PLA drills around Taiwan; G7 on PRC trade practices; Lethal aid to Russia?; Real estate; PRC-Philippines phone call scandal; Heze

It was a quiet day in PRC media with no sign of the top leadership in Wednesday reports, or in the Thursday People’s Daily. It feels, and emphasis on the word “feels”, a bit too quiet…

And literally just as I was typing this and preparing to hit send Xinhua announced that the PLA conducts joint military drills surrounding Taiwan Island:

The Eastern Theater Command of the Chinese People's Liberation Army (PLA) started joint military drills surrounding the island of Taiwan from 7:45 a.m. Thursday.

The drills are being conducted in the Taiwan Strait, the north, south and east of Taiwan Island, as well as areas around the islands of Kinmen, Matsu, Wuqiu, and Dongyin.

Li Xi, spokesperson for the theater command, said military services including the army, navy, air force and rocket force of the theater command are being organized to conduct the joint drills, code-named Joint Sword-2024A, from Thursday to Friday.

The drills focus on joint sea-air combat-readiness patrol, joint seizure of comprehensive battlefield control, and joint precision strikes on key targets, Li said, adding that the exercises involve the patrol of vessels and planes closing in on areas around the island of Taiwan and integrated operations inside and outside the island chain to test the joint real combat capabilities of the forces of the command.

The spokesperson said the drills also serve as a strong punishment for the separatist acts of "Taiwan independence" forces and a stern warning against the interference and provocation by external forces.

The shorter Chinese announcement - 受权发布丨东部战区位台湾海峡，台岛北部、南部、东部及金门岛、马祖岛、乌丘屿、东引岛周边，开展联合演训-新华网

5月23日7时45分开始，中国人民解放军东部战区位台湾海峡，台岛北部、南部、东部及金门岛、马祖岛、乌丘屿、东引岛周边，开展联合演训

This is the first substantive reaction to Lai’s inauguration. This exercise is named Joint Sword-2024A, which probably means there will be more than one this year.

Let’s hope they don’t fly planes, drones or missiles over any of the Taiwan islands. That would be a significant and bad escalation from previous exercises.

Remember this from last April? PLA conducts mock strikes on Taiwan island on 2nd day of encirclement drills - Global Times:

Under the unified command of the PLA Eastern Theater Command, multiple military services and branches on Sunday carried out simulated joint precision strikes on key targets on the island of Taiwan and in its surrounding waters, keeping the suppressive situation in which the island is encircled, China Central Television (CCTV) reported on the day.

This is the first time an official public report has revealed that "key targets on the island of Taiwan and in its surrounding waters" are mock strike targets of the PLA, observers said.

I would be surprised if this new exercise is smaller and less threatening than any last year. The PRC leadership clearly feels it needs to send a very strong message to Lai and anyone who supports him.

Summary of today’s Essential Eight:

1. Concern about G7 views on PRC trade practices - The PRC is clearly worried the other G7 countries will follow the US in enacting measures against what they see as overcapacity and trade abuses. The G-7 Finance Ministers are meeting this week and the leaders meet next month. Reuters reports that French Finance Minster Bruno Le Maire today said “in the face of this overcapacity, it is vital that the G7 and Europe stand united. Europe must affirm its economic power”. The PRC Foreign Ministry spokesperson Wang Wenbin today highlighted the worries about joint action from the G7. From a Xinhua report of his comments: “"Overcapacity" is just a pretext for the U.S. to try to coerce G7 members into creating fences and restrictions for Chinese new energy products, said Wang, noting that this could mean building a coalition for protectionism which is completely against the trend of the times that calls for openness and mutual benefit”. A “coalition for protectionism”…

2. Solar “overcapacity”? - Regulators appear concerned about overcapacity in the solar industry even though there is officially no overcapacity. The China Photovoltaic Industry Association organized a "Symposium on High-Quality Development of the Photovoltaic Industry" in Beijing, “under the guidance of the Electronic Information Department of the Ministry of Industry and Information Technology”. Some of the messages according to a readout: “the photovoltaic industry is highly market-oriented and is best suited to address current industry challenges through market-based means. However, the role of the government's visible hand should also be fully utilized…“encourage industry mergers and acquisitions to facilitate market exit mechanisms; strengthen the crackdown on malicious competition through below-cost sales; ensure stable growth in the domestic photovoltaic market”.

3. More on Lai’s inauguration speech - The vitriol volume was lower Wednesday, though it is clear now which parts of Lai’s speech really struck nerves, even if the concepts were not new.

4. Property measures - A start but not nearly enough seems to be consensus among analysts and investors.

5. UK says PRC sending lethal aid to Russia, US contradicts - In an embarrassing sign of lack of coordination between the US and UK governments, earlier Wednesday the UK defense secretary said that the PRC was providing or preparing to provide lethal aid to Russia, which is a bright red line the US has set out for Beijing. Hours later US National Security Advisor Jake Sullivan contradicted those claims. So either the UK has bad intel or the US is not ready to actually enforce a “red line”?

6. More US firms and individuals sanctioned - 12 defense firms and 10 executives made the list.

7. Philippines Senate investigated alleged “gentleman’s agreement” phone call - A Philippine Senate committee is investigating the PRC Embassy’s alleged recording of a phone call between a PRC diplomat and a senior Philippines military officer that the PRC claims is evidence of a deal the two countries had reached on resupply missions to the Sierra Madre at Second Thomas Shoal/Ren’ai Jiao. Earlier this month the PRC released a transcript, but not the audio, of what it said was a call proving the existence of a “gentleman’s agreement’ that the Marcos administration then reneged on. Now it is clear there was at least one call, though the Philippines side says the transcript was doctored.

8. Heze relocates livestreamers - The Guo Youcai livestreaming boom, discussed yesterday, at an abandoned rail station in Heze, Shandong, got so raucous that local officials cleared everyone out and told them to relocate to a flower expo park, on the pretext that thery were making so much noise that they were distracting kids studying for exams (the Gaokao is in a few weeks) and that there were “several instances of vulgar live-streaming events”. This whole phenomenon is fascinating.

Earlier today I published this week’s episode of Sharp China:

Thanks for reading and listening.