Capvision Says It Passed China’s National Security Checks; Inside the last vestige of China’s property boom; Is US funding for Ukraine under threat?
China’s Top Art Investor Amassed a Big Collection. Now He’s Selling. China’s next moon mission aims to do what no country has ever done. Its space ambitions don’t end there
Welcome to this issue of The China Brief. Today is October 4, 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.
Capvision Says It Passed China’s National Security Checks
Bloomberg
Capvision Pro Corp, a New York and Shanghai-based expert-research company, has announced that it has fulfilled a “rectification” process to address national security risks. Capvision was one of the targets in Beijing’s anti-espionage crackdown on consulting firms earlier this year. The company said it had improved its compliance system under the guidance of Chinese authorities and had passed their inspection. Capvision did not provide any further details on the inspection.
Inside the last vestige of China’s property boom
Telegraph
LVMH, the luxury goods company owned by Bernard Arnault, has announced plans to build a shopping centre in Hainan, China. The centre will feature over 1,000 luxury brands, including LVMH-owned Louis Vuitton and Dior. Luxury retailers are betting on a permanent shift in consumer spending habits, as wealthy Chinese consumers increasingly shun Western capitals. The Hainan shopping centre is in stark contrast to the struggling property market in the rest of China, where prices have fallen by up to 20% since 2021.
Is US funding for Ukraine under threat?
Al Jazeera
As the US presidential campaign intensifies, Ukraine has become a central theme. President Joe Biden is pushing for a new aid package for Ukraine, but faces scepticism from Republicans in Congress. Recent developments saw Congress ditch provisions for further funding, raising concerns about the future of US aid to Ukraine. The House of Representatives is particularly polarised, with Republicans controlling the chamber by a narrow majority. Biden is now pressing members of Congress to back a separate deal for Ukraine funding, but the ouster of House Speaker Joe McCarthy has made the challenge even harder.
Beijing has 'diverse' ways of interfering in votes, Taipei warns
Japan Times
China has a range of methods to interfere in Taiwan's upcoming elections, according to Taiwan's National Security Bureau Director-General Tsai Ming-yen. These methods include military pressure, spreading fake news, and manipulating opinion polls. Taiwan has long warned of interference from China, which considers the island to be part of its territory. Tsai stated that China aims to influence the election outcome in favor of candidates who are more favorable towards Beijing.
China’s Top Art Investor Amassed a Big Collection. Now He’s Selling.
NY Times
Chinese art collectors Liu Yiqian and Wang Wei have sent 40 artworks for auction at Sotheby's in Hong Kong, surprising the art world. The sale includes a Modigliani painting that Sotheby's sold for $42.8m in 2015, a Magritte painting, and a David Hockney painting. The auction will be the largest from a single owner that the auction house has held in Asia and is the first large public auction the couple has held for their art, though it is common for art collectors in China to do considerable private trading. The auction comes at a delicate time for China's economy as growth is slowing and Chinese stocks have been declining since early May.
U.S. regulators made Huawei's chip 'breakthrough' possible
Nikkei Asia
US export control loopholes are allowing China's largest chipmaker to produce advanced chips at scale, according to an op-ed by Douglas Fuller, associate professor of international economics, government and business at Copenhagen Business School. The US Commerce Department has issued licences for equipment sales to Semiconductor Manufacturing International Corp (SMIC), which has also acquired technology from Dutch firm ASML and Japanese vendors. If the US is serious about constraining China's technical capabilities, it must "close the loopholes of its own making," said Fuller.
US sanctions dozens of Chinese firms in crackdown on fentanyl production
Telegraph
The United States has announced sanctions against dozens of Chinese companies and individuals involved in the trafficking of the deadly drug fentanyl. The sanctions come as part of President Joe Biden’s administration crackdown on the global fentanyl supply chain, which it says often starts with chemical companies in China. The US Treasury Department has imposed sanctions on 28 people and entities involved in the international proliferation of illicit drugs, including a large China-based network. The Justice Department has also unsealed eight indictments charging eight China-based companies and 12 employees with crimes relating to fentanyl and methamphetamine production. The Chinese government did not cooperate with US authorities on the investigations. In response, China’s embassy in Washington condemned the move, saying it had “seriously eroded the foundation of China-US cooperation on counter-narcotics.” Fentanyl trafficking is expected to be a major subject of discussion during US Attorney General Merrick Garland’s visit to Mexico.
As China fights Japanification, Tokyo should look in the mirror
South China Morning Post
Japan's continued obsession with keeping the yen weak to support exports and corporate profits may be the reason why the country has not been able to shake off decades of negligible growth, stagnant wages, and the fallout from China surpassing it in terms of GDP, according to an opinion piece in the Nikkei Asia. The article argues that Japan's strategy of relying on a weaker yen as a way to boost GDP has prevented the country from implementing necessary structural reforms and has hindered the growth of its workforce. It suggests that Japan needs to learn from its own mistakes before it can offer any lessons to other struggling economies.
Philippines furious over fatal South China Sea collision
The Sydney Morning Herald
Leaders in the Philippines have condemned the ramming of a fishing vessel in the South China Sea, which left three fishermen dead. The collision occurred off Scarborough Shoal, a disputed atoll that has been the site of an escalating row between Manila and Beijing. The Philippine Coast Guard initially announced that an “unidentified commercial vessel” had hit the Filipino fishing boat, but later said an oil tanker registered to the Marshall Islands was suspected of striking it. The incident has increased tensions between the Philippines and China over maritime territory.
EU Formally Opens Anti-Subsidies Probe Into EVs Made in China
Bloomberg
The European Union has launched an anti-subsidies investigation into electric vehicles (EVs) manufactured in China. The investigation will focus on new battery-powered EVs and alleged subsidies granted by the Chinese state. The probe aims to determine whether these subsidies have allowed Chinese EVs to gain an unfair market share in the EU to the detriment of the Union industry. The investigation will cover the period from October 2022 to September 2023, and provisional measures such as countervailing duties could be imposed in the next nine months.
Developing countries facing a debt crunch
Reuters
Several developing economies are facing debt crises due to high interest rates, investor risk aversion, and excessive borrowing in recent years. These countries will be seeking assistance to recover from their debt burdens at the annual International Monetary Fund (IMF) and World Bank meetings in Morocco next week. Some of the countries facing debt troubles include Egypt, Ethiopia, Ghana, Kenya, Lebanon, Pakistan, Sri Lanka, Tunisia, Ukraine, and Zambia. Egypt needs to repay $100 billion of hard-currency debt over the next five years and spends over 40% of its revenues on interest payments. Ethiopia has requested debt restructuring under the G20 Common Framework and China has allowed partial debt payment suspension. Ghana defaulted on most external debt in late 2022 and is in the process of restructuring its debt. Kenya's public debt is at high risk of distress and it is in talks with the African Development Bank and the World Bank for budgetary support. Lebanon has been in default since 2020 and requires deeper reforms to resolve its economic meltdown. Pakistan is struggling to service external debt and rebuild from devastating floods, while Sri Lanka defaulted on international debt in 2022. Tunisia is facing an economic crisis and is at risk of default. Ukraine froze debt payments after Russia's invasion and will decide next year whether to extend the freeze or seek alternatives. Zambia, the first African country to default during the pandemic, is finalizing a debt rework deal with creditor nations and China.
CNN
China's mission to bring back the first samples ever collected from the far side of the moon is on track for next year. Preparations for the Chang'e-6 mission are progressing smoothly and a relay satellite will be deployed in the first half of next year, according to the China National Space Administration. The Chang'e-8 mission, scheduled for 2028, will include joint "mission-level" projects with other countries and international organisations, allowing overseas partners to conduct lunar research by "piggybacking" off the mission, Chinese state media said.
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