There is no end in sight for China’s uneven economic recovery;Beijing to offer 5-year travel permits to non-Chinese Hong Kong permanent residents from July 10
China to borrow treasury bonds from primary market to keep yields stable
Welcome to this issue of The China Brief. Today is July 1, 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.
There is no end in sight for China’s uneven economic recovery
CNN
China's private manufacturing sector expanded in June at the fastest pace in three years, according to the Caixin manufacturing Purchasing Managers' Index (PMI). The index rose to 51.8 in June, beating market expectations and marking the sixth consecutive month of improvement. However, an official government survey showed a contraction among larger, state-owned manufacturers, indicating that the recovery in China's economy remains uneven. The discrepancy between the two surveys is believed to be due to differences in the sectors covered. While the Caixin survey focuses on export-oriented and consumer-related companies, the official PMI is more tilted towards industrial materials manufacturers. Analysts believe that the data reflects strong exports and consumption, but softer investment. Manufacturers, however, remain less optimistic about the outlook due to recent tariff announcements from the US and the European Union.
https://edition.cnn.com/2024/07/01/business/china-economy-uneven-recovery-intl-hnk/index.html
Beijing to offer 5-year travel permits to non-Chinese Hong Kong permanent residents from July 10
South China Morning Post
Non-Chinese permanent residents of Hong Kong and Macau will be able to apply for five-year travel permits to enter mainland China from July 10, Beijing has said, with local authorities stressing the move can motivate foreign companies and talent to settle in the city. Holders of the multi-entry permits could also enjoy self-service clearance at control points once they completed procedures such as fingerprint collection, the National Immigration Administration said on Monday. Permit holders will enter the mainland for short-term purposes, such as investment, visiting relatives, tourism, business, seminars and exchanges.
https://www.scmp.com/news/hong-kong/transport/article/3268698/beijing-offer-5-year-travel-permits-non-chinese-hong-kong-permanent-residents-july-10?utm_source=rss_feed
China to borrow treasury bonds from primary market to keep yields stable
South China Morning Post
China's central bank plans to borrow treasury bonds from primary market traders to help "maintain the stable operations of the bond market." The move is unusual for the bank and follows concerns over the falling yield of ultra-long-term treasury bonds, which the bank says is not in line with the country's growth potential. The decline in China’s bond yield compared to a rise in the US has drawn capital out of China and put pressure on the yuan exchange rate.
https://www.scmp.com/economy/china-economy/article/3268731/china-borrow-treasury-bonds-primary-market-keep-yields-stable?utm_source=rss_feed
What to expect from the Third Plenum, China’s big policy meeting
Japan Times
The Chinese Communist Party is holding its annual policy meeting, known as the Third Plenum, this month. The meeting will cover a range of topics, including chip technology, land reform, and tax reform. However, major policy changes are not expected to be announced at this meeting, as has been seen in the past. The meeting will bring together around 400 government officials, military leaders, provincial leaders, and academics to discuss and guide the country's political and economic direction.
https://www.japantimes.co.jp/news/2024/07/01/asia-pacific/politics/third-plenum-china-meeting/
How ready is China’s military? Dramatic downfall of two defense ministers raises questions
CNN
China's two former defence ministers who vanished from public view last year are under investigation for corruption, according to The Diplomat and other outlets. China's defence establishment has been subject to a sweeping purge since last summer, with more than a dozen senior generals and military-industrial executives removed from office. The purge is raising questions about China's combat readiness at a time of heightened geo-political tensions. The allegations against the two ministers, Li Shangfu and Wei Fenghe, point to corruption in the procurement of weapons. They were promoted under Chinese leader Xi Jinping, despite his decade-long anti-graft campaign. China has poured billions of dollars into buying and upgrading military equipment as part of Xi's ambition to transform the People's Liberation Army (PLA) into a "world class" fighting force. The problems in the PLA's procurement system have existed for many years, according to analysts.
https://edition.cnn.com/2024/07/01/china/china-defense-ministers-downfall-analysis-intl-hnk/index.html
Chinese teenage badminton player dies after collapsing during tournament in Indonesia
South China Morning Post
A 17-year-old Chinese badminton player has died after collapsing on court during an international tournament in Indonesia. Zhang Zhijie fell to the floor during a match against Japan's Kazuma Kawano at the Asian Junior Badminton Mixed Team Championships. Despite the best efforts of medical staff, Zhang could not be revived and was pronounced dead at the hospital. Badminton Asia and the Badminton Association of Indonesia expressed their deepest condolences to Zhang's family and the Chinese Badminton Association.
https://www.scmp.com/sport/other-sport/article/3268690/chinese-teenage-badminton-player-dies-after-collapsing-during-tournament-indonesia?utm_source=rss_feed
China’s Caixin factory activity index hits 3-year high, beating forecasts, but demand still slow
South China Morning Post
China's manufacturing activity grew at the fastest pace in over three years in June, according to a private sector survey. The Caixin/Markit manufacturing purchasing managers' index (PMI) rose to 51.8 in June, up from 51.7 in May. This indicates that the manufacturing sector in China remains robust, despite slower demand growth. The index has remained above the 50-point mark that separates growth from contraction for eight consecutive months. The survey also showed that business owners are facing rising costs due to higher prices of raw materials and rising freight costs. However, manufacturing producers' confidence for the next 12 months hit its lowest point since November 2019 due to concerns over rising competition and uncertainty about the economic outlook.
https://www.scmp.com/economy/china-economy/article/3268682/chinas-factory-activity-growth-hits-three-year-high-beating-forecasts-demand-still-slow?utm_source=rss_feed
Higher duty-free limit in Hong Kong draws lukewarm response among mainland shoppers
South China Morning Post
A higher duty-free threshold for mainland Chinese tourists in Hong Kong has received a lukewarm response, with an industry leader warning that shops may close. The central government raised the duty-free threshold from CNY5,000 ($688) per trip to CNY12,000 for mainland residents aged 18 or older. However, the Retail Management Association, Hong Kong's largest trade body representing retailers, said the measure would not provide much of a boost to the struggling industry. "Business is declining rapidly, but the costs of rent and salaries are increasing significantly," said Annie Tse Yau On-yee, chairwoman of the association.
https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3268743/higher-duty-free-limit-hong-kong-draws-lukewarm-response-among-mainland-visitors?utm_source=rss_feed
China’s Communist Party on track for 100 million members by year’s end
South China Morning Post
The Chinese Communist Party (CCP) had a membership of 99 million last year and is expected to reach 100 million by the end of 2024. However, the growth rate of party membership is slowing down. The number of members aged under 30 decreased slightly, but at a slower rate than the previous year. The party has also seen an increase in the number of members with a college degree or higher. While women and ethnic minority groups are still under-represented, there have been improvements in their representation. Chinese President Xi Jinping has emphasized the need for comprehensive and strict governance over the party and called for the use of internet and information technologies in party-building. Despite leadership support for women's empowerment, female participation in China's elite politics is lagging. The current Politburo, for example, has no women members.
https://www.scmp.com/news/china/politics/article/3268723/chinas-communist-party-track-100-million-members-years-end?utm_source=rss_feed
Expectations vs. reality of Xi Jinping's charm offensive
Japan Times
Chinese leader Xi Jinping has embarked on a charm offensive in an attempt to improve China's international standing and stimulate its economy. This short-term approach aims to attract foreign investment and increase other countries' economic dependence on China. However, it is important to take a long-term view and not be misled by Xi's narrative.
https://www.japantimes.co.jp/commentary/2024/07/01/japan/xi-jinping-diplomacy-charm-offensive/
China’s stock index climbs out of 4-month low after June’s factory data beat forecasts
South China Morning Post
Chinese stocks rose on Monday after data showed that factory activity in June had expanded to a three-year high, beating expectations. The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) rose to 51.8 in June, up from 51.7 in May and surpassing analysts' forecasts of 51.2. The upbeat data helped alleviate concerns following the official PMI data, which showed a reading of 49.5 in June, indicating contraction. Shares of property developers advanced, and chip designer Cambricon Technologies and Zijin Mining also saw gains. However, Kweichow Moutai, China's biggest distiller giant, dropped 1.8%.
https://www.scmp.com/business/markets/article/3268734/chinas-stock-index-jumps-3-year-high-after-junes-factory-data-surpassed-expectations?utm_source=rss_feed
Tencent to close online education service as tech giant cuts back on noncore operations
South China Morning Post
Tencent Holdings is shutting down its online education platform, Tencent Ketang, after 10 years of operation. The platform, which had over 400 million users, will cease operations on 1 October. While users will no longer be able to access new courses from 1 August, they can still watch lessons that have already been added to their schedules until the site is closed. Tencent's decision to close the platform reflects its focus on restructuring and cutting noncore operations. The company has been divesting some of its investment portfolio, closing noncore businesses, and consolidating its operations amid economic headwinds and regulatory challenges.
https://www.scmp.com/tech/big-tech/article/3268715/tencent-close-online-education-service-tech-giant-cuts-back-noncore-operations?utm_source=rss_feed
Chinese robot 'guide dog' aims to improve independence for visually impaired
Yahoo US
Researchers at Jiao Tong University's School of Mechanical Engineering in Shanghai have developed a "guide dog" robot aimed at helping visually impaired people. The robot dog is able to navigate its physical environment via cameras and sensors, and is able to recognise traffic lights. Researchers say the robot dog's six legs help it walk smoothly and with maximum stability. Robot guide dogs are in development elsewhere, such as in Australia and the UK, but China reportedly has a shortage of guide dogs, with only 400 available for nearly 20 million blind people.
https://www.yahoo.com/news/chinese-robot-guide-dog-aims-080754359.html
Italy says seizes 6 tonnes of drug ‘precursors’ from China
South China Morning Post
Italian customs officials have seized over six tonnes of chemical precursors from China that could have been used to make narcotics worth €630m ($678m). The seizure was made at Milan's airport during an inspection of goods and included enough chemicals to produce over 63 million MDMA pills. An Italian entrepreneur from Milan is under investigation and two Chinese nationals were arrested in the Netherlands as part of the investigation. The cargo was intended to pass through a company in Milan before being shipped to the Netherlands, where Dutch police identified the intended final destination and made further seizures.
https://www.scmp.com/news/world/europe/article/3268728/italy-says-seizes-6-tonnes-drug-precursors-china?utm_source=rss_feed
Surveys show Chinese economy growing but at modest pace
Associated Press
Surveys of Chinese factory managers in June have shown mixed results, with growth remaining steady but not showing any significant improvement. The China Federation of Logistics and Purchasing's official purchasing managers index (PMI) remained at 49.5, the same as May. New export orders fell to 49.4 from 49.6. However, a separate PMI survey for the manufacturing sector showed a more positive outlook, rising to 51.8 from 51.7 in the previous month. The official PMI reading for high-tech manufacturing rose to 52.3, reflecting the government's drive to boost investment in upgrading factories.
https://apnews.com/article/china-economy-manufacturing-pmi-3151205d05c0f18bd7b88b76ae8cdfde
China to step up detentions to squeeze Lai, Taiwan officials say
Japan Times
Senior security officials from Taiwan have warned that China is likely to detain more Taiwanese people under a law that targets supporters of independence. This move is believed to be an attempt to put pressure on Taiwan's new president. The officials stated that recent developments in Beijing amounted to "weaponising domestic legislation against Taiwan". They added that there have been 15 detentions in recent years, and that Taiwanese people could be taken into custody in China or in countries with extradition treaties with China.
https://www.japantimes.co.jp/news/2024/07/01/asia-pacific/politics/china-detentions-lai-taiwan-officials/
Chinese Rocket Accidentally Launches During Test, Then Crashes
NY Times
A Chinese commercial rocket accidentally launched during a ground test on Sunday, only to crash into a nearby mountain and explode in flames. The Tianlong-3 rocket, owned by private company Space Pioneer, experienced a "structural failure" during its propulsion system test. It launched from its platform, shut down automatically and fell into a hilly area around one mile from the test site. No injuries were reported and the crash site was evacuated in advance.
https://www.nytimes.com/2024/07/01/world/asia/china-rocket-launch-crash.html
China social networks condemn anti-Japanese hate speech after knife attack
Nikkei Asia
China's top social media companies have condemned online hate speech targeting Japanese citizens following a knife attack that killed one person and injured a Japanese mother and child. Companies including WeChat-owner Tencent, TikTok's ByteDance-owned sister-site Douyin, Weibo, and NetEase have all condemned the remarks. In an online post, Douyin said the comments had disrupted the positive and peaceful atmosphere of the platform and incited unlawful behavior, citing "extreme and erroneous statements" that promoted xenophobia. Anti-Japanese sentiment in China is rooted in memories of World War II aggression.
https://asia.nikkei.com/Spotlight/Society/Crime/China-social-networks-condemn-anti-Japanese-hate-speech-after-knife-attack
China Dangled Rebates to Lure People to Spend. It’s Not Enough.
NY Times
China's plan to subsidize consumers to replace old cars and household appliances has not yet fixed one of China's biggest economic problems: weak consumer spending. The subsidy programme has been held back by tight eligibility restrictions and limited financing. In addition, the Chinese central government has turned the appliance programme over to local governments, many of which are struggling with heavy debts and reluctant to offer more generous subsidies. Consequently, factories have been forced to chase more customers overseas, which has led to trade restrictions by governments in Europe, the US and developing countries.
https://www.nytimes.com/2024/07/01/business/china-cash-for-clunkers.html
Huawei, chip maker Wuhan Xinxin to develop high-bandwidth memory chips amid US restrictions
South China Morning Post
Huawei Technologies has partnered with Chinese foundry Wuhan Xinxin Semiconductor Manufacturing to develop high-bandwidth memory (HBM) chips, an essential part of the computing infrastructure used for artificial intelligence projects. The move is an attempt to defy Washington's tech sanctions against the Chinese company. Neither Huawei nor Wuhan Xinxin have commented on the collaboration. However, the partnership will also involve mainland integrated circuit packaging firms Jiangsu Changjiang Electronics Tech and Tongfu Microelectronics.
https://www.scmp.com/tech/big-tech/article/3268643/huawei-chip-maker-wuhan-xinxin-develop-high-bandwidth-memory-chips-amid-us-restrictions?utm_source=rss_feed
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