China unleashes stimulus blitz in push to hit annual growth goal
Property stocks in Hong Kong rally on homes mortgage stimulus
Welcome to this issue of The China Brief. Today is 09 24, 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 Cuts Interest Rates and Mortgage Down Payments
NY Times
China's central bank, the People's Bank of China, announced measures to facilitate borrowing for households and companies in an effort to stimulate economic growth, address a housing market crash, and combat declining prices. The measures include cutting short-term interest rates and existing mortgage rates, lowering minimum down payments for housing, and allowing banks to lend a larger portion of their assets. The benchmark seven-day interest rate was reduced from 1.7% to 1.5%, and banks can now decrease their reserve requirements, potentially freeing up $140 billion for lending. However, there are concerns that these actions may not be sufficient to reverse the economic slowdown, as many businesses remain hesitant to borrow due to uncertainty about sales.
https://www.nytimes.com/2024/09/24/business/china-cuts-mortgage-rates.html
Property stocks in Hong Kong rally on homes mortgage stimulus
CNBC
Chinese property stocks rallied on Tuesday after top financial regulators vowed a range of monetary easing measures to provide some relief for millions of families and boost a recovery in the real estate market.
During a high-level press conference Tuesday morning, People's Bank of China Gov. Pan Gongsheng announced that Beijing would reduce the interest rates on existing individual mortgages by an average of 0.5 percentage points, and the lower down-payment ratio for second homes purchases to 15% from 25%.
It's the first time that down payment levels for first and second homes are unified, and the lower rate is expected by the PBOC to reduce household interest payments on mortgages by an average of 150 billion yuan a year ($21.25 billion).
Hang Seng Mainland Properties Index surged as much as 5% when Hong Kong markets opened shortly after the announcement was made.
Hong Kong-listed shares of real estate developers like China Resources Land , Longfor Group Holdings and China Overseas Land & Investment were some of the biggest movers on the Hang Seng index, gaining as much as 4.49%, 4.57% and 5.41%, respectively.
Chinese policymakers have been ramping up support to reduce household's financial burden and shore up the troubled real estate sector.
Previous measures have done little to spur a meaningful recovery, with property-related investment falling more than 10% in the first eight months this year, from a year ago.
The central bank will also offer guidance for commercial banks to improve pricing mechanisms for mortgage loans, Pan said at the briefing, where he also announced that that China will cut the amount of cash banks need to have in hand, known as the reserve requirement ratio or RRR, by 50 basis points.
The impacts from the new measures are likely to be limited as "rate cuts on existing loans would not spur demands for new homes, and might slow down PBOC's pace of further lowering the loan prime rates," William Wu, an analyst at Daiwa Capital Markets, said in an email, according to CNBC's translation of the Chinese.
Bruce Pang, chief economist and head of research for Greater China at JLL, an investment management firm, predicted that the housing market will still take time to bottom out.
"It is necessary and urgent to launch supportive measures on all fronts and ASAP," Pang said, but authorities will also need to provide "effective and efficient support to developers to boost property investment and construction activities."
Bloomberg reported last month, citing people familiar with the matter, that China was mulling a plan to allow homeowners to renegotiate terms with their current lenders before January next year. Homeowners could also be allowed to refinance with a different bank for the first time in years, the outlet reported.
https://www.cnbc.com/2024/09/24/china-property-stocks-rally-on-homes-mortgage-stimulus-.html
EU divided over higher tariffs for Chinese EV imports
Deutsche Welle
Despite recent discussions between the EU and China, the deadlock over proposed EU tariffs on Chinese electric vehicles (EVs) remains unresolved. The EU plans to introduce import duties of up to 36% on certain Chinese EVs due to concerns over state subsidies giving Chinese automakers an unfair edge. China has rejected these claims and threatens retaliatory measures. Following talks in Brussels, both sides expressed a desire for a mutually agreeable solution, with the EU open to adjusting its tariff proposals. Reports suggest potential reductions for some EV tariffs, but China continues to push for lower rates. Meanwhile, Beijing has initiated investigations into EU imports like pork and dairy, seen as retaliatory actions against pro-tariff EU states. The situation is complex, with differing views among EU member states; while Italy supports the EU stance, Spain is more accommodating, concerned about potential fallout for its industries. German Chancellor Olaf Scholz has also called against the tariffs, stressing the importance of open markets. Ultimately, the outcome hinges on member state negotiations, with experts suggesting that China is cautious about escalating the conflict, given its economic challenges.
https://www.dw.com/en/eu-divided-over-higher-tariffs-for-chinese-ev-imports/a-70250391
China unleashes stimulus blitz in push to hit annual growth goal
Japan Times
China's central bank has implemented a series of aggressive policy measures to support the economy and achieve its annual growth target of approximately 5%. At a briefing in Beijing, People's Bank of China Governor Pan Gongsheng announced initiatives aimed at increasing bank lending to consumers and corporations, as well as reducing the key short-term interest rate and lowering mortgage rates for existing housing loans. Analysts, such as Becky Liu from Standard Chartered, noted that the monetary policy easing was more substantial than anticipated and indicated potential for further easing in the future, particularly following recent rate cuts by the Federal Reserve.
https://www.japantimes.co.jp/business/2024/09/24/economy/china-stimulus-annual-growth-goal/
Canadian detained by China says he experienced psychological torture
NBC NEWS
OTTAWA, Ontario — A Canadian man detained by China for more than 1,000 days said he was put into solitary confinement for months and interrogated for up to nine hours every day, treatment he said amounted to psychological torture.
Michael Kovrig, speaking to the Canadian Broadcasting Corporation in an interview released on Monday, also said he had missed the birth of his daughter and only met her for the first time when she was two-and-a-half years old.
Kovrig and fellow Canadian Michael Spavor were taken into custody in December 2018 shortly after Canadian police detained Meng Wanzhou, the chief financial officer of Chinese telecommunications giant Huawei, on a U.S. warrant. Both men were accused of spying.
“I still carry a lot of pain around with me and that can be heavy at times,” Kovrig said in his first substantial comments since he and Spavor were released in September 2021.
Kovrig noted that U.N. guidelines say prisoners should not be put into solitary confinement for more than 15 days in a row.
“More than that is considered psychological torture. I was there for nearly six months,” said Kovrig, a former diplomat who had been working as an adviser with a think tank when arrested.
Kovrig said there was no daylight in the solitary cell, where the fluorescent lights were kept on 24 hours a day. At one point, his food ration was cut to three bowls of rice a day.
“It was psychologically absolutely the most grueling, painful thing I’ve ever been through,” he said.
“It’s a combination of solitary confinement, total isolation and relentless interrogation for six to nine hours every day,” he said. “They are trying to bully and torment and terrorize and coerce you ... into accepting their false version of reality.”
Kovrig and Spavor were released on the same day the U.S. Justice Department dropped its extradition request for Meng and she returned to China.
The Chinese Embassy in Ottawa, responding to Kovrig’s interview, said he and Spavor had been suspected of engaging in activities endangering China’s national security.
Chinese judicial authorities handled the cases in strict accordance with the law, it said in a statement.
Bilateral ties are chilly. This month China opened a one-year anti-dumping investigation into imports of rapeseed from Canada, just weeks after Ottawa announced 100% tariffs on Chinese-made electric vehicles.
Kovrig’s partner was six months pregnant at the time of his arrest. She played their daughter recordings of his voice and showed pictures of her father so she would recognize him when they finally met.
“I’ll never forget that sense of wonder, of everything being new and wonderful again and pushing my daughter on a swing that had her saying to her mother, ‘Mummy, I’m so happy,’” he said.
https://www.nbcnews.com/news/world/canadian-detained-china-says-experienced-psychological-torture-rcna172393
China to probe Calvin Klein parent over Xinjiang biz 'disruptions'
CNBC
BEIJING — China's Ministry of Commerce said Tuesday it was launching a probe into Calvin Klein-parent PVH Group over alleged business disruptions around its Xinjiang supply chain.
The ministry said the investigation is part of its "unreliable entities" list mechanism. Launched in 2019 shortly after the U.S. blacklisted Huawei, the list is China's version of the U.S. Commerce Department's entity list that restricts named companies from accessing items originating in the U.S.
The U.S. Commerce Department on Monday announced plans to ban the import or sale of cars with specific hardware or software linked to China or Russia.
China's Commerce Ministry on Tuesday did not state why it was probing PVH now, but said the U.S. retail group had 30 days to respond. U.S. defense companies that previously landed on the "unreliable entities" list are barred from China-related imports or exports.
The Chinese probe alleges PVH "targeted Xinjiang suppliers in violation of the principles of normal market transactions, with disruptions to normal transactions with Chinese businesses, individuals and other people, along with other discriminatory measures," according to a CNBC translation of the Chinese text.
PVH did not immediately respond to a CNBC request for comment outside of U.S. business hours.
The group, which also owns Tommy Hilfiger, is one of several foreign retail companies that have faced scrutiny in China over efforts to distance themselves from alleged forced labor in China's Xinjiang region.
In a July 2022 corporate responsibility report, PVH said that Xinjiang is one of the regions where no direct or indirect sourcing is permitted.
International revenue for Calvin Klein and Tommy Hilfiger fell by 4.3% year-on-year to $1.38 billion in the quarter ended Aug. 4, dragged down by a "challenging consumer environment in Asia Pacific, particularly in China and Australia," PVH said in an earnings release.
That overseas revenue accounted for more than half PVH's total revenue of $2.07 billion for the quarter.
Xinjiang is home to the Uyghur Muslims, who have been identified by the United Nations, United States, United Kingdom and others as a repressed ethnic group. China has repeatedly denied allegations of forced labor and other abuses in Xinjiang. The government says that facilities there that the U.S., U.K., Canada and human rights groups have characterized as internment camps are actually vocational training centers.
—CNBC's Sonia Heng contributed to this report.
https://www.cnbc.com/2024/09/24/pvh-china-to-probe-calvin-klein-parent-over-xinjiang-disruptions.html
The death of a Japanese school student: Is this just a tip of an iceberg?
Japan Times
On September 18, a boy attending a Japanese school in Shenzhen was fatally attacked by a Chinese man wielding a knife, and he died the following day. This incident follows another knife attack on June 24 in Suzhou, where a man targeted a Japanese school bus, injuring a parent and child, and resulting in the death of a Chinese woman who tried to intervene. These events have raised concerns about the safety of Japanese nationals in China, yet Chinese authorities have not provided clear information about the motives behind these attacks.
https://www.japantimes.co.jp/commentary/2024/09/24/japan/the-death-of-a-japanese-school-student/
Inside China’s US$5 billion micro drama industry, which has the US in its sights
South China Morning Post
Zhu Jian, a 69-year-old actor, is at the forefront of China's booming micro drama industry, which is challenging the traditional film sector. His latest project, "Grandma's Moon," features minute-long episodes designed for mobile viewing, appealing primarily to middle-aged workers and pensioners. The US$5 billion micro drama market is rapidly expanding, with significant traction in the West, evidenced by a China-backed app, ReelShort, surpassing Netflix in downloads. The micro dramas, often revolving around themes of social mobility and wealth, resonate with a populace facing economic challenges.
Despite their popularity, these productions face scrutiny from Chinese regulators due to their often sensational and lowbrow content. The government has removed thousands of micro dramas for violating content standards, promoting traditional values. Micro dramas are typically produced quickly and inexpensively, with budgets ranging from US$28,000 to US$280,000, allowing for rapid distribution. As the genre grows, actors' salaries have increased, reflecting its commercial potential. Producers are now exploring Western markets, adapting content to fit audience preferences, while the genre continues to evolve in response to viewer demands and regulatory oversight.
https://www.scmp.com/lifestyle/entertainment/article/3279714/inside-chinas-us5-billion-micro-drama-industry-which-has-us-its-sights?utm_source=rss_feed
Alibaba’s DingTalk launches new service bundled with AI features to boost productivity
South China Morning Post
DingTalk, a workplace collaboration app by Alibaba Group, has launched a subscription service called DingTalk 365 that offers over 10 AI features including AI-powered search, virtual assistant, and automated replies. The service utilizes large language models similar to those used in generative AI applications like ChatGPT, enhancing user productivity by summarizing and generating text from various sources within the platform. An annual subscription costs 339 yuan (approximately US$56), currently available at an introductory price of 169 yuan. Users must update their app to version 7.6.16 or higher to access the service. This move reflects a broader trend among Chinese tech companies to monetize AI technologies, following the global AI race sparked by ChatGPT's release. The GenAI market in China is expected to reach US$3.15 billion this year and grow significantly by 2030, offering substantial economic benefits. Other companies, like Baidu, have also begun monetizing their AI services through various business models.
https://www.scmp.com/tech/tech-trends/article/3279744/alibabas-dingtalk-launches-new-service-bundled-ai-features-boost-productivity?utm_source=rss_feed
Premarket: China stimulus pushes global shares to new peak, boosts commodities
The Globe and Mail
World stocks reached a record high following China's announcement of stimulus measures to bolster its economy. The People's Bank of China plans to lower borrowing costs and ease mortgage burdens, leading to significant gains in Chinese stock indices, including a 4% increase in the CSI300 and Shanghai Composite. This optimism extended to European markets, with the pan-European STOXX 600 rising 0.8%. Commodity prices also surged, driven by expectations of improved demand in China. Meanwhile, the Reserve Bank of Australia maintained steady interest rates, contrasting with the U.S. Federal Reserve's recent cuts.
https://www.theglobeandmail.com/investing/markets/inside-the-market/market-news/article-premarket-china-stimulus-pushes-global-shares-to-new-peak-boosts/
Biden to focus on foreign policy legacy including China relations in UN speech
South China Morning Post
President Joe Biden's final speech at the UN General Assembly will emphasize his foreign policy achievements, focusing on UN reform, international coalitions, and managing relations with China. He aims to highlight cooperation with allies amid rising tensions with China and growing ties between Beijing and Moscow. Biden's administration has initiated efforts against fentanyl trafficking, involving 158 countries in a coalition to tackle synthetic drug threats, despite China’s absence. Critics of the UN point to its failures in addressing climate change and global conflicts, with calls for meaningful progress in reforming the Security Council.
https://www.scmp.com/news/china/diplomacy/article/3279737/biden-focus-foreign-policy-legacy-including-china-relations-un-speech?utm_source=rss_feed
China’s EV exporters, dealers squeezed at home and abroad as price war rages
South China Morning Post
Chinese car dealers are facing significant financial challenges due to a domestic price war that has led to steep discounts on vehicles. As a result, they have urged government intervention. Despite a record high in exports for August 2024, the prices of electric vehicles (EVs) are declining, with a reported 5.74 percent drop year-on-year. The situation is particularly severe in the European Union, where prices for Chinese EVs fell 10.56 percent from the previous month amidst ongoing trade investigations. Dealers in China have incurred losses totaling US$19.55 billion in the first eight months of the year, driven by weak consumer demand and inventory backlogs. The China Automobile Dealers Association (CADA) has called for immediate relief measures from the government, including increased financial support for dealerships. The bleak outlook for the market is underscored by the removal of Grand Automotive Services Group from the Shanghai Stock Exchange, highlighting the industry's struggles.
https://www.scmp.com/economy/china-economy/article/3279748/chinas-ev-exporters-dealers-squeezed-home-and-abroad-price-war-rages?utm_source=rss_feed
US targets China’s rare earths dominance with minerals-security finance network
South China Morning Post
The US has launched a minerals-security finance network with allies to counter China's dominance in critical minerals. This initiative, part of the Minerals Security Partnership established in 2022, aims to enhance cooperation and secure diverse supply chains for critical minerals, essential for technology and clean energy. The announcement coincided with a Quad summit focusing on boosting mineral production. The US has also invested in various projects, including a cobalt refinery in Canada and a lithium deposit in the Czech Republic, to strengthen its position against China in the global minerals market.
https://www.scmp.com/news/china/article/3279674/us-targets-chinas-rare-earths-dominance-minerals-security-finance-network?utm_source=rss_feed
US-China research has given Beijing’s military technology a boost, House GOP says
Associated Press
A new congressional report claims that partnerships between U.S. and Chinese universities have allowed federal funding to support China's military technology development. The report highlights collaborations in areas like hypersonic weapons and AI, raising national security concerns. It urges stronger safeguards and enforcement against potential technology transfers. The House recently passed several China-related bills aiming to limit Chinese influence in U.S. academia and technology. Some universities, like Georgia Tech and UC Berkeley, are reevaluating or ending their partnerships in response to these concerns. The report identifies thousands of publications involving U.S. researchers linked to China's defense sector.
https://apnews.com/article/china-higher-education-research-tech-republicans-f6c00d6ccac7ebef5c9eadabf499b06b
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