BEIJING (AP) — Chinese authorities are chasing unpaid taxes from companies and individuals dating back decades, as the government moves to plug massive budget shortfalls and address a mounting debt crisis.
More than a dozen listed Chinese companies say they were slapped with millions of dollars in back taxes in a renewed effort to fix local finances that have been wrecked by a downturn in the property market that hit sales of land leases, a main source of revenues.
Policies issued after a recent planning meeting of top Communist Party officials called for expanding local tax resources and said localities should expand their “tax management authority and improve their debt management.”
Local government debt is estimated at up to $11 trillion, including what’s owed by local government financing entities that are “off balance sheet,” or not included in official estimates. More than 300 reforms the party has outlined include promises to better monitor and manage local debt, one of the biggest risks in China’s financial system.
That will be easier said than done, and experts question how thoroughly the party will follow through on its pledges to improve the tax regime and better balance control of government revenues.
“They are not grappling with existing local debt problems, nor the constraints on fiscal capacity,” said Logan Wright of the Rhodium Group, an independent research firm. “Changing central and local revenue sharing and expenditure responsibilities is notable but they have promised this before.”
The scramble to collect long overdue taxes shows the urgency of the problems.
Chinese food and beverage conglomerate VV Food & Beverage reported in June it was hit with an 85 million yuan ($12 million) bill for taxes dating back as far as 30 years ago. Zangge Mining, based in western China, said it got two bills totaling 668 million RMB ($92 million) for taxes dating to 20 years earlier.
Local governments have long been squeezed for cash since the central government controls most tax revenue, allotting a limited amount to local governments that pay about 80% of expenditures such as salaries, social services and investments in infrastructure like roads and schools.
Pressures have been building as the economy slowed and costs piled up from “zero-COVID” policies during the pandemic.
Economists have long warned the situation is unsustainable, saying China must beef up tax collection to balance budgets in the long run.
Under leader Xi Jinping, the government has cut personal income, corporate income, and value-added taxes to curry support, boost economic growth and encourage investment — often in ways that favored the rich, tax scholars say. According to most estimates, only about 5% of Chinese pay personal income taxes, far lower than in many other countries. Government statistics show it accounts for just under 9% of total tax revenues, and China has no comprehensive nationwide property tax.
Finance Minister Li Fo’an told the official Xinhua News Agency that the latest reforms will give local governments more resources and more power over tax collection, adjusting the share of taxes they keep.
“The central government doesn’t have a lot of responsibility for spending, so it doesn’t feel the pain of cutting taxes,” said Cui Wei, a professor of Chinese and international tax policy at the University of British Columbia.
The effectiveness of the reforms will depend on how they’re implemented, said Cui, who is skeptical that authorities will carry out a proposal to increase central government spending. That “will require increasing central government staffing, and that’s an ‘organizational’ matter, not a simple spending matter,” he said.
“I wouldn’t hold my breath,” Cui said.
Sudden new tax bills have hit some businesses hard, further damaging already shaky business confidence. Ningbo Bohui Chemical Technology, in Zhejiang on China’s eastern coast, suspended most of its production after the local tax bureau demanded 500 million yuan ($69 million) in back taxes on certain chemicals. It is laying off staff and cutting pay to cope.
Experts say the arbitrary way taxes are collected, with periods of leniency followed by sudden crackdowns, is counterproductive, discouraging companies from investing or hiring precisely when they need to.
“When business owners are feeling insecure, how can there be more private investment growth in China?” said Chen Zhiwu, a finance professor at the University of Hong Kong’s business school. “An economic slowdown is inevitable.”
The State Taxation Administration has denied launching a nationwide crackdown, which might imply past enforcement was lax. Tax authorities have “always been strict about preventing and investigating illegal taxation and fee collection,” the administration said in a statement last month.
As local governments struggle to make ends meet, some are setting up joint operation centers run by local tax offices and police to chase back taxes. The AP found such centers have opened in at least 23 provinces since 2019.
Both individuals and companies are being targeted. Dozens of singers, actors, and internet celebrities were fined millions of dollars for avoiding taxes in the past few years, according to a review of government notices.
Internet livestreaming celebrity Huang Wei, better known by her pseudonym, Weiya, was fined 1.3 billion yuan ($210 million) for tax evasion in 2021. She apologized and escaped prosecution by paying up, but her social media accounts were suspended, crippling her business.
The hunt for revenue isn’t limited to taxes. In the past few years, local authorities have drawn criticism for slapping large fines on drivers and street vendors, similar to how cities like Chicago or San Francisco earn millions from parking tickets. Despite pledges by top leaders to eliminate fines as a form of revenue collection, the practice continues, with city residents complaining that Shanghai police use drones and traffic cameras to catch drivers using their mobile phones at red lights.
Outside experts and Chinese government advisors agree that structural imbalances between local and central governments must be addressed. But under Xi, China’s most authoritarian leader in decades, decision-making has grown more opaque, keeping businesses and analysts guessing, while vested interests have pushed back against major changes.
“They have a hermetically sealed process that makes it difficult for people on the outside to know what is going on,” says Martin Chorzempa, senior fellow at the Peterson Institute for International Economics.
Beijing has been reluctant to rescue struggling local governments, wary it might leave them dependent on bailouts. So, the central government has stepped in only in dire cases, otherwise leaving local governments to resolve debt issues on their own.
“In Chinese, we have a saying: You help people in desperate need, but you don’t help the poor,” said Tang Yao, an economist at Peking University. “You don’t want them to rely on soft money.”
Economists say intervention may be required this time around and that the central government has leeway to take on more debt, with a debt-to-GDP ratio of only around 25%. That’s much lower than many other major economies.
“This is a huge structural problem that needs a huge structural solution that is not forthcoming,” said Logan Wright of the Rhodium Group, an independent research firm. “There’s really no way around this. And it’s getting worse, not better.”
BEIJING (AP) — Italy and China signed a three-year action plan on Sunday to implement past agreements and experiment with new forms of cooperation, Italy’s Prime Minister Giorgia Meloni said on an official visit to the Chinese capital.
Meloni is trying to reset relations with China as fears of a trade war with the European Union are interwoven with continued interest in attracting Chinese investment in auto manufacturing and other sectors.
“We certainly have a lot of work to do and I am convinced that this work can be useful in such a complex phase on a global level, and also important at a multilateral level,” she said in remarks at the start of a meeting with Chinese Premier Li Qiang.
Her five-day visit comes several months after Italy dropped out of China’s Belt and Road Initiative, a signature policy of Chinese leader Xi Jinping to build power and transportation infrastructure around the world to stimulate global trade while also deepening China’s ties with other nations.
Still, Italy remains keen to pursue an otherwise strong economic relationship with China. Stellantis, a major automaker that includes Italy’s Fiat, announced in May that it had formed a joint venture with Leapmotor, a Chinese electric car startup, to begin selling EVs in Europe.
Li, addressing Italian and Chinese business leaders after the meeting with Meloni, said that China’s push to upgrade its economy will increase demand for high-quality products, expanding opportunities for cooperation between companies from their two countries.
He pledged to open Chinese markets further, ensure that foreign companies get the same treatment as Chinese ones and create a transparent and predictable business environment, responding to frequently heard complaints from businesses operating in the world’s second-largest economy.
“At the same time, we hope the Italian side will work with China to provide a more fair, just and non-discriminatory business environment for Chinese companies doing business in Italy,” he said.
Meloni told the business leaders that the two sides had signed an industrial collaboration memorandum that includes electric vehicles and renewable energy, which she described as “sectors where China has already been operating on the technological frontier for some time … and is sharing the new frontiers of knowledge with partners.”
Electric vehicles have also become a symbol of growing China-EU trade tensions, with the European Union imposing provisional tariffs of up to 37.6% on China-made electric vehicles in early July. The two sides are holding talks to try to resolve the issue by an early November deadline.
Meanwhile, China launched an anti-dumping investigation into European pork exports, just days after the EU announced it would impose the tariffs on Chinese EVs.
Meloni, who arrived in Beijing on Saturday, is making her first trip to China as prime minister. She has held talks with Li before, meeting in New Delhi last September during the annual G-20 summit, which brings together the leaders of 20 major nations.
Italy’s decision to join the Belt and Road Initiative in 2019 appeared to be a political coup for China, giving it an inroad into Western Europe and a symbolic boost in a then-raging trade war with the United States. But Italy says the promised economic benefits didn’t materialize, and its membership created friction with other Western European governments and the United States.
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Associated Press writer Giada Zampano in Rome contributed to this report.
MANILA – A recently signed agreement will open a direct line of communication between the presidential offices of China and the Philippines to help prevent any new confrontation from spiraling out of control in the disputed South China Sea, according to highlights of the accord seen by The Associated Press on Tuesday.
China and the Philippines have created such emergency telephone hotlines at lower levels in the past to better manage disputes, particularly in two fiercely disputed shoals where the Philippines has accused Chinese forces of increasingly hostile actions and China says Philippine ships have encroached despite repeated warnings.
The territorial disputes, however, have persisted since last year, sparking fears of a larger armed conflict that could involve the United States, which has repeatedly warned that it’s obligated to defend the Philippines, a key Asian treaty ally, if Filipino forces come under attack in the disputed waters.
U.S. Gen. Charles Brown Jr., chairman of the Joint Chiefs of Staff, met Philippine military chief Gen. Romeo Brawner in Manila on Tuesday and discussed ways to further boost defense ties, enhance the militaries’ ability to operate jointly and ensure regional ability, the Philippine military said.
During a confrontation between Chinese and Philippine forces at the Philippines-occupied Second Thomas Shoal in August 2023, the Philippine government said it was unable to reach Chinese officials through an established “maritime communication mechanism” for several hours. That emergency telephone hotline was arranged after Philippine President Ferdinand Marcos Jr. met Chinese President Xi Jinping in Beijing in January 2023.
Chinese and Philippine officials dealing with the territorial disputes held talks in Manila on July 2, following a violent confrontation at the Second Thomas Shoal in which Chinese coast guard personnel reportedly wielded knives, an axe and improvised spears and Philippine navy personnel were injured. The Chinese forces also seized seven Philippine navy rifles, said Brawner, who demanded China return the firearms and pay for damages.
Both sides “recognized the need to strengthen the bilateral maritime communication mechanism on the South China Sea” and signed an arrangement “on improving Philippines-China maritime communication mechanisms,” the Department of Foreign Affairs in Manila said in a statement after the talks in Manila, but did not provide a copy or details of the agreement.
A copy of the agreement’s highlights, seen by the AP, said it “provides several channels for communication between the Philippines and China, specifically on maritime issues, through the representatives to be designated by their leaders.”
The hotline talks could also be done “through the Department of Foreign Affairs and Ministry of Foreign Affairs counterparts, including at the foreign minister and vice foreign minister levels or through their designated representatives,” it said, and added without elaborating that Philippine officials were “in discussions with the Chinese side on the guidelines that will govern the implementation of this arrangement.”
There was also a plan to set up a new communication channel between the Chinese and Philippine coast guards “once the corresponding memorandum of understanding” between them is concluded, according to the agreement.
During the talks in Manila, China and the Philippines agreed on two other confidence-boosting steps to intensify “cooperation between their respective coast guard authorities” and the possible convening of a maritime forum between Chinese and Philippine scientists and academic leaders.
“Both sides recognized that there is a need to restore trust, rebuild confidence and create conditions conducive to productive dialogue and interaction,” the Philippine department of foreign affairs statement said. It added that China and the Philippines “affirmed their commitment to de-escalate tensions without prejudice to their respective positions.”
It said that “there was substantial progress on developing measures to manage the situation at sea,” but acknowledged that “significant differences remain.”
Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
The Third Plenum, set for July 15-18, is one of the most important political meetings of the Chinese Communist Party.
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BEIJING — China’s real estate problems may be massive, but analysts expect the upcoming Third Plenum to focus on other areas — such as high local government debt levels and a push for advanced manufacturing.
The much-anticipated policy meeting, scheduled for Monday to Thursday, is a major gathering of the top members of the ruling Communist Party of China that typically happens only once every five years. This plenum was widely expected to be held last fall but has been delayed.
“The key challenge faced by Beijing is to find an alternative fiscal system, as the current one, which relies heavily on land sales, is under severe pressure due to the plunging land market,” Larry Hu, chief China economist at Macquarie, said in an email to CNBC.
He expects next week’s meeting to focus on fiscal reform and other structural policies. Hu pointed out that cyclical policies — which can include property — are usually discussed at more regular meetings such as that of China’s Politburo, expected in late July.
“Other than that, policymakers are also likely to reiterate [their] commitment to innovation, i.e. the so-called new productive forces,” Hu said, referring to Beijing’s push to support advanced manufacturing and high-tech.
The Central Committee of the ruling Chinese Communist Party, made up of more than 300 people including full and alternate members, typically holds seven plenary meetings during each five-year term.
The Politburo is a group of about 24 people within that committee.
The Standing Committee of the Politburo, made up of seven key members, is the highest circle of power in China which is headed by Xi Jinping, General Secretary of the Party and President of China.
The Third Plenum has traditionally focused on economic policy. Under Deng Xiaoping’s leadership in 1978, the meeting officially heralded significant changes for the communist state, such as China’s “reform and opening.”
At next week’s plenary meeting, “the number one thing I’m looking out for is the so-called financial reform,” Dan Wang, chief economist at Hang Seng Bank (China), told CNBC.
She’ll also be watching for details around consolidation in the banking sector, as well as signals on policy around local government finances and taxes.
“For real estate markets, I don’t think it should be a focus of the plenum, because it’s already [in a] state that everyone has a consensus [on],” Wang said. “It’s in a downturn. It hasn’t reached the bottom yet.”
While pertinent to the wealth of most households in China, the property sector’s troubles are also intertwined with local government finances and their piles of hidden debt.
“In the medium and longer term, the importance of cultivating sustainable revenue sources for local governments will increase,” HSBC analysts said in a June 28 report previewing the Third Plenum.
“Broadening the imposition of direct taxes on, for example, consumption, personal income, property, etc., is often considered as a solution. Among these possibilities, a consumption tax might be the most effective,” the analysts said, noting it could incentivize local authorities to boost consumption.
We believe transitions need to be carefully designed and carried out at this juncture, considering the low confidence level in the private sector…
It’s not necessarily that straightforward to boost sentiment, however. In the weeks ahead of the plenum, Chinese stocks slipped closer to correction territory — or more than 10% from a recent high.
“We believe transitions need to be carefully designed and carried out at this juncture, considering the low confidence level in the private sector, or it may work in the opposite direction to a supportive fiscal stance,” the HSBC analysts said.
Attempts to tackle broad financial risk have prompted more restrictions on the broader banking and finance industry. Since the latest Central Committee was installed in October 2022, the Chinese Communist Party has increased its oversight of finance and tech with new commissions.
“The scale of real estate has become so large, it’s absorbed all of China’s resources,” Yao Yang, professor and director of the China Center for Economic Research at Peking University, said last month, according to a CNBC translation of his speech in Mandarin.
“For China to compete with the U.S., we need to develop manufacturing and tech,” Yao said. “Consequently we must constrain the financial industry, including real estate. That’s the underlying reason for tightened regulations on both real estate and finance.”
Goldman Sachs analysts said in a report last month that average wages at brokerages, affecting about 0.1% of China’s urban population, fell by almost 20% in 2022 and ticked lower last year.
Together with the far larger impact of constrained local government finances, the analysts found that finance and public sector pay cuts dragged down urban wage growth by about 0.5 percentage points each year in 2022 and 2023.
Separately, China reportedly plans to limit the financial industry to an annual salary of around 3 million yuan (about $413,350) — a cap that would apply retroactively and require workers to return excess earnings to their companies, the South China Morning Post said last week, citing people familiar with the matter.
China’s National Financial Regulatory Administration did not immediately respond to CNBC’s request for comment.
Beijing’s official announcement of the Third Plenum said leaders will discuss “comprehensively deepening reform and advancing Chinese modernization.” The readout noted China’s goals to build a “high-standard socialist market economy by 2035.”
Beijing said in 2020 such “socialist modernization” would include per capita GDP of “moderately developed countries,” an expanded middle-income group and reduced disparities in living standards.
It won’t be an easy task, especially following the shock of the Covid-19 pandemic and rising geopolitical tensions. China’s per capita GDP last year in constant U.S. dollars was $12,174 — less than one-fifth of the United States at $65,020, according to the World Bank.
It may be that a slowing economy means fewer opportunities and raises more concerns about inequality and fairness than before.
While income inequality is a global issue, new research indicates that people in China have become significantly discouraged by perceived “unequal opportunity.” That’s according to surveys since 2004 by teams led by Martin King Whyte of Harvard University and Scott Rozelle of Stanford University.
The latest survey found that regardless of income bracket, more respondents thought their families’ economic situation had declined in 2023 compared to prior years.
“It may be that a slowing economy means fewer opportunities and raises more concerns about inequality and fairness than before,” a summary of the survey by Big Data China said. “In other words, inequality may be more acceptable when the pie is growing very quickly, but it becomes less so when the economy falters.”
BEIJING – Chinese President Xi Jinping called on world powers to help Russia and Ukraine resume direct dialogue and negotiations during a meeting Monday with Hungary’s Prime Minister Viktor Orbán, according to state broadcaster CCTV.
Orbán made a surprise visit to China after similar trips last week to Russia and Ukraine to discuss prospects for a peaceful settlement in Ukraine.
Orbán praised China’s “constructive and important initiatives” for achieving peace and described Beijing as a stabilizing force amid global turbulence, according to CCTV.
Besides Russia and Ukraine, the end of the war “depends on the decision of three world powers, the United States, the European Union and China,” Orbán wrote in a Facebook post showing him shaking hands with Xi.
Orbán met with Xi just two months ago when he hosted the Chinese leader in Hungary as part of a three-country European tour that also included stops in France and Serbia, which unlike the other two is not a member of the European Union or NATO.
Hungary under Orbán has built substantial political and economic ties with China. The European nation hosts a number of Chinese electric vehicle battery facilities, and in December it announced that Chinese EV manufacturing giant BYD will open its first European EV production factory in the south of the country.
“Peace mission 3.0” is how Orbán captioned a picture posted early Monday on the X social media platform depicting him after having stepped off his plane in Beijing. He was being greeted by Chinese Vice Minister of Foreign Affairs Hua Chunying and other officials.
His previously unannounced visit comes on the heels of similar trips last week to Moscow and Kyiv, where he proposed that Ukraine consider agreeing to an immediate cease-fire with Russia.
His visit to Moscow drew condemnation from Kyiv and European leaders.
“The number of countries that can talk to both warring sides is diminishing,” Orbán said. “Hungary is slowly becoming the only country in Europe that can speak to everyone.”
Hungary assumed the rotating presidency of the EU at the start of July and Russian President Vladimir Putin suggested Orbán had come to Moscow as a top representative of the European Council. Several top European officials dismissed that suggestion and said Orbán had no mandate for anything beyond a discussion about bilateral relations.
The Hungarian prime minister, widely seen as having the warmest relations with Putin among EU leaders, has routinely blocked, delayed or watered down EU efforts to assist Kyiv and impose sanctions on Moscow for its actions in Ukraine. He has long argued for a cessation of hostilities in Ukraine but without outlining what that might mean for the country’s territorial integrity or future security.
That posture has frustrated Hungary’s EU and NATO allies, who have denounced Russia’s actions as a breach of international law and a threat to the security of countries in Eastern Europe.
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MELBOURNE – Chinese Premier Li Qiang is due to arrive in Australia on Saturday on a relations-mending mission with panda diplomacy, rock lobsters and China’s global dominance in the critical minerals sector high on the agenda.
China’s most powerful politician after President Xi Jinping is expected to visit Adelaide Zoo and a Chinese-controlled lithium processing plant in the Kwinana Beach industrial estate, as well as Australia’s Parliament House, during a visit that will end on Tuesday.
Li’s visit is the first by a Chinese premier in seven years and is expected to pave the way for Xi’s first journey to Australia since 2014.
China initiated a reset of the bilateral relationship after Prime Minister Anthony Albanese’s center-left Labor Party was elected in 2022. The relationship collapsed during the previous conservative administration’s almost decade in power over legislation that banned covert foreign interference in Australian politics, the exclusion of Chinese-owned telecommunications giant Huawei from rolling out the national 5G network due to security concerns, and Australia’s call for an independent investigation into the causes of and responses to the COVID-19 pandemic.
Beijing imposed an array of official and unofficial trade blocks in 2020 on a range of Australian exports including coal, wine, barley and wood that cost up to 20 billion Australian dollars ($13 billion) a year.
“I’d be very confident that the visit this week will result in a very successful outcome for lobster producers,” Farrell told reporters Wednesday.
Many observers expect Australia will be more cautious about its future economic relationship with China after being subjected to what many see as economic coercion in recent years.
Australian National University China expert Benjamin Herscovitch describes an “emerging expectations gap” between Beijing and the Australian capital Canberra.
“Beijing, now that the coercion campaign is over, wants to … turn the page and launch into a more expansive, more positive, more cooperative bilateral relationship,” Herscovitch told Australian Broadcasting Corp.
“Canberra’s saying: ‘Look. Hold on. We want the trade restrictions gone and we want high-level diplomacy restored. But we’re not interested in deeper science and technology cooperation with China because we see that potentially from an Australian point of view as a security threat,’” Herscovitch added.
Li intends to visit Tianqi Lithium Energy Australia’s processing plant in Western Australia state Tuesday to underscore China’s interest in investing in critical minerals, news media have reported. The plant produces battery-grade lithium hydroxide for electric vehicles.
Citing Australia’s national interests, Treasurer Jim Chalmers recently ordered five Chinese-linked companies to divest their shares in rare earths mining company Northern Minerals.
Less controversially, Li is expected to make a visit Sunday to Adelaide Zoo, which has been the home of China-born giant pandas Wang Wang and Fu Ni since 2009.
The Adelaide Advertiser newspaper has reported Li will announce the pandas will be replaced by another breeding pair after they return to China in November.
While the bilateral economic relationship is recovering from plumbing new lows in recent years, the security relationship between the two free trading partners appears to be more tense.
An annual poll by the Sydney-based Lowy Institute foreign policy think tank released in June found 53% of Australian respondents saw China as more of a security threat than an economic partner.
Albanese has said he will raise with Li during an annual leaders’ meeting on Monday recent clashes between the two countries’ militaries in the South China Sea and Yellow Sea which Australia argues endangered Australian personnel.
He left New Zealand on Saturday, ending a three-day visit to a country with which China has enjoyed a more harmonious relationship than it has with Australia. Li described China and New Zealand as “good friends.”
His next stop will be Malaysia, where bilateral relations are further complicated by competing territorial claims in the South China Sea.
New Zealand Prime Minister Christopher Luxon told Li on Saturday: “China is one of New Zealand’s most important and consequential relationships.”
Li used the trip to express concerns at New Zealand’s contemplation of joining a military technology sharing arrangement under Australia’s AUKUS pact with the United States and Britain. The pact’s primary aim is to provide Australia with a fleet of submarines powered by U.S. nuclear technology.
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McLay contributed from Wellington, New Zealand.
Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
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Rod Mcguirk And Charlotte Graham-Mclay, Associated Press
America’s relationship with China is the “most important, most competitive and most dangerous” the U.S. has in the world right now, the U.S. ambassador to China says.
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Beijing (CNN) — US Secretary of State Antony Blinken said the US has seen evidence of Chinese attempts to “influence and arguably interfere” with the upcoming US elections, despite an earlier commitment from leader Xi Jinping not to do so.
Blinken made the comments to CNN’s Kylie Atwood in an interview Friday at the close of a three-day to trip to China, where the top American diplomat spent hours meeting with top Chinese officials including Xi, as the two countries navigated a raft of contentious issues from US tech controls to Beijing’s support for Moscow.
Blinken said he repeated a message President Joe Biden gave to Xi during their summit in San Francisco last November not to interfere in the 2024 US presidential elections. Then, Xi had pledged that that China would not do so, according to CNN reporting.
“We have seen, generally speaking, evidence of attempts to influence and arguably interfere, and we want to make sure that that’s cut off as quickly as possible,” Blinken said when asked whether China was violating Xi’s commitment to Biden so far.
“Any interference by China in our election is something that we’re looking very carefully at and is totally unacceptable to us, so I wanted to make sure that they heard that message again,” Blinken said, adding there was concern about China and other countries playing on existing social divisions in the US in influence campaigns.
Beijing has repeatedly said it does not interfere in US elections, based on its principle of non-interference in other countries’ internal affairs. China or actors that are believed to be affiliated with Beijing have been accused of political interference in other countries, such as Canada.
Blinken’s trip — his second to the country in less than a year — is the latest in a string of high-level engagements that culminated in the Biden-Xi summit late last year and that have seen the two countries start to expand what had been severely diminished bilateral communications.
“We are (now) focused on areas where we’re working to cooperate, but also we’re being very forthright about our differences and that’s important if we’re going to avoid the competition we’re in turning into conflict,” Blinken told CNN.
Warning on support for Russia
Blinken also said he used his meeting to raise the Biden administration’s concerns about China’s support for Russia’s defense industrial base – and to stress that further action would be taken by the US on top of existing sanctions on more than 100 Chinese entities and individuals if such support continues.
The US believes that Chinese support is enabling Russia to ramp up production of tanks, munitions and armored vehicles – and to continue its onslaught on Ukraine.
“What we said to China is this – we’re going to take actions we already have, and if it doesn’t stop, we’re going to have to take more action, and you can anticipate as well, that other countries will (too),” Blinken said, adding that he raised the issue to both Foreign Minister Wang Yi and Xi. “We’re looking to them to act, and … if they don’t, we will.”
He also said that Chinese counterparts had not acknowledged the role of these goods in the war in Ukraine. Instead, they characterized this as trade with Russia and said Moscow’s success didn’t depend on China, Blinken added.
Beijing has previously slammed the US as making “groundless accusations” over “normal trade and economic exchanges” between China and Russia.
China has long contended that it maintains neutrality in the Ukraine war and has continued to present itself as a potential peace broker in the conflict, even as it has strengthened its economic, strategic and diplomatic ties with Russia since the war began.
Defending the right to protest
Blinken also defended the American right to protest, when asked about pro-Palestinian protests that have erupted across college campuses in the US in recent days amid mounting concern about the humanitarian crisis unfolding in Gaza.
Responding to a question referencing reports of use of antisemitic rhetoric at some of these gatherings, Blinken said there had been instances where there have been clear expressions of antisemitism, but “protests in and of themselves are not antisemitic.”
“What we’re also seeing is people, young people, people from different walks of life, who do feel very passionately, who’ve had very strong emotions about (the conflict),” he said.
He also stressed the importance of such expression in democracies, without explicitly noting the lack of such freedoms in China.
“In our country, and in our society and in our democracy, giving expression to that is, of course, something that’s both appropriate and protected,” he said. “But we’ve certainly seen instances where that has clearly veered from a totally legitimate expression of views and beliefs, to in some instances, yes, clear expressions of antisemitism.”
Blinken said that the administration listens to the American people and “takes their views into account.” But he did not explain how the protestors concerns would impact Biden administration policy.
Asked if the administration would consider stopping sending weaponry to Israel, because that is what some of the protestors are calling for, he said no.
“No we are focused on what’s in the interests of the United States. How do we best reflect both our interests and our values in our foreign policy across the board, whether that’s with Israel, or with any anyone else,” Blinken said.
Ending the war in Gaza
When asked about resolving the conflict in Gaza, Blinken said it was on Hamas to decide if they are going to allow a ceasefire to go forward or not, after the militant group refused to agree to multiple possible deals.
He also said tensions in the wider region seemed to be alleviating following apparent tit-for-tat airstrikes between Iran and Israel earlier this month that ratcheted fears that the war in Gaza could expand into a wider conflagration.
“I think now, hopefully we are not seeing that kind of escalation,” Blinken said, explaining that Hamas might have been looking at that escalation when it rejected Israel’s hostage proposal.
Blinken also said it could be possible to roll out a framework for the normalization of relations between Israel and Saudi Arabia along with a two-state solution proposal for Israel and the Palestinians before a Gaza ceasefire in place, marking a reversal in the order of events that US officials had previously expected to follow.
“Certainly that’s, that’s possible,” Blinken said. “Ceasefire or not we’ll continue to make these possibilities known. But in order to actually realize this, there’s going to have to be an end of the conflict in Gaza. And as I said, there’s also going to have to be a resolution to the Palestinian question, or at least an agreement on how to resolve it.”
Previously US officials said that the ongoing negotiations to secure a ceasefire had to reach an agreement before any further regional efforts could manifest.
Referencing the countries that came to Israel’s defense after Iran launched its April 13 aerial attack, Blinken said you could “see a path in the future where Israel is genuinely integrated in the region, where other countries are helping to make sure it’s defended.”
“But that also requires that (the conflict in) Gaza come to an end, and that there be a clear pathway to a Palestinian state. In that kind of future, Israel gets what it has sought from the start of its existence, which is normal relations with countries in the region,” he said.
Blinken cited the sustained US efforts to work towards normalizing relations between Israel and Saudi Arabia as part of a potentially reach a historic agreement to bring the Israel-Hamas war to an end.
“We’ve been working intensively to flesh it out, working with our partners, working – with European partners on this as well. And I think the more concrete it becomes, and the more it moves from the hypothetical and theoretical to something that’s actually possible, that’s real, then everyone involved is actually going to have to make decisions and make choices. And so we’re doing this work. And we’re trying to make it as real as possible,” Blinken said.
TOKYO – Simmering tensions between Beijing and Washington remain the top worry for American companies operating in China, according to a report by the American Chamber of Commerce in China released Tuesday.
The survey of U.S. companies said inconsistent and unclear policies and enforcement, rising labor costs and data security issues were other top concerns. It also said that, despite the insistence of Chinese leaders that Beijing welcomes foreign businesses, many still are hindered from free competition.
“The Chinese government has stated that it encourages foreign direct investment, but many of our members continue to encounter barriers to investment and operations including policies that discriminate against them and public relations campaigns that create suspicion of foreigners,” the report said.
The report welcomed an improvement in relations in 2023 that was capped by summit meetings of Chinese leader Xi Jinping and President Joe Biden, but said the U.S. presidential election in November was “looming large” over the future business environment.
More recently, U.S. Treasury Secretary Janet Yellen visited Beijing, where she raised concerns that potential overcapacity in Chinese industries — such as electric vehicles, steel making and solar panels — might crowd out U.S. and other foreign manufacturers.
“We recognize that there are significant areas of contention in the U.S.-China relationship, many of which have no easy or short-term prospects for resolution,” it said.
The report said the Chamber saw high-level exchanges and communication between the two sides as a top priority.
Despite the relative improvement in China-U.S. ties, American companies are dealing with slow progress from the Chinese government on promises to level the playing field between foreign and Chinese companies, the report said. On the other hand, heightened export controls and other restrictions from the U.S. government have raised the cost of compliance.
“So the end result is companies are getting squeezed between the two governments, and on the regulatory front, what we’re seeing is it’s not getting easier to do business in China; it’s getting harder,” said the chamber’s chair, Sean Stein.
American companies operating in China saw improved profits last year, though slightly less than half expect to be profitable in 2024.
Still, many members of the American Chamber said they were more optimistic about growth of China’s own economy.
Among its many recommendations the report urged China to create and implement “transparent and practical economic policies which treat domestic and foreign entities equally.”
Referring to concerns over the risk of being caught up in accusations they have violated China’s national security, it also appealed to China’s leaders to clarify and narrow the scope of the country’s anti-espionage law to prevent it from interfering with normal business operations.
Such requests follow repeated raids on foreign companies that Chinese authorities say were conducted on national security grounds.
The report also had recommendations for the U.S. side, including providing clear visa policies for Chinese students to show they will be welcomed. Similarly, American students should be encouraged to study in China, the report said.
It also called on U.S. officials to avoid resorting to unilateral controls that may be ineffective and fail to meet goals for national security and foreign policy. Washington should engage with Chinese companies to allow them to address export control concerns such as military use of civilian technologies before the companies are subjected to sanctions, it said.
The 617-page bilingual report provided hundreds of recommendations spanning a wide variety of industries, from sports and online streaming to occupational safety issues and rural traffic management.
American companies generally are not planning to move supply chains out of China given how large and important it is as a market of 1.4 billion people. But their willingness to increase investments there and make it their strategic focus has been decreasing as its advantages diminish, the report said.
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AP writer Simina Mistreanu contributed from Kaohsiung, Taiwan.
Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
In meeting with former Taiwanese president, Xi Jinping stresses ‘historical trend of reunion of the country and family’.
Chinese President Xi Jinping has met former Taiwanese President Ma Ying-jeou and said that outside influence cannot stop the “family” reunion between Beijing and Taipei.
Xi emphasised dialogue between the two sides during the meeting with Ma on Wednesday, saying that all issues can be discussed, the Reuters news agency reported.
“External interference cannot stop the historical trend of reunion of the country and family,” Xi said, in comments reported by Taiwanese media.
Beijing views the self-ruled island as a province that must be reunited with mainland China, and it has not ruled out using force to assert its claims to Taiwan.
Taiwan cut off contact with mainland China and established its own government in 1949 after nationalist forces who lost the Chinese Civil War to Mao Zedong’s communists fled there.
Officially known as the Republic of China, Taiwan quickly became an economic powerhouse and an ally of the United States in subsequent years. It is now one of the largest producers of semiconductors, a key component in electronic devices across the world.
No sitting Taiwanese president has ever visited China. Ma is now on his second trip to China after becoming last year the first former Taiwanese president to visit the country.
The visit comes amid growing tensions across the Taiwan Strait. On Wednesday, Xi said both sides of the strait are Chinese.
“There is no rancour that cannot be resolved, no problem that cannot be discussed, and no force that can separate us,” the Chinese president was quoted as saying by Reuters.
Xi had previously said that the unification of China and Taiwan is “inevitable”.
But Western countries have warned China against considering an invasion of Taiwan, and US President Joe Biden has said that Washington would militarily defend the island if it is attacked.
China has conducted military exercises near Taiwan in recent years, including in 2022 in response to a visit by then-US House Speaker Nancy Pelosi to the island.
Ma told Xi on Wednesday that tensions have caused unease for many Taiwanese.
“If there is a war between the two sides, it will be unbearable for the Chinese people,” Ma said, using a term that refers to people who are ethnically Chinese in both countries.
“Chinese on both sides of the strait absolutely have enough wisdom to handle all disputes peacefully and avoid heading into conflict.”
Responding to the talks, Taiwan’s China-policy-making Mainland Affairs Council said it deeply regretted that Ma did not publicly convey the Taiwanese people’s insistence on defending the sovereignty and democratic system of the Republic of China.
It added that Beijing should stop intimidating Taipei and resolve differences with Taiwan through respectful dialogue.
Ma, who served as Taiwan’s president from 2008 to 2016, remains a senior member of Taiwan’s main opposition party the Kuomintang (KMT).
In January, Vice President Lai Ching-te, seen by Beijing as a “dangerous separatist”, won the elections in Taiwan. He will succeed current President Tsai Ing-wen in May.
Biden and Xi held a phone call earlier this month for the first time since November.
“This call will be an opportunity for the president to reaffirm the US ‘One China’ policy and reiterate the importance of peace and stability across the Taiwan Strait, especially given the upcoming May presidential inauguration in Taiwan,” a US official told reporters on the condition of anonymity last week.
Washington pursues a “One China” policy that does not recognise Taiwan as an official country despite having close ties to its government.
SHOCKING footage shows Xi Jinping’s guards drag a driver away after he ploughed his car into the gates of China’s “White House”.
The motorist allegedly tried to ram the entrance to Xi’s residence in a suspected assassination attempt on the despot.
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Man ploughs into the gates of Xi Jinping’s residenceCredit: Jam Press Vid
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The team of guards dragged the man out of his carCredit: Jam Press Vid
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A video shows the man being carried by the security team along sidewalkCredit: Jam Press Vid
The unnamed suspect tried to slam the gates of the palace in a high-end vehicle with Beijing licence plates on Sunday.
Filmed by a witness on a side of the street, the clip shows the moment the suspect’s vehicle mounted on the pavement.
A team of the dictator’s security guards dragged the man out of his car and carried him by his hands and feet along the sidewalk.
Meanwhile, other agents rushed to the man’s vehicle to check it for explosives.
The incident took place at the Xinhua Gate of the Zhongnanhai compound, where leaders of the Chinese Communist Party (CCP) reside in Beijing, China.
It is not only home to the Chinese leader – who in recent years has tightened his iron-fist grip on power – but also State Council and Politburo members and their families.
The motive of the attack remains unclear and it is unknown if the man was staging a protest against the CCP as people grow dissatisfied with China’s socio-economic situation.
Under Xi’s reign, speaking against the government policies have become a grave crime with risks of facing jail time.
The ruthless leader has committed human rights abuses against Uyghurs, strangled freedom in Hong Kong and now looks poised to seize Taiwan.
His one-party system has long presented an outward image of unity – but behind the scenes there are rumours of discontent.
Back in 2014, rumours began circulation on Chinese social media that Xi survived six assassination attempts – although state-controlled media hasn’t reported any.
These attempts were allegedly a result of the internal power struggle within the CCP- according to an anti-communist magazine The Trend which since then seized to exist.
A soldier in front of the Great Hall of the People on March 11, 2024, the closing day of the National People’s Congress in Beijing, China.
Yin Hon Chow | CNBC
BEIJING — China’s weeklong annual parliamentary meetings ended on Monday and for the first time in decades, the Chinese premier did not host a press conference.
In a break with tradition, the premier will no longer hold a press conference following this year’s parliamentary meetings — at least for the rest of the term, according to an official announcement last week.
Such press conferences were a rare instance of press interaction with the highest levels of China’s government.
President Xi Jinping did not speak at the closing ceremony. He typically speaks only at the closing ceremonies of the first session of each National People’s Congress, the nation’s highest authority which is elected every five years. This year is the second session of the 14th National People’s Congress.
To be clear, the annual gathering of the top leadership is typically ceremonial in nature. The real power lies with the ruling Communist Party, which is headed by Xi, who is general secretary of the party and president of China.
Still, announcements made during the Congress can shed some light on government policy.
Here are some highlights of what was announced at this year’s week-long parliamentary meeting, which started Tuesday last week and ended Monday.
“Along with the extensive discussions on environmental protection, the Government Work Report (GWR) explicitly pledged to lower energy consumption per unit of GDP by around -2.5% in 2024,” Citi analysts pointed out in a report Sunday.
The report “didn’t set such numeric targets in 2022-23, after the -3.0% target and ‘campaign-style’ execution led to the power outages in 2021,” the analysts said.
But they warned that investors “need to be mindful of the growth risks arising again from potential environmental policy tightening.”
China has set a 2024 growth target of around 5%, Premier Li Qiang at the start of the meetings on Tuesday when he released the much-anticipated government work report.
Industrial support clearly ranked first on Beijing’s priority list for the year ahead, according to three major plans released as part of the parliamentary meetings.
The top economic planner also noted how a push to upgrade equipment would generate a market of more than 5 trillion yuan (about $694.5 billion).
Real estate, in contrast, received less emphasis.
However, the Minister of Housing and Urban-Rural Development said property developers “that must go bankrupt should go bankrupt.” In a press conference on Saturday, Ni Hong warned that those who “harm the interests of the masses” will be probed and punished.
The Chinese Communist Party has increased its oversight of the government under Xi.
At the 2023 parliamentary meeting, Beijing announced an overhaul of finance and tech regulation by establishing party-led commissions to oversee the two sectors. Xi also gained an unprecedented third term as president at last year’s meeting.
This year, the National People’s Congress rubber stamped changes to revise the structure of the State Council, which has been the government’s top executive body led by the premier. At the ceremonial closing on Monday, the amended State Council Organic Law passed with 2,883 delegate votes — with eight rejecting the amendments and nine abstentions.
The changes include vice premiers and the head of the People’s Bank of China among the council’s top leadership group.
It was not immediately clear what impact such changes would have.
BEIJING – China’s national congress is concluding its annual session Monday with the usual show of near-unanimous support for plans designed to carry out ruling Communist Party leader Xi Jinping’s vision for the nation.
The weeklong event, replete with meetings carefully scripted to allow no surprises, has highlighted how China’s politics have become ever more calibrated to elevate Xi.
Monday’s agenda lacks the usual closing news conference by the premier, who in the past was responsible for economic affairs as the party’s No. 2 leader. It was the one time each year when journalists could directly question a top Chinese leader.
The news conference has been held most years since 1988, and the decision to scrap the event emphasizes Li Qiang ‘s relatively weak status. Past premiers have played a much larger role in leading key economic policies such as modernizing state companies, coping with economic crises and leading housing reforms that transformed China into a nation of homeowners.
A key item being put to a ritual vote on Monday are revisions of the Organic Law of the State Council that direct China’s version of a cabinet to follow Xi’s vision.
“The Communist Party always called the shots but the party leaders who ran the State Council used to have a much freer hand in setting economic policy,” Neil Thomas, a Chinese politics fellow at the Asia Society Policy Institute, said in an emailed comment.
“Xi has been astonishingly successful in consolidating his personal hold over the party, which has allowed him to become the key decisionmaker in all policy domains,” he said.
In foreign policy, China appears to be sticking with Wang Yi as foreign minister, who stepped back into the post last summer after his successor, Qin Gang, was abruptly dismissed without explanation after a half year on the job.
Analysts thought the Communist Party might use the annual congress to appoint a new foreign minister and close the book on an unusual spate of political mishaps last year that also saw the firing of a new defense minister after a few months on the job.
The Organic Law of the State Council is being revised for the first time since it was adopted in 1982. The revision calls for the State Council to “uphold the leadership of the Communist Party of China.” It also adds the governor of China’s central bank to the body.
Echoing words seen in just about every proposal, law or speech made in China these days, it spells out that China’s highest governing officials must adhere to the party’s guiding ideology, which refers back to Marxism-Leninism and Mao Zedong Thought and culminates in Xi’s philosophy on “Socialism with Chinese Characteristics for a New Era.”
Alfred Wu, an expert on Chinese governance at the National University of Singapore, said the revision institutionalizes previously made changes, making it harder to reverse them. He described the congress as a “one-man show” that shows Xi’s determination to create a system in which the party leads on policy, diminishing the role of the State Council and the legislature.
“His determination is very clear,” Wu said. “He is willing to change everything.”
Along with following “the guidance of Xi Jinping Thought” and other party directives, developing “new quality productive forces” — a term coined by Xi last September — emerged as a catchphrase at this year’s congress.
The term suggests prioritizing science and technology as China confronts trade sanctions and curbs on access to advanced know-how in computer chips and other areas that the U.S. and other countries deem to be national security risks.
As the party champions innovation and self-reliance in technology as ways to build a modern, wealthy economy, it is leaning heavily on more overtly communist ideology that harkens to past eras. Xi has fortified the party’s role across the spectrum, from culture and education to corporate management and economic planning.
“Greater centralization of power has arguably helped Xi to improve central government effectiveness,” Thomas said, “but the benefits may be outweighed by the costs of stifling political discussion, disincentivizing local innovation, and more sudden policy shifts.”
During this year’s congress, many provincial meetings were opened to the media for the first time since the COVID-19 pandemic, though they were carefully scripted with prepared remarks and none of the spontaneity once glimpsed in decades past.
Marching orders endorsed by the congress include calls to ensure national security and social stability, at a time when job losses and underpayment of wages have sparked a growing number of protests.
Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
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Elaine Kurtenbach And Ken Moritsugu, Associated Press
BEIJING – China’s foreign minister accused the U.S. on Thursday of devising tactics to suppress China’s rise and criticized the Biden administration for adding more Chinese companies to its sanctions lists.
Wang Yi, speaking to media during the annual meeting of China’s legislature, said China’s relations with the U.S. have improved since Presidents Xi Jinping and Joe Biden met in November, but America has not fulfilled its promises.
“If the U.S. always says one thing and does another, where is its credibility as a major power? If the U.S. gets nervous and anxious when it hears the word ‘China,’ where is its confidence as a major power?” he said. “If the U.S. is obsessed with suppressing China, it will eventually harm itself.”
Wang also demanded that members of the U.N. Security Council stop blocking Palestine from becoming a member of the United Nations.
The 70-year-old veteran diplomat, who has earned Xi’s trust, returned to the foreign minister’s post last summer after his successor, Qin Gang, was abruptly dismissed without explanation after a half year on the job. Wang is also the ruling Communist Party’s top foreign affairs official, a more senior position that he moved to when Qin became foreign minister at the end of 2022.
Analysts had speculated the Communist Party might use the weeklong meeting of the National People’s Congress to name a new foreign minister, but that appeared off the table after an agenda released on the eve of the opening session did not include personnel changes.
China’s U.N. ambassador, Zhang Jun, said during a Security Council debate in January that China supports Palestine becoming a full member as soon as possible, as a first step toward creating a Palestinian state, according to Chinese media reports.
Wang called Thursday for a major international conference to draw up a roadmap and timetable for a two-state solution. “We support Palestine becoming a full member of the United Nations and call on individual members of the Security Council not to set obstacles for this any more,” he said.
TAIWAN AND SOUTH CHINA SEA
He accused the United States, without mentioning it by name, of stirring up trouble in Taiwan and the South China Sea. China says that self-governing Taiwan is part of China and should be under its control, and it claims a wide swath of the South China Sea, putting it at odds with the Philippines, Vietnam and other Southeast Asian neighbors.
The Philippines and the U.S. have accused China of aggressive tactics in trying to block Philippines ships from reaching reefs and other outcroppings that both sides claim, most recently in a collision between coast guard vessels of both countries this week.
“For unreasonable provocations, we will take just countermeasures,” Wang said. “We also advise certain countries outside the region not to stir up trouble, choose sides, and not to become disruptors and troublemakers in the South China Sea.”
He said countries that insist on maintaining official ties with Taiwan are interfering in China’s domestic affairs. Most countries, including the United States, don’t have diplomatic ties with Taiwan, but China objects to visits by U.S. lawmakers to the island and U.S. sales of military equipment for its defense.
China will continue to work for peaceful reunification with Taiwan, Wang said, but warned that anyone who supports independence for Taiwan would pay a price. Most Taiwanese prefer to remain separate from China without antagonizing it. They fear Chinese rule could endanger their freedoms and democracy, particularly after China’s crackdown on Hong Kong.
“Our bottom line is also very clear,” Wang said. “That is Taiwan will never be allowed to split from the motherland.”
RUSSIA-UKRAINE WAR
Wang praised China’s growing ties with Russia, noting that trade between the two reached $240 billion last year, beating a target to hit $200 billion by the end of 2024.
The U.S. and EU say that China is giving Russia an economic lifeline at a time when they are trying to pressure its government with sanctions over its 2022 invasion of Ukraine, which sparked a devastating war that has continued for more than two years.
“Russian natural gas has entered thousands of households in China, and Chinese cars are driving in the streets of Russia, which fully demonstrates the strong resilience and broad prospects of mutually beneficial cooperation,” Wang said.
Poland’s deputy foreign minister, Wladyslaw Bartoszewski, told a Chinese diplomat the country should not provide political, economic and military support to Russia, a Polish government statement said. Bartoszewski made the comment at a meeting on Wednesday with a Chinese diplomatic envoy, Li Hui, who is is visiting several European countries this week for talks on the conflict.
The U.S. and EU expanded sanctions on companies and individuals from China and several other countries two weeks ago for allegedly aiding Russia’s war effort.
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Associated Press researcher Yu Bing contributed to this report.
Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
America’s relationship with China is the “most important, most competitive and most dangerous” the U.S. has in the world right now, the U.S. ambassador to China says.
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American CEOs used to swoon over China. Its vast pool of consumers has been a magnetic draw for decades. But doing business there has become so fraught and risky – with intellectual property theft and an expanded espionage law used to intimidate the business community – that U.S. companies have pressed the pause button.
On top of that, the U.S.-China relationship has become contentious due partly to Beijing’s belligerent activity toward Taiwan and in the South China Sea, the balloon spy incident of last year, and the list goes on.
Making matters worse, the Chinese economy has hit a wall: export growth is slowing, the country’s drowning in debt, and youth unemployment has soared.
Getting into China to tell that story is all but impossible for most Western journalists.
But when the U.S. ambassador, Nicholas Burns, invited us to come for a visit and an interview, we were granted visas. We spoke with him at his residence in Beijing.
Nicholas Burns: More money is leaving China for the first time in 40 years than is coming in from American, Japanese, European, Korean investors.
U.S. Ambassador to China Nicholas Burns
60 Minutes
Lesley Stahl: Now why is that? And how much of a problem is that for them?
Nicholas Burns: That’s a real problem for this economy. They have 1.4 billion people here. They’ve gotta keep it growing, and foreign capital is important. You ask why. I think there’s been a contradiction in the messaging from the government here in China to the rest of the world. On the one hand, they say, “We’re open for business. We want American, Chi– Japanese businesses here.” But on the other hand, they’ve raided six or seven American businesses since last March.
Lesley Stahl: Raided?
Nicholas Burns: Raided. They’ve gone into American companies and shut them down and made accusations we believe are very much unwarranted.
The American companies include Bain & Company and— the Mintz Group, a company that does due diligence for other companies that might want to invest here, was raided last year. Five of its Chinese employees were taken into custody, and they’re still there.
Another firm, Capvision, was raided. Lest the message wasn’t loud and clear, a report about it was put on state-run television.
It accused Western consulting firms of espionage and stealing national security and military secrets.
Lesley Stahl: They want the investment to come back and they’re raiding American companies? And they’re–
Nicholas Burns: Yes. They’ve passed an amendment to their counter-espionage law and it’s written in such a general way that it could be that American business people could be accused of espionage for engaging in practices that are perfectly legal and acceptable everywhere else in the world– collecting data to do due diligence so that you can decide whether you want to invest in a company or form a joint venture, right?
Lesley Stahl: What do you think the Chinese are afraid that these companies are gonna find out, these due diligence companies? What are they worrying about?
Nicholas Burns: You know, I think they want to control data about the Chinese people, about Chinese companies. And so– that I think is at the heart of the problem with those American companies operating in that sphere.
Ambassador Burns told us that’s just one of the concerns he hears about.
Nicholas Burns: There is still intellectual property theft from American companies here.
Lesley Stahl: Is every American company afraid of that?
Nicholas Burns: Yes.
All kinds of U.S. companies began flocking to China in the early 1980s after the country opened to the West under then-leader Deng Xiaoping.
And now, U.S. banks operate here. Walmart has more than 300 stores across the country. Shoppers, here in Shanghai, can buy Levi’s, browse in an Apple store, and get a caramel frappuccino.
Lesley Stahl and U.S. Ambassador to China Nicholas Burns
60 Minutes
Nicholas Burns: Starbucks has 6,000 stores in China, 1,000 stores in Shanghai, and they want to keep building because coffee–this was a tea culture—
Lesley Stahl: Right, yeah.
Nicholas Burns: –for hundreds of years. It’s now becoming, at least with the young Chinese, a coffee culture, and—
Lesley Stahl: And they love Starbucks?
Nicholas Burns: They love Starbucks. And I’ll buy you a cappuccino.
Lesley Stahl: I’ll take one, thank you.
Boeing’s here. So is Tesla, Pfizer, Chevron, Intel. But while some businesses are thriving, many of the foreign companies are worried about the business climate under President Xi Jinping.
Nicholas Burns: If you track China from the death of Mao to the opening of China to the world, we’ve seen a closing of sorts. We’ve seen a centralization of power of the Party. We’ve seen increased repression of the people of China here. That’s a very significant trend just over the last decade.
Lesley Stahl: With Xi.
Nicholas Burns: Under his leadership.
Part of that trend includes President Xi’s reversing many of the market reforms that unleashed China’s economic miracle.
Nicholas Burns: They’ve been growing over 40 years, the fastest growth rate in recorded economic history–8, 9, 10, 11% growth rates. They’ve lifted 800 million people out of poverty. But what’s happening is that growth rate is slowing down. Most economists are now projecting [that] they’ll be at 2, 3, 4% growth, maybe even lower in the next decade–
Lesley Stahl: Can they support their society if it’s that low?
Nicholas Burns: That’s gonna be difficult for them.
Lesley Stahl: If there was so much explosive growth– if so many people were lifted out of poverty, why is he turning away from what worked?
Nicholas Burns: Well, I think they’ve got maybe competing priorities. The government here in China certainly wants the economy to grow, but they also have a national security mindset. They want to control data. They want to–
Lesley Stahl: But that’s more important, the control, right? Than economic growth. It seems that way.
Nicholas Burns: I think it’s open for debate. You’re hearing, we are hearing both messages.
Lesley Stahl: It sounds as if you yourself don’t know the direction it’s going.
Nicholas Burns: What I perceive here is that the greater energy is with those on the national security side of the government of China.
Nicholas Burns: Good morning, how are you?
On a train trip from Beijing to Shanghai, the ambassador pointed out that in the decades before President Xi, China powered its economy by investing in these high-speed trains, roads, factories, and skyscrapers that light up Shanghai–the financial capital of China.
But under President Xi, China lost more than $120 billion worth of long-term foreign investments last year because of the weakening economy and the harsh government tactics, which have left American companies uncertain of the future there.
Lesley Stahl: There are a lot of American companies here. Have a lot of them just picked up and left because of this current business environment?
Nicholas Burns: You know, that’s interesting, not many.
Lesley Stahl: Not many.
Nicholas Burns: Not many.
Lesley Stahl: Why not?
Nicholas Burns: China is the second largest economy in the world. It’s a big market. So, a few American companies have left, but most have stayed.
Some American companies are moving at least some of their operations to Singapore, Vietnam, Mexico.
Lesley Stahl: But they’re not leaving China. The market’s so–
Nicholas Burns: They don’t want to leave.
Lesley Stahl: –irresistible to American business people. It’s gigantic.
Nicholas Burns: Maybe they’re not leaving, but they’re not investing, they’re not making major investments until they can see exactly where the government is headed.
Yet, because of the 1.4 billion potential consumers, some companies, like Disney, are increasing their investment.
Shanghai Disneyland loudspeaker: “Welcome to Shanghai Disney Resort.”
It recently expanded its Shanghai Disneyland that they told us is thriving.
Aptar, a $9 billion company headquartered in Crystal Lake, Illinois, is another American firm bucking the trend of capital flight.
President of Aptar Asia, Xiangwei Gong, a Chinese-born U.S. citizen, showed us around one of their five manufacturing sites in China.
Xiangwei Gong speaks with Lesley Stahl
60 Minutes
Xiangwei Gong: We are manufacturing for some of the largest U.S. brands– actually, U.S. consumer brands.
This factory makes the packaging and dispensing devices for food, pharmaceutical, and beauty products sold in Asia.
Xiangwei Gong: All of our customers like P&G, L’Oréal, Estée Lauder, they’re all here doing business.
Aptar, in China for nearly 30 years, recently invested $60 million in a new factory. Xiangwei Gong says even in a slowing economy, the company is doing well.
Lesley Stahl: American companies here, as the Ambassador well knows, are pausing or cutting back on investment, but not this firm. You’re expanding.
Xiangwei Gong: Well, because we are here for the long-term and we believe in the consumption power of the rising middle class. It’s 1.4 billion people here. And, imagine, for– for example, healthcare. And the same with cosmetics and beauty and beverage. All– all those sectors–packaged foods–these are really the biggest markets. And so– so we are very confident about the long-term.
Lesley Stahl: What does it say about the confidence, really, in the U.S.-China relationship? It– it seems to say you believe that– that things will what? I’m asking, get better?
Xiangwei Gong: That’s a great question for the Ambassador. I believe so, I hope so.
Nicholas Burns: You know, we’ll see.
Actually, Burns says he’s wary of the future as the fundamental rivalry and mistrust between the U.S. and China is shaking the confidence of the business world and has pushed our relationship to its lowest point in half a century.
Lesley Stahl: Is it our most competitive relationship in the world right now?
Nicholas Burns: This is the most important, most competitive, and most dangerous relationship that the United States has in the world right now and will, I think, for the next decade or so.
Lesley Stahl: I want to quote you back to you, and tell us what you meant. You have said, “Divorce is not an option.”
Nicholas Burns: Right. Our two countries have to live together. And this, I think, is the greatest tension in the U.S.-China relationship. China’s our most significant competitor, and at the same time, China is our third largest trade partner–750,000 American jobs at stake. Agriculture- China’s the largest market for U.S. agriculture. One fifth of all of our export ag– products from agriculture are sent to China. That was $40.9 billion last year.
Lesley Stahl: So we can’t afford really to have a real break here.
Nicholas Burns: Well, it’s complicated.
Lesley Stahl: All those jobs would–
Nicholas Burns: It’s complicated. Some people are saying, “Well, we’re so competitive with China, we should end the economic relationship.” Well, the consequence of that would be 750,000 American families wouldn’t be able to put dinner on the table. And so this makes for an extraordinarily difficult balancing act in my job.
Lesley Stahl: You’re a Wallenda brother.
Nicholas Burns: I’ve never thought of myself that way, but high wire–
Lesley Stahl: But you’re up on that tightrope.
Nicholas Burns: Right. Well, we have– we have competing interests here, and balancing those interests is the reality in the U.S.-China relationship. We’re gonna compete. We have to compete responsibly and keep the peace between our countries. But we also have to engage.
One in every five people in the world is Chinese; China’s population is four times that of the U.S. and the country is vast: 3.7 million square miles. It overlooks the Taiwan Strait, where half the world’s trade flows every day, and is located about 100 miles away from Taiwan.
President Xi likes to say that the East is rising, the West is declining, but economically, the U.S. is thriving compared to China. In December, Moody’s, the credit rating agency, cut its outlook for China to “negative.” And it’s facing a long-term demographic bind: a decline in the birth rate that experts say is irreversible, meaning the country is both aging and shrinking.
Ambassador Nicholas Burns took us on a tour, starting in Beijing.
The ambassador and his wife Libby like to take early morning walks through a park near their residence.
Nicholas Burns: This is a 600-year-old Ming Dynasty park called Ritan Park. It’s a place for a lotta retirees and a lot of young people, and it’s tremendously active.
U.S. Ambassador to China Nicholas Burns and his wife walk in a park with Lesley Stahl.
60 Minutes
It’s where the locals come for their early morning routines like Tai Chi, yo-yo-ing, and ping pong.
Nicholas Burns: Oops!
You couldn’t tell from these scenes–
Nicholas Burns: Whoa!
–that China, where the COVID pandemic began, is still emerging from the trauma of President Xi Jinping’s oppressive zero-COVID policy.
Burns, 68, a career diplomat who has served in both Republican and Democratic administrations, got to China at the height of the zero-COVID lockdowns and quarantines.
Nicholas Burns: When my wife Libby and I arrived here in early March of 2022, we were quarantined in this house for 21 days, for three weeks. Shanghai, a city of 26 million people, was completely locked down for 63 days–
Lesley Stahl: What was– what was that like, in the city–
Nicholas Burns: Well, we had women who needed to give birth and we had to find a way to get them to the hospital. We had Americans who wanted to get out but had to find a way out of their locked compounds to the airport. So, zero-COVID worked for a while. In ’20 and ’21, they had very low, or relatively lower, infection rates. But by 2022, it had really divided this society.
It set off rare, widespread protests. Then in December of 2022, President Xi ended the policy abruptly.
Joerg Wuttke: The last thing this government is gonna accept here is volatility.
Volatility is something Joerg Wuttke, a German businessman, who’s lived and worked in China for over 30 years, hadn’t seen since the Tiananmen Square uprising in 1989. He represents BASF, the world’s largest chemical producer.
Joerg Wuttke
60 Minutes
Lesley Stahl: You have said this is a PTSD country, post-traumatic stress disorder country. What– what do you mean?
Joerg Wuttke: Well, everybody has been traumatized by the lockdowns that took place in many cities across China. And the kind of messaging that came out of the leadership: “It’s for your own safety.” And then the lockdown was lifted– actually it was more a capitulation from the government. The lockdown basically left. And– and like a tsunami–
Lesley Stahl: They said, “We were wrong. We’re gonna lift it?”
Joerg Wuttke: They never said they were wrong. That’s not the system to s– admit that they did something wrong. And then you basically, like a tsunami, COVID was rolling across the country.
Lesley Stahl: After they lifted it?
Joerg Wuttke: December, January, I would say a billion people were infected. And certainly lots of people died.
Independent analysts say that an estimated 1.4 million people died.
Joerg Wuttke: This kind of environment really changes your attitude towards life. And then business, we thought we’re gonna have a comeback story. And we had a good couple of weeks. And then the economy basically has been flat since.
Lesley Stahl: You know, after COVID in the West, in the United States particularly, we did have a huge, quick rebound. Why didn’t it happen here?
Joerg Wuttke: Well, I think that COVID also has covered up a couple of long-term problems that China has been building up. For example, in the real estate sector.
We reported on the real estate sector 10 years ago with astonishing sights like this–of empty buildings in city after city across the country.
This is today. Similar hollowed-out wastelands of unoccupied and unfinished apartments known as ghost cities.
Lesley Stahl: When I was here 10 years ago, I never expected to see these buildings still here.
What was a housing bubble back then grew and finally exploded. This real estate crisis lies at the heart of China’s economic decline.
Lesley Stahl: Has anybody counted up the number of empty units, I mean, across the whole country?
Joerg Wuttke: Well, the whole of Germany, we have 82 million people, could move in here right away, 80– 80 to 90 million apartments are empty.
Lesley Stahl: 80 to 90 million apartments–
Joerg Wuttke: Yes, at least.
Lesley Stahl: –are empty?
Joerg Wuttke: Right, unfinished.
Over the years, Chinese banks readily loaned money to the developers as the building boom created millions of jobs and propelled China’s growth.
But in 2020 the government, under President Xi, clamped down on the rampant borrowing, causing the major developers to default on their loans and run out of money.
Lesley Stahl: Look at that. The facade isn’t even finished –
Joerg Wuttke: Yeah, yeah.
He says they couldn’t even afford to take down the cranes. In January, Evergrande, once China’s largest developer, was ordered to liquidate its remaining assets.
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Left in the lurch are millions of Chinese citizens who bought these apartments before they were built.
Joerg Wuttke: The developers owe their customers that paid up to the magnitude of $1 trillion.
Lesley Stahl: So, if I did a down payment on one of these apartments, will I ever see that money?
Joerg Wuttke: No, you will not see the money.
Lesley Stahl: It’s gone? It’s vanished–
Joerg Wuttke: It’s gone, it’s finished. So, I mean, it’s— it’s really dramatic.
Lesley Stahl: Ten years ago, we were told that this was the way people put money down for their nest egg.
Joerg Wuttke: Right.
Lesley Stahl: For their retirement fund.
Joerg Wuttke: Yes.
Lesley Stahl: Is that still the case?
Joerg Wuttke: 66%, two-third of a family household average wealth is in, in apartments.
That loss of wealth has depressed consumer spending and dragged down the economy.
We wondered if the people blame President Xi for that or for the COVID deaths. but it was impossible for us to gauge public opinion, or if it even matters.
While no one from the government would give us an interview, we were able to learn, as Joerg Wuttke–who’s lived here for 30 years–told us, it’s not a good idea to bet against the Chinese people.
Lesley Stahl: What are some of the positive aspects of the economy here? They do have a strong manufacturing base still.
Joerg Wuttke: Well, the big part is really between ears of the people, the brains of the Chinese entrepreneurs that actually made this success story happen. China is not really good in basic research, but they are fantastic in development. They are world-champion in actually making products better, faster, and cheaper.
Lesley Stahl: Are they better?
Joerg Wuttke: Yes they are, in some areas. Our Chinese competitors are breathing down our neck and basically drive some of us out [of] the market.
For instance, China now makes over 80% of all the solar panels in the world, dominates the wind turbine market, is poised to overtake Japanas the world’s biggest exporter of cars, and more–
Nicholas Burns: They’re the leading trade partner of twice as many countries in the world as the United States, so they have global reach-
Lesley Stahl: They’re the leading trade partner?
Nicholas Burns: With over 60 countries in the world.
And now, with heavy government subsidies, it is fast becoming the leader in electric vehicles. Last quarter, the carmaker, Byd, surpassed Tesla as the best-selling EV maker in the world.
Shanghai-based NIO is trying to break through with high-tech innovations. In December, the company unveiled a new battery with a driving range of 620 miles, more than 200 miles further than Tesla’s top-end model.
William Li
60 Minutes
Lesley Stahl: This is— this is nice.
William Li: This is our flagship.
William Li, the CEO and founder of NIO, says its battery swap technology allows owners to swap out their depleted battery for a fully charged one in under three minutes.
William Li: Exactly it’s two-and-a-half minutes.
Lesley Stahl: Two-and-a-half minutes?
William Li: Two-and-a-half, yes.We already installed 2,200 swap stations all around China.
China is also developing a humanoid robot industry.
Lesley Stahl: Look at that.
Alex Gu: After lots of years, it’s coming true.
Alex Gu is the founder and CEO of Fourier Intelligence.
Lesley Stahl: Hi there.
Last year he launched the GR-1, his first-generation humanoid.
Alex Gu: We can do arm, he can swing the arm. Yeah, you see?
Lesley Stahl: Oh, look at the fingers. Oh my word. Can he play the piano?
Alex Gu: Yeah, future definitely it can.
Lesley Stahl: In the future.
Also in the future, he says, the robots could provide health care for China’s rapidly aging population.
Alex Gu: Maybe we can, for example, we can remote control such kind of robot to help my grandpa, for example. Yeah, I think.
Lesley Stahl: Yeah.
60 Minutes
President Xi, who visited this company last year, has called for the mass production of humanoids by 2025.
President Xi Jinping, speaking Mandarin during Dec 31, 2023 speech (English translation): Some people…with employment and life…
In his annual New Year’s speech, he talked about the country’s economic woes and, for the first time, acknowledged the high unemployment rate. Still, he has laid out a long-term goal of doubling China’s economy by 2035 and surpassing the West in technology.
Nicholas Burns:Our companies and tech experts are competing on AI and biotech and quantum mathematics. All those technological advances will lead to a new generation of military technology. Our two militaries are vying for military supremacy—who’s going to be the most powerful in the most important, strategic part of the world, which is the Indo-Pacific.
Presidents Biden and Xi met in San Francisco in November in hopes of re-establishing military communications between our two countries, which China had cut off.
Nicholas Burns: I think we’re back to a more settled and stable relationship between the two countries, but it’s been a rollercoaster.
The low point, he says, was the spy balloon incident last year. But there’s also been the build up of military bases in the South China Sea, the increase of air sorties near Taiwan, and the buzzing of U.S. military planes.
Lesley Stahl: Do you see a lowering of the temperature in the South China Sea?
Nicholas Burns: No, and that’s a problem.
Lesley Stahl: You don’t?
Nicholas Burns: And then on Taiwan, following Speaker Pelosi’s visit, we’ve seen, now for 16 months, a much higher rate of Chinese both air activity and naval activity that’s very intimidating, meant to intimidate—
Lesley Stahl: And that hasn’t– they haven’t pulled back on that?
Nicholas Burns: –the Taiwan authorities. They haven’t pulled back on that. And I think ultimately, they want to become and overtake the United States as the dominant country globally. And we don’t want that to happen. We don’t want to live in a world where the Chinese are the dominant country.
Lesley Stahl: When the Cold War ended, we all thought our system had won.
Nicholas Burns: Yeah.
Lesley Stahl: You know, their system failed, our system rose up. Now he’s come back and said, “No, no, the Communist system’s the right way.” I guess we didn’t bury that after all.
Nicholas Burns: You know, it’s interesting to compare the old Cold War with this time. What distinguishes this time versus the old Cold War: Soviet Union had a strong military and nuclear weapons. It had a very weak economy, which in no way competed with ours. China’s economy is very strong. We’re dealing with an adversary, a competitor in China stronger than the Soviet Union was in the 1940s, 50s, 60s, 70s, and 80s.
Lesley Stahl: So, if that was a cold war, what are you calling this?
Nicholas Burns: It’s a competition of ideas, a battle of ideas. Our idea, America’s big idea of a democratic society and human freedom, versus China’s idea that a Communist state is stronger than a democracy. We don’t believe that. So, there’s a battle here as to whose ideas should lead the world. And we believe those are American ideas.
Produced by Richard Bonin and Mirella Brussani. Broadcast associates, Wren Woodson and Aria Een. News associate, Jessica Langer. Edited by Peter M. Berman.
CHINA’s autocratic regime has revealed 10 crimes that could trigger a chilling “tea party” invitation with Xi Jinping.
While an invite for tea is usually a cause for happiness, for Chinese people the phrase has taken on a completely different meaning.
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The phrase an ‘invitation to tea’ masks a far more grim realityCredit: AFP
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China has armies of workers monitoring their citizens for potential threats
For years now, citizens of China have been using the phrase “invitation to tea” as a mild alternative to a more grim reality.
It is used to refer to the disappearances of Chinese officials or citizens being summoned for investigation – without risking incurring the wrath of the communist regime.
And the usage of the phrase has become so extensive that China’s Ministry of State Security used the slang to release a list of what they call “10 cups of tea”.
The list, posted on the ministry’s WeChat account on Tuesday, essentially describes the 10 offences that are subject to scrutiny by Xi’s communist regime.
Anyone who is found guilty of committing the offences on the list can be summoned for brutal interrogations – and even state-level investigations, it is understood.
The list includes “crimes” like endangering national security, illegally acquiring or holding state secrets and committing or assisting espionage.
The list also warns against refusing to cooperate in an espionage investigation, leaking state secrets related to counter-espionage and intelligence works and failing to take security precautions against spies, SCMP reports.
China’s ’10 cups of tea’
FOR the first time, Beijing’s top intelligence agency has laid out 10 conditions subject to scrutiny by its agencies.
These ‘offences’ are concerned with national security, state secrets and violating the country’s updated anti-espionage law – that could lead to questioning, known in slang as ‘an invitation to tea’.
Suspected crimes endangering national security
Committing or assisting espionage
Failing to take security precautions against spying
Violating permits for construction projects involving national security matters
Refusing to cooperate in espionage investigations
Illegally acquiring or holding state secrets
Illegally producing, selling or holding spy devices
Leaking state secrets
Violating official orders of leaving the country
Committing acts endangering national security other than espionage
This is the first time Beijing has come up with such a list against the country’s citizens.
The emphasis comes as authorities in mainland China and Hong Kong plug legal loopholes to tackle potential threats to national security, according to SCMP.
While sharing the list in the WeChat post, the Chinese ministry warned individuals and organisations against illegally producing, selling, holding or using spy devices such as wiretapping and interception gadgets.
It also highlighted the anti-espionage law regarding construction projects that are concerned with national security.
Even the foreigners found violating the anti-espionage law could be ordered to leave the country within a specific period – and violating such decisions could lead to official summons.
In 2014, Xi Jinping brought a sweeping counterespionage law into place, which followed with the National Security Law in 2015 – strengthening the surveillance on both its citizens and foreign nationals.
What has followed is frequent interrogations, paranoia among the population and China requesting its citizens to snitch on their friends and neighbours as part of a counter-espionage network.
Ian Stones, aged roughly 70, was convicted of espionage in 2022 and sentenced to five years for allegedly “obtaining intelligence for overseas actors”.
Stones – who denies the charges – had worked in China for over four decades for huge US firms including General Motors and Pfizer before he was suddenly detained in 2018.
Now, his distraught family believes he may not survive his sentence.
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A state of paranoia has infested China
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The country has turned into a surveillance state with its citizens constantly fearing an ‘invitation to tea’Credit: Alamy
Taiwan’s military “monitored the situation and tasked appropriate forces to respond,” the country’s ministry of national defense said.
Tensions between Beijing and Taipei have remained high ever since Lai Ching-te won Taiwan’s presidential election early this month with a political campaign focused on pushing back against China’s threats against the island.
U.S. National Security Adviser Jake Sullivan met with China’s Foreign Minister Wang Yi in Thailand to discuss ongoing geopolitical insecurity, including attacks by Iran-backed Houthi rebels in the Middle East.
Sullivan pressed Wang to use China’s influence with Iran to ease tensions in the Mideast. The officials also agreed to work toward arranging a call between U.S. President Joe Biden and Chinese leader Xi Jinping.
“China has influence over Tehran; they have influence in Iran. And they have the ability to have conversations with Iranian leaders that — that we can’t,” John Kirby, White House National Security Council spokesman, told reporters earlier.
Danny Jia was walking down a street outside Taiwan’s Taoyuan city in late December when he suddenly heard automatic gunfire.
Not far from Jia’s location that morning, the 249th mechanised infantry brigade of the Taiwanese armed forces was conducting military drills at Guanyin beach on the island’s northwest coast.
“I was so startled that I almost dropped my phone,” the 46-year-old civil servant told Al Jazeera.
“The exercises are also a scary reminder that a war might actually come to Taiwan in the future,” Jia said.
Guanyin beach is one of Taiwan’s so-called “red beaches” – stretches of the coastline that in the event of a Chinese invasion, offer the most favourable conditions for amphibious landing assaults.
For China’s military planners, Guanyin beach would be particularly suitable as it lies less than 18 kilometres (11 miles) from Taiwan’s primary international airport, and only about 50 kilometres (31 miles) from the outskirts of the Taiwanese capital, Taipei.
Democratic and self-ruled Taiwan has never been part of the People’s Republic of China (PRC), but Beijing considers Taiwan to be part of its territory and has not ruled out using force to bring the island under its control.
In his new year speech, Chinese President Xi Jinping called Taiwan’s unification with mainland China “inevitable”.
With the ever-present threat of China’s troops spilling onto Taiwan’s shores one day, Jia believes that the military drills on red beaches serve an important purpose in preparing the Taiwanese military for the worst.
Recently, however, Jia has found himself convinced that such a scenario is far from certain due to events in China’s own military ranks.
At the end of December, nine high-ranking military officers were removed from their positions.
Several of those axed were from the Chinese military’s elite “rocket force”, which oversees China’s tactical and nuclear missiles.
Earlier, in August, two leading figures in the rocket force were likewise removed.
That same month, the then-Chinese defence minister, Li Shuangfu, went missing.
Li has since been dismissed and replaced by Dong Jun.
With so many changes among the top brass, Jia said he failed to see how the Chinese armed forces could be prepared for the complex planning involved in a large-scale assault on Taiwan in the near future.
“I think there is too much chaos in China’s military for that,” he said.
A limited Taiwanese respite
People in Taiwan have reasons to feel more secure, according to Christina Chen, a research fellow at Taiwan’s Institute for National Defense and Security Research (INDSR) think tank.
“The removal of senior officers demonstrates that Xi Jinping is clearly not confident in the military, and that reduces the likelihood of a Chinese attack on Taiwan in the near term,” Chen told Al Jazeera.
The relatively large number of Chinese officers expelled in such a short time can also affect the armed forces’ fighting spirit as uncertainty spreads as to who will be targeted next.
“More removals might follow and that could further weaken the morale of the military and its ability to fight,” Chen said.
While the risk of an imminent conflict in the Taiwan Strait may have been reduced, Chen sees Beijing’s long-term goal of taking over Taiwan staying firmly in place.
China’s new defence minister, Dong Jun, has experience with military matters regarding Taiwan from his previous roles as commander of the Chinese navy, deputy commander of the Southern Theatre Command and deputy commander of China’s East Sea Fleet.
Although a defence minister serves mostly a diplomatic and public role in China, the appointment of the highly experienced Dong Jun was not arbitrary, according to Chen.
It reflects Beijing’s overall ambition of turning China into a maritime power that can rival the United States and eventually annex Taiwan, she said.
Beijing has in recent years increasingly projected its growing maritime and air power in Taiwan’s direction.
Sabre-rattling rhetoric and large-scale military drills in the waters close to Taiwan have also accompanied times of particular tension.
This was the case in the aftermath of then-US House Speaker Nancy Pelosi’s visit to Taipei in 2022 and after Taiwanese President Tsai Ing-wen’s stopover in San Francisco last year where she met with Pelosi’s successor, Kevin McCarthy.
Some observers expect a similarly assertive Chinese reaction leading up to President-elect William Lai Ching-te taking office in May following his victory in the Taiwanese presidential election on January 13.
Beijing has branded Lai a separatist and declared that the election result would not change the Chinese government’s stance on Taiwan’s unification with the mainland.
Chen sees Beijing’s pressure campaign directed at Taiwan continuing despite the dismissals in the Chinese military ranks.
“That will not change no matter how many military officers are removed,” she said.
The biggest purge
According to Associate Professor Alfred Wu, a scholar specialising in corruption and governance in China at the National University of Singapore, the removal of Chinese military officials is more than a simple shake-up.
“In addition to the anticorruption effort, it is a purge,” Wu told Al Jazeera.
“Xi Jinping is strengthening his hold over the military and sending a signal to all those that are not completely aligned with him that they might be next and therefore should be afraid,” he said.
Wu described the use of fear as a tool employed to try to secure loyalty in China’s authoritarian state structure where a lack of oversight and transparency can easily result in corruption and poor governance.
Since Xi came to power in 2012, several anticorruption campaigns have resulted in purges throughout the Chinese state apparatus.
The Chinese military has long had a reputation for corruption, but the fact that the army’s elite rocket force has been targeted is unprecedented.
The scale of the crackdown has left observers describing it as one of the biggest in Chinese military history.
Under the rule of Xi, who has called for the military’s absolute loyalty, purges are, in Wu’s words, “a continuous process”.
Purges might even grow in frequency and magnitude, according to Wu, as the legitimacy that the Chinese government enjoyed during the country’s economic boom years comes under strain at a time when the Chinese economy is showing signs of weakness.
“The economic situation might cause insecurity to grow within the Chinese government leading them to take more hawkish steps to secure loyalty within the state and in the military,” he said.
However, continuing purges within the Chinese military may have a lingering impact on its capabilities.
“It’s difficult to fight a war if many of your generals are in jail,” Wu said.
Back on the outskirts of Taoyuan city near one of Taiwan’s “red beaches”, Jia, the civil servant who was startled by the military exercises in December, said that he doesn’t wish ill on anyone.
But he also hopes the purges continue if they protect peace.
“I hope that more Chinese officers will lose their jobs if it means we won’t get a war.”
