One Reason China Is Willing to Engage Again: Its Troubled Economy; Kerry Says U.S. and China Must Set Aside Politics to Tackle Climate Change
Xi Jinping has a Russian albatross around his neck; China youth unemployment hits high as growth falters; House Committee Targets U.C. Berkeley Program for China Ties
Welcome to this issue of The China Brief. Today is July 17, 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.
One Reason China Is Willing to Engage Again: Its Troubled Economy
NY Times
China's economy is faltering, and this may be changing the country's approach to diplomacy. The annual pace of growth in China's economy fell to just over 3% in the spring, below the government's target. In response, China has been engaging in dialogue with geopolitical rivals and showing more openness on economic policy. This shift in tone is particularly noticeable in relations with the United States, as the two countries have welcomed senior officials from each other's governments and started discussions on various issues. China has also been on a charm offensive with domestic and international business leaders. However, analysts note that any softening in approach is limited to economic or business policies and does not involve China's national security. Additionally, there are few signs that China's top leader, Xi Jinping, has endorsed a broad policy shift towards the US. Despite the economic troubles, China's economic vitality remains undiminished, according to a Chinese foreign ministry spokeswoman.
Hong Kong and Macao brace as Typhoon Talim heads for China coast
The Independent
Hong Kong and Macao have been hit by Typhoon Talim, with Hong Kong issuing a No 8 typhoon signal, the third-highest warning level, and Macao issuing a state of immediate prevention. Schools have been shut and ferry services halted, while the Hong Kong Observatory said it could downgrade the No 8 signal to No 3. The typhoon is expected to make landfall in southern China, leading the China Meteorological Administration to issue an orange alert. At least 16 flights in Hong Kong were cancelled, with a further six delayed.
House Committee Targets U.C. Berkeley Program for China Ties
NY Times
A Congressional committee has voiced concerns that a research partnership between the University of California, Berkeley and several Chinese entities could give the Chinese government an economic, technological or military advantage. The Tsinghua-Berkeley Shenzhen Institute, set up in 2014, was highlighted for its research into “dual-use technologies” that are used by both civilian and military institutions, such as semiconductors and imaging technology. The committee also questioned whether the university had properly disclosed Chinese funding for the institute and the fact it had worked with Chinese firms subject to US sanctions.
Extreme weather threatens best-kept art of the Silk Road
The Sydney Morning Herald
Climate change is threatening ancient Silk Road cave murals and statues in north-west China, according to a report by Greenpeace. The research found that Buddhist artwork in caves across Gansu province is at risk due to changing weather patterns. Rising temperatures, increased rainfall, and more frequent and intense downpours are causing damage to the murals and sculptures. The Mogao Caves, a UNESCO World Heritage site, are particularly affected. The frequent heavy rain is pushing humidity levels above safe thresholds for preservation, causing the murals to deteriorate more quickly. The paintings and sculptures provide important clues about the ancient Silk Road and have significant historical value. The threat to cultural heritage from extreme weather has only recently entered China’s climate debate. Efforts to protect the Gansu grottoes have been ongoing for decades, but the changing climate is making conservation more difficult. The Dunhuang caves have benefited from long-term collaborations between experts and the Dunhuang Academy. However, many other historical sites across China are less prepared to respond to climate change.
Kerry Says U.S. and China Must Set Aside Politics to Tackle Climate Change
NY Times
US climate envoy John Kerry has warned that the US and China are running out of time to tackle global warming. Speaking at the resumption of climate talks between the two countries, Kerry called on China to curb the expansion of its coal-fired power plants and urged urgent action to reduce greenhouse gas emissions. The talks mark the first substantive discussions on climate change between the US and China since August 2020. While both sides called for cooperation, tensions remain between the two countries over emissions reduction targets. China has pledged to peak its emissions by 2030 and be carbon neutral by 2060.
China youth unemployment hits high as growth falters
BBC
Youth unemployment in China has reached a record high as the country's economic recovery from the pandemic slows down. The jobless rate for 16 to 24 year olds in urban areas rose to 21.3% in July, according to official figures. This comes as China's economy grew by just 0.8% in the second quarter, falling short of analysts' expectations. The weak pace of growth has led to expectations that Chinese authorities may introduce new measures to boost the economy. Youth employment is a key concern as a record number of university graduates are expected to enter the job market this year.
John Kerry hails China’s ‘incredible’ renewables, warns against coal
Washington Post
US special climate envoy John F. Kerry has praised China's renewable energy expansion while urging the country to stop building coal-fired power plants. Kerry's arrival in Beijing comes after similar trips by Treasury Secretary Janet L. Yellen and Secretary of State Antony Blinken, raising hopes of improved bilateral relations. Climate is an area where both countries have a shared interest. China has vastly expanded its use of solar and wind power in a bid to peak carbon dioxide emissions before 2030 and reach "carbon neutrality" by 2060, but progress on phasing out coal has been slow.
One-way easing of U.S.-China tensions does not help much
Nikkei Asia
China should reciprocate the recent high-level outreach from the US by taking concrete action in areas of mutual interest, such as climate change, according to Brian P. Klein, founder of geopolitical consultancy RidgePointGlobal. While US officials including Secretary of State Antony Blinken and US Treasury Secretary Janet Yellen have visited Beijing, there has been little sign of progress. However, Klein argues that the two countries could potentially cooperate on a global fund for decarbonisation and establishing criteria for carbon credits, among other initiatives.
Solomon Islands leader hits back at criticism of deepening security ties with China
The Toronto Star
The Prime Minister of the Solomon Islands, Manasseh Sogavare, has defended the country's security ties with China against criticism from the United States and Australia. Sogavare signed nine agreements and memorandums during a visit to China, including a police cooperation plan. The new agreements follow a security pact signed between the Solomon Islands and China last year, which raised concerns about a military buildup in the region. Both the US and Australia have expressed concerns about the lack of transparency surrounding the police plan. Sogavare accused the US and Australia of interfering in the internal affairs of the Solomon Islands.
Taiwan reports record number of Chinese warships in waters around the island
CNN
A record 16 Chinese warships were spotted in waters around Taiwan in a 24-hour period late last week, the island’s Defense Ministry reported, in what analysts said was the latest sign of an intimidation campaign against Taipei by China’s ruling Communist Party. The People’s Liberation Army Navy (PLAN) activity in the 24 hours ending at 6 a.m. local time Saturday followed exercises earlier last week that saw dozens of Chinese warplanes fly past the median line of the Taiwan Strait and into the key regions of Taiwan’s air defense identification zone (ADIZ).
China logs 52.2 Celsius temperature as extreme weather rewrites records
Japan Times
A remote township in China's Xinjiang region experienced temperatures of over 52 degrees Celsius, setting a new record for the country. This comes just six months after China battled temperatures as low as minus 50 degrees Celsius. The extreme heat has raised concerns about the country's ability to adapt to climate change. Prolonged periods of high temperatures have already challenged power grids and crops, and there are fears of a repeat of last year's severe drought. The target of limiting global warming to 1.5 degrees Celsius is also becoming increasingly out of reach. The United States and China are currently holding talks to discuss efforts to combat climate change.
The Treacherous Silicon Triangle
Foreign Affairs
The security of Taiwan and the security of the semiconductor supply chain are two major areas of risk in the U.S.-Chinese relationship. Taiwan is the largest producer of semiconductors, which are critical components in advanced communications tools and computers. The United States has fallen to fifth place in global chip manufacturing. The United States needs to ensure the security of the supply chain and the security of Taiwan. This requires building on partnerships and alliances to enhance the resilience of the supply chain while working with Taiwan to strengthen military and economic capabilities to deter aggression from China. The United States should also provide incentives for reshoring chip manufacturing and attract investment from friendly countries. Partnering with Taiwan offers opportunities for collaboration on technology and research and development. In addition, the United States must do more to deter a potential Chinese attack on Taiwan by providing effective weaponry and scaling up local production. The United States should also guard against China's ambitions in the semiconductor industry and implement measures to protect U.S. intellectual property and prevent Chinese dominance in certain segments of the market.
Algerian president in China to push bid to join BRICS group of emerging markets
RFI
Algeria is reportedly seeking to join the BRICS group, a loose alliance of emerging market states including Brazil, Russia, India, China and South Africa. The move comes as Algeria seeks to strengthen ties with China, while the EU and US are becoming increasingly hesitant to engage with Beijing. Algeria signed a "comprehensive strategic partnership agreement" with China in 2014 and has become an active partner in China's Belt and Road Initiative. Algeria's potential membership in BRICS could expand cooperation with other emerging markets. Last month, Ethiopia also expressed interest in joining the BRICS bloc.
China GDP up 6.3% in Q2, falling short of projections
Nikkei Asia
China's economy grew by 6.3% in the second quarter of 2022, driven by recoveries in retail sales and the service sector. However, the growth rate was lower than market forecasts and reflects a global slowdown and tepid domestic demand. Preliminary data showed a contraction in exports and imports, particularly with major trading partners such as the US, EU, and Southeast Asia. Confidence among businesses in China has also fallen, with hiring and investment plans being trimmed. The country's consumer price index posted zero growth in June, raising concerns about deflation. Overall, China's recovery momentum has softened in June, with modest growth in fixed-asset investment and retail sales. The government is forecasting growth of around 5% for the year, after the economy grew by 3% in 2020.
Sanctioned Chinese military giant’s U.S. business keeps growing
Japan Times
Cirrus Aircraft, a US-based aircraft manufacturer, has been owned by Chinese military manufacturer Aviation Industry Corp. of China (AVIC), a company that has been sanctioned by the US. Cirrus's main products are single-engine planes used by private citizens and charter services, but its technology and manufacturing expertise could be valuable to the Chinese military, according to aviation and Chinese military experts. Cirrus filed an IPO with the Hong Kong stock exchange in June. AVIC is the largest shareholder in Continental Aerospace Technologies Holding, which makes piston aircraft engines and components in Mobile, Alabama. Last year, Nexteer Automotive Group, an AVIC-affiliated maker of car parts based near Detroit, received over $25m in COVID relief funds from Michigan.
China is pushing AI. The world is watching
South China Morning Post
China's World Artificial Intelligence Conference (WAIC) took place earlier this month with a strong focus on the country's development of AI technologies. Notably, the conference had just one foreign sponsor, Qualcomm, highlighting the strained relations between US tech giants and China. Tesla CEO Elon Musk made an appearance at the conference and praised China's capabilities in AI, saying the country would excel in any area it focused on, including AI. Chinese tech firms showcased their own language model products at the event, indicating their progress in the field. However, questions have been raised about censorship potentially impeding China's development of generative AI. China is taking steps to regulate AI, with the introduction of detailed regulations on generative AI and the establishment of the China Electronics Standardisation Institute to establish large language model standards.
China's Q2 GDP growth slows to 0.8% q/q, raises stimulus expectations
Reuters
China's GDP grew by 0.8% in Q2 2022, according to data released by the National Bureau of Statistics. This is higher than the 0.5% increase expected by analysts, but significantly lower than the 2.2% expansion in Q1. On a year-on-year basis, China's GDP grew by 6.3% in Q2, below the forecast of 7.3%. The data highlights the weakening momentum in China's economy due to weakening demand at home and abroad. The disappointing GDP figures suggest that China's post-COVID boom is over, with the economic recovery faltering. The higher-frequency indicators still indicate a bleak and faltering recovery. The data also revealed disappointing consumption figures, with retail sales growth slowing down to 3.1% in June. The weak GDP figures confirm the dissipating reopening recovery momentum and the need for stimulus measures to reinvigorate the economy. The consensus is that China's economy remains on a weak footing, and further stimulus may be required to stabilize and restore confidence.
Ukraine grain deal in peril; ‘emergency’ on Crimean bridge as blasts reported
South China Morning Post
Ukraine's ability to export grain via the Black Sea is set to expire at midnight Istanbul time (2100 GMT) as the deal with Russia to enable the trade has not been renewed. The Black Sea Grain Initiative has facilitated the export of over 32 million tonnes of Ukrainian grain, with China and Turkey the main beneficiaries. Meanwhile, traffic has been halted on the Crimean Bridge, which links the Crimean peninsula to Russia, following an "emergency" situation. The bridge is a vital supply route for Russian soldiers in Ukraine.
Xi Jinping has a Russian albatross around his neck
Japan Times
The failed mutiny led by the Wagner Group against Russian President Vladimir Putin has weakened Russia's leadership and is becoming a military liability for China. China's "no limits" partnership with Russia is now a cause for concern as Russia's battlefield losses in Ukraine increase. While China has publicly dismissed the incident as an internal matter and reiterated its support for Russia, it is clear that China cannot ignore the growing intangible liabilities associated with its ties to Russia. China's military brass will be concerned about joint operations with Russia, given Russia's competing chains of command and constant reshuffling of generals. Furthermore, Russia's muddled decision-making is not confined to the battlefield, as evidenced by the military's tepid response to the attempted coup. The questionable integrity of Russia's chain of command may fundamentally change China's strategic calculus or global designs. However, for now, it seems that China cannot do without even a weakened and humiliated Putin.
Chinese scientists claim lead in race for viable biodegradable plastics
South China Morning Post
Chinese scientists claim to have developed a production line that makes biodegradable plastics a viable alternative to traditional plastics. The team from Jiangnan University and Hsuko New Materials collaborated to create a petroleum-based production line that synthesises succinic anhydride and succinic acid, the compounds used in biodegradable plastics. The team claimed a conversion rate for raw materials of 100% and a product selectivity of 99.59% for the project, which has a capacity of 10,000 tonnes of succinic anhydride per year.
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