Xi Jinping to meet California’s Newsom in latest sign Biden talks to follow; Xi says he is willing to cooperate with US, ahead of potential meeting with Biden
Measuring corruption in China; Net outflow of funds from China hits 7-year high in September
Welcome to this issue of The China Brief. Today is October 25, 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.
Japan Times
Bribery of public officials is a major problem in both developing and developed countries. Studies have shown that corruption hinders economic growth and development, leading governments to increase efforts to combat corruption. China's anti-corruption campaign has resulted in the arrest or indictment of numerous high-ranking officials since 2013. Corruption raises the cost of doing business, hindering economic efficiency and fairness. Estimating the extent of bribery is difficult, but the permanent income theory can be used to establish a connection between household wealth and large consumer purchases.
Anticipation builds for Xi Jinping-Joe Biden summit as Chinese, US officials meet
Yahoo US
There are signs that preparations are under way for an anticipated summit between Xi Jinping and Joe Biden next month, analysts say, with more official exchanges between the two sides. Chinese Foreign Minister Wang Yi will visit Washington from Thursday, potentially to firm up details of a meeting that has yet to be confirmed between the Chinese and US presidents at the Asia-Pacific Economic Cooperation forum in San Francisco. Analysts say an increase in official exchanges between the two powers – from their deputy foreign ministers to the economic and financial working groups and Wang's Washington trip – indicated preparations could be under way for a leaders' summit. Sources familiar with the matter have told the Post that the US has invited China for the Apec meeting but there has been no invitation for a Xi-Biden summit as yet – they said that could happen if Wang and Blinken reach an agreement this week. Biden has not travelled to China as president.
Xi Jinping to meet California’s Newsom in latest sign Biden talks to follow
South China Morning Post
California Governor Gavin Newsom is meeting with Chinese President Xi Jinping during his controversial trip to China, which is focused on climate change. Newsom is the first US governor to visit China since the start of the pandemic. The meeting comes as expectations rise for Xi and US President Joe Biden to hold talks on the sidelines of the Apec summit in San Francisco in November. Newsom's trip has been met with criticism from both Republicans and Democrats due to tensions over Taiwan, human rights, and technological rivalry.
China’s Xi Meets California Governor Gavin Newsom in Beijing
Bloomberg
Chinese President Xi Jinping met with California Governor Gavin Newsom in Beijing, marking the first time in over six years that the leader of China has met with the governor of a US state. The meeting took place in the Great Hall of the People, a significant venue typically reserved for top dignitaries. Newsom expressed California's interest in driving green partnerships and innovation with China. The meeting comes as China and the US work to stabilize their relationship amidst tensions over various issues such as Taiwan, espionage, and trade. There are also reports that a meeting between President Joe Biden and Xi may take place at next month's Asia-Pacific Economic Cooperation summit in San Francisco.
Chinese defense chief’s ouster opens door to better military ties with U.S.
Japan Times
Chinese Defense Minister Li Shangfu has been removed from key government posts, including the defense portfolio, in a move backed by President Xi Jinping. Li, who had been sanctioned by the United States, had been a hindrance to improving ties between China and the US. His removal now opens up an avenue for resuming high-level military talks between the two countries.
Hong Kong announces steps to boost growth and restore global status
Nikkei Asia
Hong Kong Chief Executive John Lee has announced measures to stimulate the economy, including easing stamp duties to revive the property market. The economy is expected to grow by 4% this year after shrinking by 3.5% in 2022. Lee also outlined plans to enact anti-espionage laws and boost cybersecurity, as well as enhancing national security education. The government will also set up a unit to promote Chinese culture and establish two museums to showcase national history. The measures come as Hong Kong faces ongoing criticism for its implementation of the national security law and declining birth rates.
‘Fundamental rethink’: Investors dump China shares despite new efforts to shore up the economy
CNN
Investors have withdrawn more than $22bn from China's A-Share market in the three months to 19 October, the highest outflow in the platform's history, according to Morgan Stanley. The wave of selling is due to a lack of confidence in Beijing's ability to deal with the country's economic slowdown, restrictions on foreign businesses and tensions between China and the US.
Country Garden trustee notice declares bond default after missed coupon payment
South China Morning Post
Chinese property developer Country Garden Holdings has been declared in default on a dollar bond for the first time, leading to speculation that it may be headed for one of China's largest-ever restructurings. The builder failed to pay $15.4m of dollar bond interest by the end of the grace period. Country Garden has hired advisers to review its capital structure and its shares have fallen 74% this year.
‘Illogical’: China’s former envoy to EU hits back at Josep Borrell speech
South China Morning Post
China's former ambassador to the EU, Wu Hailong, has criticised the EU's narrative on bilateral ties and its criticism of Beijing. Speaking at a forum in Beijing, Hailong called on the bloc to have more empathetic reasoning when managing its relationship with China and accused the EU of placing greater emphasis on the "negative side" of China-Europe relations. Hailong's comments come as China and the EU have resumed more in-person high-level dialogue over recent months.
Chinese scientist makes history by winning the US’ top physics prize
South China Morning Post
Chinese physicist Xue Qikun has become the first Chinese scientist to receive the Oliver E. Buckley Condensed Matter Physics Prize from the American Physical Society. Xue was awarded the prize jointly with Ashvin Vishwanath of Harvard University. The prize recognises their work on topological insulators, a class of materials with properties that make them ideal for the development of low-energy consumption electronics. Xue has been a leading researcher in this field for over a decade, and his team was the first to experimentally observe topological insulation.
US and Australia set to announce infrastructure plan for Pacific Island nations
South China Morning Post
The US and Australia are planning to provide infrastructure and development alternatives to Pacific Island nations, including the laying of submarine cables and building of wharves, according to officials in US President Joe Biden’s administration. The officials said that the plan will be made public during Australian Prime Minister Anthony Albanese’s state visit to Washington this week, and suggested that military agreements involving both countries and Japan may also be announced. The move is seen as a response to China’s Belt and Road Initiative, which has seen Beijing spend over $1tn on infrastructure projects globally.
Net outflow of funds from China hits 7-year high in September
Nikkei Asia
China experienced its biggest decline in net outflows of investment capital in seven years and eight months in September. The exodus is being driven by foreign companies scaling back operations in China and wealthy Chinese shifting funds abroad. The Chinese government is imposing new restrictions on investors as it grows increasingly concerned about capital flight and downward pressure on the Chinese currency. The net outflow reached $53.9bn in September, the largest amount since January 2016.
Hong Kong cuts taxes for foreign home buyers and stock traders as it seeks to maintain global status
Yahoo US
Hong Kong's Chief Executive, John Lee, has cut taxes for homebuyers and stock traders in an effort to boost markets and maintain the city's reputation as a global financial hub. Stamp duties imposed on non-resident buyers and local homeowners seeking to purchase additional properties will be halved, the first easing of property cooling measures in the past decade. Meanwhile, stamp duty on stock transactions will be reduced to 0.1% from 0.13%. Hong Kong's economy has begun to recover following the easing of COVID-19 restrictions, with 2.2% growth in H1 2023, and the government expects growth of 4-5% for the year.
Hong Kong to introduce own national security law in 2024
Al Jazeera
Hong Kong leader John Lee has announced that the Chinese territory will introduce its own national security law in 2024. This comes four years after Beijing imposed its own legislation, which has been criticized for undermining freedoms. The Chinese law, which was implemented following protests in Hong Kong, made acts such as secession, subversion, terrorism, and collusion with foreign forces punishable with life imprisonment. Lee stated that the government was “pressing ahead” with legislative options on security and would complete the legislative exercise in 2024. Beijing’s security law has led to the exile of pro-democracy politicians and activists, the closure of critical media outlets, and the overhaul of Hong Kong’s political system.
China bans imports of ruminant animals from Belgium, Netherlands after bluetongue disease
Reuters
China has banned imports of ruminant animals and products from Belgium and the Netherlands after an outbreak of bluetongue disease, according to two statements from China customs.
China willing to provide necessary information on Baltic Sea pipeline probe
Reuters
China has stated that it is willing to cooperate with an investigation into the damage caused to a Baltic Sea gas pipeline. The damage is believed to have been caused by a ship dragging an anchor along the seabed, and Finnish police are investigating whether a Chinese container vessel was involved.
US orders immediate halt to some AI chip exports to China, says Nvidia
Guardian
The US has accelerated the deadline for chip designer Nvidia to impose new restrictions on the export of some of its high-end artificial intelligence (AI) chips to China. The company did not disclose the reason for the accelerated timing, but it does not expect an immediate impact on its earnings. The restrictions, announced by the Biden administration in October, aim to prevent countries such as China, Iran, and Russia from receiving advanced AI chips. The move affects Nvidia's A800 and H800 chips, as well as the A100, H100, and L40S chips.
Evergrande did not file court documents by requested time -source
Reuters
China Evergrande Group has reportedly failed to submit defence documents to a Hong Kong court ahead of a winding-up hearing scheduled for next Monday. The court had directed Evergrande to submit new documents by mid-last week, but it remains unclear whether the company will make the submission or request another adjournment. Failure to demonstrate progress on a restructuring plan could increase the likelihood of a winding-up order. Evergrande, the world's most indebted property developer, defaulted on its offshore debt in late 2021 and has been working on a $31.7bn debt restructuring plan.
China says investigation into Apple supplier Foxconn is ‘normal law enforcement’
South China Morning Post
China has described its investigation into Apple's key contract manufacturer, Foxconn, as a routine police matter. Beijing's Taiwan Affairs Office stated that the investigation was in line with laws and regulations, and that Taiwan businesses should play a greater role in promoting peaceful development of cross-strait ties. The Chinese government rarely explains the actions of its regulators, leading to speculation that the Foxconn inquiry is politically motivated. Foxconn's founder, Terry Gou Tai-ming, resigned from the company's board last month, as he campaigns to become president of Taiwan.
Foxconn founder Terry Gou lies low in Taiwan election as China tax probe reverberates
Reuters
Terry Gou, billionaire founder of major Apple supplier Foxconn, is seeking to become Taiwan’s next president. Gou has stepped back from running Foxconn, the world’s largest contract manufacturer, but there is speculation that he is being investigated for tax evasion. Chinese newspaper the Global Times has suggested that the probe is linked to Gou’s presidential bid, as his success would split the opposition vote and favour Taiwan Vice President Lai Ching-te, who China claims is a separatist. Gou has positioned himself as “Taiwan’s CEO” and has blamed rising tensions with China on the Democratic Progressive Party’s hostility to Beijing.
China Signals Zero Tolerance For Sharp Economic Slowdown With Rare Steps
Bloomberg
China has increased its headline government deficit to the largest in three decades, unveiled a sovereign debt package that marked a shift from its traditional growth model, and President Xi Jinping made an unprecedented trip to the central bank. The stimulus is expected to raise the country's GDP growth by 0.1 percentage points in the fourth quarter, and 0.5 percentage points in 2024, according to Bloomberg Economics. The move could be a signal that Beijing is "taking steps to help local governments, which are facing constraints in delivering stimulus", said economist David Qu.
China approves $139bn in new bonds to bolster economic recovery
Nikkei Asia
China has approved the issuance of 1 trillion yuan ($139 billion) in new bonds, its first budget revision in years. The move comes as China looks to boost confidence amid limited signs of an economic recovery. The extra funding will be used for reconstruction in disaster-hit regions and flood control, helping to ease local governments' mounting debt and declines in key revenue from land sales. The stimulus is likely aimed at revving up optimism rather than reconstruction, analysts said. China's economic growth slowed to 4.9% in the July-September period, from 6.3% in the previous quarter, as a property crisis hurt confidence despite higher infrastructure spending.
China chases US and Russia guided-missile submarine capabilities with new vessels
Reuters
China has launched its first nuclear-powered guided missile submarines, giving it the ability to conduct long-range precision strikes against land targets from its submarine and surface combatants, according to a report from the Pentagon. The submarines, known as SSGNs, will enhance China's power projection capability and pose a threat to US aircraft carriers. The report also notes that China's submarine fleet, both nuclear and diesel powered, could number 65 vessels by 2025. China is currently constructing a new generation of nuclear-armed submarines as part of its evolving deterrent force.
Xpeng aims to make smart driving technology available across China by end-2024
South China Morning Post
Chinese electric vehicle (EV) start-up Xpeng plans to expand the use of its advanced driver assistance system (ADAS) to 50 mainland cities by the year-end and nationwide by the end of 2024, as it seeks to maintain an edge over rivals in smart-driving capabilities. The X NGP (Navigation Guided Pilot) software will be rolled out in 20 mainland Chinese cities next month and another 25 in December, allowing some of the company’s models to self-navigate. Xpeng plans to deliver semi-autonomous cars in more urban areas and expand to Europe by 2024.
Xi says he is willing to cooperate with US, ahead of potential meeting with Biden
Guardian
Chinese President Xi Jinping has said his country is willing to cooperate with the US and work together to respond to global challenges, according to state media. Xi's comments come ahead of a key visit to Washington by China's foreign minister, Wang Yi, later this week, and amid hopes of a meeting between Xi and US President Joe Biden later this year. US-China relations have plummeted in recent years, and attempts to repair ties earlier this year were dashed by the spy balloon saga in January, when US authorities shot down a balloon it said was Chinese spycraft flying in US airspace.
China-US conflict should ‘never be allowed’, Beijing ambassador to US says
South China Morning Post
China's ambassador to the US, Xie Feng, has said that a conflict between the two countries should "never be allowed" and that decoupling their economies will "never work." Speaking at an event in New York, Xie described the relationship between China and the US as the "most important bilateral relationship in the world" and said that neither side could "transform or displace the other." Xie also read out a letter from Chinese President Xi Jinping, who called for mutual respect, peaceful coexistence, and win-win cooperation.
California Gov. Newsom has rare friendly exchange with China’s senior diplomat Wang Yi
Associated Press
California Governor Gavin Newsom met with China’s senior diplomat Wang Yi during his weeklong tour of China, where he is pushing for climate cooperation. The meeting between Newsom and Wang was marked by a brief moment of friendliness, which contrasts with the tense dialogue between the US and China in recent years. Newsom’s visit to China is drawing attention as it comes after years of heightened tensions between the two countries. Newsom vowed to continue cooperation on climate change regardless of the outcome of the next US presidential election.
China said the US is a disruptor of peace in response to Pentagon report on China’s military buildup
Associated Press
China has accused the United States of being the "biggest disruptor of regional peace and stability" in response to a Pentagon report on China's military buildup. The report, which is required by Congress, assesses China's military capabilities and is seen by the US government as its key threat in the Asia-Pacific region. In its response, China called the report's findings false and criticized the US for its recent actions in Ukraine and Israel, as well as its global military installations. The report warns that China is rapidly expanding its nuclear force and is on track to quadruple the number of warheads it possesses by 2035.
Mitsubishi to withdraw from China, invest in Renault's EV venture
Japan Times
Mitsubishi Motors has announced that it will withdraw from the Chinese market due to a sales slump. The Japanese automaker had halted production in China in March and will stop selling cars as soon as the inventory runs out. In an effort to speed up the development of zero-emission vehicles, Mitsubishi will invest up to €200 million ($212 million) in Renault's electric vehicle venture.
Alibaba, Xiaomi pace Hong Kong stock rally on Beijing’s extra fiscal stimulus
South China Morning Post
Hong Kong stocks rose after China announced that it will sell an additional CNY 1 trillion ($137 billion) of bonds, signaling further fiscal stimulus to strengthen economic recovery. The Hang Seng Index jumped 2% to 17,327.85, rebounding from an 11-month low. Tech stocks also surged, with the Tech Index rising 3.6%. The Shanghai Composite Index added 0.6%. This move follows recent measures to shore up confidence in the Chinese stock market, including central Huijin Investment buying exchange-traded funds tracking onshore stocks.
China passes patriotic education law for children, families -state media
Reuters
China's national legislature has passed a law to strengthen patriotic education for children and families in order to counter challenges such as "historical nihilism" and safeguard "national unity". The law provides a legal guarantee for carrying out patriotic education and outlines the responsibilities for central and local government departments, schools, and families. The law will take effect on January 1, 2024. It mandates that patriotic education respects the "history and cultural traditions of other countries and draws inspiration from all of human civilization's outstanding achievements." The law also includes targeted measures for different groups of people, including government officials and residents in Hong Kong, Macau, and Taiwan.
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