China Locks Information on the Country Inside a Black Box; Worth the Read: Who Are Responsible for US Foreign Policy?
Eyeing China, Biden official floats a new ‘Washington consensus’; Online migrant celebrities bring wave of Chinese nationals to U.S. border
Welcome to this issue of The China Brief. Today is May 1, 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.
And here’s today’s exclusive insight:
Exclusive Insight: Li Qiang as the director of the Industrial and Commercial Bureau in Zhejiang
In his early years, Li Qiang served as the head of the Bureau of Industry and Commerce in Zhejiang.
Following the so-called "831 Deadline" in 2004, which refers to August 31st, 2004, a boundary established by the central government, all land auctions had to be conducted through bidding processes. Prior to this, land transfers were based on agreements between the government and developers. Developers often lacked sufficient funds and could not pay the full amount required.
Even if developers could pay the full amount, the government had numerous tasks to undertake, such as acquiring land from farmers, implementing infrastructure projects, and other initiatives requiring substantial capital. As a result, the government lacked the funds to foster economic growth and improve its image.
Thus, it can be said that during the process of economic takeoff, the government was either unable or lacked the capacity to serve as a driving force. This constitutes the fifth factor.
The sixth point is whether the government played a role in Zhejiang's economic takeoff. It certainly did. Its impact was primarily manifested in the steadfastness of local government reforms and the creation of favorable market conditions, which were of paramount importance.
In his tenure as the head of the Bureau of Industry and Commerce in Zhejiang, Li Qiang likened his role to that of a shop assistant, providing excellent service. Zhejiang officials were dedicated to serving enterprises and, at the time, steadfastly implemented the central government's policy of abandoning class struggle and focusing on economic construction.
(This article is the nineteenth in the series "Zhejiang, Zhejiang People, Zhejiang Economy." The author, Ye Feng, is a Zhejiang research scholar.)
China Locks Information on the Country Inside a Black Box
WSJ
China's government is tightening control over information on the country's economy, curtailing overseas access to various databases on corporate information, patents, procurement documents, academic journals, and official statistical yearbooks. Furthermore, restrictions are being placed on access to one of the most crucial databases on China, Wind Information, whose economic and financial data is widely used by analysts and investors both inside and outside the country. The move is part of a broader effort by the Communist Party to tighten control over how the rest of the world forms its views on China and essentially close off China from foreign influence. The campaign has unnerved foreign businesses and investors grappling with heightened geopolitical risks associated with their investments in China.
De-dollarisation: oil market is a slippery slope for anti-dollar crowd to climb
Financial Times
Central banks from China, India, and Brazil are buying gold at the fastest pace since World War II as uncertainty clouds the global order and the threat of sanctions against dollar-denominated private sector trade remains potent. The US was able to freeze Russia's $300bn of reserves because these were held in dollars, a move that sparked accusations of dollar weaponization. Nonetheless, weaning major markets such as commodities from the dollar remains a challenge, although talk of de-dollarisation has returned. Luiz Inácio Lula da Silva, Brazil’s former president, said developing economies should seek to trade in other currencies.
China’s petition office promises to tackle ‘backlog of complaints’
South China Morning Post
The director of China's top office for handling public grievances has pledged to resolve petitions quickly and prevent instability at the grass-roots level, according to the director of the National Public Complaints and Proposals Administration (NPCPA), Li Wenzhang. Mr. Li said the focus of the NPCPA's work would be to manage complaints at the source by identifying potential conflicts early and avoiding escalation. The NPCPA serves as a collection point for information on public complaints, which are then submitted to upper government agencies for response. Its name means the “letters and visits” bureau. Petitioning is common among Chinese citizens who have grievances against lower levels of government.
How fund managers have turned bullish on Chinese stocks over the short term
The Glob eAnd Mail
Despite a potential threat of a regulatory crackdown, geopolitical tensions over Taiwan and a zero-Covid-19 policy, North American fund managers have grown more upbeat due to China's reopening trade. Reflecting this optimism, CI Global Asset Management's Emerging Markets Fund is now overweight in Chinese/Hong Kong stocks at 38%. Online travel firm Trip.com Group and hotel-chain operator Atour Lifestyle Holdings are two of the stocks said to have benefited from the reopening trade. The retail and consumer sectors are also predicted to do well in the second leg of China's reopening policy. Among emerging markets, the rapid rise of e-commerce giant Alibaba could make it "the single-most important company in emerging markets", according to CI's Matt Strauss.
China may not need Western technology very much longer
Japan Times
Chinese companies ByteDance, Tencent, and Alibaba Group have all made the list of the world's biggest spenders on research and development (R&D), according to Bloomberg. With the U.S. and Netherlands recently imposing new restrictions on exports of semiconductors and the equipment used to make them, companies are becoming increasingly wary of sharing technology with China. Meanwhile, with Chinese firms rising up the list of R&D spenders, this may signal that they won't require Western technology indefinitely.
The sources of East Asia’s industrial prowess
Japan Times
South Korea's industrial sector has caught up with global leaders in industries such as semiconductors, cars, biotechnology, and defense, and has the agility to seize external opportunities and innovation. Prowess aside, South Korea is now a reliable supplier of technology and should not be ignored as the US and its allies seek to limit China's access to advanced technologies like semiconductors. Korea's chaebols, or family-owned conglomerates, have a winning combination of family ownership combined with hired professional CEOs with strong incentives.
China’s Labor Day holiday domestic travel is set to exceed pre-pandemic levels
CNN
Over 240 million holidaymakers are expected to travel within or outside mainland China during the five-day break that began on Saturday, state media CCTV reported on Monday, an increase of more than 20% from pre-pandemic levels in 2019. Domestic bookings alone have risen by 700% compared to last year. However, the high demand has led to complaints of scalping, due to the fact that early bookings for advantageous prices were being canceled for various reasons, forcing tourists to re-book at higher costs. Warnings have been issued by state media and provincial law-enforcement authorities.
China’s EV makers tout self-driving tech, but breakthroughs are years away
South China Morning Post
Chinese tech giants and electric vehicle (EV) manufacturers are in a race to develop breakthroughs in autonomous driving, according to industry executives and analysts, although full commercialization appears to be years away. Huawei, Baidu, and SenseTime have all developed autonomous driving systems, while Li Auto, BYD, and Xpeng have all showcased their progress in autonomous technologies. However, regulatory and technical bottlenecks are holding back the development of L3 autonomous driving, which doesn't require hands on the steering wheel at all times, and the technology required, law and industry need to work together to make it happen, according to Zhang Yi, chief executive of research firm iiMedia. L4 would permit drivers to take their eyes off the road, while L5 would not require human intervention but more advanced autonomous driving technologies are still immature and legal issues remain, said Guo Tao, researcher at Kandong research institute.
Iranian Insider and British Spy: How a Double Life Ended on the Gallows
NY Times
The New York Times has revealed the identity of a former Iranian deputy defense minister who was executed on espionage charges in Iran in January. Alireza Akbari was revealed to have been a mole for the UK, with high-level access to Iran’s nuclear and defense secrets. Akbari disclosed the existence of Iran’s nuclear weapons program to British intelligence, which was then shared with Israel and other agencies. Western intelligence agencies had long been aware that Iran was building a facility at Fordo but thought it was a military storage facility. Akbari revealed it as a secret nuclear enrichment site.
Akbari, who was born in Shiraz, was a senior commander in the Revolutionary Guards and held political power in the country while privately sharing the Islamic Republic’s secrets with foreign intelligence. Officials believe he got away with it, providing valuable information for years, until 2019 when Iran discovered that he had revealed the existence of a Uranium enrichment facility, and accused him of disclosing the identity and activities of over a hundred officials. Iran has publicly unveiled his identity, accusing him of betraying Iran, and branded him with allegations of being financially motivated.
Legally, it has always been difficult to prosecute people who provide insider information about covert activities. This means confidential informants were vulnerable to being jailed or hung, like Akbari. However, human intelligence is appealing and useful to spy agencies, despite the potential risks. This story serves as a reminder of the dangers of working as a spy, and that being discovered can have serious, and potentially fatal, consequences.
Jack Ma turns up in Japan as college professor
The Independent
Jack Ma, co-founder of Chinese e-commerce giant Alibaba Group, has taken up a position as a visiting professor at Tokyo College, a research institute run by the University of Tokyo. In a statement, the university said that Ma would carry out research in sustainable agriculture and food production, while sharing his knowledge on entrepreneurship, corporate management and innovation with students and faculty. Ma's appointment began on Monday 28 June and runs through to the end of October.
Singapore Voices ‘Grave Concern’ Over South China Sea Tensions
Bloomberg
Singaporean Foreign Minister Vivian Balakrishnan has called for superpowers to work together to ensure free access and opportunities in Southeast Asia and its shipping lanes. Balakrishnan expressed his grave concern over recent clashes between Chinese and Philippine vessels in the South China Sea where tension between China and the Philippines has escalated in recent months over the contested, resource-rich waters. The Singapore foreign minister said it was important to prevent such situations and stressed the need for Asean negotiations for a code of conduct for the South China Sea.
Macau Casino Revenue Jumps Again in April on China Tourism Boom
Bloomberg
Gaming revenue in Macau surged by 449.9% YoY to reach a three-year high of MOP14.7bn ($1.8bn) in April. The data released by the Gaming Inspection and Coordination Bureau was better than the median analyst estimate of a 393% YoY increase, although the figure was still more than a third below the 2019 level. The five-day Labor Day holiday that runs till 3 May will be a key test of the strength of the tourism boom; Macau expects at least 70,000 visitors a day on average in the period. Analysts surveyed by Bloomberg estimate Macau’s gaming revenue this year may return to 56% of the pre-pandemic level.
Beijing agrees to South China Sea fishing-rights talk: Philippines’ Marcos Jnr
South China Morning Post
Filipino President Ferdinand Marcos Jnr has announced that China has agreed to discuss fishing rights in the disputed South China Sea in a recent address to the media. Marcos is pushing for better direct communication with Beijing on maritime differences between the two nations and has ordered the development of a map of fishing grounds to present to Chinese officials. Manila recently granted the US military more access to the country’s military bases as the Philippine government attempts to counter China’s growing presence in the South China Sea, however, Marcos has declared that the Philippines would not allow itself to become a “staging post” for military actions in the region.
US Chamber of Commerce warns of major increase in risks for businesses in China
CNN
The US Chamber of Commerce has warned that the scrutiny being applied to US companies in China “dramatically increases” the risks of trading in the country. The business group has said that it is concerned about heightened official scrutiny of US firms in response to a new amendment to China’s counter-espionage law that expands the definition of materials and data that China regards as relevant to its national security. The recent questioning of management consultancy Bain & Company staff in Shanghai and the closure of the Beijing office of Mintz Group, a due diligence provider, have also caused concern.
First cable car across Shanghai’s Huangpu River to be completed in three years: official
South China Morning Post
The first-ever cable car to cross Shanghai's Huangpu River is being developed by Hongkong Land, China Travel Service, and West Bund. The cable car will link the West Bund Financial Hub project on the west bank with the Expo Cultural Park on the east bank. The project is called 'The heart of Huangpu River' and is expected to be completed in three years. The West Bund Financial Hub project will comprise 660,000 square meters of offices, 210,000 square meters of retail space, 170,000 square meters of luxury residences, 55,000 square meters of five-star hotels, a 30,000 square meter convention center, and 10,000 square meters of sports facilities. The project has a gross floor area of 1.8 million square meters. Xuhui district, where the development is taking place, is home to over 3,400 foreign companies and 145 multi-national headquarters and R&D facilities.
India seeks 'demographic dividend'
Deutsche Welle
India has eclipsed China as the world's most populous nation, according to estimates by the United Nations, which show a current population of 1.4 billion, around 58% under the age of 29. India's demographic is seen as an opportunity by some. The country already has one of the fastest-growing economies globally, and India is expected to have growth of around 6.9% for 2023, according to the World Bank, with the IMF predicting an average growth rate of 6.1% for the next five years. However, high youth unemployment in India, and inflation, could pose a future challenge.
Online migrant celebrities bring wave of Chinese nationals to U.S. border
Japan Times
The difficulty of obtaining US visas and the consequences of China’s pandemic lockdowns have resulted in a sharp increase in Chinese nationals emerging at the US-Mexico border. This has been attributed to social media, with apps such as TikTok encouraging migrants on the irregular overland trek to the United States (also known as “the Big Beautiful"), acting as an enabler. Over three weeks, Reuters witnessed hundreds of Chinese migrants crossing into the US, all of them citing social media influencers, private groups, and comments, for training and organizing their trips. With Chinese people the fastest-growing demographic arriving at the US-Mexico border, CBP data shows that apprehensions of Chinese nationals reached more than 6,500 in the six months since October 2022. US officials are aware that social media platforms have increased smugglers’ access to potential migrants, creating an environment ripe for exploitation. The Department of Homeland Security has sought to combat this with social media campaigns, but the problem continues to grow.
China's Politburo says economic 'triple pressures' eased
Nikkei Asia
China's Politburo, the Communist Party's top decision-making body, has said that the country's economic growth this year is "mainly restorative" and has pointed towards expanding demand as the key to a sustained recovery. The Politburo stated that the triple pressures on the economy (shrinking demand, supply shocks, and weakening expectations) that have been felt since the beginning of the year have eased.
Soft China PMI likely to flow through to uneven commodity demand: Russell
Reuters
The drop in China's official manufacturing Purchasing Managers' Index (PMI) to 49.2 in April from 51.9 in March demonstrates that the current rebound in the world's second-largest economy is likely to be uneven, says this column from Reuters. Reading above the 50-mark indicates growth, the latest figure falling below this threshold for the first time since December. The report suggests that although China's energy commodity sector shows steady demand and coal imports have spiked, copper imports remain soft.
Dubai can be a gateway to Middle East for Hong Kong firms, officials say
South China Morning Post
Dubai could act as a gateway to the Middle East for Hong Kong businesses, according to two Dubai officials, as low taxes, supportive regulatory frameworks, technological innovation and a quality talent pool make the emirate an attractive home for a growing number of hedge funds. There are already 60 hedge funds either operating or in the pipeline in the city, with more than $1tn in assets under management. There are also 4,000 millionaires in Dubai with $966bn in private wealth. Dominick Rieb-Smith, MD at JP Morgan, said culture and environment were vital to hedge funds' success and the UAE offered a different lifestyle.
China, America and why not all growth is equal
Financial Times
The approach of outsourcing to unknown suppliers is deeply embedded in economic thinking and at the heart of global trade. However, the last four decades of neoliberal economic policy that led to growth, have also given rise to in-country inequality, negative externalities such as forced labor, and highly concentrated supply chains vulnerable to disruption. US's Inflation Reduction Act aims to counter China's dominance in key sectors by heavily subsidizing diversity of production, supporting businesses in the clean-energy transition, and subsidizing multiple sources of common goods. It is about working with allies to create a system that recognizes power cannot be economically modeled and that not all growth is the same, leading to resilience and security in the economy.
Eyeing China, Biden official floats a new ‘Washington consensus’
Washington Post
The influence of the 1980's Washington consensus, which embodied policies that promoted free trade, deregulation of business, and privatization of state enterprises, has been blamed by Biden administration officials for having created mounting social and economic inequality during a period when the power of China grew as the "manufacturing hub of the world." Administration officials are calling for a "new consensus" that should embrace industrial policies and subsidies to propel growth in the US and transform it into a green and high-tech powerhouse. US steel and other unions are supporting the Biden push, but critics, including business leaders, have criticized the president for not pursuing any new trade deals which generally offer other nations access to the US market in return for similar benefits for US exporters. They say this could mean that, in a zero-sum approach, one country's growth comes at the expense of another's.
China says UN Security Council should give smaller nations a greater say
South China Morning Post
Wang Yi has called for developing countries to be given a greater say in the United Nations Security Council. The comments were made ahead of talks over Security Council reform, and Beijing has been courting Global South support in its growing rivalry against the West. Japan, India, Brazil, and Germany have been pushing for permanent positions on the council. Wang urged ambassadors Tareq Albanai and Alexander Marschik to "lead all parties to eliminate interferences and forge consensus so that the Security Council reform process will be widely recognized... and the results will stand the test of history".
Foreign Affairs
The United States has made a bet on India as a key partner to help it in the Indo-Pacific in its geopolitical rivalry with China, but Washington's expectations of New Delhi are misplaced, argues Tanvi Madan in Foreign Affairs. India's significant weaknesses compared to China, and its proximity to it, mean that it will never involve itself in any U.S. confrontation with Beijing that does not directly threaten its own security. While India values cooperation with the United States for tangible benefits, it does not believe that it must, in turn, materially support the U.S. in any crisis. Furthermore, New Delhi retains an aversion toward participating in mutual defense and does not have any innate allegiance toward preserving the liberal international order.
U.S.-Indian security cooperation has enjoyed marked success, with defense consultations being a visible aspect, military-to-military collaboration flourishing, and U.S. firms enjoying success in penetrating the Indian defense market. However, the two nations still face important challenges: while both are looking to limit China's assertiveness, there is still a significant divide in how they aim to accomplish that. The U.S. goal in military-to-military cooperation is interoperability, whereas India rejects the idea that its armed forces will participate in any combined military operation outside of a UN umbrella. India's focus has increasingly been on defense-industrial cooperation as the key driver of its security partnership with the United States to secure technological autonomy.
As the Biden administration expands its investment in India, it should base its policies on a realistic assessment of Indian strategy and not on any delusions of New Delhi becoming a comrade-in-arms during some future crisis with Beijing, concludes Madan. While defense-industrial cooperation is likely to remain one of the leading drivers of U.S.-Indian security cooperation, the Biden administration should be prepared for the structural problems that limit cooperation in this domain, as well as continued resistance from New Delhi on expanding operational integration.
One in 5 young people in Chinese cities are out of work. Beijing wants them to work in the fields
CNN
Guangdong, the richest and most populated province in China, has said it will take 300,000 unemployed young people and rehouse them in the countryside for up to three years in a bid to ease urban youth unemployment. This follows President Xi Jinping’s call for urban youth to revitalize the rural economy by moving to the countryside, in a campaign that echoes Mao Zedong’s campaign to exile large numbers of young people to remote areas. The number of new university graduates will reach a record 11.6 million this year, so the rate of youth unemployment may well rise further. Alex Capri, a research fellow at the Hinrich Foundation, said the desire to disperse well-educated youth from cities to more rural areas may help solve the inequality levels between tier 1 and 2 cities and the poorer parts of China. However, critics argue that the strategy is not enough, as China still lacks the necessary job creation policies to employ its large and highly-trained youth population.
South Korea’s exports suffer longest losing streak in 3 years
Al Jazeera
South Korea's exports fell for a seventh month in April, as sales to China slumped amid the continuing economic fallout from the coronavirus pandemic. Asia's fourth-largest economy saw overseas sales plunge 14.2% to $49.6bn in April compared with the same month last year. This comes despite expectations of a rebound following December's reopening of the Chinese economy. Policymakers may need to look for new stimulus measures to jumpstart the fragile global economy, says Reuters.
“Not enough”: Hong Kong’s low-paid get $0.32 minimum wage bump
Al Jazeera
The minimum wage in Hong Kong has increased to HKD 40 ($5.10) per hour, a rise of 6.25%, following a four-year freeze. However, advocates have said the amount remains too low given the cost of living in the city, which has one of the most severe wealth gaps in the world. Critics of the minimum wage, however, argue that it is unsuitable for combatting poverty and that it inflates costs for firms. A report is scheduled to be published by October reviewing the minimum wage process.
China’s Midea buyout plan of Electrolux tests outbound acquisitions ability
South China Morning Post
Chinese home appliance company, Midea Group, is considering buying Electrolux, according to insiders. Despite current political sensitivity surrounding Chinese foreign acquisitions, the company is keen to add the premium, luxury Swedish appliance maker to its overseas acquisitions of other major companies, such as Toshiba Corporation and Kuka AG. Electrolux has not yet looked favorably on the proposal.
Paraguay’s Pena wins the presidential election, ensuring strong ties with Taiwan
South China Morning Post
Conservative candidate Santiago Pena has won Paraguay's presidential election with 42.7% of the vote, a lead of more than 15 points over rival Efrain Alegre. His victory tightens the right-wing Colorado Party's grip on power in the country and comes despite Alegre's argument for switching allegiance to China, which would have ended Paraguay's diplomatic ties with Taiwan. Pena had campaigned on a policy of retaining those ties. He now faces the task of boosting the country's farm-driven economy, navigating soy and beef producers' calls to align with China's huge markets, and shrinking the major fiscal deficit.
Worth the Read: The Hell of Good Intentions: America's Foreign Policy Elite and the Decline of U.S. Primacy -by Stephen M. Walt
Chapter 3 of the book authored by Harvard professor Stephen Walt provides valuable insight into the group of individuals, commonly referred to as "the blob," who are responsible for shaping US foreign policy. In this chapter, Walt delves into the intricate workings of this foreign policy establishment and its influence on the decisions made by the US government. Below we offer a succinct summary of his key arguments.
The foreign policy community in the United States is a vast and complex network of individuals, institutions, and organizations that influence, shape, and execute America's relations with the rest of the world. This community includes formal government institutions, membership organizations, think tanks, interest groups and lobbies, media outlets, academia, and private sources of support.
Key government institutions involved in foreign policy decision-making include the president, vice president, National Security Council, and various departments such as State, Defense, Energy, and Treasury. The sprawling bureaucracy of the U.S. foreign policy and national security apparatus can impede effective policymaking due to the difficulty in coordinating action across agencies and dilution of accountability.
Membership organizations, such as the World Affairs Councils, Foreign Policy Association, and Council on Foreign Relations, aim to strengthen public awareness and deepen understanding of critical international issues. Additionally, specialized organizations like Greenpeace and Oxfam also contribute to foreign policy discourse.
Think tanks play a critical role in the foreign policy community by conducting independent research, testifying before Congress, and participating in media commentary. They serve as entry points for young professionals and temporary homes for former government officials. However, the line between research and policy advocacy has become increasingly blurred, with many think tanks functioning as partisan advocacy organizations.
Interest groups and lobbies work to shape mass and elite opinion and persuade government officials to adopt their preferred policies. They can lobby directly, help draft legislation, steer campaign contributions, or engage in public persuasion. Foreign policy is heavily influenced by interest groups that focus on a wide range of issues.
The media, including major news organizations, newspapers, magazines, and influential broadcast venues, play a crucial role in shaping public and elite understanding of the world and U.S. foreign policy. Individual journalists, celebrity hosts, bloggers, and websites focusing on foreign affairs are also part of this community.
Academia contributes to the foreign policy community through research, discourse, and the education of future policy professionals. Many scholars combine academic careers with public service and remain engaged in policy-related activities after leaving office.
Finally, private sources of support, including philanthropies, individuals, and corporations, fund research and advocacy efforts in international affairs. This financial backing can sometimes raise questions about the objectivity of the organizations receiving the support, particularly when they are dependent on donations from foreign governments or corporations with vested interests.
In summary, the U.S. foreign policy community is an intricate web of actors and institutions that collaborate and compete to influence America's approach to international relations. The community's complexity can lead to challenges in coordinating policy and maintaining accountability, but it also fosters a rich and dynamic environment for the development and execution of foreign policy.
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