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13.8 billion

That’s the number of Chinese Communist Party (CCP) members who were punished by the Central Disciplinary Commission last year for violating the party’s frugality code. The eight-point code is part of the CCP’s campaign against corruption within its own ranks. Violations include accepting gifts or money, using official cars for private business and wasting public money on banquets. In 2016 the number of violations was markedly lower and stood at 57,700 party members.

Topic Of The Week: US-China relations

Liu He
Liu He at the Annual Meeting of the World Economic Forum in Davos, January 24, 2018. Image by World Economic Forum via Flickr (CC BY-NC-SA 2.0)


United States takes hard line against China in defense strategy and on trade

One year after US President Trump took office, the United States has announced a much tougher stance on China. The US military has put countering the threat from China at the heart of a new national defense strategy that was unveiled on January 19. This week, the White House announced stiff new tariffs that target Chinese and other Asian companies. These measures could escalate tensions with Beijing and trigger a trade war.

When unveiling the national defense strategy, US Defense Secretary James Mattis called both China and Russia “revisionist powers” that "seek to create a world consistent with their authoritarian models." He added that “great power competition,” not terrorism, was now the primary focus of US national security. An 11-page document released by the Pentagon does not provide details on how the shift towards countering China and Russia would be carried out. Yet the defense strategy sets priorities for the next few years that could be reflected in future defense spending. The document was the first of its kind since at least 2014. It is the latest indication of hardening resolve by Trump’s administration to address challenges from Russia and China. At the same time, the White House is trying to improve ties with Moscow and Beijing to rein in a nuclear North Korea.

On trade, the White House imposed high import duties on solar panels and washing machines. The tariffs are part of Trump’s broader protectionist “America First” agenda to help US manufacturers. The tariffs on washing machines exceeded the recommendations from a US federal agency, the International Trade Commission, while the solar tariffs were lower than domestic producers had hoped for.

China, the world largest producer of solar panels, called the measures “an overreaction” and a “misuse of trade measures.” Criticism was also voiced by the European Union and South Korea, which ships millions of washing machines to the US every year.

Further punitive US measures against China look likely. In a recent interview with the Reuters news agency, Trump said that he was considering a big “fine” as part of an ongoing investigation into intellectual property theft by China. Trump did not elaborate. He only mentioned “big damages” and “numbers that you haven’t even thought about.”

The now imposed sanctions as well as the US defense strategy could overshadow the annual World Economic Forum in Davos where Trump is due to speak on Friday. China is represented this year by Liu He, the top economic advisor and right-hand man of president Xi Jinping.

MERICS analysis: Why US tax cuts could become a headache for China. Blogpost by Maximilian Kärnfelt

China And The World

China confirms global governance ambitions

In a further sign of the Chinese government’s expanding global ambitions, the Communist Party’s mouthpiece “The People’s Daily” has published a front page commentary that calls for a bigger role for China in international affairs. The article published on January 14 calls on China to grasp a “historic opportunity” to “restore itself to greatness.” The piece was signed by the pseudonym “Xuanyan” (宣言), which means “manifesto.”

The commentary followed a speech by Chinese president Xi Jinping to the annual Chinese ambassadors’ conference in December in which he urged the diplomats to have a global vision. The article also echoed remarks by Xi at the 19th Party Congress last October where he promised to increase China’s influence in the world.

China’s ambitions were also underlined by the appointment of Ma Zhaoxu as new ambassador to the United Nations in New York. Ma is known for his controversial remarks on human rights. In 2010, soon after the late Liu Xiaobo, a Nobel Peace Prize laureate, was jailed for eleven years, Ma asserted “there are no dissidents in China.” Previously Ma was China’s ambassador to Australia and at the UN in Geneva. As China’s point man at UN headquarters he will be at the forefront of Xi’s more assertive foreign policy.

MERICS analysis: "China's emergence as a global security actor", MERICS Paper on China

Politics, Society And Media

“Xi Jinping Thought” to be added to China’s constitution

Chinese president Xi Jinping is set to become the first state and party leader since Mao Zedong, whose name will be written into the country’s constitution during his lifetime. The Central Committee of the Chinese Communist Party approved a proposal for the constitutional change during a meeting on January 18 and 19. “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” will be incorporated into the country’s constitution once the National People’s Congress has passed the amendment at its annual meeting in March.

The Second Plenum of the Central Committee was convened earlier than in previous years to deliberate the constitutional changes. In addition to “Xi Jinping Thought,” the Central Committee also proposed to add the new National Supervision Law to the constitution. The law aims to extend the fight against corruption from the current focus on CCP members to the entire nation.

“Xi Jinping Thought” was already incorporated into the CCP’s constitution during the 19th Party Congress last October. Adding Xi’s ideas to these documents while he is still in office elevates his status well above that of his predecessors, notably Deng Xiaoping and Jiang Zemin.

Controversy over Chinese textbook’s Cultural Revolution chapter

The Cultural Revolution of the 1960s and 70s, when 1.7 million people died according to official accounts, is still a sensitive subject in China. That was evident earlier this month, when proposed changes to a middle-school textbook chapter on the Cultural Revolution sparked a heated online debate.

The controversy started when the social media platform “Douban” posted pictures of the old and the revised book by the People’s Education Press, a state-owned publishing house. The pictures showed that the title of a chapter on the political campaigns of the time had been changed from “10 years of the Cultural Revolution” to “Arduous Exploration and Development Achievements.” Words such as “chaos” and “catastrophe” had been removed.

Media reports say the publisher’s actions triggered an emotional online debate. A majority of commentators criticized the changes. The horrors of the Cultural Revolution should not be forgotten and had to be taught as a “historical lesson,” they argued. A 20-year old man said the Cultural Revolution had always been a „vague thing“ to him but the country should face up to its past. “No matter if it’s good or bad – it’s history,” he wrote online.

The Chinese Communist Party (CCP) finds it difficult to openly discuss the Cultural Revolution which was started by Mao Zedong in 1966 and led to political purges and extreme violence. Since Xi Jinping became party leader and state president in 2012/13, the CCP has made efforts to emphasize positive developments in the country’s modern history. Most recently, a draft law was proposed that would make it illegal to slander “China’s heroes and martyrs.”

The heated discussion about the textbook changes also show that controversial debates are still possible in China despite strict censorship. Parts of Chinese society are not willing to accept changes in how the country’s history is presented. In the face of the online criticism, the textbook publishing house even felt the need to issue a statement saying that content on the Cultural Revolution would be published in a second volume. The company also called on people to send in additional suggestions.

MERICS analysis: "Ideas and ideologies competing for China's political future", MERICS Paper on China

Report says China customs destroy goods for having the wrong label

Differences over how to label goods produced in Taiwan have raised tensions between Beijing and Taipei. According to reports in the “Taipei Times” from January 16, Chinese customs have destroyed several shiploads of Taiwanese food products because they did not have the required label “Taiwan Area” (台湾地区) or „Taiwan Area, China“(中国台湾地区).

The managing director of the Hwa Mei Food company in Taiwan was quoted as saying that he knew of at least five cases of Taiwanese imports being destroyed due to the labeling issue. He added that Chinese customs insist on the new labels since the election victory of the Democratic Progress Party (DDP) in Taiwan. Previously labels saying “Taiwan” were considered acceptable. 

Relations between Taiwan and the People’s Republic have been tense ever since the DDP’s victory in 2016. Many communications channels have been disrupted. Unlike the previous KMT administration, the DDP puts more emphasis on Taiwan’s own identity.

An op-ed in the “South China Morning Post” recently speculated that the Chinese government in Beijing was already working on a timetable to take back control of Taiwan. The article cites growing tensions in the region with the US government as one possible reason for Beijing to take back Taiwan with military force in 2020. The author conceded that there was no concrete evidence for such a course of action but voiced concern over the tense situation. The harsh tone vis-à-vis Taiwan in speeches by Xi and high-ranking Chinese diplomats was cause for concern, he wrote. The Chinese Communist Party (CCP) regards unification with the island as an integral part of the “great rejuvenation of the Chinese nation” that should be achieved by the year 2050 the latest.

Economy, Finance And Technology

Exports give Chinese economic growth an extra boost

China’s economy grew at 6.9 percent last year with net exports and manufacturing giving the growth rate an extra boost. The latest figures released by the National Bureau of Statistics also show that growth slowed only slightly to 6.8 percent in the last quarter of 2017.

The figures for last year represent the first rise in GDP growth since 2010 and surprised many analysts who had anticipated the gradual shift to lower levels of growth to continue. The accelerated growth can be mainly attributed to an uptick in net exports and a strong manufacturing sector fueled by domestic and global demand. The latest figures come amid continued efforts by the government to move towards what it calls “quality growth” and tackle problems such as overcapacities and environmental degradation. In 2018 China’s commitment to address structural problems in the economy will be put to a test when economic conditions are likely to be less favorable and trade tensions could rise.

MERICS analysis: Manufacturing and exports give growth extra boost, MERICS Economic Indicators Q4/2017

Bundesbank to include Chinese yuan in currency reserves

Germany’s central bank, the Bundesbank, has decided to include the Chinese yuan in its foreign exchange reserves. The decision was announced in Hong Kong by Bundesbank board member Andreas Dombret and will give the international status of the Chinese currency a further boost.

Following the announcement on January 15, the yuan exchange rate against the US dollar rose to its highest level in more than two years. The exchange rate against the Euro remained almost unchanged.

The Bundesbank holds foreign exchange reserves worth 167 billion Euros. The yuan reserves will be only a very small part of this, yet Dombret would not say how much would be allocated. Last summer, the European Central Bank (ECB) invested 500 million Euros in the Chinese currency. Germany was part of that deal.

Back in 2016, the Chinese yuan was accepted to the International Monetary Fund’s reference basket of currencies, or Special Drawing Rights. Yet, the further internationalization of the yuan has been slow. By the end of 2016, less than two percent of all global payments through the SWIFT-network were in yuan.

The European View

EU Parliament calls for release of human rights activists in China

The European Parliament has passed a resolution calling for the release of detained human rights campaigners, lawyers, and other political activists in China. The motion, which was passed on January 18 in Strasbourg, stressed China’s “responsibility as a global power.” The MEPs also demanded that “all acts of harassment” of human rights defenders in China must end. Over the last few years, the human rights situation in China has continuously deteriorated.

The parliament’s resolution named, among others, the Tibetan monk Choekyi, who was detained in 2015, Tibetan activist Tashi Wangchuk, lawyer Xie Yang, pro-democracy advocate Lee Ming-che from Taiwan and the blogger Wu Gan who was sentenced to several years in prison on charges of “undermining state power.”

In its resolution, the European Parliament adopted a much more critical tone regarding China’s human rights record than individual member states. In an unusual move, the MEPs also openly criticized Greece for its timid stance on such issues. Greece, which relies on large-scale Chinese investments, last year blocked an EU resolution on China at the UN Human Rights Council in Geneva. Referring to Greece’s stance last June, the European Parliament now called on all EU member states to adopt a “firm and value-based” approach to China and to refrain from any unilateral initiatives that might undermine EU action.

The European Parliament’s resolution is unlikely to have any effects on China’s attitude. Beijing’s increasingly assertive foreign policy and its confidence in its own political system are also visible in its human rights policies. A south-south forum on human rights in Beijing in December with some 300 participants from 70 countries declared that “the right to development” was more important than individual civil rights. Also, the UN Human Rights Council last year adopted a China-sponsored resolution titled “The contribution of development to the enjoyment of all human rights.” That resolution was supported by more than 70 countries.

Mad Merix

The “Sausage Prince” is caught - again

The Chinese New Year is approaching. Time for traditions like family visits or decorating the house. But one man in Jiangsu province was arrested for taking his new year’s traditions a step too far: stealing preserved sausages.

Mr. Wang was reported to the police after being caught on film by security cameras stealing preserved sausages and roast ham from a restaurant in Nanjing. Unfortunately for Mr. Wang, the officers recognized him immediately. For the past three decades he was repeatedly arrested for stealing meats from restaurants, shops and homes and selling them for a profit at local markets. Media reports say he has spent about a decade behind bars for these offences. His unusual new year’s habit has earned him the nickname “Sausage Prince”. This year it also led – again - to his swift arrest at his home.

Preserved meats are a tradition for Chinese New Year in China and used to be a common sight along streets and on balconies when families still used to cure pork, chicken or fish themselves. Due to the pressure of bringing food gifts to family celebrations, sausage theft has also been quite common. Today most families buy the meats at the supermarket, but may still hang them up outside their homes to show their prosperity to their neighbors.