What does Xi really mean? Chinese diplomacy’s true intentions; Huawei teases new products but remains tight-lipped over mystery chip
Netflix actress is surprise candidate for Taiwan VP; China's Moutai launches boozy chocolates with Dove in diversification drive；
Welcome to this issue of The China Brief. Today is September 14, 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.
China's Moutai launches boozy chocolates with Dove in diversification drive
Reuters
Chinese luxury liquor-maker Kweichow Moutai is partnering with Mars-owned chocolate brand Dove to release limited edition alcohol-infused chocolates. This move comes as Moutai attempts to diversify its product offerings and attract a younger generation of consumers. The collaboration was met with significant interest on Chinese social media platform Weibo, with a hashtag about the partnership trending. This follows on from the recent launch of a baijiu-infused latte by Moutai and Chinese coffee chain Luckin Coffee, which sold out in cities across China. Moutai is known for its fiery baijiu spirit, which is typically served at banquets.
What does Xi really mean? Chinese diplomacy’s true intentions
Japan Times
In this article, the author argues that Chinese President Xi Jinping's recent speeches and actions indicate that China is becoming increasingly isolated on the global stage. The author suggests that Xi's references to "self-reliance" and "self-sufficiency" indicate a desire to reduce China's dependence on other countries, particularly the United States. The author also points to Xi's emphasis on the importance of the Chinese Communist Party and his crackdown on dissent as signs of a more closed and authoritarian regime. Overall, the author suggests that China's isolationism under Xi is a departure from the country's previous trajectory of opening up and engaging with the world.
Huawei teases new products but remains tight-lipped over mystery chip
South China Morning Post
Huawei is set to unveil "many new products" at its autumn launch event on 25 September, according to a poster published on social media. The announcement has led to speculation that the company will also reveal details about its latest Mate 60 Pro 5G smartphone and the chip inside. Chinese state media has praised the smartphone as evidence that the country can achieve breakthroughs in chip technology despite US sanctions. However, Huawei has remained tight-lipped about the source and capability of the processor in its new smartphone.
Following foreign investors ‘blindly’ not a good investment strategy: Economic Daily
South China Morning Post
Chinese state media outlet Economic Daily has warned domestic investors against copying foreign investors who are dumping Chinese stocks. The publication claimed that foreign investors are not the most influential force in the Chinese market, and that following them blindly is not a good investment strategy. This comes as overseas investors flee China's markets at an unprecedented rate, with $2.4bn worth of onshore stocks sold so far this month.
China's central bank set to boost liquidity but keep policy rate steady
Reuters
China's central bank, the People's Bank of China (PBOC), is expected to roll over its medium-term policy loans on Friday, boosting liquidity while keeping borrowing costs steady, according to a Reuters survey. All 33 market watchers polled predicted that the PBOC would leave the interest rate on its one-year medium-term lending facility (MLF) loans unchanged when it is due to roll over CNY 400bn ($54.98bn) worth of these maturing loans this month. The PBOC has already lowered the medium-term policy rate twice since June to stimulate credit demand and support the struggling economy.
Taiwan hits back at Elon Musk’s claim that it is ‘part of China’
CNN
Taiwan's Ministry of Foreign Affairs has responded to Elon Musk's comments calling the island an "integral part of China." Musk made the statement during a remote interview at the All-in Summit in Los Angeles. Taiwan's Foreign Minister Joseph Wu stated that Taiwan is not part of China and is not for sale. He also called on Musk to ask the Chinese Communist Party to open access to the social media platform X, which Musk now owns. X is currently blocked in mainland China. Musk's comments came in response to a question about the challenges faced by American businesses in China. Tesla is heavily reliant on the Chinese market, with deliveries from its Shanghai facility accounting for over half of its global sales.
The US wants to talk to North Korea but doesn't know how
BBC
The US faces a challenge in dealing with North Korea as the possibility of an alliance with Russia emerges. Concerns are growing over the potential sharing of technology between Russia and North Korea, particularly in the areas of ballistic missiles and nuclear submarine systems. The US has responded with derisive remarks and warnings, but it has exhausted its economic toolkit for dealing with North Korea. President Joe Biden has been focused on building alliances to counter China, but he now needs to find a way to engage North Korean leader Kim Jong Un. Creative diplomacy is needed, but experts believe there is currently no way forward. Previous attempts at diplomacy between the US and North Korea, such as the summits between former President Donald Trump and Kim Jong Un, have raised expectations in Pyongyang but ultimately failed to produce a deal. Meanwhile, China has emerged as a bigger concern for the US, and its relationship with North Korea and Russia could complicate matters further. The US needs to consider the opportunities that may arise from a potential Russia-North Korea alliance.
Netflix actress is surprise candidate for Taiwan VP
BBC
Foxconn founder Terry Gou has chosen actress Tammy Lai as his running mate in the Taiwan presidential election. Lai, who has no political experience, has been in show business for decades. Gou is running as an independent after failing to secure the nomination from the main opposition Kuomintang. Gou's pro-China stance has caused his ratings to fall behind other candidates in multiple polls. Lai's nationality is also a topic of speculation, as Taiwan laws do not allow presidential candidates with dual nationalities. Some experts believe that while Lai's addition may be a good move for Gou, it may not ultimately affect the election results.
China unveils ‘special’ measures to boost Taiwan’s access to coastal Fujian
Al Jazeera
China has announced that it will take special policy measures to improve access for Taiwanese enterprises to Fujian province. China plans to deepen the integrated development of the Chinese city of Xiamen and Taiwan-controlled Kinmen islands, which includes accelerating gas, electricity and transportation links between the two. This move is part of China's plan to turn coastal Fujian province into a zone for integrated development with Taiwan. China's air force entered Taiwan's air defence zone again on Thursday, which Taiwan says constitutes regular harassment. China supports the idea of allowing Kinmen access to Xiamen's new airport and also supports new energy cooperation between Taiwan and Ningde, a Fujian city north of Xiamen.
China's Premier Li Qiang will attend China-ASEAN expo
Reuters
China's Premier Li Qiang will be attending the China-ASEAN expo in Nanning City, Guangxi on September 17th. This was announced by the country's foreign ministry on Thursday.
LVMH, Luxury Sector Cut at Barclays on Risk of China Slowdown
Bloomberg
Barclays has downgraded its rating on both LVMH and the luxury goods industry as a whole, citing the risk of disappointing sales growth in China. The bank's analysts believe that the sector has been de-rated in response to "deteriorating macro indicators coming from China and the gradual return to more normalised growth". LVMH's stock has fallen 20% from its April record high, and Barclays' analysts say there is a risk for further disappointment in the second half of the year.
Chinese carmakers are under scrutiny in Europe
The Economist
The European Commission has launched an "anti-subsidy investigation" into Chinese car firms, fearing that an influx of Chinese electric vehicles (EVs) could outcompete European manufacturers. In the first seven months of 2023, 189,000 Chinese cars were sold in Europe, equivalent to 2.8% of all car sales. However, Chinese pure battery cars made up nearly 8% of sales for this type of vehicle, and these sales have tripled in the past two years. The commission's investigation could result in tariffs far above the 10% currently levied on Chinese imports.
UK must avoid ‘foghorn diplomacy’ with China after ‘spy’ arrest
The Independent
Former Deputy Prime Minister Dominic Raab has warned the UK government against taking rash action against China in response to the discovery of a possible spy for Beijing in Westminster. Raab cautioned that China’s economic size could leave the UK vulnerable if China were to respond disproportionately to any action or policy by the UK. He called for vigilance in safeguarding domestic security while expanding partnerships abroad to strengthen the UK’s position. Raab also warned against speaking out against China, following criticism of Prime Minister Rishi Sunak’s handling of foreign relations by Labour leader Sir Keir Starmer.
Beijing blasts EU for protectionism while China EV stocks slide
Nikkei Asia
China has criticised the European Commission's probe into the country's electric vehicle (EV) subsidies, claiming the investigation is protectionist and will damage economic and trade relations. European Commission President Ursula von der Leyen launched the investigation on Wednesday, accusing China of flooding global markets with EVs that had artificially low prices due to significant state subsidies. The probe could result in punitive tariffs and analysts have warned of potential retaliatory action by China.
The Toronto Star
Canada's Start-Up Visa (SUV) program, which aims to attract international entrepreneurs and offers a pathway to permanent residence, is facing concerns of misuse and fraud as its popularity grows. The program, which has seen its annual intake increase from 1,000 spots in 2022 to 3,500 this year, has been criticized for its lengthy processing times and lack of monitoring of designated organizations. While some support the expansion of the program, others argue that it is being exploited by unscrupulous agents who charge high fees to enroll applicants in incubator programs and secure the coveted letter of support. Critics argue that the program should focus on attracting genuine entrepreneurs rather than individuals seeking permanent residence.
Negative economic sentiment haunts China’s portfolio inflows, FDI to contract
South China Morning Post
China is likely to face more outflows of funds from global investors as interest wanes due to various factors including the coronavirus pandemic, slowing economic growth, regulatory uncertainty, and strained international relations, according to The Economist Intelligence Unit (EIU). Foreign direct investment (FDI) inflows to China slumped to just $4.9bn in Q2 2020, an 87% decline YoY, while China's share of FDI inflows among emerging markets is forecast to fall to less than 30% by 2027, compared with a historic range of 40% to 50%. Overseas investors also withdrew around $15.5bn from China's emerging market portfolios in August, the largest monthly outflow since September 2019, driven by large outflows from Chinese stocks.
China Conducts Major Military Exercises in Western Pacific
NY Times
China has launched large-scale military drills in the Western Pacific, deploying an aircraft carrier and dozens of naval ships and warplanes in a major show of force aimed at pushing back at US pressure. The joint exercises come after the US conducted a series of military drills across the region in recent weeks with allies like Japan, Australia and the Philippines. China has not announced any exercises involving the Shandong, its first domestically built aircraft carrier, one of two carriers China has in service.
Huawei Times New Product Gala for Anniversary of CFO’s Release
Bloomberg
Huawei has scheduled a major consumer launch on 25 September 2021, the anniversary of the return of CEO Ren Zhengfei's daughter Meng Wanzhou to China after three years of house arrest in Canada. The event is expected to showcase Huawei's Mate 60 smartphone series, which has caused excitement in China and concern in the US due to a made-in-China chip that potentially bypasses US sanctions. The event will provide an opportunity for Huawei to address questions about the technology in its new devices, including their compatibility with 5G wireless speeds. The US government has launched an official probe into the chip, which is believed to have been made by Semiconductor Manufacturing International Corp., which is also blacklisted by the US.
Putin may just have made his greatest blunder yet
Telegraph
Russian President Vladimir Putin is turning to North Korean leader Kim Jong-un for help in replenishing Russia's depleted weapons stocks amid its ongoing military campaign in Ukraine. The similarities between North Korea's missile systems and Russian counterparts, as well as the compatibility of conventional arms stockpiles, have prompted Putin to seek assistance from Pyongyang. However, the move risks causing friction with China, which has traditionally regarded North Korea as within its sphere of influence. The reliance of North Korea on China for trade means Beijing can exert influence over the country's actions.
Biden’s Vietnam embrace repeats past US mistakes
Al Jazeera
The United States' approach to Asia risks repeating past mistakes and could have consequences for the US, Vietnam, and the world, according to an opinion piece published by Al Jazeera. The article argues that the US is trapped in a Cold War mindset, continuing to view China as a communist threat and seeking to maintain its own superpower status. It suggests that the US should adopt a more nuanced, multilateralist approach to international issues and work towards building a multi-polar world order. The article also highlights the strong economic position of Vietnam, which allows it to resist being drawn into superpower politics and maintain a careful balancing act between the US and China. The author argues that true multilateralism, with multiple comprehensive strategic partnerships, is needed for peace and stability in the world. The views expressed in the article are those of the author and do not necessarily reflect the editorial stance of Al Jazeera.
History Turns Upside Down in a War Where the Koreas Are Suppliers
NY Times
The US and Russia have been reaching out to their allies in the Korean Peninsula to supply munitions as the countries face each other down in Ukraine. South Korea and Russia have been trading artillery shells, with South Korea supplying the US military with shells, freeing up US stocks for use by Ukraine; Moscow has repeatedly warned Seoul against supplying weapons to Ukraine. Meanwhile, North Korea is believed to have built its first intercontinental ballistic missiles with black-market rockets from Ukraine. Thus, arms deals between Putin and Kim could prompt hawks in South Korea to call for sending weapons directly to Ukraine, so it is unlikely that any such deal would be publicised. However, experts argue that North Korea does have what Russia wants, with Siemon T. Wezeman, an arms researcher at the Stockholm International Peace Research Institute, stating: “Most likely, North Korea has tens of millions of shells for artillery in stock.” There is still doubt that Putin would go so far as to provide North Korea with technology to perfect its ICBMs or build nuclear-powered submarines.
Moody's cuts China property sector's outlook to negative
Reuters
Moody's has downgraded the outlook for China's property sector to negative from stable, citing economic growth challenges that will dampen sales despite government support. The ratings agency expects contracted sales to fall by about 5% over the next six to 12 months in China, and believes that the impact of government measures to boost property purchases will be short-lived and uneven. The downgrade comes amid a string of debt defaults by cash-strapped developers, including China Evergrande Group and Country Garden Holdings. Moody's rates Country Garden as Ca with a negative outlook.
China sows disinformation about Hawaii fires using new techniques
Japan Times
China has been accused of using artificial intelligence (AI) to create false posts and images to spread disinformation on social media platforms. The posts, which feature images of people who do not exist, are part of a larger campaign to manipulate public opinion. This marks one of the first times that AI has been used in this manner, and highlights the growing concern over the use of AI in disinformation campaigns.
Taliban welcome first Chinese envoy since takeover
BBC
China has appointed Zhao Xing as its ambassador to Afghanistan, making it the first country to name an ambassador to the country since the Taliban took over in 2021. The move is seen as a signal for other nations to establish ties with the Taliban government and demonstrates China's efforts to establish its influence in the region. China has significant interests in Afghanistan, which is at the center of its Belt and Road infrastructure initiative. Some analysts believe that China's move is aimed at strengthening its influence in the region and maintaining stability. The Taliban government has faced criticism for its human rights violations, particularly in regards to women's rights.
Dominic Raab urges Government to tread carefully after ‘Chinese spy’ arrest
The Independent
Former UK deputy prime minister Dominic Raab has cautioned against taking any hasty actions with China following the discovery of a possible spy for Beijing in Westminster. Raab warned of China's covert nature and far-reaching geopolitical influence, urging MPs to be vigilant and patient in dealing with the country. He also noted that the UK's economic reliance on China could hamper its ability to respond if China were to retaliate disproportionately to any action or policy. Raab called for the enforcement of domestic powers to safeguard security and the expansion of partnerships abroad to strengthen the UK's position.
Cambodian PM Embarks on Three-Day State Visit to China
Diplomat
Cambodian Prime Minister Hun Manet has embarked on a three-day state visit to China, his first since taking office, aimed at strengthening political and economic relations with Beijing. Hun Manet will attend the 20th China-ASEAN Expo in Nanning and meet with senior officials including President Xi Jinping. The visit comes shortly after Chinese Foreign Minister Wang Yi visited Phnom Penh, pledging to build a "high-quality" relationship with the new Cambodian leadership.
China says it uncovered NSA operatives behind university cyberattack
South China Morning Post
China has identified US National Security Agency (NSA) operatives who were involved in a recent cyber attack on Northwestern Polytechnical University. The Chinese Ministry of State Security has vowed to "root out all digital spies" and strengthen tracking, monitoring and prevention of cyber espionage. This revelation comes after the Chinese government jailed US citizen John Shing-wan Leung for life for espionage in May, and a week after Beijing accused the US of "unscrupulous" cyber attacks.
20 years jail: Australia law to target training of ‘certain foreign militaries’
South China Morning Post
Australia is set to introduce tougher laws to prevent former defence staff from training "certain foreign militaries" amid concerns of China attempting to poach Western military expertise. The new laws will introduce a penalty of 20 years in prison and will widen the ban to prevent Australians from offering military training to countries deemed a national security risk. The legislation will also prevent Australian citizens or permanent residents from providing military training without authorisation. The new laws come as Australia deepens technology-sharing with the US and Britain under the Aukus agreement.
China asks big banks to stagger and adjust dollar purchases - sources
Reuters
China's central bank has reportedly asked some of the country's biggest lenders to hold open positions in the foreign exchange market for a while, in order to ease downward pressure on the yuan. The move would mean that banks would absorb some of the heavy dollar purchases made by companies, somewhat alleviating the slide in the yuan. The directive came from a meeting held by the People's Bank of China (PBOC) with a few commercial banks, and banks were also informed that companies requiring to purchase $50 million or more would need the central bank's approval.
Taiwan says 68 Chinese warplanes, 10 vessels detected near island
Al Jazeera
China has conducted military drills near Taiwan for a second consecutive day, with 68 military aircraft and 10 navy vessels detected by Taiwan's Defence Ministry. The drills were reportedly led by the Shandong aircraft carrier and involved joint sea and air training. China has been increasing military and political pressure on Taiwan, which it views as its own territory, and has not ruled out the use of force to achieve its goal. The US and its allies have been conducting freedom of navigation operations in the area to assert the international status of both the Taiwan Strait and the South China Sea.
Chinese banks shun Beijing’s flagship property bailout fund
Financial Times
A $27bn scheme launched by the People's Bank of China (PBOC) to boost the country's ailing property market has done "barely any business" almost a year after its launch, according to officials. The PBOC announced the scheme to provide interest-free loans to state-owned commercial banks in November 2015, however, it has been reported that less than 1% of the funds have been disbursed to banks. Many banks are unwilling to issue further debt to the struggling sector, due to the downside of lending to distressed property projects.
Beijing municipal authorities propose measures to support tech unicorns
South China Morning Post
The municipal government of Beijing has introduced a set of measures to support China's technology unicorns, including helping them prepare for domestic and overseas public listings. The measures aim to assist unicorns with talent acquisition, marketing, innovation, fundraising, and public listings. The government will facilitate public listings by fast-tracking applications to list on the Beijing Stock Exchange. The measures also include generous financing options and support for AI firms. Beijing is home to more than one-third of China's core AI companies.
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