US college instructor recounts surviving stabbing in China to Iowa public radio; As Li Qiang visits, ‘persistent duality’ of Australia’s China thinking on show
Beijing threatens retaliation on expected 25% EU tariff on Chinese EVs
Welcome to this issue of The China Brief. Today is June 12, 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.
Beijing threatens retaliation on expected 25% EU tariff on Chinese EVs
Nikkei Asia
China has threatened retaliation after it was reported that the European Union (EU) is planning to impose an additional 25% import tariff on Chinese-made electric cars. China's foreign ministry spokesperson criticised the move, calling it "typical protectionism" and stating that it is against the principles of the market economy and international trade rules. The spokesperson also claimed that the tariffs would harm China-Europe economic and trade cooperation, as well as the stability of the global auto supply chain. The EU's new "anti-subsidy duties" are expected to be announced by the European Commission later today, and will likely be applied from July.
https://asia.nikkei.com/Economy/Trade/Beijing-threatens-retaliation-on-expected-25-EU-tariff-on-Chinese-EVs
US college instructor recounts surviving stabbing in China to Iowa public radio
CNN
An American college instructor, David Zabner, has recounted his experience of surviving a stabbing attack in China. He was one of four Cornell College instructors attacked while visiting a public park in the city of Jilin, where they were teaching on a partnership programme with a local university. Zabner was stabbed in the arm but did not realise he had been attacked until he saw blood. The motive for the attack is not known. The incident comes as China seeks to lure back foreign visitors following three years of stringent Covid-19 border controls.
https://edition.cnn.com/2024/06/12/china/china-stabbing-us-survivor-recount-intl-hnk/index.html
As Li Qiang visits, ‘persistent duality’ of Australia’s China thinking on show
South China Morning Post
A new poll conducted in Australia shows that while most Australians view China as a security threat and have concerns about foreign interference and investment from China, they still recognise the importance of maintaining a strong relationship with the country. The poll also revealed that while around half of respondents foresee a potential military conflict with China in the next three years, there has been a six-point jump in the percentage of Australians who believe the Australia-China relationship will improve over the same period. The poll was conducted ahead of Chinese Premier Li Qiang’s visit to Australia this week.
https://www.scmp.com/week-asia/politics/article/3266246/li-qiang-visits-persistent-duality-australias-china-thinking-show?utm_source=rss_feed
Hong Kong Cancels Six Activists’ Passports in Unprecedented Move
Bloomberg
Hong Kong has cancelled the passports of six UK-based pro-democracy activists, including former lawmaker Nathan Law, as part of a crackdown on dissent. The activists were accused of engaging in activities that endangered national security and of making "scaremongering remarks to smear and slander the Hong Kong Special Administrative Region." The move follows the introduction of a security law last year that gives authorities the power to cancel the passports of wanted individuals living overseas. The activists have also been banned from receiving funding, renting property, or having joint ventures in Hong Kong.
https://www.bloomberg.com/news/articles/2024-06-12/hong-kong-cancels-six-activists-passports-in-unprecedented-move?srnd=industries-legal
China’s value push may bridge a Hong Kong gap
Reuters BreakingViews
The gap between onshore and offshore Chinese stocks is narrowing, due to a push from the China Securities Regulatory Commission for higher dividend payouts. The Hang Seng Stock Connect China AH Premium Index has eased, and at 140, is only seven percentage points above its 10-year average. This narrowing gap is likely to encourage Chinese investors to seek returns in Hong Kong stocks, which could further boost the Hong Kong market.
https://www.breakingviews.com/considered-view/chinas-value-push-may-bridge-a-hong-kong-gap/
China’s Xi Jinping again calls for greater corporate governance at state-owned firms ahead of third plenum
South China Morning Post
A Central Commission for Comprehensively Deepening Reform meeting took place yesterday, head of the meeting President Xi Jinping touched on the need to enhance China's corporate governance system, to better protect farmers' interests and to cultivate a globally competitive environment for innovation.
https://www.scmp.com/economy/economic-indicators/article/3266312/chinas-xi-jinping-again-calls-greater-corporate-governance-state-owned-firms-ahead-third-plenum?utm_source=rss_feed
Evergrande founder’s Black’s Link mansion finds a buyer after a year-long fire sale
South China Morning Post
A mansion in one of Hong Kong's most exclusive neighbourhoods has been sold after being on the auction block for 15 months. The 5,171 sq ft property sold for HKD 448m ($57.35m), 44% less than valuers estimated it to be worth. The mansion was seized by China Construction Bank (Asia) in November 2022 and put up for sale to recover unpaid bills. The sale offers a minor victory for China Evergrande Group’s liquidators as they work through an estimated $300bn of liabilities following the developer's liquidation in January.
https://www.scmp.com/business/article/3266307/evergrande-founders-blacks-link-mansion-finds-buyer-after-year-long-fire-sale?utm_source=rss_feed
5 critical shifts Chinese firms need to make to be successful
South China Morning Post
Chinese businesses will need to make five critical shifts in order to succeed in the next decade, according to McKinsey & Company's chairman of the Greater China region, Joe Ngai. Companies will need to strengthen their fundamentals, apply a more segmented and granular approach to understanding customers, build truly global companies, embrace digitalisation, and undergo significant succession processes. Ngai said that Chinese companies will need to move away from the top-down leadership style that has been successful in the past and install professional managers who can make key decisions in the top ranks.
https://www.scmp.com/opinion/china-opinion/article/3265781/5-critical-shifts-chinese-firms-need-make-be-successful?utm_source=rss_feed
China dismisses Taiwan's concerns after man arrested on river leading to Taipei
Japan Times
A Chinese man was arrested near Taipei after crossing the Taiwan Strait on a speedboat. The Chinese government claims that the man was acting on his own and that Taiwan should not be suspicious. However, Taiwanese security officials are alarmed by the incident, as tensions between Taiwan and China continue to escalate. Taiwan believes that the man, who is a former Chinese navy captain, may have been probing the island's defenses.
https://www.japantimes.co.jp/news/2024/06/12/asia-pacific/politics/china-taiwan-man-river-taipei/
Hong Kong stock market increasingly driven by mainland China investors: Hang Seng Indexes
South China Morning Post
Inflows from mainland Chinese investors have helped to support the gains in the Hong Kong stock market this year, according to a study by Hang Seng Indexes. Southbound inflows under the Stock Connect scheme have doubled year to date to HKD 321bn ($41bn) compared to the whole of 2023. The Hang Seng Composite Index, which covers 95% of Hong Kong’s market capitalisation, has risen 6% so far this year. The Hang Seng Stock Connect Hong Kong Top Shareholding 50 Index has surged by 15.9% this year, outperforming the Hang Seng Index by around 10 percentage points.
https://www.scmp.com/business/banking-finance/article/3266301/hong-kong-stock-market-increasingly-driven-mainland-china-investors-hang-seng-indexes?utm_source=rss_feed
Australia anticipates China will lift final obstacle for exports as they ease past 2020 row
Associated Press
The Australian government is confident that a ban on live lobster imports to China will be lifted after Chinese Premier Li Qiang visits the country. China banned minister-to-minister communications with Australia in 2020 and imposed trade barriers on Australian products including beef, barley, coal, wood and wine, costing Australian exporters AUD20bn ($13bn) a year. The ban on lobsters is the only remaining restriction and Australian Trade Minister Don Farrell said he was confident that Li's visit would result in a successful outcome for lobster producers.
https://apnews.com/article/australia-china-trade-li-qiang-visit-9e0b031cbbffde0ddf41342ec2cea6c1
Evergrande’s NEV unit plunges on China’s order to refund US$262 million in state subsidies
South China Morning Post
China Evergrande New Energy Vehicle Group (NEV) shares plummeted by as much as 26.7% after the Chinese government ordered the company to return all state subsidies. Evergrande NEV was ordered to return CNY1.9bn ($261.9m) in subsidies it had received because it failed to meet its contractual obligations. The company had produced just 1,700 cars at a total loss of CNY12bn last year. Evergrande NEV has 15 days to return the subsidies or risk losing its assets. The company's parent company, China Evergrande Group, was ordered to be liquidated by the Hong Kong High Court in January.
https://www.scmp.com/business/china-business/article/3266261/evergrandes-nev-unit-plunges-chinas-order-refund-us262-million-state-subsidies?utm_source=rss_feed
A Requiem for Hyperglobalization
Foreign Affairs
The era of hyperglobalization, which began in the late 1980s, played a crucial role in driving economic convergence between rich and poor countries. This period saw developing nations experience remarkable growth rates and a decline in poverty. However, since 2020, hyperglobalization has come to a halt, with developing countries' trade declining and convergence stalling. Western intellectuals and policymakers have criticized hyperglobalization for its impact on domestic inequality and manufacturing jobs, leading to protectionist measures. Still, abandoning hyperglobalization entirely would be detrimental to global economic development and increase inequality.
The benefits of hyperglobalization are evident in the reduction of poverty and the growth of developing countries. Trade became a significant engine of growth and poverty reduction between 1990 and 2020. Average wages in the manufacturing sector in China, for example, increased dramatically, lifting millions out of poverty. The decline in hyperglobalization has resulted in developing countries turning away from markets and implementing protectionist policies. This reversal without economic justification reflects a mimicry of Western sentiment and is detrimental to their own economic development.
Developing countries must consider the strategic vision of a more integrated, globalized world and whether it is still worth pursuing. The end of hyperglobalization means a return to regional and geopolitical trading blocs, increased commodity dependence, and limited access to dynamic manufacturing and services sectors. The architects of the world's economic future must take into account the perspective of developing countries and the tremendous progress that was made during the era of convergence. While hyperglobalization had its drawbacks, it played a crucial role in reducing global inequality and improving human welfare.
In conclusion, hyperglobalization was a significant driver of economic convergence between rich and poor countries. Its decline since 2020 has led to a decrease in trade and a halt in convergence. However, abandoning hyperglobalization entirely would be detrimental to global economic development and increase inequality. Developing countries and policymakers must consider the long-term benefits of a more integrated, globalized world and work towards maintaining and improving upon the progress made during the era of convergence.
https://www.foreignaffairs.com/china/requiem-hyperglobalization
China’s glut of idle property causes headache for the government
Guardian
China is facing an enormous housing oversupply problem, with millions of newly built homes standing empty and unwanted across the country. According to the National Bureau of Statistics, there were nearly 391 million square metres of unsold residential property in China as of April, equivalent to the size of Manchester and Birmingham combined. The glut of housing stock has caused problems for the government, shaken the economy and raised tensions over housebuilding in a nation where property investment has traditionally been viewed as a safe bet. The pandemic and a regulatory crackdown have led to a downward spiral in the real estate sector, with potential homebuyers reluctant to invest due to shaky faith in the economy and concerns about developers failing to deliver on paid-for apartments. The government has attempted to encourage people to invest in the property market, but these efforts have been unsuccessful. Sales of newly built residential properties between January and April were down over 30% compared to the previous year.
https://www.theguardian.com/business/article/2024/jun/12/chinas-glut-of-idle-property-causes-headache-for-the-government
G7 leaders set to highlight Chinese overproduction
Nikkei Asia
The Group of Seven (G7) countries are expected to express concern about China's overproduction and excessive government support at their summit in Italy. The leaders of the G7 nations will discuss countering Chinese export controls on key minerals and strengthening supply chains. Economic security, particularly in relation to Chinese overproduction of electric vehicles and solar panels, will be on the agenda. Japan, the US, and European countries have criticized China's subsidies and tax benefits for distorting free and fair competition. The G7 is expected to reject China's claims and emphasize that overproduction hinders the international economic order. The leaders' statement will also address economic security issues related to China and Russia, as well as call for solidarity with Ukraine and further sanctions against Russia. Japan is also expected to announce new sanctions against third-country organizations, including in China.
https://asia.nikkei.com/Politics/International-relations/G7-leaders-set-to-highlight-Chinese-overproduction
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