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March 15, 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? -

Tensions Escalate After U.S. Military Expansion in Asia-Pacific

Sailors assigned to the Los Angeles-class fast-attack submarine USS Asheville (SSN 758) salute the national ensign after arriving at Royal Australian Navy HMAS Stirling Naval Base on February 27, 2023. (Source: Courtesy photo by Australia Department of Defence)

– On March 13, the U.S., the UK and Australia announced they would join forces to develop nuclear-powered submarines to counter China’s military expansion in Asia-Pacific. Australia will acquire nuclear submarine technology with the help of the U.K. and the U.S.
– China raised serious concerns and requested clarification from the U.S. following reports that Taiwan’s leader Tsai Ing-wen plans to meet with U.S. House Speaker Kevin McCarthy during a transit in the United States.
– It has been confirmed that the U.S. House Speaker Kevin McCarthy and Taiwan’s President Tsai Ing-wen will meet in California rather than in Taipei, reportedly due to concerns about China’s military aggression as the U.S. increases contingency planning.
– U.S. intelligence chief Avril Haines said to lawmakers that China seeks to avoid escalating tensions with the U.S. and favors stable relations, despite its efforts to enhance its global economic and military power.
– U.S. officials questioned whether Chinese-made cranes at U.S. ports, including some used by the military, could potentially be used for surveillance or sabotage given that some cranes contain sophisticated sensors that could track information about shipment status.
– On March 2, senior Pentagon official on Indo-Pacific security Ely Ratner said that China would not invade Taiwan by the end of the decade due to the high cost while expressing confidence in the U.S.’s ability to deter Beijing from attacking the island.
– On March 1, The U.S. approved a $619 million sale of munitions for Taiwan’s F-16 fighter jets, including anti-radiation and air-to-air missiles, aimed at enhancing Taiwan’s defense capability amid rising tensions over the island’s status. Three days later, China reportedly flew 17 J-10 and 4 J-16 fighter jets in the southwestern part of Taiwan’s air-defense identification zone.
– On March 2, Mark Gallagher, head of the House Select Committee on the Chinese Communist Party, warned during the panel’s first meeting that the U.S. is running out of time to confront China. He emphasized the need for urgency, describing the competition with China as an “existential struggle” with fundamental freedoms at stake.

Bilateral Tech and Financial Overhauls Amidst Changing Geopolitical Tensions

An image reflecting the concept of technology around the globe. (Source: GettyImages, Royalty Free)

– U.S. Commerce Secretary Gina Raimondo is considering a trip to China this spring to de-escalate tensions and engage with China to benefit the U.S. On March 8, China’s Ministry of Commerce expressed openness to a visit from U.S. Secretary of Commerce Gina Raimondo, stating that trade ties are “very important” despite ongoing tensions.
– China announced a major overhaul to strengthen its technological self-reliance and tighten its grip on financial regulation to align with Chinese President Xi Jinping’s priorities and aim to counter U.S. technology restrictions and rising geopolitical tensions.
– On March 7, China’s leader Xi Jinping called on the country’s private sector to “fight” alongside the Communist Party, criticizing the U.S. for containing and suppressing China in an all-round way.
– Chinese solar companies reported U.S. solar panel imports resuming after gridlock, benefiting from clearer rules regarding the Uyghur Forced Labor Protection Act implementation.
– The Biden administration plans to issue an executive order to limit American investment in advanced technologies with national security applications to prevent China from acquiring military capabilities.
– Chinese foreign ministry spokesperson Mao Ning indirectly blamed the U.S. for causing financial difficulties in developing countries such as Pakistan amid a war of words between the two countries over developing country debt.
– On March 2, the U.S. Commerce Department added 28 Chinese entities and individuals to its Entity List, citing potential national security risks, including alleged dealings with an Iranian electronics firm.
– A survey by the American Chamber of Commerce in China found that fewer U.S. companies view China as a top investment destination due to disruptions caused by China’s strict anti-COVID measures and geopolitical tensions. It revealed U.S. companies’ rising pessimism about their financial prospects in China, with over half stating negative profits last year.
– The U.S. has begun consultations with allied nations to discuss possible new sanctions on China if Beijing decides to provide military support to Russia.

Beijing’s Two Sessions Comments on the U.S. and U.S.-China Relations

Chinese Foreign Minister Qin Gang answered questions from Chinese and foreign reporters on China's foreign policy and foreign relations on March 8, 2023. (Source: Chinese Foreign Ministry, Public Domain)

– U.S. National Security Advisor Jake Sullivan said that President Joe Biden plans to hold a phone call with President Xi Jinping after the Two Sessions gathering has concluded, though a date has yet to be set. The two have not spoken since November 2022.
– China’s Ministry of Finance explained that the Chinese government is seeking to largely increase diplomatic and governmental budgets and hardening public stances with the United States.
– Chinese President Xi Jinping directly accused “Western countries led by the U.S.” of “bringing unprecedented severe challenges to our country’s development” in a rare explicit reference to the U.S.
– Major Chinese companies that were targeted by U.S. sanctions, particularly semiconductor and technology companies, were celebrated during the opening of the Two Sessions in Beijing.
– Chinese President Xi Jinping has called for private firms and large entities to maintain a united front against U.S. sanctions.
– Chinese Foreign Minister Qin Gang directly addressed the U.S. to “hit the brakes” as bilateral tensions continue to rise. Minister Qin Gang also asked the U.S. to explain its plan of the “destruction of Taiwan,” adding pressure to the Taiwan question.
– Chinese Foreign Minister Qin Gang warned that the rising U.S.-China tensions risk blowing away any previous guardrails in the bilateral relationship, marking a new stage of heightened tensions.

Industrial Turmoil, Decoupling, Concerns and Competition Persist

The ByteDance logo is seen at the company's headquarters on January 6, 2022 in Shanghai, China. (Source: VCG/VCG via Getty Images)

– U.S. Senator Marco Rubio introduced new legislation that seeks to cancel Ford Motor’s deal to utilize technologies from Chinese battery company CATL.
– 12 U.S. Senators sponsored new bipartisan legislation, created by the U.S. Senate Intelligence Committee, that would allow for the expansion of President Biden’s ability to prohibit TikTok on a nationwide level; a legislation the President previously endorsed.
– U.S. Senator Josh Hawley has been in-contact with a former ByteDance employee who stated that TikTok overstates its separation from China-based Bytedance and utilizes software that is not fully secure.
– Chinese technology chip imports slowed by 27% by volume during January and February 2023.
– Nvidia Corp, Advanced Micro Devices Inc., and other large technology firms are investigating halting sails to Inspur Group Ltd. following Linspur’s addition to a U.S. export blacklist.
– Chinese Vice-Premier Liu He told top-tech industry executives that China must maintain a united “whole nation” approach to semiconductor production, as U.S. export controls increase their effect on the industry.
– The Biden administration announced new export restrictions for dozens of Chinese tech firms, adding 28 more to the Commerce Department’s Entity List.
– China’s military industries are looking to begin building China’s first constellation of low-Earth orbit (LEO) satellites this year, attempting to catch up to U.S. firm Starlink.
– According to the Australian Strategic Policy Institute, China now has a “stunning lead” in 37 out of 44 critical and emerging technologies, as the U.S. and allied nations slip on global research output goals.

Bilateral Efforts for Conflict Aversion

President Joe Biden greets German Chancellor Olaf Scholz on Friday, March 3, 2023, in the Oval Office of the White House. (Official White House Photo by Adam Schultz)

– Iran and Saudi Arabia have agreed to re-establish diplomatic relations and reopen state embassies following talks in Beijing, indicating a large shift from U.S. influence in the region.
– U.S. intelligence chief Avril Haines told lawmakers that the Chinese government is seeking to avoid further escalation of bilateral tensions and emphasized China’s desire for a more stable relationship.
– White House National Security spokesperson John Kirby told reporters that the U.S. does not see a future path of conflict with China, despite Chinese Foreign Minister Qin Gang’s warning of possible conflict with Washington.
– U.S. President Biden met with German Chancellor Olaf Scholz to discuss united measures to keep Western support homogenous amid rising tensions with China and Russia.
– U.S. Department of State spokesperson, Ned Price, stated he expected “additional calls and engagements” between the U.S. and China in the coming weeks.
– U.S. Treasury Department Deputy Assistant Secretary Robert Kaproth visited China to hold technical discussions to improve the ability of bilateral trade cooperation.

In Other News

“China is fully reopening to tourists after three years of border restrictions,” CNN News, March 14
“Asian Startups’ Confidence in U.S. Banking Wanes After SVB Panic,” The Wall Street Journal, March 13 [Paywall]
“China slams Manila again over closer US military ties, warns against ‘drawing wolves into the house,’” South China Morning Post, March 12 [Paywall]
“To Counter China, U.S. and Allies Seek to Make Militaries ‘Interchangeable,’” The Wall Street Journal, March 12 [Paywall]
“G-7 should form united front versus China: ex-U.S. trade official,” Nikkei Asia, March 10
“Nanjing university suspends lecturer after comments about imported food, US guns,” Radio Free Asia, March 10
“U.S. House unanimously backs COVID origins information declassification,” Reuters, March 10 [Paywall]
“Republicans Push Lab Leak Theory on Covid’s Origins, but Lack ‘Smoking Gun’,” The New York Times, March 8 [Paywall]
“US to relax COVID testing rules for travelers from China,” ABC News, March 7
“U.S. to lift covid testing requirements on travelers from China,” The Washington Post, March 7 [Paywall]
“Americans Continue to View China as the U.S.’s Greatest Enemy,” Gallup, March 6
“U.S. firm’s subsidiary sold electronics to Chinese defense firm linked to spy balloon program,” NBC, March 6
“Shein’s Lead Under Fire as Chinese-Owned App Tops US Charts,” Bloomberg, March 5 [Paywall]
What Happened to China’s Mars Rover?,The New York Times, March 1 [Paywall]

- What Are We Reading? -

- What's Happening Around Town? -

Upcoming Events

March 15 hosted by Harvard Fairbank Center for Chinese Studies

March 17 hosted by Wilson Center

March 21 hosted by Center for Strategic and International Studies

March 23 hosted by The U.S.-China Economic and Security Review Commission 

March 29 hosted by Center for Strategic and International Studies

- What ICAS Is Up To -

ICAS Issue Brief

The New Marcos Administration : Re-Paving the Philippines’ Grand Strategic Path

by Jessica Martin

March 9, 2023

Key Takeaways:

  • Since President Ferdinand “Bongbong” Marcos Jr.’s inauguration in June 2022, the Philippines’ new administration appears to have been open and direct in its heavy encouragement of bilateral partnerships and emphasis on self-defense. Marcos Jr. is already working towards a clear, new vision for the Philippines in the wake of the preceding administration’s about-face reputation.
  • While Manila’s diplomatic moves—many of which have already strengthened Philippine-U.S. relations—may not significantly alter Philippine-China relations, they are already impacting U.S.-China bilateral relations.
  • Between years of built up suspicions and verbal battles, the health of the U.S.-China relationship may very well be at its ‘sourest’ point ever; a fact that may persist as the U.S. renews and enhances its security cooperation with one of China’s neighbors.
  • Although a foreign diplomatic plan already appears to be underway, the Marcos administration is still settling in. If ‘Step 1’ in Marcos’ plan is to reestablish trust in Manila on the global stage, then what is ‘Step 2’ and beyond? Regardless, the world can expect to continue to see Manila’s foreign ministry in action for months, if not years, to come.

ICAS MAP Co-sponsored Event

Roles of Asian Observers in Arctic Governance: Adapting to a Changing Arctic Council

April 13, 2023

9:30-11:00am EDT (GMT+4)

What does the suspension of the Arctic Council meetings mean for Arctic Council observers? Will Norway, who will take over the chairmanship in May 2023, make any progress to break through the current ties? Will the debate on the concept of an “Arctic Council 2.0” gain support among non-Arctic states who have a deep interest in Arctic governance? Will non-Arctic countries such as China, Japan, South Korea, India, and Singapore — which have growing Arctic interests and have contributed much to Arctic research —welcome the opportunity for them to establish a more solid role in this region’s affairs? How will the observers adapt to a changing Arctic Council?

On Thursday, April 13, 2023, join the ICAS Maritime Affairs Program and University of Alberta China Institute in a joint virtual discussion on these vital questions. The full list of scholars, providing perspectives from the five Asian observers of the Arctic Council—China, Japan, South Korea, India, and Singapore—will be released soon.

ICAS In the News

On Friday, March 9, 2023, Senior Fellow Sourabh Gupta discussed China’s short- and medium-term growth prospects on CGTN.

  • “China in 2023 is going to be the motor for economic growth in the global economy. Therefore, it will fall on China’s shoulders to support global growth and in a fairly substantial way, and the best way to support that is for China to grow well. I know this government has set a growth target of 5% but I think it’s been a bit modest, I think China can and should easily reach 6%.”
  • “A new turning point in China’s development, and China still has at least 25 or 30 years of very significant growth and very significant transformation. Therefore, if I had to select a word for the future it would be tantalizing.”

On Thursday, March 5, 2023, Senior Fellow Sourabh Gupta interviewed by China Daily alongside the Two Sessions meeting

  • “I’m expecting growth somewhere in the range at or above 6 percent minimum, and so that’s a good enough number., but I think China should really strive to look at a 7 or 8 percent target if that’s possible. The main area of growth of course will be in the area of consumption, because the consumers are going to come out and spend again. It’s the government’s role to support consumption in the economy, and support economic growth without exacerbating some existing legacy imbalances that are there in the economy.” 
  • “There is no economic recession for China anytime in the near future.”

On Friday, March 3, 2023, Senior Fellow Sourabh Gupta discussed the Ukraine conflict and U.S.-German relations on CGTN America’s The Heat.

  • “I would say that initially perhaps to escalate the war, but I think it’s ultimately about strategies to end the war. I think that the Western powers are looking for an end to the hostilities by the end of this summer frankly, and that’s why there is an urgency in arming the Ukrainians, although not arming them with things like airplanes, F-16s, etc. So the goal here is to give the Ukranians another chance in terms of their right to self-defense to move the front lines. We’ll see whether the front lines move at all and thereafter come up with something which would lead to a secession of hostilities.”

On Thursday, March 2, 2023, Senior Fellow Sourabh Gupta was quoted in a China Daily article on U.S.-China relations alongside the Two Sessions meetings.

  • “The first step toward making a constructive relationship is to stabilize that relationship,” 
  • “in the broader US-China relationship, they want to add stability to it, and I should think China welcomes it”.
  • “So, coming out of the two sessions, I foresee China placing, not overriding importance to the US relationship, but significant importance in stabilizing the US relationship. And I think that will be a good thing.
Senior Fellow Sourabh Gupta discusses China's short- and medium-term growth prospects on CGTN.
Senior Fellow Sourabh Gupta discussed the Ukraine conflict and U.S.-German relations on CGTN America's The Heat.