China to enforce up to 10-year ban on ex-regulators investing in new stock offerings
More talk ‘not always best’ for US-China relationship, it’s the results that count
Welcome to this issue of The China Brief. Today is September 9, 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 to enforce up to 10-year ban on ex-regulators investing in new stock offerings
South China Morning Post
China has extended the waiting period for employees leaving the China Securities Regulatory Commission (CSRC) before they can invest in initial public offerings (IPOs) to ten years for senior officials, five years for mid-level staff, and four years for general employees. This new rule, part of an anti-corruption campaign, aims to restore investor confidence amid a decline in the stock market. The regulations also apply to the departing staff's families and require companies to disclose any former regulatory officials among shareholders. The CSRC has intensified its scrutiny following recent corruption investigations within the financial sector.
https://www.scmp.com/business/china-business/article/3277777/china-enforce-10-year-ban-ex-regulators-investing-new-stock-offerings?utm_source=rss_feed
More talk ‘not always best’ for US-China relationship, it’s the results that count
South China Morning Post
Shi Yinhong, a professor of international relations at Renmin University and former state councillor, discusses the complexities of China-US relations, which many analysts characterize as a new cold war. Despite establishing communication channels since the 2013 summit between Presidents Xi Jinping and Barack Obama, Shi emphasizes that these interactions have not led to improved relations or tangible results. Instead, the trend has been one of consistent deterioration over the past decade, with talks often revealing deeper differences rather than bridging gaps. Notably, the recent Xi-Biden summit led to a reduction in dangerous naval encounters, marking a breakthrough in military conflict prevention.
Shi highlights specific contentious issues that showcase the divide between China and the US, including North Korea's nuclear program and Taiwan's status. He notes how the US has repeatedly sought to impose sanctions against China regarding its support for Russia and its military exercises near Taiwan, indicating an escalation of confrontational rhetoric. The current political landscape, driven by domestic electoral considerations in the US, further complicates relations, with both nations preparing for potential military confrontations while avoiding formal declarations of war. Shi believes that while China’s military capabilities are growing, the overall gap in military power between the two countries remains significant.
On the topic of China’s foreign policy, Shi argues that China is becoming more cautious, particularly regarding the Belt and Road Initiative, due to economic constraints. He observes a generational shift among Chinese officials, who are increasingly aware of the limits of their discourse and the complexities of international relations. Despite some claims of increased Chinese influence due to global conflicts, Shi contends that true mediation requires neutrality and strong relationships with all parties involved; thus, China's position in international diplomacy remains constrained by its perceived biases. He concludes that while exchanges between the US and China have their benefits, they also risk entrenching existing biases, highlighting the challenges of mutual understanding.
https://www.scmp.com/news/china/diplomacy/article/3277614/more-talk-not-always-best-us-china-relationship-its-results-count?utm_source=rss_feed
Xi overlooks differences to stress China-North Korea ties in anniversary message
South China Morning Post
Chinese President Xi Jinping expressed a commitment to deepen cooperation and strategic communication with North Korea in a congratulatory message to Kim Jong-un for the country's 76th anniversary. He acknowledged the achievements of the Workers’ Party of Korea and emphasized the importance of their diplomatic relationship, marking 75 years of ties. However, relations appear strained, with North Korea strengthening ties with Russia, including a recent visit from President Putin. North Korea's shift in broadcasting from a Chinese to a Russian satellite signals waning Chinese influence, complicating the dynamics among the three nations.
https://www.scmp.com/news/china/diplomacy/article/3277740/xi-overlooks-differences-stress-china-north-korea-ties-anniversary-message?utm_source=rss_feed
VW factory fears renew concerns about China exposure of German carmakers
South China Morning Post
Volkswagen is contemplating closing its German factories due to intense competition from Chinese rivals, as highlighted by CEO Oliver Blume. The German automotive industry is facing challenges such as rising energy costs and a decline in market share in China, where Volkswagen's sales dropped significantly. Despite decreased sales, German investments in China continue to rise. Critics argue that the German government and car manufacturers are not prioritizing the national economy. The situation is drawing comparisons to a "second China shock," with potential losses in export markets impacting Germany's economy.
https://www.scmp.com/news/china/diplomacy/article/3277728/vw-factory-fears-renew-concerns-about-china-exposure-german-carmakers?utm_source=rss_feed
China brokerage deal has more bark than bite
Reuters BreakingViews
The merger between Guotai Junan and struggling rival Haitong will form China's largest brokerage with assets of $225 billion. While the crowded brokerage sector is in need of consolidation, this deal may not help Beijing's ambition to create top-tier investment banks. Although state media praised the merger as a significant step toward consolidating the sector, concerns about Haitong's financial stability persist, particularly after a significant revenue drop and the detention of a former executive. Guotai has performed relatively better and is in a position to manage Haitong’s challenges. However, both firms account for only about 10% of Chinese equity capital raising, lagging behind competitors like Citic. The merger may encourage other brokerages to pursue consolidation, but it is unlikely to produce a globally competitive investment bank in the near future.
https://www.breakingviews.com/considered-view/china-brokerage-deal-has-more-bark-than-bite/
Missing Chinese financier Bao Fan’s China Renaissance tumbles after 17-month suspension
South China Morning Post
Shares of China Renaissance Holdings plummeted as trading resumed after a 17-month suspension. The stock dropped by as much as 73% to HK$1.98 before recovering slightly to a 58% decline. The company had not traded since March 31, 2023, as it awaited approval to resume trading after fulfilling listing requirements, including publishing overdue financial results and confirming normal operations. Founder Bao Fan has been under investigation by the Chinese government since February 2023, and the company has not been able to contact him since then. Bao, who resigned as chairman and CEO citing health reasons, founded the company in 2018 and was involved in significant deals in the Chinese tech sector. The Hang Seng Index also saw a 1.7% drop on the same day.
https://www.scmp.com/business/china-business/article/3277714/missing-chinese-financier-bao-fans-china-renaissance-tumbles-after-17-month-suspension?utm_source=rss_feed
Hong Kong stocks hit 1-month low as China data fuels slowdown risks, Citigroup cuts target
South China Morning Post
Hong Kong stocks fell to a one-month low, driven by a disappointing inflation report from mainland China that heightened concerns about an economic slowdown. The Hang Seng Index dropped 2% to 17,096.57, marking its largest decline in five weeks. Key stocks like Alibaba, JD.com, and Tencent all saw significant decreases, while major Chinese property developers like Longfor and China Resources Land also faced sharp declines. Consumer prices in China rose only 0.6% in August, below expectations, and factory-gate prices fell by 1.8%. Citigroup and other Wall Street banks are cautioning against investing in Chinese stocks due to weak consumption and earnings outlook. They have adjusted their year-end target for the Hang Seng Index downward. Other Asian markets also experienced declines, with Japan's Nikkei 225, South Korea's Kospi, and Australia's S&P/ASX 200 all falling.
https://www.scmp.com/business/markets/article/3277712/hong-kong-stocks-hit-3-week-low-china-inflation-data-fuels-worries-about-growth?utm_source=rss_feed
China blames US ‘coercion’ for new Dutch export controls on ASML chip-making equipment
South China Morning Post
China has expressed dissatisfaction with the Dutch government's decision to expand export controls on ASML Holdings' chip-making equipment, particularly the deep ultraviolet lithography tools. This move aligns with export restrictions imposed by the United States last year. The Chinese commerce ministry criticized the U.S. for coercing allies like the Netherlands to tighten semiconductor export controls, arguing that this undermines Sino-Dutch cooperation and harms mutual interests. Dutch Trade Minister Reinette Klever stated that the decision was made for national safety reasons. The U.S. lobbying has effectively prevented ASML from exporting its advanced lithography systems to China.
https://www.scmp.com/tech/tech-war/article/3277709/china-blames-us-coercion-new-dutch-export-controls-asml-chip-making-equipment?utm_source=rss_feed
Xi and Putin send greetings to Kim Jong Un on North Korea’s founding anniversary
NBC NEWS
SEOUL, South Korea — Chinese President Xi Jinping and Russian President Vladimir Putin sent greetings to North Korean leader Kim Jong Un on the occasion of North Korea’s founding anniversary, state media KCNA said Monday.
“I am sure that the comprehensive strategic partnership between Russia and the DPRK will be strengthened in a planned way thanks to our joint efforts,” Putin said, according to KCNA.
DPRK is short for the Democratic People’s Republic of Korea, the North’s official name.
Xi called for deeper strategic communication and cooperation with North Korea in his message, KCNA said.
Last year, Kim marked the country’s founding day on Sept. 9 with a parade of paramilitary groups and diplomatic exchanges in which he vowed to deepen ties with China and Russia.
On Sunday, Kim underscored the importance of strengthening naval power as he toured a naval base construction site, KCNA reported.
“Now that we are soon to possess large surface warships and submarines which cannot be anchored by the existing facilities for mooring warships, the construction of a naval base for running the latest large warships has become a pressing task,” Kim was quoted as saying.
During the tour, Kim stressed the need to build a naval port capable of operating weapons systems of the warships and revealed military measures to deploy anti-aircraft and coastal defense systems for defending the port, according to the report.
Kim cited geopolitical advantages of the site for the country, bordered by the sea on both the east and west sides. The location of the site was not specified in the report.
Meanwhile, North Korea continued its campaign of launching trash balloons toward South Korea for the fifth consecutive day on Sunday, the Yonhap news agency reported, citing the South’s Joint Chiefs of Staff.
https://www.nbcnews.com/news/world/xi-putin-send-greetings-kim-jong-un-north-koreas-founding-anniversary-rcna170168
Could India become an alternative to China in the ‘chip war’?
Japan Times
The article discusses the growing global strategy to counter China's rise through economic means, often described as economic warfare. This strategy has emerged amid increasing geopolitical tensions, intertwining economic security with national security concerns. As the concept of decoupling from China gains popularity, the U.S. and its allies are increasingly looking to India as a viable alternative for restructuring supply chains and developing semiconductors.
https://www.japantimes.co.jp/commentary/2024/09/09/world/india-become-an-alternative-to-china-in-the-chip-war/
Huawei’s tri-fold phone gets 2.7 million pre-orders ahead of Apple’s iPhone 16 launch
NBC NEWS
BEIJING — Huawei has received more than 2.7 million pre-orders for its tri-fold smartphone, its website showed on Monday.
The Chinese company began pre-orders for its Mate XT midday on Saturday. That was more than two days ahead of Apple’s planned iPhone 16 launch early morning Tuesday Beijing time.
Huawei had previously announced it would launch a new product at 2:30 p.m. local time (2:30 a.m. ET) on Tuesday. The company has yet to share a price for the Mate XT. The device is set to officially begin sales on Sept. 20.
Apple fell out of the list of top five smartphone vendors in China in the second quarter, according to Canalys. It was the first time that domestic players held all five spots, the firm said.
Huawei ranked fourth by market share with 10.6 million smartphones shipped, according to Canalys.
The firm only shared shipments for the top five vendors. Apple shipped 10 million phones in the first quarter.
Huawei already sells folding and flip phones, as do its Chinese competitors. Apple has yet to expand into those categories.
https://www.nbcnews.com/news/world/huaweis-tri-fold-phone-gets-27-million-pre-orders-ahead-apples-iphone-rcna170158
China’s AI industry could see US$1.4 trillion in investment in 6 years, executive says
South China Morning Post
China's artificial intelligence (AI) industry is expected to invest over 10 trillion yuan (US$1.4 trillion) in technology development over the next six years, according to Chen Liang, chairman of the China International Capital Corporation (CICC). Speaking at the International China Investment Forum, he highlighted the significant growth potential in China's AI market, which could reach a value of 5.6 trillion yuan by 2030. The country is experiencing an AI boom, with a surge in domestic technology companies focusing on generative AI models, particularly large language models that power chatbots like OpenAI's ChatGPT.
As AI technology is integrated into traditional industries such as healthcare, legal services, entertainment, and logistics, over 237,000 AI-related companies were launched in China in the first half of this year. The total number of companies registered with AI in their business scope is approximately 1.7 million. The Chinese government prioritizes AI development amid competition with the US, implementing supportive policies to promote industrial transformation through AI.
Chen noted that China has become the largest robotics market globally, with its industrial robots accounting for half of worldwide sales. New AI technologies are further enhancing the robotics industry, as demonstrated at the recent World Robot Conference, where various AI-integrated robots were showcased for applications ranging from household chores to industrial tasks.
https://www.scmp.com/tech/big-tech/article/3277743/chinas-ai-industry-could-see-us14-trillion-investment-6-years-executive-says?utm_source=rss_feed
Details of China’s lunar station revealed as project expands with a dozen new partners
South China Morning Post
Chinese space officials announced the expansion of the International Lunar Research Station (ILRS) project, now involving a dozen new partners, including Senegal, Russia, and Pakistan. By 2035, the moon base aims to conduct research near the lunar south pole and expand into a network of facilities by 2050. China plans to launch precursor missions, including Chang’e-7 and Chang’e-8, to explore water ice and test lunar resource technologies. The ILRS initiative, seen as a rival to NASA's Artemis Program, seeks global collaboration with 50 countries and numerous research institutions.
https://www.scmp.com/news/china/science/article/3277742/details-chinas-lunar-station-revealed-project-expands-dozen-new-partners?utm_source=rss_feed
China’s ultra-rich are snatching up luxury homes in bet on first-tier cities
South China Morning Post
Linda Wang, a Shanghai native, recently purchased a luxury home in the Xuhui district for 26.4 million yuan amid a national property downturn. This reflects a growing trend of ultra-rich buyers investing in prime properties to safeguard their assets, despite market corrections. Notably, luxury homes in Shanghai have seen robust sales, with significant transactions reported in recent weeks. However, concerns linger about the sustainability of this luxury market due to potential oversupply and economic challenges affecting disposable income. The influx of new luxury properties could intensify competition among developers moving forward.
https://www.scmp.com/business/china-business/article/3277646/chinas-ultra-rich-are-snatching-luxury-homes-bet-first-tier-cities?utm_source=rss_feed
Cheaper funding, stronger EM ties are boosting yuan’s appeal in trade finance
South China Morning Post
China's lower funding costs and expanding trade connections in emerging markets are driving demand for the yuan in trade finance, particularly in Southeast Asia, Africa, and the Middle East, according to Standard Chartered. The yuan's appeal as a funding currency remains strong, with borrowing costs significantly lower than those of the US dollar. The yuan's global payment share reached a record 4.74%, while its trade finance share is at 6%. China's recent commitment of 360 billion yuan to Africa and Hong Kong's role as a yuan trading hub highlight its growing international influence. Standard Chartered is also expanding its Mandarin-speaking staff to meet this demand.
https://www.scmp.com/business/article/3277650/cheaper-funding-stronger-em-ties-are-boosting-yuans-appeal-trade-finance?utm_source=rss_feed
‘China week’ at US House puts biotech firms, Hong Kong offices in legislative cross hairs
South China Morning Post
The US House is set to vote this week on over two dozen bills aimed at addressing China-related issues, including closing Hong Kong’s diplomatic offices in the US and restricting contracts with leading Chinese biotech companies. Dubbed ‘China week,’ this initiative reflects bipartisan efforts to tackle perceived security threats from Beijing, including its technological and political influence. These measures, primarily Republican-led but with bipartisan support, will be considered under an expedited process requiring a two-thirds majority for passage. Notable proposals include the Biosecure Act, which aims to limit federal contracts with specific Chinese firms to protect American health data and reduce reliance on Chinese manufacturing. Additional legislation seeks to strengthen partnerships with allies in the Indo-Pacific and enhance scrutiny of foreign political contributions. However, some bills, such as the revival of the controversial China Initiative, lack bipartisan support and will not receive expedited consideration. With the US presidential election approaching, these legislative efforts are seen as a strategy to unify Republicans and emphasize a tough stance on China. The outcome of these votes remains uncertain, but there are potential avenues for future legislative actions before the current congressional session ends in January 2025.
https://www.scmp.com/news/china/article/3277569/china-week-us-house-puts-biotech-firms-hong-kong-offices-legislative-cross-hairs?utm_source=rss_feed
China opens up medical sector, manufacturing to foreign ownership in growth push
South China Morning Post
China is allowing wholly foreign-owned hospitals to be established in major cities and permitting foreign investors to offer stem cell and gene therapy services in pilot free-trade zones. This initiative is part of efforts to attract foreign investment and stabilize economic growth amid a domestic slowdown. Restrictions on foreign access to the manufacturing sector will also be lifted. The changes come after a decline in foreign direct investment and aim to enhance international cooperation as China seeks to modernize its economy. The updated "negative list" further reduces sectors closed to foreign investment.
https://www.scmp.com/economy/china-economy/article/3277683/china-opens-medical-sector-manufacturing-foreign-ownership-growth-push?utm_source=rss_feed
Taiwan delays trips by mainland Chinese scholars in fresh setback for cross-strait visits
South China Morning Post
Recent visits by two mainland Chinese academic delegations to Taiwan have been postponed due to obstacles from Taiwanese authorities. The first delegation, from Xiamen University’s Graduate Institute for Taiwan Studies, was scheduled for last Thursday, while the second was set for today. Taiwanese officials cited pending approvals and ongoing reviews as reasons for the delays, which may be linked to internal disagreements. Cross-strait exchanges have significantly declined in recent years due to COVID-19 and heightened tensions, with travel largely restricted despite some easing for specific regions.
https://www.scmp.com/news/china/article/3277677/taiwan-delays-trips-mainland-chinese-scholars-fresh-setback-cross-strait-visits?utm_source=rss_feed
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