Xi Jinping urges China to seize AI opportunities to modernize industry; Exclusive Insight: Unleashing Local Debt: China's Shift to Flexible Borrowing and its Impact on GDP
U.S. seeks meeting with China defense minister after being spurned; He smelled something strange in his Tibetan hotel room. It was a dead body under his bed
Welcome to this issue of The China Brief. Today is May 6, 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.
Exclusive Insight: Unleashing Local Debt: China's Shift to Flexible Borrowing and its Impact on GDP
Following 2008, the Budget Law started to relax restrictions on local governments borrowing directly. In 2009, the central government began acting as an agent for local governments to issue a small number of bonds. These bonds were issued by the central government, with the funds used by local governments, and the principal and interest were repaid by the central government upon maturity. In 2011, the central government allowed four provinces and municipalities to pilot the issuance of local government bonds on their own, with the central government repaying the principal and interest upon maturity. In 2014, the central government permitted ten provinces and municipalities to pilot the issuance of local government bonds, with the local governments repaying the principal and interest themselves upon maturity.
In August 2014, China amended the Budget Law, allowing local governments to borrow directly. Since then, bonds issued directly by local governments coexisted with the debt acquired through local government financing platform companies.
By the end of 2022, China's GDP amounted to approximately 121 trillion RMB. The central government's debt was about 24 trillion RMB; the general debt of local governments (publicly issued debt aimed at covering fiscal deficits) was around 10 trillion RMB; and the special debt of local governments (publicly issued debt intended to finance specific projects, where the project's revenue must satisfy debt principal and interest repayments) was approximately 25 trillion RMB.
The above three types of debt appear separately in the central and local governments' balance sheets and are publicly available information. The combined total of these three types of debt is around 59 trillion RMB, accounting for approximately 49% of China's GDP.
(From "Evolution and Current Situation of China's Local Government Debt" series, Part 2, by Li Weijun, Contributing Economist for The China Brief)
U.S. seeks meeting with China defense minister after being spurned
Japan Times
The US Pentagon is attempting to arrange a meeting between Defense Secretary Lloyd Austin and his Chinese counterpart, Defense Minister Li Shangfu, in Singapore next month. Sources stated that it would be the most senior in-person meeting since an alleged Chinese spy balloon was discovered in February 2021. China has rejected multiple requests for communication with Austin and General Mark Milley. If they accept, the meeting could exacerbate tensions as the US has imposed sanctions on Li for allegedly aiding weapons transfer from Russia to China.
Xi Jinping urges China to seize AI opportunities to modernize industry
South China Morning Post
Chinese President Xi Jinping has urged greater emphasis on developing artificial intelligence (AI) technology for a more modern industrial system. While the coronavirus pandemic heavily impacted the global economy, it also expedited the development of new technologies, including the implementation of AI and the Internet of Things. This new technology is becoming central to business operations, from healthcare to online shopping. Xi spoke of China's need to modernize its industry for the country's future economic strategy and international status, stating that AI science is key to this modernization. Furthermore, Xi stated that China should take advantage of the technological advancements produced by scientific research in AI to create a “harm-free and advanced” modern industrial system. Notably, this statement comes not long after the US government worked to slow the progress of Chinese technology by halting the exportation of advanced semiconductors.
He smelled something strange in his Tibetan hotel room. It was a dead body under his bed
CNN
A tourist staying in a Tibetan hotel was unknowingly residing in a room with a dead body under the bed. Mr Zhang had complained of a strong unpleasant smell and was relocated to another room. Two days later, he was informed by officers that a suspected murder victim had been discovered under his bed and that an investigation was underway, but Zhang himself was not a suspect. Over 30 people were questioned in relation to the case, and a suspect was eventually arrested.
Biden to name U.S. Air Force chief to top military post, officials say
Japan Times
US President Joe Biden is expected to announce that he has chosen Air Force chief of staff Gen. Charles Q. Brown Jr to become the chair of the Joint Chiefs of Staff, according to two unidentified US officials. If he is formally nominated he would be the second black man to hold the position after Colin Powell (1993-97). Brown’s appointment would mean that the top two Pentagon positions would be held by African American men for the first time in American history. More than 40% of those who serve in the US military are people of colour.
Iflytek Unveils ChatGPT Rival Even as China Plans AI Oversight
Bloomberg
Chinese voice-recognition company Iflytek has entered the race to build a competitor to OpenAI’s ChatGPT. CEO Liu Qingfeng unveiled its SparkDesk, employing voice-recognition prompts for enterprise and education uses that aim to exceed OpenAI’s capabilities in Chinese and reach ChatGPT's standards in English. However, Beijing’s plans for greater AI oversight have sparked concern given a series of restrictions on company development, including difficulty in acquiring high-end chips and restrictions on datasets used to train AI models. Baidu is presently considered the frontrunner in the industry in China.
Left to their own devices: the MPs and ministers embracing TikTok despite ban
The Sydney Morning Herald
More than 40 federal MPs in Australia are using TikTok, despite the government's decision last month to prohibit the social media platform on work devices. Federal Attorney-General Mark Dreyfus took advice from intelligence and security agencies before announcing the ban on using TikTok on work devices, in response to privacy concerns surrounding the China-owned platform. The most followed Australian federal politician on TikTok, Julian Hill of the opposition Labor party, has nearly 150,000 followers and over 2.3 million likes of his videos. Hill took steps to ensure data security by never installing TikTok on his work device. Some MPs are now employing social media agencies to manage their accounts, while others rely on staff to operate their accounts on personal devices.
Export orders down at 1st full post-pandemic Canton Fair in China
Nikkei Asia
China's largest trade show, the Canton Fair, saw a drop in signed export orders compared to pre-pandemic levels. The total value of offline export deals signed came to $21.69bn, down nearly a third from the $29.73bn signed in 2019. The event saw almost 130,000 buyers attend. The fair has been canceled, moved online, or held without foreign visitors since the pandemic began.
U.S. prepares to fast-track $500 million of arms for Taiwan
Japan Times
The Biden administration is preparing a $500m weapons package for Taiwan using a fast-track authority used previously for arms being shipped to Ukraine. The package will contain existing U.S. stockpiles of weapons sent under what is known as Presidential Drawdown Authority, allowing the U.S. to avoid the lengthy process of contracting and producing weapons. The U.S. Defense Department spokesman, Lt. Col. Martin Meiners, stated that this is in line with existing policy outlined in the Taiwan Relations Act. Critics argue that Congress authorized President Biden to use up to $1bn of U.S. inventory to provide security assistance for Taiwan, however, appropriations have yet to be made.
Biden adviser says a new era of nuclear risk dawning in China-Russia alliance
South China Morning Post
The growing nuclear cooperation between China and Russia could destabilize decades of international arms control, warns Pranay Vaddi, the National Security Council’s senior director for arms control under US President Joe Biden. He suggests that nuclear-armed nations need to be more forthcoming regarding potential and existing threats to avoid miscalculations, but cites a lack of interest in Beijing. Vaddi also indicates that there has been increasing worry that the era is going to be marked by potentially dangerous developments due to more countries developing weapons of mass destruction.
Will the Chinese vice president’s coronation trip to Britain help reset ties?
South China Morning Post
Britain's leaders aim to reset the relationship with China, with Foreign Secretary James Cleverly looking to meet Vice-President Han Zheng during his visit for King Charles' coronation. The relationship had soured over tensions concerning human rights, security, and Hong Kong. Cleverly hopes to discuss areas where Britain has "points of criticism." While the leaders of France, Germany, and Spain have visited China in recent months, senior British leaders have not met their Chinese counterparts in person since 2018 and have aligned themselves with the United States in taking a tough stance on China.
Pakistan set to host trilateral dialogue with China, Afghanistan
Al Jazeera
The foreign ministers of China, Afghanistan, and Pakistan will host a day-long trilateral dialogue in Islamabad, with focus on a range of regional issues. These include bilateral political-commercial relations, regional stability, and transit between Afghanistan and Pakistan. Afghanistan’s interim foreign minister, Mawlawi Amir Khan Muttaqi, was granted a travel ban exemption by the United Nations Security Council, permitting him to travel to Pakistan. The Chinese foreign minister’s trip marks his first visit to Pakistan whilst Muttaqi last traveled to Pakistan in November 2021. The visit comes as Pakistan sees a surge in violent attacks in the northwestern province of Khyber Pakhtunkhwa and the southwestern province of Balochistan, which border Afghanistan and blames attacks launched from within Afghan territory by Tehreek-e-Taliban Pakistan. However, Pakistan has continued to hold talks with the Afghan Taliban without recognizing them as the country’s lawful government and urged the international community to engage with Afghanistan's interim government.
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