Party Congress; Period of Strategic Opportunity; Taiwan; EU-China

It is a slow day at the Party Congress, with the only really important event the 2nd meeting of the Presidium, which approved the “draft resolutions on the report of the 19th CPC Central Committee, the work report of the Party's 19th Central Commission for Discipline Inspection, and an amendment to the Party Constitution”. No further details about these items were given.

The report to the 20th Party Congress appears to reflect a significant change in the assessment of the geopolitical situation. The concept of “Period of Strategic Opportunity(POSO)“ that has been in the last four Party Congress reports has changed in Xi’s report to the 20th Party Congress.

Here is the relevant language in the report to the 19th Party Congress:

Both China and the world are in the midst of profound and complex changes. China is still in an important period of strategic opportunity for development; the prospects are bright but the challenges are severe. [当前，国内外形势正在发生深刻复杂变化，我国发展仍处于重要战略机遇期，前景十分光明，挑战也十分严峻.]

This is what the report to the 20th says:

Our country has entered a period of development in which strategic opportunities, risks, and challenges are concurrent and uncertainties and unforeseen factors are rising [我国发展进入战略机遇和风险挑战并存、不确 定难预料因素增多的时期]. Various "black swan" and "gray rhino" events may occur at any time. We must therefore be more mindful of potential dangers, be prepared to deal with worst-case scenarios, and be ready to withstand high winds, choppy waters, and even dangerous storms.

The report to the 20th Party Congress also no longer includes language about peace as the “call of our day”, as the report to the 19th Party Congress did:

The world is undergoing major developments, transformation, and adjustment, but peace and development remain the call of our day. [世界正处于大发展大变革大调整时期，和平与发展仍然是时代主题] The trends of global multi-polarity, economic globalization, IT application, and cultural diversity are surging forward; changes in the global governance system and the international order are speeding up; countries are becoming increasingly interconnected and interdependent; relative international forces are becoming more balanced; and peace and development remain irreversible trends.

This looks like the relevant part in the latest report to compare to the one five years ago:

Today, our world, our times, and history are changing in ways like never before. The historical trends of peace, development, cooperation, and mutual benefit are unstoppable. The will of the people and the general trends of our day will eventually lead to a bright future for humanity. And yet, the hegemonic, high-handed, and bullying acts of using strength to intimidate the weak, taking from others by force and subterfuge, and playing zero-sum games are exerting grave harm.

Note: I made a change to the conclusion of my commentary in the Monday newsletter. The new conclusion is “So the Party is reminding everyone in no uncertain terms that it wants the PRC to be the world leader in national strength and global influence”, compared to the original comment “So the Party is reminding everyone in no uncertain terms that it wants the PRC to lead the world”. Here is the original that spurred this comment： 到本世纪中叶,把我国建设成为综合国力和国际影响力领先的社会主义现代化强国.】

This is another reason to download the Substack app! If I need to make a correction it will not appear in the email that has already gone out, but will appear automatically in the app.

Today’s top items:

1. Today at the Party Congress - The most meaningful event today was the 2nd meeting of the Presidium.

2. Another report on the next Standing Committee - The South China Morning Post follows the Wall Street Journal in predicting the upcoming changes in the Politburo Standing Committee. Once again I have no idea if they are correct, and do not think the personnel choices matter nearly as much they used to, but it is interesting that the SCMP also feels comfortable running with this kind of story, they must be confident in their sourcing.

3. Xi’s report signals nuclear build-up? - It should not be a surprise if it does, but as these analysts note it is important that the concept of “strategic deterrence 战略威慑” appears in Xi’s report. It fits with the darker reassessment of the geopolitical environment.

4. Some background on the “Period of Strategic Opportunity(POSO)” concept - The rapidly deteriorating US-China relationship is the primary reason the view of POSO has shifted.

5. Secretary of State Blinken on timeline for Taiwan - At an event in California Secretary of State Blinken said that Beijing was determined to pursue reunification on a much faster timeline. I am hearing this view much more in DC now. Is there specific intelligence that supports this, or is it from an analytical assessment? I have not seen anything in authoritative PRC public documents or statements that would indicate an accelerated timeline, though there have been repeated recent statements dismissing the idea of a "status quo". As I have written previously in the newsletter, while I do not believe invading Taiwan is Xi's preferred choice, the PLA may think sooner would be much better than later, before Taiwan has a chance to fix its military and the US rebuilds its munitions stocks and sends better weapons to Taiwan. Whatever the calculations, the tensions over Taiwan are only going to increase, as there is no viable political solution in any realistic scenario.

6. EU-China - The EU is also shifting its views about China, towards a view of competition and rivalry.

7. Local governments may no longer be able to buy land from themselves - As local government finances worsen some have turned to their captive financing vehicles to purchase land using bank loans. The Ministry of Finance is not pleased and is once again trying to crack down on the practice. The impact of the parlous financial state of many local governments has yet to fully play out.

Thanks for reading.