Record low yields prompt suspension of government bond purchases by China’s central bank；New York’s Chinese Dissidents Thought He Was an Ally. He Was a Spy.
Outspoken economist Gao Shanwen leaves his Hong Kong financial firm
Welcome to this issue of The China Brief. Today is January 10, 2025. 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.
Record low yields prompt suspension of government bond purchases by China’s central bank
South China Morning Post
China's central bank, the People’s Bank of China (PBOC), has temporarily halted its open market purchases of government bonds to manage the bond market, following concerns over rising demand and record low bond yields. This suspension, effective Friday, aims to stabilize the government bond yields and support the renminbi exchange rate, as the gap between yields in China and the U.S. has widened. The PBOC's decision reflects its commitment to curbing aggressive bond trading practices, which have led to heavy fines for certain financial institutions. The yield on China's 10-year treasury bond fell to 1.64% after hitting a record low of 1.6% earlier this month. The PBOC indicated that bond purchases will resume at a suitable time based on market conditions.
https://www.scmp.com/economy/china-economy/article/3294282/record-low-yields-prompt-suspension-government-bond-purchases-chinas-central-bank?utm_source=rss_feed
New York’s Chinese Dissidents Thought He Was an Ally. He Was a Spy.
NY Times
Shujun Wang, a 76-year-old Chinese American scholar, faces trial for allegedly acting as an illegal agent for China while publicly supporting pro-democracy movements. After migrating to the U.S. in 1994, he became a prominent figure in the Chinese dissident community, organizing events against the Chinese Communist Party. However, federal investigators claim he was spying on these dissidents for China’s Ministry of State Security. The case highlights China's ongoing efforts to monitor and suppress dissent abroad, paralleling recent incidents of Chinese influence-peddling in the United States.
https://www.nytimes.com/2025/01/10/magazine/china-spy-dissidents-new-york.html
Tesla launches refreshed Model Y in China to fend off domestic rivals
CNBC
Tesla on Friday announced a revamped version of its popular Model Y in China, as the U.S. electric car giant looks to fend off challenges from domestic rivals.
The Model Y will start at 263,500 Chinese yuan ($35,935), with deliveries set to begin in March. A spokesperson for Tesla China said that the new Model Y is only open for pre-sale in the Chinese market, rather than being launched globally.
Tesla's Model Y refresh comes after the auto giant this month reported its first ever annual decline in overall deliveries for 2024.
Elon Musk's electric vehicle firm is facing heightened competition around the world, from startups and traditional carmakers in Europe. In China, the company continues to face an onslaught of rivals from BYD to newer players like Xpeng and Nio .
Tesla is offering a number of incentives for customers to buy the Model Y including a five-year 0% interest financing plan.
This story is being updated. Please check back for more.
https://www.cnbc.com/2025/01/10/tesla-launches-refreshed-model-y-in-china-to-fend-off-domestic-rivals.html
Hong Kong admits first patient via cross-border ambulance pilot scheme
South China Morning Post
A 67-year-old man with chronic bronchitis became the first patient transferred directly from Shenzhen to Hong Kong under a new pilot scheme aimed at enhancing collaboration within the Greater Bay Area. After stabilizing at the University of Hong Kong – Shenzhen Hospital, he was transferred to Tuen Mun Hospital, accompanied by medical staff. This one-year pilot allows non-emergency patients with specific needs to be directly transferred to Hong Kong hospitals, streamlining the process and improving patient safety. The initiative is part of a larger plan to integrate Hong Kong, Macau, and Guangdong cities into a cohesive economic hub.
https://www.scmp.com/news/hong-kong/health-environment/article/3294281/hong-kong-admits-first-patient-cross-border-ambulance-pilot-scheme?utm_source=rss_feed
Rescued from Myanmar, Chinese actor Wang Xing prepares to fly home
South China Morning Post
Chinese actor Wang Xing, also known as Xing Xing, is set to return to China after being kidnapped near the Thailand-Myanmar border as part of a human trafficking scheme. Wang lost contact with friends and family shortly after arriving in Bangkok on January 3, when he was allegedly lured to Thailand under false pretenses of acting in a film. His girlfriend sought help from the Chinese embassy and reported him missing. Wang was eventually located by Thai immigration authorities after crossing into Myanmar, where he realized he had been kidnapped. His ordeal has sparked discussions on social media about similar cases, including that of Chinese model Yang Zeqi, who disappeared after responding to a recruitment ad. The incidents highlight the dangers of human trafficking in the region, particularly around the border areas.
https://www.scmp.com/news/china/diplomacy/article/3294285/rescued-myanmar-chinese-actor-wang-xing-prepares-fly-home?utm_source=rss_feed
Outspoken economist Gao Shanwen leaves his Hong Kong financial firm: source
South China Morning Post
Gao Shanwen, the chief economist at SDIC Securities, has left the Hong Kong branch of the company, and his license to provide investment advisory services has expired. His departure follows his critical remarks about China's official economic growth data, suggesting it has been overstated by 3 percentage points annually and projecting a cumulative overestimation of 10 percentage points. Gao's comments gained attention during an investor meeting and were subsequently removed from the internet, reflecting the Chinese government's tendency to censor dissenting economists. His WeChat account is now banned, and his last post discussed the property market. Other economists who have made critical statements have also faced censorship, highlighting the risks of discussing China's economic performance.
https://www.scmp.com/business/article/3294263/outspoken-economist-gao-shanwen-leaves-his-hong-kong-financial-firm-source?utm_source=rss_feed
Supreme Court to Hear Challenge to Law That Could Shut Down TikTok
NY Times
The Supreme Court will hear arguments regarding TikTok's future, as Congress has imposed a deadline of January 19 for the app to be sold or shut down due to security concerns linked to its Chinese parent company, ByteDance. The law, passed with bipartisan support, claims that TikTok could be used by the Chinese government to collect sensitive information and disseminate disinformation. TikTok argues that this law infringes on its First Amendment rights and the rights of its 170 million American users. The court's decision, expected by the end of next week, could have significant implications for digital communication, as TikTok serves as a major platform for diverse discussions and communities.
https://www.nytimes.com/2025/01/10/us/politics/supreme-court-tiktok-ban-law.html
They built careers on TikTok. Now they’re bracing for a possible ban
CNN
Joanne Molinaro, a former partner at a Chicago law firm, experienced a career transformation after discovering TikTok during the pandemic in 2020. Initially using the app for entertainment, she went viral with her cooking videos and shifted to being a full-time content creator under the handle @TheKoreanVegan, amassing over 3 million followers and publishing a successful cookbook. However, her success, along with that of other TikTok creators, is threatened by a potential U.S. ban on the app due to national security concerns related to its Chinese parent company, ByteDance. The Supreme Court is set to hear a legal challenge to this ban, which could have severe financial implications for creators and small businesses dependent on TikTok for revenue. Analysts estimate a ban could lead to significant losses in earnings and revenue for millions of users and businesses. Creators like Eli Rallo are also concerned about the financial impact and the difficulties in transitioning to other platforms, which require different strategies and audience engagement. Many influencers are now diversifying their income streams to mitigate potential losses from a TikTok ban.
https://edition.cnn.com/2025/01/10/tech/tiktok-creators-influencers-ban/index.html
Huawei gets WeChat on board with HarmonyOS, a key step to challenge Android, iOS in China
South China Morning Post
Tencent's WeChat has officially launched on HarmonyOS Next in China, providing Huawei with a crucial partner as it seeks to expand its home-grown mobile operating system and replace Android. The HarmonyOS version of WeChat, which supports essential functions like payments, live streaming, and messaging, became available for download after three months of beta testing. With 1.38 billion monthly users, WeChat is vital for Huawei's strategy to challenge the dominance of Google’s Android and Apple’s iOS in the Chinese market. Following US sanctions, Huawei has been working to reduce reliance on foreign technologies and aims for all its smartphones and tablets to run on HarmonyOS Next by 2025. The operating system currently features over 15,000 native apps and aims to reach 100,000 apps in the next six months to a year.
https://www.scmp.com/tech/big-tech/article/3294241/huawei-gets-wechat-board-harmonyos-key-step-challenge-android-ios-china?utm_source=rss_feed
Former Chinese state media editor Hu Jian lands new foreign ministry role
South China Morning Post
Former state media executive Hu Jian has been appointed as a deputy director in the Chinese Ministry of Foreign Affairs, responsible for personnel decisions and training officials. This marks a notable transition for an ex-journalist in China. Hu, who has a background in journalism with the Nanfang Daily Newspaper Group, previously served as deputy director in the ministry’s press and public diplomacy department. His role will involve managing the appointments and dismissals of diplomats and commissioners in Hong Kong and Macau. Hu's appointment reflects the ministry's strategy to incorporate talent beyond traditional diplomatic backgrounds. His time at Nanfang Daily included alignment with government narratives, and he gained recognition for his work under the state's censorship framework. His new position underscores a trend of former media executives moving into government roles, as seen with Mo Gaoyi, director of the State Council Information Office.
https://www.scmp.com/news/china/politics/article/3294289/former-chinese-state-media-editor-hu-jian-lands-new-foreign-ministry-role?utm_source=rss_feed
Jimmy Lai testimony spotlights mogul's Trump hopes, Biden doubts
Nikkei Asia
The ongoing national security trial of Hong Kong media mogul Jimmy Lai, accused of colluding with foreign forces and publishing seditious materials, has brought global political dynamics to the forefront. Testifying since November, Lai, founder of the now-defunct Apple Daily, expressed skepticism towards President Biden while favoring Donald Trump, who he believes took a strong stance against China during his presidency. Lai's trial, now in its third year, serves as a symbol of diminishing freedoms in Hong Kong under the national security law imposed in 2020.
Lai has criticized Biden's multilateral approach, while asserting that Trump's unilateral actions were effective in addressing China's policies. During the trial, he reiterated his view of Chinese President Xi Jinping as a dictator and articulated concerns about Taiwan's security. Lai, who has been jailed for over four years, fears that Hong Kong's plight may be forgotten by the international community. As Trump prepares for a potential return to the presidency, uncertainty looms about whether he can fulfill Lai's hopes for action regarding Hong Kong's freedoms.
https://asia.nikkei.com/Politics/International-relations/Jimmy-Lai-testimony-spotlights-mogul-s-Trump-hopes-Biden-doubts
UK Treasury chief heading to China to revive suspended economic and financial talks
Associated Press
Britain's Treasury chief, Rachel Reeves, is set to visit China this weekend to discuss economic and financial cooperation as the U.K. aims to improve strained relations with Beijing. The trip includes meetings with Chinese Vice Premier He Lifeng and aims to revive the China-U.K. Economic and Financial Dialogue, which has been on hold since 2019 due to the pandemic and worsening ties. Key issues affecting relations include spying allegations, China's support for Russia, and civil liberties concerns in Hong Kong. Reeves' delegation includes prominent figures from the Bank of England and major financial firms. This visit follows recent trips by Foreign Secretary David Lammy and Prime Minister Keir Starmer, who are advocating for a pragmatic approach to engage with China on global issues like climate change. However, some opposition figures express concern over prioritizing trade over national security and human rights, particularly in light of recent security threats linked to China.
https://apnews.com/article/uk-china-chancellor-rachel-reeves-visit-ee83923adde759c189b06f8af9cd2370
China’s Central Bank Stops Buying Bonds as Deflation Fears Grip Economy
NY Times
The Chinese central bank has temporarily halted its purchases of government bonds, signaling concerns about the stagnant economy. This decision comes as investors shift towards bonds, driving long-term interest rates to record lows, while other countries are experiencing rising rates due to inflation. In China, low inflation and declining housing prices and stock markets have led to a loss of public confidence, prompting households to deposit large sums in state-owned banks, which struggle to lend to pessimistic businesses. The banks have been investing these deposits in bonds, further pushing bond prices up and yields down. By stopping its bond purchases, the central bank aims to reduce demand for bonds, potentially stabilizing interest rates.
https://www.nytimes.com/2025/01/10/business/china-central-bank-bonds.html
China catches foreign spy taking photos of island military site: report
South China Morning Post
China's counter-espionage agency recently apprehended a foreign spy and an assistant who were attempting to gather intelligence on military facilities off the coast of Zhejiang province, according to state broadcaster CCTV. The pair posed as tourists and were caught taking photos near sensitive military zones after authorities received a tip-off about potential espionage activities. Security officials confiscated SD memory cards containing images of military sites and noted that the suspects had been observing military areas while driving around the island. The exact timing of the incident and the nationality of the spies have not been disclosed, nor have any arrests been confirmed. The Ministry of State Security has emphasized the risks of leaking military secrets and has previously warned military enthusiasts against photographing classified equipment. Past incidents have resulted in prison sentences for individuals caught obtaining state secrets related to military activities.
https://www.scmp.com/news/china/military/article/3294217/china-catches-foreign-spy-taking-photos-island-military-site-report?utm_source=rss_feed
China plans to build ‘Three Gorges dam in space’ to harness solar power
South China Morning Post
A senior Chinese scientist, Long Lehao, outlined a plan to construct solar power stations in space using super heavy rockets, likening it to a "Three Gorges Dam project above Earth." These stations would harness continuous solar energy, unaffected by seasons or day-night cycles. Long emphasized the need for advancements in heavy-lift rocket technology, such as the Long March-9, to transport materials into orbit and transmit energy efficiently to Earth. China has initiated experimental projects to develop these technologies, which could also support various applications, including powering remote areas and disaster zones.
https://www.scmp.com/news/china/science/article/3294091/china-plans-build-three-gorges-dam-space-harness-solar-power?utm_source=rss_feed
China hit record trade barriers in 2024 as overcapacity fears spread to developing world
South China Morning Post
In 2024, China faced a record 160 trade investigations from various countries, up from 69 in 2023, as developing nations expressed concerns over China's overcapacity issues. Notably, India initiated the most investigations, followed by the EU and Brazil. Many investigations were pre-emptive measures against a potential influx of Chinese imports. The focus was primarily on anti-dumping cases in sectors like iron, steel, and chemicals, largely due to China's domestic economic challenges. Experts suggest that China will address these disputes through negotiations and diversifying export markets, especially amid uncertainties regarding potential U.S. tariffs under President-elect Trump.
https://www.scmp.com/economy/global-economy/article/3294204/china-hit-record-trade-barriers-2024-overcapacity-fears-spread-developing-world?utm_source=rss_feed
Malaysia, Japan to bolster energy ties through LNG, hydrogen
Nikkei Asia
Malaysia and Japan are enhancing their cooperation on energy security, particularly in natural gas and hydrogen projects, as they strengthen economic ties to tackle mutual challenges. During a meeting in Putrajaya, Malaysian Prime Minister Anwar Ibrahim and Japanese Prime Minister Shigeru Ishiba discussed initiatives including the delivery of carbon-neutral LNG by Malaysian state oil group Petronas to Japan. Anwar highlighted a significant hydrogen project in Malaysia's Sarawak state, which involves collaboration with Japanese companies.
This cooperation aligns with Malaysia's efforts to promote high-value industries and cleaner energy, aiming to become a regional manufacturing and energy hub. Ishiba's visit to Southeast Asia marks his first official trip since becoming prime minister, as Japan seeks to solidify relations with ASEAN nations amid increasing geopolitical uncertainties. Ishiba emphasized the strategic importance of ASEAN and Malaysia's role as a link between Southeast Asia and the Middle East, reaffirming their commitment to regional peace and stability.
https://asia.nikkei.com/Politics/International-relations/Malaysia-Japan-to-bolster-energy-ties-through-LNG-hydrogen
TSMC cuts ties with Singapore firm over chip found in Huawei processor: sources
South China Morning Post
Taiwan Semiconductor Manufacturing Company (TSMC) has ended its relationship with Singapore-based PowerAIR due to a potential breach of US export controls related to Huawei Technologies. This decision followed a review triggered by the discovery of a TSMC chip in a Huawei AI processor. TSMC had previously halted shipments to mainland China's Sophgo for similar reasons. The US has imposed a ban on Huawei since 2020, limiting its access to semiconductor production. TSMC remains cautious with mainland Chinese clients amidst ongoing US restrictions and anticipates significant revenue growth from this market in 2024.
https://www.scmp.com/tech/tech-war/article/3294199/tsmc-cuts-ties-singapore-firm-over-chip-found-huawei-processor-sources?utm_source=rss_feed
China-born gene-editing star scientist Zhang Feng recognised with top US prize
South China Morning Post
China-born biologist Zhang Feng has received the National Medal of Technology and Innovation, the highest US honor for technological achievement, during a ceremony at the White House. As a professor at MIT and a pioneer in gene-editing technology, Zhang was recognized for developing the CRISPR-Cas9 tool, which has significant applications in agriculture and health research, including treatments for diseases like sickle cell disease and cancer. The award, established by Congress in 1980, celebrates innovators whose work has improved the US economy and quality of life. Zhang, who was born in Hebei, China, and moved to the US at age 11, holds degrees from Harvard and Stanford and has made significant contributions to both gene editing and optogenetics. He has received numerous accolades and is a member of several prestigious scientific academies.
https://www.scmp.com/news/china/science/article/3294185/china-born-gene-editing-star-scientist-zhang-feng-recognised-top-us-prize?utm_source=rss_feed
Chinese firms ‘going global’ learn important lesson: integrate, or die
South China Morning Post
Chinese companies are increasingly seeking to expand internationally amid rising domestic competition, as evidenced by the journey of William Hong, a businessman from Dongguan. His experiences in various regions highlighted the need for "localisation" and "altruism" in foreign trade, emphasizing that mere export value is insufficient for success. Hong learned that integrating into local ecosystems and prioritizing community needs are essential for Chinese SMEs aiming to establish a foothold abroad. Drawing lessons from Japan's past expansion, he noted the importance of creating jobs and contributing to local infrastructure rather than only selling products.
Despite interest in global markets, Chinese firms often face skepticism, with potential partners favoring local alternatives. To thrive, they must adapt to different cultures and business environments while prioritizing partnerships that empower local economies. Hong's approach is to act as a supportive ally to local businesses, sharing profits and building trust to secure contracts. This shift in mindset is crucial for overcoming challenges and succeeding in international ventures, as highlighted by the experiences of many SMEs looking to go global.
https://www.scmp.com/economy/global-economy/article/3294089/chinese-firms-going-global-learn-important-lesson-integrate-or-die?utm_source=rss_feed
Chinese cadres urged to splash the cash to boost consumption ahead of Lunar New Year
South China Morning Post
An official in Chongqing, Gao Hongbo, has urged Chinese officials to set an example in boosting consumer spending amid concerns about external economic pressures as Donald Trump prepares to take office again. At an economic meeting, he encouraged local leaders to buy new clothes and dine out with their families to stimulate local businesses. This call aligns with Beijing's push to enhance domestic consumption as a priority for the year, particularly in light of tariff threats from the US. The National Development and Reform Commission (NDRC) and the Ministry of Finance have announced initiatives to promote consumer spending, including an expanded trade-in scheme for various home appliances and subsidies for purchasing new electronics. NDRC head Zheng Shanjie emphasized efforts to increase incomes, reduce financial burdens, and improve the consumption environment. Gao also advocated for businesses to raise employee wages, highlighting the importance of increasing spending power to boost consumption during the Lunar New Year.
https://www.scmp.com/economy/china-economy/article/3294075/chinese-cadres-urged-splash-cash-boost-consumption-ahead-lunar-new-year?utm_source=rss_feed
China hacked phones and wants nuclear first strike capability against US: ex-Trump aide
South China Morning Post
H.R. McMaster, a former national security adviser to Donald Trump, alleged that China has tapped Trump’s phone, stolen vast data, and is preparing for a first-strike nuclear capability against the U.S. During a Council on Foreign Relations event, he emphasized the need for significant consequences for China's cyber intrusions and suggested developing both defensive and offensive strategies against Chinese aggression. McMaster advocated for a coordinated effort across economic and military domains to counter China's influence, highlighting the importance of collaboration with international partners to address these challenges. China has dismissed these claims as "malicious speculation."
https://www.scmp.com/news/china/diplomacy/article/3294116/china-hacked-phones-and-wants-nuclear-first-strike-capability-against-us-ex-trump-aide?utm_source=rss_feed
Trump tariffs will probably be 20% on most Chinese imports, not 60%: Goldman Sachs
South China Morning Post
US President-elect Donald Trump is expected to impose average tariffs of 20% on Chinese imports, despite his campaign promise of 60%. Goldman Sachs economist Jan Hatzius noted that tariffs on specific goods like solar panels and steel could reach 60%. China is prepared for a trade war, with potential responses including export controls and targeting US companies. Recent tariffs include 50% on solar panels and 25% on steel. China's GDP growth is projected to slow, prompting the government to implement stimulus measures to revive its economy amid structural challenges.
https://www.scmp.com/news/china/article/3294138/trump-tariffs-will-probably-be-20-most-chinese-imports-not-60-goldman-sachs?utm_source=rss_feed
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