Biden takes final shot at China chip industry with new investigation
China can’t rely on technology as a panacea for economic recovery；Ex-US fighter pilot accused of training Chinese military to be extradited to the United States
Welcome to this issue of The China Brief. Today is December 23, 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.
China can’t rely on technology as a panacea for economic recovery
South China Morning Post
Since 2022, China's economy has struggled with weak recovery, with GDP growth falling below 5% for two consecutive quarters. The US has intensified tech sanctions against Chinese entities, pressuring China to pursue self-reliance in technology through initiatives like Made in China 2025. Despite narrowing the technology gap with the US, China's economy suffers from overcapacity and weak consumer demand, exacerbated by wealth inequality and high living costs. This has created a cycle of low consumption and rising unemployment. To foster sustainable growth, China needs to address social security, wealth distribution, and implement targeted monetary policies.
https://www.scmp.com/opinion/china-opinion/article/3291378/china-cant-rely-technology-panacea-economic-recovery?utm_source=rss_feed
Biden takes final shot at China chip industry with new investigation
Axios
The Biden administration has initiated an investigation into China's semiconductor industry, citing national security concerns. This investigation, conducted under Section 301 of the Trade Act, may lead to potential measures such as tariffs aimed at reducing reliance on Chinese-made chips in U.S. products. The focus will be on foundational semiconductors critical for various sectors, including automobiles and military defense. However, the investigation's fate will ultimately be determined by President-elect Trump, who will assume office in a month. Administration officials believe that despite the transition, China will continue its aggressive policies, necessitating action. Commerce Secretary Gina Raimondo emphasized the negative impact of low-priced Chinese chips on U.S. manufacturers and national supply chains. The investigation is seen as a final effort by the Biden administration to address trade issues with China, and U.S.-China relations are expected to remain tense under Trump's leadership.
https://www.axios.com/2024/12/23/biden-chips-china-trade-investigtion
Ex-US fighter pilot accused of training Chinese military to be extradited to the United States
CNN
Daniel Duggan, a former US Marine and naturalized Australian, will be extradited to the US to face charges for allegedly training Chinese military pilots in violation of an arms embargo. Arrested in Australia in 2022, Duggan denies the charges, claiming he trained civilian pilots. Australian Attorney General Mark Dreyfus confirmed the extradition decision, which has upset Duggan's family. His lawyers argue he is being used as a political pawn amid US-China tensions. If convicted, Duggan could face up to 65 years in prison.
https://edition.cnn.com/2024/12/23/australia/duggan-us-fighter-pilot-extradition-intl-hnk/index.html
Japan’s Honda and Nissan merge to form world’s third-largest carmaker, amid EV transition
South China Morning Post
Honda and Nissan have announced plans to merge, potentially forming the world's third-largest carmaker by sales amid the industry's shift from fossil fuels and competition from China. This integration, involving Mitsubishi Motors, aims to enhance value and competitiveness against giants like Toyota and Volkswagen. The collaboration follows previous agreements to share EV components and research. Despite financial challenges, including job cuts and profit declines, both companies see opportunities in the merger. This move reflects a broader trend of consolidation in the automotive sector as companies adapt to rapidly changing market demands.
https://www.scmp.com/news/asia/east-asia/article/3292016/japans-honda-and-nissan-merge-form-worlds-third-largest-carmaker-amid-ev-transition?utm_source=rss_feed
China says economists who spread 'inappropriate' views should be fired
Nikkei Asia
China has directed brokerage firms to monitor and potentially fire chief economists who make negative comments about the economy, aiming to foster a positive narrative amid economic struggles. The Securities Association of China emphasized that economists should support government policies and investor confidence. This directive follows recent public criticisms of official economic indicators. Analysts warn that such censorship could exacerbate public frustration and hinder necessary discussions to address economic issues. Despite efforts to boost confidence through stimulus measures, China's economic recovery remains uncertain, with low consumer inflation and slowing exports raising concerns about future growth.
https://asia.nikkei.com/Economy/China-says-economists-who-spread-inappropriate-views-should-be-fired
China is making it easier for Americans to visit, but where is the big uptick?
South China Morning Post
A year after a summit between US President Joe Biden and Chinese leader Xi Jinping, efforts to enhance "people-to-people" exchanges have progressed, with China welcoming 14,000 young Americans since the agreement to host 50,000 over five years. Key changes include simplified visa processing, discounted flights, and the lifting of some travel warnings. However, overall American visitation remains low compared to pre-pandemic levels, influenced by expenses, geopolitics, and the availability of programs.
Despite a travel advisory downgrade, concerns persist regarding the political climate and security risks associated with travel to China. Academic exchanges are gradually resuming but are hindered by shrinking language programs and reduced government funding. The political landscape in the US, particularly with Republican control anticipated, poses uncertainties for these exchanges.
While short-term trips are seen as beneficial for sparking interest in longer stays, many Americans remain hesitant due to political and financial considerations. Overall, while initial steps have been taken to facilitate exchanges, significant challenges remain in reversing the decline in American engagement with China.
https://www.scmp.com/news/china/article/3291883/china-making-it-easier-americans-visit-where-big-uptick?utm_source=rss_feed
Malaysia’s 1MDB sues Hong-Kong headquartered Amicorp for US$1 billion for alleged fraud
South China Morning Post
1Malaysia Development Berhad (1MDB), a Malaysian state fund embroiled in a massive graft scandal, has filed a legal claim exceeding US$1 billion against Amicorp Group and its CEO, Toine Knipping, in the British Virgin Islands. 1MDB accuses Amicorp of facilitating over US$7 billion in fraudulent transactions between 2009 and 2014, alleging the firm created a complex web of shell companies and sham transactions that obscured the origins of misappropriated funds. The lawsuit seeks damages for breaches of fiduciary duty and conspiracy to commit unlawful acts, as part of a broader effort to recover stolen 1MDB assets. Investigations have previously estimated that around US$4.5 billion was siphoned from 1MDB, implicating former Prime Minister Najib Razak, who is currently imprisoned but denies any wrongdoing. 1MDB claims there is substantial evidence of Amicorp's involvement in money laundering schemes aimed at diverting funds from the Malaysian people. As of September, Malaysia has recovered approximately US$6 billion linked to the scandal.
https://www.scmp.com/news/asia/southeast-asia/article/3292007/malaysias-1mdb-sues-hong-kong-headquartered-amicorp-us1-billion-alleged-fraud?utm_source=rss_feed
SMIC, WuXi Bio lead Hong Kong rally after Trump changes tune on TikTok ban in the US
South China Morning Post
Hong Kong stocks experienced a rise, with the Hang Seng Index increasing by 0.4% to 19,797.86, following US president-elect Donald Trump's indication that he would like Chinese app TikTok to continue operating in the US, easing some geopolitical concerns. The Hang Seng Tech Index also saw a slight gain of 0.1%, although trading volume was lower due to the upcoming Christmas holiday. The market remains cautious, as previous weeks saw a 1.3% decline and investors are waiting for clearer economic signals amidst concerns over US-China relations and China's economic recovery. Key stocks such as Semiconductor Manufacturing International Corp and WuXi Biologics rose, while other Asian markets also saw gains.
https://www.scmp.com/business/china-business/article/3291933/smic-leads-hong-kong-rally-after-trump-changes-tune-tiktok-ban-us?utm_source=rss_feed
China’s security ministry says foreign spies are slandering revolutionary heroes online
South China Morning Post
China's Ministry of State Security has accused foreign spy agencies of distorting history and slandering revolutionary heroes through social media. In a recent WeChat post, the agency claimed that these foreign agents flood online platforms with fake historical narratives to undermine China's cultural identity and discredit its historical figures. The ministry warned that spies are attempting to steal sensitive information by engaging with social media users and are using tactics such as recruiting trolls or deploying bots to spread misinformation about the government. It urged government employees to refrain from sharing classified information online and called on the public to report any content that threatens national security. The ministry's increased activity on social media reflects China's heightened focus on national security and a recent expansion of its espionage laws.
https://www.scmp.com/news/china/politics/article/3292010/chinas-security-ministry-says-foreign-spies-are-slandering-revolutionary-heroes-online?utm_source=rss_feed
Builder Jinke Property reveals details of court-supervised debt restructuring plan
South China Morning Post
Chinese developer Jinke Property Group has announced its onshore debt restructuring plan, which involves cash payments of up to 50,000 yuan ($6,851) to bondholders, contingent on receiving 1.8 billion yuan from two local firms supporting the restructuring. The remainder of the debt will be addressed through a debt-to-equity swap and a trust product, with bondholders receiving shares in Jinke and a portion of the trust for their debt principal. Jinke aims to reduce its liabilities-to-assets ratio from over 90% to around 30% after restructuring. The plan could serve as a model for other struggling companies, but it requires creditor and court approval; otherwise, Jinke may face liquidation risks. The firm is also committed to funding the construction of some projects post-restructuring.
https://www.scmp.com/business/article/3291999/builder-jinke-property-reveals-details-court-supervised-debt-restructuring-plan?utm_source=rss_feed
Nearly 400,000 Hongkongers leave city on December 22, up 15% from last year
South China Morning Post
Hong Kong residents took nearly 400,000 outbound trips on Sunday, a 15% increase from the previous year, with popular short-haul destinations including Taiwan, Japan, and Thailand. The travel industry is preparing for the new year by developing packages to new mainland Chinese destinations, supported by the launch of direct high-speed rail routes starting January 5. Timothy Chui Ting-pong from the Hong Kong Tourism Association noted the growing popularity of high-speed rail due to fixed ticket prices, making travel planning easier for agencies. On the same day, Hong Kong recorded over 500,000 inbound passenger trips. The new rail service will connect Hong Kong to cities like Xi’an, Suzhou, and Meizhou, offering more affordable travel options compared to flights. The Individual Visit Scheme permits residents from 59 mainland cities to visit Hong Kong independently, potentially boosting tourism.
https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3291997/nearly-400000-hongkongers-leave-city-december-22-15-last-year?utm_source=rss_feed
China’s diplomatic clout in Mideast at risk as threats build around ally Iran
South China Morning Post
Beijing's mediation of a historic peace deal between Iran and Saudi Arabia last year marked a significant shift in China's engagement with the Middle East, providing Tehran a chance to alleviate its isolation amid U.S. pressures. However, with increasing geopolitical challenges, including the decline of Iran's regional proxies like Hamas and Hezbollah, Iran faces intensified threats. Experts suggest that under a potential second term of Donald Trump, known for his hardline policies against Iran, the relationship between China and Iran may strengthen due to shared pressures. Iran's economic struggles, exacerbated by Trump's sanctions and aggressive tactics, have made Beijing a crucial ally. While China has increased its economic ties with Iran, including oil trade, the relationship remains asymmetrical due to Iran's dire needs. Critics warn that growing U.S.-Iran tensions could hinder China's ability to act as a mediator. Additionally, ongoing conflicts, particularly in Syria, risk exacerbating regional instability, challenging China's diplomatic role in an increasingly polarized environment. As China navigates these complexities, its relationship with Iran may be influenced heavily by U.S. policies and regional dynamics.
https://www.scmp.com/news/china/diplomacy/article/3291972/chinas-diplomatic-clout-mideast-risk-threats-build-around-ally-iran?utm_source=rss_feed
Australia approves extradition of ex-US Marine accused of training Chinese military pilots
South China Morning Post
Daniel Duggan, a former US Marine Corps pilot, is set to be extradited from Australia to the United States on charges of illegally training Chinese aviators. Australian Attorney General Mark Dreyfus approved the extradition after Duggan's nearly two-year effort to avoid it. Duggan, who has been in a maximum-security prison since his arrest in 2022, served 12 years in the Marines before moving to Australia and renouncing his US citizenship. He is accused of conspiring to train Chinese military pilots between 2010 and 2012 without the necessary licenses and allegedly received payments totaling around A$88,000 (US$61,000). If convicted, he could face up to 60 years in prison, though he denies the charges. His wife expressed disappointment in the Australian government's decision, stating they feel abandoned and are exploring their options.
https://www.scmp.com/news/asia/australasia/article/3291970/australia-approves-extradition-ex-us-marine-accused-training-chinese-military-pilots?utm_source=rss_feed
Dubai developers escalate efforts to sell properties to rich Chinese, seeing ‘huge potential’
South China Morning Post
Developers in Dubai are increasingly targeting wealthy Chinese buyers, driven by a golden visa program, attractive rental yields, and strong economic prospects. The Chinese now represent the eighth largest group of buyers in Dubai's real estate market, with a notable return post-pandemic. Prime residential prices have risen significantly, reinforcing Dubai's status as a leading market for luxury homes. The UAE's residence-by-investment scheme has attracted substantial foreign investment, with many Chinese companies establishing a presence in Dubai. The city's safety, high rental yields, and investment opportunities are key factors drawing Chinese nationals to invest in property there.
https://www.scmp.com/business/china-business/article/3291890/dubai-developers-escalate-efforts-sell-properties-rich-chinese-seeing-huge-potential?utm_source=rss_feed
How Chinese science and technology have influenced the West … and vice versa
South China Morning Post
Han Qi, a professor at Hong Kong Polytechnic University, specializes in the historical interactions between Eastern and Western cultures, particularly focusing on the transmission of scientific knowledge. Contrary to the belief that China lacks a strong tradition in science, Han highlights China's extensive history of astronomical observations, dating back over 2,000 years. Chinese records, particularly those compiled by Jesuit missionaries such as Antoine Gaubil in the 18th century, significantly influenced Western astronomy. In the 20th century, Chinese records also contributed to groundbreaking research in astrophysics, demonstrating their enduring impact on contemporary science.
Han also discusses how Chinese historical records have played a crucial role in climate modeling and climate change studies. Zhu Kezhen, a former vice-president of the Chinese Academy of Sciences, utilized these records to analyze China's climate over 5,000 years, providing valuable insights into environmental studies. Furthermore, Han addresses the "Four Great Inventions" of China—printing, paper, gunpowder, and the compass—that have profoundly influenced Western culture. He notes the slow transmission of these inventions to the West and the eventual recognition of their Chinese origins, showcasing the complexity of scientific exchange between cultures.
The article further explores the reciprocal influence of Western knowledge on Chinese science, especially in astronomy and mathematics. Han references the significant contributions of European missionaries and scholars who introduced Western scientific methods and theories to China, thereby enhancing its scientific landscape. He emphasizes the importance of information exchange in technology transfer, citing historical examples of how knowledge about materials and drilling techniques led to advancements in Europe and America. Ultimately, Han underscores the multifaceted nature of scientific development, shaped by cultural, political, and religious factors, which continue to influence contemporary scientific progress.
https://www.scmp.com/news/china/science/article/3291760/how-chinese-science-and-technology-has-influenced-west-and-vice-versa?utm_source=rss_feed
Trump favours keeping TikTok in US after ‘billions of views’ during election campaign
South China Morning Post
President-elect Donald Trump expressed support for allowing TikTok to continue operating in the U.S., citing its success during his campaign with billions of views. He indicated reluctance to enforce a Senate-passed law requiring TikTok's Chinese parent company, ByteDance, to divest due to national security concerns, especially as the U.S. Supreme Court prepares to hear the case. Additionally, Trump mentioned a willingness to meet with Russian President Vladimir Putin to discuss ending the war in Ukraine, while signaling openness to a deal that may allow Russia to retain some seized territories.
https://www.scmp.com/news/world/united-states-canada/article/3291923/trump-favours-keeping-tiktok-us-after-billions-views-during-election-campaign?utm_source=rss_feed
China contemplates allowing seafood imports from Japan
Nikkei Asia
The Chinese government is considering resuming imports of Japanese seafood after analyzing water samples near the Fukushima nuclear plant, which they have deemed safe. China imposed a ban on Japanese seafood in August 2023 following Japan's release of treated wastewater from the plant. Despite concerns, the International Atomic Energy Agency confirmed the water met safety standards.
In September, Japan and the IAEA agreed to allow China to conduct independent testing, which is a condition for lifting the ban. Recent diplomatic meetings between Japanese and Chinese leaders have indicated a potential resumption of imports could occur as early as the first half of 2025, depending on diplomatic factors.
China's shift in stance is partly due to the importance of its relations with Japan amidst anticipated protectionist policies from the U.S. under President-elect Donald Trump. However, tensions could rise again post-2025 due to upcoming commemorative events in China that could provoke anti-Japanese sentiment. China hopes to finalize seafood imports and strengthen ties before any historical tensions resurface.
https://asia.nikkei.com/Economy/Trade/China-contemplates-allowing-seafood-imports-from-Japan
Trump Picks a Former Treasury Official as His Top Economist
NY Times
President-elect Donald Trump has announced the appointment of Stephen Miran as the new head of the Council of Economic Advisers. Miran, who previously served as a senior adviser for economic policy at the Treasury Department during Trump's first term, will need Senate confirmation for his new role. In his announcement, Trump emphasized that Miran will collaborate with the economic team to foster a strong economy for all Americans. Miran is currently a senior strategist at Hudson Bay Capital Management and has contributed to pro-Trump political action committees. He has been critical of current Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell in the past. A Harvard-educated economist, Miran supports Trump's tariff policies and believes the president has a mandate to restructure the global trading system for the benefit of Americans.
https://www.nytimes.com/2024/12/22/climate/trump-miran-council-of-economic-advisers.html
China says US ‘playing with fire’ by giving Taiwan more military aid
Al Jazeera
China has issued a warning to the United States, stating that it is "playing with fire" following the announcement of additional military aid and sales to Taiwan. The Chinese Ministry of Foreign Affairs urged the US to stop its actions that threaten peace and stability in the Taiwan Strait, emphasizing that Taiwan is considered part of China's territory. Despite not officially recognizing Taiwan, the US remains its main ally and supplier of weapons. Recently, the Biden administration authorized $571.3 million in defense assistance to Taiwan, which China condemned as a violation of its sovereignty. China's Taiwan Affairs Office also criticized the US for contradicting its commitments regarding Taiwan's independence. Taiwan has called for an end to China's military activities in the area, which it claims disrupt peace and international trade.
https://www.aljazeera.com/news/2024/12/22/china-says-us-playing-with-fire-by-giving-taiwan-more-military-aid
China sanctions Canadian institutions active on Uyghurs, Tibet
CBC
China announced countermeasures against two Canadian organizations and 20 individuals associated with human rights issues concerning the Uyghurs and Tibet. These measures, which include asset freezes and entry bans, took effect on Saturday and specifically target the Uyghur Rights Advocacy Project and the Canada-Tibet Committee. China claims to be protecting its interests amid accusations of widespread human rights abuses against the Uyghurs, a Muslim minority in Xinjiang, and maintains that it has "peacefully liberated" Tibet since 1950, despite international condemnation of its actions in the region. The measures also involve freezing property for 15 individuals linked to the Uyghur organization and five from the Tibet committee. This announcement follows Canada's recent sanctions on Chinese officials for human rights violations, with Canadian officials expressing concern about the situation in Xinjiang and Tibet.
https://www.cbc.ca/news/world/china-sanction-uyghur-human-rights-1.7417415
China’s C919 jet faces crunch test as its network rapidly expands
South China Morning Post
China's C919 passenger jet, the country's first domestically produced aircraft, is now operating in 10 major cities and has carried over 1 million passengers since its debut flight in May 2023. Three airlines—China Eastern, China Southern, and Air China—are currently using 14 C919s, with plans for more. The aircraft aims to compete with Boeing and Airbus by increasing its visibility and reliability through frequent flights. However, challenges related to maintenance and service frequency have arisen, leading to scrutiny on its performance as it seeks certification from Western regulators.
https://www.scmp.com/economy/china-economy/article/3291727/chinas-c919-jet-faces-crunch-test-its-network-rapidly-expands?utm_source=rss_feed
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