East Asia Digest by Ambassador Gautam Bambawale | December 2021

Ananta Aspen Centre  |  

ANANTA ASPEN CENTRE

ANANTA ASPEN CENTRE

I Overview

China:

  • Communist Party of China holds the 6th Plenary Session of the 19th Central Committee 
  • India – China trade crosses US $ 100 billion in 2021
  • China does not attend Delhi Meet on Afghanistan
  • Russia – India – China (RIC) Foreign Ministers Meeting
  • President Biden and President Xi hold a virtual Summit

Japan:

  • PM Kishida calls for 3% pay hikes
  • Japan to increase military spending by US $ 7 billion
  • Japan weighs release of oil reserves to tame prices
  • Japan establishes an Economic Security Council
  • Japan’s economy shrinks in Q3

South Korea:

  • Corona virus deaths hit record high in South Korea
  • South Korea’s exports of agricultural products tops US $ 10 billion in 2021
  • South Korea raises interest rates again

North Korea: 

  • Indications that North Korea’s economy is in the dumps
  • Pyongyang puts Kimhyongjik county under lockdown for Covid-19

Taiwan: 

  • US Congressional delegation visits Taiwan
  • Taiwan invited by President Biden for ‘Summit of Democracy’

Hong Kong:​​​​​​​​​​

  • Hong Kong hits 70% vaccination mark on 23 November 2021​​​​​​

II Developments in China

Communist Party of China holds the 6th Plenary Session of the 19th Central Committee


The Communist Party of China held its 6th Plenary Session of the 19th Central Committee at Beijing on 8 – 11 November 2021. The Session saw the passage of a ‘History Resolution’ – just the 3rd time in 100 years that such a resolution was tabled and passed. The earlier two occasions were in 1945 and 1981 when the Party experienced consolidation of leadership of Mao and then later Deng. Hence, many commentators believe that the passage of the ‘History Resolution’ in 2021 signals the consolidation of Xi’s leadership. While this may be true to a certain extent, it does not imply complete control of the Party by Xi. Such ‘History Resolutions” are important since they convey to the rank and file of the Chinese Communists how the Party views certain developments. For example, the 1981 Resolution did accept that while the bulk of Mao’s work was correct he did commit certain mistakes such as the Great Leap Forward and the Cultural Revolution. So, while the 2021 ‘History Resolution’ is important it is not the final assessment of Xi’s leadership of the Party and China. Such an assessment will only come after Xi is long gone from the scene. There can be little doubt, however, that Xi Jinping has consolidated his hold on the Party and China following the 6th Plenum. It has been announced that the 20th Party Congress will be held in the second half of 2022, most likely in October or November 2022. There, Xi Jinping will, very probably, get a third term as Party General Secretary. The Resolution, the Plenum Communique and Xi’s speech at the Plenum will be studied in great detail over the next year not merely by Chinese Communists but also by observers and students of China. Xi’s leadership will be extolled within China, thereby laying the foundation for his extension. In practice, Xi’s steering of the Chinese economy over the next twelve months will be critical as that holds the key to the satisfaction with their lot, of the people of China. 

India – China trade crosses US $ 100 billion in 2021

According to China’s Customs statistics bilateral India – China trade surpassed the US $ 100 billion mark for the calendar year 2021, in October itself. As can be expected the trade balance will be heavily in China’s favor. This is exactly why Beijing wants the rest of the bilateral relationship to continue as it has been in the past, despite their aggressive military actions in eastern Ladakh. On the contrary, India’s game plan must be to reduce bilateral interaction including trade so as to show that military aggression has costs. While trade may be up in the short term, we must expect a secular decline over the middle term as India herself takes steps and measures to reduce her dependence on Chinese imports. 

China does not attend Delhi Meet on Afghanistan

Making a lame excuse of unsuitability of timing, China joined Pakistan in not attending the Delhi Meet on Afghanistan hosted by NSA Doval on 10 November 2021. Russia, Iran, most of the Central Asian nations were present at the meeting. The significance of this move of China’s depicts how much it hews to the Islamabad angle where its own Afghanistan policy is concerned.

Russia – India – China (RIC) Foreign Ministers Meeting

The 18th meeting of Foreign Ministers of Russia, India and China (RIC) was held in virtual format on 26 November 2021. India’s EAM Dr Jaishankar hosted the meeting. The lengthy Communique issued at the end of the meeting indicates the many issues and topics that bring the three together. However, a fair amount of time was spent on discussing the situation in Afghanistan especially on ways to assist the people of that country from the famine which is ensuing. The need for an inclusive government in Afghanistan was also stressed. Bilateral issues were not touched upon in this format.

President Biden and President Xi hold a virtual Summit

The Presidents of the United States and China held a virtual Summit on 15 November 2021. The meeting lasted three and half hours, much longer than anticipated, indicating the vast interconnecting issues the two major powers need to work on. Apart from climate change, the two leaders also discussed trade and investment between their nations, with Biden clearly pointing to the less than level playing field faced by the U.S. Human rights in China particularly Tibet, Xinjiang and Hong Kong were raised by Biden. Xi said that if the US helps or assists Taiwanese independence it would be akin to ‘playing with fire’. Rules of international and multilateral engagement were discussed with Biden insisting on making the system free and open. The Indo-Pacific region was also touched upon, as was Afghanistan, Iran, DPR Korea and other international issues. Biden underscored the need to manage strategic risks and the necessity of common-sense guard rails to ensure that competition does not veer into conflict. Analysts are happy that the Summit signals that Washington and Beijing are ready to work together on intersecting issues and the cordial tone of the meeting was welcomed by one and all. Some observers felt that Xi had walked away with the honors since the mere fact of an interaction showed that the two great powers must work together, a statement Beijing had been making all along. Biden came through as being statesmanlike. 

III Developments in Japan

PM Kishida calls for 3% pay hikes

Japan’s PM Kishida Fumio has called on businesses to raise wages and salaries by 3% from next spring. The annual business – labor union talks are currently ongoing in Japan. 

Japan to increase military spending by US $ 7 billion

Japan’s Ministry of Defense announced that it would raise military spending by US $ 7 billion due to the worsening security environment. The United States, including current President Biden, has been urging Japan to take greater ownership of its own defense by raising its expenditure. 

Japan weighs release of oil reserves to tame prices

At the request of the United States, Japan is positively contemplating release of some of its oil reserves to tame rising gas prices. India too is doing the same. 

Japan establishes an Economic Security Council

PM Kishida Fumio of Japan has established a new Economic Security Council which has been tasked with planning strategies to enhance the resilience of supply chains for key materials such as semiconductors and medical products. It will also help develop artificial intelligence and other key technologies. The Council includes the Prime Minister, Finance Minister, METI Minister, Minister for Economic Security and Chief Cabinet Secretary. 

Japan’s economy shrinks in Q3

Japan’s economy shrank in Q3 at an annualized rate of 3%, showing the toll the pandemic is taking on economies round the globe. 

IV Developments in South Korea

Corona virus deaths hit record high in South Korea

By the last weekend of November 2021, South Korea’s daily new corona virus cases crossed the 4000 per day mark with the numbers of deaths and critically ill patients hitting record highs. On 27 November 2021, 4068 new cases were reported along with 52 deaths. The total death toll is 3492. Fatality rate stood at 0.8 per cent. 

South Korea’s exports of agricultural products tops US $ 10 billion in 2021

South Korea’s exports of agricultural and fisheries products reached US $ 10.13 billion during the period January – November 2021, up 16.1% over the previous year. This is the first time that agricultural exports have crossed the US $ 10 billion mark. 

South Korea raises interest rates again

South Korea’s central bank voted to increase the benchmark 7-day repo rate by 0.25 to 1 % to rein in rising inflation. Rates had been kept low to enable the economy to recover from the impact of Covid-19. Consumer prices rose 3.2% in October 2021 as compared to a year earlier, the fastest pace since 2012. The central bank kept its growth outlook for 2021 at 4% and that for 2022 at 3%.

V Developments in North Korea

Indications that North Korea’s economy is in the dumps

Pyongyang accepted greater amounts of food assistance and its trade with China also climbed compared to a year ago, signaling that she is willing to reduce her Covid-19 induced restrictions. This, in turn, appears to indicate that her economy is down in the dumps as many monitors have been arguing. 

Pyongyang puts Kimhyongjik county under lockdown for Covid-19

Pyongyang is believed to have put Kimhyongjik county on the China border under lockdown fearing a possible outbreak of Covid-19. This development comes amidst rumors that Pyongyang would relax controls at its border with China. 

VI Developments in Taiwan

US Congressional delegation visits Taiwan


Several US lawmakers from the US House of Representatives visited Taiwan on 26 November 2021 including Representatives Mark Takano (D-Calif), Elissa Slotkin (D – Mich), Colin Allred (D – Texas), Nancy Mace (R – S.C.) and Sara Jacobs (D – Calif). They met Taiwan’s President Tsai Ing-Wen. The Chinese Embassy in the U.S. had advised the lawmakers to call off their trip as it would fan Taiwanese independence claims. This is the third visit to Taiwan this year by groups of US legislators. 

Taiwan invited by President Biden for ‘Summit of Democracy’

President Biden of the United States has invited Taiwan to attend the virtual ‘Summit of Democracy’ to be held on 9 – 10 December 2021. As China has not been invited, Beijing has been critical of the invitation to Taiwan. Taiwan will be represented by Digital Minister Audrey Tang and its de-facto Ambassador to the U.S. Hsiao Bi-khim. 

VII Developments in Hong Kong

Hong Kong hits 70% vaccination mark on 23 November 2021

On 23 November 2021, Hong Kong hit the 70% mark for proportion of its population which has been fully vaccinated against the Covid-19 virus. The Special Administrative Region of China is now aiming at higher levels of vaccination. 

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