Axios China

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January 31, 2024

Welcome back to Axios China. Today we're looking at a vacuum in Trump's China circle, the rise of China's party-led diplomacy, Evergrande's liquidation, and lots more.

Today's newsletter is 1,775 words, a 7-minute read.

1 big thing: Trump's China circle

Donald Trump standing among deconstructed Chinese and American flags

Illustration: Lazaro Gamio/Axios

Some top China experts from former President Trump's administration don't plan to work for him again, leaving the field wide open for newcomers.

Why it matters: The U.S. and China are maintaining stability in their relationship despite being at odds over Taiwan, allegations of espionage, technology controls, import bans and regional maritime disputes. The people Trump surrounds himself in a second presidency would shape the direction of its China policy during this critical time.

  • Trump himself has so far said little about China on the campaign trail beyond suggesting more tariffs on Chinese-made goods.
  • It's still early in the campaign season, however, and the Trump campaign isn't likely to build out a substantive foreign policy team until later this year.

What's happening: "Many senior officials from the Trump administration do not seem interested in working for him again," one former Trump administration official told Axios.

  • That's particularly true among those for whom China has been a career-long focus.
  • That means there is a big opportunity for experts on China policy who weren't in Trump's inner circle during his first term, according to conversations with a dozen China policymakers, analysts, former Trump administration officials and others with knowledge of the issue.
  • The Trump campaign declined to comment.

Between the lines: Trump's top priority for choosing aides and advisers is personal loyalty, rather than filtering for specific policy positions, former Trump officials told Axios.

  • That makes his personnel choices for China advisers all the more important because their individual policy preferences could have extra sway in a possible second term.

Details: Several China experts' names were raised frequently in conversations Axios had with former Trump administration officials and others.

Steve Yates is senior fellow and chair of the China Policy Initiative at the America First Policy Institute, founded in 2021 by former top Trump officials. AFPI is described as a "White House in waiting" for a second Trump term.

  • Yates has championed a tough approach to China and is a strong Taiwan supporter — views that are no longer a given due to the rise of an isolationist wing of the Republican Party.
  • Yates speaks Chinese and previously served as deputy national security adviser to Vice President Dick Cheney.

Elbridge Colby served as the Defense Department's deputy assistant secretary of defense for strategy and force development from 2017 to 2018. He now runs Marathon Initiative, an organization he founded that focuses on great power competition.

  • Colby promotes the idea that the U.S. should avoid entanglements in Ukraine and the Middle East and focus on competition with China. This viewpoint is gaining traction among some Republicans.

Kiron Skinner served as the director of the State Department's policy planning office under Secretary of State Mike Pompeo from 2018 to 2019. She also served on Trump's transition team.

  • She's now a professor at Pepperdine University's School of Public Policy and a visiting fellow at Heritage Foundation — the conservative think tank that is compiling staffing lists for a second Trump term and vetting those candidates for loyalty and agreement with Trump's views, a massive project known as Project 2025.
  • Skinner is the author of the chapter about the State Department in the Heritage Foundation's lengthy policy proposal supporting Project 2025. In her chapter, she claims "large swaths of the State Department's workforce are left-wing" — an echo of Trump's "deep state" claims — and calls for sweeping reform of the department in support of a conservative president's agenda.

Miles Yu served as the China policy adviser to Pompeo, and he's now director of the China Center at Hudson Institute.

  • He's also a professor at the United States Naval Academy with expertise in the Chinese military.
  • Skinner and Yu together helped formulate the State Department's China strategy.

What to watch: Once the Republican nominee is set, expect foreign policy — and China, in particular — to become a bigger talking point in the presidential race.

2. The rise of China's shadow diplomacy

Illustration of a giant yellow star rising over the Earth in space and casting a giant shadow.

Illustration: Aïda Amer/Axios

Chinese leader Xi Jinping has reasserted the dominance of the Chinese Communist Party over the state's duties and actions. China's foreign affairs may be next.

Why it matters: Party-led diplomacy gives Beijing a powerful and largely unscrutinized back channel with political power brokers in other countries. In the long run, it could reshape the norms of international relations to bring them more in line with Beijing's interests.

What's happening: An obscure CCP bureau that manages relations with political parties in other countries is taking center stage in China's foreign relations as its current chief is likely to soon become China's next foreign minister.

  • Veteran Chinese diplomat Liu Jianchao has taken a high-profile portfolio after former Foreign Minister Qin Gang was ousted last year, and Liu has been selected as the top candidate to replace Qin, according to the Wall Street Journal.
  • Liu met with Secretary of State Antony Blinken the day before Taiwan's elections earlier this month, as the U.S. and China seek to maintain a delicate stability in their relationship.

Details: In 2022, Liu was appointed to head the CCP's International Department, the party office that oversees relations between the CCP and other political parties around the world.

  • The International Department's status and purview expanded in 2017 when Xi called for a "new model of party-to-party relations," and it's now taking a growing role in China's relations, particularly across Africa, Latin America and Pacific island nations.
  • The International Department leads CCP delegations to meet with members of political parties and welcome foreign delegations to China. It maintains relations with more than 400 political parties in over 160 countries.

The department is also now spearheading major initiatives, such as the 2021 World Political Parties Summit, where Xi made veiled criticisms of U.S. "hegemony" and "unilateralism" to more than 10,000 delegates from 500 political parties.

  • The International Department also opened a party training school in Tanzania to teach rising African leaders from six countries how to implement a CCP-style one-party state — an effort overseen by Liu.

The big picture: Direct ties between the CCP and other political parties allow Beijing to sidestep the regulations and controversies that often govern state visits in other countries, and instead speak directly and privately with the people in power.

  • "The party prefers party-to-party relations now, instead of Foreign Ministry to Foreign Ministry," said Anne-Marie Brady, a political scientist who researches Chinese foreign policy at the University of Canterbury, New Zealand, adding that the International Department now has a "lead role."

Zoom in: The International Department doesn't set policy for the Foreign Ministry — that's the role of the CCP Central Foreign Affairs Commission — but rather works to pursue similar goals through different means.

  • "Until now, the International Department has been able to work largely behind the scenes with almost no Western media reporting on its activities," Joshua Eisenman, an expert on the CCP and China-Africa relations at the University of Notre Dame, told Axios.

Read the full story

3. Catch up quick

1. Xi promised Biden that China wouldn't interfere in the U.S. elections when they met in November, CNN reports.

2. National security adviser Jake Sullivan said in a speech on Tuesday that Biden's China strategy has successfully reduced tensions, Politico reports.

3. Sullivan met with Chinese Foreign Minister Wang Yi Friday and Saturday in Thailand to discuss the Houthi attacks in the Red Sea. Go deeper.

  • Beijing's leverage with Tehran, a key backer of Hamas and Houthi rebels in Yemen, means China could play a unique role as regional peacemaker.

4. China Evergrande's financial mess

Signage at the Evergrande Palace project, developed by China Evergrande Group, in Beijing, China, on Wednesday, Jan. 31, 2024.

Signage at the Evergrande Palace project, developed by China Evergrande Group, in Beijing, on Jan. 31. Photo: Bloomberg.

A Hong Kong court has ordered the failed Chinese property developer, China Evergrande, to liquidate, Axios' Matt Phillips writes.

Why it matters: The process by which the company is sold for parts — and how the money is returned to creditors — will be closely watched at a time when global investors have quickly been losing confidence in China.

  • Evergrande is one of the world's biggest corporate debtors, with roughly $300 billion in liabilities.

State of play: After decades of near-constant global investment in China, capital has flowed out of the People's Republic rapidly over the last year.

  • The outflows reflect global investors' diminished outlook for growth there due to demographic challenges, the impact of increasingly authoritarian rule under Xi, and the country's persistent inability to shake off the economic impact of COVID.

There are few precedents for a bankruptcy of this size and complexity in China, and the housing sector is politically sensitive. Chinese homebuyers took the risk of publicly protesting in the tightly controlled nation after the company collapsed.

  • The liquidation order was issued in Hong Kong, a different jurisdiction than mainland China, where most of Evergrande's operations and assets are located.

What they're saying: "The liquidators will have very limited powers of enforcement over onshore assets in mainland China if they cannot get such recognition," Lance Jiang, restructuring partner at law firm Ashurst, told Bloomberg.

The bottom line: If global investors end up feeling ripped off — for instance, if Chinese policymakers intervene to favor domestic creditors rather than foreign investors — it won't make it any easier for China to halt the outflow of capital it needs to reinvigorate growth.

5. What I'm reading

"Arbitrary and broad:" Hong Kong pushes new security law to root out "seeds of unrest" (New York Times)

  • "The proposal, known as Article 23 legislation, has long been a major political flashpoint in Hong Kong, a former British colony that was promised certain freedoms when it returned to Chinese control in 1997. The government first tried to enact it in 2003, but backed down after major protests by residents who worried that it would limit civil liberties."
  • "The proposed law would lay out five major areas of offenses: treason, insurrection, theft of state secrets, sabotage and external interference. Some of the definitions would echo mainland Chinese treatments of those offenses."

6. 🏆 Hugo Awards held in China exclude some authors

A view of Shenzhen Yushin Bookstore with a Mobius strip design on January 3, 2024 in Shenzhen, Guangdong Province of China. (Photo by VCG/VCG via Getty Images)

A view of Shenzhen Yushin Bookstore with a Mobius strip design in Shenzhen, Guangdong province, China. Photo: VCG/VCG via Getty Images

The Hugo Awards, a literary prize for science fiction, was held in China for the first time in October last year.

  • Some authors were excluded from the awards without explanation, leading some to raise concerns about censorship, The Guardian reports.
  • The full list of nominations was made available on Jan. 20.

The excluded authors and works include:

  • RF Kuang's "Babel," which was a New York Times bestselling book that includes some elements about China.
  • Xiran Jay Zhao, who has previously made some critical comments about the Chinese government.
  • Episode six of the Netflix drama "The Sandman," based on the book by Neil Gaiman, who has previously criticized the Chinese government for jailing Chinese writers and urged Xi to release them.

What they're saying: "Nobody has ordered me to do anything," Dave McCarty, head of the Hugo jury, wrote on Facebook.

  • "There was no communication between the Hugo administration team and the Chinese government in any official manner."