Remembering a Massacre That China Keeps Trying to Erase; Exclusive: The Mediating Role of Xi Jinping's Trusted Allies in the Fourth Level
South Korea vows support for its chip sector amid China-US tension; Japan protests Chinese navy ship entering Japanese waters; Taipei says 37 Chinese military aircraft entered its air defence zone
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The Mediating Role of Xi Jinping's Trusted Allies in the Fourth Level
The fourth level of Xi's circle of power consists of two individuals, namely Zhao Leji, the Chairman of the Standing Committee of the National People's Congress from Xi Jinping's home province of Shaanxi, and Wang Huning, the Chairman of the National Committee of the Chinese People's Political Consultative Conference from Shanghai. Prior to Xi Jinping's arrival in Beijing, these two individuals had no professional interactions with him and were not part of Xi Jinping's core circle. On the other hand, the previous two General Secretaries of the Communist Party of China, Jiang Zemin and Hu Jintao, had close ties with each other, and Wang Huning even served as their speechwriter.
However, during the first decade of Xi Jinping's leadership, these two experienced statesmen played a significant role in supporting him and gaining his trust. They retained their positions as Standing Committee members at the 20th National Congress of the Communist Party of China and their ranks within the party increased. Nevertheless, their actual power decreased compared to the top two levels of the Standing Committee.
As mentioned earlier, conflicts and contradictions exist among the Standing Committee members of the higher levels, both in terms of inter-factional and intergenerational conflicts. These conflicts are prone to intensification or rupture.
The primary responsibility of the two experienced statesmen within the fourth level of the Standing Committee is to mediate and pacify conflicts when they tend to escalate or break out.
To illustrate an example of conflict mediation: During the closing ceremony of the 20th National Congress of the Communist Party of China, when the former General Secretary of the Communist Party, Hu Jintao, attempted to open a folder, Li Zhanshu, the Chairman of the Standing Committee of the National People's Congress at that time, made efforts to dissuade and explain to him. Wang Huning, sitting beside Li Zhanshu, also assisted in the explanation, preventing Hu Jintao from opening the folder. However, when the staff attempted to escort Hu Jintao away, Li Zhanshu intended to rise and see him off, but Wang Huning discreetly stopped him from behind. Wang Huning's actions were aimed at reconciling the conflict and preventing its escalation. It is believed that the two experienced statesmen within the fourth level will also perform well in the next five years, ensuring that the Standing Committee members can engage in debates without causing irreparable division.
Another natural question arises: If the personnel arrangement has caused conflicts, why appoint individuals to mediate those conflicts? This is because the seven Standing Committee members form a team, with three premier ministers pulling the cart and moving forward in the direction guided by Xi Jinping.
To prevent any premier minister from monopolizing power, the three premier ministers must keep each other in check. If any premier minister fails to pull the cart or restrain the other premier ministers properly, disciplinary actions by the Commission for Discipline Inspection, represented by Li Xi, would be applied. Of course, the checks and balances among the premier ministers must be within a certain limit. If any horse stumbles, it would affect the cart's progress. Similarly, when Li Xi uses disciplinary measures, he must not exert excessive force to avoid overturning the cart and destabilizing the situation. Once internal conflicts escalate, the experienced statesmen must step in to mediate and resolve the contradictions, calming the situation and preventing further escalation. However, once temporary reconciliation is achieved, the conflicts may resume.
In philosophical terms, this personnel arrangement is based on the concept of "unity of opposites": each individual within the team embodies contradictions, and through struggle, they maintain a state of opposition. Through the mediation of the experienced statesmen, the conflicting parties can achieve a certain level of unity. This dynamic process ensures that the political situation and work progress in the direction desired by Xi Jinping. Using the terminology of traditional Chinese culture, this personnel arrangement reflects the idea of "harmony of yin and yang," guaranteeing that Xi Jinping is the ultimate arbiter of all conflicting interests.
South Korea vows support for its chip sector amid China-US tension
Reuters
South Korea's president, Yoon Suk Yeol, has described the country's competition within the memory chip sector as "an all-out war", as increased Sino-US tension ripples through the semiconductor industry. Following a meeting with industry figures, Yeol outlined a string of measures to secure South Korea's lead, including research and development expansion, bolstering smaller players and setting up a chip testing facility. Samsung and SK Hynix depend on US technology and equipment to produce around 40% of South Korea's chip exports, while China accounts for 40% of Samsung's NAND memory chip production capacity.
Japan protests Chinese navy ship entering Japanese waters
Reuters
Japan has expressed "strong concern" and made a protest against China after two Chinese Navy and Coast Guard ships entered Japanese waters near Yakushima Island and the Senkaku Islands. The Chinese vessels also attempted to approach a Japanese fishing boat.
Taipei says 37 Chinese military aircraft entered its air defence zone
Guardian
Taiwan activated its defence systems on 22 November after detecting 37 Chinese military aircraft flying into the island's air defence zone. China sees democratically-governed Taiwan as its own territory and has benn regularly flying its air force near the island. Taiwan activated land-based missile systems and sent its own aircraft and ships to monitor the incursion. Some of the Chinese aircraft had flown to Taiwan's south-east and crossed into the western Pacific to perform "air surveillance and long distance navigation training".
BlackRock Says Investors Reassess China Allocation Amid Slowdown
Bloomberg
Geopolitical tensions mean investors need to reassess allocations to China according to BlackRock's Philipp Hildebrand. Falling economic growth may also lead to a drop in investment, with Hildebrand warning "you have a very significant demographic challenge that invariably leads to much lower growth in China over the next years to come." These additional risks could lead to a decreased allocation by investors.
Chinese Investors Flock to Japan ETFs as Local Market Slumps
Bloomberg
China's retail investors are rapidly buying up Japanese equities amid an under-performing domestic market. Japanese exchange-traded funds that follow the Nikkei 225 saw their assets grow more than 100% in May as the benchmark index reached a 30 year high, compared to a 5.7% drop in China’s CSI 300 Index. The asset under management for the China AMC Nomura Nikkei 225 ETF increased nearly 300% from end-April to CNY213m ($29.8m), while that for E Fund Nikko Asset Management Nikkei 225 ETF surged 236% to CNY171m. “We expect the correction for Chinese stocks to accelerate the flow of funds into Japanese stocks”, said strategists from Mizuho Securities. Despite geopolitical tensions with the US, Japan's improving corporate governance and partial revival of inflation are resulting in one of the world's best-performing stock markets, whereas China, which is experiencing a slower-than-expected economic recovery, has little sign of an upswing.
China Mutual Funds to End Real-Time Value Display, Report Says
Bloomberg
Chinese regulators have told the country's mutual fund companies to stop presenting their estimated net asset values in real-time to prevent speculative day trading and withhold information that may exacerbate panic selling. The reported edict came soon after Chinese shares slumped as investors took fright at a faltering economic recovery and unabated geopolitical tensions. The authorities are known to be concerned about the risk of wild price swings that the market presents given that it is dominated by individual investors that frequently use mutual funds in the pursuit of speculation.
It’s Terribly Hot in China, But Coal Prices Still Have Room to Fall
Bloomberg
Chinese coal has fallen to its lowest price in more than two years as a result of strong supply and weak demand. The fuel is currently priced at CNY772 ($108) a tonne at the port of Qinhuangdou, down from CNY845 at the end of 2016. The China Coal Transport and Distribution Association said that the price could slip to below CNY600 a tonne this month. Increased production and a fall in imports have added to the oversupply, while rising inventories and declining manufacturing activity have caused demand to stagnate.
TikTok seeks up to $20 bln in e-commerce business this year - Bloomberg News
Reuters
TikTok's parent company, ByteDance, is looking to expand its e-commerce operations and aims to generate as much as $20 billion in merchandise sales this year, according to sources cited by Bloomberg. The platform hopes to achieve this goal by growing its presence in Southeast Asia.
China fund manager approvals plummet following new rules
Nikkei Asia
China has seen the number of private fund managers (PFMs) it allows to register fall from 139 to just 2, as of May, as tighter regulation targets the $2.9tn PFM sector. Juhai Venture Capital Management and Zhejiang Jintou Dingxin Private Fund Management both fulfilled the new registration requirement to have ¥10m ($1.4m) in paid-in capital, compared with ¥2m under the previous regulations. Alongside this, the new rules stipulate that all of a PFM's senior key managers must have at least five years' relevant experience. PFM are not only required to deal with rising regulatory demands but they are also facing a challenging operating environment, with the number of firms chasing capital from a shrinking pool of investors and a huge exit backlog at their funds' end.
China’s State Banks Cut Deposit Rates to Bolster Economy
Bloomberg
Four of China's largest banks have cut rates on deposit products by at least 10 basis points in response to a government request to bolster the economy, with Industrial & Commercial Bank of China, Agricultural Bank of China, Bank of China and Bank of Communications agreeing to reduce rates on three-year and five-year deposits by 15 basis points, respectively, and annualised demand deposit rates by 10 basis points. Critics have said the rate cut risks causing a capital flight in a country where investment in wealth management products is already high.
Tech-Heavy China Stock Index Hits Three-Year Low as Bets Unravel
Bloomberg
China's ChiNext tech-heavy gauge has fallen to a three-year low, down 1.6% following concerns over the Chinese economy, price competition, heightened export controls and concerns over health care, plus worries about the customer base for a range of medical products. There are some signs of euphoria unwinding in health care, renewables and tech areas, with China decoupling from the US. The E Fund ChiNext exchange traded fund, however, has been the most popular of 2023 in onshore Chinese holdings, with $2.62bn flowing into it in 2018 alone.
Remembering a Massacre That China Keeps Trying to Erase
NY Times
On the 34th anniversary of the Beijing massacre, journalists are warning about the dangers of denying such atrocities, citing China's ongoing attempts to rewrite history and remove any mention of the massacre from the record altogether. In 1989, China sent 200,000 troops to the country's capital to invade and suppress a democratic movement that had been alive for several weeks. Journalists were present when Chinese troops opened fire indiscriminately on peaceful protesters, leading to between 400 and 800 dead, while thousands more were injured. In the 34 years since, the Chinese government has attempted to rewrite history and deny such massacres ever happened.
JD.com’s new strategy in post-Covid China: smaller brands, cheaper goods
South China Morning Post
Chinese e-commerce platform JD.com has created a network of "million vendors" to attract consumers in lower-tier markets. The plan marks a move away from JD.com's traditional model, which focused on a tightly-controlled selection of vendors, including established global and domestic brands. By drawing in smaller sellers, the company will face increased competition from rivals Alibaba Group and Pinduoduo. To succeed against these rivals, JD.com must boost the supply of cheaper items for its platform, said analysts.
China sees biggest trade increase with Russia in 2023, Chinese customs data shows
CNN
Bilateral trade between Russia and China has increased by 40.7% to $93.8bn for the period of January to May 2023, which is a sharp rise compared to the same period last year, according to China's General Administration of Customs. Further data showed that China's exports to Russia reached $42.96 billion since January 2023, a 75.6% YoY increase. Russia has become China's fastest growing trade partner in the world, as trade with most other countries or regions has fallen. This has helped Russia to temper the impact of it being shut out of the global economy following its invasion of Ukraine.
China deserves more say in global debt-relief efforts, Zhou Xiaochuan says
South China Morning Post
Zhou Xiaochuan, former governor of the People’s Bank of China, has called on the country to play a greater role in debt-relief efforts in developing nations. Zhou has said that China should have a greater say in relevant multilateral arrangements. China is the developing world’s single largest creditor after the World Bank. However, western countries have accused Beijing of aggressively seeking out energy and raw materials without regard for the environmental impact and engaging in debt-trap diplomacy. The pandemic has had an impact on Chinese investment in countries under its Belt and Road Initiative.
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