling when he opened a $10 billion display plant in the heart of America, a move that now seems prescient”;

• “In the past week, corporate leaders, including the chief executives of Pegatron Corp. and Inventec Corp., declared on earnings calls they’ve come up with ways to mitigate the impact of a trade war.”

• iPhone maker Pegatron “may add capacity in the Czech Republic, Mexico and at home” in Taiwan, and “longer term, the company may set up shop in India or Southeast Asia.”

• “Quanta and Compal…which make laptops for most of the world’s major brands, said they can add capacity in existing non-Chinese facilities when necessary.”

• “Many contingency plans haven’t been finalized…But Trump’s sabre-rattling is definitely getting them thinking,” the piece concludes.

One final, noteworthy piece of potentially trade war-related news, from the South China Morning Post: Investigation into HNA’s New York headquarters may show new escalation in US-China trade war.

—Lucas Niewenhuis

3. State TV to California: Blame the GOP!

China’s international state broadcaster CGTN has published a video on Twitter about the hardship faced by almond farmers in California because of the tariffs China has placed on the import of American nuts. The video takes a partisan approach that is rare for Chinese state media: blaming the Republican Party and pointing out that Republicans represent many of the almond-growing areas of California even if the state votes Democrat as a whole.

The video is in the new “fun” propaganda style: watch it here or below.

4. Happy birthday, Jiang Zemin!

Today is the 92nd birthday of former president and Party General Secretary Jiang Zemin 江泽民.

China doesn’t have a tradition of celebrating retired politicians’ birthdays, but for years been Jiang has been greeted with an onslaught of unsolicited birthday wishes from young Chinese, who often call themselves “fans of the toad” (蛤丝 hásī). Many Chinese millennials might not remember much of Jiang’s two-term presidency from 1993 to 2003, but his personality really stands out among senior Chinese leaders, who usually appear restrained and scripted in public. Jiang, by contrast, used to dance, sing, and cracks jokes in English.

Everything you need to know to become a toad fan is in our post for Jiang’s 91st birthday.

This year, The China Project celebrates Jiang’s birthday with this video clip that shows him launching the first English language news broadcast in China, on Shanghai TV in 1984.

—Jeremy Goldkorn

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Our whole team really appreciates your support as Access members. Please chat with us on our Slack channel or contact me anytime at jeremy@thechinaproject.com.

—Jeremy Goldkorn, Editor-in-Chief

Here are the stories that caught our eye this week (other than the trade war, updated daily near the top of our newsletters):

• China denied the existence of mass internment camps for Muslim Uyghurs in the Xinjiang region, with a Chinese delegation telling the United Nations Committee on the Elimination of Racial Discrimination, “there is no such thing as re-education centers.” Later in the week, the propaganda machine creaked into gear, alleging “anti-China forces” had made “false accusations against China for political purposes.”

• Tencent announced its first decline in quarterly profits in nearly 13 years, due to a regulatory hold-up since March for new video games. The internet giant’s stock are now down 27 percent since January, and $25 billion in value was lost upon the declining profits announcement.

• State media again urged citizens to have more babies, with one article sparking a backlash for suggesting a “reproduction fund system” (生育基金 shēngyù jījīn) that amounts to a tax on all Chinese who don’t have children.

• Debate continued over whether Xi Jinping had reached a peak in his power, with an essay by William H. Overholt — senior fellow at Harvard University’s Asia Center and longtime adviser to the public and private sectors — arguing that “The West is getting China wrong.”

• Prominent TV host Zhu Jun 朱军 sued his #MeToo accuser, who remains anonymous and defiant.

• A labor activist who previously worked at Jasic Technology, a car parts factory in Shenzhen, has been detained, and workers at the company “allege police used sleep deprivation and sexual humiliation to get them to sign documents they had not read and make video recordings.”

BUSINESS AND TECHNOLOGY:

• Fake luxury
  Investigators seize fake luxury goods worth half a billion dollars / NYT (porous paywall)
  “The federal government said it had seized enough counterfeit Gucci bags, Hermes belts and Tory Burch purses to fill 22 shipping containers…The goods were part of a scheme originating in China that stretched to warehouses in Queens and even to retailers in Illinois and California.”

• P2P crisis
  China orders bad-loan managers to help failing P2P lenders / FT (paywall)
  “China’s banking regulator has instructed the country’s four state-owned bad loan managers to deal with failing peer-to-peer lending platforms, a sign of Beijing’s concern about possible financial and social instability from the shadow banking sector.”

• Google still searching for China strategy
  Google defends controversial China project in meeting with employees / The Verge
  “We are not close to launching a search product in China,” Google CEO Sundar Pichai told employees. “And whether we would do so or could so is all very unclear.”
  Google executives misled staff in meeting on China censorship. Here are 13 questions they must answer. / The Intercept

POLITICS AND CURRENT AFFAIRS:

• Xinjiang propaganda
  Southern Xinjiang residents get lectures on social harmony / Global Times
  “University students in Northwest China’s Xinjiang Uyghur Autonomous Region have been delivering lectures on ethnic solidarity and policies to local residents in southern Xinjiang, a move to further unify the region, experts said.”
  Financial Times reporter Emily Feng responded on Twitter: “These university students are being forced to teach propaganda in rural Xinjiang; young XJ residents have told me as much, even having to give up their jobs/internships to do so. It’s surreal to see this now being repackaged as truthful news.”

• Think tanks and nationalists
  Is Hu Angang really an ultra-nationalist? The recent media controversy in political context / Chinoiresie
  Mark Jia notes on Twitter, “Contained within this insider take on Hu Angang’s works is a fascinating account of pishi—government comments on thinktank reports. ‘Hu’s Institute is known for its impressively high number of pishi… I was once shown the scan of one of these… The messy signature was Li Keqiang’s.’”

• Vaccine scandals
  China fires 4 officials over defective vaccines / NYT (paywall)
  The vaccine scandal fallout continues: The Politburo heard results of an investigation into the Changchun Changsheng rabies vaccine recall. Xinhua says “a total of 35 non-centrally-administered officials will be held accountable,” while Bloomberg cites “state media” to report that 40 officials have been purged. In a separate case reported by Xinhua, 11 local officials have been punished for their role in a different vaccine quality scandal.

• Philippines
  Duterte hits China’s ‘nasty words’ to patrolling PH pilots / ABS-CBN News
  “President Rodrigo Duterte on Friday again called out China after its troops issued ‘nasty’ words against Filipino pilots flying over the disputed South China Sea… ‘You know very well that we will not attack… We’re not prepared to go to war with you so why do you have to say those nasty words?’”
  Collin Koh, a Singapore-based researcher on naval affairs, says these are “Quite emotionally charged words, but by now it’s clear as crystal that Beijing doesn’t take him seriously.”

• Malaysia
  China to take ‘humble’ tack to win over Malaysian Prime Minister Mahathir Mohamad / SCMP
  “China will seek to stabilize ties with Malaysia, rolling out the red carpet for the Southeast Asian nation’s prime minister on Friday…China might feel it needed to take a more ‘humble’ approach to gain the support of smaller neighbouring nations such as Malaysia, Chinese analysts said.”

• Dealing with debt
  Just how big is China’s ‘hidden’ debt pile? Beijing orders local cadres to find out / SCMP
  “China’s ruling Communist Party and cabinet have ordered local authorities to stop amassing ‘hidden’ debt as part of Beijing’s bigger push to head off catastrophic financial risks. The order was sent to municipal governments throughout the country.”

• Taiwan
  Taiwan demands InterContinental hotel chain ‘rectify’ China listing on website / SCMP
  “The demand followed reports that the Britain-headquartered InterContinental Hotels and Resorts group listed the island as ‘;Taiwan-China’ in line with Beijing’s requirement that international agencies, including airlines, clothing retailers and hotels doing business on mainland China, change their website to indicate the island was a part of China… Taiwanese President Tsai Ing-wen stayed at an InterContinental hotel during a stopover in Los Angeles on Sunday.”

• Hacking and cyber espionage
  China’s Tsinghua University linked to cyber espionage, study claims / FT (paywall)
  “China’s top engineering university, Tsinghua University, was the origin of multiple recent cyber-espionage campaigns targeting groups such as the Tibetan community in India and the Alaskan state government, new research has found… Attacks originating from Tsinghua University’s infrastructure also targeted the German carmaker Daimler.”

• Belt and Road
  Guardians of the Belt and Road / Mercator Institute for China Studies
  “The case of Sudan and South Sudan provides another example of the achievements and limitations of Chinese PSCs’ work overseas. We look at both countries together because Chinese involvement in the region, which focuses mostly on the oil sector, dates back to the late 1990s, when oil-rich South Sudan was not yet independent.”

SOCIETY AND CULTURE:

• Sex
  Chinese millennials are sex-deprived, study finds / That’s Guangzhou
  “A recently released survey of thousands of Internet users in China shows that half of those born in the 1990s have no sex life.”

• Animation
  Why new Japanese anime series Cells At Work! is a big hit in China (it’s in the science) / SCMP
  “It is unusual for teachers to encourage their students to watch cartoons but a Japanese anime series set inside the human body has become a regular part of science homework for some children in China.”

VIDEO OF THE DAY

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Viral videos from China, August 10-17, 2018

What’s China watching this week? A child fallen through an escalator, pampered Rhesus monkeys, and stolen water from fire hydrants.

A complete list of videos on The China Project this week:

• A 3-year-old crawls out of debris after being trapped alone for hours

• A flying scooter

• Stealing from a fire hydrant

• 10-year-old falls through moving escalator in northwestern China

• Amazing illustrations in a student’s notebook!

• This is how pampered rhesus macaques in Henan Province spend their summer!

ON SUPCHINA

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Chinese Corner: Will China ever make peace with dogs?

Chinese Corner is Jiayun Feng’s weekly roundup of popular Chinese non fiction writing. Most links are to Chinese language sources.

Five essential Chinese silent films you must watch

The Chinese movie industry was in a golden age of sorts in the 1930s, inspired by the ideals and politics of the May Fourth Movement. Politics, revolution, bloodshed, prostitution, suicide, feminism (before it was defined as such) — these were just some of the subjects tackled in the films of that era, in ways that were forward-thinking and shocking and which remain controversial to this day.

The NBA backup whose popularity in China is making him millions

Derrick Rose is a backup point guard for the Minnesota Timberwolves earning the NBA’s veteran’s minimum, but he remains one of the most popular players in China — and as a result, he’s a top athlete in the endorsement game. Also in this week’s China Sports Column: the Chinese Football Association courts Croatia, while Team China readies to win — again — at the Asian Games.

Janet Yang: Crazy Rich Asians is ‘a big effing deal for Asians all over the world’

The romantic comedy “Crazy Rich Asians” opened on August 15 in American cinemas to a strong initial reception. Many Asian Americans are delighted by the film: for the first time since 1993, when “The Joy Luck Club” premiered, a mainstream American movie has an all-Asian cast. We spoke to Janet Yang — who was the executive director of The Joy Luck Club — about what the film means to her.

Sinica Podcast: Legendary diplomat Chas W. Freeman, Jr., on U.S.-China strategy and history: Part 1

Few living figures of U.S.-China relations are as legendary as Charles W. “Chas” Freeman, Jr., the chief interpreter for Richard Nixon’s world-changing 1972 visit to China. On Sinica, Chas discusses grand strategy — and the current “strategy deficit” — in U.S.-China relations, as well as technological innovation, nationalism, xenophobia, Taiwan, Hong Kong, and many other topics.

• Subscribe to the Sinica Podcast via Apple Podcasts, Overcast, or Stitcher, or plug the RSS feed into your favorite podcast app.

The White Wolf of Taiwan

The China Project updates and republishes John Pomfret writing about the shady past of the Bamboo Union gang leader under investigation for taking Beijing money to influence Taiwan politics.

Reddit, the ‘front page of the internet,’ has been blocked in China

Reddit, the world’s most popular discussion site and the 10th most visited website in the world (according to Alexa), is now blocked in China, joining the likes of Google, Facebook, and several Western media organizations (including The China Project).

In China, rainbow trout is now salmon?

A Chinese fishery recently entangled in a “salmon scandal” — when it tried to pass off rainbow trout as salmon — has just helped the government draft a policy to reclassify rainbow trout as salmon.

Kuora: China’s claim to ‘5,000 years of history’

China often notes it has 5,000 years of history — but on what basis? Is this an internationally agreed claim, and could the same be said of other places on Earth? Kaiser Kuo examines.

Infamous rapper PG One is pivoting to fashion

The world hasn’t heard any new music from Chinese rapper Wang Hao 王昊, a.k.a. PG One, for months. Probably seeing no imminent resolution to his dying music career, PG One has turned his energy to DeeVan, his new fashion line unveiled on August 13 on Taobao that has proven to be wildly popular amongst his diehards.

PHOTO FROM MICHAEL YAMASHITA

Flying prayer flags

In this 2009 photo, prayer flags, which are used to promote peace, compassion, strength, and wisdom, fly at Lake Nam, a mountain lake in Tibet.

—Jia Guo