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THIS WEEK:

China, Japan, and South Korea hold trilateral talks in Seoul; Xi chairs meeting with business executives and economists in Shandong; and China and Central Asia cooperate on emergency management.

1. China, Japan, and South Korea Hold Trilateral Talks in Seoul

What Happened: On May 27, the leaders of China, South Korea, and Japan held three-way talks in Seoul for the first time in four years, agreeing to revive trade and security dialogue after years of global tensions.

Efforts Revitalized: Chinese Premier Li Qiang met South Korean President Yoon Suk Yeol and Japanese Prime Minister Fumio Kishida in an effort to revitalize three-party free-trade agreement negotiations and make progress on a host of security issues. The meeting adopted the Joint Declaration of the Ninth China-Japan-ROK Trilateral Summit.

What China Said: Premier Li praised the talks as a “new beginning” in trilateral cooperation and called for politics to be “separated from economic and trade issues,” a veiled criticism of what Beijing regards as U.S.-led policies of protectionism and decoupled supply chains. China’s Ministry of Foreign Affairs said that the meeting “sent a message of East Asian countries working together to strengthen solidarity, deepen cooperation, and promote economic integration in the region, and injected stability and positive energy into a turbulent and rapidly changing world.”

Why It Matters: The meeting marked progress for the three countries, whose relations have been saddled with suspicion and tension over how to deal with North Korea’s nuclear program and ongoing trade disputes. However, progress is modest, given the nettlesome issues that remain unresolved. The meeting takes place in the context of unprecedented cooperation with the United States on military and other measures, as well as ongoing U.S.-China strategic competition. 

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

Learn More: Listen to Yuki Tatsumi unpack Japan’s balancing act between engaging and deterring China in Asia Society Switzerland's State of Asia podcast.

2. Xi Chairs Meeting with Business Executives and Economists in Shandong

What Happened: On May 23, Xi presided over a symposium in Jinan, Shandong, with a series of executives and high-profile economists on the topic of economic reform.

Who Attended: Economists Zhang Bin (Chinese Academy of Social Sciences), Huang Hanquan (Chinese Academy of Macroeconomic Research), and Zhou Qiren (Peking University), along with Liu Mingsheng (Chairman and Party Secretary of State Power Investment Corporation), Xu Daquan (CEO of Bosch China), and other company executives, had the opportunity to present Xi and Politburo Standing Committee members Wang Huning and Cai Qi with advice on the future path of economic reforms.

Xi Hopes to Restore Confidence: In recent years, a combination of the aftereffects of the Zero-COVID policy, structural imbalances in the Chinese economy, U.S. economic measures, and the broader Western de-risking agenda, as well as a series of key economic policies unrolled by Xi, have hit the Chinese economy with a sense of gloom.

Why It Matters: The long-awaited Third Plenum of the 20th Party Congress is scheduled for July. It has historically been a key CCP Central Committee meeting on the future of (economic) reform, ever since the 1978 December Third Plenum, which launched the “reform and opening up” era. Many are awaiting the Third Plenum with interest, looking for any sign that Xi means it when he says that “China's door to opening up will open wider and wider."

By Pascale Massot, Non-Resident Honorary Fellow, Political Economy, Center for China Analysis

Learn More: Have a read through of Pascale’s newest paper for CCA, which challenges three common frames that are often deployed in public discourse.

3. China and Central Asia Cooperate on Emergency Management

What’s Happening: On May 30, China and Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan) convened a ministerial-level meeting in Urumqi, Xinjiang, to discuss the establishment of a mechanism for emergency management and sign an anticipated memorandum of understanding.

The Details: At a press conference on Monday, Wang Manda, Director-General, Department of International Cooperation and Rescue, Ministry of Emergency Management, said, “China and the five Central Asian nations face high risks of natural disasters such as earthquakes, floods, and forest and grassland fires. The upcoming meeting will review cooperation among the parties on disaster prevention, mitigation, relief, production safety supervision, and comprehensive emergency rescue, and further suggestions on deepening practical cooperation will be proposed.”

The Bigger Picture: This convening comes after the first China–Central Asia Summit convened in Xi’an in 2023, which delivered a jointly signed “Xi’an Declaration of the China–Central Asia Summit.” The declaration aims to strengthen ties between the countries by supporting one another on core interests such as sovereignty, independence, green development, security, territorial integrity, and people-to-people exchange. 

Why It Matters: Amid ongoing concerns about geopolitical instability, China continues to develop partnerships with countries that it sees alignment with and value in. The China–Central Asia focus on emergency management cooperation reinforces the shared challenge of climate change affecting the region and the need to prioritize preparedness. 

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

Learn More: Read Can Kazakhstan’s Unprecedented Floods be Prevented in the Future? by ASPI Australia Research Associate Genevieve Donnellon-May.

4. Xi’s Employment Drive Reveals Social Stability Concerns

What Happened: On May 27, the Communist Party’s elite 24-man Politburo held a study session, where General Secretary Xi Jinping emphasized the need to “promote high-quality full employment” and “constantly enhance the sense of gain, happiness, and security for the broad masses of workers.”

Rising Priority: Xi wants Beijing to increase the relative importance attached to employment outcomes in economic policymaking. He called for Party leaders to “strengthen the evaluation of the impact on employment of major policies” and “better coordinate employment policies with fiscal, monetary, investment, consumption, industrial, and regional policies.” His line that “employment is the most fundamental livelihood of the people” suggests much-needed welfare reform is not a priority.

Young People: Following record-high youth unemployment last year, Xi said the Party must “give top priority to the employment of college graduates and other young people.” His solutions include encouraging entrepreneurship, promoting vocational education, adjusting higher-education offerings to prioritize STEM, and “strengthening propaganda” to adjust career expectations downward.

Why It Matters: Unemployment is a critical issue for the Party’s political security, and Xi told his comrades that it “concerns the long-term stability of the country.” The Party’s Third Plenum in July is expected to unveil new policies designed to boost employment.

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

Learn More: Read more about China’s youth unemployment with The 19 Percent: The Social Consequences of China’s Youth Unemployment Rate by CCA Fellow Barclay Bram.

5. Tesla’s New Megapack Factory Breaks Ground in Shanghai

What Happened: On May 23, Tesla broke ground for a new factory in Shanghai that will produce Megapacks, its large-scale rechargeable lithium-ion battery storage solution. Production will commence in early 2025.

Factors of the Factory: The groundbreaking comes one month after Elon Musk visited China to meet with Premier Li Qiang to discuss storing consumer data and the rollout of Tesla’s self-driving software in China. The manufactory will produce more than 10,000 Megapacks a year and is a part of Tesla’s larger Shanghai Gigafactory complex, its largest plant outside the United States.

Win Some, Lose Some: State-run media agency Xinhua praised Tesla’s construction of the $200 million plant, considering the investment in the Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone a triumph that defies U.S. and Western rhetoric of “decoupling” and “de-risking” from China. However, even with the new Megapack factory and praise from Chinese media, data from the China Association of Automobile Manufacturers found that Tesla had reduced production of its vehicles at the Shanghai facility to 49,498 units in March and 36,610 units in April, 17.7% and 33% less, respectively, than the same periods in 2023.

Why It Matters: This is another win for China’s economy and the broader global energy transition. Tesla Senior Vice President Tom Zhu forecasts that production will create almost 40 GWh of energy storage for the market and be able to power around 50,000 homes in Shanghai for one year.

By Ian Smith, Research Associate, Center for China Analysis

Learn More: CCA Fellow Lizzi C. Lee penned an op-ed on the Biden administration’s tariffs on Chinese electric vehicles (EVs) to protect the U.S. EV industry and Tesla; read an excerpt here.