Israeli Embassy diplomat stabbed in Beijing；Taiwan opposition parties to discuss joint ticket for presidential election
China’s Economy Remains Shaky After Challenging Summer; India accuses Chinese smartphone giant Vivo of visa violations and tax evasion; With purges of top officials, is China’s Xi in trouble? Hardly.
Welcome to this issue of The China Brief. Today is October 13, 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.
Israeli Embassy staffer assaulted in Beijing, Tel Aviv says
Nikkei Asia
A staff member at the Israeli Embassy in Beijing has been assaulted, the Israeli foreign ministry has said. The person is in a stable condition and receiving treatment in hospital. The attack did not take place within the embassy compound, but an investigation is currently underway.
China’s Economy Remains Shaky After Challenging Summer
WSJ
Concerns about China's economic outlook have resurfaced after recent data showed lackluster inflation and declining trade numbers. Consumer prices in China unexpectedly remained flat in September, indicating weak demand and suggesting limited impact from Beijing's attempts to stabilize the economy. Outbound shipments also continued to contract, although at a slower pace than in August. These data points highlight the challenges facing China's economy, including a prolonged property crisis, weak consumer spending, and cooling demand for Chinese goods from overseas. The International Monetary Fund has lowered its growth forecast for China for this year and next, which has also prompted a downward revision in its global growth forecast. Economists warn that the real challenge for China's economy will come in the next year or so, particularly as it tries to fend off a deflationary spiral. While some economists expect deflationary pressures to dissipate over time, others believe the measures taken by Beijing, such as interest rate cuts and easing measures, are too piecemeal to have a lasting impact on confidence and economic recovery.
India accuses Chinese smartphone giant Vivo of visa violations and tax evasion
South China Morning Post
Many employees of Chinese smartphone company Vivo and its Indian affiliates concealed their employment when seeking visas, and some breached rules by visiting Jammu and Kashmir, India’s financial crime agency has said. This follows the arrest of Vivo executive Guangwen Kuang in a money laundering investigation in India. At least 30 Chinese individuals entered India on business visas and worked as Vivo employees, but their application forms “never disclosed” that the firm was their employer, the country’s Enforcement Directorate said in the filing.
Vanguard invests in Chinese military-linked companies: report
Nikkei Asia
Vanguard, one of the world's largest index fund managers, has invested in Chinese companies linked to the country's military and those that have been sanctioned by the US government, according to a report by the Coalition for a Prosperous America. The $98.7bn Vanguard FTSE Emerging Markets exchange-traded fund has invested in the subsidiaries of 60 firms that make up China's military industrial complex. The report accused Vanguard and index provider FTSE Russell of being part of the problem, saying the fund's investments in A-shares had made it "a de facto business partner of the China Communist Party".
China Appears to Have Repatriated North Koreans Despite International Pressure
WSJ
China has repatriated a large number of North Koreans this week, despite international pressure given the harsh punishment likely faced by those who return to North Korea. Fleeing the country is punishable by hard labor, imprisonment in re-education camps, or even execution. Ties between Beijing and Pyongyang have grown stronger in recent years, with the two Communist nations pledging deeper coordination and sharing their dissatisfaction with the US and its allies.
With purges of top officials, is China’s Xi in trouble? Hardly.
Japan Times
The recent purge of two high-profile loyalists in Xi Jinping's government has led to speculation about his grip on power and decision-making. However, experts argue that the lack of transparency and predictability in China does not necessarily mean tough times ahead for Xi.
China’s Export Slump Eases as Beijing Tries to Boost Outlook
Yahoo US
China's exports fell by 6.2% YoY in September to $299bn, a slower rate than the 8% decline forecast by economists. The drop helped to ease concerns that global demand for Chinese-made goods is slowing down while the country faces a property crisis and weak consumer spending.
Taiwan opposition parties to discuss joint ticket for presidential election
South China Morning Post
Taiwan's two opposition parties are considering forming an alliance in the upcoming presidential election. None of their candidates are able to single-handedly take on front-runner William Lai Ching-te, who is Taiwan's Vice-President and the presidential candidate of the ruling Democratic Progressive Party. New Taipei Mayor Hou Yu-ih of the Kuomintang and Ko Wen-je, head of the smaller Taiwan People's Party, are trailing Lai by at least 6 to 15 percentage points in various opinion polls. The two opposition parties have agreed to hold a meeting to discuss how they might form a joint ticket, including holding debates and comparing their standings in opinion polls to determine who should be the presidential candidate and the running mate. However, analysts have said it will be difficult for the two parties to form an alliance given their differing views on key issues, the sizes of their parties and voters' expectations. Taiwanese voters will head to the polls in January.
China's Didi plans 2024 Hong Kong listing - Bloomberg News
Reuters
China's ride-hailing giant, Didi Global, is reportedly planning to list its shares on the Hong Kong Stock Exchange next year. This comes after the company was delisted from the New York Stock Exchange in December 2021 following an investigation by Chinese regulators. Didi's listing in the US had raised concerns about national security and public interest.
EU's Borrell warns trade trust with China 'eroded'
Deutsche Welle
The European Union's foreign policy head, Josep Borrell, has warned that a trade imbalance between the EU and China has severely damaged trust between the two entities. Borrell stated that if the issue is not addressed, Europe's efforts to reduce its dependence on China may accelerate, a scenario that would not be beneficial. He emphasized that trust needs to be rebuilt and highlighted the trade imbalance of €400 billion ($423 billion) as a key issue. Borrell argued that European companies face difficulties when trying to access the Chinese market, which creates an imbalance in economic and trade relations. He also warned that if the situation is not resolved, public opinion may pressure political leaders to disengage from China. The EU recently launched an anti-subsidy investigation into Chinese electric vehicle imports, which was criticized by Beijing. The trade deficit between the EU and China, as well as China's close relations with Russia after its invasion of Ukraine, have become contentious issues. Despite their differences, both sides are interested in resuming dialogue in the aftermath of the COVID-19 pandemic and amid growing geopolitical tensions.
Country Garden Co-Founder Makes Rare Appearance Amid Debt Woes
Bloomberg
Yeung Kwok Keung, co-founder of Country Garden Holdings, made a rare public appearance at one of the firm's construction sites in Foshan city. The move is seen as a sign of support for the struggling Chinese developer, which is grappling with potential default and debt restructuring. Yeung resigned as chairman in March and passed the role to his daughter, Yang Huiyan. Concerns have mounted over the billionaire family's willingness to help the company, but Yeung's visit and reported sale of a private jet suggest continued commitment to Country Garden.
US eyes more AI chip curbs on Chinese companies to close loophole
South China Morning Post
The Biden administration is reportedly considering closing a loophole that allows Chinese companies to access American AI chips through overseas units. Last year, the US imposed restrictions on shipments of AI chips and chipmaking tools to China, but left overseas subsidiaries of Chinese companies with unfettered access to the same semiconductors. The loophole has allowed Chinese firms to purchase the chips from vendors in Shenzhen. Closing the loophole is part of the US government's efforts to cut China off from top AI technology, but experts say it is difficult to police these transactions and access to chips located at foreign subsidiaries remotely is legal.
Exclusive: Banks assess China risks after being stung by Russia sanctions
Reuters
UK banks are preparing for the possibility of future Western sanctions on China. Lessons learned from other sanctions frameworks, such as those on Russia, are being shared, and discussions are taking place on the potential impact of any measures imposed on China. The project by UK Finance focuses on asset ownership transparency and supply chains in high-risk sectors including technology. While geopolitical tensions between China and the West are not expected to change immediately, contingency plans are being developed by banks.
US must be ready for simultaneous wars with China, Russia: Commission
Al Jazeera
A congressional commission evaluating the US’s strategic posture has called for the country to enhance its military modernisation to ensure readiness for the possibility of simultaneous wars with China and Russia. The bipartisan panel of six Democrats and six Republicans recommended urgent action to address the threats facing the US, including the modernisation of both conventional and nuclear forces. The commission noted that the risk of military conflict with Russia and China had grown, increasing the risk of nuclear use. The report also called for enhancements to the conventional forces of the US and its allies.
Biden eyes adding AI chip curbs to Chinese companies abroad
Japan Times
The Biden administration is considering closing a loophole that allows Chinese companies to access American AI chips through overseas units, according to anonymous sources. Last year, the US imposed restrictions on shipments of AI chips and chipmaking tools to China, aimed at curbing its military advancements. The Biden administration is now looking to tighten those rules and potentially include measures to prevent overseas subsidiaries of Chinese companies from accessing the same semiconductors. This loophole currently allows the chips to be smuggled into China or accessed remotely by China-based users.
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