Ukraine’s top diplomat signals readiness to negotiate with Russia for first time;Chinese officials warn of risks from higher US tariffs, urge US business leaders to help mend ties
Chinese-born scientist in US tells of ‘fear and desperation’ from Trump-era convictions
Welcome to this issue of The China Brief. Today is July 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.
Ukraine’s top diplomat signals readiness to negotiate with Russia for first time
South China Morning Post
During a meeting with Chinese Foreign Minister Wang Yi, Ukrainian Foreign Minister Dmytro Kuleba expressed readiness to directly negotiate with Russia. China has long been committed to promoting a political solution to the Ukraine crisis and is willing to play a constructive role in promoting a ceasefire and peace talks. Both Russia and Ukraine have recently signaled their willingness to negotiate, although the conditions and timing are not yet ripe. Kuleba emphasized the importance of rational and meaningful negotiations aimed at achieving a just and lasting peace. Previous peace talks between Ukraine and Russia have been unsuccessful in reaching agreements on critical issues.
https://www.scmp.com/news/china/diplomacy/article/3271703/ukraines-top-diplomat-signals-readiness-negotiate-russia-first-time?utm_source=rss_feed
Chinese officials warn of risks from higher US tariffs, urge US business leaders to help mend ties
Associated Press
Chinese officials have warned a group of influential US business people that higher tariffs on imports from China will harm their businesses inside the country. The Chinese Commerce Minister, Wang Wentao, emphasised that US investment restrictions on China will “seriously affect the investments and operations of American companies in China.”
https://apnews.com/article/china-us-business-secrets-tariffs-5c4f3881876b63e2f56f7124513582f6
Chinese-born scientist in US tells of ‘fear and desperation’ from Trump-era convictions
South China Morning Post
Chinese-born scientist Franklin Tao, who was arrested in 2019 on charges of hiding involvement with a Chinese university, has spoken out for the first time since his conviction was overturned in July. Tao was one of about two dozen academics charged as part of the US Justice Department's "China Initiative", which aimed to counter suspected Chinese economic espionage and research theft. Tao said his immediate hope was to return to the University of Kansas, where he was a tenured associate professor before being fired. He also highlighted the financial and personal toll the case had taken on him.
https://www.scmp.com/news/china/diplomacy/article/3271653/chinese-born-scientist-us-tells-fear-and-desperation-trump-era-convictions?utm_source=rss_feed
China’s third plenum shows it is ‘not in the mood’ to slow down on nuclear arms
South China Morning Post
China has indicated that it will continue to develop its nuclear weapons capability, drawing lessons from Russia's deterrence strategy in Ukraine. China's ruling Communist Party pledged during a key policy meeting to "speed up the development of strategic deterrence forces." This is seen as a reference to nuclear prowess. China has been rapidly expanding its nuclear arsenal in recent years, and it is expected to continue to improve the quality and quantity of its nuclear weapons systems. The aim is to reshape US perceptions of the power balance and compel Washington to respect China's core interests, particularly regarding Taiwan. China sees Taiwan as part of its territory and has repeatedly held up the issue as a "red line" in its ties with the US. China's nuclear build-up is also aimed at catching up with the US and Russia, which have the largest nuclear arsenals in the world. The Pentagon estimates that China had more than 500 operational nuclear warheads in 2023 and predicts that this number will exceed 1,000 by 2030. Russia has over 4,300 warheads in stockpile, while the US has over 3,700.
https://www.scmp.com/news/china/military/article/3271599/chinas-third-plenum-shows-it-not-mood-slow-down-nuclear-arms?utm_source=rss_feed
In China for China: German firms buck trend, bring best tech and products to compete
South China Morning Post
German industrial motion giant SEW-Eurodrive is expanding its investment in China, with plans to build a new manufacturing base in Suzhou. Despite escalating trade tensions between China and the European Union, a number of European companies, particularly advanced German manufacturers, are remaining committed to China due to its large market size and growth potential. However, these companies are adopting an "in China for China" strategy to cope with competition from local firms and rising global supply chain risks. German lens maker Zeiss has also launched a new manufacturing base in Suzhou, its third in China. Last year, German businesses' direct investment in China increased by 4.3% to €11.9bn ($13bn), despite calls from the German government to reduce exposure in the country. However, European companies have been experiencing a "decoupling" between their headquarters and China operations, leading to a slowdown in existing operations and reduced ability to capitalise on new projects or investment plans in China.
https://www.scmp.com/economy/global-economy/article/3271559/china-china-german-firms-buck-trend-bring-best-tech-and-products-compete?utm_source=rss_feed
China stocks’ ‘policy put’ is breaking down
Reuters BreakingViews
The recent bull run in Chinese markets has come to an end as hopes for significant stimulus measures have crumbled. The lack of follow-through on vows to support the economy has resulted in shorter and more volatile trading cycles, as speculators try to profit from fleeting rallies spurred by signals from Beijing. President Xi Jinping's crackdown on leverage has negatively impacted home prices and triggered a confidence crisis among homebuyers. As a result, valuations for companies included in benchmarks such as the Shanghai Composite Index have fallen. The recent rally, which began in March, has now fully unwound, leaving the country's CSI 300 stock benchmark flat since January.
https://www.breakingviews.com/considered-view/china-stocks-policy-put-is-breaking-down/
Apple supplier Foxconn breaks ground on electric vehicle plant in China’s Zhengzhou city
South China Morning Post
Foxconn, the company that manufactures iPhones, has begun construction on an electric vehicle (EV) plant in Zhengzhou, China. The EV production centre will serve both domestic and foreign automobile brands and aims to establish Zhengzhou as a core production base for Foxconn's new energy vehicle segment. The move is part of Foxconn's strategy to diversify its revenue sources and replicate its success as Apple's top smartphone contractor in the EV market. Foxconn has faced disruptions in Zhengzhou due to a Covid-19 outbreak, but it reaffirmed its commitment to the region by signing a strategic partnership with the provincial government.
https://www.scmp.com/tech/article/3271709/apple-supplier-foxconn-breaks-ground-electric-vehicle-plant-chinas-zhengzhou-city?utm_source=rss_feed
Luxury brands in China take hit on low consumer confidence as economy slows
South China Morning Post
Luxury brands such as LVMH and Chow Tai Fook are being affected by China’s slowing growth, as consumers in the country are tightening their belts amid economic uncertainty. LVMH saw sales in Asia (excluding Japan) decline by 13% in H1 2015, and sales of champagne and other wines fell by 15% in the region. Chow Tai Fook, a local jewellery brand, saw a slump in retail sales of 20% in Q2 2015, with mainland China sales falling 19%. These disappointing sales figures are indicative of broader concerns about Chinese consumer spending, which has remained weak due to a slowing economy, lower income growth and elevated unemployment levels.
https://www.scmp.com/business/china-business/article/3271697/luxury-brands-china-take-hit-low-consumer-confidence-economy-slows?utm_source=rss_feed
The Limits of the China Chip Ban
Foreign Affairs
The export controls imposed by the Biden administration on advanced semiconductors and equipment are unlikely to significantly slow China's military modernization efforts. Current weapons systems do not rely on the advanced chips covered by the restrictions, and China can use alternative sources such as smuggled chips or domestically produced chips for its military needs. However, the controls could impede China's economic growth and technological development by limiting its access to advanced chips, thus giving the United States a temporary advantage. But the controls may also inadvertently expedite China's development of its domestic semiconductor industry, as it creates demand for indigenous Chinese equipment and fabrication capacity. This could eventually allow China to catch up with the market leaders and reduce the leverage of the United States and its allies. Washington should focus on improving its own innovative capabilities and investing in the next generation of critical technologies to maintain its competitive edge over China.
https://www.foreignaffairs.com/china/limits-china-chip-ban
Shanghai expects record turnout at world’s biggest import trade fair later this year
South China Morning Post
Shanghai is preparing to host the China International Import Expo (CIIE), the world's largest import trade fair, from 5 to 10 November. The event is expected to attract thousands of exhibitors and guests from over 50 countries and international organisations. Last year, the value of deals at the expo reached a record $78.4bn, up 6.7% YoY. This year's event will have six exhibition areas, including food and agricultural products, automobiles, technology, consumer goods, medical devices and medical care, service trade, and an innovation incubation area.
https://www.scmp.com/business/banking-finance/article/3271687/shanghai-expects-record-turnout-worlds-biggest-import-trade-fair-later-year?utm_source=rss_feed
Hong Kong stocks hover around 3-month lows as earnings jitters weigh on sentiment
South China Morning Post
Hong Kong stocks fell close to their lowest in three months on Wednesday as concerns grew over weak corporate earnings and headwinds in the property sector. The Hang Seng Index dropped 0.4% to 17,397.09, while the Hang Seng Tech Index fell 0.7%. Chinese electric vehicle maker Li Auto also lost 2.7% after rival Tesla reported disappointing earnings. Investors are now waiting for official June data on Chinese companies' industrial profits, which will shed light on how second-quarter earnings could perform.
https://www.scmp.com/business/china-business/article/3271632/hong-kong-stocks-over-around-3-month-lows-earnings-jitters-weigh-sentiment?utm_source=rss_feed
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