China’s stocks hover around 5-year low as trading resumes after holiday;Taiwan
Company Tries to Distance Itself From Pagers Used in Lebanon Attack
Welcome to this issue of The China Brief. Today is September 18, 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 stocks hover around 5-year low as trading resumes after holiday
South China Morning Post
Chinese stocks are trading at their lowest levels in over five years as investors await a rate decision from the US Federal Reserve. The CSI 300 Index saw a slight increase of 0.2% to 3,164.82, but closed at its lowest since January 2019. The Shanghai Composite Index fell 0.1%, and the Shenzhen Composite Index dropped 1%. Key economic data from China for August showed industrial output and retail sales falling short of expectations, leading to cautious trading. A potential Fed rate cut could positively impact Chinese stocks by narrowing the interest-rate gap, but long-term improvements depend on the fundamentals of the Chinese economy. Among various sectors, energy producers gained while consumer staples declined due to weak spending. The upcoming US presidential election also poses challenges for Chinese stocks, with both candidates adopting tough economic policies towards China. Other Asian markets showed mixed results, with Japan's Nikkei 225 and South Korea's Kospi rising slightly, while Australia's S&P/ASX 200 fell.
https://www.scmp.com/business/china-business/article/3278947/chinas-stocks-hover-around-5-year-low-trading-resumes-after-holiday?utm_source=rss_feed
Taiwan Company Tries to Distance Itself From Pagers Used in Lebanon Attack
NY Times
Gold Apollo, a Taiwanese company, has distanced itself from the pagers linked to attacks in Lebanon that resulted in at least 11 deaths. U.S. and other officials suggested that Israel had embedded explosives in a shipment of pagers from Gold Apollo targeting Hezbollah. However, Gold Apollo's founder, Hsu Ching-Kuang, stated that the pagers in question were manufactured by another company, B.A.C., under a licensing agreement that allowed them to use Gold Apollo's brand. Hsu emphasized that Gold Apollo was not involved in the design or manufacturing of the pagers, only providing trademark authorization. Despite this, a picture of the pager model remained on Gold Apollo's website until it was taken down. Taiwan's Ministry of Economic Affairs noted no direct exports of such pagers to Lebanon from Gold Apollo, indicating that any modifications likely occurred after export. Hsu mentioned a previous "odd" incident with B.A.C. involving a delayed bank transfer, hinting at a connection to the Middle East but did not specify further.
https://www.nytimes.com/2024/09/18/world/asia/taiwan-pagers-lebanon.html
Bridgewater’s Ray Dalio, Singapore’s GIC chief firm on China despite global growth worries
South China Morning Post
Ray Dalio, founder of Bridgewater Associates, and Lim Chow Kiat, CEO of Singapore's GIC, express caution regarding the upcoming year due to political risks and uncertain global growth. Despite challenges such as rising debt and geopolitical tensions, both remain committed to investing in China. Dalio highlighted potential negative risks for global investors, including geopolitical issues and climate change costs, suggesting that surprises are likely to be negative. Lim noted the need for GIC to be more selective in investment opportunities, particularly in the US, which constitutes a significant portion of its portfolio. While GIC continues to invest in China, he mentioned that deal flows are slow and market expectations for growth are low, emphasizing the importance of not overlooking China's potential as a major economy.
https://www.scmp.com/business/markets/article/3278981/bridgewaters-ray-dalio-singapores-gic-chief-firm-china-despite-global-growth-worries?utm_source=rss_feed
Who helped Alice Guo escape? Unnamed Philippine police chief blamed
South China Morning Post
A former Philippine police chief is under investigation for allegedly accepting bribes to assist dismissed mayor Alice Guo in her escape from the country. This development came as the Senate, led by lawmaker Risa Hontiveros, probes Guo's suspected ties to Chinese crime rings. Raul Villanueva, a senior official at the gaming watchdog Pagcor, indicated that immigration and police officials may have facilitated Guo and her family's flight in July. Guo, along with her siblings, fled after a raid on a Philippine Offshore Gaming Operator revealed trafficking operations linked to her. Guo was recently arrested in Indonesia and returned to Manila, claiming Filipino citizenship, despite evidence suggesting she may be a Chinese national. Senator Ronald dela Rosa, a former police chief, distanced himself from the allegations, while Villanueva confirmed he was not implicated. Additionally, it was revealed that a senior immigration official allegedly received 200 million pesos in bribes from Guo, prompting ongoing investigations into potential collusion.
https://www.scmp.com/week-asia/people/article/3278977/who-helped-alice-guo-escape-unnamed-philippine-police-chief-blamed?utm_source=rss_feed
Chinese diet shift to more meat and fewer grains to cost US$14 billion in health spending
South China Morning Post
By 2030, China's medical spending is expected to rise by nearly 100 billion yuan (US$14 billion) due to dietary shifts towards more animal products. A study revealed that the transition from a grain-based diet to one with increased meat consumption is linked to higher food-borne health costs. Although per capita healthcare spending may decline, overall state healthcare expenditure will increase significantly. The researchers emphasized that a plant-based diet could mitigate these rising costs and associated health issues, highlighting the need for dietary reform to improve public health and economic progress in China.
https://www.scmp.com/news/china/science/article/3278963/chinese-diet-shift-more-meat-and-fewer-grains-cost-us14-billion-health-spending?utm_source=rss_feed
US officials head to China for talks amid overcapacity concerns
South China Morning Post
Senior US and Chinese economic officials will convene in Beijing on September 19-20 to discuss concerns regarding China's industrial policy, which the Biden administration believes is causing global economic disruption. The US Treasury plans to address issues related to China's macroeconomic imbalances and industrial overcapacity, which threaten to flood global markets with low-cost goods, negatively impacting American industries. Treasury Secretary Janet Yellen has emphasized the need for action against these practices and has urged US allies to respond similarly. The US delegation, led by Treasury Undersecretary Jay Shambaugh, aims to maintain communication with China despite disagreements, focusing on shared challenges and national security. This meeting follows previous discussions between Yellen and Chinese Vice-Premier He Lifeng, which have aimed to establish cooperative channels on economic matters.
https://www.scmp.com/news/world/united-states-canada/article/3278931/us-officials-head-china-talks-amid-overcapacity-concerns?utm_source=rss_feed
Chinese surveillance fears spur South Korea to remove 1,300 cameras from military bases
South China Morning Post
South Korea's military has removed over 1,300 surveillance cameras from its bases after discovering they could transmit data to a Chinese server. The cameras, supplied by a South Korean company, were found to have potential Chinese origins during a military equipment review in July. Although some cameras were located near the North Korean border, they were not used for monitoring it. There have been no reports of data leaks. The military has replaced approximately 100 of the cameras with domestic alternatives and is considering legal action against the supplier for allegedly misrepresenting the cameras' origins. This incident occurs amidst growing concerns in the West regarding Chinese surveillance technology, with several countries, including the U.S. and the U.K., taking steps to ban or remove such equipment from sensitive sites.
https://www.scmp.com/news/asia/east-asia/article/3278970/chinese-surveillance-fears-spur-south-korea-remove-1300-cameras-military-bases?utm_source=rss_feed
A student attending a Japanese school in China is attacked and a suspect is in custody
Associated Press
A 10-year-old student at a Japanese school in Shenzhen, southern China, was stabbed by a man near the school on Wednesday. The student was quickly taken to the hospital and is receiving medical attention, while the attacker was arrested at the scene. The motive for the attack is currently unknown. In response to the incident, the Japanese Embassy in China advised its citizens to remain vigilant due to a rise in knife attacks in recent months. This follows a similar attack in Suzhou in June, where a Chinese national was killed while trying to intervene in a knife attack at a school bus stop, and another incident in Jilin involving U.S. university instructors.
https://apnews.com/article/china-japanese-school-student-attack-c6b2362548ebf7d35a8648ebce213bbb
China’s economic strategy is change by a thousand adjustments
South China Morning Post
Following China's shift from its zero-Covid strategy, the government is now addressing economic risks stemming from both supply shocks and declining demand. This requires a change in macroeconomic policy towards supporting more productive sectors like emerging technologies while cautiously stimulating domestic demand. Chinese policymakers aim to stabilize the real estate market without inflating bubbles, underscoring the need for a robust long-term housing strategy. Despite short-term costs, China has avoided severe economic shocks by emphasizing structural reforms and adapting to challenges, ensuring its leadership remains vigilant against systemic risks while promoting balanced growth.
https://www.scmp.com/opinion/china-opinion/article/3278951/chinas-economic-strategy-change-thousand-adjustments?utm_source=rss_feed
‘Keen to move forward’: India, China signal thaw in ties with diplomatic, border efforts
South China Morning Post
India and China are showing signs of de-escalation in their long-standing border tensions, with recent diplomatic talks indicating a potential improvement in economic ties and cooperation. Following discussions between Indian National Security Adviser Ajit Doval and Chinese Foreign Minister Wang Yi, both nations reported positive progress in resolving issues along their disputed border, the Line of Actual Control. Indian External Affairs Minister S. Jaishankar noted that approximately 75% of disengagement issues with China had been addressed. The Chinese Foreign Ministry confirmed military disengagement in four areas along the border. As both nations aim to stabilize relations, they are exploring economic engagement, with India considering easing restrictions on Chinese investments in non-sensitive sectors to boost domestic production. Experts emphasize the importance of structural reforms in India to attract Chinese foreign direct investment (FDI) effectively. The anticipated meeting between Indian Prime Minister Narendra Modi and Chinese President Xi Jinping at the upcoming Brics summit may further signal a recalibration of their relationship, reflecting a mutual desire for cooperation despite past tensions.
https://www.scmp.com/week-asia/politics/article/3278940/keen-move-forward-india-china-signal-thaw-ties-diplomatic-border-efforts?utm_source=rss_feed
U.S. probes uranium imports from China amid concerns over Russian ban
Japan Times
The U.S. government is investigating potential support from China to Russia's nuclear industry, particularly regarding the import of enriched uranium from Russia and the export of Chinese-produced uranium to the U.S. Following a ban on Russian uranium imports by U.S. lawmakers in December 2023, which aimed to limit funding for Russia's war in Ukraine, there was a notable increase in uranium shipments from China to the U.S., totaling nearly 243,000 kilograms. This surge is significant, as there were no enriched uranium exports from China to the U.S. between 2020 and 2022.
https://www.japantimes.co.jp/news/2024/09/18/asia-pacific/politics/us-uranium-china-russian-ban/
China and Russia are ramping up joint military drills. What’s their end goal?
CNN
Last week, Russia conducted extensive military drills, termed "Ocean-2024," which showcased its military might and underscored its growing partnership with China. During the opening address, President Vladimir Putin emphasized that 15 nations were observing the drills, but only China actively participated alongside Russia, mobilizing several warships and aircraft. The exercises reflect a strategic shift towards closer military cooperation between the two countries amidst rising geopolitical tensions, particularly concerning the war in Ukraine and heightened U.S. military presence in the region.
The relationship between Russia and China has evolved dramatically over recent decades, transitioning from adversarial to cooperative, especially in military matters. Since 2014, the two nations have significantly increased joint military activities, conducting numerous drills and patrols that demonstrate growing interoperability. Experts note that while they are not as tightly coordinated as NATO allies, their military collaboration has become increasingly sophisticated, involving complex maneuvers and advanced technology. This enhanced partnership serves as a counter to perceived threats from the U.S. and its allies, with both nations viewing their cooperation as a means to project strength against Western influence.
Despite their burgeoning military ties, analysts caution against overstating the depth of their alliance. While both countries share overlapping interests in countering U.S. influence, they maintain distinct geopolitical goals that could hinder a fully unified response in a conflict scenario. Historical mistrust and differing aspirations in Asia, particularly regarding relationships with other regional powers, indicate that their partnership is more about strategic alignment than a formal alliance. Nevertheless, should a conflict arise involving China, Russia may provide diplomatic and limited military support, but the likelihood of a robust, coordinated military response remains uncertain, as both nations prioritize their individual interests.
https://edition.cnn.com/2024/09/17/china/china-russia-military-drills-analysis-intl-hnk/index.html
Trump pledges tariffs and repeats false claim of Chinese automakers building big Mexican factories
Associated Press
Former President Donald Trump made false claims during a visit to Michigan, stating that Chinese automakers are building large factories in Mexico and vowed to impose 200% tariffs on any vehicles produced there and imported to the U.S. He suggested that if Democratic Vice President Kamala Harris is elected, the U.S. auto industry will disappear, despite evidence showing that auto jobs have increased since President Joe Biden took office. Trump argued that foreign automakers would be compelled to construct U.S. factories due to his proposed tariffs, which he claimed would make Chinese vehicles built in Mexico unsellable. However, industry analysts noted there are currently no significant Chinese-owned auto factories being built in Mexico, only a small assembly operation. Additionally, Trump indicated he would implement tariffs on vehicles from countries that tax U.S. exports, although such tariffs typically raise costs for consumers.
https://apnews.com/article/trump-auto-industry-tariffs-false-chinese-factories-0f024d98e25a361db35761b2fb740e3b
China Half-Heartedly Raises Retirement Age
Foreign Policy
China has announced plans to gradually raise its retirement age for the first time since the 1950s, a move aimed at addressing the challenges posed by its rapidly aging population. Currently, men can retire at 60, while women in white-collar jobs retire at 55 and blue-collar women at 50. The proposed changes will see these ages increased to 63, 58, and 55, respectively, over a 15-year period. However, experts argue that these modest adjustments are insufficient to tackle the looming demographic crisis, with projections indicating that 28% of the population will be over 60 by 2040. The inadequacy of the reforms has raised concerns about potential public discontent, especially given the country's history of low retirement ages and elder poverty.
In addition to retirement reforms, China has abruptly ended international adoptions, likely influenced by ethnonationalist sentiments and concerns about the welfare of Chinese children. This decision has left many families in limbo and has halted a significant trend that started in 1992. While the child protection system in China has improved since the 1990s, challenges remain, particularly regarding the high number of disabled children who struggle to find homes. The cessation of international adoptions comes at a time when the country is facing criticism over its treatment of orphans and children in institutional care.
Amid these social challenges, China's economic outlook appears bleak, with Goldman Sachs and Citigroup recently lowering their growth estimates for the year to 4.7%. Weak economic data and declining property sales have raised concerns that China may not meet its 5% growth target. The situation has prompted discussions about potential government responses, including possible scapegoating and purges. Compounding these issues is a wealth management firm linked to the bankrupt property giant China Evergrande Group that is now under investigation for fraud, highlighting the broader financial instability stemming from China’s past economic boom and current struggles.
https://foreignpolicy.com/2024/09/17/china-raises-retirement-age-pension-economy/
What lies on the moon’s mysterious far side? China’s Chang’e-6 samples give first signs
South China Morning Post
Chinese scientists have revealed the composition of lunar samples from the far side of the moon, collected during the Chang’e-6 mission. The samples, which include a mix of basalts and foreign ejecta, differ significantly from previous near side samples, containing more light-colored particles like glass and feldspar. The far side material is looser and more porous, indicating a different geological history. This discovery is crucial for understanding the moon's origin, evolution, and volcanic activity, marking a significant step in lunar research as it enhances knowledge of the moon's geological diversity.
https://www.scmp.com/news/china/science/article/3278905/what-lies-moons-mysterious-far-side-chinas-change-6-samples-give-first-signs?utm_source=rss_feed
Hong Kong’s Dr Fauci Yuen Kwok-yung on growing up poor and weathering Sars and Covid-19
South China Morning Post
The article recounts the life journey of Yuen Kwok-yung, whose mother fled famine in mainland China and arrived in Hong Kong as a teenager. Yuen recounts his family's humble beginnings, living in cramped and unsanitary conditions while his father worked long hours as a dentist's apprentice. Despite the challenges, Yuen demonstrated early academic promise, surprising his mother by writing the name of a restaurant at a young age. His mother's high expectations for him were fueled by this moment, leading to a rigorous educational pursuit.
As Yuen progressed through school, he faced numerous challenges, including a serious accident that kept him from attending classes. However, he maintained a strong academic record, ultimately earning a scholarship to Queen's College and later to the University of Hong Kong for medical school. His medical education was a transformative experience, and he became deeply involved in the field of infectious diseases, particularly during significant health crises such as the emergence of SARS and H5N1 avian influenza.
Yuen's career evolved to focus on emerging infectious diseases, where he played a crucial role in identifying and responding to potential pandemics. His pivotal research during the early days of the COVID-19 outbreak led to groundbreaking findings on person-to-person transmission, significantly impacting global health policies. Yuen emphasizes the importance of preparedness for future pandemics, establishing a Pandemic Research Alliance to facilitate collaboration and information exchange. His life story highlights resilience and the ongoing fight against infectious diseases, culminating in his book, "My Life in Medicine: A Hong Kong Journey."
https://www.scmp.com/magazines/post-magazine/long-reads/article/3278860/hong-kongs-dr-fauci-yuen-kwok-yung-growing-poor-and-weathering-sars-and-covid-19?utm_source=rss_feed
Taiwan getting US$228 million in F-16V fighter jet parts and equipment: State Department
South China Morning Post
The US State Department has approved a $228 million package for spare parts and equipment for Taiwan's F-16V fighter aircraft, enhancing Taiwan's military capabilities amid rising regional tensions. The deal, which includes engineering and logistics support, aims to strengthen Taiwan's defense and maintain stability in the region. While bipartisan support in Congress is expected, experts note the smaller scale of recent arms deals compared to previous years, reflecting caution in response to potential backlash from China. The Biden administration favors an asymmetric defense approach for Taiwan, diverging from traditional conventional strategies.
https://www.scmp.com/news/china/article/3278936/taiwan-getting-us228-million-f-16v-fighter-jet-parts-and-equipment-state-department?utm_source=rss_feed
China’s EV makers feel crunch as high R&D costs collide with price-war margin pressure
South China Morning Post
Chinese electric vehicle (EV) manufacturers are rapidly launching new models to compete in a changing market, with over 50 new pure electric and hybrid models expected in 2024. However, high development costs and aggressive pricing strategies hinder profitability for most companies. While some models like Xiaomi's SU7 and Xpeng's Mona M03 have seen initial sales success, overall consumer confidence favors established brands like BYD. With only a few players achieving profit, the industry faces significant challenges, including a potential negative profitability outlook if prices continue to drop.
https://www.scmp.com/business/china-evs/article/3278898/chinas-ev-makers-feel-crunch-high-rd-costs-collide-price-war-margin-pressure?utm_source=rss_feed
Senior US official defends blend of diplomacy and competition with China in Indo-Pacific
South China Morning Post
Daniel Kritenbrink, a senior US diplomat, emphasized the need for a blend of "intense diplomacy" and "intense competition" with China to maintain communication and reduce conflict risks. He noted that the most dangerous phase in US-China relations has passed, highlighting the importance of ongoing high-level engagements. While cooperation has resumed in certain areas, tensions remain over issues like the South China Sea and trade. Kritenbrink reiterated the US strategy focuses on domestic investment, alignment with allies, and competition in advanced technologies. Former Australian PM Kevin Rudd stressed the strategy must also encompass economic aspects.
https://www.scmp.com/news/china/diplomacy/article/3278934/senior-us-official-defends-blend-diplomacy-and-competition-china-indo-pacific?utm_source=rss_feed
China's technology drive leaves young people jobless
Deutsche Welle
China's youth unemployment rate has reached alarming levels, peaking at 21.3% last year, prompting the government to manipulate data to mask the issue. Despite a projected 5% economic growth this year, millions of graduates and school leavers struggle to find jobs due to structural issues, including the impact of COVID-19, a sluggish recovery, and Xi Jinping's crackdown on key sectors like technology and private education. This has led to significant job losses, particularly among young workers.
Many young people are unwilling to pursue blue-collar jobs, despite high demand for vocational skills, further complicating employment prospects. The focus on non-labor-intensive sectors like AI and green energy limits job creation. Moreover, an oversaturated gig economy has left many disillusioned, leading some to adopt a "lie flat" lifestyle, rejecting societal pressures.
The government’s stringent regulations have stifled entrepreneurship, with startup numbers plummeting by 97% in six years. High youth unemployment threatens China's economic competitiveness and could destabilize societal structures, ultimately undermining future growth.
https://www.dw.com/en/chinas-technology-drive-leaves-young-people-jobless/a-70187883
How Chinese expertise helped to build US aerospace programmes
South China Morning Post
The United States has a rich history in aerospace achievements, including landing the first humans on the moon, but many of its successes can be attributed to contributions from China-born scientists, engineers, and astronauts. A recent report by the US National Academies of Science, Engineering and Medicine emphasizes the critical role that international talent plays in American STEM fields, stating that the US cannot fully support its research and innovation system without the involvement of foreign experts. Despite this, the report points out challenges faced by these individuals, including difficulties in creating inclusive research environments, particularly during the US Department of Justice's China Initiative.
Prominent figures among these China-born experts include Qian Xuesen, who co-founded NASA's Jet Propulsion Laboratory (JPL) and contributed to the development of the US space program, designing significant projects such as the X-20 Dyna-Soar. Although he was instrumental in several aerospace advancements, Qian faced discrimination and was ultimately forced to return to China after being accused of communist ties. Other notable contributors include Tien Chang-lin, who designed thermal protection for the Space Shuttle; Helen Ling, known for her work as a "human computer" during the early space race; and Taylor Wang, who became the first China-born person in space in 1985.
Additional contributions came from engineers like Ming Han Tang, who played a key role in NASA's hypersonic research, and Fuk Li, who managed the Mars Exploration program, leading successful missions to the red planet. Li Zhijin developed marine satellite data processing tools that enhanced climate studies and weather forecasting. These individuals exemplify how foreign talent has significantly impacted US aerospace advancements, despite facing obstacles along the way. Their legacies reflect the ongoing collaboration between the US and international experts in the quest for space exploration and technological innovation.
https://www.scmp.com/news/china/science/article/3278418/how-chinese-expertise-helped-build-us-aerospace-programmes?utm_source=rss_feed
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