China’s top financial industry officials say Beijing will press on with reforms
Chinese President Xi visits Tibetans and temple in western China, calls for ethnic unity; JPMorgan’s China bear turns bullish, finds ‘20 to 25 pc upside’ in nation’s tech stocks
Welcome to this issue of The China Brief. Today is June 20, 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 top financial industry officials say Beijing will press on with reforms
South China Morning Post
China's finance sector is set to open up further to the rest of the world in order to attract foreign investment and become a financial powerhouse, according to industry officials at the Lujiazui financial forum in Shanghai. The Bank of China executive said foreign investments were likely to become more popular as Beijing equalised playing fields between domestic and overseas players, while the Shanghai Futures Exchange said it would launch new low-carbon products to increase trading. Foreign investors are showing an increasing interest in Chinese assets following new measures introduced by Beijing.
https://www.scmp.com/business/china-business/article/3267339/chinas-top-financial-industry-officials-say-beijing-will-press-reforms?utm_source=rss_feed
Chinese President Xi visits Tibetans and temple in western China, calls for ethnic unity
South China Morning Post
Chinese President Xi Jinping has visited a Tibetan Buddhist temple in the northwestern province of Qinghai. The temple has been a key site in Beijing's communication with Tibetan Buddhist leaders since 1951. Xi's visit comes as tensions between China and the US over Tibet simmer. The US Congress passed a new Tibet policy bill last week, which would channel funds to boost Washington's support for Tibet and counter what it calls "disinformation" from China about the region's history. A seven-member US congressional delegation met the Dalai Lama, the exiled Tibetan spiritual leader, in India on Wednesday.
https://www.scmp.com/news/china/politics/article/3267341/chinese-president-xi-visits-tibetans-and-temple-western-china-calls-ethnic-unity?utm_source=rss_feed
JPMorgan’s China bear turns bullish, finds ‘20 to 25 pc upside’ in nation’s tech stocks
South China Morning Post
Chinese tech shares are expected to rise by up to 25% due to companies delivering results in a recovering economy. The Chinese tech sector has been underperforming for years, but sceptics are now returning to the market as Beijing focuses on boosting the economy. The recent rebound in the sector has been driven by indicators of macroeconomic stabilisation, according to Alex Yao, co-head of Asia TMT Research at JPMorgan Chase. However, any rally in the sector could be volatile due to weak sentiment in Chinese stocks.
https://www.scmp.com/tech/big-tech/article/3267304/china-tech-stocks-are-back-favour-sceptic-who-had-questioned-their-investibility?utm_source=rss_feed
Putin arrives in Vietnam for state visit closely watched by the US
Australian Broadcasting Corporation
Russian President Vladimir Putin has arrived in Vietnam for a state visit, following his signing of a mutual defense pact with North Korean leader Kim Jong Un. The pact includes a pledge to come to each other's aid if attacked. The US and its allies have expressed concerns over the deepening ties between Russia and North Korea, particularly in relation to alleged ammunition and missile supplies from North Korea to Russia for the war in Ukraine. The US State Department has stated that the growing Russia-North Korea relationship is of great concern, while a Ukrainian official accused Pyongyang of aiding Moscow's "mass murder of Ukrainians." Putin did not rule out "military-technical cooperation" with North Korea during his visit, and stated that the two countries are fighting together against US "hegemonism and neo-colonial practices." Putin's visit to North Korea was met with a warm reception, but his reception in Vietnam is expected to be more reserved. Vietnam has sought to avoid picking sides in the growing US-China rivalry and has carefully hedged its foreign policy position. Putin's visit to Vietnam will focus on economic, education, and energy issues, but Ukraine and defense cooperation are likely to be discussed in private.
https://www.abc.net.au/news/2024-06-20/putin-visits-vietnam-after-signing-north-korea-pact/104002650
China must avoid another big-bang yuan devaluation
South China Morning Post
Speculation about a sharp devaluation of the yuan has intensified due to China's economic challenges and the wide gap between US and Chinese borrowing costs. China is on course for the longest period of deflation since the late 1990s, putting pressure on the People's Bank of China (PBOC) to keep loosening monetary policy. There is also the prospect of more tariffs on Chinese goods, and the yuan is a key gauge of risks surrounding tariffs and exchange rates. A big-bang devaluation is on the cards, possibly ahead of the US election, which would allow the yuan to trade more in line with fundamentals. However, a 2015-style devaluation would be detrimental to China's economy, so a gradual depreciation is more likely.
https://www.scmp.com/opinion/asia-opinion/article/3267327/china-must-avoid-another-big-bang-yuan-devaluation?utm_source=rss_feed
Steady C919 flights show China's potential to reshape jet market
Nikkei Asia
Chinese aerospace manufacturer COMAC's C919 aircraft, designed to compete with Boeing and Airbus, is unlikely to be globally embraced due to geopolitical tensions and concerns over the safety and certification of the aircraft. While COMAC has received over 1,200 orders for the C919, primarily from Chinese airlines and leasing companies, the aircraft cannot fly in Europe or the US as it has not been certified by regulators in either region. Furthermore, the US has blacklisted COMAC as a "Communist Chinese military company" posing a threat to national security.
https://asia.nikkei.com/Opinion/Steady-C919-flights-show-China-s-potential-to-reshape-jet-market
Europe’s EV battery hope fades as China pulls ahead while US subsidies undermine resources
South China Morning Post
Europe's plans to establish its own electric vehicle (EV) battery value chain are under threat as Chinese manufacturers slash costs, the US draws away investment with lucrative subsidies, and EV sales slow. European suppliers have a role to play, but the region now risks falling further behind in the race to build and power the EVs of the future, according to this article.
https://www.scmp.com/business/china-business/article/3267342/europes-ev-battery-hope-fades-china-pulls-ahead-while-us-subsidies-undermine-resources?utm_source=rss_feed
China changes hundreds of village names 'to erase Uyghur culture', HRW report says
Australian Broadcasting Corporation
Chinese authorities in Xinjiang have systematically changed the names of hundreds of villages in an effort to erase Uyghur culture, according to a report by Human Rights Watch. The report found that about 630 villages in Xinjiang had their names changed to remove references to Islam or Uyghur culture and history. Words like "dutar" and "mazar" were removed from village names and replaced with generic terms often found in Communist Party policy documents. Most of the name changes occurred between 2017 and 2019 during the government crackdown in Xinjiang.
https://www.abc.net.au/news/2024-06-20/chinese-authorities-change-uyghurs-village-names-/104001048
North Korea says Kim and Putin’s defense pact permits all available means to assist each other if either nation attacked
CNN
North Korea and Russia have signed a landmark defence pact pledging to provide immediate military assistance in the event of an attack on the other. The pact, labelled a "new level" in bilateral relations by Russian President Vladimir Putin, also includes political, trade, investment, and security cooperation. The agreement is the most significant signed by the two countries in decades, and strengthens North Korea's ties with a world power that has a veto on the UN Security Council. The pact's newly published text raises questions about whether the two countries will hold joint military drills.
https://edition.cnn.com/2024/06/20/asia/russia-putin-kim-deal-military-assistance-intl-hnk/index.html
Spicy Noodles and Pickled Fish: Chinese Eateries Move Into Hong Kong
NY Times
Several famous Chinese restaurants have recently opened in Hong Kong, as owners from mainland China see an opportunity in the city's struggling food scene. Hong Kong has seen a decline in the number of people dining out, and more restaurants have closed than opened this year. However, the owners of these Chinese eateries have been encouraged by a steady flow of new customers from Hong Kong, who have been travelling to the mainland city of Shenzhen in search of more dining choices. Some people in Hong Kong view the migration of these restaurants as a sign that the city's culture is being taken over by mainland China.
https://www.nytimes.com/2024/06/20/business/hong-kong-china-restaurants.html
Collisions make visible China's 'salami-slicing strategy' in South China Sea
Japan Times
China is escalating confrontations with the Philippines in an attempt to push it out of the South China Sea. One of the main flashpoints is the Second Thomas Shoal, where the Philippine navy intentionally marooned a World War II ship to assert territorial claims. The ship is still home to a small garrison of Filipino marines.
https://www.japantimes.co.jp/news/2024/06/20/asia-pacific/politics/china-salami-slicing-strategy-philippines/
Hong Kong stocks flat, investor sentiment supported by policy expectations
South China Morning Post
Hong Kong stocks were flat on Thursday as China kept its lending rate unchanged, with investors awaiting more policy support from Beijing ahead of the city’s handover anniversary next month. The Hang Seng Index was virtually flat at 18,434.25 as of 10:30am local time. The Tech Index dropped 0.7% while the Shanghai Composite Index was steady. China left the benchmark lending rates unchanged on Thursday as the market expected after the country’s central bank held its one-year medium-term lending facility earlier in the week.
https://www.scmp.com/business/markets/article/3267312/hong-kong-stocks-flat-investor-sentiment-supported-policy-expectations?utm_source=rss_feed
China eyes trade war targets across Europe for counterstrikes
Japan Times
China is preparing to take action against the European Union in response to the proposed tariffs on Chinese-made electric cars. This comes as China has previously used a targeted approach against Australia. Some of the likely targets for Chinese retaliation include German vehicles, French wine, and Italian luxury goods. The blow will likely land hardest in Germany, France, and Italy.
https://www.japantimes.co.jp/news/2024/06/20/world/politics/china-trade-war-targets-europe/
PBOC’s new tools may spur big shift in how it manages money
Japan Times
The governor of the People's Bank of China (PBOC), Pan Gongsheng, has hinted at a blueprint for a new toolkit that could lead to the biggest policy overhaul in years. Pan suggested that the PBOC may start trading government bonds in the secondary market, which could change how the central bank injects money into the economy and regulate liquidity. He also hinted at interest-rate reform, suggesting that the PBOC may consider using a single short-term rate to guide markets, which would reduce the importance of the current one-year policy rate known as the medium-term lending facility.
https://www.japantimes.co.jp/business/2024/06/20/economy/pboc-new-tools-shift-money/
China’s risky answer to wall of debt is more debt
Reuters BreakingViews
The Chinese central government is issuing special ultra-long bonds to help the economy towards ‘high quality growth’. The latest plan is to sell special sovereign bonds with maturities of up to 50 years, with 1 trillion yuan ($138 billion) to be sold each year over several years. The government will use the proceeds to support “major national strategies” and help finance the construction of schools and hospitals in grain-producing counties as well as new industries. The move consolidates President Xi Jinping’s grip on economic planning, potentially helping to reduce wasteful investments.
https://www.breakingviews.com/features/chinas-risky-answer-to-wall-of-debt-is-more-debt/
Most Japanese firms see no need to follow U.S. with tariffs on China
Japan Times
A recent survey conducted by Reuters has revealed that most Japanese companies do not believe that their government should follow the US in raising tariffs on Chinese imports. These companies argue that China's excessive production capacity in its industrial sector does not directly affect them. This comes after US President Joe Biden announced steep tariff increases on a range of Chinese goods, including electric vehicles, batteries, and semiconductors, citing Beijing's subsidies and policies that flood global markets with cheap goods. The European Union has also imposed significant duties on EV imports, and the G7, which includes Japan, has expressed concerns about China's nonmarket practices.
https://www.japantimes.co.jp/business/2024/06/20/japan-firms-survey-china-tariffs/
Germany to push for Chinese contributions to climate finance
Nikkei Asia
Germany plans to urge China to contribute to global climate finance to help poorer countries with their mitigation and adaptation measures, according to State Secretary Jennifer Morgan. Germany is negotiating with China and others that have the capacity to contribute to multilateral funds such as the Green Climate Fund. Morgan also suggested that China can do more to increase the use of renewable energy and shift away from building new coal-fired power plants. Germany is working with China on a stable grid and energy efficiency.
https://asia.nikkei.com/Editor-s-Picks/Interview/Germany-to-push-for-Chinese-contributions-to-climate-finance
China, Europe in EV tariff stare-down as Beijing drops retaliation hints
Nikkei Asia
China's response to the European Union's (EU) proposed tariffs on Chinese electric vehicles (EVs) is still uncertain, with some expecting a compromise and others fearing a more significant retaliation. The EU increased the total tariff rate on Chinese EVs to up to 48% earlier this month due to what it called "unfair" use of state support. China has vowed to "resolutely" retaliate, but some observers believe it may be looking to avoid damaging relationships with European partners amid rising tensions with the US. Other experts argue that China's options for retaliation are limited, as it continues to attract EU investment and does not see the bloc as its main rival. However, China has hinted at potential retaliatory measures, including the acceleration of procedures to increase tariffs on high-emission petrol vehicles and the announcement of the results of an anti-dumping investigation into EU brandy. The EU and China have previously engaged in retaliatory measures, such as when the EU imposed preliminary import tariffs on Chinese solar panels in 2013 and China launched an investigation into European wine.
https://asia.nikkei.com/Economy/Trade/China-Europe-in-EV-tariff-stare-down-as-Beijing-drops-retaliation-hints
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