Hong Kong stocks surge in best month since November 2022 as property stimulus fuels gains;China has cut rates, now it needs a fiscal policy package: former central bank advise
Chinese headed to Europe and far-flung hot spots for Golden Week
Welcome to this issue of The China Brief. Today is 09 30, 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.
Hong Kong stocks surge in best month since November 2022 as property stimulus fuels gains
South China Morning Post
Hong Kong stocks experienced a significant rally, with the Hang Seng Index rising 3.3% to 21,321.97, marking an 18% gain for September—the best month since November 2022. This surge was fueled by easing home purchase restrictions in major mainland Chinese cities and increased optimism following Beijing's stimulus plans. Notable gains were seen in the Tech Index, Alibaba, and Chinese developers. Analysts from UBS and Nomura raised year-end targets for major indices, anticipating continued positive momentum. The broader Asian markets showed mixed results, with Japan's Nikkei 225 falling 4.6%.
https://www.scmp.com/business/china-business/article/3280471/hong-kong-stocks-set-best-month-nearly-2-years-property-stimulus-fuels-gains?utm_source=rss_feed
Chinese headed to Europe and far-flung hot spots for Golden Week
Japan Times
During the Golden Week holiday in China, there has been a significant increase in travel, with many Chinese tourists heading to Europe and other distant destinations. Flight and hotel bookings for international travel have surged compared to last year, with international flight reservations doubling and Europe experiencing notable growth. Additionally, overseas car rental bookings have increased by over 150%, and cruise vacations have risen sevenfold. Popular destinations include Japan and Malaysia, but there is also a notable rise in bookings for long-haul locations like Belgium, Croatia, Nordic countries, and the United Arab Emirates.
https://www.japantimes.co.jp/business/2024/09/30/chinese-europe-golden-week/
China has cut rates, now it needs a fiscal policy package: former central bank adviser
South China Morning Post
Former central bank adviser Yu Yongding has urged China to implement a fiscal policy package to boost market confidence following recent stimulus measures. He emphasized the need for increased infrastructure investment to meet the government's 5% growth target for 2024, citing weak consumer confidence and disappointing economic data. Economists at the forum echoed his sentiment, advocating for more expansionary fiscal and monetary policies. While acknowledging concerns about government leverage, Yu called for a comprehensive policy package to signal intentions for growth and enhance market confidence, despite the challenging economic landscape.
https://www.scmp.com/economy/china-economy/article/3280436/china-has-cut-rates-now-it-needs-fiscal-policy-package-former-central-bank-adviser?utm_source=rss_feed
Are Chinese scientists inflating their influence through ‘biased’ citations?
South China Morning Post
Recent studies indicate that Chinese scholars heavily cite domestic papers, potentially inflating China’s scientific stature. A report by Japan's NISTEP showed that 62% of citations to China's top papers were from within the country, compared to 24% for the US. A study titled “Paper Tigers? Chinese Science and Home Bias in Citations” found China's internal citation rate 42% higher than expected based on publication output. The research suggests that a bias-free assessment could reposition China lower in global scientific impact, emphasizing the importance of quality over quantity in scientific research.
https://www.scmp.com/news/china/science/article/3280429/are-chinese-scientists-inflating-their-influence-through-biased-citations?utm_source=rss_feed
China's factory and service sectors skid as stimulus calls grow
Japan Times
In September, China's factory activity continued to decline for the fifth consecutive month, while the services sector experienced a significant slowdown. This trend indicates a need for additional stimulus to achieve Beijing's growth target for 2024, with only three months remaining in the year. The National Bureau of Statistics (NBS) reported that the purchasing managers' index (PMI) rose to 49.8 in September from 49.1 in August, remaining below the 50 threshold that indicates growth versus contraction, but surpassing the median forecast of 49.5 from a Reuters poll. This September reading is the highest recorded in five months.
https://www.japantimes.co.jp/business/2024/09/30/economy/china-factory-service-stimulus/
Shanghai, other top tier-1 cities ease ownership curbs in boost for China’s housing market
South China Morning Post
Three major Chinese cities, Guangzhou, Shanghai, and Shenzhen, have relaxed home purchase restrictions following the government's recent stimulus package aimed at reviving the struggling property market. Guangzhou will eliminate all curbs on homebuying, while Shanghai and Shenzhen have eased requirements for non-locals. Additionally, mortgage rates will be reduced and down payments for second homes lowered. These measures are intended to boost homebuying during the upcoming National Day holiday, with expectations of increased inquiries from potential buyers. The changes signal a broader trend of deregulation across the country to stimulate market activity.
https://www.scmp.com/business/banking-finance/article/3280487/shanghai-other-top-tier-1-cities-ease-ownership-curbs-boost-chinas-housing-market?utm_source=rss_feed
Blinken says China's talk of Ukraine peace 'doesn't add up'
Deutsche Welle
China is actively seeking support from developing countries for a peace plan to end Russia's war in Ukraine, amid concerns from the United States regarding China's assistance to Russia's defense industry. US Secretary of State Antony Blinken voiced apprehensions over China's dual stance of advocating for peace while allegedly supplying critical military production materials to Russia. He highlighted that China has provided a significant portion of the machinery and electronics needed for Russia's military efforts. In response, Chinese Foreign Minister Wang Yi emphasized Beijing's commitment to peace through dialogue and criticized the US for accusations against China.
During a meeting with Brazil, China gathered support from 17 developing nations for its peace initiative, advocating for dialogue between Russia and Ukraine. Wang stressed the importance of preventing escalation and avoiding the use of nuclear weapons. In contrast, Ukrainian President Volodymyr Zelensky condemned the negotiations led by China and Brazil, arguing that they risked undermining Ukraine's sovereignty and allowing Russia to maintain its aggressive stance.
https://www.dw.com/en/blinken-says-chinas-talk-of-ukraine-peace-doesnt-add-up/a-70351667
Communist China is celebrating its 75th birthday. But not everyone is in the party spirit
CNN
Since China's reopening after the Covid-19 pandemic, the economy has struggled, leading to widespread pessimism among its citizens. Young professionals face high unemployment rates, pay cuts, and layoffs, while entrepreneurs grapple with financing issues and home prices plummet, affecting the wealth of middle-class families. This bleak sentiment contrasts sharply with the optimism seen five years ago. As the country marks the 75th anniversary of the People's Republic, Chinese leaders have initiated a stimulus package to revitalize the economy, including measures to boost lending and provide cash handouts to struggling citizens. While there has been a surge in the stock market following these announcements, experts caution that stimulating the stock market alone won't address deeper economic issues. The real estate sector, crucial to the economy, continues to decline, and household wealth has significantly decreased due to falling housing prices. Additionally, the youth face disillusionment amid intensified competition and shrinking opportunities, leading to a rise in apathy towards traditional ambitions. Overall, the Communist Party grapples with maintaining legitimacy amid economic challenges and rising nationalism, yet lacks effective solutions to reverse the downturn.
https://edition.cnn.com/2024/09/30/business/china-national-day-economic-downturn-intl-hnk/index.html
US approves $567m in military support for Taiwan
Al Jazeera
President Joe Biden has approved $567 million in new defense support for Taiwan, as announced by the White House. The funds will be used for defense articles, services, and military education and training to assist Taiwan. Despite the lack of formal diplomatic relations, the US remains Taiwan's key international supporter and arms supplier. This decision comes amid escalating military and political pressure from China, which claims Taiwan as its territory and has demanded the US cease arms sales to the island. Taiwan has expressed concerns over delayed arms deliveries, including for upgraded fighter jets, while China maintains its stance on using force if necessary to assert control over Taiwan. Taiwan insists that its people should determine their own future.
https://www.aljazeera.com/news/2024/9/30/us-approves-567m-in-military-support-for-taiwan
China remains a talking point as election day looms for Trump and Harris
South China Morning Post
In his final address to the United Nations, outgoing President Joe Biden emphasized the importance of international coalitions in managing relations with China, particularly in light of Beijing's support for Russia amid the Ukraine conflict. This speech followed a Quad summit with leaders from Australia, India, and Japan, highlighting Biden's efforts to strengthen alliances as a countermeasure against China's growing influence. While Biden has engaged with China at high levels, he has also proposed measures to address national-security threats, such as banning Chinese connectivity in US vehicles, reflecting a balance between diplomatic engagement and direct action.
As Biden's presidency comes to a close, the focus shifts to the upcoming presidential election and the potential policies of his rivals, Vice President Kamala Harris and former President Donald Trump. Trump has expressed intentions to impose stricter tariffs on Chinese imports, which could lead to increased economic tensions. Harris, on the other hand, criticized Trump's tariff approach, but the debate offered limited insights into their respective foreign policy strategies concerning China. Voter sentiment often leans more towards economic issues than foreign policy, yet the direct connection between inflation and imports from China is likely to bring these discussions to the forefront.
The economic implications of Trump's proposed tariff strategies raise concerns among economists, with warnings that they could significantly harm the US economy, potentially leading to a 10% drop in GDP. In addition to economic worries, political backlash against China is evident in states like Michigan, where local opposition to a China-linked investment project reflects broader anti-China sentiment among voters. Amid these tensions, there is a notable shift in the political landscape, with Asian-American voters feeling empowered by Harris's nomination, signaling a potential change in representation and advocacy for their community's concerns in the context of rising anti-Asian discrimination.
https://www.scmp.com/economy/global-economy/article/3280464/china-remains-talking-point-election-day-looms-trump-and-harris?utm_source=rss_feed
China factory surveys show economy weakening, as Beijing steps up support
Associated Press
China's economy has shown further signs of weakening, prompting the government to increase stimulus measures. Recent surveys indicated a significant drop in new manufacturing orders, with the Caixin purchasing managers survey reporting the fastest decline in two years for September. Although an official index from the National Bureau of Statistics showed a slight improvement, it marked the fifth consecutive month of contraction.
In response to economic concerns, Chinese stock markets experienced a surge following the announcement of various policy measures, including lower interest rates and relaxed mortgage requirements. The Shenzhen market increased by 8.2%, while the Shanghai Composite rose by 5.7%. Analysts note that while these stimulus actions may bolster activity in the coming months, challenges remain due to excess supply and weak demand, exacerbated by trade tensions and tariffs.
Additionally, the government is taking steps to support the struggling property sector, which affects many related industries. Recent measures include directing banks to cut mortgage rates and easing home purchase restrictions in major cities. The overall economic growth rate was reported at 4.7% in the last quarter, slightly below the government's target.
https://apnews.com/article/china-economy-stocks-factory-jinping-e6db38661b131c9e32179cbe31a67136
How China and the US went from ‘90% cooperation to 90% competition’
South China Morning Post
Elizabeth Economy, a senior fellow at Stanford University's Hoover Institution and an expert on Chinese politics, discusses the Biden administration's approach to semiconductor policy, highlighted by the Chips and Science Act. This legislation aims to reduce U.S. dependency on Taiwan and bolster domestic manufacturing and innovation in semiconductors, with significant investments from both the government and private sector. Despite the progress made, Economy notes that the effectiveness of export controls—intended to protect national security—has been mixed, warranting further assessment.
The U.S.-China economic relationship is increasingly strained, as both nations escalate their rhetoric and protective measures regarding trade and investment, particularly citing national security concerns. Economy emphasizes the need to maintain non-security-oriented trade, which fosters civil society connections. Furthermore, she highlights that issues such as China's overcapacity in clean energy sectors are not limited to U.S. interests but are shared by other countries, indicating a broader global concern regarding China's economic practices.
Looking ahead, Economy anticipates continued competition between the U.S. and China, particularly given the current trajectory of Chinese policy under Xi Jinping. She urges the U.S. to develop a long-term strategic vision to navigate this rivalry and leverage its innovative private sector. Although there is bipartisan agreement on the need for tougher economic policies towards China, the potential for cooperation remains in addressing global issues like climate change. Ultimately, Economy calls for leadership from both nations to establish a more balanced relationship that favors cooperation over competition.
https://www.scmp.com/news/china/diplomacy/article/3280445/how-china-and-us-went-90-cooperation-90-competition?utm_source=rss_feed
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