Huawei building vast chip equipment R&D center in Shanghai
Kishida mistakenly says China is Japan’s ‘ally’ during Biden summit in US; Singapore tightens rules for expat workers with an eye on local discontent
Welcome to this issue of The China Brief. Today is April 11, 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.
Singapore tightens rules for expat workers with an eye on local discontent
Al Jazeera
Singapore is raising the salary threshold for foreigners applying for the Employment Pass (EP) system in a move to give locals a better chance at securing jobs. From next year, new applicants for the EP system will have to earn at least SGD5,600 ($4,140) per month, up from SGD5,000. The threshold for applicants in the financial services sector will be raised to SGD6,200. Singapore has long attracted foreign talent to fill gaps in its workforce, and the number of EP holders has grown due to concerns over the country's low birthrate and ageing population. However, there has been public discontent over the perceived competition for jobs and pressure on public infrastructure. The higher threshold is seen as an attempt to strike a balance between attracting foreign talent and protecting local jobs. The changes are expected to prompt large employers to focus more on nurturing local talent and may lead to companies considering alternative locations in Southeast Asia for relocating key staff while still maintaining proximity to Singapore.
PM Kishida mistakenly says China is Japan’s ‘ally’ during Biden summit in US
South China Morning Post
During a joint press conference with US President Joe Biden, Japanese Prime Minister Fumio Kishida mistakenly referred to China as Japan's "ally" before quickly correcting himself. Kishida stated in Japanese, "China is our ally," but immediately followed up with, "Excuse me, based on a strong relationship of trust with our ally, the United States, we will urge China to fulfil its responsibilities as a major power." Kishida raised his hand as he corrected his statement. The prime minister's visit to the US marked the first time in nine years that a Japanese political leader visited as a state guest. The state dinner hosted by Biden and his wife Jill included Japanese celebrities and business leaders, with the aim of strengthening economic ties between the two countries. At the summit, Kishida and Biden agreed to enhance their security alliance in response to China's growing military and economic assertiveness in the Indo-Pacific region.
Huawei building vast chip equipment R&D center in Shanghai
Nikkei Asia
Huawei is planning to build a large semiconductor equipment research and development centre in Shanghai in an effort to counter the effects of the US crackdown on chip supply chains. The new facility will develop lithography machines, essential for manufacturing high-performance chips. The US export controls have reduced Huawei's access to this equipment, which is produced by only three companies. To staff the centre, Huawei is offering salary packages of up to twice the amount local chipmakers pay. The centre will be part of a wider R&D campus in Shanghai, and the total investment will be around CNY12bn ($1.66bn).
iPhone maker Foxconn considers rotating CEOs in management reshuffle similar to Huawei, sources say
South China Morning Post
Apple supplier Foxconn is considering implementing a rotating chief executive system as part of a management overhaul designed to nurture future talent. The move comes in response to calls from investors to boost corporate governance by separating the roles of chief executive and chairperson. Young Liu has held both roles since 2019. The rotating CEO system is uncommon, but analysts suggest it can promote teamwork and prevent leadership from becoming entrenched. Foxconn is the world's largest contract electronics manufacturer and a major iPhone assembler. Shares in the firm have risen almost 50% this year.
U.S.-Japan-Philippines summit to send 'crystal clear' signal to China
Nikkei Asia
The first-ever trilateral summit between the US, Japan, and the Philippines is a direct response to China's coercion in the South China Sea and is intended to send a "crystal clear" message of unity. The trilateral meeting comes as tensions rise in the South China Sea, with China intensifying the shooting of water cannons to block Philippine supply ships from delivering daily necessities to a military outpost that marks Manila's territorial claims. The US is embracing the Philippine leader and is trying to "lock in" relations by bolstering economic ties, with the help of Japan.
South China Morning Post
Turkey has applied to join the International Lunar Research Station (ILRS), a project led by China and Russia to build a base on the moon's south pole by 2035. If accepted, Turkey will become the first NATO member to join the initiative. Turkish involvement would benefit China given its space ambitions and programmes, with the implication of potential budget and technological contributions, said John Sheldon, co-founding managing partner of space consulting company AstroAnalytica. Turkey has its own space programme, including building its own satellites and space launch capability, and aims to make a hard landing on the moon's surface in 2026.
South Korean voters—and spring onions—deliver a rebuke to the president
Economist
The South Korean parliamentary elections on 10 April saw the Democratic Party (DP) bloc win 175 seats out of a possible 300, compared to the People Power Party (PPP) and its satellite party, which won 108 seats. This means that the DP and the Rebuilding Korea Party (RKP) would represent over three-fifths of the parliament if they work together, giving them the power to push through bills. The PPP’s loss is seen as a result of President Yoon Suk Yeol’s perceived failure to connect with ordinary South Koreans, as well as corruption allegations against his wife and his government’s handling of a doctors’ strike.
Huawei goes '007' and TSMC gets a grant
Nikkei Asia
Taiwan's chipmakers have demonstrated their ability to recover quickly from natural disasters, such as the recent earthquake. TSMC reported 70% recovery of its most critical equipment within 10 hours of the earthquake, highlighting the work ethic that has helped Taiwan secure its position as the world's most efficient chip producer. Meanwhile, Huawei is looking to build up its own chip supply chain and attract top talent to prove it can withstand a US clampdown. The company is offering highly competitive salaries to candidates with experience working with leading Western chip equipment manufacturers and chip industry veterans. Huawei is also building a massive semiconductor equipment R&D center in Shanghai. In other news, TikTok employees in the US are facing large tax liabilities on shares in the company they were awarded but have been unable to sell. The issue relates to the awarding of restricted stock units (RSUs), which can result in hefty tax liabilities when they vest. Finally, Samsung Electronics employees in South Korea could soon go on strike over working conditions. Five unions at the company have voted in favor of the strike, which would be the first in the company's history.
US Urges Transparency Over China-Backed Canal in Cambodia
Bloomberg
The US is calling for greater transparency from Cambodia over its plans to construct a $1.7bn canal, amid concerns that it could bolster China's military presence in the region. The Techo Funan Canal is set to be built by China Bridge and Road Corporation, and will stretch 111.85 miles from Phnom Penh to the coastal province of Kep. The US Embassy in Phnom Penh urged authorities to provide more information on the project to the Mekong River Commission. There are also environmental concerns, with the canal potentially directing water away from the Mekong River.
China-Taiwan trade data shows realignment as Xi meets ex-Taiwan leader Ma
Japan Times
The US has become the largest destination for Taiwan's exports, overtaking China, according to data from Taiwan's Finance Ministry. The island's shipments to the US rose 65.7% YoY in March to $9.1bn, while its exports to mainland China grew just 6% to $7.9bn. This shift in trade patterns may indicate a strengthening of Taiwan's economic ties with the US.
Ping An’s Delayed Trust Repayment Shows Lingering Property Woes
Bloomberg
Ping An Insurance's trust business has delayed repayment on a property-linked investment product due to the downturn in China's real estate market. The trust product had raised CNY772m ($107m) in 2021 to fund a property project in Xiamen, but sales at the development have been slow, leading to Zhenro Properties Group's default. Ping An Trust is now suing Zhenro and actively looking for ways to recoup investors' money. The delayed payment adds to the signs of real estate-related stress at Ping An, which lost billions from an investment in China Fortune Land Development in the past.
South China Morning Post
China's young and wealthy are reshaping the wealth management and luxury spending industries, including art collecting, industry experts have said. The country is expected to see a 47% increase in the number of ultra-high-net-worth individuals by 2028, according to a report by Knight Frank. The population of high-net-worth individuals is also becoming younger, with those aged under 40 increasing from 29% last year to 49% by 2023, according to China Merchant Bank. Tech-savvy art enthusiasts and digital technology have also made the art market more accessible for collectors, according to Christie's Asia-Pacific president Francis Belin.
South China Morning Post
A weaker yuan could have a knock-on effect, impacting other emerging- and developed-market currencies, warn strategists. Currencies of Asian neighbours such as South Korea and Thailand, which are China's primary trading partners, are the most at risk. Small movements in China's currency can have a large impact on others due to its position as a regional anchor. The yuan is showing signs of a potential slide, having been relatively stable for four months.
Ex-head of China's Guangzhou Port in custody amid anti-graft probe
Nikkei Asia
Li Yibo, former chairman of Guangzhou Port, has been detained by anti-graft authorities as the port operator conducts a thorough inspection of its construction projects. Li's arrest is likely related to the port's infrastructure projects, and Guangzhou Port has launched reviews on all construction projects since 2018. The port has undertaken several major infrastructure projects in recent years, including the widening of a deep-water channel and the development of a new phase of the Nansha Port. Guangzhou Port Group had 16 ongoing projects as of March 2023, with a total investment of CNY 31.8 billion ($4.4 billion).
China Premier Li Qiang set to visit Australia in June, live lobster import ban expected to be lifted
South China Morning Post
Chinese Premier Li Qiang is planning to visit Australia in June, in an effort to strengthen economic ties between the two countries. The visit follows the trip by China's Foreign Minister Wang Yi to Australia last month. One source suggested that the unofficial ban on Australian live lobsters would be lifted as a sign of improving trade relations. The major topics to be discussed during the visit are yet to be confirmed.
Driven by China, Coal Plants Made a Comeback in 2023
NY Times
Global capacity for generating power from coal increased in 2020, with China accounting for two-thirds of the world's new coal plants. The rise in capacity was driven by new plants coming online in China, as well as a slowdown in the retirement of older plants in the US and Europe. Despite calls for the phasing out of coal due to its heavy greenhouse gas emissions, many industrialising economies, particularly in Asia, have set longer transition periods for reducing their dependence on coal. While new coal plants are generally less polluting than older ones, experts agree that a shift away from all fossil fuels is necessary to combat climate change.
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