No. 51 | 10.07.2022
Taiwan is part of China regardless of US claims. [China Daily]
China’s Red Lines on Taiwan Are Clear Regardless of the US’ Policy of Strategic Ambiguity
Zhou Bo (周波)
As a senior fellow at the Center for International Security and Strategy at Tsinghua University, Senior Colonel Zhou Bo (retired) has been a frequent voice in international media. Zhou was the director of the Center for Security Cooperation of the Office for International Military Cooperation of the Ministry of National Defense of China.


During his visit to Tokyo in late May, Biden affirmed that the US would defend Taiwan if it were attacked by China. This apparent gaffe sparked debate about whether the US is shifting away from its long-standing policy on Taiwan. However, it was not the first time Biden “unintentionally” sent the wrong signal on the Taiwan issue. The author suggests that Biden's repeated "gaffes" need to be taken seriously, but any intention that is in opposition to the One-China Principle cannot survive.

Key points:

  • Despite the fact that the People’s Liberation Army (PLA) has three aircraft carriers and more ships than the US Navy, Biden still persists in provoking a potential war with China, as opposed to his attitude toward Russia, which is to avoid direct conflict. The reason for this is likely rooted in the fact that Moscow has threatened NATO with nuclear attacks, while Beijing vows it would never be the first to use nuclear weapons under any circumstances. If it is true, Beijing might have to shift its official military doctrine from a “small and effective” nuclear arsenal to a large-scale one, to theoretically enable an effective retaliatory second strike after surviving the enemy’s first strike.
  • Biden’s apparent gaffe in Tokyo – the third in nine months – would seem to signal a burgeoning US policy of “strategic clarity” on the Taiwan issue, a shift from its decades-old policy of “strategic ambiguity”. Nevertheless, China has strong confidence in the eventual reunification with Taiwan, demonstrated by its 2022 defense budget, which is within 2 percent of GDP, as it has been in recent years.
  • According to China’s 2005 Anti-Secession Law, which declared that any separatist action by Taiwan is illegal and punishable, the government would never allow "Taiwan Independence". The possibility of the country resorting to non-peaceful means in its attempt to reunify with Taiwan exists only because, in the past few years, Washington has been trying repeatedly to create “incidents” to impede the mainland’s efforts for peaceful reunification. The “incidents” have given Beijing a good reason to suspect Washington is only paying lip service to its “one China” pledge.
  • The reunification with Taiwan represents one of China’s core interests. This means that the PLA cannot afford to lose in a war fighting for China’s sovereignty. The PLA will be prepared for any intended conflicts led by the US in the Taiwan Strait and fight to the very end to stop Taiwanese secession.
The New Economy in China: The Past 20 Years and the Next 20 Years
Eric Li (李世默)
Eric Li is a political scholar, chairman of the Advisory Board of the China Institute, Fudan University, and the founder and managing partner of Chengwei Capital. He is also the founder of Guancha – the most influential, non-governmental, left-wing Internet media platform for current affairs and politics in China. Eric Li is a well-known writer, who has written articles explaining China’s political system and on comparative governance in the English speaking world. His latest two articles are “On China’s Success, America’s Failure, and the Irrational Rivalry” (The Wire China, November 2020); and “On the Failure of Liberal Democracy and the Rise of China’s Way” (The Economist, December 2021).


Currently, the world economy is facing downward pressure and China's domestic economic development is confronting many challenges. In his speech at the 2022 Global Venture Capital Conference, Eric Li discussed the characteristics of China’s new economy’s development in the first two decades of the 21st century and what changes are expected for the following two.

Key Points:

  • The first phase of the new economy’s development was from 2000 to 2019 and was characterized by less state regulation of capital, meaning the state supported rapid economic growth and capital grew with the expanded economic scale; however, investment in research and development grew relatively slowly. The new digital economy was driven less by technology and more by maximizing the external benefits created by the socialist state, such as the increase in people’s disposable income, the improvement in logistics and transportation, and the expansion of the digital information infrastructure. The state had to absorb all the societal negative social impacts including the widening income gap.
  • Starting in 2020, the new economy has been characterized by significantly greater state regulation of capital, meaning that both the investment industry and business owners of the new economy should follow the state-defined principles of promoting “quality development” and the "inclusive society".
  • Eric Li suggests that investments in this new period should focus on three main priorities: 1) smart optimization of the supply chain, 2) import substitution of foreign-made technologies, especially in areas like industry-specific chip manufacturing, and 3) sustainable development, especially in those technologies facilitating the use of green energy.
  • The Chinese investment industry should not blindly pursue the finance-driven game in the new economy. They should pay attention to the qualitative development of the economy, based on a deeper understanding of the entire supply chain.
  • Business owners, and especially the investment decision makers, should closely align the benefits of their investment returns with the interests of the country and the well-being of the people and contribute to the sound development of the socialist market economy.

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