Zhou is a former assistant chief for the International Liaison Department of the CPC Central Committee. He is also a senior researcher for the Chongyang Institute of Finance at the People’s University of China. On July 3rd,2020, Zhou Li called for six preparations on the “deteriorating external environment.” His proposal on the Global Times laid the groundwork for a full-scale decoupling from the U.S. Zhou further claimed that the U.S was colluding with the terrorists.
He believes that China’s pandemic control had achieved the desired result. Stress on preventing imported infections was on the rise. The reopening of the manufacturing and labor markets faced rising challenges. It made economic and social development difficult.
In conclusion, Zhou believed that it is necessary:
- To prepare for the deterioration of the Sino-US relationship and a full escalation of the conflict.
- To adapt to shrinking external demands and disruptions on the industrial supply chain.
- To embrace COVID-19 (outbreaks and preventions) as a new norm and prepare for long-term coexistence with the virus.
- To break away from the U.S. dollar hegemony and gradually decouple the RMB from the U.S. dollar.
- To adjust to a global food crisis.
- To counter the resurgence of international terrorism through regional alliance.
The Sino-U.S. relations
Zhou: “since the virus outbreak, the U.S. authorities (including the Trump administration and the U.S. Congress) have continued to pressure us.” The U.S. has engaged the following actions:
- President Trump launched comprehensive travel restrictions between the two countries.
- The Americans canceled the WTO preferential treatment on developing regions for China and Hong Kong.
- It added new criminal charges against Huawei and its subsidiaries.
- The U.S. defined five Chinese media as ‘foreign missions.’
- The U.S. passed the Taipei Act.
- They have deployed warships to the Taiwan Straits and the South China Sea to provoke China.
- Stigmatized COVID-19 as the “China virus” and tried to include it into a U.N. Security Council resolution.
- Claimed to seize the U.S. Treasury bonds purchased by China as collateral for victim compensation after the pandemic.
- The White House published a strategic policy on China.
- The 2020 Uyghur Human Rights Policy Act was signed into law.
“More actions are coming. We must have a clear understanding that the ‘decoupling’ becomes inevitable.” He wrote, “We should not underestimate nor fear the U.S. authorities. They had a fight-till-the-end mentality and policies. They would suppress China comprehensively and aggressively.”
“The difficulties and challenges we will face would be complex and extreme.” He emphasized, “currently, it was crucial to deter the risk of the U.S. pursuing restitution from us.”
Economy
China must embrace shrinking external demands and the disruption of industrial supply chains.
Zhou pointed to reports issued by international economic organizations such as the IMF during 2020. These reports changed the outlook of the 2020 global economic growth from -3% to -4.9%. It was the worst economic contraction since the Great Depression in the 1930s.
Most countries responded to the virus outbreak by shutting down their economies. They halted flights and locked down cities. Demands on various intermediate products and consumer goods withdrew.
Chinese foreign export volumes had significantly been reduced. The impeded international transport logistics network stalled production along the entire supply chain. Moreover, there was surging unavailability in raw materials and products. It stressed China’s growth stability and job security.
Zhou called for active adaptations to the shift of the global industrial supply chain. China should react under directions from the Central Committee of the Chinese Communist Party. China should observe the changes in the worldwide pandemic. “We should strive to safeguard, supplement and strengthen the economy,” Zhou added. Efforts should be made towards bolstering the domestic development landscape. We should build regional industrial chains with China at the center. We should promote more infrastructure projects in China. We should gradually transform the development model with dual economic circulations:
- the domestic flows as the main one.
- The domestic-and-international dual circulations.
Ultimately, these practices will build advantages for international cooperation and competition.
On “the U.S. dollar hegemony”
Zhou asserted, “the international monopoly of the U.S. dollar would post more threats against our future development.”
He pointed out two critical problems:
First, the value of USD denominated assets would shrink significantly. The U.S. Federal Reserve could carry out quantitative easing policies or unleash monetary supplies. In China, various organizations and individuals used U.S. dollars for international businesses. Their assets are in danger of being diluted and drained.
Secondly, the United States controlled the primary channels for international payment and clearance. Through the Global Interbank Financial Telecommunications Association (SWIFT), the United States imposed economic sanctions on Russia, Iran, and other countries cooperating with China. It obliged them to tolerate the U.S.’s “long-arm jurisdiction. “The pathway for international clearing was hindered. Financial transactions would become very challenging.”
Zhou identified the U.S. dollar to be a significant risk for China. He pleaded for actions including:
- Accelerating globalization of RMB.
- Promoting the scale of cross-border RMB payments and RMB clearings.
- Establishing localized currency settlement mechanisms with more countries.
- Creating conditions to apply RMB in the global industrial supply chain.
The Food Crisis
The world was facing the virus pandemic, locust infestations across East Africa and the Middle East, and the United States’ drought. The affected global food production would reduce by 30% this year. Zhou believes that it is also necessary to prepare for a worldwide food crisis. He feared that hedge funds would further exploit volatility in food prices. The food crisis would cause instability in many societies.
Global Terrorism
Zhou called for stronger alliances against global terrorism. In his article, he identified the threat of cyber terrorism. The terrorist organizations continued to promote Islamic extremism along with anti-China propaganda. They invited hatred against the Chinese and publicized terror attacks in China. ISIL, Al Qaeda, Turkistan Islamic Party, Hizb ut-Tahrir, and Al-Shabaab were all extending their efforts. Some factions conspired with the U.S. to defame China on the origin of COVID-19. They smeared China’s initiative on Uyghur affairs.
【Translator】 Cheng Wen
【Editor】 Dylan King
【Disclaimer】
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【Reference】
Zhou, Li. 中联部原副部长周力：积极主动做好应对外部环境恶化的六大准备, The Global Times, 3 July 2020, view.inews.qq.com/a/20200703A05VHM00
(Global Times is a state propaganda organization under direct leadership of the Communist Party of China. The hosting website belongs to Tencent. It is publicly traded in depository receipts (TCEHY) in the U.S.. The entity is under direct leadership from Communists)
