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THIS WEEK:

Indonesia’s President-Elect courts Xi, foreign investment woes continue, and China cracks down on “spiritual cultivation” scams and an errant provincial leader.

1. Newly-elected Indonesian President Visits China, Meets Xi

What Happened: Indonesia's president-elect Prabowo Subianto, on his first foreign trip since his election, had a notably friendly visit with Xi Jinping in Beijing on Monday. 

What Was Said: Official Chinese media quoted Prabowo saying he "fully supports the development of closer Indonesia-China relations and wishes to continue President Joko's policy of friendship with China.” Xi emphasized that the key to progress in their relationship is “adhering to strategic independence, mutual trust and mutual assistance, win-win cooperation, and fairness and justice.”

Close Ties Getting Closer: No foreign policy issue has attracted more attention in Indonesia than whether Prabowo will continue his predecessor’s policy of maintaining close relations with Beijing. On his first foreign trip, Prabowo is signaling that he is keen to maintain continuity. 

Why It Matters: China’s charm offensive with Indonesia stands out a success story in an otherwise tension-filled region preoccupied by territorial disputes in the South China Sea, where China and Indonesia have overlapping maritime boundaries. Xi is hoping that Prabowo focuses on bilateral engagement and economic ties, rather than maritime issues. 

By Lyle Morris, Senior Fellow on Foreign Policy and National Security, Center for China Analysis

Learn More: Read about Indonesia’s recent election in From Jokowi to Prabowo: Will Reputation Matter for Indonesia?, by Natalie Sambhi, Senior Fellow at the Asia Society Policy Institute Australia.

2. Foreign Direct Investment Continues Downward Trend

What Happened: Net foreign direct investment in China plunged to a 23-year low of $42.7 billion in 2023, less than a quarter than in 2022, according to balance of payments data published on March 29 by the State Administration of Foreign Exchange. 

Beijing’s Response: Earlier in March, Beijing issued an action plan vowing to open more areas for foreign investment and make it easier for foreigners to invest in manufacturing, telecommunications, and healthcare.

Tarnished Appeal: China is losing its attraction as a global manufacturing hub, especially among Western companies. Rising costs, subsidies to state-owned firms, and fierce local competition have eroded profit margins. Worse still, geopolitical tensions and China’s focus on national security during Xi’s “new era” have dented foreign business confidence. 

Why It Matters: Beijing continues to claim that it welcomes foreign investment, but the global economy is becoming less efficient and less productive as national security is prized over economic gains.

By: Diana Choyleva, Senior Fellow on Chinese Economy, Center for China Analysis

Learn More: Read Diana’s new report on how China’s “New Era” Changes the Game for Global Actors.

3. Former Justice Minister’s Purge Unsettles Zhejiang and Liaoning

What Happened: On April 2, the Central Commission for Discipline Inspection (CCDI) announced an investigation of Tang Yijun, the head of the People's Political Consultative Conference (PPCC) for Jiangxi province and former Minister of Justice from 2020 to 2023.

Ups and Downs: Before becoming Justice Minister, Tang served as Mayor of Ningbo in Zhejiang and then governor of Liaoning province. His ascension abruptly halted when he failed to secure a nomination as an Alternate Member of the Central Committee at the 20th Party Congress — shortly before a colleague from Liaoning, Fu Zhongwei, was purged by the CCDI in 2022.

Self-Revolution: On March 22, Li Xi, head of the CCDI, convened a meeting in Zhejiang on eradicating corruption and embodying the spirit of "Self-Revolution." This term, coined by Xi, emphasizes continuous purges to maintain the Party’s integrity.

Why It Matters: Tang’s purge reflects the CCDI's growing influence and heralds more intense scrutiny of local officials, which will cast a shadow over policymaking and economic development. It also suggests turbulence ahead for Liaoning and Zhejiang.

By: Shengyu Wang, Research Assistant, Center for China Analysis

Learn More: Neil Thomas, Center for China Analysis Fellow on Chinese Politics, predicted Purges in the Provinces as Local Liabilities Rise in China 2024: What to Watch.

4. Crackdown on “Spiritual Cultivation” Scams

What Happened: China’s Ministry of Public Security reported that over the past five years domestic law enforcement agencies handled 77 major cases involving "spiritual cultivation" training centers, confiscating assets worth over $30 million.

Training the Spirit: As more Chinese turn to spirituality and alternative religions to find meaning and fulfillment, the market has exploded for services such as spiritual healing, counseling, and self-cultivation, as have reports that some of these services are scams run by fraudsters or cults.

Inspiring Movie: The Ministry’s announcement comes as Chinese filmgoers flock to see The Pig, the Snake, and the Pigeon, a Taiwanese thriller that depicts how a fugitive criminal-turned-spiritual master carried out a cult-like scam.

Why It Matters: Discontent with a slowing economy, the pressures of China’s highly commercial society, and the regime’s atheistic, materialist credo have helped spur widespread interest in spiritual well-being, but authorities remain highly sensitive to the emergence of independent religious movements it considers may pose a threat to social stability or even national security.

By: G.A. Donovan, Fellow for Chinese Political Economy and Society, Center for China Analysis

Learn More: Read about how an Economic Slowdown Will Drive Public Discontent in China 2024: What to Watch.

5. Major Earthquake Rocks Taiwan

What Happened: Taiwan was struck by a magnitude 7.4 earthquake on April 3 that claimed nine lives, injured more than 960, and sparked tsunami warnings for neighboring countries.
 
The Details: The quake, the largest to hit Taiwan in the last 25 years, occurred at a depth of nearly 10 miles off the eastern coast. Major structural damage, power outages, and more than 25 aftershocks were reported in the hours after the quake. 

Beijing’s Response: A spokesperson said “the mainland is paying close attention to the earthquake in Taiwan and is willing to provide disaster relief assistance.” State media reported that the quake was felt in Shanghai and cities along the coast of Fujian province.

Why It Matters: As extreme weather associated with climate change becomes more common, Taiwan may experience more frequent and intense earthquakes. The April 3 quake is a reminder of the need for the international community to prioritize climate adaptation, and particularly the crucial importance of climate-resilient infrastructure, adequate warning systems, robust crisis response capabilities, and contingencies for supply chain disruptions.

By: Taylah Bland, Affiliated Fellow on Climate and the Environment, Center for China Analysis

Learn More: Taylah explained why China Will Accelerate Climate Resilience as a Security Priority in China 2024: What to Watch.