To safeguard our national security, it is crucial to stay informed about the domestic and geopolitical events happening in and around China. Here is a news digest summarizing key developments in China for January.
- Chinese Economy: According to reports, China’s economic growth rate in 2023 marked one of the lowest levels in decades, highlighting the significant impact of a property-sector collapse and weaker consumer confidence despite the lifting of all COVID-19 restrictions.[1]
- In an odd turn of events, several prominent commentaries by economists and journalists in China have disappeared from the internet in recent weeks. This development has sparked concerns that Beijing is intensifying its censorship efforts as it endeavours to portray a positive image amid economic challenges.[2]
- China’s indebted real estate developer Evergrande was forced into liquidation by a Hong Kong court after they were unable to provide a feasible restructuring plan. The ruling comes amid ongoing financial woes and an investigation into its founder. Due to concerns about the company’s potential effects on the industry and China’s economy, trading in Evergrande’s shares was halted.[3]
- US-China Dynamics: Chinese-made drones pose a national security threat to the US due to laws compelling companies to provide access to user data to Chinese authorities, according to a memo by the FBI and CISA. This risk includes potential exposure of vulnerabilities in critical infrastructure and intellectual property to Chinese intelligence services, as well as the possibility of cyber-attacks. The memo advises against using Chinese drones and suggests secure alternatives from US manufacturers. Congressional actions, including bans on the procurement of Chinese drones by federal agencies, highlight concerns over Chinese drone usage. Lawmakers advocate for a complete ban on Chinese drones to protect US interests.[4]
- There were reports that a Dutch manufacturer, ASML, a key player in the semiconductor manufacturing supply chain, had reportedly cancelled shipments of hi-tech microchip machinery to China following pressure from the US government. The Dutch government revoked the licenses that prevented the shipment of three chip-making machines to China. The cancellation of the shipments comes amidst US efforts to limit China’s semiconductor capabilities. This move follows previous restrictions placed on ASML’s deep ultraviolet (DUV) lithography machines last year under pressure from the US government.[5]
- Threat over Taiwan: According to reports, high-altitude balloons believed to be from China resurfaced over Taiwan, reminiscent of a previous incident that strained US-China relations. The timing was critical as it happened when Taiwan was going for the presidential election which has the potential to impact U.S.-China dynamics.[6] Elsewhere, an error caused panic in the public in Taiwan. A satellite launch in China triggered an emergency alert in Taiwan, days before its presidential election, causing alarm and confusion due to an erroneous English translation. The bilingual air raid alert, sent to every mobile phone, inaccurately translated ‘satellite’ to ‘missile’. The message warned of a missile flyover in Taiwan airspace. The alert was later clarified, and Taiwan’s defence ministry apologized for the oversight in the English translation.[7]
- According to reports, China is employing a diplomatic offensive in response to the election of Lai Ching-te as the next president of Taiwan. The campaign may involve propaganda, threats, and infiltration to bring the island under Chinese control without a military invasion. Despite tensions, military confrontation is not imminent, with China prioritizing its relations with the US and internal military reforms. Experts expect China to intensify pressure on Taiwan, including economic and trade sanctions and cognitive warfare, to influence the island’s politics and policies.[8]
- South China Sea Conflict: Vietnam and the Philippines signed two memoranda of understanding (MOUs) on cooperation in the South China Sea (SCS). The MOUs covered incident prevention and management in the SCS, as well as maritime cooperation. The agreements aim to enhance coordination on maritime issues bilaterally, within ASEAN, and with other dialogue partners. The MOU on maritime cooperation seeks to strengthen understanding, mutual trust, and confidence through the development of a Joint Coast Guard Committee and a hotline communications mechanism. Analysts view the agreements as a step towards breaking China’s dominance peacefully, although there are potential risks of conflict if China perceives its interests are being undermined.[9]
- A Chinese coast guard ship, known as ‘The Monster’ for its size, has been patrolling near Vietnam’s oil exploration blocks at Vanguard Bank in the South China Sea since early December, raising concerns about territorial tensions. The ship has been conducting an ‘intrusive patrol’ in Vietnam’s exclusive economic zone (EEZ), where Vietnam has oil exploration projects. The ship has been operating with its AIS (Automatic Information System) turned off, violating international maritime safety conventions. The situation adds to longstanding tensions in the South China Sea, with Vanguard Bank being a known flashpoint between Vietnam and China.[10]
