Xi to Meet Schumer, US Senators Amid Tension on Hamas-Israel War；South Korean firms get waiver on US chip gear supplies to China
Will culture be China’s most important addition to Xi Jinping Thought? Hamas-Israel conflict is likely to spill over to many nations；HSBC to acquire Citi's retail wealth management business in China
Welcome to this issue of The China Brief. Today is October 9, 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.
Hamas-Israel conflict is likely to spill over to many nations
Nikkei Asia
The Israeli response to Hamas's terrorist attack will be a full-scale war, with a ground invasion of Gaza. Israel's leaders will not rest until Hamas is comprehensively destroyed. However, given Hamas's close proximity to civilian infrastructure in Gaza, a military action will result in high civilian casualties. Israel did not anticipate this attack and it marks its most serious intelligence failure in decades. The conflict could potentially escalate and spread to other regions, leading to heightened risk of terrorism. The Abraham Accords and Saudi-Israeli rapprochement talks will also be impacted.
Xi to Meet Schumer, US Senators Amid Tension on Hamas-Israel War
Bloomberg
Chinese President Xi Jinping is set to meet with a bipartisan delegation of US senators on Monday, amid tensions over China's response to the violence between Israel and Hamas. Senate Majority Leader Chuck Schumer criticized China's lack of support for Israel during these "tough, troubled times," urging China to stand with Israel and condemn the attacks. The US delegation's trip aims to address issues of economic reciprocity, the role of Chinese companies in the US fentanyl crisis, human rights, and China's support for Russia's war efforts in Ukraine. The senators also hope to meet with President Xi Jinping.
South Korean firms get waiver on US chip gear supplies to China
Reuters
Samsung Electronics and SK Hynix have been granted permission to supply US chip equipment to their China factories indefinitely, without the need for separate US approvals, according to South Korea's presidential office. The US Department of Commerce is updating its "validated end user" list, which determines which entities can receive exports of technology, to include the two South Korean chipmakers. Once included on the list, the companies will not need to obtain permission for separate export cases.
Evergrande offshore bondholders surprised by debt restructuring regulatory hurdles
Reuters
China Evergrande Group's offshore bondholder group expressed surprise at the property developer's announcement that its offshore debt restructuring plan did not meet regulatory requirements. The group stated that it had not received any documents or filings from Evergrande despite multiple requests. Evergrande had previously revealed that Chinese regulators had barred it from issuing new debt due to an investigation into its main unit, which disrupted its offshore debt restructuring plans. The bondholder group urged Evergrande to seek a resolution from regulators to allow the restructuring to proceed, warning that the base case is that the company will be liquidated at the next winding up hearing on October 30, 2023. A Hong Kong court is scheduled to hear a winding up petition against Evergrande on that day.
US Senate Majority Leader Schumer criticizes China for not supporting Israel after Hamas attack
Associated Press
US Senate Majority Leader Chuck Schumer expressed disappointment with China's lack of sympathy or support for Israel following the recent Hamas attack. Schumer, who is leading a delegation of six senators to China, urged China to condemn the attacks and stand with the Israeli people. China's Foreign Ministry statement called on both sides to exercise restraint and immediately end the hostilities, but made no mention of the Hamas attack. Schumer also emphasized the need for fair trade between the US and China and for China to provide a level playing field for American companies and workers.
ABC
Chinese diplomats have reportedly turned down requests to develop police and military infrastructure in Timor-Leste due to concerns over an “overreaction” from Australia. Timor-Leste’s president, José Ramos-Horta, stated that China had deliberately turned down offers to help develop defence infrastructure due to Australia’s sensitivities. However, he also noted that the Australian government was not concerned about Timor-Leste’s new partnership with China, as they understood the country had no desire to build a security relationship with Beijing. Australian officials have been monitoring China’s movements in Timor-Leste due to concerns over Beijing’s strategic ambitions in the Pacific.
Asean doesn’t want to be ‘forced to choose sides’, says Thai deputy PM
South China Morning Post
Southeast Asia needs to avoid being caught up in geopolitical rivalries that could lead to regional fragmentation, warned Thailand's Deputy Prime Minister Parnpree Bahiddha-Nukara. Speaking at the Hong Kong-Asean Summit 2023, Parnpree said the world had become more fragmented and that major power rivalry should be converted into a rule-based strategic competition that does not force countries in the region to choose sides. Parnpree also highlighted the importance of unity within the Association of Southeast Asian Nations in preserving regional peace and stability.
HSBC to acquire Citi's retail wealth management business in China
Nikkei Asia
HSBC is acquiring Citi Group's retail wealth management business in China as the US bank continues to wind down its Asian consumer franchise business. The move comes as HSBC builds up its wealth business in China, with the bank expecting the number of adults in the country with at least $250,000 in net wealth to double to around 351 million by 2030. Citi is exiting its consumer franchise business in China to focus on its institutional business and to capture high net worth and ultra-rich clients in China via Hong Kong.
Evergrande EV unit resumes trading, share sale faces 'uncertainties'
Nikkei Asia
Shares in China Evergrande New Energy Vehicle Group, the electric vehicle (EV) unit of property developer China Evergrande Group, have resumed trading in Hong Kong. The stock opened 5% lower than the previous close, with price movements ranging between plus or minus 9%. The EV unit’s shares had been suspended since September 28, while parent company China Evergrande and subsidiary Evergrande Property Services resumed trading last week. China Evergrande has been under financial stress due to debt and slumping sales.
UN rights body puts abusers in guardian role
Deutsche Welle
China, the United Arab Emirates, and Eritrea, all of which have a poor human rights record, are among the countries currently serving as guardians of global human rights in the UN Human Rights Council. These countries have been accused of human rights violations including reeducation camps, torture, arbitrary arrests, and forced labor. The rise of autocratic regimes globally has led to an increase in their presence on the council. China has exploited this by influencing allies to vote in favor of its national interests. Researchers have found that the human rights scores of countries sent to the council have declined considerably since the council's inception in 2006. Compliance with human rights obligations rarely plays a role in the election of council members. China has relied on African governments for support on the council, while Latin American countries, which are more democratic, have been less influenced by China. The Human Rights Council is not blocked like the UN Security Council, and resolutions reprimanding specific countries for human rights violations have increased since its founding. China has used coercion and threats to maintain support on the council.
Europe or bust? A wary EU braces for a wave of made-in-China electric cars
South China Morning Post
The European Union's trade department has launched an investigation into subsidies in China's electric vehicle (EV) sector due to concerns over the "flood" of Chinese EVs entering the European market. Around 19% of China's global EV exports have landed in Belgium's Zeebrugge Port this year, which has become the busiest automotive hub in the world. Last year, over 200,000 cars were imported from Shanghai to the port, with Chinese EV brands accounting for 3.7% of the EU market. The investigation could result in import duties being placed on Chinese EVs, though China has warned it will retaliate if this occurs.
China targets 30% growth in computing power in race against U.S.
Reuters
China plans to increase its aggregate computing power by over 30% by 2025, according to a plan released by authorities. The plan, released by six Beijing departments including the Ministry of Industry and Information Technology (MIIT), aims to reach a total computing power of 300 EFLOPS (one quintillion floating-point operations per second) by 2025. China's computing power has already reached 197 EFLOPS this year, up from 180 EFLOPS in 2022. The plan also includes building more data centres across the country and improving computational infrastructure in western China.
Asia's arms race: China's 'breakthroughs' with nuclear-armed submarines
Japan Times
China is reportedly on track to have its new generation of nuclear-armed submarines, known as the Type 096 ballistic missile submarine, operational before the end of the decade. These submarines are expected to pose a challenge to US and allied efforts to track them. Evidence suggests that the submarines will be much quieter than previous models, making them more difficult to detect. This development is seen as part of an intensifying submarine arms race in the region.
Chinese Oil Refiners Brush Off Threats to Iranian Crude Supply
Bloomberg
Chinese oil refiners, known as teapots, are confident that their flows of Iranian oil will continue despite the recent attack on Israel by militant group Hamas. The refiners believe that the US will seek to avoid a surge in global crude prices and will not crack down on Iranian oil imports. This comes as China's purchases of Iranian oil have surged this year, reaching 1.5 million barrels a day in August. However, there are risks that stricter enforcement of US oil sanctions against Iran could occur if Iran is found to have played a role in the recent attacks.
Asian Games come to close in Hangzhou
Japan Times
The 19th Asian Games concluded with a closing ceremony in Hangzhou, China, after more than two weeks of competition involving 12,000 athletes from 45 countries and regions. Chinese Premier Li Qiang attended the event, while President Xi Jinping declared the start of the games at the opening ceremony. The games were held without face masks for athletes, spectators, and organizing staff, after being postponed for a year due to the pandemic.
Will culture be China’s most important addition to Xi Jinping Thought?
South China Morning Post
Chinese President Xi Jinping's ideology on culture, called Xi Jinping Thought on Culture, was officially unveiled at a national meeting of senior leadership in Beijing. It is the latest addition to Xi's political doctrines and is seen as the most important pillar to date. The doctrine focuses on propaganda, news, and public opinion, and aims to strengthen the party's leadership, promote Chinese culture internationally, and build China's soft power. Analysts believe the cultural aspect is fundamental to the party's leadership and spreading the appeal of Chinese culture. Propaganda officials will be busy learning the new doctrine in the coming months.
China Plans Big AI and Computing Buildup in Boon for Local Firms
Bloomberg
China plans to increase its computing power by more than a third by 2025, in an effort to boost technology self-reliance amid US sanctions. The country aims to achieve over 300 exaflops of computing capacity across its tech sector, up from 220 this year. This move is part of China's broader plan to construct digital infrastructure to stimulate economic growth. It also plans to build 20 smart computing centers and install larger optical networks and more advanced data storage. The additional computational power will support various sectors including manufacturing, education, finance, transportation, healthcare, and energy. China also aims to strengthen its supply chain security by developing controllable solutions and encouraging the use of home-grown, reliable software.
Some in Congress want to cut Ukraine aid and boost Taiwan’s. But Taiwan sees its fate tied to Kyiv’s
Associated Press
Taiwan and Ukraine have become rivals for US military assistance, with Republicans divided over where to direct the funds. Georgia Republican Mike Collins has voted against military aid to Ukraine, instead advocating for arming Taiwan. The Taiwanese government has argued that the success of Ukraine is crucial to their own survival, but has avoided commenting on the US debate over continued funding for Ukraine. China claims sovereignty over Taiwan and has taken military action near the island, amplifying concerns over armed attacks.
Ex-chairman of China Everbright Group Li expelled from Communist party and post
Reuters
Li Xiaopeng, former party chief and chairman of China Everbright Group, has been expelled from the Communist Party and his post for severe violations of discipline and law, including bribery. Li is the latest Chinese financial executive to be found guilty under President Xi Jinping's anti-corruption campaign. The probe found that Li accepted bribes, held stakes in non-listed companies, and misused power to grant loans and business contracts in exchange for money. Li's punishment comes after the former chairman of Bank of China was expelled from the party for illegal activities and taking bribes.
China stocks fall by most in 2 weeks as war clouds global growth outlook
South China Morning Post
Stocks in mainland China dropped as trading resumed after a week-long holiday. The concern over the Israel-Hamas war impacting global growth outlook led to the retreat. Hong Kong delayed trading due to a typhoon and black rainstorm warning. The Shanghai Composite Index fell by 0.7%, and the CSI 300 Index and Shenzhen Composite Index also saw declines. Higher oil prices could stoke inflation and prevent or delay global central banks from tightening their policies. China's government reported a 4.1% increase in tourism revenue during the golden week holiday. In other major Asian markets, Japan's Nikkei 225 slipped 0.3%, South Korea's Kospi rose 0.2%, and Australia's S&P/ASX 200 added 0.4%.
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