China’s third plenum: tight security surrounds crucial meeting amid big policy questions
Trump’s ‘luck’ and American ‘violence’ are the talk of China’s internet; Chinese investors chase stocks with names like ‘Trump Wins Big’ as US shooting sours mood
Welcome to this issue of The China Brief. Today is July 15, 2024. 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 third plenum: tight security surrounds crucial meeting amid big policy questions
South China Morning Post
The Chinese Communist Party has begun its third plenum meeting in Beijing to discuss the country's economic and social development over the next decade, although no further details have been released. Security in Beijing has been increased with all low-altitude aircraft, including drones, banned from flying, and security personnel deployed at public transport stations and other key locations. The event comes as the Chinese economy grows at its slowest rate for 6 years, and faces other challenges including an ageing population and mounting local government debts.
https://www.scmp.com/news/china/politics/article/3270466/chinas-third-plenum-tight-security-surrounds-crucial-meeting-amid-big-policy-questions?utm_source=rss_feed
Trump’s ‘luck’ and American ‘violence’ are the talk of China’s internet
CNN
Discussion of the attempted assassination of former US President Donald Trump dominated Chinese social media following the incident. Some social media users praised Trump's "quick reflexes" and speculated about how the situation would boost his re-election bid. Others made morbid parallels between the attack and recurring instances of gun violence in the US, which are often highlighted by Chinese state media as an example of the country's failings. China's Ministry of Foreign Affairs said Chinese leader Xi Jinping "expressed sympathy" to Trump, while state-linked media framed the violence as a symptom of American democracy.
https://edition.cnn.com/2024/07/15/china/china-trump-assassination-attempt-reaction-intl-hnk/index.html
Chinese investors chase stocks with names like ‘Trump Wins Big’ as US shooting sours mood
South China Morning Post
The attempted assassination of US presidential candidate Donald Trump has increased the odds of him winning the election in November, according to a public poll. Trump's trade policies, which include imposing tariffs on all Chinese imports at 60% if elected, would be unfavourable towards China and could negatively impact the country's exports and foreign direct investment. The news of the shooting has already affected Asian markets, with the Hang Seng Index and the Shenzhen Composite Index falling. The onshore yuan has also weakened against the US dollar.
https://www.scmp.com/business/china-business/article/3270489/chinese-investors-chase-stocks-names-trump-wins-big-us-shooting-sours-mood?utm_source=rss_feed
China’s June home prices dip for the 13th month, adding weight to stalling economic growth
South China Morning Post
China's property market continues to decline as new home prices fell for the 13th consecutive month in June. The slump in the world's largest property market has dragged on China's economic growth, which expanded at a slower-than-expected rate of 4.7% in Q2. The property sector and related industries account for about a quarter of China's economic output. Despite a slew of stimuli and policies unveiled since last year, property buyers remain reluctant to enter the market.
https://www.scmp.com/business/china-business/article/3270470/chinas-june-home-prices-dip-13th-month-adding-weight-stalling-economic-growth?utm_source=rss_feed
China’s third plenum: the 5 burning questions heating up debate – and our take
South China Morning Post
China's much-anticipated third plenum of its Communist Party's Central Committee is scheduled to take place on Monday, with the four-day meeting expected to shape the country's economic strategy for the next five to ten years. The meeting is likely to focus on comprehensive reforms that will lay out China's economic roadmap for the future. It is unlikely that a massive stimulus package will be announced, as President Xi Jinping has dedicated more resources to enhancing the nation's core strengths, rather than finance. The meeting is also expected to address personnel changes, housing and land reforms, technological advancements, and efforts to attract private and foreign businesses.
https://www.scmp.com/economy/china-economy/article/3270451/chinas-third-plenum-5-burning-questions-heating-debate-and-our-take?utm_source=rss_feed
China Is Holding a Major Meeting on the Economy That You Can’t Watch
NY Times
Chinese President Xi Jinping and other Communist Party officials are meeting in Beijing this week to review a plan to revive China's economy. The meeting will consider a draft proposal on "further comprehensively deepening reform". The real test will be whether Xi is able to win renewed confidence from the Chinese population and foreign investors who have become disenchanted with his policies. China's businesses and consumers have suffered in recent years from stumbling growth, a property sector meltdown, and local government debt.
https://www.nytimes.com/2024/07/15/business/china-economy-third-plenum.html
The Winners From U.S.-China Decoupling
Foreign Policy
The decoupling of the Chinese and Western economies could have significant economic consequences, with the International Monetary Fund estimating that it could reduce global GDP by 7%, equivalent to $7.4 trillion. However, some emerging economies are positioning themselves to benefit from this fragmentation.
One trend is the emergence of countries like Malaysia as new industrial hubs for critical goods. Malaysia's Penang has become a neutral manufacturing hub for legacy semiconductors, attracting significant foreign direct investment and becoming a major supplier of semiconductors to the US. This has been driven by the diversification of supply chains away from China, and Malaysia's lack of export controls on advanced semiconductor technology or machinery makes it an attractive base for Chinese firms looking to bypass US measures.
China is also redirecting its investments to new emerging markets as part of its diversification strategy. This has led to a rise in Chinese foreign direct investment in countries like Mexico and Hungary. Mexico has become a favored destination for Chinese greenfield FDI in manufacturing and logistics, and Hungarian-Chinese economic ties are being cultivated to ensure European neutrality in the event of a Taiwan invasion by China.
De-risking is also leading to some countries becoming intermediaries in supply chains. For example, Vietnam has seen a significant increase in Chinese goods exports, as many of China's shipments are transiting through Vietnam en route to the US. This has led to a boom in US-Vietnamese trade, but it has also resulted in longer supply chains and continued reliance on China.
Other trends include suppliers of critical raw materials playing one side against the other, with countries like Bolivia, Argentina, Indonesia, the Democratic Republic of Congo, and Turkey positioning themselves to benefit from the global hunt for critical minerals. Additionally, emerging countries are increasingly turning to new, non-Western financial donors, such as the BRICS countries and China's Asian Infrastructure Investment Bank, providing them with alternative options for aid and financing.
Overall, while there will be many losers from economic fragmentation, a few countries are well-positioned to benefit from the shifts brought about by the US-China rivalry. These winners will be those that can serve as industrial and trade hubs, have access to critical raw materials, and attract financial support from both sides. However, only a few emerging economies are likely to meet these criteria, suggesting that the risks associated with decoupling scenarios will continue to be a concern.
https://foreignpolicy.com/2024/07/15/china-decoupling-derisking-emerging-markets-malaysia-mexico-economy/
China wind, solar capacity nearly twice the world's: report
Deutsche Welle
China is constructing more wind and solar capacity than the rest of the world combined, according to a study by Global Energy Monitor. The research found that nearly two-thirds of the world’s largest wind and solar energy production plants are in China. The country has 339 GW of capacity under construction, including 159 GW of wind and 180 GW of solar, significantly more than the second-placed US with 40 GW. The report said that China’s renewable capacity is helping to reduce coal dependency, with the country generating just 53% of its electricity from coal in May, down from 60% in 2023.
https://www.dw.com/en/china-wind-solar-capacity-nearly-twice-the-worlds-report/a-69624603
Chinese capital flows into Hungary
Deutsche Welle
Chinese firms are investing billions of dollars in Hungary as a gateway to the European market. A planned BYD electric car factory and several battery plants are expected to provide jobs for locals and a way for Beijing to avoid EU import tariffs.
https://www.dw.com/en/chinese-capital-flows-into-hungary/video-69547038
Chinese migrants rush to US before election
Deutsche Welle
Over the past year, more than 31,000 Chinese nationals have crossed the southern US border, and DW visited border towns in California to speak with some of these migrants. The Chinese migrants cited a variety of reasons for their desire to reach the United States. Some mentioned the country's economic opportunities, while others were fleeing political persecution or seeking better education for their children. Many also mentioned the allure of US citizenship. Despite the risks and challenges involved in the journey, including the high cost of smuggling fees and the dangers of crossing the border, these migrants were driven by the hope of a better life in America.
https://www.dw.com/en/chinese-migrants-rush-to-us-before-november-election/video-69628998
Concern over Belarus-China military drills, near NATO border
Deutsche Welle
Belarus has begun joint anti-terrorism military drills with China, named Eagle Assault 2024, following its recent membership of the Shanghai Cooperation Organization (SCO). Experts believe that Belarus joined the SCO as a way of decreasing its dependency on Russia and expanding its markets. China is now Belarus' second-largest trading partner after Russia, with around 10% of Belarusian trade going to China. The SCO does not provide members with any financial or economic support, but instead serves as a platform for negotiations and talks.
https://www.dw.com/en/chinas-joint-maneuvers-with-belarus-is-the-sco-behind-it/a-69649357
China’s Communist Party meets to set direction for troubled economy
CNN
Top officials from China's Communist Party are gathering in Beijing this week for the third plenum, a meeting that takes place every five years to signal the direction of the world's second-largest economy. China is grappling with a property sector crisis, high local government debt and weak consumer demand, as well as increasing trade and technology tensions with the US and Europe. Economic growth in China slowed to 4.7% in Q2, down from 5.3% in Q1, and missed expectations of 5.1% expansion in the second quarter. Observers of China's opaque political system do not believe there will be fundamental economic reforms this time around, instead watching for more targeted efforts to address structural economic issues and social problems. Xi Jinping, China's most powerful leader in decades, has been overseeing the meeting, which has been delayed for months. Observers have suggested the delay was due to disagreements over how to address the economy and a high-level personnel shake-up that cast a shadow over Xi's third term.
https://edition.cnn.com/2024/07/14/economy/china-communist-party-third-plenum-economy-intl-hnk/index.html
China GDP growth slows to 4.7% in Q2, missing forecasts
Nikkei Asia
China's economic growth slowed to 4.7% in Q2 2024, falling short of expectations and amplifying calls for more effective stimulus. The country's GDP figure for the first half of the year keeps it on track to meet the full-year target of around 5%, but analysts warn of a slowdown in the coming months without strong policy support. The prolonged property crisis, weak consumer demand, and escalating trade tensions are all contributing factors to the economic slowdown. The government's attempts to revive the property market have so far failed, with investment in property dropping 10.1% in H1 2024.
https://asia.nikkei.com/Economy/China-GDP-growth-slows-to-4.7-in-Q2-missing-forecasts
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