China's communist leaders are preparing a story to tell;China’s ax-wielding coast guard tests limits in South China Sea
Singapore unveils asset recovery strategy to protect its financial crown jewel
Welcome to this issue of The China Brief. Today is June 26, 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 communist leaders are preparing a story to tell
Nikkei Asia
The upcoming third plenum of China’s Communist Party Central Committee could reveal major policy measures and shed light on the sudden removal of former Foreign Minister Qin Gang and former Defence Minister Li Shangfu, according to Ling Li, a Chinese politics expert at the University of Vienna. The meeting, which is expected to take place in July, is traditionally the first opportunity for a new Politburo to announce major new policies. Li also noted that the current economic slowdown could prompt significant policy adjustments but a sharp reversal in strategy is unlikely.
https://asia.nikkei.com/Opinion/China-s-communist-leaders-are-preparing-a-story-to-tell
Huawei smartphone sales see biggest growth in 618 shopping festival, but Apple stays ahead
South China Morning Post
Huawei emerged as the top performer in China's smartphone market during the midyear 618 shopping festival, according to data from Counterpoint Research. The company saw a 42.4% increase in sales during the festival, with strong demand for its latest handsets driving the growth. Apple defended its position as the second-best seller by offering its largest-ever discounts for iPhones in China, resulting in a 2.7% year-on-year increase in sales. Counterpoint anticipates low single-digit year-on-year growth for China's smartphone market this year.
https://www.scmp.com/tech/big-tech/article/3268096/huawei-smartphone-sales-see-biggest-growth-618-shopping-festival-apple-stays-ahead?utm_source=rss_feed
China’s ax-wielding coast guard tests limits in South China Sea
Japan Times
China's recent clash with the Philippines in the South China Sea has highlighted Beijing's willingness to test the resolve of Manila and its allies, such as the US. The clash involved China's coast guard using axes and rocks to attack a Philippine vessel, resulting in a sailor losing his thumb. The Philippines Armed Forces described the incident as a "brutal assault," while the US State Department condemned China's actions as "reckless." However, both countries have refrained from escalating the situation further.
https://www.japantimes.co.jp/news/2024/06/26/asia-pacific/philippines-south-china-sea-china/
Hong Kong helps relieve yuan pressures as mainland China grapples with capital outflows
South China Morning Post
The yuan is experiencing its highest level of capital outflow in eight years, according to Natixis. However, data from Hong Kong suggests a different story, with a significant level of foreign currency conversion into the yuan and increasing remittances of yuan into mainland China. Hong Kong's role as an offshore yuan centre has been used to support the currency, with monthly yuan remittances from Hong Kong to mainland China surging 117% from September 2023 to April 2024. However, the data also shows a slowdown in yuan internationalisation for the first half of 2024.
https://www.scmp.com/economy/china-economy/article/3268106/hong-kong-helps-relieve-yuan-pressures-mainland-china-grapples-capital-outflows?utm_source=rss_feed
China, Saudi military cooperation on ‘fast track’ as top defence officials meet
South China Morning Post
China and Saudi Arabia have strengthened their military cooperation in recent years, with two of China's top generals meeting Saudi Arabia's defence minister in Beijing on Tuesday. The two countries have also increased cooperation in other fields, including artificial intelligence and infrastructure, with China being Saudi Arabia's largest economic and trade partner and the largest importer of Saudi oil. This comes as China has been working to increase its influence in the Middle East and brokered a peace deal between Saudi Arabia and Iran last year.
https://www.scmp.com/news/china/military/article/3268083/china-saudi-military-cooperation-fast-track-top-defence-officials-meet?utm_source=rss_feed
Meet Yu Donglai ‘silliest boss’ in China who puts staff happiness ahead of making money
South China Morning Post
The boss of Chinese supermarket chain Pang Dong Lai, Yu Donglai, has been hailed as the country's "silliest boss" for prioritising employee happiness. Yu announced in March that he would offer his 7,000 employees 10 days of "unhappy leave" to take at their discretion. The time off is in addition to 30 days' annual leave and a five-day Spring Festival break. The company also offers an award of between CNY5,000 ($700) and CNY8,000 for staff who receive unreasonable complaints from customers. Yu said he wanted to create a European-style working environment.
https://www.scmp.com/news/people-culture/china-personalities/article/3265740/meet-yu-donglai-silliest-boss-china-who-puts-staff-happiness-ahead-making-money?utm_source=rss_feed
China’s Yangtze River provinces on alert for floods with more heavy rain on the horizon
South China Morning Post
Zhejiang province in eastern China has raised its emergency response level to 2, the second most severe, due to heavy rain and rising water levels along the Yangtze River. The provincial government is on high alert for dyke breaches and casualties as more heavy rain is expected. Zhejiang authorities have urged all departments to remain vigilant against the risk of floods breaking river banks, large-scale flooding in urban areas, and a large number of casualties. Floods have already ravaged southern provinces in recent weeks, leaving several dead and many homeless. Provinces along the Yangtze River are expected to receive persistent heavy rain over the next few days, with a high risk of flash floods, geological disasters, and waterlogging.
https://www.scmp.com/news/china/article/3268093/provinces-along-yangtze-alert-more-flood-emergencies-heavy-rain-continues-china?utm_source=rss_feed
Mainland Chinese, Taiwanese coastguards in tense stand-off near Quemoy
South China Morning Post
Coastguard ships from mainland China and Taiwan were involved in a stand-off near the Taiwan-controlled island of Quemoy, also known as Kinmen. Four Chinese coastguard ships entered restricted waters just 5 nautical miles from the island’s defence outpost, prompting the Taiwanese coastguard to issue radio warnings for them to move away. The standoff lasted for two hours before the Chinese ships left the area. Taiwan’s Defence Minister accused the Chinese ships of challenging Taiwan’s boundary claims around Quemoy. Beijing considers Taiwan part of its territory and has not ruled out the use of force to unite it with the mainland.
https://www.scmp.com/news/china/politics/article/3268089/mainland-chinese-taiwanese-coastguards-tense-stand-near-quemoy?utm_source=rss_feed
Michael Phelps, Allison Schmitt call for WADA reform over handling of Chinese swimmers case
South China Morning Post
Olympic swimming legends Michael Phelps and Allison Schmitt have called for reform of the World Anti-Doping Agency (WADA) over its handling of the Chinese swimming drugs scandal. Both Phelps and Schmitt testified before a US Congressional oversight and investigations subcommittee hearing in Washington, criticising WADA's acceptance of China's explanation that contaminated food caused the positive tests of 23 swimmers. Phelps and Schmitt said the scandal had damaged athletes' trust in WADA and urged Congress to use its influence to make the organisation independent and effective. US Anti-Doping Agency CEO Travis Tygart also called for reform.
https://www.scmp.com/sport/other-sport/article/3268072/michael-phelps-allison-schmitt-call-wada-reform-over-handling-chinese-swimmers-case?utm_source=rss_feed
South Korea shuts battery plant where 17 Chinese workers were killed in fire, begins probe
South China Morning Post
South Korean authorities have ordered battery manufacturer Aricell to halt operations after a fire at its factory killed 23 people. The company is being investigated for suspected safety violations, and three officials are being questioned. Safety code violations can result in jail time for fatal accidents. The cause of the blaze is still being determined, but there are concerns about the company’s hiring of temporary foreign workers and their level of safety training. Aricell makes lithium primary batteries for sensors and radio communication devices, and also supplies batteries to the military.
https://www.scmp.com/news/asia/east-asia/article/3268119/south-korea-shuts-battery-plant-where-17-chinese-workers-were-killed-fire-begins-probe?utm_source=rss_feed
Singapore unveils asset recovery strategy to protect its financial crown jewel
South China Morning Post
Singapore's status as an international finance and business hub puts it at higher risk of money laundering and terrorism financing, according to Prime Minister Lawrence Wong. Singapore has published a national asset recovery strategy report as part of its efforts to enhance its anti-money laundering (AML) and terrorism financing framework. Between January 2019 and June 2024, Singapore seized S$6bn ($4.4bn) linked to criminal and money laundering activities. Singapore's banking sector, including wealth management, was highlighted in a recent risk assessment report as posing the highest money laundering risk in the city-state.
https://www.scmp.com/news/asia/southeast-asia/article/3268073/singapore-unveils-asset-recovery-strategy-protect-its-financial-crown-jewel?utm_source=rss_feed
China’s Anguished Debate: Do Its Children Have a Crime Problem?
NY Times
China is grappling with the issue of how to deal with children accused of heinous crimes. The country has a history of being relatively lenient towards young offenders, focusing on rehabilitation rather than imprisonment. However, following a number of high-profile killings allegedly committed by children, there has been a push for harsher punishment. The government has responded by lowering the age at which children can be prosecuted for serious crimes from 14 to 12. The debate was reignited earlier this year when a boy accused of killing a 4-year-old girl was released without charge because he was under 12.
https://www.nytimes.com/2024/06/26/world/asia/china-children-crimes.html
China has an incentive to keep road to Europe open
Reuters BreakingViews
China has agreed to hold talks with the EU regarding the bloc's planned tariffs on Chinese-made electric vehicles (EVs). Although the tariffs would harm Chinese carmakers, they would not eliminate China's EVs' price advantage completely. Furthermore, companies like BYD could set up factories in friendly EU member states to bypass the tariffs. However, the issue poses a larger threat to China's $18tn economy, as EVs are a fast-growing source of exports. In 2023, China's exports to the EU accounted for 15% of the country's total exports, making the EU its second-largest export market. To protect itself, China has proposed lowering import tariffs on large-engine vehicles from Europe if the EU drops its extra duties on Chinese EVs.
https://www.breakingviews.com/considered-view/china-has-an-incentive-to-keep-road-to-europe-open/
For American Brands Worried About China, Is India the Future?
NY Times
The American toy brand Melissa & Doug is shifting some of its production from China to India due to the risks associated with relying solely on Chinese factories. The COVID-19 pandemic and trade tensions between the US and China have disrupted supply chains and increased costs. Melissa & Doug's chief supply chain officer visited a factory in Greater Noida, India, and was impressed with its ability to produce high-quality wooden toys at comparable prices to China. The company aims to have 20-30% of its production done in India. This shift reflects a broader trend of multinational brands diversifying their manufacturing locations to mitigate risk.
https://www.nytimes.com/2024/06/26/business/india-us-manufacturing.html
America’s Asian Partners Are Not Worried Enough About Trump
Foreign Affairs
A second Trump administration is likely to be far more disruptive for Asia than the first one was. Trump is likely to view allies as trade adversaries, reduce the US military footprint worldwide, befriend autocratic leaders, and challenge the norms that have thus far secured nuclear nonproliferation in Asia. Washington’s Asian security partners will need to become far more self-reliant for their defence as America becomes simply another transactional, self-interested player instead of the benevolent patron that has long supported the liberal order in the region. All US allies in the Indo-Pacific, including Japan, South Korea and Australia, need to wake up to the reality that a second Trump term will bring new and challenging surprises.
If Trump gets a second chance at the presidency, he is even more likely than before to see allies as trade adversaries, reduce the US military footprint worldwide, befriend autocratic leaders, and challenge the norms that have thus far secured nuclear nonproliferation in Asia. Washington’s Asian security partners will need to become far more self-reliant for their defence as America becomes simply another transactional, self-interested player instead of the benevolent patron that has long supported the liberal order in the region. All US allies in the Indo-Pacific, including Japan, South Korea, and Australia, need to wake up to the reality that a second Trump term will bring new and challenging surprises.
https://www.foreignaffairs.com/united-states/americas-asian-partners-are-not-worried-enough-about-trump
China's 'too small' property rescue leaves market wanting more
Nikkei Asia
Shimao Group Holdings, a Chinese developer, has had its liquidation hearing adjourned by the Hong Kong High Court until July 31st. The court case was brought by China Construction Bank (Asia) over a financial obligation of HKD 1.57bn ($203m). Shimao is suffering from depressed sales and is struggling to service its debt, while negotiations over offshore debt restructuring are ongoing.
https://asia.nikkei.com/Business/Markets/China-debt-crunch/China-s-too-small-property-rescue-leaves-market-wanting-more
Foreign vlogger in China goes viral with ‘city or not city’ meme, imitated by celebrities
South China Morning Post
American vlogger Paul Mike Ashton, also known as "Hug Hug Bear" or Bao Bao Xiong in Chinese, has gained fame in China for his creation of the "city or not city" meme. Ashton's videos, which feature him asking his family members whether various activities or places are "city or not city," have gone viral on Chinese social media platform Douyin. The phrase has become popular in various fields such as travel and fashion styling, and even celebrities like Richie Jen Hsien-chi and Ada Choi Siu-fan have joined in on the trend. Ashton now has 540,000 followers on Douyin.
https://www.scmp.com/news/people-culture/china-personalities/article/3267946/foreign-vlogger-china-goes-viral-city-or-not-city-meme-imitated-celebrities?utm_source=rss_feed
Hong Kong stocks edge up after China hastens online games approvals, US tech sector rise
South China Morning Post
Hong Kong stocks rose for a second consecutive day, driven by gains in the technology sector after China approved 104 new video games from mainland developers this month. The Hang Seng Index gained 0.2% and the Hang Seng Tech Index advanced 0.8%. NetEase rallied 3.5% and Semiconductor Manufacturing International Corp added 2.1%, while BYD lost 0.3% as Chinese and EU officials held talks on EV tariffs.
https://www.scmp.com/business/china-business/article/3268058/hong-kong-stocks-edge-after-china-hastens-online-games-approvals-us-tech-sector-rise?utm_source=rss_feed
Ignore the ‘AI revolution’ at your own peril, investors warn
Japan Times
Investors and asset managers remain positive about the potential of artificial intelligence (AI), despite concerns about a bubble in the sector and geopolitical risks. Philippe Laffont, founder of Coatue Management, said he is bullish on AI despite the hype, and that increased chatter about an investment can actually be a good sign. However, he expressed concern about geopolitical instability in China potentially affecting production of the chips that power AI computing, which could have a negative impact on Nvidia shares and global stock markets.
https://www.japantimes.co.jp/business/2024/06/26/markets/artificial-intelligence-selloff-investors/
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