China’s deflation problems get worse
China’s workers flock to Shenzhen and Hangzhou as talent war heats up
Welcome to this issue of The China Brief. Today is March 10, 2025. 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 deflation problems get worse
CNN
China's Consumer Price Index (CPI) fell by 0.7% in February, marking the lowest level in over a year and highlighting persistent deflation. This decline was sharper than expected, reversing January's 0.5% increase. Contributing factors include an earlier Lunar New Year holiday and ongoing weak consumer spending. The Producer Price Index (PPI) also dropped by 2.2%. Despite an ambitious growth target of 5% for 2025, the government announced no large-scale stimulus measures, acknowledging challenges like insufficient domestic demand and a struggling property sector.
https://edition.cnn.com/2025/03/10/economy/china-cpi-deflation-problems-intl-hnk/index.html
China’s workers flock to Shenzhen and Hangzhou as talent war heats up
South China Morning Post
In 2024, China's tech hubs Shenzhen and Hangzhou experienced significant population growth, attracting migrants amid the country's overall demographic decline. While Zhejiang province's population rose by 430,000 due to migration, central and western provinces like Jiangxi and Guangxi saw declines. Local governments are releasing population data, highlighting the shift of workers to prosperous coastal cities. Shenzhen's population grew by 199,400, aided by talent-attracting policies, while overall, China's population decreased by 1.39 million, continuing a trend of deaths outnumbering births and posing challenges for the future workforce.
https://www.scmp.com/economy/china-economy/article/3301768/chinas-workers-flock-shenzhen-and-hangzhou-talent-war-heats?utm_source=rss_feed
Chipmaker TSMC’s sales quicken in first 2 months of 2025 in upbeat note for AI
South China Morning Post
Taiwan Semiconductor Manufacturing Co (TSMC) reported a 39% revenue increase in the first two months of the year, driven by strong demand for Nvidia's AI chips. The total revenue for this period reached NT$553.3 billion (US$16.8 billion), surpassing the 34% growth TSMC experienced in 2024. Analysts expect a 41% growth for the current quarter, positioning TSMC as a key indicator for the AI chip sector amid discussions about the sustainability of the AI market.
Analysts noted that while TSMC's growth is bolstered by AI chip sales, there are signs of weaker demand in automotive and industrial sectors. Recent reports from other tech companies, including Broadcom and Foxconn, also reflect positive trends in AI-related spending.
A significant uncertainty for TSMC is the potential imposition of tariffs on chip imports by US President Donald Trump. TSMC's CEO recently met with Trump to discuss a proposed US$100 billion investment in US manufacturing, which is seen as a strategy to mitigate tariff risks, although it raises concerns about technology shifts away from Taiwan. Despite these uncertainties, TSMC maintains a strong financial position with a net cash of US$44 billion.
https://www.scmp.com/tech/big-tech/article/3301770/chipmaker-tsmcs-sales-quicken-first-2-months-2025-upbeat-note-ai?utm_source=rss_feed
Zelensky heads to Saudi Arabia as Riyadh steps up role as global mediator
RFI
Ukrainian President Volodymyr Zelensky's recent visit to Saudi Arabia highlights the Kingdom's evolving role as a diplomatic mediator, particularly in international conflicts like the Ukraine crisis. Under Crown Prince Mohammed bin Salman, Saudi Arabia has brokered significant negotiations, including prisoner exchanges between Russia and Ukraine, enhancing its global diplomatic image. Despite its controversial human rights record, including crackdowns on dissent and restrictive policies on women's rights, Riyadh seeks to position itself as a peace champion while maintaining strategic ties with major powers, including the US, to further regional stability and the Abraham Accords.
https://www.rfi.fr/en/international/20250310-zelensky-heads-to-saudi-arabia-as-riyadh-steps-up-role-as-global-mediator
Iran, China and Russia launch annual joint naval drills as Trump upends Western alliances
CNN
Iran, China, and Russia commenced their annual joint naval exercises, "Security Belt-2025," in the Gulf of Oman, highlighting their military collaboration amid changing U.S. foreign policies under President Trump. This marks their fifth joint drill since 2019, aimed at countering U.S. influence. Concerns in Washington are growing over a strategic alliance among these nations, perceived as an “axis of authoritarianism.” The exercises involve 15 combat ships and focus on enhancing military trust through various operations. Tensions with the U.S. are escalating, particularly regarding Iran's nuclear ambitions and U.S. sanctions.
https://edition.cnn.com/2025/03/10/asia/iran-china-russia-joint-navy-drills-intl-hnk/index.html
Princeton nuclear physicist Liu Chang leaves US for China in fusion energy quest
South China Morning Post
Nuclear physicist Liu Chang has left Princeton University after more than a decade to join Peking University in Beijing as an assistant professor at the Institute of Heavy Ion Physics. Liu's research has significantly contributed to nuclear fusion, particularly in addressing issues related to runaway electrons and energetic particles in magnetic confinement fusion devices, like tokamaks and stellarators. His work includes a recent study published in Physical Review Letters that proposes a method to mitigate damaging runaway electrons in tokamak devices using a specific type of plasma wave. Liu, who completed his PhD at Princeton and has held various research positions there, is part of a trend of Chinese physicists returning to China, furthering the country's role in nuclear fusion research and its commercialization. Nuclear fusion, which combines atoms to generate energy without long-lasting radioactive waste, is viewed as a potential key solution for the world's energy needs.
https://www.scmp.com/news/china/science/article/3301674/princeton-nuclear-physicist-liu-chang-leaves-us-china-fusion-energy-quest?utm_source=rss_feed
How Alibaba’s new RISC-V chip hits the mark for China’s tech self-sufficiency drive
South China Morning Post
Alibaba Group's XuanTie C930 processor is set to invigorate China's semiconductor industry by promoting open-source chips based on the RISC-V architecture, countering US tech restrictions. Launched by Alibaba's Damo Academy, the C930 targets high-performance computing applications in data centers and autonomous vehicles. The chip design is available for licensing, aiming to foster a collaborative RISC-V ecosystem. Analysts highlight the C930's potential to disrupt traditional chip markets and support China's growing AI initiatives. The Chinese government is expected to encourage RISC-V chip use, with global shipments projected to rise significantly by 2030.
https://www.scmp.com/tech/big-tech/article/3301620/how-alibabas-new-risc-v-chip-hits-mark-chinas-tech-self-sufficiency-drive?utm_source=rss_feed
China rolls out U.S. farm tariffs as Xi digs in for wider trade war
Nikkei Asia
China's new tariffs on U.S. agricultural products, ranging from 10% to 15%, took effect following U.S. President Trump's tariffs on Chinese goods. Additionally, Beijing announced significant tariffs on Canadian goods, signaling a broader trade war with the West. China's retaliatory measures include halting soybean imports from U.S. companies and expanding export controls. Despite these actions, analysts believe China's responses are moderate, leaving room for negotiation. China's economic recovery is fragile, with slowing export growth and deflationary pressures, prompting officials to set ambitious growth targets and increase fiscal measures, though experts warn they may be insufficient.
https://asia.nikkei.com/Economy/Trade-war/China-rolls-out-U.S.-farm-tariffs-as-Xi-digs-in-for-wider-trade-war
China’s retaliatory tariffs on US farm goods kick in, as trade war escalates
Guardian
China has implemented retaliatory tariffs on approximately $21 billion worth of US agricultural imports, which began today. This decision comes in response to a 10% tariff imposed by the US on Chinese exports. The tariffs include a 15% increase on US-grown chicken, wheat, corn, and cotton, alongside a 10% increase on other products such as soybeans, pork, and seafood. This move is expected to make US goods less competitive in China, potentially harming US farmers and increasing the risk of a recession in the US economy.
Additionally, China's stock markets have experienced declines, with the CSI 300 index dropping by 0.4% and the Hang Seng index by 1.8%, influenced by trade war fears and deflationary pressures. China's consumer inflation rate fell to -0.7% in February, escalating concerns about its economy.
In a related development, China announced new tariffs on over $2.6 billion worth of Canadian agricultural products in retaliation to Canadian tariffs on Chinese goods. These escalating trade tensions raise uncertainties in global markets, affecting sectors like shipping, where freight rates and asset values are declining.
https://www.theguardian.com/business/live/2025/mar/10/china-retaliatory-tariffs-us-farm-goods-trade-war-recession-stock-markets-business-live-news
Trump says 4 bidders in play for TikTok’s US business in deal expected ‘soon’
South China Morning Post
US President Donald Trump announced that he is negotiating with four potential buyers for TikTok's operations in America, with a possible deal expected "soon." TikTok, owned by ByteDance, faces a deadline of April 5 to finalize a sale or risk being banned in the US due to a law enacted during the Biden administration. Trump mentioned that all four negotiating groups are viable but did not disclose their identities or indicate a preference. There are concerns regarding national security, and Trump has suggested that the US should hold a 50% stake in the company if sold. While ByteDance has not shown interest in selling, TikTok's CEO met with Trump earlier this year. The company is also valued at over $400 billion, despite uncertainties surrounding its US business. China would need to approve any sale, and there is no support from Beijing for divesting TikTok. Potential bidders include a group led by Frank McCourt, a collaboration involving Jesse Tinsley and MrBeast, and a merger proposal from Perplexity AI. Trump's discussions have also involved Oracle’s founder, Larry Ellison, who has previously worked with TikTok on user data hosting.
https://www.scmp.com/tech/policy/article/3301764/trump-says-four-bidders-play-tiktoks-us-business-deal-expected-soon?utm_source=rss_feed
China wants to supercharge growth with applications of nuclear tech
South China Morning Post
Beijing has ambitious plans to expand the commercial applications of its nuclear technology, aiming for an annual economic output of 400 billion yuan (approximately US$55.25 billion) by 2026, up from 240 billion yuan in 2023. This initiative, highlighted by Li Song, China's representative to the International Atomic Energy Agency (IAEA), will focus on sectors such as medical treatment, agriculture, food processing, and material modification. China aims to enhance cooperation with the IAEA to leverage atomic energy for the benefit of developing countries. While China boasts the world’s largest operational nuclear power capacity, there is recognition that it still lags behind developed nations in terms of industrial scale and innovation. The government has approved 11 new reactors for 2024 and plans to continue expanding nuclear facilities while ensuring safety by limiting new sites to coastal areas. Nuclear energy is seen as a key part of China's strategy to achieve carbon neutrality by 2060, with plans to integrate nuclear technology into various sectors while promoting environmental and public safety.
https://www.scmp.com/economy/china-economy/article/3301756/china-wants-supercharge-growth-applications-nuclear-tech?utm_source=rss_feed
Martin Wolf talks to Keyu Jin: Has China’s economy run out of gas?
Financial Times
China's economy, which had been experiencing rapid growth for decades, has slowed significantly since the pandemic, facing challenges such as a property market crash, high youth unemployment, and a trade war with the US. Martin Wolf interviews Keyu Jin, a Chinese economist and professor, who argues that China's situation is often misunderstood in the West. The discussion highlights the complexities of China's economic landscape and its current struggles. The article is part of a podcast series hosted by Martin Wolf, produced by Laurence Knight, with contributions from Manuela Saragosa and others.
https://www.ft.com/content/c7bf9049-c0c7-4deb-a535-d18996432211
Food delivery platform Deliveroo to exit Hong Kong market in April
South China Morning Post
Deliveroo is set to exit the Hong Kong market on April 7, after nearly nine years of operations, due to intense competition and financial losses. The company is selling certain assets to rival Foodpanda and has appointed liquidators to manage the closure. Deliveroo's decision follows a significant market share acquisition by the mainland Chinese competitor Meituan's KeeTa and reflects its commitment to capital discipline. Foodpanda will absorb Deliveroo's customers, riders, and some restaurant partners, offering incentives for new riders to join its platform. The exit comes amid a challenging landscape for food delivery services in Hong Kong, where Uber Eats previously withdrew in 2021.
https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3301769/food-delivery-platform-deliveroo-exit-hong-kong-market-april?utm_source=rss_feed
China's top private gold miner lists in Hong Kong to fuel global growth
Nikkei Asia
Chifeng Jilong Gold Mining, China's largest private gold producer, debuted flat on the Hong Kong stock exchange, opening at HK$13.72 amid a weak economic outlook. The company raised HK$2.82 billion and plans to invest in mine upgrades and overseas acquisitions. As a privately owned miner, it focuses on international operations, with significant revenue from mines in Laos and Ghana. Despite trading challenges in Hong Kong, Chifeng's net profit doubled to 1.26 billion yuan in 2024, driven by high gold prices. Goldman Sachs predicts gold prices could reach $3,100 per ounce by 2025.
https://asia.nikkei.com/Business/Markets/Commodities/China-s-top-private-gold-miner-lists-in-Hong-Kong-to-fuel-global-growth
‘Stay calm. Be patient’: Zheng Yongnian’s antidote for China’s Trump shock
South China Morning Post
Zheng Yongnian, a prominent Chinese political scientist and government adviser, emphasizes the significance of domestic issues and resilience in the face of international challenges. In his interview ahead of China's "two sessions," he discusses the implications of potential US-Russia rapprochement on China's geopolitical standing, particularly concerning the ongoing war in Ukraine. Zheng warns against any peace deals that might come at Ukraine's expense, highlighting the enduring view within the US that China poses a primary threat. He cautions that a shift in US-Russia relations could lead to new geopolitical chaos, especially if right-wing forces gain traction in Europe and the US.
Zheng argues that China should adopt a more open approach to international engagement while being cautious not to meddle in the internal affairs of other nations. He reflects on the need for strategic patience, particularly regarding Taiwan and the South China Sea, advocating for peaceful resolution rather than military confrontation. Moreover, he believes that China must learn from the US in terms of deregulation and fostering a conducive environment for private enterprises to thrive. The interview underscores the importance of maintaining economic stability and bolstering domestic development to mitigate external pressures.
In light of the challenges posed by the US-China rivalry and technological decoupling, Zheng emphasizes China's need for reform and innovation. He suggests that China's path to technological advancement should mirror the journeys of Japan and South Korea, which transitioned from imitation to original innovation. Zheng stresses that fostering a vibrant private sector and reducing excessive regulation are vital for attracting foreign investment and enabling China to navigate global challenges effectively. Ultimately, he calls for a balanced approach that combines strategic patience with proactive domestic reforms to ensure sustainable development and societal stability.
https://www.scmp.com/news/china/diplomacy/article/3301689/stay-calm-be-patient-zheng-yongnians-antidote-chinas-trump-shock?utm_source=rss_feed
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