CRG Weekly: Leadership contenders turn attention towards China, Xi-Biden call and US passes Chips and Science Act
News from the China Research Group
Competing with China’s state-led economy. As the UK leadership contenders sharpened their rhetoric on the Chinese government, CRG Chair Tom Tugendhat MP penned an article in The Telegraph about the need to rethink dependence on China as foundational to a future China strategy.
Critical minerals and UK industrial policy. Research Lead Chris Cash wrote a piece for Force Distance Times on the significance of the UK’s new Critical Mineral Strategy and the changes in approach towards industrial policy.
The stories driving the week
Tory leadership candidates compete to take a tougher stance on China
This week saw both Conservative leadership candidates adopt a toughened stance on China, playing out in public during Monday’s BBC TV debate.
Rishi Sunak labelled China as the UK's ‘biggest long-term threat’, name-checking Confucius Institutes, intellectual property theft, protecting British strategic assets, and the creation of a NATO-style international alliance as areas of China policy that he would address as prime minister.
Meanwhile, Liz Truss used a Telegraph piece to propose closer ties among Commonwealth nations to counter growing Chinese influence. Beijing to Britain analysed Truss’s strategy, highlighting continuities from the Johnson government and assessing how this strategy might be received in Commonwealth nations.
China-UK elite links specialist Martin Thorley explored the complexities beneath the leadership candidates' 'tough on China' rhetoric for LSE Ideas.
Chinese Ministry of Foreign Affairs spokesperson Zhao Lijian pushed back against the ‘China threat’ rhetoric, remarking it would not help solve the UK’s own problems.
Xi-Biden call amid rising tensions over Taiwan, UK national security adviser warns of the risk of communication breakdown
On Thursday, US President Joe Biden and his Chinese counterpart Xi Jinping held their first call since March. According to Beijing, the call was “honest and direct” and included discussions of arranging an in-person meeting.
Tensions over Taiwan were the central focus of the call, with both leaders reinforcing their respective positions and warning against provocative actions.
The call took place against the backdrop of sabre rattling over Speaker Nancy Pelosi’s potential visit to the island.
Taylor Fravel, Director of the MIT Security Studies Program, outlined the risks of Pelosi’s visit on Twitter, while others made the case for the visit not necessarily precipitating a geopolitical crisis.
Meanwhile, Sir Stephen Lovegrove, the UK’s national security adviser, warned that further communication breakdowns between China and the West risk dangerous escalation and even a potential nuclear conflict. According to Lovegrove, understanding between the two sides is “worse today than during the Cold War.”
US Congress passes landmark bill to boost chip manufacturing
US Congress has passed a $280 billion Chips and Science Act, which aims to make the US more competitive with China through subsidising manufacturing and R&D in advanced technology.
Garnering support from across the political aisle, the bill includes $52 billion in subsidies for the semiconductor industry. This represents an attempt to boost US companies as they compete with China and alleviate a persistent semiconductor shortage that has affected everything from cars to weapons and video games.
Intel, America's largest home-grown chipmaker and foundry operator, has committed to building at least $40 billion in new foundry capacity.
Sarah Bauerle Danzman broke down the finer details of the bill and its implications for the global semiconductor arms race.
Nikkei Asia offered an in-depth analysis of the challenges facing countries attempting to build tech resilience due to the globalised nature of semiconductor supply chains.
Alibaba applies for primary listing; capital access and regulation evolving for tech
Alibaba applied for a dual-primary listing on the Hong Kong Stock Exchange (HKSE). It is currently on the HKSE as a secondary listing, which bars mainland investors from trading in the company’s shares.
If successful, analysts say the dual-primary listing lays the groundwork to grant mainland Chinese investors access to its shares and help minimise disruption if US regulators force it to delist from Wall Street.
Alibaba and its fintech affiliate Ant Group ended staff transfers as part of a wider splitting of ties on the back of a Beijing-imposed restructuring.
In other news, the Hong Kong and Shenzhen exchange operators also announced plans to integrate capital markets in a bid to develop the Greater Bay Area as a green finance hub.
Beijing also established a meeting mechanism for top officials to align their policies on the digital economy as its crackdown on tech companies appears to continue easing.
China and Indonesia hail 'win-win' cooperation after rare Beijing summit
On Monday night, Indonesian President Joko Widodo arrived in Beijing, marking Xi Jinping’s first in-person meeting with another foreign leader since the February Winter Olympics.
The visit saw both sides commit to increased bilateral trade and Beijing pledge support for Indonesia as the host of this year’s G20 summit and chair of ASEAN next year.
Katsuji Nakazawa analysed the significance of this visit and what it means for China’s broader efforts to demonstrate its leadership credentials within the G20.
This visit followed shortly after Gen. Mark Milley, chairman of the US Joint Chiefs of Staff, travelled to Jakarta. He stressed the need to strengthen US-Indonesian military cooperation to balance China’s military ambitions.
SCMP produced a useful overview of Indonesia’s evolving position within the US-China great power rivalry.
Weekend reads
Podcast: Is China’s property market about to go bust? Cindy Yu explores the challenges facing Chinese real estate and how they are shaping the economic outlook of ordinary Chinese citizens for The Spectator’s Chinese Whispers podcast.
HSBC’s past may not help its future. Michael Sheridan wrote for the FT on the growing scrutiny HSBC will be subjected to in a new Hong Kong.
China’s Wolf Warrior Diplomacy Is Fading. Writing in the Diplomat, Ray Weichieh Wang breaks down how China’s assertive diplomatic strategy is no longer effective for achieving its foreign policy goals.