China’s state planner unveils steps to boost private investment; Beijing fears local vehicles for infrastructure finance may tank
AI: How far is China behind the West? School gymnasium roof collapses, killing 11 in China; China enlists old friends to translate as U.S. talks hit brick wall
Welcome to this issue of The China Brief. Today is July 24, 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 state planner unveils steps to boost private investment
Al Jazeera
China's National Development and Reform Commission (NDRC) has announced measures to encourage private investment in infrastructure and improve financing for private projects. The move comes as part of China's efforts to boost its post-pandemic economic recovery. The NDRC plans to attract private capital to major projects in sectors such as transport, water, clean energy, advanced manufacturing, and agriculture. The commission will provide more specific details on the sectors open to private investors at a later date. China has been implementing stimulus measures to support its economy, which has been losing momentum following the initial rebound from the pandemic. Private fixed-asset investment declined by 0.2% in the first six months of the year, compared to an 8.1% increase in state entity investment. The NDRC aims to keep the proportion of private fixed-asset investment at a reasonable level and will strengthen financial support for private-invested projects.
Beijing fears local vehicles for infrastructure finance may tank
Nikkei Asia
China is cracking down on the murky fundraising practices in the structured bond market that have been exploited by shady fund managers and risky borrowers. The government is concerned that local government financing vehicles (LGFVs), which have been crucial in directing investment into infrastructure projects, have dipped too far into this perilous segment of the bond market and may default. LGFVs are struggling to service the interest payments on their debts amid a weak post-COVID economic recovery and weak land sales, so they have turned to unscrupulous private fund managers to help them access funding. This involves low-rated issuers purchasing a portion of their own bond offerings, artificially inflating the size of the issuance to attract more genuine buyers. While officially banned, structured bond issues are not technically illegal, and the light administrative penalties for violators have not been enough to dissuade the practice.
AI: How far is China behind the West?
Deutsche Welle
China is rapidly catching up with the US in the development of AI chatbots, with the country expected to spend $15bn on AI projects this year. While many experts believe the US and UK will continue to lead in AI innovation, others argue that China has the edge in implementation due to its vast amounts of data collected through state surveillance. However, critics argue that the West still holds the key to innovation, with the US currently having the advantage in this area. The US is concerned by Beijing's technological ambitions, with the Chinese government aiming to make the country the world's dominant AI player by 2030. The US has already imposed export curbs on the most advanced memory chips, which Chinese firms need for their own AI language models, and may seek to close other loopholes. While China has released its own versions of AI models similar to Microsoft's Chat GPT, it still faces hurdles such as a crackdown on the power of the tech sector, censorship and a shortage of skilled workers.
US-Taiwan trade pact key to countering diplomatic isolation, Taipei’s top trade negotiator says
CNN
Taiwan's top trade negotiator, John Deng, has said that a trade pact between Taiwan and the United States will help the island counter its diplomatic isolation from China. He described the agreement as the most comprehensive trade agreement between the two countries since Washington switched diplomatic recognition to Beijing in 1979. Deng said that the deal will allow Taiwan to demonstrate its track record in following international trade rules, which will help enable future trade deals with other advanced economies. However, the deal has drawn criticism from China, which claims Taiwan as part of its territory.
School gymnasium roof collapses, killing 11 in China
Nikkei Asia
Eleven people have been killed after the roof of a school gymnasium in China collapsed. Many of the victims were young girls playing netball. The collapse was caused by the illegal stacking of materials on the roof, according to authorities. The gymnasium was being used by a female volleyball team at the time of the incident. There were 19 people in the gymnasium when the accident occurred, with four managing to escape. A preliminary investigation found that construction workers had illegally placed perlite, a mineral with high water content, on the roof during the construction of a teaching building adjacent to the gymnasium.
Xi set to welcome world leaders to China for delayed World University Games
South China Morning Post
Chinese President Xi Jinping will welcome at least seven world leaders to China this week as they attend the opening of the World University Games in Chengdu. The leaders include those from Indonesia, Mauritania, Burundi, Guyana, Georgia, and Fiji. The event, which was originally planned for 2021 but postponed twice due to the pandemic, will take place from July 23 to August 8. The games will be held amid tight security, and the Cyberspace Administration of China has announced a 20-day "special action" to regulate online information about the games. Several countries, including New Zealand, Canada, Britain, Mexico, the United States, Russia, and Belarus, will not be participating in the event.
Hong Kong property market recovery will be a hard slog
South China Morning Post
Hong Kong's property market has failed to sustain a recovery despite the reopening of China's economy, according to Nicholas Spiro, a partner at Lauressa Advisory. Spiro said the drop in secondary home values in Q2 and the decrease in transactions in the secondary and primary markets in June were both due to a spike in the one-month Hibor rate, which has risen to its highest level since 2007. He added that the uncertainty over interest rates and weaker-than-expected recovery in China's economy were also contributing factors. The retail sector is the only bright spot, according to Spiro.
China central bank issues draft rules on its data security management
Reuters
China's central bank has issued draft rules on data security management for its own operations, as the country tightens its grip on data usage and security. The People's Bank of China is seeking public opinions on the draft guidelines until 24 August. The rules outline a system of accountability for data security and punitive measures for violations, and require the central bank's data collected within the country to be stored domestically. Data processors are also banned from splitting or reducing the size of data to avoid security checks when exporting it.
China enlists old friends to translate as U.S. talks hit brick wall
Japan Times
Chinese President Xi Jinping has met with former US Secretary of State Henry Kissinger in a bid to improve relations with the US. The meeting, which took place at the same guesthouse where Kissinger met Chinese Premier Zhou Enlai in 1971, was intended to convey the message that China "will never forget our old friend". Xi has also met with former Philippine President Rodrigo Duterte, in an effort to demonstrate that China's problems are with the US government, not its citizens or business people. The Chinese leader hopes that by meeting with business leaders and other influential figures, he can build connections with the American people and convey China's world view. The meeting between Kissinger and Xi is notable because China has refused to meet US Secretary of Defense Lloyd Austin until the Biden administration lifts sanctions placed on him in 2018.
Twitter rebrands to X as Musk moves to create ‘everything app’
The Independent
Twitter has rebranded to X as part of Elon Musk's plan to create an "everything app". Musk launched the new logo over the weekend, after crowdsourcing ideas from users. He also informed employees via email that Twitter would become X and redirected the domain X.com to Twitter.com. The blue bird logo will eventually be phased out. Linda Yaccarino, CEO of Twitter, described the app as the "future state of unlimited interactivity", incorporating audio, video, messaging, payments, and banking. However, the move is expected to further alienate Twitter's original user base.
21 dishes in 24 hours: China's youth embrace lightning travel
Nikkei Asia
China's youth are adopting a "special force style" of travel due to limited budgets and time constraints. The trend sees young people packing as much food, fun, and sightseeing as possible into trips as short as 24 or 48 hours. The growth in super-short travel is largely due to the country's high youth unemployment rate, which reached a record 21.3% in Q2 2022. While the number of trips being taken has increased, spending has not, indicating a "consumption downgrade" and reflecting a weak economic outlook.
Chinese property giant Country Garden extends losses on debt worries
Reuters
Shares in China's property developer Country Garden and its property service arm Country Garden Services Holdings have fallen due to concerns over debt. Country Garden Services Holdings dropped more than 6%, while Country Garden fell more than 3% to its lowest level since last November. The Hang Seng Mainland Properties Index also declined nearly 3%.
China warns Japan on NATO, hopes it refrains from undermining trust in region
Reuters
The Chinese embassy in Japan has criticized NATO's plan to expand into the Asia-Pacific, stating that it violates U.N. rules. The embassy urged Japan to refrain from actions that could undermine trust among countries in the region.
Hun Sen’s ruling party claims landslide win in Cambodian election after opposition was suppressed
The Globe and Mail
Cambodia’s ruling party, led by long-time Prime Minister Hun Sen, has claimed a landslide victory in Sunday’s general election. The Cambodian People’s Party (CPP) won 120 seats, while the royalist FUNCINPEC party won five. Official figures state that 84.6% of eligible voters cast ballots. However, the European Union, the US and other Western countries declined to send observers to the polls, stating that the election was neither free nor fair. The election also involved the suppression and intimidation of opposition parties. The only other contender capable of providing opposition to the CPP, the Candlelight Party, was barred from participating in the election by the National Election Committee.
China scientists make bacteria-beating bandage to outsmart superbugs
South China Morning Post
Scientists in China have developed a bandage that detects and treats bacterial infections. The "test-to-treat" bandage pad changes from green to yellow within three hours if an infection is detected, which can then be treated with an antibiotic. However, if the pad turns red, that indicates the presence of a drug-resistant superbug that is then treated with a hydrogel layer that generates toxic reactive oxygen species when activated by movement or massage.
AI-powered virtual hosts set to disrupt China’s live-streaming e-commerce market
South China Morning Post
Chinese tech companies are developing generative artificial intelligence (AI) technology to create virtual live-streaming hosts capable of round-the-clock sessions. Generative AI can be used to create new content, including audio, code, images, text, simulations, and videos. The technology could disrupt the jobs of more than 400,000 human live-streamers in China. The cost of a virtual host is much lower than that of a human live-streamer, making it attractive to small vendors and major brands. Some brands have already expressed interest in experimenting with virtual hosts to boost online sales.
China makes 'upstream superpower' presence felt in Asia
Nikkei Asia
China's vast water transfer infrastructure has the potential to disrupt water supplies for downstream countries, as many of Asia's transboundary rivers originate in China. The country's South-to-North Water Diversion Project, the largest water transfer apparatus ever built, drew over a billion cubic meters of water from the Yangtze River to supply Beijing's needs last year, despite drought conditions. This highlights the scale of China's efforts to secure its water resources, but also the potential effects on neighboring countries. The movement of water through China's infrastructure has raised concerns about environmental impacts and the potential for water shortages in downstream nations.
The effects of China's actions on water supplies and the disputes they have generated are the focus of a three-part series by Nikkei Asia. China's water security measures, including dam building and hydropower projects, have the potential to fuel regional political tensions and create new disputes. The country's influence over water supplies in the region, particularly in the Indo-Tibetan plateau, gives it unparalleled control over water resources and the ability to affect the water supply of a quarter of the world's population.
China's domestic water challenges, including population growth and industrialization in arid northern regions, have led the country to prioritize water security in national policymaking. Water shortages are seen as a threat to the survival of the nation, and addressing the severe water supply and demand imbalance is crucial for productivity and socioeconomic development. However, China's unilateral actions and the lack of multilateral agreements governing transboundary rivers in Asia have raised concerns among downstream countries, particularly regarding dam building and the potential for water supply disruptions. The growing competition for water resources in Asia could lead to tensions and conflicts in the future.
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