Young Chinese spurn traditional investments in favor of gold; Philippines summons China ambassador after South China Sea confrontations
China’s Surging Real Borrowing Costs to Drag on Growth Into 2024; What It Feels Like to Be the Target of China’s Water Cannons
Welcome to this issue of The China Brief. Today is December 11, 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.
Young Chinese spurn traditional investments in favor of gold
Japan Times
Young people in China are increasingly turning to gold as a means of saving money due to the property market downturn, weakening stocks, low bank deposit interest rates, and a sputtering economy. The trend highlights the growing uncertainty about growth prospects in China, which has been slow to recover from COVID-19 lockdowns. Many young people see buying gold as a way to protect their savings and feel more secure in an uncertain job market.
Philippines summons China ambassador after South China Sea confrontations
Al Jazeera
The Philippines has summoned China’s ambassador and is considering expelling him after two confrontations with Chinese ships in the disputed South China Sea. Chinese water cannon hit the Philippines’ vessels on 14 and 15 May as they tried to send supplies to Filipino fishermen at Scarborough Shoal, which was seized by Beijing in 2012 after a months-long stand-off. Pictures shared on social media showed the Philippines’ boats had broken windows and damaged decks from the incident. The US State Department said China had engaged in “reckless maneuvers” and called on Beijing to end its “dangerous and destabilising conduct” in the sea.
China’s Surging Real Borrowing Costs to Drag on Growth Into 2024
Bloomberg
China's real borrowing costs could remain high in 2024 due to deflation pressures, which may pose a threat to growth. The People's Bank of China has lowered policy rates and banks have reduced their benchmark lending rates to support economic activity, but real lending rates have risen due to falling consumer and producer prices. This means that companies' borrowing costs will stay elevated and residents will be more inclined to save rather than spend. Weak business confidence and a population that is more likely to save than spend have already been challenges this year.
China’s electric car factories can’t hire fast enough
Japan Times
Xing Wei, a former electrician in China, has seen a significant improvement in his quality of life and income over the past two decades. In 2003, he graduated from a vocational high school and began working in an auto parts factory, earning $1,150 per year. He lived in a dormitory with three other workers and could only afford a black three-speed bicycle. However, Xing now works as a senior electrician installing industrial robots at electric car factories for Nio, a Chinese automaker, and earns close to $60,000 per year. He recently purchased a $52,000 Nio ES6 sport utility vehicle. This story highlights the economic growth and increased opportunities that have occurred in China over the past 20 years.
China says tax breaks to stay for over 90% of new energy vehicles
Yahoo US
China's Ministry of Industry and Information Technology has announced new technical requirements for tax exemptions on new energy vehicles (NEVs). Under the new rules, pure electric cars must have a range of at least 200km per charge, while plug-in hybrid cars must be able to run at least 43km on electricity. The regulations also state that electric vehicles must have a range attenuation rate of no higher than 35% under low temperatures to qualify for the tax breaks.
What It Feels Like to Be the Target of China’s Water Cannons
NY Times
Filipino fishermen have been subjected to water cannon attacks by Chinese coastguard vessels in the Scarborough Shoal, west of the Philippines. The shoal is a point of major contention between China and the Philippines, with the former claiming most of the South China Sea as its territory, including the waters to the west of the Philippines. China wrested control of the Scarborough Shoal from the Philippines in 2012, and has maintained a presence there ever since, despite the ruling against it by an international court in 2016.
Hong Kong voters turn their backs on ‘patriots only’ election with record low turnout
CNN
Voters in Hong Kong have delivered another apparent snub to China’s “patriots only” overhaul of the city’s electoral system, as local polls that barred the opposition from standing drew the lowest turnout in decades. Fewer than 1.2 million Hong Kongers – just 27.5% of those eligible – voted in the district council elections, the lowest turnout in the quadrennial polls since the handover of the former British colony to Beijing’s rule in 1997 despite an all-out government push to get people to cast their ballots. The tepid participation was a far cry from the last time such elections were held. In 2019, months of anti-government protests galvanized a historic turnout of 71% as the city’s pro-democracy camp won a landslide victory. Four years on, Hong Kong democrats have effectively been barred from running after a major electoral overhaul that ensures only “patriots” loyal to Beijing can hold office.
China Stocks’ Premium Over HK Peers Climbs to Highest in Year
Bloomberg
Chinese stocks traded on the mainland are currently at their highest premium to Hong Kong-listed counterparts in a year, as state-backed funds buy up A-shares to boost market sentiment. The Hang Seng Stock Connect China AH Premium Index, which tracks the price premium of A-shares to H-shares for companies listed in both markets, rose to its highest level since November 7, 2022. This comes as foreign investors' sentiment toward Chinese A-shares has soured following Moody's Investors Service's decision to cut China's credit outlook to negative.
TikTok is investing $1.5 billion to get back into online shopping in Indonesia
CNN
TikTok will invest $1.5bn to become the controlling shareholder of an e-commerce unit of Indonesia's GoTo Gojek Tokopedia. The move follows a decision by Indonesian regulators to ban online shopping on social media platforms in October, forcing TikTok to close its e-commerce service TikTok Shop. Under the deal, TikTok will buy 75.01% of GoTo's Tokopedia for $840m and inject TikTok Shop's Indonesia business into the enlarged Tokopedia entity. Indonesia's e-commerce industry is set to expand to about $160bn by 2030 from $62bn this year, according to a report by Google, Singapore state investor Temasek Holdings and consultancy Bain & Co.
Snow blankets northern China, closing roads and schools and suspending train service
Associated Press
Northern China experienced overnight snowfall, resulting in road closures and the suspension of classes and train services. A red alert was issued for a blizzard in Zhengzhou, the capital of Henan province, resulting in the closure of schools and the airport. A total of 134 road sections were also closed due to snowfall and icy conditions. This was the first significant snowfall experienced in much of China this year. In Beijing, a thin layer of snow covered rooftops and parked cars, resulting in the suspension of 187 bus routes.
Zelenskyy to meet US President Joe Biden, House Speaker as aid stumbles
Al Jazeera
Ukrainian President Volodymyr Zelenskyy will visit Washington, DC on Monday for talks with US President Joe Biden to discuss the importance of continued US support for Ukraine's defence. The visit comes as Biden attempts to gather support for a $106bn military aid plan for Ukraine and Israel, which was blocked by Republicans last week. Some right-wing Republicans are resisting efforts to send more money to support Ukraine's response to Russia's invasion. Zelenskyy's office confirmed the planned meeting with Biden, with key areas of discussion including defence cooperation between the two countries.
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