Chinese supercomputer secrecy
Chinese supercomputer secrecy
...and Beijing’s Palestinian peace deal, Zelensky reassured Beijing won’t arm Moscow, why is China stockpiling commodities?
Hello everyone, and welcome to the final Observing China newsletter before I go on annual leave. A marathon and a long motorbiking adventure lie before me. Please check back in a couple of weeks (when we might have a little revamp of the newsletter) and do continue to send me articles related to the People’s Republic of China (PRC). For now, discover the latest news related to Beijing’s manoeuvres on the global stage – and please read to the end to find out about Elon Musk’s latest China-related antics. Like him or not, the man has chutzpah.
1.1 The PRC is stockpiling commodities
Beijing has significantly increased its stockpiling of commodities such as grain, natural gas, metals, and oil. Despite an expected decline in resource consumption, the PRC’s imports of commodities surged by 16% last year and continue to rise. This rapid accumulation, driven by fears of disrupted supply routes, reflects the PRC’s continued reliance on imports and strategic preparations for a potentially hostile international environment.
1.2 Increasing opacity around Chinese supercomputers
The escalating technological rivalry between the United States (US) and the PRC has led to increased secrecy from Chinese scientists about their supercomputing capabilities – even stopping participation in prominent international supercomputing forum Top500. This development marks an end to decades-long international collaboration and poses challenges for Western scientists attempting to gauge the PRC’s progress in AI and military technologies.
1.3 Retirement age to be raised in China
In response to its ageing population and diminishing pension funds, the PRC will gradually raise its retirement age over the next five years, following resolutions from the Third Plenum. The retirement age, one of the lowest globally, will be adjusted to provide flexibility and voluntariness, possibly setting the age at 65. The reform seeks to alleviate the financial burden on the Chinese pension system, which faces the risk of depletion by 2035.
1.4 Zelensky announces: China confirms it will not supply Russia with weapons
The PRC confirmed it will not supply weapons to Russia, as stated by Volodymyr Zelensky, President of Ukraine. This follows talks between Dmytro Kuleba, Foreign Minister of Ukraine, and his Chinese counterpart Wang Yi. Despite its claims of neutrality, Beijing has deepened its support for Moscow.
1.5 Beijing brokers deal between rival Palestinian factions
Beijing has successfully brokered a reconciliation agreement between rival Palestinian factions Hamas and Fatah, alongside 12 other groups, to establish a unified government for the West Bank and Gaza post-conflict with Israel. While the deal is the latest of several which have done little to bridge the factions’ schism, it marks Beijing’s growing influence in Middle Eastern diplomacy.
1.6 How might Trump 2.0 affect China?
The potential for a second Donald Trump presidency, proposing 60% tariffs on Chinese goods, is viewed by Goldman Sachs as a major threat to the Chinese economy. While some speculate that Trump’s transactional style could result in positive trade negotiations, looming tariffs add an additional layer of economic uncertainty for the PRC.
1.7 New Chinese high-res satellite enters orbit
On 19th July, the PRC successfully launched a fifth Gaofen-11 high-resolution satellite into its Earth observation constellation. Though its specific capabilities are not openly disclosed, its high-resolution imagery will support diverse applications, from urban planning and agriculture to state security operations.
1.8 AI could help US reduce mineral dependence on China
The US is attempting to reduce dependencies on the PRC for the minerals integral to renewable energies. AI can help. AI-driven technology led to KoBold Metals uncovering a major copper deposit in Zambia, estimated to produce billions of dollars’ worth of copper annually. Additionally, Washington is investing in a railway project to improve copper export logistics.
1.9 China and Russia launch new Arctic shipping route
Beijing and Moscow have jointly launched a new Arctic rail cargo service which connects Russian and Chinese ports via the Arctic and North Pacific oceans, and will reduce transport time by a week compared to traditional routes. The venture aims to move 200 million tonnes of cargo through the Northern Sea Route by 2031 and 1.8 billion tonnes by 2035.
2.1 The China Observatory at Council on Geostrategy published a Primer detailing the impacts of the National Security Law in Hong Kong on civil liberties, political freedoms, and the rule of law. The paper also makes recommendations to His Majesty’s (HM) Government.
2.2 Chatham House outlines some of the disappointed expectations surrounding the Third Plenum last week, underscoring the ongoing gap between the CCP’s policy rhetoric and concrete strategies. Hopes for clarity of economic directions were unmet, as policymakers provided more slogans than solutions and failed to address low customer confidence and the declining vitality of the private sector.
2.3 RUSI released a podcast episode debating whether the UK needs a new ‘China policy’. The experts, including Isabel Hilton, Member of the China Observatory’s Advisory Board, discuss the previous Conservative Government’s approach to the PRC, and how Labour will manage the balance between values, economic interests, security and environmental concerns – and the trade-offs inherent in dealing with Beijing.
3.1 The Department for Business and Trade has released the latest ‘Trade and Investment factsheet on China’.
In the four quarters to the end of Q4 2023, total trade in goods and services between the UK and the PRC was £90.2 billion, reflecting a 20.0% decrease from the previous year. UK exports to the PRC totalled £31.5 billion, a 19.9% drop, while imports from the PRC were £58.8 billion, a 20.0% decrease. The PRC was the UK’s 5th largest trading partner.
4.1 On 24th July, Wang Yi held talks with Kuleba in Guangzhou. Wang emphasised the strong, cooperative relationship between the PRC and Ukraine, highlighting ‘strategic partnership’ and ‘mutual respect’. The ministers’ discussion covered the Belt and Road Initiative, bilateral trade, and cooperation mechanisms. Wang also addressed Russia’s ongoing invasion of Ukraine, (framed as the ‘Ukraine crisis’), advocating for political solutions. Kuleba expressed Ukraine’s support for the PRC’s stance on Taiwan and commitment to deepening bilateral cooperation and dialogue with Russia for a peaceful resolution.
王毅指出，乌克兰危机已经进入第3个年头，冲突还在持续并存在升级、外溢风险。中方始终坚定致力于推动危机政治解决。习近平主席提出“四个应该”，为此提供了重要遵循。在此基础上，中国还和巴西联合发表了“六点共识”，涵盖冲突规范“三原则”、和谈方案“三要素”、人道保护“三关切”以及防止核风险、保障产供链稳定等重要内容，凝聚了国际社会最大公约数，得到广泛响应支持。中方认为，所有冲突的解决，最后都要回到谈判桌前；一切争端的化解，总要通过政治途径实现。近期乌俄双方都不同程度发出愿意谈判的信号，虽然条件和时机还不成熟，但我们支持一切有助于和平的努力，愿继续为停火止战、恢复和谈发挥建设性作用。中方关注乌方人道主义局势，将继续向乌提供人道主义物资援助。
[Wang highlighted the third year of the ongoing Ukraine crisis, noting the risk of escalation and spillover. China is committed to a political resolution, with President Xi Jinping’s “Four Shoulds” providing guidance. China and Brazil have also issued a “Six-Point Consensus” covering conflict norms, peace talks, humanitarian protection, nuclear risk prevention, and supply chain stability. This consensus has garnered broad international support. Wang emphasised that all conflicts should ultimately be resolved through negotiation. Both Ukraine and Russia have shown willingness to negotiate, and while conditions are not yet ripe, China supports all efforts towards peace and remains willing to play a constructive role in ceasefire and negotiations. China is also concerned about Ukraine’s humanitarian situation and will continue to provide humanitarian aid.]
库列巴表示，中国是一个伟大的国家。乌中结为战略伙伴，也是重要经贸合作伙伴。乌方支持中方在台湾问题上的立场，将继续坚持一个中国。乌方希共同落实好两国元首重要共识，夯实政治互信，激活经贸、农业等各领域合作，加强地方友城交流
[Kuleba stated that China is a great nation and a strategic and economic partner to Ukraine. Ukraine supports China’s stance on Taiwan and adheres to the One China policy. Ukraine aims to implement the consensus reached by the two countries’ leaders, strengthening political trust, and enhancing cooperation in trade, agriculture, and other fields.]
4.2 On the 25th July, the Global Times published an article detailing the strategic benefits of Arctic cooperation with Russia:
The Arctic routes are among the shortest linking Asia, Europe and North America, which will greatly reduce shipping times and costs, promoting trade and economic development across various continents. Cooperation between China and Russia to build a northern sea route will yield huge benefits for both countries and create the conditions for boosting trade between Europe and Asia.
China is a major energy importer and a major goods trading country, and a large amount of its oil and gas imports as well as its goods trade need to go by sea. From the perspective of geopolitics, early planning and precaution in terms of the diversification of shipping routes is paramount to China’s economic and trade security. Therefore, China needs to team up with Russia on the development of new shipping routes in the Arctic for their long-term strategic interests.
Gray Sergeant, Research Fellow on the Indo-Pacific at the Council on Geostrategy, writes:
The promise of Ursula von der Leyen, European Commission President, to ‘deter’ Beijing from using military force against Taiwan (see Newsletter #8), begs the question: how?
When it comes to a potential cross-strait crisis it is Japan and Australia who are, naturally, seen as the United States key partners. The role of European nations is rarely mentioned.
‘Boiling the Boat’, a recently published book edited by Matt Pottinger, former senior White House official, may have some answers. The authors of the Europe chapter have three recommendations:
Develop a range of economic sanctions so Xi Jinping knows there would be a price to pay.
Ensure Ukraine wins to make clear to dictators that force doesn’t work.
Pursue more ‘audacious’ approaches towards Taiwan to promote Taiwan’s democracy, and the right to live in peace, around the world.
These would all make for a good start. But should deterrence fail, then what? The immediate economic fallout, pre-retaliation, from a major cross-strait crisis would hit the PRC hard. If Beijing is willing to take this blow to its prosperity, would economic sanctions (likely already factored in) really alter Xi’s calculus?
Finally, as promised… Earlier this week, Elon Musk, SpaceX, Neuralink founder, Tesla CEO and Overlord of X, tweeted a snapshot from his very funny AI fashion show. Within the picture is Xi decked out in robes adorned with oddly familiar yellow smiling bears… Comparisons between the Chinese leader and Winnie the Pooh (小熊维尼) previously led to heavy Pooh censorship on the Chinese internet. It’s a bold move from Elon, who previously had several high level meetings with Xi – and whose Tesla Gigafactory is in Shanghai. Maybe Chinese leaders have developed a sense of humour about themselves now…? Or perhaps Xi won’t care. We shall see, but the odds are not with Elon.
That’s all for today - see you all soon!
- Liddy
(reach me at: elizabeth@geostrategy.org.uk)
If you would like to explore any of the Council on Geostrategy’s PRC-focused research papers, click here to visit the China Observatory.