By STUART LAU
with PHELIM KINE
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HI CHINA WATCHERS. This is Stuart Lau in Brussels, hitting your inbox again after my holidays. (A huge thank you to Jordyn Dahl and Pieter Haeck for standing in over the past two weeks.) Phelim Kine will be with you from the U.S. on Thursday.
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TRADE WAR ESCALATES: Watch out, Europe. China’s Commerce Ministry announced Sunday a new anti-dumping probe into thermoplastics coming from the EU, the U.S., Taiwan and Japan, alleging that they are sold below market price, state media reported. The investigation into the material widely used in cars and electronics comes shortly after the EU launched a series of probes into China’s products, ranging from electric vehicles to medical equipment, as well as curbing the European footprint of Chinese companies.
TAIWAN’S NEW MAN
NEW PRESIDENT SWORN IN: The man Beijing calls a “troublemaker,” William Lai, was inaugurated on Monday as Taiwan’s new president, succeeding Tsai Ing-wen for whom he served as vice-president for the past four years.
Balancing act: Lai, who once called himself a “pragmatic worker for Taiwan independence,” refrained from making provocative statements during his speech. He vowed to continue Tsai’s approach of strengthening Taiwan’s defense capabilities, while calling on Beijing to “choose dialogue over confrontation” including by developing tourism and academic exchanges.
Make peace, not war: “China's military actions and gray-zone coercion are considered the greatest strategic challenges to global peace and stability,” he said. “I also want to call on China to cease their political and military intimidation against Taiwan … and ensure the world is free from the fear of war.”
Lai's olive branch: Lai's inauguration speech included a shout out for the $1.9 billion in military hardware the U.S. Congress approved for the island last month. But he channeled Tsai by signaling his willingness to reduce cross-Strait tensions through “cooperation with the legal government chosen by Taiwan’s people."
That won't satisfy Beijing. Chinese officials have made clear that a peaceful cross-Strait relationship requires Lai to publicly state that both Taiwan and China "belong to one same country and one same nation.” That's politically unacceptable for Lai and his Beijing-skeptic Democratic Progressive Party — and won't guarantee an end to Beijing's pressure.
"The price of buying China’s indulgence is going up … they've simply become more demanding," for Taipei's submission, said Glenn Tiffert, co-chair of the Hoover Institution's project on China's Global Sharp Power.
DEFENSE FOCUS ON DRONES: In his speech, Lai called for Taiwan to become the regional hub for drone manufacturing. “Our sights are set on making Taiwan the Asian hub of UAV [unmanned aerial vehicle] supply chains for global democracies, and developing the next generation of medium- and low-orbit communications satellites,” Lai said.
Don’t trust Beijing: Lai warned Taiwanese people not to harbor any delusions about China. “So long as China refuses to renounce the use of force against Taiwan, all of us in Taiwan ought to understand, that even if we accept the entirety of China's position and give up our sovereignty, China's ambition to annex Taiwan will not simply disappear.”
“In the face of many threats and attempts of infiltration from China, we must demonstrate our resolution to defend our nation, and we must also raise our defense awareness and strengthen our legal framework for national security,” he added.
On tech and geoeconomics: Taiwan will double down on its world-leading role in making the most advanced semiconductors, despite a push from the U.S. and Europe to reshore production facilities.
“Taiwan must hold firm its key position in the global supply chain and seize the business opportunities that come as a result of geopolitical changes,” Lai said, stressing Taiwan’s cutting edge developments on microchips and Artificial Intelligence.
“We know that semiconductors will be indispensable, and the AI wave has already swept in,” he said. “We are a key player in supply chains for global democracies.”
Top VIPs: Former U.S. Secretary of State Mike Pompeo and Dalia Grybauskaitė, Lithuania’s ex-president, were among those attending the ceremony. President Joe Biden‘s former National Economic Council chief Brian Deese led the American delegation.
HOW BEIJING, WASHINGTON SEE IT
US MESSAGE: Lai's inauguration underscores Taiwan's "robust and resilient democratic system," Secretary of State Antony Blinken said in a statement Monday. "Beijing will be the provocateur should it choose to respond [to Lai's inauguration] with additional military coercion," a senior administration official told reporters last week on condition of anonymity.
Back off, Biden: The Chinese government has warned the Biden administration to keep its distance from Lai. "In what ways the U.S. deals with the new Taiwan authorities on May 20 and afterwards will affect the cross-Strait situation and also China-U.S. relations," Chinese embassy spokesperson Liu Pengyu told reporters last week. The Biden administration is urging restraint.
HARD TO PLEASE BEIJING: “Xi Jinping's government will react badly to Lai's … call for the people of Taiwan to oppose annexation and protect their sovereignty,” Daniel Russel, vice president of the Asia Society Policy Institute thinktank and a former U.S. assistant secretary of state in charge of East Asia, said in a note. He added: “But there is virtually nothing that Lai could have said, short of ‘unconditional surrender,’ that would satisfy Beijing.”
That’s indeed the case: Calling Lai’s event “a so-called ‘inauguration ceremony’,” Chinese Foreign Minister Wang Yi said Monday: “No matter how Taiwan island’s situation changes, it won’t change the ironclad fact that Taiwan is a part of China, and won’t stop the historical trend that China will eventually — and inevitably — achieve unification.”
Lai “disregards public opinion” and “sends a dangerous signal of seeking independence as provocation, and of disrupting peace and stability of the Taiwan Strait,” Chen Binhua, spokesperson of the Chinese State Council’s Taiwan Office, said on the same day.
Cross-Strait nailbiter: Beijing's easiest option is an intensified round of military maneuvers around the island, just like those that have become routine since then-House Speaker Nancy Pelosi's Taiwan trip in 2022. But that could upset the fragile stability in U.S.-China ties and harden Taiwan's antipathy toward Beijing. "It’s not in anybody’s interest —the U.S., China or Taipei— to stir things up right now," said Douglas Paal, who was director of the State Department's unofficial diplomatic outpost in Taiwan under President George W. Bush.
Punishing US firms for supporting Taipei: The Chinese Commerce Ministry announced a number of U.S. defense industry firms —including General Atomics Aeronautical Systems, General Dynamics Land Systems, Boeing Defense, Space & Security — on its unreliable entities list, saying it sold arms to Taiwan. Senior executives of all the companies are prohibited from entering China.
Taiwan allies under pressure: China responded to Lai's election in January by announcing Nauru dropped diplomatic recognition of Taiwan in favor of Beijing. Beijing might pick off another of Taipei's remaining 12 official allies to spite Lai.
"They’ll be tempted to do it – a lot will depend on what Lai has to say" after he becomes president, said former State Department official Paal.
The president of Paraguay, Taiwan’s ally, Santiago Peña, told Japanese media earlier this month that he faces intense pressure from both opposition parties and domestic agricultural exporters to switch ties to Beijing. And when Taiwan ally Guatemala floated the prospect of closer trade ties with China in February, Beijing conditioned it on ending diplomatic relations with Taiwan. The Paraguayan and Guatemalan embassies in Washington didn't respond to requests for comment.
XI-PUTIN
LOSING A FRIEND: Chinese President Xi Jinping joined his Russian counterpart Vladimir Putin in mourning the loss of a common friend: Iran’s hardline president Ebrahim Raisi, who was killed in a helicopter crash on Sunday.
A friend for China: “Raisi’s tragic death is a great loss to the Iranian people, and the Chinese people also lost a good friend,” Xi said in the condolences, according to Xinhua.
And a force for good: Raisi — who’s instrumental in backing Russia’s war against Ukraine by supplying killer drones — “made important contributions to maintaining Iran’s security and stability and promoting national development and prosperity,” according to Xi.
Same praise from Kremlin: Putin called Raisi a “true friend” for Russia. “I will forever remember him as the most wonderful person,” Putin said. Ben Munster has the story.
XI, PUTIN PUSH FOR NEW WORLD ORDER: The loss of a leader from a key country in the Beijing-Moscow plan for a new world order comes shortly after Putin and Xi met — for their 43rd time — last week in Beijing.
Here are a few highlights from the 12,000-word joint communiqué signed off by the two leaders:
— Military cooperation: Despite U.S. and EU warnings to China not to support Russia militarily, Xi and Putin vowed to “further deepen military trust and coordination, and expand the scale of joint exercises … Regular maritime and aerial joint patrols will be organized,” they said. Such moves, they added, will “effectively safeguard regional and global security.”
— Anti-U.S. and anti-NATO: Xi backed Putin in asking the U.S. to withdraw military bases from countries neighboring Russia. The two leaders said: “The two sides believe that all nuclear-armed countries should … not harm each others’ interests by expanding military alliances or setting up military bases close to the border areas of other nuclear-armed countries.” That statement is a veiled yet clear reference to Ukraine’s plan to join NATO, NATO’s bases in Baltic countries, and the U.S. presence in places such as Japan and South Korea.
— Special bond remains special: Xi considers Russia first among equals when it comes to strategic partnerships, only days after French President Emmanuel Macron tried to win him over by showing him around the southern French region where he spent part of his childhood. “China and Russia always regard each other as priority partners for cooperation,” the statement read. “Both sides are willing to further deepen comprehensive strategic cooperation.”
— Anti-sanctions: As for Western plans to seize Russian assets for the reconstruction of Ukraine, Beijing is dead against the move — out of concern the same could happen to it if and when it invades Taiwan. “The two sides [China and Russia] condemn any attempts to confiscate foreign properties and assets,” the statement read, adding that Beijing and Moscow “are determined to protect each other’s state assets.”
What does it mean for Europe? Europeans can’t turn a blind eye to the growing Chinese-Russian ties as Beijing stepped up its charm offensive to EU leaders like Macron, according to Gunnar Wiegand, the EU’s former top diplomat on Asia and now a fellow at the German Marshall Fund of the U.S. thinktank.
“There is a very close personal relationship between the top leaders,” Wiegand stressed. “When dealing with the security challenges on the European continent, Europe will from now on have to take more into account the fact that there is an ever growing Chinese-Russian alignment underway.”
“The problem for Europeans is that the Chinese are pursuing this ever more hostile, ever closer alignment with the Russians, because it serves them to have the Russians as a partner who is openly challenging and disruptive, while China at the same time wants to remain a very close economic and technological partner of the EU and the U.S. So China wants to have it both ways,” Wiegand continued.
What’s China not offering Russia? Power of Siberia-2 pipeline. After years-long negotiations, Xi is still unprepared to sign off on the massive deal that would funnel Russia’s natural gas to China. Putin, eager to clinch a deal on the pipeline to make up for the lost income arising from European sanctions, remains hopeful, saying “it’s possible to lay both a gas pipeline and an oil pipeline in the same corridor.” Reuters has more.
HEADLINES
BBC: China pours billions into crisis-hit property market.
Bloomberg: Zimbabwe in talks with China for $533 million revamp of state railway company.
New York Times: In China, deepfakes of 'Russian' women point to nationalistic sexism.
Reuters: Apple slashes iPhone prices in China amid fierce Huawei competition.
MANY THANKS: To editor Christian Oliver and producer Natália Delgado.
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