The Folly of China’s Real-Estate Boom Was Easy to See, but No One Wanted to Stop It; EU ‘dawn raids’ target Chinese surveillance kit maker in latest use of foreign subsidies regulation
TikTok Ban Looms With Biden Poised to Start 270-Day Countdown; Tech war: US is reviewing risks of China’s use of open-source RISC-V chip technology
Welcome to this issue of The China Brief. Today is April 24, 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.
The Folly of China’s Real-Estate Boom Was Easy to See, but No One Wanted to Stop It
WSJ
The Wall Street Journal article delves into the unchecked growth of China's real estate market, despite glaring signs of an impending bubble burst. It narrates instances like the extravagant Tianjin Goldin Metropolitan development and the dubious practices of major developers like China Evergrande Group. The piece highlights the consequences of the bubble burst, including defaults, job losses, and incomplete housing projects. Moreover, it examines the scrutiny faced by Chinese banks and international investors due to their involvement in the real estate sector. Overall, the article underscores the significant economic challenges arising from the bursting of China's real estate bubble and the repercussions on various stakeholders.
EU ‘dawn raids’ target Chinese surveillance kit maker in latest use of foreign subsidies regulation
SCMP
The European Union conducted surprise inspections at the Dutch and Polish subsidiaries of a Chinese company involved in manufacturing surveillance equipment. These inspections were part of the EU's efforts to enforce foreign subsidies regulations. The European Commission suspects that the company may have received foreign subsidies, potentially distorting the internal market. The inspections involved seizing IT equipment, scrutinizing documents, and accessing data. The EU has previously used similar regulations to investigate state handouts in various industries. The Chinese government and Chinese business lobbyists have opposed these regulations. Additionally, the EU is expected to use its public procurement instrument to investigate European firms' access to public tenders in China's medical devices sector. Furthermore, the European Parliament has backed a ban on products made using forced labor, particularly focusing on the Chinese region of Xinjiang.
Tech war: US is reviewing risks of China’s use of open-source RISC-V chip technology
South China Morning Post
The US Department of Commerce is conducting a review of the national security implications of China's involvement in RISC-V chip technology. RISC-V is a competitor to proprietary technology from Arm Holdings and is used in various applications, including smartphones and AI processors. The technology has been adopted by major Chinese tech firms, raising concerns about China's dominance in advanced chip technology. The Commerce Department is assessing potential risks and considering appropriate actions, but it is cautious about not harming US companies involved in international groups working on RISC-V technology. Previous controls on transferring 5G technology to China had negative consequences for US firms.
China’s prices are just too low for buyers to sweat tariffs
Japan Times
According to attendees at the Canton Fair in China, the country can withstand any new tariffs imposed on them, including those planned by US President Donald Trump. The buyers and sellers at the trade event believe that China's prices are too competitive to resist, and even a 50% tariff would not drive customers away.
TikTok Ban Looms With Biden Poised to Start 270-Day Countdown
Bloomberg
US President Joe Biden is expected to sign a bill requiring TikTok's Chinese owners to divest from the social media app or face a ban. The legislation has been passed by Congress and Biden's signature will begin a 270-day countdown for compliance. TikTok and ByteDance have pledged to fight the measure, arguing it infringes on free speech rights and harms content creators and merchants who rely on the platform. If the ban is implemented, it could disrupt a “critical channel for engaging with younger audiences and building brand visibility”, said Damian Rollison, director of market insights at SOCi.
Trading in China's SenseTime halted after shares pop 30% in Hong Kong
Nikkei Asia
Shares of Chinese facial recognition company SenseTime surged more than 30% after the release of its SenseNova 5.0 large language model, prompting trading to be halted. The jump represents SenseTime's biggest increase in over two years and highlights the fierce competition among Chinese tech firms to lead in generative AI. The suspension of trading is believed to be voluntary, possibly due to AI-related news that needs clarification. SenseTime's market capitalization remains around 20% of its peak from a year ago. The company is known for its facial recognition technology and is backed by Alibaba Group.
Blinken lands in China on tough mission to curb support for Russia's war
Nikkei Asia
US Secretary of State Antony Blinken has arrived in China for talks with officials, including those in Beijing. Among the topics on the agenda will be Russia's military production, the crisis in the Middle East, Russia's war against Ukraine, cross-strait issues and the South China Sea. Earlier this month, Deputy Secretary of State Kurt Campbell warned that Russia has "almost completely reconstituted militarily," with support from China. Blinken will also seek China's help in de-escalating tensions in the Middle East and ensuring peace and stability across the Taiwan Strait.
New Hong Kong bourse CEO needs everyone onside
Reuters BreakingViews
Hong Kong Exchanges and Clearing (HKEX) has seen a drop in its core business revenue and investment income in Q1 2021. This has contributed to a halving of the company's share price. HKEX has made progress in boosting activity in derivatives and over-the-counter trading, but it can no longer rely on investment income to offset weakness in other areas. The company has also seen a decline in initial public offerings (IPOs) and fee revenue. However, there are signs that Beijing may provide support, such as allowing mainland investors to trade some Hong Kong stocks using renminbi. The Hong Kong government could also reduce stamp duty to make high-frequency share trades more affordable. The appointment of Carlson Tong as HKEX's new chair could further strengthen the company's position.
China reveals Shenzhou-18 crew for next space station mission
South China Morning Post
China has announced the names of the three astronauts who will travel to the country's space station as part of its 13th crewed mission. The Shenzhou-18 mission will launch from the Jiuquan Satellite Launch Centre in northwestern China. During the mission, the crew will carry out experiments on fish as an initial step towards raising other vertebrates in space. The crew will stay in the Tiangong space station until late October and will be joined by a cargo ship and another crewed spaceship during their mission. China's space experiments have supported the development of various materials and research in areas such as nuclear power plants, high-performance semiconductors, and bone disease treatment.
China blasts US military aid to Taiwan, saying the island is entering a ‘dangerous situation’
Associated Press
China has criticised the latest US military assistance package to Taiwan, saying it is pushing the self-governing republic into a "dangerous situation". The package includes $8 billion for Taiwan to counter the threat of invasion by China, which claims the entire island as its own territory and has threatened to take it by force if necessary. China's Taiwan Affairs Office said the aid "seriously violates" US commitments to China and "sends a wrong signal to the Taiwan independence separatist forces".
EU targets China medical technology market with launch of new procurement weapon
South China Morning Post
The European Union has launched an investigation into access to the Chinese market for its medical device manufacturers. The probe is the first under the EU's international procurement instrument (IPI) and is expected to add to tensions in EU-China trade relations. The investigation follows years of planning and aims to open up foreign procurement markets that are currently closed to EU firms. Chinese officials have previously criticised "protectionist acts" that they believe harm fair competition in the name of fair competition.
South China Morning Post
Postal and parcel workers in China's Jiangsu province could receive rewards of up to CNY30,000 ($4,100) for reporting potential threats to state security. The new regulation, which took effect on 15 April, is aimed at cracking down on the use of delivery services to endanger national security. The rewards will be given out in a three-tier system, with the highest level reserved for tip-offs that lead to criminal cases involving national security. The regulations also require delivery workers to be alert to suspicious parcels and materials that could harm national security.
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