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1731. Limited Payoffs: What Have BRI Investments Delivered for China Amid the Coronavirus Outbreak?

Author:
Johan Van de Ven
Publication Date:
03-2020
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
The coronavirus outbreak, now declared to be a pandemic by the World Health Organization (WHO, March 11), offers a prism through which to assess how China interacts with the rest of the world in a time of crisis—one that was at first confined to China’s borders, but has since become a global emergency. Some commentaries on the connection between the COVID-19 coronavirus outbreak and the Belt and Road Initiative (BRI) have portrayed Xi Jinping’s centerpiece foreign policy program as a dangerous vector enabling the pandemic—even though China was engaged in international trade and transportation prior to the commencement of the BRI in 2013 (Foreign Policy, January 24). For its part, state media in the People’s Republic of China (PRC) has linked BRI relationships to support for China amid the initial stages of the crisis, citing positive examples of support from media outlets in South Africa, Russia, and Pakistan (People’s Daily, February 20). More recently, as the spread of the disease has abated in China and increased elsewhere, Chinese authorities have sought to illustrate their support, via the “warmth” of the Belt and Road, for current hotspots such as Italy and Iran—while also criticizing the U.S. response to the crisis (Zhejiang News, March 12). Such developments in China’s foreign relations amid the coronavirus outbreak offer a window to assess the effectiveness of the BRI in one of its central goals: namely, expanding the soft power available to the PRC. Applying an understanding of soft power as a state’s ability to induce other states to take actions favorable to its own interests, available evidence across domains related to the initial phases of the COVID-19 pandemic—such as the issuance of evacuation orders, and restrictions on public transportation—indicates that BRI investments have had only modest success in building China’s soft power. International support for China was piecemeal and rhetorical, leaving China economically and politically isolated. Demonstrating the lack of soft power available to Chinese authorities, the state tabloid Global Times demanded on February 12 that countries that “have completely cut off traffic communications with China” should “reconsider and revoke these practices” (Global Times, February 12).
Topic:
International Trade and Finance, Infrastructure, Belt and Road Initiative (BRI), Public Health, Pandemic, and COVID-19
Political Geography:
China and Asia

1732. Disposing of “Zombies”: Why the Reform of Non-Performing State-Owned Enterprises Has Gotten Even Harder

Author:
April A. Herlevi
Publication Date:
03-2020
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
Normally at this time of year, the Chinese Communist Party (CCP) and the People’s Republic of China (PRC) government would be holding the large plenary meetings known as the “Two Sessions” (两会, lianghui). China watchers would be monitoring these meetings to assess whether and how the CCP is achieving its 2020 goal of achieving a “moderately prosperous society” (小康社会, xiaokang shehui). However, the COVID-19 outbreak (China Brief, multiple dates) has not only halted key meetings (National People’s Congress, February 27), but has also put into question many of China’s economic goals. This includes key goals discussed at the Central Economic Work Conference (CEWC) held in December 2019, which focused on “three categories of risk: financial, environmental, and external” and “identified six areas of priority for China’s 2020 economic policy agenda” (China Brief, December 31, 2019). The 2019 CEWC meetings identified at least 10 distinct issues to be pursued in order to move China on the path towards a more balanced economy (Xinhua, December 12, 2019). This article will focus on one aspect of China’s efforts to achieve “high-quality development” (高质量发展, gao zhiliang fazhan): the dismantling of “zombie firms” (僵尸企业, jiangshi qiye). CCP efforts to deal with non-performing and debt-ridden “zombies” has been an ongoing effort since at least 2015. The inclusion of policies to reduce non-performing state-owned enterprises (SOEs) in the economy follows official guidance set forth in 2016, and several policy actions taken since. First, this article will discuss what “zombie firms” are, and why they are a drag on the economy; second, it will summarize the key policies intended to dismantle zombie firms. It will then examine why zombie firms are so difficult to dismantle, and conclude by noting that the COVID-19 outbreak and the resulting economic losses due to quarantines are likely to further disrupt the ability of provincial governments to deal with non-performing firms and accumulating debt. As a result of these factors, zombie firms are likely to linger for some time to come.
Topic:
Reform, Public Health, Pandemic, COVID-19, and State-Owned Enterprises
Political Geography:
China and Asia

1733. China’s Other Viral Crisis: African Swine Fever and the State Effort to Stabilize Pork Prices

Author:
John Dotson
Publication Date:
03-2020
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
Since January, much of the international news coverage surrounding the People’s Republic of China (PRC) has been dominated by the story of the COVID-19 outbreak—a previously unknown coronavirus that first manifested in the central Chinese city of Wuhan in early December, and which has since rapidly proliferated throughout China and many other countries throughout the world (China Brief, January 29; Johns-Hopkins University, ongoing). The COVID-19 pandemic has largely crowded out international attention to another viral outbreak that Chinese authorities and farmers have been battling for eighteen months: African Swine Fever (非洲猪瘟, Feizhou Zhuwen), which throughout 2018 and 2019 devastated pig populations in both the PRC and surrounding countries. The virus has caused major disruptions to both supplies and the cost of pork, the primary staple meat in Chinese society. As such, it has had a significant impact on the Chinese economy, and has also given senior officials of the ruling Chinese Communist Party (CCP) reason to fear the potential impacts on “social stability” (社会稳定, shehui wending)—the CCP’s perennial overriding domestic concern.
Topic:
Economics, Food Security, Pandemic, COVID-19, and Animals
Political Geography:
China and Asia

1734. China’s Deepening Diplomatic and Economic Engagement in Afghanistan

Author:
Syed Fazl-e Haider
Publication Date:
04-2020
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
On February 29, U.S. and Taliban representatives signed the “Agreement for Bringing Peace to Afghanistan” in Doha, Qatar, which laid out a framework for ending the 18-year old conflict in Afghanistan (U.S. State Department, February 29). Despite skepticism in many quarters regarding the viability of the deal, the negotiations leading to the agreement have been supported by many international actors, to include the government of the People’s Republic of China (PRC). On February 18, PRC Foreign Ministry spokesman Geng Shuang (耿爽) commented on the U.S.-Taliban negotiations by stating that “China firmly supports the broad and inclusive peace and reconciliation process [and] welcomes the news that the U.S. and the Taliban are expected to reach and sign a deal… China stands ready to step up cooperation with all parties to the Afghan issue and the international community for peace, stability and development in Afghanistan” (PRC Foreign Ministry Briefing, February 18). As the U.S plans to draw down its forces in Afghanistan—a key element of the February 29 deal—China is set to further deepen its involvement in Afghanistan (Nikkei Asian Review, January 14, 2019). Beijing wishes to achieve at least two key objectives. First, it wants once and for all to block any contact between the Taliban and ethnic Uighur Muslim militants seeking independence from China (China Brief, April 24, 2019). Second, the PRC wants long-term stability in Afghanistan in order to extend the China-Pakistan Economic Corridor (CPEC)—the flagship project of China’s Belt and Road Initiative (BRI)—to the war-wracked country. Beijing sees Afghanistan as a primary link between the Central Asian republics and the CPEC (China Brief, December 10, 2019). To achieve its objectives, Beijing has pursued positive engagement with the Taliban movement that controls more than half of Afghanistan’s territory. These ties have increased over the past couple of years: for example, in 2019 Taliban representatives paid at least two visits to Beijing (in June and September) for talks with PRC officials (CGTN, June 20, 2019; Al-Jazeera, September 23, 2019).
Topic:
Development, Diplomacy, International Cooperation, and Strategic Interests
Political Geography:
Afghanistan, China, Middle East, and Asia

1735. Global Supply Chains, Economic Decoupling, and U.S.-China Relations, Part 1: The View from the United States

Author:
Sagatom Saha and Ashley Feng
Publication Date:
04-2020
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
The trade war has defined the current adversarial relationship between the United States and the People’s Republic of China (PRC). While President Donald J. Trump has at times openly expressed admiration for Chinese Communist Party (CCP) General Secretary Xi Jinping, his administration has pursued policies consistent with economic and technological decoupling. These policies include reforms that strengthen the Committee on Foreign Investment in the United States (CFIUS); greater usage of the export control system, especially the Entity List; and threatening the use of the International Emergency Economic Powers Act (IEEPA) to force U.S. companies back to the United States. These policies, taken to their logical end, would see the secular decoupling of the U.S. and Chinese economies and the rerouting of the global supply chains that bind them. The interim trade deal has done seemingly little to change the structural economic conflict between Beijing and Washington. If economic decoupling came to pass, it would portend a sweeping reorientation of the global economy that many analysts regard as lying outside the bounds of conventional analysis. Yet some Trump administration officials, such as Director of Trade and Manufacturing Policy Peter Navarro, have promoted economic decoupling as their desired aim (SCMP, June 20, 2018; Forbes, December 3, 2019). President Trump himself has “ordered” American companies to look for alternative suppliers outside of China, or to return production to the United States (Twitter, August 23, 2019). The Trump Administration’s trade and investment restrictions have not been limited to U.S. companies—they also include pressuring third-party countries and foreign companies to abide by U.S. restrictions. Chinese companies are also relocating their manufacturing capabilities abroad—in part because of secular economic trends, but U.S. actions are accelerating the process. Simply put, sustained U.S. policies on China can encourage economic decoupling, but only if global economic trends continue to cooperate. Those policies are nascent, but could likely become a structural feature of the U.S.-China economic relationship—especially since a harder stance towards China has gained traction among both major parties. This has been demonstrated by widespread criticism of Chinese trade practices in both parties, and in bipartisan votes on legislation antagonistic to Beijing, such as the Hong Kong Democracy and Human Rights Act or the UIGHUR Act (see further below). The Trump Administration has pursued a three-pronged approach in breaking down economic supply-chain links: 1) escalating tariffs, which discourages bilateral trade; 2) imposing investment restrictions and export controls that punish tech transfers; and 3) issuing threats to U.S. firms that do business in China under the IEEPA. These current policies preview what could become a new orientation in U.S. policy towards China, regardless of who leads the United States at the beginning of next year.
Topic:
International Trade and Finance, Hegemony, Conflict, Trade Wars, and Supply Chains
Political Geography:
China, Asia, North America, and United States of America

1736. The Chinese Charm Offensive Towards Italy as the Coronavirus Crisis Deepens

Author:
Dario Cristiani
Publication Date:
04-2020
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
One year ago, Italy was hitting the headlines as Rome became the first G7 country to formally sign a Memorandum of Understanding (MoU) with China to join the Belt and Road Initiative, or BRI (China Brief, April 24, 2019). For Italy-China relations, 2020 would have been in any case a vital year: marking fifty years since the establishment of official diplomatic ties, the Italian President of the Republic Sergio Mattarella was due to visit China by the end of the year, after People’s Republic of China (PRC) President Xi Jinping came to Italy in March 2019 to sign the MoU (La Repubblica, January 17). However, twelve months later, Italy is finding itself facing the worst health and economic crisis it has experienced since World War II—a crisis in which the PRC is playing a number of prominent roles. This global pandemic has been caused by a new strain of coronavirus that emerged in the central Chinese city of Wuhan (Hubei Province) in late 2019. Officials of the ruling Chinese Communist Party (CCP) at first tried to cover up the outbreak, before having to admit to its existence (China Brief, January 17; China Brief, January 29). It was just a matter of weeks before this disease started spreading worldwide. Beyond China itself, the country that has faced the most virulent outbreak is Italy: as of March 31, the COVID-19 virus had claimed the lives of 11,591 Italians, while 14,620 have recovered out of 101,739 people who tested positive (Corriere della Sera, March 31). Such a horrific outbreak has thrown Italy into the worst crisis of its republican history, and one of the worst in its unitary history. This crisis soon assumed a multifaceted dimension: it became not merely a public health emergency, but also developed into a political, institutional, economic, security, and even psychological emergency, with entire Italian communities under lockdown for weeks.
Topic:
Public Health, Pandemic, COVID-19, and Travel
Political Geography:
China, Europe, Asia, and Italy

1737. The Coronavirus Pandemic and the Rise of Chinese Civil Society

Author:
Willy Wo-Lap Lam
Publication Date:
04-2020
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
According to figures provided by People’s Republic of China (PRC) authorities, the COVID-19 pandemic peaked in early March. One day after Chinese Communist Party (CCP) General Secretary Xi Jinping made his only inspection tour of Wuhan on March 10, the epicenter of the outbreak, official statistics indicated that only eight new cases had appeared in the city—with only 15 new cases in China overall. Also per official figures, on February 25 more newly confirmed cases of COVID-19 originated from outside of China rather than inside the country (WHO, February 26). At least from one perspective, the authority and prestige of Xi seem to have been salvaged to some extent. However, public intellectuals, journalists, whistleblowers and other members of civil society have insisted that if Xi had been forthcoming about the outbreak from day one—and if adequate medical facilities and equipment had been transported to Hubei Province in good time—the number of cases in China would have been significantly lower than 80,000 and that almost certainly, the number of fatalities would have been much less than the official figure of 3,199 as recorded on March 15 (Economic Times, March 15; Straits Times, March 12). At a time when parts of China are under quasi-martial law, Xi has taken this opportunity to hit out at China’s nascent civil society. A large group of intellectuals risked their personal safety to eulogize the contribution of the late Wuhan doctor Li Wenliang (李文亮), who was one of the first whistle blowers to expose the severity of the coronavirus. On December 30, Li was among the first medical professionals to warn of a large virus outbreak; he subsequently fell victim to COVID-19 associated pneumonia and passed away on February 6 (Radio French International, February 20; BBC Chinese Service, February 7). Public intellectuals such as famed law professor Xu Zhangrun (许章润) of Tsinghua University and constitutional expert and activist human rights lawyer Xu Zhiyong (许志永) have disappeared (Chinese PEN, February 20; Radio Free Asia, February 19). Meetings of institutions of civil society, such as both the legally recognized and the underground churches, have also been suppressed in the name of curtailing public gatherings (Christian Times (HK), March 20). The police state apparatus also took advantage of the quasi-curfew atmosphere to mete out a ten-year jail term to Hong Kong’s Causeway Bay bookseller Gui Minhai (桂敏海), who was first detained in Thailand in 2015 for publishing a rash of books deemed embarrassing to the CCP’s red aristocracy. While Gui has nothing to do with the pandemic, his heavy sentence seemed a warning to intellectuals who dare expose the party’s treatment of advocates of freedom of expression (HKEJ.com, February 25; Apple Daily, February 25).
Topic:
Civil Society, Public Health, Pandemic, and COVID-19
Political Geography:
China and Asia

1738. Military Activity and Political Signaling in the Taiwan Strait in Early 2020

Author:
John Dotson
Publication Date:
04-2020
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
On March 16, People’s Liberation Army (PLA) Air Force aircraft conducted a set of unusual nighttime sorties over the sea to the southwest of Taiwan. At least one KJ-500 airborne early warning and control (AEWC) aircraft and an undisclosed number of J-11 FLANKER-L jet fighters participated in the mission, and at one point crossed the median line of the Taiwan Strait, which prompted a scramble by Republic of China Air Force (ROCAF) F-16 fighters in response (Focus Taiwan, March 17; Taipei Times, March 18). Although the nature of the mission was unusual—this marked the first time that PLA aircraft flew in the vicinity of Taiwan at night—the incident was otherwise consistent with a pattern of increasingly provocative naval and military aviation operations conducted in the vicinity of Taiwan by PLA units in the first quarter of 2020. This uptick in tactical military activity has been accompanied by more assertive rhetoric from People’s Republic of China (PRC) media outlets and spokespersons since the landslide reelection of Taiwan President Tsai Ing-Wen (蔡英文) on January 11 (China Brief, January 17). These military operations (see further discussion below) have also taken place as PRC officials and citizens have scrambled to cope with the social, economic, and political impacts of the COVID-19 pandemic that first manifested in the central Chinese city of Wuhan in December (Jamestown, ongoing). This suggests that senior Chinese Communist Party (CCP) officials wish to project the message that the crisis has not inhibited the PLA’s capabilities to defeat Taiwan “separatism”—and may further wish to use such operations to assert an image of strength in the face of the internal crisis produced by the pandemic.
Topic:
Defense Policy, Military Strategy, Territorial Disputes, and Conflict
Political Geography:
China, Taiwan, and Asia

1739. The PLA Navy’s ZHANLAN Training Series: Supporting Offensive Strike on the High Seas

Author:
Roderick Lee
Publication Date:
04-2020
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
In early 2020, the People’s Liberation Army Navy (PLAN) conducted the fifth iteration of its “ZHANLAN” far seas training series (Ministry of National Defense, February 2, 2019). [1] The PLAN established ZHANLAN in 2016 as an annual far seas training event, with each iteration growing in complexity (Ministry of National Defense, May 27, 2016). Live fire and combat training often draws the most attention during such PLA training events, but the critical highlight of ZHANLAN-2020A was the training focus on combat support, rather than kinetic operations. The key takeaway from this training event is that the PLAN is developing the proficiencies to sustain limited offensive strikes against U.S. forces—perhaps as far out as Hawaii. This article argues that the PLAN is close to being able to execute offensive naval operations outside of the first island chain (and perhaps beyond the second island chain) in a wartime environment. The PLA has long discussed the concept of conducting offensive naval operations beyond the first island chain, and by comparing observables from the ZHANLAN-2020A training event with the list of proficiencies necessary to conduct deep strike, the PLAN is likely close to operationalizing this concept. The ZHANLAN-2020A training task force consisted of four vessels: DONGDIAO-class AGI (AGI-857); FUYU class (Type 901) support ship CHAGAN HU (查干湖) (AOR-967); LUYANG III class (Type 052D) guided missile destroyer HOHHOT (DDG-161); and JIANGKAI II guided missile frigate XIANNING (FFG-500). A fifth vessel, the ocean-going tug NANTUO-195 (南拖-195), took part in a limited role during the task force’s return journey.
Topic:
Defense Policy, Military Strategy, Military Affairs, Conflict, and Strategic Interests
Political Geography:
China and Asia

1740. Mind the Trap: What Basing Rights in Djibouti and Sri Lanka Reveal About the Limitations of Debt as a Tool of Chinese Military Expansion

Author:
Scott Wingo
Publication Date:
04-2020
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
On November 24, 2019, Sri Lankan President Gotabaya Rajapaksa told reporters during his first interview as president that he hoped to renegotiate the terms of the deal that gave a Chinese firm a 99-year lease over the Hambantota Port (Strategic News International, November 24, 2019). The port had been handed over as Sri Lanka struggled to make loan payments on the loss-making Chinese-built facility—thereby leading to debates as to whether the People’s Republic of China (PRC) had set a “debt trap” by intentionally lending Sri Lanka more than it could afford to repay, in hopes of eventually foreclosing on the port (China Brief, January 5, 2019). The subtext was that with a leasehold in hand, the PRC could use the port as a naval installation geared toward patrolling Indian Ocean shipping lanes. As can be observed by the Sri Lankan government’s desire to renegotiate, this has not happened. To the contrary, Sri Lankan security policy has trended against China since the debt-equity swap occurred. A comparison with Djibouti, where the PRC has established its only overseas military base to date, illuminates how this came to pass. In both Djibouti and Sri Lanka, Beijing has used infrastructure loans as a means to entice political leaders to allow naval access. However, three factors led to very different outcomes: 1) the recipient countries’ inherent willingness to host a base; 2) the degree of political competition faced by recipient leaders; and 3) the degree to which recipient leaders can diversify toward different sources of funding to reduce overreliance on China.
Topic:
Debt, Imperialism, International Cooperation, Military Strategy, and Hegemony
Political Geography:
China and Asia