Xi meets US CEOs as American businesses seek to mend China ties; PBOC Chief Seeks to Deepen Currency Ties With Asian Economies; China wins WTO dispute with Australia over steel products
Welcome to this issue of The China Brief. Today is March 27, 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.
Xi meets US CEOs as American businesses seek to mend China ties
Financial Times
Chinese President Xi Jinping met with a group of US chief executives in Beijing on Wednesday in an effort to ease strained relations between the two countries. The meeting took place at the Great Hall of the People and the details have not been revealed. The gathering followed the China Development Forum, attended by US executives, but European chief executives were not invited. US-China relations have stabilised to some extent following bilateral talks between Xi and US President Joe Biden in November but tensions continue to rise.
China wins WTO dispute with Australia over steel products
Associated Press
China has won a World Trade Organization (WTO) dispute with Australia over tariffs on steel products. The dispute began in 2021 when China filed a complaint against Australia's extra duties on railway wheels, wind towers, and stainless steel sinks imported from China. The WTO panel in Geneva found that Australia's investigating authority had acted inconsistently with the anti-dumping agreement. Australia's Trade Minister has accepted the ruling and stated that Australia will engage with China and implement the panel's findings. Trade tariffs have been a contentious issue between China and Australia, with China imposing sanctions on Australian goods in 2020. Most of the tariffs have since been lifted, but some tariffs on wine, rock lobster, and abattoirs remain. Australia has suspended a complaint to the WTO over Chinese sanctions on Australian barley in an attempt to repair relations with China.
Hong Kong’s Moribund Market Loses Another Big Deal From Alibaba
Bloomberg
Alibaba has scrapped plans to list shares in its logistics unit, Cainiao Smart Logistics Network, in Hong Kong due to poor market conditions. The move is another blow to the city's struggling IPO market, which has seen fundraising via initial public offerings drop for four consecutive years. IPO proceeds in Hong Kong are down 39% so far this quarter to around $508m, on track for the worst three-month period since the global financial crisis. The city has not seen a new share offering larger than $1bn since 2022.
China Engineering Ready to Export Desert Mega-Bases to the World
Bloomberg
China Energy Engineering Corp, the country's top engineering firm for energy projects, is ready to pitch the concept of desert mega-bases to other countries seeking integrated power solutions. These mega-bases, which combine wind and solar energy with battery storage and coal backup, have been instrumental in China's clean energy buildout. China Energy Engineering Corp has already worked on similar projects in China's interior and is now looking to bring this model to Belt and Road countries and other foreign markets. Chairman Song Hailiang said the company is ready to offer a Chinese solution that integrates generation, grid, and storage and is prepared to share its experience with other countries.
A pivot to China saved Elon Musk. It also binds him to Beijing.
Japan Times
Elon Musk's decision to build a Tesla factory in Shanghai was a strategic move for both Tesla and China. Musk saw an opportunity in China's cheap parts and capable workforce, while China needed a prominent electric vehicle manufacturer like Tesla to kickstart its own EV industry. The Shanghai factory has become a flagship for Tesla, accounting for more than half of its global deliveries and most of its profits.
Dutch leader is visiting Beijing for talks on Ukraine, Gaza and restrictions on high-tech exports
Associated Press
Dutch Prime Minister Mark Rutte is meeting with Chinese leaders to discuss a range of topics, including the wars in Ukraine and Gaza and Dutch restrictions on the export of semiconductor manufacturing equipment to China. The Netherlands imposed export licensing requirements in 2023 on the sale of machinery that can make advanced processor chips, following the US blocking Chinese access to advanced chips and the equipment to make them. Rutte and Trade Minister Geoffrey van Leeuwen are meeting with China's top leader Xi Jinping and Premier Li Qiang. Dutch company ASML is the world's only producer of machines that use extreme ultraviolet lithography to make advanced semiconductors, and China became ASML's second-largest market in 2023. China has accused the US of trying to hold back its economic development by restricting access to technology.
Chinese Stocks Erase March Gains as Policy-Driven Rally Falters
Bloomberg
Chinese stocks have erased their gains for March as disappointing earnings and a sell-off by overseas investors eroded optimism. The CSI 300 Index slipped 1.2% on Wednesday, closing below the level set on the last trading day in February. A broad gauge of Shanghai-listed stocks also dropped below the key threshold of 3,000 points for the first time since late February. This comes as overseas investors sold a net 7.2 billion yuan ($996 million) of mainland shares via trading links with Hong Kong, the biggest one-day outflow in over two months.
Gap in China’s Soybean Trade Casts Doubt on Data Reliability
Bloomberg
China's soybean import figures are diverging from other estimates, leading to doubts over the reliability of the country's economic data. Official data from China showed it imported over 96 million tons of soybeans last year from the US and Brazil, but figures from the two countries show over 101 million tons were exported to China. The discrepancy is large enough for the US Department of Agriculture to stop using China's data on soybean trade and rely on figures from exporting nations instead. The accuracy of China's soybean import data is critical for farmers around the world.
CNN
A suicide bomb attack in northwest Pakistan has killed five Chinese workers and their local driver. No group has claimed responsibility for the attack, which is the latest in a series of incidents targeting Chinese projects in Pakistan. China has invested billions of dollars in the China-Pakistan Economic Corridor, a key part of President Xi Jinping's Belt and Road initiative. However, these projects have sparked resentment among locals who say they have seen little benefit from the developments.
China to promote currency swaps, strengthen monetary cooperation
Yahoo US
China's central bank governor, Pan Gongsheng, has said that the bank will continue to promote currency swaps and strengthen monetary cooperation with Asian economies. Gongsheng said that bilateral currency swaps could provide emergency liquidity support in times of financial turmoil and banking crises. The People's Bank of China has already signed local currency swap agreements with the central banks and monetary authorities of 29 countries and regions, with a total size of around CNY4tn ($553.49bn). Gongsheng also suggested that Asian countries should push for reforms of quotas and voting shares at the International Monetary Fund to improve the treatment of emerging markets.
China kicks off clampdown on local financial asset exchanges
Nikkei Asia
Financial authorities in four Chinese provinces have announced the closure of local financial asset exchanges in a bid to combat financial risks and illegal fundraising activities. The closures mark the beginning of a broader clampdown, with existing financial asset exchanges nationwide expected to gradually cease operations. Financial asset exchanges in China have facilitated illegal financing and have not significantly benefited the financial market, according to regulators. These exchanges have served as important funding channels for indebted conglomerates.
US regulators could reach settlement with or sue TikTok over privacy
South China Morning Post
The US Federal Trade Commission (FTC) may file a lawsuit or reach a settlement with Chinese-owned app TikTok in the coming weeks over privacy and data security concerns, according to anonymous sources. The FTC and the US Justice Department have been investigating allegations that TikTok violated a 2019 agreement on protecting children's privacy. The investigation is separate from ongoing concerns about the potential access of TikTok user data by the Chinese government. TikTok denies the allegations and says it has strong data security measures in place. In March, the US House of Representatives passed a bill giving TikTok's parent company, ByteDance, six months to sell the app's US assets or face a ban due to national security concerns. The Senate has yet to make a decision on the matter. In 2021, ByteDance agreed to a $92 million class-action settlement to resolve data privacy claims by some US TikTok users.
‘I’ve shed all idealistic work expectations’: China’s jobseekers face reality
South China Morning Post
Chinese job seekers are resigning themselves to lower-paid positions and abandoning career aspirations as opportunities shrink in the country. Figures show that the adjusted youth unemployment rate for people aged 16 to 24, excluding students, rose to 15.3% in February from 14.6% in January. The country’s economic slowdown and the falling property market are among the factors behind the increasing unemployment. Around 11.79 million university students are set to graduate this year, adding to the pressure on the jobs market. The government has pledged to create more than 12 million new urban jobs this year, after creating 12.44 million in 2018. However, many employers are looking for fresh graduates with both good academic backgrounds and work experience, putting pressure on job seekers. The jobless rate for the 25 to 29 age group in February was 6.4%.
China Industrial Profits Rise in Sign of Stabilizing Economy
Bloomberg
Profits at China's industrial companies increased by 10.2% YoY in the first two months of 2024, extending the gaining streak seen since August. The increase in industrial profits is seen as evidence that the Chinese economy is on a firmer footing this year, supported by rebounding foreign demand and policy stimulus by Beijing. However, deflationary pressures remain as a property slump and subdued confidence weigh on domestic demand, and falling factory-gate prices squeeze industrial firms' profit margins. To spur domestic consumption, more policy support is needed to increase household income.
TikTok owner ByteDance steps up generative AI efforts with increased recruitment
South China Morning Post
ByteDance, the parent company of TikTok and Douyin, is increasing its efforts in generative artificial intelligence (GenAI) by recruiting more talent and developing new tools. The company has listed over 320 GenAI-related job openings on its website, with a specific focus on developing large language models (LLMs) like OpenAI's ChatGPT and Sora. ByteDance's Flow department has already attracted AI talent from Baidu and Alibaba, and the pace of work has become so intense that employees are working overtime. The company recently launched the GenAI app Hualu, which allows users to create and interact with virtual characters. ByteDance is determined to catch up with recent GenAI advances and has been strengthening its recruitment of AI talent and improving its research and development capabilities.
Chinese-made EVs set to take 25% of European market this year
Financial Times
Chinese electric vehicle (EV) manufacturers are set to capture a quarter of the European market this year as new entrants continue to take sales from European rivals, according to Transport & Environment. The study found that Chinese-made EVs will account for 11% of the European market this year, rising to 20% by 2027. The findings come as the European Commission finalises an investigation into whether local subsidies have helped Chinese-made EVs undercut European models, with tariffs expected to rise as a result. The move could raise up to €6bn ($7.1bn) per year for the commission.
China’s patent figures reveal it’s closing the gap on US quantum dominance
South China Morning Post
China's approach to quantum technology is shifting, with a greater focus on quantum computing, according to patent data from China's intellectual property office. Quantum computing accounted for 56.5% of China's domestic patent grants from 2013 to 2022, while quantum communications accounted for 30.3%. China has emerged as a leader in quantum communication, with milestones such as the launch of the first quantum communications satellite. However, the US is considered to have a lead in most aspects of quantum computing, although China's edge in specific areas makes the US lead "debatable", according to a report by the RAND Corporation.
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