China may fix fiscal spending shortfall next week, policy adviser says
Why China may be saving its bazooka for Donald Trump
Welcome to this issue of The China Brief. Today is October 30, 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.
EU to impose duties on electric vehicle imports from China by Thursday
The Globe and Mail
The European Union is set to impose import duties on electric vehicles (EVs) from China after unsuccessful negotiations with Beijing over a trade dispute concerning Chinese government subsidies. The duties, which will be in place for five years unless a resolution is reached, aim to protect the European automotive industry from unfair pricing practices that have seen Chinese EVs increase their market share in Europe from 3.9% in 2020 to 25% by September 2023. Specific duties include 17% on BYD vehicles, 18.8% on Geely, and 35.3% on state-owned SAIC vehicles, with other manufacturers facing a rate of 20.7% and Tesla at 7.8%. The decision has faced criticism, particularly from Germany, where industry leaders argue it could harm free trade and threaten jobs within the European auto sector, which employs millions. The European Commission has cited concerns that Chinese subsidies enable unfair competition, potentially undermining the EU's ability to develop its own green technologies.
https://www.theglobeandmail.com/business/international-business/article-eu-to-impose-duties-on-electric-vehicle-imports-from-china-beginning/
China may fix fiscal spending shortfall next week, policy adviser says
South China Morning Post
China's top legislative body may revise its national budget plan next week, potentially approving an additional 1.5 to 2.5 trillion yuan in treasury bonds to address a fiscal shortfall. With public spending growth lagging behind targets, economic stimulus measures have been implemented to achieve a 5% growth goal. However, the International Monetary Fund has downgraded China's growth forecast to 4.8%. Experts call for more fiscal support to mitigate local debt risks and revitalize the property sector, emphasizing the need for structural reforms to enhance private sector conditions and optimize policy effectiveness.
https://www.scmp.com/economy/policy/article/3284404/china-may-fix-fiscal-spending-shortfall-next-week-policy-adviser-says?utm_source=rss_feed
Why China may be saving its bazooka for Donald Trump
Economist
Chinese investors are closely monitoring the U.S. presidential election due to ongoing economic challenges in China, including a prolonged property slump and persistent deflation. The potential re-election of Donald Trump raises concerns about the reinstatement of steep tariffs, further complicating the economic landscape for Chinese investors.
https://www.economist.com/china/2024/10/29/why-china-may-be-saving-its-bazooka-for-donald-trump
EU tariff hikes on Chinese electric vehicles come at end of long and bumpy road
South China Morning Post
The European Union has begun imposing import tariffs of up to 35.3% on Chinese electric vehicles after extensive investigations and negotiations. The EU Commission aims to continue discussions with Chinese officials despite ongoing disagreements regarding subsidies and trade practices. Recent negotiations have revealed deep-seated conflicts over facts and legal arguments, with complaints from China about the EU's processes. The tension is escalating, with potential retaliatory measures from Beijing expected. German carmakers, facing competition pressures, are advocating for continued dialogue, warning that the tariffs could lead to a trade conflict and hinder free trade principles.
https://www.scmp.com/news/china/diplomacy/article/3284430/eu-tariff-hikes-chinese-electric-vehicles-come-end-long-and-bumpy-road?utm_source=rss_feed
China iPhone users urged to turn off FaceTime app to stop scammers
South China Morning Post
Police in Beijing and Hangzhou, China, have advised residents to disable the FaceTime app on their iPhones to prevent scams. They reported that scammers have been using FaceTime to impersonate customer service representatives and trick individuals into downloading malicious software, leading to significant financial losses. The police highlighted the risks associated with FaceTime's screen-sharing feature, which allows scammers to view victims' personal information. They emphasized that legitimate authorities would never contact individuals via FaceTime and urged people to verify any such claims. In addition, police across various provinces have recommended blocking overseas calls to reduce scam risks. China's efforts to combat telecom fraud have intensified, with significant declines in reported cases and a substantial number of fraudulent communications intercepted in recent years.
https://www.scmp.com/news/china/politics/article/3284455/china-iphone-users-urged-turn-facetime-app-stop-scammers?utm_source=rss_feed
Bourse operator HKEX to open Saudi office in 2025 to strengthen Middle East connections
South China Morning Post
Hong Kong Exchanges and Clearing (HKEX) is set to open an office in Riyadh, Saudi Arabia next year to strengthen its presence in the region and enhance Hong Kong's role in connecting financial markets between mainland China and the Middle East. The new office will provide support to regional investors, granting access to Hong Kong’s financial products and opportunities linked to Asia’s growth. This initiative is part of HKEX’s broader strategy to foster stronger capital market connections between China and the Middle East, especially in light of strained relations with the US. HKEX has made significant progress in collaborations, including a partnership with the Saudi Tadawul Group for a Saudi-focused exchange-traded fund (ETF) and recognizing several Middle Eastern exchanges for secondary listings. The recent approval of the first ETF tracking Hong Kong-listed stocks compliant with Islamic law further strengthens these ties. HKEX aims to enhance cooperation in fintech and innovation, making it increasingly attractive for Middle Eastern investors.
https://www.scmp.com/business/markets/article/3284468/bourse-operator-hkex-open-saudi-office-2025-strengthen-middle-east-connections?utm_source=rss_feed
TikTok’s founder is now China’s richest person. But the country’s total number of billionaires has shrunk
CNN
Zhang Yiming, co-founder of TikTok's parent company ByteDance, has become China's richest person, with a net worth of $49.3 billion, according to the 2024 Hurun China Rich List. His wealth surged as ByteDance's revenue grew 30% to $110 billion last year. Despite TikTok's popularity, it faces legal challenges in the US regarding child protection and national security concerns. Overall, China's billionaire count has dropped to 753, reflecting economic difficulties, including a real estate crisis and reduced consumer spending. Zhang's rise highlights a shift from traditional industries to tech and e-commerce in China's wealth landscape.
https://edition.cnn.com/2024/10/30/tech/tiktok-founder-china-richest-intl-hnk/index.html
China 'does not accept' EU tariffs on EVs, calls for more talks
Nikkei Asia
China has rejected the European Union's new tariffs on electric vehicles, which range from 8% to 35.3% and are aimed at protecting the EU market from low-priced Chinese exports. The EU implemented the tariffs following a vote, despite opposition from some member states, including Germany. China has filed a dispute with the World Trade Organization and is seeking negotiations to resolve the issue. Analysts suggest a compromise may involve China proposing minimum prices and quotas for EV exports, although significant concessions from Beijing would be necessary for successful talks.
https://asia.nikkei.com/Economy/Trade-war/China-does-not-accept-EU-tariffs-on-EVs-calls-for-more-talks
China planning to bring space shuttle back to life
South China Morning Post
China has approved the development of the reusable Haolong space shuttle, aimed at reducing cargo transport costs to the Tiangong space station. The uncrewed shuttle, designed by the Chengdu Aircraft Design Institute, will dock with Tiangong and land horizontally on runways. This initiative follows a search for low-cost transport solutions to enhance efficiency and flexibility in space logistics. The Haolong is one of two vessels contracted for engineering flight verification, with plans to showcase a model at the Zhuhai Airshow. The project seeks to foster the growth of commercial aerospace in China.
https://www.scmp.com/news/china/science/article/3284491/china-planning-bring-space-shuttle-back-life?utm_source=rss_feed
Huawei gears up for launch of new flagship smartphone model Mate 70 next month: source
South China Morning Post
Huawei Technologies is set to launch its new flagship smartphone, the Mate 70, next month, indicating a strong recovery in its premium handset business amid competition with Apple and other Chinese brands. Recent reports reveal that Huawei's smartphone sales in China surpassed Apple's for the first time in 46 months as of August. The company is preparing for increased sales of the Mate series, with component bookings up by 50% compared to the Mate 60. Huawei plans to release over one million units of the Mate 70, although the launch date may be subject to change due to ongoing supply chain issues caused by US sanctions.
The Mate 70 will be Huawei's third 5G flagship phone utilizing a domestically-made chip, aiming to strengthen its position in China's premium smartphone market. The device will run on Huawei's HarmonyOS, which is designed to differentiate it from competitors by not supporting Android apps. Huawei's recent releases, including the Mate 60, have contributed to its resurgence, with a reported 24% year-on-year increase in smartphone shipments in the third quarter, capturing a 16% market share in China, surpassing Apple's 14%. The Mate 60 has notably attracted attention in the US due to its advanced processor, which has been developed despite sanctions.
https://www.scmp.com/tech/big-tech/article/3284454/huawei-gears-launch-new-flagship-smartphone-model-mate-70-next-month-source?utm_source=rss_feed
Indonesia’s aim to gain from firms’ China decoupling hindered by rigid rules: analysts
South China Morning Post
Indonesia's efforts to attract foreign investments amidst a shift from reliance on China are hindered by bureaucratic challenges and restrictive regulations, unlike its agile neighbors like Vietnam and Thailand. Despite recent reforms, foreign direct investment (FDI) remains low at 1.6% of GDP, compared to 4.3% in Vietnam. President Prabowo Subianto aims for 8% economic growth while addressing corruption and streamlining policies. Key opportunities lie in nickel mining and electric vehicle production, but concerns over environmental impacts must be addressed to boost U.S. investments and enhance Indonesia's competitiveness in the region.
https://www.scmp.com/week-asia/economics/article/3284481/indonesias-aim-gain-global-firms-china-decoupling-hindered-rigid-rules?utm_source=rss_feed
Chinese data centre firm GDS raises US$1 billion for overseas infrastructure expansion
South China Morning Post
GDS Holdings has secured US$1 billion from institutional investors via newly issued Series B convertible preferred shares for its international affiliate, GDS International, which manages data centre assets outside mainland China. The funding, mainly from US investors, will support the development of over 1 gigawatt of data centre capacity. GDS International, established in 2022, currently has around 480 megawatts in service and plans for further expansion in strategic locations. The investment reflects a growing demand for data centres driven by artificial intelligence and cloud computing services. GDS's revenue from overseas operations has significantly increased.
https://www.scmp.com/tech/tech-trends/article/3284464/chinese-data-centre-firm-gds-raises-us1-billion-overseas-infrastructure-expansion?utm_source=rss_feed
Investors await China’s NPC meeting for catalysts to sustain US$4 trillion stock rally
South China Morning Post
Investors are anticipating a key legislative meeting in Beijing from November 4-8, where the National People’s Congress (NPC) is expected to endorse significant fiscal measures to boost the economy. This follows a recent rally that added $4 trillion to Chinese markets. Analysts suggest that to maintain this momentum, the NPC should approve at least 2 trillion yuan in fiscal stimulus. Market expectations are high as global fund managers are showing renewed interest in Chinese stocks, though uncertainty remains regarding the budget deficit and the impact of the US elections on Beijing's stimulus strategy.
https://www.scmp.com/business/china-business/article/3284337/investors-await-chinas-npc-meeting-catalysts-sustain-us4-trillion-stock-rally?utm_source=rss_feed
China’s Zhipu AI says its app can operate your smartphone for you
South China Morning Post
Zhipu AI, a Chinese start-up, is developing AutoGLM, a voice-command AI app that automates smartphone tasks. The app can understand complex commands and interact with popular local apps like WeChat and Taobao. However, it is still in the trial phase, available only to invited Android users, and has faced issues like incorrect messaging and slow responses. Despite its potential to enhance digital life, users have reported that it may be quicker to complete tasks manually. The app highlights the growing trend of AI integration in China's tech landscape, especially with limited foreign competition.
https://www.scmp.com/tech/tech-trends/article/3284343/chinas-zhipu-ai-says-its-app-can-operate-your-smartphone-you?utm_source=rss_feed
How China police use Mazu deity to mediate disputes with remarkable success
South China Morning Post
Police stations in Putian county, Fujian province, southeastern China, have been utilizing the sea goddess Mazu as a mediator in local disputes since 2019, leading to successful conflict resolution. Over ten police stations have created mediation rooms named after Mazu, where her portrait fosters an atmosphere of honesty and trust among locals. Mazu, who is revered as a protector of seafarers and a symbol of good fortune, has a legendary background that dates back over a thousand years. Her beliefs were recognized as an intangible cultural heritage by UNESCO in 2009. In contemporary society, Mazu is seen as a figure of luck, with many locals feeling compelled to behave honestly in her presence. This reverence extends to notable figures like actress Liu Tao, who portrayed Mazu in a television drama and is worshipped by some residents.
https://www.scmp.com/news/people-culture/article/3284183/how-china-police-use-mazu-deity-mediate-disputes-remarkable-success?utm_source=rss_feed
TSMC Chips Ended Up in Devices Made by China’s Huawei Despite U.S. Controls
NY Times
The U.S. government has implemented strict controls to prevent Chinese companies from accessing advanced computer chips, primarily due to concerns over military applications. Recently, Taiwan Semiconductor Manufacturing Company (TSMC) discovered that some of its chips had been found in devices made by Huawei, a Chinese company under U.S. sanctions. TSMC claimed it had not supplied chips to Huawei since the restrictions were enacted, but it continues to supply other Chinese firms, leading to concerns that these companies may be indirectly routing products to Huawei. Despite U.S. efforts, advanced chips used in artificial intelligence are still traded in China, and Chinese companies are making advancements in this technology. This situation raises questions about the effectiveness of U.S. controls and the vetting processes of companies like TSMC.
https://www.nytimes.com/2024/10/29/business/tsmc-huawei-computer-chips.html
China’s Miniso aims to expand to 10,000 shops globally by 2027 in high-margin push
South China Morning Post
Chinese budget retailer Miniso Group aims to establish a global network of 40,000 stores, focusing on the trend of "interest-driven" consumption among young shoppers. CEO Ye Guofu highlighted the opportunity for Chinese brands to expand globally, particularly in the US and Europe, where per-capita spending on franchise-related products is significantly higher than in China. Currently, Miniso operates over 7,000 stores worldwide, with plans to open 900 to 1,100 new stores annually between 2024 and 2028, targeting over 10,000 stores by 2027. The company has achieved significant sales growth, with overseas branches contributing about a third of total sales. Despite the challenges of entering Western markets, Miniso is focusing on local partnerships and product quality rather than discounting to compete.
https://www.scmp.com/business/companies/article/3284365/chinas-miniso-aims-expand-10000-shops-globally-2027-high-margin-push?utm_source=rss_feed
Finland warns Xi of 'provocation' by North Korea in Ukraine war
Nikkei Asia
Finnish President Alexander Stubb met with Chinese President Xi Jinping in Beijing to discuss escalating tensions regarding North Korea's activities with Russia. Stubb conveyed NATO and EU concerns, stating that North Korean troop deployments and arms exports represent an escalation and provocation. This discussion coincided with North Korea's foreign minister visiting Russia, amidst warnings from NATO and South Korea about potential North Korean involvement in the Ukraine war.
Stubb noted that the relationship between China and North Korea seems strained and warned Xi that continued support for Russia could negatively affect EU-China relations. Finland, which shares a border with Russia and joined NATO last year due to security concerns, is also facing tensions with China over tariffs on electric vehicles.
Xi expressed interest in building cooperative relations with Finland, while the two leaders also touched on an investigation into a damaged gas pipeline in the Baltic Sea, which may involve a Hong Kong-registered vessel.
https://asia.nikkei.com/Politics/International-relations/Finland-warns-Xi-of-provocation-by-North-Korea-in-Ukraine-war
China’s first civilian female astronaut ‘never imagined’ she would voyage into space
South China Morning Post
Wang Haoze has made history as China's first civilian female astronaut, launching aboard the Shenzhou-19 spacecraft to the Tiangong space station. Previously a nuclear rocket scientist, Wang never expected to become an astronaut, but seized the opportunity after being selected in 2020. Alongside experienced Commander Cai Xuzhe and fellow first-time astronaut Song Lingdong, she will spend six months conducting research and extravehicular activities. Wang aims to use her engineering background to assist in troubleshooting during the mission, expressing her dream of experiencing weightlessness and contributing to space exploration.
https://www.scmp.com/news/china/science/article/3284355/chinas-first-civilian-female-astronaut-never-imagined-she-would-voyage-space?utm_source=rss_feed
Chinese Tech Regulators Back Off
Foreign Policy
Chinese authorities are easing restrictions on private tutoring, reversing a 2021 ban that caused significant damage to the sector, resulting in a loss of $100 billion. The initial prohibition led to underground tutoring services becoming more expensive rather than affordable for families. This shift reflects a broader trend of regulatory relaxation in the tech sector, as the Chinese government seeks to rejuvenate an economy grappling with high youth unemployment. However, the challenge remains for authorities to address past policies without directly admitting to mistakes, particularly those tied to President Xi Jinping’s image.
The reduction in Chinese migration through the Darién Gap to the United States has become notable, with a significant decline in arrivals attributed to Ecuador's cancellation of its visa-free policy for Chinese citizens. In September, only 124 Chinese migrants crossed, compared to a peak in June. This downturn follows increased enforcement measures at the U.S. southern border and a shift in migration routes, indicating a complex interplay between international policies and individual choices driven by political and economic conditions in China.
Additionally, the Chinese government's crackdown on Halloween celebrations in major cities reflects a consistent stance against Western festivals viewed as promoting superstition or potentially politically sensitive activities. Unlike other Western holidays, Halloween is discouraged due to its associations with dressing up and "unapproved fun." The ongoing enforcement of these restrictions, alongside other regulatory measures, highlights the complexities of cultural expression in China under the current regime, which continues to navigate a delicate balance between economic recovery and maintaining control over societal norms.
https://foreignpolicy.com/2024/10/29/china-tech-regulation-crackdown-pullback-private-tutoring/
Shareholders will gain as HSBC begins major restructuring
SCMP Opinion
HSBC is restructuring its operations to simplify its complex structure and improve efficiency, moving to four main business lines: Hong Kong, the UK, corporate and institutional banking, and wealth and premier banking. New CEO Georges Elhedery believes this change will enhance customer service and drive future success. The bank, which employed 225,000 people at the end of 2023, expects some layoffs as part of this streamlining. The focus on Hong Kong as a key strategic priority underscores HSBC's commitment to the region, especially following discussions with Chinese officials. The appointments of co-CEOs David Liao and Surendra Rosha to oversee an Eastern market "super region" and the promotion of Pam Kaur as the first woman chief financial officer highlight advancements in diversity. Despite past challenges, including the cancellation of dividends during the pandemic and failed attempts to break up the bank, HSBC reported record profits and plans a US$3 billion share buy-back. As the bank navigates the complexities of geopolitical tensions between China and the West, shareholders are hopeful for its continued success.
https://www.scmp.com/opinion/comment/article/3284383/shareholders-will-gain-hsbc-begins-major-restructuring?utm_source=rss_feed
Tennis is booming in China but not without courting controversy
Australian Broadcasting Corporation
Tennis is experiencing a surge in popularity in China, with around 20 million participants, making it second only to the U.S. in global tennis participation. The momentum has been fueled by the success of rising star Zheng Qinwen, who won an Olympic gold medal and is seen as a national icon. However, the sport has faced challenges, including a four-year boycott of women's tournaments and controversies stemming from players' racist gestures, such as Paula Badosa's insensitive photo and Magda Linette's offensive caption regarding COVID-19. Experts suggest that while athletes often make naive mistakes, the geopolitical climate adds complexity to their actions, making them susceptible to scrutiny. Despite these hurdles, China's tennis scene is thriving, with ongoing investments in infrastructure and a goal for ten players of each gender in the top 100 rankings. Zheng's achievements have not only inspired younger athletes but also served as a means of sports diplomacy, enhancing China's global image. The growth of the tennis market, projected to rise from $950 million to $1.2 billion, reflects the country's expanding middle class and urbanization, indicating a bright future for tennis in China.
https://www.abc.net.au/news/2024-10-30/tennis-is-booming-in-china-but-not-without-courting-controversy/104526238
Trump Family Members and Biden Aides Among China Hack Targets
NY Times
China-linked hackers have breached telecommunications systems, targeting members of former President Donald Trump's family, Biden administration officials, and others. The hacking operation has raised alarms among national security officials, focusing on a select group of fewer than 100 individuals whose communications might interest the Chinese government. Among the known targets are Donald Trump, his son Eric, and son-in-law Jared Kushner, as well as staff from Vice President Kamala Harris's campaign and various government experts. It remains unclear what data, if any, was accessed. Eric Trump attributed the breach to the Biden administration, while notifications about the hack have been sent to those affected, including Democrats.
https://www.nytimes.com/2024/10/29/us/politics/trump-biden-hacking-china.html
TikTok CEO vows to earn global trust, as app challenges US ban
South China Morning Post
TikTok CEO Chew Shou Zi emphasized the company's commitment to earning trust in all markets during a summit in Riyadh, Saudi Arabia. He acknowledged the challenges faced by the social media industry and stressed the importance of addressing user concerns. Chew is leading efforts to prevent a US ban on TikTok, which is facing scrutiny from the government over national security issues linked to its Chinese ownership by ByteDance. A US Court of Appeals is currently reviewing TikTok's legal challenge against a mandated divestment. Chew highlighted TikTok's unique algorithm, its focus on video content, and the importance of innovation to maintain its user base of over a billion. He also noted the company's significant revenue growth, with TikTok's US earnings reaching $16 billion last year, while ByteDance's overall revenue rose to $120 billion.
https://www.scmp.com/tech/big-tech/article/3284369/tiktok-ceo-vows-earn-global-trust-app-challenges-us-ban?utm_source=rss_feed
‘Trump victory’ meme stock surges in China as buzzwords outweigh fundamentals
South China Morning Post
Retail investors in China are speculating on shares of Wisesoft, a company whose name suggests a connection to Donald Trump's potential re-election, driving its stock price up 10% over two consecutive days. Despite Wisesoft's lack of significant ties to the U.S. and a recent drop in revenue, the stock has doubled in value within a month. This trend reflects a broader pattern in China's stock market, where irrational investor behavior often inflates prices based on perceived connections rather than business fundamentals. The U.S. presidential election is intensifying this speculative sentiment among Chinese investors.
https://www.scmp.com/economy/global-economy/article/3284347/trump-victory-meme-stock-surges-china-buzzwords-outweigh-fundamentals?utm_source=rss_feed
China-South Korea ties: empty ambassador chair highlights complications in relationship
South China Morning Post
China has been without an ambassador in South Korea for over three months, the longest period since their diplomatic ties began. Analysts suggest the delay may reflect complex geopolitical factors, including increased tensions involving North Korea and changing US-South Korea relations. Beijing has not announced a new ambassador since Xing Haiming's departure on July 10. The current chargé d’affaires is Fang Kun, and other ambassadorial positions in the EU and US have also seen delays. Experts believe a new appointment will happen soon, but the vacancy is not seen as critically impacting bilateral relations.
https://www.scmp.com/news/china/diplomacy/article/3284338/china-south-korea-ties-empty-ambassador-chair-highlights-complications-relationship?utm_source=rss_feed
South Korean national arrested in China on suspicion of espionage
South China Morning Post
A South Korean national has been arrested in China on espionage charges, as confirmed by the Chinese foreign ministry. The individual, a former Samsung Electronics employee who later worked for Chinese chipmakers, is accused of leaking semiconductor-related information to South Korea. The arrest is the first involving a South Korean citizen since China's revised anti-espionage law came into effect in July 2022. Reports indicate that the suspect was detained in December 2022 and had been questioned for five months. The arrest is part of China's broader efforts to enhance counter-espionage measures amid increasing tensions with the West, particularly in the technology sector. China's updated anti-espionage law prohibits the unauthorized transfer of information related to national security.
https://www.scmp.com/news/china/diplomacy/article/3284358/south-korean-national-arrested-china-suspicion-espionage?utm_source=rss_feed
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