S Korea's 6-hour coup, PLA top brass shakeup, Shanghai consumer coupons start to show impact, low-altitude economy - Week in Review #36
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Hi folks, welcome to a new issue of Week in Review of China Translated.
You would expect to see me reviewing events of the last week(s) that I think carry a long-term impact on China. I try to stick to a weekly publishing schedule but there is no guarantee about it. Occasionally, I also publish in-depth essays, some of which are related to the themes listed in the Master Plan and Table of Core Contents.
#1 South Korea's 6-hour coup and its relations with China
On Tuesday, South Korean President Yoon Suk Yeol declared martial law, vowing to eliminate “anti-state”, and “pro-DPRK” forces.
What ensued was perhaps the most ridiculous coup d'état in my living memory. You would think for a president to do such a thing he would have mustered some forces, both military and political, to help him carry it through. But no, it turned out to be a wild gambit with pure wishful thinking. Just within a few hours, the “martial law” was voted down, the troops retreated without firing a shot and he was forced to declare his martial law was over.
The reason I mention this as a top item in China Translated is because of the role China “plays” in this saga, even though on the surface China has nothing to do with it. China’s Ministry of Foreign Affairs also refused to comment on this affair when asked about it.
In fact, I agree with most of what Mr. Leo Lewis wrote in a column for the Financial Times titled South Korea’s tumult is a symptom of China-US strife:
In geopolitical and security terms, China’s rise and the ever hardening US response to it place Korea in a complex position. The societal divide between those who would position the country even closer to Washington and its allies, and those who favour something looser is deepening.
Swirling around this are tightly connected concerns. These include the fear of being sucked into any conflict erupting around Taiwan. There is also the anxiety that the recent deployment of North Korean troops in Russia is symptomatic of a greater reset of the co-operation calculus between Moscow, Pyongyang and, ultimately, Beijing.
I don’t think China is the direct reason for Yoon’s madness. For such an act to be done, domestic political dynamics and personal temperaments most definitely play a bigger role, at least a bigger direct role.
But I am quite convinced that the US-China divide at least serves as the main backdrop for this drama. A key disagreement between Yoon and the opposition party is the attitude towards this issue. Yoon favors closer ties with Japan (with whom Korea has many historical grievances) and the US, and even ties itself to the issue of Taiwan. At the same time, the opposition, led by Lee Jae-Myung favors a more strategically ambiguous stance.
Lee, who climbed the wall to get into the legislature building on Tuesday in defiance of the martial law, became an instant star on China’s social media. In one of the many short videos that went viral in China, Lee was shown speaking to the crowd at a previous event, in which he effectively said Taiwan was none of South Korea’s business, and that South Korea shouldn’t pick a side.
No wonder Yoon used saving his country from “pro-North Korean” and “anti-state forces” as the pretext for launching martial law. It’s obvious that to Yoon, Lee’s position can be really “anti-state”.
Overall, this event reinforce the idea that our age is defined by the US-China competition. The little travelogue that I wrote back in the summer, originally only intended as an off-the-track article, could become more and more relevant day by day (3 Principles for a Small Country to Survive Great-power Competition Part 1 and Part 2). If you agree with my prescription in that article, you will think Lee Jae-Myung is right: the more sensible path for a middle power is indeed not to pick sides.
I hope Yoon’s lunatic gambit of self-sabotage can help Lee’s ideas become mainstream.
#2 Top brass shake-up at the PLA and what to make of FT’s semi-fake story
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Personnel tumult at the highest level of the PLA continues.
Miao Hua, director of the Political Work Department of the Central Military Commission (CMC) since October 2017 and a member of the 7-member CMC (including Xi, who is the Chairman of CMC), was placed under investigation.
In the last decade since Xi came to power, the CMC membership has been one of the most dangerous jobs in China. Besides Miao Hua, there were as many as 6 other CMC members, including 2 CMC Vice-chairs taken away. This long list included:
Xu Caihou, CMC Vice-chair between 2007-2012, arrested in 2014, died of cancer in 2015
Guo Boxiong, also a CMC Vice-chair between 2007-2012 (and there were only 2 vice-chairs for each CMC vintage), and was also arrested in 2014
Fang Fenghui, Chief of Staff 2012-2016, Chief of the Joint Staff Department in 2016, arrested in 2017
Zhang Yang, Director-general of the General Political Department 2012-2016 and director of the Political Work Department in 2016, committed suicide during the investigation. (The Political Work Department was established in 2016, and Zhang was Miao Hua’s predecessor as the head of that department, giving this job a danger rate of 100%! )
Wei Fenghe, Secretary of Defense 2018-2023, arrested in 2024
Li Shangfu, Secretary of Defense in 2023, arrested in 2024
2 things are immediately noteworthy about this event. First, Miao Hua is seen by many as a Xi protege, with a long career overlap with Xi when Xi worked in Fujian.
This is not the first time that a person seen as part of “Xi’s people” got himself in trouble (another notable example is the disgraced Foreign Minister Qin Gang). It could mean an embarrassment for Xi’s authority, but this could simply also be Xi’s particular style of leadership which won’t stand any corruption, foes, or friends. I tend to believe the latter reason.
The other notable thing is that 2 weeks ago, the Financial Times revealed a shocking report that it was the Minister of Defence Dong Jun, who was placed under investigation, citing “current and former US officials familiar with the situation.” The report made no mention of Miao Hua at all. Yet, after Miao Hua was taken away, Dong Jun was reported to appear during a public event, likely indicating he was not “under investigation”.
I believe the most plausible scenario is that Dong Jun may indeed be called in as part of the investigation of Miao Hua, but Dong Jun himself was cleared. The US intelligence community got wind of parts of the truth, but not the whole truth.
In any case, the fact that “current and former US officials familiar with the situation” only mentioned Dong Jun, but did not mention Miao Hua at all, suggests US military intelligence gathering work against the PLA may have some serious limitations now.
#3 Low-altitude economy
There was a piece of news that I completely overlooked but would love to bring to your attention.
In late November, it was announced that China set 6 pilot cities for the electric vertical takeoff and landing aircraft, or “eVTOL” technology.
This is the latest move in a string of policy moves aimed at boosting the eVTOL industry, especially after the PLA Air Force gave up control of low-altitude air space.
China’s determination to develop its low-altitude economy shouldn’t be underestimated and should be understood within the broader context of “new-quality productive forces” (NQPF).
Essentially, the developing NQPF is about developing industries with better technology that can vastly increase productivity.
There are two ways to achieve that. The first way is to try to catch up with existing high-tech industries of the West, such as generative AI, high-end chip-making, wide-body airplanes, jet engines, etc. China is indeed rapidly trying to catch up in these areas. But such a “catching-up” strategy is inherently difficult and it may take forever for the challengers’ products to be globally competitive, especially after the US adopts the “small yard, high fence” policy to protect its core technologies.
China’s favorite approach now is another strategy, called “弯道超车overtaking on a bend”, meaning disrupting the game by going on an alternative, but sometimes much better path of development.
The EV industry was such a 弯道超车 industry. By focusing on EV, and not traditional ICE technology which the West has a collective choke on, China rapidly disrupted the whole automobile industry.
The challenge (as well as the ambition) for China is to find at least several other trillion-dollar-sized similar opportunities like the EV, only then can China achieve a new economic engine that’s comparable in size to what the real estate sector was just a few years ago. And it’s within this context, eVTOL has been counted upon to be one of these new disruptive industries.
This is a developing trend. We will definitely see more news about this exciting new industry in the future. Stay tuned.
#4 Are Shanghai’s consumer coupons showing impact?
I just had the most crowded weekend in many years in Shanghai. The traffic jams on Friday and Saturday evenings were epic. Restaurants were also filled. While I am waiting for my team at BigOne Lab to keep a watch on the data this coming week, I suspect that Shanghai’s consumer coupon programs are finally having an impact.
Those coupons are not a fixed cash amount sent to every resident, but a wave of subsidies tied to offline activities such as catering. It has a fixed quota of issuance each time, so I have heard rumors of people waiting online to scramble for it. There were even scalpers selling those coupons on e-commerce platforms now, usually a sign that such coupons are sought-after assets.
Another smart thing about this is those coupons all have an expiration date, so the impact on consumer behavior can be immediate.
If my thesis can be proved by data, the real significance is that Shanghai may just be the beginning. It’s a pilot zone that more regions in China will be bound to follow in order to boost domestic demand.
Those who still claim China is not prioritizing domestic consumption will have an increasingly more difficult argument now.