Welcome to the 170th edition of Trade War.
Russia emerges from an almost mutiny, bad news for China’s leaders who’ve bet on a close relationship with a stable Moscow. Blinken wraps up visit to Beijing but Biden refers to Xi as a “dictator,” upsetting progress made. And Indian prime minister Narendra Modi’s visit to Washington signals growing closeness of a US-India relationship aimed at countering China.
With the economically-important property sector continuing to struggle, could China face Japan-style stagnation? Beijing starts a new nationwide survey to measure severity of local debt. And Hong Kong paper touts continuing economic influence of retired reformer Liu He in seeming bid to reassure foreign investors—color me skeptical.
Injuries and safety violations are rampant at TSMC’s Phoenix fab construction site, according to workers. And Biden’s executive orders curbing China’s advanced semiconductor manufacturing may be blunted by black market and workarounds.
Russia chaos bad for China’s leaders
As Russia emerges from an almost mutiny, that’s bad news for China’s leadership and particularly president Xi Jinping, who’s bet that a close relationship with Russian president Vladimir Putin supports China’s rise to uncontested global power.
“At the core of their alliance is hostility to Washington and its allies and what they see as an unfair and overbearing U.S.-led international order. The two men have met around 40 times as leaders of their respective countries, swapping gifts and honors and regularly wishing each other happy birthday,” report the Wall Street Journal’s Jason Douglas, Chun Han Wong and Austin Ramzy.
Now even as Wagner mercenary chief Yevgeny Prigozhin has seemingly ended the armed insurrection, ordering his troops to turn back, the standing of Putin and his regime still looks to be badly hurt.
“This is that pessimistic scenario that China was afraid of—that Putin, when he started the invasion, will eventually damage the stability of the regime,” says Carnegie Russia Eurasia Center fellow Temur Umarov.
“Many people worry that Putin’s political standing isn’t stable, and that political turmoil in Russia could affect China,” says Renmin University of China professor Wang Yiwei.
“China always emphasizes that harmony is to be prized, and with regard to its largest neighbor, China hopes they can maintain stability,” adds Wang.
Biden calls Xi ‘dictator,’ outraging Beijing
Coming fast on the heels of Antony Blinken’s visit to Beijing, U.S. president Joe Biden has referred to Xi Jinping as a “dictator,” potentially upsetting any progress made during the Secretary of State’s trip to Beijing.
“The reason why Xi Jinping got very upset in terms of when I shot that balloon down with two boxcars full of spy equipment in it is he didn’t know it was there,” Biden said at a campaign fundraiser in California on Tuesday night. “No, I’m serious. That’s what’s a great embarrassment for dictators, when they didn’t know what happened.”
China’s Foreign Ministry was fast to respond, describing Biden’s comment as “extremely absurd and extremely irresponsible,” and lodging an official complaint or démarche with U.S. Ambassador Nicholas Burns.
Speaking at a press conference two days later, Biden said he didn’t think his comments would damage relations between the U.S. and China.
“I expect to be meeting with President Xi sometime in the future, the near term, and I don’t think it’s had any consequence,” Biden said on Thursday.
“U.S. officials noted that Chinese state media hasn’t publicized the démarche, partially in the hope of seizing on momentum from Blinken’s trip, and partially to avoid drawing attention to the U.S. president’s characterization of Xi as a dictator,” reports the Wall Street Journal.
Can’t erase deep mutual suspicion
“Talking is the first step and key to avoid ugly mishaps flaring into outright conflict, as might have happened if the Chinese fighter jet that recently buzzed a US spy plane had instead collided with it,” writes the author of this newsletter for the New Atlanticist.
“But even as some high-level contacts have now been reestablished, Beijing rebuffed Blinken on setting up a military crisis hotline. And senior discussions between the two sides, of course, doesn’t equal resolving the many deep disagreements, including over the future of Taiwan, semiconductor chips, and human rights. Nor does it erase the deep suspicion each country’s leadership feels towards the other.”
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