Blinken Visit Reveals Chasm in How U.S. and China Perceive Rivalry; Exclusive Insight: The New and Old Secretaries of the Shanghai Municipal Committee
Blinken Visit Reveals Chasm in How U.S. and China Perceive Rivalry; China plans a new military training facility in Cuba- WSJ; Alibaba’s Latest Shakeup Highlights Its Conundrum
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The New and Old Secretaries of the Shanghai Municipal Committee
The former General Secretary of the Communist Party of China, Jiang Zemin, hailed from Shanghai and once promoted a multitude of Shanghai loyalists and subordinates to work in Beijing, with Shanghai as their long-term stronghold. Over the past five years, Li Qiang, the then Shanghai Municipal Committee Secretary from Zhejiang, in collaboration with his old colleague from Zhejiang, Gong Zheng, the Mayor of Shanghai, eradicated a significant number of local cadres from Shanghai and placed a large number of cadres from Zhejiang into Shanghai.
Before the 20th National Congress, Gong Zheng, the Mayor of Shanghai, was a popular candidate to succeed as the Shanghai Municipal Committee Secretary. However, after Li Qiang was promoted to Prime Minister, the position of Shanghai Municipal Committee Secretary was not passed to Gong Zheng, his old colleague from Zhejiang, but to Chen Jining, a Fujianese and former subordinate of Chen Xi at Tsinghua University, who once served as the President of Tsinghua University.
The composition of the Shanghai Municipal Committee Secretary and its key leaders primarily serves two purposes. First, it is to prevent Li Qiang, who has been promoted to Prime Minister, from turning Shanghai into a stronghold for himself and Zhejiangese, thus avoiding an imbalance of power. Second, it also aims to cultivate and challenge Chen Jining.
Looking closely at the current four main leaders of Shanghai: Chen Jining, the Municipal Committee Secretary, is from the Fujian line; Gong Zheng, the Mayor and Deputy Secretary of the Municipal Committee, is from the Zhejiang line; Zhuge Yujie, the Deputy Secretary of the Municipal Committee, is a Shanghainese; and Li Yangzhe, the Secretary of the Municipal Commission for Discipline Inspection, is from Shaanxi. The origins of these four people coincide entirely with the provinces of the Standing Committee members!
Therefore, horizontally speaking, the situation faced by Chen Jining is largely similar to that of Prime Minister Li Qiang, surrounded by people from three other provinces, with the whip holder also hailing from Shaanxi.
Vertically, the arrangement of Chen Jining prevents Li Qiang, who is from Zhejiang, from linking up with his large team in Shanghai; it also provides a certain degree of restraint on Ding Xuexiang, who is from Shanghai.
After all, five years from now, Chen Jining, with his high potential for moulding, could replace Li Qiang as Prime Minister or Ding Xuexiang as Executive Vice Premier. Such an arrangement allows Chen Jining to have both intra- and inter-generational conflicts vertically with both Li Qiang and Ding Xuexiang, two Standing Committee members. Of course, only by withstanding such trials can Chen Jining be entrusted with great responsibility in the next step.
It's worth noting that Chen Jining is the only member of the Politburo in history who has completed his doctorate degree at a foreign university and served as a scholar-official returning from overseas.
After returning to China in 1998, he initially taught at his alma mater, Tsinghua University, and gradually moved into leadership positions, assuming the role of President of Tsinghua University in 2012. In 2015, Chen Jining stepped into politics, serving as the Minister of Environmental Protection and the Mayor of Beijing in succession, entering the Politburo seven years later. During his tenure as Mayor of Beijing, the city's severe smog problem was effectively addressed.
Blinken Visit Reveals Chasm in How U.S. and China Perceive Rivalry
NY Times
Chinese President Xi Jinping's rejection of the framing of U.S.-China relations by the two most recent American presidents raises doubts about whether the world’s two superpowers can reach a strategic accommodation with each other in the coming years. “They apparently don’t buy into this framework at all,” said Bonnie Glaser, managing director of the Indo-Pacific program at the German Marshall Fund of the United States. “That begs the question: Is it then possible to stabilize relations?” Analysts say China hopes the talks can help bolster business confidence when many of the traditional levers of Chinese economic growth, such as real estate, are facing dramatic challenges. Moreover, China wanted to underscore to the Biden administration its opposition to trade restrictions that choke Chinese access to important technologies, such as advanced semiconductor chips. China has been furious over the Biden administration’s growing support for the democratic, self-governed island — including a new trade agreement, more weapons sales and increased exchanges between officials.
China plans a new military training facility in Cuba- WSJ
Reuters
China and Cuba are in talks to create a joint military training facility on the island, which has raised concerns in the US about the possibility of Chinese troops being stationed just 100 miles off the coast of Florida. This development has alarmed current and former US officials.
Alibaba’s Latest Shakeup Highlights Its Conundrum
Bloomberg
Alibaba is reshuffling its leadership in preparation for the initial public offerings (IPOs) of five of its six divisions. The company is bringing in Joe Tsai as chairman and Eddie Wu as CEO. Tsai, a long-time confidant of founder Jack Ma, will help steady the ship as each of the spun-off units operates independently. Wu, who runs the Taobao unit, will also be CEO of Alibaba Group. The company’s cloud division, Alibaba Cloud, is yet to make a profit and its future is uncertain. The renamed Cloud Intelligence Group is the second-largest unit and has strong potential to become the next giant for the company.
Ex-China central bank deputy head arrested for suspected bribery
Reuters
Fan Yifei, a former deputy governor of China's central bank, has been arrested on suspicion of bribery. This arrest is part of Chinese President Xi Jinping's ongoing campaign against corruption in the financial sector. Fan is the highest-ranking official at the People's Bank of China to be arrested in the past decade. He was expelled from the Communist Party and removed from his post earlier this month for serious violations of discipline and the law. The case is currently under further investigation.
China cuts main interest rate as economic recovery fizzles out
CNN
China's central bank, the People's Bank of China (PBOC), has cut its main benchmark lending rates for the first time in 10 months as the country's economy continues to falter. The PBOC trimmed its one-year loan prime rate (LPR) by 10 basis points to 3.55%, and reduced the five-year rate to 4.2%. However, analysts have said that these rate cuts are unlikely to stimulate business confidence and housing demand, and a more comprehensive stimulus package is needed to revive market confidence in China's recovery. Hong Kong and mainland Chinese stocks slid after the rate cuts were announced.
Germany-China talks to focus on Ukraine, climate change
Deutsche Welle
The governments of Germany and China are set to hold high-level talks in Berlin to discuss boosting cooperation between the two countries. German Chancellor Olaf Scholz and Chinese Prime Minister Li Qiang will lead the meeting, with a total of 10 government representatives from China and nine from Germany participating. The talks are expected to focus on climate change, trade relations, and Russia's war against Ukraine. The meeting comes at a time when Germany is seeking to "de-risk" from China.
China willing to work with U.S. to increase passenger flights - ministry
Reuters
China's foreign ministry has stated that it is willing to work with the United States to increase passenger flights between the two countries. This comes after discussions between U.S. Secretary of State Antony Blinken and China's foreign minister Qin Gang, in which they agreed to discuss increasing flights and welcoming more students and business people. The Chinese and U.S. authorities are said to be maintaining communication regarding this matter.
Alibaba Cloud founder points to skies for Hong Kong moonshot project to lure talent
South China Morning Post
Hong Kong has the potential to become a global hub for astronomy research, according to Alibaba Cloud founder Wang Jian. Speaking at the South China Morning Post’s China Conference, Wang said that the territory's work with China’s first space-based telescope, the Chinese Survey Space Telescope, could be used to attract talent and develop new technologies. Wang also suggested that Hong Kong could become the world's first digitalised city, using technology for sustainable resource consumption.
India’s Modi on way to US for first state visit since becoming PM
Al Jazeera
Indian Prime Minister Narendra Modi is set to visit the US, where he will meet with President Joe Biden and address Congress. The visit comes as the US seeks a regional counter to China and aims to deepen ties with India in key sectors such as trade, commerce, innovation, and technology. The visit also comes amid rising concerns over the treatment of India's Muslim minority, human rights, and democratic backsliding under Modi's leadership. However, Biden sees US-India ties as a defining relationship that will address global challenges such as climate change, artificial intelligence, and China's growing power.
HSBC cuts China's GDP forecast to 5.3% on weak property, business outlook
Reuters
HSBC has lowered China's economic growth forecast for 2023, citing concerns over the property sector and weakened business and household confidence. The bank now predicts China's GDP to grow at 5.3% in 2023, down from the previous estimate of 6.3%. This comes after other brokerages, such as J.P. Morgan and BofA Global Research, also lowered their growth outlook for China following disappointing May industrial output and retail sales growth.
Wang Yi urges US to make Apec summit reset in Indo-Pacific strategy
South China Morning Post
China's top diplomat, Wang Yi, has called on the US to reconsider its Indo-Pacific strategy ahead of this year's Asia-Pacific Economic Cooperation (Apec) summit. Wang argued that the US strategy aims to introduce great power rivalry to the region and create confrontation between camps. He accused the US of undermining peace and stability in the Asia-Pacific region and distorting the production and supply chain. Wang called for bilateral cooperation and urged the US to work with China to bring Asia-Pacific cooperation back on track. The US has consistently rejected China's Indo-Pacific concept, viewing it as a containment strategy.
Li Qiang tells German firms don’t mistake interdependence for insecurity
South China Morning Post
Chinese Premier Li Qiang has urged German businesses to properly assess "risk" and called for greater "openness and cooperation" between Chinese and German industries. Li's comments came during a meeting with industry representatives in Berlin. He stressed that risk prevention and cooperation are not opposites. The meeting included representatives from German companies such as Siemens, Volkswagen, Mercedes-Benz, BMW, Schaeffler, and Allianz. Li's visit to Europe aims to strengthen economic ties and other bilateral cooperation with the continent.
Anxious neighbours sigh in relief as US and China talk
BBC
The recent meeting between US Secretary of State Antony Blinken and Chinese President Xi Jinping has been seen as a positive step in defusing tensions between the two countries. China's neighbours, particularly those in the Asia-Pacific region, have been closely watching the situation and hoping for a peaceful resolution. Many countries in the region are caught between the competing interests of China and the US and do not want to choose sides. The meeting between Blinken and Xi has been seen as a sign that the two countries are trying to maintain dialogue and reduce the risk of conflict. However, the biggest challenge still lies ahead, particularly in relation to the issue of Taiwan.
Caution in Washington and Beijing after Blinken’s trip achieves limited results
Japan Times
US Secretary of State Antony Blinken's visit to Beijing was seen as a success, despite there being few specific outcomes. The visit was significant as it marked the highest-level US official visit to Beijing in five years. One positive was the agreement to continue talks, with the Chinese Foreign Minister expected to visit Washington in the coming months, while other US officials are also expected to travel to China. However, no progress was made on the restoration of military communications between the two countries. The visit is seen as a step towards a possible meeting between Chinese President Xi Jinping and US President Joe Biden later this year. The relationship between the two countries remains strained, with many issues of contention, including Taiwan, human rights, and the origins of COVID-19. However, the regular meetings between the two countries are expected to reassure countries in the region.
China, Cuba in Talks on Opening Military Training Site, WSJ Says
Bloomberg
China and Cuba are reportedly in discussions to build a joint military training facility on the island, according to US officials. The proposed facility, located in northern Cuba, could potentially allow China to station troops there permanently and expand espionage activities. The US is said to be in contact with Cuban officials to prevent the plans from moving forward. Earlier this month, a senior US official revealed that China has maintained espionage facilities in Cuba for years, with an expansion in 2019. The proposed bases would allegedly enable Chinese intelligence services to eavesdrop on electronic communications in the southeastern US and monitor ship traffic.
China's economic slowdown makes Taiwan crisis more likely: report
Nikkei Asia
An economic slowdown in China could increase the risk of a military crisis in the Taiwan Strait, according to a report by a bipartisan task force convened by the Council on Foreign Relations. The experts warned that the US framework for dealing with Taiwan since establishing diplomatic relations with China in 1979 had become "more and more brittle". China is entering a long-term economic slowdown due to its ageing and shrinking population, its crackdown on innovative technology companies, and US export controls on advanced technology, the report said. China's President Xi Jinping may turn to the Taiwan issue to rally support for the Chinese Communist Party and his personal rule as his economic growth slows and he becomes closer to the end of his tenure, it added.
U.S.-China ties are no longer in freefall, but it’s a rough road ahead
Washington Post
US Secretary of State Antony Blinken's visit to China had "constructive" and "substantive" conversations according to the United States' top diplomat. Both sides indicated their desire to stabilise a relationship that seems to be locked in a "downward spiral". However, for those hoping for happier relations, there’s a long, winding road ahead, littered with obstacles. Tensions over long-standing issues like the status of self-governing Taiwan or China’s activities in the South China Sea have grown all the more acute, while critical lines of communication have gone silent. Blinken was unable to get China to agree to reopen military-to-military channels, something U.S. officials have urged in recent months as fears over the possibility of an accidental military encounter and escalation grow. U.S. officials also expressed concerns about China's involvement in Ukraine's conflict. Blinken stressed that the United States did not want to jeopardize the enormous bilateral trade relationship between the countries.
Inside China’s underground market for high-end Nvidia AI chips
Japan Times
Chinese buyers are reportedly purchasing US-made Nvidia AI chips on the country's version of Instagram, Douyin. The chips are not advertised but are available from vendors located in the Huaqiangbei electronics area in Shenzhen. US export restrictions have created an underground market for the chips, which are being sold at double the usual price. While Nvidia does not allow the export of the chips to China, the company said it provides reduced-capability substitutes that comply with US law.
Chinese Premier Tells German CEOs to Take Lead on ‘De-risking’
Bloomberg
Chinese Premier Li Qiang has called for companies to take the lead in "de-risking" decisions rather than governments, during a visit to Germany. Li met with representatives from several German companies, including Siemens, Volkswagen, and BMW, and stated that enterprises have the most direct sense of risks and how to handle them. Li's visit to Germany is part of an effort to stabilize ties with the European economic powerhouse and comes amid concerns that Chinese officials will influence Berlin's updated China strategy. Li will also visit France this week for talks with President Emmanuel Macron.
Biden: China-US ties 'on right trail' after Blinken trip
Deutsche Welle
US President Joe Biden has said that the US and China are on the "right trail" following a visit to Beijing by senior official Antony Blinken. Biden praised Blinken for making progress during his two-day trip, which concluded on Monday. The US and China agreed to stabilise their relations and maintain communication lines to avoid an all-out conflict. Tensions between the two countries have been rising due to issues such as the Taiwan Strait, the semiconductor industry, and disagreements over Russia's war in Ukraine. Blinken is the highest-ranking US official to visit China in five years.
China's COMAC soars, helped by state-backed funding
Nikkei Asia
China's state-sponsored Commercial Aircraft Corporation of China (COMAC) is set to challenge the global duopoly of Boeing and Airbus as the company launched scheduled commercial passenger services by the C919 passenger jet in May. COMAC received the crucial support of the country's top leadership and was designated as one of China's "central enterprises" which are under the control of the central government. The company has received multiple capital injections and despite being loss-making for years, has enough capital to endure further losses. Unlike COMAC, Japan's Mitsubishi Heavy Industry abandoned its project to develop a passenger jet earlier this year due to a lack of resources. Mitsubishi was unable to acquire the same level of state support and was a private company listed in Tokyo. Mitsubishi did not have a large domestic market to sell into and demand for regional jets has dropped significantly since the start of the Covid-19 pandemic.
Surge in China’s Demand for Gold Is Slowing as Economy Stumbles
Bloomberg
China's gold market is beginning to slow down as the country's economy loses momentum. Retail sales of gold and silver jewellery rose 24% YoY in May, but this is slower growth than the 44% and 37% recorded in the previous two months. Furthermore, the Shanghai gold price is now trading at a discount to the international market, indicating weakening demand. However, retail sales are expected to remain elevated in the near term as gold is viewed as a sound investment while inflation concerns persist, said Zhang Ting, an analyst with Sichuan Tianfu Bank.
Optimism Rises in China Tech With World-Beating Rally
Bloomberg
Chinese tech stocks have seen a rally this month, outperforming shares in their own market and narrowing the gap with their American rivals. The Nasdaq Golden Dragon China Index has beaten the Nasdaq Composite Index for three consecutive weeks. The optimism is due to China tech shares trading at their cheapest value relative to US peers on record, as well as stronger-than-expected sales data following a key shopping festival and easing US-China tensions. However, concerns about the growth potential of these firms and the weak macro economy still remain.
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