China waves a big stick

• The unusually large naval formation is led by the Shandong, the People’s Liberation Army Navy’s (PLAN) second aircraft carrier commissioned in 2019.
• Today the Shandong is on course to rendezvous with more than 20 other Chinese warships in waters between Taiwan, the Philippines, and the U.S. Pacific territory of Guam.

Beijing’s move follows a flurry of U.S.-led military exercises in the region that saw participation from more than two dozen nations.

• While China has made no announcement about the recent dispatch of the Shandong, it has condemned a transit of the Taiwan Strait by a U.S. destroyer and Canadian frigate on September 9, accusing the ships of carrying out “public hyping” in the region.
• The U.S.-Canada joint mission was announced by the U.S. Navy as the G20 summit in New Delhi was drawing to a close. The event was skipped by Chinese President Xí Jìnpíng 习近平 but attended by both U.S. President Joe Biden and Canadian Prime Minister Justin Trudeau.

Click here for the whole story.

Zhao Yuanyuan

The U.K. Parliament researcher arrested for spying for China, said he is “completely innocent” amid uproar in Westminster over the espionage allegations. The researcher and another person were detained by police in March, in a case that went undisclosed until the Sunday Times reported it on September 9. London’s Metropolitan Police have since confirmed the arrests.

“I feel forced to respond to the media accusations that I am a ‘Chinese spy.’ It is wrong that I should be obliged to make any form of public comment on the misreporting that has taken place,” the man said in the statement. “I have spent my career to date trying to educate others about the challenge[s] and threats presented by the Chinese Communist Party,” he added. He did not attach his name to the statement but it was mentioned in a follow-up report by the Times yesterday. The man had worked for the China Research Group, which produced reports that were often highly critical of China for British MPs and for the press.

British Prime Minister Rishi Sunak had confronted Chinese Premier Lǐ Qiáng 李强 over the spying allegations on the sidelines of the G20 summit in New Delhi on September 10. Sunak raised “very strong concerns” about any interference in his country’s democracy, stating they were “obviously unacceptable.”

The Daily Telegraph ran a story today suggesting that the leak of the story about the arrest of the suspected spies was timed to disrupt Sunak’s meeting with Li, and the recent visit of British Foreign Minister James Cleverly to Beijing.

An American citizen arrested in China for espionage is a “decorated spy,” according to a post on the Ministry of State Security’s WeChat account. John Shing-Wan Leung (梁成运 Liáng Chéngyùn), a Hong Kong-born U.S. citizen was sentenced to life in prison in May this year.

Vietnamese fruit trucks are being held up at the Chinese border due to new inspection requirements, just one day after Vietnam signed a historic deal with the U.S. to upgrade diplomatic ties to a level on par with China, Russia, India, and South Korea. The fresh scrutiny on incoming produce is stoking speculation that it is a form of retaliation from Beijing against Hanoi: Chinese Foreign Ministry spokesperson Máo Níng 毛宁 urged the U.S. to “discard the hegemonic and Cold War mentality when dealing with relations with Asian countries,” when asked about the U.S.-Vietnam diplomatic upgrade yesterday.

China’s Defense Minister Lǐ Shàngfú 李尚福 has not been seen in public for two weeks since giving a speech at the China-Africa Peace and Security Forum in Beijing on August 29. The absence of Li, who was appointed defense minister in March, has stoked rumors over his whereabouts amid a series of surprise personnel changes in the upper echelons of the Chinese government since Chinese President Xí Jìnpíng 习近平 began his third term in office.

Last month, two missing generals who had commanded China’s missile forces were replaced, fanning suspicions of the largest purge in China’s military in a decade.

Cambodia’s Prime Minister Hun Manet will pay a state visit to China from September 14 to 16, where he is expected to meet with Xi, the Chinese Foreign Ministry announced yesterday. It will be Hun’s first trip to the country and one of his first overseas trips since he took up his position in August.

Notable reads: The business of farewell: A closer look at China’s mortuary industry is a report on the people and companies in China’s funeral services industry from the Ginger River Review newsletter.

Chinese state media: The most notable story on the front page of the Party paper People’s Daily today is about Wáng Hùníng 王沪宁 attending a meeting of the China Association for the Promotion of Peaceful Reunification. Wang is a member of China’s top leadership group, the seven-man Politburo Standing Committee, and is sometimes called the most important political theorist in China today.

Wang said “We must persist in daring to fight and be good at fighting, shoulder the responsibility and mission of fighting against ‘Taiwan independence’ separatist forces and external interference forces,” but his speech seemed to emphasize persuasion and non-violent coercion rather than military intervention: he called for building “a solid foundation of public opinion against ‘independence’ and promoting reunification,” and “promoting friendship between China and foreign countries.”

Xinhua News Agency’s top story today is about Xi Jinping replying to a letter from the officers who staff the customs office at the Khunjerab Pass, the only border crossing between China and Pakistan. The border is 16,200 feet above sea level on the Karakoram Highway, the highest paved road in the world, which reaches 17,434 feet on the Pakistani side.

• China’s Foreign Ministry urged the new government to restore order and ensure Bongo’s safety, similar to their response to the Niger coup one month earlier.

The jury’s out on how the coup will impact China’s position. Since the P.R.C. established ties in 1974, it’s only had to deal with two leaders in Gabon — Omar Bongo (1967-2009), then his son Ali Bongo, who won elections held shortly after his father’s death in 2009.

• Keeping it in the family meant political stability, a treasured resource in Chinese international relations.

Regardless of who runs Gabon, China is interested in boosting ties. The country has some interesting calling cards — a country with 85% forest cover, where most citizens get by on $2 a day, yet also Africa’s biggest champagne consumer.

• Gabon is also oil rich: black gold accounted for over half of Gabon’s sizable exports to China last year.
• A report earlier this year said Ali Bongo had promised the Chinese military a port.

For details, click through to the latest installment of China Ties by Alex Colville.

Alex Colville

• The controversy erupted on Sunday when Li was promoting an eyebrow pencil from Chinese makeup brand Florasis. When a viewer lamented that the cost of the product seemed to have increased over the years, Li fired back, telling the critic to stop “spreading outright lies” and be more supportive of domestic companies.
• “Sometimes you have to reflect on yourself and ask why you haven’t received a raise after so many years. Have you been working hard enough?” he said.

Li’s remarks have sparked intense debate on Chinese social media about consumer sentiment in the face of greater economic uncertainty, and whether high-earning individuals in Chinese society are out of touch with the working class.

Zhao Yuanyuan

• This week on the Sinica Podcast, host Kaiser Kuo speaks with Representative Rick Larsen of the Washington 2nd District, the co-founder and continuously serving Democratic co-chair of the bipartisan U.S.-China Working Group about his white paper outlining on how the U.S. can more effectively compete with China.You can wait for the general podcast release on Thursday, or you can get the ad-free, subscriber-only version of Sinica using any major podcast app on your phone by following the instructions at this link.

Below are links from our NewsBase to other noteworthy reports published in the last 24 hours from and about China.

BUSINESS AND TECHNOLOGY:

AI and China’s new Data Security Law
China will in time use machines to execute Data Security Law, senior scientist with role in policymaking says / SCMP (paywall)
“China will gradually replace humans with machines in the implementation and execution of its Data Security Law, a senior scientist commissioned by Beijing to identify data critical to national security said.”

China’s insurance crisis
The slow-burning insurance crisis unfolding in the shadows / Caixin (paywall)
“Banks and local government debt usually grab the headlines when it comes to risks in China’s financial system. But insurance, a sector traditionally associated with caution and prudence, has quietly turned into a slow-burning crisis for regulators.”

Chinese airlines
Air China jet evacuated after engine fire sends smoke into cabin in Singapore and 9 are injured / AP
“Nine passengers were injured after an engine fire sent smoke into the cabin of an Air China jetliner landing in Singapore, prompting an evacuation of the aircraft.”

Real estate and property development
Chinese property woes trigger ‘dramatic shift’ into US stocks / FT (paywall)
“The Chinese property sector has emerged as the biggest threat to the stability of the global economy, fuelling a ‘dramatic shift’ out of emerging market stocks and into the U.S., according to a closely watched investor survey.”
Beijing throws China’s housing market a bone / WSJ (paywall)
“The deep malaise in China’s critical housing sector has finally pushed Beijing to make some forceful moves. The real-estate market may get a meaningful boost in late 2023 — but it will remain in a state of structural decline over the long run.”
China’s nationwide property tax plan set for further delay / Caixin (paywall)
“The Chinese government’s long-awaited rollout of a controversial property tax looks set to be delayed yet again, as a law that would provide a legal basis for the levy is missing from the latest legislative program of the National People’s Congress (NPC) published last week.”
China’s housing rebound fades fast in big cities after stimulus / Bloomberg (paywall)
“A spurt of home sales in China’s biggest cities is losing momentum less than two weeks after authorities loosened mortgage restrictions, raising doubts over whether the steps are enough to revive the market before a crucial busy season.”

Apple
Apple’s iPhone 15 launch clouded by China problems / Reuters
“Apple on Tuesday is expected to unveil a new iPhone 15 lineup as questions about market access in China and competition hang over the world’s most valuable listed company.”
Apple loses about $200 billion in market capitalization on reports of iPhone restrictions in China / AP
“Apple has lost around $200 billion in market capitalization over several days as tensions between the U.S. and China rise, with several media outlets reporting this week that the iPhone maker is being singled out by Beijing.”

SCIENCE, HEALTH, AND ENVIRONMENT:

Greater Bay Area startups tackling climate change
Climate change: low-carbon innovations emerge from Greater Bay Area start-ups, inspired by ants, spider silk, tea leaves / SCMP (paywall)
“Urgency is growing for businesses and nations to decarbonise as they face tighter regulations and looming deadlines to meet emissions targets so that the world can avoid the most catastrophic effects of climate change, such as the severe rainstorm that brought Hong Kong to a standstill this week.”

Solar energy
Europe’s solar industry warns of bankruptcies over Chinese imports / FT (paywall)
“Europe’s solar power industry has warned that a glut of cheap Chinese imports has pushed some manufacturers to the brink of bankruptcy, hampering the EU’s efforts to boost local production of green technologies.”

POLITICS AND FOREIGN AFFAIRS:

China’s missing defense minister
China’s defense minister not seen for two weeks / Nikkei Asia (paywall)
“There has been no sign of Chinese Defense Minister Lǐ Shàngfú 李尚福 in public for two weeks, touching off speculation about his fate.”

China sows disinformation about Hawaii tragedy
China sows disinformation about Hawaii fires using new techniques / NYT (paywall)
“Beijing’s influence campaign using artificial intelligence is a rapid change in tactics, researchers from Microsoft and other organizations say.”

Military exercises near Taiwan
China’s navy starts largest-ever exercises in Pacific Ocean / FT (paywall)
“China’s navy has launched its largest-ever maneuvers with an aircraft carrier in the western Pacific, according to foreign defense officials and analysts, as Beijing flexes its military muscle to push back against the U.S. and its allies.”

More on Taiwan
China outlines plan to make Fujian a zone for cross-strait development with Taiwan / Reuters
“China disclosed on Tuesday more details of its plan to make southeastern Fujian province a zone for integrated development with Taiwan, including financial market initiatives.”
Taiwan says China is bolstering coastline military bases facing the self-ruled island / AP
China outlines plan to make Fujian a zone for development with Taiwan / Nikkei Asia (paywall)
PLA’s Fujian aircraft carrier poses ‘substantial threat’, Taiwanese defense ministry warns / SCMP (paywall)
“The People’s Liberation Army’s third and most advanced aircraft carrier, the Fujian, would pose a ‘substantial threat’ to Taiwan in the event of a cross-strait conflict, the island’s defense ministry has warned.”
China cranks up ‘gray zone’ incursions, Taiwan warn / Nikkei Asia (paywall)
“China is cranking up ‘gray zone’ harassment and incursions to challenge Taiwanese sovereignty, Taiwan’s new defense report warns.”

Fines instead of taxes?
China’s local governments are so cash-strapped they use police to raise revenue / WSJ (paywall)
“China’s sluggish economy is driving cash-strapped local governments to seek unconventional sources of revenue. Their law enforcers have emerged as some of their biggest earners.”

China’s new Foreign State Immunity Law
Why China is changing its laws to allow court action against foreign states / SCMP (paywall)
“China’s recent decision to allow legal action against foreign states indicates its increased willingness to use legal means to defend its national interest, analysts have said.”

Nuclear disarmament
Fresh nuclear disarmament talks should include China / Reuters
“German Chancellor Olaf Scholz called for new international negotiations on nuclear disarmament on Tuesday, saying that not only Russia and the United States but also China should be involved.”

U.S.-China competition and tensions
China publishes backstory of US ‘spy’ jailed for life / Reuters
“China’s top spy agency published new details this week about a U.S. citizen jailed for life for espionage earlier this year, describing his recruitment by U.S. agents, how they fabricated his legend, and how he helped them entrap surveillance targets.”

Italy
Italy’s Meloni meets with China’s Li as Italy’s continued participation in ‘Belt and Road’ in doubt / AP
“Italian Premier Giorgia Meloni met with Chinese Premier Li Qiang on the sidelines of the G20 summit and vowed Saturday to “consolidate and deepen” relations, as Rome considers abandoning Beijing’s ‘Belt and Road’ initiative of Chinese-built and -funded infrastructure projects.”

Myanmar
Powerful ethnic militia in Myanmar repatriates 1,200 Chinese suspected of involvement in cybercrime / AP
“One of Myanmar’s biggest and most powerful ethnic minority militias has arrested and repatriated more than 1,200 Chinese nationals allegedly involved in criminal online scam operations, an official of the group said Saturday.”

U.K.
What the spy saga reveals about U.K.-China relations / FT (paywall)
“The inevitable consequence of events will mean further demands for greater distance.”

Maldives
Maldives presidential runoff is set for Sept. 30 with pro-China opposition in a surprise lead / AP
“Maldivians will return to the polls on September 30 to vote in a runoff election between the top two candidates in the country’s presidential race after neither secured more than 50% in the first round, the elections commission said Sunday.”

India
Can India challenge China for leadership of the ‘global south’? / NYT (paywall)
“A rising India has moved aggressively to champion developing nations, pursuing compromise in polarized times and promising to make America listen.”

Vietnam
Biden says US outreach to Vietnam is about providing global stability, not containing China / AP
“President Joe Biden said Sunday his visit to Vietnam to showcase stronger ties with Hanoi was not about trying to start a ‘Cold War’ with China, but rather was part of a broader effort to provide global stability by building U.S. relationships throughout Asia at a time of tensions with Beijing.”’

Russia
‘Very high level’: Putin plays up Russia’s economic ties with China / SCMP (paywall)
“Russian President Vladimir Putin says his country’s economic ties with China are at a ‘very high level’ thanks in large part to the two nations’ political relationship.”

SOCIETY AND CULTURE:

Influencer
China state TV slams beauty influencer who told off thrifty viewer / Reuters
“China’s state television criticized on Tuesday a famous beauty livestreamer who told off a viewer for complaining about the high price of an eyebrow pencil, as many Chinese feel the pinch from an economic slowdown.”

Private tutors in China
China’s latest lesson for private tutors includes harsh fines, tighter licensing requirements / SCMP (paywall)
“Unlicensed after-school tutoring services in China could face fines of up to 100,000 yuan ($13,710), among other penalties, as part of a sweeping overhaul to the industry prompted by President Xi Jinping’s push for reform in the education sector.”