Why China’s public sector workers are in a rush to retire early; China’s stock investors cannot gauge sentiment as regulator cuts access to key data
In Cuba, China’s drive for EVs reshapes the roads of Havana
Welcome to this issue of The China Brief. Today is August 19, 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.
Why China’s public sector workers are in a rush to retire early
South China Morning Post
A number of Chinese public sector workers are opting to take early retirement because they fear that they will lose out when a new pension scheme comes into force in October. Some civil servants are also concerned about the impact of pay cuts on their pensions. The new scheme will require civil servants and employees of public institutions to contribute 8% of their salaries to a pension scheme, while employers will contribute 20%. Previously, public sector workers had not been required to make any contributions and were paid up to 80% of their salary as a pension when they retired.
https://www.scmp.com/news/china/politics/article/3274780/why-chinas-public-sector-workers-are-rush-retire-early?utm_source=rss_feed
China’s stock investors cannot gauge sentiment as regulator cuts access to key data
South China Morning Post
China's stock exchanges, the Shanghai and Shenzhen exchanges, have stopped providing real-time data on foreign inflows into onshore equities as regulators seek to downplay the influence of overseas investors amid persistent outflows. The exchanges will only publish select figures once a day after the close of trading. Foreign investors held a total of CNY3.5tn ($489.8bn) of Chinese stocks as of August last year, accounting for about 4% of the market capitalisation, according to China Capital International.
https://www.scmp.com/business/china-business/article/3274997/chinas-stock-investors-cannot-gauge-sentiment-regulator-cuts-access-key-data?utm_source=rss_feed
German warships await orders on crossing disputed Taiwan Strait
Japan Times
Two German warships are awaiting orders from Berlin to determine whether they will be the first German naval vessels in decades to pass through the disputed Taiwan Strait. China claims sovereignty over Taiwan and says it has jurisdiction over the waterway that divides the two sides. This move could potentially stoke tensions with Beijing.
https://www.japantimes.co.jp/news/2024/08/19/asia-pacific/german-warships-taiwan-strait/
In Cuba, China’s drive for EVs reshapes the roads of Havana
South China Morning Post
Cubans are increasingly using Chinese-made electric cars and scooters as a more cost-effective mode of transportation. China's Tianjin Dongxing Industrial and Cuban state-owned company Minerva created Caribbean Electric Vehicles (Vedca), a joint venture, to increase the presence of electric vehicles in the country. The introduction of these vehicles has quickly changed the face of transportation in the capital city of Havana.
https://www.scmp.com/news/china/diplomacy/article/3275006/cuba-chinas-drive-evs-reshapes-roads-havana?utm_source=rss_feed
U.S., China sign agreement to cooperate on financial stability
CNBC
BEIJING — The U.S. and China last week signed agreements for cooperating on financial stability, according to a People's Bank of China readout Monday.
The agreement was part of a meeting of the U.S.-China Financial Working Group in Shanghai on Thursday and Friday. Brent Neiman, deputy under secretary for international finance at the Treasury Department, and Xuan Changneng, deputy PBOC governor, co-lead the working group.
The two sides also exchanged a list of people to contact in the event of financial stress or risk events, the PBOC readout said. A Treasury readout was not available as of early Monday afternoon Beijing time.
https://www.cnbc.com/2024/08/19/us-china-sign-agreement-to-cooperate-on-financial-stability.html
Future murky for Russia-China pipeline as Mongolia omits project from long-term plan
South China Morning Post
Mongolia has not included the Power of Siberia 2 natural gas pipeline connecting Russia and China in its action programme through 2028. The pipeline, which is jointly overseen by the China National Petroleum Corporation (CNPC) and Gazprom, has been seen as controversial and could have provided Moscow with a financial lifeline as it grapples with sanctions and the ongoing war in Ukraine. The decision by Mongolia is seen as a shelving of the project due to pricing disagreements between Beijing and Moscow and concerns over secondary sanctions from Western countries.
https://www.scmp.com/economy/china-economy/article/3275022/future-murky-russia-china-pipeline-mongolia-omits-project-long-term-plan?utm_source=rss_feed
Beijing and Hollywood are decoupling as Chinese audiences favor domestic productions
CNBC
Hollywood blockbusters have dominated international box offices for decades, but in recent years, they have lost luster in the largest movie market outside the U.S. — China.
Walt Disney Co.'s latest film, "Deadpool & Wolverine," has taken the world by storm since its release on July 22, becoming the highest-grossing R-rated film of all time. But it has failed to replicate that success among Chinese moviegoers.
While the Marvel superhero sequel made a respectable $57 million in its first 20 days in China, a locally produced comedy-drama, "Successor," made six times as much in the time period, according to data from maoyan.com.
Released on July 16, "Successor" continues to thrive in Chinese theaters. As of Monday, it had grossed over $439 million to cement itself as China's third most-watched movie of the year. "Deadpool & Wolverine" languishes at number 15.
A hit Hollywood franchise screened in China, especially one under Marvel, would be almost certain to rank higher in the box office prior to 2020. For instance, Avengers: End Game was China's third most popular movie in 2019.
However, things have changed dramatically since then. "Godzilla x Kong: The New Empire" is this year's only Hollywood movie to rank among the top 10 highest-grossing movies in China, at number 8.
Last year, no Hollywood movie made to the top 10 — a first since at least 2011 according to Maoyan's records.
Though signs of Hollywood's waning influence on China's box office were evident even before 2020, the global pandemic helped solidify the trend, according to film experts. For roughly three years, Chinese theaters were closed, fewer films were made, and moviegoers turned to streaming for entertainment.
By the time Hollywood movies returned to screens in China, they were met with a much more insular as well as developed home market, according to Stanely Rosen, a professor of political science at the University of Southern California.
"China learned all they could from Hollywood. Now they make their own big-budget blockbuster films with good special effects, and even good animated films ... They don't need Hollywood anymore," Rosen, who specializes in Chinese politics, society, and film, told CNBC.
https://www.cnbc.com/2024/08/19/beijing-and-hollywood-are-decoupling-as-chinese-audiences-favor-domestic-productions.html
Luxury properties defy China’s slumping home sales as big-city buyers splash out
South China Morning Post
China’s luxury property market is defying the nationwide slump in the sector, with two luxury projects in Shanghai selling out within hours of being launched. A total of 110 flats at One Sino Park, developed by Sunac China Holdings, sold out in two hours, pulling in CNY 5.7bn ($798m). Meanwhile, all 124 flats on offer at Yuexiu Property’s Suhe Grand Mansion sold out, despite a price of CNY 103,570 per square metre. The successful sales are part of a trend of robust performance by luxury projects this year, despite the country’s declining property sector, with homebuyers purchasing 1,544 luxury homes in Shanghai in H1 2015, the highest in a decade.
https://www.scmp.com/business/china-business/article/3275032/luxury-properties-defy-chinas-slumping-home-sales-big-city-buyers-splash-out?utm_source=rss_feed
23,000 mainland Chinese obtain multi-entry 30-day talent visas to visit Hong Kong
South China Morning Post
More than 23,000 mainland Chinese individuals have obtained multi-entry talent visas to stay in Hong Kong for up to 30 days for technology, innovation, culture, and education-related activities since the policy was introduced in February 2022, according to Beijing's immigration authorities. The visa allows individuals to engage in scientific research exchanges, academic discussions, and other activities in Hong Kong. The policy is part of a series of more flexible visa measures between Hong Kong and mainland China that were introduced in 2022. In addition, over 30,000 requests have been filed for a new permit for Hong Kong residents with foreign passports since its launch on July 10.
https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3275050/23000-mainland-chinese-obtain-multi-entry-30-day-talent-visas-visit-hong-kong?utm_source=rss_feed
Shein gets go-ahead to build US$514-million first phase of new Guangzhou supply chain hub
South China Morning Post
Fast-fashion retailer Shein has received approval to build a new supply chain hub in the Zengcheng district of Guangzhou, southern China. The Singapore-based company, which sells clothing from $5 tank tops to $20 jeans, will construct a smart logistics park integrating warehousing, stocking, picking, distribution, shipping and settlement services. It is part of a $514m headquarters project that includes a 49-hectare site covering a construction area of at least 800,000 sq m. Shein, which was valued at $66bn in a funding round last year, is planning a potential listing in London.
https://www.scmp.com/tech/tech-trends/article/3275040/shein-gets-go-ahead-build-us514-million-first-phase-new-guangzhou-supply-chain-hub?utm_source=rss_feed
2 more top Chinese football officials netted in corruption crackdown
South China Morning Post
Two former senior Chinese sports officials have been given lengthy prison sentences for corruption. Li Yuyi, a former vice-chairman of the Chinese Football Association (CFA), was sentenced to 11 years in prison for taking bribes worth over CNY12m ($1.7m) between 2004 and 2021. Fu Xiang, a former director of the sport’s administrative centre in the provincial capital Wuhan and vice-chairman of the Wuhan Football Association, was given the same sentence for embezzlement and taking and giving bribes.
https://www.scmp.com/news/china/politics/article/3275038/2-more-top-chinese-football-officials-netted-corruption-crackdown?utm_source=rss_feed
Xi meets Vietnam's new leaders, says Hanoi is 'diplomacy priority'
Japan Times
Chinese President Xi Jinping praised Vietnam during a meeting with Vietnam's new leader, To Lam. Xi expressed China's support for Vietnam in adhering to party leadership and continuing with reforms and socialist modernization. This meeting highlights the close relationship between the two communist-run countries, despite occasional conflicts in the South China Sea.
https://www.japantimes.co.jp/news/2024/08/19/asia-pacific/politics/china-xi-vietnam-hanoi-diplomacy/
China expands export controls on drones, parts with potential for military use
South China Morning Post
China has banned the export of certain drones and their components amid growing international pressure to curb the dual-use product sales that could be used in military applications. The new policy, that takes effect from 1 September, bans unpermitted exports of drones and parts of certain specifications such as aero engines with an output above 16 kilowatts. Payload components that could have military applications are also included in the ban. The ban includes infrared imaging devices, high-precision inertial measuring units, synthetic-aperture radars, high-performance indicating lasers, wireless communication devices with a range beyond 50 km, consoles that can control more than 10 drones at the same time and general civilian counter-UAV equipment. Exporters will need to apply for approval of these dual-use items or technologies from the Ministry of Commerce, with evidence of the end users and their ultimate use. Failing to comply with the restriction could lead to administrative punishments, or even criminal charges, the ministry warned.
https://www.scmp.com/economy/global-economy/article/3274968/china-expands-export-controls-drones-parts-potential-military-use?utm_source=rss_feed
Chinese, Philippine ships collide in South China Sea
Deutsche Welle
Chinese and Philippine vessels collided near a disputed shoal in the South China Sea. China accused one of the Philippine ships of deliberately colliding with a Chinese ship. The Philippine government blamed the collision on "unlawful and aggressive manoeuvres" by China. The Second Thomas Shoal is home to Filipino troops, who are stationed on the grounded Sierra Madre ship and require regular resupply. The South China Sea is a disputed territory with multiple Southeast Asian states making overlapping claims.
https://www.dw.com/en/chinese-philippine-ships-collide-in-south-china-sea/a-69974482
Businesses Are Already Girding for Next Phase of the U.S.-China Trade War
NY Times
Easy Signs, an Australian company that manufactures banners and marketing installations in the US, has put off plans for expansion due to the trade war between the US and China. The company's cloth signs are displayed on aluminium stands made in China, which are now subject to high tariffs under policies implemented by former President Donald Trump and continued by the Biden administration. The company is concerned that the costs of imported components could increase further if Trump wins the upcoming presidential election and follows through on his threat to add tariffs on all Chinese goods.
https://www.nytimes.com/2024/08/19/business/china-us-trade-war.html
The Innovation Fallacy
Foreign Affairs
The diffusion of technology, rather than the pioneering of new innovations, is the key to geopolitical supremacy in the Fourth Industrial Revolution, according to an op-ed in Foreign Policy. The article argues that while both China and the US are focused on dominating innovation cycles in leading sectors, they are overlooking the importance of technology diffusion. The ability to embrace and adopt technologies at scale is crucial for foundational advances such as artificial intelligence (AI) and electricity. The article points to the examples of the UK in the First Industrial Revolution and the US in the Second Industrial Revolution, highlighting the importance of widespread adoption and the diffusion of iron machinery and machine tools, respectively. The US is well-positioned to maintain its technological edge in the Fourth Industrial Revolution due to its strong adoption of information and communication technologies, such as cloud computing and smart sensors. However, the US should prioritize improving the rate at which AI becomes embedded in a wide range of productive processes, rather than focusing solely on dominating innovation cycles in leading sectors. This can be achieved through policies that broaden the talent pool, such as providing greater support to community colleges, and investments in technology diffusion institutions.
https://www.foreignaffairs.com/china/innovation-fallacy
Warnings of overcapacity in China’s ride-hailing sector spread amid weak demand
South China Morning Post
A number of Chinese local governments have warned of saturation in the ride-hailing market, cautioning potential new drivers against entering the industry. The warnings come as demand growth slows due to weak economic activity and competition from driverless taxis. The warnings also highlight the high cost of ride-hailing services compared to traditional taxis and public transport. In the second quarter, the number of orders per day per vehicle in the city of Jiaxing fell by 0.6 orders to 11.9, while average daily revenues dropped by CNY9.9 ($1.4) to CNY214.7 before operating costs were deducted.
https://www.scmp.com/economy/china-economy/article/3274774/warnings-overcapacity-chinas-ride-hailing-sector-spread-amid-weak-demand?utm_source=rss_feed
China’s one-child policy hangover: Scarred women dismiss Beijing’s pro-birth agenda
CNN
China's current push for more births is proving to be a tough sell as a new generation of women are reluctant to become parents due to the sacrifices their parents made under the one-child policy. China has gradually lifted birth caps from one to two children and then three in 2021 in an attempt to tackle a looming demographic crisis. However, many women who grew up under the one-child policy now eye parenthood with reluctance, making Beijing's pro-birth push challenging to implement. The policy shift from birth limits to birth boost has left many women questioning the government's initiatives and arguing that having children or not should be a personal choice rather than a policy decision.
https://edition.cnn.com/2024/08/18/china/china-one-child-policy-hangover-intl-hnk/index.html
Regulatory, geopolitical uncertainties cloud M&A activity in China: Deloitte
South China Morning Post
Chinese companies are concerned that geopolitical tensions and macroeconomic uncertainties could hinder their ability to engage in mergers and acquisitions (M&A) deals, according to a report by Deloitte. The survey of 42 Chinese companies found that regulatory changes and geopolitical shifts are the two biggest disruptive forces affecting M&A activities. The slowing Chinese economy has also had an impact on deal-making, with M&A volumes and values in the Asia-Pacific region decreasing by 17% and 32% respectively in the first half of 2024 compared to the same period in 2023.
https://www.scmp.com/business/banking-finance/article/3274819/regulatory-geopolitical-uncertainties-cloud-ma-activity-china-deloitte?utm_source=rss_feed
Why there’s no quick fix in the South China Sea disputes, and war ‘cannot be ruled out’
South China Morning Post
Wu Shicun, founder of the National Institute for South China Sea Studies, spoke about the current situation in the South China Sea and the ongoing disputes in an interview with the South China Morning Post. He highlighted two main concerns: the increasing militarization led by the US, and the unilateral behavior of rival claimants such as the Philippines, Vietnam, and Malaysia. He explained that as negotiations on a code of conduct have progressed slowly, countries are becoming less motivated to reach an agreement and are instead focusing on building their own islands or cementing control over disputed waters. Wu also discussed China's territorial disputes with the Philippines, stating that the Philippines was the first country to violate China's rights in the South China Sea and that its actions aligned with the US strategy of containing China's rise. He argued that China's response, including its "four noes" policy, was appropriate and that it should have taken stronger countermeasures against the Philippines to prevent further negative impacts. Wu also highlighted the impact of the great power rivalry between China and the US on the South China Sea disputes, stating that the US has abandoned its neutrality in the region and is trying to jeopardize China's ties with rival claimants. He emphasized that as long as there is competition between China and the US, the South China Sea issues will not be resolved through negotiation and consultation alone. Wu also discussed other factors at play, including Vietnam's land reclamation activities and the possibility of joint oil and gas exploration. He stated that China should take countermeasures against Vietnam's actions and that joint exploration is unlikely to become a reality due to the lack of trust in China's initiative. Finally, Wu suggested that a new consensus is needed to resolve the territorial disputes in the South China Sea. He proposed demilitarization and the development of civilian facilities as a potential solution, and emphasized the importance of maintaining the status quo and engaging in discussions on demilitarization, environmental protection, and sustainable fishing.
https://www.scmp.com/news/china/diplomacy/article/3274829/why-theres-no-quick-fix-south-china-sea-disputes-and-war-cannot-be-ruled-out?utm_source=rss_feed
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