China plans reforms to boost appeal of Shanghai’s Nasdaq-style Star Market; Hong Kong stocks leap as investors eye China market reforms, stimulus
China’s central bank vows supportive monetary policy but dismisses dramatic easing measures; Tech war: US seeks help of allies Japan and Netherlands to curb China’s AI chip progress
Welcome to this issue of The China Brief. Today is June 19, 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’s central bank vows supportive monetary policy but dismisses dramatic easing measures
South China Morning Post
China's central bank governor, Pan Gongsheng, has said that the People's Bank of China (PBOC) will continue to pursue accommodative monetary policies to stimulate the economy. However, he also reiterated that the bank will avoid quantitative easing, stating that incorporating bond trading into its policy toolbox does not equate to quantitative loosening. Pan revealed that the PBOC is in talks with the finance ministry for treasury bond purchases in the secondary markets, but emphasised that this will be a gradual process. The Chinese economy is still struggling to regain momentum following the pandemic, with property investments contracting and industrial output and export growth facing headwinds from new tariffs proposed by the US and EU.
https://www.scmp.com/economy/china-economy/article/3267210/chinas-central-bank-vows-supportive-monetary-policy-dismisses-dramatic-easing-measures?utm_source=rss_feed
China says US tip led to suspect, a ‘prime example’ of cooperation amid fentanyl crisis
South China Morning Post
Chinese authorities have detained a suspect on drugs and money laundering charges using a tip-off from Washington. The detention came as Beijing reiterated its support for the US to solve the fentanyl crisis that it said was not “caused by China”. Investigations are underway after Chinese police detained a suspect for taking part in “illegal foreign exchange transactions”. The operation later “evolved into criminal activities” that included the illegal trade of foreign exchange, according to China’s public security ministry. The news came days after China’s ambassador to Washington held talks with Rahul Gupta, director of the White House Office of National Drug Control Policy.
https://www.scmp.com/news/china/diplomacy/article/3267202/china-says-us-tip-led-suspect-prime-example-cooperation-amid-fentanyl-crisis?utm_source=rss_feed
Tech war: US seeks help of allies Japan and Netherlands to curb China’s AI chip progress
South China Morning Post
The US Under Secretary of Commerce for Industry and Security, Alan Estevez, will visit Japan and the Netherlands to request additional restrictions on China's semiconductor sector, specifically focusing on its ability to produce high-bandwidth memory (HBM) chips used in AI development, according to anonymous sources. The US has been attempting to limit China's access to advanced semiconductors for years, with limited success. It is seeking support from allies to implement a more effective global blockade. Japan and the Netherlands are considered key providers of semiconductor equipment.
https://www.scmp.com/tech/tech-war/article/3267204/tech-war-us-seeks-help-allies-japan-and-netherlands-curb-chinas-ai-chip-progress?utm_source=rss_feed
Hong Kong stocks leap as investors eye China market reforms, stimulus
South China Morning Post
Hong Kong stocks rose in early trade on Wednesday as sentiment was boosted by financial market reforms announced at the Lujiazui financial forum in Shanghai. The Hang Seng Index rose 1.6% to 18,201.40, while the Tech Index added 1.4%. Lenovo Group, which is expected to be the main beneficiary of the AI PC boom in Asia, jumped 5.6%. Geely Automobile rose 5.4% and Longfor added 4.5%. Other key Asian markets also advanced after Wall Street's rally overnight.
https://www.scmp.com/business/markets/article/3267160/hong-kong-stocks-leap-investors-eye-china-market-reforms-stimulus?utm_source=rss_feed
U.S. approves sale of more than 1,000 ‘suicide drones’ to Taiwan
Japan Times
The U.S. has approved the sale of $360 million worth of armed drones and loitering munitions to Taiwan. The move is part of U.S. efforts to bolster Taiwan's capabilities and counter a potential Chinese attack. The sale includes warhead-equipped drones and anti-personnel and anti-armor munitions. The sale must be approved by Congress.
https://www.japantimes.co.jp/news/2024/06/19/asia-pacific/politics/us-taiwan-suicide-drones/
Malaysia asks China to support its bid to join BRICS
Nikkei Asia
Malaysia is planning to join the BRICS grouping of emerging nations, making it the second Southeast Asian nation to start the accession process after Thailand. Prime Minister Anwar Ibrahim raised the topic during a meeting with Chinese Premier Li Qiang, asking for Beijing's support in the application process. Malaysia's move comes as China's clout grows in Southeast Asia, and China has remained Malaysia's largest trading partner for 15 consecutive years.
https://asia.nikkei.com/Politics/International-relations/Malaysia-asks-China-to-support-its-bid-to-join-BRICS
China’s Li Qiang opens Malaysia visit ‘ready’ to build closer economic, development ties
South China Morning Post
China's Premier Li Qiang has praised the "sound momentum of growth" in China-Malaysia relations and discussed the deepening of bilateral ties during his three-day visit to Malaysia. The visit comes as Malaysia celebrates 50 years of diplomatic ties with China. Beijing has been forging closer relations with regional capitals which have refused to pick a side between the US and China. In an exclusive interview with the South China Morning Post ahead of Li’s visit, Malaysian Prime Minister Anwar Ibrahim said it made sense for Malaysia to carry on doing business with China.
https://www.scmp.com/news/china/diplomacy/article/3267194/chinas-li-qiang-opens-malaysia-visit-ready-build-closer-ties-economic-development-ties?utm_source=rss_feed
China’s ramming of Philippine ship stops short of invoking US defence treaty
South China Morning Post
The recent clash between Philippine and Chinese navy personnel in the South China Sea is not severe enough to invoke the 1951 Mutual Defence Treaty (MDT) between the Philippines and the US, according to analysts. Manila has accused China of a "high-speed ramming" incident in which eight Filipino sailors were injured and one lost their thumb. The MDT commits both countries to providing assistance in the event of an external power attacking the other. Observers warn that the Philippines will need to register its approval of China's actions with Beijing and discuss strategies with the US to continue resupply missions in the disputed waters. Beijing has blamed Manila for the incident, saying the Philippine vessel "ignored repeated solemn warnings". The Chinese government is keen to avoid a conventional war with the US, but China is likely to use grey-zone tactics to intimidate the Philippines if there is no strong response, according to analysts.
https://www.scmp.com/week-asia/politics/article/3267208/chinas-ramming-philippine-ship-stops-short-invoking-us-defence-treaty?utm_source=rss_feed
Philippines accuses China of ‘piracy’ after ship boarded, sailor injured
Washington Post
The Chinese coastguard has boarded a Philippine navy vessel and confiscated equipment, leaving a sailor severely injured. Philippine officials claim that Chinese vessels rammed Philippine ships in order to stop them resupplying a warship, the Sierra Madre. The Chinese used knives and machetes to puncture the rubber dinghies being used by the Philippine navy. The US has a mutual defence treaty with the Philippines and has warned that an armed attack on Philippine military vessels or personnel in the South China Sea could trigger a US military response.
https://www.washingtonpost.com/world/2024/06/19/philippines-south-china-sea-sailor/
Chinese 'underground bankers' launder Sinaloa drug money
Japan Times
The US Justice Department has accused Chinese "underground bankers" of helping Mexico's Sinaloa Cartel launder over $50 million in drug trafficking proceeds. An indictment unsealed in California charged 24 defendants with conspiracy to distribute cocaine and methamphetamine, as well as money laundering offenses. The Drug Enforcement Administration (DEA) conducted a multi-year investigation called "Operation Fortune Runner" which uncovered a partnership between Sinaloa Cartel associates and a Chinese criminal syndicate operating in Los Angeles and China to launder drug money.
https://www.japantimes.co.jp/news/2024/06/19/world/crime-legal/chinese-underground-bankers-sinaloa/
U.S. lawmakers meet Tibet's Dalai Lama, warn China on choice of successor
Japan Times
A group of U.S. lawmakers, led by Michael McCaul, met with the Dalai Lama in India and stated that they would not allow China to influence the choice of his successor. They also indicated that the U.S. would pressure Beijing to hold talks with Tibetan leaders to resolve the Tibet issue. This is expected to anger Beijing, which considers the Dalai Lama a separatist.
https://www.japantimes.co.jp/news/2024/06/19/world/politics/us-lawmakers-dalai-lama-china/
Extended offers dampen excitement for China's mid-year e-commerce festival
Yahoo US
China's mid-year e-commerce sales festival failed to generate much interest among shoppers, despite platforms extending offers for a longer period than ever before. The 618 festival is China's second-biggest annual sales event and a key test of household consumption. However, weak sales indicate the challenges facing China's economy, which is already grappling with a prolonged property crisis and high unemployment. Major players, such as JD.com, Alibaba's Tmall and Taobao, cancelled a traditional pre-sale period to concentrate on low prices. A survey by Re-Hub of luxury brand discounting strategies found nearly half of the brands they tracked either maintained or reduced their average discounts.
https://finance.yahoo.com/news/extended-offers-dampen-excitement-chinas-051939280.html
Eleven swimmers in doping scandal named to Chinese Olympic team
Japan Times
China has named its squad for the Paris Olympics, which includes 11 swimmers who were implicated in a doping scandal earlier this year. In April, it was reported that 23 Chinese swimmers had tested positive for the heart drug trimetazidine (TMZ), which can enhance performance. However, they were not sanctioned after the World Anti-Doping Agency (WADA) accepted the argument from Chinese authorities that the positive tests were a result of food contamination.
https://www.japantimes.co.jp/olympics/2024/06/19/china-doping-scandal-paris/
Didi IPO would give Hong Kong its dream comeback
Reuters BreakingViews
Hong Kong needs a big IPO from a well-known Chinese firm to restore investor confidence and revive the city's listings market. Didi Chuxing, the Chinese ride-hailing giant, is reportedly considering a Hong Kong listing as early as next year. Didi's listing in New York in 2021 raised $4.4 billion, but the company delisted a year later following a regulatory crackdown on tech giants. A Hong Kong IPO by Didi would demonstrate Beijing's support for offshore share sales and its commitment to the city's future as a financial center.
https://www.breakingviews.com/considered-view/didi-ipo-would-give-hong-kong-its-dream-comeback/
China and Malaysia are due to ink economic pacts as visiting Premier Li meets with Anwar
Associated Press
China and Malaysia are set to sign cooperation pacts on digital economy and green development as they celebrate 50 years of diplomatic relations. Trade is expected to dominate the agenda, but the prickly issue of territorial claims in the South China Sea is also likely to be raised. Malaysia's Foreign Minister, Mohamad Hassan, said the government's preferance is for the diplomatic channel rather than public clashes to protect economic ties, as China is Malaysia’s top trading partner.
https://apnews.com/article/malaysia-china-li-qiang-b1ced6867d4e308aee8c6ea90a7c71fd
China plans reforms to boost appeal of Shanghai’s Nasdaq-style Star Market: CSRC
South China Morning Post
China's securities regulator, the China Securities Regulatory Commission (CSRC), will introduce eight measures to reform the country's Nasdaq-style tech board, the Star Market. The reforms will focus on offerings, underwritings, mergers and incentives to promote tech innovation and President Xi Jinping's "new productive force" initiative. The announcement comes as the rebound in Chinese stocks shows signs of losing steam, with investors focusing on the country's economic fundamentals. The CSRC chairman, Wu Qing, was appointed in February and has been praised for his forceful measures to curb new share offerings and punish fraudulent listings and accounting.
https://www.scmp.com/business/china-business/article/3267156/china-plans-reforms-boost-appeal-shanghais-nasdaq-style-star-market-csrc?utm_source=rss_feed
IMF unveils plans for China-based regional centre in Shanghai
South China Morning Post
The International Monetary Fund (IMF) has announced that it is opening a regional centre in Shanghai to strengthen its engagement and partnership in the Asia-Pacific region. The centre will promote research that can inform policies in areas of interest to emerging market and middle-income countries. It will also deepen the IMF's dialogue with member countries and other stakeholders in the region, including international financial institutions, academics, think-tanks, civil society organisations and the private sector. The announcement was made on the first day of the annual Lujiazui Forum in Shanghai and ahead of China's Communist Party's third plenum in July.
https://www.scmp.com/economy/china-economy/article/3267154/imf-unveils-plans-china-based-regional-centre-shanghai?utm_source=rss_feed
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