China’s state security minister orders crackdown on spies in Beijing; Exclusive Insight: Driving Change: China's Electric Vehicle Surge Leaves Global Competitors in the Dust
U.S., South Korea Pledge Cooperation on Potential Use of Nuclear Arms; ‘There are potential landmines everywhere’: Arrest of journalist evidence of Beijing’s efforts to discourage collaboration with
Welcome to this issue of The China Brief. Today is April 26, 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.
And here’s today’s exclusive insight:
Exclusive Insight: Driving Change: China's Electric Vehicle Surge Leaves Global Competitors in the Dust
The three-year pandemic has taken a severe toll on the global economy, and foreign automobile brands have not been spared. In China's first-tier cities, a mere three years ago, domestic electric vehicle brands, with the exception of BYD, made only occasional appearances.
Fast forward to today, and these local electric vehicle brands are thriving, dominating the streets. This is particularly evident in the new energy vehicle sector, where the presence of traditional foreign brands is scarcely felt, save for Tesla.
This striking transformation is both alarming and undeniably real, aligning with data from China's automotive industry over the past year. Recent online discussions and analyses of the Shanghai Auto Show corroborate these findings.
Foreign brands are struggling to keep up with their Chinese counterparts in the new energy vehicle market, facing a generational gap.
The consumption habits of China's younger generation have solidified, and their recognition and acceptance of domestic brands have significantly evolved. The growth and improvement of domestic brands cater to the demands of these young consumers. The influence of foreign brands has waned considerably, primarily due to their products being disconnected from market demands.
Recent foreign media reports suggest that global brands, like Volkswagen, aim to regain market share—a notion that seems almost farcical. Assessing China's economic landscape cannot be done simply by interviewing a few entrepreneurs or analyzing computer data. Experiencing China's bustling streets firsthand is far more valuable than any data analysis. A majority of those with negative views on China's economy lack a genuine understanding of the situation and have not experienced the country for themselves. They continue to observe the Chinese economy remotely, without any firsthand experience.
I encourage everyone to visit China and witness the reality for themselves, and even those looking to short the market should come and explore where the "short" truly exists.
(This article is part of the series "Observing China's Economy: Rise and Fall After Returning Home," authored by Shi Keni, an entrepreneur and guest expert for China Brief.)
U.S., South Korea Pledge Cooperation on Potential Use of Nuclear Arms
WSJ
The US and South Korea have reached an agreement, called the Washington Declaration, in which the US has agreed to allow Seoul a greater voice in consultations on the potential use of US nuclear forces to defend South Korea against a North Korean attack in exchange for South Korea committing not to develop its own nuclear weapons. The text of the agreement will be released on 26 April, when South Korean President Yoon Suk Yeol comes to the White House to meet with President Biden. The new accord comes as North Korea continues to build up its military, missile and nuclear arsenal. The agreement aims to strengthen the two nations’ ability to deter an attack from North Korea and dissuade Seoul from developing its own nuclear weapons.
TikTok Ban in Montana Faces Speed Bump as Governor Seeks Changes
WSJ
Montana's governor is requesting amendments to a bill that would ban TikTok outright in the state. The changes would broaden the ban from applying only to TikTok to include social media applications that provide certain data to foreign adversaries. State legislators approved the ban earlier this month, but it is expected to face legal challenges on several fronts. Governor Greg Gianforte previously banned TikTok on all government-issued devices and urged Montana's state university system to do the same. The ban is intended to address concerns about TikTok's Chinese links and its potential for spying on US users or distributing propaganda.
Singapore Warns of Uncertain Economic Outlook, Keeps Growth View
Bloomberg
Singapore's outlook has become more uncertain as tighter global financial conditions weigh on demand and China's reopening only benefits tourism, said its central bank in its biannual Macroeconomic Review. The risks to growth in not only Singapore but globally are now "tilted to the downside", the report said. However, the authority has kept its previous estimate that the state's economy will grow by between 0.5% and 2.5% in 2019 intact, despite an expected technical recession in the US.
NetEase’s ChatGPT rival lets users build apps with text prompts
South China Morning Post
Chinese video gaming company NetEase has launched CodeWave, an app development platform supported by its large language model (LLM), following the model of Microsoft-backed OpenAI's code-generation service, ChatGPT. CodeWave is part of the company's Digital Sail business, which offers cloud, digitisation and other services for traditional industries moving online. The platform seeks to leverage generative artificial intelligence, which can create new text, images or video, to improve business intelligence services as well as asset management. While Alibaba and Baidu have launched comparable services, the latter two companies have entwined their technologies with their other products.
The Toronto Star
China’s case against Dong Yuyu, a journalist and former visitor at Harvard University, is cited as an example of China’s attempts to stop its citizens from interacting with foreigners, as harsh sentences on human rights activists, lawyers and journalists continue. Dong was arrested in February 2021 for alleged espionage, while having lunch with a Japanese diplomat in Beijing in February. Dong faces a potential sentence of over 10 years in prison. Dong’s family spoke anonymously and said his case is a message to the Chinese and the world, that trying to understand China would lead to trouble. The arrest of Dong follows the detainment of Michael Kovrig and Michael Spavor, two Canadian citizens who were arrested in 2018 and sentenced to over a decade in jail, in retaliation for Canada’s arrest of Huawei CFO.
China says Taiwan publisher under 'security investigation'
DW
A Taiwanese publisher, who has released books critical of the Chinese government, is being investigated for suspected national security crimes, Chinese authorities have said. Li Yanhe, editor-in-chief of Gusa Publishing, disappeared while visiting Shanghai, but was apparently arrested during a visit to the city to finalize his nationalization as a Taiwanese citizen. Human rights groups and Taiwan journalists raised the alarm following Li's disappearance. Commentators suggest Li was arrested over his publishing activities, which included books critical of China's ruling Communist Party. Southern China has tougher restrictions on its media than elsewhere in the country.
Chinese Tourists Remain Wary of Traveling Overseas
Bloomberg
Over half of Chinese tourists surveyed have not planned overseas trips this year, with 31% not intending to travel at all, according to a survey by Dragon Trail International. Fear for safety abroad was ranked the primary factor when considering international travel, overtaking financial and time concerns. The Chinese outbound tourism industry was worth $253bn in 2019 and its return is considered vital for the global tourism sector.
Pony.ai gets permit for driverless robotaxi services in China's Guangzhou
Reuters
Robotaxi startup Pony.ai has gained a permit to launch fully driverless ride-hailing services in Guangzhou in China, enabling its vehicles to operate without human drivers or safety operators. The news comes after the firm gained similar permission to operate in Beijing, giving it access to two of the country's most populous cities. The Toyota-backed Pony.ai has been testing such services in Guangzhou since June 2021 and has subsequently gained nearly 200,000 orders for robotaxis around the world.
Companies unnerved by China detentions, says U.S. business group
Nikkei Asia
Foreign businesses in China are concerned for the safety of their personnel and families following the recent detention of a number of expatriates. Beijing's plan to expand its counterespionage law has exacerbated the concerns of overseas firms. Sentiment surrounding US-China relations has also deteriorated and almost a quarter of US companies are planning to shift away from Asia's biggest economy, according to a study by the American Chamber of Commerce in China.
The latest tool in China’s influence campaign: Police on social media?
Washington Post
China has been engaged in an influence campaign on social media that portrays the US as an irresponsible cyber power, according to a report by the Australian Strategic Policy Institute (ASPI). Researchers found more than 4,000 posts on Twitter, Reddit, Facebook, Chinese platform Sina Weibo, and online forums last year, all posting identical content that accused the US CIA and National Security Agency of surveilling China and other countries. Some of the accounts, found to be posting similar content on Chinese platforms, showed links to local public security bureaus, offices that are responsible for policing and public security. Experts have struggled to detect Chinese misinformation campaigns and to link them directly to government entities that keep related directives covert.
Myanmar's neighbors, some ASEAN members hold secretive talks on crisis - sources
Reuters
Representatives from Myanmar, India, China, Thailand, Cambodia and Laos, along with leaders from Indonesia, met in New Delhi on Tuesday as part of a "Track 1.5" dialogue aimed at easing the military conflict in Myanmar. It followed a similar meeting in Thailand last month hosted by a think-tank. One of the two anonymous sources for this article said that the group was hoping to include representatives of Myanmar's National Unity Government (NUG) in talks. The NUG has been deemed terrorists by the junta. The initiative complements the only official diplomatic process in place for Myanmar, the peace plan known as the five-point consensus.
China’s state security minister orders crackdown on spies in Beijing
South China Morning Post
China's Minister for State Security, Chen Yixin, urged the Beijing state security bureau to crack down on spy activity during an inspection tour on Monday, with China's capital labeled as the “main battlefield” to combat infiltration, subversion, and espionage. The body's work bore “heavy responsibilities and arduous tasks,” Yixin said, calling on the office to keep China's “core secrets” safe. His secretive ministry has rarely disclosed the type of inspection undertaken. Various state security-related cases have been disclosed recently, with China emphasizing the need to safeguard national security amid geopolitical tensions.
SMIC-backed Chinese contract chip maker seeks US$1.4 billion in Shanghai IPO
South China Morning Post
Semiconductor Manufacturing Electronics Shaoxing (SMES), which is backed by China's Semiconductor Manufacturing International Corporation, is seeking to raise $1.4bn in an initial public offering (IPO) on the Shanghai Stock Exchange's Nasdaq-style Star Market. The IPO is China's latest effort to develop its domestic semiconductor industry as tensions with the US deepen. The offer will be one of the world's largest IPOs this year if successful but it falls short of ADNOC Gas' $2.48bn IPO in Abu Dhabi in March. The company will have a market value of CNY38.5bn ($5.6bn) if the IPO succeeds.
Inside Biden’s Renewed Promise to Protect South Korea From Nuclear Weapons
NY Times
US President Joe Biden and President Moon Jae-in of South Korea will not focus on disarming North Korea during a meeting on 21 September. Instead, Biden will renew a pledge that the US's nuclear capability will dissuade or respond to a North Korean nuclear attack. US and South Korean officials say that attempts to end North Korea's nuclear program through sanctions and diplomacy have failed, and the aim is now to contain the country's nuclear arsenal. South Korea's Yonhap News Agency recently estimated that North Korea possesses a stockpile of at least 45 nuclear weapons, up from a previous estimate of 30.
Binance Faces Mounting Pressure as U.S. Crypto Crackdown Intensifies
NY Times
Binance's CEO, Changpeng Zhao, has hired white-collar defense lawyers from Latham & Watkins as US regulators investigate the world's largest cryptocurrency exchange for money-laundering violations. The Securities and Exchange Commission has also launched an inquiry into Binance’s business practices. Legal threats from US regulators could have a significant impact on the rest of the crypto industry, which might not remain unscathed if Binance, processing tens of billions of dollars in trades daily, is subjected to criminal charges. Zhao has responded by hiring compliance officials with government credentials, while Binance’s US unit is setting up a political action committee to lobby Congress directly.
Honda Motor taps TSMC to ensure 'stable' supply of chips
Nikkei Asia
Honda has struck a deal with Taiwan Semiconductor Manufacturing Co. to secure supply of chips after recent shortages caused production slowdowns for Japanese automakers. As well as leading to the partnership, the chip shortages prompted Honda to reveal it will introduce four new EV models in Japan by 2026 with ambitions to sell only electric or fuel cell vehicles by 2040, and to produce two million EVs by 2030. The company also plans to develop its own operating software offering driver-assistance and automated driving features, which will be used from 2025 in large EVs in the US.
Hong Kong, mainland China’s Xinjiang to launch first direct flight from next week
South China Morning Post
Airline Urumqi Air, an aviation subsidiary of China's HNA Group, will begin running direct flights from Hong Kong to China's Urumqi next Wednesday, which aviation analysts say could boost China's foreign investment and business opportunities in its Xinjiang region. Urumqi is the largest commercial hub in northwest China and the core city of the Belt and Road Initiative, a Chinese scheme to connect economies into a trade network. Urumqi Air said the new flight would help with travel between the two cities and would boost business in the Xinjiang region.
China opposes Taiwan-US defense and military exchanges
The Toronto Star
China opposes continued US-Taiwan cooperation, following reports that the US military is sending officers to help train Taiwan's counterparts, and a defense contractor delegation is due to visit next week. China's Taiwan Affairs Office spokeswoman, Zhu Fenglian, stated her country's opposition to the US having any military or official contact with Taiwan. The People's Republic of China and Taiwan split in 1949 after a civil war. China has since responded to the reports with military exercises simulating a strike on key targets in Taiwan in response to a meeting between Taiwan President Tsai Ing-wen and US House Speaker Kevin McCarthy.
China carrying out biggest military build-up: Cleverly
The Independent
UK Foreign Secretary James Cleverly has warned his colleagues that failing to engage with China would be a “sign of weakness”. Speaking at the Lord Mayor’s Easter Banquet, Cleverly argued that China’s involvement was essential to tackling intercontinental issues such as pandemic prevention and the fight against climate change. Cleverly added that the UK must remain “unflinchingly realistic” in how it deals with China, and that he does not expect his disagreements with Beijing to be quickly resolved. He also urged China to detail its military expansion and condemned Chinese repression, pledging the UK will continue to highlight the suffering of the Uyghur people.
Time running out to prevent war over Taiwan, Japan ambassador warns
The Sydney Morning Herald
Japan's outgoing ambassador to Australia, Shingo Yamagami, has warned that time is running out for Australia and other democracies to deter China from launching an invasion on Taiwan. The Ambassador accused his Chinese counterpart of character assassination against him in a recent interview. He urged Australia not to overlook the risks China posed to peace and security in the Asia-Pacific region. Yamagami believes time is limited in responding to the risk posed by China and the West should come up with prompt action in terms of increasing deterrence.
How London lost its luxury crown
Telegraph
London is at risk of losing its status as a luxury shopping destination, with high-end tourists looking to Paris and Milan for retail therapy. While the figures from early 2020 show that tax-free spending by American visitors in the UK has rebounded to 104% of pre-pandemic levels, the comparable figures for France and Italy stand at 313% and 243% respectively, according to data company Global Blue. Top retailers, including Burberry, Mulberry, Harrods, and Selfridges, have pointed the finger at the UK’s decision to scrap VAT relief for foreign visitors after Brexit, a move they describe as a “tourist tax”. The removal of tax-free shopping has also had an impact on visitor numbers to London’s tourist hotspots, such as Eid, where rich visitors from the Gulf who would traditionally come to London have opted for Paris instead.
Yuan Overtakes Dollar as China’s Most Used Cross-Border Currency
Bloomberg
In March, China saw the yuan overtake the dollar in cross-border transactions for the first time. According to the State Administration of Foreign Exchange, the local currency's share of China's cross-border payments and receipts increased to a record high of 48% from almost zero in 2010. By contrast, the dollar’s share had declined to 47% from 83% over the same period. The figures, which include securities trading through links between China and Hong Kong, evidence China's move to reduce reliance on the dollar. Analysts argue the rise in yuan usage could be a result of China opening up its capital account, with inflows for China bonds and outflows for Hong Kong stocks both increasing, and that the yuan’s expansion is set to continue as other countries seek alternative payment currencies to diversify risks. However, there is still a considerable way to go before the yuan challenges dollar dominance.
Taiwan military drills to focus on combating blockade of island
Al Jazeera
Taiwan will begin its annual Han Kuang military drills next month using computer simulations, in a focus on countering a blockade of the country and preserving the fighting capability of its forces. The drills, based on the threat of a communist invasion of Taiwan, will run for 10 days and include civilian airports, with the navy integrating sea, air and land forces to attack enemy and amphibious assault ships, in addition to protecting sea lanes and countering blockades. China, which claims the self-ruled island as its own, has sought to isolate Taiwan internationally and viewed its president, Tsai Ing-wen, as a separatist.
EV revolution in developing Asia needs cheaper models: report
Nikkei Asia
Electric vehicle sales are growing swiftly in developing Asian countries, according to a report by the International Energy Agency, which added that further expansion would depend on offering cheaper models, many of which run on two or three wheels. Global consumers bought 10 million EVs in 2022, with 95% of sales concentrated in China, Europe and the US. The IEA described the situation in India, Thailand and Indonesia as "a notable boom".
China, Russia sign memorandum of understanding on maritime law enforcement
Reuters
China and Russia have agreed to strengthen maritime law enforcement cooperation with the signing of a memorandum of understanding between the coast guards of the People's Republic of China and the Federal Security Service of the Russian Federation. The agreement was signed in Murmansk and will involve joint efforts to combat terrorism, illegal migration, drug and weapon smuggling, as well as illegal fishing.
Taiwan seen slipping into recession in Q1 : Reuters Poll
Reuters
Taiwan's export-driven economy is expected to have entered a recession in Q1 2019 as it faces sluggish demand for technology products amid global economic woes. A poll of 24 economists by Reuters found that GDP is predicted to have fallen by 1.25% compared to the same period last year. This comes as exports slid annually for a seventh month in March, with the government stating the downturn could last until Q4 2019.
HKEX beats estimates as it posts 28 per cent jump in first-quarter profit
South China Morning Post
Hong Kong Exchanges and Clearing (HKEX) has posted a 28% rise in first-quarter earnings following a boost in market sentiments which improved its investment income. This growth followed the best-ever quarter for HKEX, where it posted a net profit of HKD2.98bn in Q4. Revenue grew by 19% to HKD5.56bn, beating analysts' predictions of HKD5.37bn, demonstrating HKEX's recovery from a wider pullback of activity and subdued initial public offerings (IPO). CEO Nicolas Aguzin hailed the results as one of the best quarters ever and remains positive, stating he'll continue to support global connectivity initiatives.
India and China play down the big demographic news
Financial Times
India has likely overtaken China to become the world's most populous nation, according to a report from the UN's Department of Economic and Social Affairs. It believes the two countries' populations crossed over in April, though more details from India are needed. India is expected to have over 1.428 billion people, while China will have just over 1.4 billion. The populations of both nations are politically sensitive issues, analysts said. India's government sees the nation's growing population as a problem rather than the opportunity cited by Amitabh Kant, India's sherpa for the G20 group of large economies.
Tencent accelerates investment in overseas gaming studios
Financial Times
Chinese tech giant Tencent is reported to be looking to invest in European gaming studios in order to diversify away from its home market. After Beijing lifted restrictions on the gaming industry recently, the world's largest listed firm aimed at purchasing or investing in gaming studios. According to Chinese data provider Chyxx, Tencent accounted for 44% of online gaming revenue in its domestic market in H1 2022. However, Tencent is said to fear that it will be prevented from dominating its domestic market in the future and is trying to move fast overseas. European gaming studios are the main target for Tencent, though the company has still not made investing in games overseas a priority. Tencent's gaming business constituted 73% of its Rmb170bn ($24.5bn) gaming revenue in 2022.
China's Fosun drops plan to sell stake in Indian drugmaker Gland Pharma
Reuters
Shanghai Fosun Pharmaceutical has scrapped plans to unload its majority stake in Indian drug maker Gland Pharma, according to unnamed sources cited by ET Now. Fosun Pharma, which currently holds 57.86% in the company, and Gland Pharma both declined to comment. Gland Pharma's shares rose 0.8% following the news, arresting a 28% fall which had been sparked by rumours the Chinese pharmaceutical company was mulling a sale of Gland Pharma after receiving interest from potential buyers.
South Korean battery groups’ domination of EV market in US faces China challenge
Financial Times
South Korea's leading battery makers, LG Energy Solution, SK On and Samsung SDI have emerged as the major North American electric vehicle battery suppliers with 17 of 22 such models said to qualify for President Biden’s Inflation Reduction Act receiving supplies from them. South Korean manufacturers have focused on nickel-manganese-cobalt (NMC) batteries, higher in cost but which have greater range and improved performance than their cheaper lithium iron phosphate (LFP) counterparts that Chinese battery makers make. However, analysts suggest that LFP is better suited for mass-market EVs and Ford's deal with CATL may threaten their dominance.
South Korea’s President has a crucial, if awkward, summit with Biden
The Washington Post
South Korea's President will visit his US counterpart Joe Biden at the White House on 21 April. The meeting between them will be centered on economic issues and international security. South Korea hopes to secure waivers, subsidies and concessions for Korean firms that produce advanced microchips to do business in China. Additionally, both leaders will also talk about the concerns about North Korea’s nuclear threat and concerns over China, the conflict in Ukraine as well as a range of business tie-ups between the two major companies in the countries. Moreover, South Korea is increasingly worried about US industrial policies and intensifying economic confrontation with China, which has ripple effects on the global economy. The Biden administration also wants Seoul to help support its efforts in Ukraine as the US wishes to deliver ammunition, in particular, artillery shells, to the front lines. South Korea has imposed sanctions on Russia over the Ukrainian conflict, but arms transfers to Kyiv may prove daunting for a country that has maintained a balancing foreign policy that takes into account the relationship with Beijing and Moscow.
US$100 billion erased from US-listed China stocks’ market value in tense month
South China Morning Post
Geopolitical concerns have cost Chinese stocks over $100bn in US market value in April. President Joe Biden is planning to sign an executive order limiting American investment in key parts of the nation's economy, with firms such as Alibaba and JD.com hit as a result. Money managers have been frustrated by the policy and valuation issues presented by China's stock markets, and some such as Union Bancaire Privee have cut Chinese stocks to neutral from overweight due to geopolitical risks.
Meta executive questions TikTok’s ‘profound differences in values’
South China Morning Post
Meta's head of global affairs, Nick Clegg, criticized TikTok in an interview with Bloomberg TV. He contended that the Chinese social media firm can easily operate in the United States while American and European rivals cannot in China, reflecting both a lack of balance and values between the two tech markets. TikTok has denied that it is backed by the Chinese government or companies, despite ownership by ByteDance. The company has come under increased scrutiny related to surveillance concerns by analysts and politicians globally, leading India to ban it. The US could follow in its footsteps, according to analysts.
China's Xi must avoid another policy-induced recession
Nikkei Asia
China's gross domestic product for the first quarter of 2023 grew by 4.5% from the previous year, exceeding market expectations and representing a recovery from the economic impact of its zero-COVID policy. However, to avoid stalling again, President Xi Jinping must implement policies that do not disrupt consumers and businesses.
British Chip Startup With CIA Ties Sees a Future in US or China
Bloomberg
Pragmatic Semiconductor may shift its operations overseas if the UK government does not provide a supportive semiconductor strategy, according to a spokesperson from the CIA-backed British start-up. If Pragmatic expands domestically, it will limit the amount of investment from China, the representative added. The firm, which produces flexible circuit boards that can be embedded into a range of products, may move to the US, where the successful CHIPS Act provides funding and tax incentives for semiconductor companies.
How China Could Save Putin’s War in Ukraine
Foreign Affairs
China's involvement in the ongoing conflict in Ukraine is mainly motivated by its three broad interests in the region, which are related to its desire to maintain the stability of its most important partner, Russia; resist America's efforts at establishing its form of international order; and participate in the post-war reconstruction of Ukraine, explains FT's Deputy Director of Research, Edward Luttwak. While China has been benefiting from the conflict so far, it may have to intervene more formally if Russia starts to suffer significant setbacks, and this could include furnishing Russia with lethal military aid. This would be a risky move as the US would consider it a red line and threaten China with severe economic sanctions. It could also turn Europe away from Western allies and bring China into direct confrontation with the US, turning the war in Ukraine into a truly global one, warns Luttwak. However, if China decides to go down that path, it would do so to prolong the war, delay a Russian defeat or speed up some kind of Russian victory.
According to Luttwak, China's participation in the war would also raise the stakes for the US and Europe, and demand greater military commitments in Ukraine. The post-war economic landscape would be greatly reshaped, undoubtedly giving China the chance to play a significant role in Ukraine's rebuilding, and positioning itself as a mediator and an economic player in Ukraine. The end of the war could be a stepping stone for the country to expand its commercial ties with Ukraine and neighboring countries, and broaden the scope of action available to powers like Russia that have flung off the rules written in Washington, says Luttwak. Whatever covert support China delivered to Russia, including drones, artillery shells, and ammunition, would not bring Russia victory as its military leadership, low morale among troops, and the Kremlin’s impoverished strategic thinking cannot be fixed by material help from China.
Hong Kong home prices rise for third month in March
Reuters
Hong Kong's private home prices rose for a third month in March, gaining 1.4% on February as the reopening of the border with mainland China and a spate of new launches boosted market sentiment. Last month's rise followed a 2.4% gain in February, according to official data. Home prices in the financial hub have recovered 5% in the first quarter after dropping 15% in 2020. April is expected to see transaction volumes fall after the recent surge, which saw some potential buyers deterred by volatile global markets, with Centaline predicting a 30% decline from March.
China features in Republican AI-generated ad attacking Biden
South China Morning Post
The Republican Party used artificial intelligence to create an ad portraying what they said would happen to the US if Joe Biden is re-elected in 2024, backed by the narrative of a dystopian future. The video imagines emboldened China invading Taiwan, hundreds of banks collapsing, and tens of thousands of migrants entering the US illegally. The ad is shown as a fantasy newscast in which San Francisco is closed due to an “escalating crime and fentanyl crisis”. The Republican National Committee told Axios Tuesday’s ad was the first 100% AI video the party has produced.
Hong Kong stocks waver near 4-week low amid China growth, policy concerns
South China Morning Post
Hong Kong stocks have fallen to within a whisker of a four-week low, as investors remain sceptical about China's economic recovery, as well as any impact from policy stimulus, according to reports. The Hang Seng index is down a fifth of a percentage point to 19,603.45, after it also fell on Tuesday to its lowest level since the end of March. While shares in Hong Kong or China-exposed firms are bearing the brunt of the sell-off, analysts at Bank of America have warned European fund managers are frustrated by China's stock markets amid unstable earnings and bullish valuations.
China’s ‘Project 912’ used social media to target dissidents
Japan Times
The Chinese government is reported to have a team of police officers creating fake social media accounts to harass dissidents and other critics outside of China's borders, according to US prosecutors. Officials from China's Ministry of Public Security are accused of engaging in a conspiracy of transnational repression that targeted US residents on platforms, including Facebook, YouTube and Twitter, with a mission to use fake accounts to promote narratives in favour of the Chinese Communist Party, stoke social and political tensions in the US, intimidate enemies of China's government and undermine public critics who have sought refuge abroad. Despite this, China's foreign ministry has rejected the US accusation.
Risk of ‘tragic miscalculation’ in China’s military secrecy: UK
Al Jazeera
UK Foreign Secretary James Cleverly has called on China to be more forthcoming regarding its military build-up in the South China Sea, and to be open on its strategy and intentions for the build-up. He claimed secrecy increased the risk of military miscalculations. Cleverly also warned of the catastrophic effects any conflict over Taiwan, which has been claimed by China and experienced a recent uptick in war games and a series of drone infiltrations, could have on the global economy, and urged a non-interventionist approach to the nation. Cleverly's speech also briefly touched on China's history and successes, including lifting 800 million people out of poverty.
US Companies in China Grow More Pessimistic about Bilateral Ties
Bloomberg
A survey carried out by the American Chamber of Commerce in China reveals that US firms operating in China are losing confidence in the relationship between the US and China. More than 87% of respondents said they were why they were pessimistic, compared with 73% in the previous survey. The lack of diplomatic progress is “affecting the ability of business to operate across borders," said Lester Ross, chair of AmCham's China Policy Committee. Additionally, trade and economic concerns were increasingly intertwined with issues of national security and law enforcement, causing trouble for US businesses.
Pentagon draws lessons from Ukraine war as it eyes possible conflict with China
Japan Times
The US has gained valuable lessons from Russia's invasion of Ukraine, particularly in terms of a potential conflict with China, including the need to build an industrial base to produce ammunition and innovation in space, said Deputy Secretary of Defense Kathleen Hicks. From the 14-month experience of the Ukraine war, the Department of Defense is pushing to give weapons manufacturers more predictability and has secured a Presidential Drawdown Authority to speed weapons deliveries to Taiwan. Hicks said the conflict has also demonstrated the ability of the US to put economic "pressure" on aggressors and the value of intelligence sharing.
China’s Consumer Recovery Under Scrutiny as Economy Rebounds
Bloomberg
China’s financial indicators suggest the country’s economy kept expanding into April, with Bloomberg’s indicator of eight key indicators succeeding January's 5 level with a gain of one point in April. That said, many analysts argue that the comparisons between April 2020 and 2021 overstated China’s consumption growth. The assessments come as the global economy remains uncertain, unemployment levels continue to be relatively high, and pundits closely monitor the sustainability of China’s rebound following Q1 2021's fastest pace in a year.
China Stock Selloff Eases After $446 Billion in Value Wiped Out
Bloomberg
Chinese stocks, which lost $446bn in the first few weeks of April due to geopolitical tensions with the US, have rallied after bargain hunters appeared on the market. The Hang Seng index of Chinese stocks in Hong Kong rose slightly, with tech shares seeing gains for the first time in a week. The CSI 300 index declined by just 0.6%, while the offshore yuan also rebounded from a seven-week nadir.
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