China Reform Monitor No. 1534

A BIPARTISAN CALL FOR U.S. BUSINESS TO CHANGE ITS APPROACH TO CHINA 
Commerce Secretary Gina Raimondo has called for the U.S. to respond to "competitiveness and the China challenge." She said Beijing is a serious threat and that Washington "will continue to press China to address its nonmarket economic practices that result in an uneven playing field." However, according to Raimondo, "we are not seeking the decoupling of our economy." Former Trade Representative Robert Lighthizer, meanwhile, has suggested a more aggressive approach. "An incremental shift is not enough. In order to truly ensure that economic relations between the two countries continue to be beneficial to America, it is time to adopt an explicit policy of strategic decoupling of our economy from theirs... There are two fronts in any contest with China: the economic front and the national security front. They are not entirely separate. One affects the other. We must prepare in both spheres - economic and military - because the best way to avoid a military crisis is to maintain our economic superiority." (New York Times, December 18, 2022) 

CHINA'S COVID SPIKE NOT DUE TO LIFTING RESTRICTIONS - WHO 
COVID-19 infections were exploding in China well before Beijing abandoned its strict "zero-COVID" policy, said the World Health Organization's (WHO) emergency director Mike Ryan, quashing claims that the sudden reversal caused the spike in cases. "The disease was spreading intensively because I believe the control measures in themselves were not stopping the disease. And I believe China decided strategically that was not the best option anymore. So the challenge that China and other countries still have is: are the people that need to be vaccinated, adequately vaccinated, with the right vaccines," said Ryan. The WHO has yet to receive data from China on new COVID-19 hospitalizations since Beijing lifted its zero-COVID policy. (Reuters, December 15, 2022; Reuters, December 22, 2022) 

PUTIN OVERSEES LAUNCH OF SIBERIAN GAS FIELD FEEDING CHINA 
Russian President Vladimir Putin has presided over the launch of a major new Siberian gas field to help support a planned surge in supply to China. The Kovykta gas field will feed into the Power of Siberia pipeline carrying Russian gas to China. With recoverable reserves of 1.8 trillion cubic meters, it is the largest in eastern Russia. The launch is part of Russia's strategy to shift gas exports to the east as the European Union cuts reliance on Russian energy in response to the war in Ukraine. Russia started selling natural gas to China at the end of 2019 via the Power of Siberia pipeline, which supplied about 10 billion cubic meters (bcm) of gas in 2021 and is due to reach its full capacity of 38 bcm in 2025. Russia is now China's third largest gas supplier. (Al-Arabiya, December 21, 2022) 

[EDITOR'S NOTE: In February, Putin reached an agreement to sell an additional 10 bcm of gas to China from Russia's Far East through a new, smaller pipeline to China's northeast. Russia plans to construct another major pipeline, the Power of Siberia 2, via Mongolia with an eye toward selling an additional 50 bcm of gas per year. Putin said the projects would allow Russia to boost its gas sales to China to 48 bcm annually by 2025, and to 88 bcm by 2030.] 

CHINA ACCUSED OF FRESH TERRITORIAL GRAB IN SOUTH CHINA SEA 
China is building on several unoccupied land features in the South China Sea as part of efforts to strengthen claims to disputed territory in a region critical to global trade. While China has previously built out disputed reefs, islands and land formations in the area that it had long controlled - and militarized them with ports, runways and other infrastructure - new images of the installations suggest that Beijing's latest construction activity is advancing a new status quo. The new land formations have appeared above water over the past year at Eldad Reef in the Spratlys, with images showing large holes, debris piles and excavator tracks at a site that was only partially exposed at high tide. Similar activities have also taken place at Panata Island, where a feature has been reinforced with a new perimeter wall. Other images reveal changes at both Whitsun Reef and Sandy Cay, where previously submerged features now sit above the high-tide line. (Bloomberg, December 20, 2022)

SENATE COMMITTEE CALLS OUT CARMAKERS' XINJIANG SUPPLY CHAIN
The U.S. Senate Finance Committee asked eight major automakers - General Motors, Tesla, Ford Motor, Honda Motor, Toyota Motor, Volkswagen, Chrysler parent Stellantis, and Mercedes-Benz - to answer questions about their supply chains in Xinjiang. Committee Chair Ron Wyden (D-OR) wrote the chief executives of major automakers saying "it is vital that automakers scrutinize their relationships with all suppliers linked to Xinjiang." The letters also said, "unless due diligence confirms that components are not linked to forced labor, automakers cannot and should not sell cars in the U.S. that include components mined or produced in Xinjiang." In June, a U.S. law took effect banning the import of forced-labor goods from Xinjiang. The United Auto Workers union has called on automakers to shift their supply chains out of Xinjiang, saying "the time is now for the auto industry to establish high-road supply chain models outside the Uyghur Region that protect labor and human rights." (Automotive News, December 22, 2022)