China-Taiwan Weekly Update, February 15, 2024

Feb 15, 2024 - ISW Press

China-Taiwan Weekly Update, February 15, 2024

Authors: Nils Peterson, Matthew Sperzel, and Daniel Shats of the Institute for the Study of War

Editors: Dan Blumenthal and Frederick W. Kagan of the American Enterprise Institute

Data Cutoff: February 13 at 5pm EST

The China–Taiwan Weekly Update focuses on the Chinese Communist Party’s paths to controlling Taiwan and relevant cross–Taiwan Strait developments.

Key Takeaways

Taiwan’s Tourism Administration canceled plans to resume group tours to the PRC on March 1 in response to the CCP changing a commercial flight route over the Taiwan Strait.
Eight PRC high-altitude balloons that crossed the median line in the Taiwan Strait two days in a row on February 9 and 10 are likely part of a campaign to test and erode Taiwan’s military readiness.
US and foreign partner cybersecurity and intelligence agencies confirmed in a joint advisory on February 7 that a PRC state-sponsored cyber threat actor infiltrated critical infrastructure organizations in the continental United States and US territories.
Philippines Defense Secretary Gilberto Teodoro Jr. called for a stronger Philippines military presence in the northern Batanes Islands on February 6. The People’s Liberation Army routinely sends naval ships through the Bashi channel between the Batanes and Taiwan.
The loss of Compact of Free Association (COFA) funding for Palau, Micronesia, and the Marshall Islands presents opportunities for the People’s Republic of China to fill the gap in funding.
The PRC and Russia held “interagency consultations” on February 1 to discuss military applications of artificial intelligence (AI).

Cross-Strait Relations

Taiwan

Taiwan’s Tourism Administration canceled plans to resume group tours to the PRC on March 1 in response to the CCP changing a commercial flight route over the Taiwan Strait. The PRC’s Civil Aviation Administration unilaterally changed the M503 domestic north-south flight route to fly within 7.8 kilometers of the median line in the Taiwan Strait. The median line serves as a de facto boundary between the PRC and Taiwan. The Chinese Communist Party (CCP) does not recognize the median line and denies its existence.[1] The change took effect on February 1 without consulting Taiwan’s government.[2] The CCP’s Taiwan Affairs Office (TAO) claimed that the move will alleviate air traffic congestion. Taiwan’s Mainland Affairs Council (MAC) said that the move posed safety risks and accused the CCP of using commercial air travel to change the status quo in the Taiwan Strait, however.[3] Taiwan’s Tourism Administration responded on February 7 by telling travel agencies to stop organizing group tours to the PRC. The Tourism Administration had planned to resume group tours from Taiwan to the PRC on March 1 for the first time since the start of the COVID-19 pandemic in January 2020. Taiwan’s government will permit tours already organized from March 1 to May 31 to proceed, however.[4] Taiwan Vice President and President-elect Lai Ching-te said that the PRC had not shown the requisite goodwill necessary to conduct friendly tourism exchanges.[5]

Taiwanese tour operator associations visited the Kuomintang (KMT) headquarters on February 8 to express their opposition to the cancellation of group tours because it harms their business. The tour operators said they may stage protests at Lai Ching-te’s inauguration on May 20 if the government does not change the policy. About one-third of the annual 17 million overseas trips by Taiwanese nationals were to the PRC before the pandemic. Group tours accounted for approximately half of those trips.[6]

The KMT and CCP have seized on this policy to criticize the DPP. Former KMT vice presidential candidate Jaw Shaw-kong accused Lai and the DPP of breaking pre-election promises to reopen group travel to the PRC and of unfairly harming the local travel sector.[7] TAO spokesperson Zhu Fenglian said that the resumption of the ban on group tours was an instance of the DPP’s “political manipulation of tourism,” would harm the economic interests of both sides of the strait, and would lead to popular dissatisfaction with the DPP in Taiwan.[8]

Eight PRC high-altitude balloons that crossed the median line in the Taiwan Strait two days in a row on February 9 and 10 are likely part of a campaign to test and erode Taiwan’s military readiness. At least two of the eight balloons on February 9 and at least six of the eight balloons on February 10 flew directly over the island of Taiwan.[9] Eight balloons crossing the median line in the Taiwan Strait in one day is a record high since Taiwan’s Ministry of National Defense (MND) started publicly tracking such balloons in December 2023. Six balloons flying directly over Taiwan in one day is also a record high. The balloons flew at altitudes ranging from 12,000 to 38,000 feet.[10]

The spike in the number of balloons passing over the median line on February 9 and 10 coincided with the beginning of the Lunar New Year celebrations in Taiwan and the PRC. The CCP may be using increased balloon incursions during the holiday to further strain Taiwan’s resources. The balloon activities are consistent with ISW’s assessment that the CCP is trying to normalize using balloons in tandem with other aerial and naval violations of Taiwan’s Air Defense Identification Zone (ADIZ) as part of a broader effort to wear down Taiwan’s resources and threat awareness.[11]

The CCP’s Taiwan Affairs Office claimed on January 31 that such balloons were “mostly” launched by private enterprises and “mostly” for “livelihood purposes such as meteorological monitoring.”[12] Retired Taiwanese Air Force General Chang Yen-ting warned that even standard meteorological balloons could provide useful data about conditions around Taiwan to help plan air and naval operations against Taiwan, however.[13]

China

US and foreign partner cybersecurity and intelligence agencies confirmed in a joint advisory on February 7 that a PRC state-sponsored cyber threat actor infiltrated critical infrastructure organizations in the continental United States and US territories.[14] The Cybersecurity and Infrastructure Security Agency (CISA), Federal Bureau of Investigation (FBI), National Security Agency (NSA), and Five Eyes cybersecurity agencies co-authored the report, which detailed the PRC state-sponsored cyber threat actor known as Volt Typhoon’s extensive penetration of critical infrastructure organizations. The authoring agencies assessed with high confidence that Volt Typhoon’s goal was to develop the capability to disrupt key operational technology (OT) functions in the event of a conflict with the United States by leveraging its access to informational technology (IT) environments. OT systems are made up of software and hardware that control physical equipment and processes. The advisory did not specify the compromised targets but stated that CISA, FBI, and NSA observed compromises in the IT networks of organizations spanning sectors such as communications, energy, transportation, and water management systems. The advisory highlighted Volt Typhoon’s focus on gathering intelligence to facilitate access to OT assets, which can be leveraged to conduct follow-on offensive operations with physical impacts. The advisory revealed that Volt Typhoon potentially gained access to files that interact with critical infrastructure facilities, including an electrical substation and water treatment plants. The advisory divulged that Volt Typhoon may have maintained access to some targets for at least five years.

Microsoft also released a report in May 2023, in which it assessed Volt Typhoon was pursuing the capability to disrupt “critical communications infrastructure” between the US and the Asia region in a potential crisis.[15] Volt Typhoon’s infiltration of networks in Guam supports the notion that sabotage is a primary motive for the PRC’s hacking. Guam is strategically positioned between the continental US and Southeast Asia and is home to several military bases whose forces would play a significant role in a potential conflict with the PRC. A disruption of communication would significantly degrade the US military’s ability to respond to a crisis in Asia and deploy its forces to the region.

Southeast Asia

Philippines

Philippines Defense Secretary Gilberto Teodoro Jr. called for a stronger Philippines military presence in the northern Batanes Islands on February 6. The Batanes are the northernmost Philippines islands and are less than 125 miles from Taiwan. The Bashi Channel between the Batanes and Taiwan is a strategically important bottleneck that funnels maritime traffic between the South China Sea and the Western Pacific. The People’s Liberation Army (PLA) routinely sends naval ships through the channel and aircraft over it to exert military pressure on Taiwan. The PLA’s Shandong aircraft carrier strike group sailed through the Bashi Channel at least four times in the last 12 months during deployments to and from the Western Pacific, for example.[16] Teodoro called for the development of more structures on the Batanes, calling the islands the “spearhead” of the Philippines’ northern baseline.[17] He also announced that the “operational tempo” for the AFP (Armed Forces of the Philippines) will be higher in 2024. Teodoro made the comments while visiting the Batanes’ naval detachment, where he also observed the ongoing construction of the Naval Forward Operating Base Mahatao.

Teodoro’s comments sparked criticism from the PRC. PRC Ministry of Foreign Affairs (MFA) spokesperson Wang Wenbin stated on February 8 that the Philippines needs to understand that the “Taiwan question… is a red line that must not be crossed,” and urged the Philippines to “tread carefully and not play with fire.”[18] The PRC’s response underscores that the CCP views the Philippines' military presence on the island as a provocation that threatens its military’s operability around Taiwan. The Philippines Department of National Defense responded to Wang’s statements, declaring that “China should refrain from engaging in provocative rhetoric and activities if it truly wants to earn widespread trust and respect that it is trying so hard to gain but has, so far, been unable to.”[19]

The PRC’s China Coast Guard (CCG) spokesperson Gan Yu stated that a Philippines Coast Guard (PCG) vessel “intruded” into the waters around Scarborough Shoal from February 2–9.[20] Gan stated that the CCG intercepted and forcibly expelled the PCG vessel from the waters around the shoal. Gan claimed that the CCG’s actions were a lawful and justified response to uphold the PRC’s maritime rights and sovereignty. The Scarborough Shoal is a maritime feature in the South China Sea that the Philippines, the PRC, and Taiwan separately claim. The PRC has controlled the Scarborough Shoal since 2012 when it stationed a persistent Coast Guard presence there after instigating a maritime standoff with the Philippines.[21] The PCG published a statement saying that it monitored the presence of CCG and four Chinese Maritime Militia (CMM) vessels near Scarborough Shoal during a nine-day patrol to deliver food to Filipino fishermen.[22] The statement claimed the CCG vessels shadowed the PCG vessel on more than 40 occasions and performed blocking maneuvers by crossing the bow of the PCG vessel. PCG commander and spokesperson Jay Tarriela posted videos of the CCG blocking maneuvers on X.[23] Tarriela reiterated the Philippines’ sovereignty over the shoal and its surrounding waters per the 2016 arbitration by the Permanent Court of Arbitration in the Hague.

A contingent of the Chinese People’s Liberation Army (PLA) Southern Theater Command is participating in the multinational “Cobra Gold 2024” military exercise from February 10 to March 8 in Thailand. Cobra Gold is the world’s longest-running international military training program and one of the Indo-Pacific region’s largest combined military exercises. Troops from the seven main participants — the United States, Thailand, Malaysia, Singapore, Indonesia, South Korea, and Japan — will join combat rehearsals at five locations, including amphibious landings, strategic parachute jumps, ground and air live-fire drills, and cyber warfare. 2024 is the 11th consecutive year that the PLA will participate in the exercise. The PLA will not take part in combat drills but will join civic action missions with India.[24] Chinese military personnel will engage in activities such as engineering assistance, humanitarian rescue, disaster relief table-top exercises, high-level forums, as well as live drills in personnel search and rescue, water and fire rescue, chemical spill handling, and medical emergency aid. The PRC’s Ministry of Defense (MoD) said its participation aims to facilitate the exchange of experiences in rescue and disaster response among the participating militaries and further promote practical cooperation in related fields.[25]

Oceania

Compacts of Free Association

The loss of Compact of Free Association (COFA) funding for Palau, Micronesia, and the Marshall Islands presents opportunities for the People’s Republic of China to fill the gap in funding. These COFAs govern the United States’ relationship with Palau, Micronesia, and the Marshall Islands while granting the United States extensive military access throughout their territories. The United States renewed COFAs with Palau and Micronesia in May.[26] It then did so with the Marshall Islands in October.[27] Congress previously funded the COFAs for a twenty-year period in 2003.[28] That funding has now expired. The newly re-signed COFA agreements are now before Congress for funding consideration in the form of H.J.Res.96 and S.J.Res.48.[29] The total cost for all three of the twenty-year agreements would be roughly $7 billion spread over the period of 2024 to 2043, according to the Congressional Research Service.[30]

The loss of COFA funding prompted political leadership from Palau, Micronesia, and the Marshall Islands to warn of PRC opportunities to gain influence in their countries. Micronesian President Wesley Simina also stated in late November that his country would be at a “fiscal cliff” without US Congressional approval of COFA funding. This would mean that “we [Micronesia] will have to find different sources of funding… and that’s not out there available immediately.”[31] Marshall Islands President Hilda Heine also stated that the PRC is targeting her country: “A proposal to develop one of our atoll municipalities – if it were granted autonomy from our national government – that I opposed generated an effort to topple my government in our parliament.”[32] Palau President Surangel Whipps Jr. stated that “every day it [COFA] is not approved plays into the hands of the CCP [Chinese Communist Party] and the leaders here (some of whom have done ‘business’ with the PRC) who want to accept its seemingly attractive economic offers – at the cost of shifting alliances, beginning with sacrificing Taiwan.”[33]

COFA funding accounts for $36.9 million of Palau’s annual $124.2 million revenue as of fiscal year 2023 and $35.2 million of the Marshall Islands’ annual $173.9 million revenue as of fiscal year 2023.[34]^,[35] The Presidents of Palau, Micronesia, and the Marshall Islands sent a letter to the leaders of the United States Senate on February 6 stating that they “cannot overstate the importance to all of our nations of final approval [of COFA funding] by the U.S. Congress” and that its delay “has resulted in undesirable opportunities for economic exploitation by competitive political actors active in the Pacific.”[36]

COFA Funding as Share of Government Revenue in Freely Associated States[37]

The loss of COFA funding threatens the security of a key sea line of communication for the United States that provides a secure route connecting American allies and partners, such as the Philippines and Taiwan, to the US territory of Guam and the state of Hawaii. The loss of funding also threatens the continuation of the Ronald Reagan Ballistic Missile Defense Test Site in Micronesia, the Department of Defense high-frequency radar system under construction in Palau, as well as the opportunity for the United States Air Force Agile Combat Employment operations to take place in Micronesia.[38]

The opportunity for the CCP to gain economic leverage over the COFA countries also threatens US efforts to preserve the sovereignty of the Republic of China (Taiwan). Palau and the Marshall Islands are also 2 of the 12 countries that maintain official diplomatic relations with Taiwan.[39] The maintenance of official diplomatic recognition is a key means for Taiwan to demonstrate its international sovereignty separate from the People’s Republic of China. Palau President Surangel Whipps Jr also stated that “the PRC has already offered to ‘fill every hotel room’ in our tourism-based private sector – ‘and more if more are built – and $20 million a year for two acres for a ‘call center.’”[40] The uptick in flights from the PRC to Palau and the CCP encouraging PRC nationals to vacation in the country suggests that the party seeks economic influence over Palau to coerce it into switching diplomatic recognition from the ROC to the PRC. The number of flights from the PRC to Palau increased from one to eight per month last year to almost daily as of this month.[41]^,[42] This change is a reversal in the CCP policy that cut tourism to Palau over the last decade to nearly zero as punishment for maintaining full diplomatic relations with Taiwan.[43]

The CCP has a history of using economic incentives to convince Pacific Island countries to switch diplomatic recognition from the ROC to the PRC. The PRC offered incentives such as a commercial aircraft to Kiribati or USD 8.5 million to the Solomon Islands, both in 2019, to successfully incentivize them to switch diplomatic recognition from the ROC to the PRC.[44] Australia evacuated the refugees that it paid Nauru to host, which led to a budget shortfall.[45] The CCP then reportedly offered Nauru USD 100 million per year in 2024 to successfully switch recognition from the PRC to the ROC, according to a Reuters report that cited an unspecified senior Taiwanese official.[46]

Tuvalu

Tuvalu is considering reviewing its diplomatic ties with Taiwan after electing its new prime minister.[47] The sixteen representatives elected on January 26, 2024, who comprise the Parliament of Tuvalu, planned to choose a prime minister the week of February 5. Poor weather conditions have delayed the vote, however, by preventing four elected members of parliament from reaching the capital Funafuti.[48] Tuvalu has not set a new date for the election of the new prime minister.

Papua New Guinea

Australia successfully countered the People’s Republic of China (PRC)’s offer of internal security assistance to Papua New Guinea. Papua New Guinea received an offer of security assistance from the PRC in September 2023. Papua New Guinea Foreign Minister Justin Tkachenko stated during the week of January 29 that the offer of internal security assistance from the PRC is still under consideration without specifying the details of the offer.[49]

Papua New Guinea Prime Minister James Marape and Australian Prime Minister Anthony Albanese also announced on February 8 that Australia would fund AUD 100 million to the Australia-Papua New Guinea Law and Justice Partnership, which has a focus on internal security.[50] This made the PRC offer less attractive while also buttressing Marape’s chances of political survival. This announcement of Australian security assistance is a necessary political lifeline for Marape as he is set to face a vote of no confidence in at least a week due to the deadly riots in January that occurred amidst a police strike.[51]

Europe

Russia

The PRC and Russia held “interagency consultations” on February 1 to discuss military applications of artificial intelligence (AI). The Russian Foreign Ministry stated that the meeting highlighted the alignment of Russian and Chinese approaches to the military application of AI.[52] The South China Morning Post reported that the Chinese readout from the meeting did not mention the military application of AI, only “outer space security, biosecurity, and artificial intelligence.”[53] ISW has not been able to independently verify the PRC readout.

PRC-Russian cooperation in emerging AI technology is already materializing. Russian tech company Soft-Logic signed a distribution contract with PRC AI microchip manufacturer SophGo in early February. Soft-Logic CEO Denis Loginov stated that the company plans to develop and produce Russian artificial intelligence infrastructure using Chinese processors.[54] SophGo is developing a new high-performance chip based on designs from the US company SiFive, which incorporates an open-source chip architecture known as RISC-V. US Senators Marco Rubio and Mark Warner encouraged the Biden administration in October to broaden export controls to include open-source semiconductor designs to prevent the PRC from surpassing US companies.[55]

Middle East

Iran

PRC Deputy Foreign Minister Ma Zhaoxu and Iranian Deputy Foreign Minister Ali Bagheri Kani discussed the Red Sea and the Iranian nuclear issue. Their meeting occurred on February 8. Ma framed the Houthi attacks in the Red Sea as a spillover from the “Gaza conflict,” which is a narrative that absolves Iranian partners and proxy groups of blame for instigating regional tensions.[56] Ma’s comments are consistent with previous PRC rhetoric insofar as they do not condemn Houthi aggression or call on the Houthis to stop their attacks on maritime shipping.

The PRC and Iranian readouts of the meeting both emphasized the resolution of the Iranian nuclear issue through political and diplomatic channels.[57] The PRC avoided condemning or approving the increasing Iranian stockpile of 60 percent highly enriched uranium. This stockpile continues to increase even as Iran adjusts the rate of its 60 percent highly enriched uranium as tensions with the United States ebb and flow. [58]This level of highly enriched uranium can be used as fuel for a nuclear explosive device. The PRC position is consistent with CCP General Secretary Xi Jinping’s February statement after a meeting with Iranian President Ebrahim Raisi that emphasized diplomacy as a means to resolve the Iran nuclear issue.[59]

Africa

Gabon and Equatorial Guinea

The CCP seeks port access in Gabon and Equatorial Guinea for military purposes, which would enhance the People’s Liberation Army Navy's (PLAN’s) power projection capacity. The Wall Street Journal reported on February 10 that the CCP is attempting to convince leadership in Gabon and Equatorial Guinea to grant it military access to ports.[60] The CCP has targeted Equatorial Guinea as a potential military port to gain access to since at least 2021.[61] This CCP effort led then-Commander United States Africa Command Stephen Townsend to state to a House Armed Service Committee hearing in March 2022 that “the thing I think I’m most worried about is this military base on the Atlantic coast, and where they [the CCP] have the most traction for that today is in Equatorial Guinea.”[62] A PLAN port in either of these countries on the Atlantic would enhance the PLAN’s power projection capacity.

Latin America

Guatemala

Guatemala is considering trade relations with the People’s Republic of China (PRC) while attempting to maintain formal diplomatic relations with the Republic of China (Taiwan).[63] Guatemalan President Bernardo Arévalo stated on February 8 that he does not intend to switch diplomatic recognition from the ROC to the PRC.[64] PRC Ministry of Foreign Affairs Spokesman Wang Wenbin’s February 6 statement that Guatemala would need to recognize the one-China principle to “conduct cooperation” between the two countries underscores the difficulty Arévalo will face holding that position.[65] The one-China principle is the People’s Republic of China’s position that it is the sole legitimate representative of China and that Taiwan is a part of China. Guatemala accepting the PRC’s one-China principle would mean breaking its relations with Taiwan.

Guatemala and Belize are the only countries in Central America that recognize the Republic of China. The other five Central American countries broke relations with the Republic of China between 2007 and 2023. Guatemala and Belize are also 2 of the 12 countries, including Vatican City, that recognize the ROC.

The CCP’s efforts to diplomatically isolate the ROC are part of a campaign to degrade the ROC’s legitimacy on the international stage. The loss of full diplomatic relations for the ROC supports the CCP’s attempts to increase pressure on Taiwan to unify with the PRC without prompting an international backlash. Undermining international recognition of the ROC buttresses the CCP’s argument that the ROC is not a state, but rather a province of the PRC.

[1] https://www.voanews.com/a/china-taiwan-airspace/4859810.html

[2] https://udn dot com/news/story/123908/7744269?from=udn-catelistnews_ch2

[3] https://www.mac dot gov.tw/News_Content.aspx?n=05B73310C5C3A632&sms=1A40B00E4C745211&s=3FA9812149A72B19

http://www.gwytb dot gov.cn/xwdt/xwfb/xwfbh/202401/t20240131_12597320.htm

[4] https://www.cna dot com.tw/news/ahel/202402070141.aspx

https://www.scmp dot com/news/china/politics/article/3251853/angry-taiwanese-travel-operators-warn-protest-presidential-oath-after-u-turn-group-tours-mainland

[5] https://udn dot com/news/story/123920/7761559?from=udn-catebreaknews_ch2

[6] https://www.taiwannews dot com.tw/en/news/5093125

[7] https://www.chinatimes dot com/realtimenews/20240207004311-260407?chdtv

[8] http://www.gwytb dot gov.cn/xwdt/xwfb/wyly/202402/t20240208_12599085.htm

[9] https://twitter.com/MoNDefense/status/1756484746023235626

https://twitter.com/MoNDefense/status/1756133641875554779

[10] https://www.taipeitimes dot com/News/front/archives/2024/02/12/2003813425

https://www.taipeitimes dot com/News/taiwan/archives/2024/02/11/2003813398

[11] https://www.understandingwar.org/backgrounder/china-taiwan-weekly-update...

https://www.understandingwar.org/backgrounder/china-taiwan-weekly-update...

[12] http://www.gwytb dot gov.cn/m/speech/202401/t20240131_12597322.htm

[13] https://www.scmp dot com/news/china/military/article/3251769/beijing-trying-create-new-status-quo-sending-balloons-over-taiwan