In this week’s episode of China Insider, Miles Yu comments on the ongoing Israel-Iran conflict, and what impact this may have on China’s strategic objectives for Iran and its relations with other states in the Middle East. Next, Miles unpacks the latest news from the G7 summit in Canada as the member nations discuss China’s non-market policies and unfair business practices. Lastly, we discuss the recent People’s Liberation Army Navy operation involving two aircraft carriers sailing east of the first island chain in the Indo-Pacific, and how the United States and its allies may look to respond under the new strategic policy shift to deter Chinese maritime aggression.
China Insider is a weekly podcast project from Hudson Institute’s China Center, hosted by China Center Director and Senior Fellow, Dr. Miles Yu, who provides weekly news that mainstream American outlets often miss, as well as in-depth commentary and analysis on the China challenge and the free world’s future.
Episode Transcript
This transcription is automatically generated and edited lightly for accuracy. Please excuse any errors.
Miles Yu:
Welcome to China Insider, a podcast from the Hudson Institute’s China Center. I am Miles Yu, senior fellow and director of the China Center. Join me each week for our analysis of major events concerning China, China threats, and their implications to the US and beyond.
Colin Tessier-Kay:
It is Tuesday, June 17th and we have three topics this week. First, we discuss China’s strategic relations in the Middle East and specifically with Iran as the Israel-Iran conflict enters the fourth day. Second, we look ahead to this week’s G-7 summit and China’s planned agenda for this year’s meeting. Lastly, we examine the latest PLA naval operations in the Indo-Pacific as China sends two carriers beyond the second island chain. Miles, great to be with you again this week.
Miles Yu:
Nice to see you again, Colin.
Colin Tessier-Kay:
So up first today, with last Friday actually, Israel launched an attack against Iran hitting more than a hundred major targets, including chief military officers as well as the Natanz nuclear site in what Israel has claimed to be a pre-emptive strike. Since then, Iran has responded with several missile salvos that have continued over the weekend and into the fourth day of the conflict. While reports are still being collected, at least 224 Iranians have been killed as well as 14 Israelis with over 390 injured. Miles let’s start with the background here. What led to Israel’s strike against Iran on Friday, and why?
Miles Yu:
It’s actually a watershed event as we all realize, but it was expected a long time ago. That’s because this marks a complete failure, complete end of this wishful approach to solve Iran’s nuclear problem. That is the JCPOA. The JCPOA is basically a relic of the six party talk regarding North Korea’s nuclear problem. If you recall the six-party talks, which is mostly hosted by China, and it’s almost like delay tactics, allowing North Korea to develop weapons without international sanctions and providing the veneer of a joint cooperation between North Korea and the six parties. So that’s basically a failure. The JCPOA is the same thing. Also, six parties, right? US, UK, France, China and Russia plus Germany. So that’s six parties. So, whenever you get China involved in these kinds of talks things always get screwed up. So that’s one reason why this is so significant.
It has a very profound impact on China’s aggressive new stance in the Middle East, which we’re probably going to discuss a little later. But I think this basically is something that Israel realizes if we keep talking all this nonsense diplomacy with Iran, that regime is not going to relent and it’s going to develop its nuclear weapons. And by the time Israel struck Iran, I think the intelligence reports indicated that Iranians were weeks away from having a real nuclear bomb because their enrichment program has reached 60%, 60% enrichment, that is way above the under 4% enrichment goal under JCPOA, which was never received in the first place. So, I think from the Israeli point of view, this is a completely self-defensive preemptive strike.
Colin Tessier-Kay:
Following Israel’s attack on Friday, Chinese foreign ministry spokesperson Lin Jian said China “opposes any infringement upon Iran’s sovereignty, security, and territorial integrity” and “deposes any escalation of tensions and expansion of conflicts, sudden rise in tensions is not in the interest of any party.” Miles, help us unpack what’s at stake here for China, especially with their strategic approach to Iran and the region.
Miles Yu:
Well, Iran became a very big piece of Chinese global strategy about 20 years ago, when China realized Iran actually play a very important key in China’s overarched global outreach called the Belt Road Initiative because Iran is the only major country that can actually connect the belt, which is across the western China and central Asia, all the way to Turkey and all the way to Europe and the road, which is what China called Maritime Silk Road. So, Iran is a country that’s sort of connected too, and that’s why Iran is very important. On the other hand, Iran also is the key to China’s decades long counter US strategy because Iran obviously is a leading enemy and adversary of the United States. So China has long dreamed of making Iran its proxy and it succeeded because seven weeks after President Biden took office in the White House in March 2021, China signed a huge, comprehensive, they called the Chinese Iranian comprehensive strategic partnership worth (get this) 400 billion dollars, through which China is going to turn Iran into China’s protectorate and the proxy. And since then, China has built Iran’s infrastructure and its telecommunication network and hospitals and schools with a massive Chinese technology infusion and monetary infusion. 400 billion dollars, that’s a lot of money. This is one reason why Iran was financially strong enough to support Hamas and Hezbollah in the Middle East to attack Israel. So, this is one reason China’s black hand is all over the place. Don’t forget, there is a stringent international sanction against Iran in terms of oil export. China is a leading oil buyer of Iran, each day until the strike last week, China buys 3 million barrels from Iran, giving Iran a lot of money. So, this is one reason why China has a big stake in this. Don’t forget this, during Trump’s first term, China tried every single way to violate the sanction regime.
Remember the Huawei CFO Meng Wanzhou (孟晚舟) was arrested in Canada and requested by the United States for extradition. She was arrested because she led Huawei’s effort to set up a dummy corporation in Hong Kong with the sole purpose of violating the sanction regime against Iran. So, Huawei’s technologies and 5G equipment going through Iran hinged on Hong Kong. That’s why she was in trouble. So, I think China has a long-term strategy in Iran, and with the signing of that comprehensive $400 billion, 25-year project, Iran was really, really close, and has basically turned to China. So, in a real and practical sense, Iran has become China’s proxy in the Middle East, [and is] the major source of trouble for the entire region.
Colin Tessier-Kay:
And with these geopolitical conversations, I’m reminded of our previous conversations on China Insider regarding at least with the Belt and Road initiative, China’s approach perhaps to Pakistan as well, where the geostrategic implications there are primarily to avoid complications with the Malacca Strait and with the Indian subcontinent. And certainly, in a similar vein, China’s approach seems to mirror that, at least with Iran. But, zooming out a little bit now on the region, it has been evident that China has long been looking to increase its strategic footprint in the Middle East, and especially since the October 7th attacks last year. So, Miles, how has the conflict right now, this past weekend since Friday, affected China’s Middle East policy overall
Miles Yu:
In a very negative way for China. Because we basically lost two most important countries to China during the Biden administration, Iran and Saudi Arabia. Iran, I just explained why we lost [them] to China. How did we lose Saudi [Arabia]? Well, basically Saudi [Arabia] was a staunch US partner in the middle. It was a sort of avowed adversary of Iran due to religious conflict, right? Sunni leader versus the Shia leader, but by demonstration miraculously managed to alienate Saudi Arabia, pushed Saudis to the Chinese political orbit by mostly two things. Number one is this Khashoggi incident, the assassination of the Saudi journalist writing for the Washington Post. And that was obviously an egregious act of violence and political murder but there is a much larger bilateral relationship at stake. So, you have to deal with it very, very skillfully diplomatically. Second issue is the extension of Democrats’ domestic agendas, mostly the LGBT issue.
We appointed a gay ambassador to Saudi Arabia, lectured the Saudis frequently on the importance of LGBT issues in social progress. Of course, this is an important message, but is this the primary message of diplomacy? I’m not sure. So mostly because of those two issues and we pushed the Saudis to the Chinese side, so Trump 2.0 is trying to reverse that with the strike on Iran, with the resumption of the US sanction with Americans second withdrawal from the JCPOA, Iran was isolated. Not only that, but the American government also imposed what I think is the core of the Trump doctrine, which is secondary sanctions against third parties buying Iranian oil. So, anybody who buys Iranian oil would lose the privilege to deal with the United States. So that’s basically the beginning to take effect. So, China gradually is losing Iran with this Israeli attack on Iran and China has taken sides on the Iranian side [by] condemning the Israelis for the attack.
And by the way, China has never condemned Hamas for its October 7th atrocities, so the stance was very clear. So, I don’t think China has gained any international reputation at all. So, Iran is gone for China, and I think the Saudis, as you see, several weeks ago, President Trump made his first overseas state visit to the Gulf State, and to basically bring back Saudis to the American political orbit through economic technological integration. So basically, the US-Saudi relationship couldn’t be better. So that’s one reason why I think for China, their Middle Eastern policy is collapsing, and their Middle Eastern strategic calculations also have gone haywire. I think this is all for good for the peace of the Middle East and most similarly for America.
Colin Tessier-Kay:
We’ll certainly continue to track those developments with the ongoing conflict as it pertains to China’s strategic importance in the region. But moving to our next topic today, we enter the final day of G7 summit meetings in Canada and look to unpack some of the discussions held there thus far. While the Israel-Iran conflict has certainly been a primary focus along with the Russian invasion of Ukraine and continued US tariffs, host-nation prime minister Mark Carney also stated that he hoped to prioritize strengthening peace and security, building critical mineral supply chains and in general creating jobs across the globe. Miles, what do we know so far from this year’s G7 Summit talks and why might this year be a particularly important year for China?
Miles Yu:
Well, first of all, let me talk about why it is particularly important for Canada, because this G7 is held in Alberta. Alberta is now having a sort of separatist movement over there. Alberta wants to get out of Canada, so this is for Prime Minister Kearney, it’s a challenge. And of course, you got President Trump there and he’s talking about the US [and] talking about Canada becoming the US’s 51st state. But that’s basically a little bit of the sideshow. But I think the G7 is important because every year there is a G7 meeting that is basically the US, UK, France, Germany, Italy, Japan, and the EU. So, the seven industrial democracies and democratic institutions in terms of EU. Together [they are] the leading force for market free trade systems in the world, to make sure the basic free trading systems were observed by all sides and to basically make sure that the seven strong economies would guarantee global supply chains [are] free from any manipulation.
So, I think this has been a long-[time] target of China, because China has been very active in pushing a counterweight against G7: that is BRICS. Brix is now practically led by China. So, if you think about other countries, China is trying to use BRICS as a replacement of the G7 and, most importantly, China tries to through BRICS to replace the United States as a leader of global order. So that’s one of the reasons why I think G7 is very important this year. Of course, in addition to the traditional topics, human rights in China, China’s military expansion in the Pacific, and it stands in the Middle East in particular. There’s also something else that is the supply chain as you indicated earlier, supply chain is very important in the context of the global tariff tensions. China uses economic might and its monopoly on some of the key minerals to basically put the world at hostage. And I think this is going to solve the problem and I think they’re going to have spent a lot of time, and they have spent a lot of time discussing this.
Colin Tessier-Kay:
Leading up to the summit this year, China made several comments, including even last Friday, warning the G7 countries against manipulating any economic issues related to China for their own political agendas, following accusations of unfair business practices like you mentioned against China last year. Even a few weeks ago in May, I think, several G7 leaders convened on a communique that found common ground on monitoring non-market policies and practices which contribute to imbalances in global trade. And while not directly mentioning China, it was pretty clear who the targets of that memo were. So, Miles, beyond the latest from these conversations, what are the overall major issues related to China among the G7 [members] here, and more importantly - or more pointedly - what has been China’s reactions to the talks so far?
Miles Yu:
Well, China’s talks, of course, attack, denounce, denounce, and that’s not news. That’s very CCP. I think your question is a very good one. It can be answered in two ways. One is basically more immediate issues that I mentioned, supply chain, economic coercion and trade practices affecting global markets and China’s military expansion, all those issues were current. Now, there was a much deeper one, historical one and even metaphysical one that is the openness with China’s market. If you pay attention, President Trump has evolved so much [since] when he ran for president 2015. He focused on [the] trade deficit, he focused on currency manipulation. And now the second term in the beginning month, he’s talking about tariffs. Now, President Trump is talking about China being a closed society, a closed market. His primary goal is to open up China to the world. Now why is this so important?
Because this is nothing new. This has been going on for the last 250 years since the time of the Opium Wars. [If] you think about it, the global domain faces one fundamental problem with regard to China, that is China is a closed society: economically, intellectually as well as politically. So now, we’re going to open up China economically and marketwise, and I think that’s actually a very important approach. This is not only to solve the problem at present, but all the issues also we talk about, the tariff barriers and non-tariff barriers and military expansion and other things. It’s to bring China again to the global community of nations, to open up, to become a normal country again. That is a tall order, and it is not just the one generation, the top mission. It has been going on for several generations. So that’s why I think ultimately, we’re going to come to the ultimate core of the China problem, and that is China remains stubbornly, as a closed society in the meantime as the dictatorship of its own people.
So, if you look at China right now, China is not only economically closer to the outside world, information wise, China has an iron grip of its international information domain. Politically, China maintained a one-party political monopoly on all powers in China. And militarily, all military forces belong to one political party. It’s not the national defense forces; it’s the Chinese Communist party’s tool. It’s like a Nazi SS party, troops right, stormtroopers. So, this is why China is a closed society and the task of my generations, our generations and generations to come is to make China open up, finally, and that’s a very, very long haul and I think the world is becoming more and more aware of that.
Colin Tessier-Kay:
Moving to our final topic for today. Last Wednesday, Beijing released photos of two aircraft carriers, the CNS Liaoning and CNS Shandong conducting training exercises in the Western Pacific, past the first island chain and around the second island chain. A PLA Navy spokesperson said last Tuesday, the training complies with relevant international law and practice and is not targeted at specific countries or entities. While Chinese naval coercion and gray zone operations are hardly novel, this is the first time that China has sent two carriers simultaneously east of the first island chain miles. Can you explain a bit more about the importance of China’s carriers entering the second island chain in the Pacific?
Miles Yu:
I mean, I think the panicked reaction among certain circles of the national security establishment is not warranted. Aircraft carrier’s primary function is militarily important as well as politically important. For China to have a carrier fleet is basically mostly political. It’s a power projection. It projects China as a global power, yet China’s carriers are really secondary in terms of quality, and it doesn’t really have the kind of propulsion system to sustain its long-distance power projection. Coming through the First Island Chain is a major development, but it’s no big deal for China’s two carriers to spend this much effort, stretch its supply, logistic chain, and to reach barely be beyond the second chain in the Pacific. I don’t think China can really project much power and confidence. Think about this, China has two sort of non-conventionally powered carriers, plus one [that’s] still operationally not quite ready yet.
The United States has eleven, at least, nuclear powered supercarriers, much bigger, much more powerful, much more lethal than China’s. So, it will take a long time for China to really become a real threat to America’s carrier capabilities. However, having said that, with that kind of limited carrier capabilities, China has been very aggressive and ridiculously provocative, right? China sent its fleet not only in somebody else’s territory in Japan’s EEZ area and Philippines EEZ area too for the sole purpose of provocation. Not only that, China sent its fleet to waters near Australia, near the Tasmanian Sea, and only gave Australia a few hours of notice. This is all designed to intimidate, to show off, when China has a very limited capability to really show off in the first place. Having said that, I think what is worrisome is not China’s true capability and a true parity with the US carrier capabilities. It is the aggressiveness, the recklessness of China’s naval maneuver in any region, not just the First Island Chain, Second Island Chain. That should be the concern of the world.
Colin Tessier-Kay:
This latest maneuver, like you mentioned, has expectedly concerned several Pacific nations, including Japan, who has issued a formal request on the activities of the carriers to Beijing. China’s MFA spokesperson, Lin Jian, again responded, reiterating compliance with international law and practices, noting China’s national defense policy is defensive in nature, seemingly redundant. With measured skepticism, Japanese Defense Minister Gen Nakatani followed up by saying the Ministry of Defense and the SDF will continue to monitor as China intends to improve the operational capability of its two carriers and conduct blue water, sea and air operations. And I should clarify along with those two carriers, like you mentioned, Miles in terms of their deep sea and blue water capabilities, they were accompanied by several supply ships as they needed resupplying after launching several of the J-15 fighter aircraft as well. But Miles, China has been encroaching on Pacific countries’ EEZs for a while now in various capacities with the Coast Guard, with maritime militia, with fishing vessels, but is there anything unique to know about this latest development as China intensifies its naval operations in the Indo-Pacific?
Miles Yu:
One thing unique is really to China’s disadvantage, in my view, in the long run, in the following sense that China has done all the set of little maneuvers here and there to get everybody mad and alerted. How did the outside world respond to China? China strategists rarely think about this. Think about this: Southern China has been doing all these maneuvers in the American domain. The United States has stepped up dramatically, in joint exercises with the forces of the Philippines and Australia. Now I’m talking about, not just about symbolic in [terms of] one platoon, one squad or one battalion, we’re talking about evolving tens of thousands of soldiers in those exercises in the Sea of Philippines, in the South China Sea with the Philippines and Australia in recent weeks. I mean that’s really very substantial. I think this is something that China strategizes, just for the sake of political show of bravado, and they never understand how democratic countries can jointly counter China
And secondly, I will say this is also very important because it strengthened the resolve of friends and allies led by the United States to develop some sort of game changing weapons systems to counter China. For example, under review in AUKUS is the Australia, UK and the US nuclear submarine deal. Now, China’s military provocations in the Pacific only provide more impetus and justifications for us to develop, for Australians, the nuclear summary fleet. So, I think that’s going to be very counterproductive to China’s own national interests, but then China is a communist country and that system functions, not in terms of wisdom and strategic wiles, but for political show and power projection for the regime itself. You just want to look strong, and how strong it is, God knows.
Colin Tessier-Kay:
Yeah. You mentioned AUKUS there and briefly to bring this topic full circle, I want to kind of focus on, at least at the culmination here, what the response has been so far from the US as well as its allies. Do you think we can expect any freedom of navigation operations (FONOPS) or potential joint training exercises like you mentioned in the near future to counter China’s coercion?
Miles Yu:
I think freedom of navigation has reached its historical mission, that is to send a signal to China. Right now it’s not to send a signal it’s to show real strength. And I think freedom of navigation has become a routine. And I think if anything, I think the freedom of navigation in the near future, maybe it’s already happening, it’s going to become not just the United States, it’s going to become joint freedom of navigation. You think about this, the French, the Germans, the British, the Japanese, the Canadians, the Australians and the United States, their navies have all conducted freedom navigations one way or another. Some of them follow in the wake of the US flotilla, in the South China Sea and Taiwan Strait. That has become a routine. So, I think that probably [means] message sending is done. And I think right now we’re going to formulate a more concrete framework of defense against Chinese maritime provocations in the region.
Colin Tessier-Kay:
Well, we could easily spend another few hours here on the topics we have before us today, but unfortunately that’s all the time we have. Miles, thank you for joining us again this week and lending your expertise to these critical issues. We’ll see you again next week.
Miles Yu:
Alright, see you next week Colin.