China appoints Lan Fo‘an as new finance ministry party chief; China, Germany resume high-level financial talks after COVID-19
China's Evergrande shares trading halted in Hong Kong; China's US envoy urges 'practical' steps to help restore ties
Welcome to this issue of The China Brief. Today is September 28, 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.
China appoints Lan Foan as new finance ministry party chief
Reuters
China's Communist Party has appointed Lan Foan as the new finance ministry party chief, replacing Liu Kun. Lan, who was previously the party chief of the Shanxi province, will work alongside Liu, who will remain as the finance minister.
Chinese ambassador says Australian lawmakers who visit Taiwan are being utilized by separatists
Associated Press
China's ambassador to Australia, Xiao Qian, has criticised Australian politicians who visit Taiwan, accusing them of being used by separatists. Xiao's comments came after an Australian parliamentary delegation visited Taiwan and as former Prime Minister Scott Morrison plans to deliver a speech in Taipei next month. China considers Taiwan to be part of its territory and has accused Taiwan's governing party of seeking independence. The ambassador called on Australian politicians to adhere to the "one-China policy" and refrain from engaging with Taiwan.
China, Germany resume high-level financial talks after COVID-19
Reuters
China and Germany will co-host a third financial dialogue in Germany on October 1st, resuming high-level talks that had been stalled due to COVID-19. The dialogue will be co-chaired by Chinese Vice Premier He Lifeng and German Finance Minister Christian Lindner. The last round of talks in January 2019 resulted in agreements to strengthen coordination in banking, finance, and capital markets. However, Germany and the European Union have since expressed concerns about economic dependence on China. Germany recently announced plans to reduce the use of equipment from Huawei and ZTE in their 5G networks.
China's Evergrande shares trading halted in Hong Kong
Deutsche Welle
Trading of shares in Evergrande Group, as well as its subsidiaries Evergrande Property Services Group and Evergrande Electric Vehicle Group, has been suspended in Hong Kong. The reason for the suspension has not been disclosed, but it comes after reports that Evergrande's founder, Hui Ka Yan (also known as Xu Jiayin), is being held by police under "residential surveillance." Evergrande's shares have plummeted by 81% since trading resumed in late August, after a 17-month suspension due to the company's failure to publish its 2021 financial results. Evergrande, once China's biggest real estate firm, defaulted in 2021 and currently has an estimated debt of $328 billion.
China's US envoy urges 'practical' steps to help restore ties
Reuters
China's ambassador to the United States, Xie Feng, has suggested that the Biden administration could improve relations between the two countries by taking "practical" steps. One such step would be to renew the China-U.S. Science and Technology Agreement, a decades-old pact that has been renewed every five years since 1979. The agreement has shown that the two countries can cooperate in scientific and technical fields, but concerns about China's military capabilities and its strategies in science and technology have raised national security and intellectual property concerns for the U.S. Xie also suggested increasing the number of direct flights between the two countries and addressing visa and entry difficulties faced by Chinese visitors to the U.S.
China's Dalian Wanda in talks to avert $4 bln IPO repayment -Bloomberg News
Reuters
Dalian Wanda Group is negotiating a proposal that would allow the conglomerate to avoid repaying about CNY30bn ($4.11bn) to investors in its shopping mall business if the unit fails to complete its initial public offering this year. The Chinese conglomerate recently told investors that an IPO of the mall unit will likely take place next year.
China shies away from row with EU over EV probe
Japan Times
European leaders have found Chinese President Xi Jinping's government to be more willing to engage in dialogue and make promises, while avoiding aggressive rhetoric. This approach has been seen as an effort to improve China's image in Europe and promote cooperation between the two regions. However, some European leaders remain skeptical and cautious about China's intentions.
Ant Consumer Finance Arm to Raise $616 Million to Revive Growth
Bloomberg
Ant Group's consumer finance affiliate is raising 4.5 billion yuan ($616 million) from investors as the company seeks to revive growth after a regulatory crackdown. Ant Group will contribute 2.25 billion yuan to the plan, and other investors include Sunny Optical Technology Group Co. and Transfar Zhilian Co. The move comes after Chinese regulators imposed a nearly $1 billion fine on Ant Group in July, ending a three-year-long probe into the fintech giant. The consumer finance unit combines Ant's online lending operations, Huabei and Jiebei, and has been crucial in driving growth at the company.
China Gold Prices Plunge the Most Since 2020, Curbing Record Premium
Bloomberg
Gold prices in China dropped by the most in three years, narrowing the gap with international prices. The drop follows a long rally in local prices that created a record premium to gold outside of the country. This premium has now fallen to $9 an ounce above international prices. The drop in prices may be due to import curbs imposed by the People's Bank of China over the summer.
Taiwan unveils new £1.3bn submarine named after mythical fish
The Independent
Taiwan has unveiled its first domestically developed submarine in a bid to counter China's growing aggression around the island's waters. The $1.54bn diesel-electric powered submarine named Hai Kun will undergo several tests before joining the existing fleet in 2025. The vessel was made possible with the help of other countries, including the US and the UK, as Taiwan maintains official diplomatic relations with only 13 nations and a robust relationship with the US. Taiwan said it hopes to deploy at least two domestically developed submarines by 2027 and equip them with missiles.
Video appears to show American solider who crossed into North Korea arriving back in the US
Associated Press
Private Travis King, the American soldier who ran into North Korea two months ago, has returned to the US. His release was facilitated by Sweden and China. King arrived in San Antonio, Texas and was seen walking off the plane in civilian clothes. There is no clear reason why North Korea agreed to turn him over or why he fled in the first place. King has been declared AWOL from the Army and could face punishment. Swedish officials took him to the Chinese border, where he was met by US and Swedish officials before being flown to a US military base in South Korea and then returned to the US.
Russia Olympic chief fuming over ‘unacceptable’ Asian Games exclusion
The Independent
The president of the Russian Olympic Committee, Stanislav Pozdnyakov, has criticized the organizers of the Asian Games in Hangzhou, China, for rescinding their decision to allow Russian and Belarusian athletes to compete. The Olympic Council of Asia (OCA) had originally voted in favor of allowing up to 500 athletes from Russia and Belarus to participate, but the International Olympic Committee (IOC) later announced that the nations would not be able to take part due to "technical" reasons. Pozdnyakov stated that the organizers did not inform them of the decision to rescind the invitation and that the lack of communication was unacceptable. Russian and Belarusian athletes have faced significant restrictions on international competition since Russia's invasion of Ukraine in 2022. The IOC has not yet made a final decision on whether Russian athletes will be allowed to compete under a neutral flag in the Paris Olympics in 2024.
Travis King: U.S. soldier expelled from North Korea arrives in Texas
Reuters
U.S. Army Private Travis King has returned to the US after being expelled from North Korea. King had crossed the heavily militarized border two months ago, and was held by North Korean authorities. He arrived at a US military base in Texas on a US military flight. There is no word on whether King will face any disciplinary action by the US Army. North Korea treated his case as one of illegal immigration.
UBS Invites Bidders for Credit Suisse’s China Brokerage Business
Bloomberg
UBS has reportedly approached several financial firms to gauge their interest in buying the Chinese brokerage venture of Credit Suisse. The firms invited to bid include Warburg Pincus, Citadel Securities, and local financial groups. The expectation for the bids is said to be at least CNY1bn ($137m). UBS acquired Credit Suisse, leading to job cuts and trimming of overlapping businesses. UBS already controls a securities venture in China and cannot hold two licenses in the same business. Credit Suisse had gained full control of its venture in China as authorities opened up the financial markets.
Temasek unit raises $3.3 bln in flagship fund investing in China
Reuters
True Light Capital, a unit of Singapore state investment firm Temasek, has raised $3.3bn for its flagship fund that invests in Greater China. The fund has now closed to new capital. True Light Fund I secured capital from global investors including sovereign wealth funds, foundations, financial institutions, and family offices. The fund will invest alongside Temasek in opportunities related to Greater China, including private and public equity. Temasek sees attractive opportunities in China, particularly in advanced manufacturing and energy transition.
China's hedge funds boost returns, and risk, using broker books
Reuters
Some Chinese hedge funds are using a leverage and derivative strategy, known as DMA-Swap, to make money in the country's stock markets. The strategy allows hedge funds to borrow up to $4 against $1 of margin, helping them to bypass regulatory borrowing limits. The use of DMA-Swap has resulted in annualised returns of some products exceeding 150%. However, analysts have warned that the combination of heavy leverage and sudden market movements could result in significant losses for investors and hurt brokerages.
China says it removed shoal barrier despite Manila’s claim it cut cordon
South China Morning Post
China has claimed that it voluntarily removed a floating barrier in the South China Sea near the disputed Scarborough Shoal after accusing the Philippines of illegally entering Chinese waters. The move comes after the Philippines said it had executed a "special operation" to remove the barrier, which China dismissed as a "complete fabrication of facts". The Scarborough Shoal has been a point of contention between Beijing and Manila since 2012, when China took control of the uninhabited shoal. The Philippines took China to an international tribunal over its territorial claims in the South China Sea, but Beijing rejected the ruling.
TikTok’s E-Commerce Ambitions Stall as Global Backlash Grows
Bloomberg
Indonesia has introduced sweeping regulations requiring TikTok to separate payments from shopping in the country. The new rules prevent social media companies in Indonesia from handling direct payments for online purchases, a feature that has contributed to TikTok Shop's explosive growth since its launch two years ago. TikTok must now either break out a separate app or risk having its business completely closed in Indonesia. The regulations are expected to benefit local companies GoTo and Sea, but they could have a chilling effect on the entire e-commerce market and deter foreign firms and investors. TikTok argues that separating social media and e-commerce hampers innovation and hurts merchants and consumers. The company's representatives have tried to assuage the Indonesian government, but it remains unclear how the situation will unfold. The conflict with the Indonesian government is a turnaround from just a few months ago, when TikTok's CEO visited Jakarta and promised to invest billions of dollars in Southeast Asia.
Who Is Detained Evergrande Founder Hui Ka Yan? His Rise and Fall Explained
Bloomberg
Hui Ka Yan, the founder of China Evergrande Group, has been put under police control, indicating the company may be entering a new phase involving the criminal justice system. This move raises questions about the future of the world's most indebted developer and the fate of the billionaire himself. Hui, who was born into poverty, founded Evergrande in 1996 and used heavy borrowing to fuel its growth. However, the company has faced liquidity issues and missed bond payments. Hui's net worth has plummeted, and he has been unable to halt the decline of Evergrande's shares.
Chinese immigrants in US sue over forced labour at marijuana operation
South China Morning Post
Fifteen Chinese immigrant workers have filed a lawsuit against Navajo businessman Dineh Benally and Taiwanese entrepreneur Irving Lin, claiming they were forced to work long hours trimming marijuana on the Navajo Nation, where cultivating the plant is illegal. The workers allege they were lured to northern New Mexico under false pretences, had their phones and car keys taken away, were barred from leaving, and were treated like prisoners. The lawsuit seeks a jury trial and unspecified damages.
China plus one will lift India’s capital market
Reuters BreakingViews
Global funds are increasing their allocations to India, as they seek alternative markets to invest in. Foreign institutional investors have increased their ownership of Indian midcap stocks, pushing up the Nifty Midcap 100 and Nifty Smallcap 100 indices. However, analysts note that there is no meaningful change in the fundamentals of most companies to justify the surge. The market for new listings is also buoyant, with Indian bourses hosting 131 issues this year, nearly quadruple the number in Hong Kong. Investment banks are expanding their presence in India, and companies are speeding up their listing plans. However, the market is seen as priced to perfection.
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