China bans Nomura senior investment banker from leaving mainland; A stimulus-fuelled China property rebound is just not on the cards
Taliban weighs using U.S. mass surveillance plan, met with China's Huawei; EU commissioner, in China, calls for more balanced trade and warns that Ukraine could divide them
Welcome to this issue of The China Brief. Today is September 25, 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 bans Nomura senior investment banker from leaving mainland -sources
Reuters
A senior Nomura banker overseeing the firm's investment banking operations in China has been banned from leaving the country. Charles Wang Zhonghe, China investment banking chairman at Nomura, is subject to the travel ban but it is unclear when it took effect. The ban is believed to be connected to China's investigation into top tech dealmaker Bao Fan and his former colleague Cong Lin. The move comes as businesses are becoming increasingly concerned about China's slowing economic growth and tougher operating conditions.
China's Huawei kicks off product launch event by thanking country for its support
Reuters
Huawei Technologies held a product launch event where it unveiled its new Mate 60 smartphone series and other products. The company launched the Mate 60 series last month with no pre-marketing events, and users and analysts who bought the Mate 60 Pro said it had a Chinese-made chip and was capable of 5G speeds. During the event, Huawei also announced the launch of a new tablet called the MatePad Pro 13.2 and the roll-out of a new ultra, high-end brand called 'Ultimate Design', which includes a Mate 60 RS smartphone and a watch. The event was broadcast live across Huawei stores, local media, and Chinese social media platforms. The Mate 60 series is seen as a sign that Huawei has overcome US sanctions that have hindered its smartphone business.
A stimulus-fuelled China property rebound is just not on the cards
South China Morning Post
JPMorgan's recent decision to revise its estimate for China's economic growth to 5% this year rather than 4.8% suggests that the country's economy may be starting to recover. Data from Bloomberg reveals that foreign investors sold a record $12bn of onshore stocks last month, leading some to believe that China may have hit rock bottom. A gauge of activity in the manufacturing sector edged closer to 50 in August, implying an end to contraction. Additionally, measures to counteract the downturn in the property sector have increased. However, experts are divided on whether these measures will revive the market or just prevent systemic risk.
EU tells China spy and sanction laws could spook investors
Deutsche Welle
European Union Trade Commissioner Valdis Dombrovskis has warned that European companies are questioning their future in China due to recent legal and political developments. Dombrovskis cited tight security laws and a more "politicized" business environment as factors that have left European companies unsure of their legal obligations when operating in China. He also expressed concerns over China's support of Russia amid the war in Ukraine and China's trade imbalances with the EU. Dombrovskis' warning comes ahead of a high-level trade dialogue in Beijing.
Exclusive: Taliban weighs using U.S. mass surveillance plan, met with China's Huawei
Reuters
The Taliban are reportedly developing a large-scale camera surveillance network for Afghan cities, with the potential involvement of Chinese telecoms equipment maker Huawei. The plans are intended to enhance security and prevent attacks by international militant groups, including Islamic State. The Taliban administration is said to have consulted with Huawei in August 2023, although no contracts or firm plans have been agreed. The potential deployment of the surveillance system has raised concerns about the Taliban’s ability to fund the project, as well as fears that the technology will be used to crackdown on protesters. The proposals involve expanding and managing mass surveillance, and obtaining a US plan that was crafted before the US withdrawal from Afghanistan in 2021. The Taliban already monitor urban centres with security force vehicles and regular checkpoints. It is not clear whether the Taliban’s plans will modify the US plan or whether the 2021 plan discussed by then-vice president Amrullah Saleh was similar to the Taliban’s proposals.
Apple’s Cheapest iPhone Surges in Popularity After Upgrades
Bloomberg
Apple's iPhone 15 model is experiencing high demand, with delivery times almost double that of its predecessor. In China, the wait times for the iPhone 15 have quadrupled, while the top-tier iPhone 15 Pro Max has also seen record waiting times for pre-orders. The extended delivery times have not resulted in higher resale prices, suggesting that demand may be driven by people trading in their existing devices. Counterpoint Research analysts believe that Apple's trade-in program is playing a pivotal role in reducing barriers for consumers looking to purchase a new phone.
EU commissioner, in China, calls for more balanced trade and warns that Ukraine could divide them
Associated Press
Valdis Dombrovskis, the European Union’s trade commissioner, has called for a more balanced economic relationship with China and warned that China’s position on the war in Ukraine could endanger its relationship with Europe. Dombrovskis highlighted the EU’s trade imbalance with China, which reached €396bn ($425bn) last year, and urged China to address the lack of reciprocity in the economic relationship. He also criticised China’s politicised business environment, which he said discourages new investment, and noted that China’s stance on Russia’s invasion of Ukraine is difficult to understand given its own principles on territorial integrity.
China cracks down on thrill-seeking drone owners and their hackers
South China Morning Post
China is cracking down on people who modify drones to get around restrictions, with offenders facing fines or even jail time. While other countries treat such violations as misdemeanours, China views them through the lens of national security. The country recently sentenced a hacker to six months in prison for unlocking drones for 21 owners, confiscating his earnings of 6,850 yuan ($940). Beijing's anti-terrorism regulation, coming into effect next January, explicitly bans the modification of drones. China's criminal code includes a set of complex rules on the use of technologies such as drones.
Huawei Mostly Omits Mentioning Controversial Mate 60 Phone in Two-Hour Event
Bloomberg
Huawei Technologies did not mention its controversial Mate 60 smartphone series at a showcase of its new consumer products on 25 October. The Mate 60 Pro, which was released last month, uses an advanced made-in-China processor and this has caused concern in Washington about Huawei's progress towards developing in-house chipmaking capabilities. Huawei's new phones have been among the top sellers in China in recent weeks, and they are the first 5G-capable handsets the company has put on sale since the Trump administration's sanctions cut it off from advanced tech suppliers.
China Drops Streaming of Some Games at Biggest Esports Event of the Year
Bloomberg
China has dropped the live broadcast of some esports matchups at the Hangzhou Asian Games, citing concerns around internet addiction. Chinese video platforms Tencent and Huya were told to only stream the semifinals and finals for multiplayer games such as Honor of Kings and League of Legends. The last-minute notice caused confusion among China's 400 million esports fans, who had initially hoped to watch the programming. China has cracked down on the gaming industry in recent years, citing youth addiction and problematic content, but has recognized competitive gaming as a legitimate sport.
China’s Rice Exports to Ivory Coast Hit Record After India Curbs
Bloomberg
China has exported a record amount of rice to the Ivory Coast, following restrictions on rice exports from India. In August, China exported 45,000 tons of rice to the Ivory Coast, the largest monthly volume since at least September 2021. This is the first shipment of rice from China to the West African country in nine months. India, the top rice exporter, implemented restrictions on its rice exports in late July to stabilize domestic prices. The Ivory Coast was the fourth-largest buyer of non-basmati rice from India in 2022/23. Ghana and the Democratic Republic of the Congo also increased their rice purchases from China, importing record amounts in September 2021.
Japan says to ensure stable energy supply amid US sanctions on Russia
Reuters
Japan's Industry Minister, Yasutoshi Nishimura, has stated that Japan will make comprehensive decisions to ensure the country's energy supply remains stable while cooperating with the G7 group, following fresh U.S. sanctions on Russia. The sanctions target companies providing services to the Russia-led Arctic LNG 2 project, in which Japanese shareholders hold a combined 10% stake. Nishimura also noted that Japan is still examining the impact of the sanctions, which do not cover the project or the shareholders themselves.
Philippines vows to remove floating barrier placed by China's coast guard at a disputed lagoon
The Toronto Star
The Philippines has said it will remove a floating barrier that China's coast guard placed in the South China Sea to prevent Filipino fishing boats from entering a disputed lagoon. The 300-metre-long barrier, made from buoys, was installed on Friday as a Philippine government fisheries vessel approached. The move escalates territorial disputes in the region, most of which are claimed by China. Washington has said it is obligated to defend the Philippines if Filipino forces, ships and aircraft come under attack, including in the South China Sea.
Thailand receives the first Chinese visitors under a new visa-free policy to boost tourism
Associated Press
Thailand has welcomed hundreds of Chinese tourists on the first day of a new visa-free entry program. Prime Minister Srettha Thavisin handed out gifts and posed for pictures with the tourists, while the country's tourism minister and other VIPs greeted the visitors. The visa exemption, which also applies to visitors from Kazakhstan, will be effective until February 29. Thailand's tourism industry has been badly damaged by the Covid-19 pandemic, and the government hopes that the new visa-free program will help to boost the country's economy.
Citic Securities Said to Eye Opening German Office by Year End
Bloomberg
Citic Securities is planning to open a new office in Frankfurt by the end of the year, in order to boost its investment banking coverage in Europe. The Chinese brokerage firm's new German office will be headed by Gian-Marc Widmer, who recently moved to Europe after almost a decade with the firm in Beijing. This move follows rival China International Capital Corp., which has offices in Frankfurt and London. The move is part of Citic's effort to diversify its offerings and reduce its reliance on the IPO business in Hong Kong and mainland China.
Is the wait finally over for China’s economic recovery?
South China Morning Post
China's economy is slowly rebounding after implementing a range of policies, but the recovery is uneven and faces challenges. While consumption and manufacturing have improved, property contraction has deepened and private sector investment is struggling. Chinese economic officials have rebuked claims that the economy is in crisis, but there are concerns about the country's economic strategy and the lack of policy clarification. Foreign businesses are calling for tangible steps to address unfair competition and to regain momentum in reopening. The EU has launched an anti-subsidy probe into China's exports of electric vehicles, which is expected to complicate bilateral relations.
How Greek shipping oligarchs are reaping billions from Putin’s war
Telegraph
Greek shipping companies have profited from Russia's use of a "shadow fleet" of ships to transport oil above the price cap imposed by the West as part of its sanctions against Russia. The shadow fleet consists of ships more than 15 years old that are deployed solely for sanctioned oil trades and have anonymous owners and opaque corporate structures. Greek shipping owners have sold a large number of oil tankers to the shadow fleet, as demand for these vessels has increased. Greece is the largest seller of high-value tankers to the shadow fleet. The rise of the shadow fleet has eroded the effectiveness of the oil price cap and has also raised environmental concerns due to the ageing nature of the ships. There are calls to put oil tankers on the West's export controls list, but evidence suggests that the price cap is not being properly policed even when Russian oil is being transported legitimately on Western ships.
China says it took 'necessary measures' to drive away Philippine vessel in South China Sea
Reuters
China's coast guard has defended its actions in blocking and driving away a Philippine vessel in a disputed area of the South China Sea. The Chinese foreign ministry said that the measures taken were in accordance with the law. The statement comes after the Philippines accused China of installing a "floating barrier" in part of the Scarborough Shoal, preventing Filipinos from entering and fishing in the area. China claims 90% of the South China Sea, which overlaps with the exclusive economic zones of several other countries in the region. Beijing seized the Scarborough Shoal in 2012, forcing Filipino fishermen to travel further for smaller catches.
Seafood imports from Japan suffer drastic cut in wake of Fukushima water release
Guardian
Seafood imports from Japan to China have dropped by 67% in August, compared to the same period the previous year, following Beijing's ban on marine products from Japan due to concerns over radioactive wastewater from the Fukushima Daiichi nuclear power plant. The move has resulted in a diplomatic dispute between the two countries, as well as a rise in anti-Japanese sentiment in China.
Distressed developer China Oceanwide declared bankrupt in Bermuda
Nikkei Asia
China Oceanwide Holdings, a Chinese developer, has been wound up by a court in Bermuda. Trading of the company's Hong Kong-listed shares has been suspended until further notice. China Oceanwide has a number of other lawsuits pending, including a separate winding-up petition made last month to a Hong Kong court by the contractor for its commercial complex project in downtown Los Angeles.
Evergrande fails to meet bond-sale rules in blow to US$20 billion debt workout
South China Morning Post
China Evergrande Group, which is struggling with a massive debt crisis, has been prevented from issuing new debt to repay approximately $20bn to offshore creditors. The China Securities Regulatory Commission and the National Development and Reform Commission imposed administrative measures that Evergrande failed to meet. The company said this was due to an "investigation" involving its key onshore unit Hengda Real Estate Group. Evergrande's shares plunged as much as 24% following the announcement.
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