US business elite welcomes Xi with standing ovation; Biden calls Xi 'dictator' after cautious remarks on Taiwan
Xi Indicates China Will Once Again Send Pandas to US Zoos; Biden and Xi agree to pick up the phone to avert crisis. But now what?
Welcome to this issue of The China Brief. Today is November16, 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.
US business elite welcomes Xi with standing ovation
Financial Times
Chinese President Xi Jinping addressed a group of US business leaders in San Francisco, emphasising China's commitment to being a partner and friend to the US. However, tensions between the two countries, combined with China's increasingly assertive domestic security apparatus, have deterred US investors from making significant bets on China. A number of US companies have already withdrawn from China or altered their supply chains due to fears of geopolitical tensions disrupting business. Although Xi's meeting with US President Joe Biden made some progress, unresolved issues remain, including tensions over Taiwan.
Biden calls Xi 'dictator' after cautious remarks on Taiwan
Nikkei Asia
U.S. President Joe Biden referred to Chinese leader Xi Jinping as a "dictator" during a news conference following their meeting in San Francisco. This off-the-cuff remark risks worsening the already fragile relationship between the two countries. Biden's comment came after he reaffirmed the U.S.'s commitment to the One China policy, which acknowledges China's view that there is only one China. However, the Chinese side is likely to be rankled by Biden's remark, especially after what was seen as a diplomatic win for them on the issue of Taiwan.
Xi Indicates China Will Once Again Send Pandas to US Zoos
Bloomberg
China's President Xi Jinping has indicated that China will renew its "Panda Diplomacy" with the US by sending pandas to American zoos. The move signals China's intent to stabilize relations between the two countries. Xi's remarks came after his meeting with US President Joe Biden, during which the two leaders reached agreements on addressing the fentanyl crisis and restoring military communications. The US faces the prospect of losing all of its pandas by the end of next year as current loan agreements expire. China had not signed new deals with American zoos, but the potential new cooperation on pandas suggests a willingness to deepen friendly ties between the two countries.
Taiwan presidential frontrunner taps U.S. envoy as running mate
Japan Times
Lai Ching-te, the frontrunner for Taiwan's presidency, has chosen Hsiao Bi-khim, Taiwan's envoy to the United States, as his running mate for the upcoming election. Hsiao is a fluent English speaker with deep connections in Washington, making her a strong choice for the role. Lai has consistently led in opinion polls ahead of the election, which is taking place amid increased Chinese pressure on Taiwan to accept Beijing's sovereignty claims.
Xi tells US firms China ready to be partner and friend
Reuters
Chinese President Xi Jinping spoke to American executives in San Francisco, reassuring them that China is ready to be a partner and friend of the United States. Xi emphasized the need for China and the US to work together, stating that China does not seek hegemony or expansion and will not impose its will on others. He also expressed sympathy for the American people over the fentanyl crisis, which was addressed in earlier talks between Xi and US President Joe Biden. The dinner, attended by nearly 400 business and government officials, provided an opportunity for companies to hear directly from China's leader as they navigate China's economic slowdown, supply chain concerns, and expanding security rules.
Biden promises a better economic relationship with Asia, but he’s specifically avoiding a trade deal
Associated Press
President Joe Biden is nurturing economic ties this week with Asia, but he’s not signing any trade deals at a regional summit in San Francisco. This fact — no trade deals — reveals a lot about the status of U.S. politics, the evolving global economy and the Biden administration’s own ambitions. U.S. negotiators say they’re progressing on finalizing agreements with 13 other countries on parts of the Indo-Pacific Economic Framework.
Fresh off meeting with China’s Xi, Biden is turning his attention to Asia-Pacific economies
Associated Press
President Joe Biden will address CEOs at the Asia-Pacific Economic Cooperation (APEC) summit to discuss the risks facing their businesses from global crises. Additionally, Biden will use the summit to persuade Indo-Pacific leaders that the US is committed to nurturing economic ties throughout the region. The summit is part of Biden's strategy to strengthen alliances and partnerships in the Indo-Pacific region, with the aim of countering China's influence and promoting US economic interests. The president's attendance at the APEC summit follows his meeting with Chinese President Xi Jinping earlier this week.
Biden and Xi agree to pick up the phone to avert crisis. But now what?
Japan Times
The leaders of the U.S. and China, Joe Biden and Xi Jinping, recently held a four-hour meeting where they agreed to reopen high-level military-to-military channels in an effort to prevent conflict between the two countries. However, experts believe that these measures alone will not be sufficient to improve the bilateral relationship between the two nations as neither side is willing to address their fundamental differences.
Musk-Xi Meeting Shows Tight Relationship China Has With Tesla
Bloomberg
Chinese President Xi Jinping expressed support for Tesla and its CEO Elon Musk during a banquet in San Francisco. Musk attended the banquet to welcome Xi, who is in the US for the Asia-Pacific Economic Cooperation leaders' meetings. Tesla's official Weibo account stated that Xi met with Musk and other important representatives, showing support for Tesla's development in China. Musk expressed gratitude for the warm reception and applauded the fast growth of China's new-energy vehicle sector. Tesla has enjoyed perks in China, including tax breaks, cheap loans, and the ability to wholly own its domestic operations.
U.S., IPEF partners agree on clean energy, anti-graft pillars
Yahoo US
The US-led Indo-Pacific Economic Framework (IPEF) has agreed on the inclusion of two more "pillars" in the initiative, covering cooperation on clean energy and anti-corruption measures, according to US Commerce Secretary Gina Raimondo. Ministers from the 14 IPEF countries also signed the text of a third pillar, covering supply chain resiliency, at a meeting during the Asia Pacific Economic Cooperation leaders' summit in San Francisco.
China's banks seen as vulnerable after ransomware attack on ICBC
Nikkei Asia
The recent ransomware attack on the Industrial and Commercial Bank of China (ICBC) has raised concerns about the vulnerability of other mainland lenders to similar attacks. The attack, which was claimed by hacker group Lockbit, resulted in ICBC disconnecting its system from the US Treasury market, disrupting activity in the $26tn Treasury market. Failed trades in the market reached $62bn, the highest since March this year. Other financial institutions are now likely to be more wary about the risk of cyberattacks, according to Thomas Fung, CIO of China Rise Securities Asset Management.
Inside Huawei's Mate 60 and a high-tech take on lunch
Nikkei Asia
China's main research institute for nuclear weapons, the China Academy of Engineering Physics (CAEP), has been able to obtain embargoed machines needed for the production of nuclear armaments from Japanese and German manufacturers, according to a report from Nikkei Asia. The report suggests that export controls of high-tech equipment are difficult to implement and highlights the dilemma companies face when doing business with China. CAEP is described as "China's sole nuclear weapons development and production unit" and is instrumental in Beijing's efforts to catch up with Washington in terms of nuclear capabilities. The report also highlights that China's technology ambitions are not limited to semiconductors, but include machine tools that can be used to develop weapons of mass destruction. The report raises concerns about China's access to advanced technology and the potential for it to be used for military purposes.
Xi-Biden meeting seen as putting relations back on course, even as issues remain unresolved
Associated Press
US President Joe Biden and his Chinese counterpart Xi Jinping met for four hours on Wednesday to discuss issues such as trade, investment, Taiwan, human rights, Tibet, Sichuan and Hong Kong. Although the two leaders did not resolve any of the major geopolitical issues between the two countries, the meeting appeared to show that while the US and China are global competitors, they are not locked in a winner-takes-all faceoff. Xi said, “Planet Earth is big enough for the two countries to succeed.” Taiwan’s Foreign Ministry welcomed the warming of relations, noting that the US had again laid down the bottom line that China must use peaceful means in its dealings with Taiwan. South Koreans watched the meeting with hope and scepticism, wondering if it would soften the intense rivalry between their key military and diplomatic ally, the US, and their largest trading partner, China. South Korea has primarily focused on strengthening its security in conjunction with its alliance with the US and has been frustrated by Beijing’s unwillingness at the UN Security Council to back stronger sanctions and pressure on Pyongyang over its nuclear and missile programmes.
Whiplash in China as state media does U-turn on U.S.
Washington Post
Chinese state media has hailed President Xi Jinping's meeting with US President Joe Biden as an "unmitigated success." The meeting, the first between the two leaders in more than a year, led to agreements on climate change and counternarcotics cooperation. Analysts have suggested the Chinese leader needed a win as he faces economic challenges at home, and also wanted to present China as a global superpower willing to cooperate with the US.
Office Building Fire in Northern China Kills at Least 26
NY Times
A fire broke out in the offices of Yongju Coal Company in Lüliang, a city in the northern province of Shanxi, China, killing at least 26 people and hospitalizing 38 others. The cause of the fire is still unknown, but some reports suggest that it may have started in a building where employees shower and do laundry. This incident follows a series of deadly fires in China, including a factory fire in Henan province last November that killed 38 people and an apartment building fire in Xinjiang that killed 10 people. Lüliang is known for its rich coal deposits and for being the site of political and economic purges in recent Chinese history.
Xi talks up pandas and superpower 'friendship' at U.S. CEO dinner
Nikkei Asia
Chinese President Xi Jinping attended a dinner in San Francisco with American business leaders such as Apple's Tim Cook and Blackstone's Steve Schwarzman. Xi called for "friendship" between the US and China and hinted at a renewal of panda diplomacy. He spoke for more than half an hour and discussed the "important consensus" he reached with US President Joe Biden during their summit earlier in the day. The two countries pledged to increase direct passenger flights between the US and China and streamline visa application procedures.
Alibaba Recovery Falters at Pivotal Hurdle Ahead of Earnings
Bloomberg
Investors in Alibaba are not optimistic ahead of the company's third-quarter results, with the stock sliding immediately after the opening bell. Block activity in options showed a bearish bias, with mainly calls being executed at the bid. For prices to become bullish, they will need to climb above November's high of HK$85.
The US-China currency wars are in an unstable lull
Financial Times
The recent meeting between US Vice President Joe Biden and Chinese President Xi Jinping did not address exchange rates, despite the fact that the renminbi and yen are at their weakest levels against the dollar in years. The lack of discussion on exchange rates is a temporary lull, as the factors that led to currency wars in the past have not disappeared. China is threatening to return to mercantilist behavior, which could reignite tensions. However, for now, the US is not overly concerned about the renminbi's value or China's trade position, as a stronger dollar helps keep inflation down and protects US companies against an undervalued renminbi.
‘Very significant’: Xi-Biden meet could help lower tensions, say analysts
Al Jazeera
Chinese President Xi Jinping and US President Joe Biden met at the APEC Summit in San Francisco this week. The leaders pledged to cooperate on issues such as artificial intelligence, climate change, and curbing fentanyl shipments to the US. They also promised to restore military communications that were previously cut off. Analysts view this meeting as a positive step towards improving the working relationship between the two superpowers, but it remains to be seen whether tensions over Taiwan will increase after the Taiwanese presidential election in January.
China's home prices dip for 4th month, may weaken further
Reuters
New home prices in China have fallen for the fourth consecutive month, with dozens of cities experiencing declines. The drop in prices suggests a broader weakening in the property sector, which could slow down the country's overall economic recovery. China's property sector was once a key driver of economic growth, but a regulatory crackdown since 2020 has tightened liquidity and increased default risks for developers. Although authorities have implemented measures to support the sector, including relaxing home purchase restrictions and reducing borrowing costs, homebuyers remain cautious due to weak demand and uncertainty over project delays.
Dalio, Cook, Citadel’s Zhao Win Coveted Seats at Xi Dinner Table
Bloomberg
Chinese President Xi Jinping will host a dinner for top US executives, including Larry Fink of BlackRock and Tim Cook of Apple, in an effort to attract foreign capital to China. The dinner will take place after talks between Xi and US President Joe Biden, aimed at stabilizing the turbulent bilateral relationship between the two countries. Beijing has been stepping up efforts to attract foreign investors, but concerns remain over issues such as national security controls and policy crackdowns.
Xi told Biden Taiwan is biggest, most dangerous issue in bilateral ties -US official
Reuters
Chinese President Xi Jinping told US President Joe Biden during their meeting that Taiwan was the biggest and most dangerous issue in US-China relations, according to a senior US official. The official said that Xi expressed China's preference for peaceful reunification with Taiwan but also discussed conditions in which force could be used. While Xi was trying to indicate that China is not preparing for a massive invasion of Taiwan, the US maintains its commitment to peace in the region. China has long employed a carrot and stick approach towards Taiwan, promising peaceful reunification while simultaneously threatening force. Taiwan's foreign ministry said that it focuses on boosting its defenses and winning international support to deter China from acting recklessly. Biden and Xi met to ease tensions and discuss various issues including military conflicts and artificial intelligence.
Tencent says it stockpiled Nvidia chips but seeks Chinese replacements
CNN
Chinese tech giant Tencent has rushed to build up a large inventory of AI chips before US export restrictions came into effect. The company purchased components from Nvidia early, allowing it to continue developing its generative AI model for at least a couple of generations. Tencent is now scouting for new suppliers within China for training chips. The US and China have increasingly escalated a feud over access to advanced semiconductors and the materials and equipment needed to create the technology. The US recently reduced the types of semiconductors that American companies can sell to China.
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