China announces new retirement ages, plans to foster 'new culture of marriage and child-bearing'
Xi Jinping tones down focus on China’s growth targets as headwinds mount;China wins only token victory in EU car wars
Welcome to this issue of The China Brief. Today is September 13, 2024. Here at The China Brief, we bring you the latest news on China's politics, economy, and society from global media sources, along with exclusive expert analysis. If you find our content helpful, please subscribe to our newsletter.
China announces new retirement ages, plans to foster 'new culture of marriage and child-bearing'
Australian Broadcasting Corporation
China will soon raise its retirement age, currently 60 for men and 50 or 55 for women, due to rising life expectancy and an aging workforce. The change, starting January next year, will progressively increase the retirement age to 63 for men and 55 or 58 for women over 15 years. This policy aims to relieve pressure on the pension fund amid a declining population. Additionally, the National Health Commission plans to promote marriage and childbirth to address low birth rates, influenced by historical policies and societal norms.
https://www.abc.net.au/news/2024-09-13/chinese-legislature-retirement-age-national-health-commission/104350244
President Xi Jinping tones down focus on China’s growth targets as headwinds mount
South China Morning Post
President Xi Jinping has downplayed China's emphasis on achieving its 5% GDP growth target this year, reflecting the challenges facing the economy. While earlier statements indicated an unwavering commitment to this goal, Xi's recent remarks suggest a focus on effort rather than outcome. Economists predict growth below 5%, citing weakening consumption, investment, and the property sector. The People's Bank of China has made monetary adjustments, but many believe further actions are necessary. Financial institutions have revised their GDP forecasts downward, with estimates now ranging from 4.5% to 4.8% for 2023.
https://www.scmp.com/economy/policy/article/3278341/president-xi-jinping-tones-down-focus-chinas-growth-targets-headwinds-mount?utm_source=rss_feed
China wins only token victory in EU car wars
Reuters BreakingViews
Spanish Prime Minister Pedro Sanchez is advocating for the European Union to eliminate proposed duties on Chinese electric vehicles (EVs), indicating that China's efforts to influence member states may be gaining traction. While Spain previously supported the levies in a non-binding vote, signs suggest a potential softening of the EU's stance on these duties. China's retaliatory measures targeting EU exports, such as brandy and pork, have been limited in scope, yet they appear to be effective in swaying opinions, particularly in Spain, which heavily exports pork to China.
However, China faces significant challenges in completely blocking the tariffs, as a qualified majority of EU member states is needed for such an outcome. Instead, China may aim to influence member states to abstain or vote against the current proposal, which could lead to modifications rather than a complete repeal of the tariffs. Nevertheless, the EU must balance its response carefully to avoid becoming a dumping ground for Chinese EVs, especially since other major markets are imposing similar or stricter tariffs. The credibility of Brussels is at stake, as its analysis of China's EV subsidies supports the need for levies. China's trade officials are actively engaging with EU countries, but the path to altering the EU's plans remains complex.
https://www.breakingviews.com/considered-view/china-wins-only-token-victory-in-eu-car-wars/
What China’s Belt and Road Initiative has in store for coming decade as priorities evolve
South China Morning Post
The Belt and Road Initiative (BRI), launched by China to create a China-centered global trade network, is transitioning towards smaller, environmentally friendly projects as it nears its 11th anniversary. This shift aims to alleviate concerns over massive debt and environmental damage that have marred previous undertakings. Key points include a focus on Central and Southeast Asia, with an emphasis on green infrastructure and energy projects, such as wind and solar power, which are expected to generate less debt risk and reduce negative perceptions abroad.
Funding sources are also evolving, with China increasingly turning to multilateral development banks like the Asian Infrastructure Investment Bank (AIIB) for support. The BRI is anticipated to become more commercial and distinct from Western development models, with an emphasis on sustainability.
However, analysts warn of risks associated with smaller projects, especially as China's economy recovers post-pandemic. Unpaid debts remain a concern, particularly for underutilized infrastructure in Africa. Despite the potential benefits, such as improved economic corridors, the success of these initiatives will depend on the financial viability and economic conditions of the recipient countries.
https://www.scmp.com/economy/global-economy/article/3278274/what-chinas-belt-and-road-initiative-has-store-coming-decade-priorities-evolve?utm_source=rss_feed
China could soon have more pets than toddlers. Why that’s a headache for Beijing
CNN
Hansen and his wife Momo, living in downtown Beijing, have chosen to care for their six pets, affectionately referred to as their “fur babies,” instead of having children. This decision reflects a broader trend in China, where many couples are opting for pet ownership over traditional family structures amidst rising living costs and a declining birth rate. The country’s efforts to increase birth rates, including incentives for families to have more children, have not been effective, leading to a projected decline in new births. A report by Goldman Sachs predicts that by 2030, the number of pets in urban China will significantly exceed that of young children, reflecting changing societal values. Young couples face challenges such as high unemployment and societal pressures, making pet ownership a more appealing alternative for nurturing instincts. The pet economy is booming, with pet food sales expected to rise sharply, highlighting a significant shift in lifestyle preferences among younger generations. Momo and Hansen express contentment with their choice, emphasizing their love for their pets over societal expectations.
https://edition.cnn.com/2024/09/12/business/china-pets-over-toddlers-aging-population-intl-hnk/index.html
China hands PwC a 6-month ban and fine over audit of the collapsed developer Evergrande
Associated Press
Chinese authorities have imposed a six-month ban and a fine of over 400 million yuan ($56.4 million) on the accounting firm PwC due to its involvement in the audit of the collapsed property developer Evergrande. This punishment is the most severe given to an international accounting firm in China. The Ministry of Finance fined PwC 116 million yuan ($16.35 million), while the China Securities Regulatory Commission added fines totaling 325 million yuan ($45.8 million) for failing to conduct due diligence. Evergrande, which PwC audited for 14 years, was found to have inflated its revenues by nearly $80 billion in 2019 and 2020. The property developer's collapse is part of a broader property crisis in China, prompting the government to crack down on excessive borrowing by developers.
https://apnews.com/article/china-pwc-ban-fine-evergrande-fe35a4f17a0e5d17f3c4f3ce0a54e27b
Cambodia mulls visa-free entry for mainland China and Hong Kong visitors
South China Morning Post
Cambodia is considering implementing a visa-free travel option for visitors from mainland China and Hong Kong by early 2025, aiming to enhance connections between the region and East Asian economies. This move follows a significant increase in Chinese tourist arrivals, which rose by 43% in early 2023. Cambodian tourism officials, including Prak Phannara, emphasized the potential for collaboration in tourism and trade, especially after discussions between Hong Kong Chief Executive John Lee and Cambodian Prime Minister Hun Manet. The initiative aims to boost mutual benefits and economic ties through increased tourism and connectivity.
https://www.scmp.com/week-asia/economics/article/3278383/cambodia-mulls-visa-free-entry-china-and-hong-kong-visitors-amid-close-trade-ties?utm_source=rss_feed
U.S. firms say confidence in China has hit an all-time low
CNBC
American companies in China are experiencing historically low business confidence and poor profits amid U.S.-China tensions and a slowing Chinese economy.
In an annual report released Thursday, the American Chamber of Commerce in Shanghai found that out of the 306 of its member companies surveyed, only 66% were profitable in 2023, the lowest level on record.
The survey also showed that key confidence metrics were at their poorest ever point. Only 47% of respondents reported optimism about their five-year business outlook in China, while a record high of 25% cut investment in the country last year.
China's slowing economy was listed as the top reason for members' decreased investment. Meanwhile, the strained relationship between Washington and Beijing as well as geopolitical tensions were seen as the biggest challenges to both their business operations and the Chinese economy at large.
"Increasing geopolitical pressures, particularly in the run-up to the U.S. election amid escalating trade tensions, and China's economic slowdown are leading firms to ramp up risk management and adjust their investment strategies," the chamber said in a statement.
The report comes amid a number of signs that the world's second-largest economy is losing luster amongst Western businesses.
While geopolitical tensions, tough regulations and censorship have long been risk factors for these firms, the country's struggling economy has increasingly emerged as a major concern.
According to a member survey released by the U.S.-China Business Council, China's macroeconomic woes ranked as the second highest concern among American companies this summer, behind only U.S.-China relations.
Similar to the AmCham Shanghai survey, the council found that more companies than ever are pessimistic about their medium-term business outlook in China, with factors like "weak domestic demand" and "overcapacity" constraining profitability.
Firms have also lost market share to Chinese competitors which have received more government support, the U.S.-China Business Council added.
Their struggles in China have also been felt by EU businesses, according to an EU Chamber of Commerce in China report released on Wednesday.
The group said that its companies were at a "tipping point" on whether to invest more in China amid low-profit margins and a poor outlook, and urged Beijing to act if it wants the companies to invest further.
The slew of negative reports from Western business groups suggest that recent efforts by Beijing to improve conditions for foreign businesses and attract more foreign investment have fallen flat.
In a statement about the AmCham Shanghai survey, Chair Allan Gabor said "this year's data indicates that while many positive policies have been announced, they have yet to fully restore confidence among private businesses or consumers in general."
While a higher rate of AmCham members in the survey noted improvements in government policies and regulations as compared to the previous year, only 22% of respondents expressed confidence in Beijing's commitment to further opening up their industry in the short-term.
However, "though foreign companies face increasing economic headwinds and fierce competition, staying in China is crucial for them to remain globally competitive," Jeff Yuan, Tax Markets Leader at PwC China, said in the release.
On how the U.S. government could support their firms in China, nearly half of AmCham respondents suggested a reduction of tariffs on Chinese goods.
Foreign direct investment into China fell by 29.6% during the January to July period compared to a year ago, according to China's Ministry of Commerce.
\- CNBC's Evelyn Cheng contributed to this report
https://www.cnbc.com/2024/09/13/us-firms-say-confidence-in-china-has-hit-an-all-time-low.html
China’s foreign joint venture universities feel chill as political controls tighten
South China Morning Post
In the context of increasing geopolitical tensions, Chinese universities, particularly Sino-foreign joint campuses, are experiencing significant shifts in their campus life and governance. Richard Li, a student involved in a Japanese culture club, was recently informed by a university supervisor that his proposals promoting Japanese culture would not be approved due to Japan's controversial discharge of radioactive water into the sea. This incident highlights a broader trend of increased restrictions on foreign cultural clubs and student organizations, reflecting a tightening grip from university authorities, particularly the Communist Party Youth League. Many students and faculty members have observed that the atmosphere on campuses has dramatically changed since June 2022, with foreign culture, LGBT, and feminist groups facing significant challenges.
The changes in governance at these institutions stem from Beijing's heightened concerns over ideological control and the need to align Sino-foreign joint universities with traditional Chinese educational institutions. Students now face longer military training requirements and mandated political education courses that emphasize national identity and patriotism. Instructors, particularly local ones, are increasingly cautious about their classroom discussions, fearing repercussions for addressing sensitive topics. The political climate has shifted such that even previously tolerated discussions around values like freedom and democracy have become taboo, leading to a chilling effect on academic discourse.
The impact of the COVID-19 pandemic further exacerbated these changes, with many foreign faculty and students opting to leave China, resulting in a less vibrant campus atmosphere. While some students report a degree of academic freedom outside the classroom, the overall environment feels more rigid and monitored. Despite the potential for some joint universities to enjoy a degree of autonomy due to their relationships with local governments, the pervasive sense of surveillance and restriction remains a significant concern for both faculty and students, casting a shadow over the promise of an open and liberal educational experience.
https://www.scmp.com/news/china/politics/article/3278294/chinas-foreign-joint-venture-universities-feel-chill-political-controls-tighten?utm_source=rss_feed
US House approves legislation to restrict tax credits for EVs using Chinese battery technology
South China Morning Post
The US House of Representatives passed a Republican bill restricting electric vehicle (EV) tax credits, which could impact licensing agreements between American automakers and Chinese battery companies. The bill, opposed by the White House and backed by Representative Carol Miller, aims to prevent tax credits for EVs using battery technology licensed from China above $5 million. Advocates argue it addresses national security concerns, while opponents warn it could hinder US competitiveness and job creation. The legislation is part of a broader effort to limit Chinese influence in the EV sector, but its future in the Democrat-led Senate remains uncertain.
https://www.scmp.com/news/china/article/3278324/us-house-approves-legislation-restrict-tax-credits-evs-using-chinese-battery-technology?utm_source=rss_feed
Foreign investors lukewarm on China stocks despite Fed rate cut buzz
Nikkei Asia
Investors are anticipating a potential rate cut by the U.S. Federal Reserve next week, which may provide opportunities across Asian markets, particularly in the Philippines. However, China's market is expected to remain restrained due to its sluggish economy and lackluster foreign investor sentiment. UBS has downgraded Chinese equities, projecting a growth rate of 4.6% for the year. Analysts express caution regarding Chinese banks and suggest that substantial government intervention in the property sector may be necessary. In contrast, there is optimism for dividend-yielding stocks in Hong Kong and an upgrade for the Philippines amidst the anticipated Fed cut.
https://asia.nikkei.com/Business/Markets/Foreign-investors-lukewarm-on-China-stocks-despite-Fed-rate-cut-buzz
Former CIA officer who spied for China sentenced to a decade in prison
CNN
Alexander Yuk Ching Ma, a former CIA officer, has been sentenced to 10 years in federal prison for conspiring to provide classified information to Chinese intelligence. Ma, 71, arranged to meet with Chinese security officers in Hong Kong to exchange classified materials for $50,000. He pleaded guilty in May and was later the target of an FBI undercover operation after applying for a linguist position. During his monitored employment, he allegedly attempted to photograph sensitive documents to pass to his handlers in China. Ma's attorney stated that the 10-year sentence was deemed just after considering various factors. As part of his plea agreement, Ma is required to cooperate with U.S. authorities for life.
https://edition.cnn.com/2024/09/12/politics/cia-officer-china-spy-case-sentenced/index.html
China ramps up industry crackdown
Yahoo US
China is intensifying its crackdown on the finance sector to address alleged corruption, which has led to the arrest of senior investment bankers and restrictions on staff travel. This follows the introduction of a salary cap for top bankers at state-backed institutions. The crackdown has also affected the property sector, with the chairman of China Evergrande Group being detained. Analysts express concern that these measures could harm the sluggish economy, as venture capital investment has drastically declined, resulting in fewer new businesses. While some believe the shakeup could promote long-term market health by prioritizing profitability, there are fears that the government's shift towards manufacturing and technology may create job insecurity and drive skilled workers away.
https://finance.yahoo.com/news/china-ramps-industry-crackdown-165719355.html
Why House Republicans Are Targeting China Weeks Before the Election
NY Times
This week, the House addressed a package of bills aimed at taking a tougher stance on China, but many of the proposals have little chance of becoming law due to Republican leaders prioritizing politically divisive measures opposed by Democrats. For months, there were promises of bipartisan efforts to counter China's influence, focusing on issues like limiting investments in sensitive industries and addressing data theft. However, the bills that reached the floor included partisan measures intended to depict Republicans as strong on China and Democrats as weak. This shift comes as elections approach, with control of Congress and the White House at stake. Speaker Mike Johnson emphasized that House Republicans would confront China in light of the Biden administration's perceived inaction. One of the bills passed requires Senate ratification for any World Health Organization agreements on pandemic preparedness, reflecting Republican criticism of the organization's pandemic response.
https://www.nytimes.com/2024/09/12/us/politics/china-congress-republicans.html
Post COVID, China is no longer the “undisputed leader” in attracting FDI
Yahoo US
The European Business in China Position Paper 2024/2025 indicates that the risks of investing in China are now surpassing the benefits. Jens Eskelund, President of the EU Chamber of Commerce in China, expressed concern about China's declining status as a leader in foreign direct investment (FDI). Key challenges for foreign companies, such as market access and regulatory barriers, remain largely unchanged from a decade ago. However, post-pandemic, slow consumption and an unpredictable investment environment, characterized by strict data rules and anti-espionage laws, have contributed to this decline.
Additionally, new export control policies in the microchip and advanced computing sectors are expected to significantly affect EU businesses in China. Overcapacity issues in industries, particularly in electric vehicles, have also led to artificially low prices and increased trade friction. Eskelund urged for a balanced approach between supply and demand and emphasized the need for policies that encourage domestic consumption. Overall, the report highlights a shift in China's attractiveness for foreign investment compared to the pre-pandemic era.
https://finance.yahoo.com/news/post-covid-china-no-longer-123535687.html
China’s debtors get ray of hope as Shenzhen shares bankruptcy data
South China Morning Post
A court in Shenzhen, China, recently approved the personal bankruptcy of a couple owing 9.28 million yuan (US$1.3 million), marking a hopeful step for financially struggling individuals amid a sluggish economy. Shenzhen is the only city in mainland China where residents can discharge debts three years post-filing. Since launching its personal bankruptcy program in March 2021, about 350 cases have been accepted. However, challenges remain, including incomplete applications and resistance from creditors. The couple had accumulated debt while running a towel business, ultimately closing shop in 2023 due to financial strain.
https://www.scmp.com/economy/china-economy/article/3278293/chinas-debtors-get-ray-hope-shenzhen-shares-bankruptcy-data?utm_source=rss_feed
Taiwan the biggest issue in US-China ties, experts at Xiangshan defence forum say
South China Morning Post
Chinese observers at the Xiangshan Forum highlighted Washington's stance on Taiwan as a major factor in deteriorating US-China relations. They argue that the US aims to suppress China and hinder its unification with Taiwan, which complicates military dialogue. Experts called for collaborative efforts to prevent Taiwan's independence and foster a peaceful reunification environment. While military ties have improved following tensions from Pelosi's Taiwan visit, concerns persist over US arms sales to Taiwan. The forum, attended by various defense chiefs, aims to address US-China relations amid rising tensions in the region.
https://www.scmp.com/news/china/military/article/3278291/taiwan-biggest-issue-us-china-ties-experts-xiangshan-defence-forum-say?utm_source=rss_feed
Stay informed about the latest news, analysis, and policy briefs from across the globe related to China with the China brief. Our team aggregates, synthesizes, and summarizes the most important information from various sources, including media outlets, think tanks, government agencies, and industry experts.
Our mission is to provide you with easily accessible and critically valuable information tailored to your specific field of interest. We understand the significance of staying up-to-date on developments related to China and aim to make this information comprehensible for our readers.
Join the conversation and stay informed about the latest news and developments related to China by visiting our website at www.6dobrief.com