Driving the Day
1. Xi meets Aung San SuuKyi
On Saturday, Xi Jinping wrapped up a state visit to Myanmar – his first foreign trip of 2020.
Some context: Traditionally a close Chinese ally, Myanmar saw a thaw inrelations with the West after it reformed its political system in the 2010s. But relations with the West have soured againsince 2015due to the Rohingya crisis (see next entry).
Now the country is swinging back into Beijing’s comfortable embrace—and being richly rewarded in the process.
More context: The China-Myanmar Corridor is a key part of the Belt and Road Initiative (BRI). In particular, Xi has got his eye on:
- Developing a deepwater Indian Ocean port
- An oil and gas pipeline aimed at diversifying China’s energy sources
While in town, Xi met with Burmese State Counsellor Aung San Suu Kyi and signed 33 agreements and protocols – 13 of which were infrastructure related.
Get smart: Chinese-invested infrastructure projects in Myanmar haveseen several false starts – not to mention significant popular resistance – in recent years.
Get smarter: As Beijing looks to recalibrate the BRI, Xi needs a win to show that the project still has legs. Myanmar may be just the boost it needs.
Xinhua:Xi meets Myanmar State Counsellor Aung San Suu Kyi
Xinhua:Myanmar experts hail China-Myanmar future cooperation after Xi’s state visit
SCMP:Chinese President Xi Jinping wraps up Myanmar visit with string of infrastructure deals, including strategic Indian Ocean port
Driving the Day
2.China supports Myanmar on Rohingya issue
There’s another reason for the chummy relationship between China and Myanmar these days.
- Unlike many Western countries, Beijing doesn’t ask too many questions when it comes to “internal affairs.”
Some context: Since 2015, Myanmar has faced growing international backlash for its treatment of the Rohingya – a Muslim minority group concentrated in the west of the country.
During Xi Jinping’s visit, the two countries released a joint statement in which China expressed support for (MoFA):
- “Myanmar’s efforts to respond to the humanitarian situation and promote peace, stability, and development in Rakhine state.”
The Burmese side responded in kind:
- “Myanmar appreciates China’s understanding of the complexity of the Rakhine state issue and its support for Myanmar.”
- “Myanmar reaffirms its firm adherence to the one China policy, believes that Taiwan, Tibet, and Xinjiang are inseparable parts of…China and supports China’s measures to deal with the issues of Taiwan, Tibet, and Xinjiang.”
Get smart: Beijing’s penchant for mind-your-own-business diplomacy makeit a natural partnerfor countries who have been cold-shouldered by the West.
Xinhua:Xi meets Myanmar State Counsellor Aung San Suu Kyi
3. Provinces target lower growth in 2020
In recent weeks, provincial governments have been finalizing their respective government work reports.
Some context: These reports set major economic and other development targets for the coming year.
The big news (SCMP):
- “More than two thirds of Chinese provinces have lowered their growth targets for the year.”
There are two reasons that provinces are setting lower growth targets.
- The economy is still slowing, so expectations for growth are naturally lower.
- More importantly, the central government has taken over responsibility for calculating provincial GDP growth, meaning that provincial governments will have less room to fudge the numbers.
A prominent example:
- “Guangdong, the province with the largest economy at 10.5 trillion yuan (US$1.5 trillion),…issued a 6 per cent target, down from last year’s 6.3 per cent growth rate.”
There is one province-level administration targeting highergrowth:
- “Tianjin…has been so far the only one to set a higher target, of ‘around 5 per cent.’ Its 2019 growth figure was 4.5 per cent.”
Get smart: Simply put, China is not one unified economy – it’s more like 30 or 100 separate economies. That means companies – both foreign and domestic – need much more than a “China strategy.” Getting granular is the only way to go.
4.Have a baby, one more time
Last Friday, the National Bureau of Statistics released some troubling numbers.
- China’s birthrate has fallen to a historic low.
Some context: In 2016, Chinaended its One Child Policy in the face of an aging population and a declining birth rate, replacing it with a Two Child Policy.
Only one problem.
Very few people have taken the government up on its generous offer to let them have a second child.
- 2019 saw a piddling birthrate of just 10.5 babies per 1,000 people
- 14.7 million babies were born in China in 2019, the lowest rate since 1961
Get smart: Decades of demographic engineering have left China with a huge cohort of elderly people and relatively small base of working age people to support them.
Get smarter: This demographic headwind is the biggest long-term threat to China’s continued development.
5.Party line on Taiwan holds steady
On Sunday, Politburo Standing Committee member Wang Yang chaired the annual Taiwan Work Conference.
Some context: The conference comes on the heels of Tsai Ing-wen’s sweeping victory in the Taiwan presidential election (see January 13 Tip Sheet).
Little was new from last year’s conference.
Wang said that basic policy remains unchanged (Xinhua):
- ”[We must] unswervingly implement the principle of ‘peaceful unification, [under] one country two systems.’”
- “[We should] adhere to the general tone of seeking progress in stability.”
And, just like last year, this will get done by facilitating cross-strait exchanges, and further integrating the two societies:
- “We need to… improve institutional arrangements and policy measures to promote cross-strait exchanges and cooperation, deepen cross-strait integration and development, and ensure the well-being of Taiwan compatriots.”
- “We should vigorously promote cross-strait youth exchanges and create better conditions for Taiwan’s youth to come to the mainland for study, internship, entrepreneurship, and employment.”
While acknowledging that great work had been done in 2019, Wang wasn’t so optimistic for the year to come:
- “The cross-strait situation will be more complicated and grave in 2020.”
Get smart:Taiwan remains the number one geopolitical risk in Asia. It’s the issue with the most potential for Sino-US tensions to escalate quickly and catastrophically.
6.Wuhan coronavirus keeps spreading
This morning, Chinese health authorities confirmed that the Wuhan coronavirus has spread to more cities on the mainland.
Some context: The new virus belongs to the same family of coronaviruses as Severe Acute Respiratory Syndrome (SARS). SARS killed almost 800 people in China during a 2002 outbreak, which was initially covered up by the government.
Developments this weekend:
- Three confirmed cases were reported in Beijing and Shenzhen.
- 136 new cases were found in Wuhan – tripling the number of people infected.
- A third death occurred in Wuhan on Sunday.
That brings known cases worldwide to over 200 – stoking concerns about containment of the virus.
Yesterday, state-run newspaper Global Times said in an editorial:
- “In the early moments of SARS, there was concealment in China. This must not be repeated.”
- “Concealment would be a serious blow to the government’s credibility.”
That might be easier said than done – as the world’s biggest annual migration is about to kick off:
- “Hundreds of millions of Chinese… will be traveling domestically and abroad during the Lunar New Year holiday period that starts later this week.”
Get smart: The SARS outbreak ultimately hit the economy hard in 2003. Depending on how far it spreads, the new virus could well have similar spillover effects – in China and beyond.
Reuters:China confirms spread of coronavirus as new cases surge
Global Times:Prevent Wuhan virus for auspicious festival