China and the Iran-Israel conflict; Lai: "Taiwan is of course a country"; Rickety "London Framework"; Curbing “involution-style” competition

The Politburo should meet in the next week, I assume/hope we will get a public readout. The June 2024 Politburo meeting announced that the Third Plenum would be held less than three weeks later. I doubt the Fourth Plenum will be held so soon given all the work that needs to go into the 15th Five-Year Plan, but if we do get a readout perhaps we will learn more about the fate of CMC vice chair He Weidong.

Summary of today’s Essential Eight:

1. China and the Iran-Israel conflict - Just as I was about to hit send, President Trump announced a ceasefire, one we should all hope holds. The Xi administration was relegated to powerless observer in this conflict, probably angered the Iranian leadership with its lack of assistance, and now will find whatever angle it can to criticize the US. But I think they will be relieved the Iranian response to the US bombing was performative, the Straits of Hormuz remain open, and the risk of a wider war may be abating. I do wonder what the value of Shanghai Cooperation Council membership is, given that Iran is a member in good standing. Maybe they wonder that too?

2. “Taiwan is of course a country” - Taiwan President Lai has launched a series of ten speeches with the theme of uniting Taiwan. He gave the first one Sunday, on the concept of “nation”. In that speech he said “Taiwan is of course a country”. This speech series comes as his administration is working to combat PRC influence in the government and society, and his DPP has launched a recall campaign against KMT legislators that if successful could give the DPP control of the Legislative Yuan. None of this is going over well in Beijing, as all these efforts cut right against PRC attempts at driving a political solution. Chen Binhua, spokesperson for the Taiwan Affairs Office of the State Council, issued a blistering statement today about Lai’s first speech:

Lai Ching-te’s June 22 speech was full of lies and deceit, hostility and provocation. It deliberately distorted and fragmented history, brazenly promoted the fallacy of “Taiwan independence,” and attempted to concoct a framework for “Taiwan independence” discourse. He used this to fuel propaganda for his “grand recall” political struggle in pursuit of personal gain. It was a blatant declaration of “Taiwan independence” aimed at stirring up cross-Strait confrontation, a mishmash of flawed and dangerous separatist rhetoric, fully exposing his obstinate “Taiwan independence” nature…

Lai twisted concepts, denied the outcomes of World War II, disregarded internationally binding legal documents such as the Cairo Declaration and the Potsdam Proclamation, and distorted UN General Assembly Resolution 2758. He absurdly claimed that “Taiwan does not belong to China” and promoted “mutual non-subordination,” completely violating international law and openly challenging its authority…

Lai Ching-te’s fabrications that violate history, reality, and legal principle will only be swept into the trash heap of history. The future of Taiwan can only be decided by all 1.4 billion Chinese people, including our compatriots in Taiwan. No matter how hard Lai Ching-te tries, he cannot change the legal fact that Taiwan is part of China, shake the global adherence to the one-China principle, or stop the historic trend toward the reunification of the motherland—a reunification that will and must happen.

So when is the next PLA exercise/rehearsal around Taiwan?

3. “London Framework” looks rickety - Bloomberg reported Friday that “US companies remain largely in the dark on when they’ll receive crucial magnets from China — and whether Washington, in turn, will allow a host of other exports to resume”. That is embarrassing for President Trump and US officials are already talking about more chip-related export controls if the rare earth magnets do not start flowing soon.

4. More US chip-related actions if rare earth magnets don’t start to flow? - The US may cancel waivers for Samsung Electronics, SK Hynix and TSMC that “allow them to ship American chip-making equipment to their factories in China without applying for a separate license each time”. The Wall Street Journal reported this first, and Reuters followed with a report that “A White House official said the United States was ‘just laying the groundwork’ in case the truce reached between the two countries fell apart”. One way it falls apart is if the Trump Administration believes the PRC side is still slow-walking export of rare earth magnets.

5. EU-China relations - EU officials are certainly signaling they are very frustrated with the PRC ahead of the late July EU-China leaders’ summit. On Monday European Union foreign policy chief Kaja Kallas said “we have wording from Nato that China is the key enabler of Russia’s war against Ukraine. It carries out cyberattacks. It interferes in our democracies. It uses coercive trade practices. These aspects strain our relationship and make it increasingly hard to continue as before”. The surge in May exports to the EU can not be helping the mood, nor can the nearly 10% depreciation of the RMB to the Euro this year.

6. Curbing “involution-style” competition to be written into law - This week’s NPC Standing Committee meeting will review the second draft of the Law against Unfair Competition. According to an NPC spokesperson “to implement the CPC Central Committee’s directive on curbing ‘involution-style competition 内卷式竞争’, the draft adds provisions regarding the fair competition review system and revises and improves rules for managing “involution” competition on platforms”.

7. India National Security Advisor meets Wang Yi - In what looks to be another sign of the attempts to improve India-PRC relations, while managing India’s NSA Ajit Doval met Wang Yi in Beijing Monday. Indian media reported that he “delivered a strong message on cross-border terrorism and terror infrastructure in the backdrop of the Pahalgam attack” but the Xinhua readout made no mention of that.

8. Cheng Lei’s new book - Last week Richard McGregor moderated a discussion with Cheng Lei about her new book Cheng Lei: A Memoir of Freedom. The discussion is chilling. At about 17:00 she says she knows an inmate who got life for leaking to a foreign reporter about an official’s assets. I wonder who the reporter/outlet is, if they know someone got life for leaking to them, and if they are doing anything to support the person's family.