The 2023 Red Paper

It was a summer of environmental extremes for China.

Scorching heat waves drained water reserves, ignited forest fires, and strained the nation’s power supply — to a point where it grew so hot in some cities that some residents took shelter in Wi-Fi-equipped underground bunkers to stay cool.

Crops were parched from record-breaking droughts in some regions, while others were submerged in torrential rainfall and floods that destroyed homes and left scores of people dead. 

But Beijing is ramping up policy measures to combat climate change and achieve its ambitious carbon neutral goals — though it constantly finds itself wedged between securing a stable source of energy and slashing its carbon footprint.

SPAR19, the flight rumored to be carrying U.S. House Speaker Nancy Pelosi, became the most tracked live flight in the world by the time it landed in Taipei in August this year, as people around the globe worried about an escalation between the United States and China over Taiwan. 

Global tensions over the self-ruled island were already brewing — given Beijing’s spat with Lithuania over a Taiwan office in Vilnius, foreign delegations paying visits to Taipei, and the Biden administration’s new policies and several comments made by Biden that appeared to indicate policy changes.

But Pelosi’s visit unleashed a chain of reactions that poked at Beijing’s most sensitive foreign policy topic and which some have called the “Fourth Taiwan Strait Crisis.” 

China responded with live-fire military drills, the suspension of talks and sanctions against U.S. officials, and the first white paper on Taiwan under Xi’s leadership.

Though many of the island’s citizens seem eerily calm in the face of such high stakes, its military is shoring up its defenses (with the help of $425 million worth of spare aircraft parts and weapons systems, courtesy of the Biden administration). 

The Sinica Podcast hosted a conversation at the end of the year with Jude Blanchette, Freeman Chair at CSIS, and Ryan Hass of the Brookings Institute to discuss America’s role in the ongoing issue. Hass urged to remember that:

…Military options may not be the option of first resort in China’s efforts. What we’ve already seen is that China is engaged in a strategy of coercion without violence. This isn’t a future hypothetical. This is an everyday reality today, where China is using an abundance of tools to try to wear down the psychological confidence of the people of Taiwan; that resistance is futile; that there is no path to peace in prosperity that does not run through Beijing, and that the people of Taiwan’s best hope is to sue for peace now rather than invite pain later.

That’s what the people of Taiwan are facing. And if we become target locked on some future hypothetical invasion scenario and begin to treat it as an inescapable inevitability, we could find ourselves sort of driving down a path that may not be necessary. And beyond that, we are not addressing the problem that the people of Taiwan are feeling today.

In a surprise to no one, Xí Jìnpíng 习近平 secured his third term as General Secretary at the 20th Party Congress this past October. The awkward exit of Xi’s predecessor, Hú Jǐntāo 胡锦涛, from the meeting left the world wondering exactly what had happened, while his leadership picks in the Politburo are mostly men who have proven themselves loyal to him.

Observers — panda huggers, panda sluggers, and those in between — indulged in a feast of Party politics punditry, including us. After the 20th Party Congress concluded, Sinica hosted a postgame recap to break down what was important and what was sideshow from the meeting.

Damien Ma, head of the Paulson Institute’s MacroPolo think tank, elaborated on a particularly interesting theory:

We’re focusing on the strength of Xi Jinping. But I think another way to think about it is – is it the person or is it the institution? In other words, is it really the strength of Xi Jinping or the weakness of the CCP because of what transpired in the last decade?

Meanwhile, Lizzi Lee, host of The China Project’s Live with Lizzie Lee, broke down the new Politburo’s resumes, including half a dozen backgrounds in science and technology – including space, environmental engineering, and public health:

We have all those experts. So what does it mean? I think one thing that works in the nerd’s favor is that they don’t have strong political coalitions in political affiliations growing up, and they are considered relatively clean in terms of factional affiliations. Also, scientists, I think, well by default are not that corrupt. And that’s something that Xi Jinping values a lot.

And more importantly, China perceives itself as locked into this rivalry, especially over high tech with the United States. So, to the extent that China wanted to really turbocharge its STEM program, those scientists, and technocrats are probably going to be coming in handy.

Regardless, a stable featuring expert technocrats was not enough to abate fear of the fate of private business under China’s most powerful leader since Chairman Máo Zédōng 毛泽东.

In July, regulators finally concluded a long probe into ride-hailing platform Didi, slapping the company with a fine of over 8 billion yuan ($1.28 billion), and in November, Alibaba affiliate Ant Group was fined roughly the same amount, which many observers saw as signs that the tech crackdown was ending.

But gloom had already set into the tech industry, along with real estate doldrums and the increasingly severe COVID curbs in 2022, especially the Shanghai lockdown in the spring. Ongoing lockdowns throughout the year snarled up supply chains.

Beijing launched a stimulus package at the end of May, and there have been dozens of local and central government measures to encourage consumption and get the economy going again. But even the bankers and usually bullish investors have remained pessimistic.

Said Joyce Chang, global head of research for J.P. Morgan:

We have actually taken down the full year China forecasts to 4.3% GDP growth. That is more than one full percentage point below the official government target of five and a half percent. And if you look at just the history of China’s growth over the last decades, it’s only the second time that we think the government will miss its official targets. The last time being 2020, the year that the pandemic broke out. So this is a fairly serious slowdown.

The implications of this on the global economy are stark.

Economist and author Stephen Roach noted that, for a long time, China’s growth had been propping the world up since the Global Financial Crisis:

…I performed the following thought experiment by removing [China’s] rapid GDP growth from the world economy to see what the world would have looked like without China. Specifically, over the five-year 2012–2016 period, actual global GDP growth averaged 3.5%.

Without China, the growth trend would’ve been reduced to just 2.3%, which is fractionally below the 2.5% threshold that we normally associate with outright recession in the world economy…

The resilience of China, or the China cushion, was the only thing that stood between a weak post-GFC recovery and a relapse back into global recession during that earlier period.

Fast-forward to today: The cushion has no air in it. I mean, China’s growing at well below the post-GFC pace, if it’s growing at all, and you show me another source of resilience.

In June, CATL, the world’s largest battery manufacturer, launched its third-generation Qilin battery for electric vehicles (EVs), which will be mass produced in 2023 and will give cars a range of at least 621 miles.

The company is pioneering other new battery technologies like sodium-ion batteries, and — together with other Chinese companies — now dominates the entire supply chain from mining of lithium and other metals to batteries ready to be installed in vehicles.  

China is also home to dozens of companies making EVs, including startups, established traditional auto companies, joint ventures with foreign car brands, and Tesla, which so far still controls 100% of its Shanghai-based company.

China produced about 6 million EVs vehicles in 2022, and in the first half of the year,  Shenzhen-based BYD became the world’s leading EV company with global sales of 640,748 units. China’s EV and battery companies are now entering new markets around the world.

Tensions between the U.S. and China and a global semiconductor shortage in 2022 turned the industry into a geopolitical battleground.

The U.S. passed the CHIPS and Science Act to promote its indigenous semiconductor industry and to cut China off from the most advanced chips and the equipment needed to make them, although this legislation is not going to make the U.S. independent of Taiwan Semiconductor Manufacturing Company (TSMC).

U.S. restrictions on sales of high-end chips to China will likely profoundly impact semiconductor, cloud, and AI companies and technologies all over the world. 

In China, the headlong rush for semiconductors resulted in the arrest of various “chip madmen” for corruption in 2022, and the industry is in a slow-burn crisis as the effects of U.S. legislation kick in.

In mid-December, the U.S. passed another round of export controls on computer chips that has “now cast a very wide net both in terms of limits on sales of semiconductors and other technology to Chinese firms,” according to Paul Triolo of Albright Stonebridge Group.

Beijing has also pushed back, with China’s Ministry of Commerce (MOFCOM) circulating a request in the World Trade Organization challenging the U.S.’s export controls “related to China.”

A MOFCOM official explained the decision in fairly strong language, accusing the U.S. of “threatening the stability of the global industrial chain …violating international economic and trade rules… and harming global peace.”

The letter is largely symbolic, but Chinese officials are almost assuredly making moves to protect China’s domestic semiconductor industry from harmful U.S. activities, Triolo stated.

In January, grim footage of a Chinese mother of eight shackled by her neck in a freezing shed in Xuzhou sparked a soul-searching national conversation about human trafficking and forced marriage. In the summer, a group of men were caught on camera assaulting a woman and her female friends at a barbecue restaurant in Tangshan. These and other incidents of abuse of women focused pubic attention on women’s rights despite Beijing’s ongoing crackdown on feminist activism. 

In an interview with The China Project, Dr. Leta Hong Fincher, the most influential writer and scholar working in the field of feminism and women’s studies in China today, said that what’s “particularly interesting” about the case of the Xuzhou woman was “the enormous amount of outrage” it aroused among the Chinese public. 

It has been a viral topic on Weibo in spite of the very aggressive censorship, and it has also sparked a lot of different kinds of activism. Citizens, women, and men as well, citizen journalists going and trying to investigate for themselves more about this case,” she added. “A lot of citizens are being detained and prevented from finding out what’s happening. But nonetheless, all of these normal efforts to prevent independent reporting in China and to prevent activism have failed to kind of stem the tide of activist outrage. And that I find to be really interesting.

There was a mixed bag of updates on some of the country’s most high-profile #MeToo cases. In Septmeber, a Chinese court rejected a lawsuit filed by Zhōu Xiǎoxuán 周晓璇, whose sexual harassment allegations against famous television host Zhū Jūn 朱军 had attracted national attention since 2018. 

Outside China, a former University of Minnesota student accused Chinese tech billionaire Richard Liu (刘强东 Liú Qiángdōng) of rape, but she later reached an undisclosed settlement with him in the U.S. 

But towards the end of the year, many feminists cheered when a Beijing court sentenced Chinese-Canadian pop star and actor Kris Wu (Wú Yìfán 吴亦凡) to 13 years in jail for rape and other sex crimes. On the policy front, China’s top legislative body updated its decades-old laws on women’s rights, adding new provisions to better safeguard the interests of women in the workplace and society as a whole.

When it comes to women’s political representation, 2022 was a step backward: At the 20th Party Congress, no woman was selected for the Politburo, the first time this has happened in 25 years. 

Illustration for The China Project by Derek Zheng

At the beginning of the year, the 1999 classic Fight Club streamed on Tencent Video and caused controversy as its iconic ending showing the destruction of a cluster of skyscrapers was altered to portray the film’s antihero reforming his ways. 

The original ending was later restored after the change prompted an intense backlash domestically and made international news. 

In August, Chinese viewers discovered that the ending of Minions: The Rise of Gru, the latest animated film in the Despicable Me franchise, was given a China-exclusive addendum that completely changed the movie’s original ending, turning it into a morality tale where no villains are left unpunished. 

Meanwhile, elements of violence, same-sex relationships, or anything deemed offensive by Chinese media censors remained the main targets of them.

In January, major Chinese streaming platforms deleted an LGBTQ plotline in popular American TV series Friends, causing Chinese fans of the show to express their anger on social media. Return to Dust (隐入尘烟), a domestically produced arthouse title that was a surprise box-office hit in China, disappeared from all Chinese streaming services, likely due to its realistic and what officials saw as unflattering depiction of rural life in the country. 

Censorship of all topics deemed sensitive by the government intensified on social media, while state media became even more homogeneous in its constant praise of Xi Jinping and the Communist Party’s leadership.