China’s central bank backs Beijing’s property destocking plan as housing sales crawl; China EV Makers Have Room to Absorb EU Tariffs, Find New Markets
Wounded Leaders of the West Gather in Italy to Discuss an Unruly World
Welcome to this issue of The China Brief. Today is June 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’s central bank backs Beijing’s property destocking plan as housing sales crawl
South China Morning Post
China's central bank, the People's Bank of China (PBOC), is supporting the government's plans to use public resources to absorb the nation's unsold homes in order to clear the property market's inventory overhang. The PBOC held a virtual meeting to discuss follow-up measures on the government's recently announced fund of CNY 300bn ($41.5bn) to help clear excess housing stock. The central bank emphasised that financial institutions should implement the Communist Party Politburo's policy to support the property market and maintain financial stability in the economy. However, data from China Real Estate Information Corporation showed that only four out of 30 cities showed signs of improvement in destocking trends in May compared to the previous month.
https://www.scmp.com/business/china-business/article/3266446/chinas-central-bank-backs-beijings-property-destocking-plan-housing-sales-crawl?utm_source=rss_feed
China EV Makers Have Room to Absorb EU Tariffs, Find New Markets
Bloomberg
Chinese electric vehicle (EV) manufacturers have several options to continue growing despite the European Union's imposition of additional tariffs. These include shifting production to the continent, turning their attention to new markets in the Middle East, Latin America, and Southeast Asia, and using high profit margins to absorb part of the hit. As the European Commission raises tariffs, BYD's profit per car in Europe may still be around 1.5 times higher than in China, according to JPMorgan Chase analyst Nick Lai. Additionally, BYD is building its first EV hub outside Asia in Brazil and its first European car factory in Hungary.
https://www.bloomberg.com/news/articles/2024-06-13/china-ev-makers-have-room-to-absorb-eu-tariffs-find-new-markets?srnd=industries-consumer
Wounded Leaders of the West Gather in Italy to Discuss an Unruly World
NY Times
The leaders of the Group of 7 (G7) countries are facing political challenges ahead of their meeting in Italy. Italian Prime Minister Giorgia Meloni will host the meeting, but all of the other leaders are facing difficulties. UK Prime Minister Rishi Sunak is expected to lose an upcoming election, French President Emmanuel Macron has called for snap elections after heavy losses to the far right, German Chancellor Olaf Scholz and his party suffered in recent elections, US President Joe Biden is facing opposition from former President Donald Trump, and Japanese Prime Minister Fumio Kishida is experiencing unrest within his party. Canadian Prime Minister Justin Trudeau expressed concern about the rise of right-wing populism in Europe and the US.
https://www.nytimes.com/2024/06/13/world/europe/wounded-leaders-of-the-west-gather-in-italy-to-discuss-an-unruly-world.html
China Is Testing More Driverless Cars Than Any Other Country
NY Times
China is leading the way in the development and testing of driverless cars, with 16 cities allowing companies to test autonomous vehicles on public roads. Baidu, the Chinese tech giant, operates a fleet of 500 driverless taxis in Wuhan, with plans to add a further 1,000. The Chinese government is providing significant support to companies developing driverless technology, including designating on-road testing areas and censoring online discussion of safety incidents to allay public fears. Surveys have shown that Chinese drivers are more willing to trust autonomous technology than their American counterparts.
https://www.nytimes.com/2024/06/13/business/china-driverless-cars.html
China’s Do-Nothing Strategy in the Middle East
Foreign Affairs
China has largely stood by as Houthi attacks on commercial vessels in the Red Sea disrupt global shipping. China sends $280 billion worth of goods per year through the Red Sea’s Bab el Mandeb Strait, accounting for nearly 20 percent of its total maritime trade. The attacks have led to rising shipping costs and supply chain disruptions, which are particularly damaging to the Chinese economy at a time when it is already under pressure. However, China has done little in response, publicly affirming the importance of safe and open seas and privately attempting to negotiate with the Houthis and their Iranian supporters.
China's restraint in the Red Sea raises questions about its larger strategy in the Middle East. While the United States and its allies bear the burden and potential reputational costs of military intervention, China can posture as the champion of the global South. Some observers suggest that China's reluctance to confront the Houthi attacks is driven by a cynical effort to enhance its regional clout. However, Beijing ultimately depends on stability in the Middle East to expand its influence in the region. China's economic stability is threatened by instability in the Middle East, as disruptions to global trade could jeopardize its energy and food security, as well as its supply chains to states in the region.
China's ambivalence about military intervention in the region is evident in its reluctance to protect its own commercial ships and its aversion to military entanglement. However, if the Houthi attacks continue, China may find itself compelled to deploy its naval forces and become directly involved in the conflict. Despite accusations that China is profiting from the Red Sea predicament as part of a policy of fomenting global chaos, Beijing's aim is to minimize its exposure to global instability and maximize its ability to survive and adapt. China seeks to expand its trade ties, diversify its sources of energy and food imports, and assert its growing influence as a great power, all while avoiding military entanglements.
https://www.foreignaffairs.com/china/chinas-do-nothing-strategy-middle-east
Sleepwalking Toward War
Foreign Affairs
The United States and China are on a dangerous path of escalating confrontation, similar to the situation between Germany and Britain before World War I, warns historian Brendan Simms. The structural forces driving the antagonism between the two powers include economic competition, geopolitical fears, and deep mistrust. However, history has shown that structure is not destiny, and the decisions made by leaders can prevent war and manage tensions. The United States must convince Chinese leaders that it is not trying to prevent China's economic development, while China must regulate its exports to avoid provoking protectionist measures from other countries. Additionally, efforts should be made to contain regional conflicts, such as the war in Ukraine and the potential conflict over Taiwan. Arms control initiatives, mutual respect, and credible deterrence are also essential in avoiding a repeat of the British-German scenario.
https://www.foreignaffairs.com/china/sleepwalking-toward-war-united-states
China vows new-energy regulations to optimise industry, while still refuting ‘overcapacity’
South China Morning Post
Chinese officials have pledged to optimise the country's massive new-energy capacity and refute claims of overcapacity. Wang Shijiang, deputy director of the Electronic Information Department of the Ministry of Industry and Information Technology, stated during a press conference that there is no overcapacity problem in China's new-energy sector. Wang added that any inefficient or backward production capacity in the green sector will be phased out through market competition. The Chinese government will also promote industrial upgrades and deepen international cooperation in new energy.
https://www.scmp.com/economy/economic-indicators/article/3266475/china-vows-new-energy-regulations-optimise-industry-while-still-refuting-overcapacity?utm_source=rss_feed
PDD Holdings’ Colin Huang and ByteDance’s Zhang Yiming top China’s tech rich list
South China Morning Post
Colin Huang Zheng, the founder of Pinduoduo, and Zhang Yiming, the founder of ByteDance, have been named the richest tech entrepreneurs in China, according to a list published by Chinese magazine New Fortune. Huang, with a personal wealth of CNY 425 billion ($59 billion), topped the list, followed by Zhang with a net worth of CNY 340 billion. Zhong Shanshan, in the traditional mineral water business, was named the richest man in China with a personal wealth of CNY 456 billion.
https://www.scmp.com/tech/big-tech/article/3266455/pdd-holdings-colin-huang-and-bytedances-zhang-yiming-top-chinas-tech-rich-list?utm_source=rss_feed
Chinese spy agency warns against mishandling classified items after ‘secret’ books sold
South China Morning Post
China's Ministry of State Security has warned against the mishandling of confidential information in an attempt to educate the public about its anti-espionage law. The ministry cited a case in which military-related materials were sold by a recycling station, after being sold to the station by military personnel who did not follow the rules on destruction of sensitive items. The ministry praised a retired man who reported the situation and handed over the books, stating that his actions prevented further dissemination of classified information and harm to military security. The ministry has also called on the public to share information about suspicious activities such as the illegal sale of items containing state secrets.
https://www.scmp.com/news/china/politics/article/3266469/chinese-spy-agency-warns-against-mishandling-classified-items-after-secret-books-sold?utm_source=rss_feed
Shein steers tough course in pursuit of blockbuster London IPO
Japan Times
Fast-fashion retailer Shein is considering an initial public offering (IPO) in London with a potential valuation of £50 billion ($64 billion). However, the company faces challenges in convincing regulators, politicians, and investors that it meets their standards for inclusion. Critics raise concerns about Shein's environmental, social, and governance record, including allegations of forced labor. Shein has stated that it has a zero-tolerance policy for forced labor.
https://www.japantimes.co.jp/business/2024/06/13/companies/shein-pursuit-london-ipo/
China's premier in New Zealand: Differences should not become 'chasm'
Nikkei Asia
Chinese Premier Li Qiang and New Zealand Prime Minister Christopher Luxon have pledged to boost trade and manage differences as the countries' relationship has cooled in recent years. Although New Zealand has adopted a warier stance towards China, economic ties, especially New Zealand's exports to China, worth $12.7bn in 2023, were discussed at a joint briefing in Wellington. The pair also discussed cyberattacks, the Pacific, South China Sea and Taiwan Strait.
https://asia.nikkei.com/Location/Oceania/New-Zealand/China-s-premier-in-New-Zealand-Differences-should-not-become-chasm
In China’s backyard, the U.S. has become a humbler superpower
Japan Times
The United States is shifting its approach to the Asia-Pacific region, no longer positioning itself as the sole guarantor of security. Instead, the US is offering to be a partner in military modernization and tech development. This change in approach is driven by the vastness of the region and the rising threat of China. Defense Secretary Lloyd Austin stated that the traditional hub-and-spokes model for Indo-Pacific security is being replaced with a more collaborative approach.
https://www.japantimes.co.jp/news/2024/06/13/world/politics/china-america-humbler-superpower/
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