China's defense minister not seen for two weeks; China’s ‘Lipstick King’ tearfully apologizes after online spat highlighting country’s economic woes
State media censors itself after featuring poem about corrupt leaders; 70 crocodiles set loose by heavy flooding in southern China; British businesses are terrifyingly exposed to the Chinese threat
Welcome to this issue of The China Brief. Today is September 12, 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's defense minister not seen for two weeks
Nikkei Asia
Chinese Defense Minister Li Shangfu has not been seen in public for two weeks, leading to speculation about his fate. This comes amid a series of surprise personnel changes in China, including the replacement of Foreign Minister Qin Gang and the firing of a senior official from the People's Liberation Army Rocket Force. A US government official suggested that Li's absence may be related to corruption. In 2018, Li was added to a list of sanctioned Chinese officials by the US State Department.
More than 70 crocodiles set loose by heavy flooding in southern China
CNN
More than 70 crocodiles have escaped from a commercial farm in Maoming, China, after heavy flooding caused a local lake to overflow. Authorities have launched an operation to recapture the animals, with some residents warned to stay indoors. The depth of the floodwater is posing a challenge to the operation, and authorities have said they may have to euthanise the crocodiles rather than capture them. Southern China and Hong Kong have been hit by heavy rain and flooding after Typhoon Haikui passed through the region last week.
British businesses are terrifyingly exposed to the Chinese threat
Telegraph
The UK government has been warned that China poses an "alarming threat" and that its approach to dealing with the country is tantamount to "kowtowing". The warning comes as UK Chancellor Rishi Sunak reportedly confronted his Chinese counterpart Li Qiang over concerns about Chinese interference in British democracy. There are concerns that China has been involved in the theft of UK intellectual property related to military and strategic technologies. The government has been urged to develop a strategy that takes into account the close links between political and commercial aspects of the bilateral relationship with China.
China’s launch of biofuel shipping fuel is only the start of industry’s green push
South China Morning Post
Shipping fuel supplier Chimbusco Pan Nation Petro-Chemical has become the first Chinese company to refuel an ocean-going vessel using a climate-friendly marine biofuel mix. The company supplied a vessel operated by Kawasaki Kisen Kaisha, a Japanese shipping firm, with a blend of 24% biodiesel produced by Hong Kong-based ASB Biodiesel from waste cooking oil, and 76% fuel oil. The blend has a carbon footprint 84% lower than conventional bunker fuel. The International Maritime Organisation has committed to reducing greenhouse gas emissions from the industry by at least 40% by 2030.
China’s navy starts largest-ever exercises in Pacific Ocean
Financial Times
China has launched its largest-ever naval manoeuvres in the western Pacific, involving its second aircraft carrier, the Shandong, along with over 20 other warships. The manoeuvres are seen as a show of force by China to push back against the US and its allies. The Chinese ships were observed in waters between Taiwan, the Philippines, and the US Pacific territory of Guam. The move comes after a series of US-led military exercises in the region involving more than two dozen countries. Neither the Chinese defence ministry nor the PLA announced the manoeuvres.
China’s Homegrown Automakers Rise to Dominate Domestic Market
Bloomberg
Chinese automakers, led by BYD and Geely, have captured over 50% of total auto sales in China for the first time in July, according to data from the China Automotive Technology and Research Center. This growth is at the expense of foreign automakers, particularly those from Germany, the US, and Japan. UBS analysts have warned that Western carmakers could lose a fifth of their global market share due to the rise of more affordable Chinese EVs. As Chinese buyers increasingly prefer local manufacturers, foreign firms are retreating. South Korea's Hyundai is selling production facilities, Ford has cut jobs, and Stellantis shut down its only Jeep factory in China last year. US brands, including Tesla, Buick, Ford, and Chevrolet, have seen their market share in China fall to its lowest level since 2008. German brands are faring slightly better, but cracks are starting to appear. VW lost its position as China's top-selling car brand to BYD earlier this year, and Mercedes-Benz has been caught up in a price war. French automakers, including Citroen, Peugeot, and Renault, have seen their popularity collapse in China, with less than 1% market share. Stellantis CEO Carlos Tavares is shifting strategy in China, exiting factories and relying more on partners to create an asset-light and less costly approach.
Apple to keep buying 5G chips from Qualcomm amid challenges in China
South China Morning Post
Qualcomm has signed a deal with Apple to supply 5G chips until at least 2026. The agreement extends a relationship worth billions of dollars and suggests that Apple is not rushing to develop its own modem chips. Qualcomm is the leading designer of modem chips that connect phones to mobile data networks. The company previously signed a chip supply deal with Apple in 2019, which ends this year. Under the new agreement, Qualcomm will supply Apple with chips for phones that will be released each year until 2026. The financial terms of the deal were not disclosed.
China’s ‘Lipstick King’ tearfully apologizes after online spat highlighting country’s economic woes
CNN
Li Jiaqi, one of China's most popular livestreamers, has apologised for comments he made during a livestream session, in which he questioned whether a viewer had been "working hard enough" to afford a product he was selling. The apology has failed to calm his critics, with Li having lost 1.1 million followers on Weibo since the comments were made. The incident has also prompted a larger debate about China's economic challenges, including youth unemployment and weak consumer spending.
Why China is restricting IPOs to drive up US$9.7 trillion stock market
South China Morning Post
China's initial public offering (IPO) pipeline has slowed down after the China Securities Regulatory Commission (CSRC) pledged to restrict new share sales to boost the stock market. According to data compiled by Bloomberg and the South China Morning Post, only eight companies have started trading on mainland China's exchanges so far this month, compared to 33 in August and 37 in July. Analysts believe that previous administrative interventions in the primary market have tended to stabilise the market and boost sentiment, with stocks performing well after IPO suspensions.
State media censors itself after featuring poem about corrupt leaders
The Guardian
Chinese state media has censored one of its own videos after viewers noticed it featured a classic Chinese poem about corrupt and indulgent leaders ignoring national crises. The video, produced by official state media outlet, the People’s Daily, aimed to promote the city of Hangzhou, which is hosting the Asian Games this month, by showcasing literary links to the city. However one featured poem by Lin Sheng raised some eyebrows. Written in the 12th century, it is interpreted as a criticism of the Song Dynasty rulers, accusing corrupt officials of fleeing troubled lands to Hangzhou, and ignoring the struggles and crises of regular people while they drunkenly enjoy their own lives.
Analysis: With Putin summit, North Korea charts new course in fraught Russia relationship
Reuters
The upcoming meetings between Russian President Vladimir Putin and North Korean leader Kim Jong Un have the potential to reshape North Korea's relationships with both Russia and China. Kim's decision to visit Russia before China has raised speculation that he is looking to balance the two major powers against each other. The talks between Putin and Kim could have implications for the war in Ukraine, tensions with South Korea and Japan, and the China-U.S. rivalry. While China will remain Pyongyang's main ally and protector, Russia could play a role as well. However, tensions and distrust between the three countries may limit cooperation in areas such as military drills and technology transfer.
China cranks up 'gray zone' incursions, Taiwan warns
Nikkei Asia
China is increasing its "gray zone" harassment and incursions to challenge Taiwanese sovereignty, according to Taiwan's new defence report. The report states that China has become more aggressive by seeking to establish a "new normal" and is conducting activities below the threshold of war. The report notes that China has increased the scale, frequency, and intensity of drills and exercises against Taiwan to strengthen its operational preparation to invade Taiwan.
A timeline of the complicated relations between Russia and North Korea
Associated Press
North Korean leader Kim Jong Un has arrived in Russia for a meeting with President Vladimir Putin. While the agenda has not been confirmed by the governments, US officials have suggested that Putin may ask for artillery and other ammunition for the war in Ukraine. This would be a reversal of roles from the 1950-53 Korean War, when the Soviet Union provided ammunition and support to North Korea's invasion of the South. Relations between Russia and North Korea have experienced highs and lows over the years. In the early 2000s, Putin actively sought to restore Russia's ties with North Korea, while in the mid-to-late 2000s, Russia supported UN Security Council sanctions against North Korea over its nuclear program. In 2012, Russia agreed to write off 90% of North Korea's estimated $11 billion debt. In recent years, Kim Jong Un has been seeking to improve ties with China and Russia to boost his bargaining power. The meeting between Kim and Putin comes as Russia is engaged in a war with Ukraine and North Korea blames the US for the conflict, hinting at an interest in supporting Russia's efforts in Ukraine.
Done right, China’s healthcare reforms could boost the economy and more
South China Morning Post
The US and China both have highly unequal healthcare systems, with the US ranking last among the world's richest countries in terms of the quality of its healthcare system. While the US spends over 18% of its GDP on healthcare, it is the only one of these countries without universal healthcare. China, on the other hand, has basic medical insurance for over 95% of its population, with health spending making up just 7% of its GDP. However, China's healthcare system is plagued by corruption and a lack of transparency and oversight. Structural reforms are needed to address these issues and ensure fair and effective healthcare delivery.
What the spy saga reveals about UK-China relations
Financial Times
The recent arrest of a British parliamentary worker on suspicion of spying for China reflects a broader change in the UK's China policy, according to Stephen Bush of the Financial Times. While it is unsurprising that there are spies working for the Chinese state in Westminster, the fact that the UK has chosen to make a public arrest and create a lot of noise about it suggests a shift in the UK-China relationship. This could lead to further demands for greater distance between the two countries, impacting China policy in the long term.
Apple to Sell Made-in-India iPhones on Launch Day for First Time
Bloomberg
Apple plans to make the India-built iPhone 15 available in India and other regions on the day of its global sales debut, according to sources. While the majority of iPhone 15s will come from China, this will be the first time an India-assembled device is available on the first day of sale. The move reflects India's growing production capabilities and is a departure from Apple's previous strategy of selling mainly Chinese-made devices. Apple began iPhone 15 production at a factory in Tamil Nadu last month, as part of efforts to narrow the gap between its China and India operations.
China ‘almost an enemy’ but this is no cold war, says ex-MI6 chief
Telegraph
Former head of MI6, Sir Richard Dearlove, has stated that China is an "almost enemy" of the UK, but that the two nations are not in a cold war. He believes that it is still possible to trade with China while being "tough" with them and showing that the UK means business when they interfere in internal affairs. Dearlove emphasised the importance of continued engagement with China and stated that it is better to talk to competitors than to isolate them. His comments come after a parliamentary researcher was arrested on suspicion of spying for China.
Lobster, wine and bulletproof carriages: Inside Kim Jong-un’s train
The Independent
North Korean leader Kim Jong-un has travelled to Russia on a heavily fortified and luxurious train. The train, which is said to be slow due to its substantial weight, features conference rooms, audience chambers, bedrooms, and luxuries such as satellite phones, flat-screen televisions, and live singers. The train is believed to have a total of 90 rail cars, with some designed to carry vehicles. Kim Jong-un is visiting Russia to attend a regional summit with Russian President Vladimir Putin, where they are expected to discuss arms shipments that could aid Russia's ongoing war in Ukraine.
Taiwan says it spotted 22 Chinese warplanes and 20 warships near the island after US sailed through
The Toronto Star
Taiwan has reported that it spotted 22 Chinese military aircraft and 20 vessels near the island over the previous 24 hours. China claims Taiwan as part of its territory and has been increasing military activities in the area, including sending warships and warplanes on a near-daily basis. The United States and Canada sailed warships through the Taiwan Strait over the weekend in a challenge to China’s territorial claims.
How Hawaii’s fires led to a change in China’s cyberwar tactics
The Sydney Morning Herald
China has been accused of engaging in disinformation campaigns to sow discord in the United States. Researchers from Microsoft, Recorded Future, the RAND Corp, NewsGuard, and the University of Maryland identified a covert Chinese campaign that spread false posts claiming that the devastating bushfires in Hawaii were the result of a secret “weather weapon” being tested by the US. The posts were accompanied by photographs that appeared to have been generated by AI programs, marking one of the first instances of using AI to lend authenticity to disinformation campaigns. China’s previous influence campaigns have focused on amplifying propaganda defending its policies on Taiwan and other subjects. The latest effort indicates a change in direction, with China making more direct attempts to disrupt the US. Researchers suggest that China is building a network of accounts that could be used in future information operations, including the next US presidential election. However, early indications suggest that few social media users engaged with the most outlandish conspiracy theories promoted by the Chinese campaign.
China state TV slams beauty influencer who told off thrifty viewer
Reuters
China's state television has criticised a popular beauty livestreamer, Li Jiaqi, for his response to a viewer who complained about the high price of an eyebrow pencil. Li, known as the "Lipstick King," had to apologise twice for his reaction. China's youth have been hit hard by the economic slowdown, with youth unemployment reaching a record high of 21.3% in June. Livestreaming is a lucrative business in China, with sales reaching $480bn last year. Li receives a commission from the products he sells on his livestreams.
Biden faces string of US political showdowns after Asia trip
South China Morning Post
US President Joe Biden faces a series of political challenges at home, including a potential government shutdown and a strike by US carmakers, as he returns from his trip to Asia. Despite positive economic signs, Biden's poll ratings are neck-and-neck with former President Donald Trump, and his Democratic Party is reportedly alarmed. Foreign policy is not a top concern for most US voters, and Biden's age is also seen as a liability. Meanwhile, hardline Republicans are pushing for an impeachment inquiry over Biden's son Hunter. Biden's message about the US having the strongest economy is struggling to break through.
TikTok Popularizes Products. Can It Sell Them, Too?
NY Times
TikTok has launched its e-commerce platform, TikTok Shop, in the US. The platform will be available to all US users by October. It will enable users to buy products within the app, without being redirected to another site. TikTok said it would push videos featuring shopping buttons into users' feeds. The company is also offering discounts and coupons as it introduces the feature. TikTok said it had already signed up 200,000 sellers and had more than 100,000 creators who could make videos and livestream with shopping buttons. The move follows TikTok's appointment of new executives overseeing commerce in the US. TikTok has moved away from an initial focus on live shopping events, which are popular in Asia but have not been successful in North America.
Xi’s G20 snub sparks concern of retreat from international diplomacy
Financial Times
Chinese President Xi Jinping's absence at the G20 summit in New Delhi has raised questions about China's future participation in international diplomacy. Li Qiang, China's number two official, attended the summit in Xi's place. Experts suggest that Xi's decision to skip the summit may be indicative of a shift in China's foreign policy, with the country's leader potentially opting out of future summits due to diplomatic conflicts or domestic troubles. Xi's absence at the summit followed tensions with India over their disputed Himalayan border, as well as India's participation in the Quad security grouping which includes the US, Japan, and Australia.
China attracts record ETF flows even as US and Europeans pull out
Financial Times
China-focused equity exchange-traded funds (ETFs) saw record net inflows of $20.6bn in August, according to BlackRock. This is more than double the amount of inflows seen in July and far surpasses the $11.1bn pulled in by ETFs focused on US equities. The inflows into China-focused ETFs came from Asia Pacific-listed funds, with US and European investors actually pulling money out. BlackRock's data does not provide a breakdown of where in the Asia Pacific region the inflows originated, but it coincided with Beijing introducing measures to stimulate the Chinese stock market. These measures include halving the stamp duty on stock trading and cutting management fees on actively managed funds. The China Securities Regulatory Commission has also fast-tracked the approval of ETFs and mutual funds. Despite these measures, demand among overseas investors for Chinese ETFs has been non-existent, with net outflows of $1bn since March.
New Alibaba CEO sharpens focus on AI as he takes over the reins
South China Morning Post
Alibaba Group Holding's new CEO Eddie Wu Yongming has outlined two areas of focus for the company: "user first" and "artificial intelligence (AI)-driven". In an internal letter sent to employees, Wu said the company would invest in technology-driven internet platforms, AI-driven tech businesses and global commerce networks. Wu's letter came two days after he took over as CEO of Alibaba Cloud Intelligence Group following the surprise exit of former CEO Daniel Zhang Yong.
Farm exports to China have jumped to a record high despite damaging tariffs
ABC
Australian agricultural exports to China have reached a record high of AUD 16.6bn ($12.5bn), a 20% increase from the previous year, according to a report from Rural Bank. Despite trade bans and tariffs on key agriculture products such as barley, wine, seafood, and hay, China remains Australia's largest and most lucrative market. The report also showed that China's demand for Australian wheat has overtaken that of Indonesia, making it the country's largest customer. However, China's share of Australia's total agricultural commodity exports has fallen to 20%, down from 29% in 2019.
China 2023 GDP growth forecast cut to 5.0%, 4.5% in 2024 - Reuters poll
Reuters
China's economy is expected to grow less than previously forecasted this year and next, according to a Reuters poll of economists. The struggling property market, rising unemployment, weak consumption, and lack of private sector investment are all weighing on growth. The poll predicts that the economy will grow 5% this year, down from a previous forecast of 5.5%, and slow further to 4.5% next year. Economists warned that the government's growth target of around 5% for this year may be missed, and that more policy support is needed for the property sector.
Putin, China's vice premier to discuss high-level contacts for end of year
Reuters
Russian President Vladimir Putin and Chinese Vice Premier Zhang Guoqing will discuss bilateral contacts at the "highest level" during their meeting in Vladivostok. This meeting comes ahead of planned bilateral contacts between Russia and China before the end of the year. Putin is expected to visit China in October, responding to an invitation from Chinese President Xi Jinping. The discussions are likely to focus on strengthening economic and political ties between the two countries.
Country Garden Gets Approval to Extend Six Bonds, Reuters Says
Bloomberg
China's Country Garden Holdings has received approval from creditors to extend the repayment of six yuan bonds by three years. This comes after the property developer requested to stretch principal payments of eight yuan notes by three years, having recently avoided a default on dollar securities. The outstanding principal of the securities amounts to CNY10.8bn ($1.5bn).
China anti-graft chief to attend summit with G77 developing nations in Cuba
Reuters
Li Xi, the chief of China's anti-graft watchdog, will attend a summit with the Group of 77 developing nations in Havana, Cuba. Li will also visit Cuba, Brazil, and Egypt during his trip. The Group of 77 is a group of developing countries that was formed in 1964 and now has over 130 members. China is listed as a member state on the group's website, but the Chinese government has stated that it supports the group but is not a part of it.
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