Evergrande detention ‘a signal Beijing won’t let super-rich off the hook’;Data could let Xi loosen grip on China's economy but keep control
Japan to provide ¥192 billion in extra aid to U.S. chipmaker Micron; Crisis-hit Evergrande shares jump in market return
Welcome to this issue of The China Brief. Today is October 3, 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.
Evergrande detention ‘a signal Beijing won’t let super-rich off the hook’
South China Morning Post
Hui Ka-yan, founder of troubled property developer China Evergrande Group, has been detained and placed under investigation for suspected crimes. Analysts have indicated that the Chinese government's move against Hui despite the potential impact on private sector confidence reflects concerns over the impact of the super-rich on China's financial and social stability. Evergrande, the world's most indebted developer, has already filed for bankruptcy protection in the US.
Data could let Xi loosen grip on China's economy but keep control
Nikkei Asia
Data is central to China's strategy to outcompete the US in their contest for technological supremacy. The Chinese government believes that a data-driven digital economy will eventually facilitate a bigger role for market forces, rather than central planners, in allocating capital and other resources, boosting efficiency, productivity, and growth. China's fearsome security apparatus allows it to gather data at will, and the government can use enhanced surveillance methods to maintain social stability. However, the digitalization of everyday life also has the potential to free up parts of the economy previously sheltered from market forces.
Japan to provide ¥192 billion in extra aid to U.S. chipmaker Micron
Japan Times
Japan will provide up to ¥192 billion ($1.3 billion) in additional subsidies for Micron Technology's plant in Hiroshima Prefecture. This comes on top of the up to ¥46.5 billion aid announced earlier, as Japan aims to strengthen its chip supply chain and ensure a stable supply of chips amidst rising tensions between the US and China. Micron plans to invest up to ¥500 billion in Japan in the next few years and will become the first chipmaker to introduce extreme ultraviolet lithography machines in Japan.
Evergrande shares soar as trading in crisis-hit firm resumes
Guardian
Shares in Chinese property developer Evergrande surged after trading resumed in Hong Kong following a suspension last week. The stock jumped more than 40% early on before settling at around 20% higher. Evergrande, China's biggest property developer, has been struggling under a $300bn debt mountain and defaulted on its offshore debts in late 2021. Last week, the company's main division, Hengda Real Estate, defaulted on 4bn yuan (£457m) of debt and said it was unable to sell new debt due to an investigation. Some analysts believe the debt restructuring plan is likely to fail and the risks of the company being liquidated are increasing.
As invasion fears rise, China hones Taiwan blockade strategy
Japan Times
China is reportedly refining a strategy to block Taiwan from the outside world and keep potential military partners at bay. The People's Liberation Army has been conducting military exercises near Taiwan, including long-range deployments in the Pacific, which suggest that Beijing is preparing for a blockade rather than an invasion. Experts believe that China has the capabilities to conduct an aerial and naval blockade, based on its military capabilities, force structure, and previous exercises.
Putin may soon say he will run in Russia's 2024 election - Kommersant
Reuters
Russian President Vladimir Putin may announce his intention to run in the 2024 presidential election, according to Russian newspaper Kommersant. The report suggests that Putin may make the announcement at a conference in November, although it is unclear whether he will run or not. Putin has been in power longer than any other Russian leader since Josef Stalin, and many expect him to stay in power for life. However, there has been no official confirmation of his plans for the 2024 presidential vote. Putin has faced a number of challenges during his time in power, including the war in Ukraine and a failed mutiny by a powerful mercenary.
EU seeks to protect sensitive tech from Chinese buyers
Japan Times
The European Union (EU) is set to release a list of sensitive technologies that it believes should be kept out of the hands of China. The move is part of the EU's effort to counter China's aggressive trade policies and protect its own security, interests, and human rights. The list of critical technologies will outline specific areas that Europe must not make easily available to countries that pose a threat to the EU.
China’s ‘extraordinary’ Chang’e 5 lunar mission wins award for its team
South China Morning Post
China's Chang'e 5 lunar mission team has been awarded the International Academy of Astronautics' highest group award, the Laurels for Team Achievements prize. The mission, which returned to Earth in 2020 with the world's first lunar samples in over 40 years, was praised for its outstanding contributions to human lunar and deep space exploration. The team's chief designer, Hu Hao, highlighted the importance of international cooperation in the mission's success and paid tribute to the European Space Agency's support. The Chinese space agency is now inviting research units to study the lunar samples.
China’s top PE firm seeks stronger ties with Middle East in hard tech, EVs
South China Morning Post
Hermitage Capital, China's top private equity firm, is in talks with sovereign wealth funds and investment authorities in the Middle East to set up a private equity fund focused on the hard tech and electric vehicle sectors. The firm is looking to help Chinese and global portfolio companies expand into the Middle East, with a focus on Saudi Arabia. Saudi Arabia's high consumption per capita and neutral political stance towards China make it an appealing market, and the country is rapidly building a tech-driven start-up community as it seeks to reduce its dependence on fossil fuels.
India police search journalists' homes and offices in the country's latest raids on media
The Toronto Star
Indian police have raided the offices of news website NewsClick as part of an investigation into allegations of receiving funds from China. The raids were criticised by observers as an attack on one of India's few remaining independent news outlets. NewsClick, founded in 2009, is known for being critical of Prime Minister Narendra Modi and his government. The case against the website and its journalists was filed under an anti-terrorism law that has previously been used against journalists and critics of Modi. No arrests have been made so far.
Apple enforces new check on apps in China as Beijing tightens oversight
Reuters
Apple is now requiring new apps to provide proof of a Chinese government license before they can be released on the China App Store. This move aligns Apple with local rivals who have been following this policy for years to meet tightening state regulations. The license, called an "internet content provider (ICP) filing," is a registration system required for websites to operate legally in China. Most local app stores have adopted this requirement since 2017. To obtain an ICP filing license, developers must have a company in China or work with a local publisher, which has been a challenge for foreign apps. Apple's previous loose ICP policy allowed it to offer more mobile apps than local rivals and boosted its popularity in China. However, the Chinese government released a new rule in August that tightened oversight over mobile apps, requiring app stores and developers to submit an "app filing" with business details. Apple's compliance status could affect the accessibility of hundreds of thousands of apps on its App Store in China, including popular foreign apps like X (formerly known as Twitter) and Telegram. Apple has not commented on the matter. Some developers have voiced concerns over Apple's decision, fearing that the company may further tighten rules to comply with China's regulations.
Assets seized in Singapore money laundering case now at $2 bln - minister
Reuters
Singapore has seized S$2.8bn ($2bn) in assets in a major money laundering case, with more arrests and seizures expected, said Second Minister for Home Affairs Josephine Teo. The operation was one of the city-state's largest anti-money laundering operations and had been on the radar of the police since 2021. The investigation was launched after suspicious transaction reports were filed by financial institutions. In August, authorities seized gold bars, designer handbags, jewellery, properties, and luxury cars. Teo dismissed rumours that the operation was due to pressure from Chinese authorities as "completely untrue".
China has reason not to let Evergrande rejig rot
Reuters BreakingViews
Evergrande's restructuring plan is in limbo, leaving creditors uncertain of their fate. The company has stated it is "not qualified" to issue new debts required to deliver on its restructuring plan. If Evergrande is forced into liquidation, unsecured offshore creditors could recover as little as 2% of their holdings. This situation raises questions about China's relationship with debt capital markets and whether Beijing still values overseas debt markets. Evergrande's restructuring process will set the tone for future deals in China.
Pavlou fined over ‘smart alec response to a reasonable request’
The Sydney Morning Herald
Anti-Chinese government activist Drew Pavlou has been fined more than $3,000 for illegal advertising after displaying placards about the Tiananmen Square massacre. Pavlou set up a table and placards near the Chinese consulate in Brisbane and displayed signs that said "Nothing happened on June 4, 1989. Change my mind." He was found guilty in court for failing to obtain consent for a regulated activity and not complying with a direction to cease from an authorised person. Pavlou's lawyer argued that his client's actions were protected under freedom of expression, but the court found that the council's laws fit the Human Rights Act's definition of a reasonable and justifiable exemption. Pavlou plans to appeal the verdict.
Taiwan's national day becomes polarizing celebration
Japan Times
Former Taiwanese President Ma Ying-jeou has announced that he will boycott official celebrations for Taiwan's national day this year. Ma accuses the current government of using the celebration as a way to promote independence, which he believes is inappropriate ahead of the upcoming general election in January. The issue of Taiwan's identity, particularly in relation to China, is a significant topic for Taiwanese voters. China claims Taiwan as its own territory and has previously threatened to use force to take control of the island.
China pulls the plug on West End-bound theatre production
The Sydney Morning Herald
Chinese authorities have disrupted a Mongolian theatre production that was set to open in London's West End. The production, titled "The Mongol Khan," was approved to perform in China's Inner Mongolia region but was shut down shortly before it was due to start. The cast and crew have faced constant surveillance and have been prevented from rehearsing, performing, or returning home. This incident follows growing restrictions on Mongolian culture in China, with activists claiming that Beijing is assimilating the Mongolian population into the Han Chinese majority.
ByteDance’s valuation down 26 per cent in latest stock buy-back: report
South China Morning Post
ByteDance, the parent company of TikTok, is reportedly buying back shares from US employees at a valuation of $223.5 billion. This marks a 26% decrease from its valuation in a similar transaction a year ago. The company is looking to purchase at least $300 million worth of stock from current and former US employees. The move comes as several start-ups have seen a decrease in valuations due to the waning exuberance in the private investment market caused by the pandemic. Additionally, TikTok has been facing calls for a ban in the US over concerns about potential Chinese government influence.
Crisis-hit Evergrande shares jump in market return
BBC
Shares in Chinese real estate giant Evergrande have surged by over 40% as trading resumed in Hong Kong. The company had halted trading in its shares last week as it confirmed its default on debts in 2021, which triggered a property crisis in China. Evergrande's stock market valuation has fallen by almost 99% since July 2020, with shares now worth around $0.05 each. The company is struggling under the weight of over $300bn of debt and recently revealed that its flagship Chinese business had failed to make coupon payments on its offshore bonds.
US and Philippines launch military drills with partners as China tensions mount
CNN
The US has launched two weeks of multilateral exercises with its Philippine allies and other international partners in the South China Sea. Maritime Training Activity Sama Sama 2023 is the seventh and largest iteration of the drills. Participants include Australia, Canada, France, Japan, the UK and Malaysia. The exercises off the Philippine coast will include drills on anti-submarine, surface and air warfare as well as land phases. Stability in the region is seen as increasingly threatened by confrontations between Chinese coast guard and maritime militia units and Philippine vessels around disputed features in the South China Sea.
China is the elephant in the room for the US
The Sydney Morning Herald
The US Federal Reserve has so far shown little concern over the economic slowdown in China, but that could change if the situation worsens, according to Bloomberg. The central bank has been cautious in its approach to international economic conditions, focusing primarily on domestic factors such as employment and inflation. While the Fed has previously adjusted its stance in response to global crises, including the Asian financial crisis and the European debt crisis, it currently sees no immediate crisis to warrant a change in strategy. However, China's economic problems are likely to have a global impact due to its position as a major player in the world's commercial and financial ecosystem. If the situation in China deteriorates further, the Fed may be forced to reassess its position, especially if inflation continues to fall. However, for now, the central bank is unlikely to focus on China in its deliberations, as any mention of the country would be difficult to justify to US lawmakers, who are increasingly opposed to all things China.
Hong Kong stocks sink most in three months amid China property woes, US rate worries
CNN
Hong Kong stocks have fallen by 3%, the biggest drop since June, as investors returned to the market after a long holiday weekend in China. The Hang Seng Index is down 12% this year, making it one of the world’s worst-performing stock indices. Investors are concerned about China’s economic slowdown, a slump in the property market, and tensions between Beijing and Washington. The slump in Hong Kong stocks comes after China’s 100 largest developers reported a fourth consecutive month of declines in property sales.
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