China Mulls $137 Billion of New Funding to Boost Housing Market; Musk, Citi’s Fraser Among the CEOs Wooing China’s Xi at APEC
Behind public assurances, Xi Jinping spreads grim views on U.S.
Welcome to this issue of The China Brief. Today is November 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.
Behind public assurances, Xi Jinping spreads grim views on U.S.
Japan Times
President Xi Jinping of China made conflicting statements during his state visit to the United States in 2015. While publicly seeking respect and peaceful coexistence with the US, he privately warned the Chinese military to prepare for potential conflict as competition between the two nations intensified.
China Mulls $137 Billion of New Funding to Boost Housing Market
Bloomberg
China plans to provide at least CNY 1 trillion ($137 billion) of low-cost financing to urban village renovation and affordable housing programs in an effort to support the struggling property market. The funds will be injected by the People's Bank of China through policy banks, ultimately trickling down to households for home purchases. The plan, part of a new initiative by Vice Premier He Lifeng, marks a major step-up in the government's efforts to support the property market, which has been experiencing its biggest downturn in decades. The move comes as market concerns grow over the financial health of the nation's largest developers.x
Musk, Citi’s Fraser Among the CEOs Wooing China’s Xi at APEC
Bloomberg
Top executives from major multinational corporations are heading to San Francisco to meet with Chinese President Xi Jinping and other Asian leaders as US-China relations show signs of warming. The Asia-Pacific Economic Cooperation meeting will allow executives to discuss concerns about US-China trade tensions and regulations, as well as conflicts over access to the Chinese consumer market. Executives such as Elon Musk, Jane Fraser and Darren Woods will attend the CEO summit on the sidelines of the event. The summit represents an opportunity for executives to push their priorities and express concerns about the US-China relationship. Although the APEC meetings rarely lead to agreement, the summit will be the first time the US has hosted the event in 12 years and a key opportunity for President Joe Biden and Xi to meet face to face.
Huawei and Xiaomi Lead China Phone Market Double-Digit Rebound
Bloomberg
China's smartphone market experienced double-digit growth in October, with phone sales up 11% compared to the same period last year. Huawei and Xiaomi led the resurgence, with Huawei seeing an 83% improvement and Xiaomi up by a third. Huawei's growth was driven by its new Mate 60 series of phones, which featured a novel made-in-China 5G chip. Meanwhile, Xiaomi's 14 series received over one million orders since its late-October launch. The success of Chinese smartphone makers could pose challenges for Apple, which has relied on the Chinese market for almost 20% of its revenue in recent quarters.
Amid competing U.S. security priorities, Ukraine could get left behind
Washington Post
Congressional interest in providing financial aid to Ukraine appears to be waning, with lawmakers distracted by other national security priorities, including Israel and the U.S. southern border. The Pentagon has warned that its provisions for Ukraine are shrinking, and the country faces a budget deficit of $35 billion for next year. Ukrainian officials are intensifying their efforts to persuade Republican lawmakers to support their cause, while Ukraine's advocates in both parties are trying to link the country's crisis to the global struggle between democracies and autocracies. However, it remains unclear if the U.S. will be able to prioritize support for both Ukraine and Israel.
How an executive's arrest struck a blow to Japan-China business
Reuters
Japanese Prime Minister Fumio Kishida is expected to raise the case of a detained Japanese executive during his meeting with Chinese President Xi Jinping this week. The arrest of the executive, who worked for drugmaker Astellas Pharma, has had a significant impact on business between the two countries, resulting in a drop in foreign investment and an exodus of expats. Five Japanese nationals are currently detained in China, with a total of 17 detained since 2015, according to Japan's foreign ministry.
Race for first drug discovered by AI nears key milestone
Japan Times
Insilico Medicine, a company that used AI to develop an experimental drug for idiopathic pulmonary fibrosis (IPF), is approaching late-stage trials for the treatment. The results of the trials are being closely watched in the drug industry as Insilico used AI to identify a new approach to combat the disease and produce a novel molecule to treat it. This makes it the first fully AI-based preclinical candidate in the global industry, according to Deep Pharma Intelligence.
iPhone Maker Hon Hai’s Profit Beats in Sign of Resilient Demand
Bloomberg
Key iPhone assembler Hon Hai Precision Industry, also known as Foxconn, has reported stronger-than-expected profit for the third quarter, suggesting that demand for Apple's signature devices is better than feared. Net income for the quarter came to TWD 43.13bn ($1.3bn), compared to the average analyst estimate of TWD 34bn. However, sales for the quarter slid over 11% to TWD 1.54tn. Revenue in the fourth quarter is expected to drop around 4% to TWD 1.89tn, marking the first annual revenue contraction since 2016.
Why Xi Can No Longer Brag About the Chinese Economy
WSJ
China's economy is facing multiple challenges, including a deflating property bubble, unmanageable local government debts, slumping confidence, and deflation. As a result, China's aspirations to lead the global economy have been set back. The country's GDP, which was 75% the size of the US's in 2021, had slipped to 64% in the third quarter of 2022. While China's growth may stabilize and exceed that of the US for the coming decade, its long-term ability to claim global economic primacy is in doubt. China's autocratic system has hindered its ability to act decisively in addressing local debts and bad bank loans, and its ideological opposition to boosting consumption has limited its potential for growth. Additionally, Xi Jinping's policies, including a regulatory crackdown on private businesses and a drive for self-sufficiency, have prompted the US and Western Europe to restrict trade and investment with China in strategic sectors. Despite these challenges, China's manufacturing sector remains strong, giving the country an important channel of global influence. However, the US is attempting to address its own deficiencies in manufacturing and is promoting the concept of "friendshoring" to build global supply chains without relying on China. The West's ability to present a united front against China is in doubt, particularly if Donald Trump is re-elected as US president. Germany, for example, may pivot back to China if faced with a newly isolationist US and the burden of supporting Ukraine against Russia.
Pandas don’t play diplomatic hard ball like China does
Japan Times
The author of the article has been teaching students at the Management Center of Innsbruck about the importance of understanding developments in Asia. They argue that the world is moving from a transatlantic system to one that accommodates the rise of Asia. The course focuses on how this shift will affect the world, including changes in power dynamics and institutions. However, recent developments may require the author to update their teachings on power.
Nepal bans TikTok, citing disruption to ‘social harmony’
Washington Post
The Nepalese government has banned TikTok, citing that its content disturbs “social harmony” in the country. The move comes amid increased scrutiny of the app, which has more than one billion users worldwide, over concerns about data privacy and its potential for Beijing to spy on or influence its users. Nepal is the latest country to restrict the use of TikTok, following India, the US and almost 40 US states. The Nepalese government did not provide a specific reason for the ban and has been criticised for violating freedom of expression.
Hungary's Chinese EV ambitions thwarted by anti-immigration grief
Nikkei Asia
Hungary’s government, known for its strong anti-immigration stance, has backtracked on plans to let hundreds of thousands of workers into the country to serve Chinese battery makers and other manufacturers. The country is aiming to become Europe’s second-largest electric vehicle battery manufacturing hub after Germany. The move requires boosting the labour force by 500,000 skilled and unskilled workers for companies such as Contemporary Amperex Technology (CATL). CATL is establishing a 100-gigawatt-hour plant in Hungary’s second-largest city, Debrecen, which will require 9,000 workers. However, the government’s proposal to allow the workers into the country was withdrawn after opposition from the electorate. Hungary’s investment bureau and cabinet office did not respond to a request for comment on the matter.
Apple supplier Foxconn books surprise rise in quarterly profit
Reuters
Foxconn, the world’s largest contract electronics maker and supplier to Apple, has reported an 11% increase in Q3 profit, beating the market estimate of an 11% drop. Increased sales of smartphones ahead of the Christmas shopping season in Western markets helped boost the company’s net profit to TWD43.1bn ($1.3bn). However, Foxconn anticipates slight declines in Q4 revenues and the full year, but expects Q4 to be slightly better than previously forecast.
Biden and Xi look to put floor under plummeting U.S.-China ties
Japan Times
U.S. President Joe Biden and Chinese leader Xi Jinping will meet on Wednesday in the San Francisco Bay Area to discuss a range of concerns in an attempt to improve bilateral ties. They will discuss issues such as military communication, Taiwan, the South and East China Seas, semiconductor export controls, fentanyl exports, and artificial intelligence threats. However, it is unlikely that the meeting will result in any significant breakthroughs.
Stock market today: Asian shares are mostly higher ahead of US inflation data and a US-China summit
Associated Press
Asian shares rose on Tuesday as investors awaited the release of US inflation figures and the US-China summit. Markets in Japan, Australia and South Korea were among those to gain, while Hong Kong's Hang Seng index was flat and China's Shanghai Composite was up 0.2%.
China's securities watchdog asks Alibaba's Cainiao to submit more info for HK listing
Yahoo US
The China Securities Regulatory Commission (CSRC) has requested additional information from Alibaba's logistics arm Cainiao ahead of its planned Hong Kong IPO. The CSRC has asked Cainiao to provide details of its shareholders and operational structure, along with information on its business relationship with Alibaba and the e-commerce giant's other companies. The regulator also wants information on Cainiao's stock incentive scheme, data security and personal data protection rules. The CSRC accepted Cainiao's application for an IPO last month.
At summit, Biden aims to show he can focus on Pacific amid crises in Ukraine, Mideast and Washington
Associated Press
President Joe Biden is looking to use this week’s summit of Asia-Pacific leaders to show world leaders the United States has the gumption, attention span and money to focus on the region even as it grapples with a multitude of foreign and domestic policy crises. Biden’s highly anticipated meeting with Chinese President Xi Jinping on Wednesday is the main event of his four-day visit to San Francisco, where leaders from the 21 economies that make up the Asia-Pacific Economic Cooperation forum are gathering for their annual summit.
The Rise and Fall of the World’s Most Successful Joint Venture
NY Times
The US and China are both working to reduce their dependence on each other as trade tensions escalate, with businesses worldwide adapting their supply chains. The economic historian Niall Ferguson had coined the term “Chimerica” to describe the symbiotic economic relationship between the two countries. However, the political schism has led businesses to shift factory production away from China, while Chinese companies focus on trade with allies and neighbours and seek domestic suppliers for technology they are barred from buying from American firms. The two countries are still dependent on each other despite efforts to reduce reliance, with Apple making most of its iPhones in China and Chinese businesses making up over three-quarters of the global supply chain for solar energy panels.
The ghosts haunting China’s cities
Guardian
Urbanisation in China has led to a fear of ghosts, according to an article in The Guardian. The separation of life from death in cities, the growth of a "stranger" society and economy, and the increasing number of abandoned buildings have all contributed to a fear of the dead. The article suggests that the separation of death from everyday life increases the fear of death, as many inhabitants of major cities have never seen a dead body. The rise of a stranger society in urban areas has also contributed to fears about death, as people buy goods and services from strangers and urban funerals are organised and run by professionals rather than family members. The idealisation of family has also led to a fear of death, as families shrink in size. Finally, the existence of abandoned buildings and neighbourhoods reminds inhabitants of the loss of communities and ways of life. The article suggests that the fear of ghosts is connected to a broader politics of memory and fear. The Communist Party regime in China has attempted to repress memories of events such as the Cultural Revolution and the Tiananmen Square massacre, but the attempt to banish all spirits other than that of the party itself can only increase the haunting of urban China.
Yellen Says China’s Support for Industries Poses Global ‘Risk’
Bloomberg
US Treasury Secretary Janet Yellen has warned her Chinese counterpart that Beijing's heavy financial support for certain industries could pose a threat to other nations. Yellen raised concerns about the issue of oversupply in industries that China is heavily investing in, stating that it could lead to overcapacity. She also discussed China's growth slowdown with finance ministers from the Asia-Pacific Economic Cooperation (APEC) nations, who agreed that it presented a downside risk to the economic outlook. China and the US have released statements affirming their commitment to creating a level playing field for companies and workers in their nations. The discussions took place ahead of the APEC summit, where US President Joe Biden and Chinese President Xi Jinping are expected to meet.
Can America Win Over the World’s Middle Powers?
Foreign Affairs
Russia may be losing influence in the West due to its invasion of Ukraine, but it has been able to increase its leverage and influence in important countries around the world. These countries, including Brazil, India, Indonesia, Israel, Mexico, South Africa, and Turkey, have taken advantage of the divisions between Russia and the West to raise their own international profiles. They have been receptive to Russian narratives blaming the West for the war in Ukraine and have been influenced by Russian disinformation. Additionally, these countries have incentives to remain neutral due to their dependence on Russian hydrocarbons, fertilizer, grain, or weapons, or concerns about Chinese regional ambitions. The United States and its allies cannot expect these countries' full support, but they can work to counter Russian disinformation and show these countries that the most fruitful opportunities lie with the West.
Russia has been successful in spreading disinformation and propaganda through outlets like RT en Español and a network of websites that appear to be legitimate news sites. Moscow has also portrayed itself as a defender of traditional values against the West's promotion of abortion and LGBTQ rights. Furthermore, Russia has capitalized on its Soviet past to gain influence in countries like India, Indonesia, Mexico, and South Africa. Energy exports, nuclear energy exports, and arms sales have also helped Russia gain influence in these countries.
The United States and its allies should counter Russian propaganda and disinformation, adjust their rhetoric to reduce support for Russian goals in Ukraine, and double down on policies that address the interests and needs of middle powers. They should also ensure that essential foodstuffs reach countries whose imports have been disrupted by the war in Ukraine, fulfill pledges regarding pandemic preparedness and climate aid, and build on innovative efforts that demonstrate the value of staying close to the West. Ultimately, the United States and its allies should work to show these countries the benefits of their partnership and counter Russian narratives that misrepresent the conflict in Ukraine.
David Cameron brings experience and baggage as he returns to politics
Financial Times
Former UK Prime Minister David Cameron has been appointed as Foreign Secretary by current Prime Minister Rishi Sunak. This marks Cameron's return to front-line politics following his resignation as Prime Minister in 2016 in the aftermath of the Brexit referendum. Cameron's appointment is seen as an attempt by Sunak to shift his cabinet to the centre ground and challenge the Conservative rightwing. However, the move has sparked controversy due to Cameron's involvement in the Brexit campaign and the subsequent lobbying scandal. Cameron was accused of lobbying former colleagues, including Sunak, to change the rules to allow financial firm Greensill Capital to obtain state loans. The firm collapsed in 2021 and is currently being investigated for fraud. Cameron's involvement in a failed UK-China investment fund has also raised concerns about his ties to China. Critics argue that the appointment sends the wrong message about human rights abuses in Hong Kong and Xinjiang. Cameron has defended his appointment, stating that his previous controversies are "in the past."
Biden and Xi strike deal to restrict Chinese fentanyl exports to US
Financial Times
China has reportedly agreed to crack down on companies exporting chemicals used to produce fentanyl, a highly potent and deadly synthetic opioid, in a deal that will be finalized during a meeting between US President Joe Biden and Chinese President Xi Jinping. The agreement is expected to be one of several reached during the summit, as the two countries seek to stabilize their relations. The deal would be a significant achievement for the Biden administration, which has been working to address the proliferation of fentanyl and its role in the US opioid crisis. The leaders are also expected to discuss tensions over Taiwan, China's actions in the South China Sea, and US export controls. Additionally, they are likely to agree to reopen military communication channels that were closed by Beijing after a visit to Taiwan by former US House Speaker Nancy Pelosi. The fentanyl agreement aims to stem the flow of precursor chemicals to Mexico, where drug cartels manufacture the opioid. China had previously cracked down on the manufacturing and export of fentanyl, but Chinese companies began selling precursor chemicals to Mexico instead. The US Treasury recently imposed sanctions on Chinese individuals and entities allegedly involved in the production and distribution of fentanyl. The agreement on fentanyl precursor exports would be a victory for Biden, who has made addressing the opioid crisis a priority.
Why businesses are pulling billions from China
BBC
China's slowing economy, low interest rates, and geopolitical tensions with the US have led to foreign businesses pulling money out of the country at a faster rate than they are putting it in, according to official data. China recorded a deficit of $11.8bn in foreign investment in Q3 2022, marking the first time since records began in 1998. Businesses are looking to alternative markets due to concerns about geopolitical risk, domestic policy uncertainty, and slower growth. However, many multinational firms are reluctant to give up market share that they have cultivated over several decades.
US Grants Chinese Journalists Hundreds of Visas to Cover APEC
Yahoo US
US has issued "hundreds" of visas for Chinese reporters to cover the Asia-Pacific Economic Cooperation gathering in San Francisco where the talks will take place. This marks an improvement in relations between the two countries, as journalist visas have been an issue of tension since 2020. In 2021, the nations eased restrictions for reporters they permanently host, handing out one-year multiple entry visas.
Yellen: Indo-Pacific trade talks need 'further work'
Yahoo US
Negotiations on the trade section of the Indo-Pacific Economic Framework (IPEF) will require further work, according to US Treasury Secretary Janet Yellen. The IPEF is a forum for multilateral talks aimed at forging agreements in areas such as trade. The Biden administration had hoped to announce outcomes on the trade pillar this week, but talks on improving labour and environmental standards and enforcement compliance have run into resistance. The IPEF is a centrepiece of the administration's efforts to deepen economic ties with Asian nations and counter China's rising dominance in the Pacific.
China tightens grip on copper, key to world’s energy transition
Japan Times
China is experiencing a rapid expansion of its copper industry, reshaping global flows of the metal that is essential for the world’s energy transition. The country's production of refined copper is on track to reach a record high this year, driven by a surge in construction of new smelters. This expansion brings a new dynamic to the global copper market, which has historically been influenced by Chinese demand. China will continue to import copper, but in the form of ore rather than refined metal.
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