Xi and Lam’s communist camaraderie: China and Vietnam deepen ties
..and PRC overseas fund data dries up, Chinese gravedigging crime ring, Sabina shoal collision
Hello everyone, and welcome back to Observing China. Xi Jinping, General Secretary of the Chinese Communist Party (CCP) has returned from holibobs on the beach at Beidaihe (北戴河).
No sooner had Xi shaken the saltwater from his grey-flecked locks (what a man of the people!), he met fraternal comrade and newly appointed General Secretary of the Communist Party of Vietnam (CPV) To Lam. The CPV and the CCP are among the few ruling communist parties in the world today, and the nations’ ideological alignment has forged in the relationship a (perhaps superficial) sense of camaraderie and shared purpose, described as ‘comrades plus brothers’ (同志加兄弟). Apart from working to synergise the People’s Republic of China (PRC)’s Belt and Road Initiative with Vietnam’s Two Corridors and One Economic Circle strategy, I wonder if Xi and Lam are getting up to any revolutionary antics. How about a Collectivist escape room where they must solve puzzles based on Marxist theory to ‘liberate’ themselves? I digress. Let’s begin:
1.1 To Lam visit to Beijing strengthens Sino-Vietnamese partnership
To Lam, President of Vietnam and General Secretary of the CPV, is currently visiting Xi in Beijing. On 19th August, the PRC and Vietnam inked 14 deals, ranging from infrastructure to agriculture. The agreements include plans to enhance cross-border railway connections and bolster defence ties.
1.2 The PRC stops releasing overseas fund data
Starting 8th August, the PRC stopped releasing daily data on international capital flows from its stock exchanges. This action is viewed as an attempt to reduce market volatility and redirect investor attention to long-term indicators. The decision likely reflects a reaction to unfavourable data, which has contributed to rising capital outflows. Does deleting the information delete the problem?
1.3 Chinese corpse stealing crime ring exposed - but Beijing hushes discussion
Between 2015 and 2023, a Chinese crime ring stole and sold over 4,000 bodies, profiting US$53 million (£40 million) in illegal bone graft trade. The scandal has sparked public outrage and raised suspicions about the involvement of state-owned enterprises. Central government authorities swiftly censored the discussion and limited investigations to small-scale corruption in the funeral industry.
1.4 Journalist groups call on David Neuberger to resign from Hong Kong courts
David Neuberger, a former President of the United Kingdom (UK) Supreme Court, has drawn criticism for his role in upholding the conviction of Jimmy Lai in Hong Kong. In response to the controversy, Neuberger resigned from a media freedom advisory position. Critics argue that Neuberger’s continued involvement in Hong Kong’s courts undermines his previous work advocating press freedom and journalists’ rights.
1.5 China’s bond market intervention
The PRC’s central bank, the People’s Bank of China (PBoC), has taken unusual steps to curb a surge in government bond prices by ordering banks to halt certain transactions, and prompting state-owned banks to sell off bonds. These actions reflect PBoC’s concerns about low yields, currency pressure, and the need to maintain financial stability.
1.6 Beijing promises to support Myanmar’s democratic transition?
In an ongoing visit to Thailand, Wang Yi, Chinese Foreign Minister voiced the PRC’s support for a democratic transition in Myanmar and adherence to the Association of Southeast Asian Nations (ASEAN) peace plan. Beijing has committed to assisting with technical support for Myanmar’s electoral process. No ideas for resolution of the ongoing civil war though..
1.7 Hong Kong-based company buys solar farms across the UK, worth £350 million
CK Infrastructure Holdings (CKI), part of Hong Kong mogul Li Ka-shing’s business empire, is expanding its presence in the UK energy sector with the acquisition of 32 wind farms for £350 million. The degree of CCP influence over Hong Kong-based companies in strategic sectors is uncertain, and should be ascertained.
1.8 Chinese ship ‘accidentally’ damaged key Baltic gas pipeline
Beijing admitted that a Hong Kong-flagged ship accidentally damaged a key gas pipeline between Finland and Estonia last October, attributing the incident to a storm. The PRC has shared its investigation results, but Estonia and Finland continue their probes. This incident will likely further strain relations between Beijing and the Baltic states, who are already wary of the CCP’s close ties with Russia.
1.9 Philippines and PRC vessels collide near Sabina Shoal
On 19th August, the South China Sea saw another flare-up as Chinese and Philippine vessels collided near Sabina Shoal. Both countries blame each other for the incident. This clash adds to a series of recent confrontations which show the need to address the growing potential for broader conflict in the region.
2.1 Sea Light has published an article on the PRC’s maritime militia, known as ‘Little Blue Men’ in their assertion of dominance over the South China Sea, particularly through paramilitary tactics disguised as fishing operations. It provides an overview of the militia’s evolution, structure, and strategic activities.
2.2 Network Contagion Research Institute has released a study showing that TikTok promotes pro-Beijing narratives and marginalises critical content on Tibet, Taiwan, and Uyghurs. The study suggests that this content manipulation may be part of the PRC’s broader strategy to ‘win hearts and minds’ internationally.
2.3 War On the Rocks has published an article about Beijing’s global influence operations, arguing a holistic response should be grounded in understanding of the CCP.
2.4 An article in International Affairs argues that the absence of a Sino-Russian military alliance is due to differing world-views (P-1 beliefs) between Xi and Putin, even as they share strategic goals (I-1 beliefs) - allowing for cooperation but not a formal alliance.
3.1 Tom Tugendhat’s trap Tiktok trash-talk
Tom Tugendhat, Shadow Minister for Security of the UK, has posted a video on X outlining the reasons why he does not use Tiktok.
I’m not going to do anything that encourages people to use a news source that is controlled by a foreign country, and one in particular that does not share any of our values and in fact, silences debate.
OK, good point, and these concerns are valid. UK politicians – or those in any open democracies, for that matter – should not be reasonably using Tiktok. This is a good thing to speak out about, and more politicians should do the same, to help the general public understand why the app is problematic from a security perspective. For me though, the power of the argument was dwarfed slightly by the comedy in Tugendhat dropping a trap beat to soundtrack the CCP’s misdeeds. Anyone else..?
3.2 A Labour in power refuses to label the PRC a threat
The Baroness Chapman of Darlington has declined to label the PRC a ‘threat’, instead referring to the three C’s championed under Labour’s China policy (that is: Cooperate, Compete and Challenge).
We will cooperate where we can, including on global net zero, health and trade, compete where we have different interests, and challenge where we must, to protect our national security and values.
The Labour Party has been accused of softening their stance on the PRC since assuming office. According to Sir Ian Duncan Smith, a PRC-sceptic Conservative MP, Labour ‘supported our votes on genocide and Jimmy Lai’s illegal detention’ when in opposition. Certainly, the tone towards and focus on the bilateral has shifted..
3.3 Labour halts near-completed Foreign Influence Registration Scheme
Earlier this year, multiple parliamentarians called for the PRC to be designated as a threat under the enhanced tier of the Foreign Influence Registration Scheme. This would allow closer scrutiny of arrangements with Chinese entities that might pose security risks to the UK. The scheme however, is not going to come into effect this year.
4.1 On 15th August, the Chinese Embassy in the UK clarified media commentary about Beijing’s bid for a mega-embassy in London (see last week’s newsletter here). The spokesperson added some thinly veiled comments which might be interpreted as an iron-fist in a velvet glove approach. Or in Chinese, ‘笑里藏刀’ (xiào lǐ cáng dāo), a dagger hidden in a smile. In the spokesperson’s words:
The Chinese Embassy in the UK is committed to promoting the friendship between the Chinese and British people and the development of bilateral relations between the two countries. Building the new embassy at an early date would help us better perform such responsibilities.
Host countries have the international obligation to support and facilitate the building of the premises of diplomatic missions. Both China and the UK have the need to build a new embassy in each other’s capital, and the two sides should provide facilitation to each other.
What do you think the consequences of refusing planning permission for this complex might be?
4.2 In an unusual video by Chinese TV station ‘Phoenix TV’, Chinese reporters visit and document the conditions of captured Russian soldiers in an Ukrainian detention station. The documentary notes that the soldiers are well fed and receive clothing, medical care, free time, calls with family, an allowance, and access to religious facilities. It is unusual for Chinese media to portray the Ukrainian side of the conflict, as part of the PRC’s extensive rhetorical support of Russia’s invasion of Ukraine involves heavily Putin-friendly media coverage. Towards the end of the video, however, the focus shifts towards Ukraine’s alleged mistreatment of Russian Prisoners of War (POWs) and gruesome examples of Ukrainian misconduct.
4.3 On 14th August, Lin Jian, Chinese foreign ministry spokesperson, declared that AUKUS nuclear-powered submarine cooperation ‘harms efforts to keep the region peaceful and secure’:
The United States, the UK and Australia formed AUKUS to advance cooperation on nuclear-powered submarines and other cutting-edge military technologies. Their moves exacerbate the arms race, undermine the international nuclear non-proliferation regime, incite bloc politics and military confrontation and hurt regional peace and stability.
The United States, the United Kingdom and Australia should not proceed with their nuclear-powered submarine cooperation, until the international community reaches consensus on safeguards and other issues.
AUKUS is a trilateral security partnership between Australia, the UK, and the US which aims to enhance Australia’s military capabilities through the acquisition of nuclear-powered submarines, and foster advanced tech collaboration in areas such as artificial intelligence, quantum technologies, and cyber warfare. It is widely understood as a strategic response to the PRC’s growing power and influence in the Indo-Pacific region, and aims to ‘promote a free and open Indo-Pacific that is secure and stable.’ Beijing has criticised AUKUS for ‘severely damaging regional peace’ and having a ‘cold-war mentality’ since its announcement in 2021.
Gray Sergeant, Research Fellow on the Indo-Pacific at the Council on Geostrategy, writes:
Two German warships are enroute to the Indo-Pacific to underline Berlin’s commitment to ‘the rules-based order, the peaceful solution of territorial conflicts and free and secure shipping lanes.’
Next month they will be close to Taiwan. The question then is whether or not to sail through the Taiwan Strait. According to Reuters, no such decision has been made yet. But if they did, it would be the first time Germany’s navy has made such a move since 2002.
Beijing’s behaviour in recent years strengthens the case for transiting. Only this weekend, three official PRC vessels carried out a 30-hour operation to ‘enhance traffic management and emergency rescue’ in the Taiwan Strait. In April last year the Fujian maritime safety administration announced a three-day special joint patrol in the central and northern parts of the Strait (they also promised ‘on-site inspections’ — but these did not materialise). With these manoeuvres Beijing appears to be, slowly, asserting greater control over these waters and pushing closer to Taiwan and its Penghu islands.
The PRC also objects to foreign military vessels passing through these waters even though they, under the United Nations Convention on the Law of the Sea (UNCLOS), have the right to do so. When, earlier this summer, HNLMS Tromp passed through the strait, it was tracked by two Chinese fighter jets, creating, according to the Dutch defence ministry, a ‘potentially unsafe’ situation. At the same time their Chinese counterpart submitted a protest, warning that the Netherlands ‘malicious’ deeds risked comprising friendly relations.
No doubt, Berlin has taken note. Still, in a matter of weeks, they will need to decide what to do. And next year the UK, as the Carrier Strike Group returns to the region, will have to make the same call. The previous defence secretary has vocally reaffirmed the Royal Navy’s right to navigate freely through the Taiwan Strait. Let’s hope his successor is prepared to demonstrate this will with action.
I had a little too much fun this week thinking about a Socialist Sandcastle making competition amongst CCP leaders during their summer retreat, with each creating elaborate sandcastles representing ideal socialist societies, complete with miniature collective farms and workers’ councils. The tide coming in would represent the inevitable and irresistible triumph of communism. Xi would win by unanimous vote, regardless of what he created. Anyway.. that’s all everyone, see you next week!
- Liddy
(reach me at: elizabeth@geostrategy.org.uk)
If you would like to explore any of the Council on Geostrategy’s PRC-focused research papers, click here to visit the China Observatory.