China OKs 105 online games in Christmas gesture of support after draft curbs trigger massive losses; China sidelines its once venerated central bank
Scammers in China get creative to score a quick buck; China stocks trade close to 13-month low as gaming stock sell-off continues
Welcome to this issue of The China Brief. Today is 12 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 OKs 105 online games in Christmas gesture of support after draft curbs trigger massive losses
Associated Press
China's National Press and Publication Administration has approved 105 new online games, signaling its support for the industry after proposed restrictions caused significant losses for major game makers. The administration's guidelines include banning online games from offering incentives for daily log-ins or purchases and limiting user recharge amounts. The proposed curbs had caused share prices of video game makers like Tencent and NetEase to plunge, resulting in losses of tens of billions of dollars. The administration's statement highlighted that the domestic online games market generated over CNY300 billion ($42 billion) in sales revenue in 2023, with 668 million people playing the games.
China stocks trade close to 13-month low as gaming stock sell-off continues
South China Morning Post
Chinese stocks, including online gaming stocks, remained near a 13-month low on Christmas Day despite efforts by the industry regulator to calm investors. The Shanghai Composite Index fell slightly to 2,914.65, close to its lowest level since November 2022. The online gaming sector has been hit by a draft ruling from China's National Press and Publication Administration that would curb spending by users. Tencent Holdings and NetEase lost a combined $63bn in market value in a single day on Friday. Chinese stocks have struggled this year due to concerns about the country's economic recovery and the property market.
AI pioneer says public discourse on intelligent machines must give ‘proper respect to human agency’
Associated Press
Fei-Fei Li, a founding director of Stanford University’s Institute for Human-Centered Artificial Intelligence, has released a memoir about her work on ImageNet, the visual database that played a significant role in the development of computer vision. In an interview, Li discussed the book and the current AI landscape. She described ImageNet as an attempt to redefine object recognition and said that she had hoped AI would achieve generative abilities, such as those demonstrated by DALL-E, faster than it actually did. Li also called for the alignment of AI with human values, including dignity and freedom.
Scammers in China get creative to score a quick buck
South China Morning Post
Online scams are a major concern in China, with the government implementing stricter regulations and increasing public awareness to combat the problem. Scammers in China are known for their creativity, using tactics such as long-distance romance, investment fraud, pyramid schemes, and identity theft to target individuals. Some notable examples include a woman who conned her friend out of $250,000 by posing as a wealthy male heir in a romance scam and a woman who married multiple men and repeatedly became pregnant before filing for divorce after having an abortion.
In non-romance scams, fraudsters use deceptive strategies to frighten victims into surrendering their money. One example is a Chinese woman who lost $210,000 after receiving a distressing message from her friend, disguised as an online fortune-teller, stating that she had a year to live unless she engaged the services of a Taoist priest. Another case involved a man who sought help from a master to change his luck and ended up losing nearly $280,000 after being instructed to participate in peculiar rituals involving consuming large amounts of food.
These examples highlight the creativity and variety of scams in China, as well as the devastating financial and emotional impact they can have on individuals. The constantly evolving nature of scams makes it difficult to ascertain the exact extent of the problem, but the Chinese government continues to take measures to combat online fraud.
What’s at stake in Taiwan’s January presidential election?
Japan Times
Taiwan's upcoming presidential and legislative elections on January 13th will have significant geopolitical implications. The outcome of the elections will determine how Taipei manages relations with China over the next four years, amidst worsening cross-strait ties and an increased risk of conflict between the US and China. China has not ruled out seizing Taiwan by force, while the US has shown indications that it may be willing to defend the island. The elections will also have economic implications for the region.
How to Thwart China’s Bid to Lead the Global South
Foreign Affairs
India and China are competing for influence and leadership among the global South, with each country seeking to shape the narrative and direction of this diverse group of nations. China has a head start in this competition, having built its empire of influence through infrastructure and investment deals, as well as diplomatic and cultural initiatives. It sees the global South as instrumental in supporting its global ambitions. India, on the other hand, is late to the game but has started to re-engage with the global South, primarily in response to China's efforts. India wants to be a leader among developing countries and seeks to reform the existing international order, rather than overthrow it like China.
The rivalry between India and China in the global South has wider implications for the United States and its allies. China aims to turn the global South against the US-led order and enlist these countries in a Chinese-led counterpart, while India wants to see the order reformed. The US can help India achieve a bigger role in the global South by taking its grievances and concerns seriously and working with India to facilitate economic and infrastructural assistance for developing countries. The US should also listen to India's arguments about the challenges facing the global South and support reforms of global institutions to make them more inclusive.
Neglecting the global South will be counterproductive to the US's larger geopolitical goals, and Western inaction could drive global South countries towards China's global ambitions. The US should view the global South as a geopolitical opportunity and work with India to counter China's influence. By supporting India's efforts, the US can help shape the narrative and direction of the global South in a way that aligns with its own interests and values.
Hong Kong catering industry ‘suffers 11% drop in business’ on Christmas Eve
South China Morning Post
Hong Kong's catering industry saw a more than 10% drop in business on Christmas Eve, according to the Hong Kong Federation of Restaurants and Related Trades. The decline was attributed to many residents travelling to mainland China or overseas for the festive break, as well as locals enjoying a long weekend. Immigration figures revealed that over 633,000 journeys were taken out of Hong Kong between Friday and Sunday, with more than 458,000 outbound trips on Sunday alone. The industry was also contending with fewer mainland tourists coming to Hong Kong for Christmas, according to the federation's president, Simon Wong Ka-wo.
China sidelines its once venerated central bank
Financial Times
China's central bank, the People's Bank of China (PBoC), has seen its influence diminish as the government increases its control over financial regulation. The PBoC has lost some of its powers to a party oversight body and a revamped financial regulator as part of President Xi Jinping's drive to centralise Communist party control over the financial sector. While the central bank retains a role in daily money markets, its governor is now ranked lower in the party hierarchy than the chiefs of some of the banks it used to regulate. Analysts believe these changes will reduce the PBoC's role in domestic policymaking and its ability to communicate with global regulators and markets. The move to sideline the PBoC comes as China faces slow post-pandemic growth and a growing debt crisis. The PBoC has been subject to an anti-corruption crackdown, and some of its officials have been removed from office. The central bank's authority on financial matters has been transferred to the Central Financial Commission, a Communist party-led oversight body, and the National Administration of Financial Regulation, a revamped version of the banking and insurance regulator.
China: Sub-zero Beijing breaks December cold weather record
Deutsche Welle
Beijing has broken its record for the number of hours with temperatures below freezing point in December, after a cold wave hit much of the country with blizzards and prolonged low temperatures. A Beijing weather observatory had recorded more than 300 hours of sub-zero temperatures since 11 December, the most for the month since records began in 1951, according to the state-backed Beijing Daily newspaper. China's National Meteorological Center has recorded record-low December temperatures at some 78 weather stations across the country, also saying average temperatures in northern and some central parts of the country were the coldest seen since 1961.
China’s C919 jet scores higher price as Boeing returns to market
South China Morning Post
China's home-grown C919 airliner has increased in price in an effort to compete with Boeing in the Chinese market. The price increase was revealed in Commercial Aircraft Corporation of China's (Comac) deal with Air China. Air China will purchase six C919 planes at $108m each, and 11 of the smaller ARJ21 regional jets at $38m each. Comac has raised its C919 price quote by $9m from 2022's level of $99m, according to mainland media outlet Caixin. Comac has said it has 1,061 orders for the C919, which is designed to take on the Boeing 737 and Airbus 320.
Two still missing a week after China quake as death toll rises to 149
Japan Times
A powerful earthquake in northwestern China has killed at least 149 people, with two still missing. The magnitude 6.2 earthquake hit the provinces of Gansu and Qinghai, where many of China's Hui people, a Muslim ethnic minority, are located. Gansu was the most affected, with over 200,000 homes destroyed and 15,000 on the verge of collapsing. The earthquake has displaced 145,000 people and injured 781.
Taiwan’s presidential election risks war, ex-Beijing official says
South China Morning Post
A former mainland Chinese government official has warned that cross-strait tensions between China and Taiwan risk escalating into armed conflict if the ruling independence-leaning Democratic Progressive Party’s front-running candidate wins the island’s presidential elections. Wang Zaixi, former deputy director of the Taiwan Affairs Office, claimed that Taiwan independence would lead to war sooner or later. Beijing has recently increased pressure on Taiwan through military and political means in the run-up to the elections, which are due to be held on 11 January 2020.
Dubai luxury homes, offices to extend hot growth streak amid China demand
South China Morning Post
Dubai's property market is attracting Chinese buyers and set to become a top financial hub like London and New York, according to property consultancy Knight Frank. Demand from China has seen Dubai become the second-most popular destination for Chinese nationals, with 14% of foreign buyers now coming from China compared to 23% in 2022. Dubai is also seeing a rise in professional investors from China, seeking to invest overseas due to concerns about the Chinese property market. The city's prime residential property market is forecast to grow by 5% in 2023, with the rest of the market expected to grow by 3.5%.
Perpetual bonds become lifeline for China's capital-hungry insurers
Nikkei Asia
Chinese insurance companies are turning to perpetual bonds to raise funds and bolster their core Tier 2 capital. Taikang Life Insurance recently became the first insurer in China to issue perpetual bonds, selling CNY 5 billion ($696.6 million) in the first tranche. The company plans to issue a total of CNY 20 billion over the next two years. Other insurers, including China Pacific Life Insurance and PICC Health Insurance, are expected to follow suit, with at least CNY 100 billion of perpetual bonds anticipated to hit the market over the next one to two years. Perpetual bonds are hybrid debt instruments that have characteristics of both bonds and equity. They have no maturity date and the issuer has no obligation to repay the principal. However, interest must be paid on the bonds indefinitely. The introduction of perpetual bonds comes as insurers in China face stricter capital requirements under the updated regulatory regime, known as the China Risk-Oriented Solvency System (C-ROSS II).
China: Philippines' South China Sea actions 'extremely dangerous'
Nikkei Asia
Chinese state media has accused the Philippines of repeatedly infringing on China's territory in the South China Sea, spreading false information, and colluding with extraterritorial forces to cause trouble. The People's Daily, a Chinese Communist Party mouthpiece, wrote in a commentary that the Philippines has relied on US support to continually provoke China, which seriously harms regional peace and stability. Tensions between China and the Philippines have heightened in recent months as both sides trade accusations over a spate of run-ins in the South China Sea. China claims most of the South China Sea, parts of which are also claimed by the Philippines, Brunei, Malaysia, Taiwan, Vietnam, and Indonesia.
300 applications, 4 interviews: Chinese foreign graduates face tough job market
South China Morning Post
Chinese students who have studied abroad are facing challenges finding jobs in China due to increased competition from domestic graduates and the preference of companies for in-person interviews. The number of domestic graduates is expected to reach 11.79 million next year, up 210,000 from this year, adding to the competition. In addition, the pandemic has led to more Chinese students studying overseas returning home after their studies, as they believe job prospects are better in China. Many are now seeking stable jobs in state-owned companies and government institutions, which are seen as offering high security and reliable benefits.
PBOC’s Yuan Support Through Fixing Causes Headache for Companies
Bloomberg
Chinese companies have been using the People's Bank of China's artificially strong reference exchange rate for their foreign exchange accounting, resulting in paper losses. The PBOC has set the fixing consistently stronger than the spot level since June, causing dollar assets to appear lower in value in yuan terms on corporate balance sheets. This has prompted some companies to consider using the yuan's spot rate for accounting purposes, moving away from the reference rate. However, the use of the reference rate is unlikely to impact the way the PBOC manages the currency.
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