Subscribe to China 5

THIS WEEK:

1. China Girds for Uncertain Election in Taiwan

What Happened: China is anxiously awaiting the results of Saturday’s election in Taiwan, the outcome of which will determine the trajectory of cross-Strait ties for the next four years. 

What Beijing is Saying: Chinese diplomats appear to be moderating Beijing’s message in the run-up to the elections, but maintaining a firm line.  

• China’s Foreign Affairs Spokesperson said on Tuesday that “Taiwan is an inalienable part of China’s territory,” adding, “elections in the Taiwan region are China’s internal affairs.”
• One of China’s top diplomats, Liu Jianchao, said during a high-profile visit to the United States that China is “not looking to fight a cold or hot war with anyone,” and hopes to see “dialogue with Taiwan”; but also warned that Taiwan was a “red line” that must “not be crossed.”

Washington’s View: The White House told press on Wednesday that it believed Beijing was “trying to shape and coerce [the election] in various different ways,” and said President Biden was planning to end a high-level delegation of former top officials to Taipei after the election.

The Context: There’s much at stake in Saturday’s election. Front-runner Lai Ching-te, of the Democratic Progressive Party (DPP), is presenting himself as a continuity candidate, while his opposition, Hou Yu-ih of the Kuomintang Party and Ko Wen-je of the Taiwan People’s Party, both promise pragmatic steps to improve relations with mainland China without sacrificing the island’s de facto independence.

Why it Matters: If Lai is elected, Beijing is widely expected to label him and the DPP a “secessionist” force bent on permanent separation from mainland China. 

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

Learn More: Register for Taiwan Elections: Rapid Reactions From Europe, Taipei and Washington, a Center for China Analysis online conversation to assess the election, from 8:30-9:30 am (New York) on January 16. Also read The “Rebirth” of Europe-Taiwan Relations: Explaining Europe’s New Balance Between Beijing and Taipei, by Center for China Analysis Senior Fellow Philippe Le Corre.

2.  Xi’s Anti-Corruption Campaign is Here to Stay

What Happened: On Monday, Xi Jinping gave a speech at the Third Plenum of the Communist Party’s Central Commission for Discipline Inspection (CCDI), the powerful body responsible for enforcing his continuing campaign against corruption.

Between the Lines: Last year saw a record number of corruption investigations of central leaders, but this year Xi highlighted corruption by grassroots officials that affects ordinary people, reflecting Beijing’s rising sensitivity to managing the social fallout of slowing growth.

The Bigger Picture: Xi is only intensifying his long-running focus on anti-corruption, which he describes as a “self-revolution” representing his contribution to resolving the Party’s existential dilemma of “successfully escaping the historical cycles of order then chaos, and prosperity then decline.”

Why it Matters: Xi’s speech signaled anti-corruption priorities this year that could negatively impact firms and investors involved in targeted sectors.Xi said the Party will focus on corruption in finance, state-owned enterprises, energy, pharmaceuticals, and infrastructure projects.More generally, he flagged “the severe punishment of corruption related to collusion between politics and business” as the new “top priority” for anti-corruption.The possibility of sudden political crackdowns on businesses may help to address corruption but will continue to affect business confidence and generate market volatility.

By: Neil Thomas, Fellow on Chinese Politics, Center for China Analysis

Learn More: Follow the latest updates on China’s political leadership on the Center for China Analysis’ Decoding Chinese Politics website, now available on mobile.

3. Spy Games Heat Up

What Happened: China’s Ministry of State Security (MSS) said Monday that it had arrested a British spy operating in the country. MSS alleged that the individual, surnamed Huang, had been recruited by Britain’s MI6 foreign intelligence service and instructed to enter China posing as a member of a consulting company and steal state secrets. 

Between the Lines: The allegation that Huang posed as a consultant is noteworthy, as Beijing has recently cracked down hard on foreign consultancies and due diligence firms, saying they pose a security threat. Multiple companies, such as Bain & Company, have had their offices in the country raided over the last year. The allegation may be used to justify continued pressure on the sector.

The Bigger Picture: The arrest comes amid heightening tensions between China and the West over espionage.

• China’s MSS recently launched a publicity blitz on social media for the first time, publicizing cases and warning Chinese citizens to watch for spies.
• Last September, British police arrested a parliamentary researcher on suspicion of spying for China, sparking deep consternation in London. Meanwhile a Belgian politician was arrested last month, having allegedly served as a Chinese intelligence asset for more than three years.

Why it Matters: Perceptions of an escalating spy war may further raise the risks and difficulties of doing business in China for foreign firms, while prompting stricter scrutiny of Chinese students and professionals residing in the West.

By: Nathan Levine, Assistant Director, Center for China Analysis

Learn More: Read The Paranoia Behind China’s Spy War, an article by Center for China Analysis Assistant Director Nathan Levine.

4. China Probes the Night Sky in Latest Achievement in Space

What Happened: On Tuesday, China successfully launched its Einstein Probe, a next-generation space-based X-ray observatory designed to monitor the night sky and generate further understanding of cosmic activity.

• The probe will spend at least three years observing distant space to better understand fleeting and often violent cosmic phenomena like how stellar matter falls into black holes.

The Details: The probe uses cutting edge “lobster-eye” technology, which results in higher resolution images and more accurate detection of distant, weaker signals. It took a decade to develop and was led by a group of researchers from the Chinese Academy of Sciences with instrument contributions from the European Space Agency (ESA) and the Max Planck Institute for Extraterrestrial Physics in Germany.

Between the Lines: In return for helping to download data from the probe, China’s international partners, the ESA and the Max Planck Institute, will receive 10% of the observation data — meaning China will retain majority ownership for its own strategic use. 

Why it Matters: The launch is the latest success in China’s strategic space agenda, which has taken significant steps forward in recent years. These achievements have begun to center China as a potential global leader in space research — a status that could give the country significant security advances in addition to scientific prestige. 
 
By: Taylah Bland, Affiliated Fellow on Climate and the Environment, Center for China Analysis

Learn More: Read about how Beijing’s Tech Restructuring Signals Enhanced Competition With the United States, by Patrick Beyrer, Research Associate, Center for China Analysis.

5. A Secret U.S.-China AI Backchannel

What Happened: Leading artificial intelligence companies including OpenAI, Anthropic, and Cohere have been engaged in secret backchannel diplomacy with counterparts in China to discuss shared concerns about AI safety, according to a report from the Financial Times.

The Details: At least two meetings took place in Geneva last year between technologists from American AI companies and non-profits and representatives of Tsinghua University and other Chinese state-backed institutions. Attendees said the goal was to find a shared path forward on AI safety policies.

• The meetings were arranged with the knowledge of the White House and UK and Chinese government officials, according to attendees.
• China’s embassy in the UK stated that “China stands ready to carry out communication, exchange and practical co-operation with various parties on global AI governance.”

The Bigger Picture: The talks are a rare example of U.S.-China collaboration in the technology space amid fierce strategic competition.

Reality Check: News of the meetings is likely to prove politically controversial. “AI safety” has come to include decisions on misinformation and censorship policies, and the idea that China may be involved in shaping those decisions will not sit well with many in the United States.

By: Nathan Levine, Assistant Director, Center for China Analysis

Learn More: Read ASPI’s report Stacking the Deck: China’s Influence in International Technology Standards Setting for more on Beijing’s efforts to proactively shape technology standards around the world.