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April 8, 2022-Stealth War 83: Beijing Condemns U.S. for Pending Taiwan Arms Sales, Speaker Pelosi’s Upcoming Visit to Taipei; Land-Sea Route from Chongqing to Yangon Operational; Duterte, Xi Discuss Filipino-Chinese Relations; Russia Looking for China’s Help in Microchip Shortage; China and Hungary to Strengthen Ties

By: Jamestown Foundation

Fri April, 2022, Age: 1 year


April 8, 2022

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Stat Du Jour 
This issue’s number to watch$46 billion
Estimated minimum monthly cost of China’s COVID-19 lockdowns, which is the equivalent of 3.1% of GDP in lost economic output. 

This Week: 

Beijing Condemns U.S. for Pending Taiwan Arms Sales, Speaker Pelosi’s Upcoming Visit to Taipei

Land-Sea Route from Chongqing to Yangon Becomes Operational 

Duterte, Xi Discuss Filipino-Chinese Relations in Telephone Summit

Russia Looking for China’s Help in Microchip Shortage

* China and Hungary to Strengthen Ties

Top Stories

Beijing Condemns U.S. for Pending Taiwan Arms Sales, Speaker Pelosi’s Upcoming Visit to Taipei

On Tuesday, the State Department approved a potential $95 million sale to help Taiwan to boost its air defense systems, according to an announcement from the Defense Security Cooperation Agency. The proposed deal includes the sale of equipment, training, planning, and maintenance of the Patriot Air Defense System, which is produced by Raytheon. DSCA said the deal “serves U.S. national, economic, and security interests by supporting the recipient’s continuing efforts to modernize its armed forces and to maintain a credible defensive capability.” In a press release, Taiwan’s Ministry of Foreign Affairs praised the deal and noted that this is the third arms sale approved under the Biden Administration. Taipei also said U.S. weapons and coordination are crucial in helping the island defend itself against China’s increasing military strength and aggressive behavior. In response, Chinese Foreign Ministry Spokesperson Zhao Lijian denounced the arms sale, which he says, “gravely undermines China’s sovereignty and security interests, and severely harms U.S.-China relations.” “China will take firm and robust measures to resolutely safeguard its sovereignty and security interests,” he added. Despite approval, negotiations and the contract for the deal still needs to be completed.

The arms deal comes amidst heightened U.S.-China tensions over reports that House Speaker Nancy Pelosi would visit Taiwan following her visit to Japan this weekend. Beijing reiterated its firm opposition to the visit, condemning any form of official interaction between the U.S. and Taiwan. Zhao said the U.S. should fulfill its “commitment of not supporting ‘Taiwan independence’” and that it would “bear the consequences of any visit.” Although Pelosi had to postpone her trip to Asia due to testing positive for COVID-19, Zhao urged her to cancel the visit altogether.

(source: China Daily)

The Land-Sea Route from Chongqing to Yangon Becomes Operational

On April 7, the first freight train began traversing the new route from Guoyuan Port, on the Yangtze River in southwest China’s Chongqing municipality, to Myanmar’s port city of Yangon. This “international rail-sea” route links a relatively unique municipality and economic powerhouse the size of Austria in western China to a significant port owned by a relatively friendly power on the Indian Ocean. Chongqing is unique in that it is one of four municipalities directly under the control of the central government (the only one in western China), it became one of seven new pilot free trade zones in 2017 (there were only four before), and it is the center of operation for the China-Singapore New International Land Sea Trade Corridor (established in 2017). With the new connection to Yangon, Western China has gained land access to another port in the Indian Ocean Region that is closer than Bangladesh or Pakistan, and within a country that it may be able to exert greater influence over. There are, however, several caveats.

Myanmar’s military launched a bloody coup against its democratic government in February, 2021. Myanmar’s military in particular has long been wary of foreign, particularly Chinese, influence. Between this stance and instability, Beijing was reportedly cool toward the coup leaders, but ended up throwing its support behind the junta in order to secure its own interests. Investments have continued and in May, China invested in a $2.5 billion power plant. Facing international condemnations, sanctions, and a rapidly declining economy, the junta has turned to authoritarian partners, the military regime has turned to China and Russia for arms, trade, and various forms of other assistance. Despite, its initial reservations, China has been willing to extend support, recently accelerated construction of the China-Myanmar Economic Corridor.

(source: SCMP)

Duterte, Xi Discuss Filipino-Chinese Relations in Telephone Summit

Earlier today, Philippine President Rodrigo Duterte and President Xi Jinping engaged in a one-hour telephone summit to discuss the South China Sea (SCS) maritime boundary disputes. According to the call readout, Xi and Duterte agreed to maintain peace, security, and stability in the SCS, and are committed to improving bilateral relations, which have become closer during Duterte’s presidency. In the meeting, the two presidents confirmed the importance of continuing discussions as well as reaching agreement on a Code of Conduct on the SCS. In a statement, the Philippine government noted that “exercising restraint, dissipating tensions and working on a mutually agreeable framework for functional cooperation,” would be the goal of the future. In addition to discussing unresolved disputes over the Scarborough Shoals and other contested maritime features, the leaders reviewed bilateral relations over the last six years, claiming the trajectory had been a positive one, which paves the way for greater partnership and cooperation. To an extent, this is true. Economic, political, and infrastructure cooperation between the two countries has increased over the last decade through the Build, Build, Build program and the elevation of Philippines-China bilateral relations to the level of a Comprehensive Strategic Cooperation. Cooperation between the two countries to counter the COVID-19 pandemic has also been extensive. In general, the Palace (the Philippine equivalent of the White House) described the summit as “open, warm and positive.”

However, some in the Philippines view Duterte’s statements as appeasement of growing Chinese aggression. Late last month, two incidents occurred where the Chinese Coast Guard violated treaties protecting navigation in the SCS, conducting close maneuvers resulted in near collisions. In one of the incidents, a Chinese Coast Guard vessel shadowed a research vessel operated by Philippine and Taiwanese scientists surveying the undersea fault lines of the Manila Trench. In the other incident, a Chinese Coast Guard vessel nearly rammed a Philippine Coast Guard vessel. The telephone summit also comes just before scheduled 2+2 talks between Japanese, Indian, and Philippine ministers on security measures in the SCS and a joint military exercise with the U.S. With election around the corner in the Philippines, Duterte’s “warm” meeting with Xi and accommodating stance to Beijing may make it harder for his successor to push back against China.

(source: CGTN)

Russia Looking for China’s Help in Microchip Shortage

According to a recent Reuters report, Russia is looking to China for help as it faces a severe shortage of microchips used in domestic bank cards. Western sanctions imposed on Russia have effectively cut off Moscow’s access to global financial networks, including SWIFT, Visa, and Mastercard, but its local Mir card payment system had seemingly filled the gap using mobile payments and digital wallets. On March 25, Apple announced it had removed Mir’s access to Apple Pay, along with Samsung pay and Google pay. Russian card holders of Visa and Mastercard cards will continue to have access to their accounts and these transactions are processed in the National Payment Card System (NSPK), meaning they are not impacted by sanctions. However, once these cards expire, Russian banks will issue new cards based on the Mir payment system, creating high demand for the microchips used in the cards. NSPK board member Oleg Tishakov explained that the shortage of microchips is now affecting all major Russian banks, pointing to the fact that European suppliers have stopped working with Moscow, and many Asian manufacturers have been forced to halt production due to COVID-19 lockdowns. On Tuesday he said, “We are looking for new microchip supplies and [have] found a couple in China, with the certification process ongoing.” While Beijing has yet to publicly respond, some Russian banks have already co-branded their cards with China’s UnionPay. If Russia can secure access to Chinese microchip suppliers, it could switch to the Mir payment system more easily, limiting the effectiveness of Western sanctions and providing another form of tacit support from Beijing as Russia’s invasion of Ukraine continues. 

(source: Hungary Today)

China and Hungary to Strengthen Ties

On April 4, Chinese Premier Li Keqiang formally congratulated Hungarian Prime Minister Viktor Orban on his party’s election wins through which it will retain control of parliament. Li emphasized China’s wish to continue their high-level development of bilateral relations in recent years, and that it desires to “further enhance mutual strategic trust, and deepen practical cooperation in all areas, so as to lift the China-Hungary comprehensive strategic partnership to higher levels.” Also on April 4, Hungary’s Minister of Foreign Affairs and Trade Peter Szijjarto’s first post-election phone call was with Chinese State Councilor and Foreign Minister Wang Yi. Of note, “Wang said that both sides should deepen cooperation, consolidate the political foundation, enhance their ability to jointly resist risks and challenges, and safeguard each other’s sovereignty, security and development interests.” Szijjarto greatly appreciated and endorsed these sentiments, also pledging that Hungary will continue championing the EU-China friendship.

The strength of Chinese-Hungarian relations is explained by a number of drivers, which also underscore why the relationship is of concern to US and NATO interests. First and foremost, Orban and his party have used the EU and NATO (most recently calling the EU and Ukraine’s President Zelenskyy “opponents” in his victory speech) as a scapegoat for Hungary’s domestic challenges. Second, under Orban, Hungary has consistently blocked EU criticism of China, or other EU efforts to hold Beijing accountable for domestic and international policies. Third, Orban has allowed China to make significant investments and inroads into the Hungarian economy and infrastructure, via the Belt and Road Initiative, the 16+1 Initiative. Notably, Orban has refused to ban the Chinese tech giant Huawei, which many countries in Europe see as a security threat. He also announced and then froze (ostensibly until after the elections) the first international campus of Fudan University, which would expand China’s influence in Hungary. Fourth, Orban is quite close personally and politically with Putin (who also hailed Orban’s victory). For example, he has refused to allow lethal aid to pass through Hungary to Ukraine, and has been one of the only leaders willing to pay for Russian fuel in rubles. Fifth, Hungary is influential in Central and Eastern Europe and the Balkans, where China has long worked hard to gain influence, driving a wedge between Eastern European nations and the West. Given its size and influence in the region, Orban is a key ally. Sixth, Orban has openly stated that he believes China is the future, that the US will be replaced by China, and that Hungary must be well positioned for this change. Finally, and perhaps most importantly, now that Hungary’s economic support from Russia and the EU are threatened, evidence shows it is looking to China to compensate for this shortfall.

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