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THIS WEEK:

1. China Adopts Muted Response to Taiwan Elections

What Happened: China responded with moderation to Saturday’s presidential election in Taiwan. While Beijing’s least preferred candidate, Lai Ching-te of the Democratic Progressive Party (DPP), was elected with 40% of the vote, China has thus far not undertaken any destabilizing military actions near the island, as some had feared.   

The Details: On Saturday, Taiwanese voters went to the polls and elected a new president and 113 new members of the Legislative Yuan. The DPP’s Lai Ching-te was elected as the next president of Taiwan, securing 40% of the vote, while Hou Yu-ih of the Kuomintang received 33.5% and with Ko Wen-je of the Taiwan People’s Party receiving a stronger-than-expected 26% of the vote.

• The victory represents an unprecedented democratic milestone: the first time a political party in Taiwan has won a third straight presidential election. Voters returned the ruling DPP to power, a seeming endorsement of the party’s current policy of pursuing more international autonomy on the world stage.

Beijing’s View: A spokesperson for the People’s Republic of China said on Saturday that the election results “reveal that the Democratic Progressive Party cannot represent the mainstream public opinion on the island.”The spokesperson added that “Taiwan is China's Taiwan,” and that the elections “will not change the basic landscape and development trend of cross-Strait relations, will not alter the shared aspiration of compatriots across the Taiwan Strait to forge closer ties, and will not impede the inevitable trend of China's reunification.”

Why It’s Important: On balance, this rhetoric from China was noticeably muted and reserved. Despite downplaying the significance of the DPP as representing the whole of Taiwan, Chinese diplomats also signaled an openness to dialogue "with relevant political parties, groups and people in Taiwan."This response, coupled with a discernable lack of military saber-rattling, suggests Beijing has settled on a tempered approach in the immediate aftermath of the elections.

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

Learn More: Read The Geopolitical Implications of the Taiwanese Elections for China, the United States and the World, by Center for China Analysis TOY Senior Fellow on Taiwan Simona Grano.

2. Trust Issues at Davos

What Happened: Premier Li Qiang, China’s #2 leader, attended this week’s World Economic Forum meeting in Davos, Switzerland, and delivered a noteworthy special address.

• In it, Li warned that “the world has entered a new period of turbulence and transformation,” and emphasized that “lack of trust is aggravating risks to global growth and peaceful development.”

The Context: “Rebuilding Trust” is the theme of the Davos meeting this year. According to Li, this encapsulates three core points: that “trust was once prevalent,” including between countries; that “the foundation of trust has now been eroded”; and that “rebuilding trust is essential” to the world.

• He suggested bolstering international cooperation in five areas to rebuild trust: macroeconomic policy, industrial specialization, science, green development, and North-South and South-South ties.

Between the Lines: Lack of trust is an issue as pronounced within China as it is on the global stage, if not more so.

• A growing “trust deficit” is today reshaping the dynamics between China’s state and society, among China’s political elites, between central and local governments, and within the general populace itself.
• Accentuated by — and contributing to — China’s economic slowdown, this erosion of trust is exacerbating political instability, policy unpredictability, social fragmentation, and other governance challenges, and risks leading the country into a uniquely “Chinese-style” modernization trap.

Why it Matters: The ability of China’s leadership to rebuild trust, both domestically and internationally, will be crucial for its own modernization ambitions, and may help shape the future of global development. The issue marks a critical test of its credibility in addressing both domestic and global challenges.

By: Jing Qian, Co-Founder and Managing Director, Center for China Analysis

Sneak Peek: The growing trust deficit in China is one of ten top trends worth watching identified by the Center for China Analysis in our inaugural forward-looking annual report, China 2024: What to Watch, coming January 30.

3. China’s Economy Grows, Population Declines

What Happened: New official data released Wednesday showed China’s economy grew 5.2% in 2023. This was up from a dismal 3% growth in 2022, but still otherwise among the slowest years of growth since 1990.

• Meanwhile, population statistics showed China’s population declined by more than 2.08 million in 2023, more than twice the fall in 2022. China concluded 2023 with 1.410 billion people.
• Contributing to this decline, China’s birthrate dropped by more than 500,000 last year to just over 9 million, accelerating the country’s ongoing demographic slide. China’s fertility rate is now less than half of the replacement rate of 2.1.The Bigger Picture: 2022 was a turning point for China and the world, marking the first year the country’s population shrank since the famines of the early 1960s. It was also the year India overtook China as the world’s most populous country. 2023 only accelerated this trend. 

Why it Matters: While China’s economy is showing signs of recovery, it’s long term challenge of reorienting to a more consumer-driven growth model will face serious headwinds if its population and labor force continue to decline.

• A raft of government incentives for Chinese couples to have more children have so far failed to produce any discernable effect, however.  

By: Nathan Levine, Research Fellow, Center for China Analysis

Learn More: Read The Last Generation: Why China’s Youth Are Deciding Against Having Children, by Center for China Analysis Fellow on Chinese Society Barclay Bram.

4. China Appoints New Climate Envoy

What Happened: Last Friday, the Chinese government appointed former Vice Foreign Minister and former Under-Secretary-General of the United Nations Liu Zhenmin as China's new special envoy for climate change. 

The Details: Liu Zhenmin takes over from his predecessor Xie Zhenhua to lead China’s climate action in the international arena.

• A senior diplomat, Liu is well versed in multilateral negotiations on climate change including the 1997 Kyoto Protocol and 2015 Paris Agreement, having served as the head or major member of the Chinese delegation on multiple occasions.
• As the Under-Secretary-General for the United Nations Department of Economic and Social Affairs, he also presided over the work in areas of climate change and sustainable development.

The Context: The appointment comes after speculation that Xie would step down after the completion of COP28 in December 2023 was confirmed.

• Liu attended COP28 where he acted as Xie’s special advisor and gave remarks at some of the China Pavilion and side events.

Why it Matters: The announcement comes as Xie’s U.S. counterpart John Kerry has also decided to step down. Both countries had just started to resume cooperation on climate change and build up momentum through COP28 and the Sunnylands Statement on climate. With both envoys stepping down, however, there is some concern that momentum will now slow.

• All eyes will be on Liu as he sets the tone for China’s engagement on climate change in 2024.

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

Learn More: Read How 2024 Will Be a Watershed Climate Moment for China by ASPI China Climate Hub Director Li Shuo. 

5. Promotion of Hu’s Son Suggests no Vendetta by Xi

What Happened: On January 16, Beijing announced the promotion of Hu Haifeng, the 51-year-old son of former paramount leader Hu Jintao, as a new deputy minister of civil affairs.

• Haifeng was party secretary of Lishui prefectural-level city in Zhejiang province since 2018, having worked in the province as a local official. Previously He also work for a branch of Beijing’s elite Tsinghua University since 2009.

Between the Lines: His father’s removal from the 20th Party Congress in October 2022 generated a frenzy of public speculation and media coverage. The older Hu appeared confused and was escorted offstage, seemingly against his will.

• Many commentators speculated that Xi Jinping deliberately humiliated Hu Jintao to show his power and purge his predecessor’s political standing.

Why it Matters: How Xi treats former leaders and their families can reveal a lot about the nature of Chinese elite politics inside the black box. Haifeng’s promotion, which brings him to Beijing, where his elderly father lives, suggests Xi’s approach may be more stable and less malevolent than is sometimes assumed.

• This doesn’t mean Haifeng hasn’t been relatively marginalized, however: he has worked under close Xi allies in Tsinghua and Zhejiang for 15 years, and often praises Xi, but is unlikely to become a national leader.
• Xi appears to be mostly using his still-unrivaled power to focus on policy problems and real corruption, rather than further shaking up the political elite and affronting the Chinese public with personal vendettas.

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

Learn More: Check out What is Xi Jinping Thinking?, a book review essay in China Books Review, a digital magazine on all things China books-related.