July 2, 2021 – Stealth War 44: CCP Centennial; China’s New Missile Silos; Didi Chuxing IPO Rocked by Probe

The Chinese Communist Party (CCP) celebrated its 100th birthday on July 1 (although the actual date of founding came a few days earlier). CCP General Secretary Xi Jinping headlined triumphant festivities in honor of the event, which have been closely observed by China watchers seeking to glean insights into the party’s future. Addressing more than 70,000 people gathered at Beijing’s Tiananmen Square, Xi celebrated a party that had overcome challenges from resisting imperialism aggression to eliminating absolute poverty, and insisted that under the rule of the CCP, China had irreversibly emerged from historic humiliations into an era of pride and prosperity. In addition to issuing strong warnings to “foreign bullies” that China would brook no interference in its internal affairs, Xi mostly restated broad policy priorities such as fighting corruption, strengthening the military and seeking unification with Taiwan.

Amid China’s worsening international reputation and a somewhat shaky domestic economy, Chinese officials have also taken advantage of the celebrations to underscore Xi’s personal importance as he prepares to seek a third term in power at the 2022 Party Congress. But as the scholars Jude Blanchette and Evan Medeiros have noted, Xi’s wide-ranging reforms since coming to power in 2012 have constituted “a paradigm shift in the Party’s organization, priorities, and operations that will constrain Beijing’s ability to address both near- and long-term challenges.” In other words, the CCP’s path to 2021 was not predetermined. Its continuing success in the future is likewise by no means assured.

Satellite imagery has shown that China is constructing over 100 intercontinental ballistic missile (ICBM) silos in its northwestern Gansu province. Alongside news of the People’s Liberation Army Rocket Force (PLARF) expansion of fixed and mobile brigades, the discovery provides further evidence supporting the U.S. military’s recent claims that China may be seeking to double its warhead supplies (currently estimated to be between 250-350) in the near future. Although China has historically held a “no first use” policy, the new silos could signal China’s determination to maintain an ability to survive a first strike from other nuclear powers such as the United States during a period of heightened international tensions. This may be an evolution from China’s previous posture of limited deterrence, allowing it to maintain a “minimum means of reprisal.”

It is also possible that the ongoing Sino-Indian border dispute could have contributed to Chinese motivations for the new buildup. Although China and India have maintained long-standing mutual understandings—including a ban on arms at the border—to prevent conflict escalations over contested border territories, developments last year weakened many of the agreements and norms that long constrained behavior. Indian media have reported that China is constructing a combined air defense system in the Western Theater Command, which oversees both Gansu province and the Xinjiang Uyghur Autonomous Region (XUAR) and is responsible for operations along the contested Line of Actual Control (LAC). Other media reports have also noted that China has increased the pace of military drilling along the border, including new militias comprised of ethnic Tibetans that have been stood up in the past year, as well as rapidly developing infrastructure and deploying new artillery and other military equipment near the border, even it has continued slow-going disengagement talks with India.

Following last week’s news that the Industrial and Commercial Bank of China (ICBC) will start divesting its coal investments, it has now dumped a plan to finance the $3 billion, 2.8 GW Sengwa coal-fired power plant in northern Zimbabwe. In a summary note to environmental campaigners, the bank reportedly said that the Zimbabwe project was a “bad plan due to environmental problems.” The news has sparked concerns that Chinese overseas energy financing may no longer be as readily available for unsustainable developments. Since Xi Jinping laid out an ambitious goal for China to achieve carbon neutrality by 2060, investments along China’s massive foreign policy Belt and Road Initiative (BRI) have come under increased scrutiny to fit the country’s sustainability goals.

Pakistan saw a victory for Chinese energy investments this week, as high-level officials from Pakistan and China participated in a virtual ceremony last Friday heralding the start of the first large-scale transmission project of the China-Pakistan Economic Corridor (CPEC). Speaking at the event in Beijing, the head of China’s National Energy Administration Zhang Jianhua said that the Matiari-Lahore project would “become the backbone transmission channel of the new structure of the Pakistani power grid…providing a solid assurance for power transmission in the south and power supply in the north of Pakistan.” On June 28, a Chinese foreign ministry spokesperson also noted that the project would play a positive role in fostering regional interconnectivity, deepening the ties between China and Pakistan. CPEC, once the crown jewel of the BRI, has been plagued by investment delays as well as local opposition. But the new transmission line may provide new impetus to the controversial project.

The BRI has faced growing pressure from a number of sides: climate change activists, observers concerned it may be a vehicle for expanding Chinese influence, and now a direct challenge from the G7’s new Build Back Better World (B3W) plan. But one analyst argues that because local politics often play an outsize role in the BRI, it may still be more competitive than more sustainable, transparent investments proposed by the B3W plan in one key area. That is, “some leaders do not necessarily solicit aid to benefit the institutions of their country—they may seek to use such aid for personal or political gain, including extending the scope of their political influence.”

Didi Chuxing IPO week rocked by regulatory probe

On Wednesday, Chinese ride-hailing company Didi Chuxing opened the largest international listing in the United States since Alibaba’s 2014 IPO. Although primarily a ride-hailing app, Didi also develops and manufactures electric and self-driving vehicles. Its listing boosts Chinese firms’ capital secured from the United States, raising a record total of $12.59 billion since the start of 2021. The successful partnership between Chinese firms and American finance reflects a stark difference between policymakers’ warnings about the need to decouple from Chinese companies and Wall Street investors’ continuing confidence in the Chinese market. This debate is being paralleled in China as well. Ren Zhengfei, CEO of Huawei Technologies, notably urged against decoupling in a recently published speech to the company, emphasizing the importance of learning from the United States. The remarks come despite a US-led global campaign against the technology firm.

At the same time, the Cyberspace Administration of China announced Friday that it was launching an investigation into Didi out of national security, cyber security, and public interest concerns. While the agency did not offer details of the probe, Didi reported its cooperation with the government along with its plan to launch a comprehensive review of its cybersecurity practices. Didi gathers user data to develop its autonomous driving technology and analyze traffic patterns. Over the past year, Chinese regulators have clamped down on the country’s tech giants, including online marketplace Alibaba and food delivery group Meituan. As the country formalizes its data protection regime, it has also positioned itself as a leader in autonomous vehicle standards. The crackdown on big tech is part of a nationwide antitrust push while also solidifying the central government’s power over private tycoons. Didi stocks fell by roughly ten percent following the announcement of the probe.

China, India Build-up Forces on Border in Latest Sign of Drawn-Out Tensions

India has reportedly moved an additional 50,000 troops to its border with China. This brings the total number of Indian soldiers on the border to approximately 200,000. The shift in forces, which have traditionally been arrayed west along the border with arch-rival Pakistan, is a historic change in Indian defense posture, signaling that New Delhi expects to be in a long-term confrontation with Beijing over its Himalayan territory. In statements made last week to the press, Chinese Foreign Ministry spokesperson Zhao Lijian pointed to India increasing its military deployment to the region as the “root cause” for increased border tensions.

The deployment comes as both countries have completed extensive infrastructure upgrades to the region and brought in heavy materiel. Both sides have upgraded facilities in the area to house additional troops. China last week also completed construction of a new bullet train that connects the Tibetan capital of Lhasa to Nyingchi, near the border of the disputed Indian state of Arunachal Pradesh, which China claims as “South Tibet.” Though Beijing claims that the new railway will bring tourism and development to the region, it could also be used to rapidly move Chinese forces to the border during an emergency.

China has emphasized development of these regions, settling people and constructing new towns near the border with India and Bhutan in order to bolster its territorial claims. Reports have emerged that some of these settlements have been found to be within the internationally recognized borders of India and Bhutan, though claimed by China. Ahead of the Chinese Communist Party (CCP)’s centenary celebrations, a Tibetan resident of one of these new border towns was honored as a “guardian of the country’s border on the Qinghai-Tibetan plateau.”

The reports of additional Indian forces to the border, and the recent high-profile emphasis of border development at the CCP centenary signals that negotiations to settle the issue and cool tensions are failing. New Delhi and Beijing are preparing for a drawn out confrontation in the contested region.

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