September SIGNAL’s

Drawing Lines in the Sand: China at Home, U.S. Abroad

From SIGNAL’s Desk: Policy Research by SIGNAL & Must-Reads

“Back to the Future”: Xi’s Across-the-Board Maoist/Leninist Reformation to Prepare China for Struggle with America

Biden Delivers Tough & Determined Messages to China and U.S. allies

China’s “Hands On” in Afghanistan

China’s Balancing Act Between Iran and the Arab Sunni States

SIGNAL is an Israeli policy organization that specializes on China-Israel relations. Focusing on academic and policy networking, SIGNAL empowers Israeli policy practitioners by cultivating in-depth knowledge of China and presents an informed understanding of Israel and the Middle East to China’s current and future leaders. Harnessing its global China policy network, SIGNAL seeks to strengthen Israel’s regional and international position and serves the national interest of Israel. More at: sino-israel.org

From SIGNAL’s Desk

Policy Research by SIGNAL 

SIGNAL’s Founder & Executive Director, Carice Witte, explains how Israel’s healthcare could benefit from cooperating with the China-led Asian Infrastructure Investment Bank (AIIB).

SIGNAL’s Director of Research and Strategy, Dale Aluf, and SIGNAL’s 2021 Summer Research Associate, Aaron Schorr, explain in an op-ed for Jerusalem Post that the China-U.S. rivalry does not present Israel with a simple binary choice between Beijing and Washington.

Must-Reads

Li Guangman, (considered to be a pseudonym) a columnist, published a piece via his WeChat account praising President Xi’s domestic reforms and likening them to the Cultural Revolution. The article was subsequently picked up and published by several official media outlets, including Xinhua and the People’ Daily, stirring domestic debate. The translation of the article can be found here. Hu Xijun, the influential editor of China’s English-language Global Times published a rebuttal in Chinese.

Hal Brands and Michael Beckley argue in Foreign Policy that contrary to the “Thucydides Trap” metaphor, China’s peaking power and imminent decline might drive it to war with the United States.

Matt Pottinger explains in Foreign Affairs how Chinese grand strategy is exploiting U.S. power.

Minxin Pei contends in The Economist that China will most likely not surpass the U.S., but will “be a formidable geopolitical adversary”.

Mathieu Duchâtel outlines the Australia strategic calculus for initiating the AUKUS defense pact and what it means for the future of deterrence in the Indo-Pacific.

“Back to the Future”: 

Xi’s Rapid Across-the-Board Maoist/Leninist Reformation to Prepare China for Struggle with America 

One cannot overstate the magnitude, scope, and pace of the series of reforms that have touched upon virtually all walks of China’s economic and societal life. Over the past year, and increasingly since marking the 100th anniversary of the Chinese Communist Party, not many stones were left unturned – from reigning-in China’s mega-corporations, seizing their wealth, controlling their data and regulating finances, through banning children’s private after-school tutoring, onto a defamation campaign targeting Chinese pop celebrities, and limiting children’s access to online gaming. 

Set by President Xi, the stated ultimate goal of “common prosperity” entails a redistribution of wealth and opportunities and evokes teachings of Mao, Lenin, and Confucius. Whether these sweeping changes will eventually amount to a “Cultural Revolution 2.0” in their scale, remains to be seen. Meanwhile, they have stirred an internal debate regarding China’s future directions (see also the above “Must Reads” section).

Notwithstanding, the current wholesale reformation seems to be the product of a carefully thought-out “top-down” comprehensive plan; the original Cultural Revolution was anything but that. Furthermore, unlike the upheaval of the 1960s-1970s, during which the leader reached-out to the grassroots youth, by some accounts to shore up his position and divert attention away from the socio-economic debacle, Xi’s reformation rests on the unprecedented internal power and control he and the Party have accumulated. Xi wants grassroots youth to loyally follow the Party line, away from Western-influenced culture. Change appears to begin at the top requiring the ongoing vigilant anti-corruption campaign that recently put a senior Police Chief on trial.

Assessing the broad contours of Xi’s reformation reveals two closely intertwined missions. The first is strengthening President Xi’s position in advance of next year’s 20th Party Congress where he is expected to be elected for an unprecedented third term. Many of the reforms seek to preserve and deepen the people’s faith in the party and its leader and ban trends that could undermine that faith, such as youth idolizing “celebs” of no substance. 

The second mission is a level of “decoupling” – both economic and societal – that emanates from the Chinese narrative regarding the West in general, and the U.S. in particular. “Decoupling” is mostly connoted to severing economic interdependencies to enhance self-reliance. China’s economic and industrial policies over the past few years – such as “dual circulation” or “Made in China 2025” – support this aim. But Xi’s reformation extends this trend to the society by seeking to reduce foreign influence that might risk China’s “national rejuvenation”. 

The unwritten pact between the Party and the people included the promise of economic growth. As growth has slowed, the leadership has spotlighted national rejuvenation. Perhaps a testament to the success of this campaign is the lack of domestic criticism to continued negative economic indicators. Public support has offered a tailwind to the pace of reforms, some of which come with a significant economic price tag, such as discouraging foreign investments in China. 

The pace of reforms reveals an apparent driver of Xi’s reformation – shoring up the resilience and preparedness of the Chinese public, economy, and society to face the unfolding rivalry with America and the West. But Xi’s reformation is not about America, but rather is based on a fusion of Maoism, Leninism, and Confucianism, more commonly known as “Socialism with Chinese Characteristics”. The rivalry with America and the West appears to increase the pace of reforms – even in face of economic challenges.

Therefore, upholding these reforms and reinforcing them despite growing economic challenges may indicate that China’s leadership assesses that escalation in the rivalry with the U.S. is inevitable. 

Biden Delivers Tough & Determined Messages to China and U.S. allies

With the benefit of some hindsight, the U.S. pullout from Afghanistan, the announcement of the new trilateral defense pact with Australia and the U.K., and the first ever face-to-face summit of the Quad, all share the same strategic imperative – to demonstrate the U.S. resoluteness regarding China.

The U.S. departure from Afghanistan that led president Biden to overrule military advice and immediately end the strategic entrapment was in part to no longer divert attention and resources away from the real challenge, i.e., China. As much as this was about effectively managing America’s strategic priorities (at least from President Biden’s perspective), it was also about sending an unequivocal message to Beijing – the U.S. will do all it needs – to meet the challenge even if it incurs a hefty strategic price.  

In executing the pullout, President Biden accepted responsibility for the critique of “abandoning” allies and partners, which China’s media campaigners eagerly exploited. Although U.S. officials have not said so in public, it seems logical to assume that President Biden was willing to absorb Chinese “Schadenfreude” (gleiing at other’s misfortune), knowing that China will no longer be able to freeride and exploit the U.S. to support protecting its major interests in Afghanistan and Pakistan (see following section). 

What probably reinforced the Biden administration’s resolve was the coming to terms with failure to reach an understanding with Beijing on basic “rules of game.” Coined by the administration as “policy guardrails,” the idea was to pursue an agreed “dual approach” – strategic competition alongside cooperation in areas of shared interests (e.g., climate change, terror, etc.). This was the primary message conveyed by the U.S. in all the high-level encounters, including the talks in Anchorage in March, the meetings of climate envoy John Kerrywith his Chinese counterparts, and the visit of Deputy Secretary Sherman to China. Increasing political pressure from the Democrats’ “progressive” caucus to adopt a more moderate approach was a contributing factor in the administration’s efforts to engage the Chinese. 

The call President Biden initiated with President Xi on September 10 appears to be the final attempt to reach an understanding. The Chinese official readout of the call stressed the necessity of both powers to work together on shared concerns, but quoted President Xi stating U.S.-China cooperation should be “on the basis of respecting each other’s core concerns and properly managing differences” – codewords for Beijing’s demands to end scrutiny and sanctions on Chinese individuals and entities concerning human rights issues, technological competition, and cyber-attacks. 

Following the U.S. pullout from Afghanistan, China’s foreign minister Wang Yi was more straightforward with Secretary Blinken: “The Chinese side will consider how to engage with the United States based on its attitude towards China. If the U.S. side also hopes to bring bilateral relations back on the right track, it should stop blindly smearing and attacking China, and stop undermining China’s sovereignty, security and development interests.” Wang further “suggested” that U.S. “should take seriously” the “three bottom lines” and the two “lists” presented to Deputy Secretary Sherman during her visit. One of the “lists” is titled “U.S. Wrongdoings that Must Stop.”  

Against this backdrop and from an American perspective, the surprising announcement of the trilateral AUKUS pact could not have been better timed. Beyond the point that the trigger leading to the pact was an Australian request and focused on procuring American nuclear-powered (but not nuclear-armed) submarines, the pact serves critical American interests and reinforces its strategic posture vis-à-vis China. 

First, AUKUS addresses and delivers in areas in which the Quad cannot. India’s traditional non-aligned posture and Japan’s constitutional limitations constrain the maneuverability of the Quad in military and defense areas. When the Quad in its current format was reconstituted in 2017, Western officials and commentators speculated that the grouping could evolve into a NATO-like alliance. The official title of the grouping is the “Quadrilateral Security Dialogue” and the four parties have started carrying out joint military exercises. However, the agenda of the first ever face-to-face summit hosted by the U.S. on September 24 did not touch on traditional security matters, and working-level meetings do not come close to debating core strategic military issues that take place regularly in NATO. Rather, Quad focuses on other critical issues, including competing with China’s COVID-19 vaccine diplomacy and cooperating to address cyber-security and the technological rivalry. 

Although the joint statement announcing AUKUS reads more like an agreement to engage in trilateral strategic planning than a well thought-through defense pact, the stir it created reflects real strategic implications. Unlike Quad, AUKUS deals head-on with the emerging military balance of power in East China and South China Seas, where China’s access denial has ended U.S. air and naval superiority. The future Australian nuclear-powered submarine fleet is only one, albeit major, potential deliverable to bolster the U.S.-led deterrent posture vis-à-vis China. Enhancing trilateral interoperability along with joint defense innovation utilizing AI and robotics to develop naval unmanned systems are expected to pose a serious challenge to China. In other words, AUKUS might credibly deter China from using military force by undercutting its access denial capabilities, specifically in the Taiwan Straits and the South China Sea. 

Secondly, AUKUS conveys a clear American message of its expectations vis-à-vis partners and allies. Following the haphazard withdrawal of Afghanistan, announcing AUKUS provided the U.S. an opportunity to demonstrate its clear support of an ally. But the pact also conveyed that such American support is not provided to any ally. In addressing the military challenge in the Indo-Pacific, the U.S. has no desire to deal with questions of its allies’ “burden sharing” that have plagued NATO since the 1950s. Australia – at its own initiative and considerable expense – will make a meaningful contribution to the U.S. military deterrent posture vis-à-vis China. Not only will the eight-submarine fleet bolster the U.S.-end of the regional balance of power, but the Australian naval facility servicing the nuclear-powered submarines will also be able to support American and British maritime operations. 

Thirdly, the hardnosed realism that led to the unnecessary mistreatment of France was also a message to Beijing. To assure the successful conclusion of the pact, the U.S. was willing to disregard the interests and respect of one of its key NATO allies – one of the few that could actually contribute to the military balance in the Indo-Pacific. This show of ruthless resolve was probably not overlooked in Beijing.  

China’s public response to AUKUS was not surprising. Chinese official statements denounced the pact as reflecting “Cold War zero-sum mentality” that will gravely undermine regional peace and stability, aggravate arms race and impair international nuclear non-proliferation efforts.” 

In addition, Beijing sought to demonstrate its power and influence in the region. First, days after the pact announcement, China publicized – for the first time – an air transport mission – featuring a large military transport aircraft (Xi’an Y-20) – landing on three airstrips constructed on artificial islands that China built on small reefs in the Spratlys, in South China Sea. The purpose of the mission and its publication was to demonstrate China’s military projection capabilities from the Chinese mainland across the South China Sea. In another show of military force, China carried out its largest-ever air incursion over Taiwan’s airspace involving 38 air force planes on October 1, China’s National Day.

Second, the day after the pact announcement, China submitted a formal application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, better known as the CPTPP. The 11-nation trade pact is the offspring of President Obama’s trade pact initiative, the Trans-Pacific Partnership (TPP), from which the U.S. was pulled out by President Trump. In applying to join the CPTPP, Beijing seeks to exploit and showcase the inability of the Biden administration to establish a meaningful economic track to engage its allies and partners in Asia. China’s endorsement of the CPTPP allows it to demonstrate a commitment to trade liberalization, but will unlikely win-over U.S. allies or partners as it continues to maintain a harsh security and diplomatic posture. 

China “Hands On” in Afghanistan 

The Western withdrawal from Afghanistan and the Taliban takeover pose a real policy challenge for China. For first time, China is forced to formulate its own role in a regional hotspot – along its border that could adversely affect critical interests. Chinese officials and experts did not hide their satisfaction from the Western departure, even though China benefitted from the U.S. presence. Effectively, the U.S. became China’s unpaid “contractor” providing (albeit imperfectly) free regional security along the Pakistani-Afghan (and Chinese) border, also known as the Af-Pak arena. This facilitated the development of the China-Pakistan Economic Corridor(CPEC), a key Chinese geo-strategic asset that became the centerpiece of President Xi’s signature policy – the Belt & Road Initiative (BRI). 

The Af-Pak arena is critical to China’s interests – in the immediate term – for two main reasons. First, the Xinjiang-based Muslim Uyghur minority have historic and ethnic ties across China’s northwestern borders with Pakistan, Afghanistan, and Tajikistan. Uyghur militants have sought haven in Afghanistan and have been linked to al-Qaeda. China’s main concern is that with return of Taliban, militant Uyghurs might seek to use Afghanistan’s remote northeast as a springboard to launch attacks and foment dissent in Xinjiang. 

The second – and closely related – Chinese concern is that Islamist terror groups –Uyghurs or Pakistani Taliban – would use Afghanistan to threaten China’s booming interests in Pakistan. Running in parallel to the Afghan-Pakistani border, the CPEC connects Northwestern China – by rail, road, and pipelines – to the Southern coast of Pakistan, where Chinese companies are constructing a major international port at Gwadar. Overlooking the intersection between the Indian Ocean and the Gulf of Oman, the Gwadar port will cut transit costs and secure China’s supply chains of critical fossil fuel from the Middle East. Gwadar will likely become China’s second overseas naval base, following Djibouti, allowing it to project military power in the Arabian Sea, the Persian Gulf, and the Red Sea. 

To date, China has invested dozens of billions of U.S. dollars in CPEC-related ventures, with some estimating over U.S.$60 billion.. These ventures are not only important to China but are also considered critical for Pakistan’s development and have been targeted by Pakistani Islamist and separatist terrorists.  

In moving ahead with the CPEC, and despite significant setbacks, China has been able to achieve in several years and without a single shot fired – what the mighty Soviet empire arguably was after and failed when it invaded Afghanistan – an outlet to the Arabian Sea and the Indian Ocean. This helps explains why securing its assets in Pakistan is a critical interest for China.

China also has longer-term potential strategic and commercial interests in Afghanistan. Afghanistan possesses considerable deposits of rare earths and other essential minerals for manufacturing. A 2010 U.S. report estimated that the  mineral possessions are worth U.S.$1 trillion. However, inherent instability precludes their extraction. Two Chinese corporations won a 30-year lease for a huge copper mine in Afghanistan in 2008 and have yet to start extracting the mineral until Afghanistan can offer a more secure and stable environment.

In addressing the evolving challenges in Afghanistan, China is expected to prioritize and narrowly focus on securing its own interests – physical protection of its investments (personnel and construction operations) and turning its border into an impenetrable barrier. Reportedly, China already uses extensive surveillance systemsto minimize border infiltration along its border with Afghanistan. 

Even ahead of the final withdrawal, China launched an effort to resolve the internal crisis in Afghanistan by mediation. To that end, Beijing was willing to relax its traditional commitment of “non-interference” in other countries’ “internal affairs”. To justify this, Chinese experts have proposed a more flexible approach – “constructive engagement”.

China’s eight-point Afghan plan foresaw an “inclusive” process of “Afghan-led, Afghan-owned” reconciliation that will produce a stable and effective government. But the unopposed takeover of all Afghanistan by the Taliban – rendered the initiative irrelevant. Once Beijing saw the direction of events, it immediately stated its support for the “choice of the people” of Afghanistan – a Taliban-led nation – and underscored its redlines – prevention of cross-border terror targeting China (Xinjiang specifically) or Chinese interests in Pakistan. Chinese media has already expressed satisfaction with statements of Taliban leaders seeking to assuage Beijing’s concerns. Since, China is leading a diplomatic effort to persuade the international community to recognize the Taliban government and remove economic sanctions. To that end, China has secured Russian support (even if reluctant) and has raised the issue at the G-20 ministerial meeting. 

From attempting to resolve the internal crisis and foster reconciliation among the various groups in Afghanistan, China has placed all its stakes on the Taliban. China has already started shipping aid into Afghanistan – when most other international aid is not getting through. Presumably, China has reached an understanding with the Taliban that in exchange for aid and supporting the new regime on the world stage, the Taliban will protect Chinese interests.  As a Taliban spokesman put it – “China is our principal partner and for us represents a fundamental and extraordinary opportunity because it’s ready to invest in and reconstruct our country.”

The next steps will probably more difficult. It remains unclear whether the Taliban – with or without Pakistani involvement – will create a stable environment amid tribal war lords and remanent al-Qaeda and ISIS operatives. 

China’s Balancing Act Between Iran and the Arab Sunni States

Marking the 50th anniversary of bilateral diplomatic relations, China’s foreign minister, Wang Yi, held a phone call with his new Iranian counterpart, Hossein Amir Abdollahian (September 3). Chinese readouts and statements following the call underscored that for Beijing, Afghanistan now tops the bilateral agenda. Wang told Abdollahian that as two neighboring countries of Afghanistan “China and Iran need to strengthen communication and coordination to play a constructive role in achieving a smooth transition and peaceful reconstruction of Afghanistan.” In response, the new Iranian foreign minister expressed his country’s readiness “to strengthen coordination with China to help Afghanistan get out of difficulties at an early date.” 

The details of what the “constructive role” of the two neighboring countries will entail and how they will proceed to coordinate remain unclear. However, Chinese diplomats strongly believe that Iran’s involvement in Afghanistan is crucial for advancing Beijing’s interests. Demonstrating Iran’s importance for China in Afghanistan, Beijing used the pretext of the Afghan crisis to secure Iran’s admission into the Shanghai Cooperation Organization (SCO), explaining that  the situation in Afghanistan requires “Iran’s full cooperation to resolve”.

China’s perception of Iran’s capability to advance Chinese interests in war-torn Afghanistan stems from the belief that Persian ethnic and historic ties make Iran influential in Afghanistan and Central Asia. Its flagrant anti-American stance and growing financial dependence on China make Iran the ideal partner. 

Against this backdrop, one can understand why senior Chinese experts are seriously entertaining the idea that China could lead an axis of influence that will stretch from Pakistan and Afghanistan to Iran. This may also explain why these Chinese experts now attach the highest possible significance to the recently concluded 25-year strategic partnership with Iran. When the agreement was signed in March, Beijing was silent, and the agreement and its content was never published. Now, these scholars claim, raising Iran’s status as proven by the 25-year agreement, “showed that the U.S. could do nothing” and the arrangements permitting the use of the digital yuan (expected to be the currency of trade with Iran) “have shaken the United States, because the U.S. hegemony mainly depends on the international currency of the U.S. dollar.” While Western watchers may consider these views a gross overstatement, it is yet another indication of the growing strategic importance of Iran for China. Nevertheless, China maintains a balancing act with its Sunni Arab partners – two of which, Saudi Arabia and Egypt, were admitted to the SCO as formal observers on the same day Iran became a full member.

The Iranians, however, seem to have different priorities for the bilateral relationship. The headline of Iran’s official news agency report on the foreign ministers’ conversation was about the strategic partnership agreement, signed in March. Earlier, and shortly after assuming office, Iran’s new President, Ebrahim Raisi, spoke with President Xi (August 18). Raisi told his counterpart that closer relations with China is a top foreign policy priority for Iran and that both countries should pursue “the full implementation” of the strategic parentship agreement. The Iranian readout appeared to suggest that Teheran had higher and more immediate expectations from the deal. China is perhaps the only source for alleviating Iran’s flagging economy. The U.S. sanctions have increased Iran’s dependence on China, with the latter purchasing the vast majority of Iranian oil and accounting for 30 percent of all Iran’s exports. Iran is also dependent on China for providing COVID-19 vaccines. Iran’s displeasure with the slow pace of vaccine shipments was communicated by both Iran’s president and foreign minister in their respective conversations. 

While the Iranian government appeals to China for investments in its oil and gas infrastructure – apparently unsuccessfully – Beijing continues to expand its economic footprint in the Arab Middle East. In August, China hosted the fifth China-Arab States Expo in Yinchuan, the capital of the northwest Ningxia Hui Autonomous Region, which featured the signing of joint ventures and investments to the tune of US$24 billion. Although not all the deals will be implemented, the expo – under COVID-19 conditions – drew some one thousand exhibitors from China and the Middle East, demonstrating that China has become the main trading partner of the Arab Middle East countries, which, in 2020, accounted to one-half of China’s crude oil imports. Furthermore, Saudi Arabia’s ARAMCO signed a MoU with a major Chinese state-owned corporation to construct a nuclear reactor in Saudi Arabia.