China Rips US for Seeing It as ‘Enemy’ After Raimondo Remarks; Chinese are making a killing everywhere but in China
‘I wont return’: Hong Kong democracy activist Agnes Chow reveals she has moved to Canada and plans to skip bail; Massive laundering case reveals dark side of Singapore’s bid to lure super-rich
Welcome to this issue of The China Brief. Today is December 4, 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 Rips US for Seeing It as ‘Enemy’ After Raimondo Remarks
Bloomberg
China has criticized the US for viewing it as a threat after Commerce Secretary Gina Raimondo defended efforts to prevent China from acquiring cutting-edge semiconductors. Chinese Foreign Ministry spokesman Wang Wenbin called on the US to work with China and stop seeing it as a hypothetical enemy. Raimondo had said that China catching up on chips posed the biggest threat the US had ever faced and that "China is not our friend." China criticized the US for sailing a warship in disputed waters in the South China Sea and stated that the US had a "Cold War mentality" and a desire for hegemony.
Chinese are making a killing everywhere but in China
Japan Times
Chinese entrepreneurs are increasingly looking to tap into overseas markets, particularly targeting American consumers. They are seeking to attract new customers and move away from a competitive domestic market that prioritizes low prices. This shift has proven successful for some entrepreneurs, such as online fast fashion platform Shein, which has filed for an IPO in the US and was valued at $66 billion in May.
Activity in China State Fund’s Favorite ETF Signals More Buying
Bloomberg
Activity in a Chinese exchange traded fund (ETF) tracking technology indices has reached its highest level in five months, indicating that a state-owned institution has increased its purchases in the ETF as part of the government's efforts to boost markets. Turnover in the China Southern CSI Guoxin Central-SOEs Technology Lead ETF rose to CNY320m ($44.8m) on Monday, which is more than six times its daily average and the second highest since its inception in mid-2023. This follows a similar spike on Friday when China Reform Holdings Corp. announced that one of its units had bought an unspecified amount of the ETF and planned to increase its holding in the future.
CNN
Agnes Chow, a prominent face of Hong Kong's pro-democracy movement, has revealed that she is living in Canada and will not return to meet bail conditions as police investigate allegations she endangered national security. Chow, who was sentenced to 10 months in prison in 2020 for taking part in Hong Kong’s mass anti-government protests, was bailed by police in a separate case in 2021. In her Instagram post, Chow said she decided to flee after “considering the situation in Hong Kong, my personal safety, my physical and mental health,” adding that she had faced sustained pressure from authorities.
China says summit with EU leaders to discuss global economic issues
Reuters
The China-EU summit will take place on Thursday in Beijing, where leaders from both sides will discuss strategic and global economic issues. China's foreign ministry stated that China and Europe are partners, not rivals, and that their common interests outweigh their differences. Chinese President Xi Jinping will meet with the President of the European Council and the President of the European Commission. The summit aims to find ways to solve problems through dialogue and cooperation and to address global challenges and increase stability in the international situation.
Massive laundering case reveals dark side of Singapore’s bid to lure super-rich
South China Morning Post
Singapore is facing increased scrutiny over its policies that have allowed money laundering to take place in the country. The recent arrest of 10 individuals involved in a major money laundering case has prompted an investigation into how so much money was able to be laundered through some of the world’s largest banks. Singapore has attracted wealthy individuals due to its generous tax incentives and long-term residency programmes, leading to a significant increase in the number of family offices in the country. However, these programmes are now being reviewed, and restrictions, such as those on the number of directorships an individual can hold, may be put in place. Banks such as Credit Suisse, Citigroup, DBS, OCBC, and United Overseas Bank have all been implicated in the case. The Monetary Authority of Singapore (MAS) has praised some banks for raising red flags, but the MAS is currently engaging with all banks involved in the case.
The recent money laundering case is not the first scandal to hit Singapore in recent years. Money laundering cases have been linked to Malaysia’s 1MDB state fund and German firm Wirecard AG. Singapore has been rated above average for its efforts to fight illicit funds, and the government has said it is working towards full implementation of the Financial Action Task Force’s (FATF) recommendations. However, the recent case has highlighted areas in which Singapore could improve, such as the regulation of property agents in relation to money laundering. Upholding its reputation as a clean financial hub is crucial for Singapore, particularly as the country faces a new round of assessments by the FATF in 2025.
UBS, Lazard gear up for China bull market as green shoots emerge in economy
South China Morning Post
Fund managers are positioning themselves for a bull run in Chinese stocks, as they bet on a lasting economic recovery to revive confidence and appetite for equities trading at their cheapest level in more than five years. Recent data shows green shoots are emerging in China’s economy as Beijing’s policy support takes hold. The MSCI China Index, which tracks more than 700 stocks listed at home and abroad, has declined 12% this year, pulling valuation down to 10.55 times price-earnings, the lowest since 2018.
China's Hozon EV unit launches first overseas plant in Thailand
Nikkei Asia
Chinese automaker Neta Auto has begun production at its first overseas electric vehicle (EV) plant in Thailand, aiming to capitalize on the Southeast Asian country's push for decarbonization. The facility is expected to have an annual capacity of 20,000 cars, with large-scale production scheduled to start in Q1 2024. Neta Auto entered the Thai market in August 2022 and has already seen success with its Neta V subcompact crossover, which was Thailand's second-best-selling EV model in the first three quarters of 2023. Thailand has set a target for 30% of cars produced in the country to be zero-emission by 2030.
McDonald’s raises China bet amid Western derisking trend
Japan Times
McDonald's has decided to take greater control of its China business and expand aggressively, despite a consumer slowdown and geopolitical tensions. The move is seen as risky but has the potential for a great pay-off. This decision contrasts with the trend of multinational corporations reducing investments in China or exiting altogether due to economic and geopolitical challenges.
Tesla's China-made EV sales skid 17.8% on year in November
Reuters
Sales of Tesla's China-made electric vehicles declined by 17.8% in November compared to the same month last year, according to data from the China Passenger Car Association (CPCA). Tesla delivered 82,432 cars in November. However, deliveries of China-made Model 3 and Model Y cars increased by 14.3% from October. Meanwhile, Chinese automaker BYD saw a record-breaking month for passenger vehicle deliveries, with 301,378 vehicles sold, up 0.09% from October and 31% from the previous year.
Taiwan vote must be free from 'outside interference', senior US diplomat says
Reuters
The United States has stated that Taiwan's 2024 election must be free from "outside interference" and that its policy towards the island will remain the same regardless of the election outcome. The US is Taiwan's most important international supporter and arms supplier, and it does not have formal ties with the Chinese-claimed island. The comments come amid concerns that China may try to sway voters towards candidates seeking closer ties with Beijing in the upcoming election. The ruling Democratic Progressive Party's Lai Ching-te is currently the frontrunner, while his main opponent is Hou Yu-ih from the Kuomintang party. China has increased military pressure against Taiwan in recent years.
Global hedge funds further offloaded Chinese stocks in Nov
Reuters
Global hedge funds reduced their exposure to Chinese and broader emerging Asia market stocks in November, according to Goldman Sachs. Chinese equities saw net outflows for the fourth consecutive month, with a reduction in long bets being the main driver. This was the ninth month of net outflows this year, making emerging Asia the region with the largest net outflows globally. The sluggish Chinese economy, crisis in the property sector, and cautiousness among investors contributed to the outflows. Meanwhile, hedge funds increased their positions in developed Asia markets such as Hong Kong, Singapore, and Japan.
Agnes Chow departure 'challenges rule of law,' Hong Kong police say
Nikkei Asia
Hong Kong activist Agnes Chow has revealed that she has left the city to study in Canada and has no intention of returning. Chow, who was a core member of a group of young activists, said that pressure from the authorities had left her with depression and anxiety. Hong Kong police have condemned her actions and warned she could become a "fugitive for the rest of her life." Chow served a 10-month sentence for charges related to the 2019 anti-government protests. The draconian national security law imposed by Beijing has led to a widespread crackdown on dissent and more than 280 arrests.
China willing to continue strengthening cooperation with Belarus -state media
Reuters
China's President Xi Jinping has expressed his country's willingness to strengthen its strategic cooperation with Belarus. Xi also stated that China is open to enhancing coordination and cooperation with Belarus in multilateral mechanisms such as the United Nations and the Shanghai Cooperation Organisation. Xi emphasised the importance of improving cross-border transport facilitation and promoting economic and trade ties between the two countries. He also highlighted the need to implement projects such as the China-Belarus industrial park and promote industrial cooperation.
WuXi Biologics Plunges 25% as Covid Boost, Biotech Boom Fade
Bloomberg
WuXi Biologics, a leading Chinese drug contract research and manufacturing company, saw its stock plunge 25% before trading was halted in Hong Kong. The company expects conditions to remain challenging until June, and its stock has already fallen 45% this year due to declines in sales and profit growth. WuXi Bio attributes the industry's near-term challenges to the drop in COVID-related sales and a slowdown in biotech funding. However, the company anticipates a positive turnaround in the second half of 2024 and steady growth in the coming years. The company's clients, mainly small biotech firms, have been facing challenges in securing clinical research funding, which has impacted WuXi Bio's deal signings in the first half of 2023.
TikTok owner ByteDance to launch AI chatbot development platform, memo says
South China Morning Post
ByteDance, the parent company of TikTok, is developing an open platform that will enable users to create their own chatbots. The move comes as ByteDance seeks to catch up in generative AI, following the launch of ChatGPT last year. The bot development platform will be released as a public beta by the end of the month. ByteDance has been working on its own text-to-image generator similar to Midjourney, according to sources. The company is known for its use of AI algorithms, which have been instrumental in the success of TikTok. Several other tech giants, including OpenAI, Baidu and Alibaba, have also entered the market for large language models as a service.
The Wild Card in Taiwan’s Election: Frustrated Young Voters
NY Times
Younger voters in Taiwan are becoming disillusioned with the two main political parties ahead of the upcoming presidential election, and are instead looking towards a third option that focuses more on everyday issues. Many young Taiwanese voters are concerned about rising housing costs, slow income growth, and narrowing career prospects, and feel that the main parties are not addressing these concerns. The Taiwan People’s Party, which has gained traction in the polls, has tapped into this frustration by promising to address bread-and-butter issues. The two main parties have also issued policy packages in an attempt to address these concerns. The outcome of the election will have far-reaching implications for Taiwan, which is a potential flashpoint between the United States and China, and young voters will play a crucial role in deciding the outcome. However, the main parties face a challenge in encouraging young voters to turn out at the ballot box, as Taiwan’s minimum voting age is 20 and many young voters would have to travel back to their hometowns to vote.
Evergrande winding-up hearing in Hong Kong adjourned again
Japan Times
China Evergrande Group, the world's most-indebted property developer, has been given more time to negotiate a restructuring agreement with its creditors. A Hong Kong court has postponed a decision on whether the company should be wound up until 29 January. Evergrande's offshore creditors have demanded controlling stakes in the equity of the builder and its two Hong Kong subsidiaries as part of the debt discussions.
China says a US Navy ship ‘illegally intruded’ into waters in the South China Sea
Associated Press
The Chinese military has claimed that a US naval ship has ‘illegally intruded’ into the waters near the Second Thomas Shoal. The area is the site of a territorial dispute between China and the Philippines in the South China Sea. The Chinese military says that a naval force was mobilised to track the USS Gabrielle Giffords during the operation. The US Navy has not yet commented on the incident. China and the Philippines have been involved in confrontations around the Second Thomas Shoal in recent months. China has accused the US of meddling in waters far from its shores, stating that America is raising regional tensions.
Korea Battery Stocks Gain on US Rules to Curb China
Bloomberg
South Korean battery stocks rose on Monday after the US set guidelines aimed at limiting electric vehicle (EV) manufacturers from sourcing battery materials from China. The guidelines, which were required as part of a deal to extend EV tax credits, establish a 25% ownership threshold for a company or group to be classified as a foreign entity of concern. The restrictions could benefit South Korean battery firms, however some Korean companies have established partnerships that exceed the 25% threshold. The guidelines could encourage South Korean firms to restructure deals to meet the new requirements.
PBOC Chief Pledges to Keep Growth of Money Supply in Check
Bloomberg
China's central bank, the People's Bank of China (PBOC), has pledged to control the growth of money supply and support key sectors such as technology and advanced manufacturing. The PBOC aims to enhance the quality of credit and avoid a rapid buildup of debt. It plans to optimize the efficiency of existing loans and step up support for strategic sectors such as tech, manufacturing, and private firms. The central bank is expected to utilize more structural policy tools to guide funds into targeted areas. The PBOC recently issued guidance for banks to cap the amount of new loans they issue and may provide cheap funding to major property and infrastructure-related projects.
China's graduates swap city dreams for farm life amid jobs crisis
Japan Times
Gong Chengqiang, a former technology company employee, has turned to farming after losing his job during the pandemic. He now grows strawberries in rural Zhejiang province but has faced challenges, including a disease that destroyed 40% of his harvest. Gong hopes to change the taste, quality, and price of 20 different types of fruit, and has received angel investment from fellow bloggers. However, he struggles with feelings of isolation and disappointment from his parents, who had hoped for a different life for their children.
China Evergrande's offshore winding-up case adjourned yet again
Nikkei Asia
A Hong Kong court has postponed a winding-up case against property developer China Evergrande Group, after lawyers for the company argued that no creditors were "actively seeking" its liquidation. This is the sixth adjournment since a winding-up petition was filed against Evergrande in June 2022. Evergrande's financial situation has continued to deteriorate, with its core subsidiary, Hengda Real Estate Group, having unpaid debts of CNY301.36bn ($42.44bn) plus overdue commercial bills of CNY205.93bn. Evergrande was once the largest developer in China but has faced difficulties amid a government crackdown on the over-leveraged property industry.
China's BYD says will keep reward system for smear campaign tipsters
Yahoo US
Chinese electric vehicle (EV) giant BYD has said it will continue its system that offers tipsters up to CNY5m ($700,918) for reporting smear campaigns against the company. The policy, introduced in late 2021 and initially valid for a year, was extended without explanation. The company, which is backed by Warren Buffet, did not say why it was extending the reward programme but said it aimed to protect its brand image.
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