US CEOs Extend China Stay After Last-Minute Invite to Meet Xi
Ex-officials of alleged Chinese police base not indicted; China sentences ex-soccer chief to life in prison in latest crackdown on sports corruption
Welcome to this issue of The China Brief. Today is March 26, 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.
US CEOs Extend China Stay After Last-Minute Invite to Meet Xi
Bloomberg
Several US executives attending a business summit in Beijing have received invitations to a meeting with a top Chinese leader, widely believed to be President Xi Jinping. The names of the attendees were not disclosed, but it is reported that some executives may need to extend their stay in China to attend the meeting. China is aiming to boost confidence amid declining foreign investment and political tensions with the US. The meeting is seen as part of the Chinese government's efforts to improve relations and build on dialogue established at the Asia-Pacific Economic Cooperation summit last November.
Lawsuit says Florida law casts ‘suspicion’ on Chinese students and faculty
South China Morning Post
Graduate students from China and a professor are suing Florida education officials to stop enforcement of a law that limits research exchanges between state universities and academics from seven countries. The law prevents the Chinese Communist government and other countries from influencing Florida’s public colleges and universities, but the plaintiffs argue it is discriminatory, unconstitutional, and reminiscent of the Chinese Exclusion Act of 1882. The law has forced two of the students to put their studies at Florida International University on hold, while the professor says he is unable to recruit research assistants.
Ex-officials of alleged Chinese police base in Tokyo not indicted
Japan Times
Tokyo prosecutors have decided not to indict two Chinese women for fraud in a case that involved their ties with an organization described as a Chinese overseas police station. The women were referred to prosecutors in February for fraudulent COVID-19 relief fund claims. The prosecutors did not explain the reason for their decision. The organization in question was established in 2018 to promote cooperation among overseas Chinese individuals and businesses.
Tim Cook’s Love for China Helps Xi Fight Fears of Economic Slump
Bloomberg
China's efforts to counter the negative perception of its economy were helped by positive comments from CEOs of global companies. Apple CEO Tim Cook said he "loved it" in China, despite the fact that iPhone sales fell 24% in the first six weeks of 2021. Other CEOs who praised China's market at the China Development Forum included Pfizer's Albert Bourla and Nestle's Mark Schneider.
Hong Kong scraps early release for national security convicts
Japan Times
Hong Kong's leader announced that individuals convicted on national security charges will no longer be eligible for early release for good behavior, according to a new law enacted by the city's authorities. The announcement came after reports that a democracy activist, who was convicted for incitement of secession, had been held back from being released. The move is seen as another step in Beijing's efforts to crack down on dissent in Hong Kong.
China Manufacturing Drive Risks Higher US Inflation, NY Fed Says
Bloomberg
New research from the Federal Reserve Bank of New York suggests that China's efforts to boost manufacturing and support its economy could have an impact on US inflation. As credit flows to Chinese factories increase, there is a possibility that the extra demand from Chinese manufacturers could push up prices for commodities and intermediate goods, leading to a weaker dollar and upward pressure on US inflation. This could delay expectations for monetary easing by the Federal Reserve. The New York Fed's findings contradict the belief that a manufacturing-led expansion in China would be disinflationary for the US. However, the researchers also noted that any boost to Chinese economic output from this shift in credit flows would likely be short-lived.
Hong Kong's new national security law enforced for first time
Nikkei Asia
Authorities in Hong Kong have denied early release to a prisoner convicted of national security-related offenses, the first known case under controversial legislation enacted on Saturday. The prisoner, Ma Chun-man, was found guilty of inciting secession and sentenced to five years and nine months in prison. The new security law allows the government to deny early release to eligible prisoners. This case is seen as a violation of free speech by activists and lawyers. The security law is more comprehensive than a previous law imposed by Beijing and includes offenses such as treason and external interference in domestic affairs.
Astra, Pfizer Boost China Bets Despite US Drive to Decouple
Bloomberg
AstraZeneca and Pfizer have committed to supporting China’s growing biopharmaceutical sector. The CEOs of both companies pledged support for an industry that is currently being targeted by US politicians. The Biosecure Act is currently making its way through Congress, with the intention of reducing US reliance on medicines made in China. The legislation seeks to ban any Chinese biotech firm “of concern” from receiving federal contracts, as well as any firms that work with them. Other companies, including WuXi AppTec, are named in the bill. However, the legislation may also represent an opportunity for other companies working in China.
Andrew Left, Banned for Evergrande Warning, Now Wants an Apology
Bloomberg
US short-seller Andrew Left has called for an apology and a refund of fines he received from the Hong Kong Securities and Futures Commission (SFC) in 2016. Left was fined HK$1.6m ($204,580) and given a five-year trading ban after questioning the financial stability of China Evergrande Group. The property developer has since defaulted on its debt and been accused of inflating its revenue by the China Securities Regulatory Commission. Left said an apology and refund of penalties would be a "gesture of good faith" from the SFC.
China sentences ex-soccer chief to life in prison in latest crackdown on sports corruption
CNN
Chen Xuyuan, former head of China's official soccer association, has been sentenced to life in prison by a court in Hubei province for corruption. Chen was found guilty of accepting $10.6m out of $11.2m offered on 217 occasions between 2010 and 2023 in exchange for aiding companies and individuals. Multiple senior sporting executives were also jailed as part of the crackdown on the country's corruption-plagued professional football league. Despite China's vision to become a soccer superpower, its development of high-level professional soccer has been dogged by financial mismanagement and deep-rooted corruption.
CNN
New Zealand has publicly accused China of launching cyberattacks on its government systems. The accusation came after the US and the UK announced charges and sanctions against seven Chinese hackers who allegedly conducted widespread attacks on behalf of China's civilian intelligence agency. The Chinese embassy in London dismissed the claims as "completely unfounded" and "malicious slander," calling the sanctions "outright political manipulation." New Zealand said it would not impose sanctions as it does not have the legislation to do so, but conveyed its concerns to the Chinese ambassador.
Ping An and Vanke look made for each other
Reuters BreakingViews
There is speculation that insurance giant, Ping An, will come to the aid of beleaguered Chinese property developer, Vanke. Vanke has recently suffered a number of credit rating downgrades and is being pressured to repay its debt early, however, banks are reluctant to lend. Ping An already has a large exposure to the property market, with property-related debts at Ping An Bank amounting to almost CNY 290bn ($42bn). If Ping An were to help Vanke, this could help to stabilise the property sector and protect its own balance sheet.
Why Are China’s Nationalists Attacking the Country’s Heroes?
NY Times
China is facing a challenge as an online army of Chinese nationalists is punishing perceived insults to the country, including from Chinese business figures. These nationalists have recently turned on China's richest man and encouraged boycotts that have wiped out billions from his beverage company's market value. They have also targeted Huawei and accused it of secretly admiring Japan. The state has often encouraged such nationalist crusaders, deploying them to drum up support, deflect foreign criticism, or distract from crises. However, the rise of these nationalists poses a challenge to China's efforts to champion its domestic companies and reassure entrepreneurs.
Chinese battery giant shrugs off EV sales slowdown to press on with expansion
South China Morning Post
China's CATL, the world's largest battery manufacturer, is pressing ahead with expansion in the face of a global slowdown in electric vehicle (EV) sales. It plans to crank up output of its more technologically advanced products, including sodium-ion batteries that could cost less than lithium-ion versions. CATL supplies batteries to major carmakers including Tesla, Volkswagen and Toyota. It generated CNY400.9bn ($56bn) in revenue in 2021, eight times its 2020 total.
Foreign firms in Hong Kong review operations for domestic national security law
South China Morning Post
Foreign companies in Hong Kong have been reviewing their operations since last year ahead of the now-passed domestic national security legislation, but they had already made major changes after the Beijing-imposed version came into force in 2020, corporate lawyers and consultants have said. City and central authorities have reassured the international sector that the new legislation, mandated under Article 23 of the Basic Law, the city’s mini-constitution, would not disrupt their operations and would be beneficial to the city’s business environment. But some companies are said to have remained concerned about the potential for unintentional breaches of the law, despite their preparation work.
China and US battle fiercely on yet another tech front: patent applications
South China Morning Post
China has overtaken the US for the second year in a row in international patent applications, according to 2023 UN data. China filed 69,610 applications in 2023, compared to 55,678 from the US. China has long been criticised for prioritizing patent quantity over quality and for subsidising patent applications. However, it is now improving the quality of its patents, weeding out plagiarised research papers and reducing substandard filings. Despite this, some analysts suggest that China's economy and ageing population could hinder its innovation trajectory and see momentum swing back to the US.
The rankings and benchmarks for innovation diverge significantly between the two countries, and it is difficult to determine the link between patent filings and new products, industries, and economic activity. Furthermore, most attempts to quantify innovation fail to capture intangibles such as government regulation, business models, and the quality and quantity of data and trade secrets. China has been criticised for providing high subsidies for patent filing, leading to lower-quality patents. However, Beijing has been working to address this issue, clamping down on plagiarism and reducing poorly vetted patents.
China's rise in patent filings has not yet prompted a wake-up call for the US tech community, partly due to the industry's inherent divisions. Patents are important for larger hardware companies, but less so for start-ups and software companies. The US patent filing process is also seen as unnecessarily lengthy. However, some US companies are choosing to file for Chinese patents to compete in the Chinese market.
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