RADAR SWEEP

Geopolitics Newsletter January 23 – January 30, 2023

China celebrates Lunar New Year amid relaxed COVID-19 restrictions

China celebrated its first Lunar New Year without restrictions since the start of the pandemic. The observance followed the lifting of quarantine restrictions earlier this month. Around 2.4 billion journeys were made across the country during the holiday week. The tourism sector also largely recovered from its pandemic-induced slump, with revenue from domestic Lunar New Year tourism generated at 73% of 2019, according to the country’s Tourism Ministry. This could mark the beginning of China’s economic recovery, following almost three years of strict zero-COVID policy.

However, the country remains in the grip of a massive COVID-19 wave. Chinese government scientist Wu Zunyou noted that over 80% of people in China have been infected so far. While this means that infections have already peaked, holiday celebrations will likely cause the virus to spread into more remote areas with weaker healthcare systems and lower vaccination rates. According to official government data, around 60,000 people have died of the disease since restrictions were lifted in early December, although this is likely an undercount by several hundred thousand. The country has highly stringent criteria for when COVID-19 can be listed on a death certificate and also excludes all deaths outside hospitals.

While the Year of the Rabbit will likely see a return to strong economic growth, this will be on the low base of 2022, during which the country grew by a mere 3%–the lowest rate in the country’s modern history. Whether China can return to solid long-term growth after the initial rebound remains unclear, as many foreign companies have already started to divest away from China. In addition, many in China have become disillusioned by the government’s handling of the pandemic and may show less goodwill toward bad economic policies.

Worshippers make their first offerings during Chinese New Year, January 21, 2023, Tyrone Siu/REUTERS

Indo-Pacific Geopolitics

Xi announces improvement of China-Australia relations – Jan. 26

In a congratulatory message for Australia Day, Chinese President Xi Jinping said that the two country’s relations were moving in the right direction. Relations between the two countries have been strained since China imposed sanctions on a wide range of Australian goods in 2020, but have improved significantly since Australian Prime Minister Anthony Albanese came to power last year. Xi and Albanese met during the G20 summit in Indonesia last November, after which they pointed to an end of bilateral antagonism. Read more [EXTERNAL]

U.S., Japan and Netherlands agree on further chip sanctions – Jan. 27

The governments of Japan and the Netherlands agreed to limit the export of advanced semiconductor manufacturing equipment to China, thereby significantly strengthening Washington’s chip sanctions. These further limits China’s semiconductor ambitions, as some of the companies affected by this deal—including ASML and Nikon–produce equipment crucial for advanced semiconductor manufacturing. Read more [EXTERNAL]

New Fiji government suspends China policing arrangement – Jan. 27

Fiji’s newly-elected President Ratu Wiliame Katonivere suspended the country’s police commissioner and announced an end to an agreement on police training and exchange with China, and instead pledged to strengthen ties with Australia and New Zealand. He cited his country’s differing systems of democracy and justice to that of China’s as the main reason. December’s elections saw the country’s first shift of governments in 16 years. This will likely significantly weaken China’s influence on the island nation. Read more [EXTERNAL]

NATO Secretary General visits South Korea – Jan. 29

NATO Secretary General Jens Stoltenberg visited South Korea to discuss strengthening security cooperation between Seoul and the alliance, amidst ongoing war in Ukraine, an increasingly bellicose North Korea and strained relations with China. He met with South Korean President Yoon Suk-yeol, as well as the country’s foreign and defense ministers. Read more.

Diplomacy

ECO Foreign Ministers Council meeting concluded in Uzbekistan – Jan. 24

The Council of Ministers of Foreign Affairs of the Economic Cooperation Organization (ECO) concluded its two-day meeting. Delegations from member nations including Afghanistan, Kazakhstan, Iran, Pakistan and Turkey attended, with Uzbekistan chairing the meeting. They discussed measures to improve current economic troubles. Read more

Egyptian President Sisi meets with Indian PM Modi – Jan. 25

The three-day meeting concluded with Sisi being honored as chief guest at India’s Republic Day celebrations. It occurred alongside the two countries’ first joint defense exercises, suggesting India will soon move towards supplying Egypt with military equipment. Read more

Turkey cancels visit by Swedish Defense Minister Pal Johnson – Jan. 27

The cancellation came amidst increasing tensions regarding Sweden’s bid for NATO membership. Following the burning of a Quran outside the Turkish embassy in Stockholm, Turkish President Recep Tayyip Erdogan announced that he would block Sweden’s application. Read more.

National Security

NATO Secretary General meets with Armenian Foreign Minister – Jan. 23

The visit came amid a flare-up in tensions between Armenia and Azerbaijan over Nagorno-Karabakh. While NATO’s policy has been to avoid direct involvement itself, Russia’s presence there makes the situation difficult. Read more.

Germany agrees to send tanks to Ukraine – Jan. 25

Following the announcement that both Germany and the U.S. would send tanks to Ukraine, Russia launched a wave of missiles across several Ukrainian cities, including Kyiv. Read more [EXTERNAL]

Swedish government provides Archer artillery to Ukraine – Jan. 26

The Swedish government provided the parliament with a plan to send 20 Archer artillery howitzers to Ukraine. The move came amidst government aims to signal to NATO that Sweden intends to assist in the Ukrainian war effort. Read more.

U.S.-Israel Juniper Oak military exercises set to conclude – Jan. 27

The joint US-Israel Juniper Oak 23.3 exercises concluded in the eastern Mediterranean Sea. The exercises were intended to increase force joint operability. They were the largest US-Israel military exercise since Russia’s invasion of Ukraine. Read more.

Finance, Economics and Technology

Japan’s parliament opened the first session of 2023 – Jan. 23

Prime Minister Fumio Kishida’s government is expected to encounter strong opposition over the coming weeks for its plans to raise taxes, in part to account for the increase in defense spending and social welfare. Read more [EXTERNAL]

South Korea announced GDP figures for last quarter – Jan. 26

The Bank of Korea announced that South Korea’s economy contracted by 0.4% in the final quarter of 2022, year-on-year, due to a global slump in consumption. As a result, the South Korean government vowed to strengthen support for the export industry. However, the country’s economy still managed to grow 2.6% for 2022 as a whole. Read more [EXTERNAL]

Japan considers lifting trade sanctions on South Korea – Jan. 28

According to Japanese media reports, the Japanese government is currently drawing up plans to lift export controls it has imposed on South Korea since 2019. The export controls were widely seen as a form of retaliation for South Korean demands for reparations for Japanese wartime atrocities during the Second World War. Representatives of both countries are expected to meet Jan. 30 to discuss measures to put the spat to rest. Read more [EXTERNAL]

Society

Pakistan’s energy grid collapses – Jan. 23

Following an overproduction of energy, Pakistan experienced a near-complete energy grid collapse, plunging 220 million people into darkness. The blackout lasted for ten hours and has triggered government inquiries, as this is already the second time within three months the country’s energy grid failed. Read more [EXTERNAL]

Japanese PM warns the country is on the ‘brink’ of societal dysfunction – Jan. 23

During his speech in front of parliament, Japanese Prime Minister Fumio Kishida warned that the country was facing societal collapse if it failed to raise its low birth rates. Japan is the third-most expensive country in which to raise children, after China and South Korea. All three countries have some of the world’s lowest birth rates and face significant population declines in the coming decades. Read more [EXTERNAL]

North Korea locks down Pyongyang – Jan. 25

The North Korean capital was locked down due to an unspecified “respiratory illness”, likely to be COVID-19. The country has never acknowledged how many people have caught the disease and has refused to receive vaccines. Read more [EXTERNAL]

Australia Day celebrations divide the country – Jan. 26

During this year’s celebrations of Australia Day, large rallies were held across the country in support of indigenous peoples. The country’s national holiday has divided the nation in recent years, as many have come to refer to it as ‘Invasion Day’. Read more [EXTERNAL]

Environment

East Asia gripped by record cold snap – Jan. 24

China, South Korea and Japan all experienced record cold temperatures. China’s northernmost city Mohe experienced temperatures of up to minus 53 degrees Celsius. Authorities in Japan and South Korea also issued cold weather and heavy snow warnings across many areas throughout the week. Read more [EXTERNAL]

New Zealand declares emergency amidst flash floods – Jan. 27

New Zealand’s newly-sworn in Prime Minister Chris Hipkins declared a state of emergency as the country’s north was inundated with massive flash floods, killing at least two. Read more [EXTERNAL]

NEW ANALYSIS

Green tech geopolitics: China and the global energy transition

China has come to dominate virtually all aspects of international green technology supply chains. As countries across the world have pledged to transition away from fossil fuels, their dependency on Beijing is growing. Read more here in our latest Analysis piece by David Song-Pehamberger.

THE WEEK AHEAD

Pope Francis to visit the DRC – Jan. 31 to Feb. 3

Pope Francis is expected to visit the Democratic Republic of Congo, followed by a visit to predominantly-Christian South Sudan. Read more [EXTERNAL]

EU-Ukraine Summit to be held in Kyiv – Feb. 3

A long-awaited summit by high-level EU officials and the Ukrainian president will take place in Kyiv, with discussions centering further steps in Brussel’s support for Ukraine. Russia will likely respond by increasing missile strikes on the Ukrainian capital. Read more [EXTERNAL]

ASEAN Foreign Ministers Meeting – Feb. 3

Indonesia will host ASEAN’s first meeting of foreign ministers of the year. East Timor will send its foreign minister for the first time, as the country is expected to eventually become the bloc’s 11th member. The ministers are expected to discuss the situation in Myanmar. Read more [EXTERNAL]

U.S. Secretary of State to visit China – Feb. 5-6

U.S. Secretary of State Antony Blinken is expected to visit China Feb. 5 to discuss easing tensions between Washington and Beijing. He will be the first U.S. Secretary of State to visit China since 2018. Read more [EXTERNAL]

Contributions by: David Song-Pehamberger, Laurence Dynes and Shravan Krishnan Sharma