China presses Iran, the challenge to the maritime order, EU's economic security plans, and the stock market crisis
China presses Iran, the challenge to the maritime order, EU's economic security plans, and the stock market crisis
+ Lunar New Year travel rush begins
Welcome back to What’s Happening in China, your weekly update on the latest news and developments from the country.
I hope you had a fantastic week. Today, I'm introducing 'In Focus', a more personal section within the newsletter. Here, I'll share stories that struck a chord with me on a deeper level, highlight ongoing narratives deserving of special attention, and bring forth compelling essays and noteworthy quotes. The inclusion of this section might be irregular and will depend on whether I come across anything meaningful I want to share in it. Honestly, I'm not 100% sure how it will turn out in the long run, so please bear with me as we go with the flow.
Let’s jump into it…
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PHOTO OF THE WEEK
IN FOCUS
I. Dan Wang’s 2023 letter
Dan Wang covers China's technological advancements at the research firm Gavekal Dragonomics. He started publishing his annual reflection letters in 2017. Since then, these long-form pieces have become a highly anticipated year-end treat for those interested in the intersection between tech, economy, history, politics, literature, travel, music, food, and, naturally, China. His 2023 year-in-review piece was out this week, and I think it’s worth reading.
I recognize that emigration is a consideration for a miniscule percentage of China’s population. Few people can contemplate abandoning nearly everything they’ve built to start anew in a foreign country. And I recognize that life is not so bad for the overwhelming majority of Chinese. I’ve written that for someone in the middle class, there has never been a better year to live in China, a comment I repeated when I went on the Ezra Klein Show in March.
This middle class, however, is feeling less sure these days, as the economy keeps getting whacked. The trouble with Xi Jinping is that he is 60 percent correct on all the problems he sees, while his government’s brute force solutions reliably worsen things. Are housing developers taking on too much debt? Yes, but driving many of them to default and triggering a collapse in the confidence of homebuyers hasn’t improved matters. Does big tech have too much power? Fine, but taking the scalps of entrepreneurs and stomping out their businesses isn’t boosting sentiment. Does the government need to rein in official corruption? Definitely, but terrorizing the bureaucracy has also made the policymaking apparatus more paralyzed and risk averse. It’s starting to feel like the only thing scarier than China’s problems are Beijing’s solutions.
Read: 2023 letter
II. “Don’t blink.”
Kevin Rudd is, to me, one of the most captivating and insightful commentators on China. This was the advice the witty former Australian prime minister and current ambassador to the United States gave when asked how countries should respond to Chinese economic coercion in a discussion with WSJ chief economics commentator Greg Ip. The Chinese government has a history of punishing foreign countries and companies that oppose its wishes by restricting access to its substantial market. For instance, in 2020, when the Australian government called for a COVID-19 origins inquiry, China imposed sanctions on Australian exports. While the relationship between the two countries has since improved, the episode highlights the complexities of navigating economic ties with China.
Don’t blink. That’s just it: don’t blink. It’s tempting sometimes to blink, but don’t blink. I’m a long-term student of the CCP. […] Because it’s a Leninist party, it’s a party that respects strength and is contemptuous of weakness. That’s just the tradition. Therefore, when you see the use of or employment of economic coercion as an instrument of foreign policy, then it’s important to simply say ‘no.’ Secondly — and this is the harder question — with friends, partners, and allies you actually therefore need collaborative arrangements so that others simply don’t race to fill the market opportunity once you’ve exited the market.
Watch: A Discussion with Kevin Rudd + Greg Ip [32:40]
III. Pu'er 咖啡
China’s coffee culture has been rapidly growing in recent years, and it's particularly vibrant in major cities such as Beijing and Shanghai. I actually began savoring coffee in my late 20s, in Beijing. The idea of enjoying something I knew would interfere with my brain chemistry was until then unappealing, but what started as a simple excuse to step out of the apartment quickly evolved into genuine epicurean appreciation. And, as it turns out, it can actually be good for you. During my travels, coffee became a delightful pretext to explore a city or neighborhood. My preferred form? Currently, dark roast espresso, enjoyed twice daily — in the morning and, following Andrew Huberman’s advice, 90-120 minutes after waking. Recently, I developed a taste for decaf in the afternoon.
Yunnan province as a whole produces between 140,000 tonnes and 150,000 tonnes of coffee beans a year, accounting for at least 98% of Chinese output.
Much of that coffee ends up in Shanghai, dubbed the new "coffee capital" of the world. The city gained more than 600 cafes in 2023, bringing its total to 8,530 -- believed to outnumber any major city in the world.
Shanghai's cafe scene ranges from national and global chains to hole-in-the-wall coffeeshops. Many began highlighting beans from Pu'er after supply chain disruptions from COVID-19 led Chinese consumers to focus more on domestic products.
Read: China's Yunnan tea country makes splash in specialty coffee circles
XINJIANG
RFA
China tests new ethnic assimilation policy on Uyghurs
The regulation calls for the creation of mixed housing, themed venues and cultural parks, and sports and cultural activities that highlight characteristics of Chinese culture and promote zhonghua minzu — a single Chinese nationality that transcends ethnic divisions.
Why China is wary of opening up Afghanistan’s new road to Xinjiang
SCMP
Zhu Yongbiao, a professor with the school of politics and international relations at Lanzhou University, said the project was more about the Taliban showing its neighbours that it could govern the country.
“The road itself is largely devoid of practical access and economic value,” he said, adding that Afghanistan did not have the capacity to build highways in the high-altitude Wakhan Corridor.
Zhu said China had no customs facilities in the area, had only frontier border guards deployed along the Wakhjir Pass, and was unlikely to step in with an investment. “It is not only too costly, [the road] will not bring any economic value in the short term.”
China considers the Wakhjir Pass to be a major counterterrorism front line between Afghanistan’s militants and Xinjiang, with its predominantly Muslim Uygur population.
POLITICS & SOCIETY
China kicks off Lunar New Year travel rush, expects record 9 billion trips
Reuters
China on Friday kicked off its busiest annual period of mass migration with a record 9 billion domestic trips expected to be made during a 40-day travel rush around the Lunar New Year holidays, state media predicted.
That would be nearly double the 4.7 billion trips made during the so-called Spring Festival travel rush in 2023 when ultra-strict COVID-19 restrictions were abolished.
Millions of people will travel back to their home towns to reunite with families for the Lunar New Year, which falls on Feb. 10 this year, in the world's largest mass migration each year.
China’s Likely Next Foreign Minister, Liu Jianchao, Worked in Beijing’s Anticorruption ‘Fox Hunt’
WSJ
Now, having taken on a more active diplomatic role in the past six months, including handling a U.S. congressional delegation’s visit to Beijing in the fall, Liu is on track to be named China’s next foreign minister, the people said, likely during the nation’s legislative sessions in March, though they cautioned that no final decision on the timing of the appointment has been made.
China’s Foreign Ministry didn’t respond to questions.
To prepare for his appointment, the people said, Beijing sent Liu to New York, Washington and San Francisco earlier this month to bolster his profile in the U.S.’s foreign-policy and business communities.
During the weeklong trip, Liu interacted with American think tanks such as the Asia Society, investors such as Blackstone Chief Executive Stephen Schwarzman and Ray Dalio, founder of Bridgewater Associates, and Biden administration officials including Secretary of State Antony Blinken.
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