Xi-Biden call; More US tech controls coming?; NDRC on equipment and consumer upgrades; Another Justice Minister goes down
Summary of today’s Essential Eight:
1. Xi and Biden have a call - A call was expected but the date had not been announced in advance. Reading the respective readouts you might be excused for thinking that the two leaders were on different calls. The PRC readout, as usual, is much longer, and a bit more declarative. It states Xi “noted…the China-U.S. relationship is beginning to stabilize, and this is welcomed by both societies and the international community. On the other hand, the negative factors of the relationship have also been growing, and this requires attention from both sides.”
Interestingly the Chinese readout lumps Taiwan and “trade and technology suppression measures” in the same paragraph, likely a signal that after Taiwan these measures are the issues of most concern to Xi and his team. From the PRC readout: “Xi Jinping stressed that the Taiwan issue is the first insurmountable red line in China-U.S. relations. We will not sit idly by in the face of separatist activities by "Taiwan independence" forces and external indulgence and support. We hope the U.S. side will implement President Biden's positive stance of not supporting "Taiwan independence" into actions. The U.S. has continuously imposed trade and technology suppression measures against China, and the list of sanctioned Chinese companies is growing longer. This is not "de-risking" but creating risks. If the U.S. side is willing to carry out mutually beneficial cooperation and share the dividends of China's development, China's door is always open; if the U.S. side insists on suppressing China's high-tech development and depriving China of its legitimate right to development, we will not stand by. 习近平强调，台湾问题是中美关系第一条不可逾越的红线。对于“台独”势力分裂活动和外部纵容支持，我们不会听之任之。希望美方把总统先生不支持“台独”的积极表态落实到行动上。美国针对中国的经贸科技打压措施层出不穷，制裁中国企业的单子越拉越长。这不是“去风险”，而是制造风险。如果美方愿意开展互利合作，共享中国发展的红利，中方的大门始终是敞开的；如果美方执意打压中国的高科技发展，剥夺中国的正当发展权利，我们也不会坐视不管”.
The tech controls especially must be causing some real discomfort, and I think the PRC side is rightfully concerned about further possible restrictions on the tech exports. The US readout said Biden “raised concerns over the PRC’s support for Russia’s defense industrial base”, language other officials have used in their readouts with PRC counterparts, and a clear sign of the growing concern that while not providing weapons directly to Russia the PRC is playing a key role in keeping Russia’s defense industrial base operating.
US Treasury Secretary Yellen visits China starting tomorrow, US Secretary of State Blinken may visit by the end of the month, and US Secretary of Defense Austin will likely have a call soon with Minister of Defense Dong Jun.
2. More tech controls coming? - Over the last week Reuters has reported that the US is “asking allies to stop domestic companies from servicing certain chipmaking tools for Chinese customers” and that the “United States is drawing up a list of advanced Chinese chipmaking factories barred from receiving key tools”. Politico reported earlier today that Li Qiang when meeting the Netherlands Prime Minister last week asked whether the Dutch “would be willing to keep servicing existing machines already sold to China”. Bloomberg reported that US officials are asking “South Korea to restrict the flow of equipment and technologies for making high-end logic and memory chips to China”. These tech controls are causing significant discomfort for the PRC side and they are signaling how worried they are about the possibility of them tightening even more.
3. Yellen trip to the PRC - US Treasury Secretary Yellen will visit China from April 3-9. Acocrding to the US readout she will meet with Premier Li, Vice Premier He Lifeng and former Vice Premier Liu He, and she will among other things underscore the “global economic consequences of Chinese industrial overcapacity”. If a Xinhua commentary today is any indication the response about overcapacity she will get may be something along the lines of “while it is just basic economics that surplus products naturally seek out markets elsewhere once domestic demand is met, and Western nations have been doing that for centuries, when it comes to China, it becomes an "overcapacity problem" threatening the world…This new variant of "China threat" theory is just a pretext for certain Western countries to poison the environment for China's domestic development and international cooperation and take more protectionist measures for their own industries.”
4. Report on possible PRC response to US sanctions in a Taiwan crisis - The Atlantic Council and Rhodium Group have a new report on how the PRC may respond to US and G7 sanctions in the event of a crisis over Taiwan. It is an interesting exercise, and it has value in considering responses to other crises, say over shoals in the South China Sea. The panel discussion for the rollout of this report was informative, and you can watch it here. It would be fascinating to know how the PRC is planning for resilience and retaliation in the event of a worst case or an extreme case scenario. I heard last year that PRC financial regulatory bodies like SAFE and the PBoC had been tasked with coming up with plans for how they would respond to an impending crisis over Taiwan. Another area to watch is whether and how much PRC firms are being told to reduce their financial exposures in overseas jurisdictions that could move to seize assets, and they have a good roadmap for that given the seizures of Russian assets after the invasion of Ukraine.
5. Survey suggests Southeast Asian elites leaning towards PRC - The ISEAS-Yusof Ishak Institute’s State of Southeast Asia 2024 survey showed that 50.5% of respondents opted for China and 49.5% preferred the U.S. if ASEAN had to pick sides. The annual survey started asking that question in 2020 and this is the first time that China was the choice over the US. According to the Institute “Respondents came from 5 affiliation categories: (a) academia, think-tankers or researchers; (b) private sector representatives; (c) civil society, NGO or media representatives; (d) government officials; and (e) regional or international organisations personnel”, so it is not clear how representative it is of the broader populations, but it is not surprising.
6. NDRC meeting on the plan for equipment upgrades and the replacement of old consumer goods with new ones - NDRC head Zheng Shanjie chaired the "first thematic symposium on large-scale equipment upgrades and the replacement of old consumer goods with new ones", as part of the process of starting the implementation of the recently announced stimulus plan. Six companies spoke at the symposium, so anyone who wants to invest based on who benefits from this plan will probably be buying JD Group, Midea Group, Haier Group, Gree Electric Appliances, Yadea Technology, and GEM Co, as they appear to be near the start of the lobbying line for any directed benefits to come from this stimulus plan.
7. Justice Minister is a dangerous job - Tang Yijun, Minister of Justice from April 2020 to February 2023, is under investigation. His predecessor Fu Zhenghua is serving life in prison, and Tang may eventually become his neighbor in Qincheng Prison. Tang had effectively been demoted last year to be chairman of the Jiangxi Provincial Committee of the Chinese People's Political Consultative Conference, sparking rumors that he was in trouble. There are plenty of examples of officials with problems who are moved to figurehead posts while the investigators build their case, and it is possible that is what happened here. Regardless, given Fu’s life sentence, Tang’s investigation, and the expulsion from the CPC of Wu Aiying, Minister of Justice from 2015-2017, it seems fair to ask why officials with problems keep getting promoted into this post.
8. Rahm Emanuel talks China - US Ambassador to Japan Rahm Emanuel joined the ChinaTalk podcast for an interesting conversation. Lots to agree with, lots to disagree with, but never boring…And maybe he will tweet about the detained Justice Minister too…
Thanks for reading.
The Essential Eight
1. Xi and Biden have a call
Xinhua readout of the Xi-Biden Call - 习近平同美国总统拜登通电话-新华网
My unofficial translation:
On the evening of April 2nd, Chinese President Xi Jinping had a phone conversation with U.S. President Joe Biden upon invitation. The two heads of state had a candid and in-depth exchange of views on China-U.S. relations and issues of mutual concern.
4月2日晚，国家主席习近平应约同美国总统拜登通电话。两国元首就中美关系以及双方共同关心的问题坦诚深入交换了意见。
Xi Jinping pointed out that in November last year, he and President Biden met in San Francisco, initiating the "San Francisco Vision" for the future. In the past few months, teams from both sides have earnestly implemented the consensus reached, and China-U.S. relations have shown a stabilizing trend, which has been welcomed by all sectors in both countries and the international community. On the other hand, negative factors in bilateral relations have also increased, which requires attention from both sides.
习近平指出，去年11月，我和总统先生在旧金山会晤，开启了面向未来的“旧金山愿景”。这几个月，双方团队认真落实我们达成的共识，中美关系出现企稳态势，受到两国各界和国际社会欢迎。另一方面，两国关系中的消极因素也有所增加，需要引起双方重视。
Xi Jinping emphasized that the issue of strategic understanding has always been the "first button" that must be fastened in China-U.S. relations. Two major countries like China and the U.S. cannot afford not to interact or deal with each other, let alone engage in conflict and confrontation. They should respect each other, coexist peacefully, cooperate for mutual benefit, and continue to move forward on a stable, healthy, and sustainable path, rather than taking steps backward.
习近平强调，战略认知问题始终是中美关系必须扣好的“第一粒纽扣”。中美这样两个大国，不能不来往、不打交道，更不能冲突对抗，应该相互尊重、和平共处、合作共赢，继续沿着稳定、健康、可持续的道路向前走，而不应该走回头路。
Xi Jinping pointed out that China-U.S. relations this year should adhere to several major principles. First, to value peace and adhere to the bottom line of no conflict and no confrontation, continuously enhancing positive expectations for China-U.S. relations. Second, to prioritize stability, avoiding troublemaking, provocation, and overstepping, to maintain the overall stability of China-U.S. relations. Third, to base actions on trust, fulfilling respective commitments through actions, and turning the "San Francisco Vision" into reality. Both sides should strengthen dialogue with mutual respect, manage differences with caution, advance cooperation with a spirit of mutual benefit, and strengthen international coordination with responsible actions.
习近平指出，今年的中美关系要坚持几条大的原则。一是以和为贵，坚守不冲突不对抗的底线，不断提升对中美关系的正面预期。二是以稳为重，不折腾、不挑事、不越界，保持中美关系总体稳定。三是以信为本，用行动兑现各自承诺，将“旧金山愿景”转为“实景”。双方要以相互尊重的方式加强对话，以慎重的态度管控分歧，以互惠的精神推进合作，以负责的担当加强国际协调。
Xi Jinping stressed that the Taiwan issue is the first insurmountable red line in China-U.S. relations. We will not sit idly by in the face of separatist activities by "Taiwan independence" forces and external indulgence and support. We hope the U.S. side will implement President Biden's positive stance of not supporting "Taiwan independence" into actions. The U.S. has continuously imposed trade and technology suppression measures against China, and the list of sanctioned Chinese companies is growing longer. This is not "de-risking" but creating risks. If the U.S. side is willing to carry out mutually beneficial cooperation and share the dividends of China's development, China's door is always open; if the U.S. side insists on suppressing China's high-tech development and depriving China of its legitimate right to development, we will not stand by.
习近平强调，台湾问题是中美关系第一条不可逾越的红线。对于“台独”势力分裂活动和外部纵容支持，我们不会听之任之。希望美方把总统先生不支持“台独”的积极表态落实到行动上。美国针对中国的经贸科技打压措施层出不穷，制裁中国企业的单子越拉越长。这不是“去风险”，而是制造风险。如果美方愿意开展互利合作，共享中国发展的红利，中方的大门始终是敞开的；如果美方执意打压中国的高科技发展，剥夺中国的正当发展权利，我们也不会坐视不管。
Xi Jinping also outlined China's positions on issues related to Hong Kong, human rights, and the South China Sea.
习近平阐述了中方在涉港、人权、南海等问题上的立场。
Biden stated that U.S.-China relations are the most influential bilateral relations in the world. The progress made in U.S.-China relations since the San Francisco meeting shows that both sides can actively advance cooperation while responsibly managing differences. He reiterated that the U.S. does not seek a "new Cold War," does not seek to change China's system, does not seek to oppose China by strengthening alliances, does not support "Taiwan independence," and has no intention of conflict with China [Bill: A new five nos? And did Biden really say this in the call, or did the Chinese embellish?]. The U.S. adheres to the one-China policy. China's development is beneficial to the world, and the U.S. does not seek to contain China's development or to "decouple" from China. He is willing to arrange for Treasury Secretary Yellen and Secretary of State Blinken to visit China soon, to strengthen dialogue and communication with China, avoid misjudgments, advance cooperation, promote stable development of bilateral relations, and jointly address global challenges.
拜登表示，美中关系是世界上影响最深远的双边关系。旧金山会晤以来美中关系取得的进展表明，双方可以积极推进合作，同时负责地管理分歧。我重申，美方不寻求进行“新冷战”，不寻求改变中国体制，不寻求通过强化同盟关系反对中国，不支持“台独”，无意同中国发生冲突。美方奉行一个中国政策。中国发展有利于世界，美国不寻求遏制中国发展，不寻求同中国“脱钩”。愿安排耶伦财长、布林肯国务卿近期访华，同中方加强对话沟通，避免误判，推进合作，推动两国关系稳定发展，共同应对全球性挑战。
The two heads of state also exchanged views on the Ukraine crisis and the situation on the Korean Peninsula.
两国元首还就乌克兰危机、朝鲜半岛局势等交换了意见。
The two heads of state considered this call to be candid and constructive. Both sides agreed to continue communication, instruct their respective teams to implement the "San Francisco Vision" well, advance consultation mechanisms in diplomacy, economy, finance, business, and military communications, engage in dialogue and cooperation in areas such as drug control, artificial intelligence, and climate change response, take further measures to expand cultural exchanges between the two countries, and strengthen communication on international and regional issues. China welcomes the upcoming visits of Treasury Secretary Yellen and Secretary of State Blinken to China.
两国元首认为，这次通话是坦诚、建设性的。双方同意继续保持沟通，责成双方工作团队落实好“旧金山愿景”，推进外交、经济、金融、商务等领域磋商机制以及两军沟通，在禁毒、人工智能、应对气候变化等领域开展对话合作，采取进一步措施扩大两国人文交流，就国际和地区问题加强沟通。中方欢迎耶伦财长、布林肯国务卿近期访华。
Xi, Biden hold phone talks-Xinhua official translation
The call follows the two leaders’ meeting in Woodside, California in November 2023. The two leaders held a candid and constructive discussion on a range of bilateral, regional, and global issues, including areas of cooperation and areas of difference. They reviewed and encouraged progress on key issues discussed at the Woodside Summit, including counternarcotics cooperation, ongoing military-to-military communication, talks to address AI-related risks, and continuing efforts on climate change and people-to-people exchanges.
President Biden emphasized the importance of maintaining peace and stability across the Taiwan Strait and the rule of law and freedom of navigation in the South China Sea. He raised concerns over the PRC’s support for Russia’s defense industrial base and its impact on European and transatlantic security, and he emphasized the United States’ enduring commitment to the complete denuclearization of the Korean Peninsula. President Biden also raised continued concerns about the PRC’s unfair trade policies and non-market economic practices, which harm American workers and families. The President emphasized that the United States will continue to take necessary actions to prevent advanced U.S. technologies from being used to undermine our national security, without unduly limiting trade and investment. The two leaders welcomed ongoing efforts to maintain open channels of communication and responsibly manage the relationship through high-level diplomacy and working-level consultations in the weeks and months ahead, including during upcoming visits by Secretary Yellen and Secretary Blinken.
Question: How much material progress has there been on fentanyl cooperation?
Biden's agenda for call with Xi included election meddling, cyberattacks - POLITICO
The Biden-Xi call kicks off a new round of high-level bilateral diplomatic engagement. Treasury Secretary Janet Yellen’s second trip to Beijing starts on Thursday and Secretary of State Antony Blinken — who last visited China in June — will make a return trip “in the coming weeks,” the official said…the bilateral Maritime Military Consultative Agreement talks — suspended since 2022 — will resume in Honolulu this week, the official said.
Washington and Beijing are also finalizing plans for a bilateral dialogue in the coming weeks “aimed at managing the risk and safety challenges posed by advanced forms of AI,” the official said.
Biden Talks to Xi About Conflicts, From Ukraine to the Pacific - The New York Times
Mr. Biden also wanted to get Mr. Xi to help curb the attacks on commercial ships in the Red Sea by the Houthi forces of Yemen, an Iran-backed military group that says it will continue strikes as long as Israel carries out its war with Hamas in Gaza, the U.S. official said. The Biden administration has pressed China to ask Iran to rein in the Houthis, especially since Chinese ships also pass through the Red Sea.
Biden and Xi speak on phone in first engagement since San Francisco summit - Financial Times
Ahead of the call, a senior US official said Biden was not expecting it to lead to any big announcements, and that it was partly to check on the progress that had been made on agreements reached in San Francisco in November. She said the two leaders were also following through on a commitment to “maintain regular open lines of communication to responsibly manage competition and prevent unintended conflict” between the two powers...
Biden also voiced concern ahead of Treasury secretary Janet Yellen’s visit to China this week over what the US sees as Chinese unfair trade practices.
Yellen, who is expected to arrive in China on Thursday, will fly first to Guangzhou for meetings with her main Chinese counterpart, He Lifeng, and the governor of Guangdong province, Wang Weizhong. In Beijing, she will meet Lan Fo’an, China’s finance minister, and People’s Bank of China governor Pan Gongsheng, as well as Liu He, a former vice-premier...
Later this week, US and Chinese military officers will meet in Honolulu, resurrecting a once-regular channel of communication that China halted after then US House Speaker Nancy Pelosi angered Beijing by visiting Taiwan in 2022.
Biden Warns Xi on Aiding Russia’s War in Ukraine - WSJ
In his first call with Chinese President Xi Jinping since their November summit, President Biden raised mounting concerns over Beijing’s substantial support for Russia’s defense industry, a senior administration official said...
“As time has gone on, we’ve really seen the PRC start to help to rebuild Russia’s defense industrial base,” the official said using the acronym for the People’s Republic of China.
China, the official added, has been helping to “provide the components that get slowly towards increasing Russia’s capabilities in Ukraine. And that has, of course, longer term impacts on European security.”
Biden Warns Xi on Aiding Russia’s War in Ukraine - WSJ
“The president reiterated our concerns about the ownership of TikTok,” National Security Council spokesman John Kirby said. “He made it clear to President Xi that this was not about a ban of the application, but rather our interest in divestiture so that the national security interest and the data security of the American people can be protected.”
China-U.S. relationship can embrace brighter future - People's Daily Zhong Sheng
In handling its relationship with the United States, China always has a sense of responsibility for history, for the world and for the people. China is ready to work with the United States to push for steady, sound and sustainable development of bilateral relations to bring more benefits for the two peoples, provide more public goods for the international community, and build an open, inclusive, clean and beautiful world of lasting peace, universal security, and shared prosperity.
National Security Advisor Jake Sullivan spoke today with Philippine National Security Advisor Eduardo M. Año. Mr. Sullivan and Mr. Ano discussed preparations for the visit of Philippine President Marcos to the White House and the historic Japan-Philippines-U.S. trilateral leaders’ summit. Mr. Sullivan also emphasized U.S. support for the Philippines following the PRC Coast Guard and maritime militia’s dangerous actions on March 23 obstructing a lawful Philippine resupply mission to Second Thomas Shoal. Mr. Sullivan underscored the ironclad U.S. alliance commitments to the Philippines under the U.S.-Philippines Mutual Defense Treaty, which extends to armed attacks on Philippine armed forces, public vessels, or aircraft—to include those of its Coast Guard—anywhere in the South China Sea.