Xi Touts Alternative to Western Capitalism in Speech on Mao; China's BYD set to overtake Tesla as world’s most popular EV maker
'Parasite' actor Lee Sun-kyun found dead amid drug investigation; China warns ‘military fans’ they could face prison for posting photos online
Welcome to this issue of The China Brief. Today is December 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 Touts Alternative to Western Capitalism in Speech on Mao
Bloomberg
Chinese President Xi Jinping used a speech commemorating the birth of Mao Zedong to promote his own framework for Chinese modernization and counter the West’s capitalist model. Xi described Chinese modernization as a cause passed down from Mao and the responsibility of today’s Chinese Communists. By linking his project to Mao’s legacy, Xi can be portrayed as an extension of the founder of modern China. Xi has spent his time in office consolidating power to levels unseen since Mao, which has raised concerns among investors. The Chinese propaganda machine has also drawn parallels between Mao and Xi, with a Communist Party research institute praising Mao’s achievements and morals and stating that Xi is another core leader of the party. In his speech, Xi also reiterated China’s stance on Taiwan, calling for reunification and peaceful development of cross-Strait relations.
China's BYD set to overtake Tesla as world’s most popular EV maker
Japan Times
Chinese automaker BYD is set to overtake Tesla as the global leader in fully electric vehicle sales, a shift that reflects China's growing influence in the automotive industry. China, which already rivals Japan for the global lead in passenger car exports, has seen its electric vehicle market grow rapidly in recent years. In October, 1.3 million of the 3.6 million vehicles shipped from China were electric.
'Parasite' actor Lee Sun-kyun found dead amid drug investigation
Nikkei Asia
Actor Lee Sun-kyun, known for his role in the Oscar-winning film "Parasite," has been found dead in an apparent suicide in a car at a park in Seoul. The 48-year-old actor had faced police questioning three times over accusations of illegal drug use. Lee claimed he was tricked into taking drugs by a bar hostess trying to blackmail him. The actor's agency expressed sadness at his death and urged restraint regarding false information and speculation. In South Korea, infringements of drug laws can result in jail time of up to 14 years for repeat offenders and dealers. Lee had also starred in other South Korean films and appeared in the Apple TV+ series "Dr. Brain." He is survived by his wife, award-winning actress Jeon Hye-jin, and their two children.
China’s Xi claims ‘reunification’ with Taiwan is ‘inevitable’ as crucial election looms
CNN
Chinese President Xi Jinping has reiterated China's long-standing desire to reunite Taiwan with the mainland, calling it "inevitable". The comments come ahead of a crucial election in Taiwan next month and are expected to increase tensions between the two sides. China considers Taiwan its own territory and has not ruled out the use of force to take control of the island. Relations between the US and China have also been strained by the issue, with the US maintaining an unofficial relationship with Taiwan and committing to defending the democratic island.
China’s focuses on digital economy to drive ‘common prosperity’ under Xi
South China Morning Post
China is set to prioritize the digital economy as part of its efforts to promote "common prosperity," according to the National Development and Reform Commission and the new National Data Administration. The government aims to narrow disparities among regions, urban and rural areas, and various demographic groups while bridging the digital divide. The plan includes expanding the application of digital technology to support the development of China's real economy, promoting regional digital collaboration, and enhancing digital talent and literacy in rural areas. Other areas of focus include inclusive access to social services, digital education resources, remote medical care, and elderly care.
China warns ‘military fans’ they could face prison for posting photos online
CNN
China's Ministry of State Security has warned "military enthusiasts" who post photos of new People’s Liberation Army (PLA) equipment online that they risk endangering national security. The ministry said that the photos could disclose operational and technical details of China's military hardware, with aircraft carriers being a particular concern. The warning comes as tensions between China and the US rise and reflects the Chinese government's increasing focus on national security. The warning states that repeat offenders could face up to seven years in prison.
China sanctions a US research firm and 2 individuals over reports on human rights abuses in Xinjiang
Associated Press
China has banned a US research company and two analysts who have reported on human rights abuses against Uyghurs and other Muslim minority groups in Xinjiang. The Los Angeles-based research firm Kharon, its director of investigations Edmund Xu, and human rights analyst Nicole Morgret have been barred from traveling to China, and any assets or property they have in China will be frozen. Chinese Foreign Ministry spokesperson Mao Ning said that the sanctions were retaliation for a US government report on human rights in Xinjiang. China has denied allegations of human rights abuses in the region.
Will China Ease Its New Video Game Controls? Investors Think So.
NY Times
Shares in Chinese video game companies Tencent and Netease rebounded on Wednesday after the government hinted it may revise proposed regulations on gaming. The National Press and Publication Administration unveiled draft rules on Friday aimed at reducing spending on games, causing tens of billions of dollars to be dumped from company stock. However, on Monday, the regulator issued licenses for about 100 new games and an affiliated association said the approvals were positive signals. Analysts from Nomura said the proposed rules could "significantly impair" the ability of Chinese video game companies to make money.
Chinese gaming stocks regain some ground as Beijing softens rhetoric
Financial Times
Shares in Chinese gaming companies Tencent and NetEase rebounded on Wednesday after Beijing adopted a softer tone towards the gaming sector, following the record sell-off triggered by new regulations. The National Press and Publication Administration (NPPA) sought to allay concerns by approving the release of new games and stating it would study responses to the plans to curb how gaming is monetised. However, analysts and fund managers remain concerned about policy uncertainty in China.
China struggles to control data sales as companies shun official exchanges
Financial Times
China's efforts to establish data exchanges to tighten control over the sale of business data are struggling as companies prefer to sell their data off the exchanges. While local governments across China have set up 48 exchanges, industry insiders claim there is no clear incentive for companies to participate, and most data sales occur elsewhere. The government hoped to increase its control over data after two decades when internet companies created economic fiefdoms using vast troves of consumer data.
UK mobile users had slowest 5G download speeds in G7 in 2023
Financial Times
The UK has the slowest average 5G download speeds among G7 countries, according to data from research company Opensignal. UK mobile users had an average 5G download speed of 118.2 Mbps between August and October 2023, down 13% from the same period in 2022. This was significantly slower than France, which had the fastest average 5G download speed of 221.1 Mbps. The UK's slow rollout of 5G has been attributed to factors such as the ban on Huawei equipment and planning permission rules for towers. The government has set a target for nationwide coverage of standalone 5G by 2030.
Private-sector vitality is needed to revive China's economy
Nikkei Asia
The Chinese government needs to introduce policies that stimulate the private sector and boost the economy, as a property recession and demand shortage continue to weigh on growth. Retail sales fell in November, and the real estate sector is performing poorly. The government has attempted to increase issuance of government bonds and make fiscal policy more active, but there is a lack of concrete details and no clear strategy to revive the economy. The government should focus on reenergizing the private sector, which is responsible for 80% of employment and serves as an engine for innovation.
China’s Industrial Profits Jump Though Deflation Concerns Linger
Bloomberg
China's industrial profits surged 29.5% in November compared to the previous year, driven by favorable year-ago comparisons and government stimulus measures. Although profits for the January-to-November period were still down 4.4% from a year ago, the decline has eased from the first 10 months. The increase in profits is attributed to the effectiveness of macro policies and the gradual recovery of domestic demand. However, signs of deflation are growing, with prices declining and demand remaining weak. This puts pressure on authorities to increase stimulus measures to prevent the economy from falling into a downward spiral. Beijing is expected to set an ambitious growth target of around 5% for 2024.
The 21-year-old ‘retiree’ who left China’s rat race for life in the rural mountains
CNN
Disillusioned by city life and facing a dire job market, some young people in China are choosing to move to the countryside. The country's youth unemployment rate in cities and towns hit a record 21.3% in June, leaving many disillusioned and burnt-out after years of academic and work pressure. Authorities have encouraged urban youth to head to the countryside in a bid to revive rural economies. One young man, Liu Youwen, built a bamboo shack in Guizhou province and has started a YouTube channel with videos of his rural life. Liu was inspired to start the channel after watching Chinese vlogger Li Ziqi's videos about life in rural China, which have earned her 18 million subscribers. Liu's videos show him building a pig pen and cooking for his piglets. Liu uploads weekly vlogs and has garnered attention online, with more than 350,000 likes across his social media accounts. He also incorporates advertising and product placement into his videos to generate a small income.
Dividends, stock buy-backs a bright spark in China market: JPMorgan fund
South China Morning Post
Chinese companies are increasing dividend payouts and share repurchases in an effort to support their valuations and fend off pessimism from the broader market. The MSCI China Index has lost over 14% this year and its valuation has fallen below its five-year average. Members of the CSI 300 Index have generated an average dividend yield of 2.94% this year, the highest on record, while companies listed in Hong Kong have spent a record $14bn on share repurchases. The move towards greater shareholder returns is seen as a structural change that will be sustainable going forward.
Victim? Villain? Huawei finds itself trapped in US-China dispute
Financial Times
The US is pushing Chinese companies into the arms of the communist state by cutting ties with the private sector, says Robin Harding in the Financial Times. As the US pushes to "decouple" supply chains from China, companies such as Huawei are being forced to duplicate technology lost to sanctions, turning research away from developments that would benefit the world. The cost of the push could also be the end of private Chinese companies, as the US is pushing them towards the state.
China’s ‘lying flat’ generation checks out in Dali
Financial Times
China's Dali is becoming a haven for social and intellectual refugees fleeing the pressures of the country's larger cities. The pandemic and China's increasingly austere political atmosphere are accelerating the trend as people look for a more accepting and open environment. Dali attracts a range of people, from entrepreneurs to dissatisfied young people looking to escape societal pressure to work long hours, buy expensive homes, and have children. Many of these individuals are middle-class people from single-child families who can afford to spend up to a year in Dali without working. However, as their parents' money runs out, they begin to look for low-key work to support themselves. For some, Dali is a place where they can freely be themselves, while others come to the city in search of new ideas and a more sustainable way of life. However, Dali is changing as mass tourism increases and costs rise, and the omnipresent Chinese police state watches over the city.
Tesla Plans Revamp of Smash Hit Model Y From China Plant
Bloomberg
Tesla is reportedly preparing to launch a revamped version of its Model Y electric SUV from its Shanghai plant in mid-2024. The updated Model Y is said to feature more noticeable exterior and interior changes than the previous update in October. The first batch of the refreshed Model Ys will be produced at Tesla's Shanghai facility, which will undergo a partial upgrade during the New Year holiday. Tesla's Model Y has been a bestseller in China, accounting for nearly 75% of the company's overall sales in the country. Tesla's domestic rivals, including BYD and Xpeng, are also introducing new electric vehicles to compete in the market.
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