CvT: Nov. 25, 2020

Arm yourself with the Coffee. vs. Tea US-China relations newsletter as the world’s two largest economies square off for global influence
Arm yourself as the world’s two largest economies square off for global influence

A Path Forward for China in the 14th Five-Year Plan

Written by: Zoe Roth

Earlier this month, China announced its 14th five-year plan (FYP), a strategy taken from the Soviet socialist model in the 1950s to chart development and growth. Despite the fact that this approach pulls from a more archaic aspect of communism, FYPs have adapted to a breadth of changes since their inception, including adapting to a business environment increasingly filled with privatized sectors. In the case of China, the shift from a planned economy to a market economy with socialist characteristics has made the FYP more of a broad guideline of objectives rather than a realistic step-by-step plan. Though FYPs often emphasize economic growth, the 14th FYP plan also highlights key issues such as innovation, green development, and technology.

Taking a page out of self-reliance

Following a turbulent year, Beijing has publicized the pervasive theme moving forward – self-reliance. One of the key ways the country plans to achieve this is through the implementation of the dual-circulation system. This process has made its rounds even prior to the plan’s announcement, and its end goal is to fortify the country’s economy by ramping up domestic consumption and localizing supply chains to meet domestic demand. At the same time, the system highlights the importance of remaining open to foreign investors while encouraging domestic companies to expand abroad. To address the national security implications of advancing core interests despite volatile external factors as seen through 2020’s pandemic and diplomatic tensions, the plan also stresses self-reliance in technology and energy frontiers as well.

Innovate or die

The second big theme in the plan is “innovation.” Intimately tied to the technology sector, innovation largely refers to the strategic areas that China has prioritized, such as AI, electric vehicles, and robotics, which has also driven the nation to look closely at intellectual property rights and high precision manufacturing capabilities. Innovation also touches upon China’s supply chain as officials push for a transition to more high-value production of specialized goods. Other initiatives that fall under this umbrella are attracting and developing talent – specifically in areas of entrepreneurship and emerging technologies – and exploring methods to facilitate the sharing of ideas.

Cleaning up emissions

Finally, Beijing has prioritized its efforts towards green development in its long-term planning. China’s energy transition as discussed in the FYP attempts to tackle climate change, with plans to cap carbon emissions by shifting away from coal consumption towards clean forms of energy. Targets for non-fossil energy generation will primarily span hydropower and nuclear technologies, while also improving grid integration of solar and wind power – which combined contribute around 5% of the nation’s current energy sources.

As China prepares to celebrate the 100th year of the Chinese Communist Party in 2021, it will be able to celebrate the achievement of becoming a “moderately prosperous society” by eradicating extreme poverty nationwide. The world will have to check back in a few more years to see if China has been able to accomplish the more difficult feat of becoming self-reliant in an increasingly globalized world.

Taiwan Arms Deal: Holding a Knife to US-Taiwan-China Relations

Written by: Grace Spoerner

China and Taiwan have been locked in a persisting identity crisis under the One-China Policy for decades. Given the independent governance structures put in place following the conclusion of the Chinese Civil War in 1949, the two societies have dramatically diverged culturally, economically, and politically. China’s meteoric rise to the global stage and the implications it brings to Taiwan’s identity under the One-China Policy have, as a result, created constant opportunity for scuffles between the US, Taiwan, and China. Specifically, under the Trump administration, the US has been more direct in alluding to Taiwan’s status as an independent nation and leveraged US-Taiwan relations as a strategic response to Chinese activity. In the latest brush up in US-Taiwan-China relations, China has announced a plan to sanction certain US companies following a recent US arms deal with Taiwan.

The arms deal, approved by the US State Department on October 22, provides US$1.8 billion worth of sensors, missiles, and artillery to Taiwan. Shortly after the deal’s approval, Taiwan made an additional agreement with US-owned Boeing Defense for a coastal defense system valued at US$2.4 billion. Unsurprisingly, Beijing responded to the agreement as an attack on Chinese sovereignty while a spokesperson for the Chinese government, Zhao Lijian, reiterated the arms deal “seriously undermines China’s security interests” and announced China’s decision to pursue sanctions against the companies involved.

Chinese sanctions: a case study on reality vs. theory

In practice, the efficacy of any retaliation against the deal is questionable as the American companies currently under Chinese fire—Boeing Defense, Raytheon, and Lockheed Martin, are already barred from trading military-grade equipment with China. However, while these defense giants cannot provide military equipment to China, they are heavily active in China through commercial partnerships. For example, Boeing provides a large portion of China’s aviation technology, which accounts for 7% of the company’s global revenue. Similarly, Lockheed Martin’s ties to China date back to the 1980s, and Raytheon is the parent company to Pratt & Whitney, a key aviation player in China. While the sanctions are specific to the defense branches of these companies, the potential for future repercussive action against the companies’ commercial branches still exists given their material exposure to China – begging the question of whether China’s intent is to impact these organizations or, rather, send a message to Washington.

Looking forward

Should the country’s signals to the US flatline, China still has several options to exert pressure on the US in future engagements. In particular, Beijing has already outlined regulatory reform as an option through which to create targeted blockades on US materials and introduce visa bans on American business leaders – thus increasing pressures on US policymakers.

As it is, the US has appeared seemingly unphased by the Chinese response. While the Trump administration has embarked on a collision course with China over the One-China Policy, the incoming Biden administration will be tasked with either maintaining the political shift of the current administration or returning the US-Taiwan relationship to its historical precedent. As Biden continues to fill key cabinet positions, the world will look with watchful eyes as to how the president-elect approaches the next potential US-China hotspot and the implications that his selections may have on the next four years of US-China relations.

Further Reading

US-China Relations Newsletter

CvT: Dec. 16, 2020

US-China Relations Newsletter

CvT: Dec. 9, 2020

US-China Relations Newsletter

CvT: Dec. 2, 2020

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