Wang Yi and Jake Sullivan meet; Xi inspects Xiong’an; Taiwan Work; More weak economic data
Summary of the Essential Eight:
Wang Yi and Jake Sullivan meet in Vienna - Top PRC diplomat Wang Yi and US National Security Advisor Jake Sullivan met in Vienna on May 10 and May 11. The readouts from both sides were very brief, and both said the two sides had candid, substantive and constructive discussions. Whether this meeting paves the way for a Xi-Biden call, and/or a visit by Secretary of State Blinken, Secretary of Treasury Yellen or Secretary of Commerce Raimondo is unclear. But if the US is hoping that this meeting will lead to other high-level calls and/or meetings then it is unlikely they will announce any new actions against the PRC, or release anything the PRC does not want them to, specifically the FBI spy balloon report, about which they have expressed such concern that it looks highly likely there are damning revelations in it. In another move towards breaking the ice between the US and China, Ambassador Burns met with Minister of Commerce Wang Wentao and there is talk that Wang Wentao will meet with USTR Ambassador Tai in Detroit later this month.
US strategy for China dialogue - Bloomberg reports that the US is making itself look so eager to talk to the Chinese in part “to appease allied nations in Asia and Europe that are anxious the US isn’t doing enough to ease tension that some fear could lead to open conflict”. Reuters has a long story about dissension in the State Department over policies towards China, and specifically that senior leadership is supposedly resisting releasing the FBI report on the spy ballon and announcing other measures because they want Secretary of State to be able to visit the PRC. From the way the story is written it sounds like there is internal anger towards Deputy Secretary of State Wendy Sherman, and morale issues at the newly created “China House”. It also reads like perhaps more hawkish forces inside the State Department and/or other parts of the Biden Administration feel like they are losing the arguments to be tougher on China and so have taken to leaking to the press. Whatever is going on it is a bad look for the Biden Administration, and as I wrote on April 17 when the Financial Times reported that the PRC was not agreeing to reschedule a visit by US Secretary of State Blinken because of concerns about what the US may reveal about the balloon and its payload: “The PRC flew the spy balloon over the US and PRC officials and propaganda outlets dissembled repeatedly about it. The PRC, domestically and globally, regularly attacks the US for its global spying efforts. Of course the PRC officials do no want the US to disclose more of what it found! But the idea that the US should keep quiet to allow Blinken the privilege of getting to pay a visit to Beijing is a weird way of transferring leverage to the PRC…And not disclosing what was found will not fly domestically in the US, nor is it tenable since we are already seeing reports of what the balloon was carrying thanks to the recent Discord leaks”.
Xi inspects Xiong’an, other areas in Hebei - Xi Jinping went to Xiong’an to inspect progress on his monumental new city and to increase momentum of its development and the move of SOEs and other organizations from Beijing to Xiong’an. He also said, as he did with Dynamic Zero-Covid, that “实践证明，党中央关于建设雄安新区的重大决策是完全正确的 Practice has proven that the Party Central Committee's major decision on building Xiong'an New Area is completely correct". So cadres who harbor any doubts about the wisdom of this massive project should not express them, otherwise they are going against Party Center. And based on Xi's comments certain SOE and other enterprises and organizations are going to be under more pressure to move from Beijing to Xiong'an, no matter how unhappy they are about it; clearly some have been slow-walking the move. Xi and his entourage are shown in some scenes masking, sometimes not, which may be a sign of the ongoing second COVID wave. Xi also sees the new city as a potential model for achieving common prosperity, as the project can help “to promote integrated urban-rural development, narrowing the urban-rural gap, promoting integrated development between urban and rural areas, and achieving common prosperity for all people, thereby forging a new path”. Xi then continued on to an inspection tour of other parts of Hebei.