Xi to Make His First Visit to Shanghai Since 2021; Record numbers sit for China civil service exam, hoping for job security; Jack Ma Gets Back Into Business With ‘Ma’s Kitchen Food’
Chasing a different dream, China's tech nomads head for the hills; Beijing stock exchange tells 'major shareholders' to refrain from selling -sources
Welcome to this issue of The China Brief. Today is November 27, 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.
Xi to Make His First Visit to Shanghai Since 2021, SCMP says
Bloomberg
Chinese President Xi Jinping will visit Shanghai this week in his first trip to the city since it underwent a two-month Covid lockdown earlier this year. During his visit, Xi is expected to visit the Shanghai Futures Exchange and several technology companies. The trip is scheduled to last three days and coincides with the 10-year anniversary of the Shanghai free-trade zone. Xi is expected to encourage city officials to boost market liberalization efforts to boost cross-border trade and capital flows. This visit follows Xi's recent pledge to improve China's business environment for foreign investors.
Alibaba's research arm shuts quantum computing lab amid restructuring
Yahoo US
Alibaba has closed its quantum computing laboratory and team, with both being donated to Zhejiang University. The lab was part of the online retailer's DAMO Academy, which conducts research into AI and machine learning. The lab's 30 employees will be offered jobs with the university.
China Remains Risk for EM Equity Rally Driven by Earnings, Flows
Bloomberg
Emerging-market stocks have dipped following a four-week rally, as concerns about China's economic recovery and inflation persist. The MSCI Emerging Markets Index slipped 0.2% after data showed slower industrial-profit growth in China, highlighting the persistent deflation pressures. Despite the pause, sentiment is improving for emerging-market stocks after a turbulent year. Flows into developing-nation equities have also improved, with BlackRock's ETF that buys equities outside China seeing seven successive weeks of net deposits. Additionally, investors have poured $20m into bond funds dedicated to emerging markets, following a 16-week streak of outflows.
Chinese families of missing Malaysia MH370 plane seek compensation in court
Reuters
Chinese relatives of passengers on board Malaysia Airlines Flight MH370 have begun compensation hearings in Beijing. The flight disappeared over the Indian Ocean almost a decade ago, with over 150 Chinese passengers on board. Malaysian investigators have not ruled out the possibility that the aircraft was deliberately taken off course, with debris confirmed or believed to be from the aircraft washing up on African coastlines and islands in the Indian Ocean. Relatives are seeking compensation from Malaysia Airlines, Boeing, Rolls-Royce and Allianz among others.
China's respiratory illness surge not as high as pre-pandemic - WHO official
Reuters
China is currently experiencing a spike in respiratory illnesses, but it is not as severe as previous outbreaks before the COVID-19 pandemic, according to Maria Van Kerkhove, an official from the World Health Organization (WHO). Van Kerkhove stated that the increase in cases appears to be due to a rise in the number of children contracting pathogens that they had not been exposed to during the COVID-19 restrictions. The WHO has requested more information from China about the recent cases. Chinese health officials have attributed the surge in respiratory illnesses to the simultaneous circulation of several pathogens, including influenza. Health officials in China are urging local authorities to increase the number of fever clinics as hospitals report long waits, particularly in northern areas. There are concerns of a potential second wave during the New Year holidays, with the elderly being at higher risk of infection during family gatherings.
Hong Kong’s Exports Unexpectedly Grow as China Demand Improves
Bloomberg
Hong Kong's exports grew by 1.4% in October from a year earlier, marking the first month of growth since April 2022. The improvement was driven by better trade with mainland China, with exports to the region growing by 5.6%. However, the government warned that the overall export performance remained weak due to the difficult external environment, including geopolitical tensions and tight financial conditions. Hong Kong recently lowered its economic growth forecast for this year to 3.2% amid a muted post-pandemic recovery. The previous forecast was a growth range of 4% to 5%.
Unlike Japan, China’s property crisis won’t lead to lost decades
South China Morning Post
China's property market bubble has burst and the country is now facing a slowdown. There are fears that China may suffer a "Japanisation", similar to Japan's lost decades after its economy declined in the late 1990s. However, China's situation is different and there are lessons it can learn from Japan. China has a massive property sector, estimated to account for 23% of its GDP, but the construction boom has created diminishing returns, particularly in small and medium-sized cities. China's focus should shift to other industries with higher investment yields to achieve short-term economic revitalisation.
New Taiwan Poll Shows Ruling Party Leading After Alliance Fails
Bloomberg
Taiwan’s ruling Democratic Progressive Party (DPP) Vice President Lai Ching-te has gained the support of 34% of respondents in a survey conducted by broadcaster TVBS. Hou Yu-ih of the Kuomintang was second with 31% and Ko Wen-je of the Taiwan People’s Party had 23%. The poll was taken between 24-26 November. The failure of an opposition alliance between Hou and Ko will improve Lai’s chances of victory in the January presidential election, as it splits the opposition vote.
China leads world in EV infrastructure but lags in consumer spending power: study
South China Morning Post
China ranks seventh out of 40 countries in terms of its readiness for electric vehicles (EVs), according to a report by Euromonitor International. The country scored highly in infrastructure maturity due to a strong investment in public charging stations and fast chargers, which have encouraged the adoption of EVs. However, China ranked 36th in average consumer spending power due to relatively low disposable household income. Overall, Norway, Switzerland, and Sweden were the top three most EV-friendly markets, while India, South Africa, and Brazil took the last three spots due to limited government incentives and low incomes.
Record numbers sit for China civil service exam, hoping for job security
Reuters
A record-breaking three million people in China took the annual civil service exam, reflecting young people's concerns about job security in a struggling economy. With high youth unemployment, many are turning to civil service careers as private sector job opportunities decline. The exam took place in 237 cities across the country, with a record high of 39,600 vacancies available in central government agencies and affiliated institutions. The competition for positions is fierce, with an average of 77 candidates vying for each job. The government has implemented various policy measures to revive the economy, but the number of people seeking graduate school education has also declined due to job insecurity.
China's money market shows signs of liquidity tightness towards month-end
Reuters
China's money market is showing signs of tightness as market participants become cautious about month-end demand and the recent liquidity squeeze. Despite liquidity injections by the central bank, borrowing costs for funds that could help financial institutions, especially non-banks, remain high. The benchmark seven-day repos traded in the interbank market reached a high of 2.8%, the highest level since 31 October. Non-bank institutions are paying around 3.5% for such repos, according to traders. The People's Bank of China injected a net CNY296bn ($41.05bn) through reverse repos in open market operations on Monday, the third consecutive session of net cash offerings.
Chasing a different dream, China's tech nomads head for the hills
Japan Times
Dali, a mountain town in China's southwest, has become a haven for individuals seeking open discussion and the exchange of ideas in a country where personal freedoms are restricted. As Chinese President Xi Jinping tightens his grip on citizens' freedoms and the economy struggles, Dali has attracted former city dwellers looking to escape the pressure. The town offers cheap rents, a mild climate, stunning scenery, and a history of relative tolerance. Dali's Old Town district, part of a larger city, has been popular among culture workers since the late 1990s, and remote work opportunities and less restrictive policies during China's COVID-19 crackdown have increased its appeal.
China Investors Face Tens of Billions in Losses Over Zhongzhi
Bloomberg
Chinese shadow banking giant Zhongzhi Enterprise Group is facing a criminal probe, with lawyers and analysts estimating that investors could lose $56bn. Ying Yue, a lawyer at Leaqual Law Firm in Shanghai, estimates that investors may only recover $14bn from the $56bn debt of Zhongzhi. Sun Jianbo, founder of Beijing-based asset manager China Vision Capital, expects that investors may recoup around 13% of their money. Authorities have opened criminal investigations into Zhongzhi after it warned of severe insolvency and revealed a shortfall of $36.4bn in its balance sheet.
https://www.bloomberg.com/news/articles/2023-11-27/china-investors-face-tens-of-billions-in-losses-over-zhongzhi?srnd=next-china
Chinese court hears suit on missing Malaysia Airlines flight MH370
Nikkei Asia
A Chinese court has held the first hearing of a liability lawsuit filed by relatives of passengers on Malaysia Airlines flight MH370, nearly 10 years after the aircraft went missing. Malaysia Airlines, along with aircraft manufacturer Boeing, its engine provider Rolls-Royce and German insurer Allianz Insurance, have been named defendants. The airline is accused of setting "unreasonable preconditions" and dodging payouts. Malaysia Airlines has not commented on the case, nor has the Malaysian Ministry of Transport, which supervised the initial search and rescue mission for MH370.
China’s CSI 300 Index leans towards tech firms in latest biannual review
South China Morning Post
China's CSI 300 Index, which tracks the performance of the top 300 companies listed on the Shanghai and Shenzhen Stock Exchanges, will add more tech stocks to its constituent companies as part of its biannual review. The move comes as China seeks to reduce its dependence on credit-fuelled investment and increase the importance of the technology and consumer sectors in driving economic growth. Inclusion in the index is expected to boost the representation of information technology, industrial and telecoms services firms in the gauge, with shares in Cambricon Technologies, Empyrean Technology and Hygon Information Technology all set to be added.
Exclusive: Beijing stock exchange tells 'major shareholders' to refrain from selling -sources
Reuters
The Beijing Stock Exchange has implemented a policy preventing major shareholders from selling stock, in order to prevent a market downturn. Major shareholders, defined as those with a stake of 5% or more, are required to make a public filing in order to sell shares. However, the Beijing exchange has been rejecting these filings, effectively preventing major shareholders from selling their stock. It is unclear how long this policy will remain in place.
Alibaba Shuts Quantum Computing Lab in Sign of Broader Cutback
Bloomberg
Alibaba has closed down its quantum computing research lab as part of ongoing efforts to cut costs and improve profitability. The lab, known as the DAMO Academy, was established in 2017 and was responsible for research into cutting-edge technologies. The move will result in the loss of around 30 staff members, although Alibaba may help some of them find positions at Zhejiang University, where the company is based. The closure comes after Alibaba recently scrapped the planned spinoff and listing of its cloud services division.
Biden expected to skip COP28 climate summit in UAE
Financial Times
US President Joe Biden will not be attending the COP28 climate summit in the United Arab Emirates, according to US officials. Although his absence had been expected due to other commitments, it comes as a surprise given Biden's focus on climate change and his attendance at the last two climate summits. The decision could impact Biden's standing with young Democratic voters, who see climate as a top issue. Despite Biden's absence, his top climate advisers are expected to attend the summit, which is likely to address the issue of emerging economies' reliance on fossil fuels.
Are we headed for a new dynasty of US-China relations after Xi-Biden meeting?
South China Morning Post
The recent meeting between US President Joe Biden and Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (Apec) summit in San Francisco marked a pause in deteriorating bilateral relations. The meeting resulted in several agreements, including a pledge to cooperate on fentanyl, discussions on the risks of artificial intelligence, and the resumption of military-military communication. However, the business community remained sceptical and concerned about China's investigations of US companies operating in the country. The meeting was criticised by some US government officials and activists who were critical of engagement with China. The Federal Retirement Thrift Investment Board also announced that it would exclude investments in Hong Kong from its international fund.
Mine accidents surge in China's top coal province as producers raise output
Reuters
The death toll from coal mining accidents in China's Shanxi province has reached 100 people so far this year, according to China's cabinet. This represents a 53% increase from the previous year. The accidents have raised concerns about the inadequate safety measures in the province's coal mines. In response, the State Council's Security Committee will station a team in the province from November 2023 to May 2024 to address the safety issues. The announcement caused a 5% jump in coking coal futures prices. Despite efforts to tighten safety standards, China's coal mining sector has experienced several accidents this year.
China regulator approves first batch of consumption-related REITs
Reuters
China's securities regulator has approved three applications to launch the country's first publicly traded commercial real estate investment trusts (REITs) products. The REITs will be backed by consumption-related infrastructure projects such as shopping malls, supermarkets, and other retail-focused properties. This marks the first batch of approvals for commercial REITs by the China Securities Regulatory Commission (CSRC).
Jack Ma Gets Back Into Business With ‘Ma’s Kitchen Food’
Bloomberg
Jack Ma, the co-founder of Alibaba Group Holding Ltd., has set up a new company called "Hangzhou Ma's Kitchen Food" that will sell packaged agricultural products. This move comes as Ma has largely retreated from the spotlight since 2020 when Beijing cracked down on his companies Alibaba and Ant Group. Ma has since focused on agricultural pursuits through his foundation and has joined other entrepreneurs in supporting the Communist Party's "common prosperity" initiative. Few details have been released about Ma's new venture.
For economy to flourish, China must ‘spell out, ram home’ private sector’s role
South China Morning Post
Beijing must abandon old theories and introduce new doctrines to support China's private economy, according to a think tank member. The private sector's investments have remained in contraction despite a 31-point policy package launched in July. "The Chinese economy will surely flourish if private firms can thrive," said Teng Tai, a member of a think tank under the semi-official All-China Federation of Industry and Commerce.
Will Livestreaming Be TikTok’s Amazon-Killer?
WSJ
TikTok is expanding its e-commerce platform in the US, aiming to tap into the growing trend of social shopping. The video app, owned by Chinese firm Bytedance, launched its e-commerce service in the US in September, having already found success in China and Southeast Asia. TikTok hopes to increase its gross merchandise value to $20bn globally this year, up from less than $5bn in 2022. However, political scrutiny in the US and other regions could pose challenges for the platform. TikTok has already been forced to suspend its e-commerce operations in Indonesia due to a government ban on social media e-commerce transactions.
ByteDance Fires Hundreds, Slashes Games Arm in Major Retreat
Yahoo US
ByteDance is reportedly planning to cut hundreds of jobs in the gaming sector and wind down its Nuverse brand, according to people familiar with the matter. The Chinese tech firm is also considering selling Shanghai Moonton Technology, a high-profile studio it acquired for $4bn. ByteDance has struggled to gain share from Tencent, the dominant player in the Chinese gaming market.
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