Xi Jinping meets Taiwan’s Ma Ying-jeou in historic first, 9 years after landmark Singapore handshake; Jack Ma steps into ‘mistakes’ brouhaha to boost Alibaba’s morale
China says economy ‘stable,’ rejects Fitch Ratings downgrade of its fiscal outlook
Welcome to this issue of The China Brief. Today is April 10, 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.
South China Morning Post
Former Taiwanese President Ma Ying-jeou has held talks with President Xi Jinping in Beijing, marking the first time a serving or former leader of Taiwan has met with top Chinese leadership. The two leaders last met in Singapore in 2015, marking the first cross-strait summit since the two sides split in 1949. Ma's visit comes amid rising cross-strait tensions, as Taiwan prepares for the inauguration of independence-leaning President William Lai Ching-te, which is likely to further complicate US-China relations.
US wants to ‘flip script’, isolate China with allies’ help, says Washington’s ambassador to Tokyo
South China Morning Post
The US is seeking the help of Japan and other allies in Asia to counter China's attempts to isolate countries in the region, according to US Ambassador to Tokyo Rahm Emanuel. Speaking ahead of a summit between US President Joe Biden and Japanese Prime Minister Fumio Kishida, Emanuel said the US wants to "flip the script" and make China the isolated party. The countries are looking to increase cooperation on security in the Indo-Pacific region as China becomes more assertive over disputed waters in the South China Sea.
Kishida’s U.S. trip highlights economic and political compatibility
Japan Times
Prime Minister Fumio Kishida and U.S. President Joe Biden are emphasizing the strong economic ties between Japan and the U.S. and the need for collaboration in areas such as AI and semiconductors. The leaders are signaling their unity against China's assertiveness in the region and their efforts to address supply chain concerns linked to Beijing.
China insurer Ping An's trust arm misses payment over property downturn
Nikkei Asia
Ping An Trust, a subsidiary of Ping An Insurance, has acknowledged its failure to make an overdue payment on a product invested in a project by Hong Kong-listed property developer Zhenro Properties Group. The trust company said it delayed payment due to the overall property downturn affecting its ability to do so. Ping An Trust is bringing a lawsuit against Zhenro, which has obligations to buy back the product. The missed payment is an example of how China's property sector woes are spilling over into the banking and trust sectors. Ping An's asset management business reported a net loss of $2.7bn in 2023.
Blizzard and NetEase Settle Their Beef, Returning Warcraft to China
NY Times
Chinese company NetEase has signed a new deal to distribute titles from Microsoft's Blizzard Entertainment, restoring access to popular video games like World of Warcraft for Chinese gamers. The companies also agreed to distribute NetEase titles on Microsoft's Xbox game device. NetEase and Blizzard first signed a distribution deal in 2008, and the agreement proved beneficial for both sides. NetEase gained access to globally popular titles, while Blizzard secured a foothold in what would become the world's largest video game market.
South China Morning Post
A 25-year-old man from China has gained popularity on mainland social media for selling electric pedicabs to customers in the United States. Luo Hao saw videos of a Chinese woman living in the US who had bought a pedicab for her father-in-law as a Christmas gift. The father-in-law was so fascinated by the vehicle that Luo decided to start a business selling them in the US. He has sold dozens of vehicles since March, but says starting a business is hard work and profits are not as high as people might think.
South China Morning Post
Local government and party agencies in China are implementing measures to cut spending as the country's economy falters. The measures include a greater use of new energy vehicles, fewer indoor plants and less tea consumption. The northwestern province of Shaanxi has mandated that new energy vehicles account for at least 40% of newly procured and replaced official vehicles at the provincial level, while the Fujian province has called for the elimination of "personal use of public resources". Beijing has urged both central and local governments to cut spending amid economic pressure.
South China Morning Post
Beijing's commercial real estate market is showing signs of recovery and is expected to stabilise further this year due to a rebound in consumption and policy support. Rents in urban Beijing's retail market rose 1.3% quarter on quarter in Q1 2024, the fastest growth since 2019. Rents in the suburban retail market also jumped by 2.8%, the fastest growth since 2019 and a rebound to 2021 levels. However, office rents continue to drop, with grade-A space seeing an 11.4% YoY decline in Q1. Office leasing inquiries are rising, but competition among landlords is putting downward pressure on rents.
China says economy ‘stable,’ rejects Fitch Ratings downgrade of its fiscal outlook
Associated Press
China's Finance Ministry has criticised Fitch Ratings' decision to downgrade its outlook to negative but maintain its A+ rating. Fitch argued that China's debt risk was rising as it attempts to tackle mounting local and regional government debts and reduce its reliance on real estate. The agency also noted that China's deficit was expected to rise to 7.1% of GDP this year, up from 5.8% in 2023, compared with the median for countries with an A rating of 3.0%. Fitch forecast China's economy would grow at 4.5% this year, compared with 5.2% in 2022.
Work to start on 2 Vietnam-China high-speed railways by 2030, Hanoi says
South China Morning Post
Vietnam plans to begin construction on two high-speed railway lines connecting its capital, Hanoi, with China. The two countries already have a system of highways and railway lines, but these are in need of upgrading. One of the planned high-speed lines will run from Vietnam’s port cities of Haiphong and Quang Ninh through Hanoi to Lao Cai province, which borders China’s Yunnan province. The other line will run from Hanoi to Lang Son province, which borders China’s Guangxi region. Trade between Vietnam and China rose 22% YoY to $43.6bn in Q1 2018, according to Vietnamese government data.
South China Morning Post
China's growing ties with Russia are raising concerns in the US, with Deputy Secretary of State Kurt Campbell comparing the situation to China's sensitivity around Taiwan. Campbell stated that the US has historically focused on maintaining peace and stability in Europe, and China's involvement with Russia in a way that the US doesn't fully understand could impact the US-China relationship. Campbell's comments come amid high-level bilateral engagements between the US and China, where both sides are confronting each other on difficult issues such as US restrictions on sales of technology to China and China's economic engagement with Russia amid the Ukraine crisis.
South China Morning Post
Alibaba Group Holding has fundamentally changed its corporate culture to put customers first in its adaptation of technology, its co-founder Jack Ma wrote, as he stepped into a social media hubbub over the hubris that caused what was once the world’s largest e-commerce platform to lose ground to competitors.
‘Robotic’ China restaurant boss mimics android to serve delighted customers, goes viral globally
South China Morning Post
A hotpot restaurant owner in China has become an online sensation after impersonating a robot waitress. The eatery entrepreneur in Chongqing municipality has been captured in a series of viral videos serving customers with robot-like mechanical movements. While some viewers thought she was a real robot, others noticed small details that gave away her true identity as a human. The restaurant owner explained that her robotic idea came about from her daily interactions with friends and that it was about "having fun using my talents and adding a unique feature to the restaurant". The videos have received thousands of likes on social media and international attention.
Hong Kong Considers Changing Tax Rules to Lure Private Credit Business
Bloomberg
The government in Hong Kong is considering introducing new tax rules to provide more favorable treatment to alternative investments, including private credit and infrastructure. The proposed rules would offer tax exemptions on interest income to special purpose vehicles for alternative investments such as private credit, hybrid securities, real estate, and infrastructure. The move comes as Hong Kong seeks to attract more asset management businesses amid growing competition from Dubai and Singapore.
South China Morning Post
China's stockbrokers experienced a second consecutive year of pay cuts in 2023, with salaries at the country's top 10 brokerages falling between 1.2% and 27%, according to data compiled by the South China Morning Post and Wind Information. The slump in salaries reflects the fallout from a three-year market slump, as well as a government crackdown on corporate extravagance in the sector. The average salary at Citic Securities, China's largest brokerage by revenue, fell 5.3% to CNY792,000 ($109,492) in 2023, while wages at Guotai Junan Securities dropped 10% to CNY668,000.
China turns up heat with regulators, banks under the microscope amid focus on financial revamp
South China Morning Post
China has launched a fresh wave of inspections on major economic and financial regulators, as well as the country's big four state-owned banks, in a move that forms part of Beijing's ongoing reform programme. The 34 targets of the discipline inspections include China's central bank, its banking, securities and foreign exchange regulators, the top economic planner and the finance ministry.
U.S. considers easing warnings for Americans traveling to China
Nikkei Asia
The U.S. is considering easing advisories against its citizens traveling to China, according to Deputy Secretary of State Kurt Campbell. He acknowledged concerns that the warnings may have curtailed exchanges between Americans and Chinese. Campbell also expressed concerns about the large number of Chinese economic migrants coming to the U.S.
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