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THIS WEEK:

China’s 5% growth target slips, extending the retirement runway, China contests import tariffs on electric vehicles, latest round of U.S.-China military-to-military talks, and Beijing’s plan for “big agriculture.”

1. Beijing Spotlights Africa Ties

What Happened: On September 3, more than 50 African leaders arrived in Beijing for the 9th Forum on China–Africa Cooperation, which was held in person for the first time since 2018.

What Xi Said: In a speech at the forum’s welcoming banquet, Xi told guests that “China and African countries have fought side by side in the struggle against imperialism, colonialism, and hegemony, walked hand in hand on the road of development and revitalization, and pursued the dream of modernization.” Xi also promised $50 billion in assistance, including $30 billion in loans.

Small Is Beautiful: China’s trade with Africa has grown steadily over the past two decades. However, Chinese loans to African nations and financial institutions peaked in 2016 and fell precipitously after Xi’s announcement in 2021 that China would fund “small and beautiful projects.” This was in preference to blockbuster infrastructure schemes that had attracted criticism.

Why It Matters: The forum provides an opportunity for Beijing to extend its international influence as well as seek political support to counter Western influence. For African leaders, it is a chance to air concerns about the continent’s growing debt crisis and trade imbalances with China.

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

Learn More: In an article for China Brief, CCA Fellow Neil Thomas analyzed China’s strategy to counter U.S. leadership by mobilizing support from the Global South.

2. Escalation Continues in the South China Sea

What Happened: On Saturday, China Coast Guard (CCG) and Philippine Coast Guard (PCG) ships engaged in several incidents near Sabina Shoal in the South China Sea. 

The Accusations: The Philippines accused China of intentionally ramming the Teresa Magbanua in an unprofessional and dangerous manner, causing damage to the vessel. China responded, saying the PCG rammed CCG vessel 5205, a collision for which the Philippines bears “full responsibility.”

U.S. Weighs In: The U.S. State Department released a statement soon after the collision, saying it “stands with its ally, the Philippines,” and condemned China’s “dangerous and escalatory actions.” It also reaffirmed its commitment to come to the aid of the Philippines under their 1951 Mutual Defense Treaty (MDT).

Why It Matters: The collisions significantly escalated a new flashpoint between the two nations, which have been embroiled in a dangerous cat-and-mouse game around several features in the South China Sea. China is concerned that a PCG vessel, which has been anchored near Sabina Shoal since April, may be permanently stationed there. The Philippines claims it has the right to administer and patrol the feature, which is within its exclusive economic zone. As both nations engage in a test of wills, the articles of the U.S.-Philippine MDT take on increasing significance. 

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

Learn More: CCA Fellow Andrew Chubb wrote an issue paper on how Indo-Pacific experts view Chinese nationalism, PRC resolve, and crisis escalation.

3. Local Governments “Smash Iron Pots and Sell the Steel”

What Happened: In a desperate bid to manage escalating debt, several Chinese local governments are liquidating state-owned assets under a policy aptly dubbed “smash iron pots and sell the steel.” 

Crisis Brewing: This drastic approach, exemplified by Chongqing’s Bishan District, aims to raise funds by selling off everything from government buildings to land and equipment in response to dwindling revenues and central directives to control debt risks. As the property market cools and economic growth slows, revenue streams have dried up, leaving authorities with soaring debts and few options. Despite central efforts to curb debt, many localities now face insolvency, with asset sales emerging as a last-ditch effort to stay afloat.

Risk/Reward: The effectiveness of liquidating assets is dubious. In a sluggish economy, demand for land and buildings is low, likely resulting in sales at depressed prices. With weak buyer interest and little financial leverage, the strategy risks leaving local governments with persistent debt and diminished resources.

Why It Matters: Success could stabilize local governments and offer a crisis management model for others. Failure, however, could trigger a vicious cycle of fiscal distress, undermining public services, straining central-local relations, and shaking investor confidence. This sell-off approach highlights the urgent need for systemic reforms to address the underlying issues of fiscal mismanagement and an overreliance on land sales.

By Lizzi C. Lee, Fellow on Chinese Economy, Center for China Analysis

Learn More: Lizzi covered how recent policies are designed to tackle property market woes for the Diplomat. Read an excerpt here.

4. Xi Lauds Positive Results in “Two Establishes” Education

What Happened: On August 30, the Central Leading Group for Party Building reported that Xi Jinping lauded the positive results achieved during a Party-wide campaign on discipline education.

Two Establishes: In April, the group initiated a three-month-long campaign to ensure that the Party comprehended the decisive implications of the “Two Establishes” — Xi’s core position within the Party as well as the guiding role of Xi Jinping Thought — particularly before the Third Plenum held in late July.

Decisive Implications: In his message, Xi urged the group to continue furthering discipline education for top leaders, young cadres, and newly promoted cadres at all levels so that they integrate it into their daily lives. As the core education component, the group will double its efforts to enhance understanding of the Two Establishes, making Xi and his ideological doctrine a core matter of the Party’s disciplinary principles. 

Why It Matters: If there were an authoritative playbook over the past decade, it would be Xi’s Two Establishes. The Party regards the slogan as the most significant political achievement since Xi came to power in 2012.

By Lobsang Tsering, Senior Research Associate, Center for China Analysis

Learn More: Stay up-to-date with the people, institutions, and networks that matter in Chinese policymaking with CCA’s Decoding Chinese Politics website.

5. Climate Envoys John Podesta and Liu Zhenmin Co-Chair Meetings

What’s Happening: On Wednesday, U.S. climate envoy John Podesta arrived in China to co-chair three days of meetings with his counterpart, Liu Zhenmin.

Concrete Steps: During Podesta’s visit, the two co-chaired a committee, the “2020s Enhanced Climate Action Working Group,” established earlier this year during their first meeting in May in Washington, D.C. Podesta’s tour follows U.S. national security advisor Jake Sullivan’s trip to Beijing last week, where he met with Xi Jinping and Minister of Foreign Affairs Wang Yi. Sullivan and Wang set the stage for the Podesta-Liu talks by underscoring the “concrete steps [needed] to tackle the climate crisis and welcomed further discussions,” per the White House.

A Prelude: The envoys’ meeting precedes two important upcoming events: the United Nations Climate Change Conference (COP 29) and the U.S. presidential election, both in November. On the former, Podesta and Liu’s dealings could augur what is to come at COP29; on the latter, the visit is one of the last scheduled between officials from the two countries before the U.S. presidential election, which could alter the climate relationship based on who takes office.

Why It Matters: In a rivalry characterized by competition in economics and geopolitics, climate issues have been one of the few areas of bilateral cooperation that both the United States and China can agree on to palliate the relationship. Events over the next few months will shape what U.S.-China climate cooperation looks like moving forward.

By Ian Lane Smith, Research Associate, Center for China Analysis

Learn More: Read Climate Change in China’s Governance: Agenda, Agents, and International Collaboration by CCA Senior Fellow Guoguang Wu for an in-depth investigation of China’s climate-related policies, politics, governance, and international relations.