23 May 2022

Understanding the military’s role in space

Ulas Yildirim and Malcolm Davis

The establishment of defence space organisations among space-faring nations means they must explain their purpose and rationale alongside well-established branches of militaries. Three distinct camps have emerged in the attempt to characterise the role of defence space organisations. The first group argues that the space domain should not be militarised and warns that even using language describing it as a contested environment will turn space into a warfighting domain.

The second group argues that space is an operational domain and cautions that any other language would make war in space inevitable.

The final group argues that space has been a warfighting domain since the beginning of the space age. They say that adversary counterspace developments suggest that space as an operational domain will quickly become a warfighting domain.

Pakistani separatists turn their sights on China

SYED FAZL-E-HAIDER

In Pakistan’s southwest region of Balochistan – the country’s largest province by area but least populous and least developed despite having huge mineral and energy resources – there is a battle being waged for independence. The Baloch have grievances against the Pakistan government, which has historically exploited the province’s resources and neglected its development needs.
Military handling of unrest in the region by Islamabad has deepened the sense of alienation and frustration felt in Balochistan, spawning several separatist groups, including the Balochistan Liberation Army (BLA), the Baloch Republican Army (BRA) and the Baloch Liberation Front (BLF).

On 26 April, a suicide attack by a Baloch separatist outside the Confucius Institute of the Karachi University in the southern port city killed four people, including three Chinese staff and their Pakistani driver. The attack was targeted towards the Chinese, who the separatists accuse of partnering with Islamabad in the exploitation of Balochistan’s immense mineral and energy potential.

Five reasons that Russia’s nuclear exports will continue, despite sanctions and the Ukraine invasion. But for how long?

Marina Lorenzini, Francesca Giovannini 

By many measures, Russia’s state-controlled nuclear energy company, Rosatom, has primacy in the global nuclear energy market. At any given moment, the firm provides technical expertise, enriched fuel, and equipment to nuclear reactors around the world. The Russian invasion of Ukraine and, more acutely, the Russian military’s dangerous actions at
the Zaporizhzhia nuclear power plant and in the Chernobyl exclusion zone have many countries rethinking their dependence on Russian nuclear products and searching for alternatives. Additionally, the ensuing global effort to cripple Russian access to international markets calls into question the viability of current contracts, government licensing, and financial instruments involved in Russia’s nuclear exports.

Former Moscow chief of station Rolf Mowatt-Larssen on the state of play in Ukraine - "Intelligence Matters"


In this episode of "Intelligence Matters," host Michael Morell speaks with former senior CIA operations officer and Moscow station chief Rolf Mowatt-Larssen about the likely trajectory of the war in Ukraine, including the possibility of a negotiated peace — or dangerous escalation. Mowatt-Larssen offers insights on Putin's options, potential rifts among his intelligence agencies, and persistent rumors about the Russian leader's health. Morell and Mowatt-Larssen also discuss Western involvement in the conflict and the lingering potential for the Kremlin to use weapons of mass destruction.

Reality Check #12 — Russia, the West, and the rest: The hard choices the US must make to reinforce its global leadership

Ferial Saeed

Key pointsThe Biden administration is confronting Russia’s naked aggression against Ukraine without direct military engagement, but a triple threat of inflation, starvation, and a coalition that is not sufficiently global promises trouble ahead for the United States and its position in a global order that is suddenly on an accelerated path to change.

The commodities shock resulting from sanctions and war is amplifying an inflationary storm menacing the global economy, with the specter of mass starvation in the Global South, cost-of-living crises in the Global North, and the spreading risk of instability and illiberalism.

Isolating Russia politically requires a truly global coalition of states prepared to sacrifice their interests to cut Russia off and deny it the runway to pursue the war, but three-quarters of the world’s population—including key rising and regional powers—are not willing to do so, undercutting the United States’ immediate interests and global position over the long-term.

Washington needs to make hard choices now to blunt these consequences and deliver the decisive strategic setback to Russian President Vladimir Putin necessary to reinforce US global leadership.

China’s Digital Authoritarianism vs. EU Technological Sovereignty: The Impact on Central and Eastern Europe


One of the major avenues of China’s interaction with Central and Eastern European states has been the Digital Silk Road (DSR) initiative, established in 2015 and part of the Belt and Road Initiative. DSR is in some ways a complement to Beijing’s Made in China 2025 strategy, a national industrial plan that aims at transforming China into a high-tech global powerhouse. But in Central and Eastern Europe, as in Western Europe, North America, Australia, and parts of Asia, the DSR, and other, earlier Chinese telecoms investments, have run into roadblocks as countries are increasingly concerned about their digital sovereignty and about other potentially negative implications of allowing Chinese firms to build their telecommunications infrastructure. For more on the conflict between China’s increasingly assertive global technology firms, who gained a foothold in Europe well before the DSR was created, and Central and Eastern European states’ desires to protect their sovereignty and digital privacy, please read the entire paper here.

The Ukraine War's Impact on Sino-European Relations


Since Russia launched its unjustified attack on Ukraine on February 24, 2022, initiating a war on European soil, NATO, the European Union, and individual European countries have reassessed the security situation multiple times. Already, the war has had a devastating effect on EU-Russia relations at all levels, and the situation in Northeastern Europe will remain strained for a long time. Additionally, questions are emerging regarding the impact of the war on the future of Sino-European relations. Despite Beijing’s so-called “neutrality,” on February 4, Presidents Vladimir Putin and Xi Jinping signed a joint communiqué declaring a “friendship without limits” between their two states.

Two months later, on April 1, President Xi held another summit — this time with European Commission President Ursula von der Leyen and European Council President Charles Michel. For the first time in several years, the Chinese leadership faced a stern European side, unwilling to address topics other than the war in Ukraine. Under such circumstances, “there cannot be business as usual,” von der Leyen said. Although China’s ability to influence Putin is limited, the EU still argued that China has unique channels with Russia.

China’s Activities and Influence in South and Central Asia

JENNIFER MURTAZASHVILI

EXECUTIVE SUMMARY
China is motivated primarily by security interests in Afghanistan. It does not want terrorism or extremist activity to spill over from Afghanistan into China. It wants to prevent terrorism from destabilizing the region.

The primary security concern of China is potential threats from the relatively small East Turkistan Islamic Movement, a group that seeks to liberate Xinjiang Province and the Uyghur people from Chinese government control and impose an Islamic

Russia and China have strong mutual security interests in Afghanistan in preventing terrorism and violent extremism. The credibility of Russia as a security partner, however, in the region is in doubt after its poor performance in

The U.S. has limited policy options in this region given that it will not engage with the Taliban, has tense relations with China, and has sanctioned Russia. This is compounded by loss of U.S. credibility throughout the region due to the disastrous result of the U.S. war in

A potential solution to this impasse is for the U.S. to support greater economic support and tools of regional connectivity to achieve positive-sum outcomes as Afghanistan’s neighbors seek to balance the influence of

Assessing the viability of an Indian Central Bank Digital Currency (CBDC)

Priyadarshini D

A large number of Central Banks around the world are planning to introduce Central Bank Digital Currencies (CBDCs) as a legal tender in their countries. The Reserve Bank of India (RBI) has also revealed similar plans, with an Indian CBDC expected in the near future. Any evaluation of such a major change in the nature of money requires a broader understanding of the opportunities and challenges arising from the adoption of CBDCs. In this paper, we discuss these issues at the conceptual level and specifically in the Indian context. We show that the conceptual issues can be characterised in three ways – monetary sovereignty issues, issues from the point of view of national sovereignty, and developmental issues. In the Indian context, we analyse these issues from the perspective of the rapid digitalization taking place in the country. Finally, we discuss the steps that the RBI needs to take in order to introduce an Indian CBDC.

Africa and the new Cold War: Africa’s development depends on regional ownership of its security

Hippolyte Fofack

The devastating consequences of the Ukraine crisis continue to highlight the need to urgently deliver the African Union’s flagship project of “Silencing the Guns by 2020” in a region where conflicts and their fallout, while underreported in the international media, have been wide-ranging, severe, and increasing in intensity and cost. More than 20,000 Africans were killed in violent conflicts in 2020, an almost tenfold increase from a decade ago. In the Democratic Republic of the Congo (DRC) where several millions have been killed in violent conflicts over the past decades, more than 2,400 were victims of war in 2020 alone.

Unable to stem the increasing rate of high-intensity conflicts and conflict-related deaths in Africa, the continent’s leaders extended the deadline for peace by another decade, shifting the goal posts toward “Silencing the Guns by 2030.” However, meeting this new deadline remains a challenge unless the region vigorously adopts a continental approach to security promotion that strengthens ownership of both national security and the development agenda for lasting peace and prosperity.

Bridging the Gap Assessing U.S. Business Community Support for U.S.-China Competition

Bonny Lin, Howard J. Shatz, Nathan Chandler, Cristina L. Garafola

The administration of President Donald Trump pursued an enhanced—and, in some ways, novel—set of policies designed to confront China over its transgressive and anticompetitive economic behaviors, such as theft of technology and intellectual property and limitations on market access for U.S. businesses. How did the U.S. business community view these policies, and did it broadly support increased U.S. efforts to counter problematic Chinese economic behavior? If not, how could the U.S. government implement policy to better achieve policy goals while also addressing corporate concerns?

In this report, the authors address these questions, which are central to determining whether the U.S. government has crafted an overall economic strategy or approach toward China that is sustainable and feasible. How the business community thinks the United States should deal with China is an overlooked and underappreciated topic, and the United States might find it difficult to compete against China without support from the business community.

Considering Responsible Behaviours as Part of Managing Threats to Space Systems

James Black

This short report captures the key points emerging from informal multilateral discussions at Wilton Park, convened on behalf of the UK Foreign, Commonwealth and Development Office (FCDO). This three-day event brought towards governmental representatives from 20 nations including from Central and South America, Africa, Australia and New Zealand, Southern and South-East Asia as well as Europe and North America. Also participating were selected industry, civil society and academic experts in aspects of space technology, security, and law.

The purpose of these discussions was to share perspectives and debate relevant issues ahead of the upcoming United Nations (UN) Open-Ended Working Group (OEWG) on Reducing Space Threats through norms, rules and principles of Responsible Behaviour, which will meet for the first formal session on 9–13 May 2022 in Geneva. While the discussions were conducted under the Chatham House rule, with comments non-attributable to individual participants, this report is intended to summarise the key insights emerging from the discussions.

The report begins with an overview of the background to the Wilton Park event and UN OEWG, before moving to discuss themes from each of the plenary and breakout sessions.

The Emergence of Physically Mediated Cyberattacks?

Herb Lin

On May 13, the State Service of Special Communication and Information Protection of Ukraine published a notice alleging that “Russia’s special services” are targeting Ukrainian internet service providers (ISPs). If this notice is to be believed, the world has just witnessed a new kind of cyberattack—different in kind rather than in degree. Here’s the relevant part:

Free access to information is a major threat to the enemy in the occupied territories of our country. As long as Ukrainians know about the true course of the war russian propaganda fails.

That is why russia keeps trying to connect Ukrainian Internet service providers to their own system controlled by russia’s special services to block access to Ukrainian web resources and gain a complete control of any activity of Ukrainian users in the Internet. Invaders use every available method, resort to blackmailing and intimidate those who refuse to “collaborate” with the occupants.

Is Gwadar’s New Development Prepared to Handle Its Weather?

Mariyam Suleman Anees

In Gwadar, a coastal city in Pakistan’s Balochistan province, seasonal downpours usually arrive in winter. The intense rain does not stay for long – only a few days a year. But even this short period often floods the entire city. This year, ocean-going boats were floating down streets in the old neighborhoods of Gwadar, helping women and children escape the several feet of water.

A little further from these old neighborhoods, just before turning to the road that leads to Gwadar port – the gateway to China’s ambitious China Pakistan Economic Corridor (CPEC) – at Mullah Moosa Mod, a few men dug at both ends of the road, making large ditches for the floodwaters to flow downward to the ocean.

While rains are one of the most important sources of water for dams, they often also leave Gwadar sinking. This has happened before: in 2010, 2007, 2005, and so on. But when parsing why Gwadar floods, we have to ask: Is it the rain that is the problem, or flaws in the planning and development of Gwadar’s rapid changes?

Evaluating China’s ‘Space-Ground Integrated Information Network’ Project

Kai Lin Tay

The “Space-Ground Integrated Information Network” (tiandi yitihua xinxiwangluo, SGIIN) is a “mega engineering project” approved by China under its 13th Five-Year Plan (2016-2020) in March 2016. Like other mega projects, this project reflects China’s “national strategic intentions,” with the specific aim to “promote the comprehensive integration of space-based information networks, future internet and mobile communication networks” by 2030.

The concept behind the SGIIN is not unique to China. The United States Department of Defense, for instance, developed similar networks such as the Global Information Grid and the Transformational Satellite Communications Systems in 2007 and 2008 respectively, which integrate space-based and terrestrial networks for military purposes. China’s development of these integrated networks appears to lag behind U.S. military programs even though it first raised the intent to develop a space-ground integrated network system in a 2000 white paper.

Nevertheless, given the important implications of the SGIIN project on China’s overall economic and military capabilities, it’s important to take stock of the project’s developments and achievements to date, especially following the recent conclusion of the 13th Five-Year Plan period.

U.S. Navy Looks to Electronic Warfare and Cyber to Enhance Ship Defenses

Kris Osborn

The U.S. Navy is refining a series of additional “non-kinetic” ship defenses, including systems involving electronic warfare (EW), cyber, or high-powered microwave weapons. These weapons, in a manner similar to kinetic solutions, can be vastly improved through the use of multi-domain networking.

Ship defenses, while increasingly layered, robust, and networked, are now quickly being reinforced by a growing range of non-kinetic assets of equal or even greater defensive value. For example, electronic warfare technologies such as the Navy’s upgraded Surface Electronic Warfare Improvement Program (SEWIP) Block III technology can sense and “jam” the electronic guidance systems of incoming precision weapons to throw them off course or disable them. Northrop Grumman’s Block III SEWIP, for example, merges information operations with EW applications to identify and deconflict relevant areas of the information spectrum and synthesize threat data to attack or disable enemy threats.

The Navy’s sophisticated ship defenses are evolving at an alarming pace as well, a phenomenon which bears prominently on the service’s coming competition with China. Ship-based defenses are of particular relevance to competition in the Pacific as there are fewer land locations from which to operate or fire interceptors. For this reason, the Navy has emphasized networking its ship defenses, since offering additional multi-domain connectivity allows its fleet a greater ability to see, track, and destroy approaching enemy attacks.

Touchpoints: How the Army Brings Emerging Tech Onto the Battlefield

Kris Osborn

The Army’s approach to future weapons and war technologies is as clear as it is simple: putting emerging technologies in the hands of soldiers to assess how they can be integrated into a combined arms maneuver formation.

The Army calls these technologies soldier touchpoints, and they are part of an initiative launched by Army Futures Command to solidify requirements for new technologies across the acquisition community. The touchpoint applications include the use of robotic technologies, networking systems, and Long Range Precision Fires. A number of critical innovations in these areas are requiring the service to adapt to new tactics, formations, and weapons applications, including “shaped charge” course-correcting artillery and the service’s Extended Range Cannon Artillery (ERCA) program, which more than doubles the range of standard artillery.

Maj. Gen. John Rafferty, director of the Long Range Precision Fires Cross-Functional Team, explains that soldier touchpoints are a foundational element of Army modernization. Part of the rationale is due to the recognition that combat-experienced soldiers are well suited to understand how to best use new weapons and determine their effectiveness in combat circumstances.

No War for Old Spies: Putin, the Kremlin and Intelligence

Philip H J Davies and Toby Steward

The Russian offensive against Ukraine has been dogged by a cascade of intelligence failures at every level of command. This has ranged from completely failing to assess the likelihood and shape of a unified Western response and Ukraine’s determined resistance, to inadequate preparations for Ukraine’s ‘mud season’ and a bewildering lack of any effective operational security (OPSEC) measures. The irony of this, of course, is that Vladimir Putin’s ruling coterie is numerically and functionally dominated by former intelligence officers. Attempts to explain this paradox have tended to rely on conventional wisdoms of why authoritarian regimes are often bad at strategic intelligence. Such governments, the orthodoxy runs, may invest heavily in covert information collection, but they are typically poor at analysis and assessment. In part this is because of an institutional bias towards espionage that neglects analysis, partly because of a pressure to tell autocrats what they want to hear because of the personal and professional risks of doing otherwise, and partly because autocrats tend to act as their own intelligence officers and ignore the truth even when someone dares speak it, acting instead on their own judgement.

While these accounts are entirely plausible as far as they go, none of them has considered specifically whether Russian intelligence has gone wrong precisely because so many of Russia’s leaders are former intelligence officers of a certain type and vintage. This is crucial because, while Putin and his clique have spent the last three decades trying to restore the kind of police state intelligence concept that had once been their professional milieu, intelligence in the democratic West had been undergoing a succession of so-called ‘revolutions’. As a result, Russia’s leadership entered the conflict almost entirely unprepared for the capabilities and uses of the 21st century intelligence that would be deployed against them.

Russia Gets a Taste of Its Own Medicine as Hackers Target the Country

Matthew Humphries

The world is used to Russian hackers being a serious threat to businesses and infrastructure, but the tables have turned, and now Russia is increasingly the focus of attacks.

As Reuters reports(Opens in a new window), Vladimir Putin held a meeting with the Russian government's Security Council today during which cyber attacks were a focus. Apparently the number of attacks targeting state-owned companies, financial institutions, medical providers, and news websites in the country have increased several-fold.

Putin said, "Targeted attempts are being made to disable the internet resources of Russia's critical information infrastructure," and that "Serious attacks have been launched against the official sites of government agencies. Attempts to illegally penetrate the corporate networks of leading Russian companies are much more frequent as well."

THE UNITED STATES IS SENDING BILLIONS IN MILITARY AID TO UKRAINE—JUST NOT THE SYSTEMS IT NEEDS

Andrew Milburn

Twisted metal, still smoldering; the eviscerated hull of a vehicle, its top half ripped off—this is what the Turkish Bayraktar TB-2 leaves in its wake. There were two such drones involved in this attack on a Russian armored column north of Kyiv—quite a bargain for the West at just under $2 million a platform.

By contrast, the much-vaunted Javelin and NLAW, both man-portable antitank guided missiles, belong to a previous era. They require an operator (or two, in the case of the Javelin) to ambush armored vehicles within the adversary’s weapons engagement zone. Their high success rate here in Ukraine owes everything to designer defects in Soviet-era armor.

The Russian BRDM armored reconnaissance vehicles are made of aluminum alloy, which burns incandescently after contact with a high-explosive round. And the manufacturer of the T-72 tank overlooked one fatal design defect: the tank’s ammunition is stored below the crew spaces without a hardened bulkhead for insulation. Even a rocket-propelled grenade fired from the flank will result in a catastrophic kill more often than not. Both these flaws are a result, in part, of the corruption and incompetence endemic throughout the Russian military procurement system—and have proven to be a great benefit for the defenders of Ukraine.

Ukraine’s information war is winning hearts and minds in the West

MICHAEL BUTLER

Russia’s invasion of Ukraine has dominated headlines since late February 2022. The war struck a nerve among Western audiences, evoking a high degree of support for Ukraine.

The reasons for the prominence of the war in the West are many and varied.

A ground war in Europe launched by a major military power evokes the ghosts of World War II. This is especially true when the attacking country has designs on territory it considers integral to its nation, and is led by a personalist authoritarian regime where all power is concentrated in a single leader. The deep involvement of the U.S. and European countries, both individually and collectively through NATO and the European Union, also inspires Cold War comparisons.

The resulting humanitarian crisis, including the mass exodus of over 5 million refugees, underscores the ethical and moral implications of the war.

The Pillars Necessary for a Strong Domestic Semiconductor Industry


Sujai Shivakumar, Charles Wessner

All major U.S. defense systems and platforms rely on semiconductors for their performance, and the erosion of U.S. capabilities in microelectronics is a direct threat to the United States’ ability to defend itself and its allies.

The COMPETES and USICA legislation, currently being reconciled in Congress, represents a national strategy to secure U.S. competitiveness and national security in the twenty-first century. Both the House and Senate legislation call for $52 billion to support U.S.-based semiconductor research and production. They also authorize several programs to both expand U.S. semiconductor fabrication capacity and support the continued research and development (R&D) of advanced chips. The key question is how these intentions can best be turned into reality.

There are several challenges that the domestic semiconductor industry confronts, such as international competition, capital investment requirements, workforce needs, gaps in the supply chain, and the shortfall in venture capital funding and technical support needed to enable commercialization of promising technologies. Addressing these issues requires a focus on the following:Tax incentives: How can a competitively awarded federal incentives program support investments by companies and consortia in the establishment, expansion, and modernization of semiconductor manufacturing facilities and infrastructure within the United States?

Sanctions, SWIFT, and China’s Cross-Border Interbank Payments System


In response to Russia’s attack on Ukraine, the United States and a coalition of cooperating countries imposed harsh financial sanctions on the Russian government, corporations, and individuals.1 These sanctions bar Russian banks from using SWIFT (the Society for Worldwide Interbank Financial Telecommunications) to facilitate cross-border payments, prohibit banks from doing most forms of business with Russian entities, and freeze assets held abroad by the Central Bank of Russia in the form of treasury securities and bank deposits.

These developments have led Russia, as well as other countries contemplating whether they might find themselves in the same position, to explore alternatives. Such options could include building a substitute for SWIFT to send instructions regarding cross-border interbank transactions; identifying financial counterparties other than Western banks with which to do international business and platforms other than Western clearinghouses through which to make payment; and finding a vehicle other than the dollar for denominating and executing transactions. Specifically, countries are looking to China, which has large internationally active banks, has created its own clearinghouse for cross-border transactions and is embarked on a campaign to encourage broader international use of its currency, the renminbi.2

Russia’s military is now a ‘wounded bear.’ Can it revive itself?

AARON MEHTA

WASHINGTON: Watching Russia’s invasion of Ukraine flag and falter, Norway’s top military officer was as surprised as the wider military world at just how badly the supposedly superior Russian military was performing.

“The status of the forces were worse than their higher officers believed. I think that’s a fact. The tanks were not as operational as they were supposed to be, they had problems with logistics, all those things,” Gen. Eirik Kristoffersen, Norway’s chief of defense, told Breaking Defense in a May 12 interview.

But despite the surprising success of Ukraine’s defenders nearly three months into the doomed invasion, Kristoffersen joins experts and other officials in warning that the conflict is far from over — and predicting that, eventually, the Russian military will regroup, even if questions remain about exactly what that looks like. In the meantime, Kristoffersen said, the Kremlin is as dangerous as ever.

China’s Economic Activity Collapses Under Xi’s Covid Zero Policy


China’s economy is paying the price for the nation’s Covid Zero policy, with industrial output and consumer spending sliding to the worst levels since the pandemic began and analysts warning of no quick recovery.

Industrial output unexpectedly fell 2.9% in April from a year ago, while retail sales contracted 11.1% in the period, weaker than a projected 6.6% drop. The unemployment rate climbed to 6.1% and the youth jobless rate hit a record. Investors responded by selling everything from Chinese shares to US index futures and oil.

China’s economy has taken an enormous hit from the government’s stringent efforts to keep the virus at bay, with major cities like Shanghai locked down for several weeks and restrictions in many other places cutting into spending, shutting factories and blocking supply chains.

The government has doubled down on its Covid Zero strategy, even though the high transmissibility of the omicron variant puts cities at greater risk of repeatedly locking down and reopening. The zero-tolerance approach has prompted criticism from businesses, fueled public frustration and has put Beijing’s ambitious full-year growth target of around 5.5% further out of reach.

China’s main financial newspapers on Monday published a six-month-old speech by President Xi Jinping on the need to preserve jobs and shore up growth, a sign of greater urgency to bolster the economy. The surge in joblessness is of particular worry to the Communist Party ahead of a twice-a-decade leadership reshuffle later this year, when Xi is expected to secure a precedent-breaking third term.

Record High Youth Unemployment

China's surveyed jobless rate was the second highest on record

“They prioritized zero-Covid over economic growth in April, but they want both for the whole year,” said Larry Hu, head of China economics at Macquarie Group. “After all, zero-Covid at the cost of surging unemployment is a hard sell politically, especially in such a year with significant political importance.”

Monday’s data suggests gross domestic product declined 0.68% in April from a year ago, the first contraction since February 2020, according to estimates from Bloomberg Economics. Growth could weaken to below 2% in the second quarter, according to UBS Group AG, while S&P Global Ratings predicted it could be as low as 0.5%. Citigroup Inc. economists downgraded their full-year growth forecast for 2022 to 4.2% from 5.1%.

With Shanghai taking the first steps toward reopening by allowing some shops to gradually resume operations from Monday, there’s optimism that last month’s data could mark the worst of the slump. However, many people still remain confined to their homes under strict lockdown measures in Shanghai and the city’s vice mayor said Sunday normal life and production will only fully resume by mid- to late-June.

China’s benchmark CSI 300 stock index closed 0.8% lower with healthcare and consumer staples shares being the worst performers. The onshore yuan weakened 0.1% to 6.7957 per dollar as of 5:04 pm local time while the yield on 10-year government bonds was little changed at 2.82%.

Disruptions in China, the world’s factory, are worsening the global growth outlook and complicating the inflation picture. Supply chain snags have affected companies from Tesla Inc. to Apple Inc, while export growth slowed last month to the weakest pace since June 2020, as operations at the world’s largest port in Shanghai took a knock.

Chetan Ahya, Morgan Stanley’s chief Asia economist, said supply chain pressures likely peaked in April and there’s optimism about some improvement going forward. His team still said its estimate of growth fut the full year is “leaning towards our bear case of 3.5%.”

“It looks like you will see some kind of solution to the supply chain issues in China over the next few weeks,” he said in an interview on Bloomberg TV. “And Shanghai reopening is definitely one important factor that we are looking at as well. So yes, there are going to be a lot of challenges for the rest of the world, but looks like the worst is behind us.”

Beijing has signaled that policy makers will step up support for the economy, with Premier Li Keqiang recently urging officials to ensure stability through fiscal and monetary policy.

The People’s Bank of China took steps on Sunday to ease a housing crunch by reducing mortgage rates for first-time homebuyers. However, it left the interest rate on one-year policy loans unchanged on Monday, as inflation pressure and worries about capital outflows reduce the scope for more easing.

“It is clear that the impact of lockdowns, or the fear of lockdowns, overwhelmed any economic easing, and the Shanghai lockdown had ripple effects across the nation,” said Wei Yao, head of research for Asia Pacific and chief economist at Societe Generale SA. If the surge in unemployment “does not raise the urgency of adjusting the zero-Covid measures to allow the economy to normalize, we don’t know what will,” she said.

‘Deadly serious’: U.S. quietly urging Taiwan to follow Ukraine playbook for countering China

LARA SELIGMAN

U.S. officials are pushing their Taiwanese counterparts with new urgency to look to Ukraine’s success in fending off Russian forces as a blueprint for countering a Chinese attack, former and current U.S. officials tell POLITICO.

But there is little doubt that China is also learning from Russia’s botched invasion as it looks to reunify Taiwan with the mainland — with or without force. Experts say Beijing is likely adjusting its plans for the island to reflect and improve on Russia’s failures.

“There is no question that the perceived reality of the possibility [of a Chinese invasion of Taiwan] is greater than it was three months ago,” said Aaron Friedberg, a professor of politics and international affairs at Princeton University. But “it’s not a trivial challenge for the Chinese, even as strong as they’ve become.”

The Clash of Asia’s Titans

BRAHMA CHELLANEY

NEW DELHI – With global attention focused on Russia’s war in Ukraine, China’s territorial expansionism in Asia – especially its expanding border conflict with India – has largely fallen off the international community’s radar. Yet, in the vast glaciated heights of the Himalayas, the world’s demographic titans have been on a war footing for over two years, and the chances of violent clashes rise almost by the day.

The confrontation began in May 2020. When thawing ice reopened access routes after a brutal winter, India was shocked to discover that the People’s Liberation Army (PLA) had stealthily occupied hundreds of square miles of the borderlands in its Ladakh region. This triggered a series of military clashes, which resulted in China’s first combat deaths in over four decades, and triggered the fastest-ever rival troop buildup in the Himalayan region.

India’s counterattacks eventually drove the PLA back from some areas, and the two sides agreed to transform two battlegrounds into buffer zones. But, over the last 15 months, little progress has been made to defuse tensions in other areas. With tens of thousands of Chinese and Indian troops standing virtually at attention along the long-disputed border, a military stalemate has emerged.

Department of Defense continues to downplay Taliban and Al Qaeda threat in Afghanistan

BILL ROGGIO

The U.S. military continues to underestimate Al Qaeda’s strength in Afghanistan and overestimate the threat posed by the Islamic State’s Khorasan Province.

The newly released Department of Defense Inspector General report on Operation Freedom’s Sentinel (OFS, the now-defunct mission in Afghanistan) and Operation Enduring Sentinel (OES, the current mission to address threats emanating from Afghanistan) puts the number of Al Qaeda operatives in the low hundreds.

Additionally, the report somehow elevated the Islamic State’s Khorasan Province as the primary threat in Afghanistan, over the Taliban, which controls the country and shelters numerous regional and global terror groups, including Al Qaeda.

Stale U.S. military estimates of Al Qaeda’s strength

The Defense Intelligence Agency, or DIA, “reported no significant change from its assessment last quarter that al-Qaeda in the Indian Subcontinent probably has about 200 members and al-Qaeda core has far fewer. During this quarter,” according to the report.

Weaken, but don’t ruin, Russia

MICHAEL O’HANLON AND MELANIE W. SISSON

While in Poland after his trip to Kyiv, Secretary of Defense Lloyd Austin stated that the West seeks for Russia to emerge from its war against Ukraine severely weakened, if not debilitated. The purpose is to ensure that Russia will not have the capacity to attempt another attack in the same place or elsewhere in the future. This is the right intent and would be a desirable outcome in the near term — as long as we don’t overdo it.

Helping Ukraine withstand Russia’s aggression and survive as a nation must be our goal. As such, the current policy of arms shipments, intelligence and other indirect support, and powerful economic sanctions makes sense. But the permanent weakening of Russia should not be our long-term objective, and we should take care not to create conditions that produce that outcome. Leave aside the humanitarian implications for the Russian people. Such a policy would be dangerous.

No historical analogy can ever be a perfect guide to future policy. But the lessons of the Treaty of Versailles, negotiated in 1919 after World War I, are instructive here.

‘The honeymoon is over’: Israel and China at 30 years

Jordyn Haime

As countries in the West have grown increasingly distant from China in recent years amid the pandemic and disputes over issues like Xinjiang, Hong Kong, and Taiwan, Israel has continued to pursue a close relationship with the PRC.

China is Israel’s third-largest trading partner. In 2021, China surpassed the U.S. as Israel’s largest source of imports at $10.7 billion that year, up from $7.7 billion the year before. In April, Israel added the Chinese yuan to its central bank reserves for the first time while trimming U.S. dollar and euro holdings in an attempt to diversify its foreign reserves. A free trade agreement, which has been in discussion for several years, is expected to go into effect by the end of this year.

As the two countries observe 30 years of diplomatic relations this year, Chinese state media has been celebrating the “flourishing” relationship. “Cooperation won’t be affected by external interferences,” the Global Times noted in January. But as China continues to distance itself from much of the world, and as U.S. pressure mounts on Israel to adopt a China policy more closely aligned with its own, the “honeymoon” between Israel and China may be coming to an end.