Reform and Development of Global Governance; Xi meets Venezuelan President; EU to probe PRC EV subsidies; Apple and Tesla risks; No property tax on agenda

Earlier today I published this week’s episode of the Sharp China podcast in which we discussed Xi and the G-20 and APEC, the budding UK spy mess, PLA corruption and more personnel rumors and Apple in China among other topics. You can listen to the podcast here.

Summary of today’s Essential Eight:

1. Proposal on the Reform and Development of Global Governance - The Ministry of Foreign Affairs issued the “Proposal of the People's Republic of China on the Reform and Development of Global Governance”. I am sorry to do this to you but I have included a long excerpt of the official English translation, and encourage you to read the whole proposal. It has five key sections:

• Enhancing global security governance and safeguarding world peace and stability, which highlights the Global Security Initiative (GSI);

• Improving global development governance and jointly pursuing global sustainable development, which highlights the Global Development Initiative (GDI);

• Advancing global human rights and social governance and jointly promoting civilizational exchange and progress, which highlights the Global Civilization Initiative (GCI) and would seem to argue ideas that undermine to UN’s Universal Declaration of Human Rights;

• Developing global governance of new frontiers and building a governance framework for the future;

• Strengthening the core role of the U.N. and advancing the reform of the global governance system, with a heavy emphasis.

GSI, GDI, GCI, BRI, Xi Thought on Diplomacy…Xi and his theorists appear to have a well thought out plan, even if the implementation is uneven.

As US Secretary of State Blinken said in a speech in DC today “the People’s Republic of China poses the most significant long-term challenge because it not only aspires to reshape the international order, it increasingly has the economic, the diplomatic, the military, the technological power to do just that”. Whether that is a challenge or a positive development depends on who you are, and to a lot of countries around the world moving away from a US-centered order is desired, so the PRC’s efforts, including this new proposal, should have a lot of supporters.

2. Xi meets Venezuelan President Maduro - The two countries upgraded their relations to an all-weather strategic partnership and signed several cooperation deals, including related to the BRI. There was no word on the state of all the debt Venezuela owes the PRC.

3. European Commission to launch anti-subsidy investigation of PRC EVs - In her State of the Union address Wednesday European Commission President Ursula von der Leyen announced the investigation. Germany, whose China car fantasy is quickly turning into a nightmare, has the most to lose in the short-term, if the PRC decides to express its dissatisfaction by using some of the many economic coercion options it has at its disposal. Sinocism readers should not be surprised. Tu Le and I discussed the coming China EV inc mess for the Europe and especially Germany in the May Sinocism podcast on the rise of China EV Inc.

4. US-China visits - More US official are visits planned, by Congressional delegations and the Governor of California. While Wang Yi is not coming for the UN General Assembly next week I hear he may be coming to the US in early October, to reciprocate Blinken’s June visit and work on plans for a Xi visit to APEC in November. We talked about that in some detail on this week’s episode of Sharp China. But as I joked on Notes earlier today:

5. Apple’s China challenges - In response to a question about the reports of bans on Apple products by certain ministry and SOEs and state organizations, the Foreign Ministry spokesperson very carefully answered that “China did not issue any law, regulation or policy document that bans the purchase and use of cellphones of foreign brands, such as iPhone 中国没有出台禁止购买和使用苹果等外国品牌手机的法律法规和政策文件” which is not at all a denial of the recent reports on restrictions. We should have data very soon on demand for the new iPhones, but given the state of the economy, the quality of domestic brands that are more than good enough, the new Huawei phone and the surge in nationalist support for it, I think the odds are weighted towards a downside disappointment for Apple. Even more important for the company, as I wrote last week, is that these restrictions may be an indication that the confidence many had that Apple is able to navigate US-China tensions to avoid any material blowback could be increasingly misplaced.

6. No “Twitter Files” about China - Given Tesla’s massive dependence on the PRC for both production and sales, Musk has tens of billions of reasons to be very careful to never say or do anything that might upset the PRC government or stir up anti-Tesla nationalist sentiments. The following excerpt from the new biography of him makes that clear. Tesla and Musk’s problem though is that there are increasing reports of Tesla being blocked from accessing certain facilities or areas, and as the zones of restrictions increase the friction from owning a Tesla also increases, while many PRC EVs are already more than “good enough” replacements.