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March 1, 2023

ICAS Bulletin (online ISSN 2836-3418, print ISSN 2836-340X) is published every other week throughout the year at 1919 M St NW, Suite 310, Washington, DC 20036.
The online version of ICAS Bulletin can be found at chinaus-icas.org/bulletins/.

- What's Going On? -

Heated Verbal Exchanges and Announcements Abound

US President Joe Biden speaks about the administration's response to recent aerial objects at the White House House in Washington, D.C. (Source: MANDEL NGAN/AFP via Getty Images)

– The U.S. Department of Energy has concluded in a confidential report to the White House and congressional officials that the novel COVID-19 pandemic “most likely” originated from a lab leak. A Beijing spokesperson responded to the report: “Politicizing the issue…will not smear China but will only damage the U.S.’s own credibility.”
– U.S. Senator Rick Scott criticized U.S. President Biden’s response to increasing U.S.-China tensions, stating that “All that Biden does is pacify China.”
– China’s state-owned Xinhua News Agency laid out new lists of issues with the methods of U.S. power usage.
– The Philippines President Marcos granted the U.S. military access to four new defense sites in the country.
– U.S. President Joe Biden stated that he makes no apologies for shooting down the Chinese balloon, adding that the U.S. is improving detection of any such objects in the future. He also clarified that three separate unmanned aerial objects, shot down by the U.S. military, were “most likely tied to private companies.”
– The Chinese Ministry of Foreign Affairs urged Japan and South Korea to separate themselves from the U.S. stance on the “spy balloon” and not to “make a fuss.” The message came as Japan and South Korea reaffirmed their support towards the U.S. response to the balloon.
– President Biden’s top China aide, Laura Rosenberger, is set to depart the administration amidst increasing bilateral tensions, though the departure was “long-planned” and did not involve the balloon incident.

U.S.-China Tensions Boil Over Taiwan

Taiwanese national flags against clear blue sky. (Source: Getty Images, Royalty Free)

– Following a fly-through of the Taiwan Strait by a U.S. military plane, the Chinese People’s Liberation Army claimed the U.S. “deliberately disrupted and undermined the regional situation.”
– U.S. CIA Chief William Burns showcased U.S. intelligence regarding a possible Chinese invasion of Taiwan, stating “President Xi and his military leadership have doubts today about whether they could accomplish that invasion.”
– The Chinese Ministry of Defense spokesman Tan Kefei said that China is determined to block Taiwan independence.
– The U.S. Department of Defense is planning on increasing U.S. troops in Taiwan, as a part of a training initiative by the U.S. for the Taiwanese military.
– U.S. Representatives Gallagher, and Khanna voiced their concern of Chinese cyberattacks and disinformation campaigns after returning from a political trip to Taiwan.
– Taiwanese foreign and security officials met American counterparts in private discussions in Washington, occurring simultaneously as the U.S. deputy Secretary of State went to Taiwan.
– Chinese Minister of Foreign Affairs Qin Gang made remarks urging countries to “immediately stop fueling the fire, stop shifting blame to China and stop touting ‘Ukraine today, Taiwan tomorrow,’”
– Following the controversial trip of the U.S. Deputy Assistant Secretary of Defense for China, Micheal Chase, to Taiwan, the Chinese Foreign Ministry spokesperson Wang Wenbin urged the U.S. to “stop any form of official U.S.-Taiwan contacts,”
– Deputy Secretary of State Wendy Sherman urged countries to warn China against a possible Taiwan conflict: ”I urge all countries to tell the PRC this affects me. This affects my people, my country. This is not a good idea.”

Everyone is Focused on Protecting Technology Supply Chains

Hand holding smartphone with AR application for check order pick time in smart factory warehouse (Source: Getty Images, Royalty Free)

– Taiwan’s Ministry of Economic Affairs said on Monday that the U.S.-led Chip-4 alliance (between the U.S., Taiwan, Japan and South Korea) is setting up an “early warning system” to protect its “highly complicated and very global” supply chains.
– Sequoia Capital is consulting independent U.S. national security-experts to vet China’s arm’s investments, as the U.S. looks to stop American funding of sensitive technologies from going to China.
– The U.S. looks to limit the level of advanced semiconductors made by South Korean companies in China according to a senior U.S. official.
– China has become the leader in global nuclear fusion patents, signaling increasing competition between the U.S. and China in nuclear fusion development.
– The Taiwan Semiconductor Manufacturing Company (TSMC) factory in Arizona has been met with increasing controversy by TSMC employees who explained that the project takes away from valued research of semiconductors that outmaneuvers rivals.
– The Biden administration’s new $53 billion Chips Act is set to test whether the U.S. will be able to undo the semiconductor production exodus.
– During a study session of China’s Politburo, President Xi Jinping emphasized China’s need to “strengthen basic research and solve key technology problems from the source” if China wanted to “achieve a high level of self-reliance.”
– China’s most influential scientific body, the Chinese Academy of Science, published outlines of how China could circumvent U.S. chip sanctions.

Private Sector Yields are Promising Despite Global Strains

A McDonald's restaurant is pictured on May 1, 2022 in Shenyang, Liaoning Province of China (Source: Yan Bo/VCG via Getty Images)

– U.S. President Biden is seeking to reduce the planned restrictions on future American investments in China and Chinese firms, and is seeking U.S. firms to notify federal authorities when investing in industries involving quantum computing and artificial intelligence technologies.
– Despite geopolitical tensions and regulatory challenges, Chinese e-commerce company Temu experienced significant growth in the U.S. market, driven by its competitive pricing, variety of products, and effective marketing strategies this February.
– The House committee on the Chinese Communist party will hold hearings with CEOs and industry representatives on how private equity, venture capital, and Wall Street firms are navigating the complexities of doing business in China.
– U.S. companies, including McDonald’s and Ralph Lauren, are planning expansions in China, viewing its large consumer market as a “promising long-term debt” despite economic and geopolitical concerns.
– U.S.-based company Mountain Pass will supply rare earth elements to Sumitomo in Japan, bypassing China, to diversify and ultimately “strengthen a supply chain of critical importance.”
– Chinese state-owned enterprises (SOEs) have been instructed to phase out contracts with the big four accounting firms as part of the country’s efforts to reduce risks and improve the quality of financial reporting.
– The U.S. Treasury Department expects difficult debt talks at the G20 finance meeting, happening in Indonesia in March 2023, centering debt relief for developing countries impacted by the Covid-19 pandemic.
– China has imposed sanctions on Lockheed Martin and Raytheon in reaction to U.S.-imposed sanctions on Chinese entities, marking China’s latest effort to retaliate against U.S. restrictions.

Diplomacy Amidst the One-Year Anniversary of Ukraine

China's Director of the Office of the Central Foreign Affairs Commission Wang Yi delivers a speech at the Munich Security Conference in southern Germany on February 18, 2023. (Photo by ODD ANDERSEN/AFP via Getty Images)

– After China called for a cease-fire, Ukrainian President Volodymyr Zelensky outlined plans to seek a meeting with Chinese President Xi Jinping.
– U.S. Secretary of State Antony Blinken reiterated previous claims that China is considering sending Russia military assistance towards the war in Ukraine, despite China refuting the claim.
– China has called for a cease-fire and peace talks in the Russian war on Ukraine, releasing an official position paper on the first anniversary of the invasion. The position paper fell flat with both the U.S. and European allies, as NATO Secretary General cited China’s lack of credibility.
– China pushed back against U.S. accusations that it has been considering lethal aid to Russia, as the spokesperson of the Chinese Foreign Ministry stated China “does not offer any arms sales to conflict zones or parties involved in wars.”
– During his EU tour, China’s State Councillor Wang Yi said the U.S. should not use the balloon incident to further agendas abroad and reaffirmed China-Russia ties.
– Chinese Foreign Minister Qin Gang told actors at a security conference in Beijing that China is concerned about the Russian-Ukrainian war, and that China is seeking an active role in peace talks.
– China told the United Nations that “brutal facts offer an ample proof that sending weapons will not bring peace.”
– U.S. Secretary of State Antony Blinken warned top Chinese diplomat Wang Yi that China will face consequences if they choose to send weapons to assist Russia in the Ukrainian war. The Chinese Ministry of Foreign Affairs spoke out against such claims: “It’s the U.S., and not China, that has incessantly [been] supplying weapons to the battlefield.”

- What Are We Reading? -

- What's Happening Around Town? -

- What ICAS Is Up To -

ICAS MAP Commentary

As war in Ukraine freezes the Arctic Council, how will Asia break the ice?

By Nong Hong

February 25, 2023

“The Ukraine crisis has changed the world in many ways, one of which is the functionality of the Arctic Council, a forum that Russia currently chairs. The decision by the other seven council members in March last year to stop joining its meetings is a grave impediment to international cooperation in the Arctic. Concerns have also been raised over the role of the observer states, including China, Japan, South Korea, Singapore and India.

Climate change has made the Arctic and its potential resources more accessible. This has changed the geopolitical landscape, and more countries are now focused on the Arctic, including in distant Asia. For China, Japan, South Korea, Singapore and India, their observer status ensures that they are involved in determining the future of the Arctic, a region they believe will affect their economic interests and the environment…

This commentary was originally released on South China Morning Post on February 25, 2023

ICAS In the News

On Wednesday, February 22, 2023, Senior Fellow Sourabh Gupta discussed US-China diplomacy amidst the Munich Security Conference on CGTN’s World Insight with Tian Wei.

  • “With regard to the meeting, what stood out to me is an agreement on both sides to disagree in-regards to the balloon…It took a while for two countries to create some sort of modus operandi to move forward.”
  • “What one will see from this balloon meeting is how soon they will be able to move on, and try to resurrect ties and have some sort of better communication and restart the working groups, but I think it’s also important that the two sides laid out their positions clearly out here, and I think that both sides wanted to place this on the record so that there’s clarity on intention on both sides that if such an event were to recur.”

On Monday, February 20, 2023, Senior Fellow Sourabh Gupta spoke about the Blinken-Wang meeting alongside the Munich Conference on CGTN’s The Point with Liu Xin.

  • “I think there is a larger point here, that there is an understanding that this is a balloon incident and a balloon incident is just a balloon incident, but they are trying to magnify the effect of this balloon incident. Because there is a consensus among the political establishments within the Beltway that we need to compete with China and China is an adversary, but that sentiment is not shared beyond the Beltway.”
Senior Fellow Sourabh Gupta discussed US-China diplomacy amidst the Munich Security Conference on CGTN's World Insight with Tian Wei.
Senior Fellow Sourabh Gupta spoke about the Blinken-Wang meeting alongside the Munich Conference on CGTN's The Point with Liu Xin