\

Arun Sahgal
Angana Guha Roy
Sanket Joshi

Volume VI, Issue 5

 China Monitor
Volume VI, Issue 5
May 2023
ABOUT US
Founded in 1994, the Delhi Policy Group (DPG) is among India’s oldest think tanks with its primary focus on
strategic and international issues of critical national interest. DPG is a non-partisan institution and is
independently funded by a non-profit Trust. Over past decades, DPG has established itself in both domestic
and international circles and is widely recognised today among the top security think tanks of India and of
Asia’s major powers.
Since 2016, in keeping with India’s increasing global profile, DPG has expanded its focus areas to include
India’s regional and global role and its policies in the Indo-Pacific. In a realist environment, DPG remains
mindful of the need to align India’s ambitions with matching strategies and capabilities, from diplomatic
initiatives to security policy and military modernisation.
At a time of disruptive change in the global order, DPG aims to deliver research based, relevant, reliable and
realist policy perspectives to an actively engaged public, both at home and abroad. DPG is deeply committed
to the growth of India’s national power and purpose, the security and prosperity of the people of India and
India’s contributions to the global public good. We remain firmly anchored within these foundational
principles which have defined DPG since its inception.

China Monitor
The DPG China Monitor features developments related to China during the month and is
compiled by our research team comprising Brig. Arun Sahgal (Retd.), Senior Fellow, Dr.
Angana Guha Roy and Sanket Joshi, Research Associates, from open-source reports and
publications.

Cover Photograph:
India’s External Affairs Minister, Dr. S. Jaishankar, holds a meeting with Chinese Foreign Minister Qin Gang on the sidelines of
the SCO Foreign Minister’s meeting in Goa, India on May 4, 2023. Source: Twitter/@DrSJaishankar
Wang Yi, Director of the Office of the Foreign Affairs Commission of the CPC Central Committee met US National Security
Advisor Jake Sullivan in Vienna on May 11, 2023. Source: Twitter/@NSC_Spox
Chinese President Xi Jinping and leaders of the five Central Asian countries plant pomegranate trees representing China-Central
Asia solidarity and cooperation after the first China-Central Asia Summit in Xi’an on May 19, 2023. Source: Xinhua/Liu Bin

© 2023 by the Delhi Policy Group

Delhi Policy Group

Core 5A, 1st Floor,
India Habitat Centre,
Lodhi Road, New Delhi- 110003.
www.delhipolicygroup.org
 China Monitor
Volume VI, Issue 5
May 2023

Contents

Abstract ......................................................................................................................................... i
Foreign and Security Policy ............................................................................................... 1
I. China-India Relations .................................................................................................. 1
II. China-South Asia Relations ...................................................................................... 3
III. China-United States Relations ...............................................................................4
IV. China-Russia Relations.............................................................................................8
V. China-European Union Relations ........................................................................10
Internal Developments ....................................................................................................... 11
Key Meetings and Addresses by Chinese Leaders ............................................... 11
Trade and Economy ............................................................................................................. 13
Defence and Security .......................................................................................................... 14
Technology .............................................................................................................................. 16
Volume VI, Issue 5 | May 2023

Abstract

The 27th Meeting of the Working Mechanism for Consultation and

Coordination on India-China Border Affairs (WMCC) was held in New Delhi on
May 31, 2023. India sought progress on disengagement in remaining areas. The
two sides agreed to hold the next round of senior military commander level
talks in the near future.

On May 4, 2023, India’s External Affairs Minister, Dr. S. Jaishankar, met Chinese
Foreign Minister, Qin Gang, on the sidelines of the Shanghai Cooperation
Organisation (SCO) Foreign Minister’s meeting in Goa. Reacting to the Chinese
Foreign Minister’s contention that the situation along India-China borders is
stable, EAM Dr. Jaishankar reiterated that India-China relations are not normal;
there cannot be normalcy if peace and tranquillity in the border areas remain
disturbed. Mutual respect, mutual sensitivity, and mutual interest must remain
the basis of the relationship, Dr. Jaishankar added.

During the 18th round of military commanders' talks held on April 23, 2023, the
PLA put forward a demand for creating a 15-20 Km buffer zone or 'no patrol
zone' inside India’s claim lines as a precondition for disengagement from the
Depsang Plains. India rejected the Chinese claim and instead offered a limited
3-4 Km buffer zone, which was not acceptable to the Chinese side. The Status
quo prevails in the region.

Given the unresolved standoff in the Depsang Plains, the Indian Army is
planning to restore patrolling in the area. Among the two remaining friction
points of Depsang and Chumar, Depsang is strategically more important, as it
is sandwiched between the Siachen Glacier on one side and China-controlled
Aksai Chin on the other.

In regional developments, on May 6, 2023, China and Pakistan held their fourth
Foreign Ministers’ Strategic Dialogue in Islamabad. China reiterated that the
“Kashmir dispute was left over from history” and should be “properly and
peacefully resolved in accordance with the UN Charter, relevant Security
Council resolutions, and bilateral agreements”.

Along with the bilateral Foreign Ministers dialogue, Pakistan also hosted the 5th
China-Pakistan-Afghanistan Trilateral Foreign Ministers’ meeting. The three
countries agreed to enhance their economic relations by extending CPEC to
Afghanistan, cooperation on counter-terrorism, and extending connectivity.

China Monitor | i
Volume VI, Issue 5 | May 2023

China hosted the first China-Central Asia Summit in Xi’an. President Xi hailed
China-Central Asia ties as entering a new era and stressed the importance of
“staying committed to mutual assistance, common development, universal
security, and everlasting friendship”.

Leaders of the G7 met in Hiroshima, Japan on May 19, 2023. The G7 Leaders’
Communiqué expressed concerns over China’s coercive economic practices,
unilateral attempts to change the status quo in the East and South China Seas,
the importance of peace and stability across the Taiwan Straits, and concerns
about the human rights situation in Tibet, Hong Kong, and Xinjiang. Beijing
counselled the G7 to stop hyping China-related issues and asserted that “the
international community does not accept the G7-dominated Western rules that
seek to divide the world based on ideologies and create exclusive small blocs
designed to serve America-first and vested interests of a few”.

People’s Daily editorial severely criticised Japan for hyping the “China threat”
as part of its G7 Presidency. It also expressed concerns about Japan
spearheading NATO’s forays into Asia-Pacific with plans to open a NATO office
in Tokyo.

US-China tensions over Taiwan showed no signs of abating. As the US

continues to strengthen Taiwan’s self-defence capabilities, China warned that
the US is turning Taiwan into a “powder keg”. China turned down a US request
to schedule defence minister level talks on the margins of the Shangri-la
Dialogue in Singapore. However, the commerce ministers of the two countries
held trade consultations during the month and diplomatic contacts are
continuing. Wang Yi, Director of the Office of the Foreign Affairs Commission
of the CPC Central Committee met US National Security Advisor, Jake Sullivan,
in Vienna on May 10-11, 2023. With mutual trust impaired between the two
sides, Chinese state media reminded Washington that it "cannot warm up
China-US relations only with words".

Chinese Foreign Minister Qin Gang visited Germany, France, and Norway
between May 8-12, 2023. Even as this visit strengthened dialogue and mutual
trust between the two sides, a Global Times editorial shed light on four major
issues that mar the China-Europe relationship. These include the Ukraine
crisis, European impulse to interfere in China’s internal affairs, especially the
Taiwan question, the EU’s attempts to decouple from China in the name of
trade de-risking and succumbing to the US’s China containment strategy.

On May 24, 2023, President Xi met Russian Prime Minister Mikhail Mishustin
in Beijing. The two sides reiterated their resolve to deepen the comprehensive

China Monitor | ii
Volume VI, Issue 5 | May 2023

strategic partnership and stand together to repel the collective West’s attempts
to maintain their global dominance.

China's Special Envoy for Eurasian Affairs, during a visit to Ukraine on May 15,
2023, stressed that “there is no panacea to resolve the Ukraine crisis”, urging all
parties to build trust and create the conditions for facilitating peace talks that
will end the conflict.

Amidst an uneven post-Covid economic recovery, China’s factory activity

dipped in April 2023 owing to weak demand. Growing youth unemployment,
and Chinese local government’s "Hidden Debt" further added to Chinese
economic concerns.

China Monitor | iii

Volume VI, Issue 5 | May 2023

Foreign and Security Policy

I. China-India Relations

The month saw several high-level political and military exchanges. The 27th
Meeting of the Working Mechanism for Consultation and Coordination on
India-China Border Affairs (WMCC) was held in New Delhi on May 31, 2023.1
India sought progress on disengagement in remaining areas. The two sides
agreed to hold the next round of senior military commander level talks in the
near future.2

India and China’s Foreign Ministers met on the sidelines of the Shanghai
Cooperation Organisation (SCO) Foreign Minister’s Meeting, in Goa, on May 4.
There were clear differences in how the outcome of the talks was presented.

India’s External Affairs Minister, Dr. S. Jaishankar, holds a meeting with Chinese Foreign
Minister, Qin Gang, on the sidelines of the SCO Foreign Minister’s meeting in Goa on May 4,
2023. Source: Twitter/@DrSJaishankar

1
In a first since LAC flare-up, India hosts China for in-person meet, The Times of India, June
1, 2023.
2
Ibid.

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Volume VI, Issue 5 | May 2023

The Chinese foreign ministry press release conveyed the current state at the
India-China border as “generally stable”, urging both sides towards reducing
tensions. 3 Disagreeing with the Chinese statement, EAM Dr. Jaishankar
commented that an abnormal position existed in the border areas.
Underscoring that India’s relations with China are not normal and they cannot
be normal if peace and tranquillity in the border areas remains disturbed”.4 He
also stressed on the need to take the disengagement process forward. At a
separate event, Dr. Jaishankar reiterated that “India faces a very complicated
challenge from China”. Adding that, “mutual respect, sensitivity and interest
have to be the basis of the relationship...How can we get along in the long term
if you don't respect me, if you are not sensitive to my concerns, if you ignore
my interest?".5

Earlier, during the 18th round of military commander’s consultation in April

2023, Chinese interlocutor, raised the issue of creating a 15-20 Km buffer zone
or ‘no patrol zone’ inside India’s claim lines, as a precondition for
disengagement from Depsang Plains.6 Rejecting the demand, India offered a
limited 3-4 Km buffer zone instead, which the Chinese do not accept. In the
backdrop of the continuing standoff in the sector, Indian Army is aiming to
restore patrolling rights to the traditional patrolling points in the Depsang
plains. It is to be noted that among the two remaining friction points, Depsang
is strategically more important. It is part of an area called Sub Sector North
(SSN), sandwiched between Siachen Glacier on one side and China-controlled
Aksai Chin on the other. Depsang has witnessed two major standoffs in the past
in 2013 and 2015.

In other developments, China has been building border defence villages

adjacent to Uttarakhand, 11 kilometres away from the LAC. 7 Additionally, it
plans to construct 400 villages in the eastern sector. Earlier in April 2023, India
expressed serious concerns over Chinese construction in the Amo Chu river
valley in Bhutan that abuts the strategic Doklam plateau.

3
“Qin Gang meets with Indian External Affairs Minister Subrahmanyam Jaishankar,” MFA,
China, May 5, 2023
4
“EAM Jaishankar on border issues,” ANI News, May 5, 2023
5
“India facing `very complicated challenge' from China: Jaishankar on India-China border
dispute,” Mint, May 28, 2023
6
“China demands creation of buffer zone inside India-claimed lines on Depsang Plains,” The
Telegraph, May 22, 2023
7
“China building border defence villages 11 km from LAC in Uttarakhand, say sources,” India
Today, May 26, 2023

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Volume VI, Issue 5 | May 2023

II. China-South Asia Relations

On May 6, 2023, China and Pakistan held their fourth Foreign Minister’s
Strategic Dialogue in Islamabad. During the meeting, Pakistan briefed the
Chinese side “on the developments in Jammu and Kashmir”.8 The Chinese side
reiterated that the dispute should be resolved properly and peacefully in
accordance with the UN Charter, relevant Security Council resolutions and
bilateral agreements. Without specifically referring to India's revocation of
Article 370, the statement stressed that “both sides opposed any unilateral
actions that further complicates the already volatile situation”. China recently
boycotted a G20 working group meeting held in Kashmir, citing its firm
opposition “to holding any kind of international meetings in a disputed
territory”.9

The Foreign Ministers' meeting also highlighted the development’s pertaining

to the China-Pakistan Economic Corridor (CPEC), stressing the need to expand
cooperation encompassing areas such as agriculture, mining, science and
information technology.10 Following the bilateral dialogue, Pakistan hosted 5th
China-Pakistan-Afghanistan Trilateral Foreign Ministers’ Dialogue, wherein
they agreed to enhance their economic relations by extending the CPEC to
Afghanistan. 11 The three, also agreed to advance political engagement,
counterterrorism cooperation, trade and investments including connectivity
under the trilateral framework. Days after the trilateral meeting, Afghanistan
resumed commercial flights with China after a hiatus of three years, aimed at
boosting bilateral economic and political relations.12

Bangladesh and China held discussion on the issue of connectivity under

Beijing's Belt and Road Initiative (BRI) at the 12th Foreign Office Consultations
(FOC) held in Dhaka on May 27.13 Both sides also discussed other multilateral
and regional issues including the Rohingya crisis. China offered to facilitate the
early, safe, sustainable, and voluntary repatriation of the Rohingyas to Rakhine
State of Myanmar.

8
“4th round of Pakistan-China Foreign Ministers’ Strategic Dialogue Joint Press Release,”
MFA, China, May 7. 2023
9
“China boycotts G20 meeting held by India in Kashmir region,” CNN, May 23, 2023
10
“Qin Gang: Work All Out to Advance High-quality Development of China-Pakistan
Economic Corridor,” MFA, China, May 6, 2023
11
“Joint Statement of the 5th China-Afghanistan-Pakistan Foreign Ministers' Dialogue,” MFA,
China, May 9, 2023
12
“Afghans welcome flight resumption between Afghanistan, China,” Xinhua, May 26, 2023
13
“Bangladesh, China show interest to regional connectivity under BRI”, Prothom Alo, May 27,
2023

China Monitor | 3
Volume VI, Issue 5 | May 2023

In an important development, China is reportedly planning to recruit Nepal's

Gurkha security personnel to the People’s Liberation Army (PLA). According to
analysts, “Chinese actions to induct Gorkha soldiers in the PLA is seen as yet
another attempt to deride India... if implemented, it could pose India serious
problems".14

In wake of Sri Lanka's decision to liberalise its fuel retail marketing, Sri Lanka
signed a long-term agreement with Chinese oil and gas giant Sinopec for
storage, distribution, and sale of petroleum products in Sri Lanka. This will
create a direct challenge to Indian interests. Since 2003, Indian Oil Company
(IOC) has been the only foreign company allowed to operate in the country.15

III. China-United States Relations

Amidst the rising tensions, the US indicated a desire to thaw its diplomatic
relationship with China. US President Joe Biden at the end of the G7 Summit
stressed that he expected ties with China to improve “very shortly”.16 Despite US
President’s assertions, China is not convinced. It believes, camp confrontation,
decoupling, and efforts to contain China are status quo, regardless of how the
West packages them. China's new Ambassador to the US, Xie Feng, said that
China-US relations face "serious difficulties and challenges” while noting that
he aims to enhance bilateral cooperation.17

Despite grandstanding, both sides held high-level diplomatic and trade

consultations to keep the channels of communication open. US National
Security Adviser Jake Sullivan met Chinese official Wang Yi in Vienna for
“candid” and “constructive” talks on May 10-11. 18 The meeting is among the
highest-level engagement between the US and Chinese officials since the spy
balloon incident earlier this year. Both sides had constructive discussions on
key issues including bilateral relations, global and regional security issues,
including war in Ukraine, and cross-Strait issues, among others.19 As the talks
took place in the backdrop of severe damage to the mutual trust between the
two sides, Chinese state media reminded Washington that it “cannot warm up

14
“Why India Should Be Worried About Chinese Army's Plans to Recruit Nepali Gorkhas,” The
Wire, May 10, 2023
15
“Fuel-starved Sri Lanka enters fuel deal with China’s Sinopec: Official,” PTI, May 22, 2023
16
“Remarks by President Biden in a Press Conference,” White House, May 21, 2023
17
“China’s new ambassador assumes office amid resumption of high-level re-engagement
between Beijing and Washington,” Global Times, May 24, 2023
18
“Readout of National Security Advisor Jake Sullivan’s Meeting with Chinese Communist
Party Politburo Member and Director of the Office of the Foreign Affairs Commission
Wang Yi,” White House, May 11, 2023
19
Ibid.

China Monitor | 4
Volume VI, Issue 5 | May 2023

China-US relations by only using words”. 20 Additionally, Beijing rejected

Washington's proposal for a meeting between US Defence Secretary Austin and
Chinese Defence Minister Li Shangfu at the Shangri-La Dialogue in Singapore
in June 2023.21

Wang Yi, Director of the Office of the Foreign Affairs Commission of the CPC Central
Committee met US National Security Advisor Jake Sullivan in Vienna on May 11, 2023.
Source: Twitter/@NSC_Spox

On May 25-26, 2023, China's Commerce Minister, Weng Wentao met US Trade
Representative, Katherine Tai, and Commerce Secretary Gina Raimondo.
Chinese analysts see this as a prelude to further high-level engagement, paving
the way for improved China-US trade and economic ties. 22 Ambassador Tai
highlighted the need to address the critical imbalances caused by China’s state-
led, non-market approach to the economy and its trade policy. She emphasised
the importance of maintaining open lines of communications, building on the
engagement between President Biden and President Xi in Bali, Indonesia, in

20
“Washington cannot warm up China-US relations using only words: Global Times
editorial”, Global Times, May 13, 2023.
21
China rejects US proposal for defense chiefs to meet in Singapore this week, CNN, May 31,
2023
22
“China, US ‘candid’ trade talks in Washington pave way for addressing ‘core issues’ in ties,”
Global Times, May 26, 2023

China Monitor | 5
Volume VI, Issue 5 | May 2023

November 2022.23 Chinese Commerce Minister Wang Wentao expressed deep

concerns about the US’s economic and trade policies toward China, especially
its policy on semiconductors and export controls, and outbound investment
review policy.24 Earlier, China strongly opposed negotiations between the US
and Taiwan over the “21st Century Trade Initiative”.25

Amidst the negotiations in Washington over raising the US government’s USD

31.4 trillion debt ceiling, analysts raised concerns about the sustainability of US
debt.26 Adding that, “de-dollarization may reshape global markets in such a way
that it will fundamentally undermine America’s bid to float itself on infinite
debt”.27

G7’s Hiroshima Statement attempted to maintain balance on China by

emphasising that “our policy approaches are not designed to harm nor do we
seek to thwart China’s economic progress and development, including de-
coupling".28 However, it warned Beijing over its “militarization activities” and
“expansive maritime claims” in the South and East China Seas, while seeking to
win its support for pressing Russia to halt its invasion of Ukraine.29

G7 called on Beijing to adhere to international norms, including addressing

“non-market policies and practices,” refraining from “unilateral attempts to
change the status quo by force or coercion” and respecting human rights,
including in Tibet and Xinjiang.30

Reaction from Beijing was furious, with China’s Foreign Ministry accusing the
G7 of using the summit to “smear and attack China and brazenly interfere in
the country’s internal affairs.” It refuted accusations of economic coercion,
claiming Washington’s unilateral sanctions against China and acts of

23
“Readout of Ambassador Katherine Tai's Meeting with Minister of Commerce of the
People's Republic of China Wang Wentao,” Office of the US Trade Representative, May 26,
2023
24
“Chinese, US commerce chiefs hold ‘candid’ talks in Washington, pave way for addressing
‘pragmatic issues’ in frayed ties”, Global Times, May 26, 2023.
25
“China firmly opposes US' 'trade initiative' with Taiwan island: FM”, Global Times, May 19,
2023.
26
“Is the policy of infinite US debt sustainable?”, People’s Daily, May 16, 2023.
27
ibid.
28
“G7 Hiroshima Leaders’ Communiqué,” White House, May 20, 2023
29
Ibid.
30
“China and Russia, lash out at G7 double containment attempt”, Japan Times, May 21, 2023

China Monitor | 6
Volume VI, Issue 5 | May 2023

decoupling and disrupting industrial and supply chains as “the real coercer that
politicizes and weaponizes economic and trade relations.”31

On Taiwan, Beijing reiterated its position that the self-ruled island is part of
China, adding that while the G7 keeps emphasizing cross-strait peace, it says
nothing about the need to oppose “Taiwan independence.”32

Referring to G7 calls on China to play by “international rules,” Beijing reiterated

that it “upholds the U.N. centred international system” and the basic norms
governing international relations built around the U.N. Charter, it “will never
accept the so-called rules imposed by the few.”33

Weeks after Taiwan said it will buy as many as 400 US land-launched Harpoon
missiles in the face of rising threat from China, the United States plans to
provide military assistance to Taiwan 34 through the Presidential Drawdown
Authority (PDA), a tool which allowed the Biden administration to send arms to
Ukraine.35 Following these developments, a Chinese People's Liberation Army
(PLA) Navy flotilla led by the aircraft carrier Shandong sailed through the
Taiwan Straits. 36 Chinese mainland experts said the Taiwan Straits is the
shortest route for the south-based aircraft carrier to travel north sending
warnings to the "Taiwan independence" forces in the process.37

US Department of State recently issued a multi nation alert revealing China’s

plan to carry out cyber-attacks against critical infrastructure, including oil and
gas pipelines and rail systems. 38 The US Cybersecurity and Infrastructure
Security Agency (CISA) in a statement said it was working to understand "the
breadth of potential intrusions and associated impacts. The Chinese
government called the warning issued by the United States and its allies a
"collective disinformation campaign.”39

31
Ibid.
32
Ibid.
33
Ibid
34
“Planned US arms shipments to Taiwan set off Beijing”, Asia Times, May 18, 2023
35
Use of Presidential Drawdown Authority for Military Assistance for Ukraine, US Department
of State, May 9, 2023
36
“PLA Navy aircraft carrier Shandong transits Taiwan Straits after US missile delivery to
Taiwan island,” Global Times, May 27, 2023
37
Ibid.
38
“U.S. warns China could hack infrastructure, including pipelines, rail systems,” Reuters, May
26, 2023
39
ibid.

China Monitor | 7
Volume VI, Issue 5 | May 2023

Further, China’s National Computer Virus Emergency Response Centre and

cybersecurity company 360 jointly released a report on the US Central
Intelligence Agency’s (CIA) cyber-attacks on other countries. 40 According to
the report, the CIA used the internet and digital technologies to promote
“colour revolutions” abroad. 41 Describing the CIA as a “syringe filled with
viruses”, a Global Times editorial claimed that the CIA is the “biggest source of
chaos that messes up the world to maintain US hegemony”.42 People’s Daily, on
its part, asserted that the US is a “total hypocrite when it comes to safeguarding
cybersecurity”.43

The Chinese government also released a report critical of the US's "notorious
track record of coercive diplomacy" through unilateral sanctions, military
threats, political isolation, and technological blockade.44

IV. China-Russia Relations

China and Russia have been doubling down on their "no limits partnership",
holding high-level meetings in Beijing and Moscow to deepen ties in several
areas.

A week after meeting Ukrainian President Volodymyr Zelenskyy, China's

special envoy Li Hui met Russian Foreign Minister Sergei Lavrov on May 26 in
Moscow. 45 Russian Foreign Minister Lavrov underscored the "serious
obstacles" to resuming peace talks with Ukraine despite Moscow's
commitment to a political-diplomatic resolution of the conflict. Lavrov,
however, praised Beijing's "balanced" position on the Ukraine conflict.46 Both
sides further discussed strengthening Russian-Chinese foreign policy
cooperation" aimed at maintaining peace and stability in the region”.47

40
“Infographics: How US leveraged Internet, technology to promote color revolutions
abroad”, People’s Daily, May 4, 2023.
41
Ibid.
42
“CIA once again confirms US' title as 'the world's biggest source of chaos': Global Times
editorial”, Global Times, May 4, 2023.
43
“U.S. a total hypocrite when it comes to safeguarding cybersecurity”, People’s Daily, May 9,
2023.
44
“America's Coercive Diplomacy and Its Harm”, Ministry of Foreign Affairs of the People’s
Republic of China, May 18, 2023.
45
“China says Ukraine envoy met with Zelenskyy during talks in Kyiv,”AP News, May 18, 2023
46
“Russia's Lavrov tells China envoy 'serious obstacles' to Ukraine peace,” Business Recorder,
May 26, 2023
47
Ibid.

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Chinese President Xi Jinping met with Russian Prime Minister Mikhail Mishustin in Beijing on
May 24, 2023. Source: Official Website of the Prime Minister of the Russian Federation

Russian Prime Minister Mikhail Mishustin visited China between May 23-24 to
discuss bilateral economic ties with Beijing. Mishustin who is the highest-
ranking Russian official to visit Beijing since the start of the Ukraine war called
Russia's ties with China “at an unprecedented high level. 48 During the visit,
Russia and China signed several agreements involving investment in trade
services, promoting agricultural exports, and boosting sports cooperation.49

President Xi offered China's firm support on issues concerning "each other's

core interests and strengthen collaboration in multilateral arenas". He urged
the two countries to "push cooperation in various fields to a higher level," and
"raise the level of economic, trade and investment cooperation."50 Russian PM
Mishustin underscored that Moscow and Beijing will stand together to repel the
collective West’s attempts to maintain their global dominance and will push
back hard against such dangerous ambitions.51

48
“Russia, China sign new agreements, defying Western criticism”, Al Jazeera, May 24, 2023
49
“Russia and China deepen economic ties amid surge in trade since Ukraine invasion,” The
Guardian, May 24, 2023
50
“China's Xi Offers Russia 'Firm Support' in 'Core Interests',” Moscow Times, May 24, 2023
51
“Russia, China to jointly fight against West’s bid to keep global dominance — PM”, TASS
(Russian News Agency), May 24, 2023.

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V. China-European Union Relations

Chinese Foreign Minister Qin Gang visited Germany, France, and Norway
between May 8-12, 2023.52 Even as the visit strengthened dialogue and mutual
trust between the two sides, Chinese state media shed light on four major
problems in the China-Europe relationship. These include the Ukraine crisis,
European impulse to interfere in China’s internal affairs, especially the Taiwan
question, EU’s attempts to decouple from China in the name of trade de-risking
and succumbing to the US’s China containment strategy. 53 Chinese Foreign
Minister asserted that the above issues could be resolved if Europe holds a long-
term view by changing its perspective toward China.54

European Council President Charles Michel during the G7 summit in

Hiroshima conveyed that it was in the EU’s interest to maintain “stable and
constructive” cooperation with China. “Given its role in the international
community and the size of its economy, China has a special responsibility in
the world and it has to play by international rules,” he added.55 Earlier in the
month, China’s foreign minister Qin Gang condemned EU proposals to impose
sanctions on Chinese companies citing Beijing’s support for Russia in the
Ukraine war, vowing to react “strictly and firmly” to defend its businesses”.56

The European External Action Service has prepared a proposal to recalibrate

the EU’s China policy. 57 In a letter accompanying the proposal, EU foreign
policy chief Josep Borrell said there were three reasons for "re-calibrating"
China policy. 58 These were "the degree to which China is changing with
nationalism and ideology on the rise; the hardening of the US-China
competition affecting all policies areas; and the fact that China is a key player
in regional and global issues".59

According to a report in Politico, the European Union’s diplomatic arm wants

member countries to “be prepared” for a potentially critical escalation in the

52
“Europe will be less confused, entangled if it listens to what China says: Global Times
editorial”, Global Times, May 11, 2023.
53
ibid.
54
ibid.
55
“G7 prepares new Russia sanctions as Zelenskiy to attend summit in person,” The Guardian,
May 19, 2023
56
“China vows to retaliate against EU sanctions on its companies”, Financial Times, May 9,
2023
57
“EU proposes to recalibrate China strategy,” Euractiv, May 11, 2023
58
“EU plans to tweak China policy but keep balanced approach,” The Economic Times, May
12, 2023
59
Ibid.

China Monitor | 10
Volume VI, Issue 5 | May 2023

crisis over Taiwan, warning that a military conflict would upend the vital supply
of microchips to Europe.60 Reportedly, “cooperation, competition, and rivalry
will continue to be at the centre of the EU’s China policy.61

Internal Developments

Key Meetings and Addresses by Chinese Leaders

On May 4, 2023, Chinese Foreign Minister, Qin Gang, addressed the Shanghai
Cooperation Organisation’s (SCO) Foreign Minister’s meeting in Goa, India.62
Noting that the world is facing multiple challenges including a “resurgence of
the Cold War mentality, unilateral protectionism, hegemonism, and power
politics”, Qin called upon SCO member states to “uphold strategic
independence and deepen security cooperation”.63 Major issues touched in FM
Qin’s address included “advocating openness and inclusiveness in the
international economic order” and “improving global governance” through the
Global Development Initiative (GDI), Global Security Initiative (GSI), and Global
Civilisation Initiative (GCI).64

Chinese President Xi Jinping and leaders of the five Central Asian countries plant
pomegranate trees representing China-Central Asia solidarity and cooperation after the first
China-Central Asia Summit in Xi’an, May 19, 2023. Source: Xinhua/Liu Bin

60
“Don’t isolate China, Brussels tells EU capitals,”Politico, May 11, 2023
61
“EU plans to tweak China policy but keep balanced approach,” The Print, May 12, 2023
62
“Chinese FM urges strategic independence, security cooperation at SCO meeting”, Xinhua,
May 5, 2023.
63
Ibid.
64
Ibid.

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Volume VI, Issue 5 | May 2023

The first China-Central Asia Summit concluded in Xi’an, China on May 19 after
two days of high-level meetings and discussions.65 President Xi hailed China-
Central Asia ties as entering a new era and stressed the importance of “staying
committed to mutual assistance, common development, universal security,
and everlasting friendship”. 66 Major issues touched in the meeting included
“supporting each other on issues of core interests”, “expanding economic ties
and deepening BRI cooperation”, “resolutely opposing foreign interference in
internal affairs”, and “maintaining a zero-tolerance towards terrorism,
separatism, and extremism”.67 The participating countries also agreed to make
the summit biennial, with the second China-Central Asia Summit scheduled to
be held in Kazakhstan in 2025.68

Global Times editorial asserted that while the Xi’an Summit demonstrated “true
multilateralism the “G7’s Hiroshima Summit displayed pseudo-multilateralism
provoking geopolitical confrontation”. 69 “Xi’an injected a multilateral clean
stream, while Hiroshima dumped political sewage”, it added.70

Highlighting strong bonds between China and the Arab League, President Xi
sent a congratulatory letter to the 32nd Arab League Summit held in Jeddah,
Saudi Arabia on May 19, 2023.71 Xi noted that the strategic partnership between
China and the Arab countries is a model of South-South cooperation and
mutual benefit. 72 As Syrian President, Bashar al-Assad, attended the Arab
League Summit after more than a decade of suspension, a Xinhua report
stressed that “growing Arab reconciliation underscores the US’s weaning
influence in the Middle East”.73

President Xi, in his remarks at the first meeting of the Central Commission for
Financial and Economic Affairs (CCFEA), called for the modernisation of the
country’s industrial system and high-quality population development. 74

65
“Xinhua Headlines-Xi Focus: Xi chairs milestone summit, hails new era of China-Central
Asia ties”, Xinhua, May 19, 2023.
66
Ibid.
67
Ibid.
68
Ibid.
69
“Xi'an injects multilateral clean stream while Hiroshima dumps political sewage: Global
Times editorial”, Global Times, May 18, 2023.
70
Ibid.
71
“Xi sends congratulations to 32nd Arab League Summit”, Xinhua, May 19, 2023.
72
Ibid.
73
“Xinhua Headlines: Syria returns to Arab summit amid growing reconciliation wave in
Mideast”, Xinhua, May 20, 2023.
74
“Xi Focus: Xi urges modernization of industrial system, high-quality population
development”, Xinhua, May 6, 2023.

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Volume VI, Issue 5 | May 2023

Beijing is considering a number of policy measures to boost the country’s

falling birth rate.75

Further, Xi visited North China's Hebei Province to inspect the progress in

development of the Xiong'an New Area.76 China aims to develop Xiong'an New
Area to a level comparable to that of the Shenzhen Special Economic Zone and
the Shanghai Pudong New Area.77 Xi also reiterated his vision of making the
Beijing-Tianjin-Hebei region pioneer in pursuing Chinese modernisation.78

Premier Li Qiang conducted an inspection tour of China’s Shandong Province

where he emphasised “boosting the country’s real economy”, “expanding
domestic demand”, and “stabilizing external demand” to promote economic
recovery.79

Trade and Economy

Amidst an uneven post-Covid economic recovery, owing to weak demand,

China’s factory activity dipped in April 2023.80 Adding to Chinese concerns,
youth unemployment in the country reached a record high in the same
month.81 Chinese local government’s "Hidden Debt" which is estimated to be
almost USD 10 trillion has also raised concern. 82 Meanwhile, China’s export
growth has slowed and markets have diverged, with strong growth in Southeast
Asia, Africa, and Russia, countering a slowdown in some of the country's top
export destinations, notably the US and the EU.83 It is to be noted that, new-

75
“China’s population woes have state organs, demographers calling for drastic societal
changes to boost birth rate”, South China Morning Post, May 16, 2023.
76
“Xi Focus: Xi inspects Xiong'an New Area, urges new progress for "city of future", Xinhua,
May 10, 2023.
77
Ibid.
78
“Xi calls for making Beijing-Tianjin-Hebei region pioneer in pursuing Chinese
modernization”, People’s Daily, May 13, 2023.
79
“Chinese premier urges efforts to boost real economy, expand demand”, Xinhua, May 18,
2023.
80
“China’s factory activity dipped in April on weak demand as bumpy post-Covid economic
recovery continues”, South China Morning Post, May 4, 2023.
81
“China’s youth unemployment hits record high in April in ‘worrying sign’ for economic
recovery”, South China Morning Post, May 16, 2023.
82
“Cover Story: China’s Effort to Move Mountain of ‘Hidden Debt’ Faces Uphill Climb”, Caixin
Global, May 22, 2023.
83
“China’s Slowing Export Growth Masks Diverging Markets”, Caixin Global, May 10, 2023.

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Volume VI, Issue 5 | May 2023

energy products such as electric vehicles (EVs), lithium-ion batteries, and solar
batteries are currently driving China’s export sector.84

Despite concerns about China’s economic recovery, the country’s tourism and
consumption rebounded significantly during the May Day holiday.85 In light of
this, Xinhua asserted that “Holiday spending mirrors China’s economic vitality
and boosts global growth confidence”.86 According to the data released by the
General Administration of Customs (GAC), China’s foreign trade continued to
grow in the first four months of 2023.87 However, Beijing’s national security
raids on foreign consultancy firms such as Capvision, Bain & Company, and
Mintz Group has triggered foreign investors’ outcry about the absence of
predictable, transparent, and stable policies in China.88

Defence and Security

People’s Daily editorial severely criticised Japan for hyping the “China threat”
as part of its G7 Presidency. 89 It also expressed concerns about Japan
spearheading NATO’s forays into Asia-Pacific with plans to open NATO office
in Tokyo.90 Chinese analysts criticised Japan for deploying Patriot missiles on
Miyako Island near Taiwan as an attempt to interfere in the Taiwan question.91
Amidst rising tensions between China and Japan, a flotilla of the PLA sailed
around Japan. On the other hand, Chinese and Japanese Defence Minister’s
held talks for the first time through their newly established maritime and air
liaison mechanism phone line.92

US-China tensions over Taiwan show no signs of abating. As the US continues

to strengthen Taiwan’s self-defence capabilities, Beijing warned that the US is
turning Taiwan into a “powder keg”. 93 Reacting to these developments, the

84
“China’s supercharged new-energy sector is propping up exports, but will it last?”, South
China Morning Post, May 9, 2023.
85
“Holiday spending mirrors China's economic vitality, boosts global growth confidence”,
Xinhua, May 7, 2023.
86
Ibid.
87
“China's foreign trade grows at faster pace despite challenges”, Xinhua, May 9, 2023.
88
China’s national security raids appear to undercut Beijing’s efforts to woo foreign investors,
Global Impact Newsletter South China Morning Post, May 20, 2023.
89
“Japan undermines regional interests by provoking bloc confrontation”, People’s Daily, May
21, 2023.
90
Ibid.
91
“Japan's Patriot missile deployment on Miyako Island slammed as further attempt to
interfere in Taiwan question”, Global Times, May 10, 2023.
92
“Chinese, Japanese defense chiefs talk through maritime and air liaison mechanism direct
phone line for 1st time”, Global Times, May 16, 2023.
93
“U.S. is turning Taiwan into "powder keg": FM spokesperson”, Xinhua, May 5, 2023.

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Volume VI, Issue 5 | May 2023

Chinese analysts shed light on the PLA’s enhanced national defence

capabilities that include reconnaissance drones encircling Taiwan, providing
intelligence for fire strikes, dispatching of warships to the Sea of Japan, and
holding joint maritime drills with Singapore.94 Meanwhile, in a letter, Xi urged
the country's submarine crew to achieve the goals set for the PLA's centenary
in 2027 and become an elite force. 95 In the aftermath of Shandong aircraft
carrier fleets combat readiness drills in the Western Pacific, Chinese experts
noted that “it refutes the arguments that Chinese aircraft carriers only play
theatrical role but pose little threat”.96

The US and Philippines recently concluded bilateral defence guidelines

affirming that the mutual defence treaty between the two countries covers the
South China Sea (SCS).97 Chinese Ministry of National Defence “opposed any
country using the bilateral treaty as an excuse to meddle in the SCS,
undermining China’s territorial sovereignty and maritime rights”.98

Debt ceiling negotiations in Washington forced QUAD's Sydney Summit to be

cancelled. 99 Instead, the leaders met on the side-lines of the G7 Summit in
Japan. Chinese analysts noted that the “cancellation of the Sydney Summit is a
fatal blow to the QUAD and it foreshadows the fate of other US-led anti-China
blocs”.100

Amidst burgeoning strategic competition between the US-led West and China-
Russia axis, Gen. Mark Milley, Chairman of the US Joint Chiefs of Staff,
reportedly stressed that the military alliance between China and Russia is not
in America's interests and that the US will do everything it can to stop it.101 The
Chinese Ministry of National Defence rejected Gen. Mark Milley’s remarks as a
reflection of Washington’s “anxiety” and “outdated Cold War mentality”. 102

94
“Taiwan island encirclement drone flights, far sea voyages highlight enhanced PLA
capabilities of national defence”, Global Times, May 4, 2023.
95
“Xi urges submarine crew to become elite force”, Chinese Ministry of National Defence,
May 11, 2023.
96
“Do Chinese carriers only play theatrical role? Shandong aircraft carrier fleet’s first Western
Pacific drills effectively refute such smears”, Global Times, May 6, 2023.
97
Ibid.
98
Ibid.
99
“Australia cancels Quad summit in Sydney after Biden pulls out”, AL Jazeera, May 17, 2023.
100
“Cancellation of Sydney summit an omen of Quad's future fate”, Global Times, May 18,
2023.
101
“Defense Ministry Spokesperson's Remarks on Recent Media Queries”, Chinese Ministry of
National Defence, May 18, 2023.
102
Ibid.

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Volume VI, Issue 5 | May 2023

Beijing reiterated that China-Russia strategic partnership is based on “non-

alliance, non-confrontation, and no targeting of any third party”.103

China’s Special Envoy for Eurasian Affairs, Li Hui, visited Ukraine on May 15,
2023, and held talks with Ukrainian President Volodymyr Zelenskyy on the
political settlement of the Ukraine crisis.104 Noting that there is “no panacea to
resolve the Ukraine crisis”, Chinese special envoy called upon all parties to
accumulate mutual trust and create conditions for facilitating peace talks that
will end the war.105

Technology

President Xi Jinping in his letter to the ‘Zhongguancun Forum 2023’ reiterated

Beijing’s call for global cooperation on technology. 106 Amidst widening
technology competition with the US-led West, Chinese government has
strengthened support for the country’s semiconductor sector through hefty
subsidies.107 In 2022, Beijing reportedly provided USD 1.75 billion in subsidies
to 190 local chip companies in pursuit of semiconductor self-sufficiency.108
Semiconductor Manufacturing International Corporation (SMIC), China’s most
advanced and largest chip foundry operator was the sectors biggest subsidy
recipient.109

Over the past decade, digital economy has emerged as a new growth engine
driving Chinese modernisation. 110 According to a report by Cyberspace
Administration of China, in 2022, the country’s digital economy stood at CNY
50.2 trillion (USD 7.25 trillion), accounting for 41.5 percent of the GDP.111 Amidst
China’s pursuit of high-tech modernisation of its industrial system, analysts

103
Ibid.
104
“Ukrainian President Zelensky meets with China's special envoy, exchanging views on
political settlement of Ukraine crisis”, Global Times, May 18, 2023.
105
Ibid.
106
“Xi Jinping calls for global cooperation on technology at Zhongguancun as Beijing courts
top scientists”, South China Morning Post, May 26, 2023.
107
“China gave 190 chip firms US$1.75 billion in subsidies in 2022 as it seeks semiconductor
self-sufficiency”, South China Morning Post, May 7, 2023.
108
Ibid.
109
Ibid.
110
“China's digital economy a new growth engine to drive modernization”, Xinhua, April 27,
2023.
111
Ibid.

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Volume VI, Issue 5 | May 2023

expressed concerns about shortage of digital talent in the fields ranging from
software engineering to electronics and automation.112

China’s first domestically developed passenger aircraft ‘C919’ completed its first
commercial flight from Shanghai to Beijing, a milestone in the country’s bid to
challenge Western dominance in aircraft production.113

***

112
“China’s digital talent gap widening amid hi-tech, smart sectors push, reports say”, South
China Morning Post, May 1, 2023.
113
“China’s C919 passenger jet completes first commercial flight from Shanghai to Beijing”,
South China Morning Post, May 28, 2023.

China Monitor | 17
Volume VI, Issue 5 | May 2023

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India

www.delhipolicygroup.org

China Monitor | 18