Alleged spy claims he was banned from returning to China; Former Alibaba CEO quits cloud unit in surprise move amid landmark restructuring
Weakened China too poor to consider attacking Taiwan, Biden says; Inside Kim Jong Un’s luxurious — and slow — armored train
Welcome to this issue of The China Brief. Today is September 11, 2023. 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.
Alleged spy claims he was banned from returning to China
Telegraph
A parliamentary researcher who was arrested on suspicion of spying for China reportedly claimed on a dating app that he was banned from returning to the country. The researcher, who is in his 20s and has not been named, is linked to senior Conservative MPs with access to highly sensitive or classified material. He was arrested in March alongside a second man, thought to be a university academic. The researcher worked for the China Research Group, a group of MPs who promote fresh thinking about how Britain should respond to China.
Former Alibaba CEO quits cloud unit in surprise move amid landmark restructuring
CNN
Daniel Zhang, the outgoing chairman and CEO of Alibaba, has stepped down from his position running the company’s cloud division in a surprise move announced just months after he assumed the pivotal role. Alibaba’s stock tumbled 3% on Monday in Hong Kong following the announcement.
Inside Kim Jong Un’s luxurious — and slow — armored train
Washington Post
North Korean leader Kim Jong Un is expected to travel to Russia for a summit with President Vladimir Putin. Kim is known to prefer travelling by train, with his heavily armoured and luxurious train leaving Pyongyang for the long journey to Vladivostok. The train is reported to have a top speed of 37 miles per hour. Kim's father, Kim Jong Il, and grandfather, Kim Il Sung, also favoured train travel. The slow speed of the train is attributed to its extra armour, which makes it extremely heavy. The train causes disruption along its route, with security agents sweeping stations for potential threats and power being turned off to prevent other trains from moving. Russia's rail network uses a different gauge to that of the Korean Peninsula, requiring a wait at the border. The Kims are believed to prefer train travel due to security concerns, as well as the ageing nature of North Korea's air fleet. Kim Jong Un also regularly travels by train within North Korea.
China’s Premier Urges Biden to See His Nation as an Opportunity
Bloomberg
Chinese Premier Li Qiang used his meeting with President Joe Biden at the recent Group of 20 (G-20) summit to emphasize that China's development is an opportunity for the US, not a challenge, according to Chinese Foreign Ministry spokeswoman Mao Ning. Li also urged the two countries to enhance communications. Li became the first Chinese premier to attend a G-20 leaders' summit after President Xi Jinping unexpectedly skipped the event. The leaders of the US and China have not spoken since a G-20 summit in Bali last year. Li had a low-profile presence at the summit, holding just five bilateral meetings, including the one with Biden.
More Chinese cities relax property curbs to revive largely frozen market
South China Morning Post
The cities of Jinan and Qingdao in eastern China have lifted all restrictions on home purchases and selling, joining several other cities in an effort to revive the frozen property market. Last week, three cities became the first to eliminate curbs on home buying, and Jiaxing city announced it would lift all restrictions in August. These moves are part of broader support measures for the sluggish property market, which accounts for a quarter of China's economy. The property sector has been in decline since 2021 when the government issued strict rules to stop indebted developers from accumulating more debt.
Brazil’s Lula backtracks on Putin arrest safety at Rio G20
Al Jazeera
Brazil's President Luiz Inacio Lula da Silva has withdrawn his assurance that Russian President Vladimir Putin would not be arrested if he attended next year's G20 summit in Rio de Janeiro. Lula stated that it would be up to the judiciary to decide whether Putin would be detained. Lula also questioned Brazil's membership in the United Nations war crimes court, saying that emerging countries often sign agreements that are detrimental to them. Putin missed this year's G20 summit to avoid possible political backlash and the risk of being detained under an International Criminal Court warrant. In March, the ICC issued an arrest warrant for Putin over accusations of unlawfully deporting Ukrainian children, which the Kremlin denies.
TikTok partnerships plentiful in Canada amid bans, foreign interference accusations
The Toronto Star
TikTok is still able to form partnerships in Canada despite being banned from civil servants' phones due to concerns about foreign interference. The video-sharing app has served as the official voting platform for the Juno Awards' fan choice award, livestreamed the Osheaga music festival in Montreal and has even emblazoned its logo across the helmets of Toronto Maple Leaf players. TikTok has also partnered with the Toronto International Film Festival. The app is being treated with caution due to concerns over data collection and potential misinformation. However, it is believed that partnerships with high-profile brands help to deflect attention away from these concerns and boost the app's userbase.
China gives strong warning against bets on renminbi depreciation
Financial Times
The People's Bank of China has taken measures to halt the renminbi's decline. The central bank released a statement on Monday warning against bets on renminbi depreciation and saying it is "capable of and feel confident in . . . keeping the renminbi exchange rate at a reasonably stable level". It went on to say authorities "will act when we act, resolutely correcting one-sided speculation". The renminbi rose as much as 1% to 7.2698 per dollar on Monday, its strongest level in two weeks.
US, Vietnam reject ‘threat or use of force’ to settle South China Sea disputes
South China Morning Post
The US and Vietnam have called for a peaceful resolution to disputes in the South China Sea and warned against the "threat or use of force" in the region. In a joint statement, US President Joe Biden and Vietnam's Communist Party chief Nguyen Phu Trong emphasized the importance of settling competing claims in accordance with international norms. The statement comes after a recent clash involving Chinese vessels in the disputed waters. The US and Vietnam are looking to deepen cooperation to counter China's growing assertiveness in the region. The Philippines, another country with claims in the South China Sea, has accused Chinese vessels of harassing its coastguard boats.
Huawei releases 5G foldable phone ahead of Apple's big launch event
Nikkei Asia
Huawei has released its second 5G-capable smartphone in just over a week, the Mate X5, ahead of Apple's launch event. The Chinese company's 5G-capable Kirin chipset, used in both the Mate X5 and the Mate 60 Pro, is manufactured by Semiconductor Manufacturing International Co. (SMIC), despite SMIC being blacklisted by the US for national security reasons. Huawei has maintained its global market share for foldable phones at 15%, despite all its shipments being limited to China.
China-EU ties: Premier Li Qiang commits Beijing to fruitful summit
South China Morning Post
China and the European Union have agreed to work towards a successful bilateral summit later this year, which is expected to be preceded by high-level talks over the coming weeks. Chinese Premier Li Qiang on Sunday drew attention to this year’s 20th anniversary of the comprehensive strategic partnership between Beijing and Brussels. Li was talking to European Council President Charles Michel on the sidelines of the G20 summit in New Delhi, India, as Beijing places a greater emphasis on its relations with Europe amid intensifying tensions with Washington.
Biden leads US tech executives in talks with business leaders in Vietnam
Al Jazeera
Tech executives from major companies such as Google and Intel have met with business leaders in Vietnam during US President Joe Biden's visit to the country. The meeting was part of an "innovation and investment summit" attended by Vietnamese firms, and aimed to deepen cooperation between the US and Vietnam. The US views Vietnam as a key partner in reducing its reliance on China for strategic resources such as semiconductors and rare earth minerals. The visit comes amid shared concerns about China's rising power and influence. The US has announced deals to expand operations in Vietnam, including plans by Microsoft and chipmaker Nvidia.
China is a challenge not a foe, says British trade minister
Reuters
British business and trade minister Kemi Badenoch has urged against describing China as a foe, instead suggesting it should be seen as a "challenge." This comes in the wake of concerns over possible Chinese interference in Britain's parliamentary democracy. British Prime Minister Rishi Sunak also expressed his concerns during a meeting with Chinese Premier Li Qiang at the G20 summit in India, following the reported arrest of two alleged spies. Despite the concerns, Badenoch emphasized the importance of China as a trading partner and its significant role in the global economy.
Lula wants Putin and Xi back in fold at Brazil's G20 next year
Nikkei Asia
Brazilian President Luiz Inacio Lula da Silva has said that he hopes that Chinese President Xi Jinping and Russian President Vladimir Putin will return to Group of 20 (G20) participation next year as he prepares to take over the grouping's presidency from India. Lula also said that he hopes the Ukraine war will be "over" by the time the G20 gathers in Rio de Janeiro in November 2024.
Chinese aircraft carrier Shandong spotted off southeast Taiwan
Nikkei Asia
Taiwan's Ministry of National Defense has announced that it detected China's Shandong aircraft carrier sailing off the southeast coast of Taiwan in the Western Pacific. This is the second time that the vessel has been spotted in the region by Taiwan's defense ministry. The Shandong was participating in a drill in waters about 111 kilometers southeast of Taiwan's main island. China has been increasing its military activities in areas east of Taiwan, and this is part of a larger pattern of Chinese military expansion in the region.
Hong Kong resident ‘posed as philanthropist’ to spy on China for US
South China Morning Post
John Shing-wan Leung, a Hong Kong permanent resident and US citizen, was sentenced to life in prison in China for espionage in May. The Chinese Ministry of State Security has now revealed that Leung posed as a philanthropist to gather information. According to the ministry, Leung used false identity documents to travel to China in 2020 and frequently took part in social activities during his visits. The ministry said that Leung was caught after he set up erotic traps to try to threaten Chinese officials into defecting.
China’s Credit Beats Expectations as Banks Pushed to Boost Loans
Bloomberg
China's credit expanded more than expected in August as the central bank urged lenders to boost loans and the government accelerated the sale of bonds. This comes after a drop-off in credit extension in July, but the slump was particularly steep due to businesses and consumers curbing demand for loans. The data provides insight into the economy's recovery, which has slowed since the post-pandemic boost in the first quarter. The People's Bank of China has been urging banks to extend more loans to the private sector to boost business confidence, while local governments have increased borrowing for infrastructure projects.
China May Ban Clothes That Hurt People’s Feelings. People Are Outraged.
NY Times
Proposed amendments to a law in China have been widely criticised for their potential to grant the government greater powers to control attire and symbols seen in public. The amendments focus on “wearing clothing or bearing symbols in public that are detrimental to the spirit of the Chinese people and hurt the feelings of Chinese people.” Some legal scholars and businesspeople have expressed concern that the law could be used to suppress any behaviour disliked by authorities. Human rights campaigners have also criticised the amendments, which are open to public comment until 30 September. If approved, the legislation would allow for fines of up to $680 and a maximum of 15 days in police custody for those seen to breach its provisions.
Can Singapore hold on to its reputation as Asia’s ‘safe haven’?
Financial Times
A recent money-laundering scandal in Singapore has raised concerns about the country's economic model and its reliance on foreign capital. The case, in which several individuals have been charged with belonging to a billion-dollar money-laundering ring, has exposed the risks of Singapore's attempts to position itself as a global financial hub. The investigation has captured global attention and highlighted the delicate balance that Singapore must maintain between the US and China amid deteriorating Sino-US relations. The city-state's ruling party will need to navigate these tensions and keep citizens convinced of the benefits of remaining pro-globalisation and welcoming foreign capital. Singapore has long relied on foreign investment, skilled workers, and technology adoption to fuel its economic growth, and it has been successful in attracting foreign direct investment. However, rising inequality and concerns about the city-state's identity have emerged as domestic concerns. The influx of rich Chinese individuals and companies seeking to move their wealth and operations to Singapore has driven up housing costs and fuelled the politics of envy. There is also a perception that Singapore serves as a bolt-hole for less-than-respectable money and flight capital. The recent money-laundering scandal will reinforce critics' views and could lead to a rise in populism and xenophobia. Additionally, as more money and people flow into Singapore and as China's influence increases, there is a risk that Beijing may start to intervene in Singaporean affairs. Singapore's position as a neutral and safe haven for business may be at risk as the country navigates the complex relationship between China and the US.
No more exceptionalism for US banks in China
Financial Times
Chinese banks are increasing their exposure to Russian banks, taking the place of western institutions subjected to sanctions and regulatory pressure, according to the Financial Times. The Industrial and Commercial Bank of China, Bank of China, China Construction Bank and Agricultural Bank of China more than quadrupled their Russia exposure to $10bn in the 14 months to March. This could raise concerns for US and European banks doing business in China, particularly those with significant operations in the country, such as Standard Chartered and HSBC.
China’s economic pain is a test of Xi’s fixation with control
Japan Times
Recent troubles in China’s economy have sparked debate about the direction of economic policy under President Xi Jinping. The country is facing a slowdown in growth, rising debt levels, and a trade war with the US. These issues have brought to light long-term problems in the Chinese economy and have led to unusually candid domestic debate about economic policy. Some critics argue that Xi’s policies, which emphasize state control and economic nationalism, are hindering economic growth and stifling innovation. However, others believe that Xi’s policies are necessary to address structural issues and promote long-term stability. The outcome of this debate will have significant implications for China’s future economic trajectory.
Alibaba shares slide 4% after outgoing CEO quits cloud unit
Reuters
Shares of Alibaba Group fell over 4% after the surprise departure of outgoing CEO Daniel Zhang from the company's cloud computing business. Zhang had been scheduled to hand over the role of group CEO to Eddie Wu on Sunday. The cloud business is China's largest cloud provider and is set to be spun off from Alibaba as part of the group's restructuring. Analysts estimate the cloud unit to be worth $41 billion to $60 billion but have raised concerns about potential regulatory scrutiny due to the large amounts of data it oversees.
Weakened China too poor to consider attacking Taiwan, Biden says
The Sydney Morning Herald
US President Joe Biden has said that China is becoming too weak to invade Taiwan, attributing the country's slowing economy to a reduced threat of a full-scale attack. Despite its bellicose rhetoric and manoeuvres in the South China Sea, Biden said the economic slowdown would affect Beijing's ability to seize control of Taiwan. However, the US and Vietnam have agreed on a strategic pact to curb Chinese influence in the region, with a key element being a boost for Vietnam as a production hub for semiconductors.
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