The People’s Liberation Army goes ballistic
...Test firing the first ICBM in 40 years; Biden bans Chinese software in EVs; and the PRC raises the retirement age
Observing China is the essential newsletter to understand the UK-PRC relationship, explained in the context of global developments.
A lot has happened since the last newsletter – missiles fired, warships departed and a continued weaving of ethical cotton conflicts.
Welcome back to Observing China.
The People’s Liberation Army (PLA) has launched an ICBM into international waters for the first time in four decades. This weapons testing comes at a time of increased tension in the South China Sea and ongoing pressure against Taiwan. Beijing called the test launch ‘routine’ and ‘annual’ but, being Beijing’s first firing of an ICBM in international waters since May 1980, experts were far from reassured by such anodyne words.
1.2 Top government adviser vanishes in the PRC after criticising government’s handling of the economy
Zhu Hengpeng, a deputy director of one of the country’s top think tanks, has been detained and removed from his posts after it was alleged that he made critical remarks about how Xi Jinping, General Secretary of the Chinese Communist Party (CCP), handles the economy in a private WeChat group chat.
Economists in the PRC have been warned not to reveal the country’s poor economic growth and, where truthful commentary has been published, the party has taken swift action to remove it from public view.
Last weekend, the Quad – made up of Australia, India, Japan, and the United States (US) – met in Delaware, where Joe Biden, President of the US, was joined by the other leaders in expressing their ‘serious concern’ about Beijing’s escalations in the South China Sea.
Biden said that the PRC ‘continues to behave aggressively, testing this all across the region, and it’s true in the South China Sea, the East China Sea, South China, South Asia and the Taiwan Straits [sic.].’
The Quad member states agreed on a set of deliverables, including the first joint Coast Guard exercise between the four countries.
1.4 US sends laser-equipped destroyer to Japan, bracing for ‘possibility of war with China by 2027’
Nikkei Asia reports that the USS Preble departed from San Diego on 22nd September for Japan. The destroyer carries high-energy laser weapon technology which can shoot down drones and missiles. The warship’s departure comes days after the US Navy announced its aim to be ready for the ‘possibility of war with the People’s Republic of China by 2027.’
1.5 Biden Administration Proposes Ban on Chinese Software in Vehicles
On Monday 23rd September, the US Government announced an initiative to ban Chinese-developed software from internet-connected cars in the US, likely to be made permanent before Biden steps down as president in January next year.
The proposed ban follows the Biden administration’s move in May to quadruple tariffs on Chinese electric vehicles (EVs) to 100%. Officials stated that security concerns led to the latest decision and not politics, while experts believe it is likely to set a precedent for further government investigations into potentially threatening technology.
1.6 The PRC’s central bank announces muscular measures to boost the economy
The Chinese central bank, the People’s Bank of China (PBOC) released on 24th September its most aggressive set of measures to boost the economy since the early days of the Covid-19 pandemic.
The first key measure announced by Pan Gongsheng, the PBOC Governor, is to reduce by half a percentage point the amount of cash banks have to hold in reserve. Interest rates for existing mortgages and lower minimum down payments on all types of homes will also be cut to 15%. Experts, however, remain unconvinced that these measures will set the PRC back on track to reach its official economic growth target of approximately 5%.
1.7 Diplomats involved after stabbing of Japanese schoolboy in the PRC
Yoko Kamikawa, Foreign Minister of Japan, has asked Wang Yi, her Chinese counterpart, to launch a full investigation into the fatal stabbing of a ten-year-old Japanese boy who was on his way to school in the tech-hub city of Shenzhen. This is the second knife assault against a Japanese child in the country in less than three months. Beijing says they are isolated incidents, while Japan says rising Chinese nationalism is to blame.
The partnership, made up of 14 nations and the European Commission, will work together to provide debt financing for various mining projects in a bid to loosen the CCP’s grip on raw materials needed for essential technologies, from EVs to advanced weapons. Chinese enterprises currently manage more than half of the global processing capacity for lithium, cobalt and nickel, which are needed to make EVs.
1.9 A potential thawing of Beijing’s freeze on Japanese seafood imports
The PRC and Japan have resolved a year-long dispute over the release of treated wastewater from Japan's Fukushima Daiichi nuclear power plant, which resulted in the CCP banning Japanese seafood in 2023. Chinese vessels continued to fish in the affected waters, and the ban continued despite Japan’s assurance that the International Atomic Energy Agency (IAEA) approved the process. Beijing softened its stance after Japan agreed to international monitoring, allowing the PRC to conduct independent checks. If these checks prove satisfactory, the PRC will gradually resume Japanese seafood imports. The Chinese market was the largest importer of Japanese seafood in 2022.
2.1 A report by the China Strategic Risks Institute (CSRI) reveals a high level of CCP involvement in the partnerships of United Kingdom (UK) universities in the PRC, known as Joint Educational Institutes (JEIs). The report argues that many British universities are unaware or unwilling to admit the extent of CCP involvement in their partnership operations.
2.2 An article published by the Centre for Strategic Studies (CSS) in New Zealand analyses why the New Zealand Secret Intelligence Service (NZSIS) recently described Beijing as a ‘complex intelligence challenge.’
2.3 A piece by War on the Rocks proffers a more accurate analytical framework to gauge the PRC’s true annual defence budget. The report seeks to correct the inflated figures often quoted by American political and military leaders.
Speaking at the 57th Human Rights Council session in Geneva, Simon Manley, Permanent Representative to the World Trade Organisation (WTO) and the UN, endorsed the US statement to ‘promptly release all individuals arbitrarily and unjustly detained in Xinjiang.’ Manley voiced the UK’s own concerns of the PRC’s attempt to apply its politically motivated prosecutions to individuals in Britain, as it has done in Hong Kong.
3.2 Labour MP scrutinises Shein ahead of planned London IPO
Liam Byrne MP has called for the UK to establish an equivalent of the Uyghur Forced Labour Prevention Act introduced in the US in 2021, which aims to ban the import of products made by forced labour in the Chinese region of Xinjiang, the most common of which is cotton. Byrne, also chair of the House of Commons’ committee scrutinising business policy, has called out Shein’s opaque supply chain ahead of the Chinese fashion e-commerce giant’s aim to launch its initial public offering (IPO) in London. Its initial plans to do so in the US were rejected by regulators.
3.3 Chinese owners of British Steel lament lack of profits since company purchase
Chinese steel giant Jingye Group purchased British Steel Ltd. in 2020, but has revealed that no profits were made since its purchase. This comes as the group is replacing the energy-intensive blast furnaces with greener alternatives, giving rise to concerns that this will threaten jobs at British Steel’s Scunthorpe site.
3.4 Manchester airport increases flights to the PRC in bid to overthrow Heathrow
Manchester airport has quadrupled the number of available seats to the PRC in the last year alone, vying to become the ‘Heathrow of the north.’ Passengers from Manchester will be able to fly to the country with Juneyao and Hainan Airlines.
4.1 While chairing the China-European Union (EU) EV Industrial Chain Enterprises Roundtable in Brussels last week, Wang Wentao, Minister of Commerce of the PRC, warned against ‘hindering’ cooperation between the two parties in light of the EU’s anti-subsidy probes into Chinese EVs. Wang said such a move would undermine the multilateral trade order based on WTO rules – which Beijing itself is frequently reported to disregard – and could undermine Chinese investor confidence in the EU.
4.2 Li Qian, Chinese Premier, has stated that the PRC’s gradual increase of retirement age is part of the CCP plans to ‘advance Chinese modernisation’, according to a report by Xinhua news agency. In the first adjustment of the retirement age since the 1950s, the CCP has announced a gradual increase in the statutory retirement age. Both domestic and foreign media maintain this is in part to address the country’s growing problem of its ageing population. Chinese media, however, have been far more reticent to acknowledge that the country’s economic downturn is another factor.
‘Advancing Chinese modernisation’ is a new buzz phrase of the CCP, alluding to Xi’s plans to make the PRC ‘a great modern socialist country in all respects’ by 2029. This article by Charles Parton explains the CCP nuance of the word ‘modernisation.’
4.3 According to the Global Times, the daily newspaper owned by the Central Committee of the CCP, Chen Xu, the PRC’s Ambassador to the UN Office in Geneva, has stated that over 100 countries in the UN support the CCP’s stance on Hong Kong, Xinjiang and Tibet. Chen’s words hit back at the claims made by other UN member states regarding the PRC’s human rights abuses (see above 3.1). The article urges the US to ‘address its own grave human rights issues, including racism and violations of immigrants’ rights.’
Gray Sergeant, Research Fellow on the Indo-Pacific at the Council on Geostrategy, writes:
It is September, and once again the UN General Assembly gathers in New York – and, once again, Taiwan remains excluded.
Taiwan’s inability to participate properly in the UN and its specialised agencies (such as the World Health Organisation) is the most glaring example of its ongoing international isolation. This means that over 20 million Taiwanese are unrepresented in a body that proclaims to be universal. Moreover, this exclusion limits the exchange of knowledge and expertise between Taiwan and the rest of the world.
This latter problem can be overcome through creative initiatives between Taipei and friendly capitals. New groupings, such as the Global Cooperation and Training Framework, circumnavigate the UN system (and Beijing’s veto).
If this is the case, why push further, particularly when Chinese pressure will likely quash efforts?
Firstly, the benefits of no other arrangement can compare to participation in the UN. Plus, a principle is at stake – Taiwan’s omission from the UN is just as nonsensical as the PRC’s exclusion all those years ago, if not more so.
Crucially, Taiwan’s exclusion also helps bolster Beijing’s expansionist territorial claims.
The CCP falsely asserts that Resolution 2758, which removed Chiang Kai-shek’s representatives from the UN in 1971, endorsed their ‘One China’ Principle. Others have regurgitated this line.
The more this narrative is accepted, the easier it will be for Beijing to justify coercive and forceful measures to annex Taiwan. Therefore, there is good reason for fellow democracies to challenge, at the very least, this distortion.
Recently, the Australian Senate passed a motion doing just this. A similar proposition also received overwhelming support in the Dutch parliament. With momentum building, will the UK parliament follow, and how will His Majesty’s Government respond?
Thank you for reading this week’s newsletter. It has been action-packed and we can be sure that interesting developments on the various military, trade and diplomatic moves regarding the PRC will follow, so check next week’s newsletter to see how it all pans out.
If you would like to explore any of the Council on Geostrategy’s PRC-focused research papers, click here to visit the China Observatory.