Ex-Bank of China chairman arrested on bribery charges; China prepares for Belt and Road summit in shadow of Israel-Gaza war
State buying of Chinese stocks will drive year-end rebound, Goldman predicts; What to watch for at Xi's meeting with Putin
Welcome to this issue of The China Brief. Today is October 16, 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.
India eyes a slice of China’s maritime trade with Adani’s new mega port
South China Morning Post
The Vizhinjam transshipment container port in India has opened, allowing the country to compete with China in international maritime trade. The Vizhinjam port, developed by Adani Ports and Special Economic Zone, is strategically located near international shipping routes and has a natural channel deep enough to accommodate some of the world's biggest ships. Until now, such ships had to dock at ports in Colombo, Dubai, and Singapore due to the lack of deep harbours in India. The Vizhinjam port will reduce logistics costs for cargo coming to and from India, bolstering the country's aspirations to be an alternative manufacturing hub.
Ex-Bank of China chairman arrested on bribery charges
Al Jazeera
Liu Liange, the former chairman of the Bank of China, has been arrested on charges of corruption. Liu is suspected of bribery and providing illegal loans. His case has been transferred to the procuratorate for review and prosecution. Liu was expelled from the Chinese Communist Party last week following accusations of wrongdoing by the country's anti-corruption watchdog. President Xi Jinping has been leading a campaign against corruption since coming to power in 2012. Critics have accused him of using corruption charges to target his political rivals.
China prepares for Belt and Road summit in shadow of Israel-Gaza war
Al Jazeera
China is hosting a forum on its Belt and Road Initiative (BRI), with representatives from 130 countries attending. However, the ongoing conflicts in Gaza and Ukraine are likely to overshadow the event. Russia's President Vladimir Putin, who is attending the forum, is making his first trip to a major global power since the Ukraine invasion and subsequent international isolation. The ongoing conflict in Gaza has been condemned by China's Foreign Minister Wang Yi, who has called for an end to the violence. However, Western officials have criticised China for not specifically naming Hamas in its statements on the conflict.
What to watch for at Xi's meeting with Putin
Reuters
Russian President Vladimir Putin will travel to China to meet Chinese President Xi Jinping. Here are five things to watch for at the meeting:
1. Defence bosses: China watchers will be looking at who takes the lead in any talks with Russian military officials on cooperation, especially as China seeks to modernize its military forces.
2. Weapons for war: China has refrained from condemning Russia's operation against Ukraine, and the US has warned against China sending weapons to Russia.
3. Best friends: Putin and Xi have a close friendship and have celebrated each other's birthdays together. Xi has called Putin his "best friend" and awarded him a friendship medal.
4. Oil and gas: Russian energy giants Gazprom and Rosneft will join Putin's retinue during the visit, as Russia seeks to secure a deal to sell more natural gas to China and build the Power of Siberia-2 pipeline.
5. Soaring trade: Trade between Russia and China has surged, with Russia becoming China's second largest trade partner outside Asia. Trade is expected to rise to over $200 billion in 2023.
Palestinian Envoy Urges China to Help End Israel-Hamas War
Bloomberg
The Palestinian envoy to China has called on Beijing to play a role in ending the war in the Gaza Strip. The envoy cited moves currently underway by Western officials to prevent further escalation of the conflict and called on China to join these efforts. The US and its allies are also working to prevent further escalation, with President Joe Biden considering a trip to Israel and Secretary of State Antony Blinken planning to return to the country for a second time. The Israeli ambassador to China has previously called on Beijing to use its relationship with Iran to rein in Hamas. The envoy downplayed the role of Iran and suggested that the problem lies within Palestine and Israel. China has close relations with Iran and has previously helped broker diplomatic detente between Iran and Saudi Arabia.
Israel-Gaza war: Wang Yi says Beijing supports Islamic nations’ unity
South China Morning Post
China's Foreign Minister Wang Yi has expressed his support for Islamic countries in strengthening unity and cooperation on the Palestinian issue. Wang condemned excessive exercising of the right to self-defence and called on the international community to act against any party that harms innocent civilians. He also called for a ceasefire and resumption of dialogue between the two parties in the conflict, as well as the opening of humanitarian aid routes to Gaza. Wang reiterated China's support for an independent Palestinian state and said China would provide emergency humanitarian assistance to the Gaza Strip.
Two brokers with mainland ties apply for Hong Kong crypto license
Nikkei Asia
Two cryptocurrency platforms, Yax and PantherTrade, are preparing to apply for retail trading licenses in Hong Kong, according to unnamed sources. Yax is linked to UP Fintech Holding, while PantherTrade is said to have ties to Futu, a firm backed by Chinese tech giant Tencent. The two platforms have previously been scrutinised by Chinese financial regulators for helping mainland customers invest in offshore assets. The licences would allow the platforms to operate cryptocurrency exchanges for retail customers, an activity that is banned in mainland China.
Xi’s $1 trillion ‘project of the century’ faces uncertain future
Japan Times
The future of China's Belt and Road Initiative (BRI) is uncertain as the project faces challenges and criticism. While the BRI has attracted $1 trillion in investment in its first decade, activity has declined in recent years as China's economy slows down. Beijing has also faced accusations of irresponsible lending and driving countries to default. The project has also become more divisive due to fractured ties with the US, with Italy set to exit the BRI by the end of the year.
China ramps up liquidity support to banking system
Reuters
China's central bank, the People's Bank of China (PBOC), has injected liquidity into the banking system by rolling over medium-term policy loans. The PBOC conducted medium-term lending facility operations worth CNY789bn ($108bn), with CNY500bn worth of loans maturing. This has resulted in a net injection of CNY289bn into the banking system. The PBOC kept the interest rate on the one-year policy loans unchanged at 2.5%. This comes amid concerns about the risk of further sharp declines in the yuan and expectations of higher US rates. Analysts expect China's monetary policy to remain dovish in the near-term, with further rate cuts and a cut to the reserve requirement ratio forecasted.
Russia follows China in suspending Japanese seafood imports
Japan Times
Russia has announced that it is suspending all imports of Japanese seafood, following in the footsteps of China. The move comes as a response to Japan's release of treated wastewater from the Fukushima No. 1 nuclear power plant. Russia's agricultural regulation body, Rosselkhoznadzor, stated that it was implementing these restrictions as a precautionary measure until it receives sufficient information confirming the safety of seafood produce from Japan. The suspension of imports will begin on October 16, 2023.
Xi’s Crackdown on Finance Hits Two-Year Mark With No Letup
Bloomberg
China's crackdown on corruption in the finance industry continues as more high-profile individuals are detained and arrested. The former party chief and chairman of Bank of China, Liu Liange, has been arrested, along with other finance professionals and regulators. At least 108 financial officials and executives have been probed or punished this year, according to government statements. This intensified crackdown on corruption is a signature issue for President Xi Jinping and has brought down over 1.5 million government officials since he took power. The government has urged the financial sector to clean up their lifestyles and serve the struggling economy.
State buying of Chinese stocks will drive year-end rebound, Goldman predicts
South China Morning Post
The Chinese government has increased its buying of domestic stocks in an attempt to revive the struggling market; a strategy that Goldman Sachs believes will lead to a rebound in equities for the rest of the year. Goldman Sachs came to this conclusion based on indicators such as the trading patterns of key holdings by state-linked entities and inflows into selected index-based exchange-traded funds (ETFs).
Philippines accuses China of ‘dangerous manoeuvres’ in South China Sea
Al Jazeera
The Philippines has accused China of dangerous manoeuvres in the South China Sea after a Chinese navy ship tried to cross the path of a Philippine navy vessel. The incident took place on 13 October near Thitu Island, occupied by the Philippines but also claimed by China. The Chinese ship shadowed the Philippine vessel before attempting to cross in front of it at a distance of 320 metres (350 yards). The countries have had several encounters in the disputed waters. The Permanent Court of Arbitration in The Hague ruled in 2016 that China’s South China Sea claim had no legal basis.
China Got a Big Contract. Nepal Got Debt and a Pricey Airport.
NY Times
The construction of an international airport in Pokhara, Nepal, funded and built by China, has left the country in debt and facing poor-quality infrastructure. The expensive airport, built by Chinese companies and financed by Beijing, has been hailed as a diplomatic victory for China, but it has been an economic burden for Nepal. The airport, part of China's Belt and Road Initiative, has faced criticism for costly and substandard construction that leaves borrower nations in debt. The New York Times investigation found that China CAMC Engineering, the company responsible for building the airport, dictated business terms to maximize profits and dismantle Nepali oversight of its work. The Chinese firm also inflated the cost of the project, leaving Nepal with a significant amount of debt and no necessary passengers to repay the loans.
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