Beijing outlines its policy goals, tensions rise over the Nile and the global scramble for chips
1 - 7 March 2021
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THE CCP UNVEILS ITS AGENDA
Friday saw a blockbuster start to the annual session of China’s parliament, the National People's Congress (NPC).
President Xi Jinping, Premier Li Keqiang and other senior Communist Party leaders kicked off the weeklong gathering at the Great Hall of the People in Beijing.
Nearly 3,000 delegates - representing mainland China, Hong Kong and Macau as well as the country's military - are attending the ceremonial event. The NPC meeting is when they vote on and approve laws put forward by the CCP’s chiefs. In essence, the annual session is "a window on the central government’s priorities and plans for the coming year".
With that in mind, here are three key takeaways from the initial presentations:
Economic expansion: A relatively modest GDP target (by China’s standards) of “above 6 per cent” for 2021. Premier Li admitted the economy still faced challenges, including weak domestic consumption.
14th Five-Year Plan: Advancing the tech sector and manufacturing capabilities are at the heart of the 2021-25 roadmap. China will focus on enhancing its expertise across a range of areas, from brain science to deep sea exploration. A generous research and development budget will help support those endeavours.
Reforming Hong Kong’s political system: As many suspected, the CCP will tighten its grip on HK’s electoral process to ensure “patriots” are in charge (I wrote about the controversy in the previous edition). In short, Beijing wants to vet all candidates running for office in the city in a bid to remove “deficiencies” and prevent “foreign interference”.
An editorial in Xinhua, China’s state media outlet, extolled the virtues of “socialist democracy with Chinese characteristics” and said it was time to appreciate “Chinese democracy and its significance to the progress of human society.” [Reminder: The CCP will celebrate its 100th anniversary in July.]
The NPC delegates have until 11 March to debate the ruling party’s draft decisions and policy ideas. Although the votes are not always unanimous, the parliament has never vetoed any of the CCP's proposals. This is why it's known as a rubber-stamp legislature.
CONTROLLING THE NILE
Egypt, Sudan and Ethiopia remain trapped in a dispute over a hydropower dam being built on the Blue Nile, a tributary of the famous river.
Tensions between the three countries have been simmering amid the decade-long construction of the Grand Ethiopian Renaissance Dam (GERD). The reason: The giant infrastructure project will alter the levels of the Nile, a vital natural resource in the region.
Negotiations to end the stand-off have failed on numerous occasions. On Wednesday, Ethiopia rejected Egypt and Sudan’s request to invite the US, EU and United Nations as mediators. Instead, Ethiopia’s ministers want ongoing talks led by the African Union to continue.
The GERD is a symbol of national pride for Ethiopia. Its electricity generation could transform the country’s entire economy - at present, more than 60% of Ethiopia’s population isn’t connected to the energy grid. Besides improving livelihoods within its borders, Addis Ababa hopes the dam will provide surplus power for export.
But since the Nile actually flows from south to north, Egypt and Sudan lie downstream, leaving them vulnerable to changes in the river. Egypt’s government has called the GERD an "existential threat” and is worried about the effects on its territory.
Sudan says Ethiopia should coordinate and share data on the GERD’s operation to reduce the risk of flooding. Another concern for both Cairo and Khartoum is how the dam will function during a serious drought.
It seems the GERD has exacerbated historic rifts in the region, especially resentment about how Egyptians apparently view themselves as “masters of the Nile”. Several academics say colonial treaties regarding control of the African river strongly favour Egypt, despite the fact that Ethiopia contributes approx. 85% of the Nile’s water.
Confused? This BBC report from July 2020 will help put things into context.
CHIP SUPREMACY
You may not realise it but semiconductors (aka chips) are all the rage at the moment.
These “unseen and unsung” tiny pieces of tech are the basic building blocks of modern computation. In our hyper-digital world, chips are used in everything - mobile phones, smart watches, televisions, fridges, treadmills, guided missiles, airplanes…you name it.
The problem is there’s a massive global shortage of chips. How did we get here? Well, a multitude of factors are at play. Firstly, companies had to suddenly ramp up production to meet lockdown-fuelled demand for consumer electronics. For example, shipments of Nintendo Switch consoles jumped nearly 36% in 2020. Secondly, some economies rebounded much quicker than expected, which further increased the appetite for semiconductors.
Unfortunately, the supply side wasn’t as robust. There were manufacturing constraints due to last year’s Covid-related closures and February’s winter storm in Texas, plus various issues linked to US-China trade sanctions. As a result, governments and corporations are now dealing with a dwindling chip inventory.
Although a handful of firms were clever enough to stockpile semiconductors, most were caught off guard by the shortfall. It’s estimated that the supply crunch will impact dozens of businesses till June or July at least. The auto sector, in particular, is suffering. Case in point: GM is extending output cuts at three of its plants in North America because of a lack of chips.
The disruption has prompted the White House to take action. President Biden recently said he would push for US$37 billion in funding to boost chip manufacturing at home. Elsewhere, China is bankrolling extra research and investment to become totally self reliant in semiconductors. However, since these high-tech facilities are incredibly complex and expensive to construct, analysts believe the current bottlenecks will remain for the next 5-10 years.
The chip crisis also reveals how innovation is intertwined with geopolitics. Taiwan Semiconductor Manufacturing Corporation (TSMC) is the world’s leading contractor in this space - Google, Apple, Sony and Nintendo are among its customers. But TSMC executives, and Taiwan in general, are often caught in the middle of Beijing and Washington’s rows. So it’s not unusual for TSMC’s commercial deals to have diplomatic implications.
Catch you next week! Stay curious, Sara x