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China - Key Policy Developments

Updated: Oct 15, 2022

A lot has been happening this year on US-China policy which makes the Chinese Communist Party (CCP) meeting next week slightly more compelling, though its key expected outcome–the reelection of China's leader Xi Jinping–suggests the continuing of a policy status quo.

What follows below is a brief summary of recent key policy developments though not necessarily inclusive of all important issues.

First, a little more about...

...the CCP Meeting

The Chinese Communist Party (CCP) National Congress meets starting October 16. It meets every five years primarily to elect its core leaders, including those of the Politburo and its Standing Committee, as well as the CCP General Secretary who also is China's President. The current General Secretary is Xi Jinping, who is expected to be reelected by the CCP to a third, five-year term. China's legislature will, in turn, formally re-confirm Xi as China's President in March. In 2018, China changed its constitution in a way that will enable Xi to remain in power as President as long as he wishes, or lives.

While the CCP apparatus can advise President Xi on policy, President Xi essentially is the highest authority in China's government and likely makes every significant policy decision of the country. Consequently, it is not clear what issues of significance will necessarily be discussed at the CCP gathering, though within-country COVID-19 lockdown policy is likely a foremost area of concern, as is China's real estate crisis, and perhaps the state-of-play with Taiwan and the United States.

Taiwan Security

House Speaker Visit Outcome. House Speaker Nancy Pelosi visited Taiwan in August, the first visit by a high ranking U.S. official since House Speaker Newt Gingrich in 1997 (the only U.S President to ever visit Taiwan was Dwight Eisenhower in 1960). In response to the visit China released a list of actions (August 5) it took against the United States including suspending: climate talks, the repatriation of illegal Chinese immigrants; regular calls between U.S. and Chinese defense leaders; legal assistance on criminal matters; collaboration on transnational crime; and, collaboration on counternarcotics efforts.

Direct Defense of Taiwan. President Biden made his second high-profile statement this year (September) concerning the defense of Taiwan in the event of an invasion by China. President Biden stated “yes” and “if it were an unprecedented attack” to a question from Scott Pelly of 60 Minutes asking “So, unlike Ukraine, to be clear, sir, U.S. forces, U.S. men and women, would defend Taiwan in the event of a Chinese invasion?” 60 Minutes said that after the interview, a White House representative stated that U.S. policy toward Taiwan “has not changed.” The President made a similar statement in May at a press conference during his trip to Asia.

Military Assistance. 2023 National Defense Authorization (NDAA) legislation currently under consideration in the Senate (October) includes plans for a significant investment in Taiwan military assistance including at least $6.5 billion over 5 years worth of military grants and loans for weapons purchases. Potential amendments to be considered on the Senate floor may add to that total. A final version of NDAA legislation will be negotiated with the House and will likely be enacted in December.

Trade, Technology & Competition

Semiconductor Export Controls. The Commerce Department announced (October) the implementation of new export control rules intended to restrict China’s ability to acquire advanced computing chips, develop and maintain supercomputers, and manufacture advanced semiconductors. The basis for the new controls is that China is using the technology to “produce advanced military systems including weapons of mass destruction; improve the speed and accuracy of its military decision making, planning, and logistics, as well as of its autonomous military systems; and commit human rights abuses." The United States also believes that U.S. technology is helping China “monitor, track, and surveil their own citizens.” The rules do a couple of key things: impose restrictive export controls on certain advanced computing semiconductor chips, transactions for supercomputer end-uses, and transactions involving certain entities on the Entity List (which was also updated); and, the rules also impose increased controls on certain semiconductor manufacturing items and transactions for integrated circuit end uses.

Semiconductor Production. The Department of Commerce released (September) its planned strategy regarding the use of nearly $50 billion in resources provided in the CHIPS and Science Act, legislation partly intended to confront both economic competition and national security threats posed by China’s efforts to gain advantages in the semiconductor manufacturing industry. Under the strategy, the Department will seek to direct $28 billion of the funding towards “leading-edge” logic and memory chip manufacturing capacity (logic semiconductors control the operation of electronic devices, while memory chips are used for digital data storage.) Another $10 billion will be used for new manufacturing capacity for mature and current-generation semiconductors, as well as for industry suppliers. The remaining $11 billion will be used to establish a National Semiconductor Technology Center, a National Advanced Packaging Manufacturing program, up to three new Manufacturing USA Institutes, and for National Institute of Standards and Technology (NIST) metrology research and development programs. Rare Earths Mineral Mining. In an effort to help address China’s world-wide dominance in rare earths mineral processing (the vast majority of the world's rare earth materials flow through China), the Federal Government has been helping to advance U.S. domestic rare earths capacity including a $120 million Department of Defense (DOD) contract with Lynas Rare Earths (June) for heavy rare earths processing in Hondo, Texas; a $35 million DOD contract with MP Materials (February) for heavy rare earths processing in Mountain Pass, California; and, a $120 million Federally-backed loan from the Department of Energy for Syrah Resources (June) to process graphite-based active anode material in Vidalia, Louisiana.

Ocean Shipping Merger. Ocean shipping giants Maersk and China International Marine Containers abandoned a merger effort (August) after a joint Justice Department/German Government review found that the merger would have combined two of the world’s four suppliers of refrigerated shipping containers resulting in Chinese entities controlling over 90 percent of the world market. If they had not abandoned their merger plan, he companies would have faced US, and likely German, antitrust action.

Human Rights

Uyghurs & the UN. The United Nations Human Rights Council rejected (October 6) a motion by western nations (e.g.,Canada, the United States, Britain) to hold a debate on Uyghur human rights in the wake of the Council’s own August Uyghur report that found, among other things, that Uyghurs placed in so-called “Vocational Education and Training Centers (VETCs)” were not, as China claims, free to join or quit VETC programs at any time. The report found “it is impossible for an individual detained in such a heavily guarded center to leave of their own free will; and that a stay in a VETC facility is, from the concerned individual’s perspective, of indefinite nature, the end of which is only determined by meeting undefined criteria as evaluated by the authorities.” Ultimately, placement in VETC facilities are not voluntary and persons appear to have no choice in being there, which amounts to a form of “deprivation of liberty.” Outside of the Council’s report and more broadly, human rights organizations believe China is undertaking mass forced labor, and potentially Uyghur genocide, in the Xinjiang region of China.

Forced Labor Law Enforcement. The United States began (June) implementation of the Uyghur Forced Labor Prevention Act (UFPLA). Goods produced by/imported into the United States from entities on the UFPLA Entity List will be subject to more stringent clearance procedures. In general, goods produced by/imported into the United States will be presumed to be produced by forced Chinese Uyghur labor unless proven otherwise by the required documentation.

Regional Defense

Chinese Military Bases. U.S. Secretary of State Antony Blinken urged (August) the Cambodian government to open the naval base it is modernizing with Chinese funds to all countries, and for Cambodia to be transparent if it intends to permit a site to be used for China’s military purposes. Reporting, including from the Washington Post, indicates that China is “secretly building” a naval military base at a facility in Cambodia and that “extraordinary measures” are being taken to conceal the operation. In addition, the Defense Department expressed concerns in March in testimony before the House Armed Services Committee about China’s efforts to secure a base on the Atlantic side of Africa, and “has made the most progress” with Equatorial Guinea. Reporting also suggests that China may be angling for a base in the Solomon Islands, after negotiating a security agreement with the nation. China currently has just one known military base - a naval facility - in the country of Djibouti in east Africa.

East & South China Sea. During President Biden’s trip to Asia (May), the United States and Japan expressed joint opposition to what they consider to be China’s “unilateral attempts” to change the “status quo” in the East China Sea including matters relating to Japan’s long-standing administration of the Senkaku Islands; they reiterated strong opposition to China’s unlawful maritime claims and militarization of reclaimed features; and, objected to “coercive activities” in the South China Sea.

Asia Maritime Awareness. Also during President Biden’s Asia trip, Asia Quad countries announced a new maritime surveillance effort called the "Indo-Pacific Partnership for Maritime Domain Awareness (IPMDA).” Quad countries–the United States, Australia, India and Japan–stated that IPMDA “will offer a near-real-time, integrated, and cost-effective maritime domain awareness picture” to country partners for three regions —the Pacific Islands, Southeast Asia, and the Indian Ocean region. While not calling out China specifically, the U.S. announcement highlights that the IPMDA will help address dark shipping (where ships turns off its identification broadcasts), illegal fishing, and responding to climate and humanitarian events. It is also likely that this effort has a direct connection towards helping countries in the Pacific monitor the movement of Chinese military vessels.

Surveillance & Domestic Harassment

Transnational Repression. The Department of Justice indicted five persons (July) in a transnational repression scheme that Justice says was conducted on behalf of China. The defendants face a variety of charges including conspiring to commit interstate harassment and criminal use of a means of identification; conspiring to bribe a federal official in connection with a scheme to obtain the tax returns of a pro-democracy activist residing in the United States; and, obstruction of justice and false statements to the FBI. There are various recent reports that in some cities of the United States and overseas, that elements of the Chinese Government, potentially police forces, have opened up offices to carryout transnational repression activities. The U.S. government has not so far not confirmed the veracity of the reporting, commented publicly, or taken any public actions.

TikTok & Data Control. The United States and TikTok are reportedly (September) nearing an agreement concerning the protection of user data from Chinese access. The Chinese government may have the ability to access TikTok user data despite prior representations by TikTok that such data is walled off from ByteDance, TikTok’s parent company. ByteDance has another subsidiary - ByteDance Technology - which is partly owned by the Chinese Government. There is concern that under Chinese national security laws, the Chinese Government can compel data access, regardless of where data is ultimately stored. This can help China undertake the surveillance of persons.


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