China Convenes Urgent Meetings on Economy With Business Leaders; Exclusive: Who is Qin Gang
Germany to unveil first-ever National Security Strategy; China study turns brain activity into Mandarin, breaks language barrier; Blinken talks to Chinese counterpart before planned visit
Welcome to this issue of The China Brief. Today is June 14, 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.
Exclusive: Who is Qin Gang?
Qin Gang, born in 1966 in Tianjin, entered the Department of International Politics at the School of International Relations in 1984. Following his graduation, Qin Gang held long-term positions in the Department of European Affairs at the Ministry of Foreign Affairs. Perhaps due to his handsome appearance and graceful demeanor, Qin Gang was appointed as the Deputy Director-General of the Information Department and spokesperson for the Ministry of Foreign Affairs in 2005. In 2011, he was promoted to the Director-General of the Information Department.
In 2015, Qin Gang was transferred to the Protocol Department of the Ministry of Foreign Affairs as the Director-General. Due to his primary responsibility of managing the country's foreign etiquette and ceremonial affairs, Qin Gang had the privilege of accompanying and guiding President Xi Jinping during his diplomatic activities, which established a certain level of trust between the two.
Subsequently, Qin Gang's career experienced a rapid rise. He was promoted to Deputy Minister of Foreign Affairs in 2018, appointed as the Ambassador to the United States in 2021, became the Minister of Foreign Affairs at the end of 2022, and assumed the position of State Councilor in 2023. In just seven years, he went from being the Director-General of the Protocol Department to a sub-national-level leader.
A careful comparison of the resumes of Wang Yi and Qin Gang reveals that the former has a rich background in the diplomatic system, while the latter's experience is relatively limited. Wang Yi lacks a personal trust relationship with Xi Jinping and needs to demonstrate his loyalty through outstanding performance in his duties, while Qin Gang enjoys a certain level of trust from Xi Jinping. Wang Yi has already left the Ministry of Foreign Affairs, thus losing connections with his former colleagues, while Qin Gang's rapid promotion requires a process to establish his own trusted team. Wang Yi has been deeply associated with the "wolf warrior" image, which will likely be recorded in future history textbooks, while Qin Gang's image is still malleable.
In fact, based on Qin Gang's performance as the new Minister of Foreign Affairs in the few months since taking over from Wang Yi, there are differences between the two regarding the "wolf warrior" issue. Perhaps this is only a temporary contraction in diplomatic work or a permanent change. Regardless, with Wang Yi and Qin Gang holding the same rank but exhibiting the aforementioned differences, it is enough to create mutual constraints and make Xi Jinping the ultimate arbiter when conflicts of interest arise between the two.
China Convenes Urgent Meetings on Economy With Business Leaders
Bloomberg
China has convened urgent meetings with business leaders and economists to seek advice on revitalizing the economy. These meetings have been described as having a pressing tone, indicating a sense of urgency. Government officials have held at least six consultations in recent weeks, discussing ideas to stimulate the economy, restore confidence in the private sector, and revive the real estate industry. Business leaders and economists have called for urgent policy revisions and a more market-oriented approach to growth. Concerns have been expressed about the timing and form of any stimulus measures. The Chinese government is considering a broad package of stimulus measures, including support for the struggling property market. Officials have acknowledged the critical period facing China's economy and have displayed a newfound impetus to find solutions. These meetings are not accompanied by official readouts, suggesting a more ad-hoc nature. The government is contemplating a stimulus package, and the central bank is expected to cut interest rates. Business leaders have reported an increase in requests from regulators for data and meetings to discuss the economy. The upcoming Politburo meeting in July is anticipated for potential structural reforms to address weak business confidence.
Germany to unveil first-ever National Security Strategy
Reuters
Germany is set to unveil its first National Security Strategy, which aims to provide a comprehensive overview of the country's foreign policy and ensure a cohesive cross-ministry approach to security. The strategy gained urgency following Russia's invasion of Ukraine, which exposed the poor state of the German military and the country's over-reliance on Russia for energy. The strategy is also expected to address the challenge posed by China, although a separate China strategy is expected to be published later this year. Chancellor Olaf Scholz has pledged to increase defense spending to more than 2% of economic output, up from around 1.5% currently. The strategy is the result of months of consultations and was delayed due to disputes between parties and ministries. The idea of a National Security Council, which would have upset the balance of power between ministries and the chancellery, was eventually abandoned.
China study turns brain activity into Mandarin, breaks language barrier
South China Morning Post
Chinese researchers claim to have developed a mind-reading machine that can turn human thought into spoken Mandarin. The team, led by Wu Jinsong from Huashan Hospital, has enhanced algorithms that observe neural activities to decode and articulate Mandarin speech from brain activity. This advancement could help restore speech capabilities in communication disorder patients who speak tonal languages. The researchers used invasive techniques to record neural activity and focused on specific brain areas related to speech. The results were impressive, outperforming traditional techniques, and could potentially be extended to other tonal languages.
Blinken talks to Chinese counterpart before planned visit
Deutsche Welle
US Secretary of State Antony Blinken and Chinese Foreign Minister Qin Gang spoke on the phone on Wednesday, as Blinken prepares to visit China on Sunday. The visit aims to ease tensions and improve relations between the two countries. The main point of contention has been the issue of Taiwan, with China asserting its claim over the self-governing island and not ruling out the use of force. Qin warned that the relationship has faced "new difficulties and challenges" this year and urged the US to "stop interfering in China's internal affairs." Blinken emphasized the importance of open communication to prevent conflict.
China’s BYD overtakes Tesla in the EV market
Washington Post
Chinese electric vehicle (EV) giant BYD has surpassed Tesla to become the top-selling EV brand in the world. BYD recently unveiled the Seagull, a compact battery-powered hatchback priced at just over $11,000, which has been praised for its affordability. The company has targeted fast-growing emerging markets, including Thailand and India, and its vehicles are now the top-selling EVs in countries such as Thailand, Israel, New Zealand and Singapore. BYD has also been helped by the Chinese government, which has supported the company with billions of dollars in funding over more than a decade. The Chinese government has been a strong supporter of the EV industry as part of its drive to reduce China’s reliance on fossil fuels and foreign automakers. Analysts predict that the Seagull will bring cutthroat competition to markets around the world and BYD will soon be competing with Tesla in countries in Latin America and Southeast Asia.
How to restructure Chinese supply chains
Japan Times
The article discusses the need for financing to support the development of new markets, industries, and institutions, and the potential role of private equity and venture capital funds in achieving this goal. It notes that tighter financial regulation and low interest rates have made mainstream financial institutions more cautious, leading to increased debt levels and market concentration. Private markets, including private equity and venture capital, have grown rapidly in recent years, with total private-market assets under management reaching $11.7 trillion in June 2022. However, private markets still account for a small share of total global financial assets. The article highlights the underdeveloped nature of the Chinese private equity and venture capital market and the potential for it to expand and support economic restructuring in China. Chinese private equity and venture capital funds are already handling a growing share of mergers and acquisitions, but foreign investment in the sector has declined amid rising geopolitical tensions. The article concludes that the Chinese government has shown it can support the development of private funds, and these funds could play a crucial role in reconfiguring China's industries and supply chains.
US Submarine Damaged in South China Sea Won’t Return Until 2026 as Shipyards Are Clogged
Bloomberg
The US Navy has announced that the USS Connecticut, a submarine that struck an underwater mountain in the South China Sea 19 months ago, will not be back in service until early 2026 at the earliest. This further adds to a backlog of maintenance overhauls for the navy as it faces a growing Chinese fleet. The repairs to the bow and lower rudder of the Connecticut will cost an estimated $80m and highlights problems with maintenance at the navy’s four shipyards.
Chinese foreign minister slams U.S. ahead of planned Blinken visit
Japan Times
Chinese Foreign Minister Qin Gang has urged the US to stop interfering in China’s internal affairs during a phone call with Secretary of State Antony Blinken. The call came as tensions between the two countries have surged in recent months over a range of issues, from semiconductor exports to Taiwan. Washington has said it hopes to manage the relationship through talks, including a planned visit to Beijing by Blinken. However, Qin appeared to blame the US for the soured ties, stating that China had always handled the relationship with respect and peaceful coexistence.
South Korea MPs Want Ouster of China Envoy as Seoul Seeks Summit
Bloomberg
South Korea is seeking to restore a trilateral summit with China and Japan this year, despite a recent diplomatic rift and calls for the expulsion of Beijing's envoy. South Korea's National Security Adviser, Cho Tae-yong, stated that the country is hoping to develop a healthy relationship with China and restore the South Korea-China-Japan consultative body. The three nations have been at odds, with Seoul and Tokyo supporting US policies curbing high-tech equipment to China and looking to diversify supply chains. While some parliament members have called for the expulsion of China's envoy, South Korean President Yoon Suk Yeol is unlikely to take such a drastic step, as it would alienate an important trading partner and a key player in persuading North Korea.
As Kyiv’s counteroffensive heats up, Washington holds its breath
Washington Post
The US and its allies are hoping for a rapid retaking of strategically significant territory as Ukraine launches its counteroffensive against Russian forces. Defense Secretary Lloyd Austin cautioned that while everyone is hopeful for overwhelming success, they also have a realistic outlook on the situation. The Biden administration needs a major battlefield victory to demonstrate the prudent use of American military strength abroad as the President heads into next year’s reelection campaign.
Amazon excludes Chinese e-commerce app Temu from competitive price checks
South China Morning Post
Amazon has excluded new competitor Temu from its price searching algorithm that checks if products sold on its platform are competitive with rivals, saying the site does not meet its standards. That means some low-priced general merchandise on Temu, owned by PDD Holdings, could beat out prices offered by Amazon’s marketplace sellers. Amazon is wary of engaging in a price war with competitors it does not consider reputable. The company said its qualification standards ensure that it does not compare or match prices against what is sees as merchandise from questionable marketplaces – including products that might be counterfeit.
List of Chinese developers facing delisting lengthens amid weak housing market
South China Morning Post
Two Chinese property developers, Yango Group and Sundy Land Investment, are set to be delisted from onshore stock exchanges as a result of the nation's weakening housing market. The delistings reflect a lack of confidence in the property industry, with a stagnant industry and liquidity crunch faced by some developers intensifying investor fears over the viability and growth of these companies.
Thailand hosts giant China business convention to lure FDI
Nikkei Asia
Thailand is hosting the World Chinese Entrepreneurs Convention (WCEC) from 24-26 June to attract more investment from China, particularly in areas such as electric vehicles (EVs). Last year China became Thailand's largest source of foreign direct investment (FDI), with trade between the two countries worth $106bn. The Thai-Chinese Chamber of Commerce is expecting more than 4,000 Chinese businesspeople to attend the event, where discussions, exhibitions and trade talks will take place. Prime Minister Prayuth Chan-ocha is also expected to attend.
Barclays Sees China Rate Cuts Every Quarter Through Early 2024
Bloomberg
Barclays Plc has forecasted that China's central bank will accelerate its monetary easing measures into next year, with several cuts to interest rates and the reserve requirement ratio. The bank expects a 10 basis-point reduction in policy rates each quarter from the third quarter of 2023 through to the first quarter of 2024. Barclays also predicts that the People's Bank of China will reduce the reserve requirement ratio for banks by 25 basis-points each in the third quarter of this year and the first three months of next year. The bank's economists also anticipate a reduction of 60-80 basis points in mortgage rates for both existing and new home loans in the next nine months. Barclays says there is limited room for major fiscal stimulus due to the central government's conservative budget and deteriorating local government finances.
Allies Pressure Biden to Hasten NATO Membership for Ukraine
NY Times
President Biden is facing pressure from NATO allies to support a faster and more certain path to membership for Ukraine. Many allies, particularly those bordering Russia, want to provide Ukraine with a strong political commitment on membership, and some want a timetable and specific goals for full membership. However, Biden is cautious about getting NATO into a direct fight with Moscow and is keen to maintain the status quo of a vague promise that Ukraine will eventually join but with no set timetable. Despite this, the debate within NATO is putting pressure on Biden to alter his position. The hope is that once Ukraine is a full member, Russia would not dare to try to topple the government in Kyiv because an attack on one NATO country is considered an attack on them all. However, only Germany has sided fully with Biden, with some allies having doubts about Ukraine's readiness to join and the risks of getting directly involved in a conflict with Russia. The issue of Ukraine's path to membership is expected to be central in a meeting between Biden and NATO Secretary-General Jens Stoltenberg.
Beijing uses its more militarized coast guard like a navy
Japan Times
China has rapidly built the world's largest coast guard fleet, which is more militarized and aggressive than traditional coast guard forces. These vessels, painted white and labeled "China Coast Guard," are equipped with 76 mm cannons and have the capacity to add anti-ship missiles. China's coast guard has disrupted the traditional role of coast guards, which was primarily focused on policing smugglers and search and rescue missions. Instead, China's coast guard has become a key player in territorial disputes and has set off an arms race in the region, with other countries rushing to deploy larger and more heavily armed patrol boats.
The waters around Taiwan are a potential battleground, as China claims the self-governed island as its own. Recent incidents, such as China's coast guard ships crowding near Taiwan and threatening to stop and search Taiwanese vessels, have raised concerns about the possibility of a broader conflict or even a war between major powers. China's coast guard has also been involved in confrontations with Japan, the Philippines, Vietnam, and other countries in the South China Sea.
The rise of China's coast guard and the shifting dynamics in the region have led to an increase in the size and capabilities of coast guard fleets in other countries. Japan, Vietnam, and South Korea have all announced plans to upgrade and expand their coast guard forces, and the United States and Australia have increased their presence in the region. The blurring of lines between coast guards and navies raises questions about the effectiveness of using lightly armed vessels to assert sovereignty and the potential for escalation in conflicts at sea.
Tencent, Xpeng lead Hong Kong stock gains on China rate-cut, Fed pause bets
South China Morning Post
Hong Kong stocks rose on Tuesday on speculation that the People's Bank of China will cut interest rates later this week to support its economic recovery, while slower US inflation prompted traders to bet on a pause in US rate hikes. Property developers and carmakers helped drive gains. The Hang Seng Index increased 0.4% to 19,521.42, while the Shanghai Composite Index added 0.3%. Although the risk of an economic double-dip is rising, analysts believe that the PBOC will slash borrowing costs. Bets increased that the Federal Reserve will also pause this week.
Stay informed about the latest news, analysis, and policy briefs from across the globe related to China with the China brief. Our team aggregates, synthesizes, and summarizes the most important information from various sources, including media outlets, think tanks, government agencies, and industry experts.
Our mission is to provide you with easily accessible and critically valuable information tailored to your specific field of interest. We understand the significance of staying up-to-date on developments related to China and aim to make this information comprehensible for our readers.
Join the conversation and stay informed about the latest news and developments related to China by visiting our website at www.6dobrief.com