China’s Xi Likely to Skip G-20 Summit in India; China Defence Ministry: We will crack down on every corrupt official
China’s bid for world domination has backfired; Engineer shortage may harm US plan to turn Vietnam into chips powerhouse
Welcome to this issue of The China Brief. Today is August 31, 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.
Xi Jinping Has Yet to Tell India If He’s Attending G-20 Summit
Bloomberg
Chinese President Xi Jinping has not confirmed whether he will attend the Group of 20 (G-20) summit in India next week, according to Indian officials. While preparations are still being made for his possible attendance, it remains unclear if he will show up. Other key leaders such as US President Joe Biden and UK Prime Minister Rishi Sunak have already confirmed their attendance. If Xi does not attend, it would be the first time he has skipped a G-20 summit since taking power, raising questions about China's global influence as its economy slows.
China’s bid for world domination has backfired
Telegraph
Chinese President Xi Jinping's ambition to make China a global superpower is being hampered by the country's economic challenges, with the Chinese economy facing the prospect of a prolonged period of deflation. The collapse of the housing market and a record high in youth unemployment are among the indicators of China's economic struggles. This presents an opportunity for Western leaders, such as the UK's Foreign Secretary James Cleverly, to encourage Beijing to adopt a more positive attitude towards the West and rebuild trust to revive China's economic fortunes.
Analysis: Engineer shortage may harm US plan to turn Vietnam into chips powerhouse
Reuters
Vietnam is facing a shortage of engineers that threatens to hamper growth in the country's semiconductor industry. Approximately 5,000 to 6,000 trained hardware engineers are available in Vietnam for the chip sector, but demand is predicted to reach 20,000 in five years and 50,000 in a decade. The US government is seeking to elevate ties between the two countries and offer support to boost Vietnam's chip production. However, the lack of trained experts could hinder the industry's rapid development, according to industry officials, analysts and investors.
China’s Xi Likely to Skip G-20 Summit in India, Reuters Says
Bloomberg
Chinese President Xi Jinping is unlikely to attend the upcoming G20 summit in India next month, according to government and diplomatic sources. Instead, Chinese Premier Li Qiang is expected to represent Beijing at the meeting. US President Joe Biden and Russian Foreign Minister Sergei Lavrov are also expected to attend the summit. Xi has spent very little time outside of China this year, with only two trips so far.
The new global threat that will test Britain’s trust in Beijing
Telegraph
UK Chancellor Rishi Sunak is looking to establish Britain as the international home of AI regulation. He plans to hold the Prime Minister’s AI Safety Summit in Bletchley Park, the home of British codebreaking operations during World War II. However, the difficult question of whether to invite China to the summit remains. Sunak wants to reach international consensus on AI regulation against the backdrop of an escalating technology war between Beijing and the West. China ranks second in the world for AI funding, and the country has said it wants to be the world’s leading AI hub by 2030. However, China’s growing technological sophistication is seen as a threat to Western values. The US has barred semiconductor giant Nvidia from supplying its most advanced AI chips to China due to concerns about Chinese cyber attacks. Sunak is keen to position Britain as a global leader in AI regulation, but not inviting China could undermine this ambition.
China: Tech giant Baidu leads rollout of AI chatbots
Deutsche Welle
Chinese tech company Baidu has made the country's first artificial intelligence (AI) chatbot publicly available, with two other companies also following suit. The move is part of China's efforts to compete with Western AI developers such as Microsoft and OPEN AI. Despite government regulations that tightly control certain information, including the 1989 Tiananmen crackdown, Chinese generative AI apps must adhere to the core values of socialism and avoid threatening national security. Baidu's CEO said the rollout would allow the company to gather "massive" feedback to improve the app quickly. The rollout resulted in Baidu shares rising 3.2% in Hong Kong.
China hones anti-submarine capabilities amid South China Sea tensions
Reuters
China's military has conducted intensive anti-submarine exercises in the South China Sea as tensions rise with neighboring countries and their allies. The exercises involved more than a dozen flights of anti-submarine patrol aircraft searching for submarines and simulating attacks. The drills aimed to enhance the military's round-the-clock aerial anti-submarine combat capabilities. The exercises were part of broader activities conducted by the Chinese military in the Indo-Pacific region. The United States and its allies have also increased military activities in the South China Sea, which is mostly claimed by Beijing.
Rural areas sacrificed for Xi Jinping’s new city, satellite imagery shows
Washington Post
China's efforts to protect the Xiong'an New Area, a development project near Beijing, from severe flooding caused by Typhoon Doksuri, contributed to the destruction of rural villages in Hebei, according to The Washington Post. Officials opened floodgates on dams to divert water away from Xiong'an and other urban areas, releasing over a trillion gallons of water into nearby villages and farmland. At least 29 people died during the flooding, with 1.75 million people relocated and the economic damage totalling $13bn. The government has not commented on the allegations.
China’s Slowdown Is Being Ignored by Global Macro Managers
Bloomberg
Despite negative headlines from China, global financial markets are not showing signs of concern. Global stock returns are in the mid-teens for the year so far, high-yield credit has outperformed, and the Bank of America GFSI Market Risk indicator is near the lowest levels of the year. One reason for the lack of concern is that the Chinese economy is not as bad as it seems right now. Iron ore is doing well due to government investment in infrastructure. Additionally, the strength of the US economy is distorting the view of China's markets.
China Defence Ministry: We will crack down on every corrupt official
Reuters
China's Defence Ministry has pledged to crack down on corruption within its military following a reshuffle of senior rocket force commanders. The ministry's spokesperson, Wu Qian, stated that every corrupt official will be investigated and punished, emphasising that the Chinese military operates according to the law and has zero tolerance for corruption. The move comes after President Xi Jinping appointed new leaders for the People's Liberation Army's Rocket Force in July, with the new appointments deviating from tradition by choosing individuals who were not from the Rocket Force. The whereabouts of the previous rocket force chief, Li Yuchao, and former Defence Minister Wei Fenghe, are currently unknown.
China economy slump pounds South Korean chip exports
Nikkei Asia
South Korean semiconductor shipments fell sharply in July, with chip shipments down 31.2% from the previous month and exports of electronic components dropping 22.7%. Semiconductors have become increasingly important in South Korea, accounting for around one-fifth of all exports. China is South Korea's largest trading partner, and the data raises concerns that a prolonged slowdown in China could worsen South Korea's already weak growth. South Korea's GDP grew 0.6% in Q2 2022, and the country's central bank has forecast growth of 1.4% for this year. To mitigate the impact of a drop in export demand from China, South Korean firms are being urged to find other markets for exports, and the government is being called on to support small- and medium-sized firms that depend on China. The government has announced plans to ease government spending while prioritizing fiscal soundness, but analysts believe that if President Yoon Suk Yeol comes under political pressure due to sluggish economic growth, he may have to increase fiscal spending to boost the economy.
Row with China over Fukushima release could shave 0.2% off Japan GDP -Daiwa
Reuters
Japan's decision to release treated radioactive water from the Fukushima nuclear power plant could have significant economic consequences. Estimates by Daiwa Institute of Research suggest that the row with China over the release could shave 0.2% off Japan's real GDP. If inbound tourism from China does not recover and there is a 20% drop in goods exports to China, Japan's GDP could shrink by 1.1%. Furthermore, China and Hong Kong have imposed bans on Japanese seafood products, which could further impact Japan's GDP. China is the biggest market for Japanese exports, with over 700 Japanese companies exporting about $600 million worth of aquatic products to China in 2022.
ASEAN's silence amid South China Sea confrontation is deafening
Nikkei Asia
China's harassment of Philippine naval vessels in the South China Sea has been met with condemnation from several governments, including Germany, Japan, Australia, and the US. The Philippines, which has visiting forces agreements with Washington and Canberra, is now pursuing a comparable pact with Tokyo. However, the Association of Southeast Asian Nations (ASEAN), which is supposed to be the main anchor of peace and security in the region, has been conspicuously quiet. The Philippines is frustrated with ASEAN's refusal to back the 2016 ruling by an arbitration court at The Hague in favor of Manila. Additionally, Manila is frustrated with the inconclusive decades of negotiations between ASEAN and China over a legally binding South China Sea code of conduct. China has repeatedly violated key provisions of the 2002 agreement, and leaks suggest that Beijing is only interested in a code that lacks legal teeth or gives it veto power over ASEAN states' initiatives. ASEAN's obsession with de facto unanimity has been a recipe for paralysis on geopolitical issues. ASEAN should support flexible, issue-specific cooperation among like-minded members and move away from a fixation with self-defeating formalities.
China issues highest warning as Typhoon Saola approaches
Deutsche Welle
Hong Kong and mainland China are preparing for the arrival of Typhoon Saola, which is expected to bring winds of over 200 kph (125 mph) to the southeastern coastline. Beijing has issued the highest typhoon warning and at least 121 passenger trains have suspended services. The typhoon is expected to make landfall in Guangzhou province on Friday afternoon or evening and is forecasted to be one of the five strongest typhoons to hit Guangzhou since 1949. Shenzhen city has suspended classes and upgraded its typhoon warning level. Hong Kong is also preparing for the powerful typhoon and the Hong Kong Observatory has urged residents to avoid water sports and coastal areas. The typhoon has already hit Taiwan and the Philippines causing floods and displacing thousands of people.
China says countries should see its national map in 'objective' way
Reuters
China's foreign ministry has called on other countries to view its 2023 edition of a standard national map in an "objective and rational" way. This comes after reports of protests from countries such as the Philippines, India, and Malaysia regarding the new map.
China's Great Wall Motor takes a bigger slice of Russian market
Nikkei Asia
China's largest SUV maker, Great Wall Motor, is expanding its market position in Russia, which has become the company's major profit generator amid weak growth at home. Great Wall reported that for the first six months of the year, operating profit of its wholly owned subsidiary Russia Haval Automobile Manufacturing was CNY1.36bn ($189m), topping the operating profit for the entire company. The surge in Russian sales helped Great Wall more than double non-China revenue to CNY20.66bn. Russian sales generated about 30% of the company's revenue, which was a 12.6% YoY increase.
China defence ministry: Military communication has not stopped with US
Reuters
China’s Ministry of Defence has stated that military communication between Beijing and Washington has not ceased, despite high tensions between the two countries. The ministry’s spokesperson, Wu Qian, acknowledged that there are many challenges in the China-US relationship but clarified that military-to-military communication is ongoing. This comes after China rejected a request for a meeting between US Defense Secretary Lloyd Austin and his Chinese counterpart Li Shangfu in June.
Baidu and SenseTime launch ChatGPT-style AI bots to the public
CNN
Chinese tech companies Baidu and SenseTime have launched their AI chatbot platforms, marking a new milestone in the global AI race. Baidu's ERNIE Bot is now available to the public, allowing users to conduct AI-powered searches and carry out various tasks. SenseTime has also launched its SenseChat platform, offering a range of features including code writing, debugging and virtual health consultation. Baidu's shares rose 4.7% in Hong Kong following the news, while SenseTime shares surged 4%. Baidu is among the first companies in China to gain regulatory approval for this type of service and the first to launch it publicly.
US approves military aid for Taiwan under programme for sovereign states
Al Jazeera
The United States has approved military aid to Taiwan under a programme usually used to help sovereign states in a move likely to anger China, which claims the self-ruled democratic island as its own territory. The Department of State informed Congress on Tuesday of the $80m package, which is modest in comparison with recent military sales to Taiwan but marks the first time Washington has provided assistance to Taipei under the Foreign Military Financing (FMF) programme, which generally involves grants or loans to sovereign countries.
UNC shooting suspect complained about professor online before attack
The Independent
A graduate student at the University of North Carolina at Chapel Hill has been arrested and charged with first-degree murder for fatally shooting his professor. Tailei Qi, a PhD student majoring in applied physical sciences, complained about the victim, Zijie Yan, on social media in the lead-up to the attack. The motive for the shooting remains unclear. In other posts, Qi also complained about hard work, "girls and tattletales," and bullies in the US. The shooting took place in one of the science buildings on campus, prompting a lockdown and a large police response. Videos posted on social media showed students hiding under desks and jumping out of windows to escape the active shooter situation. The campus was placed on lockdown for several hours before the suspect was taken into custody. This incident comes four years after a mass shooting at another UNC campus in Charlotte, where two people were killed and four injured.
China State Media Declares Huawei Phone a Victory in US Tech War
Bloomberg
Chinese state media, including the Beijing-backed Global Times, hailed Huawei's new smartphone, the Mate 60 Pro, as a technological marvel that delivered a victory over US sanctions. The timing of the smartphone's release, during US Commerce Secretary Gina Raimondo's visit to Beijing, was seen by many in China as deliberate. Chinese nationalists, who have rallied around Huawei, praised the smartphone and accused US officials of fabricating reasons for blacklisting Chinese firms.
HK’s London Trade Office Defaced as UK Seeks Detente With China
Bloomberg
The Hong Kong government has condemned the vandalism of its trade office in London as an act of rebellion by foreign forces. The vandalism involved offensive language being sprayed on the entrance of the office and defacing the regional emblem of Hong Kong. The incident occurred ahead of talks between UK and Chinese officials aimed at repairing their strained relationship. Hong Kong officials have accused overseas actors of attempting to cause chaos and disruption in Hong Kong and have vowed legal action. Last month, Hong Kong placed bounties on the heads of eight democracy activists living abroad.
New China Map Draws Another Rejection, This Time From Manila
Bloomberg
The Philippines has rejected China's latest map showing its claims in the South China Sea, stating that it has no basis under international law. This follows similar moves by Malaysia and India, who also refuse to recognize China's unilateral claims. China releases different maps annually as part of an educational effort, according to its Ministry of Foreign Affairs. The Philippines called on China to act responsibly and abide by its obligations under international law. Tensions between the Philippines and China have been escalating recently, with protests over encounters in contested waters.
China, former Taiwan ally Nicaragua sign wide-ranging free trade deal
Reuters
China and Nicaragua have signed a free trade agreement (FTA), marking a deepening of economic ties between the two countries since Nicaragua switched its allegiance from Taiwan to Beijing in 2021. The FTA covers various areas including customs, tariffs, financial services, and multilateral environmental deals. It is seen as a way to create a better business environment for companies from both countries. China has been increasing its economic influence in Latin America, traditionally a region that depends more on the US for trade. Nicaragua is one of the poorest countries in the region.
Julie Bishop heads to Beijing for ‘back-channel’ diplomatic mission
The Sydney Morning Herald
Former Australian Foreign Affairs Minister Julie Bishop will travel to China next week on a diplomatic mission aimed at stabilising relations between the two countries. The visit is part of the Albanese government’s efforts to improve relations with China, Australia’s biggest trading partner. The trip will precede a possible meeting between Prime Minister Anthony Albanese and Chinese President Xi Jinping on the sidelines of the G20 summit, as well as a planned visit by Albanese to China later this year. The visit comes after China lifted tariffs on Australian barley imports last month.
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